Lewis and Roca Intellectual Property Blog

New gTLDs – ICANN Trademark Clearinghouse Goes Live

Thu, 28 Mar 2013 16:28:44 GMT

Trademark Clearinghouse Launch

Complaints regarding inadequate protection for trademark owners will apparently not stop the Internet Corporation for Assigned Names and Numbers ("ICANN") from launching its new unlimited gTLD (generic Top Level Domain) program as quickly as possible in 2013. The new web environment will include hundreds of different words appearing to the right of the dot in domain names, in sharp contrast to the existing limited number of authorized strings such as .com, .biz, .net, and .info. Initial evaluations of over 1900 applications for new Top Level Domains have begun to be published by ICANN and will continue through August. Strings containing non-Latin script, known as Internationalized Domain Names ("IDNs"), of which there are over 100 in Chinese, Arabic and other alphabets, will launch first in May or June.

Trademark owners concerned about cybersquatting and counterfeit goods or services that could be sold at websites created at second level (before the dot) urls via domain name registrations obtained in the new gTLDs should consider filing registered trademarks with ICANN's Trademark Clearinghouse (TMCH) which goes live this week. For example, a manufacturer of food products may consider recording its registered brand names with the TMCH to help protect against use of the brand name by an infringer who might purchase the name to the left of the dot in the new (dot)food domain. As long as the registration was applied for before the particular TLD application was published and was also registered before that TLD contract is awarded, entry of a trademark registration record into the TMCH will provide two benefits:

(1) eligibility for Sunrise registrations before the general launch of any particular new TLD if a specimen of use is filed at the time the registration record is entered into the TMCH and

(2) notification to the owner if a third party proceeds to register the owner's trademark at the second level after being notified by the TMCH of the owner's claim. Common law marks and state registrations are not eligible for entry into the TMCH, but marks validated through judicial process or by statute will qualify.

There are caveats associated with these benefits because eligibility for Sunrise does not guarantee the trademark owner will get the Sunrise registration if other parties also own the same registered mark (perhaps for different goods or services). It's easy to see how this might become a problem in proposed TLDs such as (dot)store. For example, Apple Records may want to sell downloadable music at apple.store, but Apple Inc. may also want to sell consumer electronics at apple.store. Registries will have a method in place for resolving Sunrise registration disputes and this may not be first come, first served. It could ultimately involve a bidding or auction process. Further, the notification described above will only be in place for the first 90 days after general launch of a new TLD so the holder may need to employ a watch service to track registrations purchased by third parties after that 90 day period.

Unlike the recent launch of the XXX domain, there is no "blocking" mechanism available to trademark holders in connection with the new TLDs. This puts a premium on obtaining a preventive Sunrise registration or being willing to follow up with cybersquatters on an "after-the-fact" basis once they have already obtained a registration.

How Lewis and Roca Can Assist Clients with the Trademark Clearinghouse

Lewis and Roca will offer Trademark Clearinghouse registration filing services for both Sunrise and IP Claims notification purposes as soon as the TMCH finalizes its Submission Guidelines later this month. This should permit clients to confirm validation of their records with the TMCH prior to the launch of the first IDN. The cost for recording each trademark registration will be a $150 hard filing fee (for one year of protection across all TLDs that launch in that year) plus paralegal time at the normal rate for entry of the records. Volume discounts are available at the TMCH for large portfolios and/or periods of protection longer than one year.

In a decision issued at the end of last week, ICANN confirmed requested improvements for (a) 30 days prior notice of the launch of Sunrise, (b) extending IP claims notification from 60 days to 90 days out from general launch and (c) allowing previously "abused names" (such as those established as “abused” by way of prior UDRP proceedings) to be entered into the TMCH alongside the registered trademark even if not identical to the registered trademark. Presumably these previously abused names would then give rise to IP Claims notifications, but the implications are unclear since the TMCH has yet to issue its final Submission Guidelines based on these latest changes to the system.

Entry of TMCH records will involve legal decisions, including, but not limited to (1) whether to enter a registration into the TMCH or not, (2) whether to seek Sunrise registration or not, (3) how best to provide proof of use if a Sunrise registration is desired in any new TLD, (4) which period of protection to select (1, 3, or 5 years), and (5) which domain names and previously "abused names" will qualify for TMCH protection. Lewis and Roca's IP attorneys are on the cutting edge of this new area of trademark law and stand ready to offer advice based on the client's business goals combined with practical execution of clients' trademark strategies through filings with ICANN's new Trademark Clearinghouse.

For more information, contact your Lewis and Roca IP attorney, Co-Practice Group Leaders Michael McCue and Emily Bayton, or Anne Aikman-Scalese, a member of ICANN's Intellectual Property Constituency who will be participating on behalf of trademark owners in the ICANN 46 meeting in Beijing in April.

Federal Circuit Expands Liability for Induced Infringement of Method Patents

Wed, 06 Feb 2013 16:54:17 GMT

Patent law holds that a party can be held liable for direct infringement when that party performs all steps of a patent claim. In contrast, there is no direct infringement where multiple parties collectively – but independently – perform all steps of a patent claim. Historically, there could be no indirect infringement without direct infringement, that is, indirect infringement required proof that at least one party performed all steps of the patent claim.

That precedent changed last August when the Federal Circuit issued its decision in Acamai Tech’s, Inc. v. Limelight Networks, Inc., 692 F.3d 1301 (Fed. Cir. 2012). Limelight Networks and Epic Systems were defendants in separate patent suits, brought by Akamai Technologies Inc. and McKesson Technologies Inc., respectively. The Federal Circuit heard the appeals in tandem because they both involved the same issue of indirect patent infringement. In both cases, multiple, independent parties collectively performed a patented method. For example, in the Limelight case, Limelight’s customers (as opposed to the company itself) performed one of the claimed steps. Before Limelight, there could be no indirect infringement because no one party performed all steps of the claimed method.

The Federal Circuit’s ruling in Limelight and McKesson expands the scope for indirect infringement by removing the requirement of direct infringement by at least one party. Now, a party may be liable for indirect infringement if (i) it knows of the method patent, (ii) it induces the performance by others of steps that it does not perform, and (iii) all of the method steps are actually performed. In a 6-5 decision, the majority of the Federal Circuit held that “all the steps of a claimed method must be performed in order to find induced infringement, but . . . it is not necessary to prove that all the steps were committed by a single entity.” Limelight, 692 F.3d at 1306.

The practical implications are substantial. For patent holders, Limelight opens up new enforcement possibilities (and hence new licensing opportunities). Patent holders should consider whether any potential multi-party activity may give rise to previously unavailable infringement actions. Keep in mind, however, that indirect infringement requires proof of knowledge and intent on the part of the indirect infringer, in addition to proof that the method steps were all performed by someone.

For potential infringers, Limelight significantly expands the scope of potential liability for method claims. Businesses should examine their commercial activities and identify the potential for new exposure to indirect infringement liability. Specifically, a party that does not directly infringe a method claim due to non-performance of one or more steps should consider whether it could be inducing others to perform the missing steps, particularly if it has notice of an allegation of infringement.

In separate petitions to the U.S. Supreme Court, both Limelight and Epic Systems have asked the Supreme Court to overturn the Federal Circuit’s decision. The Supreme Court has not yet decided whether to hear the appeals.

Early Warning - These Particular Top Level Domains May Never Get Off the Ground

Thu, 29 Nov 2012 15:53:12 GMT

This year the Internet Corporation for Assigned Names and Numbers ("ICANN") received over 1900 applications for new generic Top Level Domains ("gTLDs"). (A Top Level Domain refers to the string of letters to the right of the "dot" such as dot com, dot net, or dot info.) Currently there are 22 of these as well as over two hundred country code domains, e.g. (dot)us. As part of this effort to launch an unlimited number of new gTLDs, ICANN had put in place a procedure whereby governments who are members of its Government Advisory Committee (the "GAC") could issue an "Early Warning" as to any new gTLDs they oppose or feel should have conditions attached before launching.

The United States took a very conservative view of its Early Warning power and only issued a "full stop" warning for three domains: (dot)army, (dot)navy, and (dot)airforce. There is understandable concern about the possible association with government-sponsored armed services websites and that concern is not limited to the U.S. The U.S. also warned as to one company that applied for 31 strings and included an e-mail from the FBI as an alleged endorsement when such was not the case. Other countries, such as Australia, took a broader view of the Early Warning process based on a number of different considerations such as consumer protection, protection of competition, and concern over what is commonly referred to in ICANN-speak as "closed generics". These "closed generics" are applications to operate a new gTLD registry by one player in an industry who wants to "corner the market" on a particular generic term and provide second level (i.e. "before the dot") registrations only to its affiliated companies or suppliers or customers.

A number of Early Warnings were lodged by countries which have an interest in particular geographic regions. For example, Chile and Argentina oppose an application by Patagonia, the apparel and accessories company, for (dot)patagonia because this is a geographic tourism region that spans both countries. Similarly, the government of Nigeria issued Early Warning against the application by Delta Faucets for (dot)delta because of a specific geographic region in Nigeria. The application filed by online retailer Amazon, received an Early Warning from Brazil and Peru. Numerous African countries issued Early Warning as to (dot)africa. The practical effect of all these Early Warnings remains to be seen. They will either operate as a "bar" to the launch of the gTLD or as a signal that the governments in question desire to negotiate terms with the applicant(s) that will protect their governmental interests. The complete list of Early Warnings and associated governments is published here:

https://gacweb.icann.org/display/gacweb/GAC+Early+Warnings

A further development on the ICANN front is the potential for negotiation of enhancements in the implementation of the Trademark Clearinghouse. This is the mechanism by which trademark owners may obtain Sunrise registrations at the second level for their registered marks which are separately registered in this centralized database and may also receive notice whenever a third party has registered the identical mark in any given new Top Level Domain, but only for the first 60 days after the launch of that new domain. ICANN appears ready to agree that trademark holders will receive 30 days advance notice of the beginning of the Sunrise period for planning purposes and also appears ready to extend the IP Claims notification process from 60 days to 90 days. Trademark holders were hopeful of getting both a blocking mechanism such as the one put in place by ICM Registry for the triple X adult Top Level Domain, but that did not materialize. Other more controversial proposals such as establishing a "Claims 2" additional claims notification period from 6 to 12 months after launch of a new TLD for an additional fee to be paid by the trademark holder are still being discussed but are vigorously opposed by the Non-Commercial Stakeholder Groups on procedural grounds that this invokes policy issues which have not been properly addressed through the appropriate policy-making body at ICANN, the Generic Names Supporting Organization ("GNSO").

The same GNSO is expected to pass a resolution at its next meeting putting certain Red Cross, Red Crescent, and Olympic Committee names on a reserved names list (meaning they could not be registered at the second level) for the current round of new gTLD applications and pending the completion of the GNSO expedited Policy Development Process that was initiated at the ICANN meeting in Toronto in October. Lastly, due to recent developments in the application evaluation and delegation process, ICANN is expected to confirm that the period for filing formal Objections (such as a Community Objection or a Legal Rights Objection) to the award of any particular gTLD will be extended to March 13, 2013. Stay tuned for more updates on GAC activity and Trademark Clearinghouse implementation details, some of which may still be in play at the ICANN meeting in Beijing in April of 2013.

Top Sports IP Plays of the Year - Part 2

Wed, 24 Oct 2012 09:48:18 GMT

Today we bring you Part Two of an article authored by our partner Ms. Emily Bayton and published by Law360 on October 16, 2012. You can check out Part One of the article here:http://www.lrlaw.com/ipblog/blog.aspx?entry=601 .

As an intellectual property lawyer and avid sports fan, I’m always interested in a case involving the legal intersection between sports and IP. There are plenty of IP issues facing the sports industry. Like any other industry, it’s driven by money, much of which is generated from IP. From licensing of team names and logos, to broadcast and sponsorship rights, to merchandise deals, IP plays a large role in the value of the sports industry.

A recent article by the World Intellectual Property Organization estimates global revenue from sponsorships, gate revenues, media rights fees to reach $133 billion in 2013. This figure does not account for revenue generated from the sale of athletic footwear and apparel, estimated at $300 billion worldwide.[1]

It’s no surprise then that athletes, teams and sports organizations go to great lengths to protect their IP. This article provides a summary of current IP issues facing the sports world and the potential impact on the multibillion-dollar industry.

Harsh Reality about “Reality”

Another hot topic in the world of sports is rights of publicity. Rights of publicity relates to one’s ability to control the commercial use of his or her identity. In 2011, NBA star Gilbert Arenas (currently in a contract dispute and considering playing in China for the 2012-2013 NBA season) sued Shed Media, producer of the reality show "Basketball Wives: Los Angeles" for various causes of action, including misappropriation of likeness and rights of publicity. Arenas v. Shed Media US Inc., CV 11-05279 (C.D. Cal. 2011). Basketball Wives features a cast of women who have or have had romantic relationships with professional basketball players. Id. at *2.

Arenas sued Shed over its casting of his ex-fiance on the show. Arenas sought injunctive relief to enjoin Shed from using his trademarks in association with the show, and if his ex-fiance appeared in the show, to prevent Shed from using “Basketball Wives” or any other term that would suggest affiliation with basketball players in the title, and from suggesting in any way any affiliation with basketball players. Id. at *6-7.

Under California common law, to demonstrate that one’s right of publicity was violated, you must demonstrate: (1) the defendant’s use of the plaintiff’s identity; (2) the appropriation of one’s name or likeness to one’s advantage; (3) lack of consent; and (4) resulting injury. Id. at *7.

The court first addressed the issue of whether Arenas’ ex-fiance’s “likely on-air conversations about Arenas (and any future promotional materials relating thereto”) constitute the use of Arenas’ identity as a celebrity. The court ruled that it does. The court also held that it was highly unlikely that Arenas’ ex-fiance would refrain from discussing Arenas or her relationship with Arenas, and therefore, Shed was likely to appropriate from the use of Arenas’ identity in connection with the show. Id.

Despite these findings, the court held that Shed had asserted two valid defenses, both stemming from the First Amendment. First, the court held that Shed offered proof that the show's value does not “derive primarily” from Arenas' celebrity status. Id. at *14. The court found that any references to Arenas would be “incidental to the show’s plot as a whole.” Id.

Shed also offered a public interest defense, stating “no cause of action will lie for the publication of matters in the public interest, which rests on the right of the public to know and the freedom of the press to tell it.’” Id. at *16. Arenas argued that discussion of his family life is not sufficiently related to his celebrity status “to render [the show]’s use of his identity a matter of public concern.” The court disagreed with Arenas based on his own exploitation of his personal life through Twitter and other means, and dismissed Arenas' right of publicity claim and his motion for preliminary injunction.

Knock-Out Punch

Companies have become increasingly aggressive with sending demand letters and filing suit to stop the piracy of sporting events. J & J Sports Prods. Inc., the exclusive commercial distributor of the broadcast rights for certain boxing matches, filed over 700 lawsuits in 2011 alone. See, e.g., J & J Sports Prods. Inc. No. 1:10-cv-4258-WSD, 2011 U.S. Dist. LEXIS 25453 (N.D. Ga. March 14, 2011).

Although businesses are required to obtain a license from J & J Sports to broadcast the boxing matches events to patrons, investigation by J & J revealed that many businesses failed to do so. In an effort to obtain information, J & J sends investigators to various establishments that have not paid the required license fee but are promoting the bout. The investigator then monitors the establishment, determines how many patrons are viewing the fight, and determines how much money is being made from the broadcast. These tactics have helped J & J to gather the information necessary to file suit for damages and lost profits based on the alleged interception and transmission of these events. The reason for being so aggressive is simple — J & J must protect its revenue stream.

Put on Your “Game” Face

In Hart v. Elec. Arts., Inc., plaintiff Ryan Hart, a former college football player at Maryland, brought a putative class action against Electronic Arts, the producer of a videogame series called NCAA Football. 808 F. Supp. 2d 757 (D.N.J. 2011). In his complaint, Hart alleged that Electronic Arts misappropriated his — and various other college football players’ — likeness and identity for a commercial purpose in connection with its video games. Electronic Arts filed a motion for summary judgment on the grounds that the First Amendment barred Hart's claims under New Jersey law for misappropriation of his likeness.

The court sided with Electronic Arts and held that the video game publisher may use college athletes' likenesses in its videogames because "there are sufficient elements of [Electronic Arts'] own expression ... that justify the conclusion that its use of the image is ... entitled to First Amendment protection." Id. For this reason, the court held that the First Amendment was a defense to Hart's right of publicity claim and granted Electronic Arts' motion for summary judgment.

8) Roll (Over) Tide

In one of the most eagerly anticipated decisions of this year, the Eleventh Circuit Court of Appeals issued its decision in the trademark infringement case between sports artist Daniel Moore and the University of Alabama. University of Alabama Board of Trustees v. New Life Art Inc., 05-00585-CV-UNAS-RBP-W (11th Cir. June 11, 2012). The University of Alabama sued Moore for trademark infringement and related claims based on his portrayal of Alabama uniforms in paintings and prints.

For over three decades, Moore painted football scenes featuring the Crimson Tide. Moore’s paintings are very popular and have been reproduced as prints, calendars, on mugs and other articles. Id. at *3. During the first several years of painting these images, Moore had no relationship with Alabama. Id. From 1991 to 1999, Moore entered into several licensing agreements with Alabama to produce and market certain items.

In 2002, Alabama told Moore that he needed permission to depict the school's uniforms because they are trademarks. Moore disagreed and argued that he did not need permission because the uniforms were being used to “realistically portray historical events.” Id. Despite raising its objection, Alabama continued to sell Moore's unlicensed calendars in its campus stores and displayed several of Moore's unlicensed paintings.

The parties couldn’t reach an agreement, and in 2005 the University of Alabama sued Moore for breach of contract, trademark infringement and unfair competition. The district court held that the prior licensing agreements did not require that Moore receive permission to portray the university’s uniforms because they were not included in the definition of “licensed indicia.”

It also found that the university’s colors had some secondary meaning “but were not especially strong marks on the trademark spectrum.” Third, it held that Moore’s depiction of the uniforms in his paintings and prints was protected by the First Amendment and constituted a fair use but that Moore’s depiction of the uniform on mugs, calendars and other “mundane products” was not protected by the First Amendment and was not a fair use. Id. at 7.

The Eleventh Circuit agreed that Moore’s depiction of the university’s uniforms in his unlicensed paintings, prints and calendars was not prohibited by the parties’ prior licenses. The court also held that paintings, prints, and calendars “do not violate the Lanham Act because these artistically expressive objects are protected by the First Amendment." Id. at 32.

Because the uniforms featured in the paintings are “artistically relevant to the underlying work, Moore never explicitly misled consumers as to the source of the items, and the interests in artistic expression outweigh the risk of confusion as to endorsement.” Id. at 32-33. Regarding the other products at issue in the dispute, the court found that record lacked evidence regarding Moore's portrayal of Alabama’s uniforms on mugs and other mundane items. Therefore, the court concluded that disputed issues of fact remained with regard to these items.

Sports, IP and money are not mutually exclusive. As long as consumers are willing to shell out big bucks for tickets, merchandise, and other sports-related items, players, teams and organizations will continue to use the legal avenue to protect their IP rights.

[1] See WIPO, Sports and Intellectual Property, www.wipo.int/ip-sport/en last accessed on Oct. 7, 2012.

Top Sports IP Plays of the Last Year - Part 1

Tue, 16 Oct 2012 20:22:30 GMT

Today we post Part One of an article authored by our partner Ms. Emily Bayton and published by Law360 on October 16, 2012. Please check back next week for Part Two!

As an intellectual property lawyer and avid sports fan, I’m always interested in a case involving the legal intersection between sports and IP. There are plenty of IP issues facing the sports industry. Like any other industry, it’s driven by money, much of which is generated from IP. From licensing of team names and logos, to broadcast and sponsorship rights, to merchandise deals, IP plays a large role in the value of the sports industry.

A recent article by the World Intellectual Property Organization estimates global revenue from sponsorships, gate revenues, media rights fees to reach $133 billion in 2013. This figure does not account for revenue generated from the sale of athletic footwear and apparel, estimated at $300 billion worldwide.[1]

It’s no surprise then that athletes, teams and sports organizations go to great lengths to protect their IP. This article provides a summary of current IP issues facing the sports world and the potential impact on the multibillion-dollar industry.

Combating Counterfeiting

Counterfeiting flourished over the last several decades due largely to the availability of better and cheaper technology to facilitate copying. The sports industry took a significant hit from increased counterfeiting. From counterfeit tickets to knock off jerseys, IP owners fight a rigorous war to rid the market of fake goods. A 2011 survey by MarkMonitor revealed an astonishing 56 million annual visits to suspected counterfeiting websites and annual sales of almost 1.2 million suspicious jerseys.[2]

Brand owners are fighting the proliferation of counterfeit products and tickets with comprehensive counterfeit plans, and federal officials have also stepped up their game. In July 2012, Homeland Security Investigations and U.S. Immigration and Customs officials joined forces to roll out “Project Copycat,” targeting websites selling counterfeit goods. The program has shut down approximately 70 websites for allegedly selling fake National Football League, National Basketball Association, Major League Baseball, National Hockey League and National Collegiate Athletic Association jerseys.[3]

Defending the Domain (Name)

The battle over the Internet raged on with sports organizations filing suit to stop unauthorized use of their names within domain names over the past year. As an example, in Cleveland Browns Football Co. LLC v. Dinoia, the NFL franchise filed an arbitration proceeding against an individual from Italy regarding registration of the domain name browns.com. The Browns relied on its trademark rights in the marks "Cleveland Browns," the "Browns" and other trademarks incorporating “Browns.”

The complaint alleged that the browns.com domain name was identical to the trademark "Browns" and confusingly similar to the "Cleveland Browns" trademark, that Dinoia had no legitimate rights or interests in the domain and that it was registered and used in bad faith. The World Intellectual Property Organization agreed and ordered that the domain be transferred to the Browns organization. WIPO Case No. D2011-0421 (2011) (Trotman, Clive, Arb.).

Similarly, the National Football League sued EE Nation over its registration of superbowlconcierge.com. NFL v. EE Nation, WIPO Case No. D2011-1228 (2011) (Gibson, Arb.). The NFL, which aggressively protects its "Superbowl" trademark, filed an arbitration proceeding against EE Nation alleging that its registration and use of the domain superbowlconcierge.com without NFL authorization or consent violated its trademark rights.

The NFL relied on EE Nation's unauthorized use of NFL logos and pictures of NFL teams, as well as the display of links for booking rooms at hotels near NFL stadiums and purchasing tickets to NFL games, to support its claim that the domain was being used in bad faith. WIPO agreed, finding that the domain was identical to the NFL's trademarks, that EE Nation had no rights or interests in the domain, and that it had been registered and used in bad faith. The panel ordered the domain name superbowlconcierge.com to be transferred to the NFL.

In Pacific-10 Conference v. Lee, the Pac-10 conference (now the Pac-12) filed an arbitration action relating to a third party’s registration of the domains pac-12network.com, pac12network.com, and pac-12network.org. WIPO Case No. D2011-0200 (2011) (Sorkin, David, Arb.). The domains were registered following the PAC-10’s announcement that it was considering expansion of the conference to 12 teams.

The conference relied on its rights in various "PAC-10" formative trademark registrations, claiming they constituted a “family of trademarks,” and its pending federal trademark application for “PAC-12.” The conference argued that the domain names were confusingly similar to its trademarks, that the respondent had no rights or legitimate interests in the domains, and that Lee registered and used the domain names in bad faith. The panel agreed and ordered that the domains be transferred to the conference.

Rookie Rights

Rookie athletes have become increasingly savvy about protecting their IP. They recognize that their value involves much more than a playing contract amount — it’s about the commercial exploitation of their name, image and likeness. This explains why almost all up-and-coming athletes work to build and maintain their “brand.”

As examples, in 2012, the highly touted college quarterback Robert Griffin III (now starting quarterback for the Washington Redskins), filed federal trademark applications for "RGIII," "RG3," "Robert Griffin III" and "Unbelievably Believable," and star Kentucky basketball player Anthony Davis filed applications to protect "Fear the Brow" and "Protect the Brow," in reference to his “trademarked” unibrow.

College Football’s Battle of the Birds

In a battle that was not played out on the gridiron but instead was fought in the Trademark Trial and Appeal Board, the University of Iowa (my alma mater) opposed The University of Southern Mississippi’s federal trademark application for an eagle head design on the basis that it was confusingly similar to Iowa’s hawk head design. The University of Iowa and The Board of Regents, State of Iowa v. The University of Southern Mississippi, Opposition No. 91164745 (July 29, 2011) [not precedential].

The Trademark Trial and Appeal Board found in favor of the University of Iowa and sustained its opposition to registration of Southern Mississippi’s eagle head design. The TTAB held that the similarities between the marks outweigh the minor differences. The TTAB also focused on the consumer recognition of Iowa’s logo based on nationwide coverage of Iowa sports, and the overlap in the parties’ goods and channels of trade. Id. at 20-21.

Regarding degree of consumer care at the time of purchase, the TTAB noted that although loyal fans may be able to distinguish between the schools’ logos, other persons may not be “necessarily attuned to minor differences between somewhat similar sports teams’ logos.” Id. at 26.

Southern Mississippi argued that the coexistence of various bird-head designs as collegiate mascots significantly narrowed Iowa’s scope of protection for its Hawkeye design. The TTAB disagreed and found that "Iowa should be able to establish a reasonable zone of protection around its Hawkeye marks in spite of the existence of many other representations of bird heads." Id. at 37.

Read Part Two of Ms. Bayton's article here:http://www.lrlaw.com/ipblog/blog.aspx?entry=604.

[1] See WIPO, Sports and Intellectual Property, www.wipo.int/ip-sport/en last accessed on Oct. 7, 2012.

[2] See https://www.markmonitor.com/pressreleases/2011/pr110201-bji.php last accessed on Oct. 7, 2012.

[2] See http://www.nfl.com/news/story/09000d5d82a84ce3/article/fake-nfl-jerseys-sold-on-seized-websites-officials-say last accessed on Oct. 7, 2012.

Challenging Patents

Thu, 11 Oct 2012 17:18:14 GMT

Any company or individual that works with technology may have to deal with patents. Even companies that do not patent their own products or services may nevertheless be impacted by patent law. While certain high-profile patent cases (Apple-Samsung) have featured large patent-holders on both sides, patent lawsuits may also be brought against small companies (start-up) that do not have any patents in their arsenal.

Now that many provisions of the America Invents Act (AIA) are being implemented, however, a greater variety of challenges to patents and patent applications has become available. The availability of such proceedings reflect the understanding that individuals and entities working in innovation industries may have knowledge and access to materials useful to the Patent Office in assessing patentability of pending patent applications, as well as ensuring that issued patents do indeed meet the standards for patentability (e.g., novelty, nonobviousness).

Such proceedings may provide speedier and less costly alternatives to litigation in federal district courts, as well as possibly staying litigation in some cases. As such, a company or individual that faces current or potential litigation by a competitor or a non-practicing entity (also called “patent assertion entity” or “patent troll”) with questionable patents now have more options to prepare for and to address such concerns.

Ex Parte Reexamination: Available since the 1980’s, ex parte reexamination of a patent can be initiated by any member of the public that submits prior art and a statement describing how the prior art raises a substantive new question of patentability. Through such a proceeding, patent claims may possibly be cancelled or narrowed.

Inter Partes Review: Newly available under the AIA, inter partes review is a trial proceeding before the new Patent Trial and Appeal Board (PTAB). Only in effect as of September 16, 2012, the goal is for the PTAB to handle a proceeding and reach a final determination within 1 year. Like ex parte reexaminations, a party may challenge the patent of another on the basis of prior art.

Post Grant Review: Post grant review is another trial proceeding that is newly available under the AIA. This proceeding allows for patent challenges on additional bases besides prior art, such as the issue of whether the patentee was actually the first-inventor-to-file. Post grant review is only available during the first nine months following issue of a patent. Like the inter partes review, the PTAB expects to resolve a post grant review proceeding within 1 year.

Derivation: Another new trial proceeding before the PTAB, a derivation proceeding determines whether an inventor of an earlier application derived the invention from another, later-filing inventor and was not authorized to file the earlier application. A petition to initiate such proceedings may only be filed within 1 year of publication of the earlier filed application.

Transitional Program for Business Methods: Yet another new proceeding conducted by the PTAB, the transitional proceedings for business methods are similar to post grant review. The petitioner (or its real party in interest) must have been sued or charged with infringement of a business method.

Third Party Submission: Third parties may participate in the review of pending patent applications by submitting prior art to patent examiners. The goal is to allow individuals and communities with deep, cutting-edge knowledge of technology to participate in examination and aid the Patent Office in determining whether an invention is actually novel. Third party submissions may be done anonymously, but must be filed before allowance.

Patent News:

1. Ask Patents is a new crowd-sourcing collaboration between the U.S. Patent and Trademark Office, Stack Exchange, and Google Patents to allows citizen volunteers to participate in identifying questionable patents and patent applications, tagging and classifying the same, finding and reporting prior art, and reporting results to the USPTO.

2. The ACLU asks the U.S. Supreme Court to invalidate patents on breast cancer gene. Background: The ACLU, in conjunction with various nonprofit organizations, had successfully brought suit to invalidate certain claims in breast cancer gene patents held by Myriad Genetics and the University of Utah Research Foundation. On a first appeal to the Federal Circuit some patent claims were found valid and other patent claims remained invalid. Before the parties’ petition to the Supreme Court could be decided, the Supreme Court issued their decision in Mayo v. Prometheus, a case with potentially significant consequences for technologies related to life sciences. The Supreme Court thereafter remanded this case back to the Federal Circuit for reconsideration in light of the Mayo decision, following which the same panel of Federal Circuit judges affirmed its earlier decision.

3. The USPTO is testing an outreach effort at Cornell University looking to give students access to resources and advice in bringing innovations to market.

Can the Design of a Candy Bar Be Distinctive? YES IT CAN!

Tue, 28 Aug 2012 18:11:54 GMT

On June 28, 2012, the Trademark Trial and Appeal Board ("TTAB") of the U.S. Patent and Trademark Office ("USPTO") ruled in favor of the Hershey Chocolate and Confectionary Corporation ("Hershey"), reversing the USPTO’s decision that Hershey’s candy bar configuration was functional and non-distinctive.

BACKGROUND

On August 20, 2009, Hershey filed a trademark application (Serial No. 77/809223) with the USPTO for registration of a design mark for "candy; chocolate" in International Class 30. The mark (see below), was described as "a configuration of a candy bar that consists of twelve (12) equally-sized recessed rectangular panels arranged in a four panel by three panel format with each panel having its own raised border within a large rectangle."

Hershey claimed that the mark had acquired distinctiveness, based on use since December 31, 1968. The Trademark Examiner refused registration, however, on the ground that the mark was a "functional configuration of the goods" and, alternatively, that if the mark was not functional, the mark consisted of a non-distinctive configuration and, accordingly, did not function as a trademark. In addition, the Examiner determined that the mark had not acquired distinctiveness, despite continuous use since 1968. Hershey appealed the decision on February 11, 2011.

APPEAL TO TTAB

Before discussing the merits of the case, the TTAB addressed the configuration of the candy bar, namely, (1) a rectangle divided into 12 segments, (2) of equal size, (3) in a four by three arrangement, with (4) a raised border design for each segment, and noted that regardless of whether each element was functional or non-functional, the overall combination of these elements would guide its review.

Functionality

The Board first considered whether the design was functional, explaining that the functionality doctrine balances trademark and patent law, and then focused on the following four factors:

The existence of a utility patent;
Advertising that touts the utilitarian advantages of the design;
The availability of alternate designs; and
Whether the design results from a comparatively simple or inexpensive method of manufacturing.

In defense of the refusal, the Trademark Examiner argued that the "flat rectangular shape and the ‘scoring’ of applicant’s candy bar into smaller pieces represent[ed] functional features which constitute an absolute bar to registration." The Examiner relied in part on the existence of a utility patent that claimed a method of scoring candy so that it could be broken into smaller pieces, numerous articles that touted the utility of the candy bar for sharing, and other third party candy bars that were flat and segmented.

In response, Hershey argued that the Examiner had only focused on one element of the design (i.e., the scoring) and ignored the other elements of the configuration. In addition, Hershey argued that the patent cited by the Examiner did not disclose the features comprising Hershey’s mark, that Hershey had not promoted the utilitarian advantages of the design and, moreover, numerous alternative designs were available to competitors. Finally, Hershey argued that its design was not the result of a simpler or less expensive method.

In considering both sides’ arguments, the Board stated that there was "no doubt" that the scoring of the candy bar served a useful function and that, "[s]imply put, candy bar segmentation is a functional feature of such goods." The Board further explained, however, that Hershey was seeking to register a candy bar that comprised all of the elements shown in the description and drawing of the mark. Accordingly, while the TTAB posited that there was "no question" that the rectangular shape or segments alone were functional and not registrable, it must balance the functional elements against any non-functional elements to determine whether the mark as a whole was functional.

In doing so, the Board disagreed with the Examiner’s focus on the rectangular shape and the segments as being dispositive of the issue of functionality, because this focus ignored the other elements of the mark. The Board further stated that the raised-border rectangles formed a prominent part of Hershey’s mark, there was no evidence that this particular combination of recessed rectangles with a raised border was used by other candy manufacturers or that the overall design was "in any way" functional. As such, when the significance of the design was balanced against the rectangular shape, including the segments, the mark as a whole was not functional.

Acquired Distinctiveness

The Trademark Examiner also refused registration of the mark on the ground that the design was not inherently distinctive and Hershey had not established acquired distinctiveness. The Board noted that Hershey admitted that the mark was not inherently distinctive and that an applicant faces a heavy burden in establishing the distinctiveness of a product design, but concluded that based on the direct evidence Hershey submitted (i.e., results of consumer recognition surveys), as well as circumstantial evidence (i.e., the declaration of Hershey’s assistant secretary as to the length of use of the mark, the sales revenue and advertising expenditures), plus evidence of attempts by third parties to copy the design, the mark had acquired distinctiveness. As such, it reversed the refusal and remanded the application back to the Examiner for further review.

POST-SCRIPT

The mark was subsequently approved for publication on July 16, 2012 and will be published for opposition on September 4, 2012.

3 Things You Need to Know About the SHIELD Act, Which Aims to Make High-Tech Patent Litigation More Risky for NPEs

Fri, 17 Aug 2012 13:58:32 GMT

On August 1, 2012, a new bill was introduced in the House of Representatives to help protect high-tech companies from frivolous patent lawsuits. The bill is sponsored by Congressmen Peter DeFazio (D-OR) and Jason Chaffetz (R-UT). Entitled the “Saving High-Tech Innovators from Egregious Legal Disputes (SHIELD) Act,” the bill seeks to make it easier for companies accused of patent infringement to recover their attorney's fees and other litigation costs. According to Congressman DeFazio, this fee-shifting measure will "put the financial burden on so-called 'patent trolls' that buy patents solely to sue the American tech startups that created the products." [1]

Patent trolls—also known by the less pejorative term, non-practicing entities (NPEs)—hold patents but do not produce any goods or services covered by their patented technology. NPEs frequently target high-tech companies and are notorious for bringing nuisance suits against them (i.e. suits of questionable merit that are nevertheless settled for approximately the cost to defend the case). A recent Boston University study indicates that NPE lawsuits impose significant costs on American businesses—to the tune of $29 billion in 2011 alone. [2]

Congressman Chaffetz claims that the SHIELD Act will reign in these costs by "moving to a 'loser pays' system for software and hardware patent litigation." [3]

Here are three things you need to know about the SHIELD Act.

1. A Loser Pays System (of Sorts) Already Exists under U.S. Patent Law

Under 35 U.S.C. § 285, a "court in exceptional cases may award reasonable attorney fees to the prevailing party." Exceptional cases have been found in lawsuits involving frivolous claims. Frivolous claims are those in which there was no reasonable expectation of success. Showing that a claim is frivolous, however, does not in and of itself guarantee an award of attorney's fees since section 285 states that courts "may" award attorney fees in such cases.

The United States Court of Appeals for the Federal Circuit recently clarified that prevailing parties seeking an award of attorney's fees must also show that the other side knew or should have known that their claims were frivolous. [4] This is a difficult burden for accused infringers to meet as courts presume that infringement claims based on a duly granted patent are made in good faith. [5]

2, The SHIELD Act Makes it Easier for Accused Infringers to Recover Attorney's Fees, But Only in Software and Computer Hardware Patent Cases

The SHIELD Act appears to create a new standard of proof in which prevailing parties are only required to prove that a claim is objectively frivolous. The Act states:

“Notwithstanding section 285, in an action disputing the validity or alleging the infringement of a computer hardware or software patent, upon making a determination that the party alleging the infringement of the patent did not have a reasonable likelihood of succeeding (emphasis added), the court may award the recovery of full costs to the prevailing party, including reasonable attorney's fees.”

Interestingly, the SHIELD Act still contains the permissive word "may." But inasmuch as the SHIELD Act is written as an exception to section 285, it is doubtful that courts would read the subjective, "known or should have known" prong into it. The SHIELD Act's lesser burden of proof would apply to declaratory judgment and infringement actions, but only in cases in which computer hardware or software patents are at issue.

3. The SHIELD Act Shifts the Financial Risk to All High-Tech Patentees, Not Just NPEs

While the SHIELD Act is being touted as a bill to combat NPEs, its fee-shifting provision would apply to any party "alleging the infringement of [a] patent." This shifts the financial risks to any holder of a software or computer hardware patent—NPEs and their operating counterparts alike. Some have speculated that this could lead to unintended consequences, such as deterring startups and small businesses—who could be crushed by having to pay the other side's costs—from asserting their patents. Whereas for NPEs, it would be business as usual as many of them are cash flush and could bear the cost of the SHIELD Act's sanctions from time to time.

That said, the SHIELD Act clearly intends to give accused infringers more choices when dealing with NPEs, and that is a good thing. Instead of having to choose between mounting an expensive legal defense or accepting an equally expensive nuisance settlement, accused infringers could fight back. The SHIELD Act's fee-shifting provision could give accused infringers the leverage they need to negotiate more palatable settlements. Accused infringers could also defend frivolous suits on the merits and then count on being reimbursed for having to do so.

This is certainly a step in the right direction for the high-tech business community.

[1] Press Release, Congressman Peter DeFazio, DeFazio Introduces SHIELD Act to Protect American Innovation, Jobs (Aug. 1, 2012), http://defazio.house.gov/index.php?option=com_content&task=view&id=792&Itemid=135 (hereinafter "DeFazio Press Release").
[2] James Bessen & Michael J. Meurer, The Direct Costs from NPE Disputes 19 (Boston Univ. School of Law, Working Paper No. 34, 2012).
[3] DeFazio Press Release.
[4] Highmark, Inc. v. Allcare Health Management Systems, Inc., No. 2011-1219, slip op. at 8 (Fed. Cir. Aug. 7, 2012).
[5] See id. at 10-11.

CLS Bank v. Alice Corp.: Divided Federal Circuit Panel Evidences Fundamental Disagreement Over How to Determine Patent Eligibility Under Section 101

Wed, 11 Jul 2012 20:14:13 GMT

The topic of what constitutes patentable subject matter under section 101 of the Patent Act has received a lot of attention leading up to and following the Supreme Court's decision in Bilski v. Kappos, 130 S. Ct. 3218 (2010). More recently, in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the Supreme Court revisited the issue. 132 S. Ct. 1289 (2012). Reversing the Federal Circuit, the Supreme Court held that Prometheus' invention for a personalized medicine dosing process constituted unpatentable subject matter, because it applied a natural process (which is never patentable) using known elements. This was the second time in the last three terms that the Supreme Court reversed the Federal Circuit in a section 101, patentable subject matter case.

