Image Attributed to flickr user Sifu Renka

The color red is bold, irreverent, and quite possibly distinctive. However, it is still just one notch on a wide spectrum of colors, which begs the question: should a shoe designer be able to trademark red on its shoes? This question is being played out in a lawsuit on appeal between Christian Louboutin and Yves Saint Laurent (YSL). In particular, this appeal highlights the tension that exists in trademark law over how color trademarks should be handled. Fellow bloggers Caroline Gousse and Alexandra Mackey have written about the beginning stages of the lawsuit and the implications of the initial decision, respectively.

Louboutin filed the initial lawsuit against YSL, making several claims under the Lanham Act, including trademark infringement. The dispute was over four different shoe designs that YSL had produced for its Cruise 2011 collection, each of which featured shoes with red soles. Louboutin claimed that YSL’s shoes were confusingly similar to his red soled shoes and that YSL’s shoes diluted the market for Louboutin’s shoes. Interestingly, Louboutin has a registered trademark for his red soles from the United States Patent and Trademark Office.

The trial court judge followed the rule from the preeminent color trademark case, Qualitex Co. v. Jacobson Prods. Co., which states that color can be protectable under the Lanham Act if it acts as a symbol that distinguishes a company’s goods and identifies their source, provided that it serves no other significant function. Louboutin lost because the judge concluded that given the creativity, seasonal change, and aesthetics of the fashion industry, the colors used in fashion products are primarily designed to advance expressive, and ultimately functional, concerns. Accordingly, the judge found that awarding Louboutin an injunction enforcing Louboutin’s trademark over the color red, even in the context of shoe soles, would impermissibly hinder competition between fashion designers.

Given the ruling of the trial court, it appears that Louboutin has an uphill battle over its trademarked red soles. Louboutin’s lawyer has argued that the trial court erred in holding that granting the red sole trademark protection would impermissibly hinder competition. Louboutin’s lawyer compares the red sole mark to the trademarks held by Tiffany & Co. for its blue box and Owens Corning for its pink insulation. Lastly, his lawyer mentions that they are only seeking to enforce protection of the red on shoe soles, not the entire shoe. YSL’s lawyer has argued that it is unfair to prohibit designers from using colors that are among the basic tools of the trade.

From Louboutin’s perspective, it seems reasonable for a court to enforce protection of his trademarked red soles. He invested a lot of resources into turning a relatively unimportant area of a shoe, the sole, into a primary aesthetic feature. Moreover, there is a strong economic value built up in the red sole mark that Louboutin should be able to protect. When consumers see red soled high heels, they instantly associate them with Louboutin. It also seems reasonable for the mark to only be protectable on the soles of shoes because it would allow designers the freedom to utilize red in their designs, while also protecting Louboutin’s investment in making soles aesthetic.

However, from YSL’s perspective, it becomes more apparent why it would be improper for the appellate court to grant Louboutin an exclusive monopoly over red soles. If a court were to grant Louboutin’s mark protection, what is stopping competitors from grabbing other primary colors for their shoe designs? Could this type of area-specific mark be applied to other types of fashion items, such as a trademark over blue sleeves on sweaters and white collars on dress shirts? Granting Louboutin’s mark protection would seem to create a slippery slope that could eventually impermissibly hinder competition. Another consideration is that Louboutin is seeking to get protection for all the shades of red in the color spectrum, not just the specific red that he uses on his shoes. Prohibiting other shades of a color, especially if it is not employed by the trademark holder, seems unnecessarily restrictive to competitors.

How this suit eventually plays out in the appellate court will be very interesting. Will red bottom shoes remain exclusive to Louboutin? Or will consumers suddenly find these red soled shoes to be ubiquitous, and perhaps, a little less enticing?

Image Attributed to flickr user Eva Rinaldi

Back in October, I reported that things were heating up in yet another Kardashian legal battle.  A few months ago, The Gap hired high-power lawyer Louis Petrich to defend the retailer against reality-TV queen Kim Kardashian’s lawsuit.  The subject of the dispute is an Old Navy commercial that featured an actress allegedly intended to look like the infamous reality star.

In mid-January, The Gap initiated an investigation to determine whether Kardashian’s reputation has been tarnished as she claims, according to The Hollywood Reporter.  The Gap is exploring several of Kim K.’s former business deals, including the failed partnership of the Kardashian clothing line with retailer Bebe, and the current Kardashian partnership with Sears.  The Gap is also questioning Kardashian’s motives for bringing the multi-million dollar lawsuit.  The discovery process to determine Kim’s true worth is expected to take up much of this year.

The Gap seems to be pursuing discovery under the tarnishment theory of trademark dilution.  A trademark is tarnished when an infringing mark portrays the original mark in a negative way.  15 U.S.C. § 1125.  A common instance of such tarnishment occurs when an infringer offers low quality goods associated with the original mark. The theory is that a tarnishing use of a mark threatens to destroy the commercial value of the original mark because people will associate the infringer’s low-quality goods with the plaintiff’s unrelated goods.  By proving that Kim’s reputation is no longer associated with higher quality goods or interpreted as a “wholesome identifier” of her brand or persona, The Gap will show that even if its use of a look-alike associated Old Navy with Kim’s brand, that association did not reduce the value of Kim’s already low-value trademark.  In other words, the discovery process could provide evidence that Kim’s reputation as a public figure has already been damaged, and further tarnishment would not reduce the value of her persona. 

Alternatively, The Gap may claim that the Old Navy commercial featuring the alleged Kim look-alike was a small part of a larger campaign, and profits gained from that individual ad would be de minimis, entitling Kim to few if any damages.  However, the entire discovery process could also be a clever way for The Gap to build a very public and very personal retaliation against Kim.  The Gap is expected to call Kim to testify; as well as Melissa Molinaro, the actress from the commercial at issue; and Reggie Bush, Miami Dolphins running back and Kim’s ex-boyfriend.

Kim and her lawyers plan to fight back by proving The Gap infringed Kim’s trademark and misappropriated her likeness, which resulted in hefty financial damage to Kim and her brand.  The Kardashian team aims to establish infringement by providing proof of customer confusion using recent consumer surveys and testimony by members of the media who reported on the Old Navy marketing plans.  In cases of trademark infringement where the respective marks, products, or services are not identical, similarity will generally be assessed by reference to whether there is a likelihood of confusion – that consumers will believe the products or services originated from the trademark owner.  15 U.S.C. §§ 1051–1127; AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).

Although Kim and her lawyers hope to win a $20 million jury verdict, The Gap will not be liable for the payment of damages, as its advertising agency’s insurer Crispin Porter & Bogusky has agreed to provide indemnification to cover Kardashian’s claims.  No settlement discussions have been initiated at this point.

The Canadian Independent Music Association submitted a list of provisions it wanted in Bill C-32 that included the ability to block users’ access to individual infringing sites, using The Pirate Bay as an example. This provision would be directly analogous to SOPA’s Section 102, which included the DNS blocking provision that was the first part of SOPA to crumble to public pressure. CIMA, along with the Entertainment Software Association of Canada, also called for an enabler provision similar to Section 103 of SOPA, which targets sites that facilitate infringement. Geist argues that such a provision could be used to against sites like YouTube, and that while established sites with the resources to defend themselves would be protected under safe harbor exceptions, the threat of lawsuits would have a chilling effect on technological investment and innovation.

Also like in the U.S., Canadian lawmakers have had trouble practicing what they preach. While SOPA author Rep. Lamar Smith was being accused of using an unattributed image on his campaign website, people using the internet in the Canadian House of Commons were downloading copyrighted music, movies, and software over BitTorrent. Canada’s Pirate Party, which made the discovery, noted that this was not evidence that MPs were pirating content but rather that it “demonstrates how easy it could be to be accused of downloading content even if you are innocent.” Indeed, the more draconian regulations become, the more difficult it will be for ordinary citizens to comply. Legislators in both Canada and the U.S. should consider whether such frustration is really something they want in their constituents.

The activities mentioned are currently legal because of a provision in the Digital Millennium Copyright Act (DMCA) that legitimizes the practice of removing the limitations imposed by Apple’s iOS operating system.  Those activities described above can be achieved through an act known as jailbreaking.  Jailbreaking is the method by which one can transform an Apple device running the iOS operating system – such as the iPhone, iPad, or iPod touch – to allow third-party applications and software to be installed and used.  Jailbreaking allows users to gain access to the operating system and download independent applications, or apps, which are not officially approved by Apple.

Why would one want to jailbreak their iPhone?  The main reason is that some Apple users want to customize their iPhone or iPad and expand its features.  A jailbreaker can modify their iPhone and change the wallpaper, icons, and other system graphics.  Some advocates of jailbreaking boast that they can now circumvent restrictions of Apple’s iOS operating system, and can now use Flash on their iPhone or turn their phone into a Wi-Fi hotspot.  Another reason for users to jailbreak their Apple devices is to access apps that are not found in the Apple App Store.  Some believe Apple censors the content of its apps, citing Apple’s decision in 2010 to remove the WikiLeaks app from its App Store.   These users may find jailbreaking to be an alternative to the censorship they believe Apple places on its apps.  

But what goes up must come down and there is definitely a downside to jailbreaking.  Apple has reported that customers who jailbreak their iPhones can experience device instability, unreliable voice and data service, disruption of services, and problems synchronizing data.  Apple also warns of compromised security, shortened battery life, and inability to apply future software updates.  Apple states clearly on its website “unauthorized modification of the iOS is a violation of the iPhone end-user license agreement and because of this, Apple may deny service for an iPhone, iPad, or iPod touch that has installed any unauthorized software.”

Jailbreaking is a known exemption under the Digital Millennium Copyright Act anti-circumvention provisions.  The DMCA, signed into law in 1998, offers protection against circumvention of technological measures used by copyright owners to protect their work.  However, every three years the Librarian of Congress may designate certain activities as exempt from the anti-circumvention provisions. In 2010, the U.S. Copyright Office and the Librarian of Congress recommended that computer programs that enable wireless telephone handsets to execute various software applications, when lawfully obtained, be placed under the list of exemptions under the DMCA.  However, this exemption for jailbreaking will expire in 2012.

In the spring of 2012, the U.S. Copyright Office will hold hearings on the proposed DMCA exemptions.  The Electronic Frontier Foundation (EFF), a non-profit group that advocates for digital rights, is petitioning the Copyright Office to protect jailbreaking.  The EFF is asking the Copyright Office to extend the 2010 exemption for jailbreaking.  The EFF acknowledges that the DMCA is made to block copyright infringement but supports the jailbreaking exemption because it will allow Apple users more freedom to make their devices “more secure and more functional.”

Under the safe harbor provision, 17 U.S.C. §512(c), service providers are not liable for “the storage of material, at the users’ direction, that resides on a network or system operated or controlled by the service provider.” The safe harbor protection is conditional, however, on the provider demonstrating three things: (1) it lacked knowledge the system contained infringing material, (2) the provider received no financial benefit directly from the infringement, and (3) upon receiving notice of infringement, the provider removed the material immediately.

Based on Grooveshark’s current business model, it appears it would be protected under the safe harbor provision. The music service allows its users to upload their music and stream the music for others; Grooveshark is merely the server the music sits on. Thus, you would expect Grooveshark to be sailing smoothly through litigation under the safe harbor provision.

But its case may be plagued by unexpected complications: recently, someone representing themselves as an employee of Grooveshark claimed in great detail on the popular blog Digital Music News that Grooveshark encouraged employees to regularly upload music to the site – an action not protected under the safe harbor provision. This finding led to an investigation by Universal which, according to TorrentFreak, revealed that several top executives and other employees of the business uploaded more than 113,000 songs to the server.

Grooveshark’s legal issues highlight the confusion over music streaming companies and the scope of protection under the safe harbor provision. Speaking as both a music composer and a frequent online music listener, I definitely have conflicting feelings on the subject of unlicensed use of music. On one hand, you want to protect websites that are simply allowing users to express themselves through the creation of playlists of music they store on the site. But on the other hand, you also want to compensate and motivate the artists and recording companies that have invested their resources to create the music.

Beyond balancing multiple interests, there were other options Grooveshark could have pursued. The music service could have obtained statutory licenses under §114 of the Copyright Act like Pandora, and/or paid a flat fee into an account for copyright holders or negotiated with music recordings clearinghouses and artists like Spotify did to get non-exclusive licenses. With these two legitimate options, why would anyone rely exclusively on the safe harbor provision that could leave a company open to multi-billion dollar lawsuits? Maybe Grooveshark desired to allow users to express themselves without liability, maybe it desired to retain a larger profit by not paying licensing fees, or maybe licensing fees were just too expensive for the start-up company. Whatever the motive, Grooveshark will have a tough legal battle ahead; the protection it thought it had under the safe harbor provision may not be guaranteed.

EA is in part relying on its recent successful summary judgment motion where a court ultimately held that the First Amendment allowed EA to use “Dillinger Tommy Gun” as free speech.  In implementing the Second Circuit’s Rogers test for protection under the First Amendment, the court found that EA had: (1) met the extremely low threshold of using the mark with at least an “above zero” level of artistic relevance to the work, and (2) the use did not mislead the public regarding source or content of the work.  The policy interest is in protecting the mark owner from a use that is “wholly unrelated to the [work] or [is] simply a disguised commercial advertisement for the sale of goods or services.”  Despite plaintiff’s argument that there was no artistic relevance because the Dillinger Tommy Gun played such a minor role in the game, the court held that EA met the minimal threshold of above zero artistic relevance.  Additionally, the court held that the plaintiff failed to provide any evidence to support customer confusion.

EA hopes to springboard off of the Dillinger decision into the Bell Helicopter declaratory judgment action.  An important point of consideration is that the court’s analysis of confusion was limited by lack of evidence supporting confusion.  As the court stated, “Plaintiff has presented no evidence that any customers are confused by the use of ‘Dillinger’ in the Godfather games.  The Court cannot simply infer that the Dillinger name confuses the public, let alone that such confusion outweighs First Amendment concerns.”  Therefore, the effectiveness of using Dillinger as precedent toward “the marginalization of certain trademarks in various mediums” might be limited, in that this holding seems easily distinguishable.  The lack of confusion analysis in Dillinger does not seem to be a judicial trend clearly prioritizing First Amendment rights over trademark abuses.

In its instant declaratory judgment action against Bell Helicopter, EA argues the nominative fair use doctrine, where that argument was absent in Dillinger.  This most likely is due to the Ninth Circuit being one of the few circuits to allow a nominative fair use defense.  The elements for nominative fair use were announced in New Kids, stating that (1) the product or service must not be readily identifiable without use of the mark, (2) only so much of the mark may be used as is reasonably necessary to identify the product, and (3) the user must do nothing to suggest sponsorship or endorsement by the mark holder.

Although the use of the helicopter marks have an equally low proportional role in the video game as the Dillinger Tommy Gun did, EA will have to show under the nominative fair use argument that there is no other readily identifiable way to represent the Bell Helicopters without the use of the mark.  In the case of the word mark, this might be a difficult challenge because “Huey” military helicopters are considered to be the most recognizable and famous military helicopter.  The Dillinger Tommy Gun might have also failed under this threshold, because the Tommy Gun has a historically defined distinctive look.

It will be interesting to see how the District Court for the Northern District of California values the Dillinger holding and evaluates the use of these video game elements as nominative fair use.  Awarding declaratory judgment may have huge effects on future unlicensed use of trademarks in the video game context.

Police in New Zealand raided the house of Megaupload.com founder Kim Dotcom, the flamboyant millionaire who is not shy about demonstrating his wealth.  The New Zealand police responded to an indictment issued by the U.S. District Court for the Eastern District of Virginia to extradite Mr. Dotcom to face charges of copyright infringement in the United States.  Megaupload was a self-described cyber-locker.  Cyber-lockers allow users to store data on the website – even copyrighted material.  Despite advertising itself as a cyber-locker dedicated to private storage, many unique attributes of the website contradicted such claims.  For example, deleting material not loaded within twenty-one days, petitioning users to become premium subscribers to decrease download times, limiting non-premium users to seventy-two minutes of streaming video, and maintaining a “Top 100 files” list of popular files to download, all point to the site not functioning solely as a cyber-locker.

The indictment described the cyber-locker site as “mega conspiracy” because the website, allegedly, allowed users to store material anonymously and actively distributed copyrighted material.  Also, the “mega conspiracy” paid users to upload popular material and store it on Megaupload’s servers.  Although the website did not have a search function enabling individuals to search the material hosted by Megaupload, anyone could access hosted material by entering the correct URL.  Theoretically, users interested in accessing copyrighted information could find the links to Megaupload hosted material from third-party sites dedicated to directing users to the infringing material.  The indictment alleges that members of the “mega conspiracy” assisted users and third party sites to access copyrighted material.

The Eastern District was able to assert jurisdiction over the case because servers that hosted material of Megaupload were located in Virginia.  In the future, other websites could structure themselves outside the reach of U.S. law enforcement by locating their headquarters, servers, and infrastructure outside the jurisdiction of the U.S.  If this technique is employed, it may pose problems to Hollywood productions that rely on international distribution to continue to make the movies the world enjoys.

Open Internet advocates are concerned that similar actions by the United States Justice Department could chill development of cloud service providers.  Those advocates may be right. Other cyber-lockers including FileSonic and Upload.to have disabled file sharing devices on their websites.  Whether more popular cloud operators such as Dropbox or Amazon will be affected by the Government’s actions remains to be seen.  The U.S. legislature could not agree on a legal framework to protect copyright holders, but holders are not without legal options.  As exhibited in the recent Megaupload related arrests, the U.S. government will pursue and prosecute infringements to the other side of the globe.

The background of the case is lengthy, dating back to The Berne Convention for the Protection of Literary and Artistic Works (Berne Convention) which took effect in 1886 and which the U.S. joined over a century later in 1989. The Berne Convention lacked an effective copyright enforcement mechanism and many works that enjoyed copyright protection abroad were not provided the same protection in the U.S. This changed after the Uruguay round of multilateral trade negotiations, which led to the creation of the World Trade Organization (WTO) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). In joining these agreements, the U.S. agreed to grant authors from other member countries the same protections it grants to its own. Because the U.S. had not previously recognized or enforced a large number of international copyrights, these agreements required it to “restore” protection to works that had formerly been denied protection and treated domestically as within the public domain. These new protections were applied when Congress enacted §514 of the Uruguay Round Agreements Act (URAA) providing in relevant part that:

Any work in which copyright is restored under this section shall subsist for the remainder of the term of copyright that the work would have otherwise been granted in the United States if the work never entered the public domain in the United States.

In simple terms this means that if a work was protected in a member country but that protection was never recognized in the U.S., the work will now receive the protection that a U.S. work would have been granted. Additionally, U.S. works receive reciprocal protection in foreign countries.

There is no compensation for the period during which protection was unavailable, nor is the protection extended beyond what the work is entitled to in its country of origin. In recognition of the “public domain” challenge, §514 includes a one year transitional period as well as an additional year’s grace period for “reliance parties” currently using an impacted work. The grace period begins only after the owner of a restored copyright gives notice to enforce.

Opposition to the ruling argued that Congress lacks authority to enact the statute. In his dissent, Justice Breyer articulates the two issues he sees with the statute. First, he asserts that the Copyright Clause does not “empower Congress to enact a statute that withdraws works from the public domain” in particular, “without providing any additional incentive for the production of new material.” Second, “the statute…‘abridges’ a preexisting freedom to speak” by taking away access to forms of expressions that the public “reasonably believed [were], or would be freely available.”

I think the majority’s ruling in Golan was correct and disagree with the petitioners as well as Justice Breyer. Without going into the details of the Court’s extensive reasoning, I’ll comment briefly on my position regarding the two points that Justice Breyer put forth. First, I do not agree that the statute fails to provide incentive for the creation of new works. Justice Breyer bases this position primarily on the fact that the statute “does not encourage anyone to produce a single new work [because it] bestows monetary rewards only on owners of old works.” This characterization overlooks the fact that copyright protection only applies to works after they are created. While it is true that many of the original copyright holders may no longer be alive and that many of the works are old, this is not the whole picture. The statute restores rights to those who should have had copyright protection; and only through to the end of that protection period. It is not exclusive to parties that are no longer creating or to old works. It is a restoration of protection to parties that have been deprived of fair protection. The statute does not discriminate between whom to restore rights to based on a showing of the ability or intention to create new works; that does not mean that it fails to meet the goal of encouraging new works. The Constitution grants Congress the power to promote science and the arts “by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” Art. I, §8, cl. 8. By my reading this is what has occurred. The restoration of rights that were denied does not seem to violate the language of the Constitution. The long term effect of this decision remains to be seen. It can certainly be argued however that providing these rights where they were previously denied creates an incentive for those who have had rights restored to continue to work, as well as for those developing future works to have increased faith that their works will be protected in the U.S.

Regarding the second point, I reject the principle that there is a fundamental First Amendment interest in maintaining access to works that should have had, but were denied copyright protection. If a work has long been available despite the fact that the owner had a legitimate claim to it, those that have used it in the meantime have obtained a free benefit–one for which they will not be charged or penalized in any way other than that the unearned benefit has ended and the rights restored to the proper owner. As Justice Ginsburg stated in the opinion, “Authors once deprived of protection are spared the continuing effects of that initial deprivation; §514 gives them nothing more than the benefit of their labors during whatever time remains before the normal copyright term expires.” Section 514 does not deprive any party of any benefit they were legitimately entitled to.

Copyright protection is a contentious subject both domestically and internationally. The creation and export of intellectual property is a significant part of the U.S. economy. The laws surrounding it are confusing and going through a necessary developmental period as works become more broadly available through more means than ever before. Protecting copyrighted material is a critical U.S. interest, one that can best be achieved by granting other nations the same rights it expects to receive in return. Without reciprocity, there is no incentive for other countries to enforce U.S. copyright protection– protection which is sorely needed abroad. Congress was correct to pass the URAA and the Supreme Court was correct to uphold it. The loss of free access to works that errantly entered the public domain in the U.S. is unfortunate but the restoration of these rights is correct because it is fair and it creates the necessary climate for enforcing U.S. copyright protection abroad.

McGee regularly publishes magazines containing excerpts from newspapers from the 30’s and 40’s accompanied by analysis and commentary about the works.   He published a supplement called The Unreadable Book which focused on Mein Kampf, hoping to provide an educational and demystifying treatment of the work.  Given that the state government holds the copyright, it’s unclear what legal theory he was hoping to publish under (presumably a form of fair use), and the court struck it down.  McGee has released a version of the supplement which blurs the relevant sections to illegibility.

As the copyrights are set to expire in 2015, this sort of protection will soon become unviable.  Germany still struggles with its Nazi history and releasing the book into the public domain will be unpleasant for many, although the book can currently be read online.  The Institute for Contemporary History is already planning a scholarly edition of the book that will come out in 2015.  Hopefully the educational and historical benefits of having the book available will counterbalance the painful national memories the book will evoke in those who see it for sale.

attributed to "Unia Polityki Realnej" on flickr

By awarding its 2011 Person of the Year award to “the protester,” Time magazine recognized that last year was a very eventful one for world events.  Whether you’re talking about the Arab Spring, the Occupy protests, or something else, there was a surge of democratic movements in which we heard voices of people all over the world.  “The protester” is keeping busy this year too, by rallying en masse against SOPA and PIPA, and apparently on Monday in Poland against the government’s plan to sign onto the Anti-Counterfeiting Trade Agreement (ACTA).

