Intellectual Property 2: Trademark | Audio Transcript

This is Professor Michael Rappa from North Carolina State University in Raleigh, North Carolina, and I’m here to talk about my course, Managing the Digital Enterprise.

One of the most vexing issues right from the start of the commercialization of the web in the early 1990s has to do with trademarks. A trademark is a word, name, symbol or device, which is used in trade with goods to indicate the source of the goods and to distinguish that source from the goods of others.

In the world of commerce, trademarks are everywhere, whether they be the names of companies or product names or even qualities of the products themselves, and so just by way of example, the Intel Corporation; their corporate name would be a trademark, obviously, but products, such as the Pentium or Pentium III would be considered to be a trademark; even something like an advertising slogan, such as Intel Inside is a trademark of the Intel Corporation, and this is fairly ubiquitous within commerce, and virtually every major company has a vast open possibility with respect to the trademarks that they have with respect to their products and services and how they communicate about those products and services to their customers.

One example might be one of the world’s most famous trademarks, that of the Eastman Kodak Company. Kodak has more than 400 active registered trademarks in the U.S. alone, and this is a fairly good example of the extent to which trademarks play a major role in modern-day commerce, and especially for companies with a global reach. We’re going to see, fairly typically, the aggressive uses of trademarks to distinguish their products from the products of other companies, and particularly, their competitors.

Of course, the digital world and the Internet in particular pose some serious challenges with regard to trademark because, of course, anything that gets attached to the web, in a sense, becomes part of a global network of information, and so it may not surprise us then that some of the largest and most significant players with regard to the commercial web like the ones we’ve talked about, such as Yahoo and Google, Ebay, Amazon.com, are now some of the world’s most widely recognized trademarks.

It’s really this globalization of commerce that provides some of the more vexing problems that we have to deal with with trademark, but before we address some of these issues, let me step back for a second and just put trademark in context, so just about any business or organization that’s providing a product or service to the public, a trademark becomes a very important means by which you’re able to advertise and sell your products in a way distinctly different from your competitors, and again, we can talk in terms of commerce here, but trademarks affect just about any organization, and if I were to just take up universities as an example, collegiate sports drive some of the most valuable university trademarks around and are very important because trademarks are very important to the universities in terms of the sales of things like apparel and caps and other kinds of clothing that carry the university’s insignia and names and slogans and so forth.

So trademarks and their application to the world of commerce, and more broadly speaking, of both profit and non-profit organizations is really quite large. Trademark is like copyright in the sense that you need to register it in order to gain some recognition, especially within the legal context of some rights to that mark, but simply the use of a word or phrase or name, company name, product name and so forth, simply it’s use gives you certain rights to it, so long as you could establish it as your own independent mark, and so registration itself is not a prerequisite, but registration becomes important when you want to protect that mark or at least litigate infringements on that mark by other parties.

Similarly like copyright and other intellectual property law, these laws pertain to certain countries, and so as we move around the globe, there are some issues with respect to trademark and how laws may vary and the need to register trademarks in different countries that we may be operating in a significant way.

So trademark is a little bit more complicated than copyright from a registration point of view because one needs to understand what names and words and phrases are acceptable within the guidelines of any particular country’s trademark laws, and so in the U.S., it’s relatively easy. One can go online, go to the U.S. Patent and Trademark Office, USPTO.gov, and learn all about trademarks and how to register a mark. One can even register the mark online, and it’s relatively inexpensive in comparison to something like applying to a patent. The only real issue with it is that if you apply for a trademark, and it’s not accepted as a valid mark, then whatever registration fees you may have paid are non-recoverable, so there is a cost involved. The cost is not extremely large, but to the extent that one really needs to understand what may be a valid mark, legal advices is advisable.

Having a trademark prevents others from using that mark or a mark which is confusingly similar to yours, but not from making the same goods or from selling the same goods or services under a clearly different mark, so this is where something like patent law comes into play as opposed to trademark, so this question of what may be confusingly similar is something that gets litigated from time to time, and some of that litigation proves to be quite interesting, and the connections between marks can seem rather thin sometimes.

