Friday, December 18, 2009

IP Threats eroded by Social Media?

I recently had a fascinating chat with a contact of mine (obviously unnamed and not a client) regarding the possibility of trade mark infringement. They had identified a third party registered trade mark with prior rights in the name they have started using but felt the services/goods they were supplying were not competitive with or detrimental to the distinctive nature of the existing mark, despite overlapping in classes. Nothing new so far.....

We chatted some more about the risks of opposition and infringement but my contact was relatively relaxed. The reason for this relaxed state of mind to what is normally a brand crunch point was social media. Social Media I hear you ask? Yes, my contact believed that if things got "heavy" (meaning litigation) they would start a social media campaign to gain support and PR for their plight, thus exerting pressure on the existing rights owner to give in to permit co-existence or better.

Of course if there were an injunction granted by the prior rights owner it would be a criminal offence not to comply but that injunction would and could not apply to all the users of Twitter for example.

This lead me on to thinking about the Trafigura case which has been seen as a 'PR own goal' by many. To paraphrase; Trafigura issued a superinjunction preventing reporting of a question in parliament. The Guardian newspaper complied with this injunction but a leak created an enormous amount of chatter via social networks and trended for several days on Twitter. This was the exact opposite of the intention of the superinjunction.

So what next should competing brands use social media as a defence to trade mark infringement. I would suggest this is dangerous ploy because there are so many unknowns and such an action could exaggerate any damage to the existing rights owner. Of course such a movement could only be orchestrated by individuals with large followings or a great deal of social influence. Negotiation a deal both parties can live with is always the best way!

I have so many questions to which as yet have no answers including:
  1. Could influential socialites set up a business or be sponsored to start a campaign to aid a defence;
  2. Should there be a law prohibiting "the incitement of negative PR for commercial benefit" who would police it - it would be very difficult to enforce and who do you enforce it against?;
  3. How will the courts react to this type of activity and how useful will an injunction be given the Trafigura matter.
Fascinating times!

Copyright Hippies

Copyright Hippies is the term I am giving to those who share or facilitate illegal file sharing of copyright works such as music, films or books with complete ambivalence.

The P2P generation seems to have had a profound psychological shift in what is acceptable behaviour with regard to copyright works in digital format. Despite attempts to educate and discourage through litigation, illegal music downloads are not decreasing.

Even copyright authors who have profited from these rights such as Jamie Cullum openly admit to illegally downloading music. Albeit to try the music before buying it legally.

Interestingly despite illegal downloads, legitimate purchases in the UK of music singles has increased with the itunes generation.

My reaction to all this is to ask: What is your favourite film? What was the production cost? Do you think this film would have been made if the producer did not think they would make a return on the investment from copyright royalties? My answer is that it probably would not and I have never had a conflicting answer. What is their incentive?

I went to see Avatar before Christmas and it was outstanding but there is no possible way that this could have been made (or rather financed) if copyright hippies were allowed to propagate.

The French government seem to be the most anti-copyright hippie introducing a new law which will allow the disconnection of users from the Internet if they are found to be illegally downloading three times. Enforcement will be the issue here - will this extend to Internet enabled smart phones for example.

For me it is a simple trade off. Respect copyright to ensure the creation of good content. The BBC is good example we pay the licence fee each year but the content we get (I believe) is strong.

I also believe that illegal downloads hurt the film/TV industry much more than the music industry because of the initial investment required. Music will always be made but big budget films may not.

Will copyright hippies stop in the same way as the flower power movement? My guess is that they are here to stay and only a technology solution will lead to copyright yuppies replacing the hippies.

Friday, December 11, 2009

Copyright, Patents and Technology the Pre-Budget implications

Well in an active week on my blog I thought I would conclude with some thoughts on Alistair Darling's pre-budget report.

Broadband

The government intends to push ahead with a 50p a month tax on broadband to fund the upgrade to enable super-fast access. Whilst a commitment to faster communications should be applauded will the future be access via wires or will it all be wireless in the ether? I question whether these plans are future proof.

Patents

A lower rate of corporation tax of 10% for income derived from patents was announced. Whilst this is a welcome boast for those who invest in technology and patent applications this will not be introduced until 2013 and is bringing the UK in line with other EU countries. It is a shame the relief does not apply to other IP such as copyright in software (non-gaming) which from my practice seems to be one of the major UK exports. The introduction of this relief is also too slow!

