• IP BLAWG

    Tipsy and Ugly Fight Over Holiday Sweaters

    Beverly A. Berneman
    Tuesday, 12 December 2017

    Unraveling an ugly holiday sweater Google search could create potential liability. Google AdWords is an advertising service offered by Google that allows a sponsor to pay for advertising and a website link to appear prominently. A problem arose when Ugly Christmas Sweater, Inc. used Tipsy Elves, LLC’s name in its Google AdWords. Tipsy Elves sued Ugly Christmas Sweater for trademark infringement and other related causes of action. Tipsy Elves had a slippery hill to climb to prove its case. The vast majority of trademark infringement cases involving Google AdWords come out against the plaintiff. It appears that the parties settled their differences and Tipsy Elves dismissed its case. Ugly Christmas Sweaters’ Google AdWords no longer come up in a Google search of Tipsy Elves.

    WHY YOU SHOULD KNOW THIS. Google AdWords creates an opportunity for competitive advertising that might not be available in any other medium. Pursuing ad words for trademark infringement has problems, so far. Yet it shouldn’t chill pursuing the issue as the courts knit a remedy for sponsored misleading search engine results.

    This post is in honor of Golan Christie Taglia LLP’s first annual Ugly Holiday Outfit Contest which is coming up on December 15, 2017. The photo shows GCT associate, Anthony J. D’Agostino, modeling his contest entry.

  • Benefits Bulletin

    No Plan Document? No Problem!

    Andrew S. Williams
    Thursday, 07 December 2017

    Many of us have believed that every ERISA plan must have both a plan document and a summary plan description (“SPD”). An SPD is required for all ERISA plans in order to explain them in plain English. ERISA also requires subject plans to have a “written instrument” and it is the usual practice, for retirement plans in particular, to have both a plan document and an SPD.

    In the absence of a separate plan document, can a plan’s SPD itself also satisfy the ERISA “written instrument” requirement? A recent decision of the Firth Circuit Court of Appeals (Rhea v. Alan Ritchey, Inc. Welfare Benefit Plan) says yes.

    Because many insured group health plans have no documentation other than an SPD, this decision may provide a defense to employers who are sued because their group health and other welfare plans are documented only by an SPD and, therefore, are alleged to fail to meet ERISA’s so-called “plan document” requirement.

    In reaching its decision in Rhea, the Fifth Circuit rejected arguments that the defendant’s SPD was deficient because it referenced a separate, non-existent “plan document.” The Court also found that the SPD’s short hand description of procedures for amending the plan and its funding arrangement satisfied applicable ERISA requirements.

    Although the decision in Rhea recognizes the reality that most sponsors of insured group health plans do not have a separate plan document, note that many of those plans do not even have an SPD. This is because their insurance company has provided only an insurance company “certificate of coverage.” That type of documentation as well as SPDs that lack all the required provisions are not covered by the decision of the Court in Rhea.

    Takeaway:

    Sponsors of insured group health plans with only an SPD and not a separate plan document can relax – but only if their SPD’s satisfy the applicable ERISA “written instrument” requirements. Also bear in mind that there are other reasons to have a separate plan document. SPDs are prepared by insurance companies and may not include optional provisions that plan sponsors frequently include in separate plan documents. Also, more employers are adopting “wrap plan” documents that consolidate all of their welfare benefits such as group health, group life and group disability plans into a single plan to allow ERISA annual reporting on just one Form 5500.

  • IP BLAWG

    No Vicarious Thrills Here

    Beverly A. Berneman
    Tuesday, 05 December 2017

    Be careful not to control someone else’s infringing activities. Barcroft Media Ltd. provides a video and image library available for download. Photographer, Jeffrey R. Werner, filed suit against Barcroft alleging that it allowed Valnet Inc. to download his photos without his consent. Jeffrey alleged that Barcroft materially contributed to Valnet’s infringement by granting Valnet a retroactive license. Barcroft brought a motion to dismiss arguing that Jeffrey didn’t state a claim. The court denied the motion deciding that Jeffrey stated a claim for vicarious liability and contributory infringement. Although the court expressed some doubt as to whether Jeffery’s going to be able to prove the facts to support his case.

    **WHY YOU SHOULD KNOW THIS. ** A party that is one step removed from infringing activity can get caught in the litigation net under two theories of secondary liability. One type is vicarious liability which has two elements: (1) the right and ability to supervise or control the infringing activity; and (2) a direct financial benefit from that activity. The other type is "contributory infringement" in which one induces, causes or materially contributes to copyright infringement. To avoid secondary liability, it’s always best to step away and not enable potential copyright infringement.