A relatively recent example has to do with Intel, the Intel Inside campaign, which I mentioned earlier. There was a chain of yoga places out in California that ran by the name Yoga Inside and ended up in litigation with Intel over whether or not that that name for this yoga chain was perhaps too similar to the Intel Inside campaign, so you could see it’s kind of interesting what can be confusing or not confusing is not always so obvious, but the key here is not to allow a trademark, which is certainly something which can be enormously valuable to a business, is not deluded in some way by being used by other parties or used in some generic way. I guess the best recent example of this has to do with Google, so Google has become so pervasive around the globe and is so widely used that it sometimes; people refer to simply the act of searching the web as Googling or “I’ve Googled the web” or “I’ve Googled a particular person or name or place.”

And this is not good for Google. It may seem like the people at Google might love to see that their name is so widely used in common vernacula, but in reality, this is a problem from a trademark point of view to the extent that simply the term “Google” becomes a commonplace term used in everyday speech to search the web; it becomes more difficult for Google, the company, to protect its unique identity, and so you get all kinds of other variations around your trademark that, all of a sudden, may take advantage of your prominence and reputation and product or service in the marketplace.

So registration is not hard, and it’s not expensive, but one has to apply for marks, which are distinctive; distinctively different than others, and particularly distinctively different from the marks of other companies in a similar line of business or in the same geography, and the mark must also be actually used. Unlike copyright, which has a specific duration, as well as patent, trademarks; the duration is for as long as they are in active use and not abandoned by the trademark owners, and so one can go to the uspto.gov., for example, and do some trademark research and look up and see whether a mark that you want to apply for already exists, whether it may be similar to other organizations, and what thing you’ll see is that some of the most famous trademarks in the world were marks that were registered decades and decades and decades ago and are still important and in use.

The digital world really presents many very vexing issues with respect to trademark. One is the global nature of this network, and so in a very practical sense, what this means is that companies operating in different parts of the world are much more likely to come into collision with each other with respect to trademarks. Even within the context of a particular country, where, at one time, if I was a small business in St. Louis and I registered a trademark for my retail shop, I didn’t really have to worry, only just about whether or not my mark would be confusingly similar to someone in the same line of business in my geography.

With the Internet, even small businesses now are affected by what companies do around the globe in terms of creating a very distinctive presence for their company with their trademarks. The trademark issue really became a very difficult and complex problem right from the start with respect to domain names, the names that are used on the web to identify the various locations of web sites, so whether it’s ibm.com or ncsu.edu; these domain names became the focal point of some very intense and problematic disputes with regard to the usage of trademarks themselves in domain names.

Some of that controversy, although it’s subsided a little bit, still lingers today. At the root of the problem was the fact that once people were free to register domain names, the process of registration was set up that it provided no guidance whatsoever and no restrictions whatsoever on the usage of trademarks within the domain name context, and so, obviously, every company and every organization who wants to set up a web site is going to want to have a domain name, which is either their company’s name or a company acronym or some common trademark for representing their company.

For the most part, that’s generally not a problem, although there may be organizations that, in the dot com space, for example, that share a similar name or a similar acronym, and therefore, both have legitimate rights to potentially using the name, but even more so, the problem is simply that there was just a free-for-all with respect to who registered what domain name, and one could simply go online and register anything, and the only thing that mattered was that you paid the registration fee, and the name wasn’t already taken, and for some companies that were slower, just slightly lower to moving to the Internet, that meant the potential that there may have been someone else who registered their company’s name as a domain name or maybe a very important product name as a domain name.

In some instances, or I could say many instances, those registrations were really done in bad faith. The person simply decided that since it wasn’t already registered, they registered for themselves, and then when the company came looking for it, they would seek a kind of finder’s fee or, as one might say, a ransom or a kind of extortion to get their company name as a domain name.

