Failing to Police Your Trademark Online: A Cautionary Tale

Police line do not cross

Trademark holders have to police their trademarks to keep them.

In mid-2015, the Academy of Motion Picture Arts and Sciences (AMPAS) brought to trial a lawsuit against GoDaddy.com to stopped its “parked pages” program. I blogged previously about this lawsuit and what it means for business owners.

Before this lawsuit, there was no legal findings about whether or not parked pages were even legal. The verdict in GoDaddy’s favor changes that and has important implications for trademark holders nationwide.

The GoDaddy verdict is a stark reminder to all trademark holders that not diligently policing your mark online could cost you thousands. Worse, if you fail to police your mark, you may lose your rights to protect it altogether.

Parked pages usually occur when valuable domains are bought and then “parked” with ads to obtain revenue while the domain waits to be sold. This is abused by cybersquatters who buy domains with names similar to the trademarked names of a business before the business can buy it.

For example, as of this writing, coke.co is a parked page whereas coke.com goes to coca-cola’s website. The individuals who do run these pages create them on the hopes that web surfers will accidentally go to one of these pages and click on an advertisement. Or, they hope that the trademark holder will buy the domain name for a handsome mark-up.

When a page is parked, the domain registar and host (a company like GoDaddy) gets a portion of the advertisement revenue.

In its lawsuit, AMPAS argued that there were 56 Oscar-related domain names at issue. These domain names include the domains 2011Oscars.com, Oscar4re.com and Oscarcam.com. AMPAS also estimated that GoDaddy.com generated revenues of at least 8 million dollars from internet goers clicking on advertising links associated with these domains.

It is important to note that AMPAS did not contend that GoDaddy owned any of the domains mentioned in its lawsuit. Instead, AMPAS argued that the trademark violators were aided and abetted by GoDaddy who profited from the parked pages. AMPAS complained that GoDaddy allowed infringers to purchase the domain names and failed to police the sites to ensure legal compliance.

The judge didn’t agree. He decided that there was not enough evidence that GoDaddy intended to traffic in trademark violations in its parked pages. In other words, the judge decided that GoDaddy did not deliberately violate AMPAS’s trademarks.

GoDaddy really scored big when the court went a step further. The judge said that GoDaddy also provided enough evidence to prove that the domain was use fairly or otherwise lawfully, which is a defense to trademark claims.

GoDaddy proved this by showing that each time AMPAS sent a complaint to GoDaddy, it took the parked page down, usually within hours.

Domain purchasers also swear to legal compliance with trademark laws as part of their purchase of a GoDaddy automated domain registration. So the court decided that the blame lays on the trademark infringers, and not on GoDaddy.

The court said that all trademark holders must diligently police their own trademarks.

“[AMPAS] confuses GoDaddy’s technical capacity to filter for trademarks with AMPAS’s legal duty to police its own trademarks. At its core, AMPAS’s [] claim would impose upon GoDaddy (and presumably any other company offering parking, hosting, or other basic internet services) the unprecedented duty to act as the internet’s trademark police. The [law] did not impose such sweeping obligations.”

This lawsuit has an important lesson for trademark holders. Trademark holders who believer that their trademarks are being infringed have limited options. They may complain to the domain holder. They may register the page with an organization that seeks to block parked pages. They may try to purchase all domain names that are similar to their trademark before cybersquatters do. Or, they can try suing the domain owner for trademark violations.

The most important lesson is that the trademark holder has the responsibility to monitor their trademark at all times. Not ensuring that others are misusing your mark can cost you millions! It is a daily requirement of any trademark holder. Failure to do so may cost you rights to your own trademark.

How do you police and protect your trademarks?

  • Monitor the internet for use of your trademark or similar words and domains
  • Monitor press sources
  • Monitor public records for infringing filings in any of the state or local governments (not just the USPTO)
  • Monitor domain registrars
  • Monitor search traffic patterns for your domain and similar words, phrases or domains
  • Send cease and desist letters to any potential infringers, and follow up with legal action

If you want to learn more about trademarks, attend one of our webinars for entrepreneurs. Sign up for our next webinar at http://trademarkswebinar.com.

