Internationally, disputes over domain names and AdWords are not new (see my post, Trade marks and AdWords). Some see the ease of registering domains and search terms, and the apparent lack of a sanction, as an open invitation to do so as a spoiling tactic against a potential competitor. But firms should be in no doubt that they are on thin legal ice when they get too close to a competitor’s trade mark or otherwise act in bad faith.

While there are potentially other legal remedies available, the starting point for most disputes involving domain names and search terms is the Fair Trading Act 1986. Among other things, this Act contains a general prohibition on business conduct that is “misleading or deceptive or is likely to mislead or deceive”, and misleading conduct in relation to trade marks. Note that there is no prohibition on “unfair conduct”. It has to be “misleading or deceptive” to a third party.

AdWords

While there has yet to be a New Zealand case on AdWords involving trade mark infringement and / or misleading & deceptive conduct, last year’s European case involving Google and Louis Vuitton did provide some guidance. There is little doubt, for example, that registering and directing a competitor’s trade mark alone to your own website would be unlawful. It gets more murky when a company simply registers an AdWord to block a competitor from registering it. That would be unlikely to amount to trade mark infringement.

Domain names

The primary remedy for .nz domain name dispute is the .nz Domain Name Commission’s Dispute Resolution Service. Unlike the Fair Trading Act, this service can provide a remedy where a competitor has acted in an “unfair” manner. Disputes unable to be solved informally are referred to experts – including former senior commercial judge Sir Ian Barker and senior IP barristers – for determination. At $1,800+gst, it’s far cheaper than the Court process, though the input of a lawyer in preparing the relevant submissions can be beneficial.

For other TLD domains, it is a matter of using the relevant dispute resolution service, or Court proceedings.

In all cases though, the Fair Trading Act (and other general laws such as passing off) still apply, meaning that Court action can be taken in appropriate circumstances. If non-domain name issues are also involved, it may be more efficient to simply include the domain name complaint in any notices sent to the other party, or Court proceedings filed, than to attempt standalone determination, although it depends on the specific circumstances (e.g. if time is of the essence).

Register!

Localist was successful in forcing Yellow Pages to back down from what clearly seemed to be pretty sneaky behaviour, even if it did take a hefty statement of claim to do so. But the lesson remains: register! A .nz domain name costs all of about $21, or less than 5 minutes of a lawyer’s billable rate. It will probably cost less to register half a dozen domain name variations than it will to get your lawyer to read & reply to your email after a situation has arisen. Firms don’t need to register every possible variation just because an unscrupulous competitor may try to ankle-tap them; there are strong remedies for misleading or deceptive conduct. But at least grab the obvious domain names and (hopefully) prevent any cybersquatting in the first place.

Facebook is attempting to assert ownership over use of the word “book” in domain names, by filing a lawsuit in the US against unrelated site Teachbook.com. It has also been reported that Facebook is attempting to claim the word “face” as well. The “book” complaint alleges:

Misappropriating the distinctive book portion of Facebook’s trademark, defendant has created its own competing online networking community in a blatant attempt to become a Facebook for teachers.

It is not uncommon for trade mark owners to take action to stop “similar” names being used by another party, even where the other is innocently using them in an unrelated manner. A recent local example being designer Trelise Cooper’s unsuccessful attempt to stop another New Zealand designer from registering her own actual name, “Tamsin Cooper” as a trade mark. Facebook will not succeed in gaining a monopoly over either “face” or “book”, but may be seeking to force a lesser-resourced start-up into a settlement. Teachbook has said it will fight the suit.

ISP or not to ISP

Computerworld reports on ongoing concern over the very broad definition of “ISP” in the Copyright Act (see my post here). Submitters have suggested that the definition be modified to only apply to organisations that allocate IP addresses. While that would be a significant improvement, it would still leaves some organisation as unintended or unwilling ISPs. For example the University of Auckland has submitted:

The University currently controls a range of 65,534 unique IP addresses which it allocates to access points in the University and to halls of residence… The University thus has serious concerns about its status and the definitions of an ISP as drafted in the Bill. It will be apparent from the information provided that the University has essentially all the characteristics of an ISP and will be the entity that is contacted if illegal file sharing is alleged.

Government Open Access and Licensing

The Minister of State Services recently announced the release of the NZ Government Open Access and Licensing Framework – a series of Govt-approved licensing models that advocate the use of liberal Creative Commons licenses. The policy is available here. It applies to all public service departments and Crown entities, except (somewhat curiously) for tertiary institutes.

We called out for another drink, the waiter brought a cease-and-desist

Can you copyright a cocktail? The Atlantic reports on a Manhattan bar that may yet find out. For the record, a recipe can be copyright, but for heaven’s sake can’t they just settle it over a Long Island Iced Tea?

