Trademarks

Another potential area of legal concern in regards to the creation of this proposed social networking site is related to the matter of trademarks, trademark infringement, and trademark dilution as, “ Trademark disputes are among the most common types of litigation involving the online environment” (Bird 48). Acc ording to the //Lanham Act of 1976//, a trademark is a, “ word, name, symbol, device or other designation, or a combination of such designations, that is distinctive of a person’s goods or services and that is used in a manner that identifies and distinguishes them from the goods or services of others” (Bird 48). Service marks are also a component of trademark and are, “words, phrases, logos, or other graphic symbols that identify and distinguish the services of a company” (Bird 50). As w ell, trademarks are divided into five categories based on the level of inherent distinctiveness (Bronski 2007). There are “generic marks” that do not receive protection, as they do not differentiate one’s business mark from the services and products of others, as well as “descriptive marks,” which do not receive protection unless they are proven to be inherently distinctive or they have “acquired a secondary meaning in the marketplace” (Bird 49). “Suggestive marks” suggest a quality or characteristic of the goods or service, while conversely, “arbitrary marks” have meanings that are unrelated to the goods or service being offered under those marks (Bronski 2007 ). “Fanciful marks” also have no inherent connection to the products or services that they represent, and are created exclusively to function as trademarks (Bird 49; Bronski 2007 ). Since suggestive, arbitrary, and fanciful marks typically receive trademark protection because they are already inherently distinctive, it would be advantageous to those creating the social networking site, to consider using these forms when designing and branding the online company (Bird 49). Moreover, it is important for the new e-business to federally register its trademarks with at least the //United States Patent and Trademark Office//, the //Canadian Intellectual Property Office//and with the //Trademarks and Designs Registration Office of the European Union// (Wensley “Lecture 6” 2009; OHIM “Trademarks” 2009). Even though federal registration is not required to establish a trademark, registration provides extensive additional trademark protection, makes claims for infringement, as well as international filing, easier and less expensive, establishes the applicant as the owner of the trademark, and if the trademark is “famous, ” it allows the owner to sue for dilution in the federal court system (Wensley “Lecture 6” 2009; Bird 49). Since individual members are contributing to the content and there is intended off-shoring of widget development, registration of trademarks will also help clarify rights of ownership and the fidelity of the overall e-business. It is also necessary to note that Federal registration of a trademark requires that the trademark either be used in commerce or that there is a “good faith” intent or promise it will be used for commercial purposes in the future (Bird 48). This means that simply displaying a trademark online does not automatically establish that it is being used in commerce, unless the mark uniquely identifies one’s goods and services from those offered by others, so it is imperative to fully establish one’s trademark(s) through registration; although, it is also important to be aware that international protection is not guaranteed through federal registration, and thus, an online company should register it marks in every country in which it conducts business (Bird 49, 80). The //Madrid Protocol// simplifies this process in offering a form of international trademark registration. A single application provides protection as if the registration was made in each of the signatory countries, which now includes France, Switzerland, Poland, Russia, the U.K. and U.S. approval of the international protocol is currently being considered in Congress (Bird 76). Another key international trademark treaty is //The Agreement of Trade-Related Aspects of Intellectual Property Rights (TRIPS).// It is a multilateral agreement of the //WTO//, whom also provides a //Uniform Dispute Resolution Policy//, which establishes guidelines and requirements for the protection of intellectual property, specifically in regards to international trade of information. It establishes the minimum protection rights of intellectual property within WTO member countries and incorporates other multilateral agreements, such as the Paris and Berne Conventions. //TRIPS// designates how international intellectual property rights are to be enforced and translates trade principles into the realm of intellectual property, employing guidelines such as the “national treatment principle,” “transparency principle” and the “most-favored nation principle” (Bird 75). The //Trademark Law Treaty// is also an international agreement that seeks to achieve uniformity in trademark protection and procedures. In order to register a trade mark or service mark one has to be able to distinguish one’s goods and services from others. It is beneficial to be aware that in some countries, like the United States, if a trademark is not distinctive and has not yet acquired a secondary meaning, it can be placed on a list, such as the Supplemental Register, and if it remains on this list with continued use in commerce for five years, it can be added to the Principal Register, in which presumed secondary meaning is acknowledged (Bird 52). Canada only has an equivalent for the U.S. Principal Register, “ As a result, clearly descriptive marks in Canada are not registrable unless they can be shown to have “acquired distinctiveness” in Canada or to be “not without distinctive character” in the case of marks registered in the applicant’s country of origin” ( Henderson 2009 ). In addition, to register with USPTO, the trademark no longer has to be used prior to making an application, but as mentioned, intent for later use in commerce has to apply; whereas in Canada, in most instances, the trademark does have to be used before trademark status will be granted, “ While your application may be based on "proposed use," you must put your trade-mark into use before registration can occur (Bird 51;  Canadian Intellectual Property Office 2009 ). Therefore, it is important to check this requirement in each country in which one seeks trademark registration and ownership. The trademark office then conducts an extensive search to see if another party is using the trademark in question for the same or a related business, and if the search yields no such reiterations, a distinctive trademark is typically granted (Bird 51). Once a trademark has been registered, one should display the ® or “SM” symbols on the website’s home page to give actual notice of federal registration and claims to ownership (Bird 51). The main source for legal protection of trademarks used to be found in common law, but now federal statutes have entrenched the rights and responsibilities of trademark owners. In the United States, state protection still exists, but the most extensive trademark protection can be found in the federal //Lanham Act//, enacted in 1946 and amended most recently in 1996 (Harvard University “Overview”). Canadian law has a comparable //Trademark Act//, with each country that composes the EU having different trademark policies, along with the collective registration option through the Community Trade Mark, which is administered by the Office for Harmonization in the Internal Market  (Government of Canada “Trade-Marks Act” 2009;  OHIM “Trademarks” 2009). These acts suggest the importance in registering one’s trademarks as part of ensuring maximum protection for a company’s identity, products and services. Reviewing the duration of a trademark and the renewal processes is also key to ensuring continued trademark protection (Bird 80). The duration of trademark protection varies from country to country. For example, in the United States and with the EU Community Trade Mark system, initial registration is for a ten-year term and can be renewed indefinitely, but in the U.S. the trademark is automatically cancelled if the applicant does not reaffirm its continued use by filing an affidavit after the fifth year (Bird 51; OHIM “Renewing a CTM” 2009). In Canada, trademark registration is also indefinitely renewable, but initial registration lasts for a period of fifteen years (Wensley “Lecture 6” 2009). It is critical for a trademark owner to be aware of these expiries and consult a lawyer when necessary to carry out the somewhat complex renewal processes (Bird 51, 80). Trademark infringement occurs when, “a party uses a trademark that causes a ‘likelihood of confusion’ between goods or the relationship between the parties that make the goods;” this usually involves competing companies and results in immediate customer confusion (Bird 58). Ten factors, known as the LAPP factors, were developed in the case of //Interpace Corp v. Lapp, Inc.