e-commerce data breaches

You Need To Protect Your E-commerce Business From Data Breach Liability

Protecting Your E-Commerce Business From Data Breach Liability

Data breaches pose a significant risk to e-commerce companies. Although the internet has opened up an entirely new world, allowing entrepreneurs to make money online from the comfort of their own homes, it has also opened up potential serious new hazards of which all companies should be aware.

Businesses store a variety of different types of sensitive customer data, including:

  • Names
  • Birthdays
  • Email and mailing addresses
  • Phone numbers
  • Passwords, and
  • Credit card information

At minimum, a data breach can result in serious lack of trust on behalf of your customers. A worst case scenario involving sensitive financial information being leaked could be disastrous for a company. Unfortunately, data breaches are increasingly common – one insurer found that 47% of small businesses experienced a data breach between 2017 and 2018, while 44% of those businesses faced multiple breaches.

Here are some steps you can take to ensure that your company minimizes your risk of data breach liability.

Limit Collection of Customer Data

A great way to avoid potential serious consequences of a data breach is to limit what data you actually collect from customers. Many ecommerce businesses can get away with only having a customer mailing list, and do not need to collect names, birthdates, or phone numbers in order to notify their customers of new items in stock.

It is also a good idea to refrain from storing customer credit card information. Yes, it can be extremely convenient for customers to login and check out without having to re-enter payment details. However, by storing this information, you are setting yourself up for serious potential consequences if this information is leaked.

In fact, storing credit card data is a violation of the PCI Security Standards Council, an international group that creates standards for payment account security. These standards are adopted by every branded credit card company, worldwide.

If you want customers to be able to store credit card information, you can consider working with a third-party payment system, such as PayPal or Amazon Pay, which outsources the security risk to another entity altogether.

Use a Trusted E-Commerce Platform

You should also ensure that your website is hosted on a secure platform. Every web-hosting company should give information regarding customer site security so you can understand how your customer data will be safe.

For example, Wix.com uses Transport Layer Security, which is “the standard security technology for establishing an encrypted link between a web server and a browser.” By using a trusted and seasoned platform, you are getting the benefit of experience from thousands of other users. This will only serve to keep your customers safe.

Use SSL Authentication for Online Checkouts

By using Secure Sockets Layer (SSL) authentication, you will authenticate the identity of your business and encrypt data being sent from your customer to you. This prevents hackers from obtaining the data while it is in transit. Using SSL authentication is another requirement businesses must follow in order to be PCI compliant.

Keep Your Software Up to Date

You should regularly monitor your site and keep all patches and applications up to date. Older versions of particular programs may have “back doors” for hackers to sneak through. It can be annoying to reinstall security updates every time a new leak or bug is found, but by regularly updating, you will make yourself less of a target to hackers.

In addition, you should also use anti-virus software on all company computers and run virus scans on a regular basis. This software should also be regularly updated so that it can catch the latest threats as soon as possible.

Limit Access to Sensitive Data

Another way to protect your customer data is to limit who has access to it. Put a password on your sensitive files to prevent someone from accidentally stumbling into them. If it is not necessary to keep this data on your company’s internal network, consider storing it on a single computer.

Consider which employees have a need to know sensitive information, and then restrict access accordingly. You should also conduct employee training and have policies in place so that your staff does not email, text, or send private customer information through online chat programs, which may become compromised.

Regularly Backup Your Site

If your site is hacked or disabled, you do not want to have to start over completely from scratch. Having weekly or monthly backups saved will let you easily restore your site to what it was before the breach occurred.

Have Your Customers Use Strong Passwords

If you have an option for customers to login to access your site, you need to make sure they use strong password with a combination of numbers, letters, and symbols. By forcing customers set strong passwords, you are helping them keep sensitive data secure.

Invest in Small Business Cyber Insurance

Finally, in order to give yourself greater protection in the event of a data breach of your e-commerce store, you should consider investing in small business cyber insurance. These policies can cover the cost of notifying your customers, investigating the breach, and purchasing credit monitoring services for any customers who were affected by the breach.

Having a trusted insurance carrier to fall back on if the worst happens can help save you a lot of stress and demonstrates to your customers that you are doing everything you can to fix any damage caused by the breach. It is an excellent way to maintain goodwill among your customer base if a breach occurred.

Additionally, even if you are not currently dealing with a data breach, an insurance carrier can help alert you to updated best practices and new security threats as a way to avoid being hacked altogether.

This article is for informational purposes only and does not provide legal advice. Revision Legal has significant experience assisting e-commerce owners through selling their businesses, including negotiating deals, drafting purchase and sales agreements, and assisting with all manners of intellectual property transactions. In order to schedule an appointment with an internet lawyer, contact us today with the form on this page, or call us at 855-473-8474.

Michigan Trademark Lawyer

Trademark AttorneyRevision Legal’s Michigan trademark lawyers are experts in trademark law. Our Michigan trademark attorneys have handled trademark registration, trademark licensing, and trademark litigation in state and federal courts around the United States. Our Michigan trademark lawyers are licensed to practice in the state courts of Michigan, the Eastern District of Michigan, and the Western District of Michigan.

Revision Legal’s trademark lawyers are experienced in all manners of trademark prosecution, defense, and litigation, including:

  1. Trademark registration with the United States Patent and Trademark Office;
  2. International trademark registration;
  3. Trademark Trial and Appeal Board oppositions;
  4. Trademark Trial and Appeal Board cancellations;
  5. Trademark litigation in federal court;
  6. Trademark licensing and merchandising;
  7. Cybersquatting and trademark domain name disputes; and
  8. Trademark monitoring.

Our trademark attorneys regularly handle trademark clearances and trademark registrations, including complex and non-traditional trademark registrations. Our attorneys have represented some of Michigan’s most well known brands, ranging from multinational insurance companies, microbreweries, lifestyle brands, and startups.

If you seek a Michigan trademark lawyer, contact the attorneys at Revision Legal at 855-473-8474 or use the form on this page.

bittorrent copyright defense

BitTorrent Copyright Defense

BitTorrent Copyright Defense

Few things are more frustrating than being sued for something you were not aware was happening and did not do. Unfortunately, this is the situation that many individuals or business owners find themselves when they receive a letter from their Internet Service Provider (ISP) informing them that they are the subject of a copyright lawsuit.

