John Farmer's Column 2011 Leading-Edge Law Group, PLC Attorneys Richmond Virginia

Published in the Richmond Times-Dispatch
January 24, 2011

The Domain Name that Got Away – Getting in on the Domain Name Drop

Here are two phrases for tech-savvy businesses to add to their lexicon: domain name “drop catching” and “getting in on the drop.”

You do not own domain names perpetually. You register them for a period of years. If you don’t renew the registration, the domain name becomes available for registration by others.

There are many reasons why you might want to corral domain names that are already registered.

Sometimes you may want to obtain an already-registered domain name because it matches the desired name of a new business, product or service you wish to launch. Or the desired domain name might be a shorter, more memorable domain name for your current business. Some people buy domain names for resale or to put up pay-per-click advertising.

Also, in my trademark practice, clients often want to acquire registered domain names that are highly similar to their trademarks. Indeed, before you register, use, buy or sell any domain name for any commercial purpose, you should make certain your doing so will not infringe on someone else’s trademark.

Unfortunately, it’s nearly impossible to get a domain name by waiting for its registration expiration and then registering it just like you would with a never-taken domain name. To be successful, you’ll almost certainly have to use a “drop catching” service and pay more than you would for a normal domain name registration.

As for timing, domain names don’t become available on their listed expiration dates, which you can look up on a domain name registrar’s website (e.g., GoDaddy.com) using the “whois” function.

Once the expiration date arrives, the domain name goes in grace periods of about 70 cumulative days during which the current registrant still can renew.

After that, the domain name is put in lockdown for five days and is placed on a “pending delete” list. The domain name cannot be transferred during that time.

Then the domain name is “dropped” back into the pool of domain names available for registration by anyone. The drop occurs somewhere in a three-hour window. It’s a jump ball. The art of trying to register a domain name at that time is called “drop catching.” Competitors are trying to “get in on the drop.”

If the domain name is desirable, you have almost zero chance of beating the pros at the drop. If the domain name is or was used for a website that attracts significant Web traffic, domain name speculators can detect that history and probably will want to register it in order to put up pay-per-click ads or to otherwise monetize the domain name.

Those drop-catching pros have massive computer resources. You will not beat them with your laptop.

Thus, the best approach is to subscribe to a drop-catching service that will watch the drop and snag the domain name for you.

Various online companies offer drop-catching services. They are competing to win the drop, so generally no single company can assure victory. You can use one company and hope it wins, or you can use multiple companies to increase your chances.

Currently, it appears that the biggest players in drop catching are Pool.com, Snapnames and NameJet. With each, you give your credit card information and are charged if and when it successfully obtains the domain name for you. Expect to pay about $60 per domain name if no one else tries to register it using the same drop-catching company.

If others also try to buy at the drop through the same drop-catching company, the domain name probably will be put up at auction, so you’ll have to bid against faceless competitors.

Of course, the better strategy is to register desirable domain names while they are still available. You’ll pay less – only about $10 a year – and spend less time. Business strategy for preemptive domain name registration is a topic for another day.

But if someone else has the domain name you crave, you’ll need a good drop-catching service (or several of them) so that you can be “in on the drop.” Sounds kinda cool, eh?

But what if you don’t think the current owner will let the domain name registration lapse? What can you do to get that must-have domain name?

Start with low expectations. Usually your odds of success are low and the acquisition cost would be high.

There are two groups of options, and then sub-options. The initial choice is between trying to take the domain name by legal force and just trying to buy it.

Here you assert a legal claim in court or through arbitration to take the domain name away.

To do so, you have to have a claim for trademark infringement, cybersquatting or both.

Trademark infringement essentially occurs when you have a trademark – usually a company, product or service name – and someone else later starts using a confusingly similar name for a similar company, product or service.

Cybersquatting essentially is where someone registers, uses or traffics in a domain name with a bad faith intent to profit off of your trademark.

You can assert either claim in court or you can claim cybersquatting in an arbitration process.

In addition to giving you the domain name, a court can also award you damages against the bad guy if you win (but it often does not), while arbitration can give you only the domain name.

Yet, going to court is much more expensive. You’ll probably spend $10,000 even if the bad guy rolls over immediately and lots more if he fights. You can conduct the entire arbitration for around $6000.

While it’s not a prerequisite to using legal force, you will be in a stronger position if you federally registered your trademark before your opponent registered the domain name, and if you’ve been diligent about stopping infringements of your trademark. If these things are not so, you may have a weak case.

Perhaps you don’t have a legal claim, or you’re not willing to pay to assert one. You can just make an offer to the domain name owner to buy it.