Are Unregistered Domains A Violation of Trademarks?

Young lady laying on the floor using a black laptopThis could be the end of GoDaddy.

Five years ago, the Academy of Motion Picture Arts and Sciences (AMPAS) filed suit against GoDaddy.com.

GoDaddy allows customers to buy domains and “park” them.  Parking them means that the domain points to a web page that has advertisements on them from Google.

When clicked, the owner of the web page gets a portion of that ad revenue. When the page is parked using GoDaddy, both the owner of the page and GoDaddy split the ad revenue.

AMPAS owns The Oscars. It’s website is registered to the domain oscars.com. But someone else registered “theoscars.com” and was holding it ransom. This is sometimes called cyber-squatting; but it is legal in most cases.

Usually, in this situation, someone in AMPAS’s shoes would pay tens of thousands of dollars to recover “theoscars.com” from the registered owner. Or, they would ignore it.

Unfortunately for AMPAS, they are suffering from 56 Oscar-related parked domains. These domains include 2011Oscars.com, Oscar4re.com and Oscarcam.com.

So AMPAS sued GoDaddy. AMPAS claimed that GoDaddy pocketed roughly $90 million in revenue just from their parked pages directed at The Oscars alone. To put this in perspective, GoDaddy annually generates a revenue over $1 billion dollars. If AMPAS wins, that would be nearly 10% of GoDaddy’s annual revenue in damages. That’s a lot of ad clicks.

While this case may seem like it is the fighting of giants and unrelated to the rest of us, that is not so. The ruling could seriously impact millions of business owners. Here’s how:

  • You may now have recourse if you found out that someone was using a domain name that is similar to your trademarked name. Should you sue?
  • GoDaddy’s business would take a crippling hit, possibly scuppering it and the millions of websites it serves. At the very least, expect prices to go up.
  • GoDaddy and other domain registrars may become forced to police trademark violations by registrants, which means more work for all of us.
  • If you own trademarks, you may be required to put in claims on domains in order to keep your marks protected (and not considered “abandoned”).
  • The cyber-squatting industry may die. But more likely, it will continue overseas, outside the jurisdiction of the United States. This will make American companies like GoDaddy suffer, as it will put them at a competitive disadvantage.

Domain hijacking is a common problem that most business owners deal with. If you’ve registered a domain recently, you probably noticed spam that came a few days later trying to sell you similar domain names.

For example, our CEO is publishing a book on election law for third parties titled Just Pursuits. We put up a sales page at JustPursuits.com. About a week later, we were hit with a demand to pay thousands of dollars for “justpursuit.com” (the s is dropped off the end).

In more serious cases, someone will put up a malicious page to try and force you to buy the domain. This happens to celebrities and politicians a lot. For example, Carly Fiorina (former CEO of Hewlett Packard who is running for President) got this gem: CarlyFiorina.org. (Not only are different spellings a problems, the top-level domain suffix like .com, .net, and .org can create problems.)

By the way, only non-profits are supposed to register .org domains. But this is not policed, really.

Ms. Fiorina’s .org spoof page isn’t too bad. There are worse ones depicting pornography, foul language, or other scurrilous materials.

If you haven’t experienced this, try typing in your domain name with minor changes and see what comes up. Are there other sites out there with similar names to your own? If there are, this case means a great deal for you.


 

Given the impact this case will have on how it does business, GoDaddy has gone through trial in this case. A verdict is still pending.

GoDaddy has not played nice during the lawsuit, either. For example, GoDaddy accused AMPAS of rigging the court system to have U.S. District Judge Audrey Collins, whose daughter is a professional actress, oversee all of the GoDaddy cases. The Honorable Collins has made some decisions that were unfavorable to GoDaddy. GoDaddy got “bench slapped” for that one, but ultimately achieved a new judge assignment.

