I’ve read quite a bit about Facebook in the news recently, and most of the stories are about trademark infringement lawsuits. I thought it would be interesting and informative to briefly summarize a few of these law suits and discuss some of the trademark issues and black letter law.
Recently, Facebook began to offer customized URL addresses to its users. It was a helpful option that allowed people to share their pages with others without long, cryptic and incomprehensible URL strings most often associated with generic, computer assigned URLs. For example, a user named John Doe could choose to have his personalized URL read http://www.facebook.com/johndoe. Various companies and trademark holders were concerned that users could choose to register well known trademarks and brand names instead of their own names. If users then sold these popular name URLs, they derived a benefit unfairly by exploiting the good will of a company and a registered trademark. If a personal user chose to register the URL http://www.facebook.com/starbucks that would constitute a trademark infringement, cyber squatting and possible dilution.
Facebook has taken steps to prevent such use. It will not allow users to select a personalized URL during the early registration if they joined the social networking site after June 9, 2010. This well prevent a flurry of users seeking to register different types of names. Also, Facebook has given all companies registered with their site an early registration window where they can register their personalized URL before any other user. Facebook has also made these URLs non-transferable so that no user may buy or sell or derive any profit from the registration. Facebook will also hear complaints from companies who allege users have unfairly pirated their name as a URL.
Facebook has also been on the prowl, actively searching for trademark infringers. It found one target, a consortium of teachers and educators who created an online “Teachbook” using a similar social networking concept as Facebook. Facebook’s greatest fear is that using the “-book” suffix could create many other groups that would dilute their brand. Indeed, as we have learned in class through examples such as Xerox, Aspirin and Shredded Wheat that effective policing is critical to the survival of a brand. Facebook is undoubtedly a trademark savvy company and recognizes that maintaining its intellectual property requires active policing to prevent third party use of confusingly similar or the same marks.
Clearly, Facebook cannot afford to hale into court each and every infringer as the cost of litigation makes such a course of action highly impracticable and disagreeable. For example, at my previous law school, we had an online “Face Book” where our school mug shots were stored on the University of Ottawa intranet and only law students and professors could access the site. Given the recent successes of Facebook in federal court on the issue of the suffix “-book” it is not unlikely that Facebook may have a strong chance of success.
Facebook sued “Teachbook” for cyber-squatting, trademark infringement, unfair competition and trademark dilution in the U.S. District Court for Northern California. Facebook’s complaint reads that “book” has no descriptive meaning but it is arbitrary, and highly distinctive in the context of social media and networking sites. Facebook argues that its use in commerce of the work “book” has gained secondary meaning and therefore deserving of protection. Facebook goes on to state that allowing “book” to be used by other social networking “would dilute the distinctiveness of the Facebook marks, impairing their ability to function as unique and distinctive identifiers of Facebook’s goods and services.”
Within the last week, Facebook has successfully registered the word “face” as it applies to Facebook. The U.S. Patent and Trademark Office on Tuesday issued a Notice of Allowance and to get final approval, Facebook must show that the mark is used in commerce. This protection only extends to “telecommunication services, namely providing online chat rooms and electronic bulletin boards for transmission of messages among computer users in the field of general interest and concerning social and entertainment subject matter.” This marks a success in Facebook’s quest to trademark the word “face.” For over 6 years it has sought such protection, beginning in 2005 when it challenged Faceparty.com, a U.K. social-networking site that launched in 2000.
Facebook is not the only one doing the suing. Recently “Lamebook” (which is an online parody of Facebook which features funny pictures, comments and wall-to-wall conversations) pre-emptively sued Facebook seeking an injunction presumably to prevent Facebook from suing it on the basis of trademark infringement. It appears that dispute resolution efforts have failed and Facebook filed a counterclaim within days. Facebook’s recent court appearances and lawsuits demonstrates that the company not only is serious about protecting its intellectual property, but it has felt threatened by the recent growth of “facebook-like” social networking sites.
Dow AgroSciences, an Indianapolis-based subsidary of Dow Chemical Co. has reportedly lost $300 million USD worth of valuable data and information as the result of a scientist sending valuable trade secrets to Germany and China.
Under U.S. law, “A trade secret, as defined under 18 U.S.C. § 1839(3) (A), (B) (1996), has three parts: (1) information; (2) reasonable measures taken to protect the information; and (3) which derives independent economic value from not being publicly known.” A trade secret could be a formula, process, design or even a compilation of informaton which is generally not known, and knowledge of which is protected, because a business can obtain an economic advantage over its competitors. A trademark on the other hand, is protected from infringement on the basis that misappropriation might confuse consumers as to the origin product once the mark has been associated with a particular supplier and that supplier’s goodwill. A trademark enjoys no protection until it is used and identifiable by consumers. The fact that a company plans to use a trademark might itself be protectible as a trade secret, but the two terms are distinct.
A federal indictment served in Indianapolis alleges that 45-year old employee Kexue Huang, a Chinese born Canadian citizen disseminated sensitive information regarding the research and development of several different pesticides and organic compounds to a univesity in China. The alleged acts of economic espionage took place while the accused worked as a researcher for Dow AgroSciences from 2003-2008. Although the accused is a Canadian citizen, he had obtained permanent U.S. resident status. The information that was misappropriated took DowAgroSciences more than 20 years to develop. Dow’s global vice-president for research and development, testified that developing the organic pesticides called spinosyns had cost the company at least $300 million US.
The indictment alleges that the accused published a paper in China about the organic pesticides and also encouraged the students at the Chinese university to proceed with further research. The FBI testified that the accused was developing a scheme to market the pesiticides in China where could have potentially made millions of dollars. The FBI believes that the accused smuggled samples of a particular bacterial strain in the suitcase of his son on a recent trip to China.
Huang is charged under the Economic Espionage Act, a rare occurance in the Unites States. Unfortunately, the indictment has been classified since the date it was filed in mid-June 2010. The indictment charges the accused with 12 counts of theft and attempted theft of trade secrets to benefit a foreign government. In addition, the accused was charged with five counts of foreign transportation of stolen property. The charges under the Act are each punishable by up to 15 years in prison. The Economic Espionage Act was passed in 1996 after the U.S. realized China and other countries were targeting private businesses as part of their corporate espionage and spy strategies.
The accused entered a plea of ‘not guilty’ before a Magistrate Judge in the United States District Court for the Southern District of Indiana. The accused has been held without bond since mid July in a Massachusetts jail.