Digital Millennium Copyright Act and Pinterest

When consumers pin your product/logo on their pinboards, have they violated yourpinterest icon copyright?  Pinterest continues to grow in popularity and small businesses having been on the positive receiving end because it gives them to showcase their company in a creative and visually appealing way.  For instance, if a jewelry boutique wants to wants to promote its brand, it can post wedding material, fashion events highlight jewelry, or photos of celebrities with jewelry that other users can “pin” on their own boards.

Back in 2012, the Washington Post reported that Pinterest was getting pushback from users who removed pinboards because they were concerned that a copyright owner would sue them for copyright infringement.[1] People who upload posts to the site agree that they are the owners of the post or have permission from the owners to post them. This was a problem for Pinterest because technically, posting some else’s content without giving credit to the original owner is risking copyright infringement. Pinterest encourages users to post from the original source and provide appropriate credit.

Now, there is an option for users to opt-out from their material being pinned – however this somewhat defeats the purpose of Pinterest of having people discover and share the things they love. If you want content removed from Pinterest based on alleged infringement of your copyrights, you can fill out a Copyright Infringement Notification Form.[2]

According to Caron Beesley from the U.S. Small Business Administration, there are five steps that one can take to protect their intellectual property (IP) rights.[3] Beesley explains that social media is a necessary evil because on one hand you obtain the easy exposure, but you nonetheless run the risk of social media users misrepresenting your brand or company. For instance, when a social media user reproduces a copyrighted blog, photograph, or video without your knowledge. Below is what Beesley suggests:

  • What’s at Stake? First, understand how IP comes into play on social media sites.

    Trademarks – involves company brand or product names from being used by another company in a similar line of business. For instance, your trademark can appear on your Facebook URL. Reserve your company name on these sites as soon as possible in order to prevent violations.

    Copyright – a creator of an original work or image automatically owns the right to that work once it is published in print or posted to a website. Unless that work is registered with the United States copyright office, you cannot sue for infringement in federal court.

  • Monitor your IP on Social Web. Consider whether and how you are going to police how people are talking about your brand and using your content online. One way to do this is to use Google Alerts[4] and/or other social media monitoring tools such as Hootsuite[5] and TweetDeck[6]. This allows you to monitor key terms and brand names.
  • Is it infringement? Exercise caution when determining what constitutes an IP infringement and what doesn’t. For instance, if someone is using or mentioning your trademark name for informational purposes, like in a status update, this may be considered a fair use of your brand name. If you believe someone is using your copyrighted material with authorization, be moderate in your approach because possibly, the violator does not know they are infringing on your rights.
  • Decide if it’s in your Best Interest to Act. It may not always be the best option to pursue action. For example, the abusing site/user might actually help your brand through affiliation or indirect promotion of your product. Weigh the pros and cons before pursing further action; consider if there would be backlash that you cannot control and if you even have the time and resources to dedicate to this effort.
  • When it’s Time to Act – Pursue Your Options. 
    • Contact the violator directly because most bloggers are not aware that they have infringed upon your rights. Also, take a screen shot of the offending content for reference.
    • Become familiar with Terms of Service of Social Media Sites. Facebook, Twitter, LinkedIn, and Youtube publish their terms of service and complaint procedures on the websites.
    • File a DMCA Infringement Notice with search engines to block the offending website from search results.
    • Puruse legal action. Consult qualified legal counsel because neither the U.S. Copyright Office nor the U.S. Patents and Trademark Office act as a law-enforcing agency. They just maintain registrations and records.

Visit www.niu.edu/Springboard for more information or inquiries.

[1] http://www.washingtonpost.com/business/technology/pinterest-addresses-copyright-concerns/2012/03/15/gIQAijAFES_story.html
[2] https://www.pinterest.com/about/copyright/dmca-pin/
[3] Caron Beesley, 5 Tips for Protecting your Business Intellectual Property in a Social Media World. U.S. Small Business Administration. 6 Aug 2015. <https://www.sba.gov/blogs/5-tips-protecting-your-business-intellectual-property-social-media-world&gt;.
[4] For more information, see https://www.google.com/alerts
[5] For more information, see https://hootsuite.com/
[6] For more information, see https://about.twitter.com/products/tweetdeck

Avoid Being Personally Liable

This post was written by Justine Bugaoisan, a Springboard Graduate Assistant and is based on information provided by Brie A. Crawford, Esquire, a Patent Attorney registered to practice before the United States Patent and Trademark Office. 