But both sides know what is at stake. AMPAS says that it seeks to establish cybersquatting as a “serious problem that should not be tolerated even if it is being perpetrated by a company that generates over a billion dollars in revenue….

For its part, GoDaddy says that the guns are aimed at the wrong target. “GoDaddy is not a cybersquatter. It is not a pirate,” its attorney said in opening statements at trial. And GoDaddy also tried to help AMPAS. Within three days after receiving AMPAS’s complaint about parked pages, GoDaddy redirected 37 domain names to no-ads templates. Given the current state of domain registration governance (something controlled by an international body), this may have been the best that GoDaddy could do for AMPAS.


 

While we await the verdict on this matter, it important to realize that it may have serious implications for us all. Currently, there is no solid law on what to do about cyber-squatters and parked pages. The legal system has simply not caught up with this issue.

There are dozens of conflicting interests at stake when it comes to domains and cybersquatting. This is an issue that impacts small and big business and even international relations.

Companies who feel their trademarks rights are being violated by parked domains have limited options, such as complaining to the domain holder, registering their page with an organization seeking to block parked pages or attempting to purchase all similar domain names so no one else may register them. Many businesses may find themselves playing a frustrating game of whack-a-mole.

We will update you with the verdict and its implications after it is reached and as the law on this evolves.

When Announcing an Award or Media Appearance Results In A Trademark Violation

we're in the news newspaperHave you ever received an award for your business or landed a great media mention? When that happens, a smart publicity strategy is to announce the award or media and put an “As Seen On” claim on your website.

But not so fast! Before you start pasting other company’s logos on your website, you better be sure that it isn’t a trademark or copyright violation. In other words, you need permission (a license) to do it.

Yes, a lot of people put these types of badges on their website. All that means is that a lot of people are potentially stealing copyrighted and trademarked images out of ignorance. The attitude that “everyone else is doing it” is a sure-fire way of getting yourself into hot water by stealing intellectual property unintentionally.

That being said, there are many times you can include another company’s logo or copyrighted work on your website, ads, or emails. Getting permission is oftentimes free and requires just a little bit of effort.

With smaller companies, the easiest way to get permission is to just ask. Some will ask you to purchase a license. Some will just say, “OK” and that will be it. Some will direct you to rules and digital downloads they have for their “assets.” Some companies have specific rules on how their assets are used and presented, and you should respect that. Their permission for your use depends on you sticking to their parameters.

Certain companies (and media in particular) will put their logos out for public use on a creative commons license, or on a restricted, royalty-free license for commercial use. So, for example, NBC’s logo is available by a creative commons license (meaning that it can be used broadly and it is registered with non-profits to make their rules easy to figure out).

Similarly, Facebook allows (and in fact encourages) you to use their logo, even for commercial purposes, under a very broad, royalty-free license. Facebook wants you to link people to your profiles using their badge so that you will drive people to their website.

Not only do big companies offer Creative Commons licenses for their works and logos, authors and the government may do this as well. You can sometimes even modify and expand upon the licensed work, depending on the permissions granted.

Two places you can check for Creative Commons licenses include Wikimedia.org and CreativeCommons.org. Both websites are private non-profits set up for this very purpose, and can be considered reputable.

Next, to some degree, use of images for parody (even in a commercial video) is considered protected free speech. Similarly, images and quoted or excerpted media for newsworthy sites may be protected “fair use” under the First Amendment. This can be a complicated area of law, so be sure to check with your lawyer if you are a media or entertainment site. All other businesses should generally just try to stay away from anything that is not expressly licensed.

Finally, you should have instructions somewhere in your Terms of Service for people to contact you with “take down” requests. This gives you a safe harbor time period to deal with any disputes before the claiming party can file a lawsuit.

If you ever have a question about a particular image, you should ask a lawyer. It’s better to be safe than sorry. We offer our clients entry into our Peace of Mind Plan — for a small, monthly fee, they can call us with all their legal questions and get the help they need.

