On one level the legal issues relevant to e-commerce and branding are the same as with traditional trade since it is not the underlying business activity that has changed but rather the medium through which trade is conducted. However, there is something of a dichotomy between the potentially international nature of e-commerce and the national territorial scope of registered trade mark protection.
The speed with which e-commerce has developed and been embraced has not been matched by corresponding amendments to legislation. The law is notorious for being slow to adapt to changing commercial conditions and this is no more clearly demonstrated than in relation to the protection and enforcement of trade mark rights. Indeed, as legislation is gradually introduced to address these issues throughout the world, new previously unrecognised problems arise requiring further amendment or adaptation. Furthermore, the nature of the e-commerce beast, particularly when dealing with new start-up companies, is such that everything has do be done yesterday, which can also create problems. All this means that lawyers advising on trade mark law and other legal issues relating to e-commerce and the protection of brands will have to be efficient, adaptable and possibly even creative!
There are two separate yet related key legal issues that need to be addressed when considering the future of e-branding. The first is the question of obtaining protection of one's brand name in the countries where trade is, or is likely to be, conducted and the consideration of what other distinctive features of a business, in addition to the brand name, can be protected. The second issue is the enforcement of those rights secured against unauthorised use of conflicting marks by third parties.
The Internet has enabled traders of all sizes to have the potential of targeting consumers far beyond the traditional national geographic boundaries that once would have represented a natural limit to their trading activities. The main tool utilisedby a trader to protect his brand has been the securing of registered trade mark rights within the trader's home country, which generallywould have been sufficient. Any move into export markets would normally have been gradual and planned well in advance, enabling searches of local registers to be conducted and the filing of appropriate applications for registration to be made. This also meant that the associated cost of searching and filing was necessarily spread over a reasonably long period. Now, the potential for immediate international exposure of one's brand has dramatically reduced this development period.
The advent of e-commerce has created many new would-be entrepreneurs and has given existing local traders international aspirations. From a branding perspective this has understandably brought the ownership of domain names to the forefront of many companies' marketing initiatives.
It is a commonly held yet mistaken belief that the ownership of the domain name (particularly the dot.com) provides the proprietor with all the protection that is needed to enable trade to commence unhindered throughout the world and provide an enforceable monopoly right in the name within the proprietor's area of commercial activity. If only it were so simple. The reality is that the ownership of the top level domain (TLD), although undoubtedly an attractive and valuable commercial asset, does not provide the proprietor with any rights in the name other than the ability to prevent another party from obtaining the identical name as a domain name. The limited value of the ownership of a domain name, from a legal perspective, will become even more apparent with the proliferation of TLD designations.
To secure protection of a brand name it generally remains necessary to obtain national trade mark registrations in each of the countries of interest. Needless to say, the cost of such a filing programme can be prohibitively expensive, particularly for a start-up venture with limited capital. However, there have been some developments towards simplifying the securing of international or multinational protection. Within the European Union it is now possible to secure a single registration affording protection within each of the countries of the EU. A "Community trade mark" application is filed at the Office for Harmonisation of the Internal Market (OHIM) based in Alicante, Spain. This has greatly simplified the procedure for protecting a mark within the EU and significantly reduced the cost of securing and maintaining a European trade mark portfolio. It is ideally suited to e-traders.
For many years there has also been in existence an "international" registration procedure (the Madrid Agreement and subsequent Protocol). Unlike the Community trade mark, an international registration is not a single registration as such but rather a system for filing national applications in signatory countries through a single application filed at the World Intellectual Property Organisation (WIPO). The system provides a cheaper, and in some countries quicker, method of securing national registrations in the designated countries. The effectiveness of the international registration procedure has been limited to date, due to the fact that many of the important trading nations are not signatories to the Madrid Agreement or Protocol. However, with the recent joining by Japan and Singapore and the anticipated accession by the US (with the likelihood of other countries following suit), the system will quickly become the favoured route for companies seeking international protection of their brands. Again, this is a particularly welcome development for e-traders and will significantly reduce the cost of obtaining necessary international protection of brands.