This was a really insidious practice, sometimes referred to cyber-squatting, and much of it has been resolved through international agreements within the context of the World Intellectual Property Organization to help negotiate and resolve domain name disputes, but the kind of extortion, which I just described, is something which is far more rare today, but there are still many problems with respect to trademarks and domain names, and those have more to do with whether or not someone’s usage of a trademark within a larger domain name; some variation of a trademark or some compound phrasing that includes someone else’s trademark, whether or not such usage in the domain name is fair and legitimate and allowable under trademark law.

Another twist on this complication has to do with First Amendment rights in the United States for freedom of speech and protest sites, which may use a trademark within the context of a domain name, whereby they’re attempting to call attention to some wrong or to protest something that they see as improper, and so those things get litigated from time to time. There’s a process by which domain name disputes can go through an arbitration to be resolved. A lot of domain names that are registered in bad faith are resolved quite quickly or at least in a fairly uncomplicated manner through that dispute resolution process, simply because the person acting in bad faith doesn’t even try to protest it.

There is another form of cyber-squatting called typo-squatting, which is an attempt by unscrupulous individuals to use typographical errors within existing trademarks of domain names to skim traffic from people who may misspell a popular web site’s domain name. Of course, this is something, which again is done rather abusively.

But I guess if you’re a large, a very large web site and you’ve got a lot of traffic coming to you and a certain portion of that traffic comes to you by typing in the domain name of the site in the browsers, URL bar, then there’s always a chance when we’re dealing with large numbers, a million or ten million or 100 million visitors; a certain percentage of those who type the domain name in their browser are going to misspell it, and there may be some misspellings, which are very, very common; maybe an example might be to take Google and instead of spelling it with two o’s, spelling it with three o’s or one o, and you can do that with yourself as a little experiment with your browser.

A typo-squatter would register the misspelling in hopes of skimming traffic and mutually running some kind of a credit card scam or something, and what they’re trying to do there is not so much take advantage of the unsuspecting visitor, as again, trying to extort money from the legitimate owner of the trademark because they’re uncomfortable with some of the visitors getting sent to the wrong destination.

If you take my example of Google, what you’ll see is if you type in one too many zeroes in Google, what you’ll find is that Google has proactively decided to ensure that you bounce to the legitimate web site, so this is one aspect of managing one’s trademarks on the Internet, which is not only to register important trademarks as domain names, obviously, your company’s name, but also product names, technology names and other ways in which your customers may be familiar with who you are and the products and services that you provide; that you register all of those things, but also to the extent that you have a very important mark and popular destination that you may be preventatively register some of those trademarks that might seem to be obvious typographical errors on your domain, on your trademark names.

There’s a lot of other things that managers can do though, and to try to manage this process of trademarks in a digital world, generally speaking, simply being preventative about trademarks and making sure that important trademarks are registered as domain names, even if you don’t operate web sites under those domain names, you can simply bounce them to your main corporate page if that’s what’s necessary, rather than say being reactive to infringements, and that’s a legitimate strategy. It requires maybe more legal muscle to go after people who have infringed on your mark, but certainly, in some instances, you’re going to need to do that.

Another thing that managers can do is to decide whether or not they want to actively monitor for infringement, and there are some companies on the web today that, as a service, will monitor your corpus of trademarks to check and see how they’re being used on the Internet and to flag any kind of major infringement so that a company and their lawyers can take some action.

Otherwise, you can simply wait until an infringement comes to your attention. Maybe you’ll get an email from a customer or somebody will tell you, but I think being more active in monitoring, and it’s not very difficult to do; maybe would be the right strategy for businesses with valued trademarks.

Once you’ve uncovered an infringement of a trademark, then there are certain decisions there that one needs to make as a manager, but first, you need to just determine is this an active web site that’s using your mark or variation of your mark? Who is the owner or contact people? This is really problematic on the Internet because too many places for too long have allowed the registration of domain names to occur without legitimate verification of who the individuals are who registered the names, and so if you do a lookup using the WHOIS directory, which contains all of the information on what domain names have been registered, you’ll find that usually, in cases whether someone’s acting in bad faith, the WHOIS contact information is completely useless and irrelevant and doesn’t lead anywhere helpful.

