Watching You ' Steal My IP

Back in the day, no one could resist singing along with Hall and Oates ' warning about how “you can't escape my private eyes ' watching you, watching you, watching you.”

Today, however, are your “private eyes” watching your online competitors, lest they steal your ideas, your customers, or both? How can an online firm learn when another firm is infringing its intellectual property?

For example, suppose someone has stolen your secret marketing techniques, or obtained products from what you thought were confidential vendors, using information obtained from a former employee (let's hope that this was done in violation of a mandatory nondisclosure agreement). Or suppose your competitor is selling directly to your customers, using a list obtained by rummaging through your trash bins, or through illicit electronic spying. Perhaps that firm is buying products through your supplier's “fighting brand” version, or from a foreign knockoff seller ' a brand for which you thought you had an exclusive distribution arrangement.

In each of these cases, the competitor may be gambling that by the time you discover the potentially improper competition, the competitor will have won over some of your customers. Perhaps it will undercut your price or offer better service. Worse, it may disparage your reputation.

After all, the Internet is a big place, and unless your own sales force uses the traditional bricks-and-mortar technique of staying in close contact with customers, e-commerce firms do not get the feedback that an old-fashioned sales call used to provide. Of course, online sellers can get plenty of feedback from comment pages. But truly dissatisfied customers, especially businesses, rarely voice legitimate complaints on comment pages, whether because of fear of legal retribution or, more likely, because there are several thousand better and more profitable things to do on any given day.

If you are lucky, you may spot the competition online. Do you periodically run searches for your products, generically, to see whose ads are displayed (i.e., to see who may have bought key search terms in your field)? The same type of search can be done using your actual business and product names ' buying a competitor's name as a search term is an established practice (albeit of questionable legality). (There are many websites describing how to do this type of marketing, and perhaps one or two of them are legally accurate.)

Don't Be Sorry

Regardless of which techniques you use, if you are not actively policing your intellectual property and online marketing, the only warning you may get about any of the gray acts described above could be your own declining sales as your business is lost to someone who can offer the same thing, but without the cost of
developing the IP assets that you worked and paid so very much to build.

Of course, all the above is simply good business advice, online or off. But what does the law require? In other words, if you don't ' or can't afford to ' spend time or money to do online due diligence, have you left yourself legally vulnerable, should you find (and even be able to prove) that a competitor is improperly using your property online?

In legal terms, do you have an affirmative duty to police the use of your IP online as a precondition to bring an infringement claim? (To be sure, the laws of trademark, copyright, patents and trade secrets have their own different, formal legal standards for when a plaintiff must first investigate potential infringement before filing a claim, and whether to take legal action. Those requirements are beyond the scope of this article. Instead, I will discuss only legal questions about the common aspects of such online due diligence.)

Duties, and Maybe Not

In fact, courts in diverse contexts have specifically rejected the existence of a formal duty to investigate, but at the same time have pointed out the common sense behind doing it. For example, it has often been alleged that Internet service providers (“ISPs”) have a duty to police their clients' intellectual property for infringement, because ISPs are often much easier to find than website owners actually responsible for online infringement. Yet, courts have routinely applied the Safe Harbor provisions of the Communications Decency Act (“CDA,” P.L. 104-104) and the Digital Millennium Copyright Act (“DMCA,” P.L. 105-304) to relieve such firms of any burden to investigate whether any content they host infringes the rights of third parties, and instead affirmatively required injured parties to bring their own claims for injunctions.

Similarly, in a celebrated 2010 case applying the CDA, Google was absolved of a duty to investigate alleged infringement based solely on a general understanding that it had occurred when it, in contrast, had no actual knowledge that a specific infringement had occurred. “The tenor of the foregoing provisions is that the phrases 'actual knowledge that the material or an activity' is infringing, and 'facts or circumstances' indicating infringing activity, describe knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity in general is not enough.” Viacom International, Inc. et al. v. YouTube, Inc., et al., No. 07 Civ. 2103 (June 23, 2010). (Emphasis added.) CNET's Greg Sandoval warned of the practical effect of such a rule in denying online property owners the ability to enforce their rights against third-party infringers: “Advocates for the creative community argue that if it is put on rights holders to constantly patrol the Web for pirated material and continuously send take-down notices, few have the resources to do that” (http://m.news.com/2166-12_3-20000815-261.htm). (For full coverage of Viacom v. YouTube, see, “Viacom Appeal May Decide Future of the Web,” in the February 2011 issue of our sibling newsletter, Internet Law & Strategy, www.ljnonline.com/issues/ljn_internetlaw/9_2/news/154747-1.html.)

