LAW-Threats to Brands From Social Media

The following information is used for educational purposes only.


Threats to Brands From Social Media


Steven T. Shelton

New York Law Journal

05-14-2012


Small online social networking services began to appear in 1997, but social networking did not begin to gain significant momentum until 2002 with the arrival of Friendster. Around a year later, MySpace and LinkedIn appeared. In 2004, the reigning champion of social networking, Facebook, went live, and Twitter arrived in 2006. Google+, the most recent social networking service, was opened to the general public just last year. The rapid growth in availability of social networking services indicates they will be around for quite some time in the future, although they will likely morph considerably, as they have already have in their short history.

Some consider social networking services as "toys" meant only for young people to exchange their personal information, share embarrassing photographs, and get to know each other, but this belief is misplaced. Social networking services are used by vast numbers of people worldwide. Facebook reportedly has over 800 million active users worldwide, 200 million of which were added just in the past year.1 Twitter had more than 178 million unique visitors in February 2012 alone.2 In its first year, Google+ has already attracted over 100 million active users.3 Social networking services are used by all age groups and races, and use of these services is fairly evenly split between women and men.4

Benefits of Social Network Marketing

With usage statistics like these, it is no wonder that social media are a marketing executive's dream. We have all witnessed how much marketing has changed with the growth of the Internet since the mid-1990s. Due to advancements in software, websites are now relatively easy to build and maintain. Almost every company, even small "mom-and-pops," now has a website at which it promotes its products and/or services. Even though websites make business promotion easier, they have a significant drawback: They are static and passive in nature. In other words, potential customers have to actively search out a company's website to find information about the company and its products.

This is where social networking services come in. They overcome the main drawback of websites and have many advantages over other types of marketing. Social networking services allow for almost instantaneous interactive communication with current and potential customers. Unlike websites, which force companies to wait for the public to visit, social networking services allow companies to "push" information to interested parties. When new company updates or product information is generated, it can be sent to all users (depending on the social networking service, "fans" or "followers") who have previously signed up for updates, and the information can be pushed or sent all over the world within a matter of seconds. Social media also provide a convenient way to drive sales through the distribution of coupons and discount programs.5 Finally, users generally access social media via mobile phones, which means companies who market through social networking sites have almost 24/7 access to users.

Below is a discussion of the threats to trademarks presented by social media. As noted above, there are several active social media websites. Because Facebook and Twitter are the two most commonly used social networks for marketing purposes, the discussion is aimed primarily at those services. However, the concepts discussed also apply to other social networking services.

Threats to Brands

Although social networking services like Facebook and Twitter provide creative and relatively easy ways to increase the public's awareness of a company and its products and to generate additional goodwill for the company's brands, these services also carry risks to brands. The primary risk is the unauthorized registration of fake usernames or account names that comprise or include a company's brand, a practice otherwise known as "brandjacking." Fake usernames can be used to distribute false information about a company, redirect the public to other companies or products, obtain confidential information, or simply prevent the brand owner from using them as their logical account names for marketing purposes.

For example, in 2010 at the height of the BP oil spill debacle, a Twitter user registered the fake account name @BPGlobalPR, which was a logical account name for BP Global. Several members of the public believed this was a legitimate BP account and registered for tweets from the account, believing they would receive updates on efforts to contain the oil spill.6 However, many were upset when they received tweets—for example, "If we had a dollar for every complaint about this oil spill, it wouldn't compare to our current fortune. Oil is a lucrative industry!"—that they mistakenly assumed were coming from BP.7 The fake BPGlobalPR obtained twice as many followers as BP's genuine Twitter account.8

In March 2012, spies opened a fake Facebook account for U.S. Admiral James Stavridis, NATO's supreme allied commander. They used the account to trick military officers and defense officials from other countries into "friending" the account, and this allowed them to gain access to private information of these officers and officials.9 A similar incident occurred in 2010 when a blogger opened a fake Facebook account for Eric Schmidt, then the CEO of Google, to see how easy it would be to open a fake account.10

Potential Remedies and Theories

A company finding that a third party has brandjacked their logical Facebook or Twitter account name will wonder what remedies are available. Suing the hijacker for some form of trademark infringement is one remedy a company might consider. But suing merely for the use of a fake account name would be problematic under the Lanham Act, because there are two hurdles that would be difficult to overcome.

First, for a claim for either straight trademark infringement or unfair competition, the Lanham Act requires that the defendant must use the trademark owner's mark "in commerce."11 Generally a mark is "used in commerce" when "placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto," and the goods "are sold or transported in commerce."12 A mark is used "in commerce" with services if it is "used or displayed in the sale or advertising of services."13 It would be difficult to demonstrate that a third party who has registered a fake account name merely to transmit parodic posts or tweets or to prevent the trademark owner from using it is "using" the owner's mark "in commerce," because such use is not in connection with promoting products or services.

