Names' Sake: Social media pose trademark threats for companies

Dell Inc. knows a thing or two about social media. The Texas-based computer giant has created three photo streams on Flickr, 26 pages and groups on Facebook and 34 Twitter feeds. These include a Facebook page for "US Consumer Dell Deals," a Facebook Fan group entitled "I support Dell for choosing Ubuntu Linux," and Twitter feeds offering special deals to small businesses.

Dell isn't alone. Many other well-known companies are pursuing the marketing opportunities offered by social media. Ford, Target, Coca-Cola and Pepsi are some of the businesses on Facebook.

United Airlines, Hotwire, CNN and InsideCounsel (twitter.com/InsideCounsel)are among those with Twitter feeds.

"Companies recognize that social media sites are great ways to engage with consumers," says Douglas Masters, an IP attorney at Loeb & Loeb. "It gets them more involved, more interactive."

But social media also pose trademark worries for businesses. "The problems are close to those in cyberspace [generally]," says Ian Saffer, a trademark and copyright litigator with Townsend, Townsend and Crew. "Companies and celebrities are at risk of some imposter taking their identity. Sometimes it's out-and-out theft, other times it is just limited real estate. For instance, there's the URL www.facebook.com/delta. Who gets it, Delta Airlines or Delta Faucet?"

The trademark issues may be similar, but the law isn't. There are clear rules and legal procedures for resolving cybersquatting and other domain name disputes, but the law hasn't yet caught up to social media. "This is somewhat uncharted territory," says Robert Zelnick, a trademark partner with McDermott Will & Emery.

Domain Disputes

If a domain name makes unauthorized use of a company's trademark--for instance, if www.dell.com were to be registered by a competitor--there are powerful legal remedies. The Uniform Domain-Name Dispute-Resolution Policy (UDRP) enables the mark's owner to bring the matter to an arbitrator for a quick resolution of the dispute. The arbitrator will award the domain name to the trademark owner if that owner can prove three things: The domain name is identical or confusingly similar to the owner's trademark; the current owner of the domain name has no right to or legitimate interest in the domain name; and the current owner of the domain name has registered and is using it in bad faith.

A trademark owner in the U.S. also can seek relief under the Anticybersquatting Consumer Protection Act. This federal statute creates liability for any entity that, "with a bad faith intent to profit from the goodwill of another's trademark," registers or uses a domain name that is either identical or confusingly similar to a mark that is distinctive at the time the domain name is registered; or identical, confusingly similar to, or dilutive of a trademark that is famous at the time the domain name is registered.

A mark is distinctive if it is arbitrary (rather than descriptive of the company or its goods/services) or is descriptive but has acquired secondary meaning.

Secondary meaning exists if a significant percentage of consumers view the mark as indicating the source of goods or services.

If a trademark owner wins its suit under this statute, the court can award the trademark owner the disputed domain name. The trademark owner can also get either actual damages or statutory damages of between $1,000 and $100,000 per domain name.

Unfortunately, neither of these legal remedies may help protect trademarks in the realm of social media.

Unresolved Issue

The problem with the UDRP is that it covers only potentially infringing second-level domain names. These domains appear in the Web address immediately preceding the top level domain, such as .com. This enables ExxonMobil to use the UDRP against a cybersquatter who registered www.exxonmobile.com.

Social media, however, do not provide users with second-level domain names. Instead, each user receives a username (such as a Twitter account @ford) and/or a personalized subdomain, which appears after a slash in the Web address (such as www.facebook.com/ford). "The UDRP does not apply to this," says Michael Boudett, a trademark partner at Foley Hoag.

The Anticybersquatting Consumer Protection Act (ACPA) may be similarly circumscribed. The statute applies to domain names that are "registered with or assigned by any domain name registrar ... as part of an electronic address on the Internet." This clearly covers second-level domain names, which are granted by registrars. Registrars, however, have nothing to do with the usernames and subdomains created in social media. Indeed, when Congress was enacting this statute, the Senate report on it stated that ACPA narrowly defined "domain name" in order "to target the specific bad-faith conduct sought to be addressed while excluding such things as screen names, file names and other identifiers not assigned by a domain name registrar or registry."

Nevertheless, at least one company has asserted ACPA in a social media context. Clean Flicks Media, a small Utah company that has two federal trademarks in its company name, is suing a competitor for registering www.myspace.com/cleanflicks. As of press time, the judge had not ruled on the validity of this claim.

"The bottom line is that this issue is not resolved," Boudett says. "The legal applicability [of ACPA] is still unclear."

Commerce Conundrum

Trademark owners have other legal options. They could sue under federal trademark law for trademark infringement or unfair competition, for instance.

These Lanham Act claims, however, may run into another limitation: The statute can be asserted only against those who wrongfully use a mark "in commerce." This requirement may be met in a social media context only if the defendant uses a social media site to sell goods or services. "Otherwise, the trademark owner may not be able to make out a Lanham Act claim," Saffer says.

A better solution may be to avoid courts altogether. If some entity is wrongfully using a company's trademark on a social media site, the company can complain to the operator of the social media site. Facebook, Twitter and other major social media sites have expressed a willingness to protect trademark owners, and they have established relatively simple procedures for receiving trademark complaints.

It is unclear, however, how the social media companies will handle complaints--or whether the results will please trademark owners. "Nobody is quite clear what Facebook's resolution process is or how it will be applied," Saffer says.

The best option for trademark owners may be to avoid trouble at the outset and register their trademarks as usernames on social network sites before anyone else does. That, however, may be easier said than done.

"If you are a company with a broad trademark portfolio, it is becoming almost impossible to reserve all your trademarks and misspellings of your marks in all of these domains and social networks," Boudett says. "You can employ someone full time just to apply for these names."

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Steven Seidenberg

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