Erik Brunetti wanted to register the word “FUCT” as a trademark for clothing. The United States Patent and Trademark Office (“USPTO”) refused registration saying it was too “scandalous” because it was “extreme nihilism”, evidence of “anti-social behavior” and “extreme misogyny”. Erik appealed to the Trademark Trial and Appeal Board (“TTAB”), who affirmed the refusal. Erik didn’t give up and appealed to the Federal Circuit Court of Appeals who reversed the refusal (See IP Blawg Post Dated 1/16/18). The director of the USPTO, Andre Iancu, appealed to the U.S. Supreme Court who affirmed the Federal Circuit thus allowing the trademark to proceed to registration.

Justice Elena Kagan, writing for the majority, adopted the reasoning in Matal v. Tam which held that a disparaging trademark like “The Slants” for an Asian American band is protected free speech (See IP Blawg Post Dated 9/9/17). Like the now-prohibited ban on disparaging trademarks, the USPTO’s ban on scandalous marks was based on the view-point of the observer. Justice Kagan stated that the USPTO allows registration for trademarks that are consistent with society’s sense of rectitude and morality. But the USPTO discriminates against trademarks that, in its viewpoint, don’t fit into a standard of morality. The USPTO’s view-point analysis is not neutral. Therefore, the prohibition against the registration of scandalous trademarks is an unconstitutional violation of First Amendment Free Speech.

WHY YOU SHOULD KNOW THIS. Erik’s trademark projects a certain sensibility; one that Erik obviously believes his customers share. Trademarks that don’t fit into society norms may be fun, interesting and good marketing tools. But, a trademark reflects the values of the owner of the products or services. So when choosing a trademark, know your customer base and be careful about the impression your trademark makes.

Return Mail, Inc. obtained a patent for a computerized system of bar coding so that companies can track returned and undelivered mail. The U.S. Postal Service was interested in licensing the technology. Before they could ink a licensing agreement, the Postal Service walked away and developed its own system. And that’s when the litigation began.

The Postal Service tried to invalidate Return Mail’s patent before the Patent Trial and Appeal Board. The Board held that the patent was valid. Return Mail sued the Postal Service under the Federal Claims Act for using a patented process without a license. Using a proceeding that was created by the America Invents Act (“AIA”), the Postal Service got a ruling that invalidated the patent. Return Mail appealed. The case landed before the U.S. Supreme Court. Justice Sonya Sotomayor, writing for the 6 to 3 majority stated that the AIA proceeding is only available to a “person”. Governmental units such as the Postal Service were not included in the definition of a “person” under AIA. So the Postal Service can’t use the AIA to invalidate the patent.

WHY YOU SHOULD KNOW THIS. When faced with any dispute, don’t assume anything. In this case, Return Mail, Inc. questioned whether the Postal Service had standing to challenge its patent. Following the 11th Commandment, “Thou shall not assume”, Return Mail, Inc. won the day.

Violent Hues Productions published a tourism guide that used a stock photograph depicting the Adams Morgan neighborhood of Washington D.C. The problem is Violent Hues used it without the permission of the photographer, Russell Brammer.

Russell sued Violent Hues. The District Court originally sided with Violent Hues saying that Violent Hues didn’t infringe because the photograph was used for “informational” purposes. The Fourth Circuit Court of Appeals reversed the decision to the relief of photographers everywhere. The Fourth Circuit rejected all of the defenses brought up by Violent Hues including, some flimsy excuses like, it was an innocent mistake and its use didn’t stop the photographer from licensing it to others. Violent Hues’ fair use defenses didn’t get anywhere. Violent Hues tried to make the case for “transformative use” because it cropped and only used half of the photograph. That doesn’t fit into the definition of transformative use. The Fourth Circuit Court’s opinion was scathing in its rebuke of Violent Hues’ defenses by holding that “fair use is not designed to protect lazy appropriators”.

**WHY YOU SHOULD KNOW THIS. ** Finding a photograph on the Internet is easy. But using it can have harsh results. When using content from the Internet, the default should always be that the work belongs to someone and you need their permission to use it. If you need stock photographs, there are numerous stock photo websites that will license the use. The license fee is substantially less then expensive and time consuming copyright infringement litigation.