Be pessimistic about your chances. Domain name owners usually demand high prices. Low-ball offers almost always fail. Often you get no response.

The best way to make an offer depends on the nature of the current domain name owner. Is the domain name used by a business or personal user, or is it being used by a domainer and domain name reseller?

A domainer is someone who registers zillions of domain names to put up automated pay-per-click websites. A domain name reseller buys domain names for resale. Often a domain name is put to both purposes simultaneously.

Thus, if the domain name you crave presently points to a website that isn’t for a particular company but has lots of links to buying opportunities, it’s probably a domainer.

These folks are slippery. They deal in high volumes of domain names and big money. They demand premium prices. They may not respond at all. They usually mask their identities with domain name proxy registration services.

Contacting them yourself may be impossible and, anyway, you’ll want to have a trusted third party arrange the transfer. Thus, in that situation, I’d use an online acquisition service.

All major U.S.-based domain name registrars offer registered domain name acquisition services. Commonly used services are at GoDaddy.com, Network Solutions, and Register.com.

These services vary somewhat but are easily understood. Each will perform an inexpensive appraisal of most domain names and will try to negotiate a purchase for you.

If the domain name is in use by a business or personal user, such as a company or family website, presumably the demanded selling price will be high. If you have a legal claim against that business or person, you’ll probably have to use it as leverage.

If you are concerned that disclosing your identity will raise the price, you could get an individual or small-firm attorney in another part of the country to be your buying agent. I’ve done that for some clients with modest success.

You also could use an online acquisition service, although that kind of offer might be ignored by a corporate owner or not make it through its spam filter.

Earlier this month, Virginia Tech lost a crucial opening battle in its suit to stop a Blacksburg real estate company from using “Hokie Real Estate” as its name. The case demonstrates limitations on a university’s ability to force every business to pay a license fee to use the school’s nicknames or colors.

First, Virginia Tech claimed that the company’s name was an infringement of its “Hokies” trademark, which the school licenses for putting on all the usual items you find in a modern college bookstore. (Do they still sell books there?)

Second, Virginia Tech also claimed its Hokies trademark is famous and that this fame would be harmed (blurred in trademark-speak) by the company’s name.

Virginia Tech moved for a preliminary injunction to stop the company from using its name pending a full trial. In order to win such a preliminary injunction, you have to show you are likely to win the case. Virginia Tech failed to do so, so it didn’t get the injunction.

Typically, cases settle quickly after a preliminary injunction ruling and settle favorably to the party that won that ruling, so Virginia Tech might be done.

In its trademark infringement claim, Virginia Tech asserted that consumers are likely to be confused into believing that the company is associated with Virginia Tech. Virginia Tech especially pointed to its plans to launch a “Hokie Home” house architectural plan business.

The court expressed skepticism that any consumer would be confused into believing that the real estate company was associated with Virginia Tech. It noted that Virginia Tech was not yet in any business similar to real estate brokerage. Also, the real estate company has used a disclaimer indicating it is not affiliated with the school.

That result makes sense, because a trademark owner generally cannot stop someone from using the same mark or a similar mark on goods or services totally unrelated to what the mark owner sells. That’s why you can have separately owned trademarks for Delta Airlines and Delta Faucets.

Virginia Tech then argued that its Hokies mark is famous, so no one else should be permitted to use “Hokie” for any company, good or service name regardless of whether Virginia Tech is in that business.

The court expressed skepticism about the fame of the Hokie mark. While “Hokie” certainly is a household word, the court pointed out a problem: Over the years Virginia Tech has tolerated many businesses using “Hokie” without having any permission from Virginia Tech to do so.

Thus, it would be hard to find that the real estate company’s name would cause Virginia Tech to lose control of the image of the “Hokie” name when it already has lost control by letting other businesses slide.

The upshot is that universities may not be able to stop businesses from using that university’s nicknames or colors in all company, product or service names.

The universities should be able to stop uses for services the school sells, particularly educational services. Also, it should be able to stop uses on products sold in a typical university bookstore (such as athletic apparel, cups and chairs).

But a university may have a hard time stopping uses that obviously would not originate from the university – like “Cavalier Carwash.” That’s because, by the time the university has become sufficiently well known to have the legal standing to stop (in theory) any unauthorized use of its nicknames or colors for any purpose, a lot of uses will have already sprung up to capitalize on school spirit. Many trademark cattle are then out of the barn.

Modern universities are money-hungry places. They’d like to be able to extract a license fee from anyone who uses their nicknames or colors for any commercial venture no matter how unrelated to the university’s mission. While this case is just a preliminary result, it reminds universities that they don’t have such broad money-extraction powers.