[ On a related issue, see my Computerworld article on AdWords and trade marks ]

A quick check on the .co whois server shows some popular .co.nz names now registered as .co’s by registrants that appear to be someone other than the New Zealand company, including nzherald.co, tvnz.co and blackcaps.co. Of course, the presence of a .co registration should not presume any illegitimacy or trade mark issue. Trade marks are territorial, and how the (global) domain name is used in a particular region (if at all) is what will be relevant.

Even more headache inducing (or wonderful, depending on ones view) is ICANN’s proposal to allow the creation of new generic top level domains (gTLDs) for “branding purposes” – i.e. vanity domains. As ICANN says:

Brand holders and organizations seeking to manage their own name as a top-level domain may have an interest in securing these rights in the early phases of the new gTLD program for future branding purposes. With the limited availability of .com domain names, some companies may opt to become early adopters of new TLDs to satisfy their marketing needs. There will also be opportunities to apply for community and geographic top-level domains, such as .blog, .brand, and .city.

For example, it is reported that IBM is likely to apply for the .IBM top-level domain. Someone could apply to register .kiwi (a popular trade mark) as a gTLD. Of course, for contested trade marks this could prove rather fraught. However, it will not be as simple as registering a normal (second/third level) domain name. To register a custom gTLD you will effectively need to become a accredited registrar and sign a contract with ICAAN.

The International Trademark Association recently expressed its concerns that the proposal could lead to cybersquatting mischief. ICANN, chaired by New Zealand barrister Peter Dengate Thrush, is expected to make a decision on its trade mark policy for the new gTLDs soon, although some remain concerned that “trademark concerns will be noted and then brushed aside”.

• AdWords and trade marks: taking care of business, Computerworld, 15 July 2010

I know at least one New Zealand company is currently attempting to “peacefully” resolve a trade mark-AdWord situation. It could be some years, though, before a New Zealand court case emerges. The EU and Australian decisions (and a further ruling last week) are fairly orthodox (helpfully so), and there’s no reason that the same wouldn’t apply in New Zealand. In short, trading off other’s trade marks is a risky business. It can also be expensive – not just because of the possibility of being sued (which is usually a last resort and, in the scheme of things, relatively uncommon) but also due to being forced to change or abandon advertising efforts.

On a related note, for new businesses starting up, key steps before settling on a business / product / service name are:

1. Search the Companies Office for similar company names.
2. Check domain names (not just for availability but for similar names).
3. Check trade marks (again, not just for identical matches but similar ones too).
4. Check Google.

It’s a lot easier to get a “clean” name / brand at the outset than have to change it down the track.

Google has not infringed trade mark law by allowing advertisers to purchase keywords corresponding to their competitors’ trade marks. Advertisers themselves, however, cannot, by using such keywords, arrange for Google to display ads which do not allow internet users easily to establish from which undertaking the goods or services covered by the ad in question originate.

The Court said it will still be up to EU member courts to assess, on a case by case basis, whether the particular way in which an advertiser has used its AdWords is confusing or deceptive – if so, standard trade mark infringement remedies will apply. Whether the service provider (i.e. Google in this case) could be found liable would depend on:

“whether the role played by that service provider is neutral, … is merely technical, automatic and passive, pointing to a lack of knowledge of, or control over, the data which it stores. If it proves to be the case that it has not played an active role, that service provider cannot be held liable for the data which it has stored at the request of an advertiser, unless, having obtained knowledge of the unlawful nature of those data or of that advertiser’s activities, it failed to act expeditiously to remove or to disable access to the data concerned”.

Service provider role recognised

The ruling draws a clear distinction between the service provider – which would avoid liability if it played merely a “neutral”, “passive” role – and the user of the service (i.e. the advertiser). There seems to be a growing acceptance of the need to make this distinction with online services. Other recent examples include an earlier UK ruling on defamation (again involving Google) and the iiNet case in Australia (currently under appeal).

This ruling applies only to Europe. Other trade mark claims have been brought and settled elsewhere, and further challenges will no doubt arise. But this ruling by the EU’s highest court is a strong endorsement of Google’s position. Due to the conforming nature of the internet, and the relatively consistency of trade mark law globally, the decision is likely to influence any challenge against Google in New Zealand.

A UK court has ruled, and a customer found out the hard way, that what was described as a “perpetual” software licence was not a “never ending” licence. In BMS Computer Solutions v AB Agri Ltd (UK High Court, 10 March 2010) the customer was granted a “UK-wide perpetual licence” for a program. However, the contract granting the licence also required the customer to keep buying support from the developer:

In the event that the software technical support agreement is terminated for any reason whatsoever this agreement shall terminate.