Versata Software Inc. licensed its automotive configuration software to Ford Motor Co. The license agreement contained an affirmative acknowledgment that Versata owned the Intellectual Property related to the software, including trade secrets. The license agreement had fairly standard language that prohibited Ford from reverse engineering the software. Ten years later, after updates to the underlying technology for the software, Ford bid Versata adieu and decided not to renew the license. No surprise, Ford developed similar software on its own. No further surprise, Versata sued Ford for violating the anti-reverse engineering clause in the license. In ruling on cross-motions for summary judgment, the court held that the language of the reverse engineering clause was ambiguous when it comes to the current version of the software. So the parties are going to have to go to trial on the interpretation of the clause.

WHY YOU SHOULD KNOW THIS. The Versata anti-reverse engineering language may have been fine at the beginning of the license agreement. But over time, the underlying technology changed and the language did not. To avoid Versata’s dilemma, license agreements should permit updates to defining the scope of Intellectual Property in software license agreements to reflect updates in the technology.

Siny Corp tried to register its trademark “Casalana” for a knit textile used in the manufacture of outerwear, gloves and the like. As its specimen of use in commerce, Siny submitted pages from its website. But the United States Patent and Trademark Office refused the specimen because it was mere advertising and not evidence of use in commerce. Siny appealed the decision all the way up to the Federal Court of Appeals and lost. Where did Siny go wrong?

In order to claim rights in a trademark, the owner has to use the trademark in commerce. Siny argued that the website showed use in commerce because it had the text “For sales information” followed by a phone number. That wasn’t enough. The website has to provide a means for ordering the goods, such as through a “shop online” or “add to cart” button or link, or through information contained on the page. “For sales information” isn’t the same as “order now” or “to order, call this number”. According to the Federal Court of Appeals, “if virtually all important aspects of the transaction must be determined from information extraneous to the web page, then the web page is not a point of sale.” If it’s not a point of sale, it’s not use in commerce. So Siny has to go back to the website drawing board and make some changes.

WHY YOU SHOULD KNOW THIS. At first glance, the Siny decision seems like splitting hairs. But it points out an important distinction between mere advertising and use in commerce. A website that shows pictures of a product doesn’t mean that the product is actually being sold. Even having contact information for the seller, doesn’t mean it’s being sold. The consumer visiting the website has to have enough information about how to actually purchase or get the product.

Stella McCartney, the fashion designer daughter of former Beatle, Paul McCartney and his late wife, Linda, tried to register the trademark “Fur Free Fur”. The United States Patent and Trademark Office (USPTO) rejected it as being merely descriptive of Stella’s use of fake fur in her fashion designs. The Trademark Trial and Appeal Board (TTAB) disagreed and overturned the decision.

The TTAB held that the USPTO failed to recognize the multiple meanings of the use of the word “fur” in the trademark. Judge Thomas Shaw, writing for the TTAB described the “Fur Free Fur” trademark as really being two things at once like Schrödinger’s Cat (see below for more information) being dead and alive at the same time. “In the first instance, ‘Fur Free,’ the term ‘fur’ refers exclusively to animal fur. In the second instance, ‘fur’ alone, the term ‘fur’ refers to imitation fur.” The “internal inconsistency” in “Fur Free Fur” would give consumers pause making the trademark distinctive. In other words, the juxtaposition of the words required some imagination on the part of the consumer to recognize the trademark as being connected to the goods and service.

WHY YOU SHOULD KNOW THIS. The “Fur Free Fur” trademark is a good example of how a trademark can be created from seemingly generic or descriptive words by adjusting word placement. The word placement of “Fur Free Fur” created a play on the words. The key is to make sure the words require some imagination on the part of the consumer when they see the trademark. Note, that this case had a rare dissenting opinion where the judge disagreed that consumers needed any imagination or perception to recognize the words as a trademark. So care must be taken when developing a Schrödinger’s Cat trademark.

More information about Schrödinger’s Cat: In 1935, Erwin Schrödinger illustrated a problem in quantum physics by presenting a hypothetical scenario where a cat may be alive and dead at the same time. For any further explanation, please consult your friendly neighborhood physicist.

