What You Can Learn From Facebook’s “Sponsored Stories” Settlement

by Michelle Sherman
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If you thought that only famous people have a “right of publicity,” think again. Ordinary people can recover damages for someone using their name, voice, photograph or likeness for a commercial purpose. Facebook recently settled a class-action lawsuit filed by Facebook users over an advertising service called “Sponsored Stories.” The lawsuit was based on California’s “right of publicity” statute, Civil Code Section 3344. This settlement is significant for businesses that market themselves online using their customers or the general public as part of their advertising.

A “Sponsored Story” is an advertisement that appears on a member’s Facebook page and consists of another friend’s name, profile picture and an assertion that the person “likes” the advertiser. This promotional advertising may be based on the friend having “liked” or “checked in” with the business through Facebook. In their complaint, plaintiffs allege that Facebook did not get their prior consent or give them an opportunity to opt out of the Sponsored Story ads. Plaintiffs also allege that Facebook told users in its Terms of Use that they could use “privacy settings to limit how [their] name and profile picture may be associated with commercial, sponsored, or related content (such as a brand [they] like)” when this was not the case.

A.  Joe Public And His “Right of Publicity”

The “right of publicity” statute in California prohibits use of another person’s name, voice, signature, photograph, or likeness for the purpose of advertising or selling products, goods or services without the person’s prior consent. If the person is a minor, then the prior consent of his parent or legal guardian is required. This statute does not require bad intent, and sets damages at a minimum of $750 and possibly greater based on actual damages or any profits received from the unauthorized use. Punitive damages may also be recovered, as well as attorneys’ fees. In other words, it can be very costly to use another person’s name, voice or picture for commercial purposes without their permission. The California statute also includes examples of what is not a violation, and these examples are defenses worth considering if your business is ever sued.

States vary on how they recognize a right of publicity, with 19 states including Nevada, New York, Pennsylvania and Washington having right of publicity statutes, and 28 other states recognizing it through their common law. Whatever its form, states recognize that individuals should have the right to be compensated for a commercial exploitation of their name, voice or image, unless they have agreed to give up that right.

In the case of Facebook and its “Sponsored Stories,” it is reported that Facebook agreed to pay $10 million to charity in addition to $10 million in attorneys’ fees to plaintiffs’ counsel. Facebook also reportedly agreed to make changes to its Sponsored Stories, including letting Facebook users decide what content can be used for Sponsored Stories, and to adopt new disclosures.

B.  Three Tips For Posting Pictures

Businesses can take several things from the Facebook settlement:

1. Have your terms of use reviewed to make sure you are giving accurate disclosures on how website posts may be used, and what users can do to opt out;

2. Have a video and photo release that covers your anticipated uses; and

3. Set it up so pictures or videos cannot be uploaded onto your website unless the user clicks an online box to indicate consent with the website Photo/Video Release, the Terms of Use and also Privacy Policy.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Michelle Sherman, Michelle Sherman | Attorney Advertising

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