On July 9, 2012, in its first section 101 decision post Prometheus, a majority panel for the Federal Circuit found that an invention claiming the computerized use of an intermediary in a financial transaction to eliminate "settlement risk" (i.e. the risk that only one party will pay its obligation) was patent eligible. CLS Bank v. Alice Corp. (No. 2011-1301). The district court had previously granted CLS Bank's motion for summary judgment of invalidity on the grounds that the asserted claims, which were all directed to the use of this credit intermediary, recited an abstract idea and were thus patent ineligible. In reversing the district court, the majority panel held:

Unless the single most reasonable understanding is that a claim is directed to nothing more than a fundamental truth or disembodied concept, with no limitations in the claim attaching that idea to a specific application, it is inappropriate to hold that the claim is directed to a patent ineligible "abstract idea" under [section 101].

Slip Op. at 20-21 (emphasis added).

The dissent observed that this holding represented a "new approach" to the question of patentable subject matter, one that "resists the Supreme Court's unanimous directive [following Prometheus] to apply the patentable subject matter test with more vigor." Dissent at 1, 3.

In the analysis that followed, the majority and dissent demonstrated a fundamental disagreement over how to determine whether an invention falls under the "abstract idea" exception to patent eligibility. The majority adopted a strict approach as it related to claim interpretation, observing that "[a]ny claim can be stripped down . . . [to] an abstract idea." Slip Op. at 19. The dissent, on the other hand, broke the claims down into plain English and asked whether the claims recited an "inventive concept," as purportedly required by Prometheus. Dissent at 3, 5 ("Now there is no doubt that to be patent eligible under § 101, the claims must include an 'inventive concept.") (citing Prometheus, 132 S. Ct. at 1294).

The majority found that the asserted claims were patent eligible because they covered the application of an abstract idea (i.e. the use of a credit intermediary) in a specific way. Slip Op. at 26. Of particular note to the majority were the limitations that recited the use of "shadow accounts" by a supervisory institution to help parties settle an obligation. Slip Op. at 27. The dissent disagreed, finding that the "shadow accounts" limitations were essentially directed to the basic idea of setting up a debit and credit account for each party. Dissent at 5. Like the claim limitations in Prometheus, this was not inventive and certainly not enough to transform an abstract idea into a patentable one. Dissent at 6.

Given the sharp disagreement among the panel members and the apparent tension between the majority's decision and Prometheus, it will not be surprising to see the Federal Circuit revisit the case en banc or for the Supreme Court to be given the chance to clarify once more the standard for patent eligibility under section 101.

Standard Clarified for Willful Patent Infringement: Objective Prong is a Question of Law For the Judge

Tue, 03 Jul 2012 11:52:14 GMT

On June 14, 2012, the Federal Circuit issued its decision in Bard Peripheral Vascular Inc. v. W.L. Gore & Assoc’s. Inc., clarifying the standard for willful patent infringement. This clarification will give patent litigants greater certainty regarding the scope of potential damages, which in turn will help litigants decide whether to attempt to settle or go to trial.

If an accused patent infringer acted willfully, the court may enhance damages up to three times the damages award, as well as award the patent holder its attorneys’ fees and costs. 35 U.S.C. §§ 284-85. The Federal Circuit modified the test for willful infringement five years ago in In re Seagate Tech., 497 F.3d 1360 (Fed. Cir. 2007) (en banc). To prove willful infringement a patent holder must prove that (1) the accused infringer “acted despite an objectively high likelihood that its actions constituted infringement of a valid patent,” and (2) the "objectively defined risk . . . was either known or so obvious that it should have been known to the accused infringer.” Id. at 1371. The first prong of this test is objective, whereas the second prong is subjective and involves the accused infringer's actual state of mind.

The new Bard decision stems from a long-time dispute over a patent for prosthetic vascular grafts. Bard Peripheral Vascular, Inc. v. W.L. Gore & Assoc’s., 670 F.3d 1171 (Fed. Cir. 2012). A jury found W.L. Gore guilty of willfully infringing Bard's patent and awarded damages to Bard. The district court enhanced those damages due to the willful nature of W.L. Gore’s infringement, and also ordered W.L. Gore to pay Bard’s attorneys’ fees and costs. Id. On appeal, the Federal Circuit initially upheld the determination of willfulness, finding that, despite several defenses offered by W.L. Gore, there was sufficient evidence to satisfy both prongs of the willful infringement test. Id. at 1175.

W.L. Gore petitioned for rehearing, again challenging the trial court's willfulness analysis. The Federal Circuit granted the petition "for the limited purpose of authorizing the panel to revise the portion of its opinion addressing willfulness." Order, No. 2010-1510.

On rehearing, a three judge panel of the Federal Circuit recognized that "[t]he ultimate question of willfulness has long been treated as a question of fact." However, "[f]ollowing Seagate, this court established the rule that generally the objective prong of Seagate tends not to be met where an accused infringer relies on a reasonable defense to a charge of infringement.'" Id. at 4-5. The panel further noted that it previously had not "clearly delineate[d] the standard applicable to Seagate's objective test." Id. at 5.

The Federal Circuit looked to Supreme Court precedent for guidance. The panel noted:

the decision to label an issue a ‘question of law,’ a ‘question of fact,’ or a ‘mixed question of law and fact’ is sometimes as much a matter of allocation as it is of analysis." Id. at 6. With regard to the objective prong of the willful infringement test, the Federal Circuit concluded: “We believe that the court is in the best position for making the determination of reasonableness. This court therefore holds that the objective determination of recklessness, even though predicated on underlying mixed questions of law and fact, is best decided by the judge as a question of law subject to de novo review.

Id. at 6-7. The Court further instructed:

In considering the objective prong of Seagate, the judge may when the defense is a question of fact or a mixed question of law and fact allow the jury to determine the underlying facts relevant to the defense in the first instance, for example, the questions of anticipation or obviousness. But, consistent with this court's holding today, the ultimate legal question of whether a reasonable person would have considered there to be a high likelihood of infringement of a valid patent should always be decided as a matter of law by the judge.

Id. at 9.

Because the objective prong must ultimately be decided by the judge, the Federal Circuit's clarification of the objective prong of willful infringement may encourage courts to more actively evaluate claims of willful infringement before trial. Since Seagate, some courts have granted summary judgment of no willful infringement under the objective prong, and this clarification may accelerate that trend. If claims for willfulness can be resolved early, it will help litigants evaluate the potential damages at stake, which will in turn help guide the litigation strategy before trial.

When the Best Defense is a Proactive Offense: Protecting Your Reputation on the Internet

Fri, 29 Jun 2012 13:45:07 GMT

Here’s the scenario: You’re a well-known athlete. You’ve worked hard to become the best in your game. You wake up one morning, grab your coffee, sit down at your computer and start to read the morning’s news. Much to your chagrin, you come upon a story about …. you. Apparently, while you were sleeping, you used Twitter to begin “trash talking” players of an opposing team and making derogatory jokes about the deaths of former players in the league. But, you don’t have a Twitter account -- you don’t even know how to “tweet.” Yet, your name is now associated with those damaging comments and it’s all over the Internet and on the news. What do you do? What can you do?

Your Persona Can Be Hijacked Online

Although you may think this scenario seems far-fetched, it isn’t. Tony La Russa, manager of the St. Louis Cardinals, found himself in a similar situation; he channeled his outrage into filing a lawsuit against Twitter to stop the imposter account. Other examples abound. A fake “tweet” supposedly from Ben Roethlisberger, Pittsburgh Steelers’ quarterback, said he had cancer. A fake Facebook account allegedly belonging to hockey star Brayden Schenn posted racist comments just prior to the start of a game, causing public uproar and condemnation of Schenn.

These high-profile examples underscore how important it is for sports teams and athletes to protect their intellectual property rights on online social media platforms.

Crash Course in Trademark Rights and Rights of Publicity

It can be helpful to understand the difference between trademark rights and rights of publicity. Trademark law is designed to protect an entity that is the source of a good or service. Famous sports teams and high-profile athletes have been recognized as having, at a minimum, common law trademark rights in their names.

Rights of publicity, on the other hand, are inalienable rights owned by every person in their own name, image and likeness. Laws protecting rights of publicity prohibit the commercial exploitation of a person’s name, image and likeness without permission, whether you’re a celebrity or not.

How to Protect Your Brand on the Internet

Social media has changed everything--including how fans, teams and athletes interact with each other. Facebook, MySpace, Twitter, YouTube, and a number of “apps” and mobile platforms seem as though they were custom-designed to feed sports fans’ obsessions. The unprecedented access that fans now have to every move their favorite player makes on and off the field can be both a benefit and a burden to the athlete. There is no question that there is value and advantage in exploiting the emotional connection a fan has with a team or athlete, which can directly translate into significant endorsement deals. On the other hand, as demonstrated above, that same access can also cause significant harm to a team or athlete’s reputation.

That’s why it is important to understand and adopt proactive enforcement policies and be vigilant in monitoring Internet activity regarding your team and/or name. Here are some tips to consider.

Tip #1: Create An “Official” Website
Teams and athletes need to have an “official” website. Here, you will provide fans, media outlets and the general public not only with accurate information about yourself, but also an “experience” of what your brand represents and who you are. This will help build the requisite “good will” in your brand that is necessary to protect it. Choose a domain name that is identical to or that closely resembles the team’s or athlete’s name (e.g. www.denverbroncos.com) so that your fans can quickly find you and separate your site from the imposters.

Tip #2: Create “Official” Pages on Social Media Sites

You also should create “official” pages on all of the major social media sites, including Facebook, MySpace, Twitter, and YouTube as well as on new-comers such as Google+ and FourSquare and then link them to your “official” website. This will help guide fans away from imposter sites and pages. In this same vein, sports team managers should consider including links to all players’ “official” sites on the team’s “official” site, and make sure to include links to the players’ “official” social media pages so that fans are not confused by the “fakes.”

This will also help serve as a resource for news services and the public, making it easy for anyone to check whether information released to the public was “fake” or not. For example, sports teams can help diffuse fake news stories and maintain a consistent brand message by keeping a close relationship between “official” team-directed material on social media and “unofficial” athlete-generated content on social media. Finally, don’t forget about putting up a page on Wikipedia about yourself or the team; it’s another platform from which to present your brand.

Tip #3: Put the Kibosh on Social Media Imposters

In the event an imposter is squatting on your name, most social media sites provide a means for trademark owners to protect their marks within the site and guard against imposters. Facebook and Twitter both have policies in place whereby trademark owners may file grievances with either company to have a particular page removed from their site and replaced with your “official” page. Twitter also allows accounts to be “verified,” a process by which Twitter places a blue check next to your Twitter name to let followers know that the page is authentic.

Tip #4: Actively “Police” Your Mark

The “Internet police” don’t exist so it’s up to you to actively monitor what is happening on the Internet in relation to you and your brand. Internet users can be fooled by fake websites and social media pages because there are so many of them out there! At first glance, it can be very difficult to tell which ones are real and which are fake. Therefore, it’s up to the team, the athlete, or their publicist(s) to ensure the risks and responsibilities are managed appropriately. There’s no hard and fast rule as to how often you should patrol the Internet for “fakes”; the more high profile you are, the more likely it is that you will have to patrol the Internet daily.

Regardless, you have to be vigilant in updating your social media platforms and maintain regular dialogue with your fans. Failure to actively participate on and patrol your sites will leave you vulnerable to attack and possibly result in a significant amount of time being invested to rehabilitate you or your brand.

Tip #5: Root Out Squatters

As a note of caution, be on the lookout for “squatters.” “Cybersquatters” are people who register domain names with the intent of depriving the trademark owner of the name and/or deceiving the public. Often, cybersquatters are looking to hold the domain name ransom until the trademark owner comes calling, preferably with money in hand.

“Squatters” also abound on Twitter, including “typosquatters.” A recent example of this involving Tim Tebow, after the Denver Broncos announced that they were signing Peyton Manning and speculation abounded as to where Mr. Tebow would land, caught the national media by surprise. Someone who was not Mr. Tebow created an account on Twitter “@TirnTebow”, replacing the “M” with a lowercase “RN,” and then tweeted, “It would be nice to play for a team in FL, preferably the #Jaguars….” This imposter then starting replying to Twitter accounts, including other NFL players’ accounts, and interacting with everyone from fans to Tebow imposter accounts. Much to their chagrin, the tweet was picked up and re-tweeted by the national media, including ESPN, which had to later issue an apology.

In the event you find yourself in either situation, it is best to contact an attorney who has experience in Internet trademark disputes, who can help guide you through your legal options.

Tip #6: Protect Yourself from Cybersquatters

One means of protecting yourself from cybersquatters is to register other domain names that incorporate your trademark and describe your services or geographic location (e.g., www.broncofootball.com; www.boisebroncos.com). Think about purchasing domain names that incorporate a common spelling or typographical errors (e.g. www.denverbroncosl.com, a case where the “L” key is just above the “.” key). You may also want to consider registering domain names that could be used to tarnish your reputation (e.g. www.ihatethedenverbroncos.com).

As for fake Twitter accounts, the Twitter Rules forbid impersonating another with an intent to deceive and can be removed. Although, as in the case of Tim Tebow above, it is important to remember that you have to be diligent and act quickly to bring down an imposter who is doing actual damage to your reputation, otherwise you may be too late to reverse what’s been done

Tip #7: Be Able To Laugh at Yourself

There are a number of sites on the Internet that are a parodies of famous teams or athletes. In fact, there are a growing number of Twitter accounts that are created for the sole purpose of being funny (e.g., @LeBronJamesEgo; @VeryFakeAlDavis). As a society, we tend to excuse and reward funny sites and/or accounts, particularly when the celebrities being mocked takes themselves way too seriously. There is little you can do about these accounts given their protection under the First Amendment--unless they cross the line and become defamatory. If the opportunity presents itself, embrace the parodies -- you’ll end up appearing more “human” to your fans.

Tip #8: Think Before You Post

The direct access that fans have to athletes and that athletes have to their fans is unprecedented. For the most part, it’s been a good thing for both parties. As an athlete or team manager, however, it’s easy to get caught up in the moment and think that what you have to say right then is worthwhile and meaningful. Instead, you run the risk of saying something inappropriate, thereby sticking your proverbial foot in your mouth.

Rashard Mendenhall found this out the hard way. Mendenhall tweeted some controversial statements about Osama bin Laden and 9-11 that brought him negative and unwanted national media attention and resulted in considerable public outrage. Soon thereafter, he lost an endorsement deal with the Champion sports apparel company. Being yourself without alienating people is not easy. On the other hand, there is no greater feeling for a fan to feel like they’ve been heard by their favorite athlete.

Conclusion

Be vigilant. Be proactive. You are responsible for your brand and reputation. If you don’t have the time to “police” the Internet yourself, find a responsible party who can do it for you, such as an attorney, brand management company, or a service like Reputation.com. Forewarned is forearmed.

John Krieger is a partner with Lewis and Roca’s Intellectual Property and Technology practice group. Mr. Krieger focuses his practice on helping clients strengthen and protect their intellectual property assets in both the real and online worlds, including enforcement of the same by way of various administrative remedies and/or litigation.

The America Invents Act - The What, The When and Making it Work for You

Tue, 26 Jun 2012 13:31:54 GMT

The Leahy-Smith America Invents Act ("AIA") was passed by Congress and signed into law in September 2011. The AIA represents the most significant change to U.S. patent law in over 50 years. Most significantly, the AIA aligns parts of U.S. Patent law with that of other countries, provides for a faster examination option, and opens up the playing field for submission of prior art. What are these portions, and when do they take effect? Well, let’s take a look.

If you have an idea, you may not want to sleep on it - the AIA changes U.S. patent law from a first to invent to a first to file system, the system used in most countries. If two inventors separately and independently conceive the same invention, the first one to file a patent on the invention will own the rights to the invention. A prior user who does not file a patent on an invention which someone else does file a patent application on, however, might be able to continue using the invention if they first used the invention for more than one year before the application covering the invention was filed by another.

The AIA also allows you to pay to move to the front of the line – via "Track 1" accelerated examination. Track 1 provides for an accelerated examination schedule for a fee, currently about $4,800.00. The accelerated examination should provide a final disposition(allowance or a final office action) within 12 months of prioritized status being granted.

Also under the AIA, third parties may submit prior art in an application of another. The deadline for submitting prior art by a third party is the later of the first office action mailing or six months after publication of the patent application.

These are some of the major changes that could potentially affect most entities in obtaining a patent. Other provisions of the AIA provide for an entity to file an application on behalf of inventors with assigned rights or an obligation to assign IP rights to the entity, updates to false marking which limits filing a claim to the government or a competitor with injury and which allows marking with an expired patent, elimination of interference proceedings and introduction of a derivation proceeding to determine original inventorship and rule out derivation.

Mark your calendars, as the provisions take effect (or took effect) as follows: September 16, 2011: Prior Use Defense, False Marking changes; September 26, 2011: Track 1 prioritized filings; September 16, 2012: Third party prior art submission, entity application filing on inventor behalf; March 16, 2013: first to file, derivative proceedings.

In light of these changes, I’m advising my clients to embrace the changes and use them to your advantage. First and foremost, I suggest that my clients start now to develop an internal process for identifying patentable subject matter quickly and efficiently. The streamlined process should consider new IP once or twice a month, and enable a quick turnaround for getting inventions protected if their process provides a green light. Provisional applications can be a quick and efficient way to get an application on file, along with a process for reviewing the business value of an invention a few months before the provisional application expires. Dates of technology usage and development should be recorded, not to establish first conception but for trade secret programs and establishing a prior user right defense. Entities may also consider performing quarterly searches for competitor published patent applications and consider submitting prior art if needed. All companies should also have solid IP assignment provisions in their employment agreements, as well as properly executed assignments for all IP.

The King is Dead! Long Live the King!

Mon, 11 Jun 2012 11:28:41 GMT

Genericide. While the word might conjure up images of shadowy plots and midnight coups or sounds like it might be thrown around casually on Game of Thrones, luckily genericide does not involve the death of any person. Unluckily, if you’re a trademark owner, it does involve the death of your trademark. Many people don’t realize that, much like video killed the radio star, popularity and ubiquity can kill a trademark. As my colleague Linda Norcross mentioned a little over a year ago (http://www.lrlaw.com/ipblog/blog.aspx?entry=322&fromSearch=true), a trademark owner must be ever on guard against the Looming Specter of Genericide (LSG, for short).

Trademarks, as you know, have to be distinctive in order to function as trademarks; that is, consumers have to understand that the trademark indicates the source, affiliation or sponsorship of a good or service. Trademark law treats marks differently depending on how distinctive they are. Arbitrary marks - plain English words that are unrelated to the goods or services that are offered under the marks, like APPLE for computers - and fanciful marks - neologisms, or as I like to call them, made up words, like STARBUCKS or VERIZON - are inherently distinctive and receive the most protection right out of the gate. Suggestive marks - which, amazingly, suggest something about the good or service, like GREYHOUND for bus services - are also inherently distinctive, but just barely. Descriptive marks - in earth-shattering news, they describe something about the good or service, like VISION WORKS for optometry services - are not distinctive; they have to acquire distinctiveness through use. And then, at the bottom of the list are generic marks, which aren’t really marks at all, but just the generic word for the good or service, like RESTAURANT for restaurants. Generic marks are unprotectable because, well, you can’t just bogart the word “restaurant.”

While your mark may start out inherently distinctive, it can, over time, slide down the slope and end up generic. You probably have used zippers, escalators and aspirin in your life, but did you know they used to be ZIPPER fasteners, ESCALATOR machines, and ASPIRIN medicine? These marks were all victims of genericide or the deterioration of a trademark into a common name for a class of goods or services.

Genericide is the central issue in a new lawsuit filed against Google, Inc. in late May in the District of Arizona. The plaintiff in the case, David Elliott, registered numerous domain names that incorporate the GOOGLE trademark, e.g. googlezodiac.com and googlealexandria.com. Google won a UDRP action against Elliott and got the domain names transferred to it. In his Arizona lawsuit, Elliott is seeking to cancel Google’s registrations for the GOOGLE mark, alleging that GOOGLE has become google, (def. to search the Internet ex. “I should google my name to find out how awesome the Internet thinks I am.”) Essentially, the argument is GOOGLE has become so well-known that people no longer see the mark as distinguishing the source of the service. When someone says “Just google it,” they aren’t exhorting you to use the GOOGLE search engine, they’re merely telling you to look for something on the Internet and they really don’t care if you’re using Google, Bing, Yahoo! or Ask. Therefore, GOOGLE has lost its source-identifying ability, or so the argument goes.

As several courts have articulated, in order to demonstrate that a mark has become generic, a plaintiff must show that “the primary significance of the mark to the relevant public is to identify the class of product or service to which the mark relates.” A plaintiff can point to evidence from purchaser testimony; consumer surveys; listings and dictionaries, trade journals, newspapers, and other publications; generic use of the term by competitors and other persons in the trade; the trademark owner’s own generic use; and generic use in the media. In his complaint, Elliott points to dictionaries (online, natch) and scholarly societies and journals that define “google” as a transitive verb that is synonymous with “search.” He also points to Google’s own Annual Report wherein Google acknowledges LSG (feel free to name your next band or WoW guild Looming Specter of Genericide; I won’t mind). He even brings up Google’s co-founder’s generic use of “google” from 1998. It appears that, at the very least, Elliott has laid out a solid foundation in his complaint. Discovery in this case could get really interesting as the parties start looking for evidence that GOOGLE is or is not generic. Interestingly, Elliott is only seeking to cancel two of Google’s GOOGLE registrations, the ones directly related to providing Internet search services. So, Google would still have other GOOGLE trademarks to work with.

LSG is the downside to having a great trademark and a popular product. While you want your mark on everyone’s lips, you don’t want them using those lips to turn your mark into a verb or the general word for every good or service in your class. LSG requires vigilance and attention to how your mark is being used, presented and represented in the marketplace, by you, your customers and third parties. As the saying goes, the best defense is a good offense (although defense wins championships), so work with your trademark attorney to develop a game plan to defeat LSG. Remember: Maius Opus Moveo. Die Luft der Freiheit weht. Non sibi, sed suis. (Feel free ~~to google a translation~~ to conduct a GOOGLE search for a translation.)

Luck of the Draw

Fri, 27 Apr 2012 16:31:24 GMT

Let me first say that I love football and I went to Stanford. But not when Stanford had good football teams, no, no. I went to Stanford when we were lucky to win 4 games in the season . So the recent, phenomenal success of Cardinal football is something I treasure deeply and hold onto with everything I have. I tell you this so as to acknowledge any bias that may creep into the following.

SOMEONE IS SUING ANDREW LUCK!!!! (Yes, that is shouting and multiple exclamation points. I’m not ashamed.) Just ahead of his being the number one (#1) pick in the 2012 NFL Draft, Leaf Trading Cards, LLC has sued Andrew Luck in Dallas County, Texas, seeking a declaratory judgment that they can continue to produce collectible trading cards featuring Luck and that such cards do not infringe Luck’s rights of publicity.

According to its Complaint, Leaf Trading Cards is licensed to produce trading cards of participants in the U.S. Army All-American Bowl, a high school all-star game. Trading cards have been produced for the games since 2009, but Leaf claims to have the right to use the name, likeness, image and intellectual property of players from prior bowl games as well. Andrew Luck played in the U.S. Army All-American Bowl in 2008.

Leaf Trading Cards has produced and distributed several 2012 trading card sets featuring players who are entered in the 2012 NFL Draft. Included in these sets are bonus cards featuring Andrew Luck’s image from the 2008 U.S. Army All-American Bowl. Well, on April 13, Andrew Luck’s attorneys sent a cease and desist letter to Leaf Trading Cards demanding that Leaf Trading Cards (I can’t just call them Leaf. Reminds me of Ryan Leaf. /shudder) stop violating Andrew Luck’s rights of publicity. However, Andrew Luck’s attorneys also requested that Leaf Trading Cards provide proof of any authorization or license, if Leaf Trading Cards believed it was licensed to exploit Andrew Luck’s rights of publicity.

Curiously, Leaf Trading Cards filed a lawsuit instead. In that lawsuit, they claim that their use is 1) protected by the First Amendment to the U.S. Constitution, 2) protected by Article 1, Section 8 of the Texas Constitution and 3) is licensed.

Leaving aside personal jurisdiction issues, the merits of this case could be interesting. Rights of publicity are common law rights which are not necessarily recognized in every state, although some states have codified them in statutes. Texas does, for now, recognize a common law right of publicity, or rather, the right to be free from unwarranted appropriation or exploitation of one’s personality. The contours of that right are fairly nebulous since the Texas Supreme Court has not yet ruled on the right; the seminal Texas case is an appellate court decision. The interplay of the First Amendment and rights of publicity can get interesting. On the one hand, people have a right to control the commercial exploitation of their likeness. On the other hand, the government can’t infringe on free speech, i.e. a person’s right to creative expression, except in limited circumstances. Therefore, the First Amendment can act as a defense to a right of publicity claim, sometimes. But the analysis is multilayered and convoluted and I’m not even going to try to work through it here. And, since I don’t practice in Texas, I shall also refrain from opining on the defense under the Texas Constitution (although, I’m not sure how a trading card can be considered an “opinion.” Just throwing that out there.)

But that final defense - that Leaf Trading Cards is licensed to use that specific Andrew Luck image - seems to be the easiest defense to tackle AND THE ONE THAT DOESN’T REQUIRE A LAWSUIT! (Sorry. I could only restrain myself so long.) Andrew Luck’s attorneys specifically requested that Leaf Trading Cards provide any evidence that they were authorized to use Andrew Luck’s name, image and likeness. If, as Leaf Trading Cards alleges, they are authorized to use Andrew Luck’s image from the 2008 U.S. Army All-American Bowl, that’s the end of the story.

But there’s some language in the Complaint that raises some red flags on this defense. Leaf Trading Cards states that the producer of the U.S. Army All-American Bowl represented and warranted that it had the authority to grant a license to Leaf Trading Cards to use the name, likeness and image of players in the Bowl. Leaf Trading Cards also stated that the producer represented and warranted that it had obtained, or will obtain, written permission from the players to use the rights that were licensed to Leaf Trading Cards. So, it’s entirely possible that Leaf Trading Cards does not have any rights to use Andrew Luck’s name, image or likeness. Hence, the constitutional defenses. But, if they don’t actually have the rights, why allege that they do?

I’ll be interested to see how this all turns out, but for now, I’m going to take solace from the fact that a Stanford quarterback is so popular that he’s gotten sued even before he’s made it to the big time. It almost makes up for that 3-8 season when I was there. Almost.

The Supreme Court and the Law of Nature Exclusion

Thu, 22 Mar 2012 11:55:51 GMT

In its March 20, 2012 opinion in Mayo Collaborative Services v. Prometheus Labs, Inc., the Supreme Court unanimously invalidated Prometheus’ patent claims based on the “law of nature exclusion,” explaining that routine, conventional activity cannot make natural correlations patent-eligible. 566 U.S. __. (2012).

Background on Section 101

Patent-eligibility is a threshold inquiry separate from novelty or innovation. Defined by Section 101 of the patent code, patent-eligible subject matter encompasses new processes, machines, manufactures, and compositions of matter. Specifically excluded from patent-eligibility, however, are laws of nature, physical phenomena, and abstract ideas.

In practice, challenging a patent based on (lack of) patent-eligibility may be easier than establishing patent invalidity based on other grounds. Lack of novelty, for example, may require extensive and costly searches, as well as expert reports/testimony, regarding obscure nuances of complex technologies. Because an inquiry into patent-eligibility does not require such evidence, patent infringement cases may be disposed of at an early stage of litigation by reference to patent-eligibility.

Conversely, patentees may be more likely to appeal adverse decisions related to patent-eligibility, because of the implications of such decisions may have on the ability to obtain patents on whole categories of subject matter. As a result, the issue of patent-eligibility has been revisited numerous times over the past several years. See Bilski v. Kappos, 130 S. Ct. 3218 (2010); Ass’n for Molecular Pathology v. U.S. Patent & Trademark Office, 653 F.3d 1329 (Fed. Cir. 2011); Classen Immunotherapies, Inc. v. Biogen Idec, 659 F.3d 1057 (Fed. Cir. 2011); Ultramercial, LLC v. Hulu, LLC, 657 F.3d 1323 (Fed. Cir. 2011).

Prometheus patent

In the present case, Prometheus markets a series of diagnostic tests covered by patent claims that essentially recite administering a thiopurine drug to an autoimmune patient and then determining a level of drug metabolites in the patient, which may be used by a doctor to judge whether the drug dosage is appropriate. Mayo claims that the claimed process attempts to monopolizes natural laws and natural phenomena, and is therefore not patent-eligible.

The Federal Circuit had upheld the Prometheus patent, finding that the drug administration and metabolite determination steps were transformative, which indicates that the process was not purely mental, abstract, nor a law of nature.

Law of Nature

On appeal before the Supreme Court, the issue was how to distinguish unpatentable laws of nature from patent-eligible applications of such laws. Allowing patents on laws of nature, natural phenomena, or abstract ideas would result in the monopolization of the basic tools of scientific and technological work, whereas “too broad an interpretation of this exclusionary principle could eviscerate patent law . . . [f]or all inventions at some level embody, use, reflect, rest upon, or apply laws of nature, natural phenomena, or abstract ideas.” Mayo, No. 10-1150, slip op. at 2.

In its opinion, the Supreme Court reversed the Federal Circuit, finding that the Prometheus process was not patent-eligible, because it failed to transform “unpatentable natural laws into patent-eligible applications of those laws.” Id. at 3. In particular, the relationship between drug metabolite levels and efficacy was determined to be a natural law, since the “relation itself exists in principle apart from any human action.” Id. at 8.

In analyzing the other steps (drug administration and metabolite determination), the Supreme Court notes that these “additional steps consist of well understood, routine, conventional activity already engaged in by the scientific community.” Id. at 11. For example, the purpose of the drug administration step was to trigger a manifestation of a natural law in a particular patient. Id. at 8. Further, the determining step was found to be “set forth in highly general language covering all processes that make use of the correlations.” Id. at 18. “[S]ince they are steps that must be taken in order to apply the laws in question, the effect is simply to tell doctors to apply the law somehow.” Id. at 13.

Impact

This decision may have implications for other patents in the medical and diagnostic fields, as well as those relying heavily on “natural correlations.” The Myriad case, for example, concerning the patent-eligibility of genes will likely be remanded to the Federal Circuit for reconsideration in light of this decision. While that case concerns a composition of matter (isolated DNA for breast cancer), patent challengers may now be able to argue that the correlation between DNA and breast cancer is a law of nature and that the isolated nature of the claimed DNA results from “well understood, routine, conventional activity already engaged in by the scientific community.”

The Supreme Court notes, however, that “[w]e need not, and do not, now decide whether were the steps at issue here less conventional, these features of the claims would prove sufficient to invalidate them.” Id. at 18. One implication is that patent-eligibility may be related to the nature of the additional subject matter surrounding the natural laws or phenomena relied upon. Patent applicants may therefore consider incorporating unconventional subject matter and subject matter that may not be required to apply natural law or phenomena, as well as describing the same with some specificity.

CrackBerry Crackdown: Trademark Board Not a Fan of Fan-Created Nickname

Tue, 13 Mar 2012 11:06:10 GMT

Everybody knows somebody who seems physically unable to peel his eyes away from his smart phone screen for longer than two seconds, regardless of his visibly offended dinner company or the swerving and honking of oncoming traffic. Some find it merely uncouth, while others cry “addict!” And for that very reason, Research in Motion Limited (“RIM”)’s popular Blackberry smart phone was dubbed “CrackBerry” by its enthusiastic fans.

Capitalizing on this sensation, Defining Presence Marketing Group, Inc. (“DPMG”) created a website for Blackberry fans called www.crackberry.com, which contains blogs and forums about Blackberry devices, and sells Blackberry accessories, such as chargers, batteries, and cases. Between 2006 and 2007, DPMG filed four applications for registration of the mark CRACKBERRY on the Principal Register for use of the term in connection with various services, including marketing services, online retail services, creating an online community for registered users, and providing online chat rooms and electronic bulletin boards. DPMG also filed an application for registration for the use of CRACKBERRY in connection with headgear and various clothing items.

The Trademark Trial and Appeal Board (the “Board”), however, is apparently less than enthusiastic about the name. In a precedent-setting decision on February 27, 2012, the Board rejected four trademark applications for CRACKBERRY. In its decision, the Board sided with RIM (who had opposed the marks), and ruled that the term was likely to cause consumer confusion. Specifically, the Board found that (1) BLACKBERRY has become famous for smart phones and closely related information technology services; (2) CRACKBERRY and BLACKBERRY are highly similar marks; (3) the two parties’ services (but not goods) are similar; and (4) there is a large overlap between RIM’s trade channels and DPMG’s trade channels (and, what’s more, that DPMG’s marketing “specifically targets [RIM’s] actual customers…[DPMG’s] customers are by design substantially all prior customers of [RIM].”). Therefore, the Board sustained RIM’s oppositions to DPMG’s applications for CRACKBERRY in connection with various services, but dismissed RIM’s opposition to DPMG’s application for CRACKBERRY in connection with goods, namely, headgear and clothing items. The Board reasoned that RIM did not own any registrations that recite similar goods, and therefore DPMG’s use on those items is not likely to confuse consumers.

The Board didn’t stop there. Given that the Board had already determined that BLACKBERRY is famous for purposes of confusion, it had no trouble finding that it was also famous enough to fall victim to trademark dilution. Under federal trademark law, 15 U.S.C. § 1125(c), there are two types of dilution. The first is “dilution by blurring,” which happens when there is an association between two similar marks that impairs the distinctiveness of a famous mark. The second type, “dilution by tarnishment,” occurs where there is an association between two similar marks that harms the reputation of a famous mark. In this case, the Board was concerned with dilution by blurring. Ultimately, the Board decided that CRACKBERRY was likely to impair the distinctiveness of BLACKBERRY because the marks are highly similar, BLACKBERRY is inherently distinctive because it is an arbitrary trademark (a real English word that is used on goods or services that are unrelated to the name), RIM’s use of BLACKBERRY is virtually exclusive in the field, the BLACKBERRY mark has become “one of the most prominent marks in our digital, wireless culture,” DPMG intended to create an association between CRACKBERRY and BLACKBERRY in the minds of consumers, and consumers do in fact associate the two marks.

Finally, the Board rejected DPMG’s argument that its use of CRACKBERRY constitutes a parody of the BLACKBERRY mark. Under federal trademark law, parody is a defense to trademark dilution. 15 U.S.C. § 1125 (c)(3)(A). However, in order for this defense to work, the person using the famous mark cannot use it as “a designation of source for the person’s own goods or services.” In this case, fans coined the term CRACKBERRY as a nickname for the BLACKBERRY devices themselves. Secondly, the Board reasoned, DPMG uses the CRACKBERRY mark on services that are very similar to RIM’s services, a circumstance generally not present in genuine parody.

DPMG can appeal the Board’s refusal to register the CRACKBERRY marks to a United States District Court, or to the United States Court of Appeals for the Federal Circuit. It will be interesting to see whether the parties will continue to duke it out. After all, the two parties have a seemingly mutually beneficial relationship -- DPMG’s website attracts attention to RIM’s products and services, and DPMG’s business is based on the popularity of RIM’s products and services.

'Bama Gridiron IP Epic Up On Appeal

Fri, 02 Mar 2012 16:14:41 GMT

Last month, the United States Court of Appeals for the 11th Circuit heard arguments on Appeal from a 2009 decision by the Northern District of Alabama in University of Alabama Board of Trustees v. New Life Art Inc.

In the District Court case, the University of Alabama sued previously licensed painter Daniel Moore through his company New Life Art Inc. for his use of the University football teams’ uniform colors (and logos) in his paintings depicting artistic accounts of real football games. In addition to its concern about use of its registered trademark logos, the University claimed that the team colors were protectable trade dress. The District Court held that the University did not have a protectable interest in the uniform colors and the painter was permitted to use the colors in his artistic works to accurately depict historic football scenes. However, the court ruled, the painter could not use any of the University’s trademarked logos or symbols in his paintings or reproduce his paintings onto any merchandise other than high-quality prints (such as calendars or coffee mugs).

In its opinion, the District Court discussed that, although the uniform colors may be entitled to trade dress rights, those rights are weak because the same colors are also associated with numerous other teams. The Court also discussed that it did not believe there would confusion as to source. In addition, the Court discussed the first amendment defense to trademark infringement claims, pointing out that the Lanham Act is construed to apply to artistic works only where the public interest in avoiding consumer confusion outweighs the public interest in free expression. In this case, the District Court found that even if there were likelihood of confusion in this case (which they did not find), the defendant had adequate defenses based on Artistic Expression, the First Amendment, and Fair Use.

Both sides appealed the lower court decision, with Moore seeking to overturn the part of the decision that prohibits him from producing derivative works on coffee mugs and calendars and the University seeking to overturn the portion of the decision allowing unlicensed paintings and prints featuring depictions of UA football games and players, including team colors and jerseys. Both sides have support in the case from the outside. Amicus Briefs have been submitted in support of the University by Collegiate Licensing Company and, similarly, Amicus Briefs have been submitted in support of Daniel Moore by a group of law professors. We can anticipate that the court’s analysis and opinion may include a more in-depth analysis of the First Amendment defense to trademark infringement, as well as an examination of the artist’s copyright claims and interest in producing derivative works and how they are balanced against the University’s trademark claims and desire to protect its sizable licensing revenues. Regardless of which side you are rooting for, it ought to be a good game…

Avoiding Waiver in Two Easy Steps: What IP Litigators Should Take Away from HTC Corp. et al v. IPCom GmbH & Co., KG (Fed. Cir. 2012)

Wed, 01 Feb 2012 13:06:41 GMT

We all know that appellate courts generally do not consider issues for the first time on appeal. That’s why the best trial lawyers, including IP litigators, force themselves to think like appellate attorneys. They spot potential errors made by the trial court and make sure those issues are preserved for appeal. In HTC v. IPCom, HTC learned the hard way that failing to do so can turn a winning argument into a losing one.

BACKGROUND

HTC, the popular Taiwanese smartphone maker, is accused of infringing U.S. Patent No. 6,879,830, owned by IPCom GmbH, a German non practicing entity (NPE) with some serious muscle. As Dennis Crouch points out in his popular Patently-O blog, “The company is run by . . . one of the most successful German patent litigators and backed by New York private equity.” The company’s patent covers “handovers” in a wireless network. A handover happens when a mobile phone or other wireless device (referred to as “mobile stations” in IPCom’s patent), switches from one base station to another as it moves through space. This frequently happens, for example, when a person uses his or her cell phone while driving.

HTC moved for summary judgment with the district court, arguing that IPCom’s patent was invalid on the grounds that it was indefinite for (1) claiming both an apparatus and method steps and/or (2) failing to disclose corresponding structure for the asserted claims’ means-plus-function (MPF) limitations. The district court granted HTC’s motion on the first grounds but denied it as to the second.