The customer wanted to terminate the support agreement, but keep using the software. Terminating the support agreement would terminate the contract which had granted the licence. It is quite common for specific terms of a contract (including software licences) to survive termination (assuming that is what the parties intended). The question in this case was whether the grant of the “UK-wide perpetual licence” intended to create a never-ending licence that would survive termination of the main contract. The judge said:

The word “perpetual” can carry different shades of meaning. It can, for example, mean “never ending” (in the sense of incapable of being brought to an end) or it can mean “operating without limit of time”.

The judge found that in this instance, the “perpetual licence” meant a licence “operating without limit of time”, i.e. it continued until either party terminated it for some valid reason (such as ending the support agreement).

The ruling does not mean that every “perpetual licence” is perpetual until terminated. A contract (such as a licence) is always interpreted according to its terms and intentions of the parties. In some cases, “perpetual” will clearly mean “never ending” (in which case it may be a good idea to record it as “perpetual, irrevocable licence”). In this case, the “perpetuality” was trumped by the tied support requirement, and could not have been intended as never-ending – either a case of poor drafting by the customer, or good (or fortuitous) drafting by the developer.

Smoking gun emails

The major court battle over copyright infringement between YouTube and Viacom currently underway in the US has turned up some pretty damaging internal emails between the founders. E.g. this from YouTube co-founder Steve Chen to Jawed Karim:

“jawed, please stop putting stolen videos on the site. We’re going to have a tough time defending the fact that we’re not liable for the copyrighted material on the site because we didn’t put it up when one of the co-founders is blatantly stealing content from other sites and trying to get everyone to see it.”

While the founders probably aren’t too concerned (having long since cashed out), the evidence may yet cause YouTube’s owner Google a headache. Another reminder not to put damaging comments in writing – in litigation, almost everything is potentially discoverable.

More audio/visual technology in NZ courts

“A bill that will allow greater use of audio visual links in courtrooms passed its first reading in Parliament yesterday.” more…

Nestlé trade marks Kit Kat shape

Nestlé has won an appeal allowing it to trade mark (in Australia) the shape of a Kit Kat bar (or as the application prosaicly calls it, “Chocolate confectionary being chocolate-coated confectionary blocks or bars and chocolate-coated wafer biscuits”). Trade marking shapes is permitted in New Zealand and other countries (for example Toblerone chocolate in some countries). In fact, many “non-lexical” things can be trade marked, including (in New Zealand) colours, smells, sounds, and tastes.

Strangely, chocolate has long been a major battle-ground for trade mark disputes. In New Zealand, Cadbury lost a 2008 Court of Appeal battle to trade mark the word “purple” (though not the colour, which it already trade marks). Last month in Australia, Guylian lost a Federal Court battle to trade mark its seahorse shaped chocolates, which the court found “not sufficiently inherently distinctive”.  In contrast, two years ago a Japanese court allowed Guylian the same trade mark in Japan, finding that the shape was sufficiently distinctive.

Computerworld reports on an Auckland High Court injunction requiring Codeshed, a software developer, to hand over the source code of its software to a customer. The injunction is an interim measure in a wider dispute between Codeshed and its customer, centering on the ownership of the intellectual property in the code. The customer obtained the injunction on a without-notice basis (previously known as an ex parte application) which meant the customer has to give an “undertaking as to damages” – i.e. once the final dispute is heard, if it turns out the customer is wrong, the customer must compensate Codeshed for having the injunction served on it. An ex parte injunction requiring the handing over of valuable IP is a relatively extreme remedy (it can include lawyers turning up on your doorstep with a court order in hand!) but the judge decided it was justified in this case (pending final resolution of the dispute).

According to the article, the matter is now being arbitrated, which usually means it will not be publicly commented on (by the parties) any further.

No iMonopoly for Apple

In Australia, Apple has been told that it does not have a monopoly on the letter “i” for technology products. The Trade Marks ruling said:

“[Apple] has not therefore demonstrated to my satisfaction that the person of ordinary intelligence and memory would be caused to wonder, or be left in doubt, about whether the Goods come from [Apple] merely because the Trade Mark terminates in the letter “i”, however that letter may be presented. Nor do I think the fact that the Trade Mark is made up of the letters of [Apple's] IPOD trade mark in reverse order would cause a significant or substantial number of relevant consumers to wonder whether the Goods were those of [Apple]“.

Amazon’s 1-click patent confirmed – with a Kiwi connection

Amazon’s infamous 1-click patent has been confirmed by the US Patent & Trademarks Office. To refresh, this patent is “A method and system for placing an order to purchase an item via the Internet” and, on the face of it, covers much of e-commerce. It has been rejected in the EU, and was not applied for in New Zealand. It has been widely criticised (rightly so) since first being granted. In 2005 New Zealand actor Peter Calveley filed a formal challenge to the patent with the USPTO. After some wrangling in the re-examination, Amazon was forced to make some very minor amendments to the patent in 2007. The amended patent has now been re-examined and affirmed by the USPTO.