  • IP BLAWG

    There is no Shame in That

    Beverly A. Berneman
    Tuesday, 28 November 2017

    Submitting an idea doesn’t mean you own it. Author, Dan Rosen, had a screenplay called “Darci’s Walk of Fame”. For those who are not ‘in the know’, the standard elements of a walk of shame are: (1) a one night stand; (2) waking up the next morning in someone else’s bed; and (3) having to walk (or taxi or Uber or Lyft) home in the clothes you wore the night before. Dan was lucky to get a meeting with actress and producer, Elizabeth Banks and her husband to present his screenplay. After discussing the plot line, characters, and themes, Banks and her husband took a pass. Not long after the meeting, Banks starred in the 2014 movie “Walk of Shame” which wasn’t exactly a box office hit. Dan’s assignee, Shame on You Productions, Inc. sued Banks, her husband, and the film’s production based on copyright infringement and an implied contract. The court applied the extrinsic test to determine if infringement occurred. The extrinsic test focuses on specific similarities between two works. Scenes a faire (standard situations that flow naturally from the plot) are disregarded. The two works shared the “walk of shame” premise and some natural elements that flowed from it, but the narratives and characters were different. Shame on You’s case was dismissed and affirmed on appeal.

    WHY YOU SHOULD KNOW THIS. When Dan submitted his idea to Banks and her husband, he believed that his idea would belong to him. But, an idea alone is not protectable by copyright. Only the expression of the idea is. This is a prime example of the problem with idea submission cases. When submitting ideas, there’s a Catch 22. It’s best to make sure that proper protections are in place. But anyone in an industry that is prone to idea submissions is reticent about accepting any unsolicited ideas or signing any idea protection documents such as non-disclosure agreements.

  • IP BLAWG

    Yummy Bread – But It’s a Secret

    Beverly A. Berneman
    Tuesday, 14 November 2017

    Trade secrets are a good way to protect a recipe. Sycamore Family Bakery Inc. sold its assets to Bimbo Bakeries USA. Included in the assets was Sycamore’s secret recipe for Grandma Sycamore’s Home-Maid Bread. When Leland Sycamore went to work for US Bakery, US Bakery started selling bread made from the same recipe. US Bakery also mimicked Bimbo’s packaging. Bimbo sued for trade secret misappropriation and false advertising. A jury awarded Bimbo $2 million.

    WHY YOU SHOULD KNOW THIS. There are two primary lessons here. First, a properly protected trade secret has a lot of value. Trade secrets are pretty much the only way to protect a recipe. Second, when you sell your trade secret, you can’t use it anymore.

  • Benefits Bulletin

    DOL Targets Plans With Missing Participants

    Andrew S. Williams
    Wednesday, 08 November 2017

    It's a Familiar Story

    You or your retirement plan’s third party administrator (TPA) need to make a benefit distribution to an ex-employee. But the employer’s records are out of date and the former employee cannot be located. Worse yet, the missing participant has attained age 70½ so the plan is required to make minimum distributions (RMDs) but cannot do so.

    Can you sit back and wait for the missing ex-employee to come forward and claim their benefits? If they never show up, can you forfeit their benefits?

    The U.S. Department of Labor (DOL) is reported to be targeting retirement plans with missing participants for audit. By examining Form 5500 annual reports, the DOL discovered that some plans were reporting a larger number of terminated vested participants who were not receiving benefits. Worse yet, the DOL was able to contact a significant number of these “missing” participants by simply sending a certified letter to their last known address. As a result, the DOL has reportedly initiated a national audit campaign targeting plans with missing participants with a view towards treating lackadaisical efforts to locate them as a breach of fiduciary duty. And, the IRS can weigh in with additional penalties for failure to make RMDs to those ex-employees who have attained age 70½.

    What to do? Well, the IRS has recently provided a get out of jail card that works if you follow the mandated procedure for finding missing participants. So, what is the secret sauce?

    If the plan has taken all of the following steps, the IRS will not challenge your plan for failure to make RMDs:

    • Searched plan and related plan, sponsor, and publicly-available records or directories for alternative contact information.
    • Used any of the search methods below:
      • A commercial locator service;
      • A credit reporting agency; or
      • A proprietary internet search tool for locating individuals.
    • Attempted contact via United States Postal Service certified mail to the last known mailing address and through appropriate means for any address or contact information (including email addresses and telephone numbers).

    Also bear in mind that the DOL expects employees to be proactive and take steps to locate missing participants before their benefit start dates.

    Takeaway: You or your plan’s TPA need to take appropriate steps to locate missing participants before their plan benefits are payable. This is likely to be successful with a significant number of ex-employees. However, for those who stay missing, you will want to follow the IRS drill set out above before those participants reach age 70½.

  • IP BLAWG

    Trademark Goes Down for the Count

    Beverly A. Berneman
    Tuesday, 07 November 2017

    A licensee can’t knock out a confusingly similar trademark. Julie A. Moreno licensed the Mexican trademark, DEPORTES CASANOVA, for sports equipment. Julie challenged Pro Boxing Supplies, Inc.’s trademark applications and registrations for CASANOVA due to a likelihood of confusion. The TTAB denied Julie’s petitions. While this looked like a priority of use problem, the real problem was that a licensee and not the owner/licensor was claiming priority of use. The TTAB ruled against Julie because: “Allowing a licensee to claim priority for itself in an inter parties proceeding based on the licensor’s use of the mark (whether through the license or otherwise), could result in a licensee being able to claim de facto ownership of the licensed mark.”

