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Clubhouse App Is Popular, But Look Out for Legal Issues

March 17, 2021, 8:01 AM

By now, you’ve probably heard of Clubhouse—an invitation-only, audio-chat social networking app that has caught the world by storm and created a buzz among tech titans. With this platform fast becoming a popular social networking service, companies need to review their internal polices and measures to minimize potential legal and litigation risks.

The first issue is whether to allow employees to use the platform, and if so, how to ensure employees use it in a responsible manner.

The second is whether a company wishes to be engaged in the platform itself, and if so, how to minimize any potential legal risks. A number of factors should be taken into account.

Like other social media, the potential issues that could arise for a company from the use of Clubhouse could vary from disputes with users to audits from regulators. It is important that a company demonstrates that it has considered the various problems that could arise, and put in place systems and policies to minimize the potential risks.

If a dispute does arise due to comments made in a room, then written notes of the discussion should be taken as soon as practicable in case of a legal dispute.

Review of Social Media Policies

On managing employees, most companies should already have a social media policy outlining the do’s and don’ts for their employees. Where use of social media is permitted, there should be some form of requirement for employees to make clear that any comments they make do not reflect the views of the company.

With deeper pockets, potential litigants are more likely to go after the company than employees, so the idea is to distance the company should the employees make inappropriate statements. A potential challenge with Clubhouse is the fact that its medium is primarily audio.

Participants in a room will unlikely have the opportunity to give a disclaimer each time before they speak. Although not perfect, one possible way to minimize the risk would be by asking employees to add some disclaimer language to their Clubhouse profiles.

Privacy

The other issue that companies should take into consideration when reviewing their policies relates to privacy. Privacy laws differ from jurisdiction to jurisdiction and concerns have been raised about the app’s to prompt access a user’s contacts list before the user can invite others to join.

The concern is that a person on a user’s contacts list is unlikely to have consented to their contact details being provided to Clubhouse. For some companies, this feature of the app may also cause security issues if a user is using Clubhouse on a company device which may contain commercially sensitive contacts. A company’s legal and IT security teams should examine these aspects from a legal and technological perspective.

Influencers and Company Reputation

There are many interesting conversations happening on the platform and some companies may see this as a good opportunity to show their support for good causes ranging from diversity and inclusion to sustainability and the environment.

It will no doubt be tempting for companies to want to associate with influencers who are speaking in these spaces. If the influencers are being paid to promote a particular company, its products, or services, there should be transparency to other users. Again, there are jurisdictions where this is required by law. With listeners from around the world who may participate, it would be prudent to set the transparency levels high.

Clubhouse offers a wide range of rooms. While the media headlines focus on the big-ticket speakers, the reality is that ordinary individuals are running the majority of rooms. The platform appears to have so far attracted many self-proclaimed “gurus” sharing various pieces of advice ranging from how to get rich to beauty tips.

Companies should ensure that proper due diligence is conducted before engaging in rooms where the speaking slots are being shared with others. A company’s reputation could be tarnished due to association with someone with a less than desirable track record.

Terms of Service

Companies should also monitor and familiarize themselves with the most recent versions of Clubhouse’s terms of service, and ensure that they and their employees abide by these terms should they engage in Clubhouse. For example, there are various restrictions, including prohibitions on advertising or offering to sell or buy goods or services for any business purposes, and prohibitions on conducting contests.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Kensaku Takase is a partner in Baker McKenzie’s Tokyo office and the group leader of its IP & Technology Practice Group.

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