The Real Cost of a Social Media Misstep

Money by Andrew Magill from Flickr (Creative Commons License)

Money by Andrew Magill from Flickr (Creative Commons License)

I was talking with some non-lawyer entrepreneurs lately, and I asked them what they thought would be the worst case scenario if their company broke the law via their social media, and they both responded that they would have to take responsibility for their mistake, apologize, and do some damage control. While I appreciate that these business owners appeared to have integrity and good intentions, I internally cringed that they both assumed that saying, “I’m sorry,” should be enough to fix a problem.

I want to share some numbers for the costs a business could easily face if they violate a law with their online posts.

Trademark Infringement – Cost of Rebranding
Think about how much time and money you’ve spent selecting the name for your business or product, your logos, your slogans, your domain, and your website. Now, how would you feel if you had to do it all again? That’s what could happen if you select a name for your business or product that’s already been registered by someone else in your industry. In the best case scenario, they’ll send a cease and desist letter and demand that you rebrand. In the worst case scenario, they’ll sue you for infringement, and you could be spending tens of thousands of dollars in legal fees and fines.

This is why I suggest companies check the U.S. Patent and Trademark Database for registered trademarks to verify the name or slogan they want to use hasn’t been claimed by someone else.   I’m also an advocate of registering your trademark as soon as you can afford it, so no one can restrict your use of your own name or steal it from you.

Illegal Social Media Policy – at least $10,000
Every company needs a social media policy, but employers need to understand that a federal law called the National Labor Relations Act (NLRA) that protect union activities also apply to employees talking about their work – even in public online forums. If you fire an employee for violating the company social media policy and it turns out your policy violates the NLRA, you could be ordered by the National Labor Relations Board (NLRB) to pay the ex-employee back wages, damages, and offer them their job back. My friend who works on these cases says if you have to pay the ex-employee $10,000, you got off easy.

Copyright Infringement – $150,000 per Work Copied
Many business owners don’t understand that they can’t use any image they find via a Google Image search. There are even marketing “professionals” who will tell you that you can use any image you find online as long as you give an attribution and a link to the original. Both of these are excellent ways to commit copyright infringement. And photographers are becoming more savvy about protecting their rights so if you use their work they may send you a bill or a lawsuit instead of a cease and desist letter or a takedown notice. In the worst case scenario, you may face a lawsuit for $150,000 per image you used without permission.

Be careful if you outsource your content creation that your contracts clear state that the writer or artist who creates your content also indemnifies you if you are ever accused of copyright infringement because of something they created for your site or posted to your social media.

Defamation – $2,500,000
Defamation generally requires making a false statement about a person to a third party that hurts the person’s reputation. When I do talks about social media horror stories, I talk about a case where a blogger was sued for defamation because of one blog post and was ordered to pay him $2.5 million. 1 blog post. $2.5 million. (The case is currently up on appeal but I don’t think it looks good for her.) This is when little words matter because it’s easy to think you’re stating an opinion but your phrasing creates a statement of a fact – and if it’s a lie, it could be defamatory. Think before you post and check your sources.

ruthcover smallerPlease note, these numbers do not include legal fees you could face in addition to damages if you’re sued because of your social media posts. The legal issues listed above only scratches the surface of what wrongs a person or company can commit online. The good news is most of these problems are preventable with education and diligence. I strongly recommend you stay abreast of what laws apply to your social media postings and developments in this area of law.

If you need a legal resource for laymen on this topic, I recommend my book, The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed. It covers a lot of the major issues that apply to blogging and social media. If you want to chat more about this topic, feel free to connect with me on TwitterFacebookYouTubeLinkedIn, or you can email me. You can also subscribe to the Carter Law Firm monthly newsletter.
Please visit my homepage for more information about Carter Law Firm.

Why You Have to Respond to Suspected IP Infringement

Cease and Desist by H.L.I.T. from Flickr (Creative Commons License)

Cease and Desist by H.L.I.T. from Flickr (Creative Commons License)

A few weeks ago we all had a good laugh when Jeff Briton, owner of Exit 6 Pub and Brewery in Cottleville, Missouri got a cease and desist letter from Starbucks when he named one of his craft beers “Frappicino.” Starbucks said this was too similar to their Frappuccino and even took the liberty of contacting the beer review website Untappd to get the Frappicino beer listing removed.

