New Sources of Old Problems
The ubiquity of the Internet in commercial activity has sparked rapid growth in the breadth and depth of trademark and unfair competition law and has forced a reconsideration of traditional trademark principles by the legislature, judiciary, industry, and the practicing bar. By its very nature, the law remains in a state of rapid evolution during seasons of great technological growth. And, the introduction of new technologies to an existing market, platform, or way of doing business always results in an upswing in litigation, resulting in new decisions from the bench and new legislation in Congress.
In recent years, we have seen Congress and the courts pass and interpret, among others, anti-counterfeiting, anti-cybersquatting, and federal trademark dilution statutes. Recognizing the need for a modern application of sound legal principles rooted in trade identity law, the process for handling domain name disputes has been reworked (and reworked) and conflicts arising from keyword and other forms of deceptive advertising and marketing schemes on the Internet have been the subject of intense litigation and are squarely on the radar of the Federal Trade Commission.
The good news is that the body of trademark law is responding to our new reality of bits and bytes in a 140-character world. The bad news is that it takes time and patience for lasting change to be implemented and frustration and confusion easily persist along the way. It is during these periods of uncertainty that business owners and brand owners find themselves vulnerable to the Mutts and Jeffs of the world. The lines delineating what activities are considered fair versus those that are unfair remain blurry and are difficult to tow. This article will introduce three common areas rife with trademark misuse on the Internet and provide practical suggestions for brand owners to monitor the misuse and for unwitting infringers to avoid getting caught on the wrong side of the tracks.
A trademark is a word, design, or a combination used by a manufacturer or merchant to identify its products and services and distinguish them from the products and services of others. It is the name/logo by which consumers recognize, distinguish, and appreciate goods and services in the marketplace. Ultimately, a trademark is a vessel for a brand’s reputation, goodwill, and commercial value and it symbolizes the social and economic power of customer loyalty.
A trademark does not have any inherent meaning or worth per se. It accumulates value only after it is used – in commerce — to designate a particular brand of good or service. Consider this: the term GOOGLE has little to no value outside of its designation as the brand name for a search engine. But, when used in a trademark manner, as the brand name for an Internet search engine, it has tremendous commercial, financial, and social value. Likewise, the NIKE “Swoosh” has no inherent meaning or worth outside of its designation as a sports brand. In 1971, Phil Knight paid Carolyn Davidson $35.00 to create the “Swoosh” logo. Today, the brand has an estimated value of more than $14 billion. Whether a brand’s commercial worth is $14.00 or $14 billion, its value is always diminished by trademark misuse.
The most fundamental goal of trademark law is to protect the public interest against deception in matters of trade identity by preventing one merchant or trader from free-riding on the goodwill and reputation of another and becoming unjustly enriched as a result. Garden variety trademark infringement occurs when one merchant or trader uses a mark that is so similar to the trademark owner’s that it causes consumers to buy the infringing products when they really meant to buy the properly marked goods. But, trademark infringement also occurs when the reputation and goodwill associated with a mark is injured by virtue of trademark misuse, even though it does not result in the diversion of sales. This happens when an infringer uses the true owner’s mark (or very similar mark), usually on non-competing goods, in a way that suggests an affiliation with or sponsorship by the mark owner that does not actually exist. This can lead consumers to ascribe unmerited trust in the infringer’s product or to assign blame to the trademark owner for the poor quality of the infringing goods and services. The latter type of trademark misuse is prevalent online and can be easily promulgated through social media.
For this, and many other reasons, the advent of social media is a double-edged sword: its immediacy and accessibility is at once a blessing and a curse. Inasmuch as information can be disseminated to a limitless audience in mere seconds, viral marketing still has its magic moments on the social web. But trademark owners and brand managers must be increasingly vigilant in monitoring social media activity that may injure the strength, reputation or goodwill in their various brands. Policing misuse of valuable trademarks in the online space is no longer an option, it is an imperative. As the maxim states, the best offense is a good defense.
Three Categories of Trademark Misuse in Social Media
1. Misrepresentation on the Internet as to Source, Affiliation, or Sponsorship
Use of another’s trademark that suggests an improper affiliation or sponsorship that does not actually exist is trademark misuse. Activities that contribute to this type of misuse include using another’s trademark in a domain name or personalized username/sub domain with the goal of diverting Internet traffic to the infringing address. (Holding the domain/username “hostage” until the true trademark owner pays up is cybersquatting, another category of trademark misuse.) Using another’s trademark in website metadata or as a key word to increase search engine rankings may also be misuse, as are some types of web linking, deep linking, and website framing. And, when any website or web address including any of these potential forms of misrepresentation is mentioned on or promoted through social media, the misuse is perpetuated — exponentially.
