Google’s new trademark policy, which will allow in certain circumstances the use of registered trademark names by non-trademark holders within an ad copy, will become effective on June 15th, 2009. Under Google’s current trademark policy, trademark names can be used without restrictions only in keyword lists. Trademark holders can request that Google bar the use of their trademarks in ad copies.

Under the new policy, however, resellers of a trademarked product and sellers of component parts to the product or product accessories will be able to use the trademarked names without restrictions. Unimpeded use of trademarks will also be extended to informational reviews and articles or written content providing general information about a trademarked product.

While it is true that Google’s more permissive policy will likely result in increased sales, trademarked companies still remain worried about the effect of having their brand names used by Internet advertising services.

Last Thursday, Google employee Dan Friedman wrote a statement on the company’s web site saying that Google’s decision was fueled by a desire to fall in line with the rest of the industry. “We are adjusting our trademark policy in the U.S. to allow some ads to use trademarks in the ad text,” Friedman wrote. “This change will bring Google’s policy on trademark use in ad text more in line with the industry standard.”

Previously, Google had maintained a strict rule of not selling trademarked terms as keywords. This was because the sale of such search terms to rival companies would enable some companies to use the trademarks in their ad copies so that related searches would pull up more links to the rivals’ web sites than links to the web site of the actual trademark owner. In other words, rivals could use a competitor’s trademark.

Such a case, many argue, could prove disastrous for companies that have spent years building up the popularity of their trademarks. At the same time, a set up like this would be incredibly profitable for Google, which does not distinguish between trademark owner and rival when looking for the highest bidder of a search keyword.

As part of its impetus for changing its trademark policy, Google cited the current policy’s inability to allow companies that sell multiple brands of products to use the name of their own brands in their purchased Google advertisements. This means that if you are a phone system provider, you can advertise specific types of phone systems in your ad copy. The new policy will also allow individuals who “don’t own a trademark, or who don’t have explicit approval from the trademark owner, to use it” under certain circumstances. These new parameters for trademark use, wrote Google’s Friedman, “will help you [i.e. advertisers] to create more narrowly targeted ad text that highlights your specific inventory.”

Google is offering to investigate any claims of trademark abuse by trademark owners. However, it has stated that advertisers are ultimately liable for the keywords they decide to employ in their advertisements. Google will begin taking ads containing trademarked terms this Friday.

The news of Google’s new policy change have many industry insiders worried that the move will inevitably result in a slew of legal battles. Already Google’s announcement comes at the heels of recent lawsuits filed against the Internet giant. The first of these was filed by the sales management software maker Firepond, who argued that Google should not be allowed to sell keywords containing a company’s trademark to competitors.

A similar lawsuit filed by Rescucom against Google was revived in April 2009 after having been dismissed in court in 2006. American Airlines also sued Google in 2007, claiming that by selling the keyword “American Airlines” to others, Google was letting people “seek a free ride on the reputation and goodwill” of the American Airlines name.

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Submitted by Olivia Goodkin, a partner at Rutter Hobbs & Davidoff in Los Angeles. She is a specialist in labor and employment, business litigation and dispute resolution and intellectual property law.

On June 18, 2008, an important case regarding employees’ privacy in the workplace was decided by the Ninth Circuit Court of Appeals. The case, Quon v. Arch Wireless Operating Company, looked at whether the Ontario Police Department had violated an employee’s right to privacy when supervisors viewed the contents of his text messages that were transmitted using Department pagers.

According to the court, the Department’s policies regarding the monitoring of e-mail, computer and text messages were overridden once a supervisor told employees their text messages would be audited if they failed to pay for overages on the text-message plan. Because the employee in the case had paid all overages resulting from his use of pager text messages, the review of the employee’s text messages was deemed illegal.

Inside the Case: Looking at the Ontario Police Department’s Policies

The Ontario Police Department issued a pager with text-messaging capabilities to Sergeant Jeff Quon. He acknowledged the Department’s “Computer Usage, Internet and E-Mail” policy, which explained that the City of Ontario had the right to monitor and log all network activity, including e-mail and Internet use.  The policy also stated that users should have no expectation of privacy in their communications when using these forms of communication.