What really catches my eye in this article is how it pits the protestors against the government, as if they weren’t all part of the same democratic body trying to govern itself in the best way possible.  Of course, those protesting the signing of ACTA don’t speak for all the Polish constituents to which the government is accountable.  The protestors have their opinions, but copyright holders whose interests aren’t being adequately protected under current law might have different opinions, and the government should consider all of them when making decisions.  It’s not surprising that a government could consider all these interests and then decide to go ahead and sign ACTA anyway, but what is surprising is Poland’s Prime Minister saying that it wouldn’t “give in” to the protestors and that it wouldn’t make “concessions to brutal blackmail.”  The protestors have a legitimate opinion too, but does voicing it in this way (as opposed to maybe in a formal hearing) make it “blackmail?”

The conflicting interests are partly a result of a problem, which in oversimplified terms, is about the impact the Internet is having on copyrighted content-producing industries.  If the advantage of the Internet is that it allows us to instantly share information around the world, its bane to many industries is that it lets us share their content with little or no accountability.  If I, you, or someone else decides to upload a video clip onto YouTube, is there a presumption that it doesn’t violate any copyrights?  If Google’s ContentID has automatically targeted the clip as infringing upon a copyright, does the uploader have to fight against that and copyright holders to prove the clip is permissible under fair use?  What I’m getting at is that it’s hard to defend your rights under today’s system, and arguably we haven’t yet found a workable solution to this problem.  The infinite reproducibility of digital files creates a heavy burden on copyright holders to adequately enforce their rights online, but also the expense of our legal system makes it so individuals are unlikely to respond to challenges from copyrighted content industries.  Overcoming a copyright infringement/non-infringement presumption falls on someone.

Protestors are arguing that provisions of ACTA, if enacted, would shift presumptions so far against the people and in favor of copyright holders that it would create an environment of surveillance that invades the peoples’ fundamental rights.  When I first read about how ACTA could invade rights so important that they’re fundamental, I was taken aback by the rhetoric.  It’s a legitimate concern generally, but I’m not convinced that it’s a concern specifically with ACTA.  Protestors are saying that signing onto ACTA will reduce the people’s right to digital privacy by strengthening the power of copyright holders to survey for infringement, but let’s look to the actual language of ACTA.  In Section 5, Article 27, Paragraph 2, ACTA says the enforcement procedures shall be implemented in a manner consistent with the adopting country’s law, preserving fundamental principles such as freedom of expression, fair process, and privacy.  By that language, wouldn’t any changes in Polish digital privacy be because of changes in Poland’s laws regarding privacy and not because ACTA imposed lesser standards?  This is a subtle distinction, but I think it’s an important one.

Another big criticism of ACTA is that the negotiations to create and amend its provisions happen behind closed doors.  It’s argued that writing statutory language behind closed doors allows fewer to participate (ideally fewer participants doesn’t mean limited representation of interests) and for the process to finish quickly.  Yes, allowing for broader participation would slow down the process because many more voices would have to be heard, but it also makes the product more democratically legitimate.

Sensing that their government signing onto ACTA will mean their interests will be given less weight than the interests of the more economically powerful copyrighted media industries, some people of Poland are protesting.  I’m reminded of a lesson learned from one of my favorite books, Daniel Quinn’s Ishmael.  If you’re unhappy with something and wish to change it, you don’t get very far by only pointing out that someone else’s solution to a problem is flawed.  Of course people should fight to defend their digital rights, but protesting the signing of ACTA might only preserve the status quo regarding copyright protection, one in which the copyrighted content industries claim their interests aren’t protected.  Even if the Polish protests are successful in shifting momentum in regards to their country’s support of ACTA, the underlying problem of balancing everybody’s interests remains and will surface again.  How do we go forward?

Image Attributed to flickr User Horia Varlan

In a state rife with division, disagreements over how to enforce anti-piracy legislation are separating traditional allies and showing the degree to which money and experience enable influence.

A week after the internet protest of the Stop Online Piracy Act (SOPA in the House of Representatives) and the PROTECT IP Act (PIPA in the Senate), the House bill has been all but left for dead and the Senate bill is on shaky ground. (For more background on the bills themselves, see the IP Brief Analysis.) The recent upheaval over the legislation has illuminated the strange political alliances and enemies created in the attempt to prevent pirating. Nowhere is this as evident or the dividing lines as atypical as in California.

California is a strange and wonderful place (full disclosure this author is proud to call California her home state), but it is hardly ideologically cohesive. While most people know of the north/south divide in the state, anyone who has lived in California, or spent much time dealing with its politics will tell you that there are many more salient divides: the coast, the valleys, and the mountains; Los Angeles and the Bay Area; cities and farm land. The state’s size and diversity have birthed many contentious arguments (transportation and water use being some of the fiercest.)

Both the High Tech and Entertainment industries have deep roots in California, and they are frequently found on the same side of progressive causes. The PIPA and SOPA debate has divided the industries and also the members of Congress who represent them. This isn’t so odd for members of the House of Representatives; for the most part the House California Caucus has divided geographically with Bay Area members siding with High Tech and Los Angeles Members siding with Hollywood.

California’s Senators, Dianne Feinstein and Barbara Boxer both hail from Northern California, the center of the state’s technological industry; however, both are PIPA sponsors. While industries can frequently count on at least their local Senator’s support on a given matter (all in the name of job creation, votes, and fundraising), with the two sides of this bill represented by the same Senators the internet companies were left without their most natural allies. This can be explained with a skeptical “follow the money.” Each of the senators has received considerably more campaign financing from the entertainment industry than from technology, a common trend within the Senate.  Much of this is because high tech is relatively new to the legislative game, especially when compared with the entertainment industry, which is led by the Motion Picture Association of America’s experience and skill.

Prior to last week’s web blackout, it seemed likely that the entertainment industry would prevail. Other bills extending copyright’s reach have been able to pass without fanfare, and during the hearing the few representatives of internet companies had been raked over the coals for not doing more to combat piracy. It was only public outcry that has disabled PIPA’s progress, which Senator Feinstein had been spun into believing had the support of both Hollywood and Silicon Valley. Recently the Senator tried to facilitate discussions between the two sides to address their concerns. This seems like a logical place for a Senator who represents so many on both sides to stand, but representatives of the entertainment industry have refused to meet with her and representatives of internet companies, and while she is willing to amend the bill Senator Feinstein is still listed as a co-sponsor of the bill. All this leaves one conclusion to be made, this isn’t left/right politics, or even so much north/south but a money/populist divide.

Image Attributed to Wikimedia Commons User Veronidae

Kodak has recently announced that it is on the verge of bankruptcy, which raises many questions.  Kodak is a name known for 35mm camera film as well as cameras themselves.  They have had considerable success but seem to be caught in a downward spiral that they have been unable to correct.  Back in 2004 they were removed from the Dow Jones Average with a stock price of $25.38. It recently hit as low as $0.36 a share.  This was a long way down from its high price of $94 a share in February 1997, and it should have been a sign to them that times were changing and that they needed to get their act together.

It is reported that Kodak owns over 10,000 patents and is considering a Chapter 11 filing that could result in the sale of 1,100 patents.  They have lawsuits in progress against Apple and RIM, but who doesn’t nowadays?  These lawsuits have not been going well, and even the rocket docket of the ITC has announced a delay in reporting the results of a review of the lawsuit against Apple and RIM.  I can only question what Kodak is doing in the ITC; if you’re going bankrupt why try and fight a battle to stop Apple and RIM importing phones if you cannot survive the fight?  Even if Kodak wins, they will still have to seek damages in a standard court or negotiate royalties, adding more delays that they do not appear to have the capital to survive.  Kodak is claiming to need $1 billion in financing to survive bankruptcy proceedings.  I think they were playing a game to increase the value of their patents, seeing the doom on the horizon and relying upon the belief that a court ruling of validity would substantially increase its patent portfolio value.

In a last-ditch effort, Kodak fired off some lawsuits against HTC and Apple on Tuesday, January 10, 2012.  They have filed in the Western District of New York and the ITC.  Kodak’s first smart move so far is seeking some damages and money from its patent portfolio to give Kodak some operating income.  This strategy all depends upon whether they can get the money to survive the length of the legal battle in order to actually earn some money to save the company.

It appears as though Kodak has held on to these patents to their own death.  They have been trying to sell a number of their patents since last summer, but delays at the ITC have prevented an auction from taking place.  Now with Kodak’s additional lawsuits against Apple and HTC, there will be further delays in valuing what their patents are worth.  In August 2011 Bloomberg reported that the portfolio could be worth $3 billion.  With all these lawsuits pending no one knows what the patents are worth.

To put into perspective how much of the patent slice Kodak owns, it is said that over 85% of digital cameras use some of Kodak’s patent technology.  Kodak has been buying up digital imaging patents, yet exploring strategic alternatives to marketing or making products based on those patents.  I remember seeing some ads for a new printer by Kodak.  It is spending money in two directions, buying patents it does not want to use and spending money to develop new technology.

Why spend money to buy patents for a technology that you are no longer pursuing? The best answer seems to be a two-fold reason.  First by holding on to patents it created an asset to ensure Kodak’s value as a company.  Second, it allowed Kodak to prohibit others from growing into and replacing its film market which is getting eliminated by technology.  This only works as long as the patents are valid and this is not a permanent solution because eventually the patents’ terms will expire.  Kodak made tons of money by making film, but film is a thing of the past.  I bet few of us have picked up a film camera in a long time.  I use my phone for almost every picture I take.  By owning the patents Kodak was able to restrict the growth of digital camera technology.  As we can see, this strategy has not been working out well for Kodak.

What did Kodak forget?  It forgot that patents are meant to promote technology, not just a property right or investment.  If you want an investment buy stocks, bonds or the like.  You cannot just buy a patent and hold onto it like a house.  You need to do something with it; take advantage of the technology you have, make an excellent product, and enrich society.  Holding patents only to make your company worth more and then only enforcing those patents to increase the company’s value is not the purpose of the patent system.

On January 20th, the companies filed a joint initial status report, which provided the plans for discovery pursuant to Fed.R.Civ.Proc.26(f). The parties agreed to have a phased discovery, with fact discovery preceding expert discovery. The dates for the stages of discovery are as follows:

Fact discovery completed by August 31, 2012
Plaintiff’s expert reports due by September 28, 2012
Defendant’s expert reports due by October 26, 2012
Rebuttal expert reports due by November 23, 2012
Expert discovery completed by December 28, 2012.
Dispositive motions to be filed by January 31, 2013
Final pretrial order to be filed by [open for Court].

Based on this schedule, it appears that both companies are preparing for a lengthy court battle. However, the document does leave open the possibility of settlement, and states that “[t]he parties have discussed settlement of this matter and submit that an early settlement conference with a magistrate judge may facilitate settlement of this matter.”

I feel conflicted about whom to side with in this case. On the one hand, TIMELINES does appear to be merely descriptive of the services offered by Timelines.com. Having never used or seen Timelines.com, my immediate reaction upon hearing the name is that it is a website that allows users to make timelines, displays timelines, or is related to timelines in some capacity. An argument could also be made that, in this particular context, the term is being used in its generic sense because we don’t really have any other useful words to describe a chronological series of events. I would guess that the best case scenario for Timelines.com will hinge on their ability to establish secondary meaning of TIMELINES. The Facebook legal team will have its work cut out for it.

On the other hand, despite its poor choice of name, I sympathize with Timeline.com’s plight. They have developed a new service, spent time and money, and have been operating for five years. The company has a federally registered trademark, and according to their complaint, Facebook continued with the launch of its timeline feature without attempting to contact the mark owner, Timelines.com. I seriously doubt that the Facebook legal team failed to investigate whether TIMELINE was a registered mark prior to rolling out the new service. Further, the counterclaim against Timelines.com seems a little hypocritical coming from a company that seems to sue any website using BOOK in its name and has applied for trademarks of FACE, WALL, and LIKE. Politics and policy aside, I think either this case will settle or Facebook will prevail.

A copy of the Joint Status Report, as well as other information, can be obtained from paidContent.org

Empress Hair Care stated in its the lawsuit that Sean John Clothing had knowledge of its trademarks, since a representative of the company offered to buy the rights to the trademark in February 2010 for the right to use “empress” as the name of its newest scent. Empress Hair Care rejected this offer because they feared market confusion since both companies reach a similar audience. After the offer was rejected, lawyers for Sean John Clothing tried to register “Empress Sean John”, but the application was rejected.

Empress Hair Care will be successful in its suit if the court finds that Combes’ company infringed on its registered trademark. Under the Lanham Act, the test for trademark infringement is the “likelihood of confusion” among consumers. 15 U.S.C. §§ 1051–1127. The Ninth Circuit developed an eight-factor test that involves weighing the different factors to determine whether consumer confusion exists. AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979). The strength of the mark, proximity of the goods, and similarity of the marks are three of the more important factors when determining if a trademark causes consumer confusion, but courts also considers evidence of actual confusion, marketing channels used, sophistication of the products, defendant’s intent, and likelihood of expansion of the product lines.

There is no combination of factors or one factor that is dispositive, which makes it difficult to predict if a court will find consumer confusion that constitutes trademark infringement. A court could find the goods proximate since hair care products and fragrances are similar products or part of the same category of cosmetics. Here the mark, “empress”, also names products that are used and targeted to the same audience.  The court might also consider the defendant’s intent. It is unknown if Combs’s company had an intent of causing consumer confusion when it named its fragrance, but the from fact they knew “empress” was a registered trademark belonging to the plaintiff, intent could be inferred.

attributed to "Gage Skidmore" on flickr

Apparently even anonymous YouTube users can get the attention of Republican presidential nominees.  Ron Paul’s campaign filed a lawsuit about two weeks ago in a California federal court against an anonymous YouTube user for having circulated a video endorsing Paul but at the expense of former nominee Jon Huntsman.  As the video’s author sees it, Huntsman’s ties with China and even his fluency in Mandarin were grounds to question his allegiance to the U.S., and the safer alternative for American voters would be Ron Paul.  Paul’s campaign has of course denied any association with the xenophobic video, but it’s pretty obvious that Paul had nothing to do with it (especially since there’s no requisite “I’m Ron Paul, and I approve this message” at the end).

Paul’s problem with the video is that some voters will see it, think it came from him, and then be dissuaded from voting for him because he would say such ridiculous things about Huntsman.  Paul’s complaint alleges (1) false advertising, (2) false designation of origin, and (3) defamation.  Georgetown law professor Rebecca Tushnet has a good breakdown of the viability of Paul’s claims, as does Mr. Paul Alan Levy, who also presents some other significant hurdles.  I agree with the consensus that Paul’s claim will fail, because the video probably is not of a “commercial use,” which is a required element for § 43(a) of the Lanham Act, the law governing the claims for false advertising and designation of origin.  There’s also the problem of needing to convince a court of a legal likelihood people would think the video came from Paul, or that he endorsed it.  You might be able to argue this point if Paul’s actual campaign videos didn’t look like professional ads trying to sell you a pick-up truck.

Instead of a § 43(a) false designation of origin claim, would Paul have any more of a chance with a trademark tarnishment claim under § 43(c)?  When I read about Paul’s lawsuit and first watched the video, my first thought wasn’t that people would think the video actually came from him but that he would be concerned about the harm to his name.  Plus, an action for tarnishment doesn’t require there to be any actual evidence or likelihood of confusion.  It would still require the video to be of a “commercial use.”  Is there any way that it could be?  Mr. Levy points out that the 9th Circuit in Bosley Medical v. Kremer held Internet communications to be noncommercial if they don’t sell or advertise goods or services, but for the sake of argument, let’s not dismiss this so fast.

Even though the video was submitted anonymously, with no advertisements or associated links that lead back to a company website, what if there were commercial purposes on the production side of the video?  The video’s simplicity makes me doubt that anyone could have been paid to make it, but that’s possible and might qualify it as being of “commercial use.”  Another possibility, that’s a shot in the dark and actually a little scandalous, is that Huntsman’s campaign was behind it all.  If that were the case, then it should qualify as a “commercial use” because Huntsman would have had something to gain with a tricky attack on Paul.  Lest we forget a crucial plot point from Brewster’s Millions, a public office position sometimes even comes with a nice economic/commercial/monetary salary.

Image Attributed to Wikimedia Commons User GS417.

French fashion house Louis Vuitton is suing Warner Brothers over a handbag featured in the summer flick, “The Hangover Part II.”  The suit was filed in late December 2011, with Louis Vuitton claiming trademark dilution against the movie studio.

Warner Brothers was probably quite happy to ring in the New Year.  It seems that in 2011 the Warner Brothers movie, “The Hangover Part II.” has kept their legal team very busy.  First, there was a copyright infringement suit over the usage of Mike Tyson’s facial tattoo on actor Ed Helms.  Fellow IPB Blogger, Mark Tratos, wrote about that lawsuit a few months ago; the suit was later settled out of court.  Next, Warner Brothers’ legal team fought a peculiar lawsuit brought by a writer who claimed that the movie was stolen from a script about his personal adventures in Asia.  That suit was later dismissed.  Then, the Warner Brothers legal team faced a legal battle from a stunt man who suffered brain damage.  Finally, the complaint filed by Louis Vuitton provides one last lawsuit to round out a year of legal woes for Warner Brothers.

The trademark dilution suit revolves around a specific scene in the movie.  The scene in question is when Zach Galifianakis’s character exclaims to Ed Helms’s character to be cautious with his luggage.  Galifianakis’s character cries out, “Careful! That is a Louis Vuitton!”  The comedic element of the scene is that Galifiankis mispronounces the fashion label’s name, and also that his character would have been unlikely to own such an expensive bag.  However, the bag used in the flick was not a Louis Vuitton but a counterfeit piece of luggage.  The bag in the scene was created by Diophy, a company that creates imitation Louis Vuitton pieces.  The company uses a similar pattern and color scheme so that its goods resemble one of the famous French leather goods.

Louis Vuitton alleges trademark dilution and unfair competition, among other claims.  The fashion house is looking for a share of the profits from the film, which has grossed more than $563 million worldwide since its May 27, 2011 opening.  Louis Vuitton also requests that the contentious scene be cut from the movie.

This specific lawsuit appears at an odd time.  “The Hangover Part II” was released in late May and the suit was filed over six months after the release.  It makes one question whether the fashion house is actually upset about the use of its name in the movie, or if this is just another piece of a larger picture of fashion houses fighting counterfeit goods?

The Hangover Part III has been rumored to be in the works and may start shooting this year. With all the legal trouble that “The Hangover Part II” caused Warner Brothers, I can only expect that the studio will be cautious when it comes to its next installment of “The Hangover” movies.

The so-called “Banana Album” has one of the most iconic album covers in existence, and the Andy Warhol Foundation has sought to use it in various products such as iPod covers and accessories.  While the image has not been registered as a trademark or copyright, the band claims that the image has become synonymous with their identity and it deserves legal protection.  In addition, they claim that while Andy Warhol may have created the image, its design came from an advertisement that was in the public domain.

Legally, given that the image was never trademarked or copyrighted, the band is at a disadvantage, but the image is iconic enough that they may have a strong argument in favor of a trademark.  The copyright question will come down to whether or not the image was in the public domain, which will require examination of the original source image Warhol used, and whether or not the work was made “for-hire” for the band or created independently.  In my opinion, the image is synonymous enough with the band that they should be able to have a say in its use, but it will require more in-depth analysis to say for sure.

Image Attributed to LSU Compliance Office

One might then expect “Honey Badger” shirts and other merchandise to be readily available in Baton Rouge and New Orleans, the two epicenters of LSU fandom, but tourists and other potential customers would be shocked to find how hard it is to purchase “Honey Badger” gear in southern Louisiana. The reason for this is a cease and desist letter issued by the LSU Compliance Office on December 7th, which effectively ended most sales of “Honey Badger”-themed clothing and paraphernalia. LSU included the “Honey Badger” moniker, Mathieu’s jersey number 7, “TM7”, and other “LSU indicia” on the list of impermissible products or advertisements.

The letter cited NCAA Bylaw 12.5.2.2, which states that if a student-athlete’s “name or picture appears on commercial items” then the institution acting on behalf of this student-athlete is “required to take steps to stop such an activity in order to retain his or her eligibility for intercollegiate athletics.”

The scope of what the university considers “LSU indicia” can be found in LSU’s own Policy Statement Number PS-93, which concerns usage of its property. Indicia is defined as “various words, images, colors and combinations of words, images and colors that have come to be associated with the University in the minds of the public which may or may not have been made a registered mark but in which the University has a proprietary interest through prior use or identification.” Anything falling within this definition, like the “Honey Badger” merchandise, is subject to university policy that seeks to protect the “valuable property rights inherent in the LSU name and indicia which are inseparable from the good name and reputation of LSU both domestically and internationally.”

Because the LSU cease and desist letter warned fans of the “Honey Badger” that “sale of any products … including the name, likeness or image of this … could have a negative impact on the involved student-athlete’s eligibility,” the majority of vendors pulled the offending merchandise out of fear that the most popular player on the team would lose his eligibility.

Image attributed to Adam Sundana/flickr user cukuskumir.

Justin Bieber has taken on a new role as an activist.  Recently, the Internet sensation denounced Senator Klobuchar, “whoever she is, she needs to be locked away in cuffs.”  What sparked such outrage in the young star?  He was complaining about the Commercial Felony Streaming Act – a bill introduced in the Senate in May that may be introduced in the House soon.

The Bill aims to end an inequality under current law that punishes essentially the same crime differently.  Presently, the streaming of copyrighted material is punished as a misdemeanor, and the downloading of copyrighted material is punished as a felony.  The Bill aims to discourage illegal streaming of movies, sporting events, and performances by treating both as a felony.  The likely target of the Bill would be Internet sites that stream live sporting events as paid broadcasts.  The sites broadcast the games for free and receive money from advertisers on the website.

The Bill, S. 978, would erase the difference between the crimes by including streaming under the definition of a public performance that would be protected under copyright.  The Bill increases the limit for criminal penalties for streaming to five years in prison.  Criminal liability would apply if the offense “consists of ten or more public performances during any 180-day period,” if the economic value exceeded $2,500, or if the fair market value of the licenses would exceed $5,000.

In fairness, Bieber’s reaction likely stems from concerns that the Bill would prevent future artists from promoting themselves using social media to broadcast a cover of another musician’s copyrighted material (e.g., Bieber performing a Chris Brown song without permission).  Bieber’s concerns are personal because he was “discovered” in a similar fashion. Moreover, his position is courageous  because it appears to contradict the Capitol Hill representatives of his patrons in the entertainment industry, including the Motion Picture Association of America, U.S. Chamber of Commerce, and the Recording Industry Association of America.

If enacted, the Bill would improve the protection of property rights of copyright holders.  Currently, the United States entertainment industry is one of the largest sources of export revenue and employs thousands of Americans.  Unfortunately, the ease of transmitting those works of authorship into publicly enjoyed media constantly challenges the traditional business models of the entertainment industry.  Legislative efforts such as the Commercial Felony Streaming Act are one of many recent proposals that aim to bring organization to the Internet and ensure that cyberspace becomes conducive to business.

Few critics of the Bill have joined Bieber’s chorus so far.  Traditional allies of open internet such as the Electronic Frontier Foundation and Public Knowledge have been critical, and may rally internet companies fearful of permitting criminal liability for allowing users to post infringing videos.  ‘Safe Harbor’ provisions of the Digital Millennium Copyright Act (DMCA) aside, concerns remain about the definitions of who might be liable under the provisions of the Bill and how strictly the provisions will be applied.

Senator Klobuchar insists that the Bill would not target individuals – the next Bieber – who post potentially infringing content without criminal intent.  Despite the Senator’s pledge, no one is completely sure how the law will be applied practically.  Also, due to the mercurial nature of the Internet, the relationships between users and service providers change constantly, and new business models may create liabilities where none existed before.  Questions remain of who and how much liability could apply to a user that sends an email or posts a blog entry that contains a link to infringing material.  Who has the ultimate responsibility to prevent usage of the link? Would the host site face liability for the user’s behavior?

