The Business of Blogging: Will I Get Sued? Part 2

Posted by on January 20, 2008 in Resources

This is the 2nd post in a series on the business of blogging which addresses the business and legal issues of operating a blog. Last week’s post dealt with the legal risks of blogging and today’s post is part 2 on this topic. The disclaimers in part 1 correspondingly apply to this post (and, indeed, all posts in this blog).

Before I begin, however, I wanted to address a larger issue raised in last week’s comments. Operating a blog is NOT going to get you into legal trouble in and of itself. Legal trouble tends to follow those who ask for it. Let me explain. Blogs gained popularity as on-line journals or dairies. The chances of someone suing you because you wrote last Wednesday you were pitched insurance and refused are quite remote.

In the personal finance sphere, many blogs follow this theme. The posts are about finding a new job, struggling to save money, speaking to a spouse about money, writing about a particular product or service etc etc. These are generally quite safe topics to speak about from a legal basis- they are, after all, your thoughts and musings on money.

The issues becomes when the blog is being used primarily for commercial purposes, contain “sharp” comments about people and companies, blatantly gives advice, violates laws, advocate the breaking of the law etc. In these circumstances, one is really asking for trouble.

I mentioned in several instances in last week’s post to use common sense. Would you walk into a china shop with an umbrella and starting opening and shutting it? Would you give someone booze if they came over for dinner knowing they are driving (or not taking their car keys away from them)? Would you yell fire in a crowded room as a “joke”? Apply these same general principles to a blog. Keep your wits about you and you will generally be fine. As much as lawyers make out the law to be mysterious, a lot of case law involves the application of reasonableness and common sense to any particular situation.

Now to discuss some more legal issues arising from blogging, considering this context in mind.

3. Risk Factor- Giving Advice (I address Risk Factor 1 & 2 last week)

Lawyers have a concept known as the “phantom clients.” Typically, someone finds out you are a lawyer at a party and asks you some inane legal question. A lawyer foolishly says something off the cuff and said person takes that as a “right” answer and applies it. Things do not go right and the “client” complains to the law society- even though they never retained you as their lawyer. They are phantom clients.

This applies equally to bloggers in the personal finance sphere. I am actually shocked at how liberally bloggers will give context-specific advice to people. I cannot stress how dangerous this practice is. Our readers are not clients and most of us are not qualified to give advice on personal finance. The questions also tend to only give half the facts at hand. Answering these individual questions could come back to harm you if the “advice” given back-fires and the individual comes back to you for compensation (this is especially applicable to investment advisors, accountants, lawyers and other professionals who blog). If your blog also mentions how success you are, you are really inviting trouble now- a lawyer knows that you have money and you are giving advice which resulted in damages.

I am not suggesting you cease to provide information. Information is the basis of the internet. There is nothing wrong with outlining what universal life insurance is, what to look out for in gym memberships or how tax credits work. In most cases, all one is doing is outlining research found and not applying it to individual situations.

The danger arises in the “reader questions” posts where someone ask a very specific question about their situation (“I am in my late thirties, have a pension at work and leaving, how do I cash out my pension and where should I put my money?”) and the bloggers responds in detail. This is advice. Pure and simple. A writer is applying information to a particular situation. The proper response is to provide information only and recommend that the reader obtain professional advice to verify the information and apply to their situation.

To be clear, it is acceptable to answer a reader question such as “can you tell me how the government calculates my employment insurance benefits?” This is an informational question because there is an absence of the application of information context. An advice based question would be “Do you think I should apply my employment insurance benefits to my retirement account? Here are my particulars…. What do you think?”

If you read this blog, you will notice I very rarely answer reader questions. In over 150 posts, I have answered reader questions twice and they were both informational in nature. If a blog has a “readers ask” posts, one should keep in mind the above in picking which questions to answer. The more specific the question, the more it should be avoided.

4. Risk Factor- Trademark Confusion

I will readily admit before I discuss this issue that trademark law as it pertains internet domains is very fluid and what works in one situation does not necessarily apply in another. I am also not going to address cyber-squatting since I am going to assume that the blog is being operated for legitimate purposes.

In order to understand this risk factor, it is important to have some basic understanding of trademarks. On a very general basis, a trademark is some type of distinguishing feature (a word, logo, phrase etc.) that differentiates one good or service from another (“just do it,” Google and Ikea would be examples of trademarks). Trademarks are national in nature so the nuisances of the law change from country to country. Trademarks are specific to certain goods and services and do not convey protection to the trademark holder in industries in which they do not engage in business.

For example, the Nike logo and catch phrase is a protected trademark for shoes and sporting goods and other industries the company is providing goods or services in. The Nike stable of trademarks does not extend to, for example, the production of chemicals since Nike has no business in that industry (as far as I know). Thus, it is conceivably possible for a “Nike Chemicals” to exist which is independent of the shoe company and such company should have a legitimate right to use that name.

The issue for most bloggers is what happens if the blog’s name or the domain name is similar to or the same as some existing good or service. This gets tricky (and, I hate to disappoint but there are no definitive guidelines only guiding principles). The analysis becomes, would a reasonable person confuse the blog name/brand with the existing good or service?