This post is for informational purposes only and not for the intention of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.

Business owners could do themselves a big favor by taking minimal steps.[1]

The main objective of an LLC, corporation etc. is to protect the business’ owner’s personal assets in the event a lawsuit is filed against the business.  It is a strong trend among business owners that after filing paperwork for this business entity formation, nothing further needs to be done to avoid personal liability.[2] It is important to follow through with an attorney to prepare Operating Agreements, Shareholder’s Agreements, etc.  In Illinois and many states, these “corporate formalities” are necessary to protect the owner’s personal assets in litigation.  A business owner will need to “prove” to the courts and a plaintiff that the plaintiff cannot “pierce the corporate veil” and obtain personal assets that were separate from the business.

Corporate formalities, which prove the rituals of the business are a bona fide corporation[3], include annual shareholder and board director meetings, even if it is just written communication.  Meetings should be held more often and documented by a corporate secretary with meeting minutes that reflect what was discussed.[4]  The substance of a corporate meeting may not be as significant as the actual meeting itself.[5] Meetings act like a city council board where policies and decisions are discussed, voted on, and approved.  In addition, a corporate record book should be kept that includes corporate actions, capital structure issues, and other relevant corporation matters.  This may be tedious and counterproductive in the middle of trying to keep a business running. However, these steps can pay back in dividends, as courts will contemplate whether there were corporate meetings or corporate formalities in determining whether an owner is personally liable.

Consider Gallagher v. Renconco Builders, Inc. 91 Ill. App. 3d 999, 1006 (1st Dist. 1980) where the owners did not observe corporate formalities, corporate resolutions, meetings, or able to produce any corporate books. The court held the shareholder personally liable for fraud and awarded the plaintiff all damages, repairs, and liquidated damages.

Consult a lawyer or ensure you have the documentation necessary to keep your records updated in order to avoid a big loss.  This may be burdensome to keep up with but the cost can be relatively low and save many headaches and money in litigation in the future.

[1] The information is for informational purposes only and not for the intention of providing legal advice.  You should contact your attorney to obtain advice with respect to any particular issue or problem.

[2] Based on information by Brie A. Crawford, Esquire. Patent Attorney registered to Practice Before the United States Patent and Trademark Office.

[3] 7 Charles Murdock, Illinois Practice Series, Business Organizations § 8:17 (2d ed. 2014).

[4] Reda, Ciprian, Magnone LLC.  Illinois Incorporations. 2011.  Web. 25 Aug. 2014 <http://www.illinois-attorney.com/practice-areas/illinois-corporate-and-business-transactional-law/illinois-incorporations/&gt;

[5] 7 Charles Murdock, Illinois Practice Series, Business Organizations § 8:17 (2d ed. 2014).

 

Pricing and the Mistakes Small Businesses Make

The following blog post was written by Kevin McCarte, a Springboard Graduate Assistant with the MBA program.

Focus on yourself. Small business owners get so caught up in the moment pricethat they don’t stop to think about their pricing and whether or not the price they are setting is correct. Sure, the Wal-Mart’s of he world thrive on the prices they charge to their customers, and the competition may sell a similar product at a lower price. However, using a successful company as a benchmark and simply copying their strategies will not always produce the results small businesses want to achieve.

Cost is the primary factor that companies should consider in order to determine what price they should charge the customer. In a successful, established manufacturing company where all jobs are customizable, pricing will depend on a number of factors: how loyal a customer is to the company, the sales volume, the application for the product, and the target price they have in mind. All of these factors should be considered, but cost is paramount. If a company cannot cover its costs with a healthy profit margin, it will likely shut down.

