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December 01, 2009

Working Smart

It’s a Jungle Out There Part 2: Protecting Your Name on the Internet

by Trey Cox, Eric Pinker and Chris Schwegmann


Working Smart

In the first part of this series, we described the various ways your company, your salesforce and your good will can be at risk on the Internet. What can you do about it? There are several courses of action available to ensure you are protected.

You must develop strong vigorous internal policies to promote compliance with your company’s sales and marketing on the Internet. First, inventory your existing trademarks, domain names and intellectual property assets. Second, develop plans to expand and protect your brand by registering new trademarks and domain names, such as the various “suck sites,” or domains containing common misspellings of your trade name. Third, utilize the intellectual property protection policies offered by the most popular Internet search engines and auction Web sites. Google and most other major search engines prohibit vendors from using another company’s trademarks in search engine results. eBay also has policies against the use of trademarks and other intellectual property, but you must notify eBay and constantly be vigilant against the unauthorized use of your name. Just as important, you should educate your independent salesforce on the proper use of your intellectual property and authorized Internet advertising. Without such programs, your sales representatives can expose you to government regulation and liability.

Monitor the Internet for Violations of Your Policies

You must vigilantly monitor the Internet for violations. Google alerts offer the most practical and cost-efficient means to do this. It allows you to automate your review of the Internet to determine who is using your name, what is being said and who is saying it. Google alerts are a powerful diagnosis tool to identify “hot spots” on a daily, weekly or monthly basis through automated reports.

To learn more, visit www.google.com/alerts.

Don’t forget the surveillance power of your own salesforce. The thousands of eyes comprising your salesforce see issues firsthand and evaluate how those affect the market in real time. You must harness and organize this ready-made early warning system. We recommend using a hotline or designated e-mail address for your salesforce to register complaints and observations. Once you open a clear line for communication, watch how fast your salesforce alerts you to renegade salesforce members and unauthorized liquidators. The hotline also allows you to collect all the information in one central location—an essential first step in eradicating problems. A word of warning: If you solicit complaints, you must deliver on the promises that you make to your salesforce. Here are few steps we recommend if you open up a hotline.

Check It Regularly

Some of our clients monitor their complaint system with a dedicated employee. Others use an automated voicemail system. Either way, if you take complaints and promise follow-up action, you must follow up. If you promise to return calls within 24 hours, make sure you do so.

Acknowledge All Complaints

Create a system that ensures every complaint is acknowledged in writing. The acknowledgement should thank the caller for the information and describe your intended response including the time frame for the response. Accountability and follow-through are essential. Unmet promises and unfulfilled expectations foster promises. If you promise to return calls within 24 hours, make sure you do so.

Investigate

Each report must be investigated and assigned an appropriate response protocol. The investigation has a dual purpose: to determine whether the complaint is true and, if so, how serious it is.

Take Action

Design a specific response protocol for each of the problems you face. An entire Web site with numerous trademark violations requires one level of response, while a lone eBay seller offering two items requires another. As Colleen Jones, General Counsel at ACN Inc., says, “You don’t want to use a bazooka to kill a fly.” At the end of the day, you must report to the caller how you addressed their complaint. Whether the protocol is to notify eBay, initiate a lawsuit or write a cease-and-desist letter, you need to have action to show the caller.

Confirm Success

No action is complete until you confirm your success. If you send a cease-and-desist letter, you must follow up to confirm that the party has stopped the offending behavior. If not, you must escalate your complaint to the next level by filing a lawsuit. No one likes to file lawsuits, but I liken it to disciplining my 6-year-old daughter. If I told her, “You will go in time-out unless you stop poking your sister,” the next time it happens—no matter how much I don’t want to do it—I have to put her in time-out. Otherwise, I lose my credibility in the family. The same is true for your credibility with the salesforce.

Report to Caller Until Closed

You should open a file and periodically update the caller on the progress of your investigation until it is closed. This does not need to be a detailed statement, but it should state that the matter is ongoing or has been closed and how.

Take Action!

