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.
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.
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.
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.
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.
Tuesday, 10 October 2017
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Tuesday, 11 July 2017
The good news is that the parties settled their trade secret litigation. The bad news is the release language in the settlement agreement. Security Camera Warehouse, Inc. sued Bowman, one of its former owners, for trade secret misappropriation. During the settlement negotiations, unbeknownst to Security Camera, Bowman still had access to Security Camera’s servers and downloaded Security Camera’s trade secrets. After the parties signed a settlement agreement, Bowman set up a new company and competed with Security Camera using the information he took during settlement negotiations. Security Camera brought a second suit against Bowman for trade secret misappropriation. The court held that Security Camera’s claims were barred by the release in the settlement agreement from the first case. The language specifically released Bowman from any claims that Security Camera may have in the future based on events that occurred before the execution of the settlement agreement.
WHY YOU SHOULD KNOW THIS. The troubling part of this decision is that Bowman apparently committed trade secret misappropriation while seeking to settle with Security Camera. So Bowman knew a material fact that he withheld from Security Camera. Perhaps the judge should have addressed this situation before coming to his decision. Be that as it may, there are several options to avoid this outcome. First, include representations and warranties in the settlement agreement where defendant affirmatively states that he is not in possession of any trade secrets belonging to the plaintiff. Second, include a requirement that the defendant destroy or return all copies of the trade secret (digital or otherwise) and provide an affidavit confirming compliance. Third, and most importantly, do not release unknown future claims.
Tuesday, 27 June 2017
A Star Trek and Dr. Seuss mashup will Live Long and Prosper. Comics legend, Ty Templeton, and Star Trek’s “Trouble with Tribbles Episode” writer, David Gerrold, collaborated on a comic called “Oh, The Places You'll Boldly Go.” The comic mashed Dr. Seuss-like drawings and dialogue with Star Trek characters. The Dr. Seuss Estate sent Templeton and Gerrold a cease and desist letter citing trademark and copyright infringement. This resulted in Kickstarter shutting down the campaign to fund the development of the comic. Litigation ensued. Victory goes to Templeton and Gerrold. A California court ruled against Dr. Seuss on the trademark claim. The court held that Templeton and Gerrold’s use of the Dr. Seuss trademarks was ‘nominative fair use’. Although the court didn’t rule yet on the copyright claims, the court indicated that the use of Dr. Seuss’ copyrighted works was sufficiently transformative to be fair use.
WHY YOU SHOULD KNOW THIS. Fair use can be a defense to both trademark and copyright infringement. For trademarks, ‘nominative fair use’ means using the trademark of another in a non-commercial manner. In creative works, such as this one, the comic uses the trademark only to reference Dr. Seuss’ goods and services and not to sell a competing product or confuse the public as to the source of the products. For copyrights, fair use in a creative work is an important element in parody. A proper parody uses a source work in a completely new or unexpected way. This is referred to as “transformative use”. Caution. There’s always a fine line between fair use and infringing use. When in doubt, get an attorney’s opinion.
Tuesday, 20 June 2017
My advertising injury may not be your advertising injury. Many general business insurance policies cover defense of claims for ‘advertising injury.’ But what does that mean exactly? This comes up when the insured is sued for IP infringement and tenders the defense to the insurance company. Then the insurance company refuses to defend the claim because it doesn’t fit into the definition of advertising injury. In recent cases, the courts were able to give some guidance on how to analyze the duty to defend "advertising injury". Here are a few examples. In Diamond State Insurance v. 21 Century, the court held that defendant’s false and misleading statements in telephone calls to its competitor’s customers fell within the definition of advertising injury. In Sentry Insurance v. Provide Commerce Inc., the court held that the defendant’s use of Google search terms to redirect users to a competitor’s website could conceivably fall within the definition of advertising injury. In Mid-Continent Cas. Co. v. Kipp Flores Architects LLC, the court held that claims for copyright infringement stemming from an advertising idea were covered. In Sentinel Insurance Co. Ltd. v. ITD, the court held that claims of trade secret misappropriation do not fall within the definition of advertising injury.
WHY YOU SHOULD KNOW THIS. Insurance policies are written to "giveth" and then "taketh away". They give coverage and then list exclusions from coverage. All insurance policies should be carefully reviewed. If the extent of coverage is unclear, an insurance professional or counsel familiar with insurance coverage should be consulted. If potential litigation isn’t covered, the business owner should inquire about the costs of a rider for additional coverage. It wouldn’t hurt to also ask whether opinions of counsel or changes in business methods can help reduce premiums. IP litigation is costly and time consuming. So the premiums might be worth the additional coverage.
