Lessons to be learnt from challenges facing the "World's Most Powerful Brand"

Further confirmation of Google's place in the forefront of our daily lives was confirmed with the announcement that it has achieved the top spot in the Brandz list of the Top 100 Most Powerful Brands compiled by Milward Brown. Eileen Campbell, global CEO of Milward Brown noted that Google's achievement highlights "the real financial value that successful business and brand management can deliver".

Google's success in developing and promoting its brand has been so great that it is now faced with a different challenge; that is to escape the fate that has befallen words such as Escalator, Taxi and Nylon in the past. These words were all once trade marks but it is now widely accepted that these marks now simply designate a particular product or service. These trademarks have slipped into descriptive use, a process that trademark specialists sometimes refer to as "falling into the public domain".

Why is this such a bad thing? A trade mark's value lies in its ability to allow a consumer to distinguish between the goods and services of one business from another. When other people unconnected with the business of the owner of the trade mark start using that mark, this value starts to slip away. This is referred to as a "dilution" of the brand.

You may have noticed Google Inc. appearing in the news amid concerns the trade mark significance of the mark GOOGLE is slipping away. In particular, people refer to the trade mark as a verb – saying that searching for an item on the web is to "google" it. Recently, the Meridian-Webster College announced they intended to include the word "google" in their dictionary. On the same day, the stock price of Google Inc. fell.

Keeping their core trade marks strong and avoiding dilution is a major issue for a large business such as Google Inc.. However, this is an issue for all businesses that value their branding. There are a number of key rules that may help to protect your trade marks from dilution. In particular, adherence to key branding guidelines can ensure trade marks are used correctly and in such a way that emphasises their significance as a distinctive trade mark.

Say for instance you start using the trade mark TIGER to market a new type of sticky tape you have developed. You want to make sure you use your trade mark correctly to build it into a strong asset for your business. Standard guidelines to follow include:

Making sure your trade mark is displayed in capitals or title case, for example:

• Incorrect: tiger
• Correct: TIGER or Tiger

In addition, the trade mark should always appear with an appropriate descriptive term, for example:

• Incorrect: Use TIGER in your home and office!
• Correct: Use TIGER sticky tape in your home and office!

Also, it is wise to ensure consistent use of the ® symbol (if your trade mark is registered) or the ™ symbol (if unregistered), for example:

• Incorrect: TIGER
• Correct: TIGER® or TIGER™

You should also make sure you avoid using your mark in a possessive form, for example:

• Incorrect: TIGER's quality
• Correct: The quality of TIGER sticky tape

These examples are only an indication. There are other guidelines and techniques for making sure your trade mark stays strong. It is a good idea to ask for advice specific to your business to make sure the value of your trade mark does not slip away.

19 June 2007

The Implementation of the Gowers Review of Intellectual Property

The Gowers Review of Intellectual Property was published on the 6th December 2006. Whilst finding that the UK IP system is broadly performing satisfactorily, it provides 54 recommendations for progress. The recommendations include introduction of a limited private-copying exception allowing consumers to format-shift legitimately purchased content, strengthening enforcement measures in relation to IP rights, and a consultation on fast-track litigation in IP cases. The Review recommended retaining existing approaches in a range of areas, including the 50 year copyright term for sound recordings and for patents not to be further extended in the fields of software, business methods and genes.

As most recommendations are to be preceded by public consultation or, in some cases, relate to changes to EU law (eg Recommendation 45 in support of an EU court for cross border disputes), the extent of their implementation to date is limited. The government has yet to indicate its position with regard to the majority of the recommendations. On 27 November 2006, nine days prior to the publication of the Gowers review, Lord Sainsbury (Minister for Science and Innovation from 1998 to 2006) was commissioned to produce a review of science and innovation policies. The Sainsbury Review will report to the government on R&D, knowledge exchange, technology collaboration and patents in time for the Comprehensive Spending Review, publication of which is expected in October 2007.

There has however been some tangible progress to date. The UK Intellectual Property Office has published a list of the Gowers Review recommendations pertaining to it, together with a proposed date for action on each, and certain recommendations have already been acted upon beyond a planning or consultation stage. Notable progress to date is as follows:

• The Review provides for the DTI to Investigate how best to provide practical IP advice to UK firms operating in foreign markets, in coordination with industry bodies, the Patent Office and UK Trade and Investment (Recommendation 28). The UK government has launched a pilot program to offer small companies IP audits enabling them to protect and garner the full value of their IP. Under the scheme forty businesses which have formally filed little or no intellectual property will receive a three-day IP audit by the UK IP Office working with regional development agencies. The project forms part of a new Innovation Support Strategy, produced by the UK Patent Office.
• The Patent Office changed its name to the UK Intellectual Property Office (UK-IPO) on the 2nd April 2007 to reflect the breadth of work undertaken (Recommendation 53).
• Section 107A of the Copyright, Designs and Patents Act 1988 (CDPA) came into force on 6 April 2007 (as provided under Recommendation 42) giving trading-standards authorities noteable powers in relation to copyright infringements, including the ablility to make test purchases, enter premises and inspect and seize goods. The Treasury is to provide a further £5 million funding in 2007/08 for Trading Standards to implement their new powers.

