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ABSTRACT

We are using this paper to present one of the most vexing challenges that Intellectual Property (IP) protection faces in the Digital Age. These are digital Web Services.

Those ubiquitous innovations allow the world to see and use our creations. But they also allow copycats to easily make duplicates to their own advantage.

Creating even more of a challenge, the very Uniform Resource Locator (URL) itself, which often holds all or part of our protected trademarks, is vulnerable for others to use or even hold for ransom, to a certain extent. This can be, as IP specialists often say, “A terrible situation”.

This information is useful for any enterprise who has an online business presence that generates a significant percentage of their revenue.

As a result, if you understand even a basic part of these concepts, it would be helpful. This is especially true for those businesses who provide or support online fulfillment services.

This knowledge is also useful for Legal Services firms when offering IP protection options to those clients who offer online services as a major part of their business revenue.

INTRODUCTION

With so many of today’s business operations relying on web services to conduct commerce, it’s no wonder that the degree of product proliferation for web apps continues to increase.

In fact, the dot-com boom never really left us. We are now living a “networked reality” that closely matches all the hype heard in the late ‘90s. Consequently, Intellectual Property (IP) has taken an increasingly important role in protecting a much sought-after market share in this highly competitive field.

As part of the networked reality, the market for web services has become progressively more crowded. Each prediction of it reaching a stage of maturity proves to be false as networking applications continue to reinvent the competitive landscape.

Now, with an explosion of mobile applications occurring on a global scale, the number of networked users continues to expand and promises to roll on into the next decade.

One of the unwanted side effects of all this proliferation is that illegal copies and knockoffs of winning web creations also continue to popup at a record pace.

Considering these trends, IP experts recommend that successful web service providers apply IP protections aggressively. The desired result is to keep market share in a digital world where cheaters can easily duplicate content, algorithms, and functionality. Dealing with illegal versions is no picnic!

Even with the support provided by legislation, such as the Digital Millennium Copyright Act of 1998, the task of policing web knockoffs remains a continuous and challenging effort.

WEB-CENTRIC APPS

It is possible for an Intellectual Property (IP) Group to apply the major forms of IP in concert to effectively protect a web services enterprise. While reading further, you should take note that supporting these protections does not come free. The total costs can be significant. But the costs of ignoring it can run even higher.

In a Top IP Theft Statistics Report published by Cyberhaven in January 2024, the total costs due to the thefts of American Intellectual Property was $1.12 billion in 2023, a 36% increase over 2022.

This problem is not going to improve unless we invest all we can to protect our IP. If a competitor steals a company’s IP assets, the results can be devastating.

A knowledgeable web service enterprise can use some or all these IP areas to protect a variety of published materials and online processing functions:

• Trademarks
• Domain Names
• Copyrights
• Patents
• Trade Secrets

Note that a company may apply more IP protection methods to protect specialized types of products and services, but the above list shows the main areas.

It is important to note that the final resolution of these protections may take more or less time to remedy, depending on the effectiveness of the statute that a company chooses to apply.

We will describe some of the more commonly used IP resources, as they relate to a web service business in various roles, in more detail below.

TRADEMARKS

Once an enterprise’s Sales & Marketing group settles on a trade name for a new business, expansion of an existing one, or new product line, a formal trademark proposal should be prepared.  The goal is for the company to file the name of its business or product line under a formal, registered, Trademark.

Initially, the IP Group creates a trademark proposal associated with the “planned” part of the Product Portfolio and has it approved by management. The IP Group will then conduct a search to see if there are any other companies/products using the name.

If there is a conflict, the team must repeat the process until they find a suitable trademark.  Preparation of a trademark application is the result, and the IP Group may need to process it in parallel with a product development effort or formation of a new company.

Upon completing the new name selection process, the Internet Domain Name decision process may begin. The company ultimately uses the final “mark” as either as part of or all their web domain name.

Many firms use the trademark for their company name as a basis for a master domain name with their product lines as sub-pages under their main web page. In this case, no registered domain name identification need be associated with the product.

However, there are situations where a product trademark is so strong that it is necessary for a company to obtain a domain name matching the product trademark. For example, General Motors® created the web page cadillac.com to support the GM’s well-known Cadillac vehicle brand rather than use their gm.com corporate website.

DOMAIN NAMES

A company normally expresses their trademark as letters or words contained in the domain name, also with a collection of name variations created just to ward off would-be competitors. For example, a company named Ford Motor Company® may own a collection of commercial domain name variations including ford.com and fordcredit.com.

Ideally, a company then expresses one trademark as the multiple domain names making up the collection under the same ownership, just separate divisions, or business interests.

Because the Internet Corporation for Assigned Names and Numbers (ICANN) centrally controls Domain Names, once ICANN clears ownership of a Domain Name such as google.com, it is ready to go. The user then codifies a web site, sets it up, and brings it online for worldwide use.

Web enterprises should obtain ICANN digital rights for a domain name right along with their trademark filing process to prevent others from getting it first. That way, it also minimizes the chances of a competitor challenging it later.

