The risks for companies using social media are plentiful, from employees who reveal trade secrets to being held responsible when outside users post copyrighted material to company-operated web pages. To avoid legal ramifications and lost business opportunities, you need to be aware of potential pitfalls.
“Social media increases the ease with which information is communicated and it does it in a permanent and attributable way,” says Robert Sieg, a Partner with Fay Sharpe LLP. “This can make it easier for confidential information to be leaked out of a company and create a potentially more harmful situation when such a leak occurs.”
Smart Business spoke with Sieg, as well as Fay Sharpe attorneys Mark Rogge and Sean Weinman, about how social media can impact your company’s intellectual property and image.
What security issues can arise with the use of social media?
With many people conditioned to post almost anything on the Internet, confidential company information such as upcoming product releases and acquisition plans are more at risk. With information posted online, that creates a record that can be found by a routine keyword search and that is directly attributable to an employee of the company, giving it more credibility. This can give the media a much stronger lead to dig into what is going on in your company. Information could also be posted that would compromise a company’s ability to obtain patent protection on new inventions or that reveals trade secrets.
As a safeguard, make sure that only those authorized to do so post to your company’s web site and social media sitesthat your legal department reviews posts before they go live and that patent attorneys review materials to make sure confidential technical matters aren’t being released.
What ownership issues arise in the context of social media?
While the ownership of a tangible item such as a company car can be clear, when it comes to social media, the distinction becomes blurry. In many cases, employees are creating pages on sites such as Facebook for company purposes using their own names and information.
That is something that you need to monitor. If you really want that site being used to represent your company, you need to make sure that it’s clear that you own that site. This can mean opening the account in the company’s name and having documentation, such as an internal social media policy, that describes ownership and proper use of the site, as well as addressing contingencies such as severance issues.
However, sites such as LinkedIn can make it difficult to distinguish between work and personal use, as many companies encourage employees to set up accounts to network with and build business contacts. But if an employee leaves for a competitor, he or she may take that LinkedIn account upon departure, and all of those contacts created as a result of employment with your company go with the employee.
While a company can argue that the account was created on company time as part of the employee’s assigned work, this can be difficult to prove, so you need to proactively set up policies to establish guidelines to ensure employees don’t walk out with your property.
What should be considered in deciding what can be posted to a company’s social media site?
If you allow visitors to post to your site, consider that it could open you up to liability. The Digital Millennium Copyright Act offers some protections against copyright infringement by providing a 'safe harbor' notice and takedown procedure in some cases in which owners of copyrighted material ask for posts to be removed. Companies should be familiar with these policies and have someone monitor posts to the company’s site to ensure that improper material is not posted.
Many companies have a dedicated employee policing their site, but with that approach, you might already be in trouble before that person becomes aware of an issue on the site. To prevent this, companies can implement a moderated system, which allows the host to queue comments for review before they go live.
What are the dangers of using social media for promotion?
While social media can be used to drive awareness and generate sales, you need to avoid misleading and deceptive advertising such as false blogs that appear to be independent but that are actually operated by someone working for the company.
In 2009, the Federal Trade Commission established guidelines concerning the use of endorsements and testimonials in advertising, which require the disclosure of connections between advertisers and endorsers. If you have third-party endorsers rating products on your web site, but they’re misleading the public, your may be liable for that false or misleading practice. But beyond any legal considerations, it's just not good advertising for your company if people discover that you’re misleading them.
How can social media impact the branding of a company?
The growth of social media has brought with it problems that can affect trademark management and the preservation of goodwill associated with a company’s brand. Practices such as cybersquatting, which involves parties purchasing Internet domains related to brands or company names, is a rising trend. Cybersquatters hold companies hostage and try to sell them those domain names for a price. In other cases, squatters may post explicit material under the brand name or company banner, or using your good name to drive traffic to their own sites.
Registering your company or brand trademark can go a long way toward stopping a cybersquatter, but the problem is exacerbated as new social media sites continue to appear. As a result, once a brand new social media network arrives, register whatever space you can that could be associated with your product to make sure that no one else does so.
Robert Sieg, Mark Rogge and Sean Weinman are attorneys with Fay Sharpe LLP. Reach them at (216) 363-9000 or email@example.com, firstname.lastname@example.org or email@example.com.
Companies routinely direct substantial resources to the development of new products, including designing exterior shapes and visual characteristics as well as technical and functional features. If you want to protect the look of your new product from copycats, you should consider pursuing more than just a utility patent. You need to obtain a design patent.
“A design patent will protect the ornamental appearance of
Smart Business spoke with Dugan about design patents and how they can be invaluable in protecting your company’s new product.
What are the benefits of obtaining a design patent?
Let’s say your company is in the eyewear business, and one of your employees develops a new pair of sunglasses. The sunglasses are of an otherwise conventional construction that includes a frame, a couple of lenses and two foldable arms that are connected to the frame. Structurally, there is nothing particularly innovative about this new product, when compared with other sunglasses on the market. However, your employee has come up with a design that is amazing -- it’s new, creative and the purchasing public loves it and is buying it like crazy. The way to protect what is making your company money – the design or appearance of the sunglasses – is to obtain a design patent for the sunglasses. Since the basic configuration of the sunglasses is well known, patent protection under a utility patent wouldn’t be available and couldn’t effectively protect this new design.