19 June 2007

Change of Official Trade Mark Practice For Conflicting Marks - A Practical Perspective

Currently, when the UK Intellectual Property Office ("UK IPO") examine an application for trade mark registration they conduct a search of the official trade mark database. This is to identify pending and registered trade marks which they consider are similar and may conflict with the mark being applied for. If such a mark is found (a "prior mark") the UK IPO raise an official objection and will not accept the application unless the objection is overcome.

However, this is set to change. As of 1 October 2007 the UK IPO will no longer refuse an application on the basis of a prior mark.

Instead, the trade mark applicant will be notified of any prior marks identified by the UK IPO's search. The holder of any such prior marks will also be notified. This gives the applicant the opportunity to withdraw or amend their application on the basis of the search results. It also gives the holder of a prior mark the chance to file an opposition against the application.

Holders of UK trade mark registrations will automatically receive such notifications. However, holders of CTM (Community Trade Mark) registrations will need to "opt in" to the notification service.

This sounds like a simple change but it has implications for businesses and how they monitor and enforce their trade mark rights. Importantly, it highlights that businesses should not rely on the UK IPO as a "gatekeeper" who will stop conflicting marks from achieving registration. This task now falls square to trade mark owners and it is expected that the number of trade mark oppositions filed in the UK will increase as a result of the changed practice.

From a practical perspective your business may need to consider reviewing your trade mark portfolio to make sure it is up to date. This will help to ensure that any notification will reach you or your trade mark advisor. Such a review could include checking your recorded details, including your or your trade mark advisor's address, and that any company name changes or transfers have been looked after. In addition, a review may identify whether you hold any CTM registrations and whether your business will need to "opt in" to the UK notification service.

From a strategic perspective this is a good time to reconsider a passive approach to trade mark monitoring and enforcement There are various options available that would make your approach more pro-active – such as maintaining a trade mark watching search. Taking steps to look out for your trade mark rights may be cheaper and easier than you expect – and could protect your trade marks in the long term.

19 June 2007

Are damages for IP infringement a sufficient deterrent?

The independent Gowers Review of Intellectual Property (commissioned by the Treasury and published in December 2006) (see article above for other issues raised by Gowers Review) noted that respondents had questioned whether the current UK system of damages acts as a sufficient disincentive to intellectual property infringement. The argument put forward by respondents is that unless an award of 'additional damages' is made, which is very uncommon, an infringer only has to pay what he would have paid had he lawfully secured a licence to the intellectual property in the first place. This arguably does not provide enough of an incentive to would-be infringers to act lawfully.

Gowers was aware that the Department for Constitutional Affairs (DCA) were working on a consultation paper on the Law of Damages and therefore asked the DCA to review the issue of damages for intellectual property infringement. The referral asked the DCA to ensure that an effective and dissuasive system of damages exists for civil intellectual property cases and to confirm that the system is operating effectively. Also sitting in the background to the Gowers Review is a European directive on the enforcement of intellectual property rights which requires 'effective, proportionate and dissuasive' civil remedies.

The DCA has now issued its paper proposing changes to the civil law on damages (comments are sought by 27 July 2007). Although it does address Gowers query, the DCA consultation does not show any appetite (or need) to change the status quo. The DCA points out that the evidence submitted to the Gowers Review preceded the making of the UK Intellectual Property Enforcement Regulations 2006 which implement the European directive. Under the UK Regulations, damages should be "appropriate to the actual prejudice he [the pursuer] suffered as a result of the infringement". This includes looking at any unfair profits made by the defendants and non-economic factors including the moral prejudice caused to the pursuer. The Regulations go on to say damages may be awarded on the basis of the royalties or fees which would have been due had the defendant obtained a licence. This doesn't appear to lead to any significant change in the law.

The DCA also recommended that the term 'additional damages' (referred to above) be replaced by 'aggravated and restitutionary damages'. The term 'additional damages' gives a judge the power to look at the flagrancy of the infringement and all the circumstances of the case and, if it is just to do so, to award additional damages. This terminology left open the possibility that a judge could award punitive damages to punish the infringer rather than damages which just compensate for the loss suffered.

