The Web 2.0 Trademark Controversy: Take Note and Take Care

Over the last several days, I have been reading the "discussion" of trademark law that has been taking place in a blog neighborhood near you. As some of you may know, in a past life I was an Intellectual Property attorney -- as they say, once an IP attorney, always an IP attorney. I actually find the intersection of law and business a really interesting, thorny discipline, with very real world implications. Three things fall out of my background and this interest: 1) I am probably slightly more "helpful" (aka, annoying) than your average VC when it comes to discussing IP issues at board meetings; 2) I have the fun of teaching a class called "Intellectual Property and its Impact on Business" at Stanford Business School (the primary objective of which is to help future entrepreneurs know when they should call a lawyer); and 3) I can't help myself, I have to comment on the controversy brewing over CMP's attempt to protect the "Web 2.0" service mark.

For those of you who haven't been following the controversy, here's the Cliff's Notes version:

In 2003, O'Reilly Media executive Dale Dougherty coined the phrase "Web 2.0" and the O'Reilly organization adopted it as a moniker for stuff that isn't Web 1.0.

In 2003, Tim O'Reilly and John Battelle decided to create a conference to talk about this new web stuff and dubbed it the "Web 2.0 Conference." They partnered with CMP Media, a big conference organization, to run the event.

In 2003, CMP Media filed for a service mark in the name "Web 2.0" with respect to conferences and live events.

In 2004, all this Web 2.0 stuff got big.

In 2005, all this Web 2.0 stuff got bigger.

By 2006, I think it is safe to say that the Web 2.0 Conference had become one of the premier events of the year. It was named Conference of the Year in 2005 by the smart folks at Conferenza. It was packed. It was sold out. It was a great conference.

In February 2006, it@cork, a non-profit technology networking organization in Ireland, announced its "it@cork Web 2.0 half day Conference" to be held on June 8, 2006. They invited Tim O'Reilly to speak at the conference, which he politely declined.

May 24, 2006, CMP sent it@cork a Cease and Desist letter informing them that CMP had a pending service mark application in the name "Web 2.0" with respect to conferences and live events. The letter concluded, "CMP hereby demands that you immediately cease and desist from utilizing Web 2.0 as the title of your event and from making any further use of our mark, or any mark that is confusingly similar to it."

On May 25th, Tom Raftery, one of the organizers of the "it@cork Web 2.0 half day Conference" blogged about the Cease and Desist letter and asked his readers for advice on how to deal with the demand from CMP.

By mid-day May 25th the CMP assertion of a servicemark in the name "Web 2.0" had spread like wildfire around the blogsphere.

Between May 25th and May 30th, numerous bloggers chimed in on the controversy, many lashing out at Tim O'Reilly personally. The overwhelming tenor of the discussion was extremely negative. Tim, unfortunately, was on vacation and out of touch -- he did not learn of the issue until he returned at the end of the week.

On May 30th, Tim O'Reilly posted a long and thoughtful response to the "Web 2.0 Service Mark Controversy" in which he stated (and I am vastly oversimplifying) that while he believed that the communications with the it@cork organization had been botched (and he apologized to Tom Raftery for the miscommunication), it was appropriate to assert rights in the service mark "Web 2.0" with respect to conferences and that CMP Media legitimately owned that service mark.

I fear that this post is sounding a little like an exam question (take note future b-school students of mine -- this would make an excellent exam question) and in many ways it is. There are very complicated trademark issues at stake. And, unfortunately, trademark law is a fuzzy discipline. If you were to survey 100 trademark attorneys on this question (and I think I will), you would likely get 100 different answers. There is nothing black and white about trademark law. Some trademarks are stronger than others (e.g., Fandango vs. Tickets.com), different companies can own the same marks in different goods and services (e.g, Monster.com vs. Monster Cable), and some marks gets such wide adoption that they are deemed generic over time and are no longer protected at all (e.g., thermos, aspirin, etc.).

