Does Your Business Take Identity Theft Seriously? How To Avoid The Business Of Scamming

Businesses need to take security threats more seriously. The fourth day of the National Tax Security Week focused largely on this issue and offered ways business practices can optimize security of businesses and deter both business and client identity theft.

You may have never thought that a business’ identity can be stolen; and indeed, it may sound odd at first, but a business has identifying information that is unique to itself. Oddly enough, among the reasons businesses should be wary of potential scammers is that scammers will often file a business’ taxes.

Potential scammers look for little snit-bits of identifying information of the business. Scammers do not need every little detail about a business to gain access, they just need some of the information that is unique to the business to commit business identity theft and file a tax return on behalf of the “business”.

Though these riveting breaches are seldom discussed unless the breach happens to larger corporations (Target in 2013 and Marriott in 2018), the most common cyberattacks are aimed at businesses that have fewer than 100 employees.

In order to curb potential threats, the Federal Trade Commission suggests that businesses adhere to the following guidelines:
• Back up important files;
• Require strong passwords for all devices;
• Encrypt devices; and
• Enable multi-factor authentication whenever possible.

The IRS is also taking precautions to better protect business information from falling into the mischievous hands of scammers. Beginning on December 13, 2020, the IRS will be redacting sensitive information from the business tax transcripts and the summary of corporate tax returns.

Additionally, the IRS is making it easier for businesses that may have had a breach of identity be proactive in these matters by filing Form 14039-B, Business Identify Theft Affidavit (the “Affidavit”). The Affidavit should be filed by the business if any of the following occurs:
• The business receives a rejection notice for an electronically filed return because a return already is on file and the business did not file it;
• Notice about a tax return that the business did not file;
• Notice about Form W-2 filed that the business did not file; and
• Notice of a balance due that the business does not believe is owed.

Although businesses can start being more proactive in ensuring there will not be major security breaches related to taxes, it is important to note that the Affidavit should not be used if the business experienced a data breach that resulted in no tax-related impact. It is also important to remember that the changes the IRS is making does not absolve the business from making the necessary changes to better protect its information.

Fortunately for businesses, there are a number of ways to strengthen the security of a business. Determining the weaknesses posed by your individual business is vital in taking action against scammers. As always, the attorneys at Vandenack Weaver are here to assist you determine potential weakness and implement changes to strengthen your business’ security.

VW Contributor: Justin A. Sheldon
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U.S. Supreme Court Rules Public Perception Determines Trademark Eligibility – It May Affect How You Protect Your Brand Online

On June 30, 2020, the United States Supreme Court ruled in Patent and Trademark Office v. Booking.com B.V., that it is possible for a generic word combined with “.com” to receive a federally protectable trademark.

This landmark case strikes at the fundamental clash between two competing, yet central ideas in trademark law.

• First, there is the notion that to protect the public from confusion, a company can receive trademark protection for works or symbols that the public understands to designate the source of goods or services.
• Contrastingly, the second idea is that to protect unfair competition, a company cannot receive trademark protection for words or symbols that are “generic” names.

But what happens when a business has a generic name in which the public has come to associate that specific business with the specific goods or services it sells? The Supreme Court answered this very question, and found in an 8-1 decision that booking.com, owned by Booking Holdings Inc., is entitled to nationwide legal protection against competing trademarks.

Booking.com is a business that maintains a travel-registration website. The business sought federal registration of marks including the term “booking.com,” but the U.S. Patent and Trademark Office (PTO) denied the business’ trademark application. It is important to note that a trademark gives a business the ability to distinguish the goods or services it offers from another business. If a business’s application for a federal trademark is accepted, then that business has certain rights, including the right to protect its trademark against use by other businesses. This not only secures to the owner of the trademark the goodwill of her business, but it also protects consumers in that when they purchase a product bearing a particular trade-mark, they can be assured that they will get the product which it wants.

U.S. trademark law, however, does not confer trademark rights to companies that claim ownership of an entire category of goods, such as wine, or computers, or books. But what about the businesses that invested significant resources in building their brands, such as weather.com and hotels.com? When consumers think of weather.com, for example, most associate that domain name with a specific service.