Published in the Richmond Times-Dispatch

April 25, 2011

The New Fast Track for Patent Applications Comes at a Price

The U.S. Patent and Trademark Office (“USPTO”) just launched a program under which you can have your patent application expedited by paying a $4000 surcharge.

Using the program could reduce application processing time to a year, which would shave nearly two years off of average application-processing time. But, unless and until the law changes, this program will cause regular patent applications to go slower than they otherwise would.

Presently it takes a long time to get a U.S. patent. The average time from application filing to final disposition is 33.9 months. That’s too long, and the USPTO is fighting to reduce that time to 20 months by 2015. That’s a daunting target. The USPTO will need help from Congress to get there (more on that below)

Last summer, the USPTO proposed to separate patent applications into three tracks – fast, regular and slow. This new program is the fast track.

The regular track is the way patents presently move through the USPTO – the track the USPTO wants to speed up to 20-month processing.

The slow track would charge lower fees for delayed processing of the application. The USPTO has not yet launched the slow track.

The $4000 fast-track fee is on top of the other filing and processing fees the USPTO charges. When you include those other fees, a corporate applicant would pay $5,520 in total processing fees while a small-entity applicant would pay $4,892.

The USPTO promises fast-track applications will reach final disposition in an average of 12 months, but it does not promise that any individual application will be processed that fast. Also, final disposition could be a result other issuance of a patent issuance, such as final rejection of the application.

The USPTO will begin accepting fast-track applications on May 4. It will accept only 10,000 fast-track applications for the rest of the current federal fiscal year, which runs through September 2011. It then will evaluate whether to accept a higher volume in the future.

Here’s the rub for regular patent applicants: Fast-track applications will go to the front of the line, so they will make regular patent applications go slower unless and until Congress changes how the USPTO is funded.

The USPTO is entirely funded by fees paid by patent and trademark applicants and owners. It receives no money from tax payments.

In fact, in the past the government has siphoned money from the USPTO to use in the general treasury. This is one reason why the patent-application processing time presently is unacceptably slow – because Congress has diverted money paid to the USPTO to do things.

In the budget deal for federal fiscal year 2011 that was just enacted, USPTO funds almost certainly will be diverted again. If the USPTO’s fee-receipt projections hold, it will lose to the Treasury approximately $110 million of its expected receipts of $2.2 billion.

Under fast-track, the USPTO planned to hire extra patent attorneys to process those applications so regular applications would not be slowed. I don’t see how such supplemental hiring will be possible given the diversion of USPTO fees. The USPTO admitted in its publication of the fast-track rules that this program could slow down regular applications for the rest of fiscal year 2011.

The solution is in Congress’s hands. Patent reform bills are pending that would let the USPTO keep all of its fee revenue. Passage would enable the USPTO to use the $4000 expedited-processing fees to hire the extra patent examiners needed to staff the fast track.

Patent reform is close to passing. The Senate has passed a bill and the House just reported a similar bill out of committee. Yet, reform could get shelved over a sticking point, or because of more important or sexier issues.

Patenting fast-track is a potentially attractive value proposition. But the regular patent system needs to go much faster too, and it shouldn’t be slowed by fast-track, so let’s hope patent reform passes soon.

A recent federal appellate court decision will impact the struggle between those who produce online content and those who aggregate or repackage that content. Unless and until Congress intervenes, the aggregators and repackagers are in a dominant position.

This case concerned a financial news aggregation service called TheFlyOnTheWall.com. Fly's business is to obtain the just-released stock buy-sell recommendations issued by financial firms and to sell subscriptions to its summary of those recommendations. For example, Fly found a way of getting Merrill Lynch's recommendations and included them in its subscription.

A financial firm spends a lot of money to produce stock analysis. It distributes that analysis to select firms and individuals hoping they will buy or sell stocks through that financial firm. If the firm discerns that you're making your trades elsewhere, you may get dropped off the distribution list. Thus, such firms use stock buy-sell recommendations to earn commissions.

Fly disrupted that business model by republishing the firm's recommendations as soon as they come out, which is when they are most valuable. The financial firms contended that Fly was stealing the value of their analysis.

This struggle is similar to others occurring online between creators and aggregators of information. For example, many newspapers complain about their online news articles being unfairly used by news aggregation websites. Newspaper websites prefer that you reach their articles by navigating down through their website so you will see more online ad impressions. Also, a snippet posted on a aggregator website might make reading the news article seem unnecessary.

The copyright law poses a problem for content creators. While it protects works such as stock analysis and news stories, it gives protection only to the particular way those stories are written. Copyright law does not protect the ideas and facts contained in those stories.

