Among the many very informative sessions on the first official day of SXSWi, one of particular interest to new businesses was called Ten Big Legal Mistakes Made by Internet Companies, led by Carl Butler, VP of Legal at Angie’s List, and David Wong, an intellectual property expert and attorney for Barnes & Thornburg LLP. In a nutshell, the session, despite its title, was centered around best legal practices for new businesses with insights on trademark laws, copyright infringement and the legal pitfalls surrounding digital work product, just to name a few. We will highlight those parts of the session that we found most insightful and that business owners might find most helpful.
An essential part of starting any business is creating a brand, and most brands begin with a logo, preferably something that is memorable and unique. But how do you really know if a logo is unique? On a local level, this process is not so difficult. The key consideration is that two similar businesses competing for customers in the same area should not have brand identities that can easily be confused with one another, such as similar names or logos.
What many new businesses do not consider, however, is what might happen when your business grows exponentially in a short time, and all of a sudden you are competing on a national or international level. When this occurs, trademark laws play a much more significant role, and your brand, something in which your business is likely heavily invested, both financially and often emotionally, can be forced back to the drawing board by a preexisting and now overlapping competitor.
Another task that every business must face is securing the online real estate needed to support their brand, like a domain name, unique Facebook URL or Twitter handle. Just like logos and taglines, these digital marks can infringe on the trademarks of larger competitors that may only become competitors years or more after your business is actually formed. Starting from scratch with a brand, after years of building name recognition, can be a fatal blow to a business. Doing due diligence and future-proofing a brand identity can be the deciding factor in the longevity of a business.
One solution suggested by the panel with which we fully agree is the importance of unique brand identities over descriptive brand identities. To extend their analogy, consider the difference between Apple and an imaginary company called Quality Personal Computers. On one hand, Quality Personal Computers tells the consumer exactly what to expect, while Apple tells the consumer absolutely nothing about the nature of its company.
On the other hand, Apple is unique because it is NOT descriptive, and the chance for a future conflict with a competitor is far less likely with a unique brand, whether or not it relates anything at all about the product or service it provides. Keep this in mind for logos, domain names or any other aspect of a brand that might infringe on another’s trademark. Users will need to be trained to recognize the brand, but, once exposed, the brand will be more clearly distinguished, and there will be less competition for the brand identity, making it less of a risk for future trademark infringement.
Another topic covered during the session was Terms of Service agreements – those incredibly long text blocks that most people immediately agree to without reading every time they update software or make an online purchase. Butler and Wong argued that, even though the technology is older, click-through user agreements are the “gold standard,” as they require more user interaction. An agreement is more likely to be legally binding if users can reasonably read and understand the information quickly.
A topic of special interest to small businesses owing to the rarity of credible online legal information focused on best practices for sharing and creating digital content. It is not uncommon for businesses to use online images without permission. And though companies may fly under the radar for years, this practice constitutes copyright infringement and can be very costly if not fatal to small businesses. Reposting digital content without permission, such as blog posts or articles, is essentially the same offense. The panel recommended original content whenever possible, advice that is not only legally solid but also a very investment.
Zooming out for a moment, one theme already emerging on the first day of sessions is that content is driving the digital experience, and the race to produce informative, entertaining and original content will determine how companies fare both in the digital marketplace and in the courtroom.