Thus, the case turned on whether consumers perceived “Booking.com” to be generic. In its opinion, the Supreme Court hypothesized that if consumers thought “Booking.com” was generic, they might expect consumers to understand Travelocity — a similar service – to be a “Booking.com” or if a consumer was looking for a trusted online hotel-reservation service, they would ask a frequent traveler to name her favorite “Booking.com” provider.

The Supreme Court agreed with the lower court’s finding that consumers do not perceive “Booking.com” in this generic way. Moreover, the PTO did not dispute that determination. Instead, the PTO argued for a “per se” rule against trademark protection for any generic word followed by a “.com.”

 Yet, the Supreme Court pointed to past instances where the PTO did not follow this rule. For example, the PTO granted trademark registration in the past to “art.com” and “dating.com.” The Court underscored that because domain names are one of a kind, a significant portion of the public will always understand a generic “.com” term to refer to a specific business. Thus, the Court rejected the PTO’s position that “generic.com” terms are categorically incapable of identifying a source or particular business.

There is a limiting principle to take away from this ruling. The Supreme Court did not rule that having a “generic.com” name automatically classifies that term as non-generic. The significance rests with whether consumers perceive that term as capable of distinguishing among members of the class. Booking.com collected consumer surveys to show that 74% of consumers of travel services recognize booking.com as a trademark. Because the PTO offered no evidence to challenge that booking.com enjoys unparalleled consumer loyalty in the travel industry, there was no dispute with respect to whether consumers perceive booking.com to be a generic term.

For businesses, this case proves that if you harness time and effort in building your brand it can pay off. But it comes at a cost. A simple google search reveals that in 2018, booking.com spent $4 billion on marketing.  It is no surprise that booking.com spent a portion of those funds on buying Google Adwords to drive consumer traffic to their website. In the second quarter of 2019 alone, Booking Holdings, the parent company of Bookings.com spent $1.19 billion on performance marketing.

It is important to highlight the point that Justice Stephen Breyer made, as the sole dissenting opinion in this case. He cautioned that the majority’s decision will “lead to a proliferation of “generic.com” marks granting their owners a monopoly over a zone of useful, easy-to-remember domains.”

While consumer perception was central to this case, there is an additional cautionary tale with respect to how booking.com and other companies obtain that perception from consumers. Essentially, bookings.com bought the public perception that was central to winning this case through the billions it spent on advertising and marketing. Notably, this was not discussed in the Supreme Court’s opinion, but nonetheless is something business owners, as well as the public, should keep in mind.

Accordingly, businesses must consider the value of both their trademark and the internet domain associated therewith — and how to ensure they are legally protected.  Simply registering an internet domain does not provide trademark protection and owning a trademark does not automatically provide your business with the right to the “.com” domain extension thereof.

As you consider how to promote your business, Vandenack Weaver attorneys can assist you in determining how to best protect your brand in commerce, social media and online.  If you have questions, please call at 402-504-1300 or contact us via info@vwattys.com.

VW Contributor: Skylar Young
© 2020 Vandenack Weaver LLC
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Are Your Business’s Posts on Instagram Protected?

Whether you run your own independent photography business, or you operate a virtual online coaching and nutrition business, the reality is, you have an Instagram, and you use that Instagram to market your services and attract clients. In fact, for many businesses, maintaining a publicly searchable account on Instagram to share photos and videos is a necessity for a successful business. Now, imagine the nightmare scenario where Instagram sells one of your images on your business’s Instagram account to a third-party vendor. That would surely be a copyright infringement and you as the business owner would have a viable and enforceable claim against that third party for copyright infringement, right? Recently, the Southern District for New York has addressed this specific issue, and so far, the answer is less than clear.

Back in April of 2020, a Judge in the Southern District of New York dismissed a plaintiff’s complaint filed against two defendants’ alleging a copyright claim. The plaintiff is a photographer, and Ziff Davis is a digital media and advertising company that owns multiple online brands and print titles. Ziff Davis owns Mashable, a media and entertainment platform that operates the website www.mashable.com.  The plaintiff uploaded an image titled “Child, Bride, Mother/Child Marriage in Guatemala,” in which she owns an exclusive United States copyright, on her public Instagram account. In 2016, Mashable contacted the plaintiff to license the image to showcase on their website. The plaintiff declined the offer. Nonetheless, a few days later, Mashable published an article and included a copy of the image. Mashable was able to do this with relative ease by embedding the content on Instagram to their website. Embedding occurs where a third party publishes content from Instagram’s servers in an Instagram frame on the third-party users’ website. In the complaint, the plaintiff agreed that rather than copying her photograph directly, the defendant posted “embed code” on its site which embedded the image in its article. The reality is, internet platforms including YouTube, Twitter, Facebook, Instagram, and LinkedIn provide their users with embed code, with which users may embed their content either on the social media platform or on other sites. Users have control to restrict or prevent embedding of their content if they designate their content as private.

