Leverage It, Protect It
Or Lose It
Of Branding, Trademarks & urls
- Reserving a domain name does not amount to a legal
right to use it. Use it or lose it, and just using it in
your email addresses isn't enough.
- The more arbitrary the mark, the broader the scope of
protection. When it comes to trademarks, Apple is
great for a computer company, but a rotten name for an
- Conduct a trademark search. It's better to spend a
few dollars now than a basketful later. It also pays to
learn what the competition is doing.
- Seek federal registration. Pardon our legalese, but
it's prima facie evidence of validity and ownership and has
- International trademark protection is very important.
Think global. Act global. Sue local.
- Watch the representations, warranties and indemnities.
Do not give worldwide representations of ownership and
indemnities for liability for infringement. OK?
- Cybersquatting is stupid and potentially expensive.
The big corporations won, and new anti-cybersquatting
legislation prevents bad faith domain registrations that are
identical to, similar to or dilutive of distinctive or
famous marks. That includes personal names.
- Domain registrants are bound by ICANN Uniform Dispute
Resolution Policy. Yes, Virginia, there is mandatory
arbitration for dispute resolution.
- Be watchful of unauthorized framing and deep linking.
Sites want their advertising revenue and they'll fight for
it. Don't try an end run, and watch out for people doing it
- Pick and choose your battles. Raising a fuss risks
adverse publicity and credibility to infringer, and
sometimes to the infringee.
(Washington, DC -- January 18, 2000) What did Amazon.com gain by
suing BarnesAndNoble.com? What did eToys lose by suing etoy? Why can't
you vroom like a Harley-Davidson motorcycle? The answers are object
lessons in the importance of protecting and leveraging intellectual
property (IP) assets, and more than 300 Internet entrepreneurs learned
that at this morning's Coffee & DoughNets meeting hosted by
IP protection is serious business, especially in the Internet world
where who you know and what you know are sometimes all you have. This
morning's session featured a panel of legal experts led by moderator Andrew
Sherman of Katten
Muchen & Zavis, who covered the in's and out's of trademarks,
patents and other rights issues from a purely practical, business
Starting with trademarks and brands, Eric
Fingerhut of Shaw
Pittman explained their importance for marketing and customer
relations. He covered the legal particulars, including their
relationship to elements like urls, and made it clear that a brand is
worth protecting because it is, "the sum of a company's marketing
position and performance. It really is an emotional relationship
between the customer and a manufacturer." That's why Harley-Davidson's
vroom sound is trademarked, and so is the color pink in the
world of building insulation. Both have developed unique mind share in
their markets, and that mind share is protected by the owners.
Patents, which permit you to exclude others from making, using, or
selling your inventions, are another form of intellectual property, one
that has been changed and expanded by the Internet. Marc
Kaufman of Sixbey
Friedman Leedom & Ferguson explained how the federal
government long rejected the idea of patenting a business model, but
has relented in the face of the revolutionary change from the online
world. Amazon.com, which has a
patent on its "1-Click" ordering process, used that to their
advantage by suing BarnesAndNoble.com
which created a similar process. Will they win? That's still
undecided, but Amazon did get an injunction which hamstrung a major
competitor just before the holiday buying season.
Strong IP assets can help your marketing, and your funding search
as well. "Venture capitalists love patents," said Kaufman.
"Having a patent for significant subject matter, or even a patent
pending application, can raise the confidence level of potential
investors and facilitate obtaining capital. Every business plan should
include a coherent strategy for protecting intellectual property
including patent protection." Christopher
Capuano, Senior VP and General Counsel of Internet solutions
developer Proxicom, agreed,
"When we were going public in 1999, one of the things the
investment bankers focused on was our IP leverage. I was a little
surprised at how much they hammered us on it, and how they turned
around and valued it. They understood that we were able to protect and
retain rights to a lot of what we did and could use that as leverage
going forward. That really added to the bottom line in the value of
The Internet is also changing another aspect IP management. As a
global medium, it forces netpreneurs to think internationally much
sooner than traditional companies may have to. Yes, it can be a
complicated maze to navigate, but, according to Capuano, it's well
worth the comparatively small sums of money it takes to make sure that
your trademarks are recognized in countries you will do business in.
Trademarks are territorial. Just because you own one in the US doesn't
mean it holds anywhere else, and it's complicated by the structure of
international domain names. Take Amazon.gr (.gr is the
country-specific domain extension for Greece). Amazon.com,
according to Fingerhut, would have had little recourse against
Amazon.gr, which claimed to be "the biggest bookstore in
Greece" and even copied Amazon.com's look and feel, except for
one thing. For some reason, Amazon.gr incorporated itself in Delaware,
making it a US company subject to US laws.
And that points out some of the most important lessons for
netpreneurs in this still developing world of Internet lawóplan
ahead, get good advice, think things through and expect the
unexpected. For example, patents are held by the individual inventors
unless assigned to a company. Do your employment agreements cover
that? If not, you could find an ugly surprise just when you're ready
for financing or about to go public. Are your NDAs so complicated that
nobody will sign them? If you're forming a joint venture, who will own
the IP? Should you buy the .net and .org versions of your url? Yes,
says Fingerhut. but what about the country-specific versions or
derogatory variations? Maybe; you have to make a business decision
which balances the cost against your long-term growth goals.
A veteran company like Proxicom, where Capuano made straightening
out the firm's IP assets a first priority, has seen firms get
blindsidedóeven savvy corporations like the large, multinational
which Proxicom partnered with for a joint venture in Spain. The
multinational used its internal marketing group to come up with the
name for the venture (Proxicom, as minority partner, was given no
input into the process). A name was chosen, Kristina Internet Business
Solutions, but the marketers failed to check all of the url
permutations. Unfortunately, Kristina.com was already a flourishing
pornography site and the domain name had to be purchased away by the
Throughout the presentations and subsequent Q&A, panelists
offered pointers, advice and clarification for protecting and
leveraging IP, yet one message came through over and over againóbe
vigilant and protect your rights. You can lose them, whether
from poor planning, non-use or failure to defend them.
You have to know when to pick your fights, however. When eToys
got complaints from customers who inadvertently went to etoy,
a site run by artists and sometimes included off-color content, it
sued the site for trademark infringement. The protests which followed,
including online "sit-ins" and boycotts by the old-guard and
artistic communities, caused so much bad press that eToys is dropping
the suit. Interestingly, although, etoy preceded eToys on the Net,
eToys had already won an injunction against the artists, in part
because eToys had been more aggressively using and marketing the name.
Remember, at the end of the day, these are business decisions even
more than they are legal ones.
Copyright 2000, Morino Institute. All