Here is what you need to know about these cases and what your options are.

How BitTorrent Works

BitTorrent is a method for sharing and downloading large files online. There are a number of different BitTorrent programs out there, but they all work by breaking up large files into “bits.”

If you download this file, instead of receiving it from one source, you receive various “bits” from several other computers that have the same file. This lets large files be shared quickly among multiple people.

BitTorrent itself is not illegal – many companies use various protocols to share files internally or to make open source software available to the public.

However, not every file is shared across BitTorrent platforms with the permission of the copyright owner. Movies, books, songs, and television programs are often shared illegally.

Some copyright holders may ignore these downloads, or – as HBO does for Game of Thrones downloaders – send letters requesting that the activity stop. However, others take a much more aggressive stance.

Copyright “Trolls”

Copyright holders who are extremely aggressive in enforcing their copyrights in court are known as copyright trolls.

Although activity online, including downloading movies, television shows, or songs, seems to be anonymous, it is not. Copyright trolls are able to trace the IP address of the user completing the download. The IP address can translate to a physical address and an internet service provider.

With this information, copyright trolls are able to file a complaint in court and ask a judge to issue a subpoena ordering the ISP to turn over the identity of the account-holder. Even if the account-holder is not the person doing the downloading – a very real possibility – this person likely has information about whom the downloader is likely to be.

While this may seem like a fair and logical way to proceed, copyright trolls are infamous for spamming the federal court system with hundreds, if not thousands, of lawsuits at any given time. Some plaintiffs, such as Malibu Media, will sue only one defendant at a time, but others will file lawsuits against dozens of people at one time.

Because it is not humanly possible for these companies to proceed with every lawsuit against every defendant, it is becoming increasingly obvious to judges that these plaintiffs are only looking for quick settlements and to move on to the next victim. One judge issued harsh criticism of this practice last year, saying that the plaintiffs are treating his courtroom “like an ATM.”

In addition to Malibu Media, Strike 3 Holdings has also been actively filing copyright lawsuits in recent months. Both own copyrights to adult material, so the embarrassment factor of being associated with this type of case can encourage people to settle who may be otherwise inclined to fight.

Defending Against a Copyright Troll

If you are dealing with a copyright troll in court, you may be able to raise a number of defenses to fight the claims.

Someone Else is the Infringer

If you know for a fact that someone else did the infringing activity, you may be able to turn this person over to the copyright troll in order to redirect focus from you. However, this can be tricky because you may not want to throw a family member or an otherwise good employee to the mercy of the plaintiff. Occasionally in this situation, the person who actually did the downloading will agree to pay a settlement in order to avoid the risk to both the account-holder and themselves.

The Case was Filed in the Wrong Jurisdiction

In order for a lawsuit to proceed, the case must be filed in the proper jurisdiction. If you have never set foot outside of Michigan, you can not be sued for copyright infringement in Ohio.

Although copyright trolls claim that their methods of determining the location of the infringing activity is highly accurate, this is not necessarily the case.

If you are involved in a copyright lawsuit that was filed somewhere other than where your home is located, you may be able to have the case dismissed for lack of jurisdiction.

The Case was Filed After the Statute of Limitations Expired

A copyright holder must bring a lawsuit within three years; otherwise, they can not bring the case. If a copyright holder attempts to sue you for downloads they claim occurred more than three years ago, the judge can dismiss the case because the troll waited too long.

Settling the Case Outside of Court

Although it is not the answer for everyone, sometimes settlement can be the best option if you are being sued by a copyright troll. If you know that you were the one who did the downloading, you may decide to settle rather than risk paying attorneys fees and statutory damages for infringement.

You may also decide that you do not want any potential negative publicity for your company or yourself. While some judges will allow copyright defendants to proceed anonymously if the copyrighted materials are adult in nature, not every judge will. Rather than take the risk, some people will decide it is in their best interests to settle quietly outside of court.

Preventing Copyright Lawsuits

The best way to protect yourself from being faced with a copyright troll lawsuit is to limit the number of people who can use your WiFi. If this is not possible due to business requirements, you should educate your employees about using the internet responsibly and enact policies designed to prevent this kind of unauthorized use with company materials.

This article is for informational purposes only and does not contain legal advice. If you are being pursued by a copyright troll or have questions regarding  copyright infringement, or other intellectual property matters, contact our experienced Internet Attorneys today with the form on this page, or call us at 855-473-8474.

fair use

Fair Use: Four Factors To Consider

Copyright and “Fair Use”

Being sued for copyright infringement can be a serious matter. Civil statutory damages can be as high as $150,000 per infringement if you are found liable for copying someone else’s work without permission.

However, there are certain affirmative defenses you can raise that would “excuse” the infringing activity. Perhaps the most common affirmative defense is “fair use,” in which you are able to use the copyrighted material without obtaining permission from the copyright holder.

Four Factors to Evaluate Fair Use

Section 107 of the Copyright Act lists four factors that a court should use in determining if someone’s use of a copyrighted work falls into fair use of the work.

1. Purpose And Character of the Use

Courts will consider the purpose and character of the use, including whether the use was commercial in nature or for nonprofit educational purposes.

If I own the copyright on a picture I took, and a business uses that picture in its advertising materials without my permission, this could be considered infringement with no fair use involved.

On the other hand, if a student uses the picture as part of a project for class, the student’s use is more likely to be considered fair use of the photograph.

This is not to say that all commercial transactions are denied the ability to claim fair use. If a graphic artist transforms the photograph into something new and sells this new work, the artist may be successful in pleading a fair use defense.

This “transformative” element is particularly important in avoiding copyright infringement – if you want to use the work, you should add or build on it.

2. Nature of the Copyright Work

The courts will consider the nature of the copyright work, and specifically the amount of creativity that went into the creation of the work.

If the work is largely technical or a news item, such as a simple whitepaper, it is more likely that fair use defenses will be successful, than if the work requires a high degree of creativity, such as a novel or a movie.