Generally speaking, you can reproduce facts and ideas expressed in someone else's copyrighted article without permission and without being a copyright infringer, provided you reword the article. On top of that, copyright law prohibits state laws from giving copyright-like protection against reproduction of those ideas and facts. In legal-speak, this is "copyright preemption."

Several decades ago, a narrow exception to copyright preemption began to develop - the "hot-news exception." The idea is that some news has high value and a short shelf life, so the party that expends effort to gather and report that information should be protected from others who would quickly republish the ideas and facts in the original article.

Creators of online content have tried to fit within that exception so they can stop others from free riding off of their content. Those efforts generally have failed. The result in the Fly case appears to make such efforts futile.

Because, in the Fly case, the hot-news exception had been previously recognized by the same appellate court, the judges didn't have power to eliminate the exception. Yet, the court said it was conceptually nearly impossible to square the exception with the clear rule in copyright law that facts and ideas can be reproduced (if they are paraphrased) without permission and with impunity. Consequently, the court construed the hot-news exception so narrowly that it will be nearly impossible to meet.

As long as this decision stands, content creators will have to find other means to protect the value of their content. They can try various technological devices, such as pay walls and online subscription contracts. But the aggregators always find counter-measures.

Congress could give online content creators some protection for the value of their reporting, but that probably won't happen. Congress doesn't tend to address intellectual property issues unless a consensus is reached by all stakeholders.

There are economically powerful forces in the aggregator camp. Those forces argue that the First Amendment to our Constitution and long-standing copyright law protect their actions. Thus, creators will have to find a way to adapt in our electronically free-flowing society.

It's effectively a Ponzi scheme. It depends on a large stream of payments from new customers to fund serving those who have already paid in full. It has a huge unfunded liability in the form of future commitments for which the government has no backing assets. An economic downturn is calamitous because new-customer payments drop precipitously while fully-paid customers still must be served.

Worst of all, in recent decades, Congress has repeatedly redirected customer payments for other purposes, thereby exacerbating the system's financial woes.

Social Security? Public employee pensions? Well, them too, but I'm talking about the U.S. Patent and Trademark Office.

Since 1992, Congress has diverted for other purposes approximately $900 million in fees paid to the Office by its users.

This fee diversion is a major reason why the Office has a huge patent application backlog. The Office desperately needs to hire thousands of additional patent examiners to catch up.

Presently, the average time from patent application filing to the issuance of a patent or final denial of the application is over 33 months. It takes on average over 27 months to get just an initial response to a patent application. The Office has approximately 700,000 unexamined patent applications. At its current staffing levels, if no other patent applications were filed, it would take the Office over 22 months just to process this backlog.

And it wouldn't have the money to do so. The Office receives no money other than the fees paid to it by patent (and trademark registration) applicants and owners. The patent part of the Office depends entirely on new fee payments to fund providing services to those who've already paid their fees.

The solution hangs in the balance between a bill the Senate passed in March and an amended version the House passed in June.

Congress is considering legislation to massively overhaul our patent laws. The version passed by the Senate would permit the Office to keep all of the fees it receives. This would stop future Congressional appropriations committees from diverting the Office's fee revenues for other purposes.

When the House considered the Senate's bill, it gutted this funding reform. The House decided that Congressional appropriations committees should continue to determine how much fee revenue the Office keeps.

The House's position would undermine support for other financial help for the Office that is in the reform bills. The Office persuaded the intellectual property community to agree that the Office should be given the ability to raise user fees without Congressional approval and that it should be permitted to impose temporary surcharges on patent fees.

This additional money is needed for the Office to try to reach its backlog-reduction goals. But the intellectual property community will not support those provisions if Congress might take the new revenue away from the Office.

The Senate will act next. It could adopt the House's position or stand by what it passed already. Any differences would have to be worked out in reconciliation and then pass both houses of Congress again. Senator Tom Coburn is pushing the Senate to stand firm and give the Office financial independence.

All of this is on hold because of the federal debt crisis. In theory, the Senate-House difference ought to be resolved quickly once the crisis has passed. Yet, the larger patent reform effort has been bouncing around Congress for several years.

Our economy is increasingly dependent on the financial success of information technology investments. The most valuable patent years for IT inventions are often the first few years after the invention is launched as a product. The slowness of the patent process is preventing the obtaining of patent protection for IT inventions during those critical early years. This discourages investment in developing these products and, thus, hurts our economy.

In case you haven't heard, the organization that oversees the administration and development of all Internet domain names - the Internet Corporation for Assigned Names and Numbers - recently announced final plans to process applications to launch new generic top-level domain names.

