The Legal Issues That Influencers and Marketers Must Get Right

Tahir Basheer
Tahir Basheer
February 28, 2020
The exponential growth of influencer marketing has caught the eyes of many across the commercial landscape. It is an area that has become...

The exponential growth of influencer marketing has caught the eyes of many across the commercial landscape. It is an area that has become fundamental to almost every modern marketing campaign and has grown to a $10billion industry in its own right in a comparatively short amount of time.

The popularity and growth of this industry have not come without its challenges, however. For example, in August 2018 the Competition & Markets Authority (CMA) launched a probe into the practices of certain celebrities and online stars engaged in brand marketing and advertisements. The CMA published its findings in January 2019, drawing the rules of disclosure and compliance with consumer protection legislation into the spotlight. The CMA’s call for heightened scrutiny highlighted that this industry is not as simple as posting a selfie in exchange for some money, as some believe.

The CMA investigation was a pivotal and highly publicised moment, which sent a clear message to the industry, namely that all incumbents involved in this sector need to be alive to the complex web-work of commercial and legal rules and regulations that surround this space. This article explores some of the legal agreements that you might come across in the industry and provides an insight as to why they are important.

What legal agreements should you use when engaging an influencer?

Brand services agreement

These agreements comprise the main contract forming the commercial and legal basis of any influencer marketing campaign. They set out the respective obligations of the brand, agency and talent that are involved. These contracts contain the terms on which the influencer provides the marketing services to the brand, whether acting through a platform, agency or working directly with the brand itself.

These agreements will contain, as a minimum, the commercial terms of the deal, namely details of the parties involved, the campaign period, the deliverables required and platforms involved, the posting dates, fee and payment schedules, any exclusivity obligations, travel and expenses (to the extent such are required) and usage rights over the content being produced. More comprehensive agreements will have legal terms attached to the commercial terms.

The legal terms cover the operative legal aspects of the influencer marketing arrangement, for example, who is responsible for what, who is liable when things go wrong, whether there are any insurance obligations on the parties, the brand's and influencer’s adherence to consumer protection legislation and relevant regulators' guidelines, whether either party has the right to terminate the agreement and under what specific circumstances do those rights arise, who owns the intellectual property in the deliverables produced, whether there are so-called morality provisions that refer to public-facing behaviour obligations as well as any reputational issues and 'boilerplate' terms which refer to the standardised key terms of the contract, such as the governing law and jurisdiction of the contract.

Having a watertight brand services agreement provides clarity and peace of mind. It is akin to standard terms and conditions for an online marketing transaction. It is designed to make the marketing campaign more efficient and, more importantly, it is the blueprint that you can rely on should things go awry.

Non-disclosure agreements (or NDAs)

Whilst not specific to the influencer marketing sector, NDAs are nonetheless key. They are contracts that are used when parties wish to discuss commercial projects that might be of a commercially sensitive nature. NDAs create a safe space for allowing the exchange of that information by preventing the recipient of that information from exploiting it to the detriment of the disclosing party by placing restrictions on how that information may or may not be used. Information is protected through the law of confidence and NDAs help to create a relationship of confidence necessary to protect confidential and commercially information from unauthorised uses.

It is important to remember that there are no intellectual property rights in ‘information’ in the strict sense; intellectual property rights protect the expression of ideas in certain forms in which they are recorded, whether it be through unregistered rights such copyright or registered rights such as trademarks and patents.

Whilst most brand services agreements will contain confidentiality obligations within the legal terms, NDAs might be used by parties at the pre-contract stage. For example, a brand may wish to engage an influencer with respect to a new product launch but cannot tell the influencer what that product is prior to the influencer signing the NDA so as to prevent any potential unauthorised leaks to the public (and possibly competitors).

Ethical commitment agreements

Ethical commitment agreements tend to be short agreements in which influencers promise to adhere to certain ethical policies of a brand.

These agreements have been increasingly deployed by larger house-hold name brands, in particular, due to their vast global reputations. One bad bit of press for these brands can be catastrophic to their overall image and can significantly impact their profit margins. This might be the case where a brand has invested lots of money into establishing its values and being perceived in a certain way, which can be easily undone in the eyes of the public if it were to engage an influencer who is revealed to have posted content espousing or embodying very different and possibly damaging views.

These agreements tend to be more important for the brands than the influencer and are used as a precautionary measure to ensure that the influencer is committed to the brand’s values. You may come across these agreements as an appendix to a brand services agreement or as part of the standard T&Cs used when a brand on-boards an influencer as a content 'supplier'.