In the end, you must police the Internet and enforce your policies. State and federal laws provide you with a number of weapons against unauthorized vendors, but you must aggressively pursue offenders to quash repeat offenders and achieve brand protection.

Pursue the Offenders

Cease-and-Desist Letters

The first weapon in your arsenal is a cease-and-desist letter. This letter puts the perpetrator on notice that you have discovered his or her bad acts and demands they stop.

In some jurisdictions, the demand letter is a prerequisite to recover certain types of relief, such as attorney’s fees. The letter must be specific with respect to: 

  • What the perpetrator is doing wrong;
  • When the perpetrator must cease the action; and
  • What you will do if the demand is not met. (See Figure 4.)

If you allow trademark abuse and rogue sales members to go unchecked, you will not only damage your credibility with your salesforce, but also run the very real risk of losing your trademark protection.

The Take-Down Notice

The Digital Millennium Copyright Act (“DMCA”) provides yet another weapon for copyright holders to pursue infringers on the Internet. The DMCA allows copyright holders to ask online service providers (such as Google, eBay and others) to remove access to your copyrighted material if that material is made available online. Under this law, a copyright holder may send written notification—also known as a “Notice of Claimed Infringement” or a “Take-Down Notice”—directly to the online service provider. The notice must contain certain information, including among other things, a list of the copyrighted works that are being infringed, the identity of the offender, and a statement that the use of your copyrighted materials is not authorized. Once the online service provider receives your notice, it must take reasonable steps to notify the alleged infringer and, in many cases, remove the infringing materials from the Internet.

Litigate

Federal and state laws provide a number of alternatives to pursue Internet offenders, depending on the type and scope of the abuse. You must, of course, consider the cost and benefits of litigation, and match the cost with your expected benefit. Oftentimes, however, litigation is your only alternative against an unscrupulous vendor who abuses your trademarks and intellectual property on the Internet.

Once the name and contact information of the unauthorized seller has been obtained, a lawsuit could be filed against that individual based on a breach of the company’s agreements or policies, tortious interference, and-or improper use of the company trademarks.

The lawsuit has at least two objectives—to identify the source of the company’s product (so that we could shut it off) and to obtain an injunction prohibiting further unauthorized sales. It has been our experience that the vast majority of unauthorized sellers agree to cease the infringing conduct in exchange for the dismissal of the lawsuit.

Unauthorized sellers can significantly dilute the value of a company’s marks and create conflict between you and your independent salesforce. The only way to stop this is to aggressively counter such improper activities with a consistent internal compliance program and a proactive program to stop improper sales and marketing activity.

Cease and Desist Letters

Cease-and-Desist Letter

One of our clients began receiving complaints from associates about numerous persons selling products on eBay, which was a clear violation of the company’s policies. To remedy the situation, we implemented a monitoring system, allowing us to receive daily alerts that apprised us of new postings containing the company’s marks. As we learned of new postings, we filed suit against eBay to discover the true identity of the persons posting the company’s products for sale. In Texas, there is a streamlined procedure to permit these actions, and the true name of the offender can generally be obtained from eBay (or similar Internet site) within 15–30 days from initiating the suit.

Call-Out-Language.jpg

Call-Out Language

“We hereby formally demand that you cease selling IS Corporation’s products, as you are not an authorized reseller. If you have not ceased selling our product by Feb. 1, 2009, we will file suit against you in federal court in Dallas, Texas, and seek monetary damages as well as an injunction, shutting down all activities of your company.”

Google AlertGoogle Alert

By using Google alerts for their company name on a daily basis, one of our clients discovered that several former employees had made some false and damaging posts on a Web site called RipoffReport.com. By using Google alerts to scour the Web each day, they quickly identified this threat and were able to take immediate steps both in the courtroom and with their salesforce to address these issues.


 Eric PinkerTrey CoxChris Schwagmann

Eric Pinker, Trey Cox and Chris Schwegmann are partners with Lynn Tillotson Pinker & Cox, LLP. For more information, visit www.lynnllp.com.