    WHY YOU SHOULD KNOW THIS. This was a case of first impression for the Board. The Board had dealt with many cases in which the owner and its licensee jointly enforce the trademarks. But this was the first time the Board had to address whether a licensee alone had standing to enforce a licensor’s trademark rights. The Board said no. So a licensee should always insist that a trademark license either require the owner to challenge confusingly similar marks or join with the licensee to do so.

  • IP BLAWG

    Spooky Banana Halloween

    Beverly A. Berneman
    Tuesday, 31 October 2017

    A banana costume could infringe on a banana costume. If you bought a banana costume for Halloween today, you may have purchased a copyright infringing product. Rasta Imposta sued Kmart for selling alleged knockoffs of Rasta Imposta’s banana costume. Costumes are generally considered clothing which are useful articles and can’t be copyrighted (Whimiscality, Inc. v. Rubie’s Costumes which held a child’s pumpkin costume could not be copyrighted). But masks can be copyrighted because they aren’t considered useful articles. (Masquerade Novelty v. Unique Industries which held that animal nose masks can be copyrighted). But would a banana costume be considered clothing and not copyrightable? We’re going to have to live in limbo because Rasta Imposta and Kmart settled.

    WHY YOU SHOULD KNOW THIS. Happy Halloween.

  • IP BLAWG

    Eleven's Frozen Eggos Are Safe

    Beverly A. Berneman
    Tuesday, 24 October 2017

    We celebrate the premier of Season 2 of Netflix’s hit horror series, Stranger Things, with a not-so-spooky cease and desist letter. The popularity of Stranger Things seeped into the culture. So much so, that in August 2017, Chicago-based Emporium Arcade Bar opened a pop-up location called “The Upside Down” which was designed to look like the sets from the series. The only problem was that they didn’t get permission from Netflix. Netflix’s in-house lawyers sent a cease and desist letter. Netflix took an even-tempered, but effective, approach. The letter could be summarized but it’s much better to see it in its entirety:

    "Danny and Doug,

    My walkie talkie is busted so I had to write this note instead. I heard you launched a Stranger Things pop-up bar at your Logan Square location. Look, I don’t want you to think I’m a total wastoid, and I love how much you guys love the show. (Just wait until you see Season 2!) But unless I’m living in the Upside Down, I don’t think we did a deal with you for this pop-up. You’re obviously creative types, so I’m sure you can appreciate that it’s important to us to have a say in how our fans encounter the worlds we build.

    We’re not going to go full Dr. Brenner on you, but we ask that you please (1) not extend the pop-up beyond its 6 week run ending in September, and (2) reach out to us for permission if you plan to do something like this again. Let me know as soon as possible that you agree to these requests.

    We love our fans more than anything, but you should know the Demogorgon is not always as forgiving. So please don’t make us call your mom."

    The bar owners cooperated and closed down as planned.

    WHY YOU SHOULD KNOW THIS. Owners have a right to shut down infringement of their Intellectual Property. Sending a cease and desist letter to the infringer is a first step. But cease and desist letters come in all shapes and sizes. An aggressive letter may be appropriate for stopping an infringing competitor. But not so much when dealing with a small company who might have infringed unintentionally. Netflix received a lot of good press for its handling of the Stranger Things pop-up bar. It got the point across without hurting the bar’s owners and alienating the fan base.

  • IP BLAWG

    Going Nuclear

    Beverly A. Berneman
    Tuesday, 17 October 2017

    The Defend Trade Secrets Act of 2016 can go nuclear to stop misappropriation. The Defend Trade Secrets Act of 2016 (“DTSA”), which created a federal cause of action for misappropriation, has one amazing feature that’s new to trade secret litigation. It allows the court to order seizure of stolen trade secrets in “extraordinary circumstances” without advance notice. This has been called the “nuclear option”. Because it’s a draconian remedy, courts have been reluctant to enter seizure orders. The recent case of Mission Capital Advisors LLC v. Romaka, gives a clue for determining extraordinary circumstances. According to court documents, Romaka had downloaded Mission Capital’s entire 65,000 person client list while he was receiving employment offers from Mission Capital’s competitors. In granting an order for seizure, the court cited Romaka’s activities such as downloading the files while he was absent from work for several weeks; he said that he deleted the files, when he hadn’t; and he had downloaded other proprietary information and stored it on his computer. Although Romaka was cooperative originally, he didn’t respond to Mission Capital’s attempts to contact him. The court ordered U.S. Marshalls to go to his home, make a forensic copy of his computer and then permanently delete the files.

    WHY YOU SHOULD KNOW THIS. The DTSA nuclear option cannot be invoked in every case. The "nuclear option" in the guise of a seizure order is still being explored by litigants and the courts. But, the Mission Capital test may help shape the appropriateness of the remedy.

