The Business of Blogging: Will I Get Sued?
This the first of a unlimited series on the business of blogging which I will usually run on the weekends as not to interfere with “regular” personal finance programming. As a definitional note, the business of blogging does not address how to make money on line (I would visit John Chow’s blog or Pro Blogger on this topic). Instead, it addresses a problem that some bloggers have raised; many blogs begin as hobbies that turn into side-businesses and then sole sources of income. However, some bloggers have never run a business before so how does one deal with the business side of blogging- should you incorporate? What are my legal and business risks? How do I declare blogging income (especially if it is paid from other jurisdictions)?
If you have asked these questions before, this series may shed some light on the business and legal issues arising from blogging and the business of operating a blog. By way of background, my qualifications to address this topic derive from the fact that I am a recovering business lawyer who use to help clients deal with these business issues. I would be remiss as a lawyer not to give you a disclaimer though: these posts are written for informational/entertainment purposes only and should not be considered to be advice of any kind whatsoever. The posts are written without regard to jurisdiction (unless otherwise indicated) and your personal situation. It has also been written in the broadest sense possible for brevity and to give an introduction to the topic. As always, please seek qualified professional advice to your personal situation and do not rely upon this series to be the end all and be all on the subject matter discussed. This post is going to be quite long so please bear with me.
I am going to begin with a question I am often asked about any business- “what did I get myself into?” Most of us begin blogging and then start attracting an audience and start making money. This obviously comes with risk since, if no one knows about your blog, no one is going to complain or sue you over what you write. For those bloggers who have audience and revenue (lawyers work under the deep pockets theory- you are only worth suing if you have deep pockets), you generally have several large risks categories:
1. Risk Factor- Intellectual Property Infringement
If you have any semblance of common sense, this is, arguably, the smallest of all risk factors. Remember in high school what your English teacher told you? Do not plagiarize. Always credit your source.
Here is a crash course on copyright law: copyright is the protection of an expression of an idea and NOT an idea itself. What this means is that no one has a monopoly over an idea in the written world (as a side-note, a patent which deals with inventions does grant a patent holder a monopoly for a certain prescribed period of time but remember it deals with inventions and not written expressions).
For example, the stereotypical mystery novel has the butler doing it. No one has a monopoly over the idea that the butler committed the crime. However, if author A writes that the butler did it in the kitchen with the help of the maid using the cutting board at midnight Christmas Eve and author B writes exactly the same thing subsequent to author A then author A has a statement action as against author B. The claim is not that the butler did it but the fact author B may have infringed upon author’s A expression of the butler did it.
In the personal finance blogging world, we often write on the same topic. This is perfectly acceptable provided that the expression of the topic is not substantially copied from another author without credit (credit in the blogging world can be done by linking or the traditional “John Smith writes…” notation). The larger risk factor is if a blogger begins to pass off work by an advisor, professional or third parties (usually a research piece) and begins making money off of it (whether by advertising, text links ads etc). Now you have a real problem- these research pieces are revenue streams for the brokerage houses that publish them and not for public domain (public domain information is where you release your claim to copyright and others may use it without compensation to you) and now you are profiting from their work and not sharing your earnings with them.
I noticed there is one personal finance site that is publishing word-for-word research reports on stocks from various brokerage houses. This is really an invitation to trouble on both the copyright and regulatory front (I’ll address regulatory matters in my next post). This site could be subject to a cease and desist order (which is a lawyer’s letter demanding you stop doing something) since it appears to be treating the information as public domain (even if the source is credited) and not sharing revenue as well as the fact the author is distributing information to jurisdictions in which it shouldn’t (in a nutshell, the U.S. and Canada have different rules on securities and Canadian research has a huge “NOT FOR DISTRIBUTION IN THE U.S.” notation on it lest the SEC thinks the brokerage is soliciting in the U.S. without the proper disclaimers).
The solution, as I suggested above, is quite simple. Use your common sense and remember what your high school teacher told you. Don’t steal anyone’s ideas. If you rely upon another source, credit it.