Comparing the Bill to YouTube’s ContentId – software that achieves what the Bill aims to do by removing copyrighted material based on its digital signature – illuminates what the social cost might be.  The software prevents infringing videos from surfacing on YouTube, but at what cost? The software removes any video that contains infringing content regardless of whether the content could qualify for a copyright exception such as fair use.  The ultimate social cost may be the next Bieber or the dissemination of knowledge.  The Bill could frighten content providers to remove non-infringing content, and deny many the benefits of novel Internet services such as promoting young artists on YouTube.  The threat of legal liability may scare Internet companies to remove any potentially infringing material to insulate themselves from prosecution and chill innovation rather than spark it.

In the end, Internet companies may want to postpone laws that regulate cyberspace to ensure that future applications of technology are not stifled.  Mr. Bieber is not a technology guru, but his concerns are genuine and should be addressed by the legislature in the bill’s text.

A lot has happened this past month with the Stop Online Piracy Act (SOPA) and the Preventing Real Online Threats to Economic Creativity and Theft of Intellectual Property Act (PROTECT IP Act or PIPA) since I last wrote about it.

Some things haven’t changed.  These bills would still cause lots of problems (chill speech, deter innovation, export censorship, harm Internet security, and many other issues), and still wouldn’t even be effective in stopping piracy; plus, there’s uncertainty of whether “piracy” is even a problem that needs to be remedied, due to the lack of unbiased data and rhetorical conflation.  Also, these bills may not be intended to, but they would impact U.S. sites.  Congressmen spearheading both bills have been influenced heavily by campaign donations from the entertainment industry, and are still not attempting to understand the Internet, or listen to the people who do.

But what has happened, is a fascinating display of activism, advocacy, and awareness; more than 1000 companies, organizations, and individuals have thus far expressed their opposition, from big companies like Google to individual Internet users.  The Internet is both the platform for opposition, and the medium that is under threat.  And the Internet community is acting!  Today, Wednesday, January 18, 2012, various websites are protesting SOPA and PIPA by blacking out their sites, including Wikipedia, reddit, Mozilla, WordPress, and many, many more listed here.

There has also been some encouraging activity by the government this week:

• Rep. Smith has removed the most controversial provision from SOPA, DNS blocking, although it’s still a very flawed bill.
• Sen. Leahy put out a statement saying that before PIPA goes to the floor, he plans to propose that the positive and negative effects of the DNS provision be studied before implemented.
• The White House responded to the “We The People” epetition that had asked the President to veto SOPA and PIPA with a memo by three top Obama Administration officials.  While they didn’t directly address the veto requested by petitioners, the White House did come out strongly against the DNS provisions in the bills.
• Rep. Issa postponed his planned hearing with seven key cyber-security and technology experts, because he was encouraged that SOPA was not going to move to the floor yet.

Yet despite all of this growing momentum, the bills are not dead yet:

The Senate is set to vote on PIPA on January 24, 2012.

The House will resume markup on SOPA in February 2012.

If you care, you can act!  To see if your Senators and Representatives support, oppose, or don’t have a position on SOPA and PIPA, check out this site.  And then, to call your Congressmen, go here.  There are some other great activism resources here and here and here.

While incongruence between technology and intellectual property is nothing new, this is a really unique protest to be experiencing, and one that may impact IP legislation for years to come.

Judge Swain defined the issue upon this last remand as “whether Defendant’s use of its ‘Mister Charbucks,’ ‘Mr. Charbucks’ and ‘Charbucks Blend’ marks . . . for one of its blended coffee products is likely to dilute Plaintiff’s ‘Starbucks’ marks by blurring.”  Looking at the six factors enumerated in the Trademark Dilution Revision Act, the court held that, despite four out of the six (“the distinctiveness of Plaintiff’s marks, Plaintiff’s exclusivity of use, the high degree of recognition of Plaintiff’s marks, and Defendant’s intent to associate its marks with the Plaintiff’s marks”) leaning towards Starbucks’ favor, the “Charbucks marks are only weakly associated with the minimally similar Starbucks marks and, thus, are not likely to impair the distinctiveness of the famous Starbucks marks.”  The court stated that “there is no dispute that four of the six factors weigh in Plaintiff’s favor,” but upon this remand the focus was on the remaining two, the degree of similarity of the marks and the evidence of actual association between the marks.

Concerning the similarity of the marks, the court stated “there is no evidence that Charbucks is ever used as a standalone term, and it is unlikely that Charbucks ‘will appear to consumers outside the context of its normal use.’”  Thus similarity of the marks turns on presentation in commerce (citing Playtex Products. Inc. v. Georgia–Pacific Corp.).  Where here, “although the term ‘Ch’arbucks is similar to ‘St’arbucks ‘in sound and spelling’ when compared out of context, the marks are only minimally similar as they are presented in commerce.”

Next the court looked to actual association with the famous mark.  Once again, the court looked to consumers’ response if the consumer were presented with the two products, “packaged and presented in commerce.”  Not only did the court find that the Starbucks’ survey did not measure this response, it also found that the survey’s percentages showing association were too small to support Starbucks’ argument.

Finally, the court weighed all the factors and looked to the “ultimate analytical question,” “whether there is an association, arising from the similarity of the relevant marks, that impairs the distinctiveness of the famous mark.”  Looking at the distinctiveness, recognition, and exclusivity factors, the court stated “although these factors are significant insofar as they establish clearly Plaintiff’s right to protection of its marks against dilution, they are not informative as to whether any association arising from similarity of the marks used by Defendant to Plaintiff’s marks is likely to impair the distinctiveness of Plaintiff’s marks.”  The court stressed the last two factors, similarity of the marks and association between the marks, as “obviously important factors.”  In summary of the court’s two analyses, it stated “the marks being compared in this case are only minimally similar as they are presented in commerce, and the evidence of association weighs no more than minimally in Plaintiff’s favor,” and held that there was no likelihood of impairment of the distinctiveness of the Starbucks marks.

The new availability of Joyce’s writings is more important than one would expect for two reasons: Bloomsday, and Stephen Joyce. June 16, the day of the events in Joyce’s Ulysses, is Bloomsday, when celebrations of Joyce occur around the world. These celebrations are particularly enthusiastic in Dublin, where the novel is set, and they generally include public readings of Ulysses. In previous years, readings in the EU required permission from the Joyce estate. Stephen Joyce, James Joyce’s grandson and only living descendant, has control of that estate and has blocked many public performances of his work in recent years. This year, Bloomsday celebrators will be free to observe the occasion as they see fit.

Stephen Joyce also has a tempestuous relationship with the scholarly community, resulting in aggressively pursuing anyone who tries to use Joyce’s writing as part of a scholarly endeavor (the estate has even gone so far as to threaten to sue biochemists who programmed a Joyce quotation into a bacterial genome). He appears to be motivated by a combination of mistrust of scholarship and a strong desire to protect the family’s privacy—laudable purposes, perhaps, if the result weren’t such a radical stifling of any public discussion. In 2006, the author of a book on James Joyce’s daughter Lucia filed suit against the estate with the help of Lawrence Lessig and the Fair Use Project, arguing that the Joyce Estate had engaged in copyright misuse. The estate settled in 2007, allowing the author to publish the material and eventually agreeing to pay her attorneys’ fees. In the EU, where fair use is not expressly recognized, a scholar might not be so lucky.

The new freedom of EU scholars, writers, and performers to use Joyce’s writings without having to satisfy a hard-to-please copyright holder should make 2012 a great year for Joyce fans. But it’s not just the European Joyceans who have something to celebrate: in the US, Joyce’s unpublished and unregistered works also enter public domain this year, joining his pre-1923 published writings.

Judge Morrow sentenced Sanchez to one year in prison with an additional year of supervised release with computer supervision.  Defending the sentence, she stated that Sanchez had “regularly uploaded pirated movies for four or five years and did not appear remorseful after chargers were brought.” The Justice Department’s stance on the issue was reinforced by US Attorney Andre Birotte Jr., who noted, “the federal prison sentence handed down in this case sends a strong message of deterrence to would-be Internet pirates . . .  (the Justice Department) will pursue and prosecute persons who steal the intellectual property of this nation.”

The discussion of Internet piracy is becoming increasingly relevant in this country with the escalation of the SOPA debate. The pressing question here is whether the punishment of a year in prison should be the standard for (or even fits) the crime of uploading a movie online. If you have ever uploaded, downloaded or streamed infringing material on the Internet, your answer is probably “ohmygod please no.” Putting aside your personal bias, there are things to consider in this case that weigh heavily against Mr. Sanchez. Sanchez uploaded this movie almost a full month before Wolverine was due out in theaters. According to the prosecution, hundreds of thousands of copies of this workprint were downloaded. This, inevitably, is going to skew the film’s box office production. Additionally, because of the incomplete nature of the workprint, some initial reviews were not based on the final movie product and negative opinion may have been formed (after seeing the completed film, however, I would argue this is not why there was negativity). Roger Friedman, previously a Fox News website columnist, even left his post after basing a review for Wolverine on the illegally downloaded workprint version.

Still, it is hard to support a yearlong conviction for this crime. Sanchez states that he purchased the film from a street vendor in his neighborhood. This means that not only was the workprint version stolen from production, it was copied enough to make its way to the streets of New York City. The government never alleged that Sanchez stole the actual copy from the studio, nor did they argue that he created any physical copies. Sanchez may have put the video online, but the copy was in circulation long before he did this – the FBI was just unable to find the culprit who took the video originally. Further, the movie raked in more than double its $150,000,000 budget worldwide, despite less than average reviews (which were based on the completed version of the film).  Sure, this was a month prior to the release in theaters and could have altered the box office numbers, but the criminal penalty in this case was severe and will change Gilberto Sanchez’s life forever.

attributed to "The Suss-Man (Mike)" on flickr

A couple weeks ago, Disney’s news blog Stitch Kingdom reported on trademark trouble Disney has with the Atlanta National League Baseball Club (“ANLBC”), owners of the Atlanta Braves.  Apparently ANLBC feels the name of Disney and Pixar’s upcoming movie “Brave” is similar enough to the name of the Atlanta Braves that consumers will confuse the two. Stitch Kingdom reported some reasons for why ANLBC feels this way, but you can’t help but come away from this article thinking about how ridiculous this trademark claim would be.  Disney and Pixar’s movie looks to be about a young Scotswoman’s courage to break a village curse and gender stereotypes to boot, but the Atlanta Braves very much isn’t about that at all.  This distinction of similarly named products being very different from each other is important in trademark law, because consumers can’t confuse two products if they are so different that they don’t compete with each other.

Oftentimes consumers like you or me wouldn’t be confused by similarities between different trademark names, but that doesn’t necessarily mean there wouldn’t be a legal likelihood of confusion.  In fact, actual consumer confusion is just a non-determinative factor in AMF, Inc. v. Sleekcraft Boat’s multi-factor test for determining whether there’s a legal likelihood of confusion between similar trademarks.  This broader ground of legal likelihood of confusion can lead to seemingly incredulous results (and good news headlines), but there is usually good reason to justify it.  I don’t want to get into that too much, but I can imagine a large store full of trinkets, and a grandmother looking to buy gifts but really not knowing whether her grandchildren wanted memorabilia from the Atlanta Braves or Disney and Pixar’s Brave movie.

What’s more interesting than a likelihood of confusion analysis is how the trouble here is stemming from the ANLBC filing a complaint with the Patent and Trademark Office, objecting to Disney registering the “Brave” trademark.  Towards the bottom of Stitch Kingdom’s report, they mention that owners of trademarks must “take all reasonable action” to prevent abandoning them and letting them fall into the public domain.  This stems from the definition of “abandoned” in 15 U.S.C. § 1127, and it means that if the ANLBC doesn’t “take all reasonable action” to protect its trademark, it would lose the trademark and wouldn’t be able to bring claims against those who infringe upon it.

Could objecting to Disney and Pixar’s trademark registration just be a part of “all reasonable action?”  It’s one thing to assert trademark protection over the word “brave” and bring a full-on lawsuit against someone, but it’s another entirely to merely file an objection to a trademark registration.  Filing an objection must not be nearly as expensive or time consuming as a full-on lawsuit, so maybe the ANLBC has no intention of going through with this and is only doing this to preempt the idea that it abandoned its trademark.  If this truly is the ANLBC’s motivation for objecting, you still have to wonder if it would be enough.  Maybe “all reasonable action” requires more and they actually would have to bring a lawsuit.  Stitch Kingdom reports that Disney and ANLBC are in negotiations to resolve the trouble, but in all honesty, I wouldn’t be surprised if the “negotiations” were just the ANLBC going through the motions necessary to not abandon its trademark.

Noah Kravitz, an employee of Phonedog.com, began Tweeting under the handle Phonedog_Noah during his time at the company and acquired 17,000 followers.  After four years, he left the company, and with his employer’s permission changed his handle to simply Noah_Kravitz, with the understanding that he would “tweet on their behalf from time to time”.  Eight months later, Kravitz became involved in a legal scuffle regarding his claim for back pay and the profits he was entitled to as a vested partner.  Phonedog, in what was apparently a retaliatory move, sued over the Twitter account, claiming the 17,000 followers were effectively a “customer list” that Noah had improperly taken.

The suit will help determine not only how much a Twitter account and its followers are worth, but how to determine the ownership of one.  Given that Kravitz opened the account while working for Phonedog, are they the legal owners?  Henry J. Sittone, an intellectual property specialist, said that it would depend on why the account was opened; if it was intended to create customers or drive up sales, then it was really opened on Phonedog’s behalf.

A Twitter account is ultimately a name; making its ownership appear to be a trademark issue.  But for the person behind it, it can be intimately tied to a person’s identity and personality in a way that most trademarks aren’t.  Does that mean the law should treat it differently?  Given that companies are opening social media accounts for themselves as entities rather than individuals, is that even true?  I don’t know, and I’ll be interested in how this case develops.

In its December 19 report, WIPO stated that the patent office in China has seen “the most dramatic increases in application levels,” from 2001 to 2010.  The WIPO report cites a number of statistics and figures, many of which indicate steady growth of confidence in the Chinese intellectual property system and may be indicative of increased foreign-investment in China.  For instance, patent filings in China have steadily increased from 63,450 to 319,177 and have sustained growth at an average of 22.6% over the nine-year period.  Although this trend has not changed the United States Trade Representative’s perceptions of China as a questionable market for intellectual property investment, this trend may be illustrative of an increased awareness and effort on China’s part in meeting intellectual property protection and enforcement needs.

The Special 301 Report issued by the USTR provides a list of markets that the United States perceives as not living up to trade obligations and/or fair business practices.  The USTR and American industries use the Special 301 Report to monitor activity in the named countries and markets for non-compliance with international obligations.  China has been on the USTR Special 301 Report for quite some time, primarily because of its weak intellectual property rights enforcement mechanisms.  The information that the USTR Special 301 Report provides is meant to increase transparency in investment and encourage countries and big market players to adjust their activities to eliminate piracy, counterfeiting and unfair business practices.  Although getting off of the USTR Special 301 Report can be a challenging task for certain countries and markets, one of China’s largest internet companies escaped a similar list this year – which hopefully will lead China to continue moving towards greater intellectual property rights protections.

As the USTR has indicated in the past, “The Notorious Markets Review identifies markets in each category that are particularly prominent examples of where infringing goods and services are sold.”  Although the list of Notorious Markets is not exhaustive, it is a good indicator for intellectual property rights owners as they decide where to file for protection.  The Notorious Markets Review, which was previously issued in the Special 301 Report, is now published separately to further expose infringing markets.  Baidu, Inc., one of China’s largest internet companies was listed on the Notorious Markets Review in February of 2011 for not adequately protecting intellectual property rights and allowing piracy to occur openly.  In a more recent publication by the USTR, Baidu, Inc. was removed from the Notorious Markets list for its positive actions towards eliminating piracy and counterfeiting.

While Baidu, Inc. may not have been required to take as extensive measures as China would have to in order to escape its designation as a “Notorious Market,” Baidu’s quick escape may be indicative of an easier threshold.  These recent publications and findings are positive indicators for change in the Chinese intellectual property system.  Although the protections available in China from piracy or counterfeiting may not be as extensive as those found in other industrialized countries, the growing recognition of the need for patent and trademark protection seems to be shifting attitudes in China.  As a result, not only did 2011 prove to be one of the best years for intellectual property rights recognition in China, it may even be the first step toward harmonization and freer trade practices.

Yesterday, a thread on Reddit began to call for a boycott of GoDaddy.com over the domain name register and hosting company’s support of the Stop Online Piracy Act (for a great overview of the negative impact SOPA will have, check out fellow IPBrief.net blogger, Ali Sternburg’s, article here). Part of the thread on Reddit called for a “Transfer Your Domain Day” on December 29th in which customers should move their domain to a different host.

GoDaddy eventually took notice of the people transferring their domains, and responded by posting an article that outlined the company’s stance on SOPA. The article was written in October, but just posted yesterday after the call for boycott began. In short, the article re-affirms GoDaddy’s support for SOPA, and dismisses any First Amendment or due process concerns expressed by the bill’s critics.

In response to GoDaddy’s article, support against the webhost mounted, and several anti-SOPA domain hosting companies began offering discounts to transfer domains away from GoDaddy (Name.com – use coupon code NODADDY for 10% off; HostGator – use NOSOPA; NameCheap – use BYEBYEGD). Further, Cheezburger’s Ben Huh has threatened to move its 1,000 domains off of GoDaddy unless it drops its support of SOPA.

Undeterred, GoDaddy responded to the boycott with a dismissive wave today. ArsTechnica.com reported that GoDaddy made the following statement to them “”Go Daddy has received some emails that appear to stem from the boycott prompt, but we have not seen any impact to our business. We understand there are many differing opinions on the SOPA regulations.” Perhaps a lot of people didn’t transfer their domains yesterday, after all the official move date is slated for December 29th. However, I would think that issuing a statement that is clearly a nicely worded middle finger to the boycotters isn’t the best idea. Even if the boycott hasn’t affected the business very much, do you really want to galvanize support against your company by issuing a challenge to hurt it? Today, people on Reddit are calling for Wikipedia.org to transfer its domain away from GoDaddy.com, and users are pledging donations to Wikipedia if it makes the move. The Wikimedia Foundation has already publicly opposed SOPA and has considered a sitewide blackout as protest.

If you are interested in transferring your domain from GoDaddy, here is a step-by-step guide.

Stopping intellectual property piracy may be a a valid goal, but H.R. 3261 (SOPA) is not narrowly tailored to just reach criminals; as written, it would chill speech, kill jobs, stifle innovation, threaten the security of the Internet, and give the government the power to completely shut down entire websites if they are merely suspected of having infringing content.  If this worries you, please contact your Representative today.

What’s at stake and why should I care?

Flaws and consequences include, but are not limited to:

• Compromising the DMCA safe harbors for online intermediaries
• Giving the government authority to block domains without due process
• Interfering with linking and search engines and the DNS, while not actually being effective
• Making uploading copyrighted content a felony, punishable by 5 years in prison
• Threatening jobs, innovation, speech, security
• Undermining the U.S.’s ability to discourage repressive regimes abroad from censoring citizens

What can I do as an individual or as an organization?

SOPA is slated for markup this Thursday December 15, so concerns should ideally be voiced as soon as possible.  You can call and email your House Representative by visiting FightForTheFuture.org. They have a great web tool where you enter your zip code, are given talking points, and then are directly connected to your Representative.  There are other useful tools on AmericanCensorship.org for websites to “censor” their sites and logos, to demonstrate the potential effects of this bill.  You can also send people to IWorkforTheInternet.org to post pictures of themselves to show that the Internet has created jobs, and these jobs are threatened by this bill.  You can share this post with any people or organizations and encourage them to act and spread the word as well!

What else should I know?

There are many prominent and diverse groups and individuals who have expressed opposition to this bill.  This is not the only option; there’s an alternative bill proposed entitled The OPEN Act.  Also, the first round of anti-censorship advocacy was incredibly successful, and generated millions of emails and thousands of calls, as this infographic shows.  If you participated in that, participate again; if you didn’t participate, now’s the time.

Image attributed to Flickr user mollyali

The U.S. Copyright Office recently received the first round of comments pursuant to the fifth anticircumvention rulemaking for the Digital Millennium Copyright Act (DMCA). Law students at American University’s Intellectual Property Clinic submitted comments on behalf of Peter Decherney and the American Association of University Professors, who have requested an exemption for college and university professors and students, and Renee Hobbs and the Media Education Lab, who have requested an exemption for kindergarten through 12th grade educators.

For those not acquainted with the DMCA anticircumvention measures, the law criminalizes circumvention of technological measures (such as encryption on a DVD) that control access to copyrighted works, even when copyright infringement is not committed. But for this rulemaking process, a professor could face criminal penalties for circumventing access code on a DVD to copy a few short clips of a movie onto her computer to use in a classroom lecture, even if the actual copying was legal under the fair use doctrine.

While the purpose of such law is to deter bootlegging and various forms of copyright infringement, the Copyright Office recognizes that such protectionist measures often hamper what would otherwise often be fair and legal uses, such as excerpting and compiling short clips for use in a documentary film. As a result, the Office triennially requires anyone seeking an exemption to file a comment and demonstrate that the prohibition on circumvention of access controls has adversely affected their ability to make noninfringing uses of a particular class of works. Even petitioners who have been granted an exemption in previous rulemaking proceedings must make their case from scratch, as “prior exemptions will expire unless sufficient new evidence is presented in each rulemaking…”

If you are a college or university professor or student, or a K-12 educator, an exemption of the kind requested would greatly improve the depth of your educational experience, and now is the time to get involved. Over 54,000 co-petitioners believe that in this day and age, students are ill served without media as an integral part of education. Educators need the ability to use films as they use texts, without the burdens of switching discs or watching mandatory advertisements, all of which waste valuable classroom time and interrupt the learning process. However, the Copyright Office will not grant exemptions unless there is sufficient, concrete evidence of harm. Although the first round comments have been submitted, other individuals or organizations are encouraged to submit statements in support of any of the requested exemptions.

Currently, college and university professors as well as film and media studies students enjoy an exemption—but that is not a guarantee that the exemption will be awarded again. Rulemaking is a key aspect of democratic governance, where federal agencies such as the Copyright Office are able to take into account comments directly from the greater public. To learn more about what rights are at stake for educators and students, or to get involved, visit www.copyright.gov/1201 or email ipclinic@wcl.american.edu.

Proving me wrong, Abercrombie apparently does think that association helps build goodwill (or at least sells t-shirts). The clothing retailer recently began selling shirts with “The Fitchuation” and “GTL . . . You Know The Deal” on them. I had to ask, but apparently “GTL” means “Gym, Tan, Laundry,” which is the cast members’ routine on the Jersey Shore. The Situation has filed a lawsuit in Florida claiming that those shirts infringe on his trademarks. Currently The Situation has several trademarks awaiting registration, which cover goods such as nutritional supplements and jewelry. The marks cover both “GTL” and “The Situation.” While the “GTL” mark is a standard character mark for use on clothing, the only live mark for “The Situation” awaiting registration that covers clothing is limited to a logo in stylized lettering.

The Situation is seeking $4 million in damages. He may have a legitimate claim on the GTL mark, but “The Fitchuation” claim may be more difficult. However, considering that the average consumer of Abercrombie products is probably not the most sophisticated shopper, as well as Abercrombie’s obvious intent in selecting those marks and the close similarity of the marks, I would think there is still a strong argument for confusion as to source or affiliation.