  • IP BLAWG

    Click at Your Own Risk

    Beverly A. Berneman
    Tuesday, 10 October 2017

    “I agree” buttons can create obligations you don’t like. When a user signs up for an Uber Technologies Inc. account, the user has to click on a button that says “By creating an Uber account, you agree to the TERMS OF SERVICE & PRIVACY POLICY.” The capitalized phrase has a hyperlink in bright blue and underlined, which links to another screen containing a button that allowed users to view Uber’s Terms of Service and Privacy Policy. Uber’s Terms contain a mandatory arbitration clause. Travis Kalernick signed up for an Uber account. He brought a class action suit in New York District Court against Uber alleging that Uber’s pricing algorithm violated antitrust laws. Kalernick claimed he didn’t recall seeing or following the hyperlink to the Terms and so he shouldn’t be bound by the arbitration clause. Uber brought a motion to dismiss the case to enforce the arbitration clause. Uber lost the motion at the trial level but the Second Circuit Court of Appeals reversed and remanded the case back to the trial court. The problem for Uber is that before it brought the motion, Uber had begun exchanging discovery materials with Kalernick. This means that Uber may have waived the arbitration clause.

    WHY YOU SHOULD KNOW THIS. The enforcement of on-line terms and conditions has been problematic for courts. The amorphous quality of an on-line terms and conditions means there is no signature demonstrating agreement, no version control and no way to verify that a party actually read the terms. So, many courts have come up with a test for enforceability. The primary components are that (1) the terms and conditions have to be easily accessible; and (2) the user has to do something affirmative to show agreement. According to the Second Circuit Court of Appeals, Uber was able to show both components in this case. Of note is that Kalernick couldn’t have created his Uber account without agreeing to the terms. So Kalernick’s faulty memory about it was not an excuse. Alas, Uber may have won the battle and lost the war by participating in the litigation before it sought to enforce the arbitration clause.

  • IP BLAWG

    A Sharp Stick in the Shoulder

    Beverly A. Berneman
    Tuesday, 03 October 2017

    Prior art can stop a patent. Dr. Steven Chudik sought to patent an implant for a portion of the humerus bone that would be utilized as part of shoulder replacement surgery. The Patent Trial and Appeal Board held that a French patent barred issuance of the patent as prior art. The Federal Circuit affirmed. So Dr. Chudik won’t be getting a patent.

    WHY YOU SHOULD KNOW THIS. A patent has to be new, useful and non-obvious. “New” was Dr. Chudik’s problem. An invention isn’t new if there is prior art. The term, “prior art” sounds straightforward but can have a lot of nuances. In a nutshell, prior art is any of the following: (i) a description of the invention in a patent issued anywhere in the world prior to the patent applicant inventing it; (ii) a description of the invention in a printed publication published anywhere in the world prior to the patent applicant inventing it; or (iii) the invention is publicly known in the US, but not necessarily patented or published, prior to the patent applicant inventing it.

    The ultimate question of whether any of these exist is best left to an experienced patent attorney who can do a due diligence search.

  • Benefits Bulletin

    Group Health Plan Audit Requirement: Who Do You Trust?

    Andrew S. Williams
    Thursday, 28 September 2017

    Most larger group health plans are self-funded, which means the employer, not an insurer, is primarily responsible for paying benefits. These plans also are likely to require employee contributions towards the cost of benefits, and those contributions typically are paid to the employer (not a trust) on a pre-tax basis through a cafeteria (Section 125) plan.

    Is a self-funded group health plan with more than 100 participants required to have an annual audit? There seems to be a difference of opinion among professionals on this question. But let’s look at the rules on group health plans and other “welfare plans.”

    The applicable Department of Labor regulations provide certain welfare plans “relief” from the annual audit requirement. The instructions for the annual report (Form 5500) refer to DOL Technical Release 1992-01 for clarification of the exemption. That release bases the availability of relief from the audit requirement for welfare plans with more than 100 participants on whether or not the contributory plan provides benefits “solely from the general assets of the employer.” If employee contributions are used for any purpose other than paying group health or HMO premiums, then benefits are not deemed to be paid solely from the employer’s general assets – and the audit requirement would apply. This is set out in the following extract from the DOL release:

    In accordance with the terms of the regulations, the relief afforded by [the regulations] is not available to any welfare plan with respect to which benefits or premiums are paid from a trust. Moreover, even in the absence of a trust…the exemptive relief would, in the absence of additional relief, be available only to those contributory welfare plans which apply participant contributions toward the payment of premiums in accordance with the terms of the regulations. For example, a welfare plan that applies participant contributions directly to the payment of benefits (or indirectly by way of reimbursement to the employer) would not qualify for exemptive relief because the benefits under such a plan could not be considered as paid solely from the general assets of the employer.

