Beginner Tip:
Avoid Trademark Troubles

by Larisa Thomason,
Senior Web Analyst,
NetMechanic, Inc.

You're sure that you've covered every possible angle related to your online business. You carefully selected a good domain name, researched keyword phrases, and now you're kicking off an extensive pay per click (PPC) advertising campaign to quickly get the new site off the ground. But be wary: trademark troubles may be lurking just around the corner.

Copyright Versus Trademark

Although many people tend to regard the terms copyright and trademark as synonyms, they aren't - although they are related. Both copyright and trademark law exists to protect artists, writers, and businesses from unauthorized use of their property.

A copyright protects original expression in written and artistic works. Copyright law protects plays, films, books, software, and Web site copy. Our November 2002 Webmaster Tip discusses copyright law in more detail and explains how it relates to your Web site.

A trademark protects names, company and product logos, slogans, color combinations, and product design and packaging. A trademark is used to identify the source of goods and services. An individual or company must use the trademark in commerce.

Note the difference: the copyright belongs to the person who created the work, while the trademark belongs to the person (or business) who creates and markets a product.

As with copyright law, it's not necessary to formally register a trademark to have the right to use it, but it's really a good idea to do so. Under trademark law, a trademark owner can exercise his rights in two ways: use the trademark to identify his goods or services and/or authorize others to also use the trademark.

It's probably easier to understand in terms of brand names and authorized dealers. The Chevrolet division of General Motors owns the trademarked Chevrolet logo and allows its authorized Chevrolet dealers to display that logo on their signs and promotional merchandise. However, a used car dealer with no relationship to General Motors wouldn't be allowed to display the Chevrolet logo without express authorization from the company.

Trademarks seem pretty straightforward, but plenty of online businesses are having problems.

Domain Names And Trademark Law

In the United States, a domain name is viewed as a piece of property that can be sued. The basis for this situation is a law passed by Congress in 1999 called the Anti-Cybersquatting Consumer Protection Act of 1999 (ACPA).

We tend to think of cybersquatting in pretty direct terms: buying McDonalds.tv or Microsoft.net in hopes of making a huge profit when the companies in question buy the rights to those domain names. However, some companies refuse to play that game and file complaints even if the domain name owner has been using the name for his or her own business, isn't a competitor, and has no interest in selling the name at a profit.

Trademark holders got another boost from the Internet Commission on Assigned Names and Numbers (ICANN) when ICANN introduced a process for handling domain name disputes. Called the Uniform Domain Name Resolution Process (UDRP), it was established as a way to handle domain disputes without lawsuits.

In order to win under the UDRP, a trademark holder must prove three points:

During its first year, over 1000 disputes were settled through the UDRP and the trademark holder won 76% of those cases.

That large percentage troubles many critics who charge that the process is rigged against small businesses and individuals. They point to several high-profile decisions like these:

Naturally, you should always research the history a prospective domain name before you buy. These types of laws and regulations make it really important to research the name itself as well! Otherwise, you could find the name yanked away by a trademark holder just as your search engine marketing campaign finally begins to pay off.

Research And Register Your Trademark

Unfortunately, researching a trademark isn't easy because - unlike other countries - trademarks don't have to be registered in the United States. There are a number of separate registries in the US:

But remember, even if you don't find the trademark registered anywhere, someone may still be using it locally. That's generally not a problem. Two businesses can use the same trademark as long as one isn't using it in an effort to confuse consumers.

For instance, the Alamo rental car company owns the domain name Alamo.com. At the same time, San Antonio, TX is the site of the Alamo US historic site and many San Antonio businesses have the word Alamo in their names. But this is ok because someone needing to rent a car isn't likely to call Alamo Pet Sitting by mistake.

This "mistaken identity" problem is as the heart of many trademark disputes. For instance, in the mid 1990's, the Nissan Computer company registered the domain name "Nissan.com." Although the Nissan Motor company later complained, they didn't really have a case under trademark law until the Nissan.com Web site began to carry automotive-related advertising.

Once you've researched the trademark, you're ready to register it. Although it isn't strictly necessary, registration does give you far more rights under the law than you would have otherwise. It's particularly important because the first person or company to register a trademark is automatically assumed to be the owner. You'd spend a lot of time and money proving otherwise if your competitor beat you to the paperwork!

In the US, file your application with the Patent and Trademark Office and state your intention to use the trademark. In other countries, you usually have to formally register a trademark for it to be valid.

The paperwork is simple and you get added protection for your online business.