Tuesday, 13 June 2017
Copyright only protects the non-standard elements of an architectural plan. Architectural plans, by their nature, incorporate elements that have been in the public domain for centuries, such as doors, windows and types of rooms in a house. Copyright Law calls those standard elements “scènes à faire”. Home developers use a combination of standard elements to create floor plans. Sometimes, the developer comes up with a unique feature. When that happens, the developer has a copyright in the unique feature. The plaintiff in Design Basics LLC v. Lexington Homes, Inc., publishes home floor plans and licenses them on a retail basis. Design Basics sued Lexington Homes for copyright infringement of its floor plans. The 7th Circuit Court of Appeals affirmed summary judgment in Lexington Homes’ favor. The Court agreed with the District Court that a jury could not find that Lexington Homes’ plans were substantially similar to Design Basics’ plans. The graphic to the left illustrates the point by juxta positioning a Design Basics floor plan with a Lexington Homes floor plan. If you take the scènes à faire out of the equation, Design Basics seems to have very little protectable elements. But there’s more. The Court, in dicta, discussed Design Basics' litigation history and used the opportunity to criticize Intellectual Property trolls. As of April 2017, Design Basics had brought over 100 copyright infringement lawsuits. Design Basics trawled the Internet and paid employees to find "infringers". The Court expressed distaste for this type of wholesale litigation. The Court reproached plaintiffs, i.e. Intellectual Property trolls, who misuse the legal system by filing dubious lawsuits for the purpose of prompting settlements to avoid costly litigation.
WHY YOU SHOULD KNOW THIS. There are two lessons here. First, if you are in the business of producing works that have minimal copyright protection, the chances are that you are going to have little success in bringing infringement suits. Second, the Intellectual Property troll phenomenon is on the radar of many courts. The Design Basics opinion referenced scholarly articles, news media coverage and recent opinions deploring the abuse of the court system by Intellectual Property trolls. The best way to deal with Intellectual Property trolls is to stand up to them. It may be costly but settling with Intellectual Property trolls only encourages them.
Tuesday, 06 June 2017
The USPTO’s audit procedure sets up a ‘use it or lose it’ proposition. The owner of a registered trademark has to file a declaration of use between the 5th and 6th year after registration and then on every 10th anniversary of registration. The USPTO will conduct random audits of about 10% of the filed declarations of use. The USPTO’s audit system will maintain the integrity of the trademark registration system by insuring that a trademark is actually being used for the registered goods and services. If the trademark owner cannot provide sufficient specimens of use, the goods or services will be deleted from the trademark registration.
**WHY YOU SHOULD KNOW THIS. **Over time, a trademark owner may drop or develop new goods or services. When it comes time to file maintenance and renewal documents, the specimens of use will change too. A trademark owner can avoid audit problems by conducting a detailed review of their registrations before filing maintenance and renewal documents. If product lines or services are no longer being offered, the maintenance and renewal documents should reflect the changes.
Tuesday, 23 May 2017
Google avoided the ignominious fate of losing its trademark due to genericide. Trademark protection extinguishes when the trademark becomes interchangeable with the name of the product or service. This process is called “genericide”. Some famous examples of genericide are aspirin for pain reliever, cellophane for plastic wrap and thermos for a vacuum flask. Two people filed a proceeding with the Trademark Trial and Appeal Board (TTAB) to cancel the Google trademark due to it having become a generic word for searching on the Internet. The TTAB denied the cancellation and the plaintiffs appealed to the Ninth Circuit Court of Appeals. The Court affirmed the TTAB. The Court’s opinion stated that even though the public might use the term as a verb, the Google mark could still serve as a source identifier.
WHY YOU SHOULD KNOW THIS. When developing a brand, a company should set a policy for how a trademark will be used. Companies like Xerox and Kimberly-Clark zealously protect their brand names from genericide. Xerox’s policy requires references to “Xerox brand copiers”. Kimberly-Clark requires references to “Kleenex brand tissues”. Brand usage policies can also dictate consistent use of the color, size or content to make sure the brand sends a consistent message. No matter the size of the company or the fame of the brand, it’s never too early to set a branding policy.
Tuesday, 09 May 2017
Dan Aykroyd’s Crystal Head Vodka gets to keep its dress. Crystal Head Vodka’s maker, Globefull, Inc. brought a trade dress suit against Elements Spirits Inc. for copying its distinctive Day of the Dead inspired packaging on Element’s Kah Tequila. And then the 7 year odyssey began. Globefull lost the first jury trial. It appealed the denial of its motion for a new trial. The Ninth Circuit agreed that the trial was unfair because defense counsel had referenced similar litigation in Mexico in closing argument. Back in district court, Globefull lost its motion for preliminary injunction. But Globefull persevered. During the second trial, the owner of the elements was caught in a lie. At the previous trial, she testified she never heard of Crystal Head Vodka when she was developing Kah Tequila. In the second trial, the testimony of other witnesses contradicted that statement. The jury found in favor of Globefull on liability. The amount of damages will be set at a later date.
WHY YOU SHOULD KNOW THIS. Sometimes, litigation can feel like a never ending spiral of defeat. But, a party who is secure in its position and is willing to fight for it can win the day. Position security arises from preparation and follow through. For the preparation side, due diligence is a must so you don’t encounter unexpected surprises. On the follow through side, perseverance can win the day.