APPEAL

(1) Apparatus Only Claims

The first part of the Federal Circuit’s analysis focused on the issue of whether the asserted claims of IPCom’s patent were invalid for covering both an apparatus and method steps. What made this issue tricky, as the Federal Circuit observed, was that the claims of IPCom’s patent were “unconventional.” That is, they were written in a “preamble-within-a-preamble” format. (Or perhaps the more appropriately titled “riddle, wrapped in a mystery, inside an enigma” format). For instance, claim 1 recites “a mobile station for use with a network,” then proceeds to recite six distinct functions related to the handover process (in a manner that makes it less than clear whether the mobile station or the network performs those functions), and finally concludes with the following means-plus-function limitation:

the mobile station comprising an arrangement for reactivating the link with the first base station if the handover is unsuccessful.

Patently-O contains a good summary of this part of the Federal Circuit’s decision. In short (since this post is focusing on the MPF portion of the decision), the panel reversed the district court, concluding that the asserted claims were not indefinite, because they covered an apparatus only—the mobile station. The six recited functions were not method steps carried out by the mobile station, as the district court had found. Instead, they were performed by the network and were recited by the patentee so as to describe the network environment in which claimed mobile station operated.

(2) MPF Limitations

HTC argued that the asserted claims were still invalid because the arrangement for reactivating element of the asserted claims was an MPF limitation that lacked sufficient corresponding structure. The Federal Circuit agreed. Yet it did not reverse the district court on the grounds that HTC had not properly preserved the issue for appeal.

Patentees may express a claim element “as a means or step for performing a specified function . . . .” 35 U.S.C. § 112, ¶ 6. If an element is expressed in this means-plus-function format, the “claim shall be construed to cover the corresponding structure, material, or acts described in the specification and equivalents thereof.” Id. If the specification fails to disclose adequate structure, the claim is invalid for indefiniteness.

The MPF limitation at issue in HTC v. IPCom covered two types of structures: (1) the hardware necessary to carry out the link reactivating process and (2) an algorithm to carry out the link reactivating process. The district court concluded, and the Federal Circuit agreed, that IPCom’s patent disclosed sufficient hardware even though it did not explicitly recite any. The panel stated that one skilled in the art would know that the means for reactivation would require a processor and a transceiver. However, reasoned the panel further, a processor and a transceiver amount to nothing more than a general purpose computer. And under the Federal Circuit’s WMS Gaming and Aristocrat decisions, a general purpose computer is too vague to constitute sufficient corresponding structure. The specification must also disclose an algorithm that describes the means or process by which the general purpose computer carries out the claimed function.

This is where the district court got it wrong, according to the Federal Circuit. Its analysis ended at the hardware. It never examined the adequacy of the algorithm purportedly disclosed by IPCom’s patent. But that’s because HTC never asked it to. HTC first raised the issue in its responsive brief on appeal. Thus, after noting the general rule that appellate courts do not consider issues for the first time on appeal, and that no exceptions to that rule applied, the panel held that HTC had waived the issue.

2 Steps to Avoid Waiver

The Federal Circuit identified several missed opportunities HTC had to raise the adequacy-of-the-algorithm issue before the trial court. Those lost chances can be divided into two categories, two (non-exhaustive) steps that other trial lawyers can follow, whether they’re IP litigators or not, to avoid a waiver finding of their own.

1. Be Specific in Your Arguments. Do not Rely on String Cites.

The Federal Circuit found that HTC’s claim construction briefs consistently focused on the lack of hardware rather than the lack or inadequacy of an algorithm. Yet its briefs included a citation to the Federal Circuit’s Aristocrat decision, which stands for the proposition that a general purpose computer, like the one disclosed in IPCom’s patent, is insufficient to provide structure to an MPF limitation. The problem with HTC’s citation to Aristocrat, reasoned the panel, was that it was buried in a string citation. It was provided in support of the more general proposition that a patent is invalid if it fails to disclose structure corresponding to an MPF limitation.

2. Cover Your Bases by Arguing in the Alternative.

The Federal Circuit also found that IPCom and the district court had “invited” HTC to raise the adequacy-of-the-algorithm issue. Yet HTC never did so because it would not argue in the alternative.

During Markman proceedings, IPCom argued that its patent disclosed an algorithm that supplied the allegedly missing structure. In doing so, IPCom cited the Federal Circuit’s WMS Gaming decision, which generally stands for the idea that in an MPF claim for a computer programmed to carry out an algorithm, the corresponding structure is not a general purpose computer, but rather a special purpose computer designed to perform the disclosed algorithm. HTC could have seized this moment to challenge the district court, even if it found that sufficient hardware had been disclosed, to examine whether IPCom’s purported algorithm was adequately disclosed in light of WMS Gaming. Instead, HTC argued that IPCom’s purported disclosure of an algorithm was neither here nor there as it would always be insufficient in the absence of a more detailed description of the computer hardware into which the algorithm would be programmed.

The district court later asked HTC’s counsel to comment on the argument that IPCom’s algorithm, not the hardware, was the structure. Again, rather than arguing in the alternative, HTC’s counsel simply replied that that argument was irrelevant.

Who Owns Betty Boop?

Wed, 25 Jan 2012 16:04:46 GMT

As a follow-up to my colleague Linda Norcross’ excellent blog piece last week, I thought I would provide our blog readers with another entertaining read on the controversial “aesthetic functionality” doctrine of trademark law. Last February, the Ninth Circuit added to the confusing annals of aesthetic functionality doctrine by denying trademark protection to the iconic design displayed below.

Fleischer Studios, Inc., the owner of the classic Betty Boop image displayed above, filed suit in 2006 against A.V.E.L.A., Inc. in the Central District of California, alleging infringement of its Betty Boop Design trademark based on A.V.E.L.A.’s licensing of Betty Boop merchandise. (Fleischer also alleged copyright infringement, but this post is limited to the trademark aspects of the case).

The district court held that Fleischer did not provide evidence, in the time required by the Federal Rules of Civil Procedure, to establish common law or federally registered trademark rights in the Betty Boop Design. Although Fleischer submitted evidence of its federal registration for the Betty Boop Design, it did so only long after the time required under the Federal Rules and the District Court refused to consider it. (Whoops!).

Fleischer appealed the District Court’s decision to the Ninth Circuit. The Ninth Circuit rejected Fleischer’s appeal on a basis that was not advanced by either party - the aesthetic functionality doctrine. The court held that the arguments presented in the parties briefs were “mooted by controlling precedent that neither party cited: Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980).”

In Job’s Daughters, the plaintiff organization filed a trademark infringement suit against a jeweler that was selling jewelry bearing the Job’s Daughters’ insignia. The Ninth Circuit held that “trademark law does not prevent a person from copying so-called functional features of a product which constitute the actual benefit that the consumer wishes to purchase [such as the insignia], as distinguished from an assurance that a particular entity made, sponsored, or endorsed a product.” Id. at 917. Ultimately, the Job Daughters Court held the jeweler was not infringing the organization’s insignia because the organization did not meet the burden of proving that a typical buyer of the jewelry would think the jewelry was produced, sponsored, or endorsed by the organization. Id. at 920.

Applying the “controlling precedent” of Job’s Daughters to the alleged infringement of the Betty Boop Design, the Ninth Circuit found that even a cursory examination of A.V.E.L.A.’s products revealed that “A.V.E.L.A. is not using Betty Boop as a trademark, but instead as a functional product” and held that the Betty Boop Design was a “functional aesthetic component[]” of A.V.E.L.A.’s products, not a trademark.

The Fleischer decision dismayed trademark owners worldwide, especially those that license their famous logos and designs for merchandise. It is easy to see why. If you apply the reasoning of the Fleischer court, any merchandise manufacturer could use nearly any uncopyrighted logo or design, including those of professional sports teams, musicians, and even Disney characters, without risk of infringement liability because the logo or design used would be considered a “functional aesthetic component” of the goods, and not a trademark.

The collective consternation of trademark owners lead to the International Trademark Association (“INTA”) filing an amicus curiae brief urging the Ninth Circuit to rehear the Fleischer case. And, luckily for merchandise licensors, the Ninth Circuit withdrew its opinion and superseded it with an opinion filed August 19, 2011. The second opinion omits any discussion of Job’s Daughters or aesthetic functionality, but still holds that Fleischer’s trademark infringement claims are not viable. The Court upheld the district court’s decision to refuse to consider Fleischer’s untimely submitted trademark registration and found that Fleischer had failed to show it had common law rights in the Betty Boop Design. Accordingly, while the revised opinion was good news for trademark owners and INTA, it didn’t change the outcome of the case.

There are four (4) lessons to be learned from the Fleischer case: (1) register your trademarks; (2) submit evidence of trademark rights, including trademark registrations, in a timely manner when involved in trademark litigation (this one should be obvious - we often attach registrations to our complaints); (3) if your trademark consists of copyrightable subject matter, obtain a copyright registration for the trademark, and; (4) the aesthetic functionality doctrine is as incoherent and misguided as ever.

The Ninth Circuit’s withdrawn opinion is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 636 F.3d 1115 (2011); the revised opinion is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 654 F.3d 958 (2011).

Lending Some Well-heeled Support

Tue, 17 Jan 2012 18:12:45 GMT

Famed high-fashion footwear designer Christian Louboutin is seeing red. Louboutin, famous for a lipstick red sole featured on its high-end heels, is embroiled in an ongoing legal battle with rival design house Yves St. Laurent (“YSL”), over the right to sell footwear bearing Louboutin’s signature red sole.

According to the corresponding federal trademark registration, Louboutin has been using its red sole brand since 1992. In the Fall of 2011, YSL’s resort collection featured four pairs of shoes with red soles. Louboutin responded by filing a request in U.S. District Court for the District of New York for preliminary injunction to prevent YSL, as well as potentially other high profile designers and lesser known brands, from producing and selling shoes bearing its distinct red sole. In August of 2011, Louboutin’s request was denied, so Louboutin appealed the decision to the U.S. Court of Appeals for the 2nd Circuit.

Louboutin recently received some key support in the form of an amicus brief, filed by the International Trademark Association (“INTA”) on November 14, 2011*. An amicus brief is filed by a professional person or entity that is not a party to the case, but offers the information contained in the brief in an effort to advise the court in rendering its decision. INTA’S brief addresses what it believes are two errors committed by the District Court, particularly with respect to its analysis of the validity of Louboutin’s trademark. This piece focuses on the first error, namely, that the court erred in rejecting the presumption of validity granted to Louboutin via the federal trademark registration.

In its analysis, the court determined that Louboutin’s claim was really about the use of red in general, which in its opinion would unfairly impede competitors’ ability to use the color not only in connection with high-end footwear, but potentially apparel and other fashion accessories as well.

Louboutin owns U.S. Registration No. 3,361,597 for the mark in question, which is expressly described as consisting of “a lacquered red sole on footwear.” INTA contends that the Court mischaracterizes the extent of Louboutin’s claim, interpreting that it is intended to cover the color red, when in fact the registration very clearly specifies that the mark covers a lacquered red sole.

Here’s what the law says: Under Section 7(b) of the Lanham Act (the federal Trademark Act), 15 U.S.C. 1057(b), a certificate of federal registration is considered prima facie evidence (on its face/presumptive) of the validity of the registered mark and of the registration of the mark, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate, subject to any conditions or limitations stated in the certificate.

INTA asserts that such limitations are clearly stated, in this instance, and that the court “failed to analyze the mark as registered,” instead mistakenly characterizing the mark as broadly covering red shoes. INTA’s brief notes that the trademark registration process is not simply a clerical process wherein an applicant files the proper paperwork and poof - the registration is granted. On the contrary, the process involves substantive examination wherein a United States Patent & Trademark Office (“USPTO”) Examining Attorney carefully considers the mark in the application to insure that it is in accordance with the USPTO’s specific examination procedures and specific parameters of trademark law, which include close review of the description of the mark, as well as an opportunity for any interested third party to oppose the mark’s registration. A federal registration certificate specifically defines the limitations of a mark as well as the goods and/or services offered. Here, the registration in question includes a line drawing of the mark which shows the color and position of the mark on the sole of the shoe, as well as a verbal description, i.e. “the color red is claimed as a feature of the mark,” and “the mark consists of a lacquered red sole on footwear.” (emphasis added) The wording expressly set forth the limitations of the rights granted through the registration process.

INTA contends that the District Court merely glanced at the recitation in Louboutin’s mark description, and thus “fundamentally misread the registration.” This is supported by the court’s analysis focusing on the presumption that Louboutin’s claim extends to the color red. On the contrary, Louboutin makes no sweeping claim to the right to use red. In fact, Louboutin did exactly what is required of a federal trademark registrant, in claiming that the color red is simply a feature of its mark, and further providing the specific limitations in the mark description, i.e. that it extends only to the sole of the footwear.

INTA’s brief emphasizes that the District Court disregarded the presumption of validity conferred by a federal registration, which actually places the burden of rebutting that presumption on the defendant (YSL). The court’s analysis should have involved the careful consideration and weighing of evidence presented by each party as to the question of the registration’s validity, whereby the burden would have been on YSL to show, by a preponderance, that it could discredit the validity of Louboutin’s registration. Instead, the District Court became engrossed in its own “fanciful hypothetical,” as INTA puts it, comparing Louboutin’s use of the color red to Picasso’s use of the color blue during his “blue period,” and theorizing about a lawsuit brought by Picasso to prevent Monet from using the same shade. However, Picasso wasn’t using blue as a trademark, he was simply using the color to paint. The issue here is not really about claiming the exclusive right to use a particular color in general, but rather, using a particular color in a limited manner as a distinctive identifier of the source of a product or service, i.e. as a trademark, which in this instance has been vetted and approved by the experts.

Rather than deferring to the USPTO’s determination that Louboutin’s mark is distinctive and valid, the court focuses on the fashion industry’s reliance on the use of color, imagining that a ruling in Louboutin’s favor would effectively inhibit other designers from using red, while leaving Louboutin with the ability to “paint with a full palette.” INTA charges that the court would never have reached this overbroad conclusion had it properly evaluated the mark as it is set forth in the registration in the first place.

As INTA’s brief surmises, if the District Court’s decision is upheld, preventing consumer confusion, trademark infringement and counterfeiting will be made even more difficult, leaving a host of trademark owners and consumers alike left feeling blue.

As a trademark lawyer who hails from Las Vegas, my guess is that the odds may tip in Louboutin’s favor before this is all over.

* Brief of Amicus Curiae International Trademark Association in Support of Vacatur and Remand, Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc., 778 F.Supp.2d 445 (S.D.N.Y. 2011) (No. 11-3303).

Play By the Rules and Nobody Gets Hurt – Ninth Circuit Offers Guidance on Safe Harbor under the DMCA

Wed, 11 Jan 2012 11:08:52 GMT

I know it seems like I keep harping on the Digital Millennium Copyright Act's “safe harbor” provision, 17 U.S.C. § 512(c), but the DMCA safe harbor is beneficial for both copyright owners and service providers, yet appears to be underutilized by both. The Ninth Circuit recently decided a copyright case between Universal Music Group (UMG), the recording company and music publisher, and Veoh Networks, which operates a video-sharing website that allows users to upload and share videos. The opinion largely focused on the meaning of the DMCA safe harbor provisions and provides guidance for copyright owners and service providers in the Ninth Circuit.

UMG sued Veoh for direct, vicarious and contributory copyright infringement and inducement of infringement, claiming that Veoh's efforts to prevent copyright infringement were inadequate and that it only removed infringing material that was specifically identified. Veoh argued that it was protected by the DMCA safe harbor provisions. The district court held that Veoh was protected by the DMCA and UMG appealed.

I'll tell you upfront: the Ninth Circuit affirmed, so Veoh won. What is more important for service providers and content owners is what the Ninth Circuit said about the conduct on both sides that is relevant under the DMCA.

For service providers, there are four important points from the Ninth Circuit that help define their obligations in dealing with online copyright infringement. First, the Court held that “merely hosting a category of copyrightable content...with the general knowledge that one's services could be used to share infringing material, is insufficient” to constitute actual knowledge of infringement under the statute. So, just because you have a content-sharing website that could be used to share infringing material (and practically, this is most content-sharing websites these days), does not mean that you automatically “know” that any specific content is infringing. Second, general knowledge that your website is hosting or has hosted infringing material or that it could be used for infringement is not enough to be a “red flag” from which a service provider should know that infringement is apparent. Third, it is possible that a notification by a third-party, not a content owner, is sufficient to raise a red flag, e.g. if one user identifies another specific user as uploading infringing material. Fourth, the “right and ability to control” the infringing conduct requires control over specific infringing activity that the provider knows about. “A service provider's general right and ability to remove materials from its services is, alone, insufficient.”

For content providers, there are two points that I want to emphasize. First, the Ninth Circuit reiterated Congress' placement of the burden of notification on content owners, stating “[c]opyright holders know precisely what materials they own, and are thus better able to efficiently identify infringing copies than service providers...who cannot readily ascertain what material is copyrighted and what is not.” The Court also reiterated its holding that “absent any specific information which identfies infringing activity, a computer system operator cannot be liable for contributory infringement merely because the structure of the system allows for the exchange of copyrighted material.” Therefore, in the usual case, if you are copyright owner, you need to specifically identify your copyrighted material to any service provider hosting infringing material and not rely on the service provider to search for all of your copyrighted material that may be on the service provider's system. Second, copyright owners cannot use deficient DMCA notices to show that a service provider had actual or constructive knowledge of infringement. A deficient DMCA notice usually does not specifically identify the infringing content. A specific identification is usually providing the URL of the page where the infringing content is located.

So, copyright owners need to be vigilant in enforcing their copyrights and need to take the time to draft specific DMCA notices with all of the information required by the statute. If a service provider does not respond to such a notice, then a lawsuit might be appropriate.

This Ninth Circuit case is similar to the Viacom v. Google case (about YouTube) that is pending in the Second Circuit. It will be interesting to see if the Second Circuit follows the Ninth Circuit. As some other publications have mentioned, if the Second Circuit doesn't, the DMCA could be making an appearance in front of the Supreme Court some day.

Nevada Federal Court: The Next Best Place for Patent Litigation?

Thu, 05 Jan 2012 14:21:37 GMT

For over a decade, federal district courts have been adopting specialized local rules of practice for patent cases with varying degrees of success. Like the Federal Rules of Civil Procedure, the new local rules for patent cases are designed to promote the just, speedy, and inexpensive determination of patent actions and proceedings. On August 1, 2011, the United States District Court for the District of Nevada became the latest district court to adopt specialized local rules of practice for patent cases. The Court’s new local patent rules are arguably some of the most progressive in the country. So is Nevada now the latest best place in the country for patent litigation? The answer may surprise many: it depends. Parties with particular strong claims or defenses will welcome Nevada’s new patent rules.

I. Background

Patent litigation is complex, expensive, and often protracted. It routinely starts with a beguilingly simple complaint, followed by intrusive discovery that can last years and involve the disclosure of a company’s most sensitive and confidential information. There are often “mini trials” at the preliminary injunction stage and “Markman” hearings, where the court determines the meaning of the words within the patent, known as “claims,” that describe the claimed invention. A judge or jury eventually decides whether the patent claims are valid and, if so, whether they are infringed by an accused device or method. But even then the case is rarely done. Most cases are appealed to the only location permitted for the appeal of patent cases: the United States Court of Appeals for the Federal Circuit, located in Washington, DC.

Patent cases are often “bet the company” cases. Where a company’s principal asset is its right to use or sell intellectual property, the final outcome of a patent case can determine whether the company survives or closes its doors. Because the stakes are so high, the process of litigation is long and patent cases are some of the most expensive in the country to litigate. Thus, many federal district courts have taken matters into their own hands in an attempt to streamline patent litigation, make it more efficient, less burdensome to parties and less expensive. Beginning with the Northern District of California in 2001, local patent rules have sprung up in over eighteen districts, from the Eastern District of Texas to the District of New Jersey. The new patent rules provide greater procedural predictability and reduce inefficiencies by eliminating the need to readdress recurring procedural issues in each case.

II. The District of Nevada’s Local Patent Rules

Against this backdrop, in August 2011, the United States District Court for the District of Nevada became the latest court to adopt local patent rules. The rules are innovative because they provide the court and litigants flexibility and adopt many of the best practices for litigating patent cases that have been implemented and tested in other districts. The District of Nevada local patent rules require the parties to crystallize their legal theories early in the case and to disclose these along with all relevant facts almost immediately. Early disclosure is coupled with mandatory court-facilitated settlement conferences and an expedited discovery and claim construction process. This renders the District of Nevada’s patent litigation process one of the most unique in the country. It is a system intended to benefit those parties whose claims or defenses are particularly strong, thereby encouraging the speedy and just resolution of the case.

Nevada’s new local rules of practice for patent cases, LR 16.1-1 et seq., became effective August 1, 2011 in conjunction with the District of Nevada’s latest amendments to its local rules of practice. The new local patent rules constitute a new section of the District of Nevada Local Rules, comprise 21 subparts, and govern all procedural aspects of patent litigation. *

A. Initial Scheduling Conference and Confidentiality

The new rules fit well within the court’s existing discovery framework currently set forth in Local Rule 26-1. To encourage flexibility in the application of the rules, during the Rule 26(f) discovery planning conference, counsel may propose modifications to how the local patent rules will apply in their case. (LR 16.1-3.) During the conference, among the topics parties should discuss is the protection of confidential and sensitive information during the litigation. Under the new rules, within 14 days of the conference, the parties must file a proposed joint protective order. Importantly, neither initial disclosures nor discovery responses may be withheld on the basis of confidentiality absent a court order. If a protective order is not yet in place when disclosures are due, a party may designate materials confidential and the disclosure will be limited to the opposing party’s outside litigation counsel. (LR 16.1-4.)

B. Initial Disclosures

Dramatic changes have occurred regarding initial disclosures in Nevada patent cases. Within fourteen days of the Rule 26(f) discovery planning conference, the party claiming patent infringement must serve its “Disclosure of Asserted Claims and Infringement Contentions” along with a substantive document production. The required disclosures include an identification of each patent claim allegedly infringed, a precise identification of the accused instrumentality of the infringement, a claim chart identifying where each limitation of each asserted claim is found within the accused instrumentality, and, if applicable, the factual basis for any willful infringement contention. (LR 16.1-6.) Mandatory initial document productions include a copy of the patent prosecution file and all evidence of any disclosures and reduction to practice of the claimed invention before the application date of the patent in suit. (LR 16.1-7.)

Those accused of patent infringement have 45 days from service of the plaintiff’s disclosures to serve “Non-Infringement, Invalidity and Unenforceability Contentions” along with a substantive document production. The disclosures include, as the name suggests, a detailed description of any non-infringement contentions, the identification of alleged prior art that renders the patent invalid, whether such prior art anticipates an asserted claim or otherwise renders it obvious, and any other unenforceability contention, such as the identification of an affirmative misrepresentation or omission of material fact made to the United States Patent and Trademark Office. (LR 16.1-8.) Mandatory document disclosures include information regarding the accused instrumentality and copies of any alleged prior art which is not in the patent’s prosecution file history. (LR 16.1-9.) Amendments to initial disclosures may be made for good cause without leave of court anytime before the discovery cut-off date. However, the parties’ patent disclosures are final thereafter and further amendments may be made only by order of the court upon a timely showing of good cause. (LR 16.1-12.)

C. Claim Construction and Markman Hearing

Claim construction and Markman hearing procedures are now designed to encourage the parties to work together and limit the terms in dispute by narrowing or resolving differences before submitting a Joint Claim Construction and Prehearing Statement. (See LR 16.1-13 to 16.1-15.) In the joint prehearing statement, the parties must, among other things, identify terms whose meanings are agreed upon, provide alternative constructions for terms whose meanings are not agreed upon, and identify the terms likely to be most significant in resolving the patent dispute. This is necessary because the court’s construction of the patent’s terms may be case or claim dispositive.

Markman briefing schedules also have been standardized. The party claiming patent infringement, or the party asserting invalidity, if there is no infringement issue in the case, is required to serve and file an opening claim construction brief and evidence supporting the party’s claim construction within 30 days after the parties submit the Joint Claim Construction and Prehearing Statement. The opposing party files a response within 14 days. A reply is due within 7 days after the response. (LR 16.1-16.) The court will hold a claim construction hearing only if it believes a hearing is necessary for construction of the claims. (LR 16.1-17.)

D. Settlement Conferences

The District of Nevada local patent rules are unique among district courts because they require three mandatory settlement conferences held at strategic points in time during the case. The first “Pre-Claim Construction Settlement Conference” is held within 30 days after the parties serve all initial disclosures and responses thereto. The second “Post-Claim Construction Order Settlement Conference” is held within 30 days following the court’s claim construction order. The third “Pretrial Settlement Conference” is held within 30 days after filing the pretrial order and before trial begins. These conferences are intended to bring the parties together at critical times in the case when the facts and circumstances are most conducive to reaching a settlement. (LR 16.1-19.)

E. Stay of Proceedings and Good Faith

If a patent-in-suit is subject to reexamination proceedings before the United States Patent and Trademark Office, the new local rules expressly allow the court to order a stay of litigation pending the outcome of the reexamination proceeding. To determine whether to grant a stay, the Court will consider the circumstances of a particular case and, without limitation, the following factors: (1) whether a stay will unduly prejudice or present a clear disadvantage to the nonmoving party, (2) whether a stay will simplify the issues in question and the trial of the case, (3) whether discovery is complete, and (4) whether a trial date has been set. (LR 16.1-20.)

The new rules expressly require that all parties follow them in good faith. Indeed, failure to provide initial disclosures, narrow the instances of disputed claim construction terms, participate in the meet and confer process, or comply with any other obligation under the rules may expose counsel to sanctions pursuant to 28 U.S.C. § 1927. (LR 16.1-21.)

III. Conclusion

The United States District Court for the District of Nevada has adopted a progressive set of local patent rules that will expedite patent litigation by requiring parties in Nevada to “lay their cards on the table” early in the case. The new rules encourage flexibility, cooperation, and transparency among patent litigants. They expressly require counsel to implement the new rules in good faith and encourage settlement by requiring settlement conferences at critical phases during the litigation process. The new rules should be welcomed by individuals and companies seeking a just, speedy, and inexpensive determination of their patent rights.

* District Court for the District of Nevada has also sought to enhance its ability to adjudicate patent cases by opting into the Patent Pilot Program established pursuant to Pub L. No. 111-349, 124 Stat. 3674. On January 5, 2010, Congress enacted a bill “to establish a pilot program in certain United States district courts to encourage enhancement of expertise in patent cases among district judges.” (H.R. 628). Nevada was selected as one of only fourteen district courts in the country that will participate in the patent pilot program.

The America Invents Act Applies the Brakes to the False Marking Bandwagon

Tue, 03 Jan 2012 20:12:23 GMT

Among the sweeping changes to the U.S. patent system by the Leahy-Smith America Invents Act, enacted on September 16, 2011, are reforms to the false marking statute. The false marking statute safeguards against the use of a false patent mark with an intent to deceive the public and was designed to permit a private individual to sue on behalf of the U.S. government. One-half of any recovered penalty is awarded to the person asserting the false marking claim while the other half goes to the U.S. government.

An accurate patent mark provides a number of benefits such as putting the public on notice that government granted monopoly rights cover a marked product. Patent marking also helps maximize recovery of damages. With respect to patented articles (as opposed to patent processes or methods), patent marking is a prerequisite for recovering patent infringement damages. A patentee may only recover damages for infringing activity that occurred after the patentee provided actual or constructive notice (met by marking) of its patent rights. Patent marking is not limited to products but also applies to websites, advertisements, brochures, and other marketing materials.

Prior to September 16, 2011, one key decision relating to the false marking statute was rendered by the U.S. Court of Appeals for the Federal Circuit (CAFC) in December of 2009. See Forest Group, Inc. v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009). In that decision, the CAFC held that where a patentee falsely marks an article with an intent to deceive the public, the false marking statute permits a penalty of up to $500 per article. This decision expanded the liability of patentees and licensees whose liability was previously limited to $500. Because a false marking suit is a qui tam action - an action that allows any person to raise a suit and split any award with the U.S. government - a huge spike in false marking lawsuits ensued following the December 2009 decision with over 1,000 lawsuits filed against unsuspecting patentees.

Prior to enactment of the America Invents Act, an act of false marking included: marking a product “patent pending” when no patent application is pending, marking a product with a patent number or “patent” when the product is unpatented or the patent is expired, marking a product with a patent number where the claims of the patent do not cover the product, or marking a product with a patent number of another without the patent owner’s consent. Also, a false marking claim could by raised by any person, whether or not the person was actually harmed by the mismarking, and included the potentially hefty penalty of up to $500 per article for violators of the false marking statute.

The false marking statute changes substantially under the America Invents Act. First, a private party is no longer automatically eligible to raise a suit for damages in the name of the U.S. government. Instead, the new law requires that a plaintiff have “suffered a competitive injury.” See Leahy-Smith America Invents Act of 2011, 35 U.S.C § 287 (2011). Second, it is no longer a violation of the false marking statute to mark a product with a patent number or “patent” when the product is expired. These changes are effective immediately and apply to all false marking cases pending on, or commenced on or after the September 16, 2011 enactment date.

For the numerous patentees who have been accused of falsely marking products with expired patent numbers, the immediate and retroactive application of the changes to the false marking statute is a godsend. Many defendant patentees have already raced to the court with motions to dismiss and at least one district court judge in Texas has started to clear his docket of false marking suits sua sponte. With the retroactive application of the new law and the new requirement for a plaintiff’s “competitive injury,” it seems evitable that other similar false marking suits will share the same outcome.

What about false marking suits alleging false marking on grounds other than an expired patent? What will be their outcome? Those cases should have a fighting chance provided they can meet the “competitive injury” requirement. But since the new law does not define or offer any guidance regarding “a competitive injury,” the requirement will surely be open to interpretation and will give a false marking claimant the added burden of proving such injury. But how will a claimant prove a competitive injury? It is anyone’s guess and it will no doubt be interesting to see what evidence a court will accept as sufficient.

The hurdle for false marking claimants, however, does not end with the new competitive injury requirement. A false marking claim includes two elements that appear to remain untouched by patent reform: 1) an act of false marking and 2) an intent to deceive the public. Thus, mismarking, alone, is not enough to find a violation of the false marking statute. A claimant will still have show that the patentee did not have a reasonable belief that the products were properly marked.

The America Invents Act has undoubtedly changed the landscape of false marking patent litigation. The new requirement of a competitive injury and the definite end of false marking suits based on expired patent numbers will surely dissuade those claimants who may be in it to make a fast buck.

Anti-Counterfeit Plan Can Prevent Damage to Team's Reputation

Fri, 16 Sep 2011 23:27:27 GMT

NCAA Division I-A sports generated an estimated $4.1 billion in revenue in 2009 - a 60% increase in revenue in just five years. With increased profitability comes an increased number of counterfeiters looking to capitalize on the valuable intellectual property rights of colleges and universities. Colleges and universities face counterfeiting issues on several fronts - most prominently with tickets and merchandise - and can no longer take a back-seat approach in dealing with counterfeiting. Colleges and universities can combat the proliferation of counterfeiting by developing a consistent and comprehensive plan, which may include some of the following strategies: categorizing counterfeiting activities to ensure that you are treating counterfeiting activities consistently; shoring up all intellectual property rights in university indicia; utilizing appropriate legal channels for dealing with counterfeiting activity; educating employees, licensees, agents and others of the internal procedures for dealing with counterfeiting and train them to detect counterfeit products; using the media to your advantage; and making sure you are up-to-date on the latest advancements in anti-counterfeiting technology. Counterfeiting not only seriously affects the bottom line of the country’s colleges and universities, it also poses a risk to the underlying goodwill of the names and indicia of all colleges and universities. If colleges and universities do not yet have an anti-counterfeiting plan in place, these institutions would be wise to pull together a comprehensive plan using some or all of the above strategies.

For the complete article on strategies for combating counterfeiting, please see the link below:

http://www.sportsbusinessdaily.com/Journal/Issues/2011/09/12/Opinion/From-the-Field.aspx

WHAT’S IN A COMPANY NAME?

Fri, 02 Sep 2011 15:40:51 GMT

WHAT’S IN A COMPANY NAME?

What’s in a company name? A great deal if you choose the name carefully, as it will identify the company and be recognized by consumers as the source of the company's products and services. With this in mind, you will want to:

1. Choose a name that is memorable;

2. Choose a name that is simple and easy to spell;

3. Choose a name with a positive connotation;

4. Consider an eye-catching design or logo; and

5. Consider a distinctive corporate color.

Choose a Name that is Memorable

When selecting a company name, remember that the name will communicate the essence of your business to the public. Accordingly, you will want to consider a name that either describes your products or services (for example, "United Parcel Service"), one that is suggestive of your products or services (for example, "Greyhound Lines" or "Microsoft") or even a name that is coined, arbitrary or fanciful (for example, "Apple" or "Xerox").

Although a descriptive name may more immediately identify a company and its products or services, in the long term, a descriptive name will be difficult to distinguish from other company names, as a single company cannot have exclusive rights to a descriptive term or name. Instead, a company may want to choose a name that suggests something about the company and its products or services, as the owner of a suggestive company name will be able to protect its rights in the name. Perhaps the best name is one that is coined and used in a "totally arbitrary and non-descriptive" manner, such as Etsy, an e-commerce website that sells handmade and vintage items. According to CNN, Etsy was selected by its founder because he wanted a "nonsense word … and to build the brand from scratch." Apparently, Etsy came to him while he was watching the Italian film, "8 ½".

(See http://www.cnn.com/2011/LIVING/04/22/website.name.origins.mf/index.html?hpt=C2.)

Although a coined name may not be immediately recognizable to the consumer, it can quickly develop name recognition and will not run the risk of confusion with another company name, thereby providing its owner with the strongest protection.

Choose a Name that is Simple and Easy to Spell

When deciding on a company name, you will also want to choose a name that is simple and easy to spell, so it will be easy for a consumer to recognize, remember and spell. Particularly in this era of domain names, a short name can be critical to a company’s success. Depending on a company’s financial resources, it may want to hire a marketing organization to assist with the name search and then narrow the names down to a handful for clearance by its trademark attorneys. Regardless of how a company selects a name, this last step – clearance of the name – is essential to ensure that the company does not select a name that is identical or similar to a pre-existing company name and, thereby, risk trademark infringement. Although this step may seem tedious and unnecessary -- particularly when the frontrunner is determined to be unavailable -- the consequences of infringement can be severe and extremely expensive if a company has to choose a new name and completely rebrand everything to do with the company -- from its products, services and website to stationery, business cards and signage.

Choose a Name with a Positive Connotation

It goes without saying, that, with very few exceptions, a company will want to select a name that has a positive connotation – a name that consumers can identify with and that makes them "feel good" about the company. According to CNN, when Microsoft was considering a name for its new search engine, it wanted a name that was "a single syllable, memorable, and easy to spell." Although Microsoft was naming a search engine, rather than a company, the same key factors discussed above, apply. One name that Microsoft considered – and rejected -- was "BANG," because it could not be used as a verb and have a positive connotation. Instead, the company selected "BING," because it sounded like "BINGO" and Microsoft hoped "BING" would also connote the moment an idea was created.

(See http://www.cnn.com/2011/LIVING/04/22/website.name.origins.mf/index.html?hpt=C2.)

Consider an Eye-catching Design or Logo

An eye-catching design or logo can be worth many millions of dollars to a company, once the consumer comes to associate it with a particular company. For example, the Coca Cola logo or the Nike "swoosh" stripe are known around the world and are immediately recognizable to consumers as the source of a cola drink and athletic shoes, respectively. As with choosing a company name, selecting a logo or a particular design for the company name can require consumer research to determine whether the design will be viewed favorably and provide a positive connotation. In addition, a logo can also run the same risk of infringing another company’s trademark rights, so it is essential that the company’s trademark attorneys clear a logo design, in addition to the company name, before the company begins to use it.

Consider a Singular Corporate Color

Although selecting a corporate color – and sticking with that color – can be more difficult than selecting a company name or logo, when properly enforced, the benefits to a company can be invaluable. In order to maintain strong trade dress rights in a color, however, it is critical that once a color is selected, the company never deviate from its chosen color and that it provide explicit guidelines both within the company and to any licensees or franchisees as to the proper use of the color. There is no room for error, if a company wants consumers to associate a particular color with the company, as well as enforce the company’s rights in its corporate color. Everyone is familiar with the pink used by Mary Kay, the brown used by UPS, and, more recently, the multi-colored logo design used by eBay. (In fact, UPS has recently run a significant advertising campaign that emphasizes the color brown in its branding.)

Once a company has selected a name – or even a handful of frontrunners – it is critical not only that the corporate name be registered in the state the company selects for incorporation (often Delaware, because of the benefits of incorporating in that state), but that the company also file trademark applications with the U.S. Patent and Trademark Office (and in other foreign jurisdictions, if the company is multi-national or is contemplating expanding beyond the United States). By registering its company name as a trademark, a company will have exclusive rights to use the name with its particular products and services and to enforce its rights against infringing use by another entity of an identical or similar name with the same or similar products or services.

Patent-Eligibility of Method Claims in Association for Molecular Pathology v. Myriad Genetics

Tue, 23 Aug 2011 20:03:07 GMT

With respect to the Myriad method claims for “comparing” or “analyzing” gene sequences, the lower court had held that such claims were not patent-eligible, because they encompassed abstract mental processes independent of any machine or transformation, as required by the prevailing standard articulated by the Federal Circuit in In re Bilski. 545 F. 3d 943 (Fed. Cir. 2008). That strict requirement regarding “machine-or-transformation” has since been deemed too restrictive by the U.S. Supreme Court in Bilski v. Kappos. 130 S. Ct. 3218 (2010). The presence of a “machine-or-transformation,” however, is still recognized as an important clue regarding patent-eligibility of method claims.

One of Myriad’s method claims for “comparing” or “analyzing” is provided below:

A method for detecting a germline alteration in a BRCA1 gene, said
alteration selected from a group consisting of the alterations set forth
in Tables 12A, 14, 18, or 19 in a human which comprises

analyzing a sequence of a BRCA1 gene or BRCA1 RNA from
a human sample or

analyzing a sequence of BRCA1 cDNA made from mRNA
from said human sample with the proviso that said germline alteration
is not a deletion of 4 nucleotides corresponding to base numbers
4184-4187 of SEQ IDS NO:1.

As can be seen, the steps involve only “analyzing” sequences of DNA. On appeal to the Federal Circuit, Myriad argued that the lower court incorrectly applied the machine-or-transformation test in light of Prometheus Laboratories, Inc. v. Mayo Collaborative Services, No. 2008-1403 (Fed. Cir. 2010). In Prometheus, the disputed method claims were directed to “determining” a level of a drug in the patient’s blood. The Prometheus court held, however, that the determination necessarily involves a transformation, noting that there was no way to inspect and determine the level of drug in the patient’s blood other than through a transformative method such as chromatography. It should be noted that the U.S. Supreme Court has granted certiorari in Prometheus, so the standard for what constitutes a “transformation” may change in the coming months.

The Federal Circuit panel distinguished Myriad’s method claims from Prometheus, however, based on the finding that the claimed “comparing” or “analyzing” of sequences can be performed mentally. While Myriad attempts to argue that the claimed “sequence” must be embodied in the actual DNA molecule, the panel found numerous instances in the patent specifications where the term “sequence” refers to an informational list of the DNA nucleotides. Further, references to the “human sample” were found to be merely indicative of source. As such, the claimed “sequence” encompassed mere information and “comparing” or “analyzing” such information encompassed abstract mental processes. The Federal Circuit therefore found that such method claims are not patent-eligible.

