Laurence Kaye on Digital Media Law

"Mr Spicy" trade mark case clarifies law on keyword advertising

Trade mark law is really beginning to get its head around the workings of search engine and the Internet. As you'll read, a search engine isn't regarded - at least for UK trade mark law purposes - as "using" (and so infringing) a trade mark when a trade marked term is displayed by a search engine as a sponsored link. The case only concerned the position of the search engine. It didn't look at the position of the advertiser who bought the search term. Here's the detail.

A recent UK High Court decision, Wilson v Yahoo! UK Ltd, has clarified the law on keyword advertising. The use of keywords for sponsored search results does not amount to trade mark infringement. As such, advertisers who sponsor links prompted by search terms are not at risk of infringing a third party's trade mark, even if the search terms entered (and subsequent keywords displayed) form all or part of that third party's trade mark.

The claimant in this case, Mr Wilson, owned a community trade mark (CTM) for "Mr Spicy." When users of Yahoo!'s search engine entered the search terms "Mr Spicy", sponsored links were displayed to third party sites (e.g. Sainsburys) who had bid on those keywords. Mr Wilson argued that Yahoo! infringed his trade mark by displaying these links to third party sites based on the search terms "mr" and "spicy", whether the sponsor had bid on such keywords individually or in combination.

Mr Justice Morgan awarded summary judgment to the defendant, Yahoo!, stating that the claim against it was "totally without merit." His reasoning, at paragraphs 64 and 65 of the judgment, was as follows:

"64. I can put my conclusions really quite concisely...as follows: The trade mark in this case is not used by anyone other than the browser who enters the phrase "Mr. Spicy" as a search query in the defendants' search engine...The response of the defendants to the use of the trade mark by the browser is not use of the trade mark by the defendants. That is enough to decide the case in the defendants' favour. But the matter does not stop there. If, by some process of reasoning, one were to hold that the search engine's response to the words used by the browser was, itself, use by the defendants, in my judgment, it is not use of the mark "Mr. Spicy". What, instead, is being used is the English word "spicy" as it appears in that phrase.

65. Further, even if, contrary to what I have now held are two fatal answers to Mr. Wilson's claim, I were to hold that the defendants were using his trade mark in doing what they did, then they are not using it as a trade mark as explained in the Arsenal Football Club case. In my judgment, this case, very comfortably and clearly, comes within paragraph 54 of the decision in that case; that is, Mr. Wilson is not able to prohibit the use of the words "Mr. Spicy" even when they are being applied to goods identical to those for which the mark is registered if that use cannot affect his own interest as proprietor of the mark having regard to its functions. That is satisfied here."

The "Arsenal Football Club case" to which Mr Justice Morgan refers is the case of Arsenal Football Club PLC v Reed decided in the ECJ.

It is now established in UK law that a search engine does not "use" a trade mark for the purposes of trade mark infringement by displaying keywords featuring all or part of such a trade mark in sponsored search results.

Laurie Kaye/Yasmin Joomraty

Trade Mark Owners - Beware!

In my post yesterday ("Managing IP Assets in a Digital World"), I mentioned some important changes in how trade marks are registered by the UK Intellectual Property Office (UKIPO).

If you own a registered trade mark, the UKIPO will no longer act as your policeman in automatically preventing similar trade marks from being registered. So what should you do? If you value your brand and it's protected by a registered trade mark, you should use a 'watching service' - offered by Trade Mark Agents etc. - to give you early warning of any applications to register a trade mark which could overlap with yours.

My colleague Yasmin Joomraty looks into this in more detail.

The detail

If you own a UK trade mark, the UKIPO will notify you of the proposed application and leave it to you to object. If you own a Community Trade Mark or an international trade mark, you must opt-in as described below in order to receive such notification.

Similarly, if you are applying to register a trade mark, you must be aware that the UKIPO will notify the owners of any similar registered trade marks, who may oppose your application. If they are successful in opposing, your trade mark will not be registered and you may be liable for their costs. If you would like to know more, please read the detailed summary below.

Changes in the UK Trade Mark Registration Procedure

Significant changes have been made to the way in which the UKIPO examines applications for trade mark applications. These may affect you in two ways:

1. Applying to register a new trade mark; and
2. Protecting your existing trade mark (i.e. when a third party applies to register a trade mark similar to your registered trade mark)

Procedure Prior to 1 October 2007

Previously, when you submitted an application to register a new trade mark, the UKIPO searched UK, EU and international records for similar registered trade marks. In the event it found a conflicting trade mark, the UKIPO could refuse the application on relative grounds. In other words, it was at the UKIPO's discretion whether to oppose an application on the ground that it conflicted with an earlier trade mark registered in the UK or under one of the international treaties.