    Despite the above authority, the accounting community has focused on whether or not the subject welfare plan funds benefits through a trust. Of course, if there is a trust, the audit requirement clearly applies as stated in the first sentence of the above extract. However, the above text goes on to deal with the applicability of the exemption to contributory welfare plans that do not use a trust. So it seems clear that the audit requirement does not turn entirely on the question of whether or not the plan is funded through a trust. But note Q&A 18 published by the American Institute of Certified Public Accountants which states that relief from the audit requirement for contributory self-funded welfare plans with more than 100 participants is based on whether or not the plan is funded through a trust:

    Question:

    Assume a partially insured H&W plan where the employer pays claims to a certain level and then reinsurance assumes the liability. There are over 100 participants, and the employer and employees each pay a portion of the premiums. The employee share is paid on a pretax basis through a section 125 plan. There is no trust established, but at year end there may be a minimal payable to the third party administrator for regular monthly charges and a small reinsurance receivable, depending on timing. Does this plan require an audit?

    Answer:

    No, the plan does not require an audit. According to the fact pattern described, no separate trust exists to hold the assets of this plan, and therefore it is not a funded plan for ERISA purposes. ERISA exempts unfunded plans from the requirement to perform an annual audit. Participant contributions made through a section 125 cafeteria plan are not required to be held in trust per DOL Technical Release 92-1, and as long as no trust is being utilized, no audit requirement exists. (Source: AICPA Audit and Accounting Guide, Employee Benefit Plans, March 2004, Appendix A paragraphs A.25 and A.28.)

    So, are the accountants right in saying that self-funded group health plans with more than 100 participants – and no trust – are always exempt from the annual audit requirement? Can that conclusion be sustained by the technical release quoted above? For sponsors of larger self-funded group health plans, the answer spells the difference between ERISA compliance and non-compliance. Remember, any plan annual report that is filed without a required plan audit is not complete and triggers a Department of Labor non-filing penalty of up to $2,063 per day.

    Takeaway: Well, should you trust the accountants on this one? We are open minded, but we’re betting that the larger self-funded group health plans with employee contributions are required to have annual plan audits.

  • IP BLAWG

    A Spoonful of No

    Beverly A. Berneman
    Tuesday, 26 September 2017

    Catchy phrases don’t always function as trademarks. Melissa Benson wanted to trademark her slogan “Still Spooning”. It appeared on her interesting mix of goods, flatware and fishing lures. Milk & Honey LLC, who sells houseware using the same trademark, opposed the registration. The Trademark Trial and Appeal Board didn’t accept Milk & Honey’s objection based on Benson’s mark being merely a descriptive argument. But, the Board accepted Milk & Honey’s second argument that the words didn’t function as a mark. The Board looked at Benson’s specimens of use and determined that the consuming public would perceive the words as ornamental and reference to the engraving on the goods. So the opposition was sustained and the mark wasn’t registered.

    WHY YOU SHOULD KNOW THIS. Look at the photo accompanying this post. This is a good example of an ornamental use that (alone) is not trademark use. Not every designation that is used in connection with goods or services functions as a trademark. Words that are informational in nature, or that express support, admiration or affiliation don’t function as trademarks and so can’t be registered. There can be a fine line between functioning and not functioning as a trademark. So, each trademark has to be evaluated on its own basis.

  • IP BLAWG

    SCOTUS Roundup: 2016 – 2017 Edition

    Beverly A. Berneman
    Tuesday, 19 September 2017

    During the 2016 to 2017 term, the US Supreme Court was able to put in the final word on some disputed areas of the law. But in others, not so much. Here’s a roundup:

    In TC Heartland LLC v. Kraft Foods Group Brands LLC, 137 S.Ct. 1514 (2017), SCOUTS held that the Patent Act fixes venue for patent infringement actions (1) in the judicial district where the defendant resides, or (2) where the defendant has committed acts of infringement and has a regular and established place of business. The problem is that the opinion didn’t go into great detail about prong #2.

    In SCA Hygiene Prod. Aktiebolag v. First Quality Baby Prod., LLC, 137 S.Ct. 954, 197 L.Ed.2d 292 (2017), SCOTUS held that laches cannot be used as a defense to an infringement action that was brought within the six-year statute of limitations in the Patent Act.

    In Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S.Ct. 1002, 197 L.Ed.2d 354 (2017), SCOTUS held that designs appearing on useful objects can be copyrighted as long as the design is separate from the functionality of the useful object. The problem is that the opinion didn’t give any guidance on how to test separatbility.

    In Matal v. Tam, 137 S.Ct. 1744 (2017), SCOTUS held that the US Trademark’s Office could not refuse to register a disparaging trademark because it would violate First Amendment free speech. This may not be the last word. There are other pending cases involving issues that were not directly addressed in this opinion.

    WHY YOU SHOULD KNOW THIS. These decisions were extremely narrow. SCOTUS raised more questions than they answered. Be assured that this Blawg will cover those answers when they happen. For more information about these decisions and their implications, as well as updates in other areas of the law, visit Golan Christie Taglia LLP’s Summer Newsletter at https://gct.law/newsletters/39.

