Australia: Chalk and Cheese? Striking a balance between compliance and an effective social media presence – Part 2

Last Updated: 11 May 2017
Article by Dudley Kneller

So how do you do it?

Part 1 of this article covered compliance challenges faced by organisations in the technology, media and communications sector. Specifically we looked at the challenges posed by the Privacy Act, 1988 and Spam Act, 2003. Part 2 builds on this piece and below we cover ACCC compliance and relevant intellectual property issues posed by social media for this sector.

So how do you effectively promote goods and services online using social media when the ACCC is increasingly monitoring online conduct? What about intellectual property rights? The Internet can often be seen as a free for all, with users paying scant regard for the ownership rights of intellectual property owners. Australian content users are particularly good at downloading movies and television shows from the Internet but forgetting to pay for them!

Intellectual Property (IP)

Let's take a look at some of the relevant IP issues emerging for this sector.

Enforcing your IP rights in the offline world can be challenging enough. Enforcing those rights in an online context is even harder. Whilst traditional IP laws were originally created for the offline world they are also applied in a digital context. At times it very much feels like the law is forcing a square peg into a round hole. Increasingly however, laws are being updated and modified to reflect the digital world in which we now live.

Social Media and copyright issues?

Challenges can arise for organisation claiming copyright in their "tweets". At a maximum of 140 characters the work needs to demonstrate originality, some level of literary skill and not be deemed too insubstantial. This can be a tall order. In Fairfax Media Publications Pty Ltd v Reed International Books Limited, it was found that a series of short headline articles could not be protected as copyright works as were deemed too short (at 32 characters).

Longer social media posts, for instance those appearing on LinkedIn or photographs on Instagram are most likely in safer territory. LinkedIn posts are obviously longer than their Twitter counterparts and can fall back on the standard protections available to more substantial works.

We discussed Australian users' propensity to use copyright protected work from the Internet without fear of repercussions. From a technology industry perspective both rights holders selling and promoting their works online as well as the tech companies hosting content or ISPs providing the underlying Internet services all have different views on how such issues should be addressed.

The iiNet case which trawled its way through the Federal Court right up to the High Court decision in April 2012 brought copyright infringement and the Internet firmly into the spotlight for the TMT sector. The High Court ultimately found that iiNet did not authorise the infringement by its customers of the copyright in films and television programs owned or exclusively licensed by 34 Australian and United States movie studios. The Court affirmed the earlier Full Federal Court decision in 2011 that iiNet had no direct powers to prevent its customers from infringing copyright and that it was not reasonable to expect iiNet to take action against individual infringers.

This has not stopped others from asking the question. Dallas Buyers Club LLC (DBC) and iiNet again hit the courts more recently with the film studio arguing that iiNet and other ISPs should hand over customer details of whom DBC suspected of illegally downloading the film, "Dallas Buyers Club". Whilst also ultimately unsuccessful the decision has led to public discussion and debate over the use of copyright material sourced online as well as broader discussions around piracy.

With the video on demand market exploding in Australia following the entry of Netflix and other on demand providers we expect the movie makers to have another go at some point. It is likely we will see the TMT sector, government and rights holders further the discussions already had for the draft industry code proposed by ISPs and rights holders representatives which sets out how to deal with piracy issues and copyright infringement occurring online.

Whilst somewhat broader in scope, the Productivity Commission released its long awaited report on intellectual property in December 2016. The Commission made a number of recommendations including various recommendations relating to copyright in a digital world.

The recommendations were broadly as follows:

  • make contracts that restrict use of copyright exceptions unenforceable (recommendation 5.1)
  • make clear that circumvention of geoblocking technology is not an infringement of copyright (recommendation 5.2)
  • repeal parallel importation restrictions on books (recommendation 5.3)
  • the Australian Competition and Consumer Commission should review the voluntary Code of Conduct for Copyright Collecting Societies (recommendation 5.4)
  • implement the Australian Law Reform Commission's recommendations regarding a fair use exception (recommendation 6.1)
  • implement the Australian Law Reform Commission's recommendations to the limit liability for use of 'orphan works' (recommendation 6.2)
  • expand safe harbour provisions to all online service providers (recommendation 19.1)
  • make changes to the Federal Circuit Count to improve access to enforcement (recommendation 19.2).

The intent of many of these recommendations is to acknowledge and support the growing digital economy and to update existing offline laws which do not adapt well in a digital context. Recommendations relating to "geoblocking" at 5.2 and the recommended introduction of a fair use exception at 6.1 are very much centred around copyright use in the digital world.