Procedure post 1 October 2007

1) Applying to register a new trade mark

Now, when you submit an application to register a new trade mark, the UKIPO will search the UK register and advise you of the results of the search. You will then have the choice to continue with the application process or not, bearing in mind the following:

• Although the UKIPO will not refuse the application outright, it will notify the owners of the similar registered trade marks.
• The owners of the marks will then choose whether or not to oppose your application. If they choose to oppose and are successful in doing so, you could be liable for their costs as well as being refused registration. 
• Only owners of Community Trade Marks/international trade marks who have opted-in as detailed below will receive notification of your application (if the trade mark is similar).

2) Protecting your existing trade marks

The UKIPO will not automatically notify the owners of Community Trade Marks or international trade marks (although it will notify owners of UK trade marks). In order to receive such notification, owners of non-UK trade marks must opt-in. It is preferable to opt-in before 20 October in order to receive notification of all relevant applications since 1 October. You can complete the opt-in form online to benefit from this service, which is charged at £50 for 3 years. 

Further information on the above can be found on the UKIPO website and in the fact sheets on applying to register a new trade mark and on opposing the registration of a third party's trade mark.

Yasmin Joomraty

Managing IP assets in a digital world

In my first post, I talked about the need for a"strategic approach to the creation, protection and management of intellectual property assets". Sounds good, but what does it mean in practice? For a typical digital media business, most of its assets are 'intangible'. They're brands (trade marks), reputation (goodwill), inventions (patents), copyrights in content and software, designs (design rights), business secrets (know-how and confidential information) the benefit of trading contracts etc.

It's stating the obvious to say that you should protect those assets. The benefits are obvious: it increases the value of the business and, as important, enables you to stop others damaging your business by using your brand or your copyrights. But it's amazing how many businesses don't have any formal policies for doing this. When VC's and other investors take a look at the business, one of the first things they will do is to look at your IP portfolio.

So what are the 'must do's'?

1. Protect your brand through trade mark and domain name registrations. (In my next post, I explain how the procedure for trade mark registration has changed, making it easier for your brand to be hijacked).
2. This might seem obvious, but make sure you use the brand you've protected. I've seen lots of clients with great trade marks who then fail to use it consistently across its products or services.
3. If you commission anyone to create a website, write copy or provide any other materials for you, make sure you have an agreement which either transfers copyright or gives you the necessary rights to re-use across your business. The fact that you commission and pay for work to be produced does not mean that you acquire copyright or any other intellectual property rights.
4. If you think you have developed a novel business idea, don't disclose it without a non disclosure agreement ('NDA'). Once the idea is out in the public domain, it's no longer protectable. An NDA can be written on one page and, to make them acceptable to the 'disclosee', they can contain reciprocal confidentiality agreements i.e. both parties agree to keep the other party's business secrets confidential.
5. Although in principle you can't patent business methods, it's worth checking out whether your idea is protectable as a patent.
6. If you're a hi-tech company, it's worth checking out the 'IP landscape' to see if you are trying to get into a business area which is already heavily protected by patents. If so, life is going to be very tought and legally risky. One of our clients, Cambridge IP, offers a very competitive service to survey the landscape for you.
7. Think of your key business contracts as part of your IP asset portfolio. Does the contract add value to the business by giving you the right to extend the term? Can you continue to exploit IP after termination? Can the contract be transferred?
8. If you are entering into any form of collaboration or joint venture, make sure you document the IP that each party is introducing and how jointly created intellectual property (e.g. software, a database etc.) is going to be owned and exploited.
9. If software is being developed for you, make sure you have access to the code if the supplier goes bust. If it's open source software, that shouldn't be a problem. If it's proprietary, you'll need to use the services of an escrow agent to hold the source code.
10. Last, and not least, document your IP portfolio.

This list is not complete. Every digital media business is unique but taking the time to stand back and think strategically about IP may make all the difference when you come to exit from the business. It's what we do everyday so let us know if we can help!

Laurie Kaye

Law 2.0 - old wine in new bottles?

'Law 2.0', 'digital media law'. Great tag lines but is it all 'sound and fury, signifying nothing' new'? After all, there are plenty of examples of how existing laws are being applied to the online world. In a recent case concerning 'Second Life', a case was brought under US trademark and copyright laws for the unauthorised sale of digital beds with animated sex positions!

In future posts, I want to explore -and get your feedback - on whether the law and new media (or Web 2.0 - take your pick) are an odd couple fated to be forever out of sync. Alternatively, are we moving slowly but inexorably to a position where the law will move seamlessly between the digital and physical worlds?  ("Can you be serious?!). I'll be looking at cases, proposals for new laws, opinion pieces and anything else that seems relevant. 

In exploring these themes, I want to examine whether there is anything really new and whether the world of 'Law 2.0' has distinctive features and, if so, what the messages are for the media industries and business generally.

