Articles Posted in Social Media

320px-Keansburg,_New_Jersey.jpgA federal judge in New Jersey denied a defendant’s motion to dismiss a former employee’s invasion of privacy claim. In Ehling v. Monmouth-Ocean Hospital Service Corp., an employee sued her employer after a supervisor allegedly accessed her Facebook account without her knowledge or permission and publicized information she considered private. The court dismissed her claim for violation of New Jersey’s wiretapping statute, but denied a motion to dismiss her invasion of privacy claim. The case could set an important precedent for an employee’s expectation of privacy in certain social media activities.

The plaintiff, Deborah Ehling, worked for Monmouth-Ocean Hospital Service Corporation (MONOC) as a registered nurse and a paramedic from 2004 to 2011. In 2008, she began a term as union president. During the time period relevant to her claim, roughly 2008 to 2009, Ehling had an account on the social networking website Facebook, which she says was only accessible to her approved “friends.” Although some coworkers were her Facebook friends, none of MONOC’s management was.
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Nearly every business must have an online presence today, not only to attract new customers, but to communicate and interact with them. A website is the core of any business’s online strategy. Even with presences on social media sites, consumers expect to find a website. It is therefore vitally important for businesses to protect their brand from online infringement. Use of a business’s name, or a similar-sounding name, in an Internet domain name, known as “cyber-squatting,” is a common form of trademark infringement. Fortunately, processes exist that allow businesses to obtain rights to a domain name from cyber-squatters.

A basic address on the world-wide web typically consists of a “domain name” with an extension known as a “generic top-level domain” (gTLD), such as .com, .net, or .org. Until now, disputes over domain names have involved the domain name itself, but a recent decision to expand the number of available gTLDs will open up a new realm of possible cybersquatting.

The Internet Corporation for Assigned Names and Numbers (ICANN), a nonprofit organization that oversees the global network of domain names and IP addresses, authorizes “registrars” to register domain names to businesses and individuals. The process of registering a domain name is quite simple, requiring a few minutes and as little as $10. ICANN accepted applications for new gTLDs for a six-month period earlier this year, eventually receiving more than two thousand. The gTLD application process, however, is far more complicated than domain name registration, and requires a $185,000 fee per gTLD. While cyber-squatting is most likely to occur in the domain name itself, businesses may encounter cyber-squatting both before the “.com” in a domain name and in place of the “.com.”
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1375057_40170684.jpgStartup businesses in New York and New Jersey always begin with enthusiasm and excitement. A new business is an opportunity to create and explore, but also requires careful planning and attention. Certain risks, if not managed effectively, can sink a new business before it has a chance to succeed. Here are five errors that new businesses often make, and tips on how to avoid them.

1. The Wrong Business Entity. Identifying the right type of business organization is critical to a company’s success. Owners must consider how they want business income to be taxed, and how they want to handle the liabilities of the business. Corporations, limited liability companies (LLCs), and partnerships each offer unique advantages. “C” corporations and “S” corporations offer similar liability protections, but different tax advantages. Partnerships offer tax benefits in some circumstances, as well as flexibility in the company’s governance. LLCs offer a great deal of flexibility, but may not be right for fast-growing companies.

2. Insufficient Planning and Agreement Among Owners. Business owners must consider not only how to start their business, but also how they plan to either end or exit it. They must plan for contingencies, like the early departure or death of an owner, with regard to how the company will handle that owner’s equity share. Any promises or contingent offers regarding additional stock or equity should be in writing. Agreement among owners at the start of the business is no guarantee of continued harmony.
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329px-Space_Shuttle_Discovery_over_Capitol.jpgSocial media has allowed companies to reach out to customers and expand their businesses more than ever before. It has also given individuals new modes of communication and expression. Unfortunately, the intersection of personal and business use of social media can be problematic for employers.

Companies have enacted a wide variety of social media policies, ranging from the highly laissez faire to the highly restrictive, in an effort to moderate employees’ use of social media. Employers face the difficulty of enforcing their policies, as employees may simply move their usage from company machines to their own smartphones. More importantly, though, are concerns about compliance with federal labor laws.

The National Labor Relations Board (NLRB) has published several reports on social media-related labor complaints over the past year. Its findings stop well short of articulating a distinct set of regulations or guidelines, but they offer a valuable guide to the issues that the federal government considers important.

