[Fredslist] FW: Lodging Law - February 2005

[Ripin, Peter M.]

Attached please find a copy of my article entitled "Brand Defense" which
appeared in the February, 2005 issue of Lodging Law.

________________________________

From: Maccaro, Jessica [mailto:Jmaccaro at ahla.com] 
Sent: Monday, February 28, 2005 1:16 PM
To: Ripin, Peter M.
Subject: Lodging Law - February 2005



 
 <http://www.ahla.com/ad_news_law/uploads/header_main_top.jpg> 	
LEGAL ISSUES + TRENDS - A MEMBER BENEFIT OF THE AMERICAN HOTEL + LODGING
ASSOCIATION 	
WASHINGTON, D.C.
	FEB 2005 / VOL 8 / ISSUE 1
CONTENTS 


BRAND DEFENSE
LOSS PREVENTION
GENERAL INFORMATION



 

BRAND DEFENSE

When it comes to Internet search keywords and trademark protection, the
legal landscape is still uncertain. For now, it's up to hoteliers to
protect their brand online. 

...by PETER M. RIPIN

BEFORE LEAVING ON A BUSINESS TRIP to Los Angeles, I wanted more
information about the hotel where I was staying; so I ran an Internet
search by entering the hotel's name next to the words "Los Angeles." At
the top of the first search-results page were two listings shaded in
light blue under the words "Sponsor Results" -- one for Expedia and the
other for downtown Los Angeles hotels. On the right and bottom of the
page were another eight "Sponsor Results", none of which included the
hotel's official Website.

I clicked on the second sponsored result on the right side of the page
which was entitled "A1 Discount Hotels (the hotel's trademark): Service
oriented company offers substantial discounts in over 90 Los Angeles
area...." After clicking on this link, I was transported to a Website
for an affiliate of Hotels.com where approximately 100 different Los
Angeles hotels were listed in small type. In much larger print, next to
a box entitled "Read About Our Lowest Rate Guarantee," I was asked to
select dates of travel and number of rooms. After entering this
information and clicking "go", I then received a listing of 25 different
Los Angeles hotels, none of which included the hotel for which I'd
originally been searching.

Fortunately for my hotel, I had already booked my reservation and
decided not to change it. However, if I hadn't already been booked
there, I might not have initially realized that the sponsored listings
were merely paid ads purchased from Yahoo by the highest keyword bidders
on the hotel's trademark. Even if I later realized I was somewhere other
than the brand's official Website, I might still have been coaxed away
from my original choice by one of the competing brands being offered.
Finally, even if I did book my original hotel choice on the third-party
Website, the hotel's profit margin would be about 18 to 30 percent less
than if I had booked the reservation directly on the hotel's own
Website.

This example illustrates how third party sites can affect a hotel
brand's online business. A recent survey by Hospitality Sales and
Marketing Association International found that hotel branded Websites
are driving Internet business, account for 75 percent of online
reservations, and produce the highest average daily rate. Combine this
with the fact that more and more consumers are using the Internet to
book hotel rooms and that search engines are becoming a critical part of
this marketing mix, and it becomes obvious why it's so important for
hotels to defend their brands in the online arena. 

"Leakage" of revenue from hotel brand Websites to third party sites is
approximately $1 billion, according to Smith Travel Research. A leading
hotel brand recently studied the impact of a third-party site's
discontinuation of keyword buys and concluded 40 percent of that site's
revenues came from keyword buys and search-engine placement. If this 40
percent average holds true for all third-party sites, as much as $400
million of the $1 billion leakage cited by Smith Travel Research may be
attributable to this diversion of trademarked keywords by third-party
sites.

