E-Commerce Coming to Social Media Messaging Apps?

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By Alexis Kramer

Feb. 24 — As social media sites show signs they are moving their messenger applications into the e-commerce space, the time has come to consider the negative implications for policing counterfeit goods and enforcement of online purchases.

Facebook Inc., WeChat and other social networks have already expanded their services to allow for users to send payments to one another through private messages. Twitter Inc. has recently introduced new tools to facilitate the exchange of direct messages between businesses and consumers. Facebook is testing a product that will enable businesses to send updates to and have personal conversations with their customers.

Buying and selling goods through messenger apps may be next, e-commerce and intellectual property attorneys told Bloomberg BNA.

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“I think that is definitely the future of mobile apps,” Christopher Götz, counsel at Simmons & Simmons LLP in Munich, Germany, said. “It makes sense to use these tools for more than just chatting.”

However, enabling retail transactions via chat may open the door for more counterfeit goods, as brand owners would have difficulty monitoring sales made via private messages, attorneys said. It could also make online purchase terms more difficult to enforce, as chat windows lack the space to properly notify customers of the terms.

“All the issues you would have when conducting transactions over the Internet are magnified when you're using a messenger app,” David Adler, principal of Adler Law Group in Chicago, said.

Messenger Headed for E-Commerce?

Facebook is testing Businesses on Messenger, which allows businesses to send personalized updates to customers, including online order confirmations and shipping updates. The product, which is available to select businesses in the U.S., allows businesses and customers to send and receive photos and text messages via Messenger.

Facebook listed on a recent trademark application—in connection with its messenger app icon—an intent to use the mark for online retail store services, online marketplaces for sellers and online facilities for connecting sellers with buyers. The application, filed as an “intent to use,” will be published for opposition March 8.

When asked about the use of Messenger for e-commerce transactions, a Facebook representative said that “we don’t comment on rumor or speculation.”

The “aim with Messenger is to create a high quality, engaging experience for 800 million people around the world, and that includes ensuring people do not experience unwanted messages of any type,” the representative said.

Snapchat also filed a trademark application listing: online retail store services; providing an Internet website portal featuring links to online retail sites; and facilitating the sale of services and products. This application was published for opposition Feb. 23.

Twitter Inc. announced Feb. 18 two new tools that make it easier for customers to send direct messages to businesses. Businesses can now add a link to their tweets that allows customers to quickly send a direct message, according to a Twitter blog post. Twitter has also created a new customer feedback feature that allows customers to privately provide feedback after a business transaction.

A Twitter representative declined Bloomberg BNA's invitation to comment. Snapchat didn't return requests for comment.

How to Monitor for Counterfeits

As social media sites begin to use their social messaging apps for commercial use, they will face a number of hurdles, William Mosher, senior counsel at Novian & Novian LLP in Los Angeles, said. “Whenever you try to do something that has never been done before, or in a way that has never been done before, you are going to be confronted with legal questions that have never been answered before,” he said.

Eric J. Perrott, a trademark attorney at Gerben Law Firm PLLC in Washington, said allowing social media users to buy and sell goods through private messages opens the door for more counterfeited goods to be sold unnoticed. E-commerce through messaging apps takes away the opportunity for brand owners to see and monitor transactions in a public place, he said.

Selling counterfeited products is already a big problem in online marketplaces. In December 2015, the Office of the U.S. Trade Representative (USTR) cited fourteen online markets in nine countries as notorious for their sale of counterfeit and pirated products . The USTR focused on Internet-facilitated counterfeiting for its 2015 report due to an estimated 15 percent increase in online sales of counterfeited goods the year before.

“Unlike a traditional online marketplace like Amazon.com, counterfeits sold through a messaging app would be much harder to police,” Perrott said.

Matthew Asbell, a partner at Ladas & Parry LLP in New York, echoed Perrott's comment. E-commerce via messaging apps could provide an avenue for sellers of counterfeit goods that would be difficult for brand owners to monitor, he said.

Asbell said that if the app providers don't proactively take steps to avoid the sale of counterfeit goods or provide sufficient public information for brand owners to monitor and notify the app provider of counterfeits, policing may be very resource-intensive for the brand owners.

Social media sites could voluntarily employ a system for brand owners to register and verify the authenticity of products offered for sale through the app or to verify a seller as an authorized distributor, he said. Brand owners could also monitor a sampling of transactions through a “secret shopper” or “private investigator.”

Internet service providers have avoided liability by providing a mechanism for brand owners to provide information about specific counterfeit activity, and they haven't been required to proactively monitor and take down counterfeits on their own. “But the proprietors of messenger apps are in a better position to monitor for counterfeiting and infringement as they have access to all of the transactions that may take place using the app,” Asbell said.

Perrott said that social media sites considering these types of private transactions should require a public listing for every product and service sold by its users and adopt a strong notice and takedown system that allows the social media site to quickly respond to both trademark and copyright infringement complaints.

Asbell said a takedown system may be difficult to implement, however, unless the counterfeit products are viewed publicly and therefore seen by brand owners.

Size Constraints for Displaying Terms

Online terms for the purchase of a product are only enforceable if the purchaser manifests assent to the agreement. Merchants will have difficulty ensuring that users have a reasonable opportunity to read those terms—and therefore manifest assent—due to size constraints, or a “lack of real estate,” on messaging apps, Adler said.

Online terms between buyer and seller may include return policies, extra charges, arbitration clauses and choice of law provisions.

Website operators use different types of agreements to obtain assent to their websites' terms. Courts generally enforce clickwrap agreements, in which Internet users affirmatively check a box or click an “I agree” button to assent to terms. Browsewrap agreements—where the terms are typically available via a hyperlink at the bottom of the screen—don't require manifestations of assent and are only upheld if users had notice of the terms.

One question is whether, given the physical and technological limits of mobile apps, users would have sufficient notice of a seller's contractual terms to be bound by those terms, Mosher said.

Companies that offer services over an app want to keep the level of detail to a minimum so as not to overwhelm the user, Götz said. At the same time, they are obliged to describe the products they offer and the purchase terms so that consumers know exactly what they are buying, he added.

In the case of browsewrap agreements, courts consider factors such as the appearance of the website and the location of the hyperlink to decide whether a user had reasonable notice of the terms. With mobile apps, however, sending users a private message with a hyperlink to a website may not constitute sufficient notice, Mosher said. For example, mobile users without a data plan, a separate Internet browser program or Internet access may not be able to utilize the link, he said.

Sending the agreement itself to a user in a private message, even in an abbreviated form, may be impossible or impracticable, Mosher added.

Courts have determined how to address the issue of seller notice and user consent for websites. “They're going to have to decide those issues anew for electronic transactions conducted via mobile apps,” he said.

To contact the reporter on this story: Alexis Kramer in Washington at akramer@bna.com

To contact the editor responsible for this story: Donald G. Aplin at daplin@bna.com

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