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Twitter Blue Checks Raise Trademark Risk After Fake Lilly Fiasco

Nov. 22, 2022, 5:45 PM

Eli Lilly & Co. and other companies that have been the subject of tweets sent by imposters under Twitter’s new pay-for-verification “Blue” service could turn to trademark law to hold those users—and even Twitter itself—accountable, attorneys say, but will likely find it a difficult case to make.

Following owner Elon Musk’s introduction of the $8-per-month blue checkmark service, the platform saw an influx of “verified” parody accounts impersonating companies and individuals. Most notably, pharmaceutical company Eli Lilly’s stock fell more than 4% after a Blue-subscribing spoof account calling itself “Eli Lilly and Company” tweeted, “We are excited to announce insulin is free now.”

Another verified user posing as PepsiCo Inc. tweeted, “Coke is better,” while other accounts impersonated individuals including President Joe Biden and former President George W. Bush.

Twitter has since paused its Blue service, with Musk tweeting on Monday that the company is “Holding off relaunch of Blue Verified until there is high confidence of stopping impersonation.”

Though many of these companies and individuals have brand protection through trademarks, attorneys say fair use protections and the law’s focus on commercial confusion make bringing an infringement case against the users behind the parody accounts or against Twitter difficult.

Suing Blue Checkmarks

Succeeding in trademark suits against the individuals behind the spoof accounts is “not out of the question,” said Alexandra Roberts, an intellectual property law professor at Northeastern University.

“These tweets got so much attention, and it seems very possible for some of them that some people were deceived—that some people thought that some of these verified tweets were coming from the actual account owners,” she said.

Any such lawsuits would have to overcome hurdles, including protections for fair use, which generally allow noncommercial use of intellectual property to parody or critique the owners or the IP itself.

“In the US the law will generally only give you a remedy when there’s a commercial element,” said Harvard Law professor Rebecca Tushnet. There was no commercial element with most of the impersonations by paid-verified accounts, she said, making it very difficult for potential plaintiff companies to make a strong infringement case, even if they can prove consumer confusion.

Roberts agreed, saying the false Eli Lilly account could be considered fair use because they were not offering any kind of product, but rather offering commentary.

“No matter how blatant a parody is, somebody is not going to understand it,” said Tushnet. “We live in a very confusing age, and so courts have very understandably said, ‘Look, when a reasonable person can figure out from context that this is a joke, then we don’t consider the fact that some people didn’t get the joke to matter.’”

Twitter Halts Paid Verification

Twitter, which opened the door to the fake-verified accounts in a shift under Musk, is another possible target of trademark suits for viral parody tweets, said trademark attorney Josh Gerben of Gerben Perrott PLLC.

“Obviously, the entity you kind of want to go after is Twitter,” he said. “You’re trying to prove that the parody defense doesn’t apply, and you’re trying to prove that Twitter is contributing to the infringement but not necessarily doing anything about it.”

Even proving contributory liability against Twitter, though, would be an “uphill battle” given the uncertainty in determining what qualifies as a parody.

Shortly after Twitter launched paid verification in early November, Musk announced that parody accounts under the program had to label themselves as such in their account description, or face suspension. He added on Nov. 10 that they should also add the word “parody” to their usernames. Users reported that the service was no longer accessible just a few days after its launch.

Even so, Cole Schotz P.C. attorney William Stroever said, Twitter should be “very, very careful” as users devise new, potentially more pernicious approaches to using paid verification.

Stroever said that while parodies may be considered above board, more “sneaky” uses such as creating a verified account that is similar to a competitor’s to steal traffic away may be subject to infringement claims, that might scoop up Twitter.

Twitter couldn’t be reached for comment.

Coming Down the Pike

Some new methods of using paid verification that go beyond parody and commentary are already cropping up, including apparent phishing scams.

On Friday, a verified account that mimicked FTX founder Sam Bankman-Fried posted an edited video of him in which he appeared to offer to double users’ cryptocurrency through a giveaway on a website. Its URL was provided in the video.

The account, which has since been suspended, had a verified blue checkmark, “SBF” in its handle and the founder’s Twitter avatar.

Scams that can be shown to cause commercial damage have stronger grounds on which to build an infringement case, attorneys say.

Eli Lilly didn’t provide comment for this article. FTX didn’t respond to requests for comment.

“Where you can show real, measurable harm, I think that increases the likelihood of a lawsuit,” said Roberts, who said that while fair use defenses are meant to be broad and robust, there will always be tweets that aren’t encompassed in the defense.

Attorneys said they expect Twitter to see fallout from the confusion caused by Musk’s new verification model, even aside from trademark litigation.

“It’s clearly become a place that seems dangerous to advertisers,” said Roberts. “And they don’t feel like they’re going to be safe or that they’re going to get value.”

Stroever said that this experience demonstrates that advertising on the platform is different than traditional advertising, with much less company control. Eli Lilly announced last week it had pulled its advertising from the platform after the insulin tweet and stock decline.

“It’s much different than buying a billboard on the street,” Stroever said, adding that he wouldn’t be surprised if companies take a step back and shift to nondigital ads.

Gerben and Roberts said users may be less likely to rely on Twitter as their trust in the platform wanes in the face of “verified” fake accounts.

“I think if you want to recapture and relegitimize the meaning of the blue check, it’s got to happen pretty much immediately,” said Roberts. “Because every day that passes, we lose trust in it.”

To contact the reporter on this story: Riddhi Setty in Washington at rsetty@bloombergindustry.com

To contact the editors responsible for this story: Adam M. Taylor at ataylor@bloombergindustry.com; Jay-Anne B. Casuga at jcasuga@bloomberglaw.com