Moreover, even though a general knowledge of infringement is not enough to trigger a duty to investigate, another federal court was unwilling to require the IP owner to act affirmatively to obtain the specific knowledge to bring a claim. In Mackie v. Hipple, 2010 WL 3211952 (W.D. Wash. Aug. 9, 2010), a case involving a potential statute of limitations bar to a copyright infringement claim, the court allowed the claim to proceed, despite the allegation that the owner could easily have found the infringement, had it looked, and that the statute of limitations would not have run out had the owner acted to investigate when it should have. Instead, in the absence of case law “indicating that Mackie had an affirmative duty to police the [I]nternet and stock photography agencies to find infringing copies of his work,” the court specifically held that it “cannot conclude as a matter of law that he is chargeable with knowledge of Hipple's alleged infringement on a date certain before his actual discovery of the alleged infringement in 2007.” (Procedurally, the court labeled that question “a fact-intensive inquiry, not appropriate for determination on the defendant's motion for summary judgment.”)

Making Catches By Using Laches

But there is a difference between a general knowledge of infringement by a third party, and particular allegations of infringement by one firm against a competitor. In that situation, a recent case, Barclays Capital Inc. v. Theflyonthewall.com, No. 06 Civ. 4908, 2010 WL 1005160 (S.D.N.Y. March 18, 2010), reached a different result. Barclays involved claims by securities analysts against online news outlets that had managed to obtain and release Barclays research reports very quickly. While the court granted an injunction to protect the news firm's investment in research to obtain the information in the research reports, it also suggested that it would revisit the question after a year, if the content owners “have not taken reasonable steps to restrain the systematic, unauthorized misappropriation of their Recommendations, for instance, through the initiation of litigation against any parties with whom negotiation proves unsuccessful.”

It's ironic that apart from modern era case law and statutes, a centuries-old, common-law concept also can affect a property owner's right to protect its intellectual property against infringement: laches. Laches is simply the principle that it is fundamentally unfair to let one party “sit on its rights,” i.e., take no action against a known infringer when it could do so. (This is a different situation than action against the unknown but recently discovered infringer, whom the rights owner should sue as quickly as possible after the discovery.) Because the decision in each case of laches will be very specific to the facts of the case ' it is an equitable principle ' standing on the proverbial litigation fence for too long could eliminate your right to pursue a wrongdoer (see, e.g., http://techroadmap.com/ipdirections/category/infringement/enforcement/laches).

Security: Common Sense

Net-Monitoring Technologies

Even if many courts will not impose a legal duty to investigate on a property owner, investigating nonetheless may still make good business sense, particularly as part of an ongoing monitoring process to protect the value of one's IP. But how can a businessperson ' rather than an attorney or IP paralegal ' do that work at all, much less at a reasonable cost? Fortunately, the Internet offers many ways to learn that process.

For firms with funding to protect their IP, many services are available online to take advantage of Internet-monitoring technologies. For example, a college course offered online lists “costly methods of finding infringement” (in a passage explaining why such monitoring can be difficult and expensive) (see, www.unc.edu/courses/2007spring/law/357c/001/policing/methods_policing_infringement_costly.html). For instance:

A holistic trademark-protection strategy ' built around multiple and complementary “detection, prevention and response mechanisms” ' offers an effective means of adapting to the challenges of the online environment ' (by) assessing every channel, every tactic abusers may leverage, including those in offline settings. '
Trademark law, like other areas of intellectual property (IP) law, is governed by principles of territoriality. In the online environment, however, where it is relatively easy to maintain an anonymous identity, using “offshore” [ISPs] or servers, for example, infringers can dodge legal action initiated by courts or administrative bodies in the countries in which they have a virtual presence and in which they generate profits.
All is not lost, however. A growing range of technologies and specialized brand monitoring services are available to support online brand protection. Companies that have leveraged these technologies as part of a holistic trademark strategy that is not exclusively legally based have seen positive results in terms of reducing trademark abuses and safeguarding brand equity. (www.wipo.int/wipo_magazine/en/2011/02/article_0007.html)

Findfiles.net can also be a helpful resource for your due diligence. This recently launched search engine looks for online documents, rather than just Web pages.

