Pinterest for Employers

Pinterest for Business

I was recently interviewed for the Society for Human Resource Management article “Pinterest Might Facilitate Copyright Infringement.” Below for your viewing pleasure is the entire text of the email-based interview with Workplace Law Content Manager Allen Smith.

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What special copyright issues arise in using Pinterest and how should employees be trained to comply with copyright laws when they are pinning content on Pinterest in a work-related capacity?

Pinterest raises more or less the same copyright issues as any other website, but it has gotten more media attention than others. In general, no one should ever place any content on the web that he or she does not own or have a license (permission) to place on the web. Employees should be aware of what intellectual property their employer owns, any of which may be posted on the employer’s behalf (in compliance with any other laws and workplace policies, of course), and what intellectual property may be subject to licenses which limit the employer’s (and by extension the employee’s) right to post. Otherwise, content located on the web is generally off-limits; making material public does not abrogate any copyright rights. Exceptions include content that is in the public domain (there are several online databases of public domain works—in general, a work published prior to 1923 will be in the public domain); content that is explicitly licensed for pinning; content that falls under fair use exceptions to copyright; and content that is subject to a Creative Commons license (though be careful with that one, as work-related uses may not qualify for some Creative Commons licenses).

Employees should be trained to look for key phrases in website Terms of Use indicating that it is safe to use content on Pinterest (a handy shortcut: if a site owner who clearly owns or licenses the content has placed a “Pin It!” button on the site, pinning should be fine; Etsy is a good example). In addition, a Pinterest account holder that pins its own content has granted a license to Pinterest, so that the content can be re-pinned by other users. The tricky part can be determining whether content was pinned by the rights owner since Pinterest does not have a corollary to the Twitter Verified Account badge.

Could you provide examples of how employees might use Pinterest for work purposes?

I have seen some companies doing wonderful things with Pinterest, primarily retailers. Random House Books has an account and pins not only its own books (brilliant given that “Books Worth Reading” is one of the default pinboards), but also interesting book- and reading-related images. Home Depot has become very involved in the home decor suggestions boards and re-pins content in addition to posting its own proprietary photos, which of course gets people thinking about ways they could improve their homes using Home Depot products. Service professionals can use Pinterest as well; one of my favorite accounts belongs to a style consultant, Sasha Westin, who uses Pinterest to gather suggested wardrobes for people, such as “Men’s Relaxed Professional,” complete with links for purchasing each item.

If employees are using their personal Pinterest accounts to promote their employer, they should be aware of FTC blogger regulations, which require disclosing that relationship.

How are the copyright issues that arise when using Pinterest similar to copyright challenges employees face with other forms of social media that’s used in their work?

As noted, they are really very much the same. No one should post content on any site that he or she does not own or have a license to use. The difference between posting a link to an article on Facebook and posting it on Pinterest, though, is that on Facebook a thumbnail of any photo accompanying the article appears (which has been pretty well, but not definitively, established as fair use), but on Pinterest the full image appears and is uploaded to the Pinterest servers. Pinterest also has a more visual focus, which encourages people to post infringing material such as the work of photographers or painters.

Is pinning content owned by others any different from a legal standpoint from retweeting content on Twitter, and if so, how?

Yes. When someone posts something to Twitter, one of two things is happening: either it is original content, which that person has granted a license to Twitter to use (and that use includes retweeting by other users), or it is not original content. Content that is not original generally must be paraphrased or be a brief introduction to linked content. Linking does not infringe on copyright, and Twitter’s 140-character limit is short enough that it would be difficult to infringe any Twitter-external content. Pinterest has no such limitations.

Are many employees oblivious to the copyright concerns that may exist in their work-related use of Pinterest and, if so, what kind of training might employers provide?

I can’t speak to employees in particular, but much of the general population has developed an ethic about sharing that is not sensitive to the rights of copyright holders. This ethic extends to personal and professional use of social media, including Pinterest. Employers should ensure that their employees are aware that when it comes to copyright, creation, not possession, is 9/10ths of the law. Employees using Pinterest in a work-related capacity should always consider the source, whether the source owns the copyrighted material, and whether the source has given the employer a right to use the copyrighted material. For employers who may be cost-sensitive, the Copyright Office maintains a series of easy-to-understand Circulars, which explain much of what an average person needs to know about copyright. Circular 1 contains the fundamentals. The Copyright Office, however, does not give information about what to look for in a license.

There are also social media certifications becoming available for employees whose routine duties involve social media; the one I am familiar with, from the National Institute for Social Media, should be coming out this fall and will be accredited. (Disclosure: I am chair of the Industry Advisory Committee for NISM, so I wrote the portions of the exam dealing with legal questions. I do not benefit financially from my relationship with NISM.)

