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CAN THEY DO THAT? Policing your intellectual property on the Internet

Date

September 17, 2009

AUTHOR(s)

Lisa Martz


As more and more commerce is conducted online, it has become increasingly important to monitor the Internet for activities that infringe a company’s intellectual property rights. In fact, the ease with which electronic material can be copied, coupled with an attitude of indifference amongst many online operators regarding the legality of their activities, makes the Internet a zone that is particularly ripe for infringement.

Once a brand is recognized to have value, it is inevitable that unauthorized third parties will do what they can to make money from it on the Internet. By now, most companies have registered for themselves an Internet address (referred to as a "URL" or domain name") that has as its dominant or only element their key brand or trade-mark (e.g., www.mccarthy.ca), and are using this address to post a website that promotes their business. However, brand owners need to be aware that the more successful their online presence, the more likely it is that someone is seeking to trade on the Internet traffic looking for the brand owner’s site.

Cyber-squatting is the term used to describe the registration of a domain name that incorporates the trade-mark of another. Although many Internet users rely on search engines (such as Google and Yahoo) to locate a website, studies show that a significant number of Internet users look for a website by way of "direct navigation," i.e., by guessing at the Internet address and typing it into their web browser. Where a brand allows for multiple logical formulations of a website address (e.g., www.mccarthy.ca, www.mccarthys.ca, or www.mccarthytetrault.ca), the potential for exploitation by unauthorized parties abounds. The typos that inevitably occur when Internet users attempt to type a brand name into their browser (e.g., www.mcarthy.ca) provide another opportunity for brand exploitation (sometimes referred to as "typo-squatting").

The incentive for third parties to register domain names based on trade-marks they do not own arises from the huge dollars now being spent on online advertising. Owning a website that can be a platform for online advertising can generate significant revenue. This is because each time an Internet user, temporarily lost or distracted from his or her intended destination, clicks on a link posted on a website he or she has arrived at unintentionally, the owner of that website (or someone down the increasingly complex chain of syndication that now characterizes the world of online advertising), earns a fee. Typically, each "click" is worth an amount well below one dollar. However, enough clicks to a website that receives a high volume of traffic, or owning enough websites that each receive a lower volume of traffic, can add up to significant revenue.

Sometimes, this kind of cyber-squatting is viewed as nothing more than a nuisance. If the "pay per click" website has a very different "look and feel" (appearance and functionality) from the brand owner’s website, Internet users are unlikely to be confused into thinking they have arrived at the brand owner’s website. Even if Internet users pause to click on a few links at the pirate site, they may well persevere in their hunt for the brand owner’s site. In such a case, a brand owner may conclude that no enforcement action is warranted. However, if the links on the pirate site lead to sites where Internet users can purchase a competitor’s products or services, then the cyber-squatter’s activities may end up depriving the brand owner of sales. In that circumstance, a failure to go after the pirate site can have a direct impact on the brand owner’s bottom line.

Another, less common, circumstance that causes brand owners to take action is where the pirate site displays content that is offensive or could have the effect of depreciating their brand in the minds of consumers (e.g., pornographic or suggestive material).

The solution for a brand owner is first, to act preventively, and register the key domain names that Internet users are likely to assume to be the location of your website. If others have gotten there first, however, mechanisms are available to recover what should rightfully be yours. Although traditional remedies via a court action for trade-mark infringement may be available in some cases, most domain names (e.g., those using ".com," ".ca," and other major country codes) are subject to mandatory dispute resolution policies that bind domain name registrars (the companies that sell and administer registrations for domain names).

Under these processes, a complainant who claims that the domain name registered by another infringes their rights can file, with one of the approved dispute resolution forums, a written submission and supporting evidence that asserts the required test has been met for unlawful registration of a domain name. The elements required generally include proof of similarity to the brand owner’s trade-mark, the lack of a legitimate claim to use the trade-mark on the part of the party who registered the domain name, and registration in bad faith (as defined in the policies). The respondent has the opportunity to file submissions and evidence to refute these claims. An arbitrator is appointed to review the materials (no oral hearings occur), and a decision is rendered within a few months. Where the domain name is found to be infringing, a mandatory order is issued to the registrar who maintains the domain name, directing it to transfer the domain name registration to the successful complainant.

In addition to the registration of domain names that incorporate the trade-mark of another, third parties may take advantage of well-known trade-marks in other ways. In the United States, the purchase and sale of key words that consist of another party’s trade-mark in order to generate "sponsored" (or paid) links on the results page of a Google search when an Internet user types that trade-mark into Google’s search engine, is the subject of ongoing litigation. The key question in these cases is whether such "hidden" use of a trade-mark (where the trade-mark itself is not displayed on the sponsored link or on the website that it leads to) constitutes "use" of the trade-mark so as to satisfy this required element for a claim of trade-mark infringement. The incorporation of another’s trade-marks in the "meta-tags" for a website (the key words coded into the hidden text on a website), so that the website appears in the list of "organic" results generated by a search engine (i.e., those generated by operation of the search engine’s own algorithms), is another form of unauthorized use of a trade-mark online. Whether such activities are unlawful remains largely unconsidered by Canadian courts.

In addition to protecting their trade-marks, companies should be vigilant in watching for breach of copyright through the unauthorized reproduction of material they have posted on their websites. Copyright law protects the rights of the owner of an original work, regardless of the form in which it appears. Content posted on a website in electronic form cannot therefore be reproduced without the permission of the owner of copyright for that material. However, the ease with which electronic information can be copied online facilitates copyright infringement, and "screen-scraping" (the copying of all or part of a web page) is rampant in the online world. Additional concerns arise where the infringing material is being used in a way that has the potential to harm the reputation or goodwill associated with the rights holder’s own business. In some cases, this practice stems from ignorance of copyright law. In other cases, the violation of rights is deliberate and is carried out in the belief that the Internet is, or should be, beyond the control of rights holders. In either case, the rights holder can take steps to bring the infringement to an end. Although no expedited process for online copyright infringement has been developed, traditional remedies through court action remain available.

The Internet poses new challenges for intellectual property rights holders. However, remedies are available to protect against infringement. Being vigilant in watching for unauthorized use of your intellectual property and, where justified, taking steps to enforce your rights, can send an important message of deterrence to those who seek to profit online from what is rightfully yours.

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