Facebook and Ferrari

Posted on April 28, 2015 in Commercial , Intellectual Property (Tags: Branding, Intellectual Property, Social Media) Intellectual-Property.jpg

Most branding consultants would stress the importance to clients of using social media as part of any brand development strategy. In many cases this will include a Facebook page promoting the business and the brands. Business owners would expect that a Facebook page created by them or their employees would be able to be controlled by them and any goodwill generated by page “fans” would also be theirs.

A recent international dispute involving a fan page established by enthusiasts of Italian sports car brand Ferrari demonstrates the legal risks and uncertainties which surround social media as a vehicle for brand development as opposed to more traditional media.

On October 14th 2014, Olivier and Sammy Wasem filed proceedings in the Superior Court of the State of California against Facebook, Inc and Ferrari S.P.A. for appropriating a Facebook page established by the Swiss-based plaintiffs which had attracted 16 million fans. The page purportedly was significantly more popular than Ferrari’s own Facebook page. The plaintiffs claim that industry experts have estimated the value to a company of a commercial Facebook page to be US$174 per fan to more than US$1,000 per fan for luxury brands in the automobile industry. The court action filed by the Wasems seeks damages against Ferrari and Facebook for their wrongful conduct in taking their Facebook page.

The plaintiffs claim that around 2009, Ferrari recognised the enormous commercial potential of their Facebook page and asked Facebook to give it administrative control over the Wasems’ Ferrari fan page. Ferrari then contacted the Wasems and informed them that they were taking over the formal administration of the Ferrari fan page. At that stage Olivier and Sammy Wasem were the only people authorised as administrators of the Ferrari fan page. The Wasems claim that without their permission or any prior notification from Facebook, one of Ferrari’s employees, Claudio Russo, was added as a co-administrator of the Ferrari fan page and that subsequently, Facebook removed their access to the page altogether.

The Wasems had a second fan page known as the Formula 1 fan page and they claim that in February 2013 they received a notice from Facebook that they no longer had any rights to the Formula 1 fan page either.

The Wasems now claim that Ferrari and Facebook acted in concert and with malice to remove the Wasems as administrators of both pages and transferred the control of the pages to Ferrari.

If the value proposition of a Facebook page has any basis, it is concerning for its creator that it can suddenly be removed from its control overnight without compensation. So what do Facebook’s rules say about the matter?

Where a Facebook page is relating to a brand, entity or public figure, that must be administered by an authorised representative of them. However, any user may create a page to express support or interest in a brand, entity or public figure provided it does not mislead others into thinking it is an official page, or violate someone’s rights. Facebook also has a “Statement of Rights and Responsibilities” which has as its basic principle that users own all of the content and information posted on Facebook and can control how it is shared through privacy and application settings. What is concerning is the following clause in the context of sharing content and information:

“For content that is covered by intellectual property rights, like photos and videos (“IP Content”), you specifically give us the following permission, subject to your privacy and application settings:

You grant us a non-exclusive, transferrable, sub-licence, royalty free, worldwide licence to use any IP Content that you post on or in connection with Facebook.”

Given that copyright would subsist in most content which is posted on Facebook, this effectively gives Facebook the right to licence to anyone in the world for any purpose IP Content posted on any Facebook page.

This would not empower Facebook to exclude content creators from access to their own work as is alleged in the Ferrari case. However, the terms of use of Facebook pages do include the right to remove administrative rights where someone’s rights are violated. So Facebook could make its own decisions as to whether that has occurred and leave it to the users to challenge it. Goliath vs David all over again.

The reality of social media is that you are at the mercy of the provider. Even worse, by using Facebook you indemnify Facebook for any claim anyone brings against Facebook in relation to your content or actions. How many of us have insurance to cover that?


Sally Peart