While a number of legal challenges to both pop-up and keyword
advertising have resulted in some important decisions, this is still
very much an unsettled and evolving area of the law. The very first
decision in this area was issued in 2002 when a federal judge in
Virginia issued a preliminary injunction preventing Gator (now known as
Claria), one of the leading pop-up advertising companies, from sending
pop-up ads to the Washington Post and New York Times. Thereafter,
however, the pop-up advertising companies, WhenU.com and Gator, won two
important victories:

In a case decided in 2003, a different federal judge in Virginia
dismissed a lawsuit by U-Haul which argued that WhenU's SaveNow pop-up
program infringed on U-Haul's copyrights and trademarks by sending its
competitors' pop-up ads to U-Haul's Website. Although the court
acknowledged that the average computer user who accessed U-Haul's
Website would not expect to find a pop-up ad from U-Haul's competitor on
the Website, the court nevertheless dismissed the lawsuit because it
found that the computer user had made a "conscious decision to install
the WhenU program (which generated these ads)"; that WhenU's pop-up
window was separate and distinct from U-Haul's Website; and that the
incorporation by WhenU of the U-Haul URL in the SaveNow directory in
order to generate competitor's pop-up ads was not an illegal use of a
trademark because WhenU merely used the marks for a "pure machine
linking function" and in no way advertised or promoted U-Haul's Web
address or any other U-Haul trademark.

In the next case, a federal judge in Michigan denied Wells Fargo's
request for a preliminary injunction against WhenU after concluding that
Wells Fargo was unlikely to prevail on its claims of copyright and
trademark infringement. The court held that WhenU did not use Wells
Fargo's trademark per se in its advertising since the pop-up ads did not
display those trademarks. In addition, the court held that there was no
trademark infringement because WhenU only used the mark in its directory
to determine what ads to display for consumers and did not hinder access
to Wells Fargo's Website. 

It certainly seemed like WhenU and the pop-up advertisers were on a roll
until a decision which came down in New York at the end of 2003. In that
case, a contact lens retailer named 1-800 Contacts brought a lawsuit
against WhenU after it sent pop-up ads for Vision Direct, a direct
competitor, to the 1-800 Contacts Website. This time, the Court granted
a preliminary injunction to 1-800 Contacts after concluding that it was
likely to succeed on its trademark infringement claims because there was
a strong likelihood of customer confusion arising from the appearance of
the pop-ups. The opinion stated:


The fact that (WhenU's) pop-up ad for competing Internet contact lenses
retailers appears shortly after a consumer types into the browser bar
(1-800 Contacts') trademarked name and accesses (its) homepage increases
the likelihood that a consumer might assume (WhenU's) pop-up ads are
endorsed or licensed by 1-800 Contacts. 

The judge also took note of a survey undertaken by an expert hired by
1-800 Contacts which showed that 68% of WhenU's Savenow users did not
know they had the software installed on their computers and that 76% of
those who did know did not know what the software did. In addition, the
survey found that 59% of Savenow users believed that pop-up ads were
placed on sites by the site's owners and 52% believed such ads were
pre-screened and approved by the Websites on which they appeared. The
survey results indicated to the Judge that "a consumer is likely to
associate a Vision Direct pop-up ad generated by the Savenow program
with the 1-800 Contacts Websites on which it appeared". Finally, the
judge also found that the use by WhenU of 1-800 Contacts.com as a term
in the SaveNow directory triggering Vision Direct pop-ups added to the
likelihood of customer confusion and trademark infringement.

Even though the facts in the 1-800 Contacts case were very similar to
the facts in the U-Haul and Wells Fargo cases, the judge in the 1-800
Contacts case reached the exact opposite result as the other two judges.
After this decision, Claria announced that it was canceling its IPO in
the face of numerous lawsuits concerning pop-up advertising including a
lawsuit by InterContinental Hotels. Since the 1-800 Contacts case has
been appealed, we can expect a more authoritative decision on this topic
shortly.

In 2004, two significant decisions were rendered on keyword advertising.
In the first case, Playboy sued Netscape Communications for selling
advertisers the use of the trademarked terms "playboy" and "playmate" to
generate banner ads on the search engine's Website. Playboy claimed that
consumers who saw unlabeled ads were likely to be confused about whether
Playboy had sponsored them. Although the lower court originally
dismissed the case, the California appellate court reversed this
decision stating that the keyword advertising could lead to "initial
interest confusion" because some consumers who were seeking Playboy's
site may initially believe that unlabeled banner ads were linked or
affiliated with Playboy.