Briton responded with a letter and a check for $6 – the profit he made from selling the beer to the three people who reviewed it on Untappd. If you haven’t read this letter yet, go do it. It’s hilarious.

My hat’s off to Briton for writing such a brilliant response and turning this situation into an awesome opportunity to promote Exit 6. Some people might say that Starbucks’ lawyers were being jerks for sending a cease and desist letter to the little guy who wasn’t their competition anyway. But it was what Starbucks had to do to protect its intellectual property.

When you have a copyright or a trademark and you know that someone is using your intellectual property without your permission and you do nothing, you send a message that you don’t care about protecting your intellectual property rights. If you let the little guys get away with things like Frappicino beer and then one of your big competitors does something similar and you try to lay the smack down on them, your competitor will have an argument that your track record shows that you let others use your property without permission or penalty. By not protecting your intellectual property, you put yourself at risk of losing your intellectual property rights.

It’s because of this risk that Starbucks has to send cease and desist letters to Exit 6 Pub. This is why I tell clients to keep an eye out for other people using their intellectual property. In trademark situations, a cease and desist letter is usually the proper response, even in situations like Frappicino beer.

This is also why I tell bloggers and photographers to be diligent about who is using their work. If they find that someone’s using their copyrights without permission, even if they’re ok with it, I often recommend they contact the alleged infringer and grant them a license after the fact and request an attribution if the infringer didn’t give them one. If they’re not ok with what the alleged infringer did, we discuss whether the artist wants to send a cease and desist, a DMCA takedown notice, a licensing agreement with a bill, or sue for infringement. There should always be a response.

If you have questions about your intellectual property rights or your strategy to protect them, please contact an intellectual property attorney in your community. If you have questions related to copyright or trademark and blogging, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed.

If you want to chat with me more about this topic, you can connected with me on TwitterGoogle+FacebookYouTubeLinkedIn, or you can email me. You can also subscribe to the Carter Law Firm monthly newsletter.
Please visit my homepage for more information about Carter Law Firm.

Guerrilla Movie Shot at Disney Parks

Escape from Tomorrow - Image from EscapeFromTomorrow.com

Escape from Tomorrow – Image from EscapeFromTomorrow.com

This is one of the most innovative projects I’ve heard about this year – Escape from Tomorrow – a film that was mostly shot at Disneyland and Walt Disneyworld without Disney’s knowledge. The cast and crew blended in with other park patrons by storing their scripts and communicating via their phones, using video cameras that were the same type that regular park-goers use, and they used natural lighting. Besides the fact that the cast wore the same outfits every day and they had to go on the same rides over and over again to get the shots, no one could tell they were up to something.

Escape from Tomorrow was written and directed by Randy Moore and it premiered at the 2013 Sundance Film Festival. The fact that the film was shot at Disney parks was kept under wraps until the premier and then it got a lot of attention from reviewers, many of which expected Disney to try to prevent the film from being shown during and after the festival. Disney has acknowledged that the film exists but hasn’t taken action against it yet. Escape from Tomorrow will be available in theaters starting October 11th.

I’m excited to see the film, not for the story itself, but to examine the legal arguments that Disney may have against the film.

What about Intellectual Property Infringement?
The general rule is “Don’t fuck with Disney” because they’re known for laying the smack down on anyone who uses their intellectual property without permission. Moore reportedly was diligent about removing excerpts from Disney movies and songs that were caught on film. Disney won’t likely try to claim copyright in everything it owns inside its parks and even if they did, Moore has a strong fair use argument.

Disney probably wouldn’t win on a trademark claim either, even though I’m sure Disney trademarks appear in the film. I bet Moore’s lawyers would make an argument that the film’s use of Disney is like Thomas Forsythe’s use of Barbie dolls in his work. Mattel lost the case against Forsythe because he couldn’t make the same artistic statement without using the iconic dolls. Tim Wu, professor at Columbia Law School also brought up the argument that no one would see this film and think that Disney was involved in it.

Shouldn’t this be a Non-Issue since Disney lets Visitors Shoot Photos and Videos in its Parks?
Of course Disney lets visitors take photos and videos inside the parks. It’s basically a form of free advertising for them. And even if they didn’t like it, they would have accepted that there’s nothing they could do to stop the hordes of people who visit every day from snapping photos or making home movies. This has become even more prolific now that everyone has a smartphone.

