Legal Consequences of Co-Blogging, Part 2

Date: Feb 22, 2008

In part 1 of this series, Eric Goldman pointed out some of the possible legal implications of blogging collaboratively. In this article, he concludes this series with solutions and recommendations for mitigating unwanted consequences.

Part 1 of this series discusses the law applicable to co-blogging and identifies a number of areas where default rules are unclear or may lead to unexpected results. This article discusses some possible ways to avoid those situations.

Private Arrangements

Co-bloggers may be able to avoid the undesirable or unclear legal consequences discussed in part 1 of this series by structuring a private arrangement. Co-bloggers have two principal choices for their private arrangements: form a limited liability entity, or enter into a co-blogger agreement.

Co-Blogging as a Limited Liability Entity

Co-bloggers can operate the blog via a limited liability entity, such as a corporation, limited liability company, or limited partnership. [1] In this case, the entity would own all of the blog's copyrights and trademarks, unless the parties agreed otherwise. [2] Also, the limited liability provided by the entity may protect the bloggers from personal liability for co-bloggers' blog-related activities. [3]

However, these benefits come at some cost, including upfront costs to form the entity and ongoing costs to comply with tax and reporting obligations. The entity also must comply with certain types of formalities to maintain its limited liability status, and these formalities can be a hassle and potentially costly as well. It may be difficult to justify these costs when they exceed the revenue generated by the blog.

Also, to the extent that the entity's equity is tied to blog participation, additional complications can arise with the addition of new bloggers or the departure of existing bloggers. These situations may trigger a reallocation of equity, which may lead to thorny emotional discussions about the fairness of existing equity or governance allocations, and there may also be out-of-pocket costs to document any ownership changes. These transactions may even require real cash to move between the bloggers (payments from incoming bloggers to buy equity, or payments to departing bloggers to buy their equity), even though there may not be any clear exit strategy or other way to recoup these cash payments.

Co-Blogging with a Co-Blogger Agreement

Instead of forming a limited liability entity, bloggers can enter into a co-blogger agreement. From a legal standpoint, this agreement will act as a partnership agreement if the bloggers intend (or are deemed) to be in a partnership. Otherwise, the agreement governs the rights and responsibilities of independent contractors.

A co-blogger agreement offers some benefits over the formation of a limited liability entity:

The agreement easily can be customized, within broad public policy limits, to fit the blogger's particular situation and preferences.
A private agreement has low transaction costs. The parties will incur few, if any, upfront out-of-pocket costs to create the agreement; the agreement may not require the parties to maintain any formalities; and the parties can easily and cheaply modify the agreement to reflect changed circumstances.

However, private agreements may not completely address bloggers' needs. Most obviously, the agreement can allocate or eliminate liability among its signatories, but it cannot limit the signatories' liability to third-party non-signatories. Also, although the agreement may expressly disclaim a partnership or employment arrangement, such contractual disclaimers don't necessarily have a relationship to the actual disposition; the arrangement could be characterized as a partnership or employment arrangement despite the parties' preferences.

Conclusion About Private Arrangements

Whether a limited liability entity or a private agreement is the better choice depends on the bloggers' specific circumstances and goals. [4] However, either choice is preferable to co-bloggers doing nothing proactive to override the default rules. With a non-choice, bloggers potentially bet their houses with every blog post they and their co-bloggers make, and remain at risk of being blindsided by unexpected legal rules.

Education About Blogging

Education about the legal consequences of co-blogging can help bloggers make smarter decisions about whether and how to co-blog. Education may also establish some new blogging norms, such as entering into co-blogger agreements when appropriate. Bloggers are also a uniquely educable group; blogger word-of-mouth is very strong and disseminates key messages quickly. Therefore, blogger education offers some promise as a way to ameliorate blogger blindsiding.

Unfortunately, education isn’t a complete solution. Co-blogging law is complex and nuanced, and many bloggers will fail to grasp it. Worse, many bloggers will naïvely assume that they can always work out any difficulties with their co-blogger friends—failing to consider that friendships change, friends die, and third parties may seek to impose an unwanted characterization on all co-bloggers.

Among other topics, any blogger education effort should address the following specific points:

Bloggers should consider registering their blogs with the Copyright Office under Section 512, which may give bloggers some protection from copyright liability for the content of co-bloggers and readers who post comments.
Bloggers should think carefully before generating revenues from the blog. The decision to make money from blogging has some significant consequences. On the plus side, it will generate cash and may help the blog engage in a "use in commerce" sufficient to commence protectable trademark rights. On the minus side, it may lead to the formation of an implied general partnership—with numerous unexpected consequences—and may negate any coverage from the blogger’s homeowner’s insurance policy. [5]
Bloggers must trust their co-bloggers. No amount of legal prophylactics will cure an affiliation with an untrustworthy co-blogger.

Judicial Restraint

Blogging is not so new or radical that it requires new laws or a distortion of existing laws. For example, the laws of partnerships or employment don’t need revision solely due to blogging. Further, it should be generally unnecessary for legislatures to provide blog-specific rules or safe harbors; it’s too difficult to define "blogs" or "blogging" with sufficient precision, and legislation is too static to cope with the rapid evolution of blogging technology and practices.

Instead, the common law typically can handle the idiosyncrasies of blogging in a sensible and contextually sensitive manner. In that respect, judges evaluating blogs should recognize that unexpected or counterintuitive rulings could significantly destabilize the blogging community. Fortunately, many of the legal doctrines discussed in this series, including partnership and employment law, are naturally flexible. Judges should use that flexibility to balance the many considerations surrounding blogging. [6]

Conclusion

The emergence of blogging has sparked an exciting new era of Internet communications. Bloggers contribute to important First Amendment ideals by expanding the marketplace of ideas and performing the watchdog function normally associated with the Fourth Estate. A lot of good activity is taking place in the blogosphere.

However, the news isn’t all good. Existing legal doctrines don’t apply cleanly to blogging, raising the specter that socially beneficial and well-intentioned decisions by bloggers will produce unexpected and adverse legal consequences. Bloggers need to get smarter about these possible consequences, but judges can mitigate the harshest consequences by using their discretion to produce sensible and nonpunitive results.

References

[1] See Larry E. Ribstein, "From Bricks to Pajamas: The Law and Economics of Amateur Journalism," 48 Wm. & Mary L. Rev. 185 (2006), at 53.

[2] Note that if a co-blogger is deemed an independent contractor to the entity, then the co-blogger will retain ownership of his or her copyrights. See the section "The Law of Co-Blogging" in part 1 of this series.

[3] The "corporate veil" will protect bloggers as investors, but will not provide protection for bloggers’ actions as the principal tortfeasor or as employees, directors, or officers of the corporation.

[4] See posting of Bill Sjostrom to Truth on the Market, "Legal Structure for Co-Blogging," (April 23, 2006, 10:50 a.m. EST), discussing the choices based on circumstances and goals.

[5] See posting of Eugene Volokh to the Volokh Conspiracy, "Bloggers—You May Already Have Blogging Libel Insurance," (February 8, 2005, 2:53 p.m. EST).

[6] See Ribstein, supra note 1, advocating that judges consider the law and economics of blogging as part of the adjudication process.