The Threat of the Internet on Intellectual Property Rights

A business' Intellectual Property is one of its most valuable assets. It can increase a business' competitiveness and contribute to its success. However, Intellectual Property is often misunderstood and is easily overlooked. Nonetheless, failure to protect Intellectual Property can place a business at risk and allow others to take a competitive advantage.

Due to the fact that Intellectual Property assets cannot be seen or touched, it is often difficult to appreciate their true value. However, a basic understanding of the law and its principles will enable a business to make the most of the mechanisms designed to protect Intellectual Property Rights. For example, a business can protect:-

  • The branding of its goods and services using a Registered Trade Mark.
  • The way its products look using Registered Designs.
  • Its innovative technology using a Patent.
  • Any literature or artistic work by relying on Copyright.
  • Any information that is disclosed and is commercially sensitive and confidential using Non-Disclosure Agreements.

In our continually modernising world, businesses are becoming increasingly reliant on the internet as a marketing tool to reach new and existing customers. The internet provides numerous threats to a business' Intellectual Property Rights by unscrupulous competitors and third parties. The potentiality for infringement can come in many forms, including:-

Forums and "blogs" damaging a business' good name and trading reputation.

If defamatory material has been posted on a website a defamation action could arise. An action in defamation will arise if the material is factually inaccurate and unsupportable.

At law, a statement is defamatory of the party in respect of whom it is published if it tends to lower them in the estimation of right thinking members of society generally or it exposes them to public hatred, contempt or ridicule. Whilst seeking to maintain a difficult balance with a person's right to free speech and expression, in this way the tort of defamation seeks to protect a business' right to its good name and reputation.

Whilst it may be difficult to locate the culprit of any illegitimate posting, the aggrieved business could demand that the Internet Service Provider removes the defamatory material.

Products, Trade Marks and brand names can be ambushed, abused or counterfeited and sold online.

An example of this is the selling of counterfeit clothing illegitimately bearing the Trade Marks and branding of well known clothing manufacturers through on-line auction sites. According to research undertaken by the International Anti Counterfeiting Coalition, up to 25% of branded goods sold on the internet are counterfeit. These are often sold to unsuspecting customers. This has a huge impact of the sale of genuine merchandise by diverting revenues from the rights holder, and can potentially damage the value of the brand by flooding the market with poor-quality fakes.

Misuse of confidential business information.

This has been found to be a particular problem within the recruitment and locum supply industries. In these sectors, databases of business critical information are often available to employees who, in view of the incestuous nature of the industry, have often been found to have illegitimately extracted that information for future use with an alternative employer by sending it via the internet from their workstation to a personal e-mail account.

Such misuse by former employees can place businesses at significant risk of commercial damage. Under the Copyright, Designs and Patents Act 1988 (as amended by the Copyright and Rights in Databases Regulations 1997), it is a primary infringement to utilise a database, or a significant part thereof. As such, any such misuse can give rise to a cause of action against the former employee.

In addition to the foregoing, there is the issue of breach of domain name rights.

Domain Name Rights

Domain names have become precious commodities as the internet has no geographical boundaries and no closing hours. This means there can often be disputes on the right to hold a domain name.

Domain names and disputes relating to the same are managed according to the policies set by the Internet Corporation for Assigned Names and Numbers, or ICANN. Disputes concerning international top level domain names (such as .com, .net and .org) are managed by an ICANN-authorised dispute resolution service provider, whilst disputes concerning country code top level domains (such as .co.uk) are managed by the individual country registry. Nominet is the registry for the United Kingdom.

Concurrent Rights

Registration is on a first to apply basis. Simply because a business may have a Registered Trade Mark, a registered company name or has been using a trade name for a lengthy period of time thereby establishing goodwill and association does not mean that a third party with a legitimate reason for registering the domain and who uses it in good faith is acting inappropriately.

One example of this is the Prince Sports case in which Prince Sports tried in vein to have the domain www.prince.com transferred from Prince Computers in the United Kingdom.

Cybersquatting

This involves the registrant having registered a domain name in bad faith to gain some commercial advantage by profiting from the goodwill of a Trade Mark belonging to someone else. This can involve trying to sell it back to a party it knows is likely to be interested in having registration of the domain name for an inflated price or using it to direct traffic to their website or the website of a trade competitor of the Trade Mark holder in return for payment of commission.

Typosquatting

This is a form of cybersquatting which relies on mistakes such as typographical errors made by internet users when inputting a website address into a web browser. Should a user accidentally enter an incorrect website address, they may be led to an alternative website owned by a typosquatter. Once in a typosquatter's site, the user may be tricked into thinking that they are in fact in the real site, through the use of copied or similar logos, website layouts or contents. Sometimes competitors of the victim site will do this. Alternatively the user will be forwarded to a site of a completely different nature from what they intended. In addition, sometimes typosquatters will use the false address to distribute viruses, which can damage customer relations of the victim by creating a feeling amongst its customer base that they have not adequately been protected by it.

Causes of Action

Such domain name disputes can potentially lend a number of causes of action to an aggrieved business.