Consider the economic principle of sticky prices. Once a customer and a business agree to a price, barring a chock to the market, why would that price ever change? Surely as a business becomes more efficient and individual costs for production decrease, the customer will not be informed. It would be foolish on the business’ part to inform the customer that the product they are selling became more profitable, but small business owners never seem to consider the inverse. Once the business and the customer agree to a price, it creates expectations in a customer’s mind, dangerous expectations that can destroy a company. As a business, stealing customers through price manipulation can only last for so long. The customer will expect the business to continues to offer better-than-Wal-Mart pricing, when Wal-Mart already has razor thin margins. All things equal, if prices rise, customers will simply move back to Wal-Mart. A majority of businesses would not be able to survive competing on price alone with Wal-Mart, since economies of scale exist. Not only can Wal-Mart sell the product at a lower price because of its size and volume, but it can also offer those prices because the cost for production on all of its products is also lower than what a small business can produce. Competing on price alone is not a viable option in the business world.

Instead of focusing on what the competition is charging for its product, small business owner should focus on what they can provide their customers. Small businesses have the opportunity to negotiate all prices, since each customer is special and unique to them, while large, established companies have rigid pricing structures and bureaucracy to work through to give customers what they need. Since every customer is unique to them they are able to customize a solution faster and with a higher service level than larger companies. In the dynamic world of business, a fast, customized, and accurate solution can be worth more to customers than simply setting a low price. Every company has different profit margins they can operate with and using the price set by anther company can be a critical mistake. It is important to know what the competition offers, but merely setting your price based on a competitor’s price can be a death sentence. What if they are not adequately covering their costs? Appealing to a customer’s pocketbook may be the easiest way to steal business from the competition, but is it really worth it? Business owners  often feel that profit can be made up solely by increasing the volume of sales, but that may intensify a problem.

Pricing for any start-up business is a crucial part of the future success of a company, however, it is not the only part. One of the most common mistakes a small business owner can make is to believe that the price of their product is going to make or break the company. In fact, customer loyalty is based on perceived value of the product offered. A superior product with higher value will always beat an inferior product. It may be easy to look at another company and attribute their success to their pricing strategies, however, the value behind the pricing is what’s important. If your products are priced higher than your competition, be sure to effectively communicate the reasons why through marketing materials.

 

Ooops! Ignoring Business Fundamentals

Remember the old saying about keeping your friends close and our enemies closer? Well the same tactics apply for business. You should always know what your competitors are up to and where they are headed. It’s much easier to anticipate thSpying - imag from cyberalert.comeir next move and determine how it may impact your business if you are keeping tabs on them.

Over the last several weeks, a scenario has played out amongst the Republican candidates reminiscent of the business lessons I have taught so many times. It’s about business fundamentals and the importance of competitive intelligence. Here’s the recent scenario. A “tweet” is sent by Donald Trump stating that Jeb bush’s domain name became available and he bought it. Jeb Bush’s website was now being redirected to Donald Trump’s. Funny scenario and it highlights how vulnerable businesses are in today’s online marketplace. As the story unfolds, it wasn’t Donald Trump after all who bought the rights to the website, but someone posing to be Donald Trump. And it wasn’t Jeb Bush’s main campaign website (www.jeb2016.com) but an alternative (www.jebbush.com). Originally I was even duped as we have turned into such a visual society. When I saw the tweet and Donald Trump’s name next to it, the post seemed legitimate. Even the tween itself was worded in such a way that you could imagine the presidential candidate making that kind of statement.

The intent of this post is not to delve deep into the intricacies of web domains, cross-pollination of names and AdWords, but to highlight the importance of business fundamentals in an online world. The person that secured the domain name http://www.jebbush.com thought things through, just like a competitor. When Americans search Google with a name that has an easy recall, they will likely use the whole name. The graph below reflects this. The red line, which represents actual searches for the term “Jeb Bush”, has significantly more traction than those searching for “Jeb 2016”, which was the presidential candidate’s primary website.

Jeb bush Searches

I am baffled that Jeb Bush’s campaign did not secure the website http://www.jebbush.com and redirect that “url” to the candidate’s main website. First and foremost, protect your online identity! Ensure domain names to your website are up-to-date and you have secured as many relevant names as possible.