In contrast, other method claims, which included a step for growing transformed cells and determining changes in growth rates, were found not to be abstract. Although the appellee argued that such steps were mere data-gathering, the Federal Circuit panel found that growing transformed cells was “an inherently transformative step involving the manipulation of the cells and their growth medium.” Further, the step of “determining” the cells’ growth rates “necessarily involved physical manipulation of the cells.” As such, the Federal Circuit found that such method claims involving steps for “growing” cells and “determining” their growth rates to be patent-eligible.

The Federal Circuit decision may be appealed to the U.S. Supreme Court. In the meantime, ensuring the patent-eligibility of method claims may continue to involve incorporation of a “machine-or-transformation.” While no longer a necessary pre-condition, satisfying the “machine-or-transformation” test has weighed in favor of finding patent-eligibility. In the meantime, proceedings related to Prometheus may provide important clues as to how the method claims in Myriad may stand up if the U.S. Supreme Court were to grant certiorari.

Federal Circuit Holds Isolated Genes Are Patentable

Mon, 08 Aug 2011 17:17:53 GMT

On July 29, 2011, the Court of Appeals for the Federal Circuit published its decision in Association for Molecular Pathology v. Myriad Genetics. The appeal was taken from a controversial Southern District of New York decision, which held that isolated DNA is not patent-eligible subject matter under 35 U.S.C. §101 due to being a product of nature. In addition, method claims directed to “comparing” or “analyzing” DNA sequences were found to lack subject matter eligibility, because they lacked any tie to a “machine-or-transformation.”

The appellant, Myriad Genetics, had requested that the Federal Circuit overturn the lower court decision on both procedural (lack of standing) and substantive (patent-eligibility) grounds.

In its opinion, the panel of three judges expresses agreement on the following:

1. At least one plaintiff had standing to bring the case,
2. cDNA (complementary DNA) is patent-eligible,
3. Methods directed to “comparing” or “analyzing” DNA sequences are not
patent-eligible, and
4. Methods directed to “growing” transformed cells are patent-eligible.

The panel split 2-1 as to the patent-eligibility of isolated DNA (excluding cDNA) with Judges Lourie and Moore finding that isolated DNA claims are patent-eligible and Judge Bryson dissenting. While all three judges agreed that the standard for patent-eligibility under Section 101 is described by U.S. Supreme Court decision in Diamond v. Chakrabarty, 447 U.S. 303 (1980), each differed on how to apply that standard.

In Chakrabarty, the disputed patent claims were directed to a bacterium genetically modified to be capable of breaking down crude oil, an ability absent in naturally occurring bacteria. The U.S. Supreme Court found that the genetically modified bacteria was patent-eligible, because it was “a product of human ingenuity having a distinctive name, character [and] use” and having “markedly different characteristics from any found in nature and one having the potential for significant utility.”

In applying Chakrabarty, the lower court had found no “marked difference,” because the isolated DNA conveys the same information (sequence of nucleotides) and has the same function (coded for a protein related to breast cancer) as native DNA and that such informational and functional characteristics were products of nature rather than human ingenuity. In reversing, Lourie relies on isolated DNA having “a distinctive chemical identity from that possessed by native DNA,” while Moore writes separately to argue that the patent-eligibility of isolated DNA is based on being “not naturally produced without the intervention of man.”

Bryson dissents, saying that “Chakrabarty requires us to focus on two things: (1) the similarity in structure between what is claimed and what is found in nature and (2) the similarity in utility between what is claimed and what is found in nature.” He concludes that isolated DNA is therefore not patent-eligible, since “[t]he only material change made to those genes from their natural state is the change that is necessarily incidental to the extraction of the genes from the environment in which they are found in nature.”

Chemistry v. Biology, or Form v. Function

According to appellant Myriad Genetics, the lower court incorrectly applied Chakrabarty by “focusing not on the differences between isolated and native DNAs, but on one similarity: their information content.” Lourie agreed, declaring that the U.S. Supreme Court directs the focus of the inquiry not to similarity, but to whether or not there are “markedly different” or “distinctive characteristics” between the claimed subject matter and its counterpart found in nature.

BRCA1 and BRCA2 in their isolated state are not the same molecules as DNA as it exists in the body; human intervention in cleaving or synthesizing a portion of a native chromosomal DNA imparts on that isolated DNA a distinctive chemical identity from that possessed by native DNA.

Though Lourie acknowledges that isolated DNA are originally part of native DNA, he argues that the difference in chemical structure is sufficient to confer patent-eligibility, despite the similarities in sequence and function.

The claimed isolated DNA molecules are distinct from their natural existence as portions of larger entities, and their informational content is irrelevant to that fact. We recognize that biologists may think of molecules in terms of their uses, but genes are in fact materials having a chemical nature and, as such, are best described in patents by their structures rather than their functions.

Moore ultimately arrives at a similar conclusion, though she interprets Chakrabarty as applying a flexible test to determine whether the claimed subject matter has “markedly different characteristics with the potential for significant utility” resulting from human intervention as compared to nature. Like Lourie, she examines the chemical formula and structure of isolated DNA and compares to that of native DNA. She finds, for example, that isolated DNA sequence terminates in a phosphate group at one end and a hydroxyl group at the other end, while in native DNA, such a sequence is connected by phosphodiester bonds to other DNA in the chromosome. Further, she argues that “man has defined the parts that are to be retained and the parts that are to be discarded” and that there are “a variety of applications and uses in isolation that are new and distinct as compared to the sequence as it occurs in nature” (as primers and probes). As such, she concludes that such uses are an “enlargement of the range of . . . utility,” thereby rendering isolated DNA patent-eligible.

Bryson counters both Lourie’s and Moore’s approaches, arguing that “it would seem to make more sense to look to genetics, which provides the language of the claims, than to chemistry.” He argues that the majority’s focus on chemical structure fails to take into account the biological context of DNA, namely as genes coding for synthesis of proteins and trait inheritance. Moreover, “the claimed genes have been isolated according to nature’s predefined boundaries, i.e., at points that preserve the ability of the gene to express the protein for which it is coded.” As such, he concludes that it is not human ingenuity that determines the chemical structure of the isolated DNA, but nature.

[N]ature has defined the genes as independent entities by virtue of their capacity for protein synthesis and, ultimately, trait inheritance. Biochemists extract the target genes along lines defined by nature so as to preserve the structure and function that the gene possessed in its natural environment.

The dissent further notes that the isolated DNA claims in question (other than those directed to cDNA) are not directed to any particular chemical structure. Rather, the isolated DNA claims are directed to a particular genetic function: coding for the BRCA polypeptide. Bryson also notes that because proteins can be coded by multiple DNA sequences, the claims actually encompass numerous chemical structures that “share only one unifying characteristic: each codes for the same protein as the naturally occurring BRCA1 gene.”

In comparing the opinions penned by each of the three judges, it appears that each approach turns on a different interpretation of what it means to be “markedly different” under Chakrabarty. Lourie directs the inquiry to whether there are any differences in chemical structure, disregarding any similarities in biological function or informational roles as indicators of hereditary traits. Under the Lourie approach, a difference in chemical structure may be sufficient to make a claimed composition “markedly different” from a natural composition. Moore, on the other hand, favors an examination of whether human intervention resulted in any structural or functional differences. According to Moore, a difference in chemical structure and function, if resulting from human intervention, may therefore constitute a “marked difference” from a natural composition. In contrast, Bryson focuses on the similarities in structure and function between the claimed composition and its counterpart found in nature. In Bryson’s view, therefore, where the claimed composition and its natural counterpart shares the same sequence, codes for the same protein and indicates the same genetic trait, such similarities weigh against finding any “marked difference.”

Patent Reform Passes the House of Representatives

Tue, 05 Jul 2011 11:47:00 GMT

The House of Representatives voted 304-117 to pass the “Leahy-Smith America Invents Act” patent reform bill on June 23. A similar bill passed the Senate on March 8 by a vote of 95-5. The next step is reconciliation, where the differences between the two bills will likely be resolved.

This bill H.R. 1249, and its counterpart, S. 23, are the biggest change in U.S. patent law in over a century. The bill affects most areas of the patent system, including the definitions of patentable subject matter and novelty; administrative procedures involving patentability and patent validity; litigation and remedies; and funding authority. Some of the features of the legislation are that:

• Patents will be awarded on essentially a First-to-File basis, versus the current First-to-Invent basis. The grace periods currently in existence under 35 U.S.C. 102 for determining novelty and prior art have been restructured and almost eliminated.

• Interference proceedings, where the first person to invent is determined, will be replaced with derivation proceedings, where a claim of inventorship by a first person to file can be challenged by those claiming that the subject matter of the invention was derived from their work. Derivation proceedings must be started within 12 months of publication of the application that contains the disclosure of the derived invention, and be supported by substantial evidence – despite the evidence typically being in the hands of the deriving party. The new derivation proceedings can apparently be circumvented with either accelerated examination or a filing of a request for non-publication of the allegedly derived application.

• Inventors will now be able to replace their oath of inventorship with a declaration. This reduces the penalties for falsely claiming inventorship and virtually eliminates them for foreign companies inducing false claiming. Also, companies and individuals claiming legal ownership of an invention can sign an unsworn Substitute Statement asserting their ownership of the invention and resulting application, if they can show unavailability of the claimed inventors. Finally, under existing law, inventorship must be shown before examination can be commenced. This will be changed to require it before a patent issues. The result of these changes will be that the criminal penalties for falsely claiming inventorship will be reduced, penalties for inducing false claiming of inventorship may be effectively eliminated, and the likelihood of actual inventors claiming inventorship will be reduced.

• Third parties can submit prior art during examination of a patent application. The submission should include a statement as to its relevance. This may make it more difficult for some applicants to receive a patent.

• New post-grant review proceedings will be instituted for newly issued patents. This introduces a new way to invalidate patents and will most likely be used by competitors. The proceedings are oppositional before Administrative Patent Judges, with decisions directly appealable to the Federal Circuit. In order to institute a challenge to an existing patent, the challenger must show a reasonable likelihood of prevailing in invalidating at least one claim based on published prior art or statements by inventors or owners of the patent during prosecution or in court. A petition must be filed within 9 months of the grant of a patent, and cannot be made if the petitioner has filed a civil action challenging the validity of any claim of the patent or after 6 months after the date that the petitioner is served with a complaint alleging infringement of the patent. Inter-partes reexamination remains available as an option for post-grant review of a patent.

• Supplemental examination can be requested by a patent owner in order to provide corrected or new information to the USPTO. If the agency concludes a supplemental examination, the patent cannot be held unenforceable on the basis of any information considered during that examination.

• A transition post-grant review program for determining what constitutes a covered business method patent will be instituted. The Director will issue regulations regarding the new procedure within one year of enactment. A petition for a transitional proceeding cannot be filed unless the petitioner has been sued for or charged with infringement of the business-method patent.

• Failure to disclose best mode under 35 U.S.C. 112 ¶ 1 has been removed as a justification for invalidation.

• Damage provisions have been revised. Either party can ask that a judge act as a gatekeeper to determine factors used in assessing damages. Moreover, either party can request that an infringement trial be sequenced to determine infringement prior to damages.

• Prior use rights, which give nonpatentees the right to continue using an invention that they were using prior to the filing of a patent application, will be extended to affiliates. Virtual marking is authorized in recognition that it is often infeasible for companies with numerous products and patents to comply with the current marking law. Instead of having to physically mark each item covered by a patent with its patent numbers, companies will now be able to just provide a web site link to a list of products covered by their patents. Also, failure of an infringer to get advice of counsel will no longer be used as evidence of willful infringement.

• Fee setting authority will be granted to the USPTO director. Included in this is a reduction of fees by 50% for small entities and 75% for a newly created class of micro-entities. Micro-entities must qualify as small entities, inventors must not have been named on 4 (House) or 5 (Senate) or more previously filed patent applications, and have a gross income that exceeds 3 times the most recently reported median household income.

• The Director of the USPTO will be able to prioritize examination of applications that he considers important to the national economy or national competitiveness, without recovering the additional cost of providing that prioritization.

There are some minor differences between the House and Senate versions of the bill. But the difference between the two bills that will most likely lead to problems during the reconciliation process concerns fee diversion. The USPTO is essentially self-funding. It typically takes in at least as much money in fees as it expends in examination. On and off for the last decade Congress has diverted some of these fees to the general revenue fund used to fund other government services. The Senate bill would prevent this diversion from happening in the future. This was removed from the House version of the bill, when the Budget and Appropriations committee chairs opposed it on the grounds that this would weaken Congressional oversight of the agency. The Republican majority in the House seemed fairly strong in their opposition, and consideration of the bill on the House floor was delayed for a week until it was removed. The Senate appears to be strongly behind this element, and so there is a potential that the bill will still fail, despite overwhelming passage in both Houses of Congress over this issue.

How to Prevent Your Trademark from Going .XXX

Mon, 27 Jun 2011 16:20:32 GMT

The Internet Committee for Assigned Names and Numbers (ICANN) has approved the launch of the new .XXX top-level domain name (“TLD”), targeted to serve the needs of the adult entertainment industry. As we've seen in the past, the launch of new TLDs may give cybersquatters the opportunity to register domain names that incorporate famous marks to later profit from selling them to their rightful owners. The risk of brand damage caused by such cybersquatting activities is enhanced in this case by the fact that the .XXX TLDs are, by definition, associated with sexually-oriented content. Sensitive to the issue, the registry behind the .XXX TLD is giving trademark owners outside the adult industry the opportunity to preemptively block their marks from being registered within a .XXX web address.

Starting on September 7, 2011, shortly before the launch of the .XXX TLDs, trademark owners will have a 30-day “Sunrise Period” to opt-in or opt-out of the .XXX registry. In order to block a trademark from being used as a .XXX web address, the interested party must own a trademark registration granted before September 1, 2011. The opt-out feature will only be offered during the 30-day pre-launch period and it will be available upon payment of a one-time fee estimated to range from $200 to $300. Only exact matches of a registered trademark may be entered during the Sunrise Period for either opt-in or opt-out, which means that abbreviations, hyphenated uses, acronyms, typos or close variations of a trademark may not be blocked.

While trademark owners will still be able to attempt to recover .XXX domain names that make unauthorized use of their trademarks by using existing anti-cybersquatting mechanisms, such as UDRP complaints, the preemptive opt-out feature will likely be less costly and more efficient. Trademark owners will also have a chance to continue to block their trademarks after the Sunrise Period, but opt-out costs are expected to be higher than those to be offered during the pre-launch period.

We, therefore, encourage our clients to review their trademark portfolios and consider applying to block their main brands from registration within the .XXX registry. If you have any questions about the launch of the .XXX top-level domain names or need assistance in opting-in or out of the .XXX registry, please contact one of the members of our IP Group.

ON YOUR MARK, GET READY…

Fri, 24 Jun 2011 17:37:39 GMT

Brand owners need to be aware that the complex world of Internet domain name registrations is about to get more confusing. On Monday, June 20, the Internet Corporation for Assigned Names and Numbers (“ICANN”) approved taking applications for an unlimited number of generic Top Level (after the dot) Domains. Qualified registrars may apply for any string of letters after the dot, e.g. (dot)realestate, (dot)casinos, (dot)sports, (dot)toys, (dot)music, or (dot)movies. The new “gTLDs” are expected to increase competition and foster free speech, but they also present a much more difficult trademark enforcement environment as brand owners struggle to ferret out and shut down unauthorized use of their marks and sales of counterfeit goods and services on the web.

The first round of applications for the new gTLDs will be accepted beginning January 12, 2012 and will close April 12, 2012. Although the new gTLDs are characterized as “generic”, (dot)Brand TLDs are eligible and large brand owners should consider whether they want to own and run their own unique Top Level Domain. For example, Hitachi and Canon have already announced they will be applying for (dot)Hitachi and (dot)Canon respectively.

Short of establishing their own (dot)Brand Top Level Domains, brand owners will have to decide how best to enforce their trademarks and the authenticity of the goods and services associated with those marks in the new unlimited gTLD environment. Certain rights protection mechanisms have been negotiated by representatives from ICANN’s Government Advisory Committee (GAC), Business Constituency (BC), and Intellectual Property Constituency (IPC).

Clients are encouraged to evaluate the needs and opportunities presented by the new generic Top Level Domains in consultation with IP counsel well in advance. In general, registrars will only be required to apply the rights protection mechanisms associated with the new domains to nationally or internationally registered marks which owners must enter into a new “Trademark Clearinghouse”. Lewis and Roca is represented on ICANN’s Intellectual Property Constituency and will be participating actively on behalf of trademark owners to provide input into ICANN’s implementation of the new gTLDs.

Federal Circuit Heightens Bar for Inequitable Conduct Defense

Thu, 02 Jun 2011 18:36:31 GMT

Sitting en banc last week, the U.S. Court of Appeals for the Federal Circuit stiffened the tests for claims of inequitable conduct. As Chief Judge Rader stated: “This court now tightens the standards for finding both intent and materiality in order to redirect a doctrine that has been overused to the detriment of the public.” In doing so, the Federal Circuit vacated a lower court finding of inequitable conduct, and called the inequitable conduct defense a “plague” not only on the courts but also the entire patent system.

The court clarified that, to satisfy the intent prong, a challenger must establish that “the applicant knew of the [prior art] reference, knew that it was material, and made a deliberate decision to withhold it.” With regard to the materiality prong, the majority adopted a “but for” standard, requiring the challenger to show that “the PTO would not have allowed a claim had it been aware of the undisclosed prior art.”

The majority did provide one exception to the “but for” standard; namely, for cases in which the patentee has engaged in egregious misconduct such as deliberately filing a false affidavit.

The case is Therasense Inc. v. Becton, Dickinson & Co., Fed. Cir., No. 2008-1511, 5/25/11, and the opinion is available at http://pub.bna.com/ptcj/081511May25.pdf

Supreme Court Clarifies Knowledge Standard For Induced Patent Infringement

Wed, 01 Jun 2011 17:57:22 GMT

The U.S. Supreme Court ruled last week that, to be liable for induced patent infringement, the would-be infringer must have actual knowledge of infringement, and that willful blindness can constitute actual knowledge. In doing so, the Court affirmed an infringement verdict against Pentalpha Enterprises Ltd. and clarified the amount of knowledge necessary to prove induced infringement, which had split the circuit courts for years.

The patent at issue involved cool-touch deep fryers. The Supreme Court affirmed the Federal Circuit’s ruling that fryers made by Pentalpha infringed the patent in suit, but rejected the Federal Circuit standard that only “deliberate indifference” to the risk of infringement was required for induced infringement.

In an opinion written by Justice Samuel Alito, the Supreme Court ruled 8-1 that a party must have actual knowledge of infringement to be found liable for induced patent infringement. While the Supreme Court agreed that the Federal Circuit used the wrong standard, “we nevertheless affirm the judgment of the court of appeals because the evidence in this case was plainly sufficient to support a finding of Pentalpha’s knowledge under the doctrine of willful blindness.”

Long applied in the criminal context, the concept of willful blindness dictates that defendants cannot escape liability by deliberately shielding themselves from evidence that their conduct is unlawful. The Court noted the widespread application of willful blindness in criminal law, and found no reason that it should not apply equally in civil patent cases.

According to the Supreme Court, willful blindness is a more appropriate standard than the deliberate indifference test because it requires active efforts by an inducer to avoid knowing about the infringement. The Court found that Pentalpha willfully blinded itself to its infringing conduct, because the company’s fryers copied all but certain cosmetic features of the plaintiff’s cool-touch deep fryers. In affirming infringement, the Court noted that the “evidence was more than sufficient for a jury to find that Pentalpha subjectively believed there was a high probability that [plaintiff’s] fryer was patented, that Pentalpha took deliberate steps to avoid knowing that fact, and that it therefore willfully blinded itself.”

The case is Global-Tech Appliances Inc. et al. v. SEB SA, case number 10-6, and the patent in suit is U.S. Patent No. 4,995,312.

Genericide - Let’s Hope it’s not Contagious

Fri, 29 Apr 2011 19:22:39 GMT

As Apple fights with Amazon.com to assert exclusive trademark rights in APP STORE for, ahem, a software application store, it may be a good reminder to trademark owners to formulate a strategy for avoiding the worst fate to befall a trademark…genericide. Yes, it is actually as deadly as it sounds. Genericide occurs when a trademark becomes generic, meaning it is no longer an indicator of the source of a particular product or service, but rather, has become synonymous with its general class.

Trademarks function as indicators of source. In other words, they identify the source from which a product or service originates so that consumers will be able to distinguish a trademark owner’s products and services from another’s, and come to expect a certain level of quality from that product or service. For example, no matter where you purchase a McDonald’s cheeseburger, you can anticipate exactly how it is supposed to look and taste, and it’s not the same as a cheeseburger from Burger King. That’s how a business’ reputation for quality, or its “goodwill” is established.

There are four levels of distinctiveness that fall along a spectrum of trademark strength. The first level, comprising the strongest trademarks are fanciful, or coined terms. Fanciful trademarks have no meaning until they become associated with a product, such as PEPSI cola or XEROX photocopiers. The second strongest is an arbitrary trademark, which is composed of a word that exists, but is then associated with a completely unrelated product or service, like APPLE (how ironic) for computers, or DELTA for an airline. The third strongest is the suggestive trademark, which requires the consumer to use his or her imagination to appreciate the relevance of the trademark in conjunction with the product or service it identifies. COPPERTONE, for example, doesn’t come right out and tell the consumer that the corresponding product is tanning lotion. Finally, descriptive trademarks are the least strong of the four trademark types. In fact, descriptive trademarks are not considered distinctive from the get go, as is the case with the first three trademark types, rather, but they can become distinctive in the minds of the relevant consumer over time, or based on a combination of factors including advertising dollars and unsolicited publicity. TV GUIDE and FROSTED MINI WHEATS are descriptive, because the identify a quality, characteristic, feature or function of the product being offered.

Generic terms do not function as a trademark at all, they simply identify the common name for a product or service, e.g. restaurant, car, coffee, or lipstick. Generic words are available for use by anyone. So how does a trademark lose its distinctiveness and become generic? It’s essentially the result of too much of a good thing, market dominance. In other words, the trademark enjoys significant dominance among competitors so that consumers ultimately identify the trademark as the generic (or common) name of the product or service. For example, aspirin was actually a trademark owned by Bayer AG for acetylsalicylic acid, typically used to reduce fevers and relieve pain. Escalator was originally a trademark for moving stairs offered by the Otis Elevator Company. Yo-yo was a trademark of the Duncan Yo-Yo company. Jell-O is pervasively used to identify gelatin dessert.

There are also trademarks that have come close to genericization, but were saved from certain death thanks to thoughtful brand resurrection campaigns. XEROX went to great lengths to re-train consumers through an extensive advertising campaign to “photocopy” rather than “xerox.” Johnson and Johnson went so far as changing the lyrics to its jingle from “I am stuck on Band-Aids, ‘cause Band-Aid’s stuck on me,” to I am stuck on Band-Aid brand, ‘cause Band-Aid’s stuck on me,” to remind consumers that it’s a BAND-AID brand bandage. Kimberly-Clark gently reminds consumers that KLEENEX tissue is the number one facial tissue brand.

So how do trademark owners maintain the fine balance between cornering the market and keeping their brand from becoming generic? First, proper use of a trademark is key. The trademark should operate as an adjective to modify a noun, e.g. DORITO’S corn chips. Avoid using a trademark as a verb, plural or possessive, unless the trademark itself is in the possessive form. Educate consumers on how to use the trademark in subtle ways, such as in marketing and packaging materials. Even following the trademark with the word brand helps. Trademark owners can also enforce their trademark rights through a variety of available legal means such as infringement, opposition or cancellation actions. Most of all, enlist the aid of a thoughtful, experienced trademark attorney who can help early on in the trademark selection and clearance process, work to obtain exclusive rights for your trademark throughout the country, and ultimately save your brand from an untimely demise.

New Guidance in an Internet Keyword Ad Case

Fri, 22 Apr 2011 16:48:44 GMT

On March 8, 2011, the U.S. Court of Appeals for the Ninth Circuit issued a key ruling in Network Automation, Inc. v. Advanced Systems Concepts, Inc., No. 10-5840 WL815806 (9th Cir. March 8, 2011). Reversing a District Court’s injunction, the Ninth Circuit found that purchase of a competitor’s trademark for use as a keyword in an internet search resulting in the appearance of an ad for defendant’s product in “sponsored links” did not constitute sufficient evidence of likelihood of confusion to support an injunction.

Network Automation and Advanced Systems both sell job scheduling and management software. Network Automation sells its software under the mark “AUTOMATE”, while Advanced Systems sells its product under the mark “ACTIVEBATCH”. Network purchased key word ads through Google, Microsoft Bing, and others for “ACTIVEBATCH” such that when a user enters the term “ACTIVEBATCH” in one of the relevant search engines, in addition to the search results, an ad for Network Automation’s product would appear under the “sponsored links” section. Advanced Systems sent multiple demand letters to Network Automation, objecting to this practice, and Network Automation filed a declaratory relief action seeking a judgment of non-infringement. Advanced Systems counterclaimed alleging trademark infringement and sought a preliminary injunction against Network Automation’s use of the “ACTIVEBATCH” mark as a keyword. The district court granted the request for injunctive relief, focusing primarily on the “internet troika”, the three factors it viewed as significant for “cases involving the internet”. The 9th Circuit reversed, vacating the injunction and remanding the case back to the lower court for further proceeding consistent with the guidance contained in its opinion.

The “internet troika” comes from the Brookfield case, in which the court focused on 1) the similarity of the marks, 2) the relatedness of the goods or services, and 3) the simultaneous use of the Web as a marketing channel, as the 3 most important factors in resolving the domain name dispute presented in that case. Brookfield Commc’ns Inc. v. West Coast Entm’t Corp., 174 F. 3d 1036, 1054 (9th Cir. 1999). Since Brookfield, the “internet troika” has been widely used by courts considering a variety of cases involving infringement claims and the internet. In Network Automation, the court posits that the “internet troika” is not appropriate to all infringement cases involving the internet, and is particularly ill-suited to keyword ad cases. Instead, the court says that in keyword ad cases, the Sleekcraft factors should be considered flexibly in order to consider those most relevant in any particular case. AMF Inc. v. Sleekcraft Boats, 599 F. 2d 341 (9th Cir. 1979).

Under a “flexible” consideration of the Sleekcraft factors, plus “other relevant” factors, the court in this case found the most relevant factors for consideration were: 1) the strength of the mark; 2) the evidence of actual confusion; 3) the types of goods and degree of care likely to be exercised by the purchaser; and 4) the labeling and appearance of the advertisements and the surrounding context on the screen displaying the results. The court notes that the ads in this case appear as “sponsored links” which lessens the possible likelihood of confusion. Although the court does not elaborate much on the reason, this is presumably because when results appear in “sponsored links” they provide a visual clue for users that the link is an advertisement not necessarily coming from the same source as the product that was indicated in the search. Based on the court’s discussion of labeling, one could infer that clear labeling of the source of an ad (while not present in this case) would also weigh in favor of a finding of no infringement under similar circumstances.

This case is significant because it sends a clear signal that the 9th Circuit does not believe the “internet troika” to be appropriate in keyword ad cases and because it emphasizes the importance of evaluating the appearance, content, and context of the resulting ad in determining whether use of a competitor’s mark as a keyword for purchasing ads from search engines amounts to infringement or not. In addition, it suggests that ads appearing as “sponsored links” are less likely to be found infringing than ads that are not segregated and labeled as “sponsored links”. It will be interesting to see if other circuits follow this approach, and how the case law continues to develop in this area, but for now, it appears that the ruling makes it more difficult for a trademark holder to challenge competitors or search engines based on use of its trademark as a keyword for online advertising, particularly where the resulting ad appears as a “sponsored link”.

Confusion Likely Between UNIVERSITY OF DENVER and Proposed DENVER STATE UNIVERSITY?

Mon, 18 Apr 2011 17:49:05 GMT

Metro State University, a public university located in Denver, Colorado, announced plans in March to introduce state legislation that would allow it to change its name to Denver State University. The University of Denver, a private university located just a few miles from Metro State's campus, is not a fan of the proposed name change.

The University of Denver alleges that the name Denver State University is likely to cause confusion between the schools among consumers; in other words, the University of Denver alleges that Metro State's use of the mark DENVER STATE UNIVERSITY would infringe its UNIVERSITY OF DENVER mark. While a suit has not been filed - the legislation will not be introduced until 2012 - the Denver Post reports the schools have exchanged increasingly contentious correspondence.

The dispute between the schools is interesting because there are literally hundreds of colleges and universities in the United States that co-exist with "similarly named" institutions. For example, there is a "[STATE NAME] State University" for almost every "University of [STATE NAME]" (Colorado State University/University of Colorado; Iowa State University/University of Iowa; Florida State University/University of Florida). These institutions co-exist without confusion among consumers. Indeed, the alumni of these universities might be downright offended if you confused their alma mater with that of their similarly named rival.

On the other hand, most similarly named colleges and universities have co-existed for decades or longer. While they aren't going to object to a similar name they have co-existed with for many years, they might object to a new-comer that adopts such a name. Moreover, most colleges and universities have developed and established unique academic programs, athletic departments, logos and color schemes that have grown to distinguish them - and their name - from similarly named counterparts. Metro State would have to "start from scratch" in distinguishing DENVER STATE UNIVERSITY from the UNIVERSITY OF DENVER.

Many of the co-existing similarly named schools in the United States are public universities that are established and overseen by the same state legislature, thereby avoiding the potential for litigation between them. As noted above, that is not the case here, paving the way for an interesting controversy to develop between the two schools.

More information on the proposed name change can be found here: http://www.denverpost.com/breakingnews/ci_17901564

If Only My Bracket Had Worked This Well - Zediva Sued for Copyright Infringement

Tue, 05 Apr 2011 18:06:26 GMT

As I posited a few weeks ago, the major Hollywood studios have sued start-up Zediva for copyright infringement. Warner Bros., Columbia Pictures, Disney, Paramount, Twentieth Century Fox and Universal filed suit in the Central District of California yesterday against WTV Systems, Inc., WTV Systems, LLC and Venkatesh Srinivasan, the founder and CEO of Zediva. You can find a copy of the filed complaint at http://www.mpaa.org/Resources/2146a1b0-20bd-48ce-a473-f5f27812ba29.pdf

Zediva, as you may remember, buys DVDs at retail and plays them on DVD players in a warehouse facility. It then transmits the images from the individual DVD players over the Internet to a single user who has “checked out” the particular copy of the DVD. Zediva’s CEO believes that, because each movie stream is going from a particular DVD to a single user at any given time, Zediva’s business model is lawful under the first sale doctrine of copyright law.

In their complaint, the studios allege that Zediva infringes on the studios public performance right (stop me, if you’ve heard this before) by streaming movies over the Internet. They claim to be irreparably harmed because Zediva “directly supplants and undermines Plaintiffs’ and their authorized licensees’ offering…to consumers” and “threatens to undermine…present and potential legitimate channels, at significant cost to Plaintiffs and their licensees.”

The studios identified 57 movies in their complaint and are seeking actual damages and profits or statutory damages of $150,000 per infringement, with each public performance of the movie counting as a separate infringement. Even if evidence were to show that each listed movie was only played once, that’s still over $8.5 million in statutory damages. (I’m assuming that’s what the studios’ prayer for relief means since it rather circularly alleges that each infringement is a separate infringement and inexplicably requests statutory damages of $150,000 per statutory award.) Of course, the studios are also seeking preliminary and permanent injunctive relief as well as attorneys’ fees and costs.

According to news reports, Zediva hasn’t yet issued a statement regarding the lawsuit since they just found out about the suit through the Motion Picture Assoc. of America’s press release on the matter. I know a lot of people wonder why they should talk to their lawyers before they do things. Here’s a great example of a $8.5 million reason.

I Don’t Think It Means What You Think It Means

Thu, 17 Mar 2011 12:25:54 GMT

Zediva, the newest kid on the block in online movie viewing, went live this week after a year in beta with their concept for letting the public watch new release DVDs online without the wait time imposed by movie distributors on competitors like Netflix and Amazon. Their concept is almost comically common-sense simple: buy DVDs on the day they become available at retail and use DVD players to play them, but send the picture and audio over the Internet to whomever rented the movie.

It seems the service works something like this:

1. Go online and check to see if your favorite new release is available to rent. If so, order it.

2. Somewhere in California, at Zediva’s data center, a copy of the DVD gets inserted into a DVD player and the movie is streamed to your computer or other device.

3. You’ve got control of the DVD and DVD player for 4 hours, during which time no one else has access to that particular copy of the DVD.

In interviews, the CEO claims that what Zediva is doing is completely legal. Because the company is using physical DVDs that it bought and physical DVD players to play them, he argues, Zediva is protected by the “first sale doctrine” of copyright law.

As a copyright owner, you have the right to distribute copies of your work to the public, whether by sale, rental, gift or what have you. As written, a copyright owner has the right to control all distribution, so that every time I lend my beloved copy of The Shining to a friend, Stephen King could come after me for copyright infringement. (Yikes!) But the Copyright Act isn’t that harsh and makes exceptions, as under the first sale doctrine. (The first sale doctrine is codified in Section 109 of the Copyright Act, 17 U.S.C. § 109, for all you kids playing along at home). What the first sale doctrine says, essentially, is that, if you own a copy of a copyrighted work, the copyright owner can’t stop you from selling or otherwise transferring possession of that copy to someone else. (Whew!) So I can sell my The Last Unicorn DVD on eBay, and LionsGate can’t tell me not to. (Not that I would sell my The Last Unicorn DVD.)

So, Zediva is arguing that it is renting the physical copies of the DVD to its customers, just like customers rent from Redbox or Netflix or (still?) Blockbuster. In fact, the CEO has characterized its customers as renting both the DVD and the DVD player and that makes this alright.

My first thought is that if I’m on the beach in Florida, I definitely don’t have possession of a DVD in California, so that’s a problem right there. But here’s where I think Zediva’s going to run into trouble, and by trouble, I mean a massive copyright infringement lawsuit from those oh-so-lovable movie studios. The first sale doctrine implicitly applies to the distribution right, since it talks about a particular copy of a work and copies are defined as material objects in the Copyright Act. The first sale doctrine has a very limited bearing on the public performance or display right; and, those are the copyrights I expect the studios will say are infringed if they decide to sue.

As defined by the Copyright Act, public performance or display includes the transmission of the performance or display of the work to the public “by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.” I think Zediva would have a hard time arguing that they are not transmitting the performance or display of the movie to the public.

But, we’ll see how this turns out. Zediva has been public knowledge for several months now and no one has sued them. And, with a savvy copyright lawyer, they could make some other arguments, I’m sure. Maybe they’ll have a happy ending and not just simply fade to black.

The PAC-12, Tupac and a 12PAC

Thu, 10 Feb 2011 15:40:29 GMT

The Pac-10 Conference will add the University of Colorado and the University of Utah to its league next fall and will subsequently undergo a rebranding from the PAC-10 to the PAC-12. Whether rebranding or launching a new brand, one important consideration should be whether the domain names you want to use for your brand are available. The Pac-10 just found out that PAC12.COM - likely the most vital domain name for the launch of the Pac-10’s new brand - is registered to someone else.

Because the Pac-10 wants to use PAC12.COM to promote its goods and services and because the domain name is identical or confusingly similar to the Pac-10’s new PAC-12 trademark, the conference has filed a Uniform Domain Name Dispute Resolution Policy (“UDRP”) Complaint with the World Intellectual Property Organization (WIPO). The UDRP is an administrative proceeding created by the Internet Corporation for Assigned Names and Numbers (ICANN) that allows a trademark owner to file a complaint with an approved provider when the owner believes its trademark rights are infringed by a domain name. The sole remedy available under the UDRP is transfer of the domain name from the registrant/respondent to the complainant.

Under the UDRP, a complainant (in this case, the Pac-10) must establish three elements to succeed: (1) the domain name is identical or confusingly similar to a trademark or service mark in which the complainant has rights; (2) the registrant does not have any rights or legitimate interests in the domain name; and (3) the registrant registered the domain name and is using it in “bad faith.” The second and third elements are often interrelated, i.e., a finding that a registrant has no rights or legitimate interests in a domain name is typically followed by a finding of bad faith registration and use and vice versa. Here, the Pac-10 can easily establish that the PAC12.COM domain name is identical or confusingly similar to the PAC-12 mark. However, the difficulty in this case - and nearly all other UDRP proceedings - is establishing the second and third elements.

Apparently, the registrant of PAC12.COM is rather clever. It has used the PAC12.COM domain name for a website that displays an Amazon.com “widget” titled “A 12PAC from Tupac.” The widget displays twelve albums by the late rap artist Tupac Shakur; each album’s picture links to the respective album’s purchase page on Amazon.com. Why is this clever? Because the registrant of the domain name presumably anticipated a UDRP action and made an attempt, however weak or lame, to establish “legitimate interests” and rights in the PAC12.COM domain name through use of the slogan “A 12PAC from Tupac,” thereby making the second and third elements of a UDRP claim much harder for the Pac-10 to establish.

Note that the registrant of PAC12.COM obtained the domain name only after the Pac-10’s expansion was announced. This is important for two reasons: (1) it illustrates the importance of obtaining desired domain names prior to publicly announcing a brand; and (2) it is at least some evidence of bad faith registration and use of the domain name.

It is difficult to say whether the Pac-10 can muster enough evidence to overcome the registrant’s attempt to establish “legitimate interests” in the domain name. The guess here is that the Pac-10 will prevail. But, had the Pac-10 registered PAC12.COM before, or even immediately after publicly announcing the PAC-12 brand, it could have saved itself a 12PAC of trouble.

PROTECTING "NOOKS AND CRANNIES" BIMBO BAKERIES USA, INC. v. CHRIS BOTTICELLA

Tue, 08 Feb 2011 13:11:46 GMT

Bimbo Bakeries USA, Inc. ("Bimbo") is one of the four largest companies in the U.S. baking industry. Bimbo and its affiliates produce and distribute a wide range of well-known baked goods, including Thomas’, Entenmann’s, Arnold, Orowheat and Boboli. In February 2010, the Federal District Court in the Eastern District of Pennsylvania granted Bimbo’s motion for a preliminary injunction against Chris Botticella ("Botticella"), enjoining him from accepting an offer of employment with Hostess Brands, Inc. ("Hostess"), one of Bimbo’s competitors, based on misappropriation of trade secrets involving Thomas’ English Muffins’ "nooks and crannies." Botticella appealed the lower court decision to the U.S. Court of Appeals for the Third Circuit, and the appellate court affirmed the lower court’s order and remanded the case back to the lower court.

BACKGROUND

Chris Botticella was Bimbo’s Vice President of Operations for California from 2001 until January 2010. In this position, he was directly responsible for five production facilities and for overseeing a variety of areas, including product quality and cost, labor issues and new product development. As one of Bimbo’s senior executives, Botticella had access to a wide range of confidential information about Bimbo’s products and business strategy, including – and importantly for this injunction – code books that contained formulas and process parameters for all of Bimbo’s products. Critically, Botticella was one of only seven individuals at the company who possessed all the information necessary to independently replicate Thomas’ English Muffins, including the "secret behind the muffins’ unique ‘nooks and crannies’ texture." (Of note, sales of Thomas’ English Muffins account for approximately half a billion dollars in annual sales.)

While Botticella was employed at Bimbo, he signed a "Confidentiality, Non-Solicitation and Invention Assignment Agreement" with Bimbo, in which he agreed (1) not to directly compete with Bimbo during his employment; (2) not to use or disclose any of the company’s confidential or proprietary information during or after his employment; and (3) upon ceasing his employment with the company, to return all documents he received from the company during his employment. However, the agreement did not restrict where Botticella could work after his employment with Bimbo was terminated.

