Negotiating the perils and pitfalls of corporate social media: a lesson from Madden v Seafolly

Online social media is now widely acknowledged as the new frontier of corporate communications.  Indeed, nearly 80 per cent of large companies now use social media to connect with their customers.  Having an online presence has become effectively mandatory, but with that comes a range of risks, including in relation to potentially misleading or defamatory statements.

The recent decision in Madden v Seafolly Pty Ltd [2014] FCAFC 30 is a timely reminder of the importance of considering and managing these risks.  This decision was an appeal from the judgment of a single judge in the Federal Court under sections 52 and 53(a) of the Trade Practices Act (you can read our post on the primary decision here).  The dispute arose out of allegations made by Ms Madden on her personal and business Facebook pages that Seafolly had copied a number of her swimwear designs.  On appeal, the court found in favour of Seafolly, rejecting all of Ms Madden’s grounds but one (which was remitted for consideration).  It was held that Ms Madden’s statements constituted misleading and deceptive representations in connection with the supply and promotion of swimwear.  This decision highlights that a social or personal post can have equally damaging legal ramifications as posts made on corporate accounts.

We have recently published an article in the Internet Law Bulletin that considers some important issues in relation to corporate social media raised by this judgment.  In particular:

  • how do we distinguish between “personal communications” and those made “in trade or commerce” on social media platforms; and
  • where is the line between assertions of fact and expressions of opinion, and how does the way we engage with social media impact on this distinction?

A copy of this article is available here:  You can post but you can’t hide: Madden v Seafolly Pty Ltd and the brave new world of corporate social media