Domain names and AdWords: fools rush in

A potential spat over domain names and AdWord spoiling tactics was resolved before it really began last week. New firm Localist (a subsidiary of NZ Post) filed proceedings against Yellow Pages Group (YPG), after YPG registered the domain names www.localists.co.nz and www.locallists.co.nz, and registered similar Google AdWords.

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.

Tech law update 3 September 2010

Throwing the ‘book

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?

More domain name headaches for trade mark owners?

Greg Adams comments here on the “recent .co virtual land grab”. Computerworld reports that “More than 39,000 organizations applied for .co domains during a ‘prelaunch’ phase for signing up big-name companies”. While this is great news for Columbia’s domain registry, it is just another potential headache for businesses trying to protect the identity of exising domain names and trade marks.

[ 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”.

Trade marks and AdWords

My latest Computerworld article is now online:

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 wins AdWords case

Google has won a major legal victory, with the European Court of Justice (the EU’s highest court) ruling that Google can continue to sell other companies’ trade marks as AdWords keywords (it was the use of the Loius Vuitton trade mark by a competitor that sparked the suit). This is seen as a major setback to the ability of companies to protect their brands. But the ruling does not green-light all manner of trade mark infringement. Advertisers must still not engage in misleading, deceptive or other infringing conduct in relation to a trade mark. The Court said (via press release):

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.

Tech Law news 25 March 2010

Not a never ending licence

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.