A generic top-level domain name - a "gTLD" in Netspeak - is the part of the domain name to the right of the last dot. The famous ones are .com, .net and .org.

But there already are many other, newer gTLD's, and many of them get little use. For example, when was the last time you visited a website using a domain name ending in .museum? For me, the answer is "never." In fact, there isn't even a website at either www.art.museum or www.history.museum.

Nevertheless, soon anyone will have the chance to apply to launch and operate a new gTLD. I could apply to launch the .triathlete gTLD, and could then sell domain names, such as pokey.triathlete.

Doing so will cost you an application fee of $185,000 and your total start-up expenses probably will run from $500,000 to $2 million, so you'd better pick a gTLD in which you can sell lots of domain name registrations.

Major brand owners are concerned. They think new gTLD's will be just one more space where they will have to defend their brand names - their trademarks - from being pirated or mimicked.

They complain that the turf they must defend online from such attacks keeps expanding - at first a few gTLD's (e.g., .com, .net), then other gTLD's of lower popularity (e.g., .mobi), then MySpace (now just BandSpace?), then Facebook, then Twitter, then LinkedIn. Now they might face a potentially infinite number of gTLD's that could pose problems.

For example, a new gTLD might pirate a famous brand. Someone other than Coca-Cola could try to register .coke as a new gTLD.

That's shouldn't be a big problem. The start-up costs are too high to attract cyberpirates, and owners of famous brands will have plenty of power to watch and defend their interests.

Another problem is that each new gTLD represents yet another area where someone can squat on someone else's trademark by registering a domain name within the gTLD that is too similar that trademark. Domain names in these new gTLD's probably will go on sale around mid-2013.

Right now, savvy businesses preemptively register close domain name variations of their brands in all popular gTLD's. For example, if you sell a line of swimming accessories called SHARKSWIM, you might register SharkSwim.com, SharkSwims.com, SharksSwim.com, SharkSwim.net, SharkSwim.org, and so forth, to keep a bad guy from getting them.

But do you preemptively register SharkSwim.jobs or SharkSwim.coop? Probably not, because those gTLD's aren't popular. Likewise, a new gTLD won't be popular unless it has a hook, like a tie-in to a popular social networking platform.

There also will be waysfor brand owners to defend themselves against cyberpiracy in domain name registrations in these new gTLD's.

For example, owners of federally registered trademarks will be allowed to record their trademarks in a "trademark clearinghouse." Doing so will enable them to get notified when someone tries to register a domain name that effectively matches their trademark and will cause a warning to be sent to anyone trying to register such a domain name.

• Remember to monitor the new gTLD applications when they are published (around April 2012) to see if any pose problems for your brands. Keep checking periodically for new gTLD applications.

• Keep abreast of whether any of these new gTLD's are becoming the next hot thing, such as being the platform for the next popular social networking scene. If one starts to heat up, pre-emptively register your brand names as domain names in the new gTLD space.

• A U.S. trademark registration for each of your key brands (company names, product names, service names, featured taglines) will be your best weapon for doing battle with someone trying to register or use a similar domain name in any new gTLD space. Get this registration now. An after-the-fact effort won't help much if at all.

For me, I'll keep an eye out for any interesting new gTLD's, like .Simpsons or .Swimming. Otherwise, I'll just keep it old school in dotcom land.

By John B. Farmer

The President recently signed legislation that makes big changes to patent law. Here's a list of ten (hopefully) interesting things about it:

1. The new law is 150 pages long and is vague in many parts. It will take about a decade of judicial interpretation to make this law as clear as our old patent law, and that old law lacked clarity in many places.

2. The new law embraces the view that our patent system has been issuing bad patents - patents on things that aren't patentable, such as things that aren't new and things that were obvious from existing technology. The new law creates several enlarged or new obstacles to getting a patent -opportunities for others to show the Patent Office that your technology isn't really new or that it's an obvious improvement. This will make it harder to get broad patent protection in well-established technology fields. Some claim the new law will make it harder for technology startups to get funding.

3. "Business method patents" get singled out for extra scrutiny. Anyone who gets sued on such a patent generally will be able to get that case stayed while the Patent Office reviews the patent. Congress implicitly determined that this technological field has seen a disproportional number of bad patents. Unfortunately, the definition of what constitutes a "business method" is vague.

4. The new law moves us to a system in which the first inventor to file a patent application for an invention will get the patent, which is different from our present system where the first person to invent something gets the patent even if that person is not the first to file a patent application on it. This move to a "first inventor to file" system will pressure inventors to file patent applications faster. Also, it will pressure inventors to file a continual stream of "provisional patent applications," which essentially are placeholders for the future filing of full patent applications.

