in touch with social media building your brand legally and … · 2014. 5. 6. · 2 in touch with...

In touch with social mediaBuilding your brand legally and successfully

1 In touch with social media: Building your brand legally and successfully

We at Eversheds advise entrepreneurs and founders of start-ups right through the company life cycle. This can involve drafting your first Shareholder Agreement, negotiating the first commercial Contract and hiring your first employee to advising the founders of the start-up on an ultimately successful exit whether through trade sale or initial public offerings.

LinkedIn seminar 6 February 2014

A lawyer’s job is not always to say no but to ask the right questions so that we help you protect your business. Our job is not to kill your ideas but to agree with you the best legal protection that is also commercially viable. Our job is to protect innovation so that it gives you the best chance at protecting your Intellectual Property (“IP”) to maximise value on an ultimate exit.

We understand that start-ups have so many immediate demands that initially you are just trying to survive and develop the business. Often, IP is not considered to be a key component at that stage. Unfortunately, this could not be further from the truth. Particularly in the case of the tech sector, companies that fail to address their IP requirements may find it impossible to rectify the situation afterwards.

Protecting your IP at the outset is a necessity but there are many ways to protect IP some you should do first and others later on in the cycle of your business.

The key issues are:

Copyright

A major part of establishing your reputation in the marketplace lies in promoting yourself as an expert in your field. In some cases that might mean the distribution of written information such as blog posts, website content and information materials that demonstrate your expertise. All of those written works are part of your brand name identity and business reputation; they will be protected by copyright.

For any written material that you publish you can consider noting your ownership with a small copyright mark or copyright along with the year of publication.

If your written materials, such as blog posts, website content and other business promotional materials are being written by third parties, make sure a contractual agreement exists between you and them to clearly establish your company as the copyright owner.

Under the Copyright and Related Rights Act 2000 the first owner of copyright in a work is the creator. This means if you outsource your web design, app design, coding etc the IP in that product will belong to the person who created it, whether it is the founder of the company before incorporation or outsourced to a web development company.

It is important to ensure that the right agreements are in place at the outset to ensure that the IP rests in the company so that on an ultimate exit a prospective purchaser will have clean title to the IP.


If you develop IP, whether it be source code, a secret recipe or a new device which can be manufactured before you set up a company and it is important that the IP is transferred from the creator/founder to the entity that will ultimately own and licence out or sell the IP. This IP Transfer Agreement will be essential on the ultimate sale of the company. Investors will always look for clean title to your IP and it is important that you are able to show who created it and how it was transferred to the entity that is selling it.

Trade Marks

In relation to the legal issues around branding and Trade Marks we usually suggest four guidelines for start-ups:

1. Do a clearance search

Find out whether a symbol, logo, catchphrase, brand name or image that you want to trademark is already registered. Attempting to registering a Trade Mark without first running a check is going to waste search fees.

2. File a Trade Mark application and protect your brands

Once you know that your logo/name is free to use, you can file for Trade Mark registration in Ireland or throughout the EU. The cost is similar and many of our clients prefer to register on a Europe-wide basis.


3. Cover all your brand bases

Even if you have already registered a Trade Mark you should also make sure that all social media tags with that name belong to you and that you have registered all the principal domain suffixes for your brand name online, eg Eversheds.com, Eversheds.ie.

4. Establish a clear IP licencing protocol

This step applies to trademark, copyright and patents. You need to establish strictly defined procedures for how you will or will not licence use of your IP to third parties. If you enter into licensing or franchising agreements with other companies or vendors make sure that the financial and legal conditions of your partnership are firmly reflected on paper and have been reviewed by legal professionals.

Some of the questions that arose at our LinkedIn seminar are set out below.

I have a great idea for an app. How can I best protect the intellectual property in that?

Firstly, until you have generated your IP, whether it is through registering it or through the expression of copyright, keep the idea to yourself until the IP is protected. In the case of an app there will be IP in the written description of the idea but you cannot protect the idea itself. That is why it is important to keep the idea confidential and to ensure robust agreements are in place with app developers or other third parties. A great example of this is the case of Facebook. The Winklevoss brothers claimed that Mark Zuckerberg stole their idea when he had been hired to create a website in Harvard University known as “Connect-U”. The case was ultimately settled for approximately $65 million. However, this figure fell short of Facebook’s worth. The result in that case may have been quite different had the Winklevoss twins agreed terms with Mark Zuckerberg initially and hired him to write the code pursuant to the terms of an agreement rather than just give him their idea and let him develop it without any legal protection whatsoever.

Once you are working with third parties in developing your app it is important to ensure that the contract with them recognises that you own the IP in the app. If it is your idea and you want to monetise the app, either initially or at a later stage, you will need to show that you own the IP. You won’t be able to show that if the IP is owned by the app developer rather than you.


At the very initial stages of developing something, before we have any sort of funding, should we be thinking about intellectual property?

The quick answer is yes. If you were a large corporation, such as LinkedIn, we would be suggesting that you register your brand name as a Trade Mark, you get everyone to sign a non-disclosure Agreement before discussing your ideas with them and you enter into legally binding and very lengthy Development Agreements. However, that is not realistic when only a small percentage of start-ups get through to third stage funding. In those circumstances, at the outset we would suggest that you keep the idea confidential as much as you can, have a very brief form of Confidentiality Agreement if you are bringing your idea to a venture capitalist or investor etc and check the terms of any Agreements with developers with whom you are working.