An Entrepreneur’s Guide to Trademarks Part Six: Maintaining Your Trademarks

alligator eating fishHuzzah! You’ve received registration for your trademark! All is complete!

Well, not quite. There is some upkeep you need to be aware of to ensure that you maintain trademark registration. If you don’t, someone might snap it up and you’ll be unable to protect yourself.

What to do?

First, to maintain your trademark registration, you must file specific maintenance documents. Failure to do so will result in cancellation of the registration. The registration can also expire if you do not file a renewal. If you registration is voided in any way, you must file a brand new application and start all over. This is the only way you can try and revive protection for your trademark. Moreover, just because you received registration previously, does not mean that you will receive approval the second time.

Second, you want to make sure that you are checking your trademark registration every so often on the USPTO Search System (TSDR) to ensure that your mark has not lapsed. Sometimes notices get lost in the mail or email so it is always important to do a quarterly check on your intellectual property registrations to ensure that they are still adequately protected.

Third, and this is extremely important, you MUST update your correspondence address, owner address and email address with the USTPO immediately of any changes in this information. If both the ownership and correspondence address are to the same address, you must update both. The USPTO uses this information to send vital information about your registration and your rights. Failure to update this information is not an excuse you can use to save yourself from a cancelled or lapsed registration. Thus, keep all this information up to date to make sure that you are informed on your rights at all times.

Finally, it is up to you to protect your rights. A trademark is only good if you police it and not allow other people to infringe.

Think of trademarks as like a house. If you let other people squat in your house and you do not evict them, then they end up having rights to your house. If you let a squatter go long enough, they can claim ownership of your house!

Trademarks are the same. If someone infringes (even if you do not know about it) and it goes long enough, you lose your trademark protections. So you must monitor your mark!

Registration is not the end of the process. As the registration holder, it is up to you to ensure that no other parties are infringing on your rights by using similar or identical marks, counterfeiting your goods, etc. The USPTO is not involved in ensuring that your registration is not infringed upon, they merely ensure that you have met registration standards. This will mean that you must keep up to date with your market, search your mark on the internet, and keep a general eye on the lookout for anything that might harm your trademark.

Ultimately you are your own best brand ambassador.

As part of our Plus and Pro Trademark Packages, Bellatrix PC protects our clients with trademark monitoring, trademark enforcement, and keeping track of renewals. That’s one of our many ways we give our valued clients Peace of Mind .

An Entrepreneur’s Guide to Trademarks Part Five: The Application Process

people walking up courthouse or government stairsOnce you have decided to protect your trademark, you have to register it with the US Patent and Trademark Office. The typical registration process follows four basic steps: (1) Preparing the mark for the application process; (2) Preparing and submitting the application; (3) Responding to USPTO Examining Attorney Office Action; and (4) Approval or Denial.

Prepare Your Trademark for the Application Process

Once you have determined that a trademark application is your next step, you must do the following:

  • Prepare the mark for registration. If you haven’t already decided on a mark to use, this is the starting point. You will want to pick a mark that is distinguishable from other marks, strong, and protectable. You may have to kiss a lot of frogs before landing on the perfect mark for you and your goods/business. This is completely normal. Be open minded in the process and you will ultimately discover the best mark for your brand.
  • Once you have determined what type of mark you want to use, you need to determine how you want the mark to look. What will the format be? Is there a drawing involved? A certain font? Not only will you want to be consistent but if your mark is going to be on mass-produced goods, you will want to also make sure that economically, it is a mark you can actually put into production. Again, you may be kissing a few more frogs here but it’s only natural.
  • Next, you will want to do a search to determine that no other company or trademark holder is using a similar mark. Bellatrix PC can aid you in this process.
  • After you have conducted a search and determined that your mark is not confusingly similar to other registered trademarks, you will want to determine what category of goods/services you intend to register for. Each category must be paid for separately. The amount of each category is set by the USPTO and varies depending on how you file your application. Traditionally, filing online is the cheaper option. Bellatrix PC can help you determine which categories will be best for you to seek protection under.
  • Last but not least, you will want to determine what your filing basis. There are two categories – Use-in-Commerce and Intent-to-Use-in-Commerce. If your products are already on the market, then you will file a Use-in-Commerce application. If your goods or services are not on the market yet, you will file an Intent-to-Use-in-Commerce application. Our attorneys at Bellatrix PC can walk you through in detail what filing basis is best for you.

