Evan Schuman's StorefrontBacktalk

Attorney Mark D. Rasch is the former head of the U.S. Justice Department’s computer crime unit and today serves as Director of Cybersecurity and Privacy Consulting at CSC in Virginia.

As retailers try and encourage customers to play with social any way they can, they run the risk of not only funding incentives that might yield little value but alienating shoppers to the point of legal violations. (That’s right. You should flinch.)

The problem, then, for retailers attempting to enter the social networking space is whether they should plan their strategy and miss new opportunities or allow that strategy to be random and chaotic and to possibly create a host of potential legal problems—from copyright infringement to defamation and potential privacy law violations. How so? Let’s start with copyright infringement.

Suppose a shopper opts to make a promotional video for your product, including cute graphics and music. The music, however, is subject to copyright and infringes someone else’s rights. Under the Digital Millennium Copyright Act, an innocent third party that inadvertently hosts infringing material posted by someone else (think, for example, YouTube) can avoid liability for infringing if that party follows the procedures of notice and take down—that is, it agrees to remove the infringing materials.

But if a retailer actively solicits the creation of user-generated content, it may not be considered an “innocent third-party hoster” under the DMCA. Depending on the level of participation, the retailer may be considered a direct or contributory infringer, even if the infringing content is hosted on a third-party Web site (Flickr, YouTube, Twitter or Facebook).

And if that retailer provides economic incentive to the consumer to generate the content, creation of the infringing work is more likely to be considered a “commercial use” and less likely to be considered a non-infringing “fair use.” In essence, the retailer may be considered as “paying” the consumer to create an infringing work.

Another issue is one of ownership of the works created by the consumer. Now, 99.9 percent of the stuff users develop will be—what’s the legal term—crap. But every now and then, a user will generate a work that is brilliant, innovative and wonderful. It promotes your product or services; it’s fun and creative; and it reaches the right target demographic. Indeed, that’s why you created the program in the first place. That guy or gal gets 10,000 bonus points (whatever that is).

But who “owns” the work created? Is it a “work for hire?” because you “paid” the user to create it? Has the author transferred the copyright or licensed it to you?

Generally, with things like essay contests and the like, lawyers (remember lawyers?) include wording like “all submissions are the property of the company.” That’s all well and good when the materials are “submitted” to the company. What happens, though, when the materials are never “submitted?” but merely “posted” to a third-party social networking site Oppblåsbare Spill?

Remember, the more the retailer “owns” the material, the more the company will be deemed liable for the content. The less the retailer “owns” the content, the less it can exploit that content. Pick your poison.