Since ICANN controls the usage of domain names on a global scale, a company may effectively block literal knockoffs. The design of the internet naming system makes it impossible to use a literal domain name that someone else owns.

Normally, two parties can complete a mutually agreed transfer for a new owner to use the domain name. In some cases, ICANN may have legal justification to allow another owner to have it transferred by using a legal challenge via arbitration.

The presence of these regulations and legal factors that differ in each market. This leads companies to develop specific strategies for handling domain names.

DOMAIN NAME STRATEGIES

Most companies follow the practice of obtaining the rights to the domain name collection, either when their trademark receives approval, or later, after the trademark becomes registered. Note that there is a distinct possibility that another party may apply for and get a domain name first.

In a competitive situation, a company can use ICANN rulings to “pull” the domain names standing for owned trademarks from others. This process can take a while, but a company can complete the domain transfer by being persistent.

A domain name becomes a functional entity using a networked host computer system that generates an expense. Use of the domain name only continues if the company pays the required maintenance fees, and a competitor does not successfully challenge its fair use.

The ongoing expenses for online services are relatively easy to manage as compared to other industries such as manufacturing. These low barriers to entry also encourage a lot of competition. This factor alone makes effective IP protection necessary.

Because of the low maintenance costs, it is not surprising that people (Cyber Squatters) hold onto domain names and offer them for sale. Often, the price is set just below the cost of filing an ICANN challenge, and so it goes, another market opportunity for some random operator.

When managing an online business, it is best for a company to focus on the parallels between domains and trademarks. It is often a cost-effective procedure to apply for the collection of related domains when the IP Group first files for a trademark registration.

Today, with nearly every business having a web presence, this is essential and should be part of any go-to-market strategy.

WEB PAGE COPYRIGHTS

Savvy companies use copyright law to protect every part of a web page’s content. This is because the ownership of content such as print copy, graphic designs, media, presentations, photographs, and animations all fall under copyright law.

An IP Group registers these works nationally with the copyright office. For instance, if Sales & Marketing believes that special pictures and music are critical to making a website stand out from others, registering these items is especially important.

Copyright law automatically protects any business to some extent. However, if a company registers a copyright for their material with the copyright office, they can add statutory damages to the actual damages. In many cases, the statutory damages for registered material will exceed the actual damages.

Further, a company must prove the dollar amount for actual damages if they take the case to court. Most of the time a legal threat of the 6-figure statutory damage fine is enough to get a good settlement and to force an infringer to stop their activities.

Due to the cost associated with formal copyright registrations, it is a good idea for creative groups like Web Development or Marketing to earmark vulnerable areas of the content and share them with the IP Group. Examples of this content are what they consider probable targets for illegal copying.

Going forward, each company group should communicate new creative info to the IP Group. The IP Group will then be able to control the overall cost using properly targeted registrations while still putting a highly effective deterrent in place for cheaters.

WEB PAGE TRADE SECRETS

During the creation of a complex web service, engineers in Product Development often create an environment that is extremely complicated and requires many team hours to create. The design information for this web service would tangibly help a competitor. That is, if they could get their hands on the source code and design data.

Also, some designs are so proprietary that the methods used to solve the problem are not suitable for the public disclosure that comes with a patent. Lawyers refer to this type of Intellectual Property as a Trade Secret.

Because of these competitive vulnerabilities, it is important that well-documented trade secrets stay securely saved and protected during transmission. It is also essential that the involved developers sign a Non-Disclosure Agreement (NDA).

A well-drafted NDA includes specific information that puts the developer on notice as to what materials are trade secrets and informs them that the information should never be disclosed to any 3rd party.

There are various legal means to penalize those who steal trade secrets. These protections normally are a significant deterrent, thus allowing a company’s competitive investments to stay intact.

A popular example of a trade secret is the Coca-Cola formula. It has remained with the company for many years, and they have never patented it. Given the long life of this product, why publish a public disclosure, in the form of a patent, that affords only 20 years of protection?

Note: Trade secrets only stay trade secrets as long as a company prevents any compromising security breaches.

PROCESS FOCUS

Below is a diagram of the process areas that take part in coordinating IP projects and creating solutions in an enterprise. The information previously covered involves active participation in the areas shown on the diagram.

Of course, if IP issues expand enough to require the participation of more groups, the process interactions will increase accordingly.

• Sales & Marketing
• Product Developmemt
• Product Portfolio
• Project Backlog
• Product Management
• Corporate Governance
• IP Legal

CONCLUSION

Web services are not exempt from requiring the full gambit of IP protections. Do not skimp on this for a web enterprise.

A web services enterprise is as competitive as any other publishing business and may also have valuable utility functionality that requires patent protection.

Considering the way employees move from company-to-company, it is also important to school everyone on the seriousness of letting out secret data. This includes information that they may have taken home or developed off site.

When using contractors, it is also important to lock in all their work to guarantee the company has rights for everything that they create as part of their contract.

If employees ever create patentable work during a development project, pay special attention to listing only those contributing employees as the inventors. Managing outside inventors has its own set of problems.

It is a good idea to get all these items on the table when a company conceives new products and forms development teams, the earlier in the process the better.