Unfortunately, the international and Community trade mark registration systems do not negate the need to conduct trade mark clearance searches of the national registers of each country prior to the use of a mark. It remains imperative that, prior to any move into new territories, searches of the local registers are conducted in order to assess any infringement risk associated with the proposed launch. Part of the problem with e-commerce and start-up companies in particular is the speed with which a project moves from simply being an idea to its implementation. The process of selecting a new brand name is generally undertaken within very short time scales which often means that the clearance process cannot be staged. This results in significantly increased and otherwise avoidable costs. This is compounded by the need to search in a large number of jurisdictions. Indeed, the usual answer given to the question "in which countries will you be trading?" is "global". In order to develop a commercially viable and practicable search and filing strategy, it is essential that a realistic assessment of the likely geographical scope of the business be made.
It seems unlikely that in the foreseeable future there will be any way of short-circuiting the search and filing process. Although the extension of the Madrid Agreement to more territories is likely to continue, there is little likelihood of any imminent move towards a global trade mark right.
Registrable trade marks
Traditionally, the distinctive characteristics of a business that have been protected through trade mark registration were limited to the brand name itself and/or a logo. However, in recent years, legislation in many jurisdictions has been implemented to recognise that other features of a business can distinguish the goods and services of one undertaking from those of another. The test widely adopted is that any such sign that is capable of distinguishing, and which can be represented graphically (a requirement which recognises the need to have a register which can easily be searched in order to identify clearly the extent of the monopoly right granted), can be the subject of a trade mark registration. Although there are exceptions to this general rule, the result is that we now have the situation where many national registries are accepting registrations of sound marks, smells, slogans, the get-up of retail premises and packaging, colours and gestures.
There is no reason, in principle, why this list will not be extended to include other distinctive elements used in the course of e-trade such as animated trade marks, amorphous marks, holograms and the distinctive get-up of a website. Registrars may, initially, be reluctant to grant registrations for such
marks although if the mark satisfies the basic requirement of a trade mark, in that it serves to denote the origin of the goods/services of the proprietor, there is no reason why registration should not be secured.
One difficulty that will be faced in securing registration of such marks will be the requirement for the applicant adequately to describe his mark graphically, so that the ambit of the protection sought can be clearly identified and the existence of the mark located by a reasonable search strategy. Clearly, randomly changing marks would necessarily be incapable of such description.
It is likely that, in the future, traditional trade marks (particularly word marks) will continue to dominate. However, traders should consider carefully other elements of their business model or the manner in which they trade to ensure that any such features that serve to distinguish their business from competitors are suitably protected.
In addition to registered trade mark protection, there is also the possibility that the distinctive signs used by a business (other than word marks) may be the subject of copyright protection. Generally speaking, copyright subsists in an original work from the moment of its creation and (subject to certain exceptions) vests in the creator of the work. Therefore, if the work in question has been created by an independent contractor, rather than an employee of the company, it would be advisable to secure an assignment of the copyright at the earliest opportunity to enable appropriate action to be taken to prevent any unauthorised copying of the work without the need to involve the original owner. However, the existence of copyright protection should not be used as an excuse to refrain from securing trade mark registrations as it is not possible to rely on copyright to prevent the use of a confusingly similar mark where that mark has been created quite independently and where there has been no actual copying.
With a little thought, and by taking appropriate legal advice at an early stage in the development of a business model or the launch of a new product or service, it should be possible to ensure that the best protection of a brand name and other distinctive features of a business is secured within sensible time scales and a reasonable budget.
Enforcement - where to go
When a trade mark owner has a problem with the registration of a domain name by someone else they need to know where to go to get the matter dealt with. This issue breaks down into two essential categories. The first of these concerns the generic top level domains such as dot.com, dot.net and dot.org. The second concerns the numerous geographical TLDs such as dot.fr, dot.tv, dot.com, dot.au and dot.co.uk. This is because the geographical TLDs are administered by independent registrars based in the country to which the designation relates. Each of these registrars has its own rules and regulations about how it deals with domain name disputes. Meanwhile, as far as the generic TLDs are concerned, the registrars administering these all comply with the ICANN (Internet Corporation for Assigned Names and Numbers) UDRPs (Uniform Domain Name Dispute Resolution Policy).