The Department of Labor issued guidance in mid-2018 which allowed employer associations to adopt a single multiple employer health plan to cover a greater number of employers and their employees. These Association Health Plans (or “AHPs”) were intended to allow more smaller employers and self-employed individuals to band together in order to secure simpler health plan arrangements and cheaper coverage in the marketplace (our February Benefits Bulletin provides some of the details here).

The U.S. District Court for the District of Columbia recently vacated significant portions of the Department of Labor AHP rule that expanded access to affordable healthcare options for small businesses. Although the Department of Labor disagrees with the Court holding and has filed a notice of appeal, there are still many businesses that have elected AHP healthcare coverage in reliance on the Department of Labor rule in effect prior to this holding. So, what does an employer that has recently signed onto an AHP that now has a questionable legal foundation do to protect itself – and its employees – from the consequences of possible non-compliance?

The Department of Labor recently issued a statement addressed to these employers advising them that they do not have to terminate or switch their current healthcare coverage until the end of the current plan year or, if later, the expiration of the current contract term (the “transition period”). So for now, employees can rest assured that their AHP coverage will stay in force.

In accordance with the above policy, the Department of Labor statement provides that it will not during the transition period pursue enforcement actions against parties for violations stemming from actions taken before the recent Court ruling – so long as the actions were taken in good faith and the AHP pays health benefit claims as promised.

Takeaways:

Small employers and sole proprietors with AHP coverage should stay the course – for now. If they instead drop AHP coverage, those employers may have to wait for an open enrollment period to obtain replacement coverage, which could create a gap in coverage. In the meantime, the Department of Labor appeal of the Court holding could reverse its holding and reinstate the prior Department of Labor AHP rule.

Ahlam Ramzy, a former employee of Perfect Brow Art, Inc., left and started her own Tennessee eyebrow threading salon. Perfect Brow brought suit against Ahlam in Chicago for trademark infringement, trade dress infringement, false designation of origin, trade secret misappropriation and unfair competition.

Ahlam brought a motion to dismiss the Chicago case for lack of personal jurisdiction. Personal jurisdiction is dictated by the reach of where the court sits. Ahlam had never been to Chicago and hadn’t done any business there. Ahlam argued that the Chicago court only would have personal jurisdiction over her if she was located in Illinois or she had sufficient minimum contacts with Illinois to justify jurisdiction over her. Perfect Brow sought to get around the fact that Ahlam had no contacts with Illinois by pointing to a clause in Ahlam’s employment agreement where the parties agreed that the employment contract would be interpreted under Illinois law. The District Court dismissed the case for lack of personal jurisdiction without prejudice. The court held that the choice of law term in the contract was not sufficient to confer personal jurisdiction over Ahlam. Note that the case was dismissed without prejudice. That means Perfect Brow can still bring suit against Ahlam in Tennessee.

WHY YOU SHOULD KNOW THIS. Companies often use employment agreements to make sure that an employee won’t take the company’s Intellectual Property with them after the employee leaves. Companies can also use employment agreements to keep any lawsuits in the company’s home state. It’s convenient and tames the costs of litigation. As Perfect Brow learned, getting the benefits of a contractual term is all in how the term is drafted. If the term had specifically stated that any litigation between the parties would take place in Illinois, then the Illinois case would probably not have been dismissed.

Has the value of your business property actually increased by 82% in just 3-years?

In light of the huge assessment increases we are seeing for commercial and industrial properties located in the northern suburbs of Cook County, which are sure to follow in the rest of the county when those reassessment notices go out, 2020 for the southern suburbs and 2021 for all properties located in Chicago, how can businesses that rely on being able to accurately project their future expenses, do so when predicting their potential property tax liability? The answer is, they can't. To address this issue, all property taxpayers must take action to vigorously contest their property tax assessments, while at the same time accruing a higher reserve as a fail safe position. Increases of up to 300% on commercial and industrial properties in Evanston, and increases averaging 82% in Elk Grove, represent a clear message to business that they are being targeted by the Assessor for substantially higher tax bills.

The Property Tax Group at Golan Christie Taglia, LLP. has the experience necessary to successfully contest your assessments throughout the state. Please get in touch if we can help. Contact us at ptax@gct.law.