This law is similar to the Bayh-Dole Act here in the US. While it is not as expansive as the University of Glasgow’s decision to give away all of its IP, it is a step in the right direction to aid in future technological development. According to Chen Cheng-hong, deputy minister of the National Science Council, any licensing and use of university-produced IP is governed by national [Taiwanese] property law. Following these rules can take up to a year, by which time the technology may be obsolete. These new rules are hoped to spur innovation in Taiwan.

Technology transfer should be a benefit to the Taiwanese Economy. For example, in 2005 alone, American universities brought 527 new products to the marketplace thanks to the Bayh-Dole Act. As innovation expands so, hopefully, will trade. Over half of the respondents to a recent survey of Taiwanese businesses stated that they will expand trade to China, with 48% “hoping to gain legal knowledge on intellectual property rights.” With this new revision, Taiwanese innovators will be able to bring their products to the market faster and partake in this increase in regional, as well as global, trade.

For a trademark infringement claim to succeed, a complainant must allege that the consumer will likely be confused by the defendant’s use of a mark or word.  Courts will look to the presence of eight factors in considering whether a likelihood of confusion exists.  Those factors are: (1) strength of the mark, (2) similarity of the marks, (3) overlapping/proximate relationship of goods or services, (4) evidence of actual confusion, (5) marketing, (6) sophistication of the relevant consumer, (7) intent of the defendant, (8) and likelihood of expansion into other markets (if the trademark owner is not present in that industry already).  This eight part test has been articulated and applied in many claims, including one of the more famous trademark cases, AMF, Inc. v. Sleekcraft Boats.

Merck KGaA is the German-based ancestor of the American drug manufacturer Merck & Co.  Both companies trace their origin back to the same owner from 1668 that purchased and operated a drug store in Darmstadt, Germany. Following World War I the subsidiary company, Merck & Co., was confiscated from the parent company in Germany and made to be an independent company.  As a result, since both companies carry virtually the same history and have been operating for over a century, bad faith use of the name Merck is very unlikely.

However, the agreement between Merck KGaA and Facebook allegedly executed in March of 2010 for exclusive rights to the “Merck Page,” may be used to establish some sort of bad faith action by Facebook or Merck & Co. since Merck KGaA claims it had already purchased and created its own page.  The terms of the agreement have not been discussed at length this point in the proceedings; however, Facebook’s explanation of how the page changed hands from Merck KGaA to Merck & Co. may establish some crucial information that could amount to a trademark infringement.  The other seven elements are heavily contingent upon the factual record that Merck KGaA is able to round up in establishing a likelihood of confusion.  While the outcome of this case is not readily apparent, it is becoming clearer that companies are preparing for battles in the new realms that technology may bring.

Online presence is now a new focus of trademark owners since many consumers are more focused on gathering information and buying products online.  Past trademark disputes have implicated Facebook, Google, and other internet based companies’ failure to protect the exclusivity of certain trademarks.  While social media websites and search engines cannot police all of their content and parse for trademark infringing data, trademark owners have argued that a system should be established for enjoining the misuse of trademarks.  Google has responded by making their policy more explicit regarding trademark infringements in AdWords and by establishing a complaint procedure.  Although Merck GaA may be seeking additional damages for breach of contract, ultimately it should set its sights on encouraging Facebook to create a more transparent and elaborate trademark complaint and enforcement mechanism as well.

The American University Intellectual Property Brief is pleased to announce the publication of its Fall 2011 issue.

Full Issue:

Capturing Clouds: Intellectual Property Issues Within the Live Entertainment Production Process by Brian Knowlton

Informal Formalities: The Government’s Attempt to Find Families for Orphan Works by Mark Tratos

The New Hawaiian Model: The Native Hawaiian Cultural Trademark Movement and the Quest for Intellectual Property Rights to Protect and Preserve Native Hawaiian Culture by Nina Mantilla

The Russian IPR Problem: How Accession to the WTO is not the Magical Solution, Rather a Step in the Right Direction by Joshua M. Green

by Mark Tratos

by Brian Knowlton

by Nina Mantilla

by Joshua M. Green

Image originally uploaded by stock.xchng user emailrober.

If you have ever lived in the United States, you have likely heard of March Madness.  The collegiate basketball tournament is one of the most highly anticipated annual sporting events, as the possibility of seeing upsets in games pitting Davids and Goliaths against one another provides incredible drama.  Eager to protect the name of its multi-million dollar competition, the National Collegiate Athletic Association (NCAA) has now petitioned the US Patent and Trademark Office to prohibit the Boston Globe from obtaining a trademark for the phrase “Munch Madness.”

Inspired by the basketball tournament, the Boston Globe began using Munch Madness to refer to its annual tournament of 64 restaurants in the Boston area.  Similar to the basketball tournament, the restaurant competition seeds competitors, places them in brackets, and divides its competition into rounds.  The newspaper prints its brackets and asks readers to vote for the winner of every “game.”  The rounds of the restaurant tournament correspond with March Madness games.  To advance to the final, restaurants have to defeat five competitors.

Worried that people may confuse the Munch Madness competition with its own March Madness tournament, the NCAA argues that the Globe should be denied a trademark as the NCAA’s brand could be damaged by the use of “Munch Madness.”  Lawyers for the NCAA point to The New York Times’ recent lawsuit against AOL, wherein it forced the company to rename the parenting blog, “Parentlode,’’ because it sounded similar to the Times’ “Motherlode’’ blog, as ample precedent for the assertion that similar names could lead to confusion.   

It is hard to understand why the NCAA feels so threatened by the phrase “Munch Madness.”  The name has obviously been inspired by March Madness, but no one who has heard of the Boston-area restaurant competition would think it was in any way related to or sanctioned by the NCAA.  Aside from the similarity in names, there is nothing that would lead a reader to believe the tournaments were associated with one another.  This case appears to be another in a long line of similar cases mentioned on this blog where organizations act over-zealously to protect their trademarks.

Are the Skelanimals logo (background) and Skullcandy logo (foreground) confusingly similar?

Recently, Skullcandy has entered the news again after filing a federal lawsuit in the U.S. District Court in Salt Lake City against fellow music accessories brand Skelanimals. Skullcandy alleges that Skelanimals uses a logo that is too similar to Skullcandy’s and infringes upon its trademark. Both brands sell headphones, clothes, and other lifestyle accessories branded with a logo resembling a cartoon skull.

Skullcandy, which first registered its logo in 2003, claims that the “skull logos used by defendants… [are] likely to cause confusion … or to deceive the consuming public.” Skelanimals states on its website that the logo is based upon cartoons of “adorable little animals who have met an untimely end” and that all its content has been copyrighted since 2008. While representatives of Skelanimals’ parent company have declined to comment, Skullcandy’s associate general counsel Tom Burton stated: “We have registered trademarks on that skull across the world, particularly in the headphone category. We are recognized globally for that skull.”

The legal standard applied in trademark infringement cases is the “likelihood of confusion” among consumers as to the source of those goods or as to the sponsorship or approval of such goods. See Polaroid Corp. v. Polarad Elecs. Corp., 287 F.2d 492 (2d Cir. 1961). The factors a court will look at when applying this standard include (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) the evidence of actual confusion; (5) the similarity of marketing channels used; (6) the degree of caution exercised by a typical purchaser; (7) the defendant’s intent; and (8) the likelihood of expansion of the product lines. See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979).

It would seem that while both Skullcandy and Skelanimals make similar products such as headphones and certain items of clothing, the usage of a skull in a logo is too universal for Skullcandy to claim as its own. Skullcandy is far from the first brand to utilize a skull in its logo and cannot claim that all uses of skulls fall within its trademark rights. For example, the “Jolly Roger” pirate flag and all subsequent variations of that skull are commonly recognized in many commercial channels. It appears that if Skullcandy is to prevail, the brand must specify what it is about its skull that would separate it from a generic skull logo, and then prove that Skelanimals is using this same type of skull.

According to the Chicago Tribune, Tootsie Roll recently sued Rollashoe, the maker of the convenient shoe-line Footzyrolls, for trademark infringement. Tootsie is arguing that not only will Footzyrolls confuse and deceive customers, the “willful, malicious and fraudulent” behavior of Rollashoe will dilute or tarnish the Tootsie Roll brand. The Footzyroll brand has been around since 2009, when the company registered the mark with the Patent and Trademark Office. At that time, Tootise Roll attempted to block that registration but failed, thus bringing the lawsuit. Tootsie Roll is seeking damages and an order blocking Rollashoe’s use of the Footzyrolls name.

Like most of these seemingly bizarre trademark cases, I have a hard time seeing where Tootsie Roll feels threatened by the shoe brand. While it is true that the names do sound similar, I highly doubt that a person shopping for these shoes will stop and wonder if the shoes are related to the candy maker. Tootsie Roll does license its trademark for clothing, socks and accessories, but even so, the rollable shoes are not being marketed to fans of the iconic candy.

As for tarnishing the brand, I also question whether a shoe company could really have the impact of tarnishing a candy brand, even one as time-honored as Tootsie Roll. An attorney quoted in a Reuters article about the case seems to think Tootsie Roll may have a shot on the dilution claim as the “2nd and 9th Circuits have held that the trademarks don’t have to be almost identical or substantially similar to win a dilution claim under the [Trademark Dilution Revision Act of 2006].” (The 7th Circuit has yet to rule on a trademark dilution case). In the end, time will tell whether Tootsie Roll can effectively show that these shoes for on-the-go women go too far in infringing on its classic mark.

Sadly, this seems like an open-and-shut case in terms of a trademark violation.  The Hungry Hobbit might have some success in arguing that it operates in a different market than SZC; as far as I know there are no “official” Hobbit restaurants.  However, SZC has made a practice of licensing other individuals and organizations to use the name and there might be legitimate likelihood of confusion with one of them.  In any case, the strength and uniqueness of the Hobbit mark would be difficult to overcome, and as always the legal fees could be problematic if Wendy chooses to fight.  It seems like her “best” choices are to seek a license or to simply change the name.

Microsoft had started the fight when it challenged Barnes & Noble’s use of the Android program for its NOOK tablets. Barnes & Noble refused to agree to the (abusive) terms of a license offered by Microsoft, which consequently claimed that Barnes & Noble was infringing on five of its patents.

Barnes & Noble has now resorted to defeating Microsoft’s claims by invoking an abundant list of publications and patents to challenge the novelty and/or non-obviousness of Microsoft’s patents. Indeed, if Barnes & Noble’s list of prior publications and patented inventions reveals that Microsoft’s patented inventions were known to the public before Microsoft “invented” them, if these inventions were described in publications more than one year prior to the filing date, or if Microsoft’s inventions were publicly used, or offered for sale to the public more than one year prior to the filing date, then Barnes & Noble will have proven that Microsoft’s inventions were not novel. Consequently, Microsoft’s patents will be invalid and the company’s claims of infringement will be baseless.

Further, the list provided by Barnes & Noble could establish that Microsoft’s patents were improperly bestowed on inventions that were obvious to one of ordinary skill in the art. Even if Microsoft’s inventions were novel, Barnes & Noble’s contribution to the “art,” as shown in the 43-page list of prior publications and inventions, question whether Microsoft’s inventions meet the non-obviousness requirement of a patent application.

Barnes & Noble surely offers a rather unusual and interesting resistance to Microsoft’s ruthless patent infringement litigation and it comes at a time where patent legislation, and prior art more specifically, has been the subject of substantial review. Although the reform will not come into effect for a while and a trial date between Barnes & Noble and Microsoft has been set for February 2012, on September 2011 the American Invents Act, which modifies the rules for patent applications, was signed into law by President Obama. If applicable, the reform would have offered a prime example of its impact on patent litigation and reexamination of patent grants. Indeed, the reform partly aims at limiting cases where an alleged patent infringer, such as Barnes & Noble, threatens a patent holder, even as controversial as Microsoft, with the possibility of reexamination of patent grants to obtain a settlement at a favorable cost. Shifting the U.S. patent regime from a first-to-invent to a first-inventor-to-file system, the reform is certain to bring jurisprudential solutions to cases where holding patent-related rights has a tremendous impact on market shares, consumer interests, and the worldwide competitiveness of American companies.

Barnes & Noble’s overwhelming list might nevertheless turn out to be a double-edged sword. Unless one shows that when it came to Microsoft’s inventions, the patent application process was flawed, it might be difficult to argue that patent examiners were fully unaware of the available literature in light of which Microsoft’s applications ought to have been considered. Especially on the issue of new technologies and the extensive litigation to which it gave rise, one could argue that patent examiners would be exceedingly careful not to grant patents to non-novel or obvious inventions. However, non-obviousness remains a complex issue, and Microsoft’s legal team will surely rejoice at the idea of examining whether Barnes & Noble’s prior and arguably immense contribution to the art made Microsoft’s patented inventions obvious to those skilled in the art.

Vivid Entertainment appears to have at least sixteen registered trademarks on the word “Vivid,” which cover goods ranging from its adult entertainment website to guitars, skateboards, and vodka. The trademark Vivid holds that is most applicable here is Registration No. 3069383, which covers “Vivid” on “adult entertainment delivered via wireless devices.” The cease and desist letter states that HTC is using the Vivid Marks in association with the sale of its wireless device, which is “built to entertain, with movies and shows” (the quoted language in the cease and desist letter comes from HTC’s description of the HTC Vivid on its website). The letter goes on to state that use of the Vivid Marks “(i) creates the false impression that your company and your company’s products are affiliated, connected, or associated with and/or sanctioned by Vivid Entertainments and (ii) is likely to cause confusion among consumers.” Vivid Entertainment alleges that the HTC Vivid mark may constitute trademark infringement and trademark dilution.

While Vivid’s registration covering “adult entertainment delivered via wireless devices” helps to establish some basis for a claim (albeit a tenuous one), there is no way that this case would work out in Vivid’s favor if the case goes to court. HTC is using a similar mark, but there is no presumption of exclusivity in infringement analysis. The issue is whether the mark would be likely to cause consumer confusion, and the claim would certainly fail the likelihood of confusion test utilizing the Sleekcraft factors. A dilution by blurring would similarly fail because Vivid would be hard pressed to establish that there was an association arising from the similarity of the marks that impairs the distinctiveness of Vivid’s mark. The 150 or so registered trademarks either using or incorporating “Vivid” demonstrates that “Vivid” is not a very distinct mark or used exclusively enough to be diluted by a mark that is substantially similar at best.

attributed to "√oхέƒx™" on flickr

Put yourself in California resident Judd Hausner’s shoes.  During your last year of college, you lucked out and got a local job working for Massachusetts-based Boston Beer Company (“Boston Beer”).  You put in a good faith effort over the next four or five years, and eventually you find yourself in a good position with a lot of company responsibility.  You recognize that you developed some marketable skills, so you look to see if you’d enjoy working for someone else, maybe even at better pay.  An offer comes along from California-based Anchor Brewing Company (“Anchor”), you decide to take it, and you give your resignation notice to Boston Beer.  Everything’s on the up and up, but then BAM.  You’re sued by Boston Beer for violating a non-compete clause and for inevitably disclosing company trade secrets.  Hausner says it’s “simply ridiculous” to be called into court across the country in Massachusetts, but despite the inconvenience, it’s part of the price he pays for agreeing to work for a Massachusetts-based company.

Hausner and Anchor disagree with Boston Beer about where this case should proceed, and for good reason.  Beyond the states’ laws governing trade secret misappropriation being different, as Noncompetenews.com points out, the two jurisdictions’ courts have different attitudes toward trade secrets.  Between the two, Massachusetts courts are apparently more amenable to non-compete claims, so there’s a strategic element in Boston Beer bringing this claim in its home state.  Anchor argues that not only California courts but also California law should govern the dispute.  Anchor contends that Boston Beer shouldn’t be able to hire California-based Hausner, to work in California, but then pursue this claim back in Massachusetts.  Memories of my Civil Procedure course say that’s not how it works.  By no means is it convenient to fly across the country and defend yourself in court, but the possibility of having to do so is part of the price you pay when you agree to work for a company that’s based there.  Anchor’s argument here would be stronger if Hausner’s circumstances made it practically impossible for him to travel to Massachusetts, but the inconvenience of cost alone isn’t enough.

It’s interesting how Boston Beer and Anchor disagree over whether they’re actually competitors based on the types of beer that they make.  Arguably, Boston Beer’s Sam Adams brand falls into a “better beer” category while Anchor’s Anchor Steam brand is a “craft beer.”  I agree that there can be distinctions between categories like this for beer, but don’t they all compete with each other all the same?  If we can assume both of these beers are available in a bar, they’re each just two different options for the same choice: which beer will I indulge in tonight?  Non-determining factors aside, they’re the same product for the same market and are competitors.

Beyond Hausner allegedly breaking his employment contract, the substantive issue of this case is his potential misappropriation of Boston Beer’s trade secrets.  Trade secret disputes are normally governed by state-adopted versions of the Uniform Trade Secrets Act, but Massachusetts never adopted it.  Instead, Bay State courts look to their case law to determine whether something qualifies as a trade secret.  To decide whether information qualifies as a protectable trade secret, the Massachusetts federal district court looked to the following factors in Harvard Apparatus, Inc. v. Cowen:

• The extent to which the information is known outside of the business;
• The extent to which it is known by employees and others involved in the business;
• The extent of measures taken by the employer to guard the secrecy of the information;
• The value of the information to the employer and to its competitors;
• The amount of effort or money expended by the employer in developing the information; and
• The ease or difficulty with which the information could be properly acquired or duplicated by others.

Boston Beer has an evidentiary burden of proving that it kept secret its business strategies for sales, distribution, and whatever else, but it could very well pull through.  If Boston Beer built its strategies around an analysis of its private business history, only a select few employees knew the details of these strategies, and Hausner was one of them, why wouldn’t this information qualify as a trade secret?  Noncompetenews.com references a Seventh Circuit case between Pepsi and Quaker Oats that held business strategies like this can indeed amount to protectable trade secrets, at least under the Illinois-enacted Trade Secrets Act.

I’ve always found it odd that trade secret law allows for remedies before any misappropriation actually happens.  Just like in the Pepsi/Quaker Oats case, the remedy sought here is to keep Hausner from working for Anchor because of his inevitable disclosure of Boston Beer’s trade secrets.  Boston Beer isn’t seeking relief because there has already been disclosure or even because it thinks Hausner intends to share Boston Beer’s private company information.  It’s seeking relief because the nature of Hausner’s new employment makes it so Hausner can’t not consider and in some way divulge Boston Beer’s private company information.

At first glance, this seems unfair to employees like Hausner, but the precarious value of trade secrets justify preemptive remedies.  If Boston Beer’s private company strategies were (accidentally) disclosed, their value would instantly disappear.  Boston Beer could get damages from whomever disclosed them, but all the work put into creating them would instantly be wasted.  As the Seventh Circuit showed in the Pepsi/Quaker Oats case, an inevitable disclosure claim doesn’t depend on the ex-employees intent.  It’s irrelevant that Hausner and Anchor agreed between themselves that Hausner isn’t to disclose any secret information belonging to Boston Beer.  The only thing that matters is whether Hausner can perform his new job without in any way relying on the secret information from his time with Boston Beer.

Hausner will have a difficult time utilizing his skills as a brewer at a new job because of the non-compete clause he signed and him being privy to Boston Beer’s private company strategies, but we must consider more than his interest.  When we back up and also consider Boston Beer’s interest in protecting its valuable information, we can see and courts recognize the value and need to protect it.

According to section 1.1 of The Trademark Act a “trademark” refers to “any sign capable of being represented graphically which is capable of distinguishing goods or services of one undertaking from those of other undertakings.” This designation includes “words (including personal names), designs, letters, numerals or the shape of goods or their packaging”. Under the relevant portion of section 3.1 of the act, trademarks fail if they “do not satisfy the requirements of section 1(1)” or are “devoid of any distinctive character.”

Basically this means that in winning their case, Cadbury convinced the registrar that the purple packaging it uses clearly identifies its product from those of competitors and that the pantone 2865c color is unique enough that the protection is not so broad as to keep everyone else from using purple at all in their packaging. So the question comes down to: if the Cadbury name, identifying pictures, labels etc. are removed – is the product still obviously Cadbury to a purchaser that knows only that it is a chocolate product? When I posed this question to myself I initially answered no. But I’m not British and that might make a big difference. Cadbury has been packaging and promoting its products in the same purple color in England for a century. The color is rumored to have been selected because it was a favorite of the Queen. Since recognition plays a big factor, the fact that I’m not as familiar with this product as I am with more popular American brands has an impact on my view of the distinctiveness element.

A comparable case exists in the United States where Hershey Co. recently dropped a lawsuit against Mars Inc. over the use of an orange background for which it holds a U.S. trademark. Unfortunately the case was dropped and dismissed from court so there is no legal ruling available but I KNOW I can recognize a Reese’s Peanut Butter cup from a distance based on the package. And ultimately this is what Cadbury is trying to safeguard and what the UK Intellectual Property office has chosen to protect: that gut consumer response to the look of a product of “I want it” that happens before the label is even legible. The response that gets kids grabbing at the color of their favorite candy based on a Pavlovian response that occurs on sight (I did it plenty recently at Halloween any time I came across a bowl of candy).

Nevertheless, I’m still suspicious of the ability to obtain trademark protection for a color. It’s hard for me to accept the position that a color can be associated with property rights. I am convinced however of the clear relationship that can exist between packaging and product recognition. I also recognize the advantage a company like Cadbury can derive from their products being easily and immediately recognizable. In this case, the color has been locked down to a very specific shade of purple. They get no protection for anything beyond pantone 2865c. Additionally, the protection only applies to the specific products they have traditionally packaged in pantone 2865c. It doesn’t extend to every product they might want to package in the same fashion moving forward. The narrowness of the decision convinces me that it likely only prevents deliberate attempts to create and benefit from similar looking packaging. Despite my general distaste for color trademarks I think that if they are to be allowed, this ruling captures the correct scope of protection.

Jackpot Junction Casino Hotel, containing 1,250 slot machines and 378 rooms, opened in 1984, and registered its trademarks in 2001.  Gaming Support, which provides casino signs and back-end operating systems to casinos, stated in its lawsuit that it has “continuously used the “JackpotJunction” mark for over five years without issue in commerce in connection with its goods and services.”  Gaming Support’s “JackpotJunction” product line is its  “most prolific gaming-enabled digital signage platform, with hundreds of installations worldwide.  The “JackpotJunction” product-line enables casino operators all over the world to enliven their operations with high-speed multimedia broadcasts that grab attention, reinforce and clarify brands, cross-promote internal businesses, and boost gaming revenue.

Gaming Support will be successful in its suit and allowed to continue its use of “JackpotJunction,” if the court finds Gaming Support did not infringe Jackpot Junction Casino Hotel’s registered trademark.  Under the Lanham Act, the test for trademark infringement is the “likelihood of confusion” among consumers.  15 U.S.C. §§ 1051–1127.  The Ninth Circuit developed an eight-factor test that involves weighing the different factors to determine whether consumer confusion exists.  AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979).  The strength of the mark, proximity of the goods, and similarity of the markets are three of the more important factors when determining if a trademark causes consumer confusion.  The court also considers evidence of actual confusion, marketing channels used, sophistication of the products, defendant’s intent, and likelihood of expansion of the product lines.

A court might find that the “JackpotJunction” mark is in the middle of the spectrum of distinctiveness.  It is not generic where it does not receives any protection, but it is also not fanciful, the strongest mark.  The mark is most likely descriptive and it can be protected if secondary meaning is shown.  A court will most likely find that Gaming Support and Jackpot Junction are not proximate.  Even though both involve casinos, they are different types of businesses.  Gaming Support’s business involves providing multimedia gaming systems to casinos whereas Jackpot Junction is a hotel in Minnesota containing a casino.  Operators of casinos will purchase products from Gaming Support, whereas Jackpot Junction Casino Hotel will provide services to tourists.

