Centuries ago, when unscrupulous competitors tried to pass off their wares for the real deal merchant guilds began to affix “marks” to their goods to avoid confusion among customers and to prevent fraud.   These “trademarks,” as they became known, let customers easily identify names they could trust and the  origin of the goods they wanted to buy.    

Today, the Internet has added a vast new dimension to merchant trade and the unscrupulous have again found ways to divert attention from the real deal.  As you probably know, the virtual world is a combination of things you see on your screen and things you don’t.  Included in the netherworld of HTML code are things called “meta tags,” words and phrases that search engines can read and use to identify relevant websites and rank web pages. 

There has long been debate about whether a competitor’s trademark, when used as a meta tag or is elsewhere hidden on a web page like a subliminal Internet message, constitutes a willful infringement of that competitor’s trademark.  A recent First Circuit Court of Appeals decision now says it does (Venture Tape Corp. v. Mcgills Glass Warehouse). 

It’s something you might want to let your webmaster and webdesigner know because “willful” infringement raises the ante considerably.  The penalty for violation ranges up to $1 million per violation.

Smart business owners and managers know that trademarks are powerful tools for protecting their brand platform.  The smartest ones will use them wisely and fairly.  Don’t let a hidden meta tag turn into a huge hidden liability for your company.

Richard S. Fuld Jr., the chief executive of Lehman Brothers Holding that owns the financially charred remains of a once formidable investment bank, didn’t look very happy answering angry questions from Henry A. Waxman’s House Committee on Oversight and Government Reform yesterday or when dodging the protesters waiting for him outside who hurled insults and held up signs reading “crook” and “shame.”

I bet Mr. Fuld is not used to people talking to him like that.

He’s also not used to being held accountable to people who talk to him like that.  The only problem now is that he can’t flick them off like flies the way he did back in June when he dismissed a call by certain shareholders to forgo bonuses this year and mockingly noted “they are only people who think about their own pockets.”

The tide has now turned against him.  The FBI and at last count 3 U.S. attorneys offices are investigating whether positive statements made by Fuld to analysts about the health of Lehman’s balance sheet five days before the company filed for bankruptcy amounted to fraud.  The Securities Exchange Commission is also examining Lehman’s asset valuation practices.

One internal Lehman document dated June 8, 2008 shown to Fuld during yesterday’s hearing warned about Lehman’s financial condition and asked, “Why did we allow ourselves to be so exposed?”  Yet Fuld claimed he never saw the document before.  Maybe he didn’t see that particular document before, but had he heard that there might be a problem from some other source?

It’s hard to believe he could be that clueless.  It makes you wonder how someone so smart could be so blind.

That incongruity offers a few interesting leadership/ legal lessons for managers of any size business:

1.  Periodically reexamine the assumptions of your cash cows.  Those cows are not sacred.  Everyone loves to make money and no one wants to lose out on the latest market trend; but, if you don’t respect business fundamentals you stand to lose even more — maybe everything.

2.  Hedge your assumptions — the goal is to survive and thrive, not gamble and hope for a bailout from Uncle Sam, your shareholders, your friends, or your family.

3.  Remember who your business is serving and serve those constituencies with integrity.

4.  Create checks and balances in your business processes and systems to avoid overconfidence and Hummer-sized blind spots.

5.  Keep your finger on the business pulse more than in the cookie jar.

Keep those 5 principles in mind and you won’t be staring down a legal nightmare or find yourself starring in a Congressional Jerry Springer Show.