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May 18, 2011
Thoughts on the Lawsuit Over the @OMGFacts Twitter Account -- Deck v. Spartz, Inc.
[Post by Venkat Balasubramani]
An Associated Press story reports on the lawsuit over the @OMGFacts Twitter account. (Here's a link to the story with comments from Professor Goldman.)
Background: @OMGFacts is a Twitter account which was created by Adorian Deck. It rose to prominence in 2010. As alleged in the complaint:
In September 2009, [Deck] created a Twitter feed [@OMGFacts]. The feed retrieved and republished titillating, sometimes trivial, factual tidbits about such subjects as celebrities, pop culture, world history and commerce. The feed quickly amassed more than 300,000 followers, including many celebrities. It became the 18th most active Twitter trend in 2009, and remained among the top ten trending terms until January 2010.
Most interesting about this dispute is that Deck was a high school student and a minor when he created the account.
Deck was allegedly approached by Emerson Spartz, who ostensibly agreed to help Deck capitalize on this success. The two entered into an agreement which provided that Deck, who was labeled as a "contractor" in the agreement, would be entitled to 30% of the revenues from the OMGFacts YouTube channel and 100% of the revenues from the sales any "OMG Facts" t-shirts. Under the agreement, Spartz agreed to promote the sale of these t-shirts and deal with the OMG Facts YouTube channel. The agreement also provided that any "documents or records or creations . . . which are made by [Deck]" would be owned by Spartz's company. The agreement also had copyright assignment provisions which purported to assign to Spartz's company "any copyright in any existing or future works . . ." that are created by Deck. The duration of the agreement was one year. Deck had limited termination rights under the agreement, but Spartz's company could extend the term for 10 additional one-year periods.
Complaint: The complaint says that Spartz breached. It alleges:
[Deck has] received less than $100 in compensation from Spartz, and has received no account or other disclosure of the revenues associated with the YouTube channel.
The complaint also alleges false designation of origin and false advertising claims, and it asks for recission of the agreement.
Some initial observations about the lawsuit and agreement.
First, with respect to ownership, the agreement focuses on the content. The blogosphere has tackled ad nasuem the issue of whether or not you can copyright a Tweet and who owns the content in a Twitter feed. The complaint contains a small concession or two that could end up being harmful to Deck's copyright claims - it says that the feed consists of "factual tidbits" which are "retrieved and republished" by Deck through the Twitter feed. Small bits of content are not easily the subjects of copyright protection, and if they are factual in nature that raises the bar for copyrightability. If Deck did not come up with the content himself and merely republished content found elsewhere, this also poses a barrier. Still, maybe Deck can argue that the compilation as a whole should be protected. (The agreement also speaks to the Twitter account itself and states that Deck has to keep Spartz apprised of the passwords for the @OMGFacts Twitter account.)
However, as the Associated Press article points out, this lawsuit is not about the content of the Twitter account at all or even over the ownership of it. The core of the dispute is over the @OMGFacts (or OMG Facts) brand, even though the complaint does not expressly alleged a claim for trademark infringement. Unfortunately, the agreement says very little about trademark rights. (Here is a link to the .pdf version of the agreement.) Spartz will argue that he was the one who commercialized the brand in the first place and therefore should own any trademark rights. On the other hand, the agreement provided that Deck will deal with all aspects of the shirt sales and retain 100% of the revenues from it, so Deck may still argue that he was the one who truly commercialized it. Deck can also argue that the hundreds of thousands of followers which he amassed prior to Spartz coming into the picture demonstrate that he already had a brand and had built up common law rights in @OMGFacts and "OMG Facts."
This of course raises the issue of whether someone can establish trademark rights by putting out a Twitter feed. In recent trademark disputes, companies have argued about whether their use on Facebook or Twitter is sufficient to establish trademark rights. Those cases have presented situations where companies have included stray references to products or services on their Twitter feeds, and none of the cases to date approach a situation where someone has amassed a substantial following on Twitter. (The Boathouse v. Tigerlogic dispute over the "POST POST" mark for "social search services" touches on this: "Social Search Services Duel Over "Post Post" Mark -- Boathouse Group v. TigerLogic.")
The equities obviously favor Deck. The agreement is very one-sided and contains an Indiana forum selection clause. When you take into consideration Deck's minority status, I can see a factfinder poking the agreement so full of holes that it becomes the contractual equivalent of swiss cheese. The agreement acknowledges Deck's minority status and includes Deck's mother as a signatory, but given the novelty of the subject matter of the agreement, you can't fault Deck's mother for not negotiating for a clearer and less one-sided agreement--to the extent she even took the agreement seriously. Deck also asks for recission of the contract, citing to a California Code section 6710 which looks like it allows minors to disaffirm contracts they enter into, except as provided by other statutes. I'm not familiar with any statutory exceptions to this rule that restrict the ability of minors to disaffirm contracts, but there must be some limitations on a minor's ability to disaffirm an agreement which the parent or guardian reviews and signs. Either way, even if the court does not end up rescinding the agreement, the agreement does not offer Spartz a definitive win. Nothing in the agreement says that Spartz owns the trademark rights, or even that he or his company have a license to use the marks.
A final comment on the agreement. It's easy to second-guess an agreement after the fact, but joint venture agreements should always deal with trademark rights, and should also provide for some sort of procedure for ownership of the trademark rights when the agreement falls apart. Some sort of formal wind-down procedure is optimal. This is discussed in Professor Goldman's article on Co-Blogging Law, which specifically talks about trademark rights.
Hollywood, Esq. (Eriq Gardner): "Teen Who Created OMGFacts Twitter Feed Sues, Claiming Swindle"
Ben Kerschberg (Forbes): "Twitter Brands, @OMGFacts, and an Allegedly “Predatory” Contract"
Emerson Spartz (the defendant): "OMG Fact: There are two sides to every story"