Court Decision Indicates Advertisers May be Vicariously Liable for Copyright Infringement From Posts by Social Media Influencers They Retain

The decision in UMG Recordings, Inc. v. Vital Pharmaceuticals, Inc., 2022 WL 2670339 (S.D. Fla. July 11, 2022) involved plaintiffs’ motion for summary judgment in a copyright infringement action brought by a group of music publishers and record companies against an energy drink and sports nutrition supplement company doing business as Bang Energy (Bang), and its CEO, Jack Owoc. Plaintiffs brought claims of direct and indirect infringement based on TikTok videos that featured plaintiffs’ copyrighted works, some posted by Bang itself and some posted by social media influencers Bang hired to promote its products. As part of its ruling, the court held that Bang exercised the requisite control over the social media influencers with whom it contracted so as to be potentially liable for vicarious infringement based on videos posted on the influencers’ TikTok accounts. The decision highlights the need for companies who use influencer marketing to seek legal advice to ensure that the social media stars they work with abide by copyright law.

Background

As is becoming increasingly common, in lieu of traditional advertising methods, such as print, TV and digital ads, Bang relies primarily on social media and experiential events for marketing. The dispute arose from Bang’s activity on TikTok, a social media platform popular among Generation Z, on which content largely consists of short videos set to snippets of popular music.

Bang paid influencers to market Bang’s products in videos, and obtained ownership of the videos the influencers created. In order to get paid, the influencers had to submit their videos to Bang’s social media team for auditing before they were posted. The auditing team verified that the videos complied with Bang’s Social Media Guidelines, which set forth certain production criteria, and a requirement that the influencers “tag” Bang and Owoc in their TikTok posts. The Guidelines did not prohibit the use of copyrighted music, and Bang’s Senior Director of Marketing did not discuss the issue with Bang’s in-house legal team.

Of the videos at issue in the litigation, approximately 140 were posted by Bang and Owoc to their own TikTok accounts, and eight were posted by influencers to the influencers’ TikTok accounts. Plaintiffs alleged that defendants were liable for direct infringement with respect to the videos posted to the defendants’ accounts, and were liable for contributory and/or vicarious infringement with respect to the videos posted to the influencers’ accounts.

The Court’s Decision

The court made short shrift of the direct infringement claims, holding that plaintiffs were entitled to summary judgment because the undisputed facts showed that the two elements for a copyright infringement claim were satisfied. According to the court, a copyright infringement claim must show “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.”¹ The court held that the undisputed facts showed that plaintiffs owned and/or controlled valid copyrights, and defendants posted the approximately 140 videos using portions of plaintiffs’ copyrighted work.

The court next denied plaintiffs’ motion for summary judgment on contributory infringement, which required a showing of “intentionally inducing or encouraging direct infringement.”² The court ruled in defendants’ favor because plaintiffs failed to respond to defendants’ argument and evidence that defendants were not involved in the production of the videos or the selection of the music.

In contrast, plaintiffs succeeded in part on their vicarious liability argument. The court held that to be vicariously liable, a defendant must both exercise control over the direct infringer (in this case, the influencers) and derive a direct financial benefit from the infringement. The court held that the control element could be satisfied through showing both “a legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.”³ Plaintiffs argued that Bang’s audit right put Bang in a position to learn of the influencers’ infringement, and Bang could refuse to pay for the videos before they were posted if they contained infringing music. Agreeing, the court held that this was sufficient to establish the control element for purposes of summary judgment.

However, the court denied summary judgment on the vicarious liability claim because plaintiffs failed to make the requisite showing of financial benefit. The court noted that the allegations in plaintiffs’ motion consisted of conclusory statements about Bang’s expansion of its social media reach and increase of its profits, with no supporting evidence, and rejected evidence that plaintiffs tried to raise in their reply brief as untimely.

Takeaways

Even though Bang prevailed on its indirect infringement arguments at the summary judgment stage, it will presumably not be difficult for plaintiffs to make the requisite showing regarding financial benefit at trial. The court’s decision therefore makes clear that advertisers can face a very real risk of liability for infringing content in social media accounts of influencers that they retain in their marketing campaigns. The type of control that the court held sufficient for vicarious liability is likely to be present in most cases, because advertisers will want it so they can ensure quality control of the influencers’ videos. To avoid the risk of vicarious liability, advertisers should seek legal advice to ensure they have the requisite contractual rights and oversight mechanisms incorporated into their social media marketing programs.

The risks of infringement are especially high on a platform like TikTok, where videos often go viral based on their association with popular sounds. Indeed, Bang is not the first company to face a copyright lawsuit for its TikTok ads. Earlier this year, Sony Music settled its copyright lawsuit against fitness-apparel startup Gymshark for the use of its songs in Gymshark’s ads on TikTok and Instagram. TikTok does have a Commercial Music Library (CML) containing music that is pre-cleared for use by businesses, including for use in advertisements. However, advertisers should still verify that music from the CML was uploaded by the rightsholder and does not have infringing content. In addition, influencers may disfavor CML content because it will not necessarily include TikTok’s most viral sounds, since users making non-commercial content have access to a wider range of music they can legally use.

The risk of vicarious liability is also something of note for acquirors of companies that market through social media influencers. Acquirors should diligence the targets’ marketing programs to ensure they have the requisite controls and procedures in place to prevent influencers from promoting the targets and their products using infringing music and other content.

For more information regarding social media music licensing, please contact any of the authors or your primary Arnold & Porter attorney.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.