protecting your consumer product and retail brand in the social media era

McCarthy Tétrault LLP / mccarthy.ca

Protecting Your Brand in the Social Media EraRetail West, Vancouver, October 15, 2014

Christopher W. Gouglas, Head Counsel, Best Buy Canada Ltd.

Elder C. Marques, Litigation Partner, McCarthy Tétrault LLP

2


The Promise of Social Media & Retail

• Instant feedback

• Free/cheap marketing

• Reach young customers

• Create online “community”

• The illusion of being “cool”

• Quick, agile, responsive communications

3


The Perils of Social Media & Retail

• Instant feedback that’s negative, embarrassing

• A single “bad apple” customer rep brings the brand down

• Picture worth a thousand words

• There is nothing less “cool” than trying to be “cool”

4


The Perils of Social Media & Retail: Examples

Rookie Mistake: “Hashtag Spam”

5



Losing Control of the Account

(at a particularly bad time)

6



Other Twitter Disaster-Makers:

• Misunderstanding “trending” hashtags (i.e., it’s not always about you)

• Being “funny” about news items (i.e., you’re not really that funny)

7



Other Twitter Disaster-Makers (Cont’d):

• Using automated messages

• Asking for trouble: e.g., asking for “stories”

• Personal messages going out on official account

8


Practical & Legal Risks of Increased Online Activity

• Regulatory Risk: your interactions are exposed to the world for all to see, including Competition Bureau, other regulators, future litigants

• Third Party Abuse: Use of your customer lists

9


Practical & Legal Risks of Increased Online Activity

• Mistake Magnification: A small error becomes a big one – pricing misprints, advertising errors, contests

• Harder to Maintain Consistent Marketing “Voice”

10


Online Forum/Reviews

• Depending on nature of retailer, opportunity to make your site a go-to for product information

• Can drive hits, enhance your credibility, and create a “community”

11


Online Forum/Reviews

• Do you monitor/approve posts or not? What principles do you apply and how do you do it consistently?

• Risk of your brand being disparaged

• Risk of consumer product brands being disparaged

12


Social Media, Data, and Your Employees

Two major sets of risks relating to employees and data:

• Risk #1: Employee use of customer data that you collect

• Risk #2: Employees on their own accounts, talking about:• Your brand (e.g., “My boss is a tyrant”)• Your customers (e.g., “These customers are idiots”)• Your internal data (e.g., business secrets)

13


Risk #1: Your Employees and Your Customer Data

Privacy litigation is here to stay and it’s growing - Different rules in different provinces

• Strong statutory protections (e.g., British Columbia)

• Common law remedies plus statutory rules (e.g., Ontario)

• Limited protections (e.g., Alberta)

14


Your Employees and Your Customer Data

In Ontario, common law tort of “intrusion upon seclusion” recognized by Court of Appeal

• Jones v. Tsige, 2012 ONCA 32

Already the subject of a class action about customer information being given to third parties, who allegedly used it to commit identity fraud

• Evans v. The Bank of Nova Scotia, 2014 ONSC 2135

15



In British Columbia, no common law tort, but Privacy Act makes privacy violations actionable

• Demcak v. Vo, 2013 BCSC 899

Class action against Facebook about use of photos based on Privacy Act

• Douez v. Facebook, Inc., 2014 BCSC 953

16



In Alberta, limited protection through Commission• Martin v. General Teamsters, Local Union No. 362, 2011

ABQB 412

In all provinces, public takes privacy violations seriously, creating serious legal and reputational risks

17



What to do to protect customer privacy?

• Technology is part of the solution, but not enough

• Internal controls: develop policies and communicate them

18



Policies/contractual terms to protect customer privacy

• Who can use what, for what purpose

• What happens in event of breach (e.g., statutory reporting obligations; legal and communications strategy)

• Document retention policies should be consistent with these principles and applied regularly

19



Additional considerations about customer privacy

• Relationship with third party contractors: • Requiring them to respect policies• Liability for breaches

• Insurance implications• What are you covered for?

20


Risk #2: Your Employees and Their Own Expression

Employee Expression is Complicated• Sharing concerns with colleagues and others is legitimate

and protected, yet restrictions on certain public statements may also be legitimate and protected

• Courts recognize harm of attacks by employees on:• Customers• Your brand

21



What is boundary between conduct that is properly subject to reprimands by employer and conduct that is not?

