But user-generated content can also be a great source of risk and exposure.  Again, there’s probably no better example of this than YouTube.  YouTube was sued by the Viacom studio in 2007 for $1 billion in damages, for allegedly distributing Viacom’s copyrighted materials without permission.

If you understand the risks associated with user-generated content, you can take steps to reduce your exposure and protect your online assets, while at the same time increasing the value of your website.

What is User-Generated Content?

User-generated content is a broad term that includes any material that a website user posts on the website for others to see.  This can include not only blog comments, but also pictures, videos, articles, or anything else that a user might post in a forum or bulletin board section of your website, or as part of their own personal profile on the website.

What are the Risks with User-Generated Content, and How Can I Address Them?

There are a number of legal issues that you will need to become familiar with if you permit or promote user-generated content on your website.

a. Intellectual property infringement.  There are two primary types of intellectual property infringement issues that you should be aware of.  The first is copyright infringement.  Key elements of liability include knowledge of the infringing activity, inducing or contributing the improper conduct, and attaining a direct financial benefit in the infringing activity when you have the ability to supervise the direct infringer. 

Copyright holders generally try to enforce their rights by means of “takedown notices” that are sent in accordance with the requirements a particular Federal law (the Digital Millennium Copyright Act).  You’ll have to decide what position to take once you receive takedown notices.  Do you evaluate each and respond notice as you feel appropriate?  Or do you simply honor all takedown notices immediately?  It’s a balance between avoiding legal risk of a lawsuit by those who claim to hold a copyright to the material that someone else posted, versus possibly alienating your users if you aren’t giving any consideration to their “fair use” rights in that content.

Trademark law prevents the use of trademarks of others in a manner that creates a likelihood of confusion about the source of goods or services or in a manner that dilutes the value of the trademark. User-generated content sometimes falls afoul of trademark law.

b. Defamation. You should also be aware that there is potential liability for allowing users to post defamatory statements about others on your website.  There is a Federal law (The Communications Decency Act) which can provide some protection against defamation claims based on what your users do on your website, but the scope of the protection is still somewhat uncertain, so you should not ignore the possibility of claims against you based on user generated content.

c. Obscenity and Child Pornography.  The Federal laws that provide protections to website owners generally exclude protections for obscene materials that appear on such websites, even if the materials are posted by users themselves.

How Can I Reduce My Risks?

One common technique for a website operator to reduce their risks of legal liability for user generated content is to not actively monitor the user activities on the website.  While this may seem counter-intuitive, the relevant Federal laws provide a greater degree of protection (through a so-called “safe harbor”) for passive web services that do not actively manage or supervise user content.

If your business model requires you to actively monitor user activity on your website, then you may wish to retain a third party to actually conduct the monitoring.  The relationship with the third party should be properly structured as an independent contractor relationship, which will likely include giving the third party some degree of control over the user generated content, in order to avoid you being held liable for the third party’s actions.

You should also have a mechanism in place for promptly responding to legitimate complaints about user-generated content.  These complaints may come from other users themselves (another reason to nurture your web-based communities; if the members are loyal to your website, they’ll be likely to flag any improper or possibly illegal user-generated content).
 
It is very risky to allow anonymous visitors to post content (particular pictures or video content).  You should therefore plan to prepare and use comprehensive agreements that submitting users must agree to.  At a minimum, these user agreements should state that users are prohibited from engaging in any conduct that is illegal or would give rise to any legal liabilities, or that otherwise interferes with the operations of the site.  In order to qualify for the Federal law safe harbors, the agreement must also state that repeat offenders will have their website user accounts terminated.

Another solution may be to use a third party service for the user generated content.  By this, we mean allowing users to post direct links to, or by using “plug-in” players for, videos that are hosted on YouTube, MetaCafe, Vimeo, or any of the other services available.  You are less likely to receive the takedown notices – since the content isn’t actually hosted by your website, the notices would be sent to the entity actually providing the videos.  But you also lose control over whether the videos are actually taken down, and you aren’t the sole source for that user generated content – people can also view it by going directly to the hosting entities website, and other people are likely to link directly to that other site as well.  Again, it’s a balancing act between your business objectives and the legal risks.

Other Issues to Consider.  Apart from the purely legal issues, if you make a strong push to user generated content then you’ll have to consider bandwidth issues as well.  If there’s a chance that any particular post will generate a very large amount of traffic to your website, you should have a plan for what to do if the traffic crashes the server, or exceeds that bandwidth that you are paying your hosting company for.  You may want to consider capping the amount each registered user can upload in a day or month. 

The possibilities for user-generated content to boost your website are great, as are the risks.  If you take steps to understand the legal issues and reduce your risks, then you be able to maximize your business gains while still protecting your online assets.

For more information on how to protect yourself & your business from the devastating financial and security risks you face every day your website is online here: http://www.ProtectYourOnlineAssets.com

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