5. The law increases the risk that an inventor's disclosure of the invention to others prior to filing a patent application may unleash a chain of events that would kill that inventor's patent rights. Many inventors will be wise to get a patent application filed prior to disclosing the invention to the public or, if you are extra cautious, even to potential business partners.

6. If Congress keeps its non-binding promise, the Patent Office will now be allowed to keep all of the fees paid by patent applicants and owners. In the past, Congress diverted a lot of these fees to other federal expenditures. This denied the Patent Office money it needed to do its work and caused a massive backlog of patent applications. Hopefully Congress will keep its hands off the Patent Office's money so it can hire the additional patent examiners it needs to work down its backlog.

7. The law creates a fast track for patent application review for those willing to pay a $4800 surcharge and to abide by some restrictions. This surcharge is discounted for smaller applicants. Yet, paying for the fast-track doesn't exempt you from someone asserting to the Patent Office that your invention isn't really new or that it's an obvious improvement. Thus, you might pay extra and still get bogged down in the Patent Office for years.

9. If you sell an item covered by one or more patents, it's a good idea to put the patent numbers on the item, in order to position yourself to claim damages should someone infringe on your patents. But patents expire after a while. The new law permits companies to give notice of their patents on a website instead, which will save money and hassles.

10. Of course, the new law contains some pork. Among other things, it mandates the creation of a satellite Patent Office in Detroit, Michigan. The statute requires this office be named after Elijah J. McCoy, who was a successful black inventor who did his work in the late 19th and early 20th century. The saying "the real McCoy" is considered by some to originate as a reference to one of his inventions - a device for automatically lubricating metal joints on trains. Railroad engineers purportedly would ask if a train had "the real McCoy system."

Consider the Total Legal and Management Effort Required to Move to the Cloud

Many businesses are eager to move all or part of their business computing systems into the cloud. Before taking the leap, give thought to the total cost and legal issues associated with such a move.

What constitutes cloud computing is fiercely debated, but I define cloud computing as using software and/or data storage that is located remotely and that is accessed via an Internet connection, rather than using computers in your offices or remote computers you own and access by a dedicated transmission line.

• "Software as a service" ("SaaS" in geekspeak) - using, over the Web, a software program that is owned and hosted by someone else (Google Docs, for example).
• Software Hosting - Having a cloud provider host at its facilities some or all of the software you have purchased the right to use ("licensed" in lawyer-speak) and would otherwise run on your own computers, except that you now use that software remotely via a Web connection. For example, my law firm could contract to have its main business software hosted - word processing, document management, email, bookkeeping, and metadata scrubbing.
• Online backup - using a remote service to periodically back up the data stored on computers on your premises.

The biggest issues businesses contemplating moving to the cloud need to understand are the enormity of thecontract negotiation task and how that impacts the cost-benefit analysis.

Entering into a cloud computing contract will (or at least should) force your business to negotiate contractual terms addressing all of the risks and concerns you may have in the future with the computing systems that you will put in the cloud.

If you run your own computer systems and tech staff, you generally can handle these as management issues. If you don't like the way things are being handled, you can change direction or staff.

A cloud computing arrangement forces you to think in advance of all of the computing issues that may arise and to make certain your contract covers those concerns.

For example, if you run your own computer system on your premises, it's a management issue as to whether the systems are running properly and are fairly constantly available for use. If you put those systems in the cloud, you have to negotiate a service-level agreement with the cloud provider that addresses all aspects of the computing systems operating properly and being available enough of the time.

This is specialized contacting stuff, so you can't really do it without a lawyer. Template cloud computing contracts offered by vendors tend to be one-sided against you. You will incur substantial legal bills to negotiate the deal. Formulating the deal will take a lot of management's time. Once you're in the cloud, someone will have to oversee the performance of the cloud provider, both in terms of technical performance and contract compliance.

If you have just a small or medium-sized business, you may not have significant leverage in negotiating with a cloud service provider. Even then, you may be able to negotiate a small addendum to the standard cloud services agreement that covers your most important concerns. Even that will require substantial lawyer involvement and management attention.

That said, here are a few issues that I recommend business owners keep an eye on when having their lawyers negotiate a cloud services agreement:

• What is the minimally acceptable level of uptime functionality for your computing system, and when it will be down for scheduled maintenance?
• What support will you get for technical failures, and what about help-desk support for confused users?
• Data security and confidentiality terms must be carefully crafted, including (i) limiting the geographic locations where data may be stored, (ii) requiring the cloud provider to comply with data security laws, and (iii) addressing who pays the cost of dealing with any data security breaches.
• Make certain you have adequate legal rights to use the software in the cloud in the ways you may need to use it.
• You may later want or need to switch cloud providers or to take functions back in-house, so the contract needs to provide for how you can take your data (and perhaps your software) in a usable format as quickly as you need and without major obstacles.