  • IP BLAWG

    No Delete Button For Your Brain

    Beverly A. Berneman
    Tuesday, 12 September 2017

    An employee can’t unlearn information that belongs to a former employer. The “Inevitable Disclosure Doctrine” is a term of art in trade secret law. The Doctrine applies to bar a former employee with knowledge of the employer’s trade secrets and confidential information from accepting a similar role with the employer’s competitor. In Utilisave, LLC v. Miele, the Third Circuit Court of Appeals affirmed the entry of a preliminary injunction under the Doctrine. The preliminary injunction was based on the substantial overlap between the former employee’s old job and his new one which was basically the same role, in the same industry, for the same geographic territory. With this kind of overlap, the court felt the former employee was likely to use confidential information and trade secrets to the detriment of his former employer. The preliminary injunction was warranted even though there wasn’t actual misappropriation of any particular trade secret or confidential information.

    WHY YOU SHOULD KNOW THIS. The problem with the Inevitable Disclosure Doctrine is that a person can’t simply unlearn and segregate knowledge when it comes to performing a job. If an employee is barred from taking similar positions with other employers, the employee has limited ways to earn a living going forward. For this reason, the Doctrine has come under a lot of scrutiny. Some courts apply the Doctrine on an extremely limited basis. According to Utilisave, the right time to apply the Doctrine is when the employee is going to use that knowledge in pretty much the same position the employee held with his former employer.

  • IP BLAWG

    Splitting Up Isn't Easy for Trademarks

    Beverly A. Berneman
    Tuesday, 05 September 2017

    Business divorces can put trademarks in limbo. Devon Johnson and Latresa Moore launched the fashion and lifestyle magazine, PYNK, in 2011. It only took two years for the team’s relationship to sour. The parting of the ways was not all that simple. Johnson kept the magazine, but hasn’t posted new content for a long time. Moore set up her own ThinkPynk website and a Pynk Magazine Instagram feed. Johnson tried to trademark the word and design mark for “Pynk”. Moore opposed registration saying that she is a co-owner and Johnson can’t register the mark alone. The TTAB granted the opposition. The board said that it wasn’t possible to delineate what intellectual property and assets remained and with whom. Since Johnson could not show that he was the sole owner, he couldn’t register the marks.

    WHY YOU SHOULD KNOW THIS. The start of a business is a heady time as the founders launch the new venture. The last thing anyone wants to think about is planning for a split up. But ignoring the possibility shouldn’t be an option. Planning for the worst case scenario seems pessimistic, but it’s just good business. If the parties don’t plan, then like Johnson and Moore, they fight over the spoils when the parties are in an adversarial position. Then everyone loses. Moore will have trouble registering the marks because Johnson can claim joint ownership. Since the parties don’t appear to be getting along, valuable trademarks may be lost to both parties.

  • IP BLAWG

    Tech Giants Stand Up for Little Guys

    Beverly A. Berneman
    Tuesday, 29 August 2017

    The super-powers of technology have decided to address the increasingly convoluted and confusing world of patents. Google, Amazon, Intel, Dell, Cisco, Oracle, Salesforce and Adobe are all on the same virtual page. Members of this illustrious group of tech companies recognize that innovation in the form of new and better products is fundamental to economic growth and American jobs. But, there is a “patent quality crisis” of baseless patent assertions and active patent troll litigation. So these tech super-powers have banded together to form the “High Tech Inventors Alliance” ("HTIA"). The goal is to advocate for a balanced patent policy both in the application process and in the courts. They intend to speak up when tech issues are debated in the courts, the Patent and Trademark Office and the media. You can visit their website at https://www.hightechinventors.com/.

    WHY YOU SHOULD KNOW THIS. You’re not the only one. It’s easy to see the patent process as costly and uncertain. The members of HTIA recognize that the current state of patent prosecution and protection isn’t sustainable. HTIA has already commented on a House Judiciary IP Subcommittee Hearing about the effect of low—quality patents on innovation and economic growth. Hopefully, HTIA will continue the conversation.

  • IP BLAWG

    Use It or Lose It

    Beverly A. Berneman
    Tuesday, 22 August 2017

    If you don’t use your trademark, someone else can claim priority over you. SPV Coach Company, Inc. filed a trademark application for ARMBRUSTER STAGEWAY in connection with vehicles, namely, customized limousines. Executive Coach Builders, Inc. opposed registration claiming that it had started using the mark before SPV and so had priority of use. The TTAB denied the opposition holding that Executive Coach had abandoned the mark. Further, Executive Coach couldn’t prove that it had any intent to resume use of the mark once it was abandoned. The TTAB cited Executive Coach’s lack of any documentary evidence and the inconsistent and contradictory testimony of its president to support the abandonment ruling. Executive Coach’s alleged use of the abandoned mark was isolated and de minimus. Executive Coach took no orders for branded vehicles. Executive Coach’s domain name didn’t identify the goods or services. Displays at Executive Coach’s plant merely showed historical and not current use of the trademark. So, SPV had priority because of its constructive use of the mark after Executive Coach’s abandonment.

