Walking into a minefield

Jan 01, 2009
<p>Corporate blogging is becoming commonplace but there are serious legal and reputational pitfalls for the inexperienced</p>

It was the stuff of a general counsel’s nightmares. An employee was making unsubstantiated, serious allegations about company outsiders, and the outsiders were involved in a lawsuit with the company. What made the situation truly unsavory was that the action took place in the relatively untested world of informal, online communications.

In this case, the cyber-battleground was a website known as ‘Patent troll blog’. Writing anonymously, attorney Richard Frenkel would regularly skewer so-called patent trolls – a derogatory term for patent owners who don’t offer products or services, but who make a living by regularly suing companies for infringement. Then, in October 2007, he allegedly wrote that patent lawyer Eric Albritton ‘conspired’ with a court clerk to alter some court documents about an infringement suit Albritton had filed against Cisco.

By February 2008 another patent lawyer, supposedly the initial inspiration for the term ‘patent troll’, offered a $15,000 reward to anyone who could unmask the author of the ‘Patent troll blog’. Figuring that the jig would soon be up, Frenkel revealed himself. The twist: when he wrote the post in question, Frenkel was a patent attorney at Cisco. In March Albritton filed a libel suit against the attorney and Cisco, even though management claimed it knew nothing of the blog.

This sort of kaleidoscopic legal horror story is just one type of scenario that makes many executives and lawyers edge away from this interactive communication channel. With potential dangers including premature disclosure of material information or intellectual property, liability for damaging statements and negative PR fallout, you might understand the reluctance. In fact, there are many companies that ban or firmly discourage all employees, including CEOs, from making statements or releasing information via non-official internet sites.

Yet many companies have found that blogs provide a new and effective way to reach customers, prospects, investors, current and perspective employees, and the media. With a style less formal than a press release or filing statement, a blog can help put a human face on a corporation. Companies have a tightrope to walk, with traditional methods of mass communication losing effectiveness on one side and heaping helpings of possible liability on the other.

Inviting embarrassment
A poorly executed blog can be embarrassing. As Jeremiah Owyang, a Forrester analyst in his ‘day job’, wrote in his own ‘Web strategy by Jeremiah’ blog in October 2007, ‘The CEO blog may be the most difficult to create and maintain, and will likely be under the most scrutiny of any other employee.’ For example, Whole Foods Market CEO John Mackey created an embarrassing whirlwind when he was caught making anonymous comments on Yahoo stock forums about his own company, setting off an investigation, ultimately dropped, by the SEC. And a June 5, 2008 entry in the Whole Foods ‘CEO’s blog’ written under his name started as follows: ‘Just a quick heads up that John Mackey will be speaking on Conscious Capitalism in Austin, Texas on June 12, 2008. It’s actually rare to have the opportunity to hear John speak in his hometown.’ Either Mackey refers to himself in the third person, or it is painfully obvious that the blog’s infrequent posts may actually be the work of the company’s PR or IR department.

But for many companies, blogs are becoming an especially important and highly visible component of their communications strategy. ‘The internet is certainly in our view a very important means of communicating with our investors, our shareholders and our various other constituents,’ says Craig Norris, vice president of corporate law at Sun Microsystems. ‘Our CEO blogs; our general counsel blogs.’

A serious undertaking
Joel Postman, principal of the social communications consultancy Socialized, says that blogging by a CEO can certainly be effective ‘if the CEO has the personality and understands social media and the need for authenticity, and makes the time commitment to actually keep up the blog.’ But blogging need not only be the purview of senior executives as other departments can make contributions, too.

Part of the marketing team for InsWeb, an online insurance marketplace, is devoted to a company blog. ‘The insurance industry is not known for lighthearted or particularly engaging reading material,’ says general counsel and corporate secretary Eric Loewe. ‘So we task the group with writing a blog in ways that create some interesting topic discussions. I think [blogs] represent an opportunity for a company to have a little bit more of a real human face, to have a connection with their customers, a connection that pretty much evaporated when companies become more web-focused and less store-focused.’