When the Twitter handle @LouisVuitton was first registered, it was not to the high-end retailer, but to an unrelated individual. The harm in this case stemmed from co-opting a protected trademark in a manner that arguably suggested some type of tacit or implied affiliation with the Louis Vuitton brand. The web address www.twitter.com/louisvuitton is now properly owned by Louis Vuitton Digital Worldwide.
A number of years ago, Uzi Nissan, the proprietor of Nissan Computer, a computer repair shop, promoted his company’s services through his websites www.nissan.com and www.nissan.net. While the initial use of these sites was limited to computer repair services and the like, the company began to display car-related advertisements and links to other car merchandisers on its websites. Nissan Motor Co., owner of a federal trademark registration for the mark NISSAN for automobiles, sued. The court held that posting car-related advertisements and car-related Internet links on Nissan Computer’s websites was trademark misuse in that it created increased advertising revenues given the diversion of a consumer’s initial interest in NISSAN branded vehicles.
To mitigate this type of trademark misuse, start by taking some practical “self-help” measures. First, buy up the domain names that comprise your most important marks (and slight variations) for all available top level domains, e.g. .com, .net, .org, .info, and so forth. Next, register your important brand names as usernames on relevant social media sites, familiarize yourself with their use policies, and follow the established protocol for registering complaints. Finally, establish Google Alerts for your important marks and monitor the results.
2. False and Misleading Advertising: Comparative Use v. Disparagement
Comparative advertising, aka “my product is better than yours” advertising, is an appropriate marketing technique provided the content of the advertisement is straight-forward, truthful, and non-deceptive. The strategy of comparing products is very effective and particularly helpful for newer brands trying to gain recognition relative to industry standards.
In the early 1970s, the Federal Trade Commission showed public support for this type of advertising on the basis that it is more informative for consumers. Since then, we have seen the comparison wars being fought on many fronts on a daily basis. You may recall Wendy’s “Where’s the beef?” (and, more recently, “Here’s the beef!”) campaign to promote the quality of its meat over other fast food burger shops. AT&T and Verizon have relied heavily on comparative advertising in their intensely heated battle for mobile customers. And to smooth the way for its entry into the coffee market, Dunkin’ Donuts took Starbucks head on in comparative ads by emphasizing the different price points and appealing to a broader class of customers. Not until an advertisement includes false or misleading statements about another’s products or services does the comparative use become a disparaging, and actionable, misuse.
The impact of this format is enhanced when used in social media. Not only can the visual effects of a television ad be replicated online, but important keywords and hashtags embedded in a post can help to spread your message. Moreover, advertising activity through social media is necessarily an interactive process that engages both advertiser and customer. Herein lies the risk.
Beware of mission creep! Stay true to the original goal of fairly touting the benefits of your products in relation to another’s. Encourage customer feedback, but actively monitor their posts and delete any that include disparaging content on pain of being held responsible for their actions. Failure to monitor the interaction between advertiser and consumer may be construed as an implicit endorsement of the consumer’s position and impute unwanted legal liability.
3. Watering it Down: Dilution by Blurring or Tarnishment
The goal of trademark dilution law is to protect the business reputation and distinctiveness of well-known trademarks from deterioration caused by another’s use of the same or similar mark on unrelated products or services, e.g. KODAK bicycle, GOOGLE grocery store, CHEWY VUITTON dog toys. The harm to the trademark owner comes from a gradual whittling away – or dilution — of the positive image each mark conjures in the public’s mind by its use on these non-competing goods. This erosion is directly translated to economic harm when it results in reduced sales and/or advertising revenues.
There are two types of trademark dilution: dilution by blurring and dilution by tarnishment. Blurring occurs when a distinctive mark is used on non-competing goods in a way that weakens, or blurs, the mark’s ability to bring to mind a particular product, e.g. a KODAK bicycle or TOYOTA computer. Tarnishment occurs when a distinctive mark is used in a distasteful or inappropriate manner such that the positive associations engendered by the mark are diminished, or tarnished. In essence, it lessens the commercial appeal of the mark, e.g. The TIFFANY Tavern, BUTTWEISER t-shirts, CHEWY VUITTON dog toys.
It can be tempting to purchase a domain name that contains a famous trademark and connect it or redirect it to a different website that promotes wholly unrelated goods or services. The same goes for co-opting well-known brand names for usernames and other social media handles/URLs. However, even if your efforts are not intended to cause harm to the trademark owner, but simply to give yourself a boost, you just might land in the middle of a mess, a federal trademark lawsuit mess. Caveat emptor! Innocent infringement is as actionable as willful infringement, so steer clear of the danger zone.
The Path Forward
Social media is still a very new platform for promoting and conducting commercial activity. As social technology continues to advance and we transition into the era of the semantic web, the law will work to stay apace and promises to provide measured guidance along the way. Historically, trade identity law has shown itself to be flexible and malleable in the face of technological change and has demonstrated the ability to respond effectively and often just in time before Mutt and Jeff cause too much trouble.