While this highlights the need for reform of the patent system, a major development may occur next month when the US Supreme Court is expected to rule on the Bilksi case, involving the patentability of business methods.

For the record:

• Copyright protects original works, not ideas.
• Trade marks protect origin, not ideas (or content).
• Patents protect novel, non-obvious, documented inventions, not ideas (or configurations).

Despite what the IPONZ homepage implies, there is no way to prevent someone “having your  idea”. A patent comes close, but protects the invention – not simply “an idea” as such.

It is certainly a good thing to be able to use intellectual property law to protect the improper taking of your intellectual property, but making sure someone else doesn’t “have the same idea”? Not a good idea.

Credit: good spotting by Jonathan Hunt, HuntDesign

Two recent events concerning trade marks, one in New Zealand and one in the US, highlight the same underlying issue, albeit in different ways.

The first incident: local blog Editing the Herald received a cease-and-desist letter from APN, publisher of the NZ Herald, on the basis that EtH was using a modified version of the Herald masthead, a trade mark of APN.

The second incident: the author of a book on Ubuntu, whose website used the Ubuntu logo without authorisation from Canonical (owner of the US Ubuntu trade mark) sparked much comment by claiming that “trademarking is almost totally incompatible with the essential freedom offered by open source. Trademarking is a way of severely limiting all activity on a particular product to that which you approve of.”

Both of these incidents highlight that trade marks are not about “ownership” in the way that copyright is, but are about identity and origin. As the Intellectual Property Office of New Zealand says:

“A trade mark enables businesses to distinguish their products or services from similar products or services offered by competitors.”

If you are the registered owner of a trade mark, then you have the exclusive right to use that trade mark in connection with the products and services that it covers. If anyone else uses your trade mark (or something similar to your trade mark) without your permission in the course of trade, you are entitled to take action against them. Use of a trade mark that is not in the use of trade is not infringement, however the meaning of “in trade” is wide.

It is important to note that a trade mark will usually only apply to the goods and services that it is registered for. That is, it does not amount to a blanket monopoly on a word or phrase. For example, the word Kiwi is registered as a trade mark by a number of companies for different products such as shoe polish, bacon, beer, milk and packaging. If you owned the Kiwi trade mark for beer, you could not prevent someone using the Kiwi name to sell clothing, for example.

The trade mark (logo) for “New Zealand Herald” is registered for the following goods and services:

“printed matter; publications; paper and cardboard; stationery; posters and photographs; instructional and teaching materials (except apparatus)”

and

“publishing; electronic publishing; education, entertainment and cultural activities in this class including (without limitation) the organisation and running of competitions for education and/or entertainment; information services (including, without limitation, on-line information services) relating to education or entertainment”

The terms “publications” and “publishing” are very broad, and would clearly apply to someone publishing a blog. So using the New Zealand Herald logo (or an imitation of it) on a blog without authorisation would infringe the trade mark, if the use is “in trade”. But is a non-commercial blog “in trade”? EtH sums it up well: “I would have at least an arguable case in court but it would cost both money and time, only one of which I have in appreciable amounts”.

Should there be “parody rights” for trade marks? Probably not – trade marks are used to designate origin, not protect content. Copyright, on the other hand, should expressly protect parody as fair use.

As for the trade mark and open source issue, this is far from the first time it has arisen. Indeed, early on in the history of Linux, one opportunistic William R. Della Croce, Jr registered the US trade mark Linux and attempted to extract royalties for its use. Fortunately the matter was soon resolved, and the US trade mark is now owned by Linus Torvalds.

The Ubuntu author’s statement that trade marks are “totally incompatible with the essential freedom offered by open source”, is off the mark. The “essential freedom” of (fully) open source software is that you are free to copy, modify and redistribute the code. If someone releases software under their trade mark, you are free to take their code and re-release it under your own name or trade mark (subject, of course, to any terms and conditions of the specific licence such as attribution). Of course, the trade mark owner may allow you to release it under their name. But that is their choice. The unfettered ability to release software under any given name (and therefore possibly mislead as to its origin) would certainly be a “freedom” but is not the essential freedom.

The inverse makes the point. It would be unfortunate if a someone could simply take any well-known open source project, modify it into a buggy version, and then promote it under the original name. Admittedly, in some cases the issue is slightly less clear cut, as in the Firefox / Iceweasel tussle. In that situation, a more light-handed trade mark policy may have solved the problem.

Ultimately, it is the “essential freedom” that wins the day. If a project becomes too oppressive on a matter such as trade marks, it can be forked and rebranded, the prospect alone of which may help common sense to prevail.