Archive: Legal

They say that imitation is the sincerest form of flattery, and its not uncommon for successful sites and designers to find their work being appropriated by others, but when the hard work youve put into a project is blatantly ripped-off elsewhere it can really hurt, not to mention potentially cause damage your business.

Unfortunately the (US) Copyright Act of 1976 created a common misconception about copyright law that still exists today, some thirty years later. This misconception often serves as a trap that many a copyright owner, including web developers and designers, unknowingly falls for. What is it? Its the belief that “a copyright owner does not have to file a copyright application to protect its works…rather, copyright protection forms when the works are created.”

While technically true (copyright protection begins at the ‘publication’ of the work), taking a “I don’t need to file copyright applications” attitude can often come back to haunt you. The reason for this, under the US Copyright Act, is that registration of the copyright within ninety (90) days of publication (or before infringement takes place) is necessary to enable the copyright owner to receive what are referred to as “statutory damages.”

Here is where the “I don’t need to file copyright applications” strategy bites you…if registration is not made within that time limit, the only action you as a copyright owner can take against an infringer is essentially limited to:

1. the Court ordering the infringer to stop infringing and
2. damages in the amount of the infringer’s profits or the copyright owner’s loss (which are often the same thing).

As you can imagine, proving what your loss actually is or what monetary amount the infringer profited can be difficult, if not impossible. Further, the recovery of attorney’s fees and costs is not possible either, meaning that your actual recovery would be (profit or loss) minus attorney fees!

The result is that many copyright owners, when faced with infringement of a copyright they failed to register, are left in a position where tolerating the infringement is better than paying an attorney’s bill with no hope of recouping that expense in order to get the infringer to stop.

Know Your Statutory Rights

However, if you have complied with the requirements of the Copyright Act and actually filed a copyright application at the appropriate time, then the aforementioned “statutory damages” come into play.

What are these statutory damages? In the US they include: a sum of not less than $750 or more than $30,000 per work infringed; attorneys fees; costs; and, where the copyright owner can show that the infringement was willful, an award of up to $150,000 per work. As you can imagine, the threat of statutory damages (including attorneys fees) alone are often enough to force the alleged infringer to the bargaining table (a tactic that individuals sued by the RIAA are well aware of). As you can see, the availability of statutory damages often makes or breaks the decision of whether or not legal action is even a viable option.

Note: for those of you reading this outside the United States, if your country has entered into the appropriate copyright treaty with the United States (most have), then statutory damages for infringements in the United States are likely available to you as well (presuming you comply with your country’s registration requirements (consult with a local attorney for more information.

Are you convinced yet?

Did I mention that the fee for filing a copyright application is only $45? Of course, having a copyright attorney prepare the application for you (should you choose to have that done) will cost you more than that, but it isn’t uncommon for startups to assume the risk, read up on the topic and file their own copyright applications. More information about the U.S. registration process can be found on the U.S. Copyright Office’s Registration website

Another, related, registration question that you may have is “if I can’t file the application until the work is complete and ‘published,’ how can I protect my work?” This is a question that oftentimes applies to alpha and beta software testing. Luckily, the U.S. Copyright Office recently started a “preregistration” system that allows copyright owners to file what essentially is a temporary application with the Copyright Office. This “preregistration” allows the copyright holder to file a copyright infringement action even before the work is commercially distributed (and traditional registration is possible) should the work be infringed. http://www.copyright.gov/prereg/help.html

Whose right is it anyway?

Finally, web developers should remember that in the US the author of the work is the owner of the work unless the author has assigned his/her rights in writing, has a duty to do so based upon an employment agreement, or the work is one of the few other “works for hire” exceptions (”a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas”). So, when you are working with an independent contractor on your projects, it is essential that the written agreement you have with the independent contractor includes and assignment of his/her copyright interests to you. Of course, your intellectual property attorney could assist you in preparing the appropriate agreements for signature.

A few ounces of preventative medicine today may save you tons of copyright issues down the road.

Trademarks and names

Whether it’s Whistler or Longhorn, product codenames eventually get replaced with a formal product name. Determining what final name to use is a delicate balance of marketing (including domain name availability) and trademark rights. Just because a name would be a strong trademark doesn’t mean it is appealing from a marketing perspective, and vice versa.

A general understanding of how trademark strength is determined should aid in helping you choose a name for your web app, service or product, which will maximize its trademark potential.

What is a trademark? In legal terminology, a trademark is an ‘indicator of source.’ While legal definitions have never been accused of being easily understandable, what ‘indicator of source’ really means is that the trademark is a virtual arrow that points to a single business (or other entity). For instance, when you see the word FLICKR, you automatically think of a web app, now owned by Yahoo!

If a trademark ‘points’ to a single source of goods, then it is ‘distinctive.’ Distinctive trademarks are protectable, those that lack distinctiveness are not protectable. Thus, not all names are created equal.

Traditionally, trademarks can be classified into five different categories: generic (generically descriptive) trademarks, merely descriptive trademarks, suggestive trademarks, arbitrary trademarks and coined trademarks.

a. Generic

Generic trademarks are trademarks consisting of the generic name of the goods or services (hereafter just ‘goods’).

• Example: Company X releases a new web-based spreadsheet application under the trademark SPREADSHEET.