Attend IP Security School on the Internet

For those interested in using such tools but are unable to afford them, Google offers an online “Copyright School” to help non-lawyers understand what they can, and cannot, post online through Google's services (www.youtube.com/copyright_school; registration required). Of course, Google has also been criticized for making it too easy to infringe others' rights, and turning a blind eye as it counts the profits from traffic drawn to the potentially illegal content ' “online piracy public enemy No. 1,” as claimed by some lawmakers recently (see, for instance, www.politico.com/news/stories/0411/52687.html and www.maximumpc.com/article/news/congress_takes_google_task_over_anti-piracy_efforts). While some cynics see this as nothing more than Google's effort to avoid liability in the ongoing litigation over the presence of copyrighted material on YouTube.com (e.g., www.precursorblog.com/content/googles-copyright-school-tacitly-admits-liability-viacom-vs-youtube-case), the videos do provide a very accessible method to understand what on your site may violate the rights of third parties (or to help you determine if other sites' content may infringe on your rights).

A similar free online tutorial, “IP on the Internet: Policing the Internet for Infringement of Intellectual Property,” is available at www.unc.edu/courses/2007spring/law/357c/001/policing/importance_policing.html, through a cyberspace law class project at the University of North Carolina Law School. While these materials appear to be a few years old ' several lifetimes, in Internet years, especially the reference to the late, great Alta Vista search engine ' the basic information on investigating online infringement is clearly written, and provides practical ways to protect your firm's intangible assets (including links to “Free and inexpensive methods for policing the [I]nternet” for do-it-yourselfers (“DIYers”)) (www.unc.edu/courses/2007spring/law/357c/001/policing/methods_policing_infringement_free.html). The site even lists websites and Internet tools, such as Google Alerts, that can automate a firm's self-monitoring for third-party infringement. There is also a chapter on “Inexpensive Methods for Small/Medium Businesses” that should be of particular interest to readers of this publication. The site also points out the realistic limitations on an effective response to infringement, such as the difficulties of proving damages, and locating those actually responsible for potential harm to your business (see, www.unc.edu/courses/2007spring/law/357c/001/policing/issues_policing_practical_liability.html). Nonetheless, the site concludes with examples of successful efforts to protect online IP and warnings of legal risks from poorly executed efforts (www.unc.edu/courses/2007spring/law/357c/001/policing/issues_policing_legal.html), and furnishes examples of “how to proactively prevent or deter infringement” (www.unc.edu/courses/2007spring/law/357c/001/policing/prevent_infringement.html).

Help from Google and Others

Apart from the DIYers sites, popular search engines offer their own procedures for content owners to control how the owners' assets may appear in search results at those sites. Google, for instance, has multiple listings for making complaints about such matters as unauthorized uses of third-party trademarks, sale of counterfeit goods or even use of trademarks as search terms in its “AdWords” program (see, http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=6118 ' a separate “Advertising Program Terms” page gives more details and links to specific policies ' at www.google.com/intl/en_us/adwords/se lect/TCUSbilling0806.html).

Certainly, Google in the first instance encourages parties to resolve disputes directly, before involving the company in the disputes. In its AdWords Help section, Google says: “Because Google is not a third-party arbiter, we encourage trademark owners to resolve their disputes directly with the advertisers, particularly because the advertisers may have similar ads running via other advertising programs” (http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=6118). Google also allows brand owners to designate, in advance, those who may use their trademarks in Google's advertising programs, e.g., a franchisor permitting franchisees to use its brand marks in their own local ads (https://services.google.com/inquiry/aw_tmauth). (For sites not listed here, check each one's “terms and conditions” or “legal” pages for references to such policies, often stated in conjunction with copyright notices, or other legally required documentation.)