Certainly in the US blogs are becoming a commonly consumed form of communication. According to a 2007 Forrester study, one quarter of online consumers read blogs at least once a month and the growth rate has continued from there. But, many Fortune 500 companies are not picking up on this emerging trend and have yet to start using blogs, and among those that have, a good percentage have done so badly.

‘The larger, more established companies, most of the Fortune 500, need to be persuaded that a blog is another marketing vehicle,’ Postman says. ‘What most of them want to talk about is new products and new features and their promotions.’ This is a pity, because done well, blogs can attract readers and wield influence among customers and investors.

But to use blogging well, a company must understand how blogs work and the inherent dangers and considerations that arise. One potential problem is how much noise there is in the blogosphere. Dominic Jones, president of IRWebReport.com, estimates that the number of blogs in existence is at least 50 million. The chance of any single blog gaining outsized attention is negligible. So a company considering an official blog must realize that success comes in reaching a specific yet important audience, not a mass market. That takes time and can require a prolonged investment in energy.

Who are you talking to?
For anything useful to happen from blogging, a company must approach the activity intelligently, raising important questions before anyone touches a keyboard. Herb Kozlov, a senior partner at law firm Reed Smith, advises that companies should ask, ‘Why are we doing it?’ He highlights that companies need to consider what they are trying to achieve and who they are trying to talk to: ‘What’s our purpose? What are the areas that the blogger is permitted to cover and what are the limitations?’ Without this degree of focus, blogs will seem vague and uninteresting to a potential audience.

Even with a theme and with a high level of consistency among postings, there are major problems that a company should consider. If you say the word blog to Dick Block, at the time of writing with law firm Dreier’s employment law group of Block Bernstein & Lagasse, the first word that comes to his mind is fear.

‘You have no control,’ he says. ‘Cisco, Sun Microsystems, IBM – all of the tech companies are blogging. But their policies are so amorphous: Don’t say anything that’s obscene, don’t say anything that’s confidential, don’t say anything that can open us to lawsuits. The employees aren’t lawyers. You certainly don’t have any control when members of the public put their comments on the blog.’ (See ‘Legal pitfalls'.) For this reason many companies insist all blog posts are reviewed by legal. But this can result in postings that do not have a natural flow.

A company cannot stop blog readers from drawing unfortunate inferences. ‘An unofficial employee blog may end up being confused with the company itself, as unfortunately happened to the ‘Patry copyright blog’, formerly run by a lawyer who had the misfortune, so to speak, of becoming Google’s chief copyright counsel,’ says Maxwell Kennerly, a litigator with the Beasley Firm and a blogger himself. ‘No matter what he did, his posts were construed as representing Google’s official position, so he gave up.’

‘Most of the blogging issues aren’t into litigation [yet],’ says Rex Stephens, a Baker Hostetler partner. ‘There’s always a wave. You have this critical mass, everyone else is doing it, and then you can compare it to stock option backdating. It was off the radar screen, then all of a sudden one case starts, and then it balloons from there.’

What is a company to do?
Companies have two choices: give up any potential benefits from blogging, or create a relatively safe blog. The first is a waste of a resource, leaving the second option, which requires research into how blogs work. ‘Whatever you’re doing, whether your job is to shrink-wrap the box when it comes off the assembly line or you’re the CFO, you have to know the job and have experience,’ says Kozlov. ‘You don’t want to put someone in charge of the blog who doesn’t have a good feel and touch for blogging.’
Next, create a training program. ‘Most people don’t know they’re doing something wrong,’ says Jacqueline Klosek, a Goodwin Procter senior counsel. ‘Have the policy, but also some training so people understand it.’ That goes for CEOs as well. ‘It’s more difficult to control the CEO, but it’s not more difficult to train the CEO,’ Kozlov says.

‘There certainly are legal risks that you have to be mindful of,’ Loewe cautions, ‘but I don’t think they rise to the level of creating that kind of fear, where you have to create so many rules around the blog that it turns out to eliminate what I think is of real value.’

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