3. Amount And Sustainability

Courts will look at the amount and sustainability of the copyright work that has been used.

If you use a small clip of a TV show, song, or movie in an advertisement, it is more likely to be considered fair use than if you use the entire work.

However, even using a small clip may be enough to amount to full infringement, depending on which portion of the work you are using, if it is “the heart and soul” of the work in question.

4. Effect on the Work’s Value

The courts will also look at the effect on the work’s value.

Courts consider both the effect of the defendant’s particular use, as well as the effect that such uses, if widespread, would have on the marketability of the original work in question.

Specifically, courts examine if the original work is losing, or could lose sales, if the use continues and is widespread.

An additional factor that courts typically consider is whether the work is properly attributed to the author.

There is not a specific formula that courts use to determine if the defendant in a copyright infringement case is covered under the fair use defense.

Instead, courts will look at all the facts in the case before making a decision. However, there are a number of scenarios that are more likely to sustain a fair use defense.

Common Fair Use Scenarios

Criticism, Comment, and News Reporting

In general, copyrighted works may be discussed and even sampled by critics. It is common for book or musical album critics to quote an author or songwriter when reviewing a work. Similarly, news reporters are generally allowed to show clips of television or movies, or play a portion of a song without permission from the copyright holder.

This type of fair use defense typically succeeds when there is something transformative about the use. The commentators copying the work are giving an opinion, comparing it to other works, or engaging with it somehow.

The fair use defense has been successful in situations in which the copyright holder attempts to silence critics of the work. Criticism is by nature transformative, so it is permitted under this defense.

Teaching, Scholarship, and Research

Academics are typically also allowed to use copyrighted works without gaining permission of the author.

Teachers are typically allowed to make copies of short stories, book excerpts, poetry, or song lyrics for students in class, up to a certain extent. However, they may not make unauthorized copies of entire novels to distribute to the class, unless those works are old enough to be part of the public domain.

Students and researchers may also quote copyrighted works in projects, reports, and dissertations because they are generally engaging with the work and transforming it into something new.

Parody

Parody, a subset of commentary or criticism, is one of the most common types of fair use defense. Under parody, the work is being used in a humorous way or for social commentary.

Parody requires a certain amount “borrowing” from the original copyrighted work in order to make a point, which is why it is generally permitted as a fair use defense.

Fair Use: Avoiding a Copyright Lawsuit

The best way to prevent a copyright lawsuit is to obtain permission from the copyright holder for your use. However, this is not always possible, especially if tight deadlines are creeping up or if you wish to criticize the content of the copyrighted work.

If you are unable to obtain the permission, the next best thing you can do is ensure that you are adding to the original work by transforming it into something new.

You should also be selective about which portions of the work you utilize. If you take too much, you use may be considered infringement, even if you are offering valid criticism or creating a thoughtful parody of the work in question.

This article is for informational purposes only and does not contain legal advice. If you have questions regarding copyright protection, copyright infringement, or other intellectual property matters, contact our experienced IP attorneys today with the form on this page, or call us at 855-473-8474.

cease and desist letters

Cease And Desist Letters: How To Protect Your Trademarks

Protecting Your Trademarks From Infringers

Trademarks are an important way to protect your brand’s reputation. They also protect consumers because trademarks allow consumers to determine the source or origin of goods or services.

Filing for trademark protection is the first step in enforcing your brand rights. However, in order to maintain protection your brands, you must diligently monitor third party use of these marks and pursue infringers for their illegal use of your brand.

Here are some tips for monitoring and enforcing your trademarks.

Monitoring for Trademark Infringement

The internet makes it easy to conduct searches for potential infringement of your brands. You can set up Google alerts to automatically tell you if your brand names, or similar brands are appearing in the news, on blogs, or on other sites.

You should also make it a regular practice, either once a month or more often, to conduct manual searches of sites allowing individuals or companies to list products, including Amazon, Ebay, and Etsy. Do not forget international sales sites, such as Alibaba and AliExpress for products being sold in international markets.

You can also conduct searches of pending trademark applications using the US Trademark Office’s online search tool. If you discover a pending mark that you believe is similar to a brand that you own, you can oppose that mark’s registration.

Trademark Enforcement

If you determine that someone is infringing on your trademarks, you can choose whether to attempt to resolve the matter outside of court, by sending a cease and desist letter, or you can proceed directly to a trademark infringement lawsuit.

Cease and Desist Letters

Typically, if someone is infringing your marks, you will begin by sending a cease and desist letter to the infringing party. It can be a useful way of ending the infringement without the extra time and expense associated with going to court right off the bat.

A cease and desist letter has four components. First, it introduces you and your legal claim to the trademark, typically by including information regarding your trademark registration.

Second, it identifies the infringing item. For example, if Mary’s t-shirt company owns a trademarked logo that includes the silhouette of a pig surrounded by a circle, and Nancy begins selling shorts that use a logo that is very similar to Mary’s logo, Mary’s cease and desist letter will demonstrate the similarity between the two marks, with photographic evidence.

Third, the cease and desist letter will list the steps you expect the infringing party to take. These steps typically include:

  • Immediately stopping all use of the infringing mark by removing items containing the mark from their online or brick-and-mortar stores, website, or other marketing materials
  • Showing proof of compliance within a certain time period, typically 10 days

Depending on the extent of the infringement, you may also ask the other party to pay you a settlement so that you will not pursue further legal action. It is also possible that the two parties reach a licensing deal, where the other party will start paying your company in order to use your brands on their products.

Finally, your cease and desist letter will inform the other party that you can and will take further legal action by filing a trademark lawsuit if the other party does not comply with your demands.

Although cease and desist letters carry the specific and serious threat of a federal trademark infringement lawsuit, we often hear stories of amusing takes on the letter. For example, in 2017, Bud Light sent a town crier with a scroll to deliver an amusing cease and desist letter to a brewery selling beer utilizing one of A-B InBev’s brands (Bud Light’s parent company). The message got the point across in a humorous but effective way. This can be a useful approach if you are concerned about your company’s public perception but still want to maintain exclusive rights to your brands.

