Imagine this scenario: a brand has hired a large influencer to take part in a social media campaign to bring awareness to the brand’s new beverage. The brand has made clear that they want to highlight the drink’s health benefits, namely, that the drink will help improve consumers’ focus and attention and can even contribute to weight loss. Additionally, the brand wants the influencer’s message to be organic, so in their campaign brief that includes the instructions for the social posts, it asks for the influencer to tag the brand, but to avoid using hashtags such as #ad or #partner and to avoid the “paid promotion” disclosure tools on social media.
So, it’s time to go live, and the influencer has decided to adapt the Michael Jordan crying meme with a caption that says “when a drink tastes amazing, makes you focus, and helps you lose weight @brand”.
After a few weeks, things start to turn ugly. The influencer has been contacted by the FTC for (i) failing to make the appropriate disclosures about the product, and (ii) making false or misleading statements about the product’s health benefits. Additionally, the brand has been contacted by the company that took the original photo of Michael Jordan alleging that the brand via the influencer has violated the company’s copyright.
Notwithstanding any legal defences that may be available to either the brand or the influencer, or the strength of the above claims, one clear thing is that both parties have contributed at least in some part to the conflict. So, in such a situation, who would be responsible for the costs of resolving a court case or paying the fines/settlements?
The answer will likely depend on the indemnity clause that is drafted within the campaign agreement between the brand and influencer. For those who are unfamiliar, an indemnity clause is an essential term to include in contracts where one party (the “Indemnifying Party”) agrees to compensate the other party (the “Indemnified Party”) for costs or expenses arising out of claims, losses, expenses, or other liability from the Indemnifying Party’s conduct.
In the context of campaign agreements, in some circumstances, I’ve seen brands attempt to include one-sided indemnity clauses that essentially shift all liability, costs, or expenses onto the influencer for any legal actions or claims that arise from a campaign. However, since talent is often at the mercy of the brand related to the instructions for the campaign, it’s not necessarily fair for the influencer to carry the financial risk related to instructions they recieve from the brand or related to the legality of the brand’s business (for ex, the FTX situation where Kim Kardashian was fined for promoting unlawful securities).1 For this reason, for talent clients, I always try to have an indemnity clause which covers the talent from liabilities caused by the brand’s instructions or business activities.
On the other hand, from a brand’s perspective, a brand justifiability would want to protect themselves from any claims that arise as a result of the influencer’s conduct, such as infringing third-party intellectual property rights or as a result of the influencer failing to make appropriate material connection disclosures (in circumstances where the influencer was explicitly instructed to).
Ultimately, whether you are acting on behalf of talent or a brand, it is reasonable for both parties to have certain obligations related to indemnity. Both parties should be responsible for their own instructions and conduct and should watch out for indemnity clauses that unreasonably subject them to risk or obligations that the other party should be responsible for.
If you are a brand, agency, or talent looking to strengthen your agreements to ensure you are protected for your next campaign, please don’t hesitate to reach out to GME Law.
*Nothing in this blog is meant to be legal advice.
1 U.S. Securities and Exchange Commission Press Release, SEC Charges Kim Kardashian for Unlawfully Touting Crypto Security, October 3, 2022.
