Your brand is intimately associated with your company’s good will. Like it or not, companies are part of the new media. On any given day, a customer or critic can set off a firestorm with a comment or critique. If properly targeted, venomous falsehoods could take a decade to counteract.
Social media provides novel opportunities to express the benefits of the brand, but it could just as easily be used against the brand. This article explores some of the concepts, particularly in franchising, which can be used to limit exposure to threats in the new media.
The new media includes social networking sites such as LinkedIn, Facebook, MySpace, Second Life and listservs. Your brand consists of intellectual property like patents (for inventions), trade secrets (for confidential information), copyrights (for artistic works), and trade and service marks (to signify products and services). Legal protections for intellectual property are helpful in reducing threats to your brand generally, and in social media in particular. These legal protections, which have been around for a century, do not always lend themselves perfectly to the new media. Let’s review the advantages of the protections and how they lend themselves to the new media.
Trademarks are any word, symbol, phrase, design, image, sound, shape, smell, color, group of letters or numbers or combination of these items used to identify a source of goods. Trademarks are used to identify a company’s products and distinguish them from the products of another company. A service mark is similar in that it identifies and distinguishes the source of a company’s services instead of a product.
A trademark registrant at the U.S. Patent and Trademark Office has certain legal advantages, (a) use of the ® symbol instead of the ™ symbol, (b) evidentiary advantages in federal court, (c) registration opportunities internationally, (d) a prevention mechanism for improper import of goods and (e) notice to the public. Valuable proprietary marks need to be protected and policed.
A copyright is a set of exclusive rights granted to the author or creator of an original work, including the right to copy, distribute and adapt the work. On the Internet, examples of potentially copyrighted works include Flash programs, artwork, music or jingles, texts in advertisements, and the like. Many of the same legal, business and practical benefits associated with the registration of trademarks also apply to the registration of copyrights.
Registration of proprietary marks and copyrights will give the registrants tools to use against infringers who misappropriate the brand, but offer little protection for direct attacks on the brand through gripe and satire sites.
Gripe and satire sites are Internet locations that complain or use satire to criticize or tarnish a brand. They are typically operated by disgruntled former employees, dissatisfied consumers or activists claiming fair use of the brand name to express their outrage. Courts will balance freedom of speech against the right to protect brand and freedom of speech will generally prevail. The typical gripe site will have a domain name similar to “McBurgersSucks.com,” so that one searching for the McBurger website might come across the gripe or satire site. Complaining about or satirizing a brand is typically protected speech.
Companies should work proactively to avoid the establishment of a gripe site, because once a gripe or satire site is established, it may be too late do anything without causing additional problems. Your cease and desist letter sent by counsel is likely to be posted on the site, showing the oppression of the brand’s critics. The better course is to register the domain names of likely Internet addresses of these sites, such as “McBurgersSuck.net” and other likely variants. The Internet should be closely monitored with Google Alerts to determine when a criticism occurs on the Internet.
You should have competent counsel review the offensive site to determine whether some crime or actionable conduct occurred. The threat of a crime, disparagement or defamatory content, disclosure of trade secrets, unfair competition, and actionable infringement may warrant meritorious legal action. But for most sites, responding on the site or some other Internet site with a good sense of humor or good news is probably the best antidote in most cases.
Federal law provides private remedies for unfair competition and false advertising. Cybersquatting occurs when an individual or entity registers an Internet domain name in bad faith in order to sell the name to the owner of a related, legitimate mark for profit or to potentially harm the mark owner by using the related name. “Typosquatting” is a special kind of cybersquatting that registers domain names that are intentionally similar to or contain intentional misspellings of brand names. Web extension cybersquatting occurs when an individual or entity registers a brand name with an extension that the brand/mark owner has not registered (e.g., whitehouse.org). “Political cybersquatting” consists of registering domain names with some change in a well-known brand or trademarked name to propound some political viewpoint, (e.g. murderking.com, mccruelty.com and kentuckyfriedcruelty.com).
The Anti-cybersquatting Consumer Protection Act provides a cause of action by an owner of a distinctive or famous mark against the registration, trafficking or use of a domain name that is identical or confusingly similar to that mark. If the mark is famous, the use need only be likely to dilute the mark; otherwise, you need to prove the registrant has bad faith intent to profit from the mark. The Anti-cybersquatting Consumer Protection Act contains nine factors to determine whether the mark is registered in bad faith.
Actionable activity typically consists of registering domain names of other trademark owners, making false statements when registering the domain name and attempting to have the trademark owner pay for the domain name, registration of a domain name from a former employee or franchisee, or typosquatting with linkage to a competitive website. Available remedies for violations include transfer of domain name to trademark owner, cancellation of domain name registration, an injunction against registering a trademark owner’s domain name, recovery of actual damages, recovery of statutory damages of not less than $1,000 and not more than $100,000 per domain name, with counsel fees in extraordinary circumstances.
The Internet Corporation for Assigned Names and Numbers (ICANN) is a nonprofit partnership to coordinate the Internet naming system and provides an administrative method of resolving disputes through its uniform policy, the Uniform Domain-Name Dispute-Resolution Policy (UDRP). Under the UDRP, a trademark owner can typically resolve a domain name dispute in approximately two months without extensive discovery. The dispute is commenced by filing a proceeding with an approved dispute resolution service provider, typically the World Intellectual Property Organization (WIPO), to acquire or cancel a domain name, regardless of where the targeted name is used. The decisions are made by a single panelist unless a three-person panel is selected. Fees are paid by the complainant.
In order to prevail, the complainant must prove the domain name at issue is identical or confusingly similar to a trademark owned by the complainant, the domain name registrant has not legitimate rights or interest in the domain name, and the domain name was registered or used in bad faith. WIPO quickly resolves issues with reduced counsel fees but a complainant may not collect damages.
Careful drafting of franchise agreements, employment agreements, confidentiality agreements, for employees, strategic partners, vendors and others that may use or link to the website can reduce or eliminate many of the problems in the new media. Most of the actionable cases result from people who have contracted with the brand, such as former employees, franchisees and vendors. Post-termination provisions preventing Internet linking and trade secret retention and prohibitions on establishing websites using the brand have been shown to limit actionable conduct.
New media is a new area of law, and courts are attempting to grasp how to apply established concepts to new challenges. Careful drafting and intellectual property protection are the only prevention of threats to the brand. •
Craig R. Tractenberg is a partner in the New York and Philadelphia offices of Nixon Peabody. He is a former editor of the ABA Franchise Law Journal. Tractenberg can be reached by e-mail at email@example.com .