R&D

AD announced that one of the major hurdles to claiming tax relief on R&D expenditure will be abolished. Currently a company has to own all IP deriving from R&D before the relief can be claimed. This is a welcome announcement and should aid much needed collaboration within small to medium high tech businesses which may have been hindered by this test.

To summarise I think there were positives moves in the pre-budget report in relation to IP and technology revenue but I do not think enough to engender a world leading knowledge based economy in the UK, clearly needed to shrug off the effects of one of the worst recessions of modern times.

Wednesday, December 09, 2009

Social Media Risk Management

Social Media Risk Management (3 of 3)

In my previous two posts I have identified a number of risks concerning business participation in social media as well as the factors that exaggerate these risks.

As financial return on investment seems to be difficult to ascertain with any accuracy it is difficult to determine whether a risk is worth taking. Therefore, it is important to mitigate risks as much as possible.

As with all business risks they can normally be:

1. Managed - terms and conditions, including disclaimers, can assist in managing risk. In a recent case a disclaimer on a website excluded liability when a visitor to the site tried to rely on content published on that site to sue its operators. Arguably the same will apply to a disclaimer on a Twitterback for example. Following Social Media etiquette is also key to managing risk.

2. Insured - it may be possible to insure risks associated with Social Media. I am not qualified to advise on insurance coverage so would recommend speaking to your broker.

3. Considered and Risk Taken - it may be that if the risks have been discussed and a strategic decision taken to accept them. Given the rapidly changing social media landscape such a decision would need to be under constant review.

4. Ignored - many choose to take the head in the sand approach with risk on the Internet until there is a problem. This will change when some of the legal risks are tested in court.

5. Avoided - Risk training for those who are participating in Social Media on behalf of the business will mean that they should appreciate the risks and more easily spot content that could incur liability. Having an acceptable content and participation policy would also assist participators with avoiding risk.

Every business will be different and should consider the normal risk v reward conundrum. Training and awareness is one way of making this decision easier as well as an appreciation of the technology and its potential.

As the social media landscape changes rapidly (seemingly on a week by week basis) this question will need to be kept under constant review.

My view is that risk can be reduced by a mixture of empowering the right people, disclaiming liability, training them on the risks and setting guidelines (perhaps with example posts of what is and isn't acceptable from the business' point of view) for acceptable participation.

Social Media Business Risks

Social Media Business Risks (2 of 3)

Social Media would seem to be affecting the way businesses view risk.

Businesses large and small appear to be participating in social media across numerous platforms without question or hesitation. The potential brand reach and return on investment appears to be blinkering many from the real risks that seem to jump out.

The social media platforms themselves disclaim themselves of liability in their terms and conditions and would rely heavily on the innocent conduit defence.

I have set out below a non-exhaustive list of the most apparent risks that are applicable to a UK business. In my previous post I explained how these risks are exaggerated as a result of Social Media Risk Multipliers.

I initially came up with 30 possible risks but have tried to distill these into general headings. I think that these risks can usefully be split into legal and strategic/commercial risks but the two, of course, are inextricably linked (please feel free to add to this list by leaving comments):

Legal
  • Contractual - Are your Social Media participators accidentally creating or varying contracts using Social Media - has this been excluded from your terms and conditions?
  • References and Testimonials - are your Social Media participators providing references or testimonials via Social Media platforms . If so what happens if these are incorrect/negligent and someone relies on them?
  • Regulated Activity - is your business regulated? - ie are required to comply with Financial Services Legalisation when using SM to promote services?
  • Product - are your SM participators making unauthorised representations or warranties about products or services that bind your business.
  • Country Specific Rules - is their legislation in other countries that you might breach if people can access your content or follow you from those countries?
  • Professional - does the use of SM breach Professional Codes of Conducts - ie for Solicitors is the person participating in SM holding themselves out as a solicitor when they are not?
  • Data Protection - when you tweet an individuals name or contact details or retweet the same or discuss one of your employees via Social Media does this comply with data protection processing obligations?
  • Criminal - are your employees discriminating via their tweets or inciting criminal behaviour?
  • Consumer Protection Legislation - does your Social Media participation fall foul of consumer protection legislation - in particular with respect to misleading advertising. Sometimes all you have is 140 characters of text so it could be easy to mislead.
  • Ownership - of the profile and the following built up by employees as part of the business - what if the employees leave?
  • Advertising - do your business tweets or other participation comply with the ASA Codes?
  • Intellectual Property Infringement- do your Tweets or other content infringe copyright or trademarks? 140 characters can still represent copyright infringement. It is quality not quantity!
  • Defamation/Privacy - are you staff defaming people or other businesses via social media platforms? Are they breaching a persons right to a privacy?
  • Breach of Terms and Conditions - Each SM Platform will have its own terms and conditions of use. Does the way your business uses that platform breach those terms?
Strategic