Social media posts often entirely public or at least broadly disseminated (e.g., even if limited to registered “friends”) and can have significant impact on business/

22



B.C. Labour Relations Board found “proper cause” where derogatory Facebook posts suggested violence

• Lougheed Imports Ltd. (West Coast Mazda) v. United Food and Commerical Workers International Union, 2010 CanLII 62482 (BC LRB)

Posts were particularly offensive:• “punches” and “stab in his face”• “Top five kills” from Dexter television show

23



Inquiries are always fact-specific :

• Mixed outcome in Bell Technical Solutions v. CEP Union of Canada 2012 CanLII 51468 (ON LA)

• United Steelworkers of America v. Tenaris Algoma Tubes Inc., 2014 CanLII 26445 (ON LA)

24



Employee posts reflect on Company for good or bad

Need Social Media Policy so employees:- distinguish between personal and work- do not speak for company without authority- do not disclose confidential information- do not infringe third party rights

25



Policies covering social media use must be coordinated with other policies dealing with:

• Confidentiality/ethics• Harassment/inappropriate conduct• Securities

26


Law of Defamation and Protecting Your Brand

A statement is defamatory if it “tends…to lower him [a person] in the estimation of right-thinking members of society generally and in particular to cause [that person] to be regarded with feelings of hatred, contempt, ridicule, fear, dislike or disesteem. The statements is judged by the standard of an ordinary, right-thinking member of society. Hence the test is an objective one…”

Color Your World v. CBC (1998), 38 O.R. (3d) 97 (C.A.)

27



Corporations can be defamed – the law recognizes that they have reputations which have value. Corporations may also be entitled to punitive damages

See Barrick Gold Corp. v. Lopehandia (2004), 71 O.R. (3d) 416 (C.A.)

28



To be actionable, the words must be:1. Defamatory;

2. Referring to the Plaintiff;

3. “Published” (broad definition).

There are lots of defences that then might apply.

29



Other defences:• Absolute Privilege• Qualified Privilege• Innocent Dissemination

• Fair Comment• Responsible Communication

Truth Wins: If something is substantially true, even if it was said maliciously, truth is a full defence.

30



Courts also consider• Was there malice? If there was, most defences are

defeated• Was there an apology or retraction?• What was the nature of the circumstances in which

the comments were made?

31



Considerations if you are considering bringing an action• Limitation periods may be very short• Is the publicity of the action going to do more harm

than the initial injury?• If the attacker is anonymous, courts will generally be

sympathetic and help you unmask the defendantSee Manson v. John Doe, 2013 ONSC 628

32



Considerations if you are defending an action• The law has evolved in some ways in favour of

freedom of expression in these matters, assuming there is no malice

• What is the impact of the litigation (whether you fight or settle) on your own brand?

33



Considerations if you are facing a possible scandal• Courts value the freedom of the press• The defences of “fair comment” and “qualified

privilege” can apply in media cases• The more recent defence of “responsible

communication” protects responsible and diligent journalists even if they are wrong

34



“Responsible Communication” requires

• Good faith reporting on a matter of public interest• Real efforts to be diligent and responsible• Efforts to be balanced, which often means getting a

comment from both sidesSee Grant v. Torstar, 2009 SCC 61

35



Lessons for dealing with “bad news”:• Saying “no comment” creates real risk of giving

up your legal rights to complain later• Get your story out there• Recognize potential problems early on by

monitoring the health of your brand online

36


Questions?

Christopher W. GouglasHead Counsel

Elder C. MarquesPartner, Litigation

VANCOUVERSuite 1300, 777 Dunsmuir StreetP.O. Box 10424, Pacific CentreVancouver BC V7Y 1K2Tel: 604-643-7100 Fax: 604-643-7900 Toll-Free: 1-877-244-7711

CALGARYSuite 4000, 421 7th Avenue SWCalgary AB T2P 4K9Tel: 403-260-3500 Fax: 403-260-3501 Toll-Free: 1-877-244-7711

TORONTO

Suite 5300, TD Bank TowerBox 48, 66 Wellington Street WestToronto ON M5K 1E6Tel: 416-362-1812 Fax: 416-868-0673 Toll-Free: 1-877-244-7711

MONTRÉALSuite 25001000 De La Gauchetière Street WestMontréal QC H3B 0A2Tel: 514-397-4100 Fax: 514-875-6246 Toll-Free: 1-877-244-7711

QUÉBEC CITYLe Complexe St-Amable1150, rue de Claire-Fontaine, 7e étageQuébec QC G1R 5G4Tel: 418-521-3000 Fax: 418-521-3099 Toll-Free: 1-877-244-7711

LONDON, U.K.125 Old Broad Street, 26th FloorLondon EC2N 1ARUNITED KINGDOMTel: +44 (0)20 7786 5700 Fax: +44 (0)20 7786 5702