Secondly, protect your intellectual property. Imagine if this scenario had transpired with a competitor from another country. We are all familiar with stores of fictitious storefronts in China illegally pretending they are famous international brands. Imagine if a foreign competitor had bought the rights to a domain name reflecting your business or products and redirected it to their site. It could easily resemble your brand and consumers likely would be unaware that they were ordering from another company.

Lastly, even though this scenario wound up not being one campaign against another, it depicts the power that is now in consumer’s hands. Be diligent. Monitor your company and brand. Your business and reputation depends on it.

Snowstorms Instill Fundamental Skills

I love snow, especially when I learn of a pending storm that may produce totals in the 12-18″ range with temperatures in the mid 20’s. It’s the same routine . . . a quite smile comes over my face followed by a quick little giggle. I especially love when large snowfalls start on a Friday night and the first thing you wake up to Saturday morning iSnowstorms a beautiful fresh blanket of white snow with the fireplace going and a cup of ho cocoa.

Large snowfalls remind us of simpler times. We have time to stop and talk with our neighbors while outside shoveling snow. Everyone is not in a rush to meetings, sporting events, or running errands. Younger neighbors gain fundamental business skills as they carefully hustle older neighbors by shoveling driveways and walkways in order to make some extra money. Snowmen dot front yards and snow angels are scattered about. Nature is truly at one of its finest, purest moments. Nighttime snowfalls are especially peaceful as a calm hushes the hectic world in which we live. It’s amazing to catch a glimpse of snow when the light barely hits it and illuminates a field of diamonds as each snowflake twinkles about.

Snowstorms enable us to maintain essential skills that seem to be fading the in the fast-paced world we live in. Patience, team building, communication, and planning become paramount. The blizzard that halted the eastern part of the United States earlier this year is a perfect example. People helped complete strangers by providing them with food, drink or items to keep them warm. Some families took shifts shoveling the heavy, continuous snow. For all of the good deeds that come to the forefront in events such as this, it’s amazing to watch a few people become unglued. Frustration takes hold when a situation is out of their hands and they cannot control it – whether it is because their streets haven’t been plowed quickly enough or the delivery truck could not make it through the storm to deliver essential supplies to the supermarket. Instant gratification that has infiltrated our consumer-based world is suddenly usurped by Mother Nature.

In times such as this, curling up with a good book, knitting, crossword puzzles, family games, or other hobbies move to the forefront when life is halted for a day or two. It reinforces the fundamental skills needed throughout life.

Cyber Vulnerabilities

The following letter provides insight as to a business’ vulnerability for a cyber attack. Be proactive and take the necessary precautions to protect your business.Cyber_Security_Postage_Ad-Andy Pemberton

Dear Business Owner:

Thank you for making my job so easy. Despite all of the warnings and news about computer breaches, you still haven’t taken any steps to protect yourself. Today was another great day for me as I sat in the local Starbucks hacking into your employee’s company laptop while he sipped his latte and signed on to the free wi-fi. Little did he know, that even though I sat three tables away seeming busy with my own laptop, I was hacking into his computer, stealing passwords and downloading data from your company. I wonder if your competitors would be interested in paying for the information I captured. If not, I know I can sell it on the black market without a problem.

Speaking of company passwords, thanks for allowing your employees to have such easy-to-remember ones. Sometimes it’s laughable how many times an employee reuses the same password, or just one digit is changed.

So when was the last time you actually updated your computer browsers or downloaded the security patches? I thought it was hysterical when you received a system warning that there was an intruder and your staff ignored it. So much for anti-virus software! Oh, the best one was when I contacted your receptionist telling her I was a vendor and needed some help. All I really needed was some additional information to steal an identity and she believed me. The information she provided allowed me to complete my file and now I have everything I need. I told her how grateful I was for her assistance and excellent service.

I also want to applaud you for saving your company money by refusing to send employees to those boring technology security seminars we keep reading about. What a way to save your company money in the short term by not realizing that your decision will help me make more money in the long term. I  will continually be able to re-enter your system at will.

