Recent lawsuit sheds light on agency liability

PR firms need to be aware of their legal liability in claims they put forth on behalf of clients, as underscored when PR firm TransMedia Group revealed it had received cease and desist letters in its promotion of client, medical device company RyMed Technologies.

PR firms need to be aware of their legal liability in claims they put forth on behalf of clients, as underscored when PR firm TransMedia Group revealed it had received cease and desist letters in its promotion of client, medical device company RyMed Technologies.

Rival company ICU Medical claimed that in representing RyMed the PR firm was infringing on some of its patents.

“If one PR firm can be silenced, it sets a very dangerous precedent for the entire profession,” Thomas Madden, CEO of TransMedia Group, told PRWeek.

Michael Lasky, partner and head of the PR law practice for Davis & Gilbert and co-chair of its litigations department, says he has seen a sharp uptick in the number of patent claims involving PR firms. He says that's because there's been a growth both in “business method patents” and the amount of digital-based work PR agencies are doing for clients.

Unlike traditional patents which protect, for example, a product formula, business method and software patents protect a method of doing business or basic software processes. In many cases, PR firms have been targeted because their communications work for clients today includes building digital channels, such as websites and social media platforms, which can infringe on systems and methodologies that could give rise to patent infringement.

“Those two things have come together to create what I call a perfect storm in the patent arena,” says Lasky. “But I don't think PR firms should feel or worry that they will be silenced. They just have to be more proactive in terms of how they protect from it in their contracts.”

He says every client-agency agreement should have an indemnification provision, which allocates responsibility for any potential legal claim made by a third party.

Typically, the provision stipulates that clients are legally responsible for any information about its products and services that may be disseminated by the PR firm. Conversely, clients are protected in terms of the creative produced and/or secured on its behalf by the PR firm—creative such as taglines, photography, music, or other collateral. 

"With that said, unlike taglines, photography, and music, patents are not usually within an agency's ‘sphere of expertise' and there has been a recent shift towards resisting such obligations within the patent arena," adds Lasky.

Gene Grabowski, SVP of Levick Strategic Communications and chair of its crisis and litigation practice, agrees it is important for PR firms to use non-disclosure agreements (NDA) to help protect from unknowingly communicating information on behalf of a client that is libellous or defamatory. “We almost always insist on a clause in the NDA that indemnifies us against such occurrences, just as a protective measure,” he says.

However, while a PR agency may not be able to vet every piece of client info, he says it is the job of a communications pro to challenge a client if there is the suspicion information could have legal ramifications.  

"We can serve as a check for the client,” says Grabowski. “And we consider that part of our job, because as a communicator you can easily get into competitive entanglements or litigious issues."  

In fact, under the FTC, PR agencies can be held liable for disseminating client messages if there is justifiable reason for them to suspect the client may be misleading stakeholders, either through distortion or by leaving out important information. Lasky calls this “messenger liability.”

If a PR firm, for example, is making scientific claims on behalf of a client, “they do not need to be the research analyst verifying that it was a double-blinded study,” says Lasky. “But they need to at least have something that appears to be statistical evidence to support that scientific claim.”

Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Register
Already registered?
Sign in

Would you like to post a comment?

Please Sign in or register.