The marks are similar because they contain the same two words joined together but their designs are different.  The court might also look to see if there has been actual confusion among consumers.  Since Gaming Support has been using the mark for the past five years without any problem in commerce, a court might find this as evidence of no actual confusion.  Gaming Support does not have to show that at all eight factors weigh in their favor.  No one factor or combination of factors is dispositive, which makes it difficult to predict if a court will find consumer confusion that constitutes trademark infringement.

Dan Henderson is widely recognized as one of the most exciting and talented fighters in mixed martial arts today.  At 41 years of age he can be considered to be an old man in the fighting world, but his opponents have learned not to take him lightly, as Henderson has won six of his last seven fights, bringing his career record to 28-8.  Henderson is in the spotlight as he fights this weekend, headlining a stacked card of bouts at UFC139 with his battle against Brazilian legend Mauricio “Shogun” Rua.  However, recently he finds himself in a different variety of battle in the legal world.  In February Henderson filed suit against his former teammate, training partner, corner man, and UFC middleweight title contender Matt Lindland, alleging that Lindland has infringed on his trademark rights to the famed Team Quest fist logo (seen here at their website).  Henderson alleges that he and former teammate and UFC heavyweight champion Randy Couture commissioned an artist to create the fist logo currently being used on Team Quest merchandise in 1999 and then copyrighted the artwork with the U.S. Copyright Office.  Henderson alleges that they were using the logo before Lindland joined the team in 2001, and that Lindland intentionally omitted his name from the trademark application he filed for the team name and logo in 2006.

Lindland responded in May by filing a counterclaim alleging that Henderson was never an owner of the original Team Quest, but simply a member of the team.  Lindland alleges that he, Couture, and trainer Robert Follis were the ones who entered into business together and built the first gym in Portland, Oregon.  In 2001 he registered Team Quest Fight Club LLC in Oregon with Couture and Follis as investors, while Henderson declined.  Lindland alleges that Henderson never wanted to devote the time and effort toward being an owner of the business and never invested or took on any of the team’s risk.  Lindland has a registered trademark for the Team Quest logo and name, and his counterclaim seeks injunctive relief preventing Henderson from continuing to use the Team Quest name, which he believes is an infringing use.

This is a case that is not entirely cut and dry.  Henderson certainly joined Team Quest in 1999, and has been known to wear Team Quest shirts in his early days competing in Japan.  However, even if he did previously use the Team Quest logo, it is a bad fact for his lawsuit that Lindland has a registered trademark for both the name and the logo.  Furthermore, Henderson has continued to use the name and logo for his Team Quest gym in Temecula, California.  Lindland has complicated this picture by stating that he asked Henderson to take a more active role in the running of Team Quest Fight Club LLC, which Henderson turned down.  It is possible that Henderson’s prior use of the trademarked materials will weigh in his favor if he can indeed prove that he was part of creating the logo.  However, it certainly looks bad for Henderson that Lindland has the registered trademark for both the logo and the name.  If Lindland can show that he never gave Henderson permission to use the Team Quest name for his gym in California, and his registered trademarks are held valid by the court, he will likely receive injunctive relief.  Henderson, for his part, has not offered any comment on the lawsuit.  As he enters the ring this weekend for another in a long line of fights one can’t help but wonder how this pending legal controversy affects his state of mind.  Those who have seen Dan Henderson fight know never to count him out when he is the underdog, but in this legal battle for the right to use the Team Quest name he may have too much to overcome.

Kellogg seemed to not give a hoot when self-policing its “Toucan” trademark. If Kellogg had, the company likely chosen not to enforce its rights against MAI.  MAI is a project of the California-based World Free Press Institute (“WFPI”), a non-profit that defends free expression and challenges repression of cultural heritage issues.  If attacking a non-profit over the use of a not-really-similar mark is not enough – Kellogg argued that Toucan Sam is often seen in a Mayan environment.  This “environment” turned out to be an online video game in a Mayan setting where the only character of color was an evil witch doctor who steals.

Realizing that the two marks were not likely to be confused and that any confusion would be caused by a culturally insensitive depiction of the Mayans, MAI and the WFPI launched a public relations attack on Kellogg.  Backed with an extensive knowledge of the media and reporting, (WFPI’s co-founder Clay Haswell worked for the Associated Press for 18 years before helping to start the non-profit) MAI began to send out charged statements like this one: “Kellogg’s products are a staple of many Guatemalan households. We expect a brand that is so familiar to children to play a role in supporting cultural and racial understanding around the world, rather than undercutting it by promoting demeaning racial stereotypes.” It was not long after the initial cease and desist letter from Kellogg that the large cereal corporation began to receive a great deal of press. To their credit, Kellogg immediately took down the offending online game and began settlement discussions with MAI once they realized their mistake.

Usually settlement agreements aim to reach a middle ground, but because of the lack of judgment Kellogg showed in self-policing (or bullying) its trademark, MAI has come out of this as the clear winner.  According to the Battle Creek Enquirer, discussions between Kellogg and MAI led Kellogg to be satisfied that their trademark is not in danger.  In the same report, MAI spokesperson Sam Haswell stated that in an act of good corporate citizenship, “Kellogg made it clear that they wanted to be part of the solution rather than part of the problem. When they understood some of the issues facing Mayan culture, they decided to come to the table and be part of the solution.” What exactly does coming to the table mean?  In this case, it means donating a lot of money.

In a joint statement released November 15, Kellogg has agreed to make a $100,000 contribution “to help launch one of the MAI’s priority projects to improve the lives of the Maya people in a region rich in cultural heritage but lacking in access to education and economic opportunities.”  The project referred to is a Mayan cultural center that will feature classrooms and storage areas to protect Mayan antiquities. Along with the generous donation, Kellogg will also feature “major Mayan accomplishments and a link to the MAI website on Kellogg’s Fruit Loops cereal boxes next year.”

My colleague Mr. Dennis was on point in analyzing that the move to threaten legal action may do more “damage to the brand’s goodwill than any (and extremely unlikely) confusion that may arise.”  Luckily for Kellogg, they realized their mistake early and have done their best to work with MAI and restore the corporation’s public image before it ran a-fowl.

As part of this meeting, trade representatives and leaders discussed the prospect of protecting intellectual property rights under the terms of a new trade agreement.  On Saturday, November 12th, the parties issued a statement indicating their consensus on a number of provisions of the upcoming agreement.  One of these terms stipulates that the parties will “reinforce” and “develop” the existing World Trade Organization obligations under the new regime.  While the TPP agreement will not displace the terms in the WTO Trade Related Aspects of Intellectual Property (TRIPS) agreement, the parties appear to be interested in extending some of the protections.

The TRIPS agreement provides the baselines by which member states should grant and guarantee intellectual property rights to inventors, businesses, and artists from other countries.  The minimum standards established in the TRIPS agreement are one of the many attempts to bring about harmonization of laws to grant certainty to innovators in various countries.  Similarly, the terms of the TPP agreement will also move the various countries closer to harmonized laws – and in many instances, raise the level of protection granted in countries with weak intellectual property rights regimes.

While the exact terms of the TPP agreement are unclear, the outline of provisions released by the United States Trade Representative (USTR) discusses almost all of the subcategories of intellectual property as on the table.  The outline of the agreement specifies that:

“Proposals are under discussion on many forms of intellectual property, including trademarks, geographical indications, copyright and related rights, patents, trade secrets, data required for the approval of certain regulated products, as well as intellectual property enforcement and genetic resources and traditional knowledge.”

The fact that genetic resources and traditional knowledge are being discussed as part of this agreement seems to suggest that developing countries are trying to bargain their way into getting additional protections.  On the flip side, the United States and Australia are most likely pushing for greater protection of patents, copyrights, and trade secrets.

Whether the countries will negotiate terms in a quid pro quo fashion or simply maintain TRIPS standards, however, remains unclear.  Negotiations are set to resume in December of this year, and additional rounds will also be established for 2012 as needed.  Although this agreement is still in its nascent stage, a new multilateral trade agreement seems to be promising for all parties interested in greater intellectual property protections.

China, a country where a good’s location of origin can be as important to consumers as the company producing the goods, will refuse to register a trademark that incorporates a geographical  indication if that indication is false or misleading. The Chinese wine and spirit company Shenzhen Ying Jun attempted to register the mark “FRACOGNAC,” a mark which the Bureau National Interprofessionnel du Cognac (BNIC) and the Institut National de l’Origine et de la Qualité (INAO) opposed.

This is the second time Shenzhen Ying Jun has had a mark for “FRACOGNAC” within Class 33 of the Nice Convention  (Alcoholic Drinks except beer) denied. In both applications the BNIC and INAO argued, and the Chinese Trademark Office (CTO) agreed that the use of FRA, a common indicator for the French Republic, combined with the geographic indicator Cognac would mislead the public, even if the product were clearly marked with a different origin in Chinese.

Cognac is closely protected by BNIC and INAO as a geographic indicator as well as a standard of quality, a common trait among geographic indicators. Cognac is a brandy named for the wine growing region surrounding the town of Cognac in southwestern France. In addition to being produced from grapes grown in the region it must meet specific distilling requirements to receive the “cognac” mark. China has a large market for the drink, which has encouraged domestic production of brandy in the cognac style.

China established domestic trademark protection in 1979 and has since become a member of the Paris Union and a signatory of the TRIPS Agreement. Chinese trademark law prohibits the registration of a mark that suggests a geographic origin when the goods being represented by that mark do not originate from that geographic region.

Generally a mark is said to be geographically indicative when it “identifies a good as originating in the territory [of a given state] or a region or locality in that territory, where a given quality, reputation or other characteristics of the good is essentially attributable to its geographical origin.” TRIPS § 3, Art. 22.  Geographical Indications are most commonly applied to food and agricultural products (i.e. Champagne, Roquefort) because the environment the product is created in imparts unique characteristics on or within the product.

The United States has included clauses in trade agreements allowing for the use and continued registration where a mark has been used in commerce for more than ten years or was registered or applied for in good faith. While the US has frustrated the European community with its stance on geographical indications, China has fulfilled their treaty obligations in this area.  This may stem from the fact that China, like Europe, has a long tradition of regionally specific products, especially foodstuffs (i.e. Sichuan peppercorn.) While China has been admonished by the international trade community for their lax enforcement on goods with infringing marks or which have misappropriated copyrights, as evidenced by the fact that Fracognac can be purchased in China, the CTO has taken a hard line stance against registering marks with misleading geographic indicators.

Sources Referenced:

World Trademark Review, Original Coverage

USPTO; Program in China Underscores Importance of Protecting Geographical Indication and Trademarks

Asia Law Profiles; Can a Geographic Term Become a Trademark?

Export.gov; Protecting Your Intellectual Property Rights in China

According to the Supreme Court in Feist Publications, Inc. v. Rural Telephone Service Company Inc., to prevail on a claim of infringement the plaintiff must prove: “(1) ownership of a valid copyright, and (2) copying of constituent elements of the work that are original.” Webb probably will not have a problem proving he has a valid copyright in his work “The Cordoba Caper”: the U.S. Copyright Office’s public catalog shows registration for both the dramatic motion picture screenplay and short story in 2008 and 2009 respectively. Thus Webb’s timely registration gives rise to a presumption that the copyright is valid, because under 17 U.S.C. §410(c), “In any judicial proceedings the certificate of registration . . . shall constitute prima facie evidence of the validity of the copyright.”

If this case does go to trial, the court will probably focus on the second element, copying of a constituent element of a work that is original. Under Laureyseens v. Idea Group Inc., actionable copying occurs when the defendant actually copied the copyrighted work and when the defendant improperly appropriated that copyrighted work for use in its own work. Regarding the first element, since direct evidence is seldom available, Webb’s attorney will present circumstantial evidence which includes whether the plaintiff had access to Webb’s work and whether “The Expendables” and “The Cordoba Caper” share similarities probative of copying.

Here is why this case will probably survive summary judgment and be as tough of a fight as Rocky fighting Drago in Rocky IV. First, it is reasonably possible that Stallone and associates had access to Webb’s screenplay. According to the complaint, Webb states that “from 2006 through 2009 [he] submitted the screenplay to numerous literary forums, and it was widely available for viewing and consideration by the motion picture industry.” “The Cordoba Caper” also was entered into and placed in several big motion picture contests, like the 2009 PAGE international screenwriting awards and the 2006 American Zoetrope Screenplay Contest, where many studios purchase screenplay rights.

Even if it cannot be proven that Stallone physically possessed one of the copies of Webb’s screenplay floating around, access can be inferred if the works are “strikingly similar.” As excerpts from the complaint explain (via Reuters and Opposing Views), the pieces are striking similar, referring to 22 similarities including: (1) the general plot of having a team of mercenaries hired by a female character to defeat a dictator in a small Latin American country, (2) the fictional villain being named “General Garza,” (3) the opening scene portraying a hostage rescued at sea, off a foreign coast, which has nothing to do with the main plot, and (4) large portions of the dialogue, including the main protagonist repeatedly defining missions as going “to hell and back.” Arguably some of these similarities can be described as “idea” which is not protected under copyright law, but the aggregation of all these similarities does make it appear that these two works are strikingly similar. Additionally, Webb made conscious choices and selections in his screenplay that are protectable elements. It is expression like this that leads me to believe Stallone may have an uphill battle trying to prove that “The Expendables” is an independent creation.

Not to be one sided, a legitimate argument can be made that the similarities between the two are merely elements taken from the public domain and are staples of action movies. I must admit that when I watched “The Expendables,” it appeared to be just another Stallone action movie, no different than Rambo, Cobra, or Demolition Man. However, the number of similarities between the “The Expendables” and “The Cordoba Caper” and what is similar make it a tough argument that Stallone had no contact with Webb’s work. But judge for yourself: does Stallone have a Rambo-esque fight in front of him or is “The Cordoba Caper” just another action script with little protectable substance?

MCF’s patent lies square in one of the burgeoning areas of technological development: mobile device-based business-to-consumer communication. MCF’s patent provides them the right to exclude others from business methods that “involve[] [a subscription-based system for] receiving mobile device user information relating to a geographic location to locate one or more merchants within a subscription-based shopping network . . . .” Simply put, if you have used a smartphone app such as Groupon’s or Yelp’s to locate a merchant in your area, you have relied on the patented technology owned by MCF. The complaints specifically call out Groupon and Yelp for making available applications for a variety of platforms including iPhone, Android, and Blackberry devices.

While Groupon and Yelp are the latest companies to come under attack, they were not the first. In March of this year, Foursquare, a location-based social networking website for mobile devices, was served with a complaint by MCF for violation of the same patent. Most recent news reports on the suit note that Foursquare responded to the complaint on May 13, denying infringement and arguing that the patent is invalid and unenforceable.

How the patent ended up with MCF is unclear from online sources available to this blogger. The patent had been filed on May 26, 2005 by another poorly known company called Hothand, Inc. Hothand’s website indicates that it received this patent on April 6, 2010, the patent itself being titled “Mobile Commerce Framework.” It is important to note that this patent had been filed at an early point in the development of mobile device business methods. In Michael del Castillo’s blog post on Portfolio.com, he points out that the filing of the patent was three years before Groupon existed, four years before Foursquare came to life, and one year after Yelp launched. The patent was awarded well after the launch of each organization.

The issue in this patent battle sets the stage for what may become a vast war of litigation. Here, we find that a surprisingly broad patent owned by what appears to be a non-producing entity can essentially tax the efforts of those who fabricate, perfect, and disseminate a completed product such as Groupon or Yelp. But the breadth of the patent and the trolling of MCF are only the beginning. As PCWorld’s recent article on mobile device patents explains, the sheer vastness of both the number and scope of patents in the cell phone industry make the area ripe for litigation.

Layered in this war is a very lucrative industry with application creators, large and small, contending with trolls and cell phone manufacturers who own a variety of patents over the products and processes of cell phone functionality. For those with deep pockets such as Groupon and Yelp, the odds are good that they can weather the legal and monetary storm against trolls like MCF. Major competitors should also be able to fare better when they attack one another’s patent rights, as their resources can float the investment in these attacks when necessary. Who will end up losing is the next innovator that may want to connect business to consumers via mobile device.

In his October 2nd interview with Maria Bartiromo on CNBC, Google CEO Eric Schmidt said, “We still have a problem in our industry. Too many overbroad patents are being used to shut down other companies. A large company like Google can afford to buy a company like Motorola. But what about a small start-up that finds itself not able to enter a market and create innovation because it’s so patent-full?” Well when it’s MCF versus the innovator of the next mobile consumer device, that innovator may be quite simply out of luck.

Pisco is a form of brandy that is South America’s oldest spirit.  It traces its roots back to the 16^th century, when Spanish colonists in what is today southern Peru began to produce the wine for their own consumption out of grapes deemed undesirable for export.  The drink quickly became a favorite of sailors , who called it Pisco, after the Peruvian port from which it was thought to originate.  By the 18^th century, Pisco became the drink of choice of sailors around the world because of its low price, availability, and strong taste.  In the early 20^th century, a beverage known as Pisco also began to be produced in Chile, although it was quite distinct from Peruvian Pisco; because the Chileans used different varieties of grapes and a different distillation process, the two alcoholic beverages are different both in terms of taste and appearance.  Due to various factors, the Chilean Pisco soon came to dominate the international market for Pisco at the expense of its Peruvian counterpart.

To protect the domestic Pisco industry, Peru has long lobbied for the exclusive right to the use of the name Pisco, arguing it should only be applied to products from the region surrounding Pisco, Peru.  Such geographic indications have long been used in the alcoholic beverage industry.  For example, Champagne can only come from the Champagne region of France, Grappa can only be grown in Italy, and Port wine can only be produced in the Douro Valley of Portugal.  If produced elsewhere, these beverages are prohibited from incorporating the geographic indicator on their labels. 

According to the Lisbon Agreement of the World Intellectual Property Organization, to qualify for a geographic indicator, or appellation of origin, a product must come from a region that imbues that product with distinctive characteristics.  Furthermore, the product should take up the name of the land from which it comes.  Peru has argued that only Peruvian Pisco meets the appellation of origin requirements because there is only one place in the word called Pisco, and only in this region do the specific climatic characteristics and production methods converge to enable the creation of Pisco.

Currently, Peru’s appellation of origin has been accepted by a number of Latin American and Southeast Asian countries.  WIPO member states give exclusivity to Peru, unless they are bound by previous trade pacts with Chile, wherein the Chileans are allowed use of the name Pisco.  For example, members of the European Union cannot accept Peru’s request for exclusivity for this reason.  Furthermore, Peru continues to approach individual nations with requests for recognition of its exclusivity.  The Chilean Pisco industry has responded with a massive campaign promoting the beverage as a traditional beverage.

Given the bitter dispute that Peru has engaged in with Chile, it is of little wonder that the Peruvians have reacted with such disdain to recent news that U.S. distillers are now marketing products under the name Pisco.  Most of the criticism has been aimed at the Peruvian government, which people argue should have been more aware of what was going on in the United States.  Many of these critics argue that the government should sue the U.S. producers to protect the name of its national beverage.  However, in truth there is little the Peruvian government can do.  The United States has never accepted Peru’s exclusive use of the term.  In fact, Pisco was specifically mentioned in the Free-Trade Agreement between the United States and Peru.

Although unlikely to do so, Peru may want to consider adopting a new approach in its battle to protect the domestic Pisco industry.  Instead of convincing the world that only it should be able to use the name Pisco, the Peruvians could explain what makes their product so special and different from the competition.  The Colombians undertook such a marketing campaign to perfection with their coffee.  To this day, people hold Colombian coffee in high esteem.  If Peru were to follow suit, maybe one day we will hear people at bars asking for “Peruvian Pisco.”

That wouldn’t have been a problem, but Beaven began selling the poppies and donating the money to charities . . . specifically, organizations other than the Royal British Legion.  The poppy image is a trademark of the RBL, and Beaven had been granted a license to sell the teardrop poppies, but only in connection with the Poppy Appeal, which is organized by the RBL.  Beaven has claimed the RBL office was aware of her project and she has not exceeded the boundaries of her license.  Further, she claims she has public support and that Camilla, Duchess of Cornwall sent her a note saying she was intending to wear the teardrop with pride (a representative said that the Duchess would not comment on private correspondence, and it’s unclear whether she was aware of the controversy).

As I’ve noted many times in the past, the collision between intellectual property law and morality can have unintended consequences.  While there’s no reason to doubt that Beaven intended to do good by selling her teardrop poppies and was donating the proceeds to charity, if she was violating the terms of her trademark license she was undeniably committing a wrongdoing.  The Royal British Legion no doubt relies on the ability to sell poppies and deserves protection for that activity.

Basically, in patent litigation between a brand-name drug innovator and a follow-on generic manufacturer, the generic company will agree to “sit out” and not produce their generic version, even if the patent the innovator pharma company holds is weak, could be invalidated, or the generic drug might not even infringe.

To explain: in a free market, the price of goods is constrained by supply and demand, as well as the cost of manufacture and competition.  In order to turn a profit in a competitive market, the manufacturer needs to charge more than the cost of manufacture, but with a large number of competitors, there is often a “race to the bottom,” where competing companies lower prices to lure customers away from competitors.  Thus, companies’ profits suffer, because they are forced to compete with competitors who can underbid them.

In a constrained market, however, where there are less competitors, prices can rise higher, and are constrained only by how much the market will pay for the goods.  In a patented, regulated market like pharmaceuticals, where the brand-name company is often the only good in the market for a particular need, the price of each good will generally be the maximum amount that many people will pay, thus maximizing profits for the company.

For example:  If a drug costs $1 to make, but the drug is patent-protected and the only drug that has received premarket approval, and individuals will pay up to $10 for it, the cost will be fixed at $10, because there is no competition.  However, the introduction of competition in the form of generics will quickly lower the cost of the drug to at-or-near the cost of manufacture, or say, $2.  For the generic companies, it all realized profit, as they undercut the brand-name manufacturer.

Pay-for-delay settlements are when the generic and the brand name company sit down and agree:  The generic company will stay out of the market, the brand name will continue to charge $10, and the brand name will pay you $4.  We get $6, you get $4.  Basically, it is authorized collusion.

It is judicially allowed because, as the FTC writes: “Due regard for patent rights is . . . a fundamental premise of the Hatch-Waxman Act’s framework.”  See, for instance, the Sixth Circuit’s decision in In re Cardizem CD Antitrust Litig., 332 F.3d 896, 908 (6th Cir. 2003).  However, the FTC, the President, and some key members of Congress disagree with the courts.  The Federal Circuit and the Second Circuit issued similar rules, but the Eleventh Circuit disagreed.

Hence, there is a strong push against it in Congress as in the academic community.  Senators have introduced a bill to ban the practice, and the bill has the support of the Obama administration and should save the Federal Government money if passed.  There is nothing in the patent law theory of “permitted monopolies” that should allow this collusive practice to continue.  It is time that either the Supreme Court or Congress acted to close the loophole once and for all.

The injunction against BT, the UK’s largest internet service provider (ISP) provider, was made “pursuant to section 97A of the Copyright, Designs and Patents Act 1988.”  That legislation states that the “High Court … shall have power to grant an injunction against a service provider, where that service provider has actual knowledge of another person using their service to infringe copyright.”  In establishing that these statutory requirements were met,  Justice Arnold stated, “[i]n my judgment it follows that BT has actual knowledge of other persons using its service to infringe copyright: it knows that the users and operators of Newzbin2 infringe copyright on a large scale, and in particular infringe the copyrights of the studios in large numbers of their films and television programmes [sic].” 