In such a case, it is impossible for the trademark SPREADSHEET to indicate source because a consumer will always view the word ’spreadsheet’ as generically describing the goods (a spreadsheet) rather than serving as a trademark (pointing to a single source of goods). Generic trademarks are never protectable and should be avoided like the plague.

b. Merely descriptive

Merely descriptive trademarks aren’t the generic name of the goods, but instead they describe them.

• Example: Company X releases a new web-based spreadsheet application under the trademark of FAST.

While FAST isn’t the generic name for a spreadsheet, it does (presumably) describe Company X’s spreadsheet. A consumer seeing the word FAST on a spreadsheet would not view the usage as a trademark (pointing to a single source of goods) but would instead view it as merely being a description of the goods themselves (that they are fast). Thus, Company X’s FAST trademark fails to function as a trademark (it doesn’t distinguish over the goods of its competitors) and is therefore not protectable.

Of course, if a trademark owner’s use of a merely descriptive trademark over an extended period of time results in consumers actually viewing the term as an indicator of source and not as being merely descriptive of the goods, then at that point the trademark has ‘acquired distinctiveness’ (secondary meaning) and is protectable. Acquired distinctiveness can be difficult to prove and as such it is typically best to avoid adopting merely descriptive trademarks.

c. Suggestive

A suggestive trademark does not merely describe (or generically describe) the goods, but instead suggests a feature or quality of them.

• Example: Company X releases a new web-based spreadsheet application called CONFIDENCE.

While the term ‘confidence’ may suggest that you can trust the spreadsheet, it does not merely or generically describe the spreadsheet. Suggestive trademarks are by definition distinctive and are protectable.

So, where is the dividing line between ‘distinctiveness’ and ’suggestivity?’ Judging whether a term is properly classified as descriptive or suggestive depends on several factors. Generally speaking, suggestive trademarks are those which need imagination, thought or perception to decide what the goods actually are. Descriptive marks, on the other hand, immediately describe something about the goods with which the mark is associated. So, if the words in the mark describe the goods connected with the mark, then the mark is descriptive. If, however, a consumer must make a leap of imagination to understand why the trademark was selected, then the mark is suggestive. All clear?

d. Arbitrary

An arbitrary trademark is one whose use is arbitrary…having no connection with the goods.

• Example: Company X releases a new web-based spreadsheet application called ICECUBE.

The word icecube has no relationship to spreadsheet applications. Its use is completely arbitrary. Arbitrary trademarks are, by definition, distinctive and protectable.

e. Coined

A coined trademark is a trademark that was coined or made up.

• Example: Company X releases a new web-based spreadsheet application called XYROTHAN.

The word xyrothan has no meaning in English or any other known language. Coined trademarks are likewise, by definition, distinctive and protectable.

Summary

Generic trademarks should never be used. Merely descriptive trademarks should be avoided because to be protectable you have to prove that the public has come to recognize the trademark as an indicator of source and not as merely being a description of the goods. Suggestive, arbitrary and coined terms are therefore desirable from a strength standpoint.

This is a hard lesson for many entrepreneurs to learn. Most want to use a product name that enables aperson viewing the trademark to immediately know what the product is. The problem is that because a merely descriptive trademark uses descriptive terms, every knock-off application that surfaces will likely use one or more of the same descriptive terms in naming their product. When that happens, consumers are easily confused into which product to download/use. Thus, it is imperative that you pick stronger trademarks to use with your goods.

Trademark Registration

Provided that your trademark is not generic or merely descriptive (unless secondary meaning exists), it may be worth your while exploring the benefits of trademark registration.

Note: trademark rights vary from country to country. The following briefly explains the benefits of Federal (US) registration for trademarks used in the United States. If you reside in another country, you’ll want to discuss these matters with local counsel.

Why Register?

A trademark user acquires rights in a trademark by using the trademark in commerce, not by registering it. The value of Federal (US) Registration is that it provides a registrant with broad nationwide coverage for the trademark upon the cited goods. Prior users, if any, typically can only cut snippets from this broad blanket of coverage. Federal Registration also puts others on notice as to the registrant’s use, thereby preventing future conflicts by warning off potential users of the same or similar trademarks. An additional benefit is the possibility that the U.S. Patent and Trademark Office (USPTO) would prevent later filed trademark applications from registering that are likely to cause confusion with your trademark.

Trademark Searching

Because US Federal and state trademarks can be infringed, and common law/state unfair competition actions also come into play, a proper trademark search of Federal (US), state (all 50 states if the trademark will be used in interstate commerce), common law, and international trademarks should be made before settling upon a product name. Such a search should be performed regardless of whether or not a trademark application will be filed.

If a potential issue exists with respect to your proposed trademark being likely to cause confusion with a third party’s trademark, knowing that fact before expending thousands/hundreds of thousands of dollars in advertising and branding will oftentimes prevent a tremendous amount of grief.

While an intellectual property attorney’s services are typically needed to perform thorough trademark searches and the interpretation of the results, a cursory search of the Internet for related products, as well as searches of the USPTO trademark databases: www.uspto.gov can be made as you narrow your list of product names to have your intellectual property attorney review.

Consideration of these points should help increase the protectability and ultimate strength of the trademarks you use.

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