    WHY YOU SHOULD KNOW THIS. If a trademark isn’t used for 3 consecutive years, it is deemed abandoned. The presumption of abandonment can be overcome if the owner can prove intent to resume use. Executive Coach had two problems. First, SPV started using the mark after Executive Coach abandoned it. Second, Executive Coach couldn’t prove it intended to resume use of the abandoned mark. A trademark owner can avoid Executive Coach’s fate by never letting non-use go for more than 3 years. And during that period, at the very least, the owner should document marketing activity and other affirmative acts designed to resume use.

  • IP BLAWG

    Viral Birth Video Gives Life to Fair Use

    Beverly A. Berneman
    Tuesday, 15 August 2017

    News and commentary about a dad’s big oops is fair use. Proud dad, Kali Kanongataa, accidently live streamed a video of his partner giving birth to their son. The video went viral. As often happens in the world of viral videos, Kanongataa’s video gave rise to a commentary by the media. Much of the commentary involved showing short clips from the 45 minute video. Kanongataa sued ABC, NBC, Yahoo and COED Media for copyright infringement. The judge dismissed the case on the basis of fair use. But, it didn’t stop there. The judge ordered Kanongataa to pay the defendants’ attorney’s fees. The judge said, "no reasonable lawyer with any familiarity with the law of copyright" would have filed the cases.

    WHY YOU SHOULD KNOW THIS. Copyright infringement is the unauthorized use of the works of another. Fair use is a defense to copyright infringement. Fair use is a necessary component of copyright law because it protects uses that are essential to open dialog and creativity. A fair use analysis isn’t always simple or straightforward. But using small clips of a video for news or commentary falls squarely within the parameters of fair use. This case points out that no matter how aggrieved one may feel about the use of their content, rushing into court without an objective fair use analysis can cost a plaintiff far more than the embarrassment of a viral video.

  • IP BLAWG

    Concurrent Use Agreement Holds Up

    Beverly A. Berneman
    Tuesday, 08 August 2017

    Similar trademarks can co-exist with the blessing of the TTAB. Bras for Cause, Iowa, Inc. tried to register BRAS FOR THE CAUSE for charitable fundraising services. Soroptimist International of Glendale California, CA opposed registration because it wanted to register BRAS FOR A CAUSE for the same types of services. In the end, the parties settled allowing each party to use their marks. The opposition proceeding became a concurrent use proceeding. At first, TTAB refused to accept the concurrent use agreement because of concerns that the parties would be offering similar services in potentially overlapping geographic territories. This would lead to marketplace confusion. The parties submitted a revised agreement that staked out their territories so there would be no overlap. TTAB accepted the revised agreement and both parties were allowed to proceed with restricted registrations.

    WHY YOU SHOULD KNOW THIS. Federal trademark law provides nationwide protection for a trademark; even if the trademark isn’t used everywhere in the U.S. As this case demonstrates, sometimes parties with the same or similar trademarks can stake out their territory and still get registrations. However, TTAB doesn’t rubber stamp these agreements. Trademark law still has an interest in minimizing confusion in the market place. So, concurrent use agreements have to be carefully drafted to make sure that the risk to confusion is relatively small.

  • IP BLAWG

    To File or Not to File - It's no Question

    Beverly A. Berneman
    Tuesday, 01 August 2017

    No matter how right you are, you need to register a copyright before filing suit. Section 411(a) of the Copyright Act requires registration of a copyright before bringing suit. Federal Circuits are split on how to interpret this. Some circuits say filing an application is enough. Other circuits say the plain language of the statute requires actual registration. In Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC, the Eleventh Circuit Court of Appeals went with registration means registration. Wall-Street licensed content from Fourth Estate. After the license expired, Wall-Street continued to post Fourth Estate’s content without permission. Fourth Estate applied for registration and then filed suit before the works were actually registered. In affirming the dismissal of the suit, the Eleventh Circuit focused on the fact that the Copyright Office had to examine the application before registration. So filing the application can never be enough.

    WHY YOU SHOULD KNOW THIS. As often happens, Fourth Estate probably didn’t have a mechanism to regularly register its copyrights. Although the application process is pretty straightforward and the Copyright Office fees are very affordable ($35 to $55 per application), many businesses see copyright registration as a “nice to have” instead of a “need to have”. If a copyright owner doesn’t have regular application process, what should the owner do when an infringement occurs? The Copyright Office has a special handling process where for a filing fee of $800, it will expedite a decision regarding registration. The usual registration process can take several months to complete. The special handling process takes one to three weeks.