Later, the Department announced at a staff meeting that the policies also applied to using pagers. Under the City’s contract with Arch Wireless Operating Company (“Arch”), the company providing the paging service, each pager was allotted 25,000 characters. The City was required to pay any overage charges.

The Oral “Amendment” to the Written Computer, Internet and E-Mail Policy

Quon’s supervising officer, Lieutenant Duke, told him it was not his intent to audit employees’ text messages for the purpose of seeing whether or not the texts were personal messages. He said he would only conduct an audit if Quon did not pay for the overages. Quon paid the City for overages each time they occurred.

When several officers went over their 25,000 character limit, Lieutenant Duke was ordered to obtain the transcripts to see if the messages were personal or business-related. Arch provided the transcripts, which included personal messages, including several from Quon to his wife.

Quon and others sued Arch for divulging the transcripts of their text messages, and also sued the Ontario Police Department and some of its supervisors.

The Right to Privacy and Fourth Amendment Issues

The Fourth Amendment to the U.S. Constitution protects the right “of the people” to be secure in their “persons, houses, papers, and effects, against unreasonable searches and seizures.” Quon and others involved sued under this Amendment, alleging that a public entity (the Ontario Police Department) obtained the text messaging transcripts improperly.

The court said that Quon’s expectation of privacy “turns on the Department’s policies regarding privacy in his text messages.”  The court pointed out that if the policies of the Department were reflected only in the written Computer, Internet and E-mail policy, with the oral amendment applying to text messages, then the case would end there. Those polices clearly indicated that Quon should have no expectation of privacy in using those resources.

However, once Lieutenant Duke told Quon and the staff that he wouldn’t audit their text messages as long as they paid for any overages, the policies were in effect amended, and created an expectation of privacy.  Since Quon paid for overages as they occurred, it was reasonable for him to expect his messages to remain private.

Because the Quon case involved a Fourth Amendment claim, which applies when there is a “state” or government action, the court decided there was a violation of the Fourth Amendment because the search was unreasonable.

Why the Quon Case Applies to Your Private Company

An employee’s expectation of privacy can apply to any case involving a California employer – whether public or private. The key issue for California employers is that a verbal statement made by a supervisor can override the written policies of a company. In this case, Lieutenant Duke’s assurance that he would not review text messages, except in the limited situations that did not apply to the Quon case, superseded the written policies that specifically restricted employees’ rights of privacy.

What Should Employers Do Now?

Employers must train supervisors regarding policies and procedures. It is not enough to have written policies that define privacy rights. Review written Internet, computer, e-mail, cell phone and other electronic usage policies to see if they reflect company needs. Then, discuss the policies with all company supervisors to ensure that they understand the repercussions of making exceptions to those policies.

In the first blog installment of this series, we discussed strategic alliances, why small technology companies should seriously consider entering into a strategic alliance with other companies, and provided factors that a business owner of a small technology company should consider in determining which proprietary technology should be made available for licensing under the strategic alliance. Once you, as the business owner, have identified proprietary technology for licensing, what additional steps should you consider in identifying a strategic alliance partner to develop, market and distribute products based on your technology?

In this second blog, we discuss how you can find strategic alliance partners and why these partners should be further qualified.

Tip – Identify and qualify your potential licensees.

Do you know of any companies that are selling products relevant to your technology? If so, they may be a prospective partner, particularly if your technology can be used to improve or complement the prospective licensee’s existing products, and your partner has the means to commercially exploit the technology. However, if you don’t know of any companies offering such products, how do you find prospective partners? Good sources for potential licensees include listings in trade magazines, directories, patent and literature searches. Visiting trade shows or conferences and word-by-mouth publicity is another good way to identify and meet potential licensees. Alternatively, you can also publicize the availability of a license through trade journals and the United States Patent and Trademark Office (USPTO) Official Gazette if the technology is patented, and have potential licensees come to you.

Before you contact the prospective partner to discuss your technology further, you should qualify the potential licensee by ascertaining several factors such as financial strength, technical and market expertise, sales/distribution network, commitment to relevant product line, etc. Much of this information is available online for free or through commercial databases offered by LexisNexis, Hoovers, and Dun & Bradstreet. The investigation can be done in a brief fashion initially before the licensee expresses an interest in the technology. You can follow up more fully once the prospective licensee shows some interest.

