There is no doubt there is an array of business opportunities for companies that engage in social media.
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However, there are risks associated with using social media that companies and businesses should be aware of.
In the case of Seafolly Pty Ltd v Madden [2012] FCA 1346, Seafolly Pty Ltd initiated proceedings against Leah Madden, the designer of White Sands Swimwear,, claiming Madden had engaged in misleading or deceptive conduct.
The allegations concerned a number of statements made by Madden on Facebook and by email, including Madden posting an album of photos on her personal Facebook page with the title "The most sincere form of flattery?".
The album included a number of photos of Seafolly garments (taken from a Seafolly catalogue and website) placed alongside photos of the White Sands Swimwear garments that Madden considered to be similar.
The captions also contained the statements "White Sands as seen at RAFW in May – Seafolly September 2010" and "White Sands 2009 – Seafolly 2010". Madden also posted a number of comments under the album, including:
"Seriously, almost an entire line-line ripoff of my Shipwrecked collection."
"I know, the buyer from 'Sunburn'(who, as it turns out, works for Seafolly) came to my suite at RAFW and photographed every one of these styles."
"Ripping off is always going to happen, but sending in a dummy 'buyer' to get photos is super sneaky."
Further, Madden sent an email to several media outlets attaching the photographs from her Facebook page.
Madden claimed that she was simply exercising an honestly held opinion and had taken down the photos from her Facebook page within about 30 hours of them being posted.
The court found that the various statements made by Ms Madden on Facebook and via email:
falsely represented that Seafolly had copied Madden's designs;
falsely represented that Seafolly was not the creator of the Seafolly designs; and
falsely represented that Seafolly had used underhanded means to obtain photographs of the White Sands Swimwear garments in order to copy them.
Although Madden did not expressly accuse Seafolly of copying, the statements made on her Facebook page and in the email to media representatives were understood by her audience to be assertions that Seafolly had engaged in unethical practices. The key factor was the understanding of the audience to whom the statements were made.
Even if the representations made could be seen to be expressions of Madden's opinions, the court found that Madden was reckless in forming them.
She took no steps to ascertain the truthfulness of her suspicions.
It transpired that six of the eight Seafolly garments had been on the market before the time that Madden suggested the copy occurred.
The decision highlights that, along with the increased commercial opportunities social media offers, it carries increased risks that must be appropriately managed.
Statements made in Facebook posts or comments are made instantly and, even if they are only online for a short amount of time, can result in serious consequences for individuals and business, including payment of damages and legal costs and adverse media attention.
Disclaimer: Readers should seek independent legal advice as this article is for information purposes only. Zoe Broadbent is a solicitor at Beck Legal, Bendigo.