The court noted that although the consumers who clicked on these ads
might thereafter realize that they were not at a Playboy sponsored site,
they also might be perfectly happy to remain on the advertiser's site
and purchase their competing product. The court concluded that since the
consumer would have reached the competitor's site because of Netscape's
use of Playboy's mark, this use could constitute trademark infringement.
As a result, the Court of Appeals reversed the lower court's decision
and sent the case back down for a trial. 

Shortly thereafter, Netscape settled with Playboy for an undisclosed
amount rather than risk putting a fundamental part of its business model
at risk. However, it's important to note that the Court's decision in
this case was a limited one which only addressed ads which would be
confusing to the consumer. In other words, the court did not address a
situation where a banner ad clearly identified its source with its
sponsor's name or which overtly compared its competing products to
Playboy's. Instead, the court limited its holding to competitors' banner
ads which were unlabeled and which did not compare themselves to
Playboy. 

While Google had originally gone out of its way to comply with trademark
owners who requested that the company stop using trademarked keywords to
sell ads, it announced a change in policy in April 2004 and stated that
it would now allow advertisers to base their ads on trademarks. A few
weeks later, Google and Overture were sued by GEICO in Virginia based on
a set of facts similar to the Playboy case. Initially, after Google and
Overture moved to dismiss the case, the court denied the motion and
Overture decided to settle out of court. However, on December 15, 2004,
after presiding over two days of trial, the judge ruled that there was
insufficient evidence of trademark infringement and that Google could
continue to sell keyword advertising triggered by GEICO's trademark. 

While this decision appears -- for the moment, at least -- to have
stemmed the recent legal tide against the pop-up and keyword advertising
companies, it remains to be seen whether other federal judges in similar
cases pending against Google will adopt the court's reasoning. In one
such case, Google is being sued by a home furnishing company called
American Blind and Wallpaper Factory which claims that Google engaged in
trademark infringement by selling paid links for the words "American",
"blind" and "wallpaper" to the company's competitors. This case may help
to decide whether a company can purchase generic keywords which are also
part of a hotel's trademark such as, for example, Holiday Inn. 

Notwithstanding the legal uncertainties, there are a few protective
steps hotels can and should take: Prohibit keyword buying and pop-up
advertising in contracts with third party sites and enforce those
prohibitions. Indeed, it's important to recognize that third party sites
are contractual partners of hotel brands. Recently, InterContinental
Hotels adopted new standards requiring its third party distributors to
agree, among other things, not to bid on or purchase placement rights
for InterContinental's trademarks or to engage in predatory advertising
methods which was defined to include pop-up advertising. When
InterContinental was unable to reach an agreement with Expedia and
Hotels.com on these standards, it severed the relationship. Other
options include paying the search engines "ransom" by bidding on your
own trademark and/or seeking the advice of counsel concerning possible
legal action. Although the legal route can be costly, it can also be
highly effective. Since we clearly haven't received a "final answer"
from the courts on these issues, it's important that hotels take
proactive steps to protect their online brands. >>

Peter M. Ripin is a partner with the law firm Davidoff Malito & Hutcher
LLP in New York City. In addition to other areas, Ripin has represented
hotels in connection with disputes concerning Website domain name piracy
and the Anti-Cybersquatting Piracy Act. He may be reached at
pmr at dmlegal.com or (212) 557-7200.


LOSS PREVENTION
FRONT AND CENTER RESPONSE

In most hotel emergencies, the front desk is a crucial link in the chain
of response. How to better safeguard guests, staff, and property?
Establish the front desk as the hotel's 24-7 safety control center. 

...by RAY ELLIS, JR.

IN TOO MANY EMERGENCIES, front desk-related failures are the result of
insufficient training. Inadequate management and supervision can often
compound the problem. Take the recent example of a new front desk
associate alone in a small motel when a fire occurred. Having received
no instructions in advance, he panicked and lost critical minutes before
calling the fire department. Or look at another incident where a guest
appeared at a front desk after being attacked outside the property. She
was left standing at the desk bleeding and in shock while the staff
spent fifteen minutes locating a security guard. In media stings, room
access cards have been handed to a reporter posing as a guest for a room
in which the individual was not registered. Guests' room numbers have
been given to strangers. Front desk associates have publicly announced
the name and room number of a registering guest...

