Intellectual property rights in trademarks, copyrights, domain names and website content are among a company’s most significant assets and account for key elements of a business’ core operations and consumer brand recognition. Twenty-first century businesses must protect these critical assets by developing comprehensive IP watch and enforcement strategies—and by recognizing the legal risks and financial costs of failing to do so. This article will help businesses take practical, appropriate, and timely steps to protect their legal rights and interests, and avoid common—yet costly—brand and other IP asset protection mistakes.
Challenges to Brand Assets in the Digital Age
With its ease of access, ubiquitous presence and ability to reach wide audiences, the internet presents companies with tremendous opportunities to market their brands and expand their consumer base. Yet those very same characteristics also pose unique challenges related to brand protection. Because of the sheer volume and constantly evolving nature of online marketplaces and content, brand owners now face an expansive landscape of risks to brand assets including loss or weakening of rights due to third party abuse or infringement of a company’s trademarks on social media or other online sources, online piracy of a company’s copyrighted content, and cybersquatting.
While companies invest significant assets in online marketing, they must devote equal effort to protecting their brands. Failure to adequately police a trademark or other brand asset endangers brand value and can lead to diluted or even lost rights. In today’s marketplace, where threats of infringement or misuse are many and varied, proper brand enforcement necessarily requires a comprehensive, multi-faceted approach. Here are some best practices for developing an effective policing and enforcement strategy.
Monitoring the Marketplace
It is critical that companies establish appropriate monitoring procedures whereby third-party infringement or misuse can be quickly identified and acted upon. Early detection is important because the longer a brand violation is allowed to continue, the more difficult and costly it will be to reverse the damage.
Given the wide range of content to watch out for, brand holders and practitioners should consider a combination of commercial and in-house watching options. Most commercial vendors today offer two main forms of monitoring. Trademark application watch services identify newly published trademark applications for marks that could cause confusion or dilute the mark being protected. These services are important because they enable a brand owner to act quickly before the third-party invests significant resources in its mark, thus increasing the chance of a settlement or other cost-effective resolution. Another useful option is to subscribe to internet watch services, which scour the internet, including ad-words, meta-tags, social media and domain names, to identify potential infringements and other threats to a brand owner’s mark or reputation. These services are effective tools to monitor online channels, which are often difficult to track, and to preserve evidence of misuse to be used in enforcement actions.
Fees for commercial watch services can add up, and it may not be cost-effective for a company to put all of its trademarks on a watch service. Costs can be reduced by prioritizing between core marks and non-core marks. Also, certain monitoring can be done in-house, free of charge. Marketing and sales personnel are often most familiar with the relevant market and thus best suited to spot infringing or harmful activity.
Taking Appropriate Action
It is impracticable, and fortunately not required by trademark law, to police every identified infringement or abuse of a trademark. Enforcement efforts can be costly and time-consuming. Further, companies must increasingly be wary of the possibility of negative publicity arising from enforcement activity. Examples abound of companies being vilified as “trademark bullies” for perceived overaggressive policing efforts. Regardless of the merits of such characterizations, the resulting blow-back can result in the enforcement action doing more harm than good.
Companies must, therefore, adopt a flexible approach to enforcement—adequately protecting key brand assets while minimizing costs and public-relations risks. Enforcement activity should be prioritized by considering factors such as the nature and scope of the detected third-party activity, the importance of the impacted mark to the company, and the strength of the mark compared to the possible defenses and counter-claims of the third-party. In addition, caution is advised when researching an unauthorized third party trademark infringer—always make sure that you are the senior user before acting. There are few worse situations than challenging a third party only to later discover that they actually have prior rights.
For situations in which action is deemed appropriate, companies should generally employ a tiered approach to enforcement for all but the most high priority risks (e.g., clearly willful infringements of core company brands), starting with a softer, informal overture to the suspected infringer, followed by a formal cease-and-desist letter, and then formal legal proceedings as necessary.
Specific to brand abuse found online, many digital media platforms expressly provide enforcement procedures for reporting and taking down copyright or trademark infringements. These procedures are often posted on the platform’s website. Companies should always look to use platform takedown mechanisms when available as they can be a quick, cost-effective means to remove infringing content.