Also if you have a catchy brand name or logo, carry out some searches to see whether other people are using that name already. If they are, then you might be stopped at a later stage from using it so it is best to know before you have spent money on advertising or promoting the brand name to check that it is clear to use. Similarly, check all of the domain name registrations to see whether you can register your brand as a domain name. It is important to get the name right at the outset and to ensure that it is clear to use so that ultimately you will be in a position to register it as a Trade Mark if and when you obtain funding.

Can I protect my work on social media?

A big part of establishing your reputation lies in promoting yourself as an expert in your field. In some cases that might mean distribution of information such as blog posts, website content, and guides that demonstrate your expertise. All of those written works will be protected by copyright. To protect any written material that you publish, you can consider noting your ownership with a small copyright mark or the phrase “copyright” along with the year of publication.

If your written materials, such as blog posts, website content and other promotional materials are being written by third parties, make sure a contractual agreement exists between you and that third party to clearly establish your company as the copyright owner.


Can I copy and paste photographs and content from other websites onto my blog?

As you own the copyright in the material produced and created by you, third parties own the material that they have created. If you want to use their material you need to have their permission. This permission can be obtained by licence, either directly from the copyright owner, for example if you want to copy a piece of written work on your website you can approach the owner directly. There are other ways of obtaining licenses, eg photographs: You can licence the use of photographs online through various licence providers. Ensure you use a reliable source and check the terms and conditions.


How private is content posted to my private social media pages?

Social networking sites have provided some interesting case law over the past few years. They also present would be employers with a wealth of information concerning potential recruits or current employees. Similarly, prospective investors will usually search social media for the founders of a company before investing. In this context, there is very little that is “private” online.

In a case called Crisp v. Apple Retail, an employee wrote a Facebook post complaining about his work hours, Apple products defaults along with sarcastic paraphrasing of an Apple marketing slogan. A fellow colleague who happened to be a Facebook “friend” saw the comments and passed them onto the store manager. Mr. Crisp was subsequently dismissed for gross misconduct. He argued that his Facebook profile and all comments posted on it were private. The Employment Tribunal found the dismissal to be reasonable taking into account the importance of image to Apple’s business and how the image had contributed to its success as well as the fact that Apple had made it clear in its social media policies and training that commentary or critical remarks on Apple products were strictly prohibited. Interestingly, the Tribunal stated in response to his claims to a right to privacy, that Mr. Crisp could not have had a reasonable expectation of privacy over the information posted on Facebook. Facebook posts are not truly private and can be forwarded easily with people having no control over that process.


The Court held:

• OperationofachatroomqualifiesasaninformationservicesocietyundertheDirective allowing it to take advantage of the exemptions of liability under the E-Commerce Directive.

• Moderationofonepartofawebsitedoesnotpreventotherareasofthesamesite from being exempt from liability. This means if your website includes a mix of user generated content in some parts and your own content in other parts, you can still avail of the exemptions under the E-Commerce Directive for the user generated parts of the website.

• Developingarobustsocialmediapolicywithinyourcompanyandhavingrelevant clauses in your terms and conditions of use of your website/app may help reduce the risk of a claim for defamation on IP infringement.

I have a successful website on which I encourage my customers and social media network to post comments. Can I be held liable for the content of those comments?

The answer to this is “it depends”. There is a defence under Article 14 of the E-Commerce Directive which limits the liability of providers of “information society services” where such services consist of the “storage of information”. However, the defence only applies where the provider:

(a) Does not control or have knowledge of the illegal activity or information; and

(b) Expeditiously removes the offending information when alerted to it.

There have been some interesting cases around this topic, including Kaschke v. Gray and Hilton which concerned a defamation action brought in respect of a posting made on a blog run by Mr. Hilton. The post on the blog claimed that, Ms. Kaschke had been arrested on suspicion of being a member of a terrorist group. Mr. Hilton played an active role in relation to the website content if one looked at the website as a whole. However, in relation to user-generated posts, his role was more limited. Mr Justice Stadlen in the UK provided some guidance on the nature and extent of liability for user-generated content.


1. IP is important for your business from the very beginning. It can and should be protected cost effectively.

2. When setting up a business always have an eye to an ultimate sale and ask yourself the question – what will a purchaser expect in terms of documents, agreements, ownership of assets etc? At the very least a purchaser will want to see that you own all of the IP in your business so make sure you have this sorted out at the beginning.

3. The areas which require particular attention in relation to IP ownership include transfers from the creator of the IP to the company and remember clauses in Employment Agreements/Consultancy Agreements/third party Contractor Agreements. Also consider licence terms and conditions if you are using third party IP.

4. When building a brand online, reputation is key – nothing is truly “private” online and you can be held liable for your online content whether via your own website or comments placed on third parties websites. While there are criteria defences available, try to limit the risk as much as possible by having a good social media policy in place and the relevant terms and conditions on your website.

Finally, remember...

Key contactFor more information, please contact:

Kate Colleary Head of Intellectual Property and Data ProtectionDirect: +353 1 6644 321 Main: +353 1 6644 200 [email protected]

www.eversheds.ieEversheds Ireland is a member of Eversheds International Limited.

EDUB.119 02/14

in touch with social media building your brand legally and … · 2014. 5. 6. · 2 in touch with...

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