In September 2009, Hostess offered Botticella a position in Texas as Vice President of Bakery Operations for its eastern region. Botticella accepted the position in October, but did not disclose his plans to Bimbo for several months. During this time, Botticella continued to work at Bimbo and had complete access to Bimbo’s confidential and proprietary information. Botticella claims he continued to work at Bimbo in order to receive his 2009 bonus and to complete two projects for the company. During this period, Botticella also executed an agreement with Hostess that stated Hostess was not interested in "any confidential information, trade secrets or other proprietary information" Botticella had received from Bimbo and, moreover, that he would not disclose this information to Hostess. On January 4, 2010, Botticella informed his supervisor at Bimbo that he would be leaving Bimbo on January 15, but he did not reveal that he was leaving to work for a competitor. It was not until January 13, the day after Hostess announced that Botticella would be joining the company, that Bimbo learned of Botticella’s plans. Botticella was asked to vacate his office that same day.

Critically, between the time he accepted Hostess’ offer and when he left Bimbo, Botticella continued to have access to Bimbo’s confidential and propriety information. However, he later stated that he no longer felt "comfortable" having access to this information, and, accordingly, deleted e-mails and electronic documents containing confidential information and "blocked" similar information that he was exposed to in meetings. Botticella deleted a number of such documents over the Christmas holiday, but subsequently asked a technician to restore them in early January. After Botticella left the company, Bimbo hired a computer forensics expert to investigate Botticella’s use of his company laptop during this period. The investigation revealed that a user (who logged on as Botticella) had accessed a number of confidential files during this period and, in particular, that twelve files were accessed within thirteen seconds on January 13 -- Botticella’s last day at Bimbo. Moreover, this access took place after a phone call with human resources in which Botticella disclosed his plans to join Hostess. The forensic expert determined that this activity – as well as similar activities over the weeks prior to Botticella’s departure – were "inconsistent with an ordinary usage whereby an individual’s files are opened and either read or edited," but were "consistent with copying a group of files," although he could not conclusively determine whether Botticella had copied the files or simply deleted them. The investigation also revealed that three external storage devices (i.e., a "thumb" or "flash" drive) had also been connected to Botticella’s computer, although it was unclear when this had occurred.

A number of the files that were accessed during Botticella’s last days with Bimbo were "highly sensitive" (e.g., information regarding cost-reduction strategies, product launches, plant and line closures, production strengths and weaknesses, and labor contracts). Clearly, possession by a competitor would have been very damaging to Bimbo. In his deposition, Botticella admitted to copying files during his last weeks at Bimbo, but claimed he did so "only to practice his computer skills in preparation for his new position at Hostess." The District Court found Botticella’s explanation "confusing at best" and "not credible" and granted Bimbo’s motion for a preliminarily injunction against Botticella beginning his employment with Hostess and divulging any confidential Bimbo information to Hostess. The court also ordered Botticella to return any confidential or proprietary information to Bimbo. Botticella appealed the decision.

DISCUSSION

In determining whether to grant a preliminary injunction, the court must consider four factors: (1) a likelihood of success on the merits; (2) whether the party seeking the injunction will suffer irreparable harm if the injunction is denied; (3) whether granting relief will result in even greater harm to the non-moving party; and (4) whether public interest favors such relief.

I. Likelihood of Success on the Merits
The District Court found that Bimbo was likely to prevail on the merits in its claim of misappropriation of trade secrets. First, Botticella had access to and had acquired a number of Bimbo’s trade secrets during his employment, including information in Bimbo’s code books, Bimbo’s strategy for increasing profitably, knowledge of how Bimbo produces bread, documents copied with no "credible" explanation, Bimbo’s promotional strategies, cost positions and customer identities. Accordingly, the court determined that Bimbo would be able to prove at trial that Botticella would misappropriate these trade secrets if he were allowed to work at Hostess. Botticella claimed that the conclusion was wrong as a matter of law, because (1) a court can only enjoin a defendant from starting a new job to protect the former employer’s technical trade secrets; (2) where it would be "virtually impossible" for the defendant to perform his new job without disclosing trade secrets; (3) Bimbo did not present any evidence that Botticella’s new responsibilities at Hostess would lead him to disclose Bimbo’s trade secrets; and (4) the District Court drew "impermissible adverse inferences" against Botticella that shifted the burden of proof to him.

As a preliminary matter, the Court of Appeals determined that the District Court could properly grant an injunction even if disclosure of the trade secrets was not inevitable. The court then considered Botticella’s claims and found: (1) while a court may "more readily" enjoin new employment when technical trade secrets are involved, the rule is not inflexible, but depends on a "highly fact-specific inquiry" and a court can enjoin a defendant from starting new employment when the facts demonstrate a "substantial threat" of trade secret misappropriation; (2) under the circumstances of this case, it would have been "virtually impossible" for Botticella to avoid disclosure of trade secrets if he were employed at Hostess; (3) based on his prospective position at Hostess, Botticella would have similar broad responsibilities at Hostess such that the District Court did not err in determining that the two positions were "substantially similar;" and (4) Botticella’s conduct after accepting the position at Hostess demonstrated his intention to use Bimbo’s trade secrets in his new employment.

II. Irreparable Harm
The District Court determined that Bimbo would suffer irreparable harm if it did not grant an injunction because disclosure of its trade secrets would put Bimbo at a competitive disadvantage. On appeal, Botticella argued that the court should grant a narrower injunction where he would stipulate that he would not disclose Bimbo’s trade secrets. Although the Appellate Court recognized that evidence at trial could show that a narrower injunction was appropriate, it found that the lower court did not abuse its discretion in granting the injunction when "faced with the evidence of Botticella’s suspicious conduct during his final weeks at Bimbo."

III. Harm to Botticella Caused by Injunctive Relief
The District Court also concluded that the harm to Bimbo if its trade secrets were disclosed outweighed the harm to Botticella as a result of not being able to begin work at Hostess until the court made a final determination. As the restriction on Botticella’s employment was only temporary (although delayed by Botticella’s appeal), the Appellate Court agreed that the injunction was necessary to prevent greater irreparable harm to Bimbo.

IV. The Public Interest
Finally, the Appellate Court agreed with the District Court that granting a preliminary injunction was consistent with the public interest in "upholding the inviolability of trade secrets and enforceability of confidentiality agreements," which, under the facts of this case, outweighed the public interest in employers being able to hire whomever they please and employees being able to work for whomever they please.

CONCLUSION

The Appellate Court affirmed the District Court’s decision in its entirety and remanded the case to the lower court for further review. On December 30, 2010, the District Court granted permanent injunctive relief against Botticella, (1) enjoining him from working for -- or providing services to -- Hostess; (2) enjoining him from using or divulging any of Bimbo's trade secrets, proprietary information or confidential information; (3) ordering him to return any confidential or proprietary information to Bimbo; and (4) ordering him to notify Bimbo if he accepts employment or a contract position in the baking industry within the next 24 months. On January 4, 2011, the District Court entered an order disposing of the outstanding motions and closed the case.

Senate Judiciary Committe Approves Patent Law Reform Bill, S 23

Thu, 03 Feb 2011 17:44:57 GMT

A patent law reform bill, S. 23, was approved today by the Senate Judiciary Committee of the 112th Congress . It is very similar to S. 515 that expired with the final adjournment of the 111th Congress in December 2010.

The patent reform bill passed out of committee today contains a number of different elements. Some of the more notable changes in the patent law are:

- Replacing our traditional First-to-Invent system with a First-to-File system. The primary justification for the change is patent law harmonization with much of the rest of the world.
- Accompanying the First-to-File system is an elimination of most of the filing grace periods. There is also a significant move towards an absolute novelty standard, as employed by many other countries. This means a loss of patent rights if an inventor inadvertently discloses his invention or tries to sell it before he files a patent application.
- A “derivation” procedure is introduced to replace the current interference practice. In some situations, in the new First-to File system, an applicant can overcome an earlier filed patent application covering the invention provided the applicant can prove that the earlier filer derived his invention from that of the applicant.
- There is an opportunity for third parties to submit prior art related to a pending patent application. Additionally, third parties can submit prior art to the United States Patent and Trademark Office (U.S.P.T.O.) to challenge a patent up to 9 months following its grant.
- An adversarial inter-partes review, by Administrative Patent Judges, is introduced as an alternative to litigation and the current inter-partes reexamination procedure.
- A judicial gate keeping role for the courts for screening the legal basis for specific damage theories and jury instructions is introduced.
- The bill codifies the current judicial standard for willfulness and enhanced damages by requiring a clear-and-convincing evidence standard and requires willfulness be pled with particularity.
- The U.S.P.T.O. will be granted fee setting authority.

The primary groups pushing the legislation are big high-tech multi-national companies, such as IBM and Microsoft. Their interests seem to be to weakening the patent system for small companies and independent inventors in this country who file patent infringement suits against them, while not weakening the patent system for themselves. These companies tend to have large overseas operations generating patents, and as a result, are already conforming to a First-to-File system. They argue that a First-to-File system would make the U.S. more competitive, but do not actually explain why.

On the other side of the debate are small companies, independent inventors, and larger companies that do not file a lot of patents or do not do so outside the United States. Part of their argument is that by weakening the patent system, their ability to raise funds based on their patents and patent applications will be adversely impacted.

The proponents of the legislation have worked for a number of years for its passage, and it appeared that the patent reform bill might pass the week before the Congressional summer recess, when a lot of pending legislation was combined into an omnibus bill. However, the legislation did not reach the floor before recess.

In the new 112th Congress, it initially appeared that the House Judiciary Committee members were more avid for patent reform legislation than was the Senate, which had carried the brunt of process in the previous Congress. But most recently, some of the Republicans on the Committee have started questioning the legislation and ask if it really is best for the country, or just best for the large high tech multi-national companies pushing the legislation. If you or your company wants to voice an opinion on the patent reform law, please contact your congressional representatives.

Sometimes a cigar is just a cigar. When what's in a place name doesn't affect the purchaser.

Tue, 01 Feb 2011 17:54:58 GMT

The U.S. District Court for the District of Columbia recently held that the Trademark Trial and Appeal Board (TTAB) erred as a matter of law in applying the three-part test for primarily geographically deceptively misdescriptive marks. Guantanamera Cigar Co. v. Corporacion Habanos, S.A., Civil Action No. 08-0721 (RCL), 2010 WL 3035750 (D.D.C., August 5, 2010) reversing and remanding the prior TTAB decision in Corporacion Habanos, S.A. v. Guantanamera Cigar Co., 86 USPQ2d 1473 (TTAB 2008) [precedential].

The underlying TTAB action was an opposition filed by Corporacion Habanos (Habanos), a Cuban cigar company with many cigar brands, including GUANTANAMERA registered in many countries around the world. Habanos’ 2002 U.S. application for GUANTANAMERA is suspended because of a prior application by Guantamera Cigar Company (GCC) for the identical mark. Habanos opposed the GCC application arguing that the mark was primarily geographically deceptively misdescriptive and, therefore, barred from registration. The TTAB agreed and refused registration. GCC appealed to the District Court for de novo review.

The District Court found that the TTAB followed the correct three-part test providing that a mark is “primarily geographically deceptively misdescriptive” if:

1) the primary significance of mark is a generally known geographic location,
2 )the consuming public is likely to believe the place identified by the mark indicates the origin of the goods bearing the mark, when in fact the goods do not come from that place, and
3) the misrepresentation was a material factor in the consumer’s decision.

Guantanamera Cigar Co., 2010 WL 3035750 at *4. Under this test, the Court opined that there was sufficient evidence in the record to find that Guanatamo, Cuba is the primary significance of “GUANTANAMERA” and that there was sufficient evidence to find that the consuming public is likely to believe that GCC’s cigars originate in Cuba. However, the Court held that the TTAB failed to properly apply part 3 of the test, because Habanos never established a prima facie case that a significant portion of the relevant consumers would be materially influenced in the decision to buy GCC’s cigars because of the geographic meaning. Echoing last year’s Spirits case before the Federal Circuit, In re Spirits International N.V., 563 F.3d 1347, 1350-51 (Fed. Cir. 2009) in which the mark MOSCOVSKAYA was held not geographically deceptively misdescriptive because Moscow’s well-known reputation for vodka was not enough to support a conclusion that a significant portion of the relevant consumers would be materially influenced, the Court here found Cuba’s well-known reputation for cigars is not enough to infer influence on a significant portion of the relevant consumers.

The case was remanded to the TTAB to reconsider the third part of the test under the proper standard.

Originally published in the INTA Bulletin.

The SUPER BOWL or the "Big Game"

Fri, 28 Jan 2011 16:03:18 GMT

The National Football League (NFL) will play its 45th annual championship game, more commonly known as the SUPER BOWL, on Sunday, February 6, 2011. The game will pit the Green Bay Packers against the Pittsburgh Steelers at Cowboys Stadium in Arlington, Texas. The SUPER BOWL mark is protected by trademark law, as are the team names, and businesses planning promotions centered around the game should use the SUPER BOWL mark and/or team names cautiously.

The NFL has been extremely aggressive in policing its SUPER BOWL mark. That's why you often see advertisers and media outlets refer to the SUPER BOWL as "the big game." This may be an overly cautious position, as detailed in a Phoenix Business Journal article featuring our partner Emily Bayton. As Ms. Bayton states in the article, businesses can likely use the SUPER BOWL mark and team names to refer to the game, so long as that use does not create the appearance that the promotion or event is affiliated with, licensed by or sponsored by the NFL or the individual teams.

The full article can be found at: http://www.bizjournals.com/phoenix/stories/2009/01/19/daily25.html

“VILLE WARS” - Blingville sues Zynga for Declaratory Judgment

Thu, 27 Jan 2011 16:50:59 GMT

The home page at Blingville, LLC’s website (www.blingville.com) currently reads “New Facebook Game Coming Soon!” On August 18, 2010, Blingville, a West Virginia company, announced on its Facebook page that it had begun working on this new Facebook game, and the game has been in Beta testing since then. But will Blingville have to change its name?

If you’re a Facebook user, you probably know or have heard of Farmville, the social networking game published by Zynga Game Networks that lets you grow crops and raise animals on a virtual farm. To date, nearly 29 million users have “liked” Farmville on Facebook. Zynga is also the publisher of the popular Mafia Wars game and has created a series of other social networking games, including Cityville, Frontierville, Petville, Fishville and Yoville. See any pattern here?

On November 2, 2010, Zynga sent a cease and desist letter demanding that the name of the game be changed. On November 5, Blingville’s predecessor Overtime Apps filed a trademark application for Blingville in the United States Patent and Trademark Office. After receiving several further demand letters from Zynga, Blingville filed suit on January 14, 2011 against Zynga in a West Virginia federal court seeking a declaratory judgment that its use of Blingville for a social networking game does not infringe any of Zynga’s trademark rights. We’ll have to wait and see whether Zynga, which is clearly building a family of “Ville” trademarks used in social networking games is successful in protecting that family. Its chances seem pretty good to me, although I, of course, don’t know all the facts in play.

Hopefully, Zynga does not mind litigating the issue in West Virginia, as opposed to its home in northern California. If nothing else, this case illustrates the need to consider your trademark enforcement strategy carefully. Sending demand letters to enforce your trademark rights is often very effective, but it can lead to you becoming a defendant far from home, just as Zynga has become here. Before firing off that letter, you should consult with counsel to discuss your options, including whether it makes sense to be the first to file a lawsuit and send a copy of the complaint with your demand letter.

Branding: Tips for Standing Out in a Crowd

Wed, 26 Jan 2011 15:11:47 GMT

Innovation is a common buzzword these days, as companies search for new and unique ways to distinguish themselves and even turn a profit. How do companies large and small stand out among their competitors in today’s economy? How does a company turn an idea into a billion dollar intellectual asset, which ultimately strengthens its balance sheet and/or attractiveness to potential investors or purchasers? One way is to better understand how to build a solid brand identity that stands out and outlasts the others. When brand clearance and management is an afterthought that follows instead of intersects with the creative process, companies fail to take full advantage of the value of that brand. Companies with an understanding and appreciation for all of the factors that go into building an effective, competitive branding campaign will reap the benefits of a brand identity that enjoys strength, longevity, a more significant impact on the marketplace, and a far greater return on the initial investment.

Many companies create a product or begin offering services without giving much, if any, thought to the many components that can be protected as intellectual property assets. A common misconception about intellectual property and the creative process is the assumption that intellectual property is limited to patents. But as it relates to the branding process, intellectual property includes clearing and protecting many other facets of the branding campaign, including some or all of the following* :

• Name
• Logo
• Tagline or Slogan
• Product design
• Package design
• Distinctive colors or scents
• Ad copy
• Scripts associated with commercial advertisements
• Point of sale display look and feel
• Website content
• Offensive domain name registrations
• Spokesperson’s name, image, and likeness

These components can be protected under trademark, copyright, trade secret, trade dress, rights of publicity, and design patent. Failure to thoroughly flesh out all protectable components of a campaign early on can result in a variety of negative outcomes ranging from defending an un-necessary lawsuit, to being forced to re-brand after having spent a considerable sum on marketing and corresponding collateral, or even face financial ruin. It simply doesn’t have to be that way. Engaging knowledgeable intellectual property counsel at the outset of the creative process can help companies successfully navigate the branding waters. Intellectual property counsel can create a cost-effective strategy to identify potential infringement issues, insightfully evaluate the strength of a proposed name (even make recommendations for stronger, more distinctive alternatives), negotiate the purchase of senior rights, draft iron-clad licenses to use an individual’s name, image, and likeness, secure copyright protection in creative content, and craft expertly written documents to protect trade secrets critical to a company’s success, and much more.

Innovation manifests itself in many ways. In this case, it involves crafting an all-inclusive approach, marrying intellectual property and the creative process from the beginning, rather than at a point in time when it is too late to realize all the benefits afforded a strong, pervasively marketable brand identity that can ultimately be worth far more than the initial investment. The brand identity of the Company that encourages timely collaboration between its business executives, research and development team, and marketers, while engaging top-notch legal experts in the intellectual property field, will ultimately dominate.

*For additional examples, see, Anne H. Chasser and Jennifer C. Wolfe, Brand Rewire - Connecting Intellectual Property, Branding and Creative Strategy, John Wiley & Sons, 2010.

A Victory for Trademark Owners: Claims for Contributory Cybersquatting and Contributory Dilution Recognized

Wed, 26 Jan 2011 00:35:04 GMT

The Western District of Washington is allowing the Microsoft Corporation to move forward with claims for contributory cybersquatting under the Anti-Cybersquatting Protection Act (ACPA) and contributory dilution under the Lanham Act. In an order denying the defendants’ motion to dismiss Microsoft’s claims, the court stated that causes of action for contributory cybersquatting and contributory dilution had never been directly addressed by statute or appellate courts.

As the basis for its claims for contributory cybersquatting and contributory dilution, Microsoft alleges that the defendants, Amish Shah, Jose Rivera, Digispace Solutions LLC and YMultimedia LLC, sold software that allowed users to create domain names incorporating Microsoft marks. In their motion to dismiss, the defendants argued that claims for contributory cybersquatting and contributory dilution are not recognized.

Under the ACPA, 15 U.S.C. § 1125(d)(1), a plaintiff must show that “(1) the defendant registered, trafficked in, or used a domain name; (2) the domain name is confusingly similar to a protected mark owned by the plaintiff; and (3) the defendant acted with ‘bad faith intent to profit from that mark.’” The “bad faith” requirement is nearly always the most difficult element to show in a claim under the ACPA.

Here, the court first noted the well-established doctrine of contributory liability for trademark infringement. The court then reasoned that because the intent of the ACPA is to prevent bad-faith use of a mark in a domain name, the defendants’ alleged conduct “falls squarely within the statutes’ goal of imposing liability on those who seek to profit in bad faith by means of registering, trafficking, or using domain names that contain identical or confusingly similar marks” and held that the ACPA should not be read so narrowly as to insulate the defendants from liability for their alleged conduct.

The Lanham Act provides a cause of action for dilution under the Trademark Dilution Act, 15 U.S.C. § 1125(c). Dilution is generally defined as a blurring or tarnishment of a famous mark. Blurring of a famous mark occurs where a defendants’ use causes the connection between the mark and the goods with which the mark is used to be weakened in the minds of consumers. Tarnishment occurs where a defendant uses the famous mark in an unwholesome manner or in connection with inferior goods. The court stated that, like contributory cybersquatting, contributory dilution “is a tort-like cause of action which naturally lends itself to the theory of contributory liability.” Similarly to its reasoning on the contributory cybersquatting claim, the court reasoned that the intent of the Trademark Dilution Act is to prevent the exact type of harm, blurring or tarnishing of a famous mark, alleged by Microsoft.

In short, the court denied the defendants’ motion to dismiss based on the legislative intent of Congress in enacting the ACPA and the Trademark Dilution Act. The holding potentially gives trademark holders two additional causes of action with which to go after cybersquatters. Given the ever-expanding list of domain name extensions (.com, .net, etc.), and the associated increase in opportunities for cybersquatters, the court’s order is a small but needed victory for trademark owners in the battle for cyberspace.

This Could Get UGGly

Mon, 24 Jan 2011 10:20:57 GMT

Ever wonder where the UGG brand name originated? According to a recently filed suit in the District of Minnesota, in the early days of aviation, Australian pilots wrapped their feet and legs with sheepskin to keep warm in unheated airplanes. Allegedly, the wraps were so ugly, the pilots referred to them as “UGGS.” Many American women would be dismayed to learn the origin of the ubiquitous UGG brand, regarded as an upscale and fashionable footwear company.

As for the substance of the suit, Ugglebo Clogs, LLC filed suit against Deckers Outdoor Corporation, the owner of the UGG brand, alleging that Ugglebo has manufactured clogs and clog boots under the UGGLEBO mark since the 1960’s.

Ugglebo alleges claims for unfair competition under the Lanham Act, common law unfair competition, and deceptive trade practices under the Minnesota Deceptive Trade Practices Act. Ugglebo argues that UGG is generic in Australia to describe sheepskin boots and that, “through aggressive litigation, coincidence, and advertising,” the owner of the UGG brand has converted a generic term into a trademark for footwear.

Interestingly, Ugglebo does not allege that consumers are likely to believe that Ugg products are manufactured by or affiliated with Ugglebo. Rather, Ugglebo alleges that consumers, wholesalers and retailers will conclude that Ugglebo is attempting to trade off the UGG mark. The timing of the suit also raises several questions because the UGG mark has been used for footwear in the United States since at least 1998 and UGG was named “brand of the year” by Footwear News in 2003, nearly a decade ago. It’s hard to predict how Ugglebo will counter Deckers’ inevitable laches argument, but at the outset it appears that Ugglebo will argue that Deckers only recently began manufacturing clogs under the UGG mark, bringing about the likelihood of confusion and the subsequent lawsuit.

The case is Ugglebo Clogs, LLC v. Deckers Outdoor Corp., 0:11-cv-00154.

After 4-4 Supreme Court Split, Ninth Circuit’s First Sale Doctrine Decision Stands

Wed, 29 Dec 2010 12:45:41 GMT

On December 13, 2010, an equally divided U.S. Supreme Court let stand the decision of the Ninth Circuit Court of Appeals in Costco Wholesale Corp. v. Omega SA that original, copyrighted works legitimately purchased overseas cannot be imported into the United States and re-sold here under the first sale doctrine of U.S. Copyright law.

In this case, Costco had purchased genuine Omega watches overseas and then imported them into the United States for sale at its warehouse retail stores. The watches bore a copyrighted design on the back side of the housing. These are typically referred to as gray market goods - genuine products of a manufacturer that are made and sold exclusively for one geographic market that have made their way into another geographic market.

Omega sued Costco for copyright infringement alleging that the watches Costco purchased abroad were not intended for the U.S. market, and, therefore, were not authorized for sale here. Costco defended by asserting the first sale doctrine defense, which states that a copyright holder’s rights are exhausted (and thus unenforceable) once a genuine first sale of the article incorporating the copyrighted work has been made. The idea, is that upon the first sale, the copyright owner has been made whole from the proceeds of that sale.

Costco relied upon a 1998 Supreme Court decision in Quality King, Inc. v. L’Anza Research in which the first sale doctrine was held to apply to goods made in the U.S., purchased overseas and then imported back into the U.S. The Ninth Circuit distinguished that case on the fact that the Omega watches were not originally manufactured here in the U.S. The Supreme Court decision in Costco v. Omega is not precedential, but at least for now, in the Ninth Circuit, copyright owners who manufacture and sell products overseas can avoid the application of the first sale doctrine to the re-sale of those products in the United States.

ICANN Delays Decision on New Generic Top Level Domains (gTLDs) Program

Wed, 15 Dec 2010 12:03:17 GMT

Last week, at its Board meeting in Cartegena, Columbia, the Internet Corporation for Assigned Names and Numbers (ICANN) was expected to approve the implementation of a process to increase the number of generic top level domains (i.e. .com, .net, .org., etc.) that could be made available for registration of domain names. The proposal, which had been under public review and comment since August of this year, would allow anyone who wanted to create a new top level domain name registry to apply, subject to meeting certain criteria, to choose a new gTLD and run the registry. Thus, for example, new TLDs might be created for specific companies, products or categories -- i.e. .ibm, .wii or .casino.

Public comment, especially from trademark owners and government officials, expressed substantial concern over the creation and implementation of this proposal. Referring to this public comment, the ICANN Board identified a number of “overarching issues” that it believed warranted further consideration: trademark protection, mitigating malicious conduct, impact on the DNS root zone server system, economic issues, what to do with geographic names and morality issues. Ultimately, the Board included that further study and consultation with the Governmental Advisory Committee (GAC) would be worthwhile before reaching a final decision on the launch of the new program.

The Board anticipates meeting with the GAC in February of 2011, so, at least for now, we’ll wait to see what happens. From a trademark enforcement perspective, however, trademark owners should consult with their IP counsel to discuss a strategy for how to handle the new gTLDs. This discussion should include whether to apply to run a gTLD registry based on a famous name or brand; what, if any, protections may be available to prevent its brand from becoming a new gTLD; what, if any, domain names it will need to register when and if new gTLDs are released; and how to implement and/or expand a watch service to help police and protect its trademarks.

USPTO Extends Pilot Program for Green Technology

Thu, 11 Nov 2010 11:02:27 GMT

The U.S. Patent and Trademark Office (“PTO”) has announced that it will extend a pilot program that moves applications for environmentally friendly inventions closer to the front of the line.

According to PTO Director David Kappos, the program, which was set to expire on December 8, 2010, will now run until the end of 2011. In addition, patent applications that were filed before the program began in December 2009 are now also eligible for the expedited examinations (assuming they are for green technology).

Despite the extension, only the first 3,000 speedy-review applications that were filed before the new deadline will be accepted. So far, the PTO has granted almost 800 petitions from green technology inventors and has issued 94 patents on the technology.

The goal of the program is to boost investments in green technology and to hopefully create new jobs. According to Kappos, “We’ve seen great results so far for those applications in the Green Technology Pilot Program, so we want to extend it for another year and open the program to additional green inventions.”

Normally, an application takes just over two years on average to receive a first office action. Under the expedited program, once a green technology petition is granted it takes an average of only 49 days. In some cases, the PTO has granted green applications within a year of filing, which the PTO said it hopes will help inventors secure funding and speed their green technology to the market.

Supreme Court to Consider Intent Standard for Induced Patent Infringement

Tue, 26 Oct 2010 20:12:18 GMT

On October 12, 2010, the Supreme Court agreed to review Global-Tech Appliances Inc. v. SEB S.A., No. 10-6, which challenges the Federal Circuit’s standard for induced patent infringement. Under 35 U.S.C. § 271(b), “[w]hoever actively induces infringement of a patent shall be liable as an infringer.” Courts have consistently interpreted that statute as requiring intent on the part of the inducer. The contours of that "intent" element, however, are not well established. In 2006, the Federal Circuit held that a plaintiff must establish that the alleged infringer “knew or should have known his actions would induce actual infringements,” which necessarily means that the infringer had to be aware of the patent. In Global-Tech—the decision to be reviewed by the Supreme Court—the Federal Circuit specifically addressed the requirement that the alleged infringer knew of the patent, and held that a plaintiff need only show “deliberate indifference” to the existence of a patent.

Global-Tech is now challenging that standard, and asking the Supreme Court to reject the “deliberate indifference” test. Instead, Global-Tech is advocating a “purposeful, culpable expression and conduct to encourage an infringement.” A group of law professors submitted a brief supporting Global-Tech’s petition, and additional briefs are likely to follow.

The Supreme Court should hear oral argument this Term, and will likely issue a decision by next summer. That decision will likely suggest guidelines for avoiding liability for induced patent infringement, which is important to any business that may be accused of patent infringement or that seek to protect its own patent rights.

Insurance Coverage for Alleged Intellectual Property Infringement -- What’s in Your Policy?

Tue, 19 Oct 2010 19:52:49 GMT

Intellectual property accounts for the majority of all property owned by modern corporations. Because of its value, liability for alleged infringement is a major risk facing businesses today. Companies of all sizes may encounter lawsuits for a variety of intellectual property disputes, including patent infringement, trademark or trade dress infringement, copyright infringement, trade secret misappropriation, unfair competition, and privacy violations, just to name a few.

Businesses confronted with such lawsuits should look to their Comprehensive General Liability (“CGL”) policies for “advertising injury” coverage. For the most part, insurance companies continue to take a narrow view of what constitutes “advertising injury.” Despite that fact, however, courts around the Country have found coverage for various intellectual property claims under “advertising injury” provisions.

Advertising injury provisions may cover liabilities from allegations of trademark and “trade dress” infringement, which occur when one party commercially uses the mark of another without authorization in such a way that the use is likely to cause confusion among consumers. Some courts have held that insurance companies have a duty to defend such claims as “advertising injury.”

Advertising injury provisions may also cover allegations of patent infringement. Although courts frequently find that patent infringement is not covered, insurance coverage may be available depending on the particular facts. Recently, the United States Court of Appeals for the Ninth Circuit (which includes Arizona, Nevada and California, among other western states), found coverage for patent infringement claims under the advertising injury provisions of the insurance policy.

In April 2010, the Ninth Circuit held that an insurer was obligated to provide defense coverage under a general liability policy, because the alleged patent infringement constituted “advertising injury” as defined in the policy. Specifically, in Hyundai Motor Am. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, No. 08-56527 (9th Cir. Apr. 5, 2010), Hyundai brought suit against its insurer after Hyundai was denied defense coverage in a patent infringement claim. The underlying lawsuit was based upon allegations that Hyundai's website had features that violated certain patents. The plaintiff in that action brought suit against Hyundai and numerous other automobile retailers, claiming that the implementation of patented web site features constituted patent infringement.

After being sued, Hyundai sought to tender defense to its insurer, claiming that the allegations of the complaint sought damages based on a type of “advertising injury,” as defined in the insurance policy. The policy defined “advertising injury” as injury arising out of one or more of the following offenses:
a. Oral or written publication of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services;
b. Oral or written publication of material that violates a person's right of privacy;
c. Misappropriation of advertising ideas or style of doing business; or
d. Infringement of copyright, title, or slogan.

Because Hyundai was accused of misappropriating patented “advertising ideas,” it argued that the claims should be covered as advertising injury. The insurer disagreed and denied all coverage. As a result, Hyundai paid for its own defense and was ultimately found liable for patent infringement (with a resulting $34 million damage award that was later overturned). Hyundai then sued its insurer to recover the cost of its defense. The District Court found in favor of the insurer. The Ninth Circuit, however, reversed on appeal, finding that the insurer owed Hyundai a defense under the “advertising injury” provision of the insurance policy.

In doing so, the Ninth Circuit found that an insurance carrier “must defend a suit which potentially seeks damages within the coverage of the policy,” and that coverage can only be excused where there is no conceivable theory under which coverage could arise. The Ninth Circuit further concluded that Hyundai's website constituted an “advertisement” because it was marketed to the public at large. The court noted that patent infringement may constitute an advertising injury where “an entity uses an advertising technique that is itself patented.” As such, the Ninth Circuit concluded that the insurer should have provided a defense.

CONCLUSION
Despite some insurance carriers’ narrow interpretation of “advertising injury” clauses, policyholders should work with their legal counsel to determine whether there may be “advertising injury” coverage for accusations of intellectual property infringement.

It’s a HARD ROCK life

Wed, 06 Oct 2010 11:05:10 GMT

Hard Rock Café International (USA), Inc. (HRCI), the owner of the HARD ROCK trademarks, has sued the owners and operators of the Hard Rock Hotel and Casino in Las Vegas (“HRH”) and the producers and distributors of the reality TV show “Rehab: Party at the Hard Rock” for trademark infringement, trademark dilution, breach of contract, unfair competition and a declaration that the licensing agreement under which the Hard Rock Hotel and Casino operates is terminated.

REHAB is the name for the raucous pool party that takes place every Sunday during pool season at the HRH. In its complaint, filed in the Southern District of New York, HRCI paints a sordid picture of the REHAB pool party, alleging it is a venue for “drunken debauchery, acts of vandalism, sexual harassment, violence, criminality and a host of other behavior that most members of the general consuming public…would find unseemly and objectionable” and that it sullies the goodwill of the HARD ROCK trademarks. And all this so-called “debauchery” is available in living color to 93 million households across America because REHAB is the subject of a reality TV show on the truTV network.

HRCI alleges that the HRH companies breached the license agreement by allowing and encouraging the airing of the “Rehab: Party at the Hard Rock” TV show, by allowing the HARD ROCK mark to be used in the title of the show, and by allowing the HARD ROCK mark to become associated with “unsavory, offensive conduct.” HRCI also alleges that by authorizing the title “Rehab: Party at the Hard Rock” without clearing it with HRCI first, the HRH companies have caused actual and likely confusion that HRCI approves or endorses the behavior depicted at REHAB. HRCI even includes direct quotes from customers stating that they will never patronize a HARD ROCK establishment again, thanks to the behavior shown on the TV show.

On top of that, HRCI takes the HRH companies to task for using the acronym “HRH” as a trademark, alleging that the HRH companies are attempting to create a sub-brand with goodwill independent from the HARD ROCK marks. However, HRCI has at least one registration for the HRH trademark and the license agreement specifically forbids the HRH companies from developing any HARD ROCK marks without the express consent of HRCI. HRCI also calls the HRH companies on the carpet for allegedly sub-licensing the HARD ROCK marks to two Indian casinos, one in Tulsa, Oklahoma and one in Albuquerque, New Mexico. Not because they are Indian casinos, but because the graphic version of the HARD ROCK mark used to advertise the casinos isn’t a version authorized by the license agreement or one that is generally used by HRCI and wasn’t approved by HRCI.

Finally, HRCI alleges that the HRH companies have registered or caused to be registered at least 63 domain names that incorporate the HARD ROCK or HRH marks, all in violation of the license agreement.

So what does HRCI want in recompense for this litany of bad behavior? Oh, nothing too much, just a declaration that the license agreement is terminated; a permanent injunction against all the defendants and their sub-licensees prohibiting them from using any HARD ROCK mark in connection with any good or service; the transfer of all those HARD ROCK and HRH-containing domain names; the destruction of pretty much everything the defendants may have that bears any of the HARD ROCK or HRH marks; an accounting of profits; consequential damages, and; attorney’s fees and costs.

Leaving aside the potential large sum of money involved, that permanent injunction is serious business. The Hard Rock Hotel and Casino in Las Vegas has been around since 1995. That’s an awful lot of money-making history (read: goodwill) to just throw away. Plus, the hotel casino has a huge guitar sticking out of it; what other brand would want to take over that space when you have that to deal with?

We’ll keep an eye on this one because there could be some interesting discussions about the fair use of the trademark in regards to the title of the TV show (REHAB is a pool party at the Hard Rock Hotel and Casino; that is truthful and descriptive), as well as whether the Hard Rock Hotel and Casino in Las Vegas has generated goodwill separate from HRCI’s marks.

Milkaholics Anonymous

Tue, 28 Sep 2010 19:37:28 GMT

The epic battle that could have been Lindsay Lohan v. E*Trade came to a quiet end last Wednesday when the parties settled and stipulated to withdraw the lawsuit with prejudice. This after a long summer of heavy briefing, however. Here’s the tale of the tape for all of you keeping score at home.

E*Trade fired first with a motion to change venue from Nassau County, where Lohan brought the suit, to New York County, where E*Trade et al. have their principal places of business. E*Trade argued that Lohan hadn’t established that she was actually a current resident of Nassau County (she used her mother’s address as her residence) and pointed to all the indicia that Lohan is a California resident. Lohan didn’t have a particularly good comeback to that argument and the court granted the motion, transferring the case to Manhattan. E*Trade - 1. LiLo - 0.

E*Trade also fired off a motion to dismiss for failure to state a claim. They argued that New York law does not protect the use of a common first name by itself with no other indicia of a specific person. "There were over 250,000 females named Lindsay or Lindsey born between 1980 and 2008; Lohan is just one of many." Even among famous or well-known people, there are several other Lindsays/Lindseys, including Lindsey Vonn, who, if you can remember back to the beginning of the year, was heavily touted in connection with the Vancouver Olympics, when the “milkaholic” commercial was airing.[1] Since there were no other indicia that “Lindsay” in the commercial is supposed to be Lindsay Lohan, Lohan failed to state a claim. They also argued that Lohan’s common law claims had to be dismissed because they do not exist in New York.[2]

In opposing E*Trade’s motion, Lohan’s attorneys offered a meandering history of the right of publicity in the United States and New York, with a side excursion into the Lanham Act and federal guidelines regarding endorsements. On the facts, they argued that early drafts of the commercial had the “milkaholic” baby named Deborah and that the name was later changed to Lindsay once the “milkaholic” characterization was introduced. In a convoluted and inarticulate way, Lohan also seemed to argue that the “milkaholic” Lindsay had to be her because she herself is an alcoholic and a bimbo. Unfortunately, E*Trade didn’t bite on any of these issues and sedately replied that Lohan had conceded that all of their arguments were correct.

The world was deprived of what, no doubt, would have been a fantastic opinion because the parties managed to settle the case before the court could rule on the motion to dismiss. Various online sources are reporting that E*Trade paid Lohan something to make the case go away, but the settlement terms are confidential, so who knows? Everyone’s spokespeople are just saying that everyone is satisfied with the result; that could mean anything from “I’m just glad we got out of this without racking up more attorney’s fees” to “Thanks, Lindsay, for filing this and giving us tons of free publicity.” All things considered, I think the parties probably ended up in a tie, thus killing any chance of either team playing in a BCS bowl game.

[1] E*Trade’s attorneys also mentioned Lindsay Wagner, but neglected to make any Bionic Woman reference. They lose style points for that.

[2] I have to point out that I noted this when the case was originally filed and I don’t even practice in that jurisdiction.

Las Vegas Startup Sues Websites: Copyright Trolls and the Rise of the Internet Police

Tue, 21 Sep 2010 18:00:00 GMT

Websites beware. Once a mighty empire, the newspaper industry -- an industry that has blamed the Internet for more than a decade’s worth of declining readership and advertising revenues -- is striking back. If you own a website and a newspaper article from the Las Vegas Review-Journal (the “Review Journal”) has been posted on your website then you are in the crosshairs and are at risk of being sued for copyright infringement. Righthaven LLC (“Righthaven”), a Las Vegas-based startup, wants your money and it will take you to federal court to get it. “Grubstaked” by Stephens Media LLC, the publisher of the Review-Journal, Righthaven is making big business out of suing websites whose users have posted copies of Review Journal articles in website discussion threads, forums, and blogs. Righthaven has sued website owners and operators located throughout the United States and Canada for violating U.S. copyright laws.

