IP can be among a company’s most valuable assets. Recognizing this fact, state and federal statutes give rights holders powerful weapons to punish infringement. And in doing so, they encourage aggressive prosecution. Trademark law goes even further; failure to enforce Trademark rights can result in loss of those rights.
This attitude is understandable up to a point. But there is a downside that the law does not take into account—public disapproval of companies perceived as “sue happy” can damage goodwill.
Until recently, this downside wasn’t much of a concern–the plaintiff either won or lost and no more than a tiny minority of customers even knew about the suit. So when companies looking at the competitive landscape see something that looks like it might be infringement, they tend to err on the side of suing. Intellectual property firms often recommend that “the owner should be diligent in giving ‘cease and desist’ notices or taking other actions against infringers.”
In just the last decade, the calculus has changed. The internet (social media, blogs, Facebook, Twitter, etc.) provide defendants with a new weapon with which to fight back—a bullhorn that is as big and loud for a small time blogger or business as for the largest corporation.
In this new Army of Davids landscape, a growing number of companies are being blindsided by public relations debacles. As well known law blogger Eugene Volokh pointed out, “[i]n the Internet era, it has become commonplace for people to publish cease-and-desist letters.”
There are myriad examples of companies coming to regret their protective strategy. A poorly researched cease and desist letter sent by the attorneys for Academic Advantage embarrassed the company and cost their law firm a client. An online website, Chillingeffects.org, was created by the Electronic Frontier Foundation and several prominent law schools to help protect first amendment rights against IP lawsuit abuse.
So far, the damage is sporadic and anecdotal, but as the public becomes more sophisticated about social media, the danger will grow to the point that corporate attorneys will have no choice but to do something most will resist: cooperate with marketing departments. The one size fits all cease and desist letter followed by settlement or lawsuit must be replaced by a more nuanced approach that is less confrontational, less aggressive.
In the long run, the law needs to change to reflect the new reality. But companies need to find a way to tread more lightly now.