Ask Your Uncle Sam

Beyond popular search sites, the U.S. Patent and Trademark Office offers its own IP protection resources at www.stopfakes.gov. In particular, a small business center is available at www.uspto.gov/smallbusiness, with an online course and “resource center library” available. Given the “world wide” scope of the Internet, the information on foreign rights at www.stopfakes.gov/data/us/media/525/IPR-Text-only.pdf can also be helpful to firms battling thieves from abroad who often rely on the difficulty and cost of chasing them to avoid any type of prosecution.

IP Protection Is a Main Attraction in Hollywood

The cost of protecting one's rights must be a part of any planning, and because the costs of doing so can pile up quite high, and quickly, content owners must decide whether the benefit of acting, if action is to be taken, is worth the potential cost. In Congressional testimony last month concerning “Promoting Investment and Protecting Commerce Online: Legitimate Sites V. Parasites” (www.mpaa.org/Resources/8b8d8441-9bb6-4df7-abc9-b09e2994e8f6.pdf), the Motion Picture Association of America (“MPAA”) ' admittedly an interested party ' described the cost of its members' efforts to combat online infringement:

The impact of this nefarious activity is documented in a recently published report by Envisional, an independent Internet consulting company. Envisional's “Technical Report: An Estimate of Infringing Use of the Internet” estimates that almost a quarter (23.8[%]) of global Internet traffic and over 17[%] of U.S. Internet traffic is copyright infringing. This staggering level of theft cannot be sustained without significant damage to the motion picture industry and the workforce it supports. '
The MPAA and member studios spend an enormous amount of time and financial resources on identifying and seeking removal of unauthorized, copyrighted content online or links to such content. On average, a motion picture studio identifies several hundred thousand pieces of, or links to infringing content online per month. In addition, a number of companies must hire private vendors to assist in locating and responding to additional hundreds of thousands incidences of unauthorized content. Unfortunately, not all content owners have the resources to protect themselves.
To respond to such illegal activity, a content owner must file countless copyright infringement notices pursuant to the [DMCA]. For those sites that are responsive to notices, it can still take days or weeks before the content is removed. With sites that are dedicated to providing unauthorized copyrighted content online, it is a virtually fruitless exercise. '
The MPAA and member studios also invest substantial financial resources to generate digital fingerprints and watermarking of their copyrighted content. Fingerprints are provided to cooperative online user-generated content sites, such as YouTube, MySpace, and Daily Motion, in order to provide for identification and removal of unauthorized copyrighted content that a user might seek to upload. Watermarking is used to protect film content in theatrical release; where a device manufacturer is willing to install watermark detection technology, a bootleg DVD copy of a film camcorded in a theater will be disabled from playback on such a device. These measures only have a limited impact given the small number of sites or entities willing to cooperate with us. (www.mpaa.org/Resources/8b8d8441-9bb6-4df7-abc9-b09e2994e8f6.pdf. Emphasis added.)

Conclusion

While most online firms do not have the same budgets for policing intellectual property online as a movie studio has, the issues at risk are no less important. As I have stated in many articles in this publication, if a firm's principal assets are intangible, then programs to protect them are no less important than the thickness of the vault in a bank, or the security systems at a retail store.

Therefore, although I began by discussing the legal principles that may (or may not) require policing one's intellectual property online, I think the practical business case for such investment in your brand is much stronger. The business benefits and technical challenges of policing one's intellectual property, regardless of whether doing so is required by the applicable IP law or not, are far more significant than any particular legal rule. In other words, in the best case ' which rarely occurs ' in which you not only find online infringement in time to act on it but also locate the source, send a cease and desist letter, and even get a settlement or court-ordered injunction, the cost of the next steps often can be far greater than the benefit of shutting down the infringing site. It may just reopen with the same content in a different Third World country, or vary its content enough to force you to start over again.

Knowing that reality of e-commerce today, then, I believe knowing what your competition is doing online will instead help you develop a site to win customers, whether with better and less-expensive products, or better service ' especially if your competitor knows that you are “watching it, watching it, watching it,” and may have to delay its infringement long enough to let you maintain a competitive edge.

