As businesses increasingly rely on social media to promote products or services, copyright infringement claims are increasing as well, making it more important than ever for organizations and those who facilitate their advertising campaigns to understand the intersection of copyright law and social media. Claims previously exclusive to publishers have now reached major companies that market their products through their own social media posts or third-party influencer posts. Re-sharing user-generated content without the creator’s permission can expose organizations to significant legal liability and risks. Being on the wrong side of a copyright infringement lawsuit could cost thousands or even millions of dollars in legal fees and damages. Fortunately, a comprehensive risk management and insurance program can help mitigate these losses if a copyright owner accuses an organization of unauthorized use of their work.
Understanding the Risks
Understanding the potential risks is crucial to recognizing the activities that can expose an organization to copyright infringement claims. For example, businesses that create and share photos and videos to promote their product or service can be liable for copyright infringement should they choose to use content without approval from the creator.
In addition, companies using music on their social media pages or website are also at risk. Copyright exposure arises if the music is not properly licensed, even if it is playing innocently in the background. For example, the United States District Court for the Southern District of Florida found that Bang Energy violated Universal Music Group’s copyrights when it posted TikTok ads with music without the artist’s permission.
It is important to note that a low follower count is not a defense. Likewise, while it is a best practice for other reasons, crediting the original creator does not confer the right to use copyrighted work or afford automatic protections. Instead, linking to the source and attributing the original creator notifies the creator of unauthorized use. There is also software that can detect inappropriate uses of copyrighted material on the internet, contributing to the notable increase in claims.
Copyright infringement claims can lead to significant defense costs, actual damages, statutory damages and attorney’s fees. For example, 17 music publishers sued Twitter for over $250 million for copyright infringement (including a $150,000 statutory penalty for each of the thousands of violations), claiming that Twitter had not paid for a license allowing its users to upload copyrighted material.
Uploading or downloading copyrighted works without permission from the creator violates the creator’s exclusive rights to reproduce and distribute. Those who commit copyright infringement may face federal statutory damages of up to $30,000 per work infringed, or up to $150,000 per work in cases of willful infringement. Damage amounts are significant because, as more companies lean into trends like short-form videos with music cues on platforms like Instagram or TikTok, the number of cases of potential infringement increases significantly.
Many companies use a social media strategy that leverages popular influencers to advertise on TikTok and Instagram. All three major U.S. record labels have hit some companies for failure to obtain a license to use the music in more than 100 videos. In one case, a federal judge ruled for the labels, finding the social media posts to be “work.” In other cases, creators have elected for quicker alternatives like sending cease and desist letters, settlement demands, or bills for the creators’ licensed work, underscoring the importance of analyzing exposure to copyright infringement claims and developing a strategy to mitigate and decrease liability.
Mitigating Copyright Infringement Risks
Although there may not be an all-encompassing solution to avoid copyright infringement claims, organizations can minimize the potential impact of such claims by relying on a comprehensive insurance program, having a clear social media governance policy and using original content.
While it is not a substitute for risk mitigation, relevant insurance coverage is available as part of a broader risk mitigation plan. The role of insurance as a component of a broader risk-mitigation plan is twofold: First, as many would expect, insurance may help lessen or eliminate out-of-pocket loss from a copyright violation. Second, and often overlooked, insurance may help reduce or completely cover the cost of defending claims of copyright infringement, even if those claims do not result in liability. Indeed, the cost of defending a lawsuit can be worth more than paying the amount of any resulting judgment or settlement.
A good social media governance policy is also part of a broader risk-mitigation plan—and one that most insurers will require. A policy that requires ensuring the creator has approved posts sharing music or content of others is especially important when contracting third-party influencers to market products and services. The governance policy should account for security provisions, regulatory compliance requirements and copyright infringement prevention tactics such as specific guidelines around reposting content, using trending sounds and partnering with third-party creators.
Creating original content for social media also mitigates the risk of copyright infringement claims. While jumping on trends, such as trending music and reposting content, are powerful plays to increase social media engagement, the dangers might outweigh the benefits. If posting original content is not ideal because of costs or other factors, it is crucial that those using third-party content and any contracted third parties understand the proper licensing and permissions that should be in place to avoid copyright violations.
Insurance Coverage for Copyright Infringement Claims
Adequate and appropriate insurance coverage can help safeguard organizations in copyright infringement cases. From media liability to commercial general liability (CGL) to cyber insurance, organizations can leverage insurance for defense costs, judgments or settlements related to copyright infringement claims. However, every policy includes unique language and defined policy terms. Carefully review policies and consult with insurance professionals to ensure adequate coverage for specific business risks.
Most CGL policies do not cover intellectual property risks, such as copyright infringement claims, and will typically contain an intellectual property exclusion. The policy will include coverage for advertising injury, which aims to protect businesses from claims of offenses committed in advertising, including online platforms. However, restrictive definitions and broad exclusions that might render coverage for copyright infringement illusory dilute this policy so the relationship between a copyright claim and advertising is not automatic. Further, the common CGL policy phrase “in your advertisement” can be construed restrictively, depending on its usage.
Other exclusions beyond the intellectual property exclusion may also lead an insurer to deny coverage. For example, policies may exclude coverage for claims involving material first published or posted before the beginning of the policy period. Policies also typically exclude coverage for acts of the insured that are intended to, or could reasonably be expected to, cause injury. Thus, the company’s conduct must be inadvertent, which is arguably not the case with social media posting.
Media liability insurance is a type of professional liability or errors and omissions coverage that can protect against copyright infringement lawsuits related to reproducing, distributing, performing or displaying a protected work without permission. Companies that post media content either on their websites or social media should consider adding media liability insurance to their risk management program.
Cyber insurance policies may also include coverage for copyright infringement claims under a media liability insuring agreement. If included, there is generally coverage for damages and claim expenses, including legal costs and expenses resulting from the investigation and defense of the copyright infringement claim and damages that might result from a judgment or settlement. However, these damages rarely include fines, penalties or future profits.
While companies continue to embrace social media and influencer marketing techniques, they should be diligent in mitigating the risk of copyright infringement. They should also avoid assuming their current insurance program provides adequate protection, as narrow definitions, exclusions or ambiguous policy language might present complexities or prevent coverage altogether. Consult with experienced insurance coverage professionals to ensure that adequate coverage is in place for risks and potential exposure related to copyright infringement claims.