I am frequently asked to provide guidance on intellectual property license agreements, and thought a short guide would be helpful to readers. If you compare intellectual property (IP) rights to a bundle of sticks, the licensee would be required to obtain a couple sticks out of that bundle to continue her project. A license is granted when one obtains a subset of the full ownership rights of intellectual property.
What can the licensor and licensee expect to see in a license agreement? These agreements vary greatly, depending on the unique circumstances of each deal, including the type of IP being licensed, the licensee’s intended use of the IP, and the size of the contracting parties. Here’s a list of some of the clauses that are common to intellectual property licenses:
Definition of the intellectual property being licensed. This can sometimes be heavily negotiated because this defines exactly what the licensee can sell by using the licensed IP.
Scope of the license. Licenses can vary greatly. Sometimes there are geographic limitations to where a licensee can exploit her license, sometimes there are temporal limitations. Channels of trade may also be restricted—for instance, a license to use some software license may be limited to software sold in retail stores, or internet stores. The licensee may also be limited in how she can use her license. Licensors may also wish to set minimum or maximum price levels a licensee can sell a product at. There are other elements that can limit the scope of use; these negotiations can become quite complex.
Royalty terms. For obvious reasons, these are some of the most heavily-negotiated terms in a license agreement. Royalties can be paid in a variety of ways—in a lump sum, or on a regular, ongoing basis. The calculation of royalties may be done using a variety of methods, including looking at net sales resulting from the license, or profits resulting from the license. The payment method, term, and regularity will need to be agreed upon by both parties.
Audits. With any calculation of royalties based on a licensee’s sales or performance, the licensor will want to conduct regular audits of the licensee’s activities. Parties will need to decide when these will take place, by whom, and who will bear the costs of such audits.
Enforcement. Parties will also need to determine whose duty it is to enforce the intellectual property associated with the license. There are several ways of organizing this duty, and the stakes can be high for all parties involved.
Modifications to Intellectual Property. Will the licensee be able to modify or improve the intellectual property in any way? Who will own the rights to such modifications?
This list represents a sample of the many considerations that may arise in a licensing transaction. If you have any further questions about licensing agreements, then please contact Veronique Kherian at vkherian@higagipsonllp.com. You can also reach Ms. Kherian by telephone at (415) 692-6520.
Showing posts with label trademark. Show all posts
Showing posts with label trademark. Show all posts
Thursday, April 26, 2012
Tuesday, November 1, 2011
Search Engine Optimization Can Cause Trademark Infringement
Scrutinize Search Engine Optimization Submissions to Avoid Trademark Infringement
A trademark is a word, name, symbol, or device that a business uses to identify its goods or services and to distinguish those goods or services from those offered by others. Accordingly, the owner of a trademark has the exclusive right to use that mark in interstate commerce. Infringement occurs when a party uses a mark identical to or confusingly similar to a trademark owned by another party. The penalties for trademark infringement are not dependent on the intent of the infringer; trademark infringement is categorized as strict liability. In the United States, trademark infringement is pursued under the Lanham Act. Accordingly, a party found liable for trademark infringement may be subject to the following:
• trademark owner’s lost profits;
• costs of court action;
• trademark owner’s attorney’s fees;
• statutory penalties of three times (3X) actual damages; and/or
• infringer’s goods subject to injunction.
Note that Federal law protections apply regardless of whether the owner of the mark registered the mark with the US Patent & Trademark Office.
Armed with this knowledge, most present day business owners refrain from creating marks that are identical to a competitor’s mark or one that is confusingly similar to a competitor’s mark. A problem arises; however, when an examination of a company’s website reveals that the website uses metatags containing trademarks of competitors. Back in 1999, the Ninth Circuit Court of Appeals held that using a competitor’s mark in your company’s metatags may lead to initial interest confusion, which in turn can amount to trademark infringement.
What are metatags? If a consumer searching for a good or service does not know the company’s domain name, then the consumer will use a search engine such as Yahoo® or Internet Explorer® by typing in keywords to look for the target company’s website. When keywords are entered, the search engine processes those words through a self-created index of websites to generate a list of websites relating to the entered keywords. Each search engine uses its own algorithm to arrange indexed materials in sequence, so the list of websites that any particular set of keywords will bring up differs depending on the search engine used. Search engines look for keywords in domain names, actual text on the web page, and in metatags. Metatags are HTML code intended to describe the contents of the web site. Description metatags describe the web site. Keyword metatags contain keywords relating to the contents of the web site.
With this basic understanding of Internet search engines, there exists the possibility for a company to commit trademark infringement in its efforts to drive consumer traffic to its site. With the growth of the Internet, there is an accompanying growth in the number of firms offering Search Engine Optimization services where a company will revamp a company’s website by expanding the keywords used as metatags to boost the company to the top of the search engine’s list when a search is conducted by a consumer. For example, suppose that a company creates a website to market and sell a new soft drink. The website itself and the text on the web pages that make up the website make no reference to its competitors’ mark or products. However, the SEO firm hired by the company to market the new soft drink set up an entire page of metatags designed to hoist the company’s website to the top of searches for soft drinks. On this hypothetical metatags description page, the following terms appear: Pepsi, Coca-Cola, Gatorade, Lipton, and Starbucks among a host of other descriptive terms. The SEO firm inadvertently exposed the soft drink company to at least 4 separate trademark infringement claims. Why? Taking a moment to consider the circumstances reveals the error.
