By now, many people are familiar with Facebook and the proposition the social networking site repeatedly poses: “X wants to be friends with you on Facebook . . . confirm or ignore?”

For most companies, there is no ignoring the fact that having a presence on social networking sites can be very productive. Facebook, Twitter, MySpace and others, including “virtual world” websites such as Second Life, offer companies unprecedented access to customers to help build brand awareness, build excitement about new products and forge closer, more lasting bonds with consumers through promotions and interactive communications. In turn, social network users may comment on a company's posted information and declare themselves “fans” of the company or product, quickly reaching other consumers with good publicity. Despite these obvious benefits, like many relationships, your company's friendship with social networking sites and their users can be “complicated.”

Social networking sites present several risks, including trademark infringement and copyright violation issues. For example, your company's valuable trademarks could appear without authorization on a user's profile page or as part of a user name (“name squatting”) on a social networking site. In many instances, unauthorized uses of your company's marks could cause consumer confusion as to source, sponsorship or affiliation. Although the types of intellectual property infringements that occur on social network sites are similar to those that occur on traditional websites, social network infringements can spread rapidly and exponentially, becoming “viral,” and may present an acute crisis for a company and its corporate counsel.

What can be done when an infringement occurs on a social networking site? The leading social networking sites have adopted dispute procedures for intellectual property issues. In most cases, these procedures are the best starting point for corporate counsel faced with intellectual property infringements or other sensitive issues, such as false advertising and defamation. The dispute procedures allow for removal of infringing content and termination of infringing users, at relatively low cost and with little or no interaction between the company and the infringing users.

If the harm caused by the infringement is acute, implicates public health through an issue such as counterfeiting or if the social networking site is unresponsive to counsel's concerns, traditional enforcement methods may be pursued against the social networking site and the infringing user, including cease and desist letters and potentially an infringement action. If the company decides to take action against the social networking site, then theories of direct, contributory and vicarious liability should be considered.

Great care should be taken on several fronts, however. For example, a user who receives a heavy-handed or over-reaching demand letter could pass it along through the social networks, creating negative publicity travelling at “viral” speed. In many instances, it will be advantageous to initially take a soft approach with users and closely consider whether a positive relationship can be developed from the user's possibly well-intentioned, though technically infringing, actions. For example, some companies, when faced with unauthorized uses of their marks by fans on Facebook, have partnered with those fans to help reform the content and to reach the extensive following the fans developed on Facebook.

Moreover, careful consideration must be given to whether defenses such as fair use, parody, criticism, commentary or others are viable before initiating contact with the user or the site. Of course, a traditional cease and desist letter, threatening suit and demanding immediate action, may result in a declaratory judgment action by the recipient(s). To reduce the risk of a declaratory judgment action, the company may want to communicate its concerns and establish a dialogue through a carefully worded letter of inquiry rather than a relatively harsh cease and desist letter.

Importantly, a company can take preventative measures to deter misuse of its intellectual property on social networking sites. For example, a company can create Facebook vanity URLs and Twitter accounts featuring the company's name, new product names and existing product names. A company can also establish an “official” company page on social networking sites. By proactively securing a presence for the company's most valuable marks, a company may reduce intellectual property enforcement expenses, while simultaneously advertising its brands to consumers.

Employees' improper use of social networking sites can also present risks to a company. To prevent and mitigate public relations and liability issues caused by employees' use of social networking sites, companies should adopt social networking policies and train employees on the appropriate use of social networking sites as it relates to the company.

Social networking sites can present difficult enforcement and liability issues, but with appropriate preventative measures, consistent monitoring and carefully designed enforcement priorities and actions, companies can “confirm” social networking sites and their users as friends with few reservations.

Read Christopher Dolan's next column.

By now, many people are familiar with Facebook and the proposition the social networking site repeatedly poses: “X wants to be friends with you on Facebook . . . confirm or ignore?”

For most companies, there is no ignoring the fact that having a presence on social networking sites can be very productive. Facebook, Twitter, MySpace and others, including “virtual world” websites such as Second Life, offer companies unprecedented access to customers to help build brand awareness, build excitement about new products and forge closer, more lasting bonds with consumers through promotions and interactive communications. In turn, social network users may comment on a company's posted information and declare themselves “fans” of the company or product, quickly reaching other consumers with good publicity. Despite these obvious benefits, like many relationships, your company's friendship with social networking sites and their users can be “complicated.”

Social networking sites present several risks, including trademark infringement and copyright violation issues. For example, your company's valuable trademarks could appear without authorization on a user's profile page or as part of a user name (“name squatting”) on a social networking site. In many instances, unauthorized uses of your company's marks could cause consumer confusion as to source, sponsorship or affiliation. Although the types of intellectual property infringements that occur on social network sites are similar to those that occur on traditional websites, social network infringements can spread rapidly and exponentially, becoming “viral,” and may present an acute crisis for a company and its corporate counsel.

What can be done when an infringement occurs on a social networking site? The leading social networking sites have adopted dispute procedures for intellectual property issues. In most cases, these procedures are the best starting point for corporate counsel faced with intellectual property infringements or other sensitive issues, such as false advertising and defamation. The dispute procedures allow for removal of infringing content and termination of infringing users, at relatively low cost and with little or no interaction between the company and the infringing users.

If the harm caused by the infringement is acute, implicates public health through an issue such as counterfeiting or if the social networking site is unresponsive to counsel's concerns, traditional enforcement methods may be pursued against the social networking site and the infringing user, including cease and desist letters and potentially an infringement action. If the company decides to take action against the social networking site, then theories of direct, contributory and vicarious liability should be considered.

Great care should be taken on several fronts, however. For example, a user who receives a heavy-handed or over-reaching demand letter could pass it along through the social networks, creating negative publicity travelling at “viral” speed. In many instances, it will be advantageous to initially take a soft approach with users and closely consider whether a positive relationship can be developed from the user's possibly well-intentioned, though technically infringing, actions. For example, some companies, when faced with unauthorized uses of their marks by fans on Facebook, have partnered with those fans to help reform the content and to reach the extensive following the fans developed on Facebook.

Moreover, careful consideration must be given to whether defenses such as fair use, parody, criticism, commentary or others are viable before initiating contact with the user or the site. Of course, a traditional cease and desist letter, threatening suit and demanding immediate action, may result in a declaratory judgment action by the recipient(s). To reduce the risk of a declaratory judgment action, the company may want to communicate its concerns and establish a dialogue through a carefully worded letter of inquiry rather than a relatively harsh cease and desist letter.

Importantly, a company can take preventative measures to deter misuse of its intellectual property on social networking sites. For example, a company can create Facebook vanity URLs and Twitter accounts featuring the company's name, new product names and existing product names. A company can also establish an “official” company page on social networking sites. By proactively securing a presence for the company's most valuable marks, a company may reduce intellectual property enforcement expenses, while simultaneously advertising its brands to consumers.

Employees' improper use of social networking sites can also present risks to a company. To prevent and mitigate public relations and liability issues caused by employees' use of social networking sites, companies should adopt social networking policies and train employees on the appropriate use of social networking sites as it relates to the company.

Social networking sites can present difficult enforcement and liability issues, but with appropriate preventative measures, consistent monitoring and carefully designed enforcement priorities and actions, companies can “confirm” social networking sites and their users as friends with few reservations.

Read Christopher Dolan's next column.