If you can find out who owns the site; how do I contact them, that would be promising, but that’s probably only going to occur in cases where there may be a legitimate disagreement about the appropriate use of the trademark and not in a situation where someone is clearly acting in bad faith.

Then you need to determine what, in fact, the site does; does it tarnish the mark? Does it dilute the mark’s value to you? Is there a blurring of the mark such that customers may be confused between your services and whoever else is running this other web site? Are they trafficking the domain? That is, are they offering it up for sale? Are they trying to make money off of your mark in some way?

Then you need to determine how serious is the damage done because, like any issue involving intellectual property, you have to enforce your rights in these instances, and that costs money, so one has to weigh the relative cost of having lawyers pursue the matter, especially because the person infringing may not only be across the country. They may be somewhere else around the world, and they may be trying to cloak where they are, and so all of this adds up, and it can add up very quickly, so one has to think about; well, what’s the damage being done? How much of a cost is that damage to our business, and is it worth pursuing it in order to get some satisfactory resolution, given the costs that are involved.

Now, the good thing is is that through the World Intellectual Property Organization, the domain name dispute resolution process there; one can sort of avoid a lot of the sort of in‑court litigation, especially in instances where they think that someone has acted in bad faith, going through the dispute resolution process is, in all likelihood, going to yield a very satisfactory result for you and without too much great expense. This is, again, the uniform dispute resolution process or UDRP, which is part of WIPO, the World Intellectual Property Organization.

Finally, I think managers need to sort of take into consideration to what extent attempts to police their trademarks and usages and variations on their trademarks meet with general industry practices, and to the extent that one becomes highly aggressive in prosecuting trademarks that they may own, you potentially run into some problem with respect to an adverse effect on public relations, and so, especially with large companies that have many trademarks and globally recognizable trademarks to the extent that fairly minor and small and inconsequential derivatives from the mark may occur in random places. They are aggressively going after those individuals; may come across from a public relations point of view as being somewhat drastic and unnecessary by the public at large, and there are many, many examples of this that one can point to.

There always popping up from time to time, whereby they hit the news, and people are a little bit jarred about why a company is so concerned, and after all, companies with a longstanding and highly recognizable, very, very valuable trademark name of product names; that all plays well to the public image, and so aggressive litigation that seems frivolous or inconsequential just doesn’t really serve any good purpose in this regard.

Let me just conclude by saying I think that the best advice is really to be very proactive with respect to one’s trademarks in the digital world, so whether you have sort of new products coming out or important technologies imbedded in these products that are going to be used in the context of advertising that are going to have general public awareness, then I think that one should really be aggressive in locking onto the necessary domain names that you need in order to protect yourself as people come looking for your product and service online, and I think that when we think about; for starting a new company, clearly, and certainly existing companies; if you think about product names, I think now the domain name’s side of that should be hand-in-hand with product naming, so I wouldn’t choose any product name unless I thought I could get a distinctive domain name that would protect my interest in that regard.

More and more every day, when people go looking for something, they turn to the Internet to find it, and the domain name is important, even if they go to Google or Yahoo and search on a company name. Having the name imbedded in the domain name itself is going to increase the likelihood that that link is going to pop up at the very top of a search, so it’s not a frivolous thing, and especially in terms of protecting yourself from some other party registering those domain names that could be relevant and important to you and especially from people who may be acting badly, so it certainly proves to us to pay a lot more attention to trademarks in the digital world.

This is Professor Michael Rappa. Until next time, all the best with your studies.

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Unedited transcript of audio podcast produced on November 18, 2005.

Audio source file: http://digitalenterprise.org/podcasts/trademark.mp3

Michael Rappa is the Alan T. Dickson Distinguished University Professor of Technology Management at North Carolina State University.

For more information, please visit: digitalenterprise.org