Publishing client logos on your website is an easy and effective way to build trust and credibility with potential new clients. But when designing a new website, founders should avoid the temptation of exaggerating their client list and should not assume that all clients will want to have their logo featured.
The safest way to stay on the right side of the law (and to avoid complaints) when it comes to using client logos is to seek written permission upfront. If you have a client’s permission to reproduce their logo, the legal and commercial issues tend to fall away. However, in circumstances where you do not have permission, there are three key risks that often arise.
This blog is the fifth in a series on Marketing your Startup: Risks, Tips and Traps which will highlight some key risks which startups should watch out for and some tips to avoid the risk of a legal claim. See our other blogs here.
What are the potential risks?
The major risks relate to misleading or deceptive conduct, copyright and trade mark infringement. Of these, misleading or deceptive conduct is the most likely to bring startups undone.
Misleading or deceptive conduct
Section 18 of the Australian Consumer Law (ACL) prohibits conduct in trade or commerce that is misleading or deceptive or is likely to mislead or deceive. This section applies to a very wide range of activities, including making representations to the public at large, such as via a website. Section 29(h) of the ACL also provides that a person must not in trade or commerce make false representations that they have a sponsorship, approval or affiliation that they do not have.
There can be a strong temptation to make up an impressive list of clients or to exaggerate the amount of work you have done or work you have done in a different capacity (e.g. for a different company or in your old job), in order to encourage new business. However, if your website creates the impression that you have worked for a client when you have not, or that you have done extensive work for a client when that is not the case, then the website is likely to be misleading and the penalties can be severe – up to $1.1. million for a business.
A similar situation arises when businesses publish fake testimonials, which may be from friends or family or, in more severe cases, from customers who have simply been made up completely. Find out more about fake testimonials in our article, here. In short, fake testimonials are prohibited by section 29(e) of the ACL. In the 2015 case of Australian Competition and Consumer Commission v A Whistle & Co (1979) Pty Limited  FCA 1447, the Federal Court ordered the franchisor of the Electrodry Carpet Cleaning business to pay penalties of $215,000 for publishing fake testimonials on the internet. The company posted, and asked its franchisees to post, customer testimonials about the quality of carpet cleaning products, when those customers were fake. The penalties could have been even more severe if the business had not been co-operative.
For more detail on the risks of misleading and deceptive conduct, see our blog here.
Trade Mark Infringement
Many companies seek to protect their brand by registering their brand name and logo as a trade mark. Trade mark protection gives the owner of the trade mark the monopoly right to use the trade mark in relation to their goods and services, and can be a powerful marketing tool as your business grows.
But does simply putting another company’s logo on your website amount to trade mark infringement? If you are using your client’s logo simple to describe them as client, the answer is likely to be ‘no’. This is because, from a legal perspective, you are not using the client’s logo “as a trade mark” (i.e. as a badge of origin or as a brand) and therefore are not in breach of section 120 of the Trade Marks Act 1995 (Cth).
For more detail on the risks of trade mark infringement, see our blog here.
It is also likely that there is copyright in client logos as artistic works, although company names alone are likely too short to attract copyright protection. If copyright exists in a logo, it may be an infringement to include the logo on your website without permission as you will be reproducing and communicating the logo to the public. In these circumstances, the damage to the client as a result of the use of their logo may be minimal, but it is another legal right that the client can rely on if it is unhappy with your use of the logo.
Of course, there is nothing to stop the client from raising copyright infringement and trade mark infringement as issues if you have not warned them in advance about using their logo on your website.
For more detail on the risks of copyright infringement, see our blog here.
Do a thorough review of your website and consider the ‘overall impression’ the website creates. If the website contains false or distorted information that suggest you have worked for or are endorsed by a client when that is not the case, it is likely to be misleading.
We hope you enjoyed our fifth blog in a series of blogs about Marketing your Startup: Risks, Tips and Traps
Please see our other blogs in the series here.
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