Presented live at the 2011 Direct Selling Association Annual Meeting (Miami, FL) - June 6, 2011 Direct selling companies are beginning to embrace the power and impact that social media can have upon product marketing and sales. Unfortunately, social media use can impact the value of certain underlying intangible assets of your company and brand. This presentation addresses some of the legal issues surrounding such use of social media, and pointers for next steps.

1. Protecting Your
Brand in a Social
Media World
Thomas A. Kulik, Partner
Scheef & Stone, L.L.P.

2. Introduction: Trademarks & Copyrights in the
Digital Domain
• What is a trademark?
– Governed by federal statute (15 U.S.C. §1051 et seq.) & state law
– A distinctive name, word, “logo” or other descriptor used to (i) distinguish
one’s products or services from those of another, and (ii) to designate
origin
– Gain trademark rights through use in commerce (“common law” rights) –
can designate by the “™” or “℠” symbols
– Can register at the state level for intrastate use, or at the federal level
(designated by the “®” symbol) if used in interstate commerce

3. Introduction: Trademarks & Copyrights in the
Digital Domain
• What advantages does it provide the owner?
– Senior user can leverage its rights against a junior user of a “confusingly
similar” trademark
– Federal registration provides national rights that generally “trump” state
registrations and common law rights, such as:
• Exclusive rights to use of trademark
• Presumed valid once registered
• Constructive notice to the entire country of your rights in and to the trademark, etc.
• Bottom line: Get a federal trademark registration!

4. Introduction: Trademarks & Copyrights in the
Digital Domain
• What is a copyright?
– Constitutional and statutory basis (17 U.S.C. §101, et seq.)
– Definition: An original work of authorship fixed in a tangible medium of
expression
– Attaches once fixed – registration not required, but recommended
– Protects the expression of the idea, not the idea itself, such as in
• Literary works
• Audiovisual works
• Artwork/sculpture
• Music
• Software

5. Introduction: Trademarks & Copyrights in the
Digital Domain
• What advantage does it provide the author?
– Confers exclusive rights to use, reproduce, prepare derivative works from,
publicly display and publicly perform the work
– Significant term of protection, depending upon where/when created and
first published
– Registration confers additional protections that can be wielded by the
author/owner

6. Protecting Your Brand in a Social Media World:
Why Should a Direct Selling Company Care?
 Trademarks & “Typosquatting” Your Brand
 “Handlesquatting”
 The “Work-for-Hire” Doctrine and “Your” Content
 Facebook, YouTube & the Content Conundrum
 Online Comparative Advertising
 Online Defamatory Content
 Facebook and its “Like” Button

7. Protecting Your Brand in a Social Media World:
Trademarks & “Typosquatting” Your Brand
• What is “typosquatting”?
– A form of “cybersquatting” (the bad faith registration of, trafficking
in, or use of a domain name confusingly similar to, or dilutive of,
another’s trademark or personal name)
– Refers to the registration of domain names reflecting typographical
errors made by Internet users (i.e. “gopgle.com”)
– Plays off misspelling of secondary-level domain to redirect users to
alternate web sites

8. Protecting Your Brand in a Social Media World:
Trademarks & “Typosquatting” Your Brand
• “Typosquatting” is a big deal for the direct sales industry
– One Harvard paper estimates that from the top 100,000 “.com”
sites, Google made $497 million from typosquatting alone!
– Same paper estimates at least 938,000 typosquatted domains
targeting the top 3,264 sites, and that is just scratching the
surface…
– Trademark owners have duty to police trademarks – failure to
police online can weaken trademarks and may lead to brand
dilution

9. Protecting Your Brand in a Social Media World:
Trademarks & “Typosquatting” – What to Do?
– WIELD the Uniform Domain Name Dispute Resolution Process
(UDRP) - a cost effective tool to “wrestle” offending domain names
from third-parties IF not a legitimate business interest and in bad faith
– UPDATE Policies & Procedures – tighten trademark restrictions and
prohibit the registration of any domain names using the trademarks
– IMPLEMENT an effective trademark policing strategy - cover both
traditional print media AND digital versions

10. Protecting Your Brand in a Social Media World:
“Handlesquatting”
• Facebook Usernames
– Personalized usernames since 2009
– Not always personal - Usernames can potentially reflect a company’s
trademark(s)!
– Good news: Infringing username report can be filed electronically
• Twitter “Handlesquatting”
– Twitter usernames (“handles”) that contain well-known company names
and brands registered by third parties trading off your brand
– Twitter’s Trademark Policy not always helpful
– Must extrapolate trademark law to address

11. Protecting Your Brand in a Social Media World:
Handlesquatting - What to Do?
• UPDATE Policies & Procedures – tighten trademark restrictions and
prohibit the registration of any usernames or “handles” using the
trademarks
• EXERCISE all available tools – use notices/forms available through the
specific social media service for initial recourse
• IMPLEMENT an effective social media policing strategy to counter
potential abuses

12. Protecting Your Brand in a Social Media World:
The “Work for Hire” Doctrine and “Your” Content
• “Work-for-Hire” Doctrine vests authorship of works in employer
– Section 106 of the Copyright Act defines “works made for hire” (WFH)
– Employer will be deemed the “author” of employee works - presumed to be
WFH unless written agreement to the contrary
• BUT what about independent contractors? *NO*
– Absent an express agreement to the contrary, the independent contractor
is the author of the work
– MUST have written agreements with ICs using the right language
• Ask the question: Who is creating YOUR content?