Since March, 2010, Righhaven has filed approximately 130 lawsuits in the United States District Court for the District of Nevada and it continues to do so almost daily. According to an article about Righthaven in Wired.com, Righthaven’s vision is “to monetize news content on the backend, by scouring the internet for infringing copies of [Righthaven's] client’s articles, then suing and relying on the harsh penalties in the Copyright Act — up to $150,000 for a single infringement — to compel quick settlements.” David Kravets, Newspaper Chain’s New Business Plan: Copyright Suits, http://wired.com/threatlevel/2010/07/copyright-trolling-for-dollars (last visited September 22, 2010). In simpler terms, Righthaven is a copyright troll.

Most of the lawsuits filed by Righthaven are based upon the display of a single Review Journal article on the offending website. The lawsuits allege “willful” copyright infringement. However, in most cases, the articles were posted by third party visitors to the website and not by the website’s owner or operator.

Since Righthaven does not send cease and desist letters before filing suit, many of its targets have reported being taken completely by surprise. Indeed, many alleged infringers have reported that they would have voluntarily removed the newspaper articles from their websites if they had been asked to do so.

In response to these lawsuits, defendants have challenged Righthaven’s standing to sue. The arguments concerning Righthaven’s lack of standing have focused on whether and when Righthaven obtained copyrights in the articles at issue, arguing that absent any ownership rights at the time the complaint was filed, Righthaven lacks standing and the Nevada federal court lacks subject matter jurisdiction. Other standing-related arguments have challenged the validity of the assignments by which Righthaven purportedly obtained the copyrights at issue.

Defendants with little or no ties to Nevada are challenging whether the Nevada federal court can constitutionally exercise personal jurisdiction over them. Many of the defendants that have been sued operate websites from other States, have not conducted business in Nevada, and, in some cases, have never even been to Nevada or have not visited Nevada in years.

In addition to these defenses, several defendants have raised a variety of substantive defenses, including fair use, implied license, the de minimis doctrine, champerty, and barratry.

The fair use defense requires the court to weigh four factors: (1) the purpose and character of the allegedly infringing use, including whether the use was for commercial or nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work. See 17 U.S.C. § 107. Upon weighing these factors, if the court determines that a defendant’s use of a copyrighted work is a fair use, then the use is not an infringement.

The implied license defense looks to the plaintiff’s conduct to see if the plaintiff has expressly or implicitly consented to the alleged infringement. Some defendants have suggested the existence of an implied license because the Review-Journal posts its news stories on its webpage where they can be viewed for free, displays links that allow persons who view its articles to save, email, or print the articles, and also allows visitors to its site who view its articles to right-click and copy the articles when technical measures are available to prevent the articles from being copied. These defendants have also pointed out that the Review Journal does not post any terms or conditions on its website stating that copying articles is forbidden.

“The legal maxim ‘de minimis non curat lex’ insulates from liability those who cause insignificant violations of the rights of others.” Robert A. Gorman & Jane C. Ginsburg, Copyright: Cases and Materials 435 (5th ed. 1999). In the copyright context this means a technical violation so trivial that the law will not impose legal consequences. Id. Cases involving de minimis infringements are rarely litigated because such cases involve “questions that never need to be answered.” Id. (citing Knickerbocker Toy Co. v. Azrak-Hamway Int’l, Inc., 668 F.2d 699, 703 (2d Cir. 1982) (rejecting toy manufacturer’s infringement claim based upon competitor’s photo of its product)); see also Ringgold v. Black Entm’t T.V., Inc., 126 F.3d 70 (2d Cir. 1997) (two minute use of copyrighted quilt design in television program held de minimis).

“Champerty” concerns the situation where a person with no interest in a lawsuit agrees to finance and bear the expense of litigation in exchange for a portion of the proceeds. The doctrine originated in medieval England where the wealthy would assist poorer members of society by supporting their legal disputes with the wealthy citizen's personal or political enemies. See Del Webb Cmtys., Inc. v. Partington, No. 2:08-cv-00571-RCJ-GWF, 2009 U.S. Dist. LEXIS 85616, at *10 (D. Nev. Sep. 17, 2009). In return for funding the lawsuit, the party to whom the claim actually belonged promised to give his or her benefactor a stake in the outcome. Id. Through this practice, the wealthy became wealthier. Id. “Champerty was a means by which powerful men aggrandized their estates and the background was unquestionably that of private war.” Id. (quoting Osprey, Inc. v. Cabana Ltd. P’ship, 240 S.C. 367, 375 (2000)). Thus, champerty was prohibited at common law and is prohibited by Nevada law today. Id. at *10-12.

Barratry has been described as the “continuing practice of … champerty.” Id. at *9. It has also been described as the “act or practice of bringing repeated legal actions ….” Barratry, http://en.wikipedia.org/w/index.php?title=Barratry&oldid=385272254 (last visited Sept. 22, 2010) (on file with the author). 28 U.S.C. § 1927 “authorizes federal courts to punish barratry by requiring offending lawyers personally to satisfy their opponents’ litigation debts.” Schutts v. Bently Nev. Corp., 966 F. Supp. 1549, 1558 (D. Nev. 1997). (Emphasis added.)

While some of the Righthaven cases have settled, none of the remaining cases have advanced far enough through the litigation process for the Court to consider the merits of these defenses. Thus, it is still to early to tell how the Nevada federal court will rule on these issues.

The implications of the Righthaven cases upon free speech is clear. By appointing itself as the copyright enforcer of the Internet, Righthaven is chilling free speech throughout the country. Techdirt.com, reports “a blogger was just sued by Righthaven … [b]ecause of this, the blogger has taken down their entire blog, because it now represents too big a liability.” The Techdirt.com article was referring to a website called thearmedcitizen.com, who was sued by Righthaven on July 21, 2010, and suspended “all updates and archives” on July 22, 2010. Righthaven, however, seeks to expand its reach. Wired.com reports that Stephens Media runs over 70 other newspapers in nine states and that Righthaven’s CEO states that he already has an agreement to expand his practice to cover those properties. See Kravets, supra. Gibson is further quoted as stating that there are “million” if not “billions” of infringements on the Internet. Apparently, Righthaven intends to pursue every one.

Website owners and operators, however, need not wait in fear of being sued by Righthaven. In her July 29, 2010, post to this blog, my colleague, Nikkya Williams, summarized the procedures necessary for online service providers to take advantage of the “safe harbor” provisions of the Digital Millennium Copyright Act (the “DMCA”) codified at 17 U.S.C. § 512(c). Assuming compliance with its requirements, the DMCA may limit an online service provider’s liability for copyright infringement arising from third party website posts.

Attorneys from Lewis and Roca, including the author, are presently engaged in representing several defendants in both settlement negotiations and litigation.

The Innovative Design Protection and Piracy Prevention Act: Will Fashion Finally Trump Function in the Fight for Copyright Protection of Fashion Designs?

Tue, 07 Sep 2010 17:51:23 GMT

On August 6, 2010, New York Senator Charles Schumer introduced a new bill entitled the “Innovative Design Protection and Privacy Prevention Act” ("IDPPA”) which would amend the U.S. Copyright Act to grant certain protections to new and original fashion designs. While U.S. design patent and trade dress laws currently offer limited protections, the passage of the IDPPA would bring U.S. laws in line with those in the European Union, Japan and other foreign fashion markets that have long extended broader legal protections to unique and novel fashion designs.

The proposed bill, which Senator Schumer expects to be passed this fall, represents a compromise between leading fashion industry organizations such as the Council of Fashion Designers of America and the American Apparel and Footwear Association, which had been unable to reach a consensus as to the language in prior versions of the bill which was first introduced in 2006.

If passed, the IDPPA would provide protection to apparel (i.e., clothing, undergarments, gloves, footwear and headgear), accessory (i.e., purses, wallets, suitcases, bags and belts) and eyeglass frame designs. New designs are eligible for protection so long as they “provide a unique, distinguishable, non-trivial and non-utilitarian variation over prior designs for similar types of articles”. Unlike earlier unsuccessful versions of the bill, registration of fashion designs with the U.S. Copyright Office is permissible but not required. The proposed term of protection for new and original fashion designs under the IDPPA is three years after the date they are first introduced to the market, with any designs created prior to the effective date of the act remaining in the public domain.

To prevail on an infringement claim, the owner of a protected design must establish that: (a) the defendant’s design is “substantially identical” to the protected design (i.e., it is so similar in appearance that it is likely to be mistaken for the protected design and contains only merely trivial differences in construction or design) and (b) the defendant previously saw or otherwise had knowledge of the protected design. The presence or absence of color(s) or of a pictorial or graphic design work imprinted on fabric is not considered in determining whether a particular design is protectable or in the infringement analysis. The IDPPA limits damages for infringement to a maximum fine of $50,000 in the aggregate and $1 per copy.

The bill includes a “Home Sewing Exception” excluding from liability any person producing a single copy of a protected design for personal use or for the use of an immediate family member, provided such copy is not offered for sale or other commercial use during the applicable period of protection. In addition, as is the case under existing U.S. copyright laws, a party can rely on an “independent creation” defense as a complete defense to an infringement claim if it can establish that its allegedly infringing fashion design was independently created.

BATTLE OF THE BOTTLES: MAKER'S MARK V. CUERVO

Wed, 01 Sep 2010 18:23:23 GMT

I. INTRODUCTION

Maker’s Mark Distillery, Inc. (“Maker’s Mark”) brought suit against Tequila Cuervo La Rojena S.A. de C.V., Casa Cuervo S.A. de C.V., Jose Cuervo International, Inc. (“Cuervo”) and their U.S. distributor, Diageo North America, Inc. (“Diageo”) in the U.S. District Court, Western District of Kentucky, at Louisville, alleging that the Defendants violated federal trademark and common law, by producing and distributing a bottle of tequila capped with a red dripping wax seal similar to the seal Maker’s Mark had used for over 50 years. Maker’s Mark alleged (1) federal trademark infringement, (2) false designation of origin, (3) dilution, and (4) common law trademark infringement and unfair competition under the laws of Kentucky.

After a six-day bench trial, the court found (1) Maker’s Mark's dripping wax trademark was valid; and (2) Cuervo’s use of a similar red dripping wax infringed, but did not dilute, the mark. Based on these findings, the court issued an injunction prohibiting Cuervo from using the red dripping wax seal on its tequilas sold in the U.S., but did not award any damages.

II. BACKGROUND

Plaintiff Maker’s Mark has been producing bourbon whiskey, using a red dripping wax seal to cap its bottles since 1958. Today, Maker's Mark sells more than 800,000 cases of whiskey annually and most of the company’s $22 million advertising budget is used to promote it red wax seal. In 1985, Maker’s Mark registered its trademark (U.S. Trademark Registration No. 1,370,465) for a “wax-like coating covering the cap of the bottle and trickling down the side of the neck of the bottle in a freeform irregular pattern.” The registration does not specifically cover the color red, however.

Defendants Cuervo are the largest sellers of tequila in the U.S., selling more than 3.8 million cases each year in the U.S. alone. In addition, Cuervo spends $100 million per year in advertising. In the mid-1990s, Cuervo decided to create a high-end tequila to celebrate the company’s 200^th anniversary of legally producing tequila products. Initially, the bottle was capped with a non-dripping wax seal, but in 1997, Juan Domingo Beckman (now CEO of Casa Cuervo) decided to change the seal so that it included dripping wax, after he saw a bottle in mid-production, before the drips were cut off. As of 2001, Cuervo was selling 3000-4000 bottles of this tequila (at approximately $100 per bottle), using a red dripping wax seal,.

III. INFRINGEMENT

In arriving at its decision that Cuervo infringed Maker's Mark's dripping wax seal, the court first addressed the scope of Marker’s Mark registration and whether it afforded protection for all dripping wax seals or only red dripping wax seals. Although Cuervo argued that it would be prejudiced by a focus on a red seal, the court agreed with Maker’s Mark and allowed it to assert its rights in a red seal, because the color was “such a fundamental, likely inseparable, element of the mark.” Moreover, even if Cuervo were correct and the focus on the color red expanded the protection afforded by the registration (rather than, narrowing it, as the court determined), the court found that the red dripping wax seal was inherently distinctive and had gained secondary meaning based on 50 years of continuous use.

Cuervo also argued that the seal was functional, because it protects the cork and preserves the contents in “some” bottles of alcohol. Here again, the court disagreed with Cuervo’s position, stating that it “completely failed to show that wax seals are functional.” Cuervo further argued that even if the seals were not functional in the traditional sense, they were “aesthetically” functional (i.e., when an aesthetic feature, such as a color, serves a significant function). The court also found this argument unpersuasive, as red is not the only color that could be used for the wax seal.

Cuervo also submitted that Maker’s Mark registered mark is generic, but again, the court was not convinced by the limited evidence Cuervo presented, and determined that the registration was valid. The court then turned to an analysis of whether there was a likelihood of confusion between the two marks, using the Sixth Circuit’s eight-factor Frisch test: (1) the strength of the senior mark, (2) relatedness of the goods and services, (3) similarity of the marks, (4) evidence of actual confusion, (5) marketing channels, (6) likely degree of purchaser care, (7) intent of defendant in selecting the mark, and (8) likelihood of expansion of the product lines, as follows:

Strength of Mark – The court found the mark inherently distinctive and, moreover, that Maker’s Mark’s marketing enhanced the distinctiveness of the mark (“Maker’s Mark red dripping wax seal is an extremely strong mark due to its unique design and the company’s singular marketing efforts.”).

Relatedness of Goods – The court determined that the parties’ products were part of the same broad class of high-end distilled spirits, and, as such, the products were “somewhat” related, but not directly competitive. Accordingly, this factor favored Maker’s Mark slightly.

Similarity of Marks – The court commented that this factor carried considerable weight and that based on the “obvious facial similarities,” this factor also favored Maker’s Mark slightly.

Evidence of Actual Confusion – The court found that neither party presented any meaningful evidence of actual confusion and determined that as a result, this factor was neutral.

Marketing Channels – Maker’s Mark sells it bourbon in liquor stores, bars and restaurants; Cuervo sells its high-end tequila primarily in liquor stores. In addition, the difference in the two parties advertising budgets also limits the overlap in the marketing channels. Accordingly, the court decided that the channels are similar in some ways, but dissimilar in others, and concluded that this factor also marginally favored Maker’s Mark.

Degree of Purchaser Care – The court determined that this factor favored Cuervo in that consumers would use a high degree of care in choosing Cuervo’s high-end tequila.

Intent in Selecting Mark – Again, the court found that Cuervo’s intention was benign and that there was not sufficient evidence to prove that its use of the red dripping wax seal was intentional. Accordingly, this factor was neutral.

Likelihood of Expansion of Product Lines – Maker’s Mark had no plans of expansion and Cuervo did not have any plans at the time of the trial. Accordingly, the court again found that this factor was neutral.

Ultimately, the court found in favor of the Plaintiff, Maker’s Mark, but commented that the “question of infringement was a close call.” Although the majority of the factors favored Maker’s Mark, only the strength of the mark strongly favored Maker’s Mark. However, two other factors – relatedness of the goods and similarity of the marks – marginally favored Maker’s Mark, so when all three factors are taken together, the court found there was a likelihood of confusion between the two marks.

IV. DILUTION

In considering whether Cuervo’s use of a red dripping wax seal constituted federal trademark dilution, pursuant to the Trademark Dilution Recovery Act (“TDRA”), the court used the Sixth Circuit’s five-part test for dilution: (1) the mark is famous, (2) the mark is distinctive, (3) the defendant used the mark in commerce, (4) after plaintiff’s mark became famous, and (5) defendant’s use is likely to cause dilution of plaintiff’s mark.

The court stated that the threshold issue is whether a mark is famous. Using the four-factor TDRA test, the court determined that Maker’s Mark trademark was a “terrifically strong and focused brand,” but it had “serious doubts” that is was in the same league with such famous brands as Nike, Pepsi, Nissan, Audi, Hershey or Victoria’s Secret. Based on the evidence presented, the court determined that the mark was not famous, and, accordingly, Maker’s Mark’s dilution claim failed.

V. STATUTORY REMEDIES

Having found that Cuervo infringed the Maker's Mark trademark, the court considered the two statutory remedies Maker's Mark requested: (1) a permanent injunction, and (2) money damages. With regard to a permanent injunction, Cuervo argued that it was inappropriate, as it had stopped using the dripping wax seal over five years before and there was no proof that it intended to resume use. Nonetheless, the court held that "equity supports injunctive relief," although it granted a narrow injunction, prohibiting Cuervo from using the red dripping seal wax on any tequila sold in the United States. With regard to damages, however, the court denied Maker's Mark's request for damages based on a reasonable royalty, finding that Maker's Mark did not offer any proof that it has lost actual sales or goodwill and there was no evidence of copying or bad faith. Moreover, Cuervo had voluntarily ceased its use of the mark. For these reasons, the court concluded that an injunction without an award of damages was the proper result.

Federal Judge Denies Everest Gaming’s Injunction Bid for WSOP 2010

Tue, 24 Aug 2010 18:44:36 GMT

On August 20, 2010, Nevada federal district Judge James Mahan denied Everest Gaming Limited’s motion for a preliminary injunction to stop Harrah’s Interactive Entertainment, Inc.’s continued use of the EVEREST POKER trademark in connection with the 2010 World Series of Poker. Everest claimed that a Promotional Agreement, previously entered into by Harrah’s and Everest’s predecessor-in-interest, Ultra Internet Media, S.A. (“UIM”), that authorized the use of the EVEREST POKER mark for the 2008, 2009 and 2010 World Series tournaments had been effectively terminated as of April 1, 2010. In his order, Judge Mahan ruled that Harrah’s continued use of the EVEREST POKER mark in connection with the 2010 World Series, which began in May, was improper only if the Promotional Agreement had been terminated. However, he concluded Everest had not, at least at this stage of the proceedings, satisfied its burden of proving that it was likely to succeed on the merits of its claim that the Promotional Agreement had in fact been terminated. Accordingly, Judge Mahan denied Everest Gaming’s request for an injunction against Harrah’s finding that on the evidence before him it was unclear whether the Promotional Agreement had been terminated or not.

This dispute arises from an earlier claim that Harrah’s had breached the Promotional Agreement by allowing ESPN to improperly obscure the EVEREST POKER mark in French rebroadcasts of the 2008 and 2009 WSOP events. For now, Harrah’s may continue to use the EVEREST POKER trademark in connection with the 2010 World Series of Poker, and the parties are left to litigate whether Harrah’s breached the Promotional Agreement and whether the Promotional Agreement was in fact terminated by Everest prior to the beginning of the 2010 World Series.

Better "Safe" Than Sorry

Thu, 29 Jul 2010 15:14:40 GMT

Let’s say you have a website. And on your website, you allow third-party users to post content, say, their home videos or fan fiction or random comments about whatever it is your website is about. So one day, you’re sitting around managing your website (like you do) when you get served with court papers; you’ve just been sued for copyright infringement! But what the copyright owner is suing you for is a copy that one of your third-party users posted to your website, not something that you posted to your website. Are you left holding the bag or can you get out of this lawsuit?

Well, it depends. Have you taken the necessary steps to be protected by the “safe harbor” provision in the Copyright Act that limits online service providers’ liability for copyright infringement based on copyrighted works posted by third-party users? If so, then you, my friend, are in luck!

To take advantage of this “safe harbor”, an online service provider must meet the following criteria:

must not have actual knowledge of the infringing material or conduct;
must not obtain a financial benefit from the infringing activity, but only where the online service provider has the right and ability to control the infringing activity;
must remove or disable access to the infringing material when it receives the proper notice; and
must have a designated agent to receive proper notices of infringement whose name, address, phone number and email address is available on the online service provider’s website and whose contact information is registered with the U.S. Copyright Office.

While many people readily meet the first three criteria, very few take the time to take care of the fourth criterion, which is a shame since the process to designate an agent with the Copyright Office is simple and relatively inexpensive. You can follow these steps.

Go to http://www.copyright.gov/onlinesp/agent.pdf. This is the form to designate an agent. The Copyright Office recommends you use this form for ease of processing.
Fill in the requested information. You must provide the full legal name of the online service provider. You can provide up to 10 additional, alternate names for an additional fee. For example, if your company is America’s Best Lawyers.com LLC, you would include that as the full legal name. If you also operate ambestlaw.com, ANTL.com, americasbest.com and toplawyer.com, you could include those domain names as alternate names on the same form.
Sign and date the form and submit to the Copyright Office with the required fee. The current fee (as of August 2010) is $105.00 per designated agent and $30.00 for up to 10 alternate names. In the example above with America’s Best Lawyers.com, the total filing fee would be $135.00.
Mail the form and payment to:

P.O. Box 71537

Washington, DC 20024

That’s it! You’ve just designated an agent.

Of course, there are all sorts of permutations and ramifications to how you operate your website and just because you’ve designated an agent won’t necessarily get you off the hook in every case. As self-serving as this sounds, it is also true: you should always check with an intellectual property attorney to make sure you’re doing everything legally and enjoying the fullest protection under the law. But designating an agent is a great, and quick, self-help strategy to start you on the right path.

A Bird in the Hand is Worth Two in the Ambush

Tue, 27 Jul 2010 17:49:34 GMT

You have probably heard these sayings a time or two: “Nice guys finish last.” “The early bird catches the worm.” “He who laughs last, laughs best.” These familiar idioms could all be associated with running a successful ambush marketing campaign.

Ambush marketing is a marketing campaign that occurs around a public event, typically a major sporting event, and involves circumventing payment of a sponsorship fee. Many companies pay hundreds of thousands of dollars to sponsor an event, the primary benefit of which is exclusive advertising rights before a large, captive audience. Sports Marketing experts Simon Chadwick & Nicholas Burton, of the Centre for the International Business of Sport located at the Coventry University Business School in the United Kingdom, estimate the amount spent on exclusive sponsorships last year at $43.5 billion dollars (billion with a B). Ambush marketing occurs when competing companies promote their brands despite the fact that another company has paid to market their brand as an official event sponsor. Venue and event owners are left scrambling to come up with an effective deterrent in response.

Here are a few noteworthy examples. During the 1992 Summer Olympics, American Express Co. (“AMEX”) ran a television commercial showing scenes of Barcelona, Spain, the host city that year with a message that said “You don’t need a visa” to visit Spain. Visa was the official sponsor, and while Visa complained, AMEX declared that the commercials were not referring to the Olympics, and were not an attempt to ambush Visa’s marketing efforts. Visa took no official action.

In 1996, at the Summer Olympics in Atlanta, Georgia, British sprinter Linford Christie wore contact lenses bearing the Puma logo at a press conference held before the 100 meters final. Reebok had paid $40 million to be the official sponsor of the games.

At the 2006 World Cup games, fans of the team from Netherlands sported orange lederhosen which had been provided by Bavaria Brewery. Stadium officials responded by forcing those wearing the brightly-colored trousers to remove them if they wanted to be permitted inside the stadium. Budweiser was the official beer.

In November of 2009, Philadelphia Eagles tight end, Brent Celek raised his right knee in the end zone, in the familiar Captain Morgan stance following a touchdown reception, reportedly in exchange for a $10,000 donation to the Gridiron Greats charity fund that assists retired NFL players. Celek was not disciplined, but the NFL made it clear that any future tributes to “The Captain” would be penalized.

Most recently, during the World Cup match between Netherlands vs. Denmark on June 16th, Bavaria was at it again. During the match, nearly 40 Dutch women stripped out of the clothes they had worn into the stadium to reveal orange mini-dresses underneath. The mini dresses incorporated the color of the Dutch national team, but also bore a tiny logo identifying Bavaria brand beer. This would have been just fine were it not for the fact that Budweiser was the official beer of the games. The two ladies considered the leaders of the great orange mini-dress debacle were arrested by Johannesburg police and had their passports confiscated. ITV pundit Robbie Earle also lost his job when it was revealed that he had provided the tickets to the group (Mr. Earle contends that he was unaware of the ambush marketing scheme and did not profit from it in any way). Charges against the ladies have since been dropped, their passports were returned, and Bavaria has entered into a confidential settlement agreement with FIFA. While poor Mr. Earle may be unemployed, the "net" is still buzzing about Bavaria. In fact, that infamous orange dress was also made available for purchase on Bavaria’s website.

Now who has the last laugh?

Application War - Lawsuits Over iPhone Applications On the Rise

Wed, 21 Jul 2010 17:55:50 GMT

Apple’s slogan - There’s An App for That™ - is catchy and seemingly true. Apple markets and sells applications for its iPhone product that cover almost anything a consumer could want . . . applications for cooks, students, moms and dads…applications for the outdoors, work, music, managing money, traveling and many more. In a speech at the 2010 Apple Worldwide Developers Conference, Steve Jobs stated that Apple passed 5 billion total applications downloaded, with over $1 billion paid to application developers - these are staggering numbers. But with the good, comes the bad. The increasing popularity and success of Apple’s iPhone - and its many applications - has also lead to an increase in litigation involving ownership of intellectual property rights in the applications, including a June 18, 2010 copyright infringement lawsuit filed in the Western District of Washington against Apple, Inc.

Apple’s iBird Explorer Backyard application provides users with an “interactive field guide” that allows the user to search for North American birds by color, shape, habitat and location. The application falls under Apple’s broader “Great Outdoors” category of iPhone applications and is marketed and sold on Apple’s online store. On June 18, 2010, Mr. Martyn Stewart of Redmond, Washington, an audio-naturalist engaged in the business and activity of recording “naturally occurring sounds,” filed a copyright infringement lawsuit against Apple, Inc. alleging that its iBird application violates his copyrights in various bird sound recordings. Stewart v. Apple, Inc., 2:10-cv-01012-RSL (W.D. Wa., June 18, 2010). In the complaint, Mr. Stewart alleges that he has collected and recorded various bird sounds over a period of 35 years and that Apple is using these recordings with its iBird series of applications without Mr. Stewart’s knowledge and permission. Id. at *2-3. He further alleges that Apple acknowledges his ownership in the sound recordings because the iBird application identifies him as the recorder and author of the bird sound recordings. Id. Time will tell if an “iBird” in hand is truly worth two in the bush for Apple.

In a separate iPhone application lawsuit filed in early June in the Middle District of Pennsylvania, The Hershey Company filed a declaratory judgment action for non-infringement related to its HERSHEY’S® Chocolate Milk iPhone application. The Hershey Company v. Hottrix LLC, 1:CV-10-1178 (M.D. Penn. June 2, 2010). In the suit, Hershey alleges that Hottrix has demanded that Hershey stop marketing and distributing its iPhone application. According to the complaint, Hottrix is improperly claiming exclusive rights in the “idea of an iPhone application or video depicting a virtual ‘glass’ of milk that the user can pretend to ‘drink’ from his or her iPhone.” Id. at *1. The Hershey Company claims that Hottrix does not, in fact, own exclusive rights for an application featuring a glass of milk, and that there are “substantial differences” between the parties’ applications, including differences in various expressive elements in Hershey’s application that are not present in Hottrix’s application, such as the ability to tip the phone to drink the milk, the use of a red and white straw to blow bubbles in the milk, the ability to pour chocolate syrup, and others. Id. at 4-5. Because of these differences, and Hershey’s allegation that it independently created the code for its application, Hershey asks the Court to enter an order that its application does not infringe Hottrix’s copyrights or otherwise violate any of Hottrix’s rights. It will be interesting to see how this - and future - iPhone application lawsuits pan out. One thing is clear - someone will be left crying over spilt milk after this case is decided.

Proceedings Resume in TTAB Action Suspended Over 25 Years

Fri, 16 Jul 2010 14:19:42 GMT

The U.S. Trademark Trial and Appeal Board recently resumed proceedings in a long suspended case, originally filed in 1982. See United Black Fund v. National Black United Fund, Inc., Cancellation No. 92013503. The action was filed by United Black Fund, Inc. seeking to cancel registrations for “BLACK UNITED FUND” and “NATIONAL BLACK UNITED FUND” held by National Black United Fund, Inc. based on the Plaintiff’s assertion of rights in the mark “THE UNITED BLACK FUND”. Both parties are civic organizations serving African-American communities.

In 1984, the Cancellation Action was suspended pending the disposition of a concurrently pending civil action, and remained suspended for more than 25 years. During the suspension, the parties periodically provided brief updates on the status of the civil action at the TTAB’s request and obtained further extensions of the suspension.

In December of 2009, the TTAB requested that the parties provide an update on the status of the civil action within 30 days. In response, on January 19, 2010, the Defendant reported to the Board that the civil action pending in the U.S. District Court for the District of Maryland “has not been dismissed” and submitted that the cancellation proceeding should remain suspended.

The following day (January 20, 2010), Interlocutory Attorney Jennifer Krisp issued a further order requesting more details about the pending civil action. Specifically, she requested a detailed summary of the current court activity and settlement efforts. On February 19^th, 2010, the parties requested a 60-day extension of time to memorialize understandings reached since the “administrative closing” of the District Court action. The parties then explained that the “closing” occurred during a meeting with the parties’ attorneys in the chamber of the Judge (now deceased) in 1984 (notably the same year the Cancellation Action was suspended), and advised that they would seek formal termination of the District Court case now, if necessary. The parties explained further that the administrative closing has given the parties sufficient time to settle their grievances, but that they needed an additional 60 days to memorialize their settlement and access all of their records, some of which were in storage.

On March 31^st, the Interlocutory Attorney denied the request for a 60-day extension of time noting both that the February 19^th filing did not include proof of service on the petitioner as required by Trademark Rule 2.119(a) and that, given the lengthy suspension and intent by the parties to have the District Court case formally terminated, further suspension of the Cancellation action appears “unnecessary and ineffective”. Proceedings have been resumed and discovery and trial dates have been set for late 2010 and early 2011.

Business Methods and Unpatentable Subject Matter

Tue, 13 Jul 2010 12:42:20 GMT

The United States Supreme Court on June 28, 2010, issued its opinion in Bilski et al. v. Kappos. This case was on appeal from the Federal Circuit which had held that the claims for managing hedging risk in Bilski’s patent application were not statutory subject matter under 35 United States Code(“USC”) §101. Rather, they were deemed to be unpatentable as an abstract idea.

The lower appellate court had held that the sole basis to determine whether a claimed process was patentable subject matter was the “machine-or-transformation test.” This test requires that (1) that the claims are tied to a particular machine or apparatus, or (2) the claims transform a particular article into a different state or thing.

A unanimous Supreme Court affirmed the Federal Circuit’s decision but then held that the “machine-or transformation test” is not the exclusive test to determine patentable subject matter for claimed process applications. The development of future tests regarding statutory subject matter was left to the lower courts. The justices were divided in their reasoning.

A majority of the Court went on to say that business methods are not per se unpatentable. In the Bilski case, the court held that the rejected claims were non-statutory because they were directed to an abstract idea. The result of this decision is that business method patent claims are not statutory if they merely claim abstract ideas. While the “machine or transformation” test is not the only test to determine eligible statutory subject matter, if the claims pass that test, they are likely to be considered to be directed to subject matter that is subject to patenting.

Part of the reason that this case has gained so much notoriety is that it had the potential for invalidating thousands of patents in other areas, notably those involving gaming and

software. The issue of software patents was the subject of many of the 90+ briefs filed with the Supreme Court. The Court never addressed the issue of software patents directly. Because the “machine or transformation” test is no longer the sole test for determining the question of statutory subject matter, there is a substantial argument that claims involving the manipulation of other physical things, including playing cards or other gaming tokens, in games including wagering, are statutory subject matter for patents. Careful claim drafting of software patent claims should overcome most nonstatutory subject matter rejections

Earlier this year, the United States Patent and Trademark Office (“USPTO”), relying on the Bilski decision by the Federal Circuit, had extended non-statutory subject matter rejections to gaming, including card games and other games played without the use of machines. Most card games should not be considered business methods unless a “house” is involved, since they do not involve any form of business even if wagers are a part of the game. Even though the first prong of the “machine or transformation” test requires a tie to a “particular machine”, there is a substantial argument that “machinery” actually encompasses other physical things, including playing cards, card tables, wagering chips, and the like.

Throughout the last year, patent examiners became increasingly zealous in applying the “machine or transformation” test to determine patent eligibility. Software, business method, and even card game claims were being increasingly rejected when they failed to claim sufficient connection to a machine or apparatus. The Supreme Court’s determination that this test is not the only test available for determining statutory subject matter eligibility is likely to reduce the frequency and severity of this type of patent claim rejections. With the Bilski decision, in addition to patent claims that are writable to involve sufficient connection to a machine or apparatus, we now have the alternative available of showing that patent claims do not claim abstract ideas and do not attempt to preempt the use of such abstract ideas.

Bimbo and Hostess Battle Over Nooks and Crannies

Wed, 23 Jun 2010 12:07:58 GMT

Bimbo Bakeries USA, Inc., the owner of Thomas' English Muffins, Oroweat brand breads and the recently launched Sandwich Thins, received a preliminary injunction against its former Vice President of Operations for California, Chris Botticella, preventing him from working for its competitor, Hostess Brands. The reason: Botticella was privy to nearly all of Bimbo's trade secrets.

What's a trade secret? Most states have codified the definition of a trade secret, but the basic ingredients are generally the same. In Pennsylvania (here, Bimbo and Hostess agreed that Pennsylvania law applied) a trade secret is defined as “information, including a formula…method, technique or process that 1) derives independent economic value from not being generally known to, and not being readily ascertainable by proper means by, other persons who can obtain economic value from its disclosure or use [and] 2) is subject to efforts…to maintain secrecy.” Pennsylvania Uniform Trade Secrets Act, 12 Pa. Cons. Stat. Ann. § 5302. So, a trade secret is essentially information you don’t want a third party to know because it is profitable and, therefore, you try really hard to keep it confidential.

But back to Bimbo. At the trial court, Bimbo presented several not-so-savory facts against their former VP:

Botticella had access to all of Bimbo's technical and commercial trade secrets. In fact, he was one of only 12 people with access to all of Bimbo's formulas and process parameters for its products, e.g., the secrets that give Thomas' English Muffins those delectable nooks and crannies.
Botticella accepted the job with Hostess on Oct. 15, 2009; he told Bimbo he was leaving to take a job at Hostess on Jan. 13, 2010.
During the three months between accepting the Hostess job and being terminated, Botticella had access to additional trade secrets, including cost reduction strategies, pricing strategies and future developments.
According to Bimbo’s computer forensic expert, Botticella connected three different external storage devices to his work laptop, only two of which were recovered from Botticella.
On his last day at Bimbo, his day went something like this:

The trial court granted a preliminary injunction, saying that Bimbo was likely to succeed on its misappropriation of trade secrets claim. Botticella appealed on the ground that the injunction was inappropriate under the circumstances and overbroad. The Third Circuit heard oral argument on June 3, 2010 and has yet to issue a decision. Of course, Botticella hasn't been employed since February when the injunction issued. And, a decision on whether he actually did misappropriate Bimbo's trade secrets is still waiting for trial. Sometimes you can’t have your Hostess Cupcakes and eat them too.

Three Trees Make a Row: Category Descriptors, Line Marks, and the Descriptiveness Problem

Wed, 16 Jun 2010 20:13:45 GMT

One of the greatest challenges facing those who market innovative products or services, is educating consumers about what the new products or services are, and what they can do for the consumer. Consumers usually won't buy something unless they understand what it is and have reason to want it. And one of the greatest tools available to the marketer to help meet this challenge is logical organization or categorization. If consumers can come to understand what the new thing is and what it does, the chances improve that they may want one, so if marketers can categorize the new thing as similar-to-but-better-than something familiar, chances improve that the consumer can develop a need or desire for it. As savvy marketers have known for many years, product categorization is the fundamentally important bedrock upon which much else rests, and whole categories of products and lines of specific products within them have been developed based on a clever marketer's recognition that consumers can, and will, draw finer and finer distinctions that influence their purchasing decisions if encouraged to do so.

To understand this, one need look no further than the creation and evolution of the now-ubiquitous SUV market. Thirty years ago there was no such category of vehicles, but now there are small SUVs, large SUVs. hybrid SUVs, crossover SUVs, etc. etc. It is not unusual to hear "If you are looking for an eight-passenger SUV...," or "Introducing the first full-sized hybrid SUV...," or "This luxury crossover SUV offers..." in commercials from the automakers as they watch consumer demand for different varieties rise and fall. And the automakers have responded with whole lines of SUV products to create and meet the demand for these varieties, so that, as just one example, the Korean automaker Kia Motors offers a Borrego full-sized SUV, a Sorento mid-sized SUV, a Sportage small SUV, a Rondo compact SUV, and even a Soul compact crossover SUV.

But one of the problems with assigning a separate trademark to each product occupying a different niche in your system of categories is that it can lead to consumer confusion and loss of recognition. Where once automotive companies may have had a half dozen or dozen car models bearing separate trademarks active in any year, now they may have two or three dozen if they pursue a naming strategy such as that of Kia above. Consumers are hard pressed to remember all the offerings in any company's line, or even to tell the difference between a Sorento and a Rondo merely by the name or mark alone. So another strategy is often employed to help with categorization but reduce confusion: the use of line marks. Line marks are trademarks applied to a whole line of products, rather than just a single product in the line. Often they are accompanied by additional designators to help consumers distinguish one product in the line from another, so, for example, one can now look not just for an iPhone, but an iPhone 3g, or an iPhone 3gs, each version having different features or capabilities. Line expansions often lead to the introduction of popular performance-distinguishing designators such as "super," "plus," "extra," or "sport," model-distinguishing designators such as "rx," "sx," or "lx," or feature-distinguishing designators such as "with Borax," "sea breeze scent," "diet," or "low-sodium." Used correctly, category descriptors, line marks, and product designators can help marketers educate customers and build brand loyalty for the company's products.

Unfortunately, they are not always used correctly – at least from a trademark perspective – so that sometimes what was intended to be one company's unique coined trademark is lost to it and given over for all to use. This happens because a fundamental principal of trademark law is that generic and descriptive terms are generally free for all to use, even if those terms are newly created by one company and have never been used by others. New terms are entering the language all the time, and there are hundreds of examples of newly-coined terms quickly (or over time) becoming generic terms, among them SUV, escalator, linoleum, aspirin, flash drive, and 3g network. When consumers recognize the new term as identifying a new kind of thing, rather than serving exclusively as one company's brand for that kind of thing, then the new term is a generic term and can't be claimed exclusively by any one company, even the one that coined it. Sometimes marketers inadvertently help consumers reach this conclusion – one fatal to any claim of trademark rights – by mixing marks and not-marks together when creating category descriptors, line marks, and product designators. Hence the title of this article and our quick tip for the month: treat new terms carefully and with logical consistency if you want them to remain exclusive to you.

Here's how this works. Say your company has just invented a new thing (it could be a whole new product or service, or just a slight improvement of some kind that you want to distinguish from what has gone before), and that you have been asked to market it as something new. Here's what to think about:

Category descriptors

Most category descriptors are generic or descriptive terms. So, if you need a new category descriptor and the existing category descriptors around you are generic terms (e.g. sedan, compact, truck, station wagon), do not expect any new category descriptor you come up with (e.g. Sport Utility Vehicle or SUV) to remain exclusive to you. If the trees already in the row are generic, guess how consumers are likely to treat the new tree? So in that case create a "throw away" generic that you are happy to have your competitors use, and save your creative energies for a great line mark (e.g. Explorer, Range Rover, etc.) or a group of product marks (as in the Kia example above). Same if there are no existing category descriptors (you invent a whole new thing, an electronic moving stairway, and you call it an escalator, and guess what happens?). Don't fight it: create a new and easy to use generic term as your new category descriptor, use it liberally to identify the new kind of product or service, and expect others to do the same.

