The Top Five Legal Mistakes Made by Creative Agencies and Social Media Departments

Creative agencies and in-house social media departments operate in fast-paced environments where speed and creativity are essential. But the pressure to move quickly can lead to legal shortcuts that expose organizations and their clients to significant liability. Having represented these organizations for many years, we repeatedly encounter the same avoidable mistakes. These are five of the most common.

1. Taking a Shortcut to Copyright Infringement

Clients hire agencies to create original content. Accordingly, agency Master Services Agreements often include an agency representation that their deliverables will be original, not infringing on third-party copyrights, and require the agency to indemnify their client if those representations prove false.

Problems arise when deadlines approach and shortcuts are taken. A designer may incorporate a design, photograph, or other material found online into a deliverable. The client approves the work, launches a campaign, and later receives a cease-and-desist letter demanding that the infringing materials be withdrawn and damages paid.  The campaign screeches to a halt.

Social media departments face similar risks. Teams frequently reuse memes, screenshots, music clips, photographs, and videos circulating online under the mistaken assumption that content posted on social media is free to use. It is not. Every piece of third-party content used in any commercial context should either be: (1) original, (2) used pursuant to a written license, or (3) clearly subject to an applicable legal exception after consultation with counsel.

Generative AI introduces additional complexity. Master Service Agreements should state whether AI can be used in the creative process and agencies should align their policies governing whether AI-generated outputs may be incorporated into deliverables. AI-assisted creation may increase efficiency, but it does not eliminate legal risk.  After all, where did AI get that photo, blurb, or other content incorporated into deliverables?

2. Failing to Secure a Right of Publicity License

Even when a photograph is properly licensed from the photographer, another set of rights may be implicated: the rights of the individuals appearing in the image.  California, like most states, recognizes a right of publicity that allows individuals to control the commercial use of their name, image, and likeness (NIL). Accordingly, in addition to a license from the photographer, consent from each identifiable individual in the photograph is likely necessary before using that image in marketing materials.  Right of publicity violations can be expensive. California law permits recovery of damages, profits attributable to the violation, and attorneys’ fees.

The rise of influencer marketing and user-generated content has made this issue particularly important for social media departments. Reposting a customer’s photograph, using consumer testimonials in advertising, or amplifying content featuring identifiable individuals will likely require explicit consent. The safest practice is simple: whenever identifiable individuals appear in marketing materials, confirm that appropriate written publicity releases have been secured from those individuals.

3. Failing to Execute Work-for-Hire Agreements Before Work Begins

Creative agencies routinely engage independent contractors to supplement internal capabilities. The common assumption is that payment to contractors equals ownership of their outputs. Under copyright law, however, that assumption is often incorrect.

Unless the parties execute an appropriate Work for Hire agreement addressing ownership of work product before work begins, the creator may retain copyright ownership of that work product, even after being paid in full. Agencies may later argue that an implied license existed, but implied license is merely a defense. It does not prevent litigation and must be established through costly legal proceedings.

The lesson is straightforward: before any contractor begins work, make sure that the contractor has executed a proper Work for Hire agreement addressing ownership of the contractor’s work product.

4. Failing to Secure Appropriate Asset Licenses

Agencies often obtain licenses permitting their designers to use specialized fonts, stock imagery, music libraries, and other creative assets. However, those licenses do not necessarily authorize a client’s subsequent commercial use of those materials.  For example, a font license permitting an agency to use a typeface in the design process may not allow the agency’s client to use that typeface in advertising or product packaging. Separate licenses may be required.

Social media teams should exercise similar caution. Stock photographs, music libraries, video templates, and other digital assets frequently contain restrictions governing commercial use. Licenses permitting internal use may not authorize use in paid advertising or public-facing campaigns.  Reviewing license terms and terms of use before publication of deliverables is far less expensive than defending an infringement claim later.

5. Overpromising Regarding Trademark Availability

Master Service Agreements will sometimes require agencies to represent that their deliverables will not infringe “third-party intellectual property rights.” While agencies can reasonably warrant that deliverables are original and do not knowingly infringe copyrights, trademark rights present a very different challenge.

Trademark rights arise not only through registration, but also through use in commerce. As a result, it is often impossible to determine with certainty whether another party somewhere in the world possesses preexisting rights that could conflict with a client’s intended use of a deliverable as a logo, slogan, or other branding element.  Agencies must resist broad contractual representations regarding the availability of using a deliverable as a trademark.  Legal counsel should be engaged to determine whether a deliverable can be used as a branding element without triggering a trademark infringement claim.  Agencies providing deliverables cannot, and should not, make any representations about the availability of use of a deliverable as a trademark without infringing third party trademark rights.

Conclusion

These five issues share a common theme: speed often overtakes process. Creative agencies and social media departments are under constant pressure to produce content quickly and capitalize on emerging trends. A few basic safeguards can substantially reduce legal exposure. Proper and timely agreements with contributors, careful review of licensing terms, internal policies regarding AI-assisted creations, and periodic intellectual property training can prevent disputes that will cost far in excess of the value of any single campaign.