// to determine a likelihood of confusion. These include: “strength of the mark… kind of mark… similarity of goods… channel of trade… consumer sophistication… wrongful intent… actual confusion… zone of natural expansion… length of time the defendant used the mark… same sales efforts…” and they have been applied in such cases as //Checkpoint Systems, Inc. v. Check Point Software Technologies// (Bird 59). This case, which involved a domain name dispute, established that no single LAPP factor is determinative, that each factor does not have to be given equal bearing and that when products directly compete, trademark similarity “may be the most important of the ten factors in Lapp” (Bird 61). Apart from infringement, there is also trademark dilution as defined in the //Federal Trademark Dilution Act// as, “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) the likelihood of confusion or mistake or to deceive” (Bird 63). Dilution can occur without customer confusion as it results from a company using another company’s trademark in such a manner that it loses or reduces its identity over time. For instance, dilution can be applied to domain name disputes in which a trademark owner sues a party of a registered domain name that reduces the value of their mark; although, for a successful dilution claim, the plaintiff company has to prove the trademark is a “famous trademark” (Bird 63). This is often accomplished in court through the use of an expert witness discussing surveys related to the mark, but one of the best methods to qualify a trademark as “famous” is to register it in the Principle Register and then engage in a comprehensive advertising campaign (Bird 64). There is “dilution by tarnishment,” which occurs when, “the plaintiff’s mark has been associated by the defendant’s conduct with unwholesome, unsavory, or shoddy quality products or when consumers are likely to associate the lack of prestige or quality of the product with the plaintiff’s unrelated goods” and “dilution by blurring” that, “occurs over an extended period of time when a famous trademark’s value will be diminished by its use on dissimilar products” (Bird 67). As previously mentioned, selecting a domain name for the social networking site can also lead to potential trademark issues and international consensus on this topic has not been reached (Bird 77). Different companies can use the same trademark for a different class of products or services, but only one company can use a specific domain name. It is essential that an online company register its distinctive domain name as a trademark with the appropriate trademark offices and in order for the domain name to qualify in the U.S., it must be associated with the products or services produced by the company. As declared in the 1998 Sixth Circuit ruling of //Data Concepts, Inc. v. Digital Consulting, Inc. 150 F. 3d 620, 627,// “When a domain name is used only to indicate an address on the Internet and not to identify the source of specific goods, the name is not functioning as a trademark” (Bird 47). Inappropriate domain name selection has resulted in numerous trademark infringement suits by trademark owners against domain name registrants, and even when an established registrar informs one of the “availability” of a given domain name, it is necessary to do a trademark search as a trademark owner of the same or “confusingly similar” name, even if they have not registered it as a domain name, may sue for “bad faith” registration. For example, it is possible for a domain name to be the same or “deceptively similar” to a common law or registered trademark, like in the //WIPO// arbitration in the case of //Julia Roberts v Russell Boyd//, in which the plaintiff was found to have registered the domain of “juliaroberts.com” in bad faith” (Bird 54-58). “Cyberpirates” purchase domain names related to famous trademarks and attempt to sell the domain names to the registered trademark owners for large sums of money (Bird 67). The 1999//U.S. Anticybersquatting Consumer Protection Act// tries to protect trademark owners from cybercrimes in stating, “A person shall be liable in civil action by the owner of a mark, including a personal name which is protected as a mark… if that person has a bad faith intent to profit from that mark,” also making it illegal to register the name of a living person as a domain without the person’s consent, if there is intent to sell the name for profit (Bird 68). One should consider registering any derivative domain names that relate to one’s products or services to avoid such legal situations and allow for future expansion of the company (Bird 80). The U.K. has ruled against cybersquatters, and for example, claimed jurisdiction over a German web site when the plaintiff claimed damages and harm resulted in the U.K. (Bird 77). Even though some countries have recognized cybersquatting as a crime, and even if there is a potential cybersquatter, international enforcement on such charges often proves difficult. A popular trademark is easily diluted online due to the great number of domain names with deceptively similar marks, the cybersquatter may provide a fictitious address, and even if he/she is found and served with a cease and desist notice, the cybersquatter can avoid consequences by transferring the domain name to a third party and may remain on a domain registrar for a significant period of time even after a lawsuit (Bird 78). Therefore, overall, in order to avoid legal consequences, it is vital to put great thought, care and research, into domain name selection and registration, and is usually best to select a domain name that matches one’s trade name (Bird 49, 80). To avoid other potential trademark issues, the social networking company should not include any “deeplinks” that automatically link beyond the home page of other sites, bypassing advertisements and trademarks of the other web site owners. These “deeplinks” can also purportedly link a product or service with the wrong company, like “framing,” that, “allows a Web site user to view content from another Web site while still viewing the home page of another site” (Bird 71, 74). This new e-business should also avoid using unethical metatags or invisible embedded code that wrongfully makes web site users believe there is an affiliation with another company; this can constitute trademark dilution, infringement or unfair competition, as the infringing site may use trademarks that have no association to their company, in order to attract customers to the site, which is often called “invisible trademark infringement” (Bird 72, 78). The creators of this social networking site should also be aware that trademark has been expanded to include trade dress or the overall visual appearance, shape, or design of a product and/or its packaging (Bird 50; Jassin 2000 ). This is significant because the colours, design, and graphics used on a one’s website can be federally registered as trade dress if the icons, graphics and colours work as trademarks in distinguishing one’s products and services from others (Bird 50). Despite this advance in trademark protection, U.S. Supreme Court cases like the 2000 case of //Wal-Mart Stores, Inc. v Samara Brothers, Inc// 529 U.S. 205, 216 and //Two Pesos, Inc. v Taco Cabana, Inc. 505, 763,// demonstrate the difficulties in proving “inherent distinctiveness” and may make it harder to federally register the trade dress of a website that has not obtained a secondary meaning as the sole consequence of its distinct colour and design (Bird 50-51; “ Wal-Mart Stores, Inc. v. Samara Brothers Inc.”; “Two Pesos, Inc. v Taco Cabana, Inc.”). When applied to online environments, these cases also reinforce that making a product or service more aesthetically pleasing on a website, does not necessarily imply that it can be registered and protected by trademark law, but that trade dress should be considered as a viable option in ensuring overall trademark protection. Works Cited Bird, Robert C., et al. __CyberLaw: Text and Cases__. 2nd ed. United States: Thomson: South-Western West, 2004.