The governing document central to the dispute is Instagram’s “Terms of Use.” When the plaintiff, and any other individual or business that enters into a contract with Instagram, accepts the Terms of Use, they are licensing to Instagram any photo they share while their account is set to public. Images may be sub-licensed by Instagram to a third-party user of Instagram’s services. Additionally, the defendants cited to Instagram’s “Platform Policy” which states that Instagram “provides the Instagram application programming interface (“API”) to help broadcasters and publishers discover content, get digital rights to media, and share media using web embeds.” The judge agreed with defendants and affirmed that the use of a public Instagram photo as embedded in an article on a third-party website is covered by Instagram’s Terms of Use.

                However, last week, the Southern District in New York reconsidered its ruling in Sinclair v. Ziff Davis, LLC after a different judge in the same district addressed the same issue but ruled in the opposite. Earlier this month in McGucken v. Newsweek LLC, the court refused to dismiss the photographer’s copyright infringement claims based on Instagram’s Terms of Use, despite the defendant relying on the Sinclair decision in their argument.

Upon reconsideration, the judge reversed the earlier opinion and instead denied Mashable’s motion to dismiss plaintiff’s second amendment complaint. Relying on McGucken, the District Judge reasoned that there are various interpretations of Instagram’s Terms of Use and Platform Policy. Upon reconsideration, the court agreed with the earlier opinion that the plaintiff in Sinclair agreed to the Terms of Use and by doing so, authorized Instagram to sub-license her public content. However, the court did not find evidence that Instagram had exercised this right by extending a license to Mashable, the defendant. The earlier opinion did not give full force to the requirement that a license must convey the licensor’s explicit consent to use a copyrighted work.

Then, on June 4, 2020, Instagram publicly clarified that its policies do not grant a blanket license to API users to embed public third party content. The social media tycoon stated “Our platform policies require third parties to have the necessary rights from applicable rights holders. This includes ensuring they have a license to share this content, if a license is required by law.” This declaration by Instagram is a victory for business owners who use public facing Instagram accounts and provides an answer to the possible interpretations the court alluded to on reconsideration in Sinclair with respect to Instagram’s Terms of Use. Now, business owners who upload content on their Instagram have a powerful tool in their toolbox when it comes to fighting copyright violations.

VW Contributor: Skylar Young
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The Green Jacket of the Masters Golf Tournament is Finally a Registered Trademark

The golf season is almost here for most individuals in the United States and, for golf enthusiasts, that means the Masters golf tournament. Last year, Tiger Woods won the iconic tournament in a dramatic return to the winners circle. However, while Tiger was putting on the green jacket as the winner of the Masters, a fight over that jacket was occurring with the United States Patent and Trademark Office (“USPTO”).

On February 21, 2019, Augusta National, Inc., applied to register the green jacket as a trademark. Initially, the USPTO denied registration of the green jacket with gold buttons because they deemed it a non-distinctive product design with functional elements, thus not eligible for registration. The USPTO subsequently denied registration because the jacket was deemed a decoration and ornamentation, not an inherently distinctive service mark, thus not eligible for registration. Regardless of the reasons, the green jacket that has been awarded to the winner of the Masters since 1949, when Sam Snead won the tournament, was initially deemed ineligible for trademark registration. Ultimately, the inherently distinctive green jacket prevailed in arguments with the USPTO and it received registration almost a year later.

For businesses, this illustrates a couple important points. First, that trademark law is used for trade dress, sounds, designs, and possible even smell, not just your standard logo or words. The second is that regardless of how distinctive and historical a trademark, the registration process requires expertise and knowledge of the overall prosecution process. Of course, the attorneys are Vandenack Weaver LLC are here to help with that prosecution, even if the trademark isn’t as famous as the green jacket. As for Tiger, we will have to wait and see if he can defend his title at the Masters.