The issue isn’t that they were shooting video, but that they were shooting video for a commercial purpose. Disney parks are private property and they can require people to pay for a location release to use their property. I suspect their lawyers have contract templates ready and a fee structure for anyone who approaches them about shooting a movie at a park.

This gets into a gray area when people go to Disney for personal/recreational purposes, shoot videos, and then post them on YouTube. If the patron monetizes their videos and they get enough hits, they could make money off of their Disney experience. I suspect the amount in question would be too low for Disney to care, but it raises the question of how much financial success can you have via YouTube before you have to worry about legal repercussions.

What about People in the Background?
Moore and his people didn’t get releases from anyone who was caught in the background of any of his shots. He might be accused commercializing their images without their consent if he doesn’t blur them out. I wonder if there are enough pissed off people who were caught on film that they would pursue a class action against Moore.

If I heard that Moore was filming at a Disney park the same time I was there, I’d be running to the theatre to see it, hoping that I made it in the background. I suspect some people would be excited to be on it and may only ask to be listed in the credits for posterity if possible.

It’s uncharacteristic of Disney not to respond to a potential legal fight. On one hand I wonder if they’re waiting to see if the film will be a commercial success before deciding if they’re going to pursue it because there’s often no point in winning a lawsuit (besides pride) against someone who can’t pay up. Alternatively, Disney may be ignoring the film out of fear that if they respond that it will lead to more attention, and more people will see the film, and Moore will make more money.

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DMCA Abuse

Copyright license choice by opensourceway from Flickr

Copyright license choice by opensourceway from Flickr

The Digital Millennium Copyright Act (DMCA) is part of the copyright law. Its purpose is to protect people who provide online forums but don’t control the content people post to them – like YouTube and Pinterest. If they receive a notice that material on their site is allegedly copyright infringement, they must remove it. This law gives content creators a way to react to copyright infringement when someone posts their work online without permission. Instead of sending a cease and desist letter to the person who stole their work, they bypass them and deal with the infringer’s webhost instead.

Lately, I’ve seen a few instances where people have been improperly using the DMCA to get material removed from the internet that they don’t like. I’m starting to refer to these acts as DMCA abuse.

1. Using the DMCA to address TM Infringement
The DMCA should only be used for copyright issues – when you suspect someone is using your original content without your permission. Don’t use it to removed suspected instances of trademark infringement.

In a recent incident, GoPro allegedly sent a DMCA takedown notice to DigitalRev’s webhost to remove a picture of its camera from the site. The photo was in article that compared GoPro against another camera. GoPro didn’t think DigitalRev copied their content, but that they were using a picture of the camera that had the wrong branding. GoPro should have sent DigitalRev an email with a correct image of the camera instead of getting the whole article pulled for alleged copyright infringement.

2. Using the DMCA to Eliminate the Original
This story really bothered me. Somebody copied someone’s original content onto their site, and then used the DMCA to claim that they were the real owners and get the original removed for its site. Thankfully the original author could get their work put back on their site by sending a DMCA counter takedown notice.

Apparently this is a common incident. This behavior was so disturbing, I had to make a video about it.

If you think you have questions about how you, your brand, or your content is being used online, please consult an intellectual property attorney. Don’t just send a DMCA takedown notice – that may not be the right tool to address your problem. When you send a DMCA takedown notice, you attest under the penalty of perjury, that your statements are true. If you send a DMCA takedown notice and it turns out what you did qualifies as what I call DMCA abuse, you may have committed a crime.

For more information about copyright, please check out my book The Legal Side of Blogging: How Not to get Sued, Fired, Arrested, or Killed.
You can connect with me on TwitterGoogle+FacebookYouTubeLinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.

Can Kasperski keep the FnB Name?

Old Scottsdale Sign by kmaschke from Flickr

Whenever I ask my friends where I should take my quasi-foodie parents when they visit, one of the most common answers I get is FnB. This little restaurant in Scottsdale has won a bunch of awards and gotten a lot of good press since it opened three years ago, including a mention in Food & Wine magazine. The owners Charleen Badman and Pavle Milic recently announced that they’re moving FnB to a new location at the beginning of 2013. Shortly after that, FnB’s soon-to-be former landlord, Peter Kasperski, announced he wanted to keep the name “FnB.”