Prepare and Submit Application

Once you have finished all of the previous steps, it is time to fill out and file your application. You will want to double and triple check all information provided to the USPTO to ensure that it is completely accurate. Trademark applications can be pending for some time, so you will want to make sure you check the status online at least once a month. You will also want to ensure that all contact information is current in case the USPTO sends notices with set deadlines for a reply.

Office Actions with the USPTO Examining Attorneys

Once the USPTO determines that you have met the basic filing requirements, you application is assigned to an examining attorney. The attorney is then going to review the application with a fine-toothed comb to ensure that it complies with all statutes, rules and regulations and that it is not similar to any other marks already registered.

If issues arise, and they usually do, the examining attorney will send what is called an “Office Action.” An office action is simple a letter outlining any issues with the trademark and it provides a deadline in which to respond and/or fix the errors. These must be responded to in a timely manner or your application may be abandoned.

Approval or Denial

Once the examining attorney no longer has any objections to the trademark application, it will be published in the USPTO “Official Gazette.” Your trademark application will run for thirty days to allow for the public to object to registration.

Once publication is finished and no objections have been made, the trademark will officially be approved and registered.

Note that if you have filed an Intent-to-Use-in-Commerce application, there are some additional steps you must take before you can receive full registration.

Our sixth and final article in this series discusses how to protect your trademark so that you do not lose it.

If you are ready to get started protecting your business’s valuable intellectual property, please go to our Trademarks Packages page to start the process.

Non-Disclosure Agreement

NON-DISCLOSURE AGREEMENTS

Non-disclosure agreements are called by many different names: NDAs, confidentiality agreements, confidential disclosure agreements, and proprietary information agreements, among other terms. Regardless of the terminology or type of business entity which is involved, all non-disclosure agreements share the same basic objective: protecting businesses against financial losses arising from the disclosure of trade secrets and confidential information. They must not be confused with non-compete agreements, which are designed for a different purpose and are of limited use in the state of California, where they are typically considered unenforceable.

Startup Tools Toolbox

Because clear and enforceable non-disclosure agreements are a dynamic and effective means of protecting proprietary information, well-constructed NDAs have proven invaluable for countless business owners and employers across a diverse range of industries, and should be included in every company’s legal toolbox. But remember, NDAs which violate state or federal laws often create more problems than they protect against.

At Bellatrix PC, our knowledgeable business attorneys have extensive experience helping start-ups, partnerships, limited liability companies, and corporations draft detailed, favorable, and enforceable non-disclosure agreements.  We pride ourselves on our sophisticated understanding of state and federal business and employment law, and will work closely with your company to determine and pursue a strategic and cost-effective means of resolving any NDA-related matter.

To schedule a confidential legal consultation, call our law offices today at (800) 449-8992.

Understanding the Difference Between Non-Compete and Non-Disclosure Agreements

As noted above, it is critical for employers and business owners to familiarize themselves with the fundamental differences which separate non-disclosure agreements from non-compete agreements. The two contracts serve different purposes, yet the terms are often transposed or mentioned in the same context, which creates confusion and misunderstandings regarding their actual purposes.

Non-compete agreements impose restrictions on a current or former employees future employment opportunities. For instance, a non-compete agreement may state that when an employee leaves Company A, that employee cannot work at a competing company for a certain period of time.  In addition, it may state that the employee cannot start a competing business for a finite period of time. Because non-compete agreements expressly restrict both competition and a person’s ability to earn a living, they are rife with potential problems and are seldom enforceable in California.