Bronski, Daniel M. “The Five Categories of Trademarks: Legal and Marketing Considerations.” __Veri-Trademark__. 2007. 1 April, 2009 .

Canadian Intellectual Property Office. “A Guide to Trade-Marks: The Basics.” 30 January 2009. 2 April 2009 .

Government of Canada. “Trade-Marks Act.” 2009. 2 April 2009 .

Harvard University. “Overview of Trademark Law.” 2 April 2009 .

Henderson, Gowling Lafleur. “Canada and the U.S. Differences in Trade Mark Law.” __Gowlings__. 2009. 2 April 2009 .

Jassin, Lloyd J. “Trade Dress Protection: How to Tell a Book by its Cover.” 2000. 2 April 2009 .

Office for Harmonization in the Internal Market (OHIM Trade Marks and Designs). “Trademarks.” 2009. 2 April 2009.

Office for Harmonization in the Internal Market (OHIM Trade Marks and Designs). “Renewing a CTM.” 2009. 2 April 2009.

Two Pesos, Inc. v Taco Cabana, Inc. 505, 763. United States Supreme Court. 1992. Information From: Cornell University Law School. “Two Pesos, Inc. v Taco Cabana, Inc.” 2009. 3 April 2009 .

Wal-Mart Stores, Inc. v. Samara Brothers Inc. 529 U.S. 205, 216. United States Court of Appeals for the Second Circuit. 2000. Information From: FindLaw: Thomson Reuters. “Wal-Mart Stores, Inc. v. Samara Brothers Inc.” 2009. 3 April 2009 < http://caselaw.lp.findlaw.com/cgi- bin/getcase.pl?court=US&vol=000&invol=99-150>. Wensley, Anthony. “Lecture 6: Trademarks.” Lecture. University of Toronto, Mississauga, 12 February 2009. Type in the content of your new page here.