The NLRB released its first report, entitled “Report of the Acting General Counsel Concerning Social Media Cases,” on August 18, 2011. It released updated reports on January 24 and May 30, 2012. Each report consists of reviews of cases brought before the NLRB in the past few years involving social media. Many cases involve a complainant who was terminated due to violation of an employer’s social media policy, often for something posted to a site like Facebook or Twitter. The NLRB reviewed whether the termination was lawful. In some cases the NLRB also reviewed the legality of the employer’s policy.
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Facebook_HQ.jpgFacebook, the social networking website that began as a college dorm room project and grew into a multi-billion dollar corporation, in many ways embodies the dreams of small business owners and entrepreneurs. It has enjoyed explosive growth since its founding in 2004, and its service has become a feature of daily life for almost a billion people. In light of this, it may not be surprising that Facebook’s initial public offering (IPO) had very high expectations. The IPO broke records and raised billions of dollars. At the same time, the stock price failed to rise much above the initial price, disappointing many investors who hoped to see the price skyrocket.

Facebook began in a Harvard dorm room in 2003. Within a year, it had moved to Silicon Valley and acquired millions in start-up funding. The basic story of the company’s founding, with a fair amount of artistic license, is familiar to moviegoers from the 2010 film The Social Network. By the time the film came out in theaters, Facebook had over 500 million active users. By the time of the company’s IPO in May 2012, the total number of users had surpassed 900 million. This amounts to roughly three times the population of the United States and one-seventh of the world population.

On February 1, 2012, Facebook filed a registration with the Securities and Exchange Commission (SEC) for an IPO. The registration form, known as Form S-1, provides basic information for investors about the business, including the financial risks associated with investing in the IPO. Facebook’s registration declared an intention to raise $5 billion through sales of shares of common stock, but it did not say how many shares it hoped to sell or at what price. An analysis of the IPO registration by the technology blog Mashable compared the IPO’s potential earnings to those of companies like AT&T Wireless and Deutsche Telekom.
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Colearn Social MediaSocial media is no longer an optional feature for most businesses. Consumers expect to find businesses online, not only on a company website, but also on popular social media platforms like Facebook and Twitter. Many businesses use these platforms to market products or services, but some use them simply to engage with their customers. These forms of media offer varying degrees of benefits and opportunities for different types of businesses, but all companies using social media face certain potential legal risks and liabilities. As small business lawyers for New York and New Jersey, we have seen how social media can get companies into trouble, but we have some suggestions for what to do.

1. False or misleading advertising: Advertisements put forth through social media must adhere to the same rules as any other kind of advertising. New York and New Jersey’s consumer protection laws prohibit businesses from making false or misleading statements to consumers about their products or services, and the penalties can be quite harsh.

2. False or defamatory statements: Social media, particularly Twitter, lends itself to short, quick bursts of information, often without the thought and consideration that might go into a longer marketing piece. Statements about a competitor or any other person or business, even limited to 140 characters, could expose a business to liability for defamation. Several recent lawsuits, including one against musician Courtney Love, indicate that Twitter is a viable medium for defamatory speech.

3. Bad publicity: Social media, perhaps for the first time in history, offers a two-way street between companies and consumers. A disgruntled customer can cause havoc for a company’s reputation through social media. A company’s response can make the difference between allowing the dust to settle and causing the dispute to “go viral,” giving it far greater exposure than it might have otherwise had (often known as the “Streisand Effect.”)
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Woman-typing-on-laptopSmall businesses need a way to market and advertise their products and services, and the internet and other communications technologies offer many opportunities that are both effective and affordable. Traditional advertising can be quite expensive, particularly in media like television, making it difficult for small businesses with small budgets to get much exposure. This is where the internet can offer excellent opportunities for many businesses.

The New York Daily News profiled a New York company offering what it calls a “digital marketing tool” for small businesses last week. The company touts its ability to help small businesses reach a wide range of consumers online through multiple platforms. It allows a business to announce new deals or promotions near-simultaneously via e-mail to customers, postings to blogs and social media sites, updates to the business’ website, and notices to publishing networks all at once. The company claims that it is signing up a hundred new customers per month, with sales approaching $3 million. The company faces stiff competition from social media companies, companies offering “daily deals,” and search engine optimization companies, all of which offer marketing opportunities to small businesses.

New technologies for advertising and marketing sometimes lead a business to forget about the old rules governing such activity. From the standpoint of a small business’s legal concerns, small businesses must abide by the same laws governing advertising, marketing, and sales as any other company. This includes laws prohibiting deceptive trade practices and governing how products are marketed to the public.