Filing a Trademark Infringement Lawsuit

If your cease and desist letter is unsuccessful in stopping the infringing activity, or if you decide to take a more aggressive approach from the outset, you can file a trademark infringement lawsuit in federal court.

Filing a lawsuit does not foreclose the possibility of settling outside of court – often parties will be in settlement discussions while they are filing motions and taking depositions to prepare for trial.

Because federal lawsuits can take a year or more to resolve, you may not have a quick decision regarding the alleged infringement. However, filing lawsuits against infringers is a way to show that you are serious about enforcing your marks. If you have a history of successfully defeating infringers in court, you will be able to demonstrate your successes in future cease and desist letters you may need to send.

Consequences of Failing to Enforce Your Trademarks

It is important to remember that trademark protection requires that you pursue all infringers that you discover using your brands. Failure to monitor and protect your trademarks carries some serious consequences, including:

  • Loss of the ability to stop a particular infringer, if you knew or should have known that individual or company was infringing your marks
  • Loss of trademark rights altogether if third parties start to use your mark in connection with goods or services similar to your mark.

Works like “aspirin” and “escalator” used to be trademarked, but because these names were used so often by third parties, they became genericized, essential creating a free-for-all allowing everyone to use these terms. This process can happen extremely quickly – for example, Apple created the “App Store” trademark and lost the exclusive right to use the name in less than two  years.

Do not let this happen to your cherished intellectual property – take the time to properly monitor and enforce your brands.

This article is for informational purposes only and does not provide legal advice, nor does it create an attorney-client relationship. If you have questions about trademark filings, contact the experienced trademark attorneys at Revision Legal. We can be reached today by using the form on this page or by calling us at 855-473-8474.

Selling Your E-Commerce Business

Selling Your E-Commerce Business

Selling your e-commerce business that you worked hard to set up can be difficult. It can represent the end of a chapter in your life, and you want to be sure that when you let it go, you do it the right way.

When you decide to sell your e-commerce business, consider the following steps to help maximize your profit while limiting your potential liability.

Understand Your Motivation to Sell

There are a variety of reasons that you may decide it is time to sell your e-commerce business. Maybe you are ready for a new challenge in a different industry. Maybe you want to spend time with your family, or you are ready to retire. Maybe you are just burnt out and want a break.

You should get to the roots of why you want to sell your business because this will help you determine your priorities in the sales process. For example, if you are exploring selling your company because you want to retire in the next six months to a year, you probably are willing to wait a little longer than someone who is one irate customer away from changing their name and catching the next flight to Fiji.

Your psychological motivation will help you set a sales timeline and will influence the ultimate selling price.

Determine What Your Business is Worth

The next step in selling your e-commerce business is to evaluate what it is worth. One estimate is that an e-commerce company typically sells for two to three times the net profit, if the business brings in between $20,000 and $2 million each year.

  • However, you should still weigh a number of factors before setting a sales price:
  • Monthly and annual total revenue
  • Revenue for each product
  • Monthly and annual sales volume
  • Value of your current inventory
  • Amount of time, effort, and money spent on marketing
  • Total number of customers
  • How much it costs to acquire a single customer
  • Number of repeat customers
  • Projected short-term and long-term growth.

You should also do some research on any competitors or similar businesses, to determine what they sold for. Viewing other listings will help you determine what are, and aren not, important in a listing.

Often, if you work with a broker or e-commerce attorney, he or she will help you with these steps so that you can know what to expect before your company hits the market.

Get Your Financial Details in Order

Any serious potential buyer will want to see the financial statements of a company before agreeing to invest in it. You should take the time to get your bookkeeping in order to make it easy for your potential buyers to view proper income statements and balance sheets.

If you need to hire a professional accountant in order to complete this step, it is well worth it. Perspective buyers do not want to spend time sifting through messy paperwork to find the details they are looking for. Disorganization may also raise serious red flags for buyers, who may wonder if you are trying to hide something underneath all the mess.

Find Ways to Increase the Value of Your Business Before Selling it

When trying to increase the value of a home, owners may take the time to make some aesthetic changes to the home, such as updating the paint or having professionals steam clean the carpet.

Similarly, a business owner may decide to invest a little extra time before selling an e-commerce company in order to bring in a potentially higher sale. For an e-commerce business, this may involve updating your website, especially if it’s using an outdated theme or older pictures that take too long to load.

In addition to having your financial statements prepared for potential buyer consideration, you can also prepare forward-thinking documents, showing potential growth areas in the industry and in your customer base. You can also show a history of success, whether from streamlined operations, widespread brand recognition, a large number of repeat customers, or a low number of consumer complaints. In short, be prepared to demonstrate why your business will be successful in the future.

Finding Brokers and Potential Buyers

Whether or not to hire a broker is a personal decision and is dependent on how hands-on you want to be with the sale. It is possible to sell a business without hiring a broker, and there are a number of websites designed to let owners do just that.

Brokers will be able to help you connect with potential buyers and help you negotiate the deal. However, they will typically charge a commission on the sales price for the e-commerce business.

If you decide to hire a broker, you should select someone you feel comfortable with and who can give you a realistic view of what the sales process and timeline will look like.

Prepare Contracts and Close the Deal

Once you have a buyer, you should have purchase and sales agreements drawn up by an experienced e-commerce lawyer. At minimum, your contract should list:

  • The parties involved,
  • What is included in the sale – this can include physical inventory, but also intangible assets such as your intellectual property, as well as debt obligations the buyer will assume as part of the sale
  • Disclosures of known liabilities, such as lawsuits or fines
  • The agreement on how payment will be made, for example as a lump sum or as installment payments
  • Any brokers or agents involved in the deal, and
  • The signatures of the parties

Your attorney will help ensure that everything is covered in the purchase and sale agreement, so that you can look ahead to the next chapter. This article is for informational purposes only and does not provide legal advice. Revision Legal has significant experience assisting e-commerce owners through selling their businesses, including negotiating deals, drafting purchase and sales agreements, and assisting with all manners of intellectual property transactions. In order to schedule an appointment with an internet lawyer, contact us today with the form on this page, or call us at 855-473-8474.

copyright infringement

The 2019 Guide To Avoiding Copyright Infringement

Protecting Your Company From Copyright Issues in 2019

As 2019 begins to swing into gear, it can be a good idea to review your company’s potential liability for copyright disputes and possible copyright infringement issues in order to avoid big surprises later on. Here are a number of issues to think about this year:

Avoiding Copyright Infringement: Knowing Who Owns What

Knowing who owns what is an important component of avoiding copyright infringement. Under the current US framework, a work automatically receives copyright protection when it is created. The question of “who owns the work” can be simple or complicated depending on the employment relationship, or lack thereof, between the creator and the person paying for the creation.