According to Phoenix New Times, he came up with the name and he likes it, but does that give him ownership rights in the name?

Probably not.

A trademark is the mark used with a product or service that distinguishes it from its competition and informs consumers about the source and quality of what they’re buying. In regards to a restaurant, a mark could be the name, the way the restaurant is decorated (trade dress), logos, and/or slogans. When you have a trademark, you have the exclusive right to use it on your products or services in your established market. If your register your company’s trademark with the U.S. Patent and Trademark Office, you get the exclusive right to use your mark on your products and services nationwide. No one can start a business or create a similar product with a mark that is similar to yours.

Unfortunately, no one has registered “FnB” with the USPTO for use with a restaurant. If Badman and Milic did that, they would have exclusive control over who could open an FnB restaurant anywhere in the U.S.

All is not lost in this story. If Badman and Milic can argue that they are known nationwide, they can make the argument that their established market is the entire country so no one can call their restaurant “FnB” without their consent. There was a case in 1948 about a fancy New York restaurant called “The Stork Club.” They had spent thousands of dollars in nationwide advertising and had been featured in news articles in newspapers throughout the country. They were able to force a small tavern in San Francisco called “Stork Club” to change its name because they made the argument that consumers might think the tavern was affiliated with the restaurant, which could hurt the restaurant’s reputation.

What about Kasperski’s statement that he thought of the name? Trademark rights come from using the mark in commerce. From what I can tell, he’s leased property to a company that used the name. If he didn’t use it himself, he has no trademark rights in the name.

According to Phoenix New Times, Kasperski claims he’s partners with Badman and Milic. I looked up Badman and Milic’s LLC and he’s not listed as an owner, so I’ve seen no evidence that supports that claim.

Kasperski also said Badman and Milic will be successful without the FnB name. Given their success so far, that is probably true; however, that doesn’t change their rights in their business’ name. They were the ones who used the name in their business and build a stellar reputation. Unless there are contracts that explicit give Kasperski rights in the FnB name, I foresee him struggling to make a valid claim in the trademark rights.

The take away lesson: If you want to avoid problems like this, talk with an intellectual property attorney about registering your trademark with the USPTO.

You can connect with me via TwitterGoogle+Facebook, and LinkedIn, or you can email me.
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The Oatmeal Sued Again – This Time for Trademark Infringement

One of the Greeting Cards available on TheOatmeal.com

I suspect he has a harder fight on his hands this time around.

Ars Technica released a story this week that The Oatmeal (aka Matt Inman) is going back to court, courtesy of Oatmeal Studios. Oatmeal Studios is a greeting card company that’s suing the artist for trademark infringement because he’s selling greeting cards on The Oatmeal website.

Matt became more infamous than ever with his legal issues related to FunnyJunk earlier this year. I think that was a pretty easy fight for him to win, but this time he has a more formidable opposition.

According to the USPTO, Oatmeal Studios has been selling greeting cards under this brand since 1978 – that means they’ve been selling cards since before Matt was born. In 2004, the company registered the trademark “Oatmeal Studios” for use on “greeting cards, gift cards, occasion cards, paper party decorations, writing pads, note pads, and memo pads.” That means no one can start using “Oatmeal Studios” as a trademark on these or similar products anywhere in the United States after the mark was registered.

Matt has had his site since at least 2009 according to the WhoIs records. He started drawing comics and now he also sells greetings cards, prints, mugs, t-shirts, stickers and posters on his site.

I suspect Oatmeal Studios thinks “The Oatmeal” is too similar to “Oatmeal Studios” so they want to shut down at least the greeting card arm of his operation. Since they have the federally registered trademark, they might succeed, but I think there’s a strong argument that the marks are different enough and the products are different enough that Matt could be allowed to sell his cards because no consumer would ever confuse the two products.

Let’s take a brief look at the factors the court looks at when deciding the likelihood of confusion.