Trade Mark Infringement

Registered Trade Mark owners can issue a claim under the Trade Marks Act 1994 to prevent another person using a sign in the course of trade that is identical or confusingly similar to a Registered Trade Mark or to prevent any use of a Trade Mark that would be detrimental to the character or repute of the sign or which takes unfair advantage of it. This can therefore assist in action against cybersquatters.

Passing Off

Passing Off means someone is using an unregistered Trade Mark to represent goods or services as their own, meaning they are representing a link to another business and thus riding off the back of the goodwill and reputation of that business.

The principles regarding Passing Off in domain names were laid down in the "One in a Million" case.

This is one of the first United Kingdom cases on domain name registration, and is certainly the best known. It involved 5 cases which were joined together, because the Defendants were similar.

The Plaintiffs were all well known companies - (1) British Telecommunications Plc, (2) Virgin Enterprises Plc, (3) J Sainsbury Plc, (4) Marks and Spencer Plc and (5) Ladbroke Group Plc. There were several Defendants - (1) One in a Million Limited, its directors (2) Mr Conway and (3) Mr Nicholson and their other companies (4) Global Media and (5) Junic.

The domain names actually in dispute had been registered by different companies. One in a Million had registered ladbrokes.com, sainsbury.com, j-sainsbury.com, marksandspencer.com, cellnet.net, bt.org and virgin.org. Global Media had marksandspencer.co.uk, britishtelecom.co.uk and britishtelecom.net, and Junic had britishtelecom.com. The case was filed on the basis of Registered and unregistered Trade Mark infringement.

The case established that, in order to establish Passing Off, 3 factors must be established:-

  1. The aggrieved business must establish it has acquired a reputation in the name.
  2. There has been a misrepresentation by the registrant which has led to confusion by the public.
  3. Damage has been caused, such as loss of profits or damage to reputation.

Useful Advice

Misuse or hijack of domain names is not an uncommon problem for brand owners. Unscrupulous third parties engaging in activities such as cybersquatting and typosquatting can damage commercial standing, revenues and brand value. In this way, domain name squatters can divert traffic from an official site, making it more difficult for users and consumers to find the correct and legitimate site, thereby impeding a business' ability to reach customers effectively. Consequently, a natural domain name can be held to ransom. However, prudent steps can be undertaken to minimise the risk.

Register Common Misspellings

If a name is commonly spelt incorrectly it may be advisable to register the misspellings in order to prevent typosquatters. In this way, a business may pre-empt typosquatting by obtaining a number of websites with common misspellings and redirecting them to the main, correctly spelled website. For example, www.gooogle.com, www.goolge.com, www.gogle.com and www.gewgle.com all redirect to www.google.com.

Register the Domain Name as a Trade Mark

Having a Registered Trade Mark would assist in any dispute resolution procedures to retrieve a similar domain name from another registrant.

A Trade Mark is a sign which is capable of distinguishing the goods or services of one business from those of another. To secure Trade Mark protection in the United Kingdom, an application process is required to be undertaken through the United Kingdom Intellectual Property Office. The process is commenced by filing an Application Form. The application is then examined and, if it is accepted, it will then be published. Third parties are then afforded an opportunity to oppose the registration. If the registration process is successful a United Kingdom Registered Trade Mark will be obtained; this can be indicated by placing the Trade Mark symbol ® next to a mark. The process takes on average 4 months.

If someone then uses the Registered Trade Mark in relation to identical or similar goods or services, or takes unfair advantage of it, an infringement action can be pursued.

Registering a Trade Mark in the United Kingdom does not protect it abroad. To protect a trading name throughout the European Community, a business can apply to the Office for Harmonisation in the Internal Market, or OHIM, for a Community Trade Mark. The OHIM is based in Alicante, Spain.

In addition, the Madrid Protocol offers protection outside of the United Kingdom in the sense that, where an application is filed in a party's own country, that registration is treated within those countries signed up to this Protocol as the equivalent of a registration effected directly in those countries provided that the initial registration is filed with the World Intellectual Property Organisation for subsequent filing in the countries signed up to the Protocol where protection is required.

Acting Monitoring

It is advisable to actively monitor and periodically check if any similar domain names have been registered. Specialist monitoring agencies can be engaged to provide "watching" services.

Seek Expert Legal Advice

Protection of Intellectual Property Rights, including domain name rights, should be one limb of a 3-tiered business approach to Intellectual Property involving protection, enforcement and exploitation. Businesses should acquire expert legal guidance from Solicitors who specialise in:-

  1. Securing Intellectual Property Rights and brand protection, including making national and international Trade Mark applications.
  2. Enforcing Intellectual Property Rights. Upon detection of an infringing activity, Solicitors can prevent and discourage further infringements of rights, as well as obtain monetary damages, through methods of negotiated settlement, alternative dispute resolution and commercial litigation.
  3. Commercialising Intellectual Property Rights. This can include structuring licensing strategies, negotiating and drafting contracts, advising on joint ventures and distribution and agency agreements, as well franchising.

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