Line marks

Most line marks should be just that – distinctive trademarks that distinguish your line of products from those of your competitors – so don't mix trademark trees with generic trees in creating line marks. If you have Glade for air freshener products, Minwax for a line of furniture polishes, and Tide for a line of laundry detergents, why choose "HandSoap" for a line of hand soap products? But perhaps more importantly, if any existing line marks you have are highly descriptive or generic, do not expect your newly coined and somewhat descriptive line mark to fare as well as it would in less descriptive company. If the existing trees in your row of line marks are the "Smart" line, the "Fast" line, the "Pro-Consumer" line, and the "Pro-Business" line, do not expect "Fast-Consumer" to survive long as an exclusive trademark of yours – your competitors will almost always be able to use these terms to describe characteristics of their products as well. There is nothing wrong with choosing generic or descriptive terms to identify lines of products and distinguish one line from another, just recognize that these terms are not protectable or exclusive to you (and they are not really "line marks") even if you apply them to your products or services before others do. So, to borrow a line from Yoda, "Do, or do not...": choose distinctive trademarks as line marks, or choose descriptive terms to identify multiple lines, but do not expect descriptive terms to become trademarks just because you use them first.

Product Descriptors

When you are talking about lines of products, most companies follow one of two basic branding strategies: A) create an effective trademark (e.g. iPod or Tide) to apply to the whole line at the outset, then add secondary marks (e.g. iPod Nano) or product descriptors (Tide With Bleach) as the line expands; or B) use generic or descriptive line discriminators (e.g. large SUV, small SUV, etc.), either under a single house mark (e.g. Dial hand soaps, Dial shampoos, Dial detergents, etc.) or with individual trademarks for products in the line (as in the Kia example above). Here again, either strategy can work well, as long as you don't mix trademark trees with generic trees. As suggested above, performance-distinguishing designators such as "super," "plus," "extra," or "sport," model-distinguishing designators such as "rx," "sx," or "lx," or feature-distinguishing designators such as "with Borax," "sea breeze scent," "diet," or "low-sodium," are descriptive and don't function well as protectable trademarks. So recognize the difference between secondary marks and product descriptors and don't put them in the same row. Since the term "nano" suggests tiny sizing to many people, Apple might have had a hard time claiming it as a mark if it had chosen to identify other products in its iPod line as "iPod Full," "iPod Compact," "iPod Mini," and "iPod Micro," as that would have given consumers and courts one more reason to see the term "nano" more descriptively. Similarly, having previously used Tide With Bleach, Tide With Bleach Alternative, Fresh Scent Tide, and New Foaming Action Tide, the makers of such a line would have a difficult time claiming that introduction of Tide SudsLess entitled them to exclusive use of the newly coined term "sudsless" since one could easily argue that consumers would perceive it as another descriptive product identifier.

In short, when you want to market something as new – especially if its a new kind of thing or a whole new line of products – logical organization or categorization can be a great tool. But be careful in developing new category descriptors, line marks, and product descriptors so that they achieve your branding objectives. As a general rule, category descriptors should be generic terms, line marks should be non-descriptive trademarks, and product descriptors (at least in a single line) should be one or the other. The more descriptive a term is, the more likely it is to fail as a trademark, so look at the forest before you add a new tree.

Can Subway Trademark FOOTLONG for…Sandwiches that are a Foot Long?

Mon, 17 May 2010 11:51:38 GMT

Doctor’s Associates, Inc., the parent company of the Subway sandwich chain, recently applied for a federal trademark for FOOTLONG for “restaurant services.” An article from NPR indicates not only that Subway may have a tough time achieving federal registration for the mark, but also that Subway may have an equally tough time enforcing any rights it claims in the FOOTLONG mark. The full article is available here:
http://www.npr.org/blogs/money/2010/05/subway_to_everyone_you_cant_se.html.

Penalty for False Patent Marking Set at Highest Sales Price

Fri, 14 May 2010 11:30:33 GMT

After remand from the Federal Circuit, the United States District Court for the Southern District of Texas ruled that, due to the penal nature of the false marking statute, the appropriate penalty for marking a product with an incorrect or invalid patent number should be assessed at the maximum price the articles were sold, rather than the profit margin or economic benefit to the defendant. Forest Group, Inc. v. Bon Tool Co., 2010 U.S. Dist. LEXIS 41291 (S.D. Tex. Apr. 27, 2010). In Forest Group, the district court imposed a fine of $180 per mismarked article, even though the stilts were sold at a price ranging between $103 and $180. The court noted that, by basing the penalty on the highest sold price, the wrongdoer would be deprived “of more than it received for the falsely-marked stilts, [thereby] fulfilling the deterrent goal of § 292’s fine provision.”

Prior to remand, the Federal Circuit set the stage for the increased damages calculation. Previously, courts calculated damages against false marking defendants on a "per decision" basis. In December 2009, the Federal Circuit distinguished a century’s worth of precedent and declared that every article falsely marked is subject to a penalty up to the maximum fine. In other words, the maximum fine for violation of the federal false marking statute should be applied on a per article basis, rather than the “per decision” basis applied by a majority of district courts in the past. See Forest Group v. Bon Tool Co., 590 F.3d 1295 (Fed. Cir. 2009).

Parties have not hesitated to take advantage of the Federal Circuit’s decision. In fact, since that decision was rendered there have already been about 140 false marking claims filed.

Patent holders should also be aware that more change is likely. The Federal Circuit has already heard oral argument on the Pequignot v. Solo Cup case, with an opinion expected within the next few months. Central issues in that case include liability for marking products with expired patents, the relevant burden of proof for Section 292 cases, and what type of evidence is required to overcome a presumption of intent to deceive when knowingly engaging in false marking.

In light of this shift in jurisprudence, patent holders should take steps to mark their products with appropriate patent numbers, and, in appropriate circumstances, should obtain opinions of counsel when doing so. Businesses should also take care to inspect their products and make certain that expired or non-applicable patent numbers have been removed.

Trademark Keyword Advertising: Google Rebounds To Successfully Defend Adwords Program

Thu, 06 May 2010 17:54:41 GMT

On April 28, 2010, the District Court for the Eastern District of Virginia granted summary judgment in favor of Google that its use and sale of “Rosetta Stone” as a keyword in its Adwords program did not infringe upon the Rosetta Stone trademark for language instruction software products. This decision represents the most recent victory for Google in its battle against trademark owners claiming that the Adwords program violates their rights.

The battles began in 2004, when GEICO sued Google alleging that Google’s unauthorized sale of GEICO’s trademarks as keywords to trigger the display of third party ads on Google’s search results page infringed GEICO’s trademark rights. GEICO argued that consumers were likely to be confused by these sponsored ads into the belief that they were genuine GEICO ads or that the advertisers were somehow associated with GEICO. After losing a motion to dismiss that claim, the case was ultimately settled. But new suits followed, including complaints filed by American Blind & Wallpaper, American Airlines and Rescuecom. In most cases, the claims were ultimately settled before a final determination about Google’s practices could be made by a court, and the settlement terms were confidential.

Then, in 2009, Google suffered a setback when the Second Circuit Court of Appeals reversed the trial court’s dismissal of Rescuecom’s complaint against Google. Google had successfully persuaded the trial court that its sale of trademarked keywords was not a “use in commerce” as required by the Lanham Act, the federal trademark statute. The Second Circuit disagreed and held that Google’s practice satisfied the “use in commerce” requirement. It remanded the case back to the trial court to determine whether Rescuecom could prove the remaining elements of its trademark infringement case. Earlier this year, Google again settled the claims levied against it.

But against Rosetta Stone, Google took the case to decision and won. Like previous plaintiffs, Rosetta Stone argued that Google’s sale of “Rosetta Stone” as a keyword to trigger sponsored ads by third parties violated its exclusive trademark rights. It complained that the keywords triggered paid ads for Amazon.com, competitors offering other language instruction products, and even counterfeiters. In successfully defending the Adwords program and obtaining summary judgment from the trial court, Google avoided the “use in commerce” argument that proved unsuccessful before the Second Circuit and instead focused on how its advertising program was consistent with the policies underlying trademark law and fair advertising. A retailer selling the Rosetta Stone software has the legitimate right to use that mark in its advertisements, even if it also happens to sell competitors’ products as well. A Rosetta Stone competitor has the right to advertise its services using the Rosetta Stone mark in a comparative manner so long as it does not create confusion. And, as for counterfeiters, Google pointed to the efforts it undertakes to stop counterfeiting of which it is made aware, including specific efforts it undertook with respect to counterfeit Rosetta Stone products. All in all, the trial court determined that Rosetta Stone lacked sufficient evidence to support its claims.

Rosetta Stone has indicated that it is considering an appeal, and we can probably expect an appeal will be forthcoming. But for now, a big win for Google and Adwords.

Resale of Imported Copyrighted Works

Mon, 26 Apr 2010 16:51:20 GMT

The United States Supreme Court recently said it would consider whether Costco Wholesale Corp.’s resale of Omega SA watches, legally purchased by Costco in foreign countries, constitutes copyright infringement. Omega filed suit after Costco imported Omega watches into the United States and sold 43 of them in California in 2004. The Court’s decision will hinge on whether copyright law’s “first-sale doctrine” applies to sales outside of the United States.

Under the first-sale doctrine, a copyright holder’s rights extend only to the first sale of a copyrighted good. In other words, when you purchase a DVD at your local retailer, the “first-sale” has taken place and you are free to resell the DVD (mind you, the physical DVD you purchased, not a copy of it) without risking a suit for copyright infringement. The question is whether buying a legal copy of the same DVD in a foreign country constitutes the first-sale and therefore, whether the copyright holder’s rights are still intact or whether the buyer is free to resell the DVD in the United States.

Before the Ninth Circuit, Omega argued that § 602 of the Copyright Act, which makes importing a copyrighted work an actionable offense, compelled a holding that a foreign sale of a copyrighted good does not constitute a first-sale. The Ninth Circuit agreed with Omega, reversing a decision from the U.S. District Court for the Central District of California.

In its petition for certiorari, Costco argued that excluding sales of foreign purchased goods from the first-sale rule would be “nonsensical,” prohibiting, for instance, libraries from lending foreign books and car rental companies from renting foreign cars. eBay and several other companies filed briefs in support of Costco’s petition, while the U.S. Department of Justice opposed Costco’s petition, claiming the law in the area is well-settled.

Needless to say, the ultimate decision of the Supreme Court could have far-reaching effects on United States retailers. The case is Costco Wholesale Corp. v. Omega SA, case no. 08-1423. The Ninth Circuit’s opinion is located at 541 F.3d 982.

Federal District Court Finds DNA Not Patentable

Tue, 20 Apr 2010 14:12:50 GMT

On March 29, 2010, the United States District Court for the Southern District of New York ruled that claims covering isolated DNA and methods of use for DNA diagnosis are not patentable.

The lawsuit, Assoc. for Molecular Pathology v. U.S. Patent and Trademark Office, 09 Civ. 4515, was brought by a conglomeration of plaintiffs including the American Civil Liberties Union, various doctors, medical researchers, and patients. The defendants included the patent owner Myriad Genetics, the USPTO, and others. The plaintiffs challenged the validity of patents directed to BRCA1 and BRCA2 genetic mutations associated with certain types of cancer. But the broader goal of the lawsuit was to altogether eliminate the patentability of isolated DNA. The plaintiffs argued that the free use of information contained in DNA should not be restricted by patents and violated the First Amendment, whereas the defendants argued that patentability was necessary to promote the progress of science and commercially available DNA-based products. Otherwise, the defendants argued, inventors have little incentive to invest in research and development of this technology.

The District Court’s decision was based upon the nature of the claimed subject matter. Thirty years ago, the United States Supreme Court held that, to be patentable, subject matter must be useful and non-naturally occurring. Diamond v. Chakrabarty, 447 U.S. 303 (1980). Here, the District Court found that isolated DNA has not been "markedly changed" to become a useful product under the Chakrabarty standard. The district court relied upon the Federal Circuit's decision in In re Bilski, 545 F.3d 943 (Fed. Cir. 2008), requiring either the transformation of a material or the use of a machine to create patentable subject matter. The district court also held that the claimed method of using isolated DNA for diagnostic determinations was not patentable. According to Judge Robert W. Sweet, the purification of DNA from the body using well-known techniques is not patentable because it has not been transformed into something fundamentally different in character.

This ruling changes course for DNA protection because gene sequencing and mutations for use in developing diagnostic DNA probes and assays were previously deemed patentable. As a result, the USPTO (and most foreign patent offices) have issued thousands of patents for that technology. And because their work was previously deemed patentable, biotechnology companies have invested millions of dollars in developing isolated DNA and methods of use for DNA diagnosis. Unless the Molecular Pathology decision is overturned on appeal, it may significantly hinder financing in the biotechnology sector and deter the development of new gene-related diagnostics and therapeutics.

TTAB Expands Types of Documents That May Be Introduced in Trademark Opposition

Tue, 13 Apr 2010 12:23:26 GMT

On March 28, 2007 Safer, Inc., a Pennsylvania based pest-control company, filed a Notice of Opposition against OMS Investments, Inc., a subsidiary of The Scotts Miracle-Gro Company, with respect to its application for the mark DEER-B-GON, alleging a likelihood of confusion with its prior registrations for the DEER AWAY and DEER AWAY PROFESSIONAL marks. Safer, Inc. v. OMS Investments, Inc., Opposition No. 91176445, 94 USPQ2d 1031 (TTAB 2010). The marks covered identical goods, namely, deer repellent.

Critical to Safer's position were its arguments that (1) its DEER-OFF registration (which it failed to plead in its Notice of Opposition) had become admissible by implied consent, (2) the statutory presumption of the incontestable status of its marks constituted evidence of the strength of the marks, and (3) documents obtained from the Internet were admissible as self-authenticating printed publications. In a precedential decision dismissing the Opposition, the Trademark Trial and Appeal Board ("TTAB") of the U.S. Patent and Trademark Office addressed all three issues and, in doing so, clarified its holding with respect to the first two issues and expanded the types of documents that may be introduced as self-authenticating printed publications.

Admissibility of DEER-OFF Registration

Safer is the owner of trademark registrations for DEER AWAY, DEER AWAY PROFESSIONAL and DEER-OFF. Although Safer claimed ownership of its DEER AWAY and DEER AWAY PROFESSIONAL marks in its Notice of Opposition, it neglected to claim ownership of its DEER-OFF mark. Rather, the first notice of ownership was during the discovery period when Safer included its DEER-OFF registration in response to an interrogatory request and produced documents relating to ownership of the mark. OMS submitted a copy of the registration in its Notice of Reliance for the limited purpose of establishing that Safer had previously disclaimed the word “DEER.” Safer alleged that inclusion in OMS’ brief amounted to an implied consent to trial of the issue, and, accordingly, included evidence of its ownership in its Notice of Reliance and trial brief. OMS objected to Safer’s reliance on the DEER OFF mark and registration, because it was not included in Safer's initial Notice of Opposition. The TTAB agreed, stating that Safer had not asserted ownership of the DEER-OFF registration. Moreover, the TTAB noted that Safer had numerous opportunities to amend its Notice of Opposition and to notify OMS that it intended to rely on this registration, but did not do so until it filed its rebuttal Notice of Reliance, which the TTAB concluded was too late and would unfairly prejudice OMS if included in the likelihood of confusion analysis. As such, the TTAB limited admissibility of the DEER OFF registration to evidence of Safer’s disclaimer of the term “DEER” and refused to include it for likelihood of confusion purposes.

Incontestable Status

Safer also argued that the incontestability of its registrations for DEER AWAY and DEER AWAY PROFESSIONAL provided statutory evidence of the strength of its marks, while OMS responded that "incontestable status does not make a weak mark strong." The TTAB first noted that appellate courts are split on this issue and that neither the Federal Circuit nor the Court of Customs and Patent Appeals ("CCPA") had expressly addressed this issue, although the CCPA had recognized that the strength of a mark can change over time and that an inherently weak mark can become a strong mark through extensive promotion. Moreover, the TTAB noted that it had previously held that statutory presumptions do not affect the likelihood of confusion analysis. As such, the TTAB determined that the incontestability of Safer's marks was not determinative of the relative strength of its marks.

Admissibility of Documents Obtained from Internet

As part of its Notice of Reliance, Safer submitted numerous publications from federal and state agencies, universities and various other private entities, all of which had been obtained from the Internet. OMS objected to the admissibility of a number of these documents on the ground that they had been obtained from the Internet, and, accordingly, did not qualify under current rules as self-authenticating "publicly available printed publications," permitted for inclusion under a Notice of Reliance. The TTAB noted, however, that as a general rule, a hard copy document that identifies its publication date and source may be introduced into evidence. Further, in applying USPTO rules, the TTAB explained that courts must recognize and adapt to changes in technology, particularly the Internet.

As to the question of whether it should allow the introduction of Internet materials, the TTAB cited its decision to admit newswire stories downloaded from the Internet to demonstrate the usage of certain terms. The TTAB also noted that the way in which publications, including government documents, are maintained and circulated has changed dramatically in the past decade, such that many records -- including new trademark files -- are now only retained electronically. Based on this technological evolution, the TTAB determined that where a document obtained from the Internet (1) identifies the date of publication or date that it was accessed and printed, (2) includes its source, and (3) continues to be available at that site, it is admissible into evidence through a Notice of Reliance, just as a printed publication in general circulation would be.

In so holding, the TTAB commented that it was "liberalizing the practice" of documents that may be introduced into evidence to include not only printed publications in general circulation, but documents such as websites, advertising, business publications and annual reports, as well as studies or reports prepared by or for either party or a non-party, if they can be obtained through the Internet as publicly-available documents. The TTAB also noted that a webpage printout may have more limitations as to its probative value than traditional publications and that a party can increase the weight of the evidence through testimony and the frequency a particular website is viewed. In addition, because of the increased opportunities for abuse, a propounding party must always indicate the relevance of such materials and associate the materials with the relevant likelihood of confusion factor or particular issue, so that the adverse party will be properly advised of the evidence it will need to rebut. In this case, the TTAB admitted certain documents Safer had retrieved from the Internet, but did not admit those where there was no date or URL on the document.

Although the TTAB expanded the standard for admission of Internet documents, it cautioned that even if a party submits a proper Notice of Reliance setting forth the relevance of the materials, they may still be objectionable as cumulative and may have little probative value. Indeed, despite the Board’s acceptance of Safer’s Internet documents, the TTAB adopted OMS’ arguments that they held little weight to establish the fame of Safer’s marks in the relevant marketplace and dismissed the opposition in favor of OMS.

*Applicant OMS Investments, Inc., was represented by Manatt, Phelps & Phillips, Palo Alto, Calif. Lewis and Roca LLP attorney, Christine Klenk, represented the Applicant in the TTAB proceeding while she was employed as an associate at Manatt, Phelps & Phillips.

2d Circuit Concludes eBay Has not Dulled Tiffany's Luster

Fri, 09 Apr 2010 11:44:34 GMT

Although Tiffany & Co. had probably wished it was an April Fool's joke, on April 1, 2010, the Second Circuit upheld the Southern District of New York's determination that eBay, Inc. was not liable for direct or contributory trademark infringement, nor trademark dilution of Tiffany's indisputably famous trademarks, by facilitating and allowing counterfeit Tiffany items to be sold on eBay. The Second Circuit unanimously concluded that the burden of policing and protecting its trademarks in Internet commerce lay solely with Tiffany, not eBay. However, in handing less than complete victory to eBay, the second Circuit sent Tiffany's false advertising claim back to the district court for "reconsideration" of whether eBay's advertisements were misleading when they indicated Tiffany products were available on eBay's site.

At the heart of the case was the allegation that the majority of Tiffany products sold on eBay are counterfeit and that eBay profits from those sales. Tiffany conducted two separate surveys wherein it purchased various items on eBay and then inspected and evaluated them to determine whether they were counterfeit. Tiffany found that close to 75% of the items it purchased were counterfeit. Although the district court questioned the methodology of the surveys, it nonetheless decided that a significant portion of the sterling silver jewelry listed on eBay was counterfeit and that eBay knew that at least some portion of the Tiffany goods sold on the site were counterfeit. The district court found that eBay actively took steps to grow the sales of Tiffany items on its site and profited from it. eBay's business model is based upon revenue derived from postings, final value fees, as well as fees charged through its subsidiary, PayPal, to process transactions. Consequently, it is to eBay's advantage to help "boost" sellers' sales, which it did in the case of Tiffany products by educating its sellers on the use of descriptive and keywords incorporating the Tiffany trademarks, advertisements that hyperlinked back to Tiffany items for sale on the site, and purchasing sponsored-link advertisements with various search engines to promote the availability of Tiffany items on the site. eBay's Jewelry & Watches category manager estimated that between April 2000 and June 2004, eBay earned $4.1 million in revenue from completed listings with "Tiffany" in the listing title.

It appears that after years of pursuing actions against individual sellers, Tiffany had finally had enough and decided it would try to hold eBay accountable for the illegal activities of the sellers on its site and for encouraging the same. In 2004, Tiffany filed suit against eBay alleging direct and contributory trademark infringement (both federal and common law), direct and contributory trademark dilution (both federal and common law), unfair competition, and false advertising. In July 2008, the district court, after a bench trial, concluded in a rather lengthy opinion that Tiffany was unable to sustain its burden of proof of any of its claims. The court noted that although Tiffany had reported 284,149 listings to eBay through its VeRO Program, Tiffany had only invested modest resources (e.g. 1.15 to 1.6 full-time employees per month) to monitor the eBay website, which, between 2003 and 2006, had over 1,000 listings for "Tiffany" and "silver" daily. eBay, on the other hand, removed listings once it was notified of the infringement/counterfeit, took appropriate steps to warn and/or suspend sellers, used special warning messages to inform buyers products may not be authentic, and actively took steps to improve its technology and develop anti-fraud measures as they became technologically feasible and reasonably available. Given that eBay does not actually sell the good or ever obtain possession of it, the court found that any use of Tiffany's marks on the site was only a nominative fair use, which was not actionable. Although the district court sympathized with Tiffany and other similarly situated rights holders who invest substantial resources in their brands only to see them "illicitly and efficiently exploited by others on the Internet," the court concluded that "it is the trademark owner's burden to police its mark, and companies like eBay cannot be held liable for trademark infringement based solely on their generalized knowledge that trademark infringement might be occurring on their websites."

The Second Circuit agreed with the district court that eBay's use of Tiffany's trademarks on the eBay website and in sponsored links was lawful, concluding that eBay's use was essentially nominative and consequently not trademark infringement or dilution. Although, in what will be a seminal case applying the principle of contributory trademark infringement to the online marketplace, both the Second Circuit and the district court agreed that Inwood Laboratories v. Ives Laboratories, 456 U.S. 844 (1982), a case that attributes trademark infringement liability to one party based upon the actions of others in the chain of distribution, which traditionally had only been applied to manufacturers and distributors of goods, applied to a service provider like eBay. The court explained that a service provider is liable for the infringing conduct of another if (1) the service provider "intentionally induces another to infringe a trademark," or (2) if the service provider "continues to supply its [service] to one whom it knows or has reason to know is engaging in trademark infringement." Tiffany argued that eBay fell into the second category of culpable service providers because it had received thousands of complaints from Tiffany and buyers claiming they had purchased counterfeit items on eBay and, therefore, had knowledge of "widespread sale of counterfeit Tiffany products." The court rejected Tiffany's argument and held that a service provider must have more than a general knowledge that its service is being used to sell counterfeit goods - "contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary."

Where the district court absolved eBay of the false advertising claim on the basis that it was not the party actually selling the counterfeit merchandise, the Second Circuit took pause. The circuit was particularly concerned with whether eBay's advertisements of Tiffany goods on its site misled or confused consumers, directly or impliedly, as to the genuineness of those goods. The court indicated that a disclaimer might suffice, but cautioned that "the law prohibits an advertisement that implies that all of the goods offered on a defendant's web site are genuine when, in fact, as here, a sizable proportion of them are not." Given that the district court was in a much better position to evaluate the evidence given this standard, the Second Circuit sent the issue back for "reconsideration."

Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947-cv,

Although Tiffany & Co. had probably wished it was an April Fool's joke, on April 1, 2010, the Second Circuit upheld the Southern District of New York's determination that eBay, Inc. was not liable for direct or contributory trademark infringement, nor trademark dilution of Tiffany's indisputably famous trademarks, by facilitating and allowing counterfeit Tiffany items to be sold on eBay. The circuit unanimously concluded that the burden of policing and protecting its trademarks in Internet commerce lay solely with Tiffany, not eBay. However, in handing less than complete victory to eBay, the circuit sent Tiffany's false advertising claim back to the district court for "reconsideration" of whether eBay's advertisements were misleading when they indicated Tiffany products were available on eBay's site.

At the heart of the case was the allegation that the majority of Tiffany products sold on eBay are counterfeit and that eBay profits from those sales. Tiffany conducted two separate surveys wherein it purchased various items on eBay and then inspected and evaluated them to determine whether they were counterfeit. Tiffany found that close to 75% of the items it purchased were counterfeit. Although the district court questioned the methodology of the surveys, it nonetheless decided that a significant portion of the sterling silver jewelry listed on eBay was counterfeit and that eBay knew that at least some portion of the Tiffany goods sold on the site were counterfeit. The district court found that eBay actively took steps to grow the sales of Tiffany items on its site profited from it. eBay's business model is based upon revenue derived from postings, final value fees, as well as fees charged through its subsidiary, PayPal, to process transactions. Consequently, it is to eBay's advantage to help "boost" sellers' sales, which it did in the case of Tiffany products by educating its sellers on the use of descriptive and keywords incorporating the Tiffany trademarks, advertisements that hyperlinked back to Tiffany items for sale on the site, and purchasing sponsored-link advertisements with various search engines to promote the availability of Tiffany items on the site. eBay's Jewelry & Watches category manager estimated that between April 2000 and June 2004, eBay earned $4.1 million in revenue from completed listings with "Tiffany" in the listing title.

Where the district court absolved eBay of the false advertising claim on the basis that it was not the party actually selling the counterfeit merchandise, the Second Circuit took pause. The circuit was particularly concerned whether eBay's advertisements of Tiffany goods on its site misled or confused consumers, directly or impliedly, as to the genuineness of those goods. The court indicated that a disclaimer might suffice, but cautioned that "the law prohibits an advertisement that implies that all of the goods offered on a defendant's web site are genuine when, in fact, as here, a sizable proportion of them are not." Given that the district court was in a much better position to evaluate the evidence given this standard, the Second Circuit sent the issue back for "reconsideration."

Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947-cv (2d Cir. April 1, 2010)

Lindsay Lohan and a Brief Introduction to NY’s Right of Privacy.

Wed, 07 Apr 2010 11:19:50 GMT

As you’ve probably heard by now, a few weeks ago, Lindsay Lohan sued E*Trade over its “milkaholic Lindsay” commercial that originally aired during the Super Bowl and also aired during the Vancouver Winter Olympics (If you haven’t seen it yet, you can find it here (www.etrade.com/tv)). According to the complaint, E*Trade violated Lohan’s right of publicity under Sec. 51 of the New York Civil Rights Law, her right of privacy and her common law right of privacy to exclusive control of commercial use of her likeness, name, characterization and personality. How? By using Lindsay Lohan’s name and characterization in its ad. She is seeking an injunction preventing E*Trade from using the ad or any other ad using Lohan’s likeness; an injunction requiring E*Trade to recall and turn over all copies of the ad; an accounting of E*Trade’s profits; $50 million in compensatory damages; $50 million in exemplary damages and interest, costs and attorneys’ fees. That’s at least $100 million in damages before any accounting of profits, for those of you keeping score at home.

Section 51 of New York’s Civil Rights Law provides for a civil cause of action for any person whose “name, portrait or picture is used within this state for advertising purposes or for the purposes of trade” without written consent. So, to prove a violation, LiLo has to prove that 1) E*Trade used her name, portrait or picture 2) for trade or advertising purposes 3) within the State of New York 4) without her consent.[1] I don’t think that E*Trade can deny that the ad is, well, for advertising purposes or that it ran in New York. They’ve already admitted that they didn’t have Lindsay Lohan’s consent to run the ad (that is, they’ve stated publicly that they serendipitously chose the name Lindsay because it was the name of a member of the team working on the ad; therefore, they didn’t need Lindsay Lohan’s consent). Element number 1 is where Lohan might run into some problems.

The statute clearly reads “name, portrait or picture” and Lohan’s complaint, just as clearly, refers to “name, characterization and personality.” The Court of Appeals of New York[2] has previously held that Section 51 is to be narrowly construed and strictly limited to “nonconsensual commercial appropriations of the name, portrait or picture of a living person.”[3] Narrowly construed + strictly limited to name, portrait or picture = not good for Lindsay Lohan. In a quick and dirty review of the case law, I did see some references to “likeness” and “personality,” but I wouldn’t want to bet my $100 million case on a couple of references that are decades old. Plus, the amount of evidence necessary to convince a judge or jury that a five-second mention of the first name “Lindsay” (and what if it’s actually “Lindsey?” Where does that leave this lawsuit?) is a reference to Lindsay Lohan would have to be gargantuan.

But, wait. It gets better.

New York does not recognize a common law right of privacy or right of publicity. Not that “New York hasn’t yet adopted” or “New York courts have not reached the question of whether there is.” No, New York courts have flatly rejected that there is a common law right of privacy or right of publicity.[4] So, those second and third causes of action are DOA (demurrerable on arrival, in this case. Feel free to share that one with your friends).

This being the law (glacial) and the news cycle being what it is (hyperspeed), we’ll probably never hear how this works itself out. But, I wouldn’t bet the college fund on Lindsay Lohan winning this one.

[1] Just to be lawyerly and give me some street cred, I’ll cite to supporting case law. Alvidrez v. Roberto Coin, Inc., 6 Misc.3d 742, 745 (N.Y. Sup. Ct. 2005)

[2] Unlike most other states and the federal government, New York’s highest court is the Court of Appeals; the Supreme Court of New York is a lower court. Go figure.

[3] Messenger v. Gruner + Jahr Printing & Publ., 94 N.Y.2d 436, 441 (2000).

[4] See e.g. Stephano v. News Group Publications, Inc., 64 N.Y.2d 174, 183 (1984); Maxwell v. N.W. Ayer, Inc., 605 N.Y.S.2d 174, 176 (N.Y. Sup. Ct. 1993) and Messenger, supra.

Who's(e) Melo?

Fri, 26 Mar 2010 11:02:46 GMT

Melvin L. Vinson recently filed a trademark infringement suit against NIKE in the Western District of Wisconsin alleging trademark infringement and unfair competition based on Vinson’s trademark registrations for the MELO and MELO GEAR and Design marks for shirts, pants, hats and other apparel.

Mr. Vinson alleges he has been called “Melo” for his entire life and that he thought of starting an urban clothing line under the mark “MELO GEAR” in the late 1990s. He also alleges a date of first use of “prior to” June 2003. His timing is interesting, as explained below.

In June of 2003, Carmelo Anthony, or as you may have guessed, “Melo,” was drafted by the Denver Nuggets of the National Basketball Association. Anthony’s star was rising quickly, he had lead Syracuse University to its first NCAA basketball championship in April of 2003 and was named Most Outstanding Player of the NCAA Final Four. After announcing his intentions to leave Syracuse for a career in the NBA, Anthony signed a contract to endorse NIKE basketball shoes and apparel. NIKE immediately made plans to produce a signature shoe and a line of clothing under the MELO mark.

June of 2003 was the earliest Nike could have used the MELO mark because it did not secure Carmelo Anthony’s endorsement until around that point in time. However, Mr. Vinson alleges a date of first use prior to June 2003. The lesson for all those budding stars playing in the NCAA tournament over the next two weeks: think about applying for trademark registrations as soon as possible.

Fraud on the Green

Tue, 23 Mar 2010 10:43:18 GMT

Worth an estimated $19 million, the trademark TAVERN ON THE GREEN has become the subject of a bitter feud between the City of New York’s municipal government, and the descendant’s of Warren LeRoy, the last restaurateur to operate the establishment until its doors were closed in December of 2009. The City has owned the parcel of land situated on the southwestern edge of Central Park since 1934. The land, initially housed a sheep barn, but was renovated that same year to accommodate a seasonal restaurant called Tavern on the Green, which was so named by then Parks Commissioner, Robert Moses. The City continued to pay the bulk of the costs for subsequent renovations.

Over the years, the City contracted with private concessionaires to operate the now-famous restaurant. In 1973, Warner LeRoy was selected as the newest concessionaire. LeRoy entered into an agreement with the City that laid out his obligations, which included obtaining the City’s permission if he wanted to change the name of the restaurant, required adequate staffing by employees wearing government-approved uniforms, and allowed for the City to approve the restaurant manager. LeRoy invested $10 million in renovations, and the restaurant re-opened in 1976. Two years later, LeRoy filed a federal trademark application for TAVERN ON THE GREEN for restaurant services, but failed to mention one little thing: that he didn’t actually own the trademark, TAVERN ON THE GREEN, and was simply a licensee permitted to use it in connection with the operating agreement.

Although LeRoy died in 2001, his company, Tavern on the Green LP, continued to operate the restaurant. In 2009, feeling the financial stress of the economic downturn, Tavern on the Green LP filed for bankruptcy protection. During the bankruptcy proceeding, the TAVERN ON THE GREEN trademark was valued at $19 million. The City responded by filing a lawsuit in federal court asking for the withdrawal of any references to Tavern on the Green LP’s ownership of the TAVERN ON THE GREEN trademark from the bankruptcy proceeding, in an effort to establish itself as the true owner of the trademark. (City of New York v. Tavern on the Green LP, S.D.N.Y., No. 09 Civ. 9224 (MGC), 3/10/10). Not surprisingly, the City also failed to renew Tavern on the Green LP’s operating license, instead, awarding it to Dean Poll, owner of The Central Park Boathouse restaurant. Tavern on the Green closed its doors on December 31, 2009. Poll plans to re-open the restaurant after some major renovations.

On March 10, 2010, the U.S. District Court in the Southern District of New York sided with the City, determining that it does indeed own the TAVERN ON THE GREEN trademark, based on its common law rights, which originated in 1934, some 42 years before LeRoy came onto the scene. The court further determined that LeRoy had fraudulently obtained the federal registration for TAVERN ON THE GREEN, which essentially means that the registration is likely not worth the paper it is written on. The court based its decision on a number of factors, including its interpretation of the 1973 agreement in which LeRoy acknowledged the City’s rights in the restaurant name, and his role as licensee. The fact that LeRoy filed a federal trademark application providing the first date of use for the TAVERN ON THE GREEN trademark as August 31, 1976 was considered an attempt by LeRoy to mislead the United States Patent & Trademark Office, by failing to disclose the City’s long prior rights in the name. In the trademark application, LeRoy also declared that he was unaware of any competing rights to use the name, failing to mention his agreement with the City whatsoever.

This trademark dispute could have been prevented all the way back in 1973 with the simple stroke of a pen. The parties in any kind of a business operating agreement need to consider and spell out in writing who will be responsible for obtaining the federal trademark registration, the trademark ownership arrangement, and the obligations of each of the parties involved, always bearing in mind what could happen if the business relationship goes south.

Louis Vuitton sues Hyundai over a basketball

Tue, 23 Mar 2010 10:30:04 GMT

Last month, French high-end accessories manufacturer Louis Vuitton filed a lawsuit in federal court in New York against Hyundai Motor America over the use of an alleged imitation of the Louis Vuitton trademark on a commercial aired during the XLIV Super Bowl.

The commercial entitled “Luxury” shows a Hyundai Sonata automobile driving away amidst symbols of luxury combined with everyday life, such as policemen eating caviar inside their patrol car, chandeliers replacing common street lights, a cafeteria serving lobster and the main culprit: men playing basketball with a ball, emblazoned with a pattern resembling the Louis Vuitton trademarked monogram usually seen on bags and other leather goods. The basketball is shown for no more than three or four seconds.

In the complaint, Louis Vuitton alleges that Hyundai’s use of imitations of its marks constitutes (i) trademark dilution, (ii) false designation of origin and unfair competition, and (iii) trademark infringement. Louis Vuitton bases its dilution claim on the allegation that Hyundai’s conduct lessens Louis Vuitton’s capacity to identify and distinguish itself as the exclusive source of Louis Vuitton branded products (blurring), and negatively reflects on Louis Vuitton as it associates its brand with products of inferior quality (tarnishment). Ouch. Louis Vuitton also claims that Hyundai engages in unfair competition because it seeks to trade off the Louis Vuitton brand to confer a luxury status to its car. Louis Vuitton’s third argument is that Hyundai’s conduct is likely to cause confusion, mistake and deception as to the origin and quality of the Sonata car based on Hyundai’s use of a basketball pattern that closely resembles the Louis Vuitton mark.

Louis Vuitton is asking that Hyundai be permanently enjoined from diluting and infringing upon Louis Vuitton’s marks and for the destruction of all copies of the allegedly offending commercial. Louis Vuitton also seeks damages, costs and attorney’s fees and asked that the Court order an accounting of Hyundai’s profits from its sales since the first televised broadcast of the “Luxury” commercial, which, let us not forget, was broadcast during the most watched TV event in U.S. history.

U.S. Supreme Court Holds Copyright Registration Not a Jurisdictional Prerequisite to Filing Suit

Tue, 16 Mar 2010 18:30:00 GMT

Section 411(a) of the Copyright Act of 1976 (the "Copyright Act”) states, in part, the following: “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” 17 U.S.C. § 411(a).

The term “subject matter jurisdiction” generally refers to the type of case a court may hear. Federal courts applying § 411(a) have held that registration of the copyrighted work with the U.S. Copyright Office is a jurisdictional prerequisite. In the absence of a copyright registration, federal courts have dismissed copyright infringement lawsuits for lack of subject matter jurisdiction. Put more simply, given the language of § 411(a), federal courts have held that copyright cases alleging the infringement of unregistered works cannot be heard in the federal courts. See, e.g., Well-Made Toy Mfg. Corp. v. Goffa Int’l Corp., 354 F.3d 112, 114-115 (2d Cir. 2003); Morris v. Business Concepts, Inc., 259 F.3d 65, 72-73 (2d Cir. 2001).

That changed on March 2, 2010 when the United States Supreme Court decided Reed Elsevier, Inc. v. Muchnick, No. 08-103 (U.S. Mar. 2, 2010). There, the United States Supreme Court clarified that the federal courts have subject matter jurisdiction to hear copyright infringement suits--even ones concerning works that have not been registered with the U.S. Copyright Office. The court also clarified the circumstances under which a statutory precondition to suit will be considered “jurisdictional,” meaning that a failure to satisfy the precondition will usually result in dismissal of the action for lack of subject matter jurisdiction.

The decision in Reed Elsevier arose as a result of the United States Supreme Court’s earlier decision in New York Times v. Tassini, 533 U.S. 483 (2001). In Tassini, the court held that owners of online electronic databases and print publications had infringed the copyrights of freelance authors by electronically reproducing the authors’ works online without first obtaining the authors’ consent. Following Tassini, similar lawsuits that had been pending (and stayed) at the time of the decision were consolidated in the United States District Court for the Southern District of New York by the Panel on Multidistrict Litigation. The district court certified a class action (which included claims for the infringement of both registered and unregistered copyrights) and approved a class settlement. Ten of the plaintiffs objected asserting grounds not at issue here. When the district court overruled the objections, the objecting plaintiffs appealed to the United States Court of Appeals for the Second Circuit. The Second Circuit sua sponte ordered briefing on the issue of whether § 411(a) deprives federal courts of subject matter jurisdiction over infringement claims involving unregistered copyrights. The Second Circuit held that § 411(a)’s registration requirement was jurisdictional and overturned the district court’s class certification and settlement approval.