Like the Protect IP Act, which proposes similar ISP blocking techniques beyond notice and takedown measures, there have been mixed reactions to this legal precedent.  Those who favor this holding state that Justice Arnold’s decision provides confirmation that there is a cause of action against ISPs that does not entail going after individual websites.  It is a “powerful weapon to assist [content owners] in protecting their copyrights online,” states Simon Baggs, one of the solicitors acting on behalf of the Motion Picture Association (MPA).

Others argue that this holding creates issues of censorship, like those expressed in opposition to the Protect IP Act.  Peter Bradwell of Open Rights Group stated, “[w]ebsite blocking is pointless and dangerous . . . .  And there are serious risks of legitimate content being blocked and service slowdown.  If the goal is boosting creators’ ability to make money from their work then we need to abandon these technologically naive measures, focus on genuine market reforms, and satisfy unmet consumer demand.”  Gregor Pryor, a partner at Reed Smith, had a similarly negative view of the ruling, saying that the holding has “set a precedent that has the potential to result in a flurry of less worthy court applications to block infringing content.  Innumerable websites carry user-uploaded content and could equally now be the subject of a request for ISP blocking.  YouTube is but one example.”  Finally, as Mike O’Connor of Consumer Focus indicated, website blocking does not go to the source of the problem, but rather only superficially attacks the symptoms.

There are many other arguments that illuminate the weaknesses of blocking ISPs as a means to protect intellectual property rights (IPR).  In the case of opposition to the Protect IP Act, the arguments include the fact that website blocking is easily circumvented by using a non-filtered domain name system (DNS) service.  Additionally, using non-filtered DNS services involves a host of greater security risks to the information stored on the user’s computer or transferred via the Internet.

The reality is time will dictate the effectiveness of the UK High Court’s latest attempt at minimizing IP infringement.  As it stands now, there are other ISP providers in the UK that are not blocking Newzbin2.  Because the blocking procedure requires court action, a question remains whether the cost will be too much for all rights holders to use.  Also, it is unclear what the implications on the free flow of information will be, in addition to uniformity concerns that are likely to arise when different ISP providers have different “versions” of the Internet.

This holding comes on the heels of the UK government’s acceptance of the “Hargreaves review,” which promotes a different approach to protecting IPR than ISP blocking.  The Hargreaves report calls for broad changes to intellectual property law as a whole, including a “Digital Copyright Exchange.”  Using Mike O’Connor of Consumer Focus’s phrasing, this would attack the source of the problem, instead of the symptoms.

Image attributed to flickr user ePublicist, Yoel Ben-Avraham.

Internet and entertainment companies should rejoice.  The U.S. Court of Appeals for the Federal Circuit fit a square patent peg into a round cyberspace hole.  In Ultramercial v. Hulu, the Federal Circuit reversed a decision of the U.S. District Court for the Central District of California and held that a process for monetizing the transmission of data over the web using advertisements does not qualify for the abstract idea exception to patentability.  Many legal scholars were concerned that the Supreme Court’s decision in Bilski v. Kappos – upholding the rejection of a business method patent to hedge energy markets because hedging was an abstract idea – would eviscerate business method patents and potentially leave services in cyberspace without patent protections.  However, the Federal Circuit’s decision fits service innovations in cyberspace within the business method patent category.

Ultramercial claimed that Hulu and YouTube had infringed on Ultramercial’s patent that obligated internet viewers to watch or interact with commercials in a particular way.  The claim was dismissed by the district court because the court found that the claim did not contain patentable material.  The Federal Circuit reversed on the grounds that the patentable material was a “process” within the scope of 35 U.S.C. § 101.  In the ruling, Chief Judge Rader followed the ruling of Bilski and confirmed the relevance of the machine or transformation test to differentiate between “abstract ideas” and “processes,” but shied away from directly applying the test to the case at hand.  The opinion noted that the internet blurred the line between unpatentable abstract ideas and patentable processes, and suggested that traditional ideas such as the machine or transformation test – relevant in the Industrial Age – would not necessarily apply to the Information Age.  The court held that the method of advertising was a practical “application of an abstract idea” and could fit within the definition of a business method patent.  The court differentiated Ultramercial from Bilski, finding that the patent went beyond simply patenting a general idea of advertising, but instead listed the practical applications of how the idea involved computers and users.

Interestingly, the court did not completely abandon all elements of the machine or transformation test.  In a nod to In re Alappat – upholding a patent on computer software – dicta in Ultramercial emphasized how the involvement of computers with this process of on-line advertising strengthened arguments for patentability.  The court in Ultramercial highlighted the patentable nature of software explaining that “programming creates a new machine,” and placed software outside the realm of the mathematical algorithm or abstract concept exceptions to patentability.  The Chief Justice avoided requiring a particular level of computer involvement to determine whether a computer program or method could be patentable.  However, the ruling strongly supports patent protections for methods of delivering services via the Internet.

The line between abstract ideas and patentable business methods remains ambiguous in the context of cyberspace.  As of yet, courts have avoided overly technical analysis of how to determine which programming applications merit patentability and which ones do not.  However, this ruling allows business method patents applied to internet services to potentially provide a useful tool to protect innovators who develop mechanisms to monetize services on the internet.  Patenting these tools should support the creation of business models for cyberspace that will facilitate the medium of the internet to absorb the entertainment industry.

Barnes & Noble refused to agree to the terms of Microsoft’s license to use patents developed by the Washington-based company and to abide by the restrictions on upgrades allegedly demanded by those terms. As a consequence, in March 2011, Microsoft initiated proceedings against Barnes & Noble and asked the U.S. International Trade Commission to stop imports of Barnes & Noble’s NOOK products, arguing that the book retailer was infringing on five patents that Microsoft owns on electronics operating under the Android system.

On November 8, 2011, Barnes & Noble quite publicly recommended that the U.S. Department of Justice take a closer look at Microsoft’s unforgiving enforcement of its patent-related rights. According to Wired magazine, Barnes & Noble is claiming that the license offered by Microsoft for the use of Microsoft’s patented products was much too restrictive, as a result of which Microsoft is abusing its dominant position by limiting Microsoft’s competitors’ influence on the relevant market.

Barnes & Noble’s strategy seems an interesting one: Microsoft already has a reputation as a blob-esque company and Barnes & Noble’s theory that Microsoft is violating antitrust laws is not completely ludicrous. The news of Barnes & Noble’s questioning the legality of Microsoft’s market behavior, with its David-against-Goliath feel, nonetheless reveals important issues between the preservation of incentives and rewards for innovation, on one hand, and the possible abuses of dominant positions on the other. Microsoft’s patent infringement claims might be indeed unforgiving, but it seems unclear whether they should be dismissed on the mere count that these claims are establishing Microsoft’s dominant position in the market. After all, patents are granted for the very reason that they can be used against competitors, thus assuring patentees’ lead on relevant markets and rewarding patent-holders for the cost of research and development they have incurred in developing patented products. Barnes & Noble is arguing that “Microsoft is attempting to raise its rivals’ costs in order to drive out competition and to deter innovation in mobile devices.” That may very well be true. Yet, aggressive protection of patent-related rights against companies which have not incurred the expenses of research and development is another means of preserving competition.

U.S. courts have many times upheld such an approach. The creation and preservation of a monopoly through the commercialization of an innovative product does not violate antitrust laws. Licenses may be restrictive as long as they do not create restraints that exceed the exclusive exercise of patent-related rights. “[W]hether [licenses] have or threaten to have anticompetitive effects beyond what the patentee could achieve through exclusive retention of the patent rights or an exclusive license of the totality of those rights” has been suggested as a sum-up test used by courts to determine the line between rightful license terms and abuse of dominant positions. See Donald F. Turner, Basic Principles in Formulating Antitrust and Misuse Constraints on the Exploitation of Intellectual Property Rights, 53 Antitrust L.J. 485, 491 (1985). In Europe also, courts have held that strengthening a dominant position did not necessarily amount to an abusive use of patent rights in violation of antitrust law.

The state of mind of the claimant may, under Rule 11 of the Federal Rules of Evidence, be taken into an account to determine whether this claimant is frivolously raising patent infringement claims. The dichotomy between preserving incentives for competition via a tolerance for monopolies and the distortion of competition incurred by the same dominant positions has been resolved in Europe, at least in part, by the introduction of “block exemptions.” The block exemption system allows agreements to escape the scrutiny of Article 81 of the Treaty of Rome, relating to abuses of dominant positions, provided these agreements abide by the specific terms of the block exemption. Such a system might not serve as an applicable example to the United States, but it remains that U.S. courts may soon have to define a clearer limit between frivolous infringement suits and zealous defense of one’s patents in light of the highly competitive market for new technologies.

TATA Motors was named for the family who owns the company. Image attributed to flickr user code_martial, Tahir Hashmi.

As India’s economy grows and modernizes the state has worked to bring their business, trade, and intellectual property law into line with international standards, but a large fragmented system plagued by corruption and attachment to tradition can sometimes cause problems. One area where this is clearly the case is in trademark where a traditional reading of ultra vires and naming requirements is at odds with trademark principles.

The ultra vires doctrine, which prevents a company from undertaking any object which they are not specifically granted, is still a force in Indian business law. While England and the United States have moved away from the doctrine by allowing corporations to state their objectives broadly when incorporating, India still requires a specific purpose to be outlined when registering a company. Additionally, when registering a company in India an entrepreneur must select a name which relates in some way to the business. Name approval is time consuming, it can take weeks to get approval, it also takes away an entrepreneur’s ability to control his or her marks. An individual who wants to do business in India must submit their choice of name and two alternates for the government to choose from. If they are not seen as having enough to do with the company they will be rejected. (The Indian government recently prevented an online gaming company from calling itself “Kratos” after the Greek god of strength, because the business had nothing to do with Greek mythology.) 

The name registration procedure incentivizes marks that are the opposite of what a traditional trademark scheme prefers. In order for a trademark to be valid it must be distinctive. Trademark law has traditionally given the greatest protection to “arbitrary” or “fanciful” marks, marks which have a meaning unrelated to the goods or services they are attached to (“bubbly publishers”) or that did not exist prior to the company’s use (“Kodak”). A generic mark can be canceled because it doesn’t distinguish itself as a brand from other similar goods and the protection granted to descriptive rights is severely curtailed.

What Indian business law has left for its companies is suggestive marks, which indicate the nature, quality, or a characteristic of the products or services. This doesn’t close off trademark protection but it does prevent owners from receiving the broad protection arbitrary marks are granted, potentially injuring Indian firms in global trade.

Seeing this problem, India’s Ministry of Corporate Affairs has drafted a proposed rule to remove the naming requirement when applying to form a company. However, the draft rule was published in March of this year and no progress has been made on implementing it. Additionally, some in the business community wonder about the efficacy of such a policy change considering the nature of India’s federalism, where ministries sometimes lack direct control over local offices and local officers are often tied to tradition.

Sources:

http://online.wsj.com/article/SB10001424052970204479504576639233537716542.html?mod=WSJ_hp_us_mostpop_read#articleTabs%3Darticle

http://blogs.wsj.com/indiarealtime/2011/11/02/what-you-said-the-struggles-of-indian-entrepreneurs/?KEYWORDS=india

http://www.companyformationindia.com/guidelines-name-approval.html

http://www.mca.gov.in/Ministry/pdf/Companies_rules_15Mar2011.pdf

http://rubylearning.com/blog/2007/01/26/company-name-approval/

In November 2008, Motiva filed its suit for patent infringement against Nintendo, over Motiva’s 7,292,151 patent for “Human Movement Measurement System” filed in June 2005 and granted in November 2007.  Motiva’s infringement claim was based on a theory that Nintendo infringed two patents for a system that tracks a game user’s position through the player’s Wii controller.

Motiva’s suit involves a patent that was filed the same year Nintendo introduced the Wii and the Wii remote at issue to the world market.  Because the ITC court, unlike federal courts, requires that a company have actual products on the market in order to make a claim, the fact that Motiva does not have a product on the market was fatal to the company’s suit. 

This suit resembles a recent suit brought against Nintendo involving patents filed very close in time.  In September, ThinkOptics sued Nintendo for infringing on several patents related to technologies used in the Wii. ThinkOptics produces the Wavit Remote and sued Nintendo over three patents: 7,796,116: Electronic equipment for handheld vision based absolute pointing system; 7,852,317: Handheld Device for Handheld Vision Based Absolute Pointing System; 7,864,159; Handheld Vision Based Absolute Pointing System.  However, all three patents were applied for in July of 2005, two months after Nintendo first introduced the Wii to the public at the 2005 E3 conference. ThinkOptics claims that because several of Nintendo’s patent applications were rejected based on the ’116 patent, Nintendo had prior knowledge of the ThinkOptics patents and “knew or should have known of the objective risk that one or more of their patents infringed at least one claim of the ‘116 patent.’” The ’116 patent, titled “Electronic Equipment for Handheld Vision Based Absolute Pointing System,” was issued Sept. 14, 2010.

These two cases exemplify two distinct problems in patent law today: the availability of double litigation through the ITC loophole and the lack of an independent creation defense for inventors not first-to-file.

Motiva brought suit through the U.S. International Trade Commission rather than the court system.  This approach utilizes a “loophole” which allows patent holders to claim that the infringing goods were an “unfair trade practice” in order to seek an injunction against the import of those products into the U.S. – effectively the same thing as a court injunction against sale – while also bringing the same case before the federal courts.  Companies have been utilizing the alternate ITC forum to bring suit against their American counterparts just as often as the ITC is used against foreign companies.  A report finds that while there’s only a slight increase in the likelihood of the ITC finding in favor of the patent holder, it’s much more likely to grant an injunction barring the sale of a product. This two-track system allows companies to bring essentially the same case twice and will potentially result in inconsistent rulings.  Further, this abuse of the ITC and court system will not provide precedent on which companies may rely, spurring further infringing business activity.  Greater coordination between the ITC and federal court system is necessary to prevent companies from taking advantage of the loophole available currently.

ThinkOptics’ case exemplifies the frequent problem of several companies developing similar technology simultaneously, and patent protection providing inadequate deterrence of infringing development of products utilizing similar technology.  ThinkOptics was awarded three patents, and the Patent office denied claims in two Nintendo-assigned patent applications because of ThinkOptics’ ‘116 patent.  However, because ThinkOptics was two months too late in filing its patents, Nintendo brought its product to market utilizing the potentially infringing technology and ThinkOptics may be unable to win its infringement suit for the products of its research and development.  No public information from either company was available prior to the patent filing to indicate that Nintendo was making this technology.  As such, how can patent law only protect the efforts of one company for winning the race to file by two months, while still promoting the creation of the useful arts?  An independent creation defense should be implemented to protect companies who in good faith, invest in research and development but lose the race to file for a patent.

Judging by the Motiva and ThinkOptics claims, Nintendo seems to be walking a thin line between simply being the winner of the race to file and bring its products to market, and infringing on technology that it knew or should have known to exist and be patent-pending at other companies.  It appears fair that Motiva’s claims failed and the company was unable to take advantage of the ITC loophole.  However, the ThinkOptics case will present the question whose innovation efforts should be rewarded: the little known owner of the more comprehensive patent, or the holder of the worldwide consumer market?  ThinkOptics’ suit against Nintendo is pending in the District Court for the Eastern District of Texas.  The case is ThinkOptics, Inc. v. Nintendo of America, Inc. et al, 6:2011cv00454.

Judge Robert Rogers’s findings in the Motiva case will be made public after each party has redacted confidential business information. Although Judge Rogers’s decision is subject to review by a six-member commission in Washington, the commission usually follows rulings by ITC judges.  If the commission decides to review Rogers’s findings, the case is scheduled to complete the process by March 5, 2011.  The case is In the Matter of Video Game Systems & Controllers, 337-743, U.S. International Trade Commission (Washington).

The New York Times’ Motherlode blog gained acclaim in blogging communities for covering a variety of hot topics relating to parenting.  However, the lead writer for the Times’ blog recently left to start a parenting blog at The Huffington Post with a similar name.  Last week, the New York Times filed suit for trademark infringement over the blog title.  

On October 1st, 2008, Lisa Belkin began a blog entitled Motherlode for the New York Times.  At the time, Belkin was a frequent writer for the New York Times and parent of two children.  The blog focuses on matters surrounding parenthood; topics range from what is the appropriate amount of sleep for a new parent to how to determine if you are bragging about your children.  Belkin headed up the Motherlode blog for three years, and in late September of 2011 announced she was leaving to join The Huffington Post, but that the Motherlode blog would still exist as a New York Times product.

On October 24th of this year, the Huffington Post launched its parenting blog, Parentlode, authored by Belkin.  Belkin wrote that the new website’s name is a nod to readers who have e-mailed about equal parenting.  The e-mailers commented that fathers, just as much as mothers, are involved in the parenting process. Some reporters view the new name as a jab by Belkin to her former employer.

The main issue here is the similarity between the two blog names. The complaint, filed on November 4th, cites the cause of action as 15 U.S.C. 1125(A), trademark infringement and unfair competition. The complaint alleges that The Huffington Post clearly intended to create an association between its new blog and the New York Times’ Motherlode blog. The New York Times also alleges that the title was a deliberate attempt to mislead readers to believe the blogs were the same.

The relief that the New York Times is requesting is for the court to enjoin The Huffington Post from using the domain name and to abandon its pending trademark application for Parentlode.  It is also requesting damages in regards to The Huffington Post’s alleged trademark infringement and unfair competition.

The New York Times filed for a “used-based” trademark with the US Patent and Trademark Office for Motherlode on October 24th. Ten days earlier, The Huffington Post filed for a trademark for Parentlode with the USPTO. If the Times can prove that readers are confused by the two blogs, then the case has a great chance of success.  But The Huffington Post can try to prove that the Parentlode reader is sophisticated enough to understand that there is a difference between Belkin’s writings for the Motherlode and her blogs for The Huffington Post.

Some legal journalists are commenting that the case is a strong one.  These journalists point to the fact that Belkin isn’t shy about the fact that the two blogs have similar names.  An even more damaging fact is that the first post by Belkin on the Parentlode blogsite was tagged as “motherlode-blog”, enabling web-surfers looking for Motherlode to be directed to the Parentlode blog.  Still other reporters are suggesting that the suit is just a continuation of a fight between the two media sources.  Recently, The Huffington Post has poached a number of high-profile authors from the Times, who were probably attracted by the generous salaries offered to former Times employees.

Personally, I believe the Times’ case is a strong one.  The blogs, many of which are authored by Belkin, are similar enough to create confusion in the reader’s mind. I think The Huffington Post should change its parenting blog name. If not only for legal reasons, but for the fact that The Huffington Post blog could use a more attractive name.

Photo by flickr user kfwk_lobo.

In an open letter to Urban Outfitters by Sasha Houston Brown, Ms. Brown accused Urban Outfitters of taking “Indigenous life ways and artistic expressions and trivializ[ing] and sexualiz[ing] them for the sake of corporate profit.”  She writes, “[t]here is nothing honorable or historically appreciative in selling items such as the Navajo Print Fabric Wrapped Flask, Peace Treaty Feather Necklace, Staring at Stars Skull Native Headdress T-shirt or the Navajo Hipster Panty.”

Leaving aside these arguably strong accusations that this clothing line is insulting and of poor taste, which Ms. Brown writes as “disrespect[ing] our history and undermin[ing] our sovereignty as Tribal Nations”, naming these articles of clothing “Navajo” was very likely illegal under IP law and the Federal Indian Commission Act.

The Navajo Nation Office of the Attorney General sent a cease-and-desist letter and issued this statement:  “[w]hether spoken or written, the Navajo name and corresponding marks are what make all things that are actually associated with it exceptional.  So when products that have absolutely no connection to the Navajo Nation, its entities, its people, and their products are marketed and retailed under the guise that they are Navajo in origin, the Navajo Nation does not regard this as benign or trivial.  It takes appropriate action to maintain distinctiveness and clarity of valid name-association in the market and society.”

The Indian Arts and Crafts Act of 1990 “prohibits misrepresentation in marketing of Indian arts and crafts products within the United States.”  Since no Native peoples were “involved in the production or design process”, the Urban Outfitters’ clothing most likely does not meet the definition of “arts and crafts” within the Indian Arts and Crafts Act.  But the Navajo Nation owns 12 trademarks concerning the use of “Navajo,” some directly related to clothing products.

In response to these allegations of illegal use of the word “Navajo,” Urban Outfitters wrote: “The Native American-inspired trend and specifically the term ‘Navajo’ have been cycling thru fashion, fine art and design for the last few years.  We currently have no plans to modify or discontinue any of these products.’”  But soon after, Urban Outfitters did in fact remove the “Navajo” name from the product line.

So this is a victory for the Navajo Nation, right?  Probably.  But two larger issues remain.  What if the Navajo Nation did not have formal IP protections?  And, shouldn’t the Navajo-based print be protected?  These two questions embody many of the tensions surrounding the argument for protecting traditional cultural expressions (TCEs), or expressions of folklore.  According to WIPO, TCEs are “productions consisting of characteristic elements of the traditional artistic heritage developed and maintained by a community . . . or individuals reflecting the traditional artistic expectations of such a community.”  TCEs include “music, art, designs, names, signs and symbols, performances, architectural forms, handicrafts and narratives.”

The difficulty in protecting TCEs revolves around the boundary between the public domain and the scope of contemporary IP protections.  IP regulations, via copyright laws, authentication and certification marks, and geographic indicators, tend to not be a good fit for protection of TCEs.  For example, how do you protect a Navajo design that “[t]o the western mind, and to those outside indigenous communities, … [has] often been regarded as belonging to the public domain, because [it] originated in centuries-old traditions, having no specific source or author.”  Additionally, “the copyright system . . . does not easily extend to . . . [TCEs because they] are traditionally unpublished, often not fixed in tangible medium, created not by one individual known author but collectively, and created not on a certain date but over time.”

Although the Navajo Nation was successful here in stopping the use of the word “Navajo,” in many cases such TCEs do not have IP protections.  Also here, the Native American print design remains unprotected.  It remains very clear that Urban Outfitters is selling a product that is heavily influenced by a print originally designed and created by Native American cultures.

Unfortunately, the theft of indigenous design is not unique to this occurrence.  (See Gaultier and Maori designs.)  The recent controversy between the Navajo Nation and Urban Outfitters serves as a great reminder of how IP law can sometimes successfully protect TCEs, but it and other cases also illuminate the limitations that modern IP law has in protecting TCEs.

Attributed to "appleswitch" -- flickr

In an ideal world, the contours of the law would align with our own instinctual senses of right and wrong.  When I see or hear something surprising, I try to rationalize it so it can fit together with how I understand everything else in the world.  If I can’t do it, sometimes I chalk it up to a limited perspective, but other times I end up with a bitter suspicion that the private interests of others are unfairly weighed over the public’s.  It’s a feeling that becomes more robust the longer it brews inside me.  I know a lot of people that shy away from this type of thing, preferring instead to sugarcoat their views and dismiss these suspicions as froth.

One such instance involves a family-owned coffee shop in southern California.  Judging by the pictures on its website, I expect it’s like other coffee shops in that it offers customers the chance to sip coffee and pass some time in a comfortable chair.  Looking like it was converted from residential to business use, the property might even beat out other shops in trying to recreate a familial, living-room-styled ambiance.  To complete the look and feel, there used to be a record player in the corner of the lounge, with a collection of records customers could look through and play at their leisure.  That record player isn’t there anymore.  The shop’s owners took it away, because it being there was illegal.

