Seafolly is a well-known Australian swimwear company with world-wide online and in-store sales. It offers an innovative and fashion range of swimwear and summer accessories for women and kids. Their clothing is made of high quality fabrics with eclectic colours and textures.
The Case: Seafolly vs Ms. Madden
Leah Madden, the owner of a small swimwear business called White Sands, accused Seafolly of copyrighting her designs. Ms Madden saw the catalogue of Seafolly and reasoned the designs were very similar to hers. Her reaction was to post on her Facebook page the Seafolly designs with a sarcastic question “The most sincere form of flattery?” alongside with White Sands designs. She also posted the entire Seafolly collection was alike her collection, and contacted media organisations to support her claim.
Seafolly reacted immediately and successfully requested Facebook to take down Madden’s posts. The company also made an announcement at the press saying the Madden’s Facebook comments were completely false and malicious, and assured many designs were released into the market before White Sands.
The swimwear giant sued Madden for misleading and deceptive conduct breach of the Consumer Law, the Trade Practices Act., copyright infringement for exposing the catalogue’s pictures and trade libel claim. However, Seafolly couldn’t prove the copyright infringement since they didn’t have an own intellectual rights policy. They also defeated for trade libel claim because they couldn’t prove damages. As a result, Madden was liable for misleading and deceptive conduct having to pay $25,000 in damages.
Legal Risks Of Social Media
In terms of legal risks of social media, Dundas Lawyers outline the legal risks of social networking for business falling into six categories: confidential information, wrongful dismissal, statuary risks, occupation and organisation specific risks, and reputation risks. Misleading and deceptive conduct and copyright claims presented in the Seafolly case belong to the Statuary Risks category.
To avoid misleading and deceptive conduct, Dundas Lawyers encourage companies to regularly monitor comments made by third parties on their social media pages and delete false or misleading and deceptive statements. Whereas, the Copyright law in Australia based on the Copyright Act 1968 protects textual material, computer programs, compilations, artistic works, dramatic works, musical works, cinematograph films, sound recordings, broadcasts, published editions. The Act also states that copyright protection is automatic from the time a work is first written, recorded or published.
The Seafolly and Ms Madden case shows how a ‘misuse’ of social media can entail legal risks for businesses as well as for individuals. Ms Madden tried to protect what she thought was copyright of her business swimwear collection. However, she didn’t take into account the legal consequences of false statements on social media. She did a misuse of Facebook arousing bad reputation for a big competitor who responded immediately showing they were monitoring their social platforms and other business mentions made by employees, suppliers and competitors.
It is important to highlight Seafolly lacked of policies related to breach of intellectual property since their copyright infringement claim against Ms Madden failed. The swimwear company should implement a Social Media Policy (SMP) document to communicate what is an acceptable and unacceptable conduct on their social networks. Thus, They can address more effectively internal and external legal risks that entail false statements or misleading and deceptive conduct, loss of confidential information, breach of copyright, defamation, among other risks – as suggested by Dundas Lawyers – against harmful actions of employees, third parties and competitors.
Whilst implementing a SMP and undertaking any action, Seafolly should also consider Rogerson’s 8 ethical principles: honour, honesty, bias, professional adequacy, due care, fairness, consideration of social cost, and effective and efficient action. These principles will enable to establish an ethical framework and guidance to carry out any further actions on social technologies.
What do you think about this case? Does your company have a SMP? leave your comments below!
By Giannina Pacheco