  • IP BLAWG

    Subscriber in Disguise

    Beverly A. Berneman
    Tuesday, 25 July 2017

    The unauthorized use of someone else’s subscription password can result in multi-million dollar liability. eVestment Alliance LLC offers a subscription to its trade secret protected database of investment products and performance data. An eVestment subscriber hired Compass iTech LLC to help analyze the eVestment’s data. Compass then used the subscriber’s password about 3,000 times to download information from eVestment’s database for its own benefit. eVestment discovered the activity and shut off access to the database. Compass sued for defamation and unfair trade practices. eVestment counterclaimed. eVestment was granted summary judgment on all of Compass’ claims. On eVestment’s counterclaim, a jury found that Compass deliberately misappropriated eVestment’s trade secrets and violated the Computer Fraud and Abuse Act. The jury awarded eVestment $2.5 million in compensatory damages and $1.2 million in punitive damages.

    WHY YOU SHOULD KNOW THIS. Compass’ first mistake was to use someone else’s password as mechanism for unauthorized access to a competitor’s protected trade secrets. Compass’ second mistake was to race to the courthouse and file suit on a very shaky foundation. As Compass learned, a subscription to a database grants a limited right to use it under certain terms and conditions. Using someone else’s password doesn’t give you any rights. And if you use the password in order to unfairly compete with a competitor, the competitor may be able to get a multi-million dollar judgment against you. Of course, eVestment’s success resulted from carefully protecting its database with reasonable measures to restrict access to its trade secrets.

  • Benefits Bulletin

    Can you put your Retirement Plan on Autopilot?

    Andrew S. Williams
    Friday, 21 July 2017

    Consider a typical retirement plan sponsored by a private employer. The employer is a fiduciary to the plan along with employees who individually serve as trustees or members of the plan’s investment or retirement committee.

    The employer may (should!) have concerns about the liability associated with its fiduciary status. Let’s say you are the person asked by the employer to look into this matter.

    There are a number of steps you might take to protect plan fiduciaries from liability. One thing you might consider is engaging an investment advisor to act as a co-fiduciary along with the in-house staff responsible for the plan. But let’s say you take another step and engage an “investment manager” to take on “all” responsibility for plan investments. In this case, the hired investment manager actually makes all decisions about plan investment and, as a “discretionary” advisor, only notifies the employer afterwards as to specific investment transactions.

    At this point, in-house fiduciaries are exempt from liability for the specific investment decisions made by the investment manager. But are the in-house fiduciaries completely off the hook?

    A recent federal district court decision, Perez v. WPN Corp, et al., elaborates on what in-house fiduciaries are required to do in exactly this situation. The court holds that the plan fiduciaries who appoint the investment manager are still responsible for “monitoring” the investment manager’s performance. This duty includes adopting routine monitoring procedures, following those procedures, reviewing the results of the monitoring procedures and, most important, taking any action required to correct any performance deficiencies of the investment manager. So, whether you pick an investment advisor to act as a co-fiduciary or an investment manager to make all the decisions on plan investments, in-house fiduciaries still need to review the conduct of these professionals and take action when necessary.

    The Takeaways:

    1. There’s no risk-free way to put your retirement plan on autopilot. Having quality service providers is a good idea but they cannot relieve you, your company or your other in-house fiduciaries from all responsibility for investment and administrative decisions.
    2. Some financial advisory firms charge extra to act as “investment managers.” You may find that the “extra protection” afforded by this arrangement is not really worth the additional expense.
    3. Consider other alternatives to mitigate fiduciary liability. This may include steps like adopting a suitable investment policy statement or obtaining fiduciary insurance. Other possibilities are outlined in “Your Fiduciary Duty – And What to Do About It” that can be viewed here.
  • IP BLAWG

    Virtual Krusty Krab Wins the Day

    Beverly A. Berneman
    Tuesday, 18 July 2017

    The denizens of Bikini Bottom could be confused by a real Krusty Krab restaurant. Viewers of the cartoon, SpongeBob SquarePants, are familiar with the underwater (and, of course, fictional) eatery, The Krusty Krab. When IJR Investments, LLC wanted to register the trademark, “The Krusty Krab”, for a dry land real restaurant, Viacom International, Inc., sued for trademark infringement, unfair competition and other causes of action. IJR argued that Viacom never registered the trademark and Viacom only has a fictional restaurant. So, IJR argued, it was free to use the name. The court rejected IJR’s arguments. The court looked at Viacom’s use of the name. It appeared in 166 out of 203 SpongeBob episodes over the 17 year run of SpongeBob. There were 2 successful movies and substantial merchandizing. Viacom’s substantial use for 2 decades established that the name acquired secondary meaning in the minds of consumers. Thus, Viacom had established enforceable common law rights in the name. The court entered judgment in favor of Viacom on its trademark and unfair competition claims.

    WHY YOU SHOULD KNOW THIS. This case demonstrates how a trademark owner can establish rights in a common law trademark; even if the trademark relates to a fictional product. Here’s a list that is not, by any means, exhaustive: (1) Active, continuous use of the trademark over a span of time; (2) Large advertising and promotional budget; (3) Active merchandising; and (4) Licensing of the trademark. Note, however, that rights in a common law trademark can be restricted to the geographic location in which they are used.