Published by LawTechie - January 15, 2013 - LawTechie

This past Friday, as some of us were looking forward to a relaxing weekend, Cisco lawyers were pitilessly thrust into emergency mode: Cisco was being sued by a little-known university on the East Coast for trademark infringement over a marketing slogan.

Then again, Cisco is no stranger to lawsuits, and probably employs an always-on-call army of lawyers to police its intellectual property and eats trolls like East Carolina University for breakfast. In dealing with intellectual property trolls, most small businesses are not quite so lucky.

What Is an Intellectual Property Troll?

Intellectual property lawsuits have become a big business for struggling companies seeking an alternate stream of revenue. These companies file frequently frivolous lawsuits against bigger, more successful entities, in order to monetize their licenses or trademarks. Pay the troll and cross the bridge you may to sell your legal product or service.

But this is now how intellectual property law was the designed to function.

Background on Intellectual Property Law

Trademark law, specifically, the Lanham Act, provides businesses with the exclusive right to use a trademark in connection with goods or services that they were the first to sell in interstate commerce. What this means is that a trademark owner can exclude a competitor who attempts to use a “confusingly similar” trademark for their goods or services.

The policy behind the Lanham Act is to protect consumers so that they are not deceived by unscrupulous sellers into believing that they are buying the goods and services of companies that they know and trust when in fact they may be buying a lower quality imitation.

For example, when I buy a Toyota, I want to know that my family would be protected by all of the safety features that I, as a consumer, have come to associate with the Toyota brand, and that I am not in fact buying a lemon.

So the way that courts handle claims of trademark infringement under the act is they decide whether the alleged infringers’ mark is “confusingly similar” to the valid owner’s trademark. And this would obviously necessitate an examination of whether the goods and services provided under the two marks are also similar such that they could potentially confuse the consumer as to the goods’ or services’ source.

The Cisco Suit

In the Cisco case, East Carolina University has a trademarked motto that the server hardware company subsequently began to use in connection with its products. In this case the marks are identical but one must then ask, “Are educational services provided by a state university anywhere in or near the same ballpark as computer hardware services that are sold by Cisco?”

However, it’s obvious that these two things are far afield and could not possibly confuse consumers – in the university’s case, students; and in Cisco’s case, sophisticated server administrators. We get a pretty strong implication that the university’s lawsuit is not entirely about protecting its intellectual property rights.

Trolls are Trendy

This, by the way, is similar to Kinbook LLC v. Microsoft Corp. lawsuit which I discussed recently, where a modestly popular Facebook application developer tried to sue Microsoft over its Kinect Xbox, and the 3rd Circuit was having none of that.

So more and more, we see these quasi-frivolous lawsuits and ask ourselves whether the plaintiffs are legitimately trying to police their marks or using the court system as an additional revenue stream for their faltering businesses.

Perhaps some IP Law Reform?

We need stricter sanctions against frivolous lawsuits. Perhaps something like attorney’s fees for a successful defendant. Right now successful plaintiffs get attorney’s fees.

IP Watchdog recently opined on the use of Rule 11 sanctions to combat trolls. It’s a good start but, as the Watchdog admits, infrequently used due to judicial reluctance to grant sanctions.

Until then, there are a number of steps that businesses can take to protect their trademarks from trolls.

How to Protect Against IP Trolls

Keep good records. From the day that you begin to use your trademarks, maintain very accurate records of your marketing, your customers, your sales so that you can immediately provide a strong evidentiary showing that there has been no actual confusion among consumers and therefore there is no likelihood of confusion.

The strategy is to contact a good trademark litigator immediately and be able to provide him with sufficient documentation so that he can inundate the court with evidence that there is no confusion between the trademarks.

LawTechie is a blog focusing on trends in tech and digital media. Areas covered include intellectual property, cyberlaw, venture capital, transactions and litigation as they relate to the emerging sectors. The blog is edited by the firm's partner Tim Bukher with contributions from the firm's experts in their respective areas of law.

Contact

Enter your email to get started.