 

VW Contributor: Alex Rainville
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Federal Trade Commission To Evaluate Endorsements and Testimonials in Advertising

On February 12, 2020, the Federal Trade Commission (“FTC”) announced that it is seeking public comment regarding endorsements and testimonials in advertising, including those on consumer review websites. The FTC is interested in learning about the connections between the endorser, reviewer, the underlying business, and the medium in which the endorsement is posted.

The FTC is charged with enforcing the Endorsement Guides, as enacted in 1980 and amended in 2009. The Guides provide rules for businesses and other organizations to follow when using endorsement and testimonial advertising, including a requirement to disclose material connections of the endorser. The intent is to ensure that the consumer understands the connections in order to properly evaluate the credibility of the endorsement and testimonial. Based on the evolution of technology, the FTC is particularly concerned with the use of consumer review websites and whether they properly disclose the various connections and incentives.

The FTC is accepting comment from the public regarding these rules and, based on statements from commissioners on the rise of influencers and fake reviews, this could be an area that the FTC decides to revise rules and have stricter enforcement. For businesses and organizations that use consumer reviews and endorsements as a form of advertising, this is the time to ensure that the advertising and marketing efforts comply with the Guides.

VW Contributor: Alex Rainville
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New Rules at the Trademark Office

Effective February 15, 2020, the United States Patent and Trademark Office (“USPTO”) implemented several new rules for applicants and registrants. While these rule changes are not substantive in nature, the procedural and administrative updates are likely to cause substantive disruption for certain trademark owners and applicants. Although it is arguable what will have the largest impact, the update to the specimen requirements are likely to create new challenges.

The USPTO revised the items that are deemed an acceptable specimen. The change is designed to ensure that the specimen submitted clearly depicts the trademark in use with the specific good or service provided. By way of example, mock-ups, designs on their own, and labels without clear association with the good or service are no longer accepted. Another change includes the USPTO designating email as the only method for formal correspondence. This procedural change includes a new requirement that all registration applications must be submitted electronically, with limited exception. For attorney’s filing on behalf of a client, the attorney will also need to provide the email address for the client, as opposed to just the attorney. This requirement applies to proceedings in front of the trademark trial and appeal board as well as registration applications.

These procedural changes are the latest updates to take effect as the USPTO attempts to modernize and combat fraudulent registrations and applications. For those with a registered trademark, these changes will apply to the next required filing or, if the USPTO so elects, to an audit of the registered mark. This means that trademark owners should ensure that they continuously use their trademarks in commerce in the manner described in the trademark registration.

VW Contributor: Alex Rainville
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Scandalous Trademarks: What You Need to Know.

The Lanham Act, which governs trademarks that are registered through the United States Patent and Trademark Office (“USPTO”), expressly prohibits the registration of marks that are deemed scandalous, immoral, or deceptive. This prohibition has historically prevented brands from using marks that could fall into this category, even if the mark is appropriate for the situation. However, in 2019, this prohibition was expressly overridden and these types of marks are now eligible for registration and protection under the Lanham Act.

During the summer of 2019, the United States Supreme Court determined that the prohibition against scandalous marks contained in the Lanham Act is an unconstitutional prohibition on protected speech. See Iancu v. Brunetti, 488 U.S. ___ (2019). Essentially, the Court decided that this amounted to viewpoint discrimination, in violation of the First Amendment. As a result, the USPTO is required to accept and consider scandalous trademark registration applications.

For businesses, artists, and musicians that utilize what was deemed scandalous marks by the USPTO as part of their operations, now is the time to act to protect the intellectual property. Although the USPTO hasn’t reported a rush applications that fit this category, now that these previously un-protected marks are protectable, it is expected that the volume of applications will increase.

VW Contributor: Alex Rainville
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Supreme Court to Determine Whether Fossil Must Turn Over Profits for Trademark Infringement

Fossil, Inc., the luxury goods retailer, could owe a manufacturer, Romag Fasteners, Inc., its profits for infringing on Romag’s trademark. The issue of whether Fossil owes Romag approximately $6.7 million dollars in profits gained by using the infringing trademark depends on whether the remedy of disgorgement of profits by a party infringing on a trademark requires willfulness by the infringing party.