Domain name disputes can be dealt with either by way of a dispute resolution procedure adopted by the relevant domain name registrar administering the domain name in question (if such exists) and/or through the courts of the relevant country or countries. The ICANN UDRP which is discussed below has, despite only having been operative since the beginning of 2000, proved to be quite an effective procedure for trade mark owners. However, in general, the dispute resolution procedures adopted by many of the geographical TLD registrars are still not proving to be as effective. In some cases, some of the geographical TLDs have also signed up to the ICANN UDRP and there is discussion of further geographical TLD registrars signing up to this. However, currently this is still an issue for trade mark owners.
Many courts throughout the world in their decisions recognise the issues concerning domain name hijacking or cyber squatting. Where necessary, laws have been adapted to make it possible for courts to at least order the transfer of domain names where they believe that they have been registered by a third party who should not be entitled to hold that domain name. The US has gone so far as to introduce legislation to deal with cyber squatting, although to date such additional specific legislation has not been introduced by other countries. When a trade mark owner is considering court action against someone who they believe is cyber squatting, the normal rule is to go to the court which has jurisdiction over that third party. That court will be the court where the third party is resident. In some incidences that is not a particularly satisfactory country for the trade mark owners to bring proceedings into court and, therefore, there can be other choices available to them such as the court of the country in which the relevant domain name registrar is based or, in certain circumstances, the country where the server holding the website to which the domain name is delegated is situated or the country where the domain name is infringing the trade mark. The only difficulty with the last twooptions is that while the trade mark owner may obtain a court order, this may prove to be ineffective for a number of reasons. If nothing else, courts in other countries will not enforce such an order unless the relevant treaty is in place between the countries of the courts in question to require this.
The ICANN UDRP
At the beginning of the year 2000, the UDRP was put into place for domain name disputes relating to the generic top level domains such as dot.com, dot.net and dot.org. Certain organisations were approved by ICANN to administer this procedure. Among these was the WIPO and, in particular, its arbitration centre.
UDRP lays down rules concerning the means by which a dispute can be brought before one of the designated dispute resolution centres and concerning the basis on which a decision can be given, either requiring the domain name registrant to transfer the domain name to the complainant or not as the case may be. The procedure is relatively cheap and quick. The various dispute resolution centres charge the complainant in the order of a few thousand dollars (depending on the number of arbitrators designated; one or three). From the time of filing the dispute, a timetable is set so that a decision is rendered within a maximum of nine weeks except in exceptional circumstances.
The rules require that a complainant show that the domain name registrant registered the domain name in dispute on a non-bona fide basis and is continuing to hold it on a non-bona fide basis and that that person is not entitled to the domain name. The main basis for any such complaint is normally a trade mark registration but this does not necessarily have to be the case. There have been some decisions based on unregistered trade marks where the trade mark owner was able to show that they had such
trade mark rights and that such rights were more than local. By contrast, the mere ownership of a registered trade mark will not guarantee success for a complainant. There have been a number of decisions now in favour of the respondent where the respondent was able to demonstrate some form of bona fide interest in the domain name and, in particular, where the trade mark owner could not show any reputation of his trade mark beyond one country. Normally the arbitrators who have presided over these disputes have felt it necessary to take into consideration the international nature of the Internet and, therefore, do take into consideration the existence of a lack of any reputation in a number of countries.
An example of the ICANN UDRP in operation was the case concerning the domain name jeanettewinterson.com. Jeanette Winterson is an English writer who is published in over 21 countries in the world in a variety of languages. An academic with Cambridge University registered her name as a dot.com along with some 130 other English authors' names. Needless to say, Ms Winterson did not have her name registered as a trade mark but was not about to have it hijacked just as she was about to launch her new hi-tech inspired book The Powerbook. Fortunately, Jeanette Winterson is hardly a common name and she launched a UDRP complaint based on her considerable reputation. Within just a few weeks the WIPO appointed arbitrator found in her favour and required the domain name to be transferred to her. The cost of the procedure was a few thousand dollars and the result was achieved, on a worldwide basis of course, in a fraction of the time that it would have taken for a series of national courts to deal with the matter.
Misuse of trade marks on the Internet
Domain name cyber squatting is not the only type of misuse of trade marks which can be seen on the Internet. Straight trade mark infringement is now rife. It is not at all uncommon for a trade mark owner to find blatant infringement of his trade marks by others on their websites.