A music licensing company had sent them a letter informing them that playing the music in a store open to the public is considered a public performance of that music, and when unlicensed, it infringes upon the music’s copyright.  Under section 106(4) of the Copyright Act, copyright holders of audiovisual works are granted the exclusive right to perform those works publicly.  This applies whether it’s on a stage in front of a group of screaming fans or through a stereo and into a coffee shop for a few people nursing a cup of the day’s bold roast.

You might think these two types of performances should be treated differently, but beyond differences of scale and presentation, they’re still both performances delivered to the public for commercial purposes.

As expected, there are limits to this right.  The most relevant one for our purposes is in section 110(5), and was discussed at length by the Seventh Circuit in BMI v. Claire’s Boutiques.  Section 110(5) says that a business playing music through a radio on its premises is a public performance, but it doesn’t infringe upon the music’s copyright so long as the radio isn’t any more sophisticated than one typically used in a home.  In BMI v. Claire’s Boutiques, the Seventh Circuit defined a qualifying radio to include a receiver and ceiling-mounted speakers, like ones you’d expect to find in many small businesses around the country.  It went on to speak of how Congress carved out this exception for unsophisticated radios so that music licensing fees wouldn’t be pushed onto unsuspecting small businesses who find it perfectly reasonable to play a radio for their customers.  All of this sounds perfectly applicable to our coffee shop’s record player, except for one important fact—it’s not a radio.

The difference between a radio and a record player must be significant because the language of section 110(5) explicitly describes devices that play audio received from transmissions.   In either scenario the coffee shop patron will hear music, but with a radio, the music’s copyright holder was recompensed by the radio station for broadcasting rights.  With music on a record player, the copyright holder isn’t recompensed beyond the money paid for the record.  Should this distinction matter?  The language of 110(5) and a lack of case law to the contrary show that many think it does, but I don’t.

Broadly speaking, of course copyright holders should have exclusive rights in their works so that they can be appropriately paid for their efforts.  It’s fair that they have every right given to them by the Copyright Act, but that’s not what the exception under section 110(5) is about.  Whether we’re talking about a radio broadcast or the spinning of a vinyl record, the focus of the exception is the rule’s impracticality in the small business context.  By looking to the impracticalities and unfairness of pushing music licensing fees onto small businesses, Congress distinguished public performances to large audiences from those to small audiences.  If copyright holders weren’t compensated for “public performances” to small audiences like those in coffee shops, would that actually reduce their incentive to create?  If not, then wouldn’t enforcement here be beyond the general purpose and scope of copyright law?

Time to flash back to my childhood.  For those unfamiliar, the Mighty Morphin Power Rangers (“Power Rangers”) was a popular television series in the 1990s.  The show was based on a group of teenagers that would morph into Rangers to fight the evil in the world.  The superheroes were recognizable by their colored-coded costumes; they were dressed head-to-toe in blue, pink, red, yellow or black.

The company who owns the intellectual property rights to the Mighty Morphin Power Rangers filed suit against a website that sells Power Ranger-like costumes.  SCG Power Rangers LLC (“SCG”), the company that owns the Power Ranger franchise, filed suit on October 13th against Underdog Endeavors for selling the Power Ranger costumes on its website mypartyshirt.com.  SCG said that it filed the complaint only after it had sent Underdog Endeavors several cease and desist orders.  The complaint alleges (1) copyright infringement (2) violation of Section 43(a) of the Lanham Act (3) Federal Trademark Infringement and (4) violation of the Federal Anti-Dilution Act (15 U.S.C. §1125(c))).

At issue in this case is whether these costumes violate the Copyright Act if they don’t reproduce the copyrighted characters or if the costumes don’t display the trademarked name.  The real question here is more fundamental to copyright law: can costumes, and more generally clothing, be afforded copyright protection?

Under the Copyright Act, protection is not extended to “useful articles”.  The Copyright Act only protects elements of the artist’s original work if those elements can be separated from the work’s utilitarian, or useful, function.  A useful article is defined as an “article having intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.”  (17 U.S.C. §101) Therefore, most of these garments are not eligible for copyright protection because the costumes serve a purpose as clothing.  The leading case on the issue of Halloween costumes is Chosun International, Inc. v. Chrisha Creations, Ltd., 214 F.3d 324 (2005), which holds that the design elements are entitled copyright protection if they can be separated from the overall function of the costume as clothing.

Obviously, if a costume is packaged with the trademarked name displayed, then the costume has most likely infringed on SCG’s trademark and copyright.  However if the costumes do not display these trademarked names, the outcome becomes a little unclear.  If SCG can prove that the individual design elements of the costume are separable from the costume’s utilitarian function as clothing, then the copyright infringement suit will likely be successful.

This case provides another example of the ongoing debate of whether fashion design and clothes can and should be afforded copyright protection.  Currently, there is proposed legislation to amend the Copyright Act to extend protection to fashion design.  This past July, the Subcommittee on Intellectual Property, Competition, and the Internet heard  the proposed legislation.  If passed, this legislation will have major effects on the design industry, including the Halloween costume industry.

The target of the bills are pretty clear: drug counterfeiters that sell their infringing goods through web ads and media hosting sites, like the Pirate Bay, that operate overseas and are notoriously hard for domestic copyright holders to shut down. Between jurisdictional issues, softer IP protection laws, and foreign judges that are often unwilling to grant injunctions or extraditions against infringers, it’s clear that American copyright holders are having a tough time curtailing rampant infringement. However, these bills raise a number of issues, perhaps bigger and thornier than the ones they aim to solve.

What the two bills do, in essence, is to draft search engines, service providers, credit card companies and ad networks into the fight to help copyright holders protect their IP rights. The senate version of the bill would allow copyright holders to bring an action against these companies to get the Attorney General’s office to force them to cut off access to websites that host or advertise infringing material, as long as they can cite “specific facts” demonstrating that the sites are “dedicated to infringing activities.” Credit card companies would be unable to process payments to them, search engines would not be able to show them in search results, and service providers would not be allowed to provide access to them on their DNS servers.

The House version goes a step further and allows rights holders to go straight to service providers to request the site be blocked before they get a court order. This creates an even stronger incentive for service providers to block sites with little to no investigation of the infringement claim or a response from the “infringers” themselves (and any fair use defenses they may assert). The House bill also expands the scope of sites that rights holders can go after to those that “ha[ve] only limited purpose or use other than [infringement].”

Both bills serve to significantly erode the compromise struck in the Digital Millennium Copy Right Act that limits liability for service providers as long as they take down infringing content. These bills force service providers to block entire sites that host infringing content, and create a private right of action for rights holders if they do not.

While these bills raises serious due process and first amendment concerns, it is worth wondering, is this good for rights holders themselves? This law threatens to hit any website right where it hurts– in its wallet. If a website can’t market itself, or make ad revenue, it’s pretty much dead in the water. As a result, it will take down anything that even smells like infringement: fan sites, industry blogs, media posted on social news and networking sites, as well as foreign pirating sites. Is this what media companies want? To effectively erase all of the free promotion this type of activity gives their products? It’s hard to argue that piracy is not a problem for rights holders, but these bills might not even be in their best interest, let alone those of service providers or consumers who sit on this side of what some commentators are calling “The Great Firewall of America.”

More on these bills can be found here.

Before delving into the implications of the slide to unlock patent, it is important to look at what the patent covers. The USPTO approved Apple’s slide to unlock patent, No. 8046721, which lays out the specifics of the slide to unlock mechanism. The highlights include control over a method of “unlocking a hand-held electronic device,” the method “detecting a contact with the touch-sensitive display at a first predefined location,” and the method “moving the unlock image on the touch-sensitive display in accordance with movement of the contact.” In simpler terms, the patent covers unlock features that have a preset location to initiate the unlocking mechanism, that have a predetermined drag route, and that are part of a hand-held device.

A prominent question stemming from the grant of the slide to unlock patent is whether it should have been granted at all. To qualify for patent protection, a process or machine must pass five requirements: patentable subject matter, novelty, utility, nonobviousness, and disclosure/enablement. The two most interesting requirements, and in this case the only potentially controversial ones, are the novelty and nonobviousness requirements. The novelty requirement involves a determination of whether an ordinary viewer would see the machine as a new machine rather than as a modification of an existing machine (which is commonly referred to as the prior art). Nonobviousness requires that the differences between the machine and the prior art not be obvious at the time the applied-for machine was invented to a person having ordinary skill in the pertinent art.

Applying these rules to the slide to unlock patent, it seems a little curious that this mechanism passed the novelty and nonobviousness requirements. For nonobviousness, the slide to unlock mechanism on Apple’s phones involves a lot of complicated technology. It seems somewhat difficult to believe that developing this process would be obvious to a technology expert. Therefore, there is some merit behind the UPSTO allowing the slide to unlock mechanism to pass the nonobviousness requirement. For the novelty requirement, the slide to unlock mechanism could be seen as entirely new because before the invention of this technique, phones were unlocked by putting in a password or by pressing a button. However, since the days of the Discman, slide to unlock mechanisms have been present in that format. Perhaps the patent examiners viewed the technology involved in changing the slide to unlock mechanism from a physical lever to an electronic motion recognition process as distinct enough to warrant protection. However, there is evidence that the slide to unlock mechanism existed in a cell phone two years before Apple received the patent. In light of this discovery, there are serious questions about the validity of Apple’s slide to unlock mechanism passing the novelty requirement, and subsequently being granted a patent.

The slide to unlock patent is also indicative of how patent system currently works and the effect that it has on innovation. Granting this patent gives Apple the power to sue every Android phone on the market for infringement because they all currently use a similar slide to unlock mechanism. The validity of the patent has already been questioned in courts around the world, with a court in the Netherlands already throwing it out. The effect that this type of patent has on innovation has also been called into question.  On one hand, the patent is indicative of the growing patent war between global technology companies like Apple and Google. On the other hand, the patent represents a technique to inhibit innovation through the use of double patents. The ultimate effect means that smaller technology companies will be locked out, stifling the promotion of innovation.

The Supreme Court is set to take their seemingly annual patent case up again.  This year’s version is Mayo Collaborative Services v. Prometheus Labs, Inc [hotlink to briefs].  As reported this week by Patently-O, the case turns on a § 101 subject-matter challenge to a diagnostic method patent, and on the somewhat abstract question of whether the patent is “concrete” or “tangible” enough.

With the Bilski, Classen, Myriad, and Ultramercial cases, the Federal Circuit and the Supreme Court have been busy rendering appellate decisions on § 101 subject matter challenges this past year.  In all this flurry of activity, it is important to stop and reassess why the patent bar, the Federal Circuit, and the Supreme Court is so interested and active in hearing these challenges.

In practice, and historically, § 101 challenges have been a rarity—the exception to the rule.  At the Office, § 101 challenges are easily defeated and rarely raised during prosecution.  At the trial level, it would seem so much more effective, as Chief Judge Rader has noted, to bring an invalidity defense for obviousness or anticipation of a broad claim.  Yet that requires evidence, and leg work, and if not preserved on appeal, it cannot be relitigated at the Federal Circuit.

Subject matter jurisdiction, however, can always be raised without much cost, and can give petitioners the ability to effectively relitigate the issues of novelty and nonobviousness through the lens of, “is this really just patenting something occurring in nature?”  And, as noted in numerous law reviews, law schools, and courtrooms around the nation, gatekeeping doctrines like standing, finality, ripeness, and exhaustion have a pervasive and tempting allure to the appellate judge.  Thus, whether intentionally or not, the patent bar has attempted to strengthen its own form of subject matter jurisdiction as a way to win appeals.

It is fertile ground for an appellate lawyer or judge.  It is largely theoretical, abstruse, and difficult (much like standing).  Some would say impossible to predict.  Yet, some seem to be taking notice of the wastefulness of spending countless hours, days, and often years litigating subject matter jurisdiction when the case may have been much stronger for clear anticipation of the patent by long-understood or long-known methods.  Chief Judge Rader, for one, in some of the more notable rejections of § 101 at the Federal Circuit level, has repeatedly emphasized that § 101 is a “coarse filter” and should not be confused with novelty or obviousness challenges.

Unfortunately, another bite at the apple is often too tempting for appellate lawyers to pass up.  (As the scorpion in the parable says, “It is my nature.”)  And an issue that exists largely in the mind would seem a litigator’s heaven, locked in an office looking up precedent and drumming up compelling analogies (like the “magic microscope”) and policy arguments as to why we should not allow patents on genes, or business methods, or tax shelters.

All well and good.  But rather than spending so much time, money, and effort on these late-stage § 101 challenges, the court—and the bar—should be spending their time on the stronger case of the obviousness of broad patent claims, or the anticipation of methods that have been long-practiced without the help of a computer or a lawyer.  Chief Judge Rader has it right, and if the Supreme Court can see the forest through the trees, they will listen.  Settling parties’ expectations, denying the majority of § 101 subject matter challenges, and refocusing patent appellate litigation on the merits of cases and the issues preserved will increase certainty, conserve judicial resources, and prevent the inevitable academic slide into debate over issues that should largely be left to Congress.  If justice is blind, the patent system should be deaf and dumb as well, if only to questionable § 101 arguments.

We need to return to fixing problems with examination, issuance, and post-grant challenge to strengthen patents, and should avoid prolonged detours into the intellectual thickets of the theoretical, if oftentimes compelling, land of § 101 subject matter challenges.  It may be the Court’s role to emphatically state ‘what the law is,’ but it is not their role to state what patents should be.

In its complaint, filed on January 18, 2011, VS alleged that Twitter “creates and makes publicly available, interactive, virtual communities and profiles of people in various fields of endeavor” in violation of its patent. In response, Twitter primarily argued that VS’s patent was invalid under the recent Supreme Court case Bilski v. Kappos, which held, in part, that a process is patent-eligible if (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a different state or thing (the “machine-or-transformation” test).

First, Twitter argued that VS’s “virtual community” patent failed the “machine” prong of the test because it was not “tied” to a particular machine or apparatus, in this case, the internet, because the patent described the process as publishing profiles over any “machine readable media.” Twitter also asserted that even if the patented process was “tied” to the internet (i.e. required publication via the internet), the internet is not “a particular machine” for purposes of satisfying the machine prong. To support this proposition, Twitter cited CyberSource Corp. v. Retail Decisions, Inc., in which the Federal Circuit stated that practicing the patented method “over the internet” did not tie the process to a particular machine because the internet is an “abstraction” comprising a network of many individual machines.

Second, Twitter argued that the patent did not satisfy the “transformation” prong because the patent merely organized data and did not transform it into “a different state or thing.” Twitter further argued that VS’s patent was not distinguishable from the “prior art”— all the information that has been made available to the public in any form before a given date that might be relevant to a patent’s claims of originality; if an invention has been described in prior art, a patent on that invention is not valid—because certain previous online technologies described similar “online communities.”

Finally, Twitter argued that even if VS’s patent was valid, its service works differently than the system described in the patent such that Twitter’s service does not infringe on VS’s patent.

Twitter’s motion for summary judgment was denied, and the case proceeded to trial on October 24th. At the conclusion of the trial, the jury found that Twitter was not liable and refused to award the $8.4 million in damages claimed by VS; the jury found not only that Twitter did not infringe VS’s patent, but agreed with Twitter that the patent was invalid because it did not describe a novel invention. Had the jury found otherwise, any website on which individuals maintain profiles and can interact as an online community may have been in jeopardy.

While the outcome of this case has an immediate impact on Twitter, potentially saving it from total destruction, it also continues the recent trend of chipping away at the controversial “business method patent.” A business method patent is defined as a class of patents that disclose a new method of doing business, including types of e-commerce, insurance, banking, and tax compliance. For many years, the U.S. Patent and Trademark Office (USPTO) took the position that “methods of doing business” were not patentable, but with the explosion of internet-based technologies and start-ups during the 1980s and 1990s, the Federal Circuit ultimately decided that they could be, if the basic criteria for patentability were satisfied (novelty, non-obviousness, usefulness).

The Supreme Court in Bilski cast doubt on the appropriate scope of business method patents, but did not decide in that case whether they were per se unacceptable. Despite the lack of clear guidance on the issue, a number of courts, including the Federal Circuit itself, have taken steps to significantly restrict the scope of business method patents. If this trend continues, and I believe it will, the business method patent may become a thing of the past. The Supreme Court is already set to visit the issue of the scope of “medical method” patents in December, and will also hopefully clarify the permissibility and scope of business method patents in that case once and for all.

Yet, the objective of the Convention is quite an important one because counterfeit drugs pose problems much different from other counterfeited goods. Although sales of counterfeit haute-couture bags enjoys much more publicity, buying a fake Louis Vuitton does not have the side-effects on health as ingesting a counterfeit painkiller. And while one can easily recognize the fake 2500 euro bag, it is much harder to distinguish between pills – some of which contain the right ingredients at the right dosages and some that do not. Further, the impact of counterfeited drugs is not only on public health: in 2006, Pfizer was forced to call back quantities of its best-selling anti-cholesterol drug after counterfeited products had entered the UK market. Public health, still, appears to be the primary concern.

This is an argument that the drafters of the Convention made in the preamble of the text, which interestingly refers to the Universal Declaration of Human Rights and to the Convention for the Protection of Human Rights and Fundamental Freedom, stressing that counterfeiting medical products violates the right to life protected in these declarations. The text further exposes the purposes of the Convention, which are to prevent and combat threats to public health. The focus of the Convention is therefore not on infringements of intellectual property rights, but “concerns [about] medical products whether they are protected under intellectual property rights or not, or whether they are generic or not, including accessories designated to be used together with medical devices, as well as the active substances, excipients, parts and materials designated to be used in the production of medical products.” Phrased differently, the Convention is not aimed at fighting against intellectual property infringements. The Convention, however, applies to situations in which the criminalized conduct also infringes on intellectual property rights.

Chapter II of the Convention details the substantive criminalized conduct. The new criminal provisions need not apply only to situations were actual damage to individuals has been identified. Rather, the provisions are meant to apply to any situation where a risk to public health has been detected. Read together with the scope of the Convention, which, again, does not apply any time there is infringement to an intellectual property right but may so apply, this is a new weapon for pharmaceutical companies and other IP rights holders. These companies may not be plaintiffs in civil actions, but they might still find relief in criminal sanctions as soon as an incident infringing on their IP rights falls under the provisions of the Convention, without having to prove the damage that the manufacture and trafficking of the counterfeited drugs have caused, if these counterfeited drugs have only created a risk for public health.

The text further provides sanctions for aiding, abetting, and for attempting to commit any conduct prohibited by the Convention, but allows for Countries to make reservations as to attempt to make up for the differences in the legal systems.

The Convention also creates corporate liability when a person in a leading position within a company has committed an offense proscribed by the Convention and when the person’s conduct has produced benefits for the company. The Convention does not impose criminal sanctions associated with corporate liability, but provides that civil or administrative sanctions might also be appropriate. Where corporate liability requires a civil sanction, does this create a new course of action for wronged IP right holders who could sue infringing companies where no damage to specific individuals has been asserted but where a danger to public health has been created? This would certainly and interestingly expand the scope of remedies for trademark and patent holders in the field of medical products, especially since the Convention is not only for Member States of the Council of Europe but is open to any other interested country.

After this story appeared in the news it likely triggered the two applications for the phrase OCCUPY WALL STREET. Both applications were filed on October 24, 2011. One of the applications was filed by Pete Dutro and Victoria Sobel, two OWS organizers that have been maintaining the finances for the group. Their significant involvement in the movement is demonstrative of their good intentions, and the move was most likely to prevent people like Maresca from trying to capitalize on OWS.

The questionable part of this story comes from the second application, filed by Fer-Eng Investments, LCC, an Arizona based corporation. Fer-Eng Investments appears to be a shell corporation with the only officer named as “The Ferraro-Eng Family Trust.” The names provided on the address refer to Vincent Ferraro and Wee Nah Eng. Interestingly enough, Ferraro, a Stanford Business School grad, is the former Vice-President of Worldwide Marketing for Hewlett-Packard, where he met his wife Wee Nah Eng. Ferraro now serves as the Vice President and Chief Marketing Officer of Global Marketing for Eastman Kodak, and also appears to hold several consulting positions. Now, I don’t know what type of compensation Ferraro receives, but based on his title, position, and impressive (publicly accessible) Linkedin resume, I would be willing to give anyone 10:1 odds that the Ferraro-Eng household is bringing in enough to meet the $380K a year threshold for the “top 1%.”

The irony would be palpable if Ferraro-Eng actually intends to sell the clothing, bags, footwear, etc. that the trademark application covers. If this scenario were in a book or movie script it would probably be rejected for being too obvious – somebody in the top 1% registers OCCUPY WALL STREET as a trademark so that they can make money off the 99% that protests against them.

To be fair though, I do not know what the Ferraro-Engs’ motivations are in registering OCCUPY WALL STREET as a trademark, and I am not aware of either party being affiliated with any particular political group. There are certainly those in the top 1% who support OWS, and would like to see changes made in this country. It is entirely possible that the Ferrero-Engs intended to register the mark to either donate it to the group or to prevent people like Maresca from attempting to exploit the movement. I am personally hoping that is the case – that the Ferrero-Engs are in the top 1%, but have a mindset more akin to Bill Gates than to Steve Jobs. Pending the outcome of the trademark applications, I guess we will find out soon enough.

In his press release, Senator Leahy stated: “Vermonters take pride in the natural products our state produces, and I have been alarmed by the growing number of individuals and businesses claiming to sell Vermont maple syrup when they are in fact selling an inferior product that is not maple syrup at all. This is fraud, plain and simple, and it undermines a key part of Vermont’s economy. I know that hardworking syrup producers in Maine, New York and other states have been similarly hurt by this crime. Our bill will deter this criminal conduct.” Under current law, passing off imitation syrup carries a one-year penalty, while the new law would increase the offense to a felony, punishable up to five years.

This story brings up the issue of geographical indicators. According to the USPTO, “geographical indications are indications that identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin.” Geographical indicators serve as (1) source-identifiers; (2) guarantees of quality; (3) and protectors of business good will. Much like Champagne comes only from a certain region of France or Idaho potatoes can only come from Idaho, maple syrup will have to be genuine maple in order to receive that designation.

While maple syrup protection may not be high on the list of priorities for most Americans, it is important to recognize a product’s locality and its assurances of quality. Like Napa Valley wine, Georgia peaches or Florida oranges, a locality takes pride in its agriculture and it is unfortunate when others take advantage of the good will built up over the years. Producers of maple syrup want their consumers to know that the product they are buying is genuine. While the punishment chosen may be a bit heavy handed, I applaud the Senators’ effort to come together and help local farmers in their states.

The dispute arose from Mr. Oliver Brüstle’s patent on “isolated and purified neural precursor cells produced from human embryonic stem cells used to treat neurological diseases.”  Mr. Brüstle works at the University of Bonn in Germany as a Professor of Reconstructive Neurobiology.  Greenpeace, along with a number of religious organizations, contested the patent and sued for “ethical reasons,” to invalidate Mr. Brüstle’s ownership rights in the patent.  The patent was declared “invalid insofar as it covers precursor cells obtained from human embryonic stem cells,” by the Federal Patent Court (Bundespatentgericht), and the case was subsequently referred to the European Court of Justice.

The issues that the European Court of Justice was asked to determine largely arose from the European Union’s approach to patentability and embryonic research.  The relevant legislation and treaty language can be found in the German national law, TRIPS article 27, CGEP articles 52(1) and 53, and Directive 98/44 with respect to article 6(2)(c).  Of these sources of law, the Court particularly focused on the directive since the case turned on the definition of “embryo” and the “dignity and integrity” of a person.  The Court’s decision was largely centered on the concepts of ordre public and morality that are included in the laws and treaties.  However, since there is some question as to whether a stem cell or purified precursor cell could be considered to be an embryo, the Court first attempted to define and interpret the concept of human embryo with respect to article 6(2)(c).