In many cases, a product can be protected by both design and utility patents. Taking above example a bit further, if your employee also developed a scratch-resistant coating that is included on the lenses of the new pair of sunglasses, then obtaining a utility patent to protect eyewear with this protective coating on the lenses would also be appropriate. Importantly, the utility patent would not be limited to use on sunglasses that have the new design. Rather, the utility patent might be broadly drafted to cover any eyewear that includes the protective coating, regardless of the design, appearance or type of the eyewear.
What cannot be protected by a Design Patent?
Design patent protection is not available for products with an appearance that lacks visual design elements, such as shape or surface ornamentation. Cleaning products, such as liquid detergent and powdered dishwashing soap, are examples of products for which design patent protection is unavailable and wouldn’t make sense. However, these products are often sold in containers that are covered by one or more design patents, as the containers are normally designed to have a distinctive shape and appearance that makes the product identifiable to consumers.
How does a design patent help protect a company’s product from infringers?
With the continual advances in digital imaging, computer-aided modeling and rapid manufacturing technologies, it keeps getting easier for new players to enter a market by replicating existing products. Unfortunately, this can be achieved at relatively low cost and in a very short period of time. In many cases, the new competitor may not even make the slightest of changes to the knocked-off design. This, of course, is not new news for many companies.
What is often unknown to many companies, however, is that patent rights in the US are not granted to the patent owner until the date that the patent actually issues. So, there is usually a window of three to five years between the launch of a new product and the issuance of a utility patent covering that product. Within this window, a competitor could enter the market with a product having the same design and continue to sell that product – largely without recourse – until such time as a utility patent issues. However, this window can be substantially shortened by pursuing protection for the visual appearance of the product through a design patent.
How long is the design patent in effect, and how much does it cost?
A Design Patent is only valid for 14 years – slightly shorter than for a utility patent, which is about 20 years. So what happens when the 14 years are up? By then, any utility patents will have issued and additional patent protection will be available for the product from these patents, which will still be enforceable.
Additionally, the product design can be tied into ‘trade dress’ protection laws, which is intellectual property that comes from a product’s distinctiveness in the marketplace. If a product has 14 years of exclusivity afforded by a design patent, then it is possible for the patent holder to establish trade dress protection for the design. This is not automatic and typically takes some effort on the patent owners’ part. However, trade dress is perpetual and will continue to protect the design of the product for as long as it is being used. Additionally, most of the same remedies that are available for design patent infringement are available for infringement of trade dress protection.
The Apple iPhone, for example, has numerous design patents for the outward appearance of the phone and probably hundreds of utility patents covering the technology used in the phone. By virtue of many millions of iPhones that have been sold, Apple has also established that the design of the iPhone is recognizable as being an Apple product and has registered the design with the US Patent and Trademark Office. It is important to remember, though, that it is not necessary to sell such a large quantity of products to acquire trade dress protection. But, some effort on the part of the patent owner is usually required.
Design patents cost far less than utility patents — less than $500 for the government application filing fees, plus attorney fees and the cost of preparing formal patent drawings — and take less time to get. For example, a utility patent could take five years. A design patent takes six to 14 months, on average, to obtain from the patent office. The scope of protection, of course, is more limited than a utility patent.
What does a business need to get in place to apply for a design patent?
Obviously, the first thing that is needed is the design itself. Once that has been developed, the initial patent application papers can be prepared for filing.
One of the factors that contributes to the relatively low cost of obtaining a design patent is that these initial application documents are relatively straightforward. However, the initial application will need to include drawings with six to eight views of the product. The scope of protection covered by the design patent directly relates to what is shown in the drawings. So, careful attention is usually paid to preparing the drawings.
You want to fully illustrate the product and the aspects of the design that are to be protected. But, a bit of a balancing act is required. You want to include enough detail of the design, but not too much. With regard to design patents, the less detail that is included the better. The patent attorney collaborates with the client and the designer to find the right balance. Here’s an example of why:
Let’s say you want to obtain a design patent covering a new design for a car. The drawings of your design that are in your patent application show the body of the car, plus the tires and wheel covers, an antennae, and a graphic with flames down the sides of the body. The resulting design patent will have a relatively limited scope of the protection that will require a competitor to sell a car having all of those details to infringe your design patent.
On the other hand, if the tires, wheel covers, the antenna and the graphics are omitted from the drawings of your patent application and only the hood and the front half of the car body are shown, you are protecting the shape of the illustrated car body itself and the resulting design patent will have a broader scope of protection. In such case, there is a greater likelihood that a competitor will be found to infringe the design patent.
Matthew Dugan is a partner with Fay Sharpe LLP. Reach him at (216) 363-9000 or firstname.lastname@example.org.