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Why 'brandjacking' matters, and how to handle potential threats

· Brandjacking,Brand Protection,Trademark

Sometimes self-inflicted, oftentimes nefarious, brandjacking is when a third-party takes control of a brand, with potentially disastrous results

Companies in the entertainment, consumer, retail, food and beverage and pharmaceutical industries can attest, product piracy and brand protection have always been an issue in markets where copyright enforcement is lax.

But brandjacking is not only attributed to the physical domain. It is also a major challenge when operating online.

Brandjacking, which is exactly what it sounds like, happens when a person or group hijacks a brand to negatively affect the company’s reputation.

There are many examples on social media.

The activist NGO named ‘The Toxic Effect’ has now been pushing their campaign #AskChevron for more than 2 years. This campaign, set up and paid for by the NGO in 2014, was a negative and purposely defamatory agenda against one of the world’s largest oil companies that continued to trend into 2016.

Greenpeace’s own viral Youtube campaign against Lego resulted in the non-renewal of a 68 million pound deal. After it racked up over 3 million views, it was initially blocked on YouTube for a copyright claim. Today, those numbers have now hit 7.7 million views.

There are also thousands of examples of social campaigns gone wrong. When McDonald’s asked for #McD stories, they were rewarded with images of rats in their stores.

When the New York Police Department asked Twitter users to share a photo with a New York Police Officer with the hashtag #myNYPD, what they expected was thousands of happy snaps with police officers. Instead, they received photographs of police brutality.

Cybersquatting and Domain Kiting

In the online context, the scale of the cybersquatting problem is significant.

The dictionary definition of Cybersquatting is: “the registration of a commercially valuable Internetdomain name, asa trademark, with the intention of selling it or profiting from its use”.

A study released by MarkMonitor, a privately held firm that alerts companies if their brand is being abused online, attempted to quantify the scale of the problem. They found more than 286,000 instances of cybersquatting for the 25 brands it studied — an average of 11,400 instances per brand for a 30-day period. MarkMonitor’s study also found more than 11,000 cases of domain kiting carried out against the 25 companies in the sample group.

Domain Kiting means registering and deleting domain names in order to take advantage of a 5-day grace period in order to run a website for free. The primary target of domain kiting were financial institutions, which accounted for 980 incidents of kiting attacks within MarkMonitor’s testing group. Domain kiting makes it almost impossible for big brands to secure their domains putting their reputation at risk to those that want to redirect clients to phishing sites or to defame them.

What about when companies purposely steal your brand via domain names?

If you own a registered trademark, there is an excellent chance that a cybersquatter has already obtained Internet domain names that are identical or confusingly similar to your mark. These Domain names are purposely designed to infringe on your trademark.

While there are many cases where this is out of sheer ignorance because the registrant does not understand the prevailing country trademark laws, or the legal significance and consequences of trademark infringement, there are many more sinister reasons for registration.

Today Domain names are a billion dollar business. The companies that issue domain names and the companies that facilitate domain name appraisals, auctions and sales all have a vested interest.

So just how do you determine if a domain name might infringe on your trademark?

First, check out BetterWhois or WHOIS lookup for infringing domain names. Both of these sites provide a comprehensive database of registered domain names.

 

Second, assess the risk. For example, take the hypothetical eLearning Production company ABC Learning

  • www.abclearn.com -> pay per click -> Global Impact – Target Market –  High Priority – Enforce
  • www.abclearn.com.my -> adult content -> Malaysia -> Secondary Market – High Priority for reputation risk – Enforce
  • www.ripoff.abclearn.co.uk. -> slander -> UK -> Not active -> Priority -> Potential High Priority -> Monitor for change
  • www.abclearn.com.ph -> children’s learning products -> Philippines -> Not active -> Low Priority -> Archive for compliance.

Third, if the domain name is infringing, depending on its risk to your mark, you have 6 options:

  1. Do nothing
  2. Send a Cease and Desist letter on your letter head
  3. Have your lawyer send a Cease and Desist letter
  4. Enter into a trademark license agreement with the infringer (often costly and not ideal)
  5. File an ICANN arbitration action to obtain the infringing domain name
  6. File a lawsuit in federal court for violation of the Anticybersquatting Consumer Protection Act (ACPA) or for .sg see the Singapore Domain Name Dispute Resolution Policy

The reality is that today there is over 110 million domain names and clearly from the example above from the production company ABC Learning, not all domain infringements are equal.

  • Consider the similarity of the domain to your brand
  • The manner and content related to its use
  • Tolerance of the brand to infringement
  • The market associated with the content
  • The reach and consumer audience of the infringement

BrandJacking Challenges Offline

In China, brandjacking reached new levels last year in the banking sector. Goldman Sachs (Shenzhen) Financial Leasing was discovered in August 2015 after a letter was sent by a US casino workers union to Chinese anti-corruption officials asking them to investigate the firm.

This was discovered soon after a pirate branch of the Asian heavyweight China Construction Bank (CCB) offered customers deposits but no withdrawals. A 39-year-old Shandong farmer was the mastermind. It had operated for a month in Shanzai, before one unsuspecting customer was refused a withdrawal of RMB40,000 (US$6,000). It was staffed by the entrepreneur’s 15 year old daughter and her schoolmates. They had branded card readers, teller counters and signs.

So just how do you determine if a domain name might infringe on your trademark?

First, check out BetterWhois or WHOIS lookup for infringing domain names. Both of these sites provide a comprehensive database of registered domain names.

Despite being identical as CCB, this fake bank didn’t do as well as another swindle-job in Nanjing. In 2015, the bank stole RMB200 million (US$30 million) from unsuspecting customers before it was discovered.

This is not the first instance of a fake outlet of a major company. In 2011, US blogger Jessica Angelson noticed a fake Apple store in Kunming. Kunming is the capital city of Yunan Province in Southwest China. It turns out that they had even launched a chain of fake stores.

The fake retail chain’s signs looked real. The products looked real. Allegedly, even the staff all thought they worked for Steve Jobs.

Many big consumer brands have faced issues with ‘brandjacking’ through store replicas across China and other emerging markets. These include Ikea, Disney, D&G, Nike, Starbucks and McDonald’s. Unfortunately, in countries where there is poor local enforcement of copyright law, it makes it difficult to close these stores down.

Reputational Risk Mitigation

There are three typical approaches to mitigating ‘brandjacking':

  • Social, media and mark monitoring of the brand (Check out MarkMonitor),
  • Pre-emptive registration of trademarks and domain names
  • Strong and persistent legal action against those responsible for the infringement.

Brandjacking, if not effectively managed, puts customers, revenue, credibility and reputations at risk. Moreover, the company can be held hostage to a brandjackers demands.

Buyer beware. Company beware. Brandjacking, just like piracy, is now big business.

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