Launching a Website? Here Are 5 Common Intellectual Property Pitfalls to Avoid.
Receiving a cease-and-desist letter or, worse, having a complaint filed against you in court, is never a welcome occurrence. Multiple resources must be diverted away from your business and toward resolving the dispute or rebranding. A modest investment in intellectual property (IP) diligence work before launching a website can help you avoid the following common pitfalls.
Pitfall No. 1: Infringing someone else's trademark rights
The problem: You've selected a brand name for your new website or product and spent money developing content and promotional materials around the brand. Now you get a letter from Company A claiming you're infringing its trademark rights and demand that you stop all use of the name. You face tough choices -- do you rebrand or pay a lawyer to fight the demand?
This dilemma is anything but uncommon. For example, DCistNOW.com changed its name after Joe Ricketts of NewMediaNews, owner of DCist, sent a cease and desist letter. And Christian clothing company Armor & Glory was sued by Under Armour for trademark infringement seeking it surrender its domain name using "Armor," its products and profits.
How to avoid it: Before you are too invested in a name, pick several candidates and do some diligence. While there may be no such thing as a 100 percent safe trademark, there will likely be major differences in risk among various candidate marks. Run initial searches on the internet, the USPTO's website and applicable foreign databases such as WIPO, EUIPO and the Canadian Trademarks Database to see if anyone is already using the same or a similar name for a related product or service. In running these searches, think about what you foresee your company doing in the next three years and make sure no one is occupying a similar space. If you don't find someone else using a concerning mark, consult with a trademark attorney who has additional resources and expertise to identify and evaluate any risks. A couple thousand dollars now can save you vastly more down the road.
Pitfall No. 2: Choosing a name that cannot be protected
The problem: You've selected and are using your brand name, only to find that it cannot be registered, protected and/or enforced. For example, the Trademark Trial and Appeal Board refused registration of ECONTEXT for, inter alia, "computerized market research services," finding it to be merely descriptive of electronically delivered marketing strategy involving relevant situational circumstances. If you haven't selected a protectable name and registered it as a trademark, you might have difficulty stopping Company B from using a confusingly similar mark or claiming certain kinds of damages.
How to avoid it: After selecting your name, file to register it as a trademark. A federal registration provides benefits that include a presumption of ownership and validity and the right to seek certain monetary damages. It also acts as a deterrent to others adopting a similar name. Make sure your application covers all of the products and services you hope to offer within the next few years. Apply in other countries where you expect to operate.
Once you own your mark, enforce your rights to it. If you see another company using a similar mark for a similar product, consult with your trademark lawyer about how to stop it.
Pitfall No. 3: Failing to coordinate domain name registration and adoption of a trademark
The problem: You've selected and filed for a mark. But, when you go to register the corresponding domain name, it's already taken. If the owner learns that you are intending to launch a web business with the same name, the owner will likely assume you are desperate for it and will pay a hefty sum to get it. Or, under another scenario, you pay a lot of money for a domain name only to find out that the trademark is not available in the United States or another important market for your business.
How to avoid it: Coordinate the timing of your trademark filings and any disclosure of your intended name with your purchase of domain names to ensure that both are available and affordable for the name you choose in the U.S. and any other countries where you plan to operate.
Pitfall No. 4: Using content that you don't own
The problem: In designing your website, you use content from the internet. Now the owners of the copyrights in that content demand payment because you used material without their permission. Getty Images, for example, frequently send letters to people who they suspect have used their copyrighted images without permission and has filed suit when those letters were ignored.
How to avoid it: Make sure you have the right to use all the content on your website. Never copy and paste images or text from the internet without permission. Either develop your own content or obtain a license from the copyright owner. And don't forget that showing faces or using names of people to promote your business may violate those persons' rights of publicity. Make sure that you have adequate agreements in place with any third-party content providers. This includes having consultants or contractors hired to create work assign the copyright to you. Otherwise, the consultant or contractor will own the copyright.
Pitfall No. 5: Making unsubstantiated advertising claims, especially in comparative advertising
The problem: In marketing your new product or service, you make claims on your website about it based on unsubstantiated or incomplete information. The claims might also compare your product to Company C's product. Company C sees your marketing materials and files a complaint for false advertising. Or, you learn that the Federal Trade Commission is questioning your claims.
How to avoid it: Make sure any claims you make on your website (or in any other marketing materials) are true and backed by substantial and credible evidence obtained before you make those claims. Use a respected third party to conduct any scientific tests or analyses. Make sure you keep the supporting documents and materials. Remember to update claims if they're no longer true.
Be particularly careful when making claims about competing products. While comparative advertising is not unlawful in the U.S., it must comply with advertising and trademark laws. And while comparative advertising can be very effective, it's risky because it will be scrutinized by your competitors. Also, be careful about using your competitors' and others' trademarks. For example, avoid using their distinctive logos or using their names in any way that suggests an affiliation or association with you that doesn't exist.
Spending some resources up front before launching a website can save you from these pitfalls and the serious business threats they can create down the road.