The list of preventable incidents is long, but the key word is
preventable: careful training and supervision can transform the front
desk into a 24-7 control center safeguarding guests, staff, and
property. A few basic steps go a long way:

- The name and room number of the guest should be carefully guarded and
never announced for persons, other than the guest, to hear.


- It makes good business sense to have the guest sign a registration
form confirming the fact of a contract. Have the rate and date of
departure initialed. Require some form of picture ID from each guest.
A replacement key or electronic room access card is never to be provided
without positive identification of the registered guest. 

- If the guest indicates that their key card or personal ID is in the
guestroom, have a security officer accompany the guest to the room to
confirm.


- If front desk staff don't possess current first aid training, CPR
skills, knowledge of the Heimlich maneuver, and training in the use of
an Automatic External Defibrillator (AED); they should know how to
contact such persons on staff or at an emergency response source, such
as 911. 


- It's crucial to fully train staff in procedure regarding the safe
deposit box. A duplicate key for the deposit box should never be
provided to the guest, and no one other than the registered user should
receive access. Photo ID and comparison of signatures should be
required. 

- Front desk personnel should work closely with the operator if they do
not, in fact, serve as operator for incoming direct calls. Ensure staff
are trained in protocol for handling a bomb threat. A laminated
instruction card should be available, since stress could otherwise
interfere with the ability to respond properly.

- Emphasize that when responding to an emergency, the first call must be
to fire and/or police authorities. Maintain a front desk phone roster
for use in an emergency. Other internal calls should be to security,
engineering, and senior management. Wireless alternatives should be
available in the event the emergency has compromised the phone system. 

- When confronted by the media on any matter, instruct staff to connect
the reporter to a designated spokesperson. Similarly, if a police or
other government authority requests data on a guest, the employee should
contact the manager or a designated person. 

- Front desk staff should be fully trained in responding to a guest
under the influence of alcohol or drugs. While bar or restaurant staff
receive primary training, front desk personnel should also be trained to
intercept a guest whose intoxication may have gone unnoticed by other
employees. Such training should also extend to all employees. 


- In a fire emergency, the front desk should coordinate staff response
after calling the fire department. When first responders arrive, the
desk should have as much information on the fire as possible: location,
number of people assigned to guestrooms in the affected area, number of
individuals in an affected meeting room and function area, etc. Staff
should have a printed record of guests requiring special assistance and
information regarding any employee fire responders who may have been
dispatched to the scene. (Remember: such use of staff must be reviewed
with fire authorities prior to an incident. Fire authorities will also
decide whether management/staff should start calling all or selected
guestrooms, which levels should be evacuated, and which should be
instructed to remain in place. In addition, fire authorities will advise
whether staff should enact notification and search of facilities
immediately, or whether to wait for fire responders.)

- The Occupational Safety & Health Act requires training of personnel in
the safe use of hazardous chemicals. An integral requirement is material
safety data for each hazardous chemical in use. A master file of those
chemicals should be available at the front desk for first responders. In
case of fire, some chemicals could require extinguishment units and the
use of special respiratory protection. 

- Staff must know the location of shut-offs for all utilities. If other
staff can be directed to accomplish a shut-down without danger to the
employee, begin that process prior to the arrival of emergency
responders. >>

Ray Ellis, Jr. is professor and director of the Loss Prevention
Management Institute of the Conrad N. Hilton College of Hotel &
Restaurant Management at the University of Houson. He is author of the
Loss Prevention Bulletin, a monthly news alert on safety, security, and
loss prevention. To receive the Bulletin by e-mail, send a request to
rellis at uh.edu <mailto:rellis at uh.edu> . Search for topics, research, and
past articles at www.losspreventionbulletin.com
<http://www.ahla.com/enewsletterpro/t.aspx?S=2&ID=234&NL=54&N=94&SI=3&UR
L=http%3a%2f%2fwww.losspreventionbulletin.com%2f> .



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