Qualifying the prospective strategic alliance partners before you begin serious discussions is important, as it may help a small business owner to avoid headaches later on by not entering into an alliance relationship with the wrong partner. Before considering serious discussions with a potential partner, it is helpful to have a non-disclosure agreement in place. We will discuss such agreements in the next blog.

In light of the soft economy, businesses are seeking new ways to save money and maintain strong financials. Increasingly, business owners are looking to the IRS as a source of assistance and valuable savings opportunities to help ride out the economic slowdown. There are a few easy steps that savvy business owners can take to make the most of what Uncle Sam has to offer:

Don’t Skimp on the Necessities – The amount allotted for small business equipment purchases has doubled for 2008. This may allow business owners to afford the necessary tools to keep their businesses up and running. Up to $250,000 can be expensed this year, as compared to $125,000 in 2007. “Equipment” refers to items such as computers and software, office furniture and machinery.

Last Year’s Loss May Be This Year’s Gain – Did your expenses exceed revenues last year? If so, you may have had a net operating loss. Consider carrying back this loss to offset your income and receive a tax refund. If business is still down, it’s not too early to start planning for a carryback this year. Net losses can be carried back for up to two years, so follow up on old losses for a quick infusion of cash.

Don’t Let Unpaid Debts Go Unnoticed – Even if your business is doing well, there is a possibility that your customers or other business connections may be struggling. If sales go unpaid or loans are not repaid, business owners are entitled to a bad debt deduction. Documentation is key here, as debts must be proven worthless in order to qualify.

Take Care of Your Health – The last thing a small business needs in difficult times is a sick or injured owner. The IRS has made it easier for business owners to take proactive steps to care for their health by allowing them to deduct health insurance premiums on policies held in the owner’s name.

There are many reasons why small technology companies would consider entering into a strategic alliance with other companies. Many small tech companies use these alliances to get access to cash as well as to benefit from the more established channels of distribution, or marketing and brand reputations of bigger, more well-known players. These bigger players on the other hand wish to get access to the brain power of newer technologies for product development.

What are strategic alliances? Strategic alliances have many different meanings but they can be defined as a contractual relationship between two or more parties working together to achieve mutual objectives. These contractual relations are typically defined by one or more contractual agreements which include a license to the intellectual property relating to the technology. For a definition of the various forms of intellectual property that are typically used in protecting technology, see

5 Things to Know About Patents

Difference Between Patents and Trademarks

Copyright Basics

During the planning and negotiation process, a technology company needs to consider how it can use these contractual agreements to protect its intellectual property rights and what restrictions need to be placed when transferring proprietary information. Furthermore, the ability of a technology company to recover its intellectual property rights and protect its proprietary information is particularly critical if the strategic alliance does not work out. The termination clauses relating to recovery and protection of trade secret information need to be laid out in these license agreements.

In this blog and the next several blog entries, a series of tips directed to small technology business owners will be discussed to help these business owners protect their intellectual property as well as avoid common mistakes relating to licensing of their proprietary technology to other companies.

Tip – Identify the technology available for licensing

As a preliminary matter, a business owner needs to do an in-house technology due diligence review and identify what technology they wish to keep in-house and what to license out. Typically, the technology would fall into three categories, namely (i) technology that the company is currently using to develop its products; (ii) technology that the company is not using but is ready to use; and (iii) technology that needs development such as technology at the conceptual or research level. Core technology that the company is using to develop its products should not be excluded, particularly if the company is interested in a particular product application (e.g., military use instead of a medical diagnostic use) or commercially exploiting the technology in a particular geographic location, e.g., U.S. and Canadian markets only.

Consider also the timing of the license. Why would a company license early? If the company needs cash now and the product (or at least some uses of the product) are more suitable for the licensee, then licensing early makes business sense. Why would a company license later? If the technology is pertinent to the company’s main product, capital is available for developing the technology now and there is a high expected return on investment, then by all means delay licensing, especially if the company’s proprietary position is expected to be stronger in the future. As a general rule of thumb, technology licensed at later stage is more likely to command a higher price.