To do this, I'd like to suggest some overall themes. So here's my list of 'Top 10' issues and features of digital media law which I will be exploring over time in this blog.

1. Liability for 3rd party content, including user generated content, has to be top of the list. Search engines (CopiePresse v. Google), social network sites (Viacom v. YouTube), Forum operators (Gina Ford v. Mumsnet). Let's face it, the law is a mess here. We have different legal regimes in Europe and the EU which create limited service provider immunities from legal liability, both of which were created at a time when the online world was much simpler. It was all about ISP's. Definitely one to watch.
2. Privacy - Search engines and social network sites (see Times Online - "Facebook opens profiles to all comers") have become aggregators and users of terabytes of personal information. The law is struggling to hit the right balance. Data protection laws vary across jurisdictions and often seem over-complex and too focused on a 'tick the box' approach. But privacy is much broader than protecting personal data. It is also about personal reputation and identity.  Who am I on the Internet or, more precisely, how can you know (and authenticate) who I am?
3. Jurisdiction - where are you? What does jurisdiction mean where there are no geographic boundaries nor divisions between the real and virtual worlds?  The answer is - quite a lot. Think of legal jurisdiction as a function of State power and you'll readily see its significance. There are several international legal instruments that apply to cross border disputes. Brussels I (to work out which country's courts have jurisdiction; Rome I (contractual disputes) and Rome 2 (non contractual disputes e.g. copyright infringement), to decide which country's laws apply to the dispute.
4. Old wine, new bottles - inevitably, the starting point for any legal issue in digital media world is the existing framework of laws and regulations. Linden Lab, the owners of Second Life, use good old contract law in the form of their Terms and Service to deny service to participants who don't play by the rules. And when Courts of law deal with issues of copyright infringement, defamation or any other illegal activity, they can only apply the law as it is. Of course, that legal framework is as often as bad as London roads - always under construction. This leads us neatly to......
5. Asynchronous Law - a permanent state suffered by the law (and lawyers!) whereby the the law is always behind - and even occasionally ahead - but never in sync with the online world. Typically, it takes about 5 to 10 years for new legislation to move from initial idea to adoption as law and for the Courts to work out what it means. The European Union's database right introduced by the Database Directive is an excellent case in point. Check out my article on the subject. The unfortunate condition of 'asynchronous law'. leads directly to the next ingredient...
6. Softlaw - this could also be called 'fastlaw'. These are ways of shaping policy without introducing formal legislation. Examples are Codes of Conduct and Recommendations introduced by the European Commission e.g. its Recommendation on management of online rights in musical works. These give a clear message - in this case to the collecting societies - on how they should respond to market changes without a legilslative 'big stick'. These are also useful in a rapidly changing and uncertain world where legislation will either be too slow or plain wrong.
7. De facto law - in the digital world, technical standards play a major role in determining how digital goods and services are exchanged. The ACAP ('Automated Content Access Protocol') project is an ambitious project to develop a standard for 'machine to machine' permissions readable by search engines giving website owners much more control over what search engines can and can't do. Although the law (e.g. copyright law) may provide the overall legal framework for what can and can't be done with copyright content, standards controls what happens. In that sense, they are a kind of 'de facto' law.
8. Regulation - we'll be looking at regulation at the infrastructure level (e.g. the 'Net Neutrality' issue) and at the content level. The European Union's upcoming Audiovisual Media Services Directive distinguishes between revised,'traditional style' regulation of television broadcasting ('linear services') and a so-called 'light touch' approach for on-demand services ('non-linear services'). Getting the right approach to infrastructure and content regulation is, needless to say, a major challenge.
9. New business models - copyright law in particular is often the whipping boy for the lack of new business models for the delivery of entertainment and information services that consumers want and are willing to pay for. We'll keep an eye on how the commercial and non-commercial sector are responding.
10. 'It's the content, silly' - it's no so much that content (or, for that matter, the consumer) is king. If 'paradigm shift' means anything in the context of the Web, it's that content is no longer tied to a specific method or platform of delivery. Digital audio, podcast, e-book, CD, print on paper, mobile music, TV etc. What this does is place the need for a strategic approach to the creation, protection and management of intellectual property assets at the top of the business agenda. In the work we're doing for clients, this message has really hit home.

I don't think that we're going to be short of topics to discuss!

Laurie Kaye

Getting going!

In usual lawyer fashion, I've thought about the pros and cons of blogging - 'to blog or not to blog'. So, enough analysis, here goes.

I thought I'd start with a short piece about brand names. I took a call from a client on Friday. He'd been told about a site using a very similar brand name to theirs. I asked the usual questions about trade mark registrations etc. Choosing the right brand name - one that's right for the product or service and that's legally protectable - is vital in the online as well as the offline world. Here's a really useful piece with tips on what to think about when choosing a brand name