Express Oil Change used the service mark “Tire Engineers” for its tire sales, repair and maintenance services. The Mississippi Board of Licensure for Professional Engineers & Surveyors had a problem with that. According to the Board, no one can use the word “engineer” unless they are actually engineers and have registered for a license to practice engineering in Mississippi.

Express Oil Change brought a declaratory judgment action against the Board. On appeal from summary judgment in the Board’s favor, the Fifth Circuit Court of Appeals reversed. In its opinion, the Court held that commercial speech is protected by the First Amendment. Anyone challenging commercial speech has to justify any restrictions. And the challenger has a heavy burden. The Board didn’t meet that burden. The Board tried to argue that Express Oil Change’s use of the word “engineer” was misleading. The Court rejected the argument for two reasons. First, the word engineer is generally defined as someone having technical skills and does not exclusively refer to a person who designs, builds, or maintains engines, machines, buildings or public works. Second, the essential character of how Express Oil Change used the word is not deceptive or misleading.

WHY YOU SHOULD KNOW THIS. What the Board failed to understand is that there’s a difference between holding yourself out as an engineer for engineering services and using the word “engineer” for marketing other types of services. Many professions are regulated for public policy reasons. For example, someone can’t call themselves a medical doctor without proper degrees and registrations. But someone can call their clock and watch repair business “The Clock Doctor” without having to register with a medical professional board. The essential character of using “doctor” for fixing clocks isn’t deceiving the public.

In the first three townships having a significant commercial and/or industrial tax base, (Norwood Park, Evanston and Elk Grove, the new assessor has been increasing market values by as much 50 to 300%. He claims that properties in the northern suburbs have been grossly underassessed for years, hence a 1-year catch-up was justified. Of course, no consideration was given to the jobs that will be lost as tenants and companies relocate, nor to the investors who will no longer invest in Cook County, nor to the companies that will no longer consider locating in Cook County, nor to the existing companies that will jettison their expansion plans. The same is true for owners of residential income properties that have also experienced significant increases. Who will be able to afford the higher rents that landlords will try to pass on to them? As to the homeowners, many of whom saw only minor increases, what will become of their property values if local jobs disappear and they cannot sell their houses? To date, the assessor has stubbornly refused to grant relief on a vast majority of commercial and industrial appeals, as his property valuations are apparently perfect.

If you don't think your property valuation is "perfect", contact Donald T. Rubin at DTRubin@GCT.law or 312.696.2641 for a discussion and consultation to fight the insanity and reduce your tax burden.

VidAngel Inc. removed nudity and violence from films and then sold the ‘redacted’ versions. Disney Enterprises, Inc. its subsidiary Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corp. and Warner Bros. Entertainment Inc. sued VidAngel for copyright infringement.

This case has boomeranged between the District Court in California and the Ninth Circuit Court of Appeals. The courts have consistently rejected VidAngel’s defenses and affirmed injunctions against them. Among VidAngel’s defenses were First Amendment free speech and fair use. The District Court called these arguments “poorly developed” and “convoluted”. VidAngel also argued that an obscure 2005 statute called the “Family Home Movie Act” allowed it to edit dirty material from films and then sell the edited versions. The courts rejected this argument. The act permits the development of technology for consumers to skip content once they’ve purchased a film. The District Court has now entered summary judgment in favor of the Hollywood studios against VidAngel on the issue of liability. The case will proceed to the damages phase.

WHY YOU SHOULD KNOW THIS. VidAngel’s sanitized versions of popular films were derivative works. Derivative rights belong solely to the owner of the copyright. Without a license to create, copy and distribute those derivative works, VidAngel’s business model had a shaky foundation. Perceiving and acting on a need is a good business model. Infringing on someone else’s copyright is a bad business model.

In the never ending battle between the qualifying factors for receiving a charitable property tax exemption as first enunciated in the Korzen case, Methodist Old Peoples Home v. Bernard Korzen, County Treasurer, et al, 233 N.E, 2d, 537, 39 Ill.2d 149 (1968), the Illinois Supreme Court initially set forth the following criteria for successfully obtaining a property tax exemption.