For example, Jill is an accountant. In her free time, she enjoys taking photographs of her dogs. Jill owns the copyright for every photograph she takes. If her boss asks her to take some photographs of the office, however, these photographs may be considered works for hire because they were created within the scope of Jill’s employment, and therefore may be owned by the firm.

On the other hand, Jack is a professional photographer and videographer. Jill’s accounting firm hires Jack to take photographs of all the employees to put on the firm’s website and to assist in creating a series of YouTube videos advertising the firm’s service. Because Jack may be considered an independent contractor, as opposed to an employee of the firm, if the contract hiring Jack does not specifically lay out whether the photographs and videos are works for hire, Jack may retain ultimate ownership of the works.

One way to avoid potential confusion is to clearly lay out ownership before any work is created. Including language in the employee handbook and any employment contracts you offer can educate and remind your employees of the company’s ownership of copyrighted materials. You can also include language in any vendor contracts clearly specifying ownership of any copyrighted works created by the contractor. This will assist in avoiding confusion down the road.

Additionally, if you are working with a creative team in a non-employment relationship, it is important to have a contract specifically laying out copyright ownership before the work is actually created. Otherwise, you may find that only one person actually owns the work. That person may agree to assign ownership to the rest of the team, but is not obligated to.

Auditing Your Website’s Images to Ensure You Have the Proper Licenses

If you use some form of stock imagery on your website, you should do an audit of all the images, even if you outsource web development to a professional graphic designer. Remember – just because something is available online does not mean that it is available for free.

Placing copyrighted material on your website that you do not have permission to use can lead to being asked by the copyright holder to remove the work via a DMCA takedown notice, or even a copyright infringement lawsuit.

Instead, it is much better to use images whose owners give explicit permission for you to use them, even if you have to pay a fee.

When reviewing your existing images or investing in new ones, you should review the image license to understand the terms. What kind of attribution do you need to include on the image? What limitations are there, if any, on using the website in online or printed marketing materials? Is there a one-time licensing fee, or will you owe additional fees as your website brings in more traffic?

While there are some sites that allow certain images to be used at no cost, using them may still come with terms and conditions. For example, some are available for non-profit or educational uses, but not for commercial uses. It is important to read the fine print before you open your company up to potential liability.

Avoiding Copyright Trolls by Limiting Access to Your Company’s Internet

Finally, if your company offers internet to your employees, customers, or the general public, you may be opening yourself to liability for copyright infringement.

If someone uses a BitTorrent program such as Popcorn Time on their smartphone, tablet, or computer while connected to your internet, you may find yourself on the receiving end of a copyright lawsuit. Copyright trolls are owners of copyrighted material, who files hundreds if not thousands of lawsuits against alleged infringers, but rarely, if ever, litigate these cases. They are able to trace downloads of their material to specific locations through an IP address, on the theory that the person paying the bill for the internet account is either the infringer or knows who the infringer is.

Even if neither you nor your employees downloaded copyrighted material without permission, if the bill is in your name, you can get dragged into these suits while the copyright troll pursues the true infringer.

This type of copyright lawsuits were on the rise in 2018, with a handful of copyright holders filing thousands of suits in order to obtain IP records from your internet service provider. Typically, these copyright holders are looking to settle cases outside of court for thousands of dollars, rather than go through a long and arduous litigation process.

One way to limit your exposure to these types of cases is to limit access to your company’s internet by putting in a strong password on the Wi-Fi and reminding your employees about what is, and is not, appropriate use of company resources. However, other businesses find it essential to have open Wi-Fi for customers. This is increasingly common in restaurants, bars, and coffee shops. These companies may need to spend some time defending themselves in court from these cases, to the extent of demonstrating that it is impossible to find the true infringer.

This article is for informational purposes only and does not contain legal advice. If you have questions regarding copyright protection, copyright infringement, or other intellectual property matters, contact our experienced IP attorneys today with the form on this page, or call us at 855-473-8474.

Trademark Registration of Marijuana, CBD, and Hemp Products

Trademark Registration of Marijuana Products

Trademark Registration of Marijuana, Cannabidoil, and Hemp Products

A trademark is any word, slogan, logo, symbol, or design that identifies an organization’s goods or services as unique from another set of goods or services. Trademarks serve two important functions. First, they are a source identifier, allowing one company to distinguish its goods or services from its competitors’, and preventing infringers from benefiting from the public perception earned through the sweat, blood, and tears of the trademark owner. Second, they are an indicator of quality, allowing consumers to know where they bought their products.

Because branding comes into play in every industry, we are seeing interesting developments from a variety of different sectors. For example, in 2017, we saw heavy metal bands challenging long-standing rules on disparagement, and our own Detroit Red Wings look at a potential infringement case against a hate group.

One area in which we will see opportunities for growth in the coming months is in marijuana-related products due to potential changes in definitions at the federal level.

Definitions Under the Controlled Substances Act (CSA)

Although marijuana and related products are legally available to various degrees in 47 states, including Michigan, under the CSA, marijuana is still a Schedule 1 controlled substance, meaning that it has a high potential for abuse with no currently accepted medical value.

Previously, the CSA defined marijuana to include the entire Cannabis Sativa L. plant, not making any distinction between its different parts. However, on January 4, the 2018 Farm Bill was signed into law, which brings about major changes to how the federal government regulates cannabis. 

This bill has created a new, separate definition for “hemp,” defining it as any plant with a tetrahydrocannabinol (THC) level below 0.3%. Hemp produces cannabidiol (CBD) oil, which is promoted as a wellness drug that does not get users high. Instead, it may be useful for treatment of epilepsy, anxiety, as well as for other medical problems.