However, there are also less obvious forms of trade mark infringement which can occur on the Internet. A good example of this is the use of trade marks in "meta-tags". What this involves is the relevant trade mark not appearing on the part of the website which can be seen by a viewer but being put into the software code of that website so that the software from indexing pages, search engines and web callers see the trade mark. The effect of this is that, for example, when using a search engine to find a website relating to a particular trade mark, those websites with a trade mark appearing in their meta-tags will appear high up the list in search results. Indeed, clever meta-tagging by trade mark infringers can mean that their website appears higher in the search results than that of the legitimate trade mark owners. As far as courts are concerned, this is a relatively new phenomenon for them to tackle and only a few around the world have issued decisions relating to trade mark infringement through meta-tags. However, of those who have applied themselves to the issue, the uniform view appears to be that this does indeed amount to trade mark infringement even though the potential consumer never actually sees the trade mark itself.
Another version of this phenomenon is referred to as "word stuffing". This involves inserting the trade mark being misused into the HTML code behind the website on a frequent basis, so that once again the indexing software, and some search engine software, recognises the website in question in preference to that with fewer mentions of the trade mark. Based on the court decisions which do exist concerning trade mark infringement by meta-tagging, it seems likely that courts will also find this particular misuse of trade marks to be an infringement.
The other side of the coin to misuse of trade marks on the Internet is a concern on the part of companies that they might unintentionally infringe the trade marks of another. This becomes a particular issue where, due to the territorial nature of trade mark registrations, one organisation owns the same trade mark as another but in relation to a different country or set of countries. Since the Internet knows no national boundaries, this has arisen as a particular issue for companies using the Internet.
One of the interesting things about trade marks, however, is that in general a registered trade mark will only be infringed if the person using it is actually using it for trading purposes in the country where it is registered. Thus, if a trade mark is registered in the UK and that same trade mark is being used on a Finnish language website in relation to the same goods or services for which the UK trade mark is registered but directed specifically at the Finnish marketplace, there is a good argument to say that this does not amount to infringement of the UK registered trade mark. This is because the trade mark is not being used in the course of trade in the UK. This argument can be reinforced by way of a disclaimer. Thus, it is possible to make it clear on the relevant website that the goods and services being sold under a particular trade mark are not available for sale in another country where that trade mark is registered. Such disclaimers can be particularly useful where one cannot point to the language of the website as distinguishing the market- place to which that website is directed. This, clearly, can be a particular issue for English language and increasingly Spanish language websites in particular. However, such disclaimers will not save a website owner where, in fact, they are not acting in accordance with a disclaimer. If a website says that the goods on offer are not available for sale in the US, but nevertheless accepts and fulfils orders for consumers clearly resident in the US, all the disclaimers in the world will not save you from the inevitable conclusion that the site is actually trading in the US.
It has to be said that disclaimers of this type have not been extensively tested yet in the courts of various countries in the world and, therefore, it still remains to be seen the extent to which they can assist. However, if such disclaimers are not found by courts to be effective, it is difficult to see how the Internet community will deal with the issue of cross-border trade mark infringement where the old world of trade mark laws is rubbing up against the new world of e-commerce.
Clearly, branding in a virtual world is here to stay. As technologies expand and develop, branding becomes more important as a signpost for business and the related legal issues will expand and develop alongside. While governments and legislation cannot always move fast enough to cope with these burgeoning issues and the ever-inventive minds of those exploiting the virtual environment, we can already see some degree of consistency in the international treatment of branding legal issues being achieved, not by governments but by the Internet community itself. This is particularly the case when one looks at the development of the ICANN UDRP. However, this means that brand owners will have to work with, as opposed to against, that community in encouraging good brand practices.
Governments have always been slow to deal together outside their own borders but brand owners in the virtual world must find ways to deal with the dichotomy between the territorial nature of current legal protection for brands and the lack of any national borders on the Net.
From the brand owners' perspective, the fundamental need to secure and enforce trade mark rights remains and, if anything, has assumed even greater significance. Indeed, the Internet has raised businesses' awareness of the importance of trade mark registrations and the territorial nature of trade mark rights.
For any legal adviser specialising in this area of law, it is now more important than ever to be aware of and advise clients on the international perspective of trade in what is becoming an increasingly small world.
Taken from a book called Branding @ the Digital Age and is an Interbrand publication. This chapter was written by Morag Macdonald and Allan Poulter. The book was published by Palgrave in 2001.