If, for example, a blog’s name was “New England Patriots” and the subject of the blog was Massachusetts politics, there would be a defense that a reasonable person who visited the site would determine that the site had nothing to do with the football team of the same name: different topic, audience would not over-lap that much, the phrase is quite common. I say “defense” because big businesses have tried some suits based on some shaky grounds before to protect their brand.

The larger risk becomes if the domain name is similar, derivative or the same as a good or service in the same industry. In this case, it is harder to present a defense that there would not be any confusion between the domain name and the good or service (I am assuming that the blog did not precede the good or service). In this scenario, the choices are really (a) do nothing and hope no one notices (b) change the name or (c) do everything in the bloggers power to ensure the readers know there is no confusion between the two entities with similar names (a big disclaimer and directing someone looking for the product or service to the appropriate site would be two practical steps to consider after seeking professional advice on the matter). If the blog’s name preceded a good or service, you are generally on safer ground.

Trademark law is an extremely complicated field of law and I only highlight only issues that some bloggers may encounter. As usual, please seek qualified legal advice in your jurisdiction for more details.

 

5. Rick Factor- Regulatory Issues

I don’t want to spend too much time on this issue other than to point out three issues:

(a) Minors/Publication Bans and People in Vulnerable Positions

Three weeks ago, two teenagers are alleged to have murdered a third teenager in the City of Toronto. The victim’s friends promptly posted on Facebook the names of the accused. One problem. Releasing names of accused under 18 is a criminal offense under the Criminal Code of Canada.

Since laws change from jurisdiction to jurisdiction, the only broad and non-individual specific statement I can write is- don’t write something about people under judicial, tribunal or other regulatory proceedings unless the mass media is doing it first and notice how they describe the person. Are they merely accused at this point? Is it merely speculation or have formal charges been laid? If you get ahead of yourself and speak out of turn, you could be facing criminal charges and civil litigation (in the form of defamation of character).

(b) Solicitation to Purchase Securities

Every jurisdiction has different disclosure requirements in terms of solicitation to purchase securities (“securities” are defined in most jurisdictions as stock, bonds, hedge funds, mutual funds etc.). Generally, one will fall under regulatory scrutiny if a blogger is soliciting its readers to purchase a security (this is especially problematic if the security is a new issue (i.e. an IPO). If it is a pre-existing security, the issue is that you may be found to be soliciting others to purchase securities without being a registered dealer). In the regulatory environment we are in, please do not invite trouble. Certainly, you can write about why you bought something that you did or what types of securities you are looking at right now but don’t invite your readers to buy it to (see my comments on advice). The best way to protect oneself in this situation is the usual disclaimer that the reader should conduct its own due diligence and you are not soliciting anyone to take the same action as your own.

What I have also noticed some bloggers doing is if someone comments “thanks for the recommendation”, the blogger immediately comments, “this is not a recommendation or solicitation, please seek your own advice.” This is a very pro-active approach to dealing with both giving advice and avoiding the perception that one is soliciting others to purchase securities.

    (c) Insider Trading

I am going to assume that everyone knows what insider trading is- you act upon some information that is not publicly disclosed (regardless whether your act resulted in a profit). There are generally two variations on insider trading. The first is the direct one- you work for company X and you know they just signed a huge contract. You buy shares on the market before this information is released. This is insider trading.

The second variation is more indirect (and the one that first got Martha Stewart in trouble). You are told by an individual who you believe would credibly have access to insider information and you act upon it. In this case, you are one degree removed (in the sense you are not a direct insider) but you have access to insider information. If you act upon it, there is a possibility you will be prosecuted for insider trading.

Thus, it should come as no surprise that publishing anything that could be considered to be insider trading will make you potentially liable for civil and criminal offenses. Having said that, merely speculating on something where you have no knowledge is fine. Out of an abundance of caution, if you blog and work for a publicly traded company, I would not even make causal mentions like “At work, I am working on a big project that could make the company a lot of money.” People can put two and two together and figure out where you work and speculate on the stock.

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The following is a non-exhaustive review of some common legal issues bloggers may face. As I have mentioned several times, this information is not individual or jurisdictional specific. Specific questions should be addressed to your qualified legal professionals.

My next post in this series will deal with the pros and cons of incorporating your blogging business. Comments and questions are always appreciated. Thanks.

4 Comments on The Business of Blogging: Will I Get Sued? Part 2

By Four Pillars on January 20, 2008 at 8:45 pm

Wow, that’s quite a post.

I haven’t answered very many reader questions mainly because I never get any!

What if you answer a reader question by giving them a series of choices instead of one definite answer? – which is usually how it ends up being anyways.

Mike

By admin on January 21, 2008 at 8:42 am

Mike- what you suggest is quite prudent. Choice, with the caveat that it is really up to the reader to make a choice appropriate to them, removes a lot of liability in that you are not telling them what to do.

By Mrs. Micah on January 21, 2008 at 7:51 pm

Fortunately for me, my readers don’t often ask for specific advice. I’ve had a few people tell me that they’re trying to start a home-based crafts business and then I’ll tell them what I did and how it’s working out for me…but that I really don’t know much more than what I did and how I got there.

By Saturday Weigh In and LinkStuff | Quest For Four Pillars on January 26, 2008 at 6:09 am

[...] with intellectual property rights (ie no copying), defamation of character (names CAN hurt you). Part II deals with the potential ramifications of giving advice to readers among other [...]

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