The issue arises from Fossil using a magnetic snap fastener on some of its bags, purchasing some of the fasteners directly from Romag. However, Fossil also purchased some fasteners that looked nearly identical to those of Romag from another source, likely knowing that the fasteners were counterfeit and infringed on the trademark of Romag. Despite this knowledge, Fossil proceeded to use them anyways in “callous disregard” to the rights of Romag. In a moment of luck for Romag, an employee discovered the counterfeit products when visiting a Macy’s, finding the Fossil bags with the counterfeit fastener. Romag successfully argued that Fossil infringed on their trademark rights, but an open question regarding the remedy remains. The United States Supreme Court will determine whether the remedy includes the profits of Fossil, and such decision will be based on whether Fossil must willfully infringe on Romag’s trademark rights or if “callous disregard” is sufficient to entitle Romag to the profits of Fossil.

This case highlights the broader importance of protecting the brand and intellectual property of a company. Traditionally, this means taking active steps to ensure that the trademarks, copyrights, trade secrets, and patents are protected under applicable law, but it should also mean proactively verifying that the initiatives of the company don’t infringe on the rights of another. Failure to take consider trademark rights, as Fossil is learning the hard way, could result in disgorgement of profits.

VW Contributor: Alex Rainville
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Fortnite Under Siege

Fornite, the video game by Epic Games that has taken the world by storm, has been subject to a number of copyright infringement claims for dances performed by characters in the game. The dances causing problems include those that are well known and new viral sensations such as the “Carlton,” “Backpack Kid” flossing, “Milly Rock” dance, and Halloween “Pump It Up.” While most are relatively standard copyright infringement claims, alleging the characters doing the dances in the game infringe on the copyright, one claim, for infringement of the “Running Man” dance, has an interesting twist.

A recent decision by the United States Supreme Court mandated that a copyright owner must register the work with the Copyright Office prior to filing a claim for copyright infringement. As a result, many claims, including those against Epic Games, were withdrawn until the work could be registered. However, the owners of the “Running Man” dance elected to amend their claim, from a copyright infringement claim to trademark infringement claim. As a defense to trademark infringement, Epic Games is asserting that the claims are preempted by the Copyright Act. Although no one disputes that the name of a dance can be protected under trademark law, it is unclear whether a court will decide if the dance itself is protected; typically a dance is protected by copyright, as choreography.

This could open the door for more claims against Epic Games for dances used in Fortnite, but the more impactful consequence is the potential to further define the scope of what constitutes a trademark. If it is ultimately determined that a dance can be a protectable trademark, that would add to the list of protectable marks, which already includes color, scent, sound, designs, layouts, and words.

VW Contributor: Alex Rainville
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Intellectual Property: A Peloton Story

Most people know Peloton because of their flashy and controversial ads, as well as for revolutionizing the indoor cycling industry. However, as Peloton forges forward in the competitive fitness equipment industry and fights to keep its stock price above its IPO level, they have also been litigating trademark and copyright claims. Recently, a Federal District Court ruled in favor of Peloton in the trademark matter, which means, for now, Peloton will be able to retain its name.

In the case, Move Press, LLC v. Peloton Interactive, Inc., Move Press claimed that Peloton was infringing on their trademark rights because Move Press has a cycling publication named Peloton Magazine. Move Press had registered this trademark with the United States Patent and Trademark Office, and its use of the mark clearly preceded the use by Peloton. However, Move Press did not file the claim against Peloton for well over four years. As a result, Peloton argued that this claim was barred under an equitable legal theory known as laches, which means that Move Press waited an unreasonable period of time to bring the claim. Peloton had to argue laches, as opposed to a statute of limitations, because the Lanham Act, which governs registered trademarks, does not have a statute of limitations. The Federal District Court, after undergoing a rigorous review of the elements in the laches defense, ruled in favor of Peloton.

Had Move Press timely made the claim against Peloton, the result would have likely been in favor of Move Press and the public would know Peloton as something different. For business owners, this raises two important points. The first is that every registered trademark owner has an obligation to police their marks and, should they find someone infringing on their mark, timely bring a claim. The second is that a business, when selecting its name, branding a new product, or re-branding, should review its rights in the marks prior to making a significant marketing investment.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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