Second, the trademark owner would also have to prove that the brandjacker's use of the fake account name would cause a likelihood of "confusion," another requirement of the Lanham Act.14 The test for confusion involves the application by a court of a complicated, multifactor test, and the test differs in minor ways from circuit to circuit.15 Several of the factors in the confusion analysis look at how the defendant has "used" its mark in question. So, again, if the brandjacker is not using a fake account name in commerce to promote products or services, it makes it difficult to prove that the use of a fake account name would generate confusion.

Some might wonder whether one could analogize fake account names to domain names and use the Lanham Act's §43(d),16 also known as the Anticybersquatting Consumer Protection Act (ACPA), to pursue a claim against a brandjacker. To prevail on a claim under the ACPA, a trademark owner is required to demonstrate that the defendant had "a bad faith intent to profit" from the trademark and the defendant registered a "domain name" that is "identical or confusingly similar to" the trademark owner's mark, or "identical or confusingly similar to or dilutive of" the mark if the mark is famous.17 The ACPA refers only to domain names, and no matter how analogous fake account names might seem to domain names, they are not domain names.

Courts have shown that they are reluctant to apply the ACPA to trademarks used in URLs, even though such use is far more analogous to domain name usage. For example, in Knight-McConnell v. Cummins, the Southern District of New York held that

defendant's use of plaintiff's name in the post-domain path of a URL and placement of URLs using the plaintiff's name in the post-domain paths on chat forums, discussion boards, and search engine do not give rise to any source confusion.18

The U.S. Court of Appeals for the Sixth Circuit issued a similar holding in Interactive Prods. v. a2z Mobile Office Solutions.19 Because the ACPA's language is specifically limited to domain names and courts have noted their reluctance to apply the ACPA outside of the domain name context, it is highly unlikely a court would agree to apply the ACPA to fake social networking account names.

Secondary Trademark Liability

Trademark owners may also consider suing the relevant social networking site itself to force the transfer of the fake account name since the Lanham Act allows suits for contributory infringement against "any person" who engages in an infringing act.20 In Inwood Labs. v. Ives Labs., the Supreme Court set the standard for contributory trademark infringement. Under Inwood, a person is liable for contributory trademark infringement if it either (1) "induces another to infringe a trademark," or (2) "continues to supply its product to one whom it knows or has reason to know is engaging in trademark infringement."21 The second Inwood condition would cover permitting the registration of fake account names by social media websites.

In connection with online services, the Second Circuit in Tiffany (NJ) v. eBay held that contributory trademark infringement must be premised on specific knowledge of infringing activities, not generalized knowledge that a site is being used for infringement.22 Under Tiffany v. eBay, social media websites are not required to police themselves for fake account names.23

Based on these cases, a social networking site might be liable for contributory trademark infringement if it were notified of a specific infringing account name and yet refused to take it down. To date, only a handful of parties have made such claims against social networking sites. For example, in La Russa v. Twitter,24 the baseball manager Tony La Russa sued Twitter when a third party registered the Twitter account name @TonyLaRussa and used it to tweet off-color comments. The case was quickly settled when Twitter disabled the account name and transferred it to La Russa. Similarly, in Oneok v. Twitter,25 the natural gas distributor Oneok sued Twitter for contributory trademark infringement when a third party registered the account name @Oneok. Again, the complaint was dismissed almost immediately when the account name in question was turned over to Oneok.

Site Processes for Violations

Although trademark owners have the option of suing social networking sites under the right circumstances, this option is not advisable. Most social networking sites have processes in place to handle allegations of trademark infringement, and they are usually quite responsive to such notifications and good about working with brand owners with a legitimate claim.

Facebook's trademark policy is: "You will not post content or take any action on Facebook that infringes or violates someone else's rights or otherwise violates the law."26 Twitter's trademark policy is: "Using a company or business name, logo, or other trademark-protected materials in a manner that may mislead or confuse others with regard to its brand or business affiliation may be considered a trademark policy violation."27 LinkedIn28 and YouTube29 have similar policies.

Instead of suing social networking sites, it is much cheaper and faster to contact the site, report the potential trademark violation via the site's form,30 and request that the offending account name be transferred to the trademark owner. If the trademark owner owns a trademark registration for the mark in question, it generally speeds up the resolution of the fake account dispute.

Practical Tips

There are several steps trademark owners can take to help prevent their brands from being brandjacked and used as part of fake account names on social media websites. Many of these steps are simple and inexpensive and yet very effective. Here are some practical actions trademark owners can take:

1. Obtain a trademark registration for each of your most important brands. Although most social websites do not require a trademark owner to have a registration in order to force the turnover of a fake account name, in the author's experience owning a valid registration (especially a U.S. registration, since it is easier for a social media site to confirm) makes social networking sites more amenable to transfer or shut down a fake account name.