New York law prohibits companies from “false advertising,” which is broadly defined to include a failure to reveal material facts about a product or service as well as a false or misleading statement about the product or service. It applies not only to statements but also images, designs, or any other context presented in an advertisement. A business cannot mislead consumers about a feature or benefit of a product, and it cannot deliberately withhold material information about a risk inherent to the product. The New York Attorney General can bring a civil lawsuit against people or businesses believed to be in violation of the statute. A business found to have committed a deceptive trade practice could be held liable for up to $5,000 per violation.
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1362247_82745113_03292012.jpgSome businesses, while screening job applicants, may request passwords that would allow them to directly access applicants’ Facebook accounts, along with other social media services. According to an Associated Press report, this has become an increasingly common practice among employers, as the increase in social media usage has offered a view into job applicants’ and employees’ lives and, perhaps, their characters. In an economic climate where prospective employers may find themselves inundated with job seekers, this may seem like an attractive option at first glance. It is not.

The practice may not directly violate any laws, although legislators have already begun to propose new laws to counteract this trend. Facebook itself has also weighed in, calling the practice “inappropriate” and warning of direct and indirect legal complications. Small businesses looking to hire new employees should understand the possible consequences of attempting to poke around in a job applicant’s online life.

Facebook’s Chief Privacy Officer, Erin Egan, issued a statement on Friday, March 23, 2012, stating the company’s position that employers should not demand passwords from employees or job applicants, and threatening legal action against anyone using “password sharing” applications. In addition to describing the trend as “distressing,” she warned of additional legal issues that an employer could face based on information obtained from an applicant’s Facebook profile. Job applicants do not have to disclose certain personal information during interviews, and employers are not supposed to ask for such protected information. This includes information regarding whether an applicant is married, has children, or belongs to a protected group involving age, race, gender, disability, et cetera. An employer who discovers information like this while fishing through an online profile could then face a legal claim for employment discrimination if they do not hire that applicant. This is an unintended but clearly serious consequence for an employer.

Two Democratic U.S. Senators, New York’s Charles Schumer and Connecticut’s Richard Blumenthal, have asked the Attorney General and the Equal Employment Opportunity Commission to investigate the matter. They have suggested that the practice might violate two federal statutes, the Stored Communications Act and the Computer Fraud and Abuse Act. They are also working on a bill that would address any gaps that the other statutes miss regarding this issue. State legislators in California, Illinois, Maryland, Massachusetts, and possibly elsewhere have introduced, or plan to introduce, bills to prohibit public and private employers from demanding online passwords from job seekers. Some bills extend to other online services like e-mail, or prohibit employers or their agents from “friending” an applicant in order to access otherwise-protected information.
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484010_62695363_01032012.jpgThe beginning of a new year is as good a time as any to take stock of your business, review your performance over the past twelve months, and take a look at the state of the economy and business in general. Every year, people publish lists of trends from the past year, trends to watch out for in the new year, lessons and warnings, and so on. A small business owner can get overwhelmed by all the lists and advice circulating, especially in the first week of the new year. As business attorneys, we like to take a look at the issues affecting New York and New Jersey to see how we can best serve our clients.

The economic outlook for New Jersey and New York is good, but current conditions remain rather bleak, with hiring still down and borrowing and lending only rising slowly. In times like these, it is important to recognize what is working in your business and what is not working, and to look at new developments that could help. The Street‘s Elizabeth Blackwell recently identified five lessons for small businesses from 2011 that are worth reviewing.

First, New Jersey small businesses have an abundance of resources offering support to owners and managers. Trade associations, merchant groups, chambers of commerce, and city- and state-supported programs allow business owners to draw on the expertise of others, or just to spend time among like-minded people. No one should have to run their business entirely alone.

Technological advances continue to change the way we run our businesses. Sometimes these changes make little overall difference and eventually fade away. Others make a lasting mark. Blackwell identifies the iPad, which gained ever-greater prominence in 2011, as an “instant status-booster and conversation-starter.” Identifying which new technologies are worthwhile and which are not is an ongoing challenge of running a business.

Social media may have hit its high point in 2011, with nearly every business in America deciding whether or not to join Facebook, Twitter, Google+, and other platforms. Some businesses will thrive online while others will remain comfortably analog. This decision depends entirely on the personality and needs of the business and its owners. Some features of the pre-internet days remain crucial features of running a business. For many businesses and customers, no amount of social media proficiency will ever replace the power of a simple handshake.
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