The level of obligations in respect of these agreements can vary. For instance, they can involve a simple declaration agreeing to those brand values or others can involve wide-reaching and onerous provisions requiring an influencer to audit their entire social media presence and promise that nothing has ever been said, liked, shared or posted that could possibly be detrimental to the brand (quite a big ask!).

Data protection agreements

Data protection agreements have arisen from increased data protection and regulation across the board, in particular, due to the General Data Protection Regulations (GDPR) which came into effect in May 2018. They are used to ensure that the flow of information between a data controller and a data processor (or sub-processors) is protected adequately and in line with GDPR and equivalent data protection legislation.

The purpose of GDPR and data protection legislation is, broadly speaking, to ensure that people’s personal data is not being used for reasons that they have not consented to and/or being shared with parties that they are not aware of in jurisdictions without adequate data protection regimes.

In the world of influencer marketing, information is being shared all the time, particularly because statistical data on user engagement is key to determining strategy and also a key performance indicator for the purpose of ROI. To this end, an influencer should be alive to the fact that some comments or social media profiles may contain names, photographs or other personal data of a data subject. Whilst that data subject will be subject to the relevant platform’s terms and conditions, extracting that information and processing that personal data on behalf of a brand for individual marketing purposes may not be something that is expressly permitted. When sharing such information, the best approach would be to use anonymised data only.

A breach of the GDPR can lead to a maximum fine equal to €20million or 4% of annual global turnover—whichever is greater. You can start to understand why some brands have taken the precautionary approach with data protection agreements to ensure that any suppliers within its supply chain (of content or otherwise) are in lockstep with GDPR protocols.

Assignments agreements

An assignment agreement is an instrument which transfers the ownership in intellectual property rights from the owner (Assignor) to the new owner (Assignee). For an assignment to be effective, it must be in writing.

One of the main intellectual property rights that concern content creators is copyright. Copyright protects the expression of ideas in the form of various creative works such as artworks, literary works, songs, video recordings and films - just to mention a few. Copyright is known as an unregistered right and it will arise automatically upon creation by the first author. So, although a brand might pay for the content, they will technically not own that content unless it is expressly assigned to them in writing. Assignment provisions will often be included in brand services agreements if a brand is wanting a full buy-out of the content.

Separate assignment agreements are particularly important when more than one person is involved in creating that particular content. One example where an assignment agreement would be required is where an influencer had their friend film them whilst they featured in the frame (which is often the case unless the influencer has a drone following them or they exclusively shot their content with selfie sticks). In this example, the influencer’s friend would technically own the content being shot because they are the first author and, although they are not subject to the brand services agreement, the influencer who is would be wise to get an assignment in writing from their friend so that they have cleared the rights in that content in order to sell it to a brand.

Licence agreements

A licence agreement is similar to an assignment agreement but it does not transfer ownership. It is an instrument which gives permission from the owner (Licensor) to a person or company wishing to use that particular right (Licensee).

Normally licences will be limited for a predetermined period of time and/or for a specific purpose – but they can equally be granted on an irrevocable, perpetual and royalty-free basis, which is almost like owning the content.

Licence provisions will normally be included in a brand services agreement, however, they are equally used outside of the brand services agreement when third parties are involved. One example where a licence agreement would be required is where a person or company wants to use a song on a video that they have shot. The owner of the song is unlikely to ‘assign’ all of their rights in that song and so may grant a licence instead to use it in the video instead.

Advertising Standards Authority (ASA) CAP Code and Consumer Protection Legislation

Whilst not a legal agreement in of itself – the ASA’s CAP Code and its influencer marketing guidelines, as well as consumer protection regulations, are pervasive and form the regulatory and statutory rules with which both brands and influencers alike are required to comply.

It is important that both brands and influencers are up to date with the most recent rules and guidelines, in particular with respect to disclosure practices. The power to influence the consumer's decision to spend their hard-earned money is not taken lightly by the regulators. Accordingly, they will pursue instances where the underlying commercial relationship between a brand and an influencer is not clear to the viewer as this has the propensity to distort the marketplace and ultimately harm consumers.

The regulators have repeatedly stressed the need for disclosure in such forms as ‘#AD’ in a clear and obvious manner. ASA complaints and CMA investigations can negatively impact an influencer's and/or brand's reputation and can be particularly costly to manage in terms of time and legal fees. It is therefore important to keep on the right side of the regulations.

As part of the agency, brand or influencer team having specialist legal and business affairs support will lead to better more professional deals and less problematic issues moving forwards.

By Tahir Basheer, Partner at Sheridans.

Tahir is a specialist in digital media law. He works with influencers, brands, agencies and digital platforms. He also founded the firm’s technology practice and headed up their branding practice.

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