2. Proactively obtain account names using all of the trademark owner's most important brands, especially for new products or services before they become public. This should be done with all the major social networking sites. The cost of registering account names is generally zero. Some social networking sites require account owners to make minimum use of an account to retain it. For example, Twitter's rules state: "Accounts that are inactive for more than 6 months may also be removed without further notice."31

3. Monitor social networking sites to find unauthorized uses of brand names. This can be done internally by specified employees, third-party vendors such as Cyveillance, or law firms.

4. Retain trademark counsel beforehand to handle account name disputes on their behalf, or have specified employees become familiar with the dispute resolution processes of the major social networking sites. When unauthorized use of the trademark owner's brand is discovered, contact the relevant social networking site and report the use immediately.

In summary, preventing unauthorized use of a brand on social networking sites does not have to be complicated or expensive. Most social media sites have effective trademark policies in place that resolve fake account name disputes quickly. Taking a few proactive steps will go a long way toward preventing trademark problems involving social media.

Steven T. Shelton is a member of Cozen O'Connor in New York.

Endnotes:

1. Social Media Statistics 2012, http://www.techrevel.com/social-media-statistics-2012-infographic.

2. Emily Steel, "Happy Birthday, Twitter! A Look Back at Some Noteworthy Tweets," Wall Street Journal, March 22, 2012, http://blogs.wsj.com/speakeasy/2012/03/21/happy-birthday-twitter-a-look-at-noteworthy-tweets/.

3. Nick Bilton, "Countering the Google Plus Image Problem," The New York Times, March 6, 2012.

4. Greg Finn, "A Portrait of Who Uses Social Networks in the US (And How Social Media Affects Our Lives)," July 16, 2011, http://searchengineland.com/a-portrait-of-who-uses-social-networks-in-the-u-s-and-how-social-media-affects-our-lives-81653.

5. "Coupons Drive Sales on Social Media," Adweek, June 9, 2010, http://www.adweek.com/news/technology/coupons-drive-sales-social-media-102541.

6. Jennifer Valentino-DeVries, "Fake BP Twitter Account Draws Followers With Oil-Spill Satire," May 24, 2010, http://blogs.wsj.com/digits/2010/05/24/fake-bp-twitter-account-draws-followers-with-oil-spill-satire/.

7. Id.

8. Id.

9. "Spies stole info with fake Facebook account for NATO's Savridis," msnbc.com, March 10, 2012, http://worldnews.msnbc.msn.com/_news/2012/03/10/10638276-reports-spies-stole-info-with-fake-facebook-account-for-natos-stavridis.

10. Michael Arrington, "Being Eric Schmidt (On Facebook)," Oct. 10, 2010, http://techcrunch.com/2010/10/10/being-eric-schmidt-on-facebook/.

11. 15 U.S.C. §§1114(1)(a) and 1125(a)(1), respectively.

12. Id. at §1127.

13. Id.

14. Id. at §§1114(1)(a) and §1125(a)(1).

15. The Second Circuit uses the multifactor test in Polaroid v. Polarad Elect., 287 F.2d 492 (2d Cir. 1961).

16. 15 U.S.C. §1125(d).

17. 15 U.S.C. §1125(d)(1)(A).

18. Knight-McConnell v. Cummins, 2004 U.S. Dist LEXIS 14746 (S.D.N.Y. July 29, 2004).

19. Prods. v. a2z Mobile Office Solutions, 326 F.3d 687 (6th Cir. 2003).

20. 15 U.S.C. §§1114(1), 1125(a).

21. Inwood Labs. v. Ives Labs., 456 U.S. 844 (1982).

22. Tiffany (NJ) v. eBay, 600 F.3d 93 (2d Cir. 2010).

23. Id.

24. La Russa v. Twitter, CGC-09488101 (2009).

25. Oneok v. Twitter, 4:09-cv-00597-TCK-TLW (N.D. Ok. 2009).

26. http://www.facebook.com/legal/terms.

27. http://support.twitter.com/articles/18367-trademark-policy#.

28. http://www.linkedin.com/static?key=user_agreement&trk=hb_ft_userag#pri-10.

29. http://support.google.com/youtube/bin/answer.py?hl=en&answer=151655.

30. Sample forms for reporting trademark violations: Facebook: http://www.facebook.com/help/contact_us.php?id=208282075858952; Twitter: https://support.twitter.com/forms/trademark.

31. http://support.twitter.com/groups/33-report-a-violation/topics/121-guidelines-best-practices/articles/18311-the-twitter-rules#.


Source: www.newyorklawjournal.com