IP risks and other social media pitfalls that could hurt companies

IP risks and other social media pitfalls that could hurt companies | Global law firm | Norton Rose Fulbright

Publication March 13, 2017

Although the risk of falling victim to fake news purveyors, cyber squatters and similar social media pitfalls is growing exponentially, many companies in South Africa are still not prioritising the protection of their intellectual property (IP).

“A lot of people don’t know what the recourse available to them is, if their IP is infringed, and companies are not protecting some things.  For example, some companies spend a fortune on graphic design for their branding but when you suggest registering a trade mark, they say there is so much internal red tape in obtaining the necessary approvals to spend their legal budget on protecting their IP,” says Sinal Govender, an IP lawyer at Norton Rose Fulbright’s Johannesburg offices.

“Social media can be, just as bad as it is good, if not worse.  Sharing information on social media platforms gets faster and easier every day, which is great in terms of advertising, but at the same time the risk to companies is growing exponentially.  In fact, the risk is limitless,” Govender said, pointing to the surge in confusion about the source of information online.

Pre-empt abuse rather than react 

Govender said companies can avert considerable brand and reputational damage - not to mention costs - by being proactive rather than reactive in protecting their IP in the social media age.  “Setting things up properly at the beginning is the best way to protect your company.  If you can provide Facebook or Twitter with a registration certificate showing that it’s your trade mark being wrongfully used in a post, they will take steps to remove the offending post or user.  Trademark infringement can only occur when you have a registered trade mark.  If not, you have to rely on common law rights to establish a case of passing-off.  This comes with its own difficulties, as it is costly, and time-consuming.”

Listing the five main social media-related risks to a company, Govender said that these are infringement, defamation, cyber squatters, passing off and brand or trade mark dilution.
Cyber squatters are making big business out of using domain names that are identical to or very similar to a company’s brand, she said.  They can use these domain names to lure consumers to a fake website, where the aim is to defraud unwitting consumers by obtaining their personal details or deceiving them into thinking that they are purchasing genuine goods.  They can also try to sell these domain names to the truthful brand owner for a profit.

There is also a risk of passing off, where imposters claim to be associated with a brand but are not.  This is becoming increasingly common, as is brand dilution, where uncontrolled hashtag use could potentially cause brands to be “thrown around the internet - and not in the way you want it to be”.

Companies or individuals being disparaged, with apparent impunity, on social media platforms is also on the rise, along with trademark and copyright infringement.  “With copyright infringement, the assumption is that all information emanating from the internet is free to use”, Govender said.  Adding to the problem of copyright infringement is the sheer speed and ease at which infringing material can be spread on social media.

Key steps companies can take to mitigate their IP risk on social media:

  • Create distinctive brands, and obtain trade mark registrations for these.  A distinction should be drawn between formal trade mark registration (offering greater protection) and simply registering domain names or using hashtags to advertise.  In terms of domain name registration, companies should register their primary domains (being the ones they intend to conduct their business through) as well as defensive domain names (being those that potential cyber-squatters may attempt to register, for example, a misspelling of the brand names).
  • Implement social media policies for their employees.  This should include explaining what company IP assets may and may not be shared on social media, explaining the consequences of infringing someone else’s copyright or trade mark, and guiding employees about what to do if they are uncertain about IP compliance.
  • Entrench “routine vigilance” by holding regular training for employees to act as “brand police” and having a designated person to monitor social media conversations about the company.  Companies should also take action where necessary by lodging social media complaints and take-down notices, and taking court action to obtain an interdict against further infringements.

This article first appeared in Business Day Law and Tax review


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