Do your employees use Twitter to promote your company or its products or services? If so, think about how to keep control over those Twitter accounts if tweeting employees depart.

In case you don't know how Twitter works, if you have a Twitter account, you can post messages of up to 140 characters. Anyone can read your Twitter postings - your "tweets" - just by searching for your Twitter account at Twitter.com.

Once someone finds you, they can "follow" you, which means they can sign up to see your tweets in their "feed." Someone's feed is a constant scroll of the tweets of all of the people that person has chosen to follow, like an email in-box.

When you open a Twitter account, you get a Twitter name - a "handle." That handle begins with an @ sign. For example, mine's @JohnBFarmer. People on Twitter will know you by your handle and can send messages to your feed by including your handle in their messages.

Because tweets don't have to be opened like e-mail, your message can't be missed (although someone can un-follow you if they tire of you). Salesmen love to have large Twitter followings.

Unfortunately, there are no laws, court cases or Twitter terms setting clear rules for whether a Twitter account belongs to an employer or an employee when the account is used for company purposes. While some cases eventually will be decided, how the cases come out will depend upon their particular facts.

Overall, there are things employers can do to position themselves to win Twitter account control, which means there are opposite things employees can do if they would like to take their Twitter accounts to the next job.

Tips for employers: Some of these might reduce the allure of Twitter marketing, so weigh legal protection against marketing punch.

• The best thing you can do is have your employees sign written employment agreements saying that any Twitter accounts (or other social media accounts) used for company purposes belong to the company, not the employee. Require that all Twitter login information and passwords be disclosed to the company both on demand and at the end of employment. Forbid any "goodbye" tweets or any unauthorized tweets encouraging the reader to follow the poster at a different Twitter handle.
• If this policy isn't in a signed employment agreement, at least publish it as company policy, such as in an e-mail you save. This might not win the case, but it could help.
• Require that your employees do any tweeting about the company using Twitter handles that use company's trademarks (company name, product and service names) instead of the individual's name. For example, use @AcmeCorp rather than @JoeSchmoe. You then probably could force the employee to change his Twitter handle if he manages to keep the Twitter account when leaving the company.
• If you followed the previous tip, federally register your trademarks. This will help establish your trademarks in court or if you need to ask Twitter to terminate the Twitter account of a departed employee.
• Require employees to use company Twitter accounts for company purposes only, not for personal messages.
• Have the picture associated with the Twitter account be your company's logo rather than a picture of the tweeting employee.
• Of course, have a social media policy about what is appropriate conduct and whether any internal review or approval must occur prior to posting. There are some legal reasons for doing this, but, above all, you want to control your company's marketing message.

Tips for employees: Employees who want to keep their business-related Twitter accounts will want to do the opposite of the above. In case it isn't obvious:

• Tweet in your own name, not in your company's name.
• Mix in some non-company related tweets.
• Use your picture for your Twitter icon.
• Avoid signing an employment agreement that gives your employer ownership over your Twitter and other social media accounts.
• If your employer claims that all Twitter accounts ever used for any business purposes belong to the company, you may need to make a tough call about whether to speak up, hope for the best or change jobs.

Here's a question for business owners: If you spent a fortune to build a new headquarters for your business, should you save money by not maintaining and securing the property? Would it be better to let the building be looted and crumble?

Of course not, yet business owners commonly choose such false savings when it comes to their trademarks.

A trademark is a product or service name, such as iPad or Google. Usually a company's name and key advertising slogans also are trademarks.

I'll leave how to choose a good trademark for another day, but, in a nutshell, you need to choose a distinctive trademark and then have legal clearance research performed to make certain no identical or similar trademarks are being used to sell similar products or services. And then you should federally register it.

Just as buildings don't maintain themselves, trademarks don't police themselves. A trademark owner needs to watch for, and take prompt action against, infringements of its trademark. If you don't, the trademark will weaken and may eventually die.

What does "infringement" mean? Well, as in horseshoes and hand grenades, close counts in trademarks. When you own a trademark, you not only can stop someone from using the exact same trademark to sell the same product or service, but you also can stop someone from using a confusingly similar trademark to sell even a similar product or service.

This means you have a zone of protection around your trademark - your "trademark turf." How big that turf is depends on several things, such as how inherently distinctive your trademark is and whether you picked a trademark that is unlike any other trademark being used to sell similar products and services.