  1. Strength of the Plaintiff’s Mark: “Oatmeal Studios” for a greeting card company sounds like an arbitrary mark to me, which is a pretty strong mark. This makes it more likely that consumers will be confused about the difference between “Oatmeal Studios” and “The Oatmeal.”
  2. Degree of Similarity between the Marks: The marks are pretty similar. One has an added “the” and the other has “studios.” I think the fact that Matt doesn’t have “studios” or something along those lines as part of his name helps him. “Oatmeal” describes the company on one side but “Oatmeal” describes him as a person on the other.
  3. Proximity of Products: Matt sells his cards on his site. Oatmeal Studio’s cards look like the cards I see in Walgreens and stationary stores. The fact they’re not sold in the same places helps Matt’s case.
  4. Likelihood that the Plaintiff will Bridge the Gap: These companies both sell greeting cards, but I doubt Oatmeal Studios will be selling signed prints, posters, mugs, t-shirts, or stickers anytime soon.
  5. Evidence of Actual Confusion: Has anyone been confused about the differences between Oatmeal Studios and The Oatmeal? I doubt it.
  6. Defendant’s Good Faith in Adopting the Mark: If memory serves, Matt’s alter ego The Oatmeal came from his activities in the gaming world. It had nothing to do with Oatmeal Studios. I suspect when he started his site to share his comics that he wasn’t thinking of creating a line of greeting cards.
  7. Quality of the Defendant’s Product: Go check out Oatmeal Studios’ website. I see no similarities between these cards and The Oatmeal’s greeting cards except that they’re both on paper. I think they’re of equal quality as paper products, but when you look at the quality and characteristics of the artwork, they’re not similar at all.
  8. Sophistication of the Buyer: People who buy The Oatmeal products specifically seek out Matt’s work. They will not even thing for a second that Oatmeal Studios is his work.

I think there’s a good chance that Matt can argue that there is no likelihood of consumer confusion when it comes to these two brands. The names may be similar, but I think the products are different enough that Matt has a good shot at winning. I hope this case also inspires Matt to register his trademark for his products to avoid similar problems in the future.

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The North Face vs The South Butt Trademark Saga

 

North Face vs South Butt, Ruth Carter, trademark infringement

The North Face vs The South Butt, photos by TerryJohnston and JL Johnson

The North Face Apparel Corp. is well-known for their outdoor apparel. When I lived in Oregon, I became quite familiar with their brand. Their tagline is “Never Stop Exploring.” In 2010, The North Face sued The South Butt, LLC for trademark infringement when the company started selling apparel with a similar name, logo, and tagline. The South Butt’s logo uses a similar font as The North Face and incorporates a set of curved lines, similar to The North Face’s log. The South Butt’s tagline was “Never Stop Relaxing.” The South Butt even tried to sell the brand to The North Face for $1 million. When I first saw a South Butt shirt, I thought it was hilarious and I knew it was a parody of The North Face, but I figured it wouldn’t last long on the market.

The two companies settled this dispute with an injunction that prohibited The South Butt from using The North Face’s trademarks or any mark that was similar to The North Face’s without permission. The trademark laws generally prohibit you from unfairly riding another brand’s coattails for your own benefit, confusing consumers about what the quality and source of the good they’re buying, or otherwise damaging another brand’s reputation with your trademark.

Fast-forward to the summer of 2012, The North Face is back in court asking a judge to hold the owners of The South Butt in contempt. According to the report, the owners of The South Butt started a new company, Why Climb Mountains, LLC, and they are selling apparel under the brand “The Butt Face” with the tagline “Never Stop Smiling.” The logo also features curved lines which are similar to The North Face’s logo.

The North Face is claiming that The South Butt owners are violating the injunction with this new line of apparel. They commissioned a survey that found that 35% of respondents associated The Butt Face logo with The North Face brand. The judge is expected to decide whether The South Butt owners violated the injunction that prohibited them from using a trademark that’s similar to The North Face.

I understand why a company would want to create a parody of an existing company’s brand, but this story makes me wonder, “Why would you do it twice to the same company if you ended up in court the first time around?” On the flip side, this story shows that there is a market for parody brands which, if a company was looking to expand its market, that would be one option to consider.

If you’re considering using a trademark that might be confused with your competitors’, please consult a trademark attorney in your community before you invest too much time and energy into creating that brand.

If you want to hear more of my thoughts on this topic, or if you think this post is too long to read, I made a video.

Feel free to connect with me via TwitterGoogle+Facebook, and LinkedIn, or you can email me.
Please visit my homepage for more information about Carter Law Firm.

Hat tip: JD Supra