March 27 (Bloomberg) -- Sammy Wasem was 15 when he started a Ferrari fan page that would become one of the most popular car sites on Facebook. Six years later, he is in a legal battle with his favorite Italian sports-car maker in a case that may help define freedom of expression rights in social media.
Wasem, an amateur race-car driver, and his father Olivier have filed a criminal complaint against Ferrari SpA, claiming copyright infringement as they lost control of their site. Ferrari has sued the Wasems, arguing they misused the company’s trademark to advertise non-Ferrari merchandise and for personal messages such as invitations for Wasem’s 18th birthday.
“They dared to take away a kid’s dream,” Sammy Wasem said in an interview. “They have no scruples.”
The case is emblematic of the challenges companies have dealing with copyright and trademark rights on social media. In the years Wasem spent his adolescence building up a marketing tool for Ferrari, social media has grown up as well. Facebook Inc.’s revenue rose 55 percent to $7.87 billion last year.
“The issue isn’t with Facebook or with our fans but with those who try to use Ferrari’s intellectual property to make money out of it,” said Stefano Lai, a spokesman for the Maranello-based carmaker. The company hasn’t been informed of a criminal complaint, he said. The Wasems made no money selling merchandise on the site, Olivier Wasem said.
Ferrari’s standoff contrasts with the approach of Coca-Cola Co. in a similar situation, where it ended up hiring the fans. The power of social media is such that there’s an increasing tendency for brands to shun lawsuits over social media disputes, even where there’s clear damage to their brand.
“There’s a change happening in the behavior of IP lawyers to defend their clients,” said Benoit Van Asbroeck, a lawyer at Bird & Bird in Brussels who specializes in intellectual property and information technology. “We now try to be very friendly to avoid an aggressive reaction on the Web.”
The alternative is risking lengthy legal battles that can fuel a backlash from fans on the Internet. Nestle SA learned this the hard way in 2010 in a dispute over a YouTube video. Greenpeace had made an ad that said the food company’s palm oil sourcing was destroying rain forests.
The video showed an office worker biting a KitKat bar that turned into a bloody orangutan finger. Nestle asked YouTube to take it down, so Greenpeace published it on other sites, attracting more than 1.5 million views, according to the group. Nestle later held meetings with Greenpeace and won its approval by changing purchasing policies.
This case “was the trigger for us to say to our clients we have to do it much quieter and more smoothly,” said Van Asbroeck, whose law firm does some work for Nestle, according to its website.
“Social media is a really important tool for us to communicate with consumers and with stakeholders” such as non-governmental organizations, said Chris Hogg, a spokesman for the Vevey, Switzerland-based maker of Nespresso coffee and Lean Cuisine meals. He declined to comment on whether Nestle requested the video be taken down.
One of the biggest-name examples of companies avoiding such a legal battle involves Coke in 2008, when the world’s largest beverage company saw the potential of working with two creators of a Facebook page about the soft drink that had reached millions of “likes” or fans. Coca-Cola contacted Dusty Sorg and Michael Jedrzejewski, offering to make theirs the official company fan page and giving them resources to build it further.
The Atlanta-based company’s Facebook page went from almost 2 million “likes” or fans, when Coca-Cola first partnered with Dusty and Michael more than five years ago, to more than 80 million fans today, said Wendy Clark, Coca-Cola’s senior vice-president Global Sparkling Brand Center.
“In a socially networked world where everyone has 24/7 access to media to express a point of view - good or bad - it is crucial that we embrace our fans and followers,” Clark said in an e-mailed statement.
Facebook’s rules state that users can make fan pages about brands as long as they don’t claim to speak for the company and violate intellectual property rights. Official brand pages must be administered by the company. Facebook, based in Menlo Park, California, declined to comment on the dispute.
Ferrari took a strong-arm approach in the dispute with the Wasems. The car company began with a March 2009 e-mail to Sammy and Olivier Wasem that congratulated them for their work after gaining more than 500,000 fans within a year of creating their Ferrari fan page. The company then said “unfortunately legal issues force us in taking over the formal administration of the fan page.”
Nobody has the right to take over such a site “just like that,” according to Joris van Manen, a lawyer at Hoyng Monegier LLP in Amsterdam who specializes in intellectual property and the Internet. Creators of fan pages can rightfully claim copyright on their contributions and their work, he said. Van Manen isn’t involved in the Ferrari case.
While the Wasems agreed to make their site the official fan page for Ferrari, they say the carmaker named managers for the site without communicating with them. Ferrari offered the Wasems lifetime membership to its Scuderia club and sent them logos the company said they could use.
They began to work on the page for the car company without getting the terms they wanted in writing -- financial compensation that could help fund Wasem’s car-racing. They continued for four years before losing their administration rights. They filed a civil lawsuit in February 2013, saying they’re owed compensation for more than 5,500 hours of work.
The Wasems’ mistake may have been agreeing to become Ferrari’s official page before signing a written contract.
“If you hand over an account, you have to negotiate possible financial compensation before doing so,” van Manen said.
The Geneva prosecutor is analyzing the Wasems’ criminal complaint against Ferrari and will determine what action to take, Henri Della Casa, a spokesman for the prosecutor, said by telephone. The Wasems have demanded compensation of at least 10 million Swiss francs ($11 million) in their lawsuit, and they’re asking the prosecutor to investigate Facebook’s role. The prosecutor has agreed to meet with them in April, according to Gerald Page, the lawyer at Page & Partners representing the Wasems.
The issue of how to react in such cases will become more common as social media expands.
“Now each time it’s a balancing act: will we go after that or just leave it like that because the risk for negative publicity is too big,” said Stijn Debaene, a lawyer specialized in intellectual property law at the Brussels office of Field Fisher Waterhouse LLP.