The legal labyrinth of influencer marketing: Understanding copyrighted content usage and its consequences

With the advent of globalisation and rapid advancement in technology, influencer marketing is now in the spotlight. As per the survey conducted by Statista- in the year 2022, the influencer marketing total net worth was around Rs 12 billion. Influencer marketing had a staggering 55 million urban Indian users in the year 2022 and are expected to increase exponentially with more and more people joining the “Influencer Movement”.

With increase in the popularity of social media influencers, the risks associated with the same have also increased.  In order to address/mitigate these risks, new rules have been put up. The government has introduced endorsement guidelines for social media influencers to curb unfair trade practices and misleading promotions. In May 2021, Advertising Standards Council of India (ASCI) released the ‘Guidelines for Influencer Advertising in Digital Media’ with an aim to regulate the influencer industry.

Further to this, the Department of Consumer Affairs also published guidelines for ‘Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022’ focusing on the disclosures which need to be made by influencers, virtual influencers and celebrities on social media platforms. The purpose of these guidelines is to make sure that the audience is not misled while endorsing any product or service and ensure that they are in linewith the Consumer Protection Act, 2019.

Even the market regulator SEBI had issued guidelines for financial influencers. A financial influencer is the one who offers advice on matters concerning investment or other financial topics like trading in stock market, mutual funds or personal financial matters. They provide advice on financial matters over various social media platforms like YouTube. Followed by millions of subscribers, these financial influencers influence stock prices and even have the power to boost mutual fund investments. 

The term ‘Influencer’ as consistent with these guidelines means someone who has a target audience and can impact the audiences’ choices or views regarding a brand, product, or service since influencers have that knowledge and are in that position of authority. These guidelines are applicable to influencers and digital creators across all forms of media, and content-delivering platforms. 

The objective of these guidelines includes that consumers can differentiate between sponsored promotional content and other content posted by influencers. It is also intended to prevent misuse of the audiences’ trust in an individual.

As per the guidelines, every post being made by social media influencers should disclose/state whether it is an advertisement. Any promotion/advertisement of free products, discounts and offers, coverage, awards, etc., must be labelled and identified by the influencers through their posts, stories, reels, or videos.

ASCI has proposed significant disclosures that must be made by the influencers on areas such as: brand collaborations, paid partnerships, advertisements or sponsorships. It also aims to ensure that influencers follow due diligence while creating their work.

The business of influencer marketing involves promotions and endorsements of products/services by individuals or a group of individuals or even an organisation in order to reach out to their target audiences; in other words, curation of promotional content for brands. This has become well-known since it provides a platform for people to become aware of the brands and enhance customer loyalty and overall goodwill in the market. 

Although there are advantages of marketing through influencer for a product/brand. It helps in increasing awareness about the brand, increases engagement of potential consumers, builds trust and credibility with regards to a brand in the market, increases sales, cost and time effective, boost small-scale businesses among others. Yet with having many advantages, it does come with challenges, including copyright infringement. No doubt the influencer market is likely to grow in the coming years, it is essential that it is properly regulated. 

It is important that influencers are aware of the liabilities or legal issues that they could possibly face, if they do not disclose facts or make false statements or violate copyright laws, while promoting products, brands, businesses online.

Copyright Infringement

Section 2 (y) of the Indian Copyright Act, 1957, defines work which encompasses all kinds of literary, musical, dramatic or artistic works including images, videos, graphics, and even music or sound recordings. Everything from reels to cinematographic films to theatrical compositions to even tweets; all can be protected under Copyright laws. But it is important to note that only original work can be copyrighted. 

Now, the first question that would arise is whether a work needs to be copyrighted or the work gets automatically protected from the time of its creation? As per the Indian Copyright Act, registration of copyright is not mandatory. Hence, copyright comes into existence as soon as a work is created and no formality needs to be done for acquiring copyright protection. Though as an extra protection, the creator must proceed with getting it registered with the relevant authority. This is because, a certificate of registration of copyright serves as prima facie evidence or legal proof of ownership in court in cases where dispute on ownership of copyright arises. 

Copyright infringement occurs if a creator’s work is being used by some other person without taking due permission from the creator. Thereby the owner of the copyright is entitled to civil as well as criminal remedies like: injunction and/or damages and in some cases even imprisonment under Section 55, Sections 63-70 of the Copyright Act, 1957. 

One way to avoid copyright infringement is by putting a disclaimer. A disclaimer would indicate that the influencer is not claiming ownership of that particular content posted by them and their intention behind posting such content is bona-fide. It also helps in making sure that the influencers are not trying to pass off someone else’s work as their own.

Issues like copyright infringement and violation of publicity rights are some key and common issues that arise due to lack of knowledge of the social media influencers. Influencers and brand owners may incorporate work or some parts of another’s copyrighted works while working on their own promotional content. For instance, an advertisement displayed during a YouTube video may be an imitation of someone else’s work that leads to violation of intellectual property rights and causes serious damage to the influencer. Therefore, Copyright Licenses must be obtained before using such works. 

The prominence of obtaining a Copyright License can be demonstrated by the war between Warner Music and Iconic London in the famous case of Atlantic Recording Corporation et al v. Iconic London Holdings Limited. It was alleged that Iconic London had utilised Warner Music’s creation (music) in various social media posts without obtaining their prior permission. The US District Court for the Central District of California held that influencers and brand owners have no right to infringe upon someone else’s intellectual property for commercial purposes without seeking permission from the original content owners. If such permission or license to use the copyrighted content is not obtained, a case of infringement can be made and significant damages can be incurred. 

Obligations of an influencer:

- Disclosures: In order to prevent fraud, dishonesty or deceptiveness in the market and to protect the customer audience, it is essential that the influencers disclose their plans on their profiles, posts or websites and the same can be achieved by labeling them or by using Hashtags, which can be indicative of paid partnerships such as: #paidpartnership, #paidpromotion etc.

- Due-Diligence: Influencers must be cautious and exercise due-diligence while creating their work, or promoting new products, especially lesser-known brands. They must ensure that any claim that they make is substantiated. This is in consonance with Section 21(5) of the Consumer Protection Act, which states that endorsers cannot be held liable if they are able to prove that they exercised due diligence prior to endorsing the product.

- Influencer Agreement:Another way to avoid legal issues is by way of an influencer agreement. As the agreements consist of rights and obligations which are legally binding on the influencer and the business engaging the influencer. The term of the said agreement should be clear enough in order to avoid any confusion. Amongst all these issues, influencers tend to forget about their intellectual property rights. This is where such influencer agreements are of help as they clearly state the ownership of the content, or how one’s brand, its logo and designs are used. 

Conclusion

As social media continues to grow, businesses are likely to be exposed to vicarious copyright infringement lawsuits due to the influencers posting copyrighted content on social media without taking due permission from the original creators of the works. It can be said that influencer Marketing is although a valuable business idea for brand owners, yet it is crucial that influencers are aware of the copyright laws and avoid any kind of infringement. Online content creators are increasingly becoming aware of their social and moral responsibilities towards their audiences. It is nevertheless important to ensure that content creators must not falsely advertise and must use appropriate hashtags and be vigilant and exercise caution. By doing so, the owners of the copyrighted works or content can make the most of their business.