The soft drink company’s competitors have spent a lot of time and money building their respective brands. Yet, by listing the competitors’ trademarks in its metatags, the new soft drink company effectively usurps its competitors’ trademarks as descriptors for its new product. The result will be that a consumer searching for Coca-Cola would be directed to the new soft drink company’s website instead as a result of the search. The new soft drink company is using the fruits of another competitor’s labor and brand building to capture market share. In essence, this redirection of a consumer by using another’s mark amounts to initial interest confusion which could rise to the level of trademark infringement in the wrong circumstances.
The prudent course of action is to closely scrutinize the keywords and descriptors being used to describe your company’s goods or services when the website is initially set up or when a SEO firm is hired to boost traffic to your company’s website. In a trademark infringement action, the owner of the website would be the primary infringer and would be liable for any resulting damages. It is important to note that liability may or may not run to the SEO firm depending on the contractual terms between the parties. In any event, the new soft drink company would be clearly identified as the infringer.
If your company is creating a website or hiring a SEO firm to overhaul your company’s website, then be aware that the use of competitors’ marks in the metatags exposes your company to liability for a trademark infringement claim. The best practice is to eliminate any keywords as metatags that could create initial interest confusion between your products or services and a competitor’s goods or services. For more information on this topic, then contact either Ronnie Gipson at (415) 692-6523, email at gipson@higagipsonllp.com; or Veronique Kherian at (415) 692-6520, email at vkherian@higagipsonllp.com.
A trademark is a word, name, symbol, or device that a business uses to identify its goods or services and to distinguish those goods or services from those offered by others. Accordingly, the owner of a trademark has the exclusive right to use that mark in interstate commerce. Infringement occurs when a party uses a mark identical to or confusingly similar to a trademark owned by another party. The penalties for trademark infringement are not dependent on the intent of the infringer; trademark infringement is categorized as strict liability. In the United States, trademark infringement is pursued under the Lanham Act. Accordingly, a party found liable for trademark infringement may be subject to the following:
• trademark owner’s lost profits;
• costs of court action;
• trademark owner’s attorney’s fees;
• statutory penalties of three times (3X) actual damages; and/or
• infringer’s goods subject to injunction.
Note that Federal law protections apply regardless of whether the owner of the mark registered the mark with the US Patent & Trademark Office.
Armed with this knowledge, most present day business owners refrain from creating marks that are identical to a competitor’s mark or one that is confusingly similar to a competitor’s mark. A problem arises; however, when an examination of a company’s website reveals that the website uses metatags containing trademarks of competitors. Back in 1999, the Ninth Circuit Court of Appeals held that using a competitor’s mark in your company’s metatags may lead to initial interest confusion, which in turn can amount to trademark infringement.
What are metatags? If a consumer searching for a good or service does not know the company’s domain name, then the consumer will use a search engine such as Yahoo® or Internet Explorer® by typing in keywords to look for the target company’s website. When keywords are entered, the search engine processes those words through a self-created index of websites to generate a list of websites relating to the entered keywords. Each search engine uses its own algorithm to arrange indexed materials in sequence, so the list of websites that any particular set of keywords will bring up differs depending on the search engine used. Search engines look for keywords in domain names, actual text on the web page, and in metatags. Metatags are HTML code intended to describe the contents of the web site. Description metatags describe the web site. Keyword metatags contain keywords relating to the contents of the web site.
With this basic understanding of Internet search engines, there exists the possibility for a company to commit trademark infringement in its efforts to drive consumer traffic to its site. With the growth of the Internet, there is an accompanying growth in the number of firms offering Search Engine Optimization services where a company will revamp a company’s website by expanding the keywords used as metatags to boost the company to the top of the search engine’s list when a search is conducted by a consumer. For example, suppose that a company creates a website to market and sell a new soft drink. The website itself and the text on the web pages that make up the website make no reference to its competitors’ mark or products. However, the SEO firm hired by the company to market the new soft drink set up an entire page of metatags designed to hoist the company’s website to the top of searches for soft drinks. On this hypothetical metatags description page, the following terms appear: Pepsi, Coca-Cola, Gatorade, Lipton, and Starbucks among a host of other descriptive terms. The SEO firm inadvertently exposed the soft drink company to at least 4 separate trademark infringement claims. Why? Taking a moment to consider the circumstances reveals the error.
The soft drink company’s competitors have spent a lot of time and money building their respective brands. Yet, by listing the competitors’ trademarks in its metatags, the new soft drink company effectively usurps its competitors’ trademarks as descriptors for its new product. The result will be that a consumer searching for Coca-Cola would be directed to the new soft drink company’s website instead as a result of the search. The new soft drink company is using the fruits of another competitor’s labor and brand building to capture market share. In essence, this redirection of a consumer by using another’s mark amounts to initial interest confusion which could rise to the level of trademark infringement in the wrong circumstances.
The prudent course of action is to closely scrutinize the keywords and descriptors being used to describe your company’s goods or services when the website is initially set up or when a SEO firm is hired to boost traffic to your company’s website. In a trademark infringement action, the owner of the website would be the primary infringer and would be liable for any resulting damages. It is important to note that liability may or may not run to the SEO firm depending on the contractual terms between the parties. In any event, the new soft drink company would be clearly identified as the infringer.
If your company is creating a website or hiring a SEO firm to overhaul your company’s website, then be aware that the use of competitors’ marks in the metatags exposes your company to liability for a trademark infringement claim. The best practice is to eliminate any keywords as metatags that could create initial interest confusion between your products or services and a competitor’s goods or services. For more information on this topic, then contact either Ronnie Gipson at (415) 692-6523, email at gipson@higagipsonllp.com; or Veronique Kherian at (415) 692-6520, email at vkherian@higagipsonllp.com.
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