Even when a company has taken steps to secure and safeguard its trademark, it may be surprised to discover that a third party has registered a domain name that is identical to or is a confusingly similar variation of the company’s name or trademark. These similar domains pose potential harm to the company’s brand: some may divert the company’s sales and improperly suggest an affiliation between the company and those websites; others may be held by domain squatters demanding significant sums to transfer the domains; still others may offer a place to comment on the company’s goods and services. Whatever the level of harm, the company should takes steps to address the issues.
Identifying the domain holder or registrant on the WHOIS directory is the logical first step. One can contact the registrant to assess their intent, and either negotiate the acquisition of the domain for a reasonable price or demand that they cease and desist.
In some cases the registrant will have used a domain privacy service to mask their information. While it is possible to contact the registrant through the privacy service, there is no other method of identifying the registrant other than an adverse proceeding, such as one under the uniform domain name dispute resolution policy (UDRP).
All domain name registrars must comply with the UDRP. The policy requires that all trademark disputes involving a domain name be resolved by agreement, arbitration, or court action before a registrar will cancel, suspend, or transfer a domain name. Domain name registrants of most top level domains may initiate an administrative procedure by filing a complaint with an ICANN-approved dispute resolution service provider to contest the registration of an infringing domain name. An administrative proceeding has a relatively low cost and can often be resolved quickly compared to a civil action.
To prevail, the trademark owner of either a registered or unregistered trademark must prove that the domain name is identical or confusingly similar to a trademark in which the trademark holder has rights; that the registrant of the domain name has no rights or legitimate interests in it; and that the domain name was registered and is being used in bad faith. The prevailing trademark owner may request to have the domain name transferred to itself or be cancelled.
If transferring or cancelling the domain name registration is an inadequate remedy and/or significant damages have been incurred, a trademark owner may elect to pursue civil action under the Lanham Act on a theory of trademark infringement or cybersquatting under the Anticybersquatting Consumer Protection Act. The ACPA allows the court to award actual damages or statutory damages and to order the forfeiture or transfer of the domain name to the trademark owner. The touchstone is to demonstrate a confusingly similar domain and defendant’s bad faith intent to profit. Where the court finds that the domain registrant cannot be identified or that the trademark owner could not obtain personal jurisdiction over the defendant, the statute allows the trademark owner to bring an action in rem against the domain name in the district where the domain name registrar is located. However, no monetary damages are available in in rem cases.
Using DMCA Takedown Procedures
With the rise of online content sharing platforms, which allow users to illegally share copyrighted articles, books, photos, music, movies and other materials, copyright owners do not have complete control of how and when their materials may be posted on the internet by users. To combat these practices, copyright owners may take steps to protect their copyrights using a takedown notice under the Digital Millennium Copyright Act (DMCA).
The DMCA establishes a straightforward takedown process by which copyright owners can complain and request that a website’s host remove or block access to infringing materials. Upon receipt of such a complaint, the website’s host must take down the content or else it will be considered a co-infringer.
To be effective, a takedown notice must include the following: a description of the copyrighted work that is claimed to be infringed; the location of the allegedly infringing material—a hyperlink, URL or screen shot will typically suffice; a good-faith statement that the disputed use is not authorized by the copyright owner, its agent, or the law; and the required contact information, sworn statement of accuracy, and signature of the complaining party.
It is important to note that before sending a takedown notice, a business should confirm any doubts about the existence, validity, or ownership of copyrights in the posted content because it may be liable for knowingly materially misrepresenting that the material or activity is infringing.
While copyright registration is not required to obtain protection under the DMCA, copyright owners should still seek copyright registration prior to publishing any material. If the copyright owner needs to bring an action in federal court for copyright infringement, copyright registration is a statutory prerequisite. Copyright registration enables the owner to seek potential damages including, but not limited to, attorney fees, statutory damages, and an injunction.
Drew Kastner, a partner at Schnader Harrison Segal & Lewis is co-chair of the firm’s intellectual property practice group. He is an experienced intellectual property attorney whose practice includes handling trademark and copyright licensing and general intellectual property matters.
Stephenie Wingyuen Yeung, a partner with the firm is the co-chair of the privacy and data security practice group, with a practice including protecting clients’ intellectual property through securing patent and trademark rights.
Andrew Chou, an associate with the firm, is a registered patent attorney whose practice focuses on intellectual property matters including searching, monitoring, and clearing trademarks and the preparation and prosecution of patent applications, both foreign and domestic.
Sekou Lewis, an associate with the firm, is a corporate attorney who represents private and public companies in corporate and business matters, including IP issues in corporate transactions.