"It has been stated that a charity is a gift to be applied...consistently with existing laws, for the benefit of an indefinite number of persons, persuading them to an educational or religious conviction for their general welfare--or in some way reducing the burdens of government; that the distinctive characteristics of a charitable institution are that it has no capital, capital stock or shareholders, earns no profits or dividends, but rather derives its funds from public and private charity and holds them in trust for the objects and purposes expressed in its charter". The court goes on to say "that a charitable and beneficent institution is one which dispenses charity to all who need and apply for it, does not provide gain or profit in a private sense to any person connected with it, and does not appear to place obstacles of any character in the way of those who need and would avail themselves of the charitable benefits it dispenses."

In responding to a rather convoluted plurality decision in the Provena Covenant Medical Center v. Department of Revenue case, 236 Ill.2d 368 (2010), which found that Provena failed to meet the requirements for a charitable use exemption from property taxes, the Illinois Legislature hurriedly enacted 35 ILCS 200/186, which appeared to pave the way for hospitals to acquire exempt status simply by proving that the value of the charitable services they provided either met or exceeded their possible property tax liability.

In the pending case, Plaintiff Carle is arguing that the charitable use requirements as set forth in Korzen, have been reduced to just two factors by the recent decision in Oswald v. Hamer, 2018 IL. Docket No. 122203 (September 20, 2018), because the Supreme Court did not reiterate all of the requirements as set forth in Korzen. The trial court states that Plaintiff, Carle "submits that the new test is outlined in paragraphs 15-17 of Oswald and includes that 1) they provide charity for the benefit of an indefinite number of persons which reduces the burdens of government and 2) their primary purpose is charitable". Defendant, Illinois Department of Revenue alleges the Oswald decision did not change any of the Korzen requirements.

In the trial court opinion, (Memorandum Opinion on Cross-Motions for Summary Determination of a Major Issue/Case Management Order (11/26/18) the judge states:

"Would it have been helpful to lower courts, practitioners and property owners had the Illinois Supreme Court been more specific and given greater guidance? Of course. They could have said: "We overrule Korzen" They could have said: "We find that only "use" factors and not "ownership factors from Korzen apply." They could have said" "We find that all of the Korzen factors constitute the constitutional test." They could have said: "We find that all the Korzen factors constitute the constitutional test, however depending on the facts and circumstances of a case, some factors may be inapplicable or can be given greater/lesser weight?" The trial court decision states: "In the end, this Court agrees with the Defendants that Oswald does not eliminate or reduce the Korzen factors."

TAKEAWAY:

In this author's opinion, Carle will once again be finding its way back to the Supreme Court for

Learn more about what follows the Property Tax Appeal Board by contacting Donald T. Rubin at DTRubin@GCT.law or 312.696.2641.

Using someone’s trademarks when criticizing their products or services can be tricky. But if you do it the right way, it could be considered nominative fair use.

Applied Underwriters, Inc. owns the trademark “Equity Comp” for financial services. Providence Publications LLC, which describes itself as a provider of informative journalism, offered a webcast seminar titled: “Applied Underwriters’ Equity Comp Program: Like it, Leave it, or Let it be?” The seminar wasn’t very complimentary. Applied Underwriters sued for trademark infringement and unfair competition. Providence Publications moved to dismiss the complaint arguing that the use of the trademark was permitted as nominative fair use. The motion was granted and affirmed on appeal. Relying on the leading case of New Kids on the Block v. News Am. Publ’g, Inc., the Ninth Circuit Court of Appeals showed that the three factors of nominative fair use existed in this case. Those factors were (1) Applied Underwriter’s products and services could not have been readily identifiable without use of the trademark; (2) Providence Publications only used so much of the trademark as was reasonably necessary to identify Applied Underwriter’s products and services; and (3) Providence Publications did nothing that would suggest Applied Underwriters sponsored or endorsed the seminar.

WHY YOU SHOULD KNOW THIS. Providence Publications used Applied Underwriter’s trademarks in a non-competitive, public commentary/free speech kind of way. But what happens if a competitor uses another’s trademark? In other words, how far does commentary and free speech go between competitors? The New Kids on the Block factors should help figure out the answers to those questions.

The Illinois Secure Choice Savings Program requires employers with at least 25 Illinois employees to set up a state-sponsored IRA based retirement program if they do not already have a retirement plan. Although the program is funded solely by payroll contributions from employees, subject employers must go through an online registration and enrollment process, forward payroll contributions to the program custodian and provide program information to employees (click here for more details).

