May 2012 Newsletter

Our latest newsletter, including an article on what business owners need to do and know for the websites and changes to our firm. The Morton Memo May 2012.

Website Legal Checklist

A company’s website is a valuable asset. For Internet based companies, it is often its most valuable asset.

Business owners often are plagued by problems resulting from their websites. These problems primarily result from business owners’ lack of knowledge of the fundamental things they should have and know about their website.

With hardball trademark tactics and copyright trolls, the Internet has become an often perilous place for business owners. The following is a checklist of information that a business website owner must have.

1. The business should own the domain. Not a partner individually, someone’s spouse, etc. But, the corporation, LLC, or partnership must own the domain.

2. Possess all access information for your domain. You, personally, should have the username and password for the account that manages your domain – e.g. the GoDaddy account with which you bought your business’s domain.

3. Own all domains around your main domain. If your primary domain is xyzwidget.com, then buy xyzwidget.biz, xyzwidget.net, xyzwidget.org, xyzwidget.xxx, xyz-widget.com, xyz-widget.net, xyz-widget.org, etc. Spend some money and buy them all up

4. Use a reputable website designer. Not a friend or a relative or employee. They’ll make mistakes and break the law.

5. Have a contract with the designer. You must have a written contract with your web designer. The contract should spell out the services and the price and contain two terms:

a. The designer’s work is “work for hire”. You will own the content, not the designer.

b. All stock art, photos, content will be licensed. There should be a line item in the contract for the cost of getting licenses for stock photos. Do not allow your designer to put someone else’s pictures, art or photos on your website without a license or permission.

6. Protect your trademarks. If you do not register your trademarks, unscrupulous persons might try to take them away from you – particularly now that you are broadcasting them to the Internet.

7. Post terms and conditions of use and a privacy policy on your website. If you will be doing business on the website, you must have terms and conditions of use and a privacy policy.

8. Know your host. You need to know who is the company that is hosting your website (and probably providing you email service) and you should be in direct contract with that company.

9. Have your FTP information. You must also have the FTP (File Transfer Protocol) information and any other information that will allow you full access to the site and transfer the site to another server.

10. File your copyrights. Once your site is complete, file a copyright registration for its content.

This post is not so much informational as a checklist to be referred to by a business owner when starting a company’s website. If you need any help with any of the above items, please contact me. We have extensive experience with each of these areas.

Social Media Is Advertising

Advertising laws are now being applied to social media. Any business with a Facebook account or is on Twitter must understand that those means of communication are legally considered advertising.

I attended a great telephone seminar today that was sponsored by the Intellectual Property Section of the California State Bar regarding advertising law. Among the many topics covered was social media as used by businesses.

The Federal Trade Commission and the courts have held that advertising and unfair competition laws apply to the use of social media by businesses. Furthermore, CAN-SPAM, the Federal anti-spam email law also applies.

Facebook has sued several business entities that spammed Facebook users. The courts held that Facebook had standing to use as an ISP under CAN-SPAM and that CAN-SPAM applied to communications on Facebook.

The FTC recently sued a plastic surgery clinic in Florida for unfair competition. The clinic used various types of social media, including blogs, to create an Internet buzz. Employees provided comments on Facebook and fake customers reviews, among other things.

The FTC sued on the basis that such practices were deceptive advertising. If an employee "Likes" his/her employer's Facebook page and provides favorable comments, and does not reveal that the he/she is an employee, then that is the same as writing a false customer testimonial. The business is liable under false advertising and unfair competition laws.

Any business that might get into any form of social media must have a social media policy that takes these legal issues into account.

Court rules that use of competing brand as keyword is not infringement

The courts are becoming more sophisticated in their application of trademark law to Internet. Today, the Federal 9th Circuit Court of Appeals issued a ruling in a keywords ad case.  The defendant in the case bought a competitor's brand name as a keyword for ads on Google and Bing.  A search for the competing brand would bring up a sponsored ad for the defendant. The competitor sued claiming that the use of its brand as a keyword was a violation of its trademark rights.

In Network Automation, Inc. v. Advance Systems Concepts, Inc.,court found that it was not since the search engine results showed the defendant's ad and name as a sponsored result. The court found that consumers are not likely to be confused by the sponsored ads since they can discern the difference between the companies' brand, plus the defendant's ad is obviously not the brand of the competitor.

This is a shift from earlier similar cases in which the same court held that the use of a competing brand could be considered trademark infringement if used as a keyword.  The court's reasoning in this case was that the Internet was changing, the consumers are more sophisticated now than in the past, and the court's must be flexible in applying the law to Internet cases.

The full case opinion is here.