And you thought you didn’t have to pay attention to cyber security, that it was only the large businesses that had to be concerned. Little did you know that we target companies we consider vulnerable which are small and medium sized businesses. A business just like yours.

Sincerely,

The Mad Hacker

P.S. Whatever you do, do not visit NIU’s Springboard (www.niu.edu/springboard) where you will find ways to make my life harder. Make sure your phone blocks calls to (815) 753-6927 where they will put you in touch with strategies and experts to make your sites more secure.

Springboard Analyst Enters the Workforce

A degree just isn’t enough.

“A lot of people coming out of college don’t have the experience that’s needed in the workforce,” says NIU graduate Joe Malak, “Businesses tend to spend more time training new jobthose students.” That’s why an experience like the one offered by NIU Springboard is vital to students entering a revitalized economy. Businesses are hiring and they are looking for proven talent. How do you prove you got what it takes? Just ask Joe how he did it.

Springboard is NIU’s outreach vehicle for businesses within the region, offering contracted “student analysts” to do research to assess competitors, untapped markets, and social media promotion, to name a few of their tasks.

Joe heard about Springboard from a professor during his final semester as an Economics student. “She said [Springboard] was a new initiative and an alternative to the traditional capstone project.” The capstone usually consists of a research paper. Springboard offered the chance to gain experience.

Joe began work as a student analyst early in Springboard’s development. Director Luanne Mayorga guided him and the other few analysts through the basics of research. “The biggest challenges were understanding the research, what could be used, what couldn’t be used, and how to back up findings by looking at different databases,” Joe says.

As a Springboard analyst, Joe’s capstone project was to identify international market trends and possible overseas markets for an agricultural technology manufacturer. This was his first experiential learning project. He would go to on to become a Senior Analyst and supervise the new Springboard recruits on their research.

This experience enabled Joe to be hired as a Quality Assurance Agent with Prime Therapeutics even before he graduated in May 2015 with a BS in Economics. And he points to his time with Springboard as the reason why. “I don’t think that [without Springboard] I would’ve gotten a call from my next employer. Springboard is a great way to prepare yourself for the next level.” The recruiter that hired Joe concurred, stating “normally [we] don’t see recent graduates with these kinds of skills…Springboard sounds like a great program!”

Social Media Recommendations

Most businesses have profiles on Facebook, Twitter, Instagram, and YouTube. Other popular platforms include LinkedIn, Pinterest, and Google Plus. What social media sites should your company be active on? We routinely provide one simple piece of advice – it depends!

There are several factors that can influence your decision of which platform you social media optionsshould use. One of the first qualifiers is whether your primary sales are to consumers (B2C) or other businesses (B2B). If you exclusively sell to businesses, then dig deeper as to whether or not you receive the expected results on consumer-driven platforms such as Facebook. We all know the popularity of Facebook, but it is important to engage with consumers in a mutually beneficial spot. Personally, I disregard Facebook page requests when it features business-related information. I would much rather have that person connect with me via LinkedIn, which is geared to a B2B audiences.

It’s time-consuming to keep up with numerous platforms so identify where you have the most interactions with consumers and eliminate those that are irrelevant to your targeted audience. Another important fact is not to think of social media platforms as another way to sell or market to your audience. If that’s the case, you may find people “unfriend” or “unlike” your page. Some promotional material doesn’t hurt, but you don’t want it to be your focus. Get to know your audience. Find out their interests, struggles, frustrations, and highlights. It may lead you to an idea for a new product. Make sure the content you post on the site is engaging, whereby it encourages people to post. However, be cautious not to make derogatory remarks that may be offensive to some viewers.

Conduct a quick social inventory and determine what is working and what is not. It’s okay to scale back from having a presence on several social media sites and being actively engaged on others.

Local Governments Fighting for Their Tax

Don’t be surprised if local governments start getting a piece of the e-commerce pie. According to the U.S. Small Business Administration, if you conduct business boxing glovesonline but your business has a physical presence in a state, you must collect applicable state and local taxes.[1]  However, a 1992 Supreme Court ruling held that states cannot require online retailers to collect sales tax unless they have a physical presence in the state.

