Protecting Intellectual Property in a "Flat" World

New York Times columnist Thomas Friedman used the phrase "the world is flat" to describe the more level economic playing field created by globalization. To many, it could be added that "the world is smaller." Just as airplanes made the world feel smaller geographically, globalization and the internet have made it feel smaller economically. The internet has so fundamentally changed the way people do business that it is difficult to remember the days, not too long ago, when similar trademarks could co-exist on similar products and services (if not always happily) in different regions of the country.

Today, even small start-ups need and expect to be able to do business nationally and internationally. As sales territories have expanded, they have increasingly overlapped. For businesses competing for customers in these overlapping territories, the need for brand protection has resulted in the world seeming smaller.

People today educate and entertain themselves, but more importantly for businesses, shop, plan, and inform themselves about products and services on the internet. For many businesses, the internet has opened up the entire world as a customer base. For more traditional brick-and-mortar businesses, it is now often the most important marketing medium, offering a unique opportunity to promote and sell. For many, it is a strict necessity that they do so just to remain competitive.

The internet makes the world smaller by making many businesses' sales territory (and therefore trademark use) bigger - vastly bigger. Single-location shops now routinely sell products and services throughout North America and the world. Each such seller must therefore protect its trademark all over this enormous new area. Not only does it make business sense to do so, the law requires it; one must protect a brand or lose it. The law recognizes that, even with diligent policing efforts, some infringing uses will occur, but the fact that the trademark owner cannot stop all infringement does not mean it is not obligated to do what it reasonably can.

In addition to the internet, globalization in general has produced an increased importance attached to brand protection. Due perhaps to customers' recognition that the internet has produced an increase in infringement, the value of branding has increased as customers seek assurance of the origin of a product or service. Furthermore, the internet is still largely a visual medium (although becoming less so). Trademarks, also more visual than aural, acquire an even greater importance on the internet than in other media.

The internet does not, of course, change trademark law. Trademark law treats the internet similarly to other media. What is new are the many issues which arise only because of the internet.

Businesses use their trademarks on the internet, as in other media, to promote and sell their products and services. For businesses that have a trademark in their trade name, it is often desirable to register that name as a domain name. One problem that arises is that many words and symbols which are capable of being trademarked are associated with a wide variety of products and services. Under trademark law, it is perfectly acceptable for one brand name to be attached to a product or service, and a similar name to be attached to a different product or service of another business, provided that the similar brand name does not result in a likelihood of confusion (which it will not if the products/services are sufficiently different from each other). This is the case regardless of whether either or both of the trademarks is registered.

Naturally, trademark owners want domain names comprised of their marks and as little else as possible. With the limited number of domain name combinations and the prized value of ".com," it is impossible for all to obtain their desired domain names. Businesses with similar brands will go for similar domain names. This crowded arena naturally results in infringement, both intentional and unintentional.

A simple, but surprisingly common, infringement is the actual use of a competitor's mark (or one confusingly similar) in an advertiser's website. Oftentimes, this is accidental. In other instances, advertisers are apparently relying on the general rule that mere use in a domain name does not by itself constitute "use." However, courts have typically held that using another's mark in a domain name will constitute an infringement.

Perhaps the most insidious problem raised by the internet is the hidden use of another's mark on an advertiser's website (meta tagging). At first impression, one could think that if a mark is hidden, it cannot be an infringement. But where another's mark is used, without being seen, to divert customers to a different site than they intended to reach (in the hope that, once there, the customer will stay), courts have generally found infringements.

Before the internet, policing a brand name could be accomplished relatively easily by either the brand owner or a monitoring-service company. Policing efforts included reviews of content and ads on television and in newspaper and magazines. A small amount of infringement may have gone unnoticed, but not enough to endanger the mark. The costs associated with clearing new trademarks and bringing them to market made larger companies acutely aware of the potential costs of infringement which they therefore sought to avoid. As noted, smaller companies typically did regional, not national, business and were consequently less of a threat to a national brand and less aggressive about their own brands. Local infringement was generally more difficult to hide and, therefore, was much less common.

The new global and internet economy changed this situation dramatically. Monitoring the internet has now become as important as monitoring other media.

The internet has dramatically lowered the financial barriers for starting new businesses (the world really is flat). Many new businesses now create the illusion of success and sophistication without having committed the resources, as was necessary in the past, to build a brand name. They have "nothing to lose" by infringing on well-established brands. These infringers initially created problems for only the larger, well-established brands, but they have now begun to prey upon smaller brands. In part, this is done because the smaller brand owners do not have the resources to enforce their rights as aggressively, particularly in distant jurisdictions.

The policing efforts that any particular trademark owner will choose to pursue obviously depend on the business, the available budget, and the value of the brand. Nevertheless, as with many business issues, a small outlay on prevention often produces a large savings in cure. To put it another way, an infringer caught early in the act is more likely to concede quickly and easily. At the least, the most basic act of prevention - trademark registration - is more necessary than ever.