The liability for the acts performed by influencers hired by companies for the preparation and publication of promotional videos on social networks is a discussion that continues to generate debate both in Chile and abroad.
On July 11, the U.S. Southern District Court ruled in a summary judgment that a U.S. company dedicated to the sale of energy drinks is liable for copyright infringement for including in its TikTok promotional videos, musical works without having the corresponding authorizations. Additionally, the same Court ruled that the company will not be held liable for the acts committed by the influencers who were hired to make videos of the same nature, where there was also an infringement of third party rights.
The judgment is clear in pointing out that there is no doubt in the application of the strict liability regime by the U.S. company with respect to the commission of the crime of copyright infringement, but the question arises as to whether or not the company is held liable for the videos that the influencers published under its commission, considering also that the entity maintained a self-regulatory system for this type of acts. Thus, firstly, it ensured that the advertising videos made by the influencers were under its ownership, through the institution of “work for hire” or by making the corresponding assignments. On the other hand, it maintained a specific internal protocol for this type of cases, where influencers were obliged to undergo a prior audit, including the evaluation of the form and substance of the advertising act. The audit was a prerequisite for the influencer to receive the financial compensation agreed after the publication of the video.
In this context, the plaintiffs argued that under U.S. law there would be vicarious liability on the part of the company for the acts committed by the influencers. This was mainly because there was a social media team auditing the published videos, which implied prior knowledge of the music included in the advertisement.
The U.S. company based its defense on the fact that there would be no material participation on its part in the making of the videos and that, in addition, there was a misunderstanding with respect to the licensing by TikTok.
Finally, it is determined that the company will not be liable for the videos made by third parties. This, since although the plaintiffs were able to prove that there was sufficient control on their part over the advertising content, the concurrence of another key element for infringement, namely, the direct economic benefit of the unlicensed use of the works in favor of the company from the advertising acts performed by the influencers, was not accredited.
The judgment is particularly interesting since it includes multiple aspects that undoubtedly need to be considered when carrying out advertising acts in social networks, an activity that is essential for most companies nowadays. Thus, it is relevant to take into account aspects related to the copyright of the works that are part of the advertising itself, aspects of compliance and also adequately regulate the business relationship that will be maintained with the influencer, if applicable.
With respect to copyright, in our experience the sources of conflict for acts of this nature have their origin in the lack of information regarding the licenses that the different social network applications deliver to their users. While it is true that there are musical works whose use is automatically licensed by the application itself, such authorization does not extend to companies that want to make commercial uses in promotional videos using musical works whose rights are under the ownership of third parties.
In order to link a musical work in advertising videos, it is necessary to obtain a license on the Synchronization Rights, which are composed of both the authors’ and composers’ rights, as well as the authorizations granted by the corresponding phonographic producer.
Regarding compliance aspects, our recommendation is to work on internal protocols that provide sufficient guidelines to verify that the applicable legal regulations are duly complied with. At this point, it is important to consider aspects of territoriality, understanding that there may be geographical limitations around the advertising exhibition that make necessary the extension of this type of authorizations to verify compliance with the rules applicable to the case. On the other hand, the protocols must include guidelines related to preventive and reactive aspects in case of potential conflicts with third parties directly or indirectly related to the advertising act. In addition, the commercial agreements entered into with influencers must integrate the bases and guidelines of such protocols.
At this point, we highlight that by means of exempt resolution No. 00534 dated June 16 of this year, the “Interpretative Circular on Native Advertising and Influencers” of the National Consumer Service was approved, where it is expressly stated that in matters of liability for infringement of the rules of the Consumer Protection Law, the civil and infringement liability falls on the advertiser, understanding that there is an obligation on its part to ensure compliance with regulations in the actions of its agents. This does not exclude that an influencer may also be liable when acting as an advertiser or supplier, in addition to being civilly liable when acting autonomously without a commercial or contractual relationship with the supplier of the product or service that is the object of the advertising action.
Undoubtedly, liability for advertising activities carried out by influencers, where third parties are commissioned, is an issue that will continue to be constantly discussed, so we reaffirm our commitment to inform our clients about the key aspects to be considered in this type of cases to avoid incurring civil liabilities or reputational damage.
For more information on these issues please contact our IP, Tech and Data group:
Eugenio Gormáz | Director of the IP, Tech and Data Group | egormaz@az.cl
Antonia Nudman | Associate | anudman@az.cl
Natalia González | Associate | ngonzalez@az.cl
Constanza Pasarin | Associate | cpasarin@az.cl