NDA’s on the other hand are designed to prevent a party, often an employee, who will be exposed to confidential, trade secret, or proprietary information  from divulging that information without expressly restricting competition or future employment. In the instance of an NDA, an employee may agree that when they leave Company A, they will not divulge or misappropriate any confidential or proprietary information obtained from Company A. Breaking the terms of a well drafted non-disclosure agreement  would expose the breaching party to substantial liability  based on breach of contract (damages for breach of an NDA are discussed in more depth later in this article). Because NDAs do not prohibit competition per se – they merely prohibit misappropriation and use of the employer’s confidential information, they do not face the same enforceability problems as non-compete agreements.

NDAs can be “mutual” (meaning two parties share trade secrets, often used when two businesses collaborate on a single project) or “one-way” (meaning only one party shares information, often used when an employer is entrusting trade secrets to an employee).

For California business owners, the important thing to remember is that NDAs do not struggle with the same enforceability issues as non-compete agreements.  Therefore, NDAs are consistently the more effective and reliable means of protecting confidential information and preserving a business advantage.

What Are Trade Secrets?

Trade secrets are as varied as the businesses who hold them.  Depending on what the entity does, trade secrets might include formulas, computer software, algorithms, recipes, databases, product designs, methods of manufacturing, businesses strategies, and other pieces of information which give the business a competitive edge.

Cal. Civ. Code § 3426.1, which is part of the Uniform Trade Secrets Act, defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process” which both (1) “derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use” and (2) “is the subject of [reasonable] efforts… to maintain its secrecy.”

While there is no bright line rule for what constitutes a trade secret, it’s safe to say that any business which has created, designed, or implemented something that gives it an economic advantage or a competitive edge should take measures to protect it.

Recovering Damages for Breach of Contract and Confidentiality Violations

The Uniform Trade Secrets Act doesn’t simply define what trade secrets are: it also sets forth potential consequences of violating a non-disclosure agreement.  Cal. Civ. Code § 3426.3(a) clearly states the following:

A complainant may recover damages for the actual loss caused by misappropriation [defined as “acquisition of a trade secret… by improper means” or “disclosure… without express or implied consent].  A complainant also may recover for the unjust enrichment caused by misappropriation that is not taken into account in computing damages for actual loss.

The Act also supplies some additional guidelines pertaining to civil lawsuits and compensation:

  • Even if it cannot be proven in court that misappropriation of a trade secret led to unjust enrichment or financial damages, the court can still “order payment of a reasonable royalty” for a limited period of time (see Cal. Civ. Code § 3426.3(b)).
  • If the misappropriation was “willful and malicious” (i.e. intentional and with the intent to do harm), then the plaintiff can potentially recover damages up to twice the award under Cal. Civ. Code § 3426.3(a) or Cal. Civ. Code § 3426.3(b) (see Cal. Civ. Code § 3426.3(c)).

As with any type of contract or written agreement, the use of generic boilerplate documents is a recipe for legal and financial disaster. The importance of drafting unique, customized NDAs with assistance from an experienced business lawyer cannot be overstated.  Businesses have maximum protection when they have NDAs which account for specific details and conditions unique to their business.  Using a clear, comprehensive, and tailored agreements drastically reduces the chance that the contract will be breached or found to be unenforceable in future.

Employers are urged to steer clear of the numerous generic templates available for download from the internet. NDA templates are often overbroad, unenforceable, and include non-compete clauses which violate California law. The breach of contract attorneys of Bellatrix PC have years of experience representing a broad spectrum of entities in the preparation and defense of business contracts like non-disclosure agreements and covenants not to compete. Whether you simply need assistance drafting or reviewing new or existing NDAs, or you need aggressive legal representation from a commercial litigation attorney, our team is ready to help yours

To talk more about how we can help you meet your goals and resolve your disputes, call Bellatrix PC right away at (800) 449-8992.