A similar program was adopted in California and was challenged in court. Although the U.S. Department of Labor had issued favorable guidance as to the impact on these state programs of ERISA, the federal pension law, Congress rescinded this guidance with the change of administration in 2017. This presented the issue of whether or not ERISA would “pre-exempt” these state programs and impose burdensome federal compliance responsibilities on employers.

A U.S. District Court in California held in Howard Jarvis Taxpayers Ass’n v. California Secure Choice Ret. Savings Program on March 29, 2019 that the California program was not subject to federal law and could be implemented on its terms. Because the California program is very similar to the Secure Choice Program in Illinois, the California case may remove the Secure Choice Program from legal limbo. Although the California decision is not binding in Illinois (and it could be reversed on appeal), this makes it less likely that ERISA-related litigation will impede the Secure Choice Program.

Takeaway:

Employers that do not currently sponsor a retirement program for their Illinois employees need to consider retirement plan options to the Secure Choice Program such as a 401(k) plan. For employers with 100-499 Illinois employees, the Secure Choice compliance deadline is July 1, 2019 (employers with 25-99 employees have until November 1, 2019 to enroll in the Secure Choice Program – or set up an alternative arrangement). Employers with 500 or more Illinois employees who have no retirement plan need to scramble – their Secure Choice compliance deadline, November 1, 2018, has already passed.

The famous movie producer, Sam Goldwyn, is credited with saying that “An oral contract isn’t worth the paper it’s written on”. The son of Bob Ross, the Joy of Painting icon, found out that there’s an exception to this rule.

Bob Ross created a company, Bob Ross Inc., along with his wife and Walt and Annette Kowalski, two of their friends. There were no written assignments or other written agreements between Bob and the company. During Bob’s lifetime, the company registered his trademarks and managed his business. The company licensed Bob’s trademarks, his likeness and his name for the manufacture and sale of merchandise and collected the revenues. Bob also executed a trust that was administered by Bob’s brother. The trust had some language about the ownership of intellectual property. After Bob died, his son, Robert Stephen Ross, took over administering the trust and brought suit against the company alleging that the trust and not the company owned all of Bob’s intellectual property. The court entered summary judgment for the company. In granting summary judgment, the court held that it was clear that Bob wanted the right to his name and image to go to the company. He may not have formally assigned the rights on paper, but he did make a verbal grant and otherwise made his intentions clear.

WHY YOU SHOULD KNOW THIS.  Bob and the company didn’t have anything in writing. Instead, the company proved years of custom and usage that the judge used as a substitute for a written agreement. But, these results are not typical. The lack of a written agreement can suffer from the passage of time which can cause divergent memories regarding the parties’ intentions. Don’t leave something as important as management of intellectual property to chance. Always choose a written agreement over an oral one.

Swarmfly Inc. and CloudFlare Inc. courted each for a potential acquisition and licensing relationship related to video streaming service technologies. Each party signed non-disclosure agreements. Sadly, the courtship didn’t lead to a marriage proposal and each party went their separate ways. Until, Swarmfly sued CloudFlare for trade secret misappropriation.

Swarmfly’s wings were clipped when the court denied Swarmfly’s motion for preliminary injunction. The court stated that Swarmfly’s trade secret claims were “moving targets” which didn’t bode well for its ability to ultimately prevail on the merits. Four months later, Swarmfly dismissed its case with prejudice. CloudFlare then brought a motion pursuant to the Defend Trade Secrets Act, the California Uniform Trade Secret Act and the court’s inherent powers seeking an award of the attorneys’ fees it incurred between the denial of the preliminary injunction and the dismissal. The motion was granted. It seems that during mediation, new facts came to light that "unquestionably rendered Swarmfly's misappropriation claim objectively specious." The court stated that Swarmfly was "ethically obligated to drop its misappropriation claim” at that time. Since Swarmfly didn’t, Swarmfly has to pay CloudFlare’s attorney’s fees.

WHY YOU SHOULD KNOW THIS. The best way to avoid Swarmfly’s cataclysmic outcome is to: (1) properly identify your trade secrets; (2) make sure you maintain reasonable