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Crowdfunding and Your Business

In March, Congress passed the controversial Jumpstart Our Business Startups Act (JOBS Act), Public Law 112-106, and President Obama signed the bill into law on April 5, 2012. The Act is designed to stimulate job creation (and, by extension, the economy) by helping emerging companies get better access to capital. This post explores some of the changes to crowdfunding brought about by the Act and what you might consider in deciding whether crowdfunding is right for your business.

First and foremost, this bill made crowdfunding legal. Before, it was (and still is) illegal. But wait, you may ask, what about sites like Kickstarter and IndieGoGo? Are they illegal? No; crowdfunding in the sense we are speaking of here means allowing unaccredited investors (read: people who are not rich) to invest in new and emerging companies that are not publicly traded. Both Kickstarter and IndieGoGo allow people to give money to others in exchange for a product or service (or nothing) to be provided in the future, as opposed to in exchange for an ownership interest in a company. Now small business owners, too, will be able to receive investments from the public, and members of the public will be able to become part-owners of the smallest of companies.

The JOBS Act allows greater access to funding by small companies (it calls them “emerging growth companies” and defines them as companies with less than $1,000,000,000 in annual revenue, if they did not have their initial public offering on or before December 8, 2011) in large part by deregulating them—giving them selected exemptions to the reporting, advertising, and other requirements of the Securities Exchange Acts of 1933 and 1934, as well as the Sarbanes-Oxley Act. It also gives a framework for operations of companies that will deal in emerging growth company securities, including brokers and the newly-created category of funding portals.

These funding portals are subject to some, but not all, of the same regulations as brokers, likely because a funding portal is far more limited in the functions it can perform — little more than selling emerging growth company securities. No matter which type of intermediary is involved, the intermediary will have a great many disclosure requirements as well as obligations to ensure certain protections are in place for investors. Emerging growth companies, as issuers of securities through these intermediaries, will have to provide a great deal of information in preparation for receiving investments. All crowdfunding will have to go through a broker or a funding portal.

If you have a small business, here are some highlights you should be aware of:

  • It will now be possible to receive up to $1 million per year in funding from investors who are not accredited. Anyone from your parents to strangers will be able to invest in your company.
  • You still cannot advertise a crowdfunding offering, except to direct people to the broker or funding portal that is supporting your securities offering.
  • You must ensure that information you provide to your broker or funding portal, which is then passed on to investors, is complete and correct. The JOBS Act lists some of the information that will need to be provided and gives the SEC authority to require additional disclosures.
  • When you seek investments, you will be required to select a target, and you will not be able to receive any funds at all unless you reach your investment target amount (think Kickstarter).
  • All officers, directors, and major shareholders of your company will be subject to background checks before you can list your securities offering.
  • Your broker’s or funding portal’s officers, directors, or partners will not be able to have a financial interest in your company.
  • You will need to make an annual report to the SEC and to your investors regarding your operating results and financial statements.
  • If you meet all of the requirements, your offering will be exempt from state blue sky laws, which are the state equivalent of the Securities Exchange Acts.
  • Securities you sell in a crowdfunding offering cannot be transferred for a year, unless they are transferred back to your company, to an accredited investor, to a family member, or in connection with the death or divorce of the investor. The SEC has the option to impose additional restrictions.
  • Crowdfunding is available only to domestic companies that are not investment companies and are not reporting companies under the Securities Exchange Acts.
  • The SEC has, in several places, the authority to promulgate whatever regulations it believes are needed. The statute gives the SEC 270 days, or 9 months, to create the regulations. They are subject to public comment both now and upon release.

Are you still interested in crowdfunding after reading all of that? Here are some more things to consider in deciding whether crowdfunding is right for your business:

  • The wait. If your company is in need of funds now, crowdfunding is not the way to go. It is likely to take at least a year to a year and a half before there are any crowdfunding opportunities.
  • The expense. Overall, complying with the disclosure requirements could be prohibitively expensive for companies in the earliest stages. The SEC has publicly stated its displeasure with several aspects of the JOBS Act and is widely expected to use its rule-making authority to create substantial barriers to crowdfunding.
  • Communicating with investors. You know how anxious your friends and family are to hear about how your business is going now? Imagine how much worse they would be if they had money riding on the outcome. Small investors, like many small business owners, are likely to be very emotionally invested in the outcome of your business and may be more likely to sue than larger investors if things do not go as planned.
  • The responsibilities. You may see crowdfunding as an opportunity to bring on some money without being beholden to an angel investor or venture capitalist. But once you take on investors, no matter how small they are, you will have responsibilities to them. Minority stakeholders have rights—make sure you know what those are and how they will affect your operations before you decide you want a few.

Do you think crowdfunding will be right for your company, or are you waiting to see what the SEC regulations look like before deciding?