Thus, the United States Supreme Court took up the issue in Reed Elsevier. Writing for the majority, Justice Thomas distinguished between “jurisdictional requirements” on the one hand and “claim processing rules” on the other hand. According to the majority, the term “jurisdiction” refers to “a court’s adjudicatory authority” and applies “only to ‘prescriptions delineating the classes of cases (subject matter jurisdiction) and the persons (personal jurisdiction)’ implicating that authority.” Reed Elsevier, Inc., slip. op. at 5. The majority opinion noted that many courts have confused language in statutes outlining the limits of a court’s jurisdiction with “claim processing rules” (i.e., what a party must prove to succeed on a legal claim). Justice Thomas explained that the Supreme Court has offered guidance to litigants to help distinguish “jurisdictional” requirements from “claim processing rules.” The majority opinion quoted the following language from Arbaugh v. Y & H Corporation, 546 U.S. 500 (2006):

If the legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue. But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.

Reed Elsevier, Inc., slip. op. at 6 (quoting Arbaugh, 546 U.S. at 515-516). In other words, statutory limitations are, by default, not jurisdictional requirements unless Congress “clearly states” that they are.

The majority considered whether § 411(a) “clearly states” that its registration requirement is jurisdictional and held that it does not. The court rejected the argument of Amicus Curiae that because the last sentence of §411(a) contains the word “jurisdiction” that § 411(a)’s registration requirement was a jurisdictional prerequisite. The last sentence of § 411(a) states the following:

The Register [of Copyrights] may, at his or her option, become a party to the action with respect to the issue of registrability of the copyright claim by entering an appearance within sixty days after such service, but the Register’s failure to become a party shall not deprive the court of jurisdiction to determine that issue.

17 U.S.C. § 411(a). The court reasoned that the last sentence of § 411(a) was inserted solely to clarify that a federal court can determine whether a work may be registered under the Copyright Act even though the Register of Copyrights (the person who would normally determine registrability) is not a party to the action.

Next, the court noted that § 411(a)’s registration requirement is located in a section of the United States Code that is separate from the sections that expressly grant the federal courts subject matter jurisdiction over copyright claims. Compare 17 U.S.C. § 411(a) with 28 U.S.C. §§ 1331 and 1338. The court also noted that 28 U.S.C. §§ 1331 and 1338 confer subject matter jurisdiction over copyright claims upon the federal courts, but do not require registration of the work as a prerequisite.

Moreover, the court pointed out that § 411(a) allows federal courts to hear copyrights actions involving unregistered foreign works, rights of attribution and integrity (without regard to whether the work is registered), or where registration of the work has been refused. Reed Elsevier, Inc., slip. op. at 10.

The court concluded that § 411(a)’s registration requirement “imposes a precondition to filing a claim that is not clearly labeled jurisdictional, is not located in a jurisdiction-granting provision, and admits of congressionally authorized exceptions. Section 411(a) thus imposes a type of precondition to suit that supports nonjurisdictional treatment under our precedents.” Id. at 11.

In sum, as a result of the Supreme Court’s holding in Reed Elsevier, a party filing a lawsuit alleging infringement of an unregistered work need not worry about having the suit dismissed for lack of subject matter jurisdiction.

“The Hurt Locker” could be in for a world of pain.

Tue, 09 Mar 2010 08:00:00 GMT

Having won the Academy Award for Best Picture and Best Screenplay, you would think that the players behind the film would be riding high on their success. But, they’ve still got a pretty major lawsuit still hanging over their heads.

On March 2, 2010, a little less than a week before the Oscars were handed out, Master Sergeant James Sarver filed a lawsuit against the makers of “The Hurt Locker” in federal court in New Jersey. Sarver accused the director, writer, producers, production companies and Playboy Enterprises of violating his right of publicity, placing him in a false light, defamation, breach of contract, intentional infliction of emotional distress, fraud and negligent misrepresentation. Oh, and why Playboy, who isn’t involved in the movie? It’s because the screenwriter was working for Playboy when he was embedded with Sarver’s explosive ordnance disposal (EOD) unit and wrote an article about it for Playboy magazine.

The complaint alleges that the main character in the film, Will James, is based on Sarver’s misappropriated likeness and personal story. The complaint lists approximately 15 similarities between the character and Sarver, including:

Sarver is seeking damages, costs and attorney’s fees. For a movie with a production budget of around $15 million and box office gross around $20 million, any sort of money damages could be significant. Interestingly, Sarver is not seeking an injunction preventing further distribution of the movie or DVDs. While “Winner-Best Picture” can be a marketing godsend, “Loser for defaming and misappropriating the likeness of an active-duty U.S. soldier” is probably not going to do a lot for those post-Oscar-win sales.

DON’T MESS WITH…the Texas Department of Transportation

Tue, 02 Mar 2010 08:00:00 GMT

In a precedential decision issued February 5, 2010, the Trademark Trial and Appeal Board granted a Motion for Summary Judgment filed by the Texas Department of Transportation (TxDOT) in a case pending against an individual, Richard Tucker, related to his registration and pending application for “DON’T MESS WITH TEXAS” for clothing. Texas Department of Transportation v. Richard Tucker, Cancellation No. 92030882 and Opposition No. 91165417 (February 5, 2010) [precedential].

TxDOT had filed cancellation and opposition proceedings against Tucker’s registration and application, respectively, based on its longstanding use and multiple registrations for the identical mark. TxDOT holds four U.S. registrations for “DON’T MESS WITH TEXAS” covering a variety of goods and services related to its anti-litter campaign as well as merchandise associated with the campaign. The registrations do not explicitly claim rights in the mark for clothing, although TxDOT presented evidence that it had used the mark on T-shirts and other clothing since at least as early as 1986, and the mark was in use with other goods and services since at least as early as 1985. In the meantime, Tucker obtained a registration for the identical mark in 1995 for various types of clothing, including: “women’s tops, T-shirts, blouses, skirts, dresses, pants, shorts, caps, coats jackets and sportswear, and men’s shirts, T-shirts, tops pants, shorts, caps, coats, and jackets”. Tucker also had a pending application filed in September of 2000 for additional apparel items, including: “boots, shoes, belts, hats, caps, scarves, neckties.” That registration and application were the subject of the recently decided opposition and cancellation action.

In discussing the issue of priority, the TTAB distinguished between the opposition and the cancellation proceeding, noting that in the opposition, priority was not at issue given TxDOT’s submission of its prior registrations into evidence and, whereas in the cancellation proceeding, priority was very much at issue since both parties have registrations, so the TTAB must look to evidence of record to determine priority.

The TTAB decided for TxDOT on a Motion for Summary Judgment, determining that TxDOT had submitted clear evidence of priority which Tucker had admitted (despite subsequent arguments to the contrary) and that Tucker had failed to demonstrate any genuine issues of material fact as to priority and likelihood of confusion, given that: the marks are identical and used on identical goods, TxDOT’s mark is famous, and that it is common practice to put slogans on clothing.

In addition to the strong and, apparently, voluminous evidence submitted by TxDOT in support of its contentions, Tucker’s own statements, actions, and admissions hurt him in various ways throughout the case. For instance, Tucker’s Declaration states that he conceived of use of the mark while driving down the highway and seeing TxDOT’s highway anti-litter campaign sign and thought it would make a good name for a line of Western clothing. In responding to Requests for Admissions, Tucker admitted TxDOT’s priority. Tucker argued that evidence of actual confusion is “de minimis”, noting that the record reflected only one apparel vendor had asked whether he was associated with TxDOT. The Board agreed with this last assertion, but reminded Tucker that only likelihood of confusion was required, and found that TxDOT had submitted ample evidence in support of a finding of “likelihood of confusion”.

While the case does not appear to break new ground and has left trademark practitioners wondering what about the case makes it precedential, it is a good reminder to trademark holders to review their portfolios regularly to ensure their registrations cover their full range of goods and services and a reminder to would-be imitators and infringers that they are not necessarily free to use a mark for particular goods just because that mark is not registered for those identical goods.

The Kricket Chirpeth No More

Tue, 23 Feb 2010 17:24:00 GMT

The United States District Court for the District of Arizona recently dealt a strong blow to a company for willfully infringing Cricket Communication’s intellectual property rights. In Cricket Communications, Inc. v. Nazir d/b/a GSM Cellular, Case No. 08-CV-00295, the Court held that the defendant had willfully infringed Cricket’s trademark rights in the Cricket® trademark. The Court permanently enjoined the defendant from further infringing acts, and ordered the defendant to pay Cricket’s attorneys’ fees in their entirety. In doing so, the Court found that “Defendant’s behavior throughout the course of this litigation may certainly -- at the very least -- be considered deliberate, willful, and fraudulent,” rendering the case exceptional under 15 U.S.C. § 1117(a).

Lewis and Roca was co-counsel for Cricket along with the law firm of Fish and Richardson. The dispute began when the defendant began selling Cricket-branded products and accepting customer payments on behalf of Cricket without authorization. Cricket sued the defendant for trademark infringement, false designation of origin and unfair competition. Cricket successfully obtained a preliminary injunction against the defendant, and the Court found that the defendant had intentionally used the registered Cricket trademarks in connection with defendant’s ownership and operation of retail cellular stores. In doing so, the defendant had misrepresented to the unwitting public that his stores were affiliated with Cricket. Then, in a bizarre twist, the defendant changed his business name to “Kricket,” and registered KRICKET as an Arizona trademark.

Cricket then moved for summary judgment, and attorney Shane Olafson from Lewis and Roca appeared at oral argument on behalf of Cricket. The Court ruled from the bench, rendering the preliminary injunction permanent, and granting Cricket’s motion for summary judgment against defendant. In doing so, the Court found the defendant guilty of willful trademark infringement, unfair competition and false designation of origin in violation of the Lanham Act, as well as related common law claims. Cricket then sought an award of attorneys’ fees and costs.

Not rolling over lightly, the defendant moved for reconsideration of the Court’s ruling, and requested another hearing. After further briefing, the Court denied defendant’s motion for reconsideration, and ordered the defendant to pay Cricket’s attorneys’ fees and costs in their entirety.

Forget About Summary Judgment For Fraud On The PTO

Thu, 18 Feb 2010 10:25:45 GMT

In Daimlerchrysler Corporation V. American Motors Corporation, Cancellation No. 92045099, the Trademark Trial and Appeal Board denied DaimlerChrysler’s motion for summary judgment on its fraud claim and made it all but impossible for a petitioner to prevail on a fraud claim on summary judgment.

DailmlerChrysler alleged that American Motors committed fraud on the Patent and Trademark Office by falsely representing that it had usd the AMC and design mark on automobiles and structural parts thereof, when, in fact, it had not. DaimlerChrysler alleged that American Motors had knowingly made the false representations to induce the PTO to register the AMC and design mark. Citing In Re Bose, 476 F.2d 1331 (Fed. Cir. 2009), the Board held that, to prove fraud, DailmerChrysler is required to prove that the registrant knowingly made a false and material representation with the intent to deceive the PTO. The PTO observed that intent to deceive may be based on direct evidence or inferred from indirect or circumstantial evidence. The PTO held that intent must be “separately proved.” Moreover, the PTO noted that issues of intent are typically unsuited for determination on summary judgment.

The PTO held that DailmerChrysler failed to present any direct evidence of intent to deceive and failed to present indirect evidence that would lead to the “inevitable conclusion” that the registrant had the intent to deceive the PTO or at least had a reckless disregard for the truth. The PTO indicated that the registrant maintained that it used the mark on the goods at issue and maintained that its statements were not false. However, the PTO did not identify the nature of the evidence that the registrant was relying on.

The PTO’s decision delivers the clear message that it is not likely to grant summary judgment in favor of the petitioner on summary judgment. Indeed, it is hard to imagine any case in which the indirect evidence would lead to the “inevitable conclusion” that there was intent to deceive, particularly when all genuinely disputed facts must be resolved in the light most favorable to the non-moving party. Thus, it appears that the PTO may only grant summary judgment in favor of the petitioner on a fraud claim when there is undisputed direct evidence of fraud, such as an admission by the registrant that it intended to deceive the PTO, which, of course, may never happen. The effect of the PTO’s rule is that fraud claims will inevitably proceed to trial and will not be disposed of on summary judgment. At least there is one bright spot for petitioners asserting fraud claims – the PTO acknowledged that it is still an open question whether reckless disregard for the truth is sufficient to establish intent to deceive. If the answer is yes, there is still a glimmer of hope in establishing a fraud claim and prevailing on summary judgment on the claim.

The Recording Industry Prepares for Battle as Artists Seek to Recapture Their Sound Recording Copyrights

Tue, 09 Feb 2010 11:07:05 GMT

After several years of waging an anti-piracy litigation campaign against the unauthorized downloading and file sharing of recorded music, the recording industry may soon find itself playing defense as legal notices served on record labels by recording artists asserting termination of the labels’ sound recording copyrights start to take effect on January 1, 2013.

Subject to a few key exceptions, Section 203 of the U.S. Copyright Act (17 U.S.C. § 203) permits authors of copyright works and their statutory successors to terminate any contracts the authors executed on or after January 1, 1978, that grant copyrights in the authors’ works, and recapture ownership of such rights in the U.S. after a period of approximately 35-40 years has elapsed (a substantially shorter period than the full copyright term consisting of the life of the author plus 70 years).

The termination right is meant to safeguard authors that may have initially made bad deals due to their lack of bargaining power by giving them or their statutory heirs a second chance to be fairly compensated for the use of the authors’ copyrighted works.

With January 1, 2013 (the date terminations of copyright grants executed on or before January 1, 1978 can commence) fast approaching, record companies have already been served and will continue to be served with termination notices from recording artists seeking to recapture the copyrights in their sound recordings from the late 70’s and early 80’s. (See http://www.law.com/jsp/cc/PubArticleCC.jsp?id=1202434372952).

The outcome of recording artists’ efforts to terminate record labels’ copyrights in their sound recording will depend in large part on how courts come down on the unsettled issue of whether such sound recordings are “works made for hire”, which are not subject to the termination right. The recording industry has routinely taken the position that sound recordings are works made for hire, with record contracts typically providing that any recordings created by artists are “specially ordered or commissioned as works made for hire” by the record companies. Conversely, advocates for artists’ termination rights argue that the U.S. Copyright Act’s definition of “works made for hire” does not apply to sound recordings, as recording agreements are typically structured as independent contractor relationships between labels and artists (as opposed to employer/employee relationships) and sound recordings are not included in the nine categories of “works made for hire” listed in the statutory definition.

In an interesting historical plot twist, Congress, at the urging of the recording industry, added to the 1999 Satellite Home Viewer Improvement Act, an amended definition of a “work made for hire” that included sound recordings, but a coalition of prominent recording artists know as the Recording Artists’ Coalition successfully lobbied for the repeal of this change, which Congress deleted less than a year later, per the “Work Made for Hire Corrections Act of 2000”.

Now that the definitional status quo has been restored, record labels are sure to take the position that sound recording are works made for hire as parts of collective works or compilations (i.e. albums), one that has worked favorably in the past. (see UMG Records vs. MP3.COM, 109 F.Supp.2d 57 (D.D.C. 1999)).

After suffering through a decade long decline in the sale of recorded music, there’s no doubt that some record labels will take to the courts to challenge the validity of artists termination of their U.S. copyrights in sound recordings which are a source of precious back catalog revenue streams in a time of great financial uncertainty for the recording industry. Regardless of whether these courts buy into the labels’ work made for hire arguments, the labels will retain any non-U.S. copyrights in the sound recordings originally granted by the recording artists (as copyrights are territorial and the termination provisions of the U.S. copyright act are limited to the United States). Since these grants of foreign copyrights will be valid even after artists terminate the labels’ U.S. copyrights, here’s hoping that rather than coming out guns a’blazin, the record companies simply open up their wallets and pay the artists a premium to re-acquire the U.S. copyrights in their sound recordings. After all this kind of compromise bodes well for artist/label relations and is exactly the sort of “second bite at the apple” Congress had in mind when it enacted the copyright termination provisions.

Update: NFL’s claim of “Who Dat” a “significant misunderstanding”

Tue, 02 Feb 2010 11:30:40 GMT

Over the weekend, the NFL sent a letter to Louisiana Senator David Vitter, backing off its claim that the NFL had trademark rights in the phrase “Who Dat” and calling the debacle a “significant misunderstanding.” Their clarification is that the NFL is not claiming “Who Dat,” they’re claiming “Who Dat” when it’s used in conjunction with Saints trademarks, like the Saints’ version of the fleur de lis. Therefore, as an NFL spokesman explained, the t-shirts one targeted business owner was selling were perfectly okay as long they are not advertised using any of the Saints marks. The business owner was apparently advertising the t-shirts as Saints gear.

Under that logic, what the NFL was trying to protect are their trademarks, you know, the ones they own and have the right to enforce. If that’s the case, why didn’t they just say so in the first place? No one disputes that the NFL (or the Saints organization) has trademarks on “SAINTS” and their specific fleur de lis. Just tell people they can’t use those and nobody gets hurt. Maybe that’s what the NFL did and it got lost in translation. But still, no one knows exactly what the NFL actually said in the letters because no one has released a copy to the public.

The NFL appears to have headed off their growing public relations nightmare and tamped down the seething anger and threat of lawsuits from Louisiana. We may never know the full story behind “WhoDatgate,” but for now Who Dat Nation can continue to improvise on the theme and do that voodoo that only they do. The Mardi Gras floats on this should be inspired.

Who What?!!

Fri, 29 Jan 2010 15:25:02 GMT

“Who dat? Who dat? Who dat say dey gonna beat dem Saints?” Apparently, the National Football League.

A television station in New Orleans reported that earlier this week the NFL sent cease and desist letters to several small business owners regarding their use of “Who Dat” and the fleur de lis on merchandise and now the Who Dat Nation is up in arms.

The actual content of the letters hasn’t been released, but it seems the NFL is claiming trademark rights in the phrase “Who Dat” and the fleur de lis as it relates to the New Orleans Saints. The league has demanded that the business immediately stop producing “Who Dat” merchandise and turn over 10% of their profits related to any sales. At least two of the businesses that received the letters say they will comply.

But nothing in New Orleans is ever that easy, despite the city’s nickname. The NFL claims that the Saints team owns “Who Dat” based on a Louisiana state trademark registration from 1988. However, that registration is for “Advertising and Business,” not sports teams or apparel. There are also 63 other records showing the use of “Who Dat” in Louisiana as business names and trademarks. In addition, the men popularly credited with bringing the Saints chant to prominence, Sal and Steve Monistere and Carlo Nuccio, claim that they have a trademark rights in “Who Dat.” And complicating that issue, there’s an undated letter, signed by the Saints’ then-Director of Marketing Greg Suit, purporting to transfer whatever right, title and interest the Saints had to Who Dat?, Inc., a company operated by the Monisteres.
There are six active federal trademark registrations that include “Who Dat” in some form. None of them are owned by the NFL or the New Orleans Saints. However, the Saints organization just filed, on January 25, 2010, a trademark application in Florida (the site of this year’s Super Bowl featuring the New Orleans Saints) for “Who Dat” for use on “Men's, Women's & Children's Clothing, Caps, Headwear, T-Shirts, Sweatshirts.”
There’s no telling what will happen with “WhoDatgate.” Members of Louisiana’s Congressional delegation have already condemned the NFL’s actions, attorneys are rumbling about class action lawsuits on behalf of the affected business owners, and New Orleans Saints fans are mobilizing against the NFL, calling for boycotts of official NFL merchandise and threatening to create as much “Who Dat” merchandise as they possibly can. Whether this will turn out to be an example of zealous protection of intellectual property rights or opportunistic overreaching by a large enterprise, we all know one thing: Look out, Cincinnati, “Who Dey” may be next!

Carlos the Jackal Wants to Protect His Image

Wed, 27 Jan 2010 15:52:07 GMT

Ilich Ramirez Sanchez, aka world-famous terrorist Carlos the Jackal, wants final cut of a French documentary about his life and is willing to sue to get it, according to a story in the Washington Post. Ramirez, sentenced to life in a Paris prison, has filed suit against French production company Film in Stock, demanding that it give him three months to review the content of, and impose changes to, the documentary once it’s completed in order to protect his intellectual property rights in his name and biographical image. He’s worried that the documentary will be a propaganda film unless he can monitor its accuracy. Isabelle Coutant-Peyre, Ramirez’s attorney and wife, also alleged that Film in Stock planned to portray Ramirez as the instigator of several terrorist attacks for which he was not convicted in violation of his right to presumption of innocence.

Film in Stock has countered that granting Ramirez the right to edit would deprive Film in Stock of its guaranteed right to freedom of speech. It also argued to the French court that no other French public figure or politician would get the right to edit a biographical documentary. The court is expected to rule on this issue on February 4, 2010.

Perhaps unsurprisingly, Ramirez never sued the author Robert Ludlum over his use of “Carlos the Jackal” in the Bourne trilogy. Of course, these books were published well before Ramirez’s capture in 1994. It’s probably difficult to file lawsuits when you’re on the run from international spy agencies.

Student Athletes Spar with NCAA Over Publicity Rights

Thu, 14 Jan 2010 17:27:46 GMT

Stanford (Go Cardinal!) wasn’t the only thing in Northern California upsetting the balance of the National Collegiate Athletic Association (“NCAA”) during the college football season. Since May 2009, eight putative class action lawsuits have been filed in the Northern District of California accusing the NCAA and its authorized licensing company, Collegiate Licensing Company (“CLC”), of violating either the Sherman Antitrust Act or individual student-athletes’ rights of publicity or both in the licensing of student-athletes’ likenesses to third parties. There’s also another case pending in the Eastern District of Tennessee. The name plaintiffs are all former student-athletes who were members of either NCAA Division I football teams or men’s basketball teams.

In general, the lawsuits accuse the NCAA, CLC and other co-conspirators of conspiring to restrain trade by reducing the price paid to student-athletes for the use of their likenesses to zero. The lawsuits allege that all NCAA student-athletes are required to sign “Form 09-3a” before they are allowed to compete in NCAA athletic events. A provision of “Form 09-3a” allows the NCAA to use a student-athlete’s “name or picture” to generally promote “NCAA championships, or other NCAA events, activities or programs.” The lawsuits accuse the NCAA of interpreting this form as an exclusive perpetual license under which the NCAA has the sole right to use the student-athletes’ likeness, thus preventing student-athletes from profiting from their own likenesses even after they no longer play in NCAA events.
Some of the lawsuits also accuse the NCAA and Electronic Arts, Inc. (“EA”), the video game software developer, of appropriating student-athletes’ likenesses for use in the NCAA Football, NCAA Basketball and NCAA March Madness franchises. The accusations stem from the NCAA licensing the uniforms and numbers of teams in its member conferences to EA for use in the NCAA video game franchises. EA, however, allegedly goes farther, giving the players in its video games the same statistics -- height, weight, position, hair color, skin color and accessories -- as the real-life student-athletes that share the same uniform and number. The lawsuits accuse the NCAA of approving these games and this use of the student-athletes’ likenesses in violation of NCAA regulations and the players’ rights of publicity.
Among other things, the plaintiffs are asking for treble damages, disgorgement of profits, an injunction preventing the continued use of former student-athletes’ likenesses, injunctions preventing the continued use of “Form 09-3a,” and, in the video game cases, destruction of all copies of the NCAA Basketball, NCAA Football and NCAA March Madness video games in the control of Defendants or third parties (to extent the law allows, of course. Video gamers breathe a sigh of relief.)

All of these cases are in the early stages. The NCAA, CLC and EA have filed motions to dismiss in each one, all of which are still pending. The Northern District of California cases, all of which are assigned to Judge Claudia Wilken, are scheduled for a Case Management Conference on April 27, 2010. The Tennessee case has a motion to remand pending in front of Judge Leon Jordan.

Northern District of California cases:
Keller v. Electronic Arts, Inc. 4:2009cv01967
O'Bannon v. NCAA 4:2009cv03329
Bishop v. Electronic Arts, Inc. 4:2009cv04128
Newsome v. NCAA 4:2009cv04882
Anderson v. NCAA 4:2009cv05100
Wimprine v. NCAA 4:2009cv05134
Rhodes v. NCAA 4:2009cv05378
Jacobson v. NCAA 4:2009cv05372

Eastern District of Tennessee case:
Nuckles v. NCAA 2:2009cv00235

Review of Important 2009 Trademark Cases

Wed, 06 Jan 2010 14:57:46 GMT

In 2009, several important trademark decisions and rulings issued, impacting trademark practice with respect to the topics discussed below:

Fraud/Maintaining Trademark Registration: The most notable decision, In re Bose Corp., 580 F.3d 1240, 91 USPQ2d 1938, (Fed. Cir.2009) heightened the requirements to successfully establish a claim of fraud as a basis for cancellation of a trademark registration. Prior to Bose, under Medinol v. Neuro Vasx, Inc., 67 USPQ2d 1205 (T.T.A.B. 2003), fraud was found where a party made a material statement that it knew or should have known to be misleading. This issue frequently arose when a party sought to cancel another’s registration because the mark was not in use for all of the goods or services for which it was registered or renewed - a party could assert a claim of fraud for registration of goods or services not in use, whether or not the error was intentional. In Bose, the Trademark Trial and Appeal Board (“TTAB”) cancelled the registration for WAVE on the grounds of fraud, the mark was not used in connection with all of the goods for which it was renewed - specifically, audio tape recorders and players. The mark was cancelled despite evidence that the error may have been in good faith - the declarant signing the renewal affidavit believed servicing the audio tape recorders and players to constitute “use” of the goods. The Federal Circuit reversed and held that fraud could only be proven through clear and convincing evidence of an intent to deceive the United States Patent and Trademark Office (“USPTO”), and reinstated Bose’s registration. It specifically overruled the Medinol decision, noting that negligence was not sufficient to establish fraud. Note that despite this new leniency, clients should be cautious when filing affidavits of use before the USPTO to ensure that a good faith basis exists for each good or service claimed, lest the registration be subject to cancellation for fraud.

Keyword Advertising/Enforcement of Mark: Another interesting ruling affects a party’s ability to sue Google for selling its trademark as a keyword term. In Rescuecom Corp. v. Google Inc., 562 F.3d 123, 90 USPQ2d 1287 (2d Cir. 2009), Rescuecom brought a complaint against Google, alleging its recommendation and sale of the RESCUECOM mark to Google’s advertisers - so as to trigger the appearance of their advertisements and links - was likely to cause consumer confusion under the Lanham Act. The district court, relying on 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005), dismissed the action for failure to state a claim for relief, finding that Google did not make use of Rescuecom’s trademark in commerce within the meaning of the Lanham Act. The Second Circuit Court of Appeals reversed the District Court’s decision, finding that recommending and “selling” a mark to an advertiser to trigger a sponsored link could violate trademark law and holding that a trademark owner can sue Google for trademark infringement for selling its mark as a keyword as part of the AdWords program. The court distinguished the decision from its holding in 1-800 Contacts, Inc. v. WhenU.com, Inc., 414 F.3d 400 (2d Cir. 2005) (“1-800”), noting that in 1-800, the defendant did not use, display or sell trademarks as search terms to its advertisers. As a result, Google’s recommending and selling trademarks mark as a keyword as part of the AdWords program may constitute trademark infringement, and trademark holders may bring suit accordingly.

Contributory Infringement for Counterfeiting: Fashion house Louis Vuitton achieved a victory when a Northern District of California jury awarded a $32 million verdict against a domain hosting company for contributory trademark and copyright infringement, for enabling the sale of counterfeit goods. In Louis Vuitton Malletier SA v. Akanoc Solutions, Inc., 5:07-CV-03952 (N.D. Cal. Dec. 23, 2008) (Verdict Aug. 28, 2009), plaintiff Louis Vuitton sent thirteen take down notices to the defendants’ domain hosting companies, notifying defendants of the sale of counterfeit Louis Vuitton products, and requesting that websites be taken down. While defendants’ took down certain websites, over sixty remained operable or were moved to different IP addresses also owned by defendant at the end of the six month period. Louis Vuitton sued, and defendants claimed lack of knowledge and control of the infringement. The court held the plaintiff had established contributory trademark infringement, by proving defendant had enabled the supply of an infringing product, with knowledge of the infringement, noting that they merely hosted the domain names and did not sell any Louis Vuitton products. The court noted that defendants’ internal emails acknowledging sales of “illegal, counterfeit product, in particular Louis Vuitton” were sufficient to establish knowledge of the sale of counterfeit goods. The court likened the defendants’ infringement liability to that of a flea market proprietor who could not choose to remain “willfully ignorant” of the sale of counterfeit goods. The court also discredited defendants’ lack of control defense, noting that the defendant had conceded in testimony that it was capable of disabling a single IP address within a half of an hour. The jury awarded a $32.4 million verdict. Note that this decision appears to stand in stark contrast to the 2008 decision in Tiffany (NJ) Inc. v. eBay, Inc., No. 04 Civ. 4607 (S.D.N.Y. July 14, 2008), where the court held that Tiffany failed to establish that eBay was liable for contributory trademark infringement for its failure to stop the sale of infringing Tiffany products of which it was aware or should have been aware.

Contributory Infringement for Cyber Squatting: In another surprising ruling relating to contributory infringement, the central district of California held that a domain proxy service can be held liable for cyber squatting in Solid Host, NL v. NameCheap, Inc., 2009 U.S. Dist. LEXIS 63423 (C.D. Cal. May 19, 2009). In its complaint, plaintiff Solid Host alleged a hacker accessed its domain name password for the <solidhost.com> domain name, unlawfully transferred the domain to himself, used defendant’s proxy service to mask his identity on the Whois domain name database, then offered to transfer the domain name back to plaintiff for $12,000. Plaintiff notified proxy service defendant, provided evidence of the domain name theft, and requested defendant reveal the identity of the customer and return the domain name. Defendant refused to comply, indicating that the customer had denied the theft and it would therefore “remain neutral” with respect to any dispute between its customer and plaintiff. Plaintiff brought suit against defendant NameCheap and customer Doe. Defendant filed a motion to dismiss on the basis that it was not the true registrant - merely its proxy - and provided the identity of the Doe defendant. The Court denied NameCheap’s motion to dismiss, noting that under ICANN rules, “the registrant must provide personal and contact information that becomes part of the Whois database” and because the information provided was that of the defendant, the defendant was the registrant of record, regardless of any underlying proxy agreement. The court also discredited defendant’s defense that it qualified for “safe harbor” protection as a domain name registrar, noting that the defendant had not merely acted as a domain name registrar, but had licensed the domain to Doe, controlled the domain name, and had the ability to transfer the domain name back to plaintiff. The court found defendant to be the “cyber-landlord” of the internet real estate stolen by Doe, i.e., the domain name <solidhost.com>” and concluded that the plaintiff’s complaint adequately pled a cyber squatting claim against NameCheap on a contributory liability theory and unfair competition claim, and denied the motion to dismiss.

Negotiation Memos/Settlement Agreements: As a cautionary tale for any party engaging in settlement discussions, a simple unsigned, hand-written document listing ten bullet points of agreement was found to be an enforceable settlement contract in American Eagle Outfitters v. Lyle & Scott, 584 F.3d 575 (3d Cir. 2009). The parties dispute stemmed from use of their respective eagle design trademarks. The parties held negotiations to work out an acceptable business arrangement, wherein the parties drew up an informal handwritten document listing ten bullet points summarizing the terms of their agreement. The defendant later refused to sign a formalized version of the agreement and claimed the hand-written memo - referred to by the parties as “the London Agreement” - was unenforceable. The appellate court evaluated whether the conduct of the defendant indicated an intent to be bound and noted that the defendant’s representative contacted his supervisor many times during the negotiations to confirm acceptance of monetary and other terms of the agreement, suggested that the parties set out the agreement in writing, and offered to sign the document. In addition, both parties’ representatives shook hands after reaching the original deal, stating something to the effect of “we have a deal.” The appellate court confirmed the Magistrate court’s opinion that these actions indicated a manifestation of an intent to be bound and held the agreement - outlining global coexistence and a $1M payout to defendant - to be valid.

Importance of Federal Registration/Cyber Squatting: The importance of obtaining federal trademark registration was emphasized by a court’s remand of a decision transferring a domain from a serial cyber squatter in Lahoti v. Vericheck Inc., 586 F.3d 1190, 92 USPQ2d, 1641 (9th Cir. 2009). In the matter, Vericheck brought a successful Uniform Domain-Name Dispute-Resolution Policy action (UDRP) action against a serial cyber squatter for the domain name <vericheck.com>, under which Lahoti was found to have acted in bad faith and was ordered to transfer the domain. Instead of complying with the order to transfer the vericheck.com domain, Lahoti filed a declaratory judgment action in district court for a judgment that he did not violate the Lanham Act, on the basis that Vericheck did not own a distinctive mark capable of protection. Vericheck did not own a federal registration for the VERICHECK mark -- it owned only an Arizona state registration. The district court noted that Lahoti acted in a bad faith attempt to profit from his use of the domain name, and rebutted Lahoti’s claim that the mark was not distinctive. On appeal, the Ninth Circuit found the district court erred in its reasoning that the mark could not be descriptive, and remanded for further analysis to determine whether VERICHECK is a distinctive mark, despite affirming that Lahoti was a serial cyber-squatter acting in bad faith. Note that VERICHECK would have been likely to succeed in the dispute if it owned a federal registration, as a federal trademark registration on the Principal Register is presumed to be distinctive and entitled to protection.

Bilski v. Kappos: Where Will the Supreme Court Draw the Line Between Obvious and Statutory Patentable Business Methods?

Mon, 14 Dec 2009 15:08:04 GMT

Bilski v. Kappos: Where Will the Supreme Court Draw the Line Between Obvious and Statutory Patentable Business Methods?

On November 9, 2009, oral arguments were heard by the United States Supreme Court in the case of: Bilski v. Kappos*. With some eighty briefs filed with the case, it is one of the most popular cases this term with the High Court. And, even more surprising is that it is a patent case that addresses the question of what is statutory subject matter for patents.

The Bilski case involves a patent application filed for a method of commodity hedging. The claims in the application were rejected by the United States Patent and Trademark Office (U.S.P.T.O.) examiner, then by the Board of Patent Appeals and Interferences, followed by the Federal Circuit, on the basis that the claims were not directed towards patentable subject matter. Notably the method of commodity hedging actually requires heavy use of computers, but that was not claimed.

One big reason that this case has garnered so much interest is that the U.S.P.T.O. has interpreted the Federal Circuit decision to limit software patents. It has been almost thirty years since the U.S. Supreme Court last addressed software patents, and in that time, software has become ubiquitous in our society. Software now provides the novelty in many of the electronic devices that we take for granted, including cell phones and many home appliances. Rejecting patent protection for software would likely invalidate hundreds of thousands of issued U.S. software patents.

I am a member of the IEEE-USA Intellectual Property Committee. The Institute of Electrical and Electronics Engineers (IEEE) is the premier professional organization for electrical and electronics engineers, and also claims as members a large number of software engineers. We convinced the IEEE-USA board of directors to allow us to submit an amicus brief to the Supreme Court in this case in the name of the organization. This brief pointed out that software has become a ubiquitous part of many electrical devices and argued for a standard where patent claims directed towards software and tied closely to machines (such as general purpose computers) would be considered statutory subject matter.

The oral arguments were interesting. For one thing, this was one of the first cases where newly installed Justice Sotomayor took an active part. Both she and Justice Breyer had done work in the Intellectual Property realm when they had been in private practice.

During the arguments of the petitioner, the Justices attempted to get counsel to draw a line between what they considered obvious business methods and what should be statutory. Justice Ginsburg asked about tax avoidance, estate planning, resisting a corporate takeover, and choosing a jury. Justice Breyer asked about his great, wonderful, really original method of teaching antitrust law. Justice Scalia mentioned horses more than once, one time to comment that there are areas that existed in the past, but don’t now, and one of them was training horses. He asked whether horse whisperers should have been covered. Chief Justice Roberts asked about an alphabet, which let the discussion into the Morse and Bell patents. Justice Scalia admitted that an electric current was physical, which may ultimately be a way to overcome current problems with signals being unpatentable.

The arguments by the respondent (the government) revolved around the machine or transformation test. The government seemed to admit that State Street Bank♦ concerned patentable because of the use of the computer, which is a machine. This would seem to support patents for software installed on computers. But then Justice Stevens questioned how that could be a patent on a machine if the only thing novel were the process that the machine is using. Justice Breyer then asked whether, by tying them to a computer, all business methods would be patentable subject matter.

Considering the number of briefs filed with this case, the Supreme Court may not rule in this case until next summer.

* Bilski v. Kappos, 545 F.3d 943, 88 USPQ2d 1385 (Fed. Cir. 2008)
♦ State Street Bank v. Signature Financial Group, 149 F.3d 1368, 47 USPQ2d 1596 (Fed. Cir. 1998)

Bloggers Beware

Fri, 11 Dec 2009 16:37:26 GMT

On October 5, 2009, the FTC announced that it approved final revisions to its “Guides Concerning the Use of Endorsements and Testimonials in Advertising” (the “Guides”), which address endorsements by consumers, experts, organizations, and celebrities, as well as required disclosures of relationships or connections between advertisers and endorsers. The changes, which go into effect December 1, 2009, are targeted, in part, to the increased product sponsorships and endorsements in new-media formats, such as endorsements made by bloggers, endorsements by Twitter and Facebook users and endorsements made in other social media outlets.

Under the changes, the Guides instruct that bloggers or other “word-of-mouth” marketers are subject to the following rules:

• If you are writing about a product or service, you may be considered an “endorser” under the proposed changes. If a blogger makes an “advertising statement” (as defined under the proposed Guides) about a product, service or company that consumers believe represent the blogger’s own opinion, belief or experience, the statement may be considered an endorsement, and the blogger an endorser and ultimately the statement may subject the blogger to FTC product endorsement guidelines.

• Be careful of making false/unsubstantiated claims in posts. If the blogger posts material considered to be a product endorsement, a blogger may be subject to liability for any statements that turn out to be false or unsubstantiated.

• Be honest. Blogger posts that fall under the FTC’s proposed definition of “product endorsement” must reflect honest opinions, findings, beliefs or experiences of the endorser and cannot convey any express or implied representations considered to be deceptive. If they do, bloggers may be subject to liability.

• If you’ve received cash or in-kind payment to blog about a product or service, disclose it. A blogger paid to endorse a product or service could be held liable for failing to disclose clearly and conspicuously that he/she is being paid to endorse the particular product or service.

• If you have a relationship with the company or received a product for free in exchange to write about it: disclose it. A blogger should disclose any relationship or connection between him/herself and the seller of the advertised products or service if the relationship between the blogger and the company might “materially affect the weight or credibility of the endorsement.” For example, if a company has provided a blogger with a free product in exchange for writing about the product, the blogger should post that he/she received the free product from the manufacturer.

It is important to note that the Guides are administrative interpretations of the law that are intended to help advertisers, bloggers and others comply with the FTC Act; they are not binding law themselves. In any law enforcement action challenging the allegedly deceptive use of testimonials or endorsements, the FTC would have the burden of proving that the challenged conduct violates the FTC Act.