Due to this new definition, certain strains of cannabis are now legal at the federal level – a major change to the previous drug enforcement regime.

Trademarks for Cannabis, Marijuana, and Related Products

There are a number of provisions under the current statutes and regulations that apply to the trademark registration of marijuana related products.

First, 15 USC 1051 and 15 USC 1127 allow owners of trademarks used in lawful commerce to seek trademark protection. Again, trademarks allow companies to avoid unfair competition, so it makes sense that Congress would not allow companies conducting illegal transactions on the black market to seek legal trademark protection.

Second, if an applicant is requesting a trademark on a service or product that is regulated under another law, 37 CFR 2.69 allows the Trademark Office to determine if the applicant is complying with the applicable standard because use of a mark in commerce must be lawful.

In a 2017 Trademark Trial and Appeal Board case, the Trademark Office refused to issue trademarks that would protect branding on “dispensaries selling marijuana” and “dispensary services.” These actions are illegal, under the CSA’s prohibition on manufacturing distributing, and dispensing controlled substances, including marijuana. As a result, the Board could not register the mark due to the then-definitions in the CSA.

This decision did foresee the reclassification of certain strains of cannabis. Due to the new definition in the 2018 Farm Bill, excluding hemp and CBD from Schedule 1 drugs, we will almost certainly see new trademark applications for these products in the coming months.

Tips for Protecting Your Cannabis-Related Trademarks

Register Early

Now that hemp and Cannabidoil have been removed from the list of controlled substances, if your business is part of the cannabis industry, you should consider filing for trademark protection in order to protect your brand sooner rather than later. Due to the long timeline for trademark registration, it often makes sense to begin the process early.

Canada legalized recreational marijuana in 2018, but already their Intellectual Property Office is facing a bottleneck of cannabis-related brand names. Companies who delayed attempts at registration may be looking at a wait time of over a year before their brand is protected.

A similar “green rush” to register trademarks in the US is expected, so don’t delay getting your application in to avoid potential bottlenecks.

Work With a Lawyer to Get Your Application Right the First Time

At the moment, not all cannabis is legal in the U.S. – only certain strands. This is a new development in a new industry. The attorneys at the Trademark Office may not be aware of the different definitions in what is legal under federal law and what is not. This will not result in an automatic rejection, but it could delay your application.

An experienced trademark attorney will be able to craft your application in a way that clearly demonstrates that the goods or services your company provides are legal under current federal definitions. A clear, technical explanation at the outset can go a long way to smoothing the path to approval and could save months in further office review.

It is also useful to note that the trademark office has approved more than 300 marks specifically related to marijuana that do not involve actions currently prohibited by the CSA. For example, “Professional Marijuana Grower” owns a word mark on the title of their magazine that specifically protects their printed publication. There is a lot of room for business development in the cannabis region that does not involve manufacturing or dispensing the product.

Contact Your Elected Officials

While this last step does not specifically relate to brand protection, it is a smart move for any business in this new industry. If you are involved at all in the marijuana industry, you should contact your Senators and House Representatives to urge their support of changes to the law toward full legalization.

Marijuana is a huge industry, projected to generate $75 billion in sales, if it is fully legal by 2030. This alone should make your elected officials take note of the importance of having their constituents enjoy the full benefits of the law.

This article is for informational purposes only and does not contain legal advice. If you are interested in seeking trademark protection for your marijuana-related product or have other intellectual property questions, our experienced IP attorneys today with the form on this page, or call us at 855-473-8474.

cryptocurrency scams

How to Avoid Getting Scammed With Cryptocurrencies

The rise of cryptocurrencies has been fascinating to watch, but there are a number of common scams associated with with this form of digital currency.

Cryptocurrencies are incredibly exciting and it can be a roller coaster to watch your investment grow and shrink. However, unlike traditional currencies and stocks, cryptocurrency is unregulated. While there are many legitimate companies out there, there are nearly 1,000 dead cryptocurrencies whose coins have no value or were nothing more than scams or Ponzi schemes to begin with.

In Japan, for example, eight men were arrested who collected more than $68 million in cryptocurrency from around 6,000 people as part of a pyramid scheme.

If you are getting started in the world of cryptocurrency investment and trading, here are some areas where you should conduct due diligence before moving forward:

Initial Coin Offerings (ICOs)

ICOs, like IPOs, offer an opportunity to get in at the ground level. The Securities and Exchanges Committee (SEC) has issued a warning against them, stating: “They also bring increased risk of fraud and manipulation because the markets for these assets are less regulated than traditional capital markets.”

In the United States, many ICOs qualify as securities, and must be registered with the SEC. This agency actively investigates companies promoting digital assets and cryptocurrency ICOs that have not registered and are not eligible for an exception. Registration ensures that securities make financial disclosures to investors. It also works to prohibit deceit, misrepresentation, and fraud in the sale and exchange of securities. Information from registered companies is publicly available online to promote truth in securities.

Other countries have taken an even harsher approach against ICOs. For example, South Korea and China have banned ICO fundraising altogether due to the risks involved. Unlike more traditional IPO and stocks, which give investors equity in a company, ICOs give investors tokens that increase in value as more people invest in the company.

Governments are right to be worried – one study suggests that 80% of 2017 ICOs were scams, receiving $1.34 billion in funding. The good news is that, despite the large number of ICO scams out there, they received only 11% of funding given that year. This means that the majority of projects were legitimate, which is good news for the future of this industry.

One way to vet an ICO is to look at the supporting documents and examine the company, as you would for any IPO or similar investment. In addition to researching the company, make sure you look at its whitepaper. Ask yourself, does the whitepaper make sense, or is it full of jargon? Does it sound like it is written by someone who understands the company, or by a freelancer who recycles the same generic blockchain explanation from a dozen other papers?

Moreover, when you ask questions to the company, do they provide real answers that you can understand, or is every answer a regurgitation of empty buzzwords? Play devil’s advocate and question the feasibility of the project. Transparent companies with a legitimate ICO will demonstrate their faith in their companies.

