1 January 2011CopyrightKaty Cullen and Amanda Mallon

Social-networking sites: opportunities and challenges for brand owners

The growing popularity of social-networking sites is a double-edged sword for trademark owners, who may benefit from the increased exposure of their brands on these websites, but who must also deal with the threat of trademark infringement by the users of such sites. Policing the use of trademarks on the Internet can be extremely challenging—a task made more difficult by the colossal volume of information and its global reach.

The opportunity

The surge in social networking, particularly among young, affluent consumers, presents brand owners with opportunities they cannot ignore. Each of the top 10 brands on Twitter and Facebook has millions of users following it, and so the potential positive implications are huge. The use of social networking to facilitate commerce was largely assisted by Facebook’s creation of ‘vanity URL’s’ in 2009.

These allow users to create personalised usernames and have been utilised by brand owners to create their own official Facebook sites (for example, Hugo Boss’s Facebook page is found at www.facebook.com/ hugoboss). As a consequence, dedicated sites can provide a forum for online trading—Heinz recently made headlines in the UK by launching a limited edition ketchup product on Facebook.

Challenges

However, these opportunities are accompanied by the challenge of controlling the use of trademarks in the vast, fluid, cross-border—chaotic even—world of social-networking sites. Trademark owners must therefore be aware of the following issues.

Trademark infringement and dilution

A common example of ‘traditional’ trademark infringement on social-networking sites is that of ‘brandjacking’, where fake profiles are set up on a site in the name of a business or notable individual. For example, an ‘ExxonMobilCorp’ account set up on Twitter that purported to answer questions about the company was later stated to be unauthorised. The account contained several errors that could have been detrimental to the brand’s image.

It is therefore important that companies control third-party usage of their trademarks, especially in usernames, in order to control the public’s perception of their brands and avoid any false association. In addition, although it is difficult owing to the nature of the content generated on social-networking sites, brand owners should look out for users of Facebook, Twitter and other networking sites seeking to use a brand name to advertise counterfeit products or services.

This can be achieved by using a ‘web chatter’ listening service to monitor brand usage and ensure early steps are taken to prevent unauthorised trademark use.

Social networking has also produced a proliferation of third-party ‘fan’ sites. By definition, these sites generate free publicity for brands, but if left unchecked, can also erode the very image that brand owners so carefully strive to nurture and project. Brand owners such as Coca-Cola have therefore chosen to embrace and participate in existing fan sites, thus gaining a degree of control as opposed to demanding their removal and possibly creating negative publicity.

Genericide

‘Genericide’—the loss of trademark rights because of a mark’s amalgamation into the general language of a market—leaves the brand owner without legal protection and can be disastrous for a business. For example, a European Community trademark can be revoked if it has become the common name in the trade for the products or services registered. Genericide is not peculiar to the Internet and many former brands, such as ‘escalator’, fell into the public domain well before the advent of social-networking sites.

However, these sites have reduced trademark owners’ control over how their marks are used in the public domain. It is therefore imperative that owners police the use of their trademarks and take immediate steps against any inappropriate use. By way of example, although Google’s media campaign in reaction to the Washington Post’s assertion that its use had become too generic was regarded as heavy-handed by some commentators, it had the effect of retaining the sanctity of its trademark.

Genericide due to use on social-networking sites can be very difficult to prevent, owing to the sheer volume of content and difficulty of searching social media.

However, brand owners should monitor the use of their trademarks on social-networking sites as best they can, again by using a ‘web chatter’ service. Prompt action should be taken to address any improper or incorrect use by contacting the user of the brand directly and, if appropriate, launching a targeted marketing campaign to educate the public about the ownership of the brand.

Brand owners should also keep a record of all action taken to ensure they can demonstrate proper control of the mark should this ever be challenged in the future.

Do current trademark laws address the issues presented on social-networking sites?

The fundamental principles of trademark law apply to all forms of use, including use on socialnetworking sites. Any proven online misuse of brands is likely to be dealt with in the same way as misuse in the physical world. However, there are a number of difficulties regarding legal action against users of social-networking sites. Firstly, offenders may be difficult to catch, as they may not have registered on sites under their own name, and may therefore be able to evade prosecution.

In addition, due to the rapid growth in use of social-networking sites, the legal framework has not caught up with trends in infringements. The trademark may not always be used to sell goods or services, meaning that current laws in some jurisdictions may be inapplicable, and laws on domain names and copyrighted content may not apply to social media. In addition, a trademark owner’s rights may be limited territorially, depending on where the trademark has been registered.

Twitter has been sued twice in the US for trademark infringement, but both cases were voluntarily dismissed, due in part to the fact that the plaintiff brands could not prove that the false account was likely to confuse consumers. The facts of both cases illustrate the problems in bringing a trademark infringement claim against a social-networking site.

The World Intellectual Property Organization’s Standing Committee on the Law of Trademarks, Industrial Designs and Geographical Indications attempted to deal with some of these issues in its Joint Recommendation of November 2010, stating that “the use of a sign on the Internet is treated as the use in a Member State, only if the use has a commercial effect in that particular member State”.

It also provides a non-exhaustive list of factors to assist the competent authority in making a decision on commercial effect. If the use of a trademark is found to have commercial effect in a member state, the Joint Recommendation provides a notice and avoidance of conflict procedure that is intended to balance the interests of good faith legitimate users and owners of infringed trademarks.

If use of a trademark is found to be in bad faith, the competent authority in the member state may then impose a number of sanctions, including gateway web pages, or the imposition of a statement on the Internet, making it clear that the infringing party has no relationship with the trademark holder. However, the Joint Recommendation does state that, wherever possible, a member state should avoid imposing a remedy that would, in effect, prohibit any further use of the sign on the Internet.

The Joint Recommendation may not be perfect, but at least it represents an attempt to address social networking from a trademark perspective.

In practice, there is very little trademark case law involving social-networking sites, and most objections by trademark owners to date have been settled by notice and takedown procedures operated by the networking site providers. For example, if a trademark owner discovers an infringement on Facebook, they can fill in an automated IP infringement form and Facebook will either remove the page or block access to it.

To prevent username squatting, Facebook specifically prohibits the transfer of user names and will reclaim any names it determines are being used for squatting. This is a clear and successful method to avoid the commoditisation of usernames, which is rampant in the field of domain names and detrimental to brand owners. Such procedures are valuable tools against trademark infringement and may also help the social-networking sites themselves avoid allegations of contributory infringement.

However, if a trademark owner considers that the infringement has led to financial damage, it may still consider legal action. It is also interesting to note that Twitter’s trademark policy explicitly states that “using another’s trademark in a way that has nothing to do with the product or service for which the trademark was granted is not a violation of Twitter’s trademark policy”.

Therefore, whilst Twitter’s policy will accommodate blatant cases of infringement, more complex cases involving the use of marks with a reputation in connection with dissimilar products or services still require recourse to the courts.

Social-networking sites provide a significant opportunity for brand owners to capitalise on their brand’s exposure to its consumer base. However, this exposure comes at a price: brand owners must now invest heavily in monitoring and protecting their brands to avoid misuse and infringement by third parties. Brands therefore need to formalise their presence on social-networking sites, while acknowledging that they have limited control over third-party output and must therefore continually police the very same sites.

Katy Cullen is head of trademarks and designs at Walker Morris. She can be contacted at: katy.cullen@walkermorris.co.uk

Amanda Mallon is an associate trademark attorney at Walker Morris. She can be contacted at: amanda.mallon@walkermorris.co.uk

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