With this discussion now very much on the agenda, the Australian TMT sector is likely to face increasing regulation around the management and protection of IP rights more broadly. As an aside we wonder whether the Australian TMT sector will find itself forced to progress this discussion in the same way as their UK counterparts. The English Court of Appeal has recently upheld the English High Court's decision to grant Cartier an injunction which required the key UK ISPs to block access to websites selling counterfeit Cartier goods. This is a step forward for rights holders seeking to protect their trademark and brand online and serves as a warning that perhaps the pendulum is now swinging back towards rights holders!

Australian Consumer Law

Traditional "bricks and mortar" advertising has long been regulated by the Australian Competition and Consumer Commission (ACCC). Australian businesses and consumers are fairly familiar with the ongoing trials and tribulations of our largest retailers as they battle it out for market supremacy. Whether its how retailers promote their "free range" eggs, argue that their bread is "freshly baked in store" or that their red wine vinegar hails from the Barossa Valley. This battle is regularly played out in the aisles and checkouts of our favourite retailers every day.

Increasingly these battles are shifting online and the ACCC has weighed in with guidance on how to do the right thing with its online "Guide on Social Media". With many organisations happy to sit back and allow posts to be published with little or no review, organisations are now having to take a more proactive approach. The Guide is clear in shifting responsibility to the companies and organisations running social media campaigns and websites. Organsiations can be held responsible for posts or public comments made by others on their social media pages which are false or likely to mislead or deceive consumers. The Guide makes a number of key points including pointing out that social media operates 24 hours a day, seven days a week, and many consumers use social media outside normal business hours and on weekends. If you have a social media presence then you need to manage it effectively, ensure regular monitoring occurs and that you take proactive steps to remove inappropriate content.

The ACCC is also not afraid to flex its considerable muscles when organisations do the wrong thing. In June 2016, the Federal Court handed out a $2.75 million penalty to an online betting company following a contravention of the Australian Consumer Law. The case is worthy of brief discussion.

In 2015 the ACCC brought a Federal Court action against Hillside (Australia New Media) Pty Ltd trading as Bet365 (Bet365) as well as its UK subsidiary, Hillside (Shared Services) Limited. Bet365 like many of its online brethren regularly seeks to attract new punters with various promotions, giveaways and endorsements. Samuel L Jackson cuts a familiar figure in their advertising online and on television. One of their promotions from March 2013 to January 2014 offered new customers "$200 FREE BETS".

The Court found that this promotion was misleading and deceptive, breaching s 18 of the Australian Consumer Law as well as contravening s 29(1)(b)(i) and (m) of the Australian Consumer Law as a false representation. The headline promotion gave the impression that if you were a new customer you were entitled to $200 worth of free betting without any sort of restriction or limitation.

Unfortunately that was not the case – there were a number of limitations in the "small print". For example, there was a 90 day offer limit, the customer had to pay a deposit and risk that deposit before being able to make any "free" bet and the offer was not available for wagers at odds of less than half ($1.50). The terms and conditions setting out these limitations amongst others were not clearly displayed and it was only after the unsuspecting punter had proceeded well beyond the opening headline to the Welcome and Account page that the terms and conditions could be properly reviewed.

There was some discussion in the case as to whether Bet365 had deliberately omitted to include the limitations within or close to the headline promotion. The Court found that this was not the case. What is probably more interesting from a broader TMT industry perspective however, is how the promotion came to light in the first place as well as what it means now for online advertisers using social media to promote products and services.

The proceedings were instigated by the ACCC following a sweep of "free" offers on websites targeting Australian consumers. Given Bet365's prominence online and offline it is debateable whether the regulator would have come across the promotion by some other means other than through this targeted investigation. Be that as it may, it is useful intelligence for technology companies advertising online to tread carefully when offering anything for "free" as clearly the ACCC is monitoring social media advertising closely and is prepared to follow through with enforcement action.

Separately the decision itself is a clear reminder that "the big print giveth and the small print taketh away". Online marketers need to ensure any offers should prominently display the related terms and conditions. A failure to do so in conjunction with a "free offer" will likely see that marketer in breach of the ACL for misleading and deceptive conduct and related infringements.

Final comments and wrap up

And so we conclude our observations on striking a balance between compliance and an effective social media presence. Having commented in Part 1 on the privacy and SPAM compliance challenges faced by organisations in the technology, media and communications sector we have now also explored additional compliance challenges around our evolving IP laws as well as compliance with ACCC obligations.

In some ways it seems a difficult balance to strike. Technology innovation and social media engagement will always result in the law playing catchup for organisations pushing the boundaries and adapting their social media strategies to align with market demands and the opportunities technology presents.

Having an increased awareness of some of the evolving compliance and legal obligations which are slowly adapting to the digital world is nevertheless important. Companies and organisations who properly consider effective compliance and risk management in their social media strategy are likely to be the organisations that succeed in the digital space. These organisations will be able to successfully promote, adapt and modify their approach and are less likely to be distracted or hamstrung by regulator or consumer complaints.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.

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