Cryptocurrency Offers

One of the defining features of a cryptocurrency is the potential for anonymity. Is anyone on the internet really who they say they are?

Most people are able to recognize scams in spam email – what are the odds that a Nigerian prince is actually reaching out to you for assistance with his financial issues? However, people sometimes lose their common sense when it comes to new technology that they may not quite understand. In London, for example, nine people invested a combined £150,000 from cold-callers purporting to sell non-existent cryptocurrency over the phone. Do not let this be you!

There is real danger in investing without knowing to whom you are giving money. Do not let the promise of instant riches sway your better judgment. As the SEC warns:

“If an investment sounds too good to be true, be cautious.”

As with any other type of potential investment, if a promoter guarantees returns, if an opportunity sounds too good to be true, or if you are pressured to act quickly, please exercise extreme caution and be aware of the risk that your investment may be lost.”

When you go to the company’s website, does it feel like a real company website, or is the same person doing all the work? Are all the photos of the company stock photos, or is there a real office with real people, not just models? Again, use your judgment. Do not be afraid to turn down an offer if it does not feel right.

Cryptocurrency Exchanges

Finally, you should be cautious about the exchange you use to buy cryptocurrency. Even if you do all your due diligence on a cryptocurrency and feel confident in purchasing the tokens, you should turn an inquiring eye on the exchange you want to use as well.

Exchanges are where cryptocurrencies are traded. They make good money on transaction fees from these trades and are not regulated or secured.

One infamous example is Mt. Gox, one of the original bitcoin exchanges that hosted 70% of all transactions. In 2014, the exchange was hacked and 850,000 bitcoins were lost or had been stolen, valued at $473 million at the time.

Due to the potential for hacks on less-than-secure exchanges, many experts recommend storing your own cryptocurrency in your own wallet, not on the exchange. 

When choosing a cryptocurrency exchange, your due diligence should include the history of the exchange, the number of transactions that occur on the exchange, what kind of security systems are in place to prevent hacks, and how it is insured.

Final Thoughts

You may have noticed a common theme running through this post – the importance of treating cryptocurrency investments and transactions the same way you would treat any other business or financial transaction. At the end of the day, investing in cryptocurrencies can yield great rewards. However, the new technology should not make you forget the common sense you would utilize in any other situation.

This article does not provide legal advice. If you seek an Internet lawyer who understands your business and technology, contact the Internet lawyers at Revision Legal today at 855-4-REVISION.

Bitcoin 101

One of the most exciting internet trends in the past few years has been the rise and decline of bitcoin. Although the currency has been around for a decade, in December 2017 it reached its record high of nearly $20,000 per coin. While the coin’s value has dropped considerably in 2018 – it is currently less than $4,000 per coin – it is likely that we will be hearing more about the currency in 2019 and beyond.

Here is what you should know about bitcoin right now.

What is Bitcoin?

As much as bitcoin has been in the news, it can be a difficult concept to wrap your head around.

Bitcoin is a cryptocurrency, meaning that it can be used to buy products and services. Many businesses, including Revision Legal, have been accepting bitcoin payments for a number of years. Like paper currency, it has value because the people who use it believe it has value and pay money for it, or accept it in exchange for goods or services.

Bitcoin is unregulated by design; there are no government currency controls. Instead, all transactions are publicly stored in a ledger called “blockchain,” which is stored on a peer-to-peer network. All transactions are open and public, but users’ identities are anonymous.

Data miners track and encrypt bitcoin transactions, and save this data in the blockchain, in a similar manner as a family keeps track of expenses in a checkbook. The blockchain records every bitcoin transaction between any two parties in a public record, stored on every data mining system. This makes many people say that the blockchain is indisputable, and argue that bitcoin has a technologically secure system.

New bitcoins are created through data mining. In a nutshell, data miners use software that generates code and verifies bitcoin transactions in the blockchain ledger. In exchange, data miners are eligible to receive bitcoin as payment for their work.

Bitcoins are traded on public or private exchanges. In order to access your coins, you need to store unique private keys – passwords – in a wallet.

How can I Get Rich With Bitcoin?

There are two ways that people can make money off of bitcoin and other cryptocurrencies – data mining and investing in the currency.

Data miners can invest in either hardware systems or in cloud services. If you decide to invest in a hardware system, it will need to be more powerful than typical home or business systems. Basic set-ups begin at $500, but can easily cost thousands of dollars. Many miners today choose to join mining pools, which pool their computing power in order to increase their chances of earning bitcoin, and then split the profits.

While data mining was incredibly profitable years ago, it is becoming less so today due to competition. Data mining also requires a great deal of energy, which also can be a significant investment.

On the other hand, investors buy and trade bitcoin as if it is a stock rather than cash. Some may actively invest in the currency, while others may accept it in lieu of payment for services rendered. For example, in January 2018, rapper 50 cent announced that he had accepted 700 bitcoin for a 2014 album and forgotten about it for several years. He then discovered the account, which was worth $7.8 million.

Anyone who wants to invest in bitcoin can do so. You can buy and sell bitcoin on any of dozens of exchanges. When investing in bitcoin, you should remember:

  • Not every bank allows cryptocurrency purchases, so check with yours to make sure it does before trying to make a purchase.
  • Store your pass keys in a secure wallet. This is the only way you will be able to access your investment. While many exchanges offer wallet services, some experts recommend keeping your passcodes in your personal wallet for maximum security, even going as far as to print your keys, to avoid the possibility of being hacked.

There are also several business opportunities that run parallel to bitcoin, blockchain, and cryptocurrency. For example, IBM has created its own open source blockchain technology called Hyperledger. It is designed to increase data security and streamline transactions. This technology is adaptable to a variety of industries ranging from finance to healthcare, travel, and entertainment.

App developers can create secure wallet storage solutions or a payment platform that makes it easier to use cryptocurrency to purchase goods or services. Data security experts will be needed to monitor and neutralize threats to companies partaking in cryptocurrency transactions.

As the interest in bitcoin grows, there may be more demand from people who want a piece of the action. Bitcoin ATMs and vending machines, which connect to exchanges and allow investors to purchase bitcoin with cash, are popping up around the world. They offer opportunities for developers, designers, and marketers to create, distribute, and maintain these boxes across the country and around the world.