Aggravated damages compensate the pursuer for mental distress, but cases have confirmed they are not punitive. Restitutionary damages are largely similar to an account of profit and strip away gains made by the defender as a result of the wrong committed. This subtle change in terminology probably removes the possibility of punitive damages being awarded, albeit the courts had not used this power in any event.

The DCA has therefore effectively answered Gowers query by saying that the current system is working effectively, especially in light of the new regulations, and simply recommends a subtle change in terminology. The DCA also suggest that the lack of additional damages granted may have more to do with the fact that most cases settle out of court. For now at least, the status quo largely remains.

19 June 2007

Defamation and the Internet

Introduction

Parenting website Mumsnet has recently settled a long running dispute with controversial childcare expert, Gina Ford, who had threatened Mumsnet with defamation proceedings following criticism of her methods in online forums hosted by the website. The settlement has been hailed as disappointing by many commentators who had hoped that progression of the case would allow the courts an opportunity to provide some long-needed guidance on the application of UK defamation laws in an online context.

The Current Legal Position

The current approach was first outlined in the English case of Godfrey v Demon Internet , which established the "notice and takedown" principle. This case was brought against an Internet Service Provider ("ISP") in relation to defamatory comments posted on a message board, of which the claimant had notified the ISP. The ISP had failed to remove the offending postings, which were eventually taken down some 10 days later as the result of an automatic time-expiry process. The defendant relied on section 1(c) of the Defamation Act 1996, which provides a defence for a publisher who did not know, and had no reason to believe that it had caused or contributed to the publication of a defamatory statement.

The judge clarified that this defence will not apply where an ISP has been notified that such a defamatory statement exists on its site. From the point at which the defendant knew of the defamatory content of the posting, it could not rely on the protection offered by the "innocent dissemination" defence. In order to protect itself from legal action, an ISP/website owner must remove the offending content on notice of its existence. The ISP's systems must clearly support a mechanism to allow web users to be able to communicate their unhappiness with statements made on the site.

Criticism of current approach

The application of existing defamation principles in an online context has been described as "the rough equivalent of trying to use a set of railway signals to control the air traffic over Heathrow – the principles may be fine but different forms of communication, just like different forms of transport, require a different approach." There are a number of problems inherent in the current approach:

• Removal of defamatory content – how long is reasonable?
  
  Unfortunately, the judge in Godfrey failed to provide any guidance on the speed at which action should be taken by an ISP to remove a defamatory comment. In that case, the offending content had been available online for 10 days following notification of its defamatory nature, which was clearly viewed as too long. The E-Commerce Regulations , which enshrine the "notice and takedown" principle in respect of certain online carriers, simply state that the operator must block access to the content "expeditiously".
  
  Some direction on an appropriate timescale for removal may be found in the Terrorism Act 2006, which creates offences relating to the encouragement of acts of terrorism and the dissemination of terrorist publications. The legislation establishes a notice and takedown regime that applies to website operators and provides that a statement will be regarded as having the endorsement of a person where the person has failed to comply with a notice requiring the modification or removal of offending material within two days of notice. This provision could perhaps be used to suggest that Parliament has considered two days to be a reasonable period to allow for the removal of content which has the potential to be far more serious than defamatory words.
  
  However, given the prevailing uncertainty, it seems that the risks inherent in defending a defamation action are too large for ISPs/website owners. In the Mumsnet case, the offending content had been removed 24 hours after notification. The website took the view that the law was not clear enough to justify the expense of arguing this point in court. Website owners/ISPs need guidance on how quickly they must remove user's comments to avoid liability.
  
• Freedom of speech
  
  There is an argument that in protecting themselves from legal action, ISPs are in effect curtailing freedom of speech, which should be protected under the European Convention on Human Rights. In effect, ISPs are being asked to act as both judge and jury in deciding whether a comment is defamatory – a problem which was recognised by the Law Commission in 2002 . ISPs and website owners, particularly those with limited resources, are unlikely to want to take on this role, and an informed industry debate is required in relation to the level of involvement that is appropriate. During the Law Commission's consultation in 2002, some ISPs expressed a concern that they would be leaving themselves open to actions for breach of contract in removing content which was later found not to be defamatory.
  
  These issues create an unsatisfactory and uncertain environment for ISPs. The fact that there have been no significant cases in this sphere since the Law Commission's report in 2002 does not mean that there is no impetus for change – indeed it is precisely due to the uncertainty surrounding the area that many ISPs/website owners are simply complying with "notice and takedown" or settling actions to avoid the expense of defending them.

Conclusion

It is understood that the Department of Constitutional Affairs is due to issue a consultation paper on the need for reform later this year, and it will be interesting to see the extent to which the issues discussed above are taken on board. Dialogue with ISPs and website owners will be key to this process. Shepherd and Wedderburn would be delighted to discuss further research with interested parties to back up any consultation response.

19 June 2007