United States: Intellectual Property Alert

Consumer Review Fairness Act: Preserving the Right to Post

On December 14, 2016, President Obama signed the Consumer Review Fairness Act of 2016 [H.R. 5111], which forbids businesses from retaliating against consumers for posting negative reviews, and claiming ownership of reviews uploaded by consumers. The Act empowers the Federal Trade Commission (FTC) and state attorneys general to enforce the law. However, it does not preempt existing state law, such as California's 2014 law voiding consumer contract provisions that impede consumer reviews.

The cornerstone provisions of the Act, detailed below, are effective beginning March 14, 2017 (90 days from the Act's enactment). The FTC must issue best practices for compliance within 60 days of enactment, by February 12, 2017. 

What the Act Does

The Act's impact is twofold. It voids ab initio any contractual provisions that:

  1. Restrict consumers from sharing their reviews; or
  2. Transfer the intellectual property rights of a consumer's review to the reviewed business.

At first blush, the import of protecting a consumer's ability to post reviews is more obvious than that of protecting a consumer's intellectual property rights in his or her review. The former prohibits what are more commonly known as "non-disparagement" or "gag" clauses that serve to stifle consumer opinions, thereby ensuring public access to honest, crowd-sourced information about products and services. Likewise, the Act makes it unlawful for anyone to offer a form contract containing such a provision.

Equally significant, the latter prevents businesses from sidestepping the consumer and going straight to the consumer's chosen platform (e.g., Yelp), claiming copyright ownership over the review and demanding that the site take down the post. Prior to the Act, this could be accomplished by sending the host site a Digital Millennium Copyright Act takedown notice.

Notably, the Act not only benefits consumers, but also helps level the playing field for businesses that do not use unfair tactics to prevent negative reviews. The Act also grants the FTC the authority to levy civil penalties for violations, pursuant to the Federal Trade Commission Act, which provides for civil penalties of up to $10,000 per violation.

What the Act Doesn't Do

The Act only applies to "form contracts," which are defined as those "imposed on an individual without a meaningful opportunity for such individual to negotiate the standardized terms." In essence, the Act protects consumers from what are often termed "contracts of adhesion," in which one party – typically the larger, more-sophisticated party – drafts the terms to which the other party simply agrees. Contracts of adhesion are generally enforceable if the consumer affirmatively consents to terms that are not otherwise unconscionable.

  • However, excluded from the "form contract" definition are employment contracts and those between employers and independent contractors. The Act also does not limit the rights of businesses with respect to postings that are false, misleading, defamatory, libelous, slanderous, harassing, sexually explicit, and those that promote intrinsic bias or constitute a breach of confidentiality.
  • Likewise, the Act does not prevent a host site from removing content that is considered privileged or confidential or that is unrelated to the product or service offered by the business in question.

Practical Steps to Take

Form agreements directed to consumers should be reviewed to ensure they do not contain provisions restricting consumers from sharing their reviews, or transferring the intellectual property rights of a consumer's review to the reviewed business. In particular, websites and blogs that allow consumers to submit product reviews should review their website terms and conditions and submission guidelines, and remove any clauses that may be deemed void.

Diversion of Company Domain Names and Social Media Accounts Subject to New York State Conversion Claims

A groundbreaking decision recently issued by a New York federal district court permits state law claims for conversion and replevin to proceed against a terminated marketing agent who hijacked a company's domain names and social media accounts. The decision in Salonclick LLC v. Supergo Management LLC, No. 16 Civ. 2555 (S.D.N.Y. Jan. 18, 2017), expanded the scope of a conversion claim to include a broader range of intangible assets – in this case the company's domains, social media accounts and websites.

Salonclick extends a seminal, 2007 decision by the New York State Court of Appeals, which was later adopted by the federal Second Circuit Court of Appeals. That decision held that conversion claims in the Internet era could no longer be limited to traditional tangible assets, and should cover, in that case, intangible electronic records on a computer.  

Conclusion

The new decision by Southern District Judge Kimba Wood gives owners of domains, websites and social media accounts additional ammunition to seek damages and equitable relief through conversion and replevin claims in federal courts, and likely in New York state courts as well. Companies should also ensure that any consulting or independent contractor agreements involving these valuable intangible assets clearly state that all domains, websites, digital assets and content are the exclusive property of the company, and that any misuse, hijacking or other diversion or conversion of such assets will cause irreparable harm and entitle the company to both temporary and permanent injunctive relief, in addition to damages, without the necessity of posting a bond.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.