According to the Seventh Circuit of the United States, the Court of Appeals decided in 2010 that a second tax on a resale of a ticket to an entertainment event in Chicago does not fall under the Tax Freedom Act § 110 et seq., 47 U.S.C.A. §151 (hereinafter Internet Tax Freedom Act). The Internet Tax Freedom Act prohibits multiple or discriminatory taxes on electronic commerce on tangible personal property.  Because taxes on Stubhub! are done online, Stubhub!’s defense consisted of being under the umbrella of multiple taxes.  For instance, if a user sells a ticket on the Stubhub! website, Stubhub! would not charge the new user an additional tax because the seller paid the tax on the ticket when she initially bought it.  Chief Judge Easterbrook wrote the opinion on this case:

“the statute does not create ‘tax freedom’ for transactions on the Internet…”
         City of Chicago, Ill. V. StubHub!, Inc., 624 F.3d 363 (7th Cir. 2010).

Chief Judge Easterbrook explained the term “multiple tax” involves two states taxing the same thing without a tax credit.  Thus, because there was only one tax on tickets for events in Chicago, the tax is valid on the ticket (tangible property) even if they are called “multiple taxes.”  In an easier sense, the reselling of tickets is not protected under the Internet Tax Freedom act because the Chicago tax is not discriminatory against Chicago citizens (meaning all tickets are being taxed, not just the tickets outside of Chicago) and other states such as Wisconsin, Indiana, etc. would be taxed the same amount.

The Streamlined Sales Tax Governing Board works to help states modernize sales and tax collection for online practices.[2]  The Streamline Sales Tax Project (SSTP) works to uniform the different state tax codes in order to propose to Congress to create a law that allows states to tax online sales.  The SSTP stresses that companies, whether they be “brick-and-mortar” stores or online remote sellers, should be on the level playing field and be taxed equally.  There are currently 44 states that utilize the Streamlined Sales and Use Tax Agreement by simplifying their tax codes and use tax collection.

As the decision to tax a corporate entity conducting business solely online comes from a United States Court of Appeals, defining whether a state or local government can collect a tax is a hot topic on the table.  Determining which sales tax to charge can be a challenge. However, lawmakers are determined to get the sales tax dollars.
[1] http://www.sba.gov/content/collecting-sales-tax-over-internet
[2]
http://www.streamlinedsalestax.org/

Red Flags for International Inquiries

Red flagsYou just received an international inquiry. Someone found your website and immediately sent you an email to place an order. Before you get too excited, it’s important to do your “due diligence” or vetting of this person/company. Especially if it’s for a large order.

International sales are an exciting step forward for businesses but you need to be cautious because there are numerous scams. Some of these fictitious inquiries are targeted towards a smaller business due to their presumed vulnerability. They anticipate the level of excitement their inquiry will generate and expect you will immediately ship the merchandise.  Below is a list of problematic items:

  • Generic email addresses (such as Gmail)
  • Someone wanting to place a large order but insists that you send samples first so they can evaluate the product
  • Wanting to immediately place a large order without ever seeing the merchandise.
  • A credit card number is in the initial email.
  • Not providing contact information other than the email address (which is generic)
  • Using an English sounding name which doesn’t fit the country they are supposedly from

We suggest you take the following steps to do an initial vetting of a contact:

  • Conduct an online search of the contact’s name and/or company name
  • Does the company have a website? Is the person who contacted you affiliated with the company?
  • Look for social media links associated with the contact. When was the last time they posted? How many likes do they have? Has there been any recent engagement activities or conversations between the company and consumers?
  • Does the company’s inquiry match the industry represented by their online presence?
  • Are there profiles of other executives on the company’s website? If so, conduct an online search for each of the individuals.
  • Remember, there are resources to help you conduct further due diligence through your local U.S. Commercial Service office.

Don’t be afraid of international sales. It’s a great way to expand your business. Just take appropriate precautions to protect yourself from scams.