To give some context to the Court’s ruling, I will briefly outline a few relevant points in stem cell research.  While there are a few different types of stem cells, embryonic stem cells are probably the most potent and controversial since production starts with the fertilization of a human ovum (“egg”).  Within a few days after fertilization, a blastocyst is formed, which is comprised of a number of cells and regarded by a number of scientists to be an early stage embryo.  In the interim period between fertilization and blastocyst formation, the ovum (now a “zygote”) undergoes a number of changes.

These changes include the formation of totipotent cells (unspecialized cells which can form anything in a human body) and eventually pluripotent cells (which can form a number of things but within one of three categories).  Totipotent cells precede pluripotent cells chronologically and denote different stages of development.  Therefore, the issue the Court had to wrestle with determining the moment at which an embryo could be regarded to exist, since it would be protected by national law.

In the end, the Court determined that while the pluripotent cells and blastocyst are more specialized in the development of a human being, that totipotent cells were also necessarily included in the definition of an embryo.  The Court stated that “[A]ny human ovum must, as soon as fertilised, be regarded as a ‘human embryo’ within the meaning and for the purposes of the application of Article 6(2)(c) of the Directive, since that fertilisation is such as to commence the process of development of a human being.”  This definition is also meant to include traditionally and non-traditionally matured ova, such as in parthenogenesis (maturation of an ovum without fertilization).  However, the Court seems to have left open the question of whether a stem cell obtained at the blastocyst stage is an embryo, which may lead to further debate in the field.  In addition to its determination that an embryo exists once an ovum is fertilized, the Court determined that scientific research and industrial use of embryos cannot lead to patents and further excluded any materials obtained from the destruction or use of embryos as base material.

While the implications of this decision are not entirely clear at this point, Mr. Brüstle and a number of other scientists have articulated that this decision comes as a huge blow to the scientific community.  The scientists feel that this decision will serve as a huge setback in the development of stem cell products and may result in a greater advantage for their Asian counterparts.  Greenpeace, the Catholic Church, and a number of religious organizations, however, feel that this decision comes as “a victory for human dignity.”

However, Mr. Julian Hitchcock, a lawyer with Field Fisher Waterhouse LLP also voiced his opinion that this decision may not actually be too detrimental to stem cell research; it could very well provide scientists and researchers with more freedom to not “worry about infringing someone else’s patent.”  Furthermore, he points out that “While the ruling restricts patentability of such inventions, it doesn’t in any way restrict the use of embryonic stem cells.”

As a result the Court’s decision may not really do much at all in the way of discouraging stem cell research – it may very well promote it.  While in the United States we have the Bayh-Dole act to promote non-commercial research which can later become commercialized; embryonic stem cell products could very well start as non-commercial ventures in Europe and later lead to greater developments that may be nevertheless be patentable as well.  The incentive in obtaining a patent and conducting a research may merely be delayed as opposed to entirely eliminated.

Furthermore, some practitioners have even posited the idea that researchers could depend on trade secrets and regulatory procedures to sidestep the hurdle.  Lastly, the Court through its ruling has not foreclosed all embryonic stem cell research as such.  Scientists may still be able to patent embryonic stem cell products by establishing that a stem cell obtained at the blastocyst should not be considered an embryo and therefore could potentially be patentable subject matter.  In sum, the Court’s decision may provide very little guidance at all, and certainly leaves open the question of how to implement this new restriction on patentability; it will certainly be interesting to see how scientists, organizations, and Courts deal with this matter in the coming months and years.

Groupon describes itself as the innovator of deal-of-the-day websites that provide consumers with discounted offers for goods and services that are targeted by location and personal preference. After Groupon rejected Google’s 6 billion dollar buyout last year, Google created Google Offers a similar daily deal website.

The complaint stated that “in their new positions with Google Offers and/or Google, Hanna and Nolan will provide the same or similar services as they provided at Groupon,” requiring them “to employ confidential and proprietary information that they learned while employed at Groupon.” The complaint states the confidential information the defendants were given and had knowledge of were Groupon’s deal history with merchants, pricing and structure of those deals, the identification of existing and prospective Groupon merchants, and Groupon’s in-house sales Wiki providing information regarding Groupon’s sales practices and strategies. Groupon also states in the complaint this information is not publicly available and was developed over time through substantial research.

Groupon alleges Hanna and Nolan did not return some of the company’s information it obtained during its employment. It also alleges Hanna emailed himself client information on his last day working for Groupon. Groupon alleges Google will use this information to compete with Groupon and as a result it will suffer irreparable injury. Groupon seeks damages for violation of the Illinois Trade Secret Act and contract damages.

Groupon will most likely be successful in establishing the information at issue are protectable trade secrets. Under the Uniform Trade Secret Act, which resembles the Illinois Trade Secret Act, to be a protectable trade secret the information must not be secret, some value must be derived from it not being generally known, and reasonable means of secrecy need to be taken. If the Court finds Groupons allegations in the complaint to be true, the three requirements for a protectable trade secret will most likely be met.  Courts will consider information to be secret if it is not generally known or not readily ascertainable. If Groupon is correct that the information at issue here is not publicly available, then it most likely meets the secret requirement.  The court will also most likely find that Groupon derives commercial value from the information the defendants had access to, since it gave Groupon a competitive advantage in the marketplace. Groupon also most likely took reasonable means to protect their secrets, since they had the defendants sign a confidentiality agreement in their employment contracts.

The information Groupon alleges Hanna and Nolan revealed to Google is most likely a protectable trade secret; therefore, it can be misappropriated. According to the Illinois Trade Secret Act, acquiring the trade secret by improper means or disclosing or using a trade secret that was acquired under a duty to keep secret or confidential constitute misappropriation. The court would have to find that the defendants disclosed to Google the information they acquired while at Groupon and agreed to keep confidential. The court also could find it improper for Hanna to email Groupon’s client information on his last day of employment.

If Illinois accepts the inevitable disclosure doctrine, it could be applied in this case.  Inevitable disclosure is applied when an employee’s knowledge and skills are inseparable from an employer’s trade secret such that the employee cannot avoid using the secrets for a subsequent employer. PepsiCo, Inc. v. William E. Redmond and the Quaker Oats Company, 54 F.3d 1262 (1995). General knowledge obtained can’t be protected. Groupon alleges the defendants in their new positions at Google will inevitably disclose Groupon’s trade secrets. A court could find these allegations to be true since it will be hard for Hanna and Nolan from using the knowledge they acquired from Groupon’s trade secrets, such as sales and operational plans, in a similar position at Google. The inevitable disclosure doctrine was applied to a similar case, PepsiCo, Inc. v. William E. Redmond and the Quaker Oats Company, where Redmond a high-level employee at PepsiCo had access and knowledge of its confidential trade secrets, such as marketing and pricing plans, obtained a similar position at PepsiCo’s competitor Quaker. The court found Redmond would inevitably disclose these secrets in his new job at Quaker, which would cause harm to PepsiCo since Quaker is a direct competitor with its sport’s drink line.

Robert and Diane Maresca, both residents of Long Island, have attempted to register a trademark for the “Occupy Wall Street” slogan.  They want the exclusive right to use the label on T-shirts, handbags and drinking glasses, which they would presumably sell for a profit.  Robert said that he realized the OWS slogan had the potential to become a “global brand” and that the move was inspired by his “practical business side”.  He used the age old explanation that if he didn’t make this move, someone else would have.  Indeed, apparently another attempt had already been filed to register “We are the 99%”.  Robert did claim that his motives were to protect and enable the spread of the message rather than to control it.

Trademarks were originally intended to be attached to physical goods, and it’s not surprising that using them in regards to a political movement has unexpected consequences.  The diffuse nature of a grassroots movement like OWS makes them particularly vulnerable to attempts like this.  Of course, it’s questionable whether the registration will succeed, and even if it does it wouldn’t prevent the movement from using the slogan, merely prevent others from selling those particular goods with the slogan on it.

Image by Flickr user tableatny

A new paper, Priority Rules: An Empirical Exploration of First-to-Invent Versus First-to-File by R. Polk Wagner and David Abrams has come to the conclusion that the switch to a first-to-file system that happened in Canada in 1989 has resulted in a significantly lower number of patents being granted to small inventors.

However, the changes that occurred in Canada in 1989 did not involve the publication rule, which grants patent rights to the first person to publish, so long as the inventor files within a year. Although the paper by Wagner and Abrams provides an interesting insight to a pure first-to-file system, it is not a good comparison to what is going to happen in the U.S. patent system; Canada does not have the self-publication grace period. Inventors in Canada do not have an option to publish to a website to secure their rights. The only option they have is to spend the money to obtain a patent and be fast enough to win the race to the patent office. By not implementing a self-publication exception, Canada set itself up for difficulties, making it hard for small inventors to beat large companies to file first, as evidenced in the paper by Wagner and Abrams.

Although there are many explanations floating around for the phenomenon described in Wagner and Abrams’s article, one acceptable explanation is that small businesses will not have the money to compete with larger businesses under a first-to-file system. Small inventors are unable to file everything and see what pans out; an active decision must be made if the invention is valuable enough to justify the cost of patenting. With the self-publication exception in the America Invents Act, inventors large and small can easily secure their rights for one year, without an expensive race to the patent office, while temporarily prohibiting another company from getting a patent on the same idea. Let’s take a look at the changes from the perspective of the inventor, and see how you can take advantage of the new changes to make the patent system cheaper for your business.

In order to compare what is happening in our patent system, let’s look at the current rule in effect for the next 18 months. Currently the U.S. patent system grants priority to the first person to invent, which is seen as a way to protect the small inventor. If a small inventor can prove that they created the idea first, they get the rights to the patent.

Simple, right? Not so much. What really happens is that the patent enters an interference proceeding to determine who actually invented the invention first. Many times interference proceedings turn on such small details as a scribbling of a date in a notebook , which can make for expensive litigation.

If you are a small business or solo inventor, do you really have the money on hand to fight an expensive litigation battle to prove that your scribbling in your notebook happened before some major lab’s notes? Having been a small business owner, I know I did not have a few extra hundred thousand dollars lying around to fight that battle. I would suspect that in most cases, the inventor must go out and seek some financing. I would not want to be making that sales pitch: “I actually invented this first, but another company is claiming they did, so I need a large chunk of cash to try and prove that I scribbled this date before they scribbled their date.” I am sure it has been done, it just does not seem like a good start.

The new rules under the America Invents Act, taking effect March 16, 2013, are implementing the infamous first-to-file system. By itself, this means that whoever submits their application to the patent office first, gets rights to the patent regardless of who invented the invention first. This by itself would be bad for small inventors, as I am sure any large company would be able to churn out a patent application faster, by either having patent attorneys on retainer or in house counsel, than most small inventors can get the finances required to turn their invention into a patent. It would appear that many smaller companies would have to consider the choice of spending the money to file, instead of having a set budget or in house counsel that they are paying if they file patent applications or not. (For a good discussion on the costs and some suggestions to reduce the cost under the current system see The Cost of Obtaining a Patent in the US)

It’s important to remember that a pure first-to-file system is not the whole story. The exception that will be implemented is equally important, especially for small inventors and small business owners. An inventor who publishes first gets rights to the patent regardless of who files first, so long as the inventor files their application within one year. This exception is great for small inventors, large inventors and everyone. Not only does it promote one of the major goals of the patent system, to increase public knowledge though publications, it also makes it easy for small budget inventors to secure their patent rights.

So how can you secure your patent rights? Well, you have to make a choice; do you plan to pursue a patent in only the U.S., or are you considering an international application? Remember, international applications can get very expensive very quickly: filing fees per country range from a few thousand to over $50,000. This does not count the costs of translations if needed, additional research, and the associated attorneys fees. Additionally, a U.S. patent still prohibits foreign companies from importing a competing product.

If you plan to only pursue a patent in the U.S. in order to secure your rights, it’s simple: publish everything on your company’s web page. Although there is a minimal amount of law regarding whether the Internet can count as a prior art publication, currently the USPTO states that it does. (See 2128 “Printed Publications” as Prior Art [R-5] – 2100 Patentability of the MPEP) Consider starting a research blog or other regular update on what you or your company has invented. Remember though, when you make those posts the clock begins ticking and you only have one year to get your patent application in.

One key aspect right now is that it must be a self-publication, which means that if you publish your idea even one day before your competitor files, you can stop that competitor from getting a patent, while still keeping your rights for up to one year. It is not an open grace period of one year.

Considering some of the benefits, not only does self-publication secure your rights to a future patent, it also prohibits another company from securing a patent on the same idea. The time it takes to post on a website is nothing compared to the costs of obtaining or losing a patent. From the date of your post, you have one year to decide to file an application, so now you have time to consider if filing for an application is a smart investment. For the sake of your patent attorney, please do not wait until two weeks before your patent is due and come into their office expecting a patent. They will be upset, you will not get as good of a patent as you could, and they will probably charge you double. At a minimum, six months would be a good time to get in touch with your patent attorney.

If you plan to obtain patents outside of the U.S., there are numerous things you need to consider.  First, you must consider whether to publish or not. Some countries do not have a grace period for publications. Thus, publishing your invention can actually prohibit you from obtaining a patent in those countries. If you are considering filing outside of the U.S., you need to talk to your patent attorney about the countries you are considering filing in and their laws.

One thing you can do, regardless of where you plan to file, is to take advantage of the provisional application. The provisional application is an under-utilized item in our patent system. If you ask different people you will get a different answer as to what it is useful for. But it does do one amazing thing. It secures your patent rights for one year, and generally it can be done much more cheaply and more quickly than filing a full application. It has a much less stringent requirement on what is included and acts like a placeholder to your rights for one year. You can still file an international application within one year of your provisional application and claim your provisional date as the priority date. (For additional considerations and cautions with the provisional see Proceed with Caution with U.S. Provisional Patent Applications)

Another consideration that must be taken into account involves what you are disclosing in your publications. You do not want to publish non-enabling disclosures and count on that securing your rights for that one year, or unintentionally publish an enabling disclosure and not file in time, there by losing your rights. Consider what you are publishing, talk to your patent attorney, and set up a plan for when and what should be included in your publications. Keep an eye on when you have to file and when you need to talk to your patent attorney. Finally, try to not ruin your patent attorney’s day by needing a patent filed in a week; someday that attorney might be me.

If you only plan to file in the United States, and only want to prohibit the sales of competing inventions within the United States, you can get up to two years to make the full commitment to obtaining a patent: publish, file a provisional application, then make a full patent application. If you do not patent and decide to pursue the invention, you have prohibited others from obtaining a patent. If you are working on an international level, take advantage of your provisional application in order to secure your rights quickly while keeping your costs in check.

The new rules make it cheaper and easier to secure your patent rights, a good thing for all inventors. The rules also promote the general distribution of knowledge.

After being ravaged by tornadoes in 2008, Chapman High School has been facing the unenviable task of rebuilding large portions of its community, and is still picking up the pieces. The high school, “Home of the Fighting Irish,” finally opened a new school building in January of this year. Folks in the community of 1,393 had cause for optimism as they moved on from the disaster that displaced 200 of their fellow residents. Enter the letter Notre Dame University sent to Chapman School District this summer, stipulating that both the “Fighting Irish” and leprechaun logo were federally registered trademarks of the University which Chapman could not use.

This is not the first time a major university has flexed its legal muscles by sending cease and desist letters to high schools that were allegedly using its trademarks. Arizona State University has also successfully changed the mascot and logo of Culpeper County High School in Virginia, and Penn State University has asked a Fredericksburg, Virginia elementary school to alter its logo so that it wouldn’t resemble the “Nittany Lion”. Notre Dame itself has encountered similar cases in the past involving Catholic Central High School in Springfield, Ohio, and Cathedral High School in El Paso, Texas, among others.

Under the Lanham Act (15 U.S.C. §§ 1051–1127), which currently governs federal protection and registration of trademarks, “likelihood of confusion” among consumers is the test for trademark infringement. There are eight elements generally relevant to satisfy “likelihood of confusion”:

1. strength of the mark,
2. proximity of the goods;
3. similarity of the marks;
4. evidence of actual confusion;
5. marketing channels used;
6. type of goods and the degree of care likely to be exercised by the purchaser;
7. defendant’s intent in selecting the mark; and
8. likelihood of expansion of the product lines.

See AMF, Inc. v. Sleekcraft Boats, 599 F.2d 341 (9th Cir. 1979).

There is little doubt that based on purely stylistic evidence alone, universities with federally trademarked mascots and logos have a strong possibility of satisfying these eight elements when bringing claims against high schools that use identical logos or mascots.

However, it seems that most universities take a passive approach to enforcing their trademark rights. University spokesman Dennis Brown said that Notre Dame does not actively seek out such schools, and that they ask administrators at those schools to find alternatives when such cases do come to their attention because unauthorized usage could weaken Notre Dame’s property interests and rights to its federally trademarked words and symbols. After soliciting advice from a school district attorney, it appears that Chapman will bow to Notre Dame’s demands and has begun a contest to pick the replacement mascot.

Viacom’s principal argument was that under DMCA § 512(c)(1)(A)(ii), YouTube loses its safe harbor from copyright infringement liability if it doesn’t generally remove content it knows to be unlicensed and copyrighted but for which it hasn’t received a DMCA takedown notice. A U.S. district court disagreed and awarded summary judgment to YouTube, holding instead that YouTube’s duty to remove unlicensed, copyrighted content from its website is not a general one. The district court held the duty only applies when a DMCA takedown notice or other facts alert YouTube to specific instances of infringement.

The case involves other issues and other provisions of the DMCA, but the focus is really on how to interpret DMCA § 512(c)(1)(A)(ii). This provision says that to qualify for a copyright infringement safe harbor, a service provider such as YouTube must remove copyrighted material not only when it receives a takedown notice but also when it’s aware of “facts or circumstances from which infringing activity is apparent.” Even though the district court worked to determine whether this meant YouTube’s duty to remove copyrighted material was general or only in specific instances, something else caught my eye in the reports of what the parties said at appellate argument. According to the New York Law Journal, counsel for YouTube made a distinction between knowing that content was copyrighted and knowing that it infringed upon a copyright.

Implicit in this is the idea that YouTube might know some of its content is unlicensed and copyrighted, but the content might not infringe on the copyright because of fair use (e.g., criticism, teaching, research, and parody). The language of the provision supports this, as it only says YouTube must act when it knows “infringing activity is apparent.”

The reason why this caught my eye is because it specifies but does not change the principal disagreement between the parties to the case: who has the duty to find the videos on YouTube that have unlicensed, copyrighted content and aren’t protected under fair use? Both parties are trying to avoid it because of its scale. When YouTube’s users upload untold numbers of videos everyday, finding which ones have copyright-infringing content is like a game of “Whack-A-Mole.” By narrowing the issue to only infringing content, YouTube is emphasizing the depth of the analysis Viacom would have it take each time a new video pops up.

This is a huge burden to meet, but I think it could still fall on YouTube. Viacom argued on appeal that it wants its DMCA takedown notices to make YouTube remove not only videos it specifies as copyright infringing but also all the other copies of it that continue to pop up. If the language of § 512(c)(1)(A)(ii) says YouTube must remove material when it’s aware of “facts or circumstances from which infringing activity is apparent,” wouldn’t that occur when Viacom gives it DMCA takedown notices for other instances of infringement? I could see YouTube successfully arguing at trial that just because one video infringes on a copyright, it doesn’t necessarily mean another video with the same copyrighted material is also infringing. That would depend on the similarities of the two videos. If the other video were identical to the first, then of course its infringing upon a copyright would be apparent. On the other hand, maybe the copyrighted material appears in the second video in the context of a school lesson or satire. Whose burden would it be to determine if the second video uses the copyright material in fair use? In many cases, it wouldn’t be YouTube because the DMCA provision says YouTube only has to act when it’s “apparent,” i.e., clear that the content infringes upon a copyright.

Nevertheless, last week’s appellate arguments were only for overturning a summary judgment. Because YouTube could have a duty to remove videos if they are copies of others for which it has received DMCA takedown notices, a summary judgment was improper. There is room for the facts of the case to determine the extent of YouTube’s duties, and the district court awarding a summary judgment didn’t give Viacom the opportunity to point them out.

Atilla Engin, the original author of the sample that Djuma Soundsystem used

Copyrights are granted to the authors of “original works of authorship,” including literary, dramatic, musical and other works. Without authorization from a copyright holder, others are not allowed to reproduce or distribute the work in copies, as Djuma Soundstyem did in Denmark. In that case, Danish electro band Djuma Soundsytem used a sample of Atilla Engin’s track “Turkish Showbiz” in their track “Les Djinns” without telling their label at the time, EMI, that they did so. The track was released and sold a measly 150 copies. However, after being dropped from EMI, their new label Get Physical thought the track could sell and contemplated a re-release. The group then decided to do the right thing and get permission from the original author. Unfortunately, the artists were unable to come to an agreement with the copyright holder. When the case went to trial, some contend that the judge did not understand the unique aspects of “modern” music. They contend that because this was a ten second sample, the crux of the case was how should a sample be defined. Similar criticism came from those concerned that the verdict would set a precedent and affect the Danish music industry for the worse. Specifically, the verdict places an economic burden on musicians who use short samples of songs. The critics say that Djuma should not be forced to pay such an exorbitant amount for a sample used in a song that made them one tenth of the fine. Essentially, the copyright holder won 84% royalties on a song that did not profit the band.

Djuma, however, is appealing the verdict in a higher court. While I agree with the need for a fine for copyright infringement, I also agree with the criticism of the verdict in this case: the fine should be commensurate with the actual profit made by one who reproduces copies of a piece of work without permission. However, perhaps the judge was trying to send a strong message to the Danish music industry. He has succeeded in doing so and it will be interesting to watch how this case is decided on appeal.

The first sale doctrine provides that “owners of a particular copy or phonorecord lawfully. . . [obtained are] entitled, without the authority of the copyright owners, to sell or otherwise dispose of the possession of that copy or phonorecord.” Codified in the Copyright Act of 1976, the first sale doctrine would allow for an owner of a copyrighted work to transfer that physical copy without infringing on the copyright owner’s rights of distribution.

Consumers can and have sold used CDs under the first sale doctrine. What makes digital music different? The actual selling element prevents the first sale doctrine from applying to digital music. When digital music is sold, the original copy can still remain on a hard-drive. Thus, there are two copies of a copyrighted work; a lawfully purchased one, and one illegal infringing copy. This clearly presents a different situation from when you sell a book or CD, where the seller gives up the physical possession of the product and not just a copy.

This is the very issue that has halted Bopaboo, a 2008 proposed startup website that similarly offered to sell used music files. According to Fatdrop, the Bopaboo model included allowing users to upload a particular file just once and the user agreeing to delete the original file once it’s sold. Additionally, Bopaboo would share the proceeds of each sale with the users and the recording label. Bopaboo’s requirement of users deleting the original files of the sold digital media was not enough to satisfy the requirement that the media be transferred. Increased pressure from recording labels resulted in the service being discontinued.

So what makes ReDigi different from the failed Bopaboo and peer-to-peer sites like Napster? According to its CEO John Oseenmacher, it makes sure the original copy is deleted from the computer and external machines. ReDigi requires each user to download its patent-pending software that verifies the file was legally purchased and eligible for sale and deletes it from the computer and external drives once the user decides to sell it.

If ReDigi technology does as it promises – verifying the music was legally purchased and deleting sold music files from the seller’s computer – it may be a legitimate legal market for used digital media under the first sale doctrine. The skeptical law school student in me, however, hesitates at this point to join the site, but I will follow them on twitter and see how the music industry embraces Redigi “recycling” the copyrighted works.