Before I dismiss the trademark question as unanswerable with any certainty -- at least by me, a former-attorney who never specialized in trademark law -- let me just add one more important foundational concept around which all trademark law is built. Trademark law is all about attribution. A trademark is intended to be an identifier of source. In other words, when you go drink a Diet Coke, you can make basic assumptions about the likely taste, quality, safety of the product because you "know" the company that is responsible for producing it (The Coca-Cola Company). And if you were to drink a Lemon Coke, you would make similar assumptions about the taste, quality and safety of the soda because you would assume that it too came from the same source (The Coca-Cola Company). If it turns out that Lemon Coke is not produced by The Coca-Cola Company, that is a breach of Coca-Cola's trademark because 1) Lemon Coke sales are assisted by the false association with Coca-Cola's good reputation, and/or 2) The Coca-Cola Company's reputation is harmed by the assumed association with an inferior product.

Given that trademark law primarily concerns identification of source, the question for me is to what extent the term "Web 2.0" has appropriately become associated with CMP Media or, more specifically, the CMP Media event "The Web 2.0 Conference"? I believe that the answer to that question is that "Web 2.0" when used in the context of a conference or live event is very much associated with Tim O'Reilly and John Battelle's "Web 2.0 Conference" that is run by CMP Media. Given that, and assuming that the "Web 2.0" service mark has been appropriately granted to CMP Media, they certainly have the right to assert their mark against other conferences or live events attempting to use the moniker. Nothing that CMP has done or Tim O'Reilly has said suggests that they are attempting to assert the "Web 2.0" mark more broadly. That would undoubtedly be a different calculus. But, to my mind, there is nothing sinister, nor anti-competitive about registering a service mark for your conference and then attempting to protect that mark and maintain the purity of the association.

Even if my legal analysis is correct, that does not ultimately answer the question of whether or not CMP Media should have sent it@cork a Cease and Desist letter. The reason my course at Stanford B-School is entitled "Intellectual Property and its Effect on Business" rather than the simpler "Intellectual Property" is that I believe Intellectual Property needs to inform business decisions, not dictate them. Entrepreneurs should never take on risks that they don't understand and appreciate fully. But that is not to say that entrepreneurs should never take on risk -- they should just choose to take on that risk after fully exploring its scope. In some cases that risk is Intellectual Property risk (will my ability to enforce my trademark be diminished by my failure to enforce it in this instance?). In other cases that risk is pure business risk (will my long-time supporters turn on me if I enforce my trademark in this instance?). Or perhaps a mixture of the two.

I am quite certain that had CMP fully appreciated the potential business risk of sending a Cease and Desist letter to it@cork, they would not have done so. More importantly, I am certain that if Tim O'Reilly had had the opportunity to consider and comment upon the risks of such aggressive trademark enforcement by CMP, he would have urged them to think better of it. But, alas, whoever ultimately made the decision to crack down on the use of the "Web 2.0" service mark (I suspect it was a lawyer, not a business person) did not fully consider the ramifications of doing so and the result of that action have reverberated throughout the blogsphere.

Despite the incredible vitriol that has been spewed as a result of CMP's actions (and Tim O'Reilly's guilt by association), it is hard for me to believe that this is a hanging offense. Perhaps the communication was handled less delicately than was appropriate, but I believe that CMP Media has every right to enforce its interest in "Web 2.0" when it comes to conferences. In this instance, however, what I believe is less important that what a very vocal community of influencers has to say and they have no doubt spoken. I hope that they will at least take Tim O'Reilly at his word -- those of us who know Tim appreciate him for his unflinching honesty and forthrightness -- and consider his well reasoned apology and response to this controversy. For good or bad, this has been yet another reminder of the incredible power of digital media -- entrepreneurs and VCs alike should take note and take care. I know that I will.

Comments

[Andrew Fife]

In regards to trademarks used in different context there couldn't be a more appropriate example than O'Reilly Media, Inc. and O'Reilly Auto Parts (NASDAQ: ORLY).