Back in the day, no one could resist singing along with Hall and Oates ' warning about how “you can't escape my private eyes ' watching you, watching you, watching you.”

Today, however, are your “private eyes” watching your online competitors, lest they steal your ideas, your customers, or both? How can an online firm learn when another firm is infringing its intellectual property?

For example, suppose someone has stolen your secret marketing techniques, or obtained products from what you thought were confidential vendors, using information obtained from a former employee (let's hope that this was done in violation of a mandatory nondisclosure agreement). Or suppose your competitor is selling directly to your customers, using a list obtained by rummaging through your trash bins, or through illicit electronic spying. Perhaps that firm is buying products through your supplier's “fighting brand” version, or from a foreign knockoff seller ' a brand for which you thought you had an exclusive distribution arrangement.

In each of these cases, the competitor may be gambling that by the time you discover the potentially improper competition, the competitor will have won over some of your customers. Perhaps it will undercut your price or offer better service. Worse, it may disparage your reputation.

After all, the Internet is a big place, and unless your own sales force uses the traditional bricks-and-mortar technique of staying in close contact with customers, e-commerce firms do not get the feedback that an old-fashioned sales call used to provide. Of course, online sellers can get plenty of feedback from comment pages. But truly dissatisfied customers, especially businesses, rarely voice legitimate complaints on comment pages, whether because of fear of legal retribution or, more likely, because there are several thousand better and more profitable things to do on any given day.

If you are lucky, you may spot the competition online. Do you periodically run searches for your products, generically, to see whose ads are displayed (i.e., to see who may have bought key search terms in your field)? The same type of search can be done using your actual business and product names ' buying a competitor's name as a search term is an established practice (albeit of questionable legality). (There are many websites describing how to do this type of marketing, and perhaps one or two of them are legally accurate.)

Don't Be Sorry

Regardless of which techniques you use, if you are not actively policing your intellectual property and online marketing, the only warning you may get about any of the gray acts described above could be your own declining sales as your business is lost to someone who can offer the same thing, but without the cost of
developing the IP assets that you worked and paid so very much to build.

Of course, all the above is simply good business advice, online or off. But what does the law require? In other words, if you don't ' or can't afford to ' spend time or money to do online due diligence, have you left yourself legally vulnerable, should you find (and even be able to prove) that a competitor is improperly using your property online?

In legal terms, do you have an affirmative duty to police the use of your IP online as a precondition to bring an infringement claim? (To be sure, the laws of trademark, copyright, patents and trade secrets have their own different, formal legal standards for when a plaintiff must first investigate potential infringement before filing a claim, and whether to take legal action. Those requirements are beyond the scope of this article. Instead, I will discuss only legal questions about the common aspects of such online due diligence.)

Duties, and Maybe Not

In fact, courts in diverse contexts have specifically rejected the existence of a formal duty to investigate, but at the same time have pointed out the common sense behind doing it. For example, it has often been alleged that Internet service providers (“ISPs”) have a duty to police their clients' intellectual property for infringement, because ISPs are often much easier to find than website owners actually responsible for online infringement. Yet, courts have routinely applied the Safe Harbor provisions of the Communications Decency Act (“CDA,” P.L. 104-104) and the Digital Millennium Copyright Act (“DMCA,” P.L. 105-304) to relieve such firms of any burden to investigate whether any content they host infringes the rights of third parties, and instead affirmatively required injured parties to bring their own claims for injunctions.

Similarly, in a celebrated 2010 case applying the CDA, Google was absolved of a duty to investigate alleged infringement based solely on a general understanding that it had occurred when it, in contrast, had no actual knowledge that a specific infringement had occurred. “The tenor of the foregoing provisions is that the phrases 'actual knowledge that the material or an activity' is infringing, and 'facts or circumstances' indicating infringing activity, describe knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity in general is not enough.” Viacom International, Inc. et al. v. YouTube, Inc., et al., No. 07 Civ. 2103 (June 23, 2010). (Emphasis added.) CNET's Greg Sandoval warned of the practical effect of such a rule in denying online property owners the ability to enforce their rights against third-party infringers: “Advocates for the creative community argue that if it is put on rights holders to constantly patrol the Web for pirated material and continuously send take-down notices, few have the resources to do that” (http://m.news.com/2166-12_3-20000815-261.htm). (For full coverage of Viacom v. YouTube, see, “Viacom Appeal May Decide Future of the Web,” in the February 2011 issue of our sibling newsletter, Internet Law & Strategy, www.ljnonline.com/issues/ljn_internetlaw/9_2/news/154747-1.html.)