13. Protecting Your Brand in a Social Media World:
Facebook, YouTube & the Content Conundrum
• Social Media creates communities, so third parties (or you ) actually
post content
• The Conundrum: Direct selling companies can help foster discussion,
but limited ability to manage the content and direction of the discussion
• Controlling the “message” depends upon nature of the content - whose
is it?
– If third-party content, how to control the message?
– If your content is uploaded without consent, how to remove?

14. Protecting Your Brand in a Social Media World:
Facebook, YouTube & the Content Conundrum
• Facebook & YouTube Terms of Service – specific usage policies
must be continually reviewed and leveraged (including for ads)
– Facebook “Statement of Rights and Responsibilities”
• Copyright – automated DMCA form
• Trademark/Other IP – automated IP infringement form
– YouTube Terms of Service
• Copyright Tips page
• Content Verification Program/Copyright Infringement Notification –
basically a DMCA takedown mechanism
• ContentID – use for your audio/visual content that you wish to control

15. Protecting Your Brand in a Social Media World:
The Online Content Conundrum - What to Do?
• DEVELOP a comprehensive social media marketing strategy that includes
content creation and management
• UNDERSTAND applicable social media terms of service – addresses your
rights in content as well as usage policies that may help curtail abuses
• EXERCISE all available tools – use Facebook, YouTube and Twitter notices
for initial recourse
• REVIEW applicable terms on a regular basis – terms routinely updated and
changed to address trends that may affect your rights

16. Protecting Your Brand in a Social Media World:
Online Comparative Advertising
• Growing trend – 3P “coaches” and other service providers using your
brand on their blogs and in attendant social media, implying their
products/services necessary to help consultants really succeed
• Nominative “Fair Use’ in Trademark Law – Use of another's mark
truthfully to identify another's goods or services in order to describe or
compare its product to the trademark owner's product…
• BUT such “nominative use” cannot be one that creates a likelihood of
confusion as to source, sponsorship, affiliation, or approval.

17. Protecting Your Brand in a Social Media World:
Online Comparative Advertising
• What 3Ps CAN do: • What 3Ps CAN’T do:
– Use trademarks truthfully to – Use your trademarks to imply
identify your goods/services any type of sponsorship,
affiliation or endorsement
– Compare your products to their
own without implying – Use such trademarks in
sponsorship, affiliation or metatags to drive traffic (i.e.
endorsement initial interest confusion)

18. Protecting Your Brand in a Social Media World:
Online Comparative Advertising – What to Do?
• KEEP WATCH for inappropriate postings/misleading content
• LEVERAGE the law – not all comparative trademark use reflects a
proper descriptive or nominative fair use, so get your counsel
involved for guidance!
• ACT – Trademark owners have an obligation to police their brand,
so don’t be afraid to do it!

19. Protecting Your Brand in a Social Media World:
Online Defamatory Content
• Where to Draw the Line? A balance between libel/slander and First
Amendment protection of free speech
• Domain Names are NOT off limits (i.e. “walmartsucks.com”) – split of
authority weighing in favor of First Amendment rights
• ISP Awareness is Key - ISPs ARE immune from liability IF they are not
aware of the defamatory content
• VERY difficult to prove in court, assuming you can find the person
behind the username

20. Protecting Your Brand in a Social Media World:
Facebook and Its “Like” Button
• Facebook “Like” Button – a thumbs-up symbol that allows Facebook
members to share links, but places unique cookie on computer,
combines it with information from paid advertisers for “targeted” ads
• Has become the target of many different privacy lawsuits – claims that
the like is operating as an endorsement (misappropriation of name/
likeness) – especially if minors are involved
• Legal issues remain murky – state law misappropriation, free speech
concerns, CDA (ISP immunity) issues

21. Protecting Your Brand in a Social Media World:
Online Defamatory Content – What to Do?
• ENFORCE policies and procedures with your consultants to prevent
potential problems from occurring
• REVIEW offensive domain names as part of online policing strategy,
remaining sensitive to the split of authority involving domain name disputes
• ADDRESS criticisms online in a truthful and proactive manner (i.e.
threaded response to a RipOffReport entry)
• BE CAREFUL of structuring ad campaigns using Face book's ”Like” Button

22. Q&A
Email: tom.kulik@solidcounsel.com
LinkedIn: www.linkedin.com/in/tkulik
Twitter: www.twitter.com/LegalIntangibls (@LegalIntangibls)
Blog: www.legalintangibles.com