This is where watching and policing come in. Once you pick and legally clear your trademark and commit to it, you need to immediately begin watching for anyone who invades your trademark turf.

If you choose such "poor man's watching," you need to watch both for problematic trademark registration applications and for new "common law" trademarks.

Registration does not create trademark rights but just strengthens them. Just using a name for a product or service creates a common-law trademark, so you need to watch for new, similar product and service names.

On the registration side, visit the website of the U.S. Patent and Trademark Office every 30 days and use its database search engine to look for problematic new trademark registration applications.

Also monitor trade publications and advertising outlets commonly used in your industry. Use a search engine every month to look for infringements. Set up Google Alerts on your trademarks.

And don't kid yourself. "Poor man's watching" won't catch many problems, and you may not have the trademark legal experience needed to discern what an infringement is.

For important trademarks, consider purchasing a commercial trademark watching service, which costs about $1200 a year. Because such watching services are tricky to use, you probably should hire trademark counsel to periodically review the results and identify infringements.

And when you find an infringement, you must police your trademark. Once you know of an infringement, you have a limited amount of time to act before you lose your ability to stop it - perhaps only weeks. You usually can't wait to see whether the infringer will become a serious player before deciding to take action.

Also, it's easier to stop infringers if you catch them before they become greatly invested in the infringing name.

If you allow several infringements to persist in your trademark turf, your turf will shrink. Other trademarks will be able legally to become more similar to your trademark. If you allow too much trespassing on your turf, eventually your trademark will die.

It all comes down to realistic budgeting. If you build a new headquarters, you have to budget for maintenance and security. Likewise, when building a new brand - a trademark - budget for watching for infringers and shooing them away.

The process just launched for what could be hundreds of new generic top-level domain names ("gTLD's"). If you want to protect your business from cybersquatting and opportunity loss in those domain names, you need to get moving now.

A top-level domain name refers to the part of the domain name after the last dot, such as .com or .org.

Up until now, the organization that controls the domain-name system - the Internet Corporation for Assigned Names and Numbers ("ICANN") - has approved only a few gTLD's.

These top-level domain names are "generic" because they don't refer to a specific country. There also is a topic-level domain name assigned to each country, such as .us for the United States.

ICANN just opened the process for anyone to apply to operate a new generic top-level domain name ("gTLD"). We may see about a couple hundred new gTLD's in a little more than a year and eventually thousands.

Domain names will be sold in most of the new gTLD's. For example, a new gTLD might be .swim, and someone could register the domain name faster.swim, which could be used to put up a website at www.faster.swim.

You may want to defend your trademarks - your product and service names, and perhaps your company name and ad slogans - against cybersquatting in these new domain names.

Also, because sometimes the same word is a trademark for different products from different companies - think CHAMPION spark plugs and CHAMPION sporting goods - you may want to win the race for domain names for such matching trademarks.

Generally speaking, here's what to do:

1. Apply immediately to federally register your trademarks. You will need these registrations to claim certain rights as the new domain names roll out. You must start immediately to have a chance of obtaining these registrations by the time you will need them.

2. Monitor the new gTLD applications to see if any of them are too similar to your trademarks. The application period opened on January 12, 2012. The applications will be published around the end of April 2012. At that time, you will have about seven months to object to a new gTLD.

The applications will be published on ICANN's website. Watch http://newgtlds.icann.org/en/.

3. Around October 2012, ICANN will open a database called the "Trademarks Clearinghouse" in which you can record your trademarks. This won't protect you against new gTLD's that are too similar to your trademarks - there will be another way to deal with that. But such recording will provide you with limited protection against others registering exact-match domain names in the new gTLD's.

For example, if you own the trademark PALMPINES and if someone opens a new gTLD called .trees, you could get limited protection for the potential domain name PalmPines.trees. You might have the chance to register that domain name before others.

4. The first round of new gTLD's could begin selling domain names as soon as January 2013 (it probably will be a few months later). When the new gTLD's open up, consider buying preemptive domain name registrations, to keep the domain names away from others.

Which domain names you may choose to buy in a new gTLD will depend on the popularity of the new gTLD, its relevance to your business, and your budget for protecting yourself here.

5. Use a watching service to monitor for problematic domain name registrations in the new gTLD's. It is impossible to preemptively register every domain name that might cause you problems, so you may need to take action against domain names registered by others.

In addition, use a search engine every month to see what results come up for your trademarks and set up Google Alerts on each of them.

The most important thing, though, is to register your trademarks now. You need to move fast to get those registrations in place in time for them to help you.

by John B. Farmer

Your use of this Web site constitutes acceptance of our terms of use and privacy policy even if you choose not to view them. The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation.