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Blogworld Report: The New Paradigm Gains Momentum

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Legally Social spent this past weekend at Blogworld New Media Expoin Las Vegas, and can safely report (a) that the world of social media remains dynamic, forward thinking and intense; (b) that people in social media still don’t think about the legal ramifications of what they’re doing as much as they ought to, and (c) Las Vegas is profoundly amusing.

I live-tweeted a several panels (you can follow me @legallysocial) but for me the most important aspect of the conference was seeing the interaction between the old social media format (which was highly informal and largely consisted of bloggers talking amongst themselves) and the new paradigm (which is far more focused on commerce, marketing and co-branding).  Once upon a time, bloggers could joke about “taking the Boeing” as shorthand for selling out.  Now, the idea of “selling out” is preposterous, with the word “monetize” thrown around more often than any other word including “and” “the” or “a”.  Social media interaction is no longer thought of as a hobby for pajama-clad folks blogging from their basement; instead it is a sophisticated marketing tool used by the largest companies in the world (and the smallest) to develop dialogue with their customers. To be sure, the number of social media devotees focused on their hobbies and their lives remains large, but what is interesting is that this more informal world is now almost indistinguishable from the land of professional marketers.

This will lead, of course, to all sorts of interesting issues over the next few years, ranging from brand control and privacy to employment law and innovation.  But right now, we should all be pleased to witness the early stages of a new communications paradigm.  Web 2.0 is still less than a decade old (at most).  We have many years (and many more versions) yet to come.  It is an exciting time, indeed, and next year should be even better.


Master of My Domain…And Your Domain Too!

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Clients frequently ask me to explain the difference between domain names and trademarks.  They don’t understand whether registering a domain name has any impact on trademark rights, or whether using (or registering) a trademark has any impact on domain names.  Thankfully, this is one circumstance where the answer is actually fairly easy to understand — even without a love of circuitous complexity

Let’s take trademarks first.  Trademarks are designations of source or origin.  They tell consumers where a product or service originated, and act as a form of consumer protection.  Depending on who you believe, trademarks were either first developed by Roman blacksmiths or medieval guilds, but in either case they were intended as a way to “brand” a product as originating from a single, specific source.   Unlike patent rights (which must be the subject of a registration to have any validity) trademark rights (in the United States) are derived from use.  Trademark registrations provide certain procedural advantages (and there are some circumstances where registrations are not only useful but necessary); however, it is only use of the mark that develops any rights to the mark.

Domain names are nothing more than addresses.  To quote that ever-popular information source, Wikipedia, “A domain name is an identification label that defines a realm of administrative autonomy, authority, or control on the Internet, based on the Domain Name System (DNS).”  As far as trademark law is concerned, a domain name is no different than a street address, and thus entitled to no trademark protection without separate “use” as a trademark.  In other words, while a domain name can be a trademark, use of a term solely as a domain name does not itself provide any trademark rights.  Thus, Amazon.com develops no trademark rights through use of its domain name www.amazon.com.  However, Amazon.com does develop trademark rights through its independent use of “Amazon.com” as a trademark on its site and through its marketing efforts.

“But wait,” you might say, “I heard about this ICANN thing, and you can stop folks from using a domain name that infringes on your trademark, right?”  Yes, the one twist in all of this is that while use of a domain name does not create trademark rights, valid trademark holders can challenege domain names where:

(i) your domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; and

(ii) you have no rights or legitimate interests in respect of the domain name; and

(iii) your domain name has been registered and is being used in bad faith.

Thus, you can’t simply register the domain name “coca.cola.com” if you are not, in fact, Coca-Cola.  In addition to the ICANN dispute resolution system I linked to above, there are other weapons available to trademark holders, most notably the Anti-Cybersquatting Consumer Protection Act, which can provide more extreme legal impact.  We’ll talk about that one another day.

In short, you should walk away from today’s post with a very simple piece of knowledge: trademark rights are not domain names, and domain names are not trademarks.  However, a valid trademark can trump a domain name under certain circumstances, but the reverse is not true.


This is your brand. This is your brand on social media. Any questions?

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Brand building used to be such a simple thing: people liked your products, and they told their friends, and soon you had a reputation.  After a while, people associated your brand (in the early days, literally your physical brand) with quality, and thus equity was developed in your trademark.  And everyone lived happily ever after.

The early days of advertising merely represented more of the same, but on a larger scale — perhaps with some questionable performance claims thrown in for good measure.  During the Mad Men era (the “Golden Age” of advertising) folks began to dig deeply into the associations woven into the brand experience, and teased out clever ways to show that folks buying a cigarette weren’t actually buying a cigarette, but instead were purchasing a whole basket of non-literal associations: Manliness. Femininity.  Rugged individualism.  Love of menthol.

Today, however, things have come full circle, and are now once again about being a fan.  As the Financial Times reported earlier this year:

More than 10m people each day become a “fan” of a brand on Facebook. The world’s largest social network – with well in excess of 400m members globally – plays host to more than 1.4m branded fan pages on Facebook. BrandZ Top 100 brands such as Coca-Cola and Starbucks, along with other smaller brands outside the Top 100 such as Adidas (brand value or BV of $3.3bn in the latest MBO list), have each “befriended” millions of people.

More than 1 billion “likes” are generated each day on Facebook, representing the largest single source of immediate consumer preference information available on earth.  When your brand does something different in the marketplace, the reaction is immediate — and can be either startling positive or savagely ugly within minutes.

From a trademark perspective, this leaves traditional legal analysis somewhere in the dust.  Trademarks are all about control, all about locking down your brand and policing third party uses.  The whole point of a trademark is to designate a single source.  Yet social media insists that, to the contrary, brand building is a partnership with your customers, and that others can — indeed, must — use your brand in order to build a functioning community.

Because of that dichotomy between what the law expects of you and the immediate needs of commerce, marketers need a new framework in order to consider how they use and protect their brands.  My theory is that trademark owners need to step away from mechanistic approaches to trademark enforcement, and instead consider their brands through the lens of what I call “ownable distinction.” 

Trademarks, unlike copyrights and patents, are not property: “a trademark is an identifier, not a freestanding piece of intellectual property” says Judge Posner, our most influential judge (in a case, amusingly, argued by the infamous Marc Dreier).  This means that a trademark exists only to the extent that it continues to function as a source identification.  It is, in effect, a form of consumer protection more than a piece of property that can be sold in gross. 

Thus, it is important to consider how your mark is really being used in the context of social networking, and whether the use by third parties is actuallyundermining the ownable distinction of your mark, or whether it is really promoting it.  For example, if someone creates a video on YouTube about your brand, praising you and suggesting that others buy your product, is that in any way diminishing your control over the brand?  If folks create “fan” sites on Facebook, are they undermining your trademark rights in any tangible way?

Maybe they are, and maybe they’re not — this is always a fact-intensive analysis, and there are certainly many similar situations where the correct response will vary (and there are a whole host of First Amendment and Lanham Act Fair Use issues at stake here that we will discuss in future posts).  That said, it is always a good idea to stop and think about it before rushing off to draft a demand letter.  Rather than a reflexive assumption that all third party use is negative, trademark owners should consider the totality of the circumstances before assuming the worst. 

There is no question that an aggressive response will still be necessary in many cases: For example, if the site is constructed in a manner as to create confusion as to who is actually running the fan page, that’s a no-brainer.  The whole point of trademark law is to prevent confusion, and anything that promotes confusion should still be verboten.  If the site is somehow changingthe nature of your mark’s distinctiveness, that may also constitute grounds for an aggressive response.  If someone adopts your most famous trademark as a Twitter handle, your discomfort is warranted.  However, there are also cases where a scorched earth approach may harm your brand equity, rather than protect it, or where third party use supports your ownable distinction rather than undermines it. 

Thinking through how your enforcement approach applies to social media sites may not result in a dramatic change, but it might, and these days no one can afford to miss out on an opportunity to strengthen their brand.


Choosing a trademark for your website without getting sued

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The Wall Street Journal recently ran an article entitled “Name Choices Spark Lawsuits.”  They might as well have run an article entitled “Sun rises in East” or “BREAKING: Wine made from Grapes.”

In other words, this is hardly news.  Companies have had problems with trademark infringement for centuries, and the Internet and social media have only increased the chance for a conflict over names.   As with other kinds of intellectual property disputes, companies big and small can easily find themselves as either plaintiffs or defendants in these suits.  But with some planning, and a little care, the pain of trademark infringement can be minimized, or at least somewhat controlled.  Today, we’re going to talk a bit about the defensive side of the equation: how do you avoid becoming a defendant in this type of suit.  Tomorrow, we’ll talk about what to do if someone else is ripping you off.

When entrepreneurs start out, or established businesses launch a product, they often inadequately clear their new trademarks.   They don’t want to spend the money on a lawyer are in a hurry, and don’t want to take the time to figure out real availability.  Or they just do a search on Google, or look to see if the domain name is available.  They are, in short, asking for trouble — while you should certainly do those things too, they do not substitute for a real trademark search reviewed by a trademark practitioner.   The old aphorism about “an ounce of prevention beats a pound of cure” may as well have been about trademark clearance.  Would you rather spend a few thousand dollars at the beginning of the process, or hundreds of thousands (or millions) of dollars later?

This is not, by the way,  a problem limited to entrepreneurs.  I have personally been involved in trademark infringement disputes where large companies find themselves sued by smaller ones, and end up having to pay out significant amounts of money to repair the damage.  But for small companies, these problems can be even worse — at least the big companies can afford to hire lawyers to fight their battles.  Small companies, conversely, often find themselves over a barrel, threatened with financial apocalypse if they don’t accede to the demands of a more senior trademark owner.  

This is why, when starting out, you need to think about what you’re doing.  Searching for the availability of a mark before you use it is annoying, but a relatively inexpensive insurance policy.  Does it eliminate all risk? Of course not:  no trademark clearance process is perfect.  But will it dramatically improve your chance of avoiding messy problems later, the kind of problems where you have to change your branding and then pay a lawyer and then perhaps pay damages or a settlement to a competitor?

Absolutely.


Europe takes aim at Facebook — do you have European exposure, too?

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As I have long predicted, regulators in Europe are finally begining to move against Facebook.  This is hardly surprising — folks in other jurisdictions beyond our shores are far more serious about privacy than Americans.  This type of conflict was, in many ways, inevitable. 

But this raises, of course, an interesting point: who, exactly, are you marketing to when you put up that website or engage with social media?  The answer is simple: you are marketing to everyone and you are marketing everywhere.  This means that “international exposure” needs to become part of your vocabulary. 

Right now.

We talk about a global economy, and that’s all well and good, but borders do exist.   If you’re shipping things across those borders, you need to be aware of customs and trade issues — including tariffs and other random ugliness.  If you’re transferring customer data across borders, you need to be aware that some countries have strict laws dealing with what you can and cannot do in that regard, even in the context of litigation and discovery obligations (let alone as part of your marketing efforts). 

This also extends to branding — do you have trademark protection in the jurisdictions where you’re selling your widgets and/or services?  Have you checked to make sure you’re not in conflict with the rights of others? 

This is, once again, one of those situations where there is no “correct” way to position yourself.  Rather, it speaks to the need to consider what it is that you’re doing, and to systematically think through your legal obligations when you find yourself moving beyond selling to friends and relatives.  Otherwise, you may find yourself in trouble, and in ways that you never even expected.


Loyalty Programs: The Potentially Huge New Power of Mobile Social Media

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Perhaps the most useful marketing tool in the social marketing shed is the oft-neglected loyalty program.  Consumers love reward programs (heck, an entire Oscar-winning movie was devoted to the power of reward programs last year), and nothing says “I want you to return to my website and buy things” more than “I will give you things for free if you return to my website and buy things.”

Recently, some of the more innovative thinkers on the social media front have started to realize that by combining geotagging, social media platforms and traditional loyalty programs, they could simultaneously (a) track the behavior of their customers in real time, and (b) drive people to physically go places in order to earn rewards.

This past week, Loopt has introduced a “check-in” style rewards program/game called Loopt Star that has many folks buzzing about the possiblities.   Effectively, this turns your mobile device into a “virtual loyalty card.”  Just as with Foursquare and MyTown, simply going somewhere allows you to “check-in” through a social media site, announcing to others your location.  But rather than merely tell your friends about where you might happen to be (or earn nonsense game benefits like becoming the “mayor” of some random location) you earn coupons, can redeem benefits with participating stores, or otherwise interact in real life with the places you go.

Check into the Gap twice and get 25% off.  Future benefits will, apparently, allow you to earn rewards at places like Burger King, bars, and a variety of other retailers.

This is, for obvious reasons, potentially significant for the growth of social media because it provides a tangible benefit that can be measured.  One of the few things holding back social media from becoming as totally dominating as it could be is the lack of metrics.  How on earth do you measure the value of participation, or the impact of your efforts.  With a program like this, suddenly you can.  

There are, of course, also a variety of legal issues raised by this type of program.  As with any loyalty program, there are a number of state laws that apply, and simply copying your airline’s frequent flyer program will not suffice (the FAA preempts state laws, so frequent flyer programs are not a good model).  You also need to consider practical issues, like redemption and how to structure your participation in a third-party program where administration and customer interaction may be out of your control.

But despite the complexities, every business with a physical presence needs to consider whether and how to ride this coming geotagging wave.  While your customers may not be as crazily obsessive about earning points with you as George Clooney in Up in The Air, you never know, and why miss out on the opportunity?


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