Moreover, even though a general knowledge of infringement is not enough to trigger a duty to investigate, another federal court was unwilling to require the IP owner to act affirmatively to obtain the specific knowledge to bring a claim. In Mackie v. Hipple, 2010 WL 3211952 (W.D. Wash. Aug. 9, 2010), a case involving a potential statute of limitations bar to a copyright infringement claim, the court allowed the claim to proceed, despite the allegation that the owner could easily have found the infringement, had it looked, and that the statute of limitations would not have run out had the owner acted to investigate when it should have. Instead, in the absence of case law “indicating that Mackie had an affirmative duty to police the [I]nternet and stock photography agencies to find infringing copies of his work,” the court specifically held that it “cannot conclude as a matter of law that he is chargeable with knowledge of Hipple's alleged infringement on a date certain before his actual discovery of the alleged infringement in 2007.” (Procedurally, the court labeled that question “a fact-intensive inquiry, not appropriate for determination on the defendant's motion for summary judgment.”)

Making Catches By Using Laches

But there is a difference between a general knowledge of infringement by a third party, and particular allegations of infringement by one firm against a competitor. In that situation, a recent case, Barclays Capital Inc. v. Theflyonthewall.com, No. 06 Civ. 4908, 2010 WL 1005160 (S.D.N.Y. March 18, 2010), reached a different result. Barclays involved claims by securities analysts against online news outlets that had managed to obtain and release Barclays research reports very quickly. While the court granted an injunction to protect the news firm's investment in research to obtain the information in the research reports, it also suggested that it would revisit the question after a year, if the content owners “have not taken reasonable steps to restrain the systematic, unauthorized misappropriation of their Recommendations, for instance, through the initiation of litigation against any parties with whom negotiation proves unsuccessful.”

It's ironic that apart from modern era case law and statutes, a centuries-old, common-law concept also can affect a property owner's right to protect its intellectual property against infringement: laches. Laches is simply the principle that it is fundamentally unfair to let one party “sit on its rights,” i.e., take no action against a known infringer when it could do so. (This is a different situation than action against the unknown but recently discovered infringer, whom the rights owner should sue as quickly as possible after the discovery.) Because the decision in each case of laches will be very specific to the facts of the case ' it is an equitable principle ' standing on the proverbial litigation fence for too long could eliminate your right to pursue a wrongdoer (see, e.g., http://techroadmap.com/ipdirections/category/infringement/enforcement/laches).

Security: Common Sense

Net-Monitoring Technologies

Even if many courts will not impose a legal duty to investigate on a property owner, investigating nonetheless may still make good business sense, particularly as part of an ongoing monitoring process to protect the value of one's IP. But how can a businessperson ' rather than an attorney or IP paralegal ' do that work at all, much less at a reasonable cost? Fortunately, the Internet offers many ways to learn that process.

For firms with funding to protect their IP, many services are available online to take advantage of Internet-monitoring technologies. For example, a college course offered online lists “costly methods of finding infringement” (in a passage explaining why such monitoring can be difficult and expensive) (see, www.unc.edu/courses/2007spring/law/357c/001/policing/methods_policing_infringement_costly.html). For instance:

A holistic trademark-protection strategy ' built around multiple and complementary “detection, prevention and response mechanisms” ' offers an effective means of adapting to the challenges of the online environment ' (by) assessing every channel, every tactic abusers may leverage, including those in offline settings. '
Trademark law, like other areas of intellectual property (IP) law, is governed by principles of territoriality. In the online environment, however, where it is relatively easy to maintain an anonymous identity, using “offshore” [ISPs] or servers, for example, infringers can dodge legal action initiated by courts or administrative bodies in the countries in which they have a virtual presence and in which they generate profits.
All is not lost, however. A growing range of technologies and specialized brand monitoring services are available to support online brand protection. Companies that have leveraged these technologies as part of a holistic trademark strategy that is not exclusively legally based have seen positive results in terms of reducing trademark abuses and safeguarding brand equity. (www.wipo.int/wipo_magazine/en/2011/02/article_0007.html)

Findfiles.net can also be a helpful resource for your due diligence. This recently launched search engine looks for online documents, rather than just Web pages.

