According to one source (http://www.statisticbrain.com/employee-theft-statistics/), the annual amount of employee theft from US businesses is $50 billion, and seventy five percent of employees have stolen at least once from their employer. It’s no surprise that employers have security cameras in stores, and policies in place to reduce the amount of employee theft. What is surprising is that employers are not more careful with other assets.
Although perhaps not technically theft, there is a new employee risk relating to employer assets in the online world. Some seemingly clever employees have chosen to register their employer’s trademarks as second level domain names to enhance the value of the domain names. With registration of the domain names in hand, the employee’s intent may be to sell the domain names back to the employer, offer them on the domain name market to someone seeking a high traffic domain name, or hold them for some misguided leverage against the employer in the future. Any of these strategies should not be acceptable to an employer as a trademark owner, and appropriate action should be taken.
Trademarks, and the associated goodwill, are valuable assets of employers. Many employer trademarks have been in existence for years, and based on extensive use and effort, have become significant tools for consumer awareness, brand loyalty, and quality consistency. Misappropriation and misuse of trademarks can be very costly for employers, and can damage the valuable goodwill associated with the marks. Having employees compromise the value of the trademarks should be taken seriously.
Although employees owe a general duty of loyalty to their employers, it is not always clear whether the rules for employees registering domain names are different than for an independent third-party registering domain names that include the employers trademarks. Attempting to discipline an employee for using a trademark in a domain name may not be an easy case. Probably the best course of action is for employers to adopt broad policies relating to employee use of trademarks, specifically as they relate to domain names. Also, employers need to be vigilant in monitoring the use of their trademarks in domain names, and in any other way that might impact or compromise the integrity of the goodwill of the marks.
About the author
John H. Rees is a Shareholder and Intellectual Property Section Chair at Callister Nebeker & McCullough in Salt Lake City, Utah. John is a corporate and intellectual property lawyer working with clients to develop strategies and solutions for complex legal challenges and managing legal risk in a dynamic business, legal, and regulatory environment. He focuses more particularly on matters involving branding and trademarks, domain name management, disputes and strategies, technology use and development, software and database licensing, including SaaS, copyrights, and doing business in a rapidly changing business and social online environment. John can be contacted by email at firstname.lastname@example.org or by phone at 801.530.7388.