Less my area but the obvious ones are:
  1. Brand Dilution over numerous platforms
  2. Brand degradation- how will your customers react to participation in SM
  3. Off Brand Message being disseminated
  4. Diversion of resources - SM participation is time consuming. Is it diverting resources form other useful activity?
  5. Next SM Platform Syndrome - what next. Twitter is en vogue in the US and UK but will it be the same in two years time? Will Xing acquire LinkedIn or vice versa?
  6. Profile/Brand squatting - is your business name available for a vanity url or otherwise? Did someone beat you to the name?
Given the numerous risks my big three big questions for any business participating in Social Media or putting together a Social Media Strategy are:
  1. Who are you empowering to participate in Social Media on behalf of your business and do they appreciate the risks?
  2. How do you intend to manage risks and risk multipliers?
  3. How are you going to maintain control over content and dissemination?
My next blog will consider what can be done to manage risks. Of course if a risk can be managed it is more likely that a business decision will be made to take that risk.

Monday, December 07, 2009

Social Media Risk Multipliers

Social Media Risk Multipliers (1 of 3)

Much is written and discussed about the rewards (potential or otherwise) of Social Media and return on investment, but more and more people are asking (as I have done myself) what are the risks to my business if it participates (or rather its employees participate) in social media.

Having considered a number of risks such as copyright infringement, brand dilution, defamation, data protection, misrepresentation, fraud, implied warranties, amongst others (more to follow in my next blog), I consider the business risks to be no different in the social media era to those of the offline and web 1.0 world. In fact I am assured that the same risks were debated at length when email was first introduced. However, social media is different because of factors that exponentially increase risk, which I am coining "Social Media Risk Multipliers".

My working list of Social Media Risk Multipliers includes:

A. Participation - in a move away from one-way dissemination of information in static form, social media allows participation and interaction on an unprecedented scale. The ability to have conversations at all levels is one of the main draws of social media but increases the risks of the wrong brand message being portrayed or misstatements being made.

B. Immediacy - social media is all but instantaneous. This increases the risk of problems being created and compounded quickly. It also makes containing problems once they occur difficult.

C. Viral - any mistake can quickly be reproduced all across the world in a matter of minutes. Consider a defamatory comment made via twitter. If it is published to only a few individuals the damage may be minimal but if this is retweeted by 10 people who in turn retweet the offending tweet, the damage becomes worse with the publication self perpetuating and almost impossible to contain.

D. Openness - Many of the social media interactions on the web are open and public. Moreover, trending software allows monitoring and aggregation of these public posts which means that mistakes are made publicly and are more likely to come to the attention of people that have been wronged. Therefore, the risk of mistakes or wrongs being picked up is higher and evidence will be easier to obtain via trending software.

E. Casual - the vast majority of social media interaction is casual and especially when content limits are as low as 140 characters. I believe that in this relaxed atmosphere employees are more likely to make statements that they would not if they were using the phone or email. Without guidance this increases the risk of customers potentially being misled, mis informed, provided with unauthorised warranties/offers or worse.

F. No Boundaries - Social Media knows no boundaries. Does you Social Media activity comply with local laws in all countries? For example online gambling in the United States is prohibited. Will promotion via social media be illegal in a particular country and can you choose not to target it? Immediate world wide reach increases the risk of breaching laws.

As with all business risks they can normally be:

1. managed;
2. insured;
3. considered and taken;
4. ignored; or
6. avoided,

but is this the case when the Social Media Risk Multipliers are applied?In a later blog I will consider this non exhaustive list further

From a strategic management point of view it is critical (like any new business venture) to understand and appreciate the risks so that a decision can be made as to whether any return on investment from Social Media activity outweighs the risks to your business.

In an interesting dichotomy many of the key benefits and opportunities provided by social media are also the same features that are multiplying the risk to businesses. More than ever risk versus reward needs to be considered!

As a final question regarding business asset risk: if an employee creates a social media profile and uses it to promote the business, who has the right to the profile followers or connections when that employee leaves - or does it matter? The business or the employee? Arguably a social media profile which has a number of brand followers will be a valuable asset to the business in the long term. In fact a twitter profile disseminating news has recently being purchased in the US for a significant sum.