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Twitter has finally laid its hands on trademark rights to the word “tweet,” but the case provides yet another lesson in why companies have to nail down intellectual property rights early on.
A Wall Street Journal (NSDQ: NWS) report says the micro-blogging service has finally come to an agreement with an advertising minnow, Twittad, that will clear the way for it to obtain “tweet.” In 2008, Twittad obtained trademark rights to “Let Your Ad Meet Tweets,” a development that led the U.S. Patent and Trademark Office to refuse Twitter’s repeated attempts to trademark “tweet.” Twitter last month sued Twittad in California federal court, accusing the smaller company of unfairly interfering with Twitter’s attempt to own the mark.
The two parties are subject to a confidentiality agreement that prevents them from disclosing whether cash changed hands, according to the Journal report. But it is a safe bet that Twittad made out just fine. The small company had a strong hand given the roadblock at the trademark office and the need for Twitter to secure rights to an essential part of its brand identity (it would be like Ford allowing another car company to use the word Mustang).
The case appears to fall into a category of cases in which small companies come into a windfall when, by luck or design, they obtain rights to a famous brand. In some cases, such as the fight between Timelines.com and Facebook, the small company appears to be using the name in an honest attempt to build a business. In others, such as the trademark fights over iPad, iBooks or i-just-about-anything, the owner of the mark may have scooped the name in hopes of a later windfall.
The case of Twittad seems to fall somewhere in between. On one hand, the small company did build a business in which it paid 27,000 users to send advertising tweets en masse. But on the other hand, Twittad’s blog has been fallow for almost a year, suggesting it may have been more pre-occupied with a settlement agreement than a business plan.