Attend IP Security School on the Internet

For those interested in using such tools but are unable to afford them, Google offers an online “Copyright School” to help non-lawyers understand what they can, and cannot, post online through Google's services (www.youtube.com/copyright_school; registration required). Of course, Google has also been criticized for making it too easy to infringe others' rights, and turning a blind eye as it counts the profits from traffic drawn to the potentially illegal content ' “online piracy public enemy No. 1,” as claimed by some lawmakers recently (see, for instance, www.politico.com/news/stories/0411/52687.html and www.maximumpc.com/article/news/congress_takes_google_task_over_anti-piracy_efforts). While some cynics see this as nothing more than Google's effort to avoid liability in the ongoing litigation over the presence of copyrighted material on YouTube.com (e.g., www.precursorblog.com/content/googles-copyright-school-tacitly-admits-liability-viacom-vs-youtube-case), the videos do provide a very accessible method to understand what on your site may violate the rights of third parties (or to help you determine if other sites' content may infringe on your rights).

A similar free online tutorial, “IP on the Internet: Policing the Internet for Infringement of Intellectual Property,” is available at www.unc.edu/courses/2007spring/law/357c/001/policing/importance_policing.html, through a cyberspace law class project at the University of North Carolina Law School. While these materials appear to be a few years old ' several lifetimes, in Internet years, especially the reference to the late, great Alta Vista search engine ' the basic information on investigating online infringement is clearly written, and provides practical ways to protect your firm's intangible assets (including links to “Free and inexpensive methods for policing the [I]nternet” for do-it-yourselfers (“DIYers”)) (www.unc.edu/courses/2007spring/law/357c/001/policing/methods_policing_infringement_free.html). The site even lists websites and Internet tools, such as Google Alerts, that can automate a firm's self-monitoring for third-party infringement. There is also a chapter on “Inexpensive Methods for Small/Medium Businesses” that should be of particular interest to readers of this publication. The site also points out the realistic limitations on an effective response to infringement, such as the difficulties of proving damages, and locating those actually responsible for potential harm to your business (see, www.unc.edu/courses/2007spring/law/357c/001/policing/issues_policing_practical_liability.html). Nonetheless, the site concludes with examples of successful efforts to protect online IP and warnings of legal risks from poorly executed efforts (www.unc.edu/courses/2007spring/law/357c/001/policing/issues_policing_legal.html), and furnishes examples of “how to proactively prevent or deter infringement” (www.unc.edu/courses/2007spring/law/357c/001/policing/prevent_infringement.html).

Help from Google and Others

Apart from the DIYers sites, popular search engines offer their own procedures for content owners to control how the owners' assets may appear in search results at those sites. Google, for instance, has multiple listings for making complaints about such matters as unauthorized uses of third-party trademarks, sale of counterfeit goods or even use of trademarks as search terms in its “AdWords” program (see, http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=6118 ' a separate “Advertising Program Terms” page gives more details and links to specific policies ' at www.google.com/intl/en_us/adwords/se lect/TCUSbilling0806.html).

Certainly, Google in the first instance encourages parties to resolve disputes directly, before involving the company in the disputes. In its AdWords Help section, Google says: “Because Google is not a third-party arbiter, we encourage trademark owners to resolve their disputes directly with the advertisers, particularly because the advertisers may have similar ads running via other advertising programs” (http://adwords.google.com/support/aw/bin/answer.py?hl=en&answer=6118). Google also allows brand owners to designate, in advance, those who may use their trademarks in Google's advertising programs, e.g., a franchisor permitting franchisees to use its brand marks in their own local ads (https://services.google.com/inquiry/aw_tmauth). (For sites not listed here, check each one's “terms and conditions” or “legal” pages for references to such policies, often stated in conjunction with copyright notices, or other legally required documentation.)