Criticisms of Bitcoin

Although bitcoin is widely praised in the technology community and gaining support in financial districts, there are many concerns about it.

One criticism is that bitcoin is a bubble waiting to burst. As more and more people jump on board, prices increase. However, there is concern that there is only so much growth possible. People may be making money now due to the increased interest and growth in cryptocurrencies, but at some point, further growth may be impossible.

Another concern is that there is nothing backing bitcoin. Even though the US Dollar has not been redeemable by gold or silver in decades, Federal Reserve banks hold collateral equal to the currency in circulation and the Fed stabilizes the market for dollars to avoid extreme fluctuation in value. On the other hand, bitcoin acts more like a stock than currency. It has no intrinsic value and the market can change drastically in a matter of hours.

Additionally, there are many aspects of cryptocurrencies, including the complicated technology and anonymous nature that make it easy for scammers to take advantage of buyers – a topic we will explore in the future.

This article does not provide legal advice. If you seek an Internet lawyer who understands your business and technology, contact the Internet lawyers at Revision Legal today at 855-473-8474.

dmca

Digital Millennium Copyright Act and Internet Service Providers

Digital Millennium Copyright Act and Internet Service Providers

The Digital Millennium Copyright Act (DMCA) was enacted in 1998 to bring the United States up to date with technology and with international intellectual property treaties.

While there are many aspects of the DMCA, one of the most important to web hosts and internet service providers (ISPs) involves the “safe harbor” provisions. Under this provision, if a content provider:

  • Does not have actual knowledge that the material was infringing another’s copyright;
  • Is not aware of facts or circumstances where infringing activity is apparent; and
  • Acts quickly to remove the content, once made aware of it,

Then the content provider will not be liable for monetary damages for copyright infringement.

If your company is a web service provider who wishes to take advantage of the “safe harbor” provisions, you will need to ensure that your organization is registered with the Copyright Office’s DMCA website. This way, you will have a designated agent on file in a public database, so that you will be able to receive notices of copyright infringement, otherwise known as “takedown notices.”

DCMA Takedown Notices

One of the most common ways we see the DMCA’s “safe harbor” provisions in use today is through takedown notices submitted to service providers. If a copyrighted work is being hosted on a website against the wishes of the copyright holder, the copyright holder can send a takedown notice to the website.

This notice should include:

  • The identity and contact information of the person who is requesting the copyrighted material being removed
  • Information of how the individual is related to the copyrighted material. For example, does this person own the copyright, or were they assigned the right to enforce it?
  • Information about the copyrighted material being infringed, including what the copyrighted material is comprised of and a link to the page it is hosted on
  • A statement that this information is accurate, under penalty of perjury, and
  • A physical or digital signature

Once a service provider receives a takedown notice, they must investigate the claims in a timely fashion. Responses to a takedown notice may include:

  • Removal of the copyrighted material, or
  • Disabling access to the copyrighted material, such as deactivating links

If a third-party user is the subject of multiple verified takedown notices, a service provider may decide to terminate that individual’s ability to access their site.

Because copyright is automatically granted, you will be able to enforce certain rights with a DMCA takedown notice, even if it is not registered with the US Copyright Office. This has led to the DMCA to be a useful tool in controlling the spread of “revenge porn” – compromising selfies sent by one individual to another in confidence, which are later posted to websites and visible to anyone online.

Because the individual who took the picture is the copyright owner, that person is able to contact websites like Google or Tumblr and ask for the material to be removed under the DMCA.

Penalties for ISPs That Ignore a DMCA Takedown Notice

If you receive a DCMA takedown notice but fail to act accordingly, you may lose protection of the “safe harbor” provision and can be found liable for copyright infringement.

In 2014 and 2015, the safe harbor provision was put to the test. BMG Rights Management, LLC, filed a lawsuit against Cox Communications Inc., an internet service provider.

BMG’s enforcement arm, Rightscorp, attempts to pursue individuals who download music online without paying for it. Rightscorp will send emails requesting individuals settle these claims for $20-30 per song. However, the only way to trace these individuals is through the ISP. BMG sends copyright notices to ISP providers with messages to pass along to the users. Other ISP providers would simply forward these emails as instructed. However, Cox did not.

BMG then sued Cox, and won $25 million. Cox’s refusal to forward these messages – a reasonable step, according to the judge, to implement a policy to terminate repeat infringers – meant that it was no longer protected by the “safe harbor” provisions, and would therefore be liable for the copyright infringement of its users.

This was the first case of its kind, and it may embolden other copyright holders or enforcement agencies to be more aggressive in ensuring their messages reach their intended audience.

If you receive a DMCA notice and have questions about determining the proper course of action to ensure your organization is eligible for the DMCA’s “safe harbor” provisions, contact an experienced internet attorney today to understand your legal obligations.

Creating a DMCA Compliance Policy

You should create a DMCA compliance policy if your organization:

  • Has a website that allows third-parties to post content, such as social media posts or blog comments;
  • Hosts websites; or
  • Provides internet services to users.

This policy should include:

  • Notice and takedown procedures for receiving, processing, investigating, and acting when a DMCA takedown notice is received;
  • Provisions to routinely monitor your site and automatically remove copyrighted material; and
  • A policy to terminate accounts of or access by repeat infringers.

Many companies have gone one step further, and made their DMCA reporting and compliance policies exceedingly user-friendly and easy to understand.

For example, social media sites like Facebook, Twitter, and Pinterest have streamlined their DMCA compliance policy by creating easy to use fillable forms for copyright holders who believe their work was uploaded without permission.

Similarly, web hosting company A2 Hosting’s DMCA policy walks its users through the elements of a proper takedown notice, listing very clearly the elements needed for an actionable request.

When you create your company policy, you should remember that many people seeking to enforce their copyrights online through the DMCA are not lawyers and may have limited understanding of how the act works. Creating a user-friendly system will make your process of sorting out the real notices significantly easier.

If you have questions regarding how to stay compliant with the DMCA, contact Revision Legal’s team of experienced copyright and internet attorneys through the form on this page, or call 855-473-8474.