In regards to enforcing the trademark, does anyone know if CMP filed to protect the mark in Europe? If not their C&D letter wouldn't mean much at all.

[Tom Fragala]

As CEO of a tiny tech company that got attacked by a huge public company over trademark (company name), I may add some worthwhile advice. It's so simple but it seems to rarely happen:

Pick up the phone and call a human being.

It would have solved this Web 2.0 problem instantly. Call IT@Cork and in a friendly way say,"We love your conference idea. However, we're advised that we shold protect its use in conferences. Do you have any ideas on how we can work out a solution?"

Why do smart, savvy businesspeople think that sending a brutish letter from an attorney is good business? It's stupid. Even if the person is wrong, when they get a nasty letter it's just human nature to react negatively. They'll never want to help you no matter what.

By the way, it took six difficult months of negotiation, but I managed to avoid any repercussions with the public company. We signed a very favorable agreement that protected them and gave me a great, easy solution. How did I do it: I called their general counsel and talked man to man with him. I asked him to help me to find a solution. I am sure he appreciates it to this day.

ENTIRE LEGAL COST TO ME: $0 (ZERO). I didn't even call a lawyer. They spent all the money and wrote up an agreement built around a friendly informal framework I worked out with the general counsel.

[Simon Olson]

Great post!

I read through all 400 or so comments posted on the O'Reilly blog and yours definitely ranks among the best!

You really did an excellent job parsing through the legal issues and highlighting the maddening vagary of trademark law.

One other interesting thing worth mentioning is that, although the controversy owes its origins to the law, it has very little to do with the law.

Reading between the lines, it seems that many people seemed to feel personally betrayed for reasons having nothing to do with the merits of O'Reilly's claim.

Constant memes were that O'Reilly's stance is not consistent with Web 2.0 values and that they hold O'Reilly to a higher standard.

By promoting the term 'Web 2.0' and then later claiming it as their own, albeit in this limited capacity, without first publicly disclosing the fact that they were retaining some rights, people seemed to feel like O'Reilly pulled a 'bait and switch' on them.

It was like when Microsoft started deleting messages from Hotmail accounts over a certain size in order to get people to buy more space: you introduce something to the market, people come to rely on it, and then you take it away.

I don't think that this is what O'Reilly did but I think that this is what people think that they did.

This was compounded by the fact that everyone associates Tim with Web 2.0 and the values that it represents.

It is sad because it seems like a big misunderstanding brought on by (a) O'Reilly's failure to disclose that it was retaining some rights to the name, (b) a bungled enforcement effort, (c) the inability to reach Tim, which allowed the fire to gain strength, (d) innocent but misguided efforts by O'Reilly staff to manage the situation, and (d) Tim's response which, while very good, still managed to somehow miss the heart of the issue.

Anyway, I agree with you, this is not a hanging offense and hope to see things at O'Reilly return to normal.

[David]

Sorry, but it seems it's you who hasn't followed the controversy:

1. The term wasn't coined by anyone connected with O'Reilly

2. O'Reilly has added meaning to the term but O'Reilly is not claiming the service mark

3.CMP has been falsely and misleadingly indicating the service mark was for 'Web 2.0 Conference' - see the 2006 website

4. There was no service mark covering Eire

5. Many conferences had occurred / are planned which have been ignored by CMP. Mesh Canada's Web 2.0 Conference, for example. CMP has clearly not been trying to assert its supposed service mark over anyone who can afford a lawyer

6. Web 2.0 is clearly generic

[Jason M. Lemkin]

Core trademarks are of course very important but secondary stuff like Web 2.0 is rather petty.

It reminds me back in the day when we at BabyCenter.com asked Drugstore.com to stop advertising their baby products as "BabyCenter". We had a registered trademark in "BabyCenter" which of course was the core of the company. Their reponse? "BabyCenter is too generic". That coming from Drugstore.com ;)

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