Ask Your Uncle Sam

Beyond popular search sites, the U.S. Patent and Trademark Office offers its own IP protection resources at www.stopfakes.gov. In particular, a small business center is available at www.uspto.gov/smallbusiness, with an online course and “resource center library” available. Given the “world wide” scope of the Internet, the information on foreign rights at www.stopfakes.gov/data/us/media/525/IPR-Text-only.pdf can also be helpful to firms battling thieves from abroad who often rely on the difficulty and cost of chasing them to avoid any type of prosecution.

IP Protection Is a Main Attraction in Hollywood

The cost of protecting one's rights must be a part of any planning, and because the costs of doing so can pile up quite high, and quickly, content owners must decide whether the benefit of acting, if action is to be taken, is worth the potential cost. In Congressional testimony last month concerning “Promoting Investment and Protecting Commerce Online: Legitimate Sites V. Parasites” (www.mpaa.org/Resources/8b8d8441-9bb6-4df7-abc9-b09e2994e8f6.pdf), the Motion Picture Association of America (“MPAA”) ' admittedly an interested party ' described the cost of its members' efforts to combat online infringement:

The impact of this nefarious activity is documented in a recently published report by Envisional, an independent Internet consulting company. Envisional's “Technical Report: An Estimate of Infringing Use of the Internet” estimates that almost a quarter (23.8[%]) of global Internet traffic and over 17[%] of U.S. Internet traffic is copyright infringing. This staggering level of theft cannot be sustained without significant damage to the motion picture industry and the workforce it supports. '
The MPAA and member studios spend an enormous amount of time and financial resources on identifying and seeking removal of unauthorized, copyrighted content online or links to such content. On average, a motion picture studio identifies several hundred thousand pieces of, or links to infringing content online per month. In addition, a number of companies must hire private vendors to assist in locating and responding to additional hundreds of thousands incidences of unauthorized content. Unfortunately, not all content owners have the resources to protect themselves.
To respond to such illegal activity, a content owner must file countless copyright infringement notices pursuant to the [DMCA]. For those sites that are responsive to notices, it can still take days or weeks before the content is removed. With sites that are dedicated to providing unauthorized copyrighted content online, it is a virtually fruitless exercise. '
The MPAA and member studios also invest substantial financial resources to generate digital fingerprints and watermarking of their copyrighted content. Fingerprints are provided to cooperative online user-generated content sites, such as YouTube, MySpace, and Daily Motion, in order to provide for identification and removal of unauthorized copyrighted content that a user might seek to upload. Watermarking is used to protect film content in theatrical release; where a device manufacturer is willing to install watermark detection technology, a bootleg DVD copy of a film camcorded in a theater will be disabled from playback on such a device. These measures only have a limited impact given the small number of sites or entities willing to cooperate with us. (www.mpaa.org/Resources/8b8d8441-9bb6-4df7-abc9-b09e2994e8f6.pdf. Emphasis added.)

Conclusion

While most online firms do not have the same budgets for policing intellectual property online as a movie studio has, the issues at risk are no less important. As I have stated in many articles in this publication, if a firm's principal assets are intangible, then programs to protect them are no less important than the thickness of the vault in a bank, or the security systems at a retail store.

Therefore, although I began by discussing the legal principles that may (or may not) require policing one's intellectual property online, I think the practical business case for such investment in your brand is much stronger. The business benefits and technical challenges of policing one's intellectual property, regardless of whether doing so is required by the applicable IP law or not, are far more significant than any particular legal rule. In other words, in the best case ' which rarely occurs ' in which you not only find online infringement in time to act on it but also locate the source, send a cease and desist letter, and even get a settlement or court-ordered injunction, the cost of the next steps often can be far greater than the benefit of shutting down the infringing site. It may just reopen with the same content in a different Third World country, or vary its content enough to force you to start over again.

Knowing that reality of e-commerce today, then, I believe knowing what your competition is doing online will instead help you develop a site to win customers, whether with better and less-expensive products, or better service ' especially if your competitor knows that you are “watching it, watching it, watching it,” and may have to delay its infringement long enough to let you maintain a competitive edge.