One caveat- blogging is such a recent phenomenon that copyright and intellectual property law in connection with blogging is still being developed. Thus, we could yet see some more laws and cases that deal with how bloggers deal with other people’s intellectual property. It is an ever changing field of law.
2. Risk Factor- Defamation of Character
Defamation of character are false claims that may harm the reputation of some person (I use person in the legal sense to include corporations, governments, NGO’s etc.). This type of tort (a tort is a fancy legal term for lawsuit) has two primary forms- libel (written) and slander (verbal). For obvious reasons, I will deal with libel.
This type of tort is extremely complicated and every jurisdiction has its own tests for what it considers defamation of character. Thus, this summary only attempts to address in broad generalities the subject of libel; country-specific tests can be found be seeking your own independent legal advice.
Libel- in a nutshell- is the expression in written form that has the result of damaging the reputation of a third party (whether the damage is monetary or not) based upon some false statement of fact being made. Stating an opinion, some type of parody or hyperbole is generally considered by most jurisdictions not to be libel since an opinion cannot be proven to be true or false (again, the specifics as to what constitutes libel is jurisdiction specific so this is a very broad definition).
For example, one could potentially be committing an act of libel by writing without any support evidence that: “XYZ corporation is a nuclear power company. It dumps waste into the local lake and, as a result, my research has found everyone in town has cancer. Sell your shares in XYZ since it is destroying the earth.” Where is the supporting evidence: (a) it dumps waste into the local lake (and, by implication of the above, that it is doing it illegally without a permit) or (b) everyone has cancer?
If we redrafted the above to say: “I am a big believer that nuclear power is harmful to the earth. XYZ Corporation is a nuclear power company and I feel that it is populating the local community with its power plants which may affect the health of all. As a result, I am selling my shares in XYZ Corporation.” One is generally out of the “libel zone” in jurisdictions which protects freedom of speech. Note the emphasis on the opinion words- “believe,” “feel”- and the reliance of conjuncture (“it MAY affect”) rather than the definitive (“my research has FOUND…”) . Finally, the redraft doesn’t advocate to the readers it does anything (“I am selling my shares…” rather than “sell your shares…”); it merely describes what the writer is doing.
One is also generally out of libel zone if you use a mixture of true fact and opinion. Here’s what I wrote about CIBC in the past. I back my assertions with previous indiscretions as found by a court of law or regulatory body. I make reference to the fact that statements made by CIBC are “speculation” and the only fact I rely upon are those backed by research or in their financial statements.
Do you want to be free and clear of any libel claims? If so, do the following when you write to protect yourself:
- rely upon fact
- never use definitives for forward looking statements unless you clearly label it as only an opinion (“I believe in the future…” is an acceptable statement whereas “Research says sell” and there is no research is not)
- use the word “alleged” if something hasn’t been proven
- make it clear it is your opinion and you are not passing off as fact something you cannot back up (“I believe Presidential candidate ABC is an idiot” is acceptable where “ABC is corrupt” is not since you have no evidence to prove that they are, indeed, corrupt)
Since most blogs are a collection of personal thoughts and beliefs, most bloggers should be writing on topics which would not attract a libel claim. However, better safe than sorry, I try to avoid writing in definitives or suggesting to anyone do or not do something. There are no guarantees one will not get sued but best to take preventive measures.
However, libel is a very complicated field and this is not an end all and by all on the topic. Use common sense. Would you make outrageous statements about a co-worker without the facts backing it up? Use the same logic in a blog. Back up statements of fact or make sure everyone knows it is an opinion. The one good thing about blogging is that it is a malleable medium. You can always change the text later if you get into hot water (a blogger friend once got an email from Conrad Black’s lawyer- before the Chicago trial- one change to the post later and he was off the hook).
Next week, I’ll speak about risk factors from branding your blog in a confusing manner as another entity and regulatory issues (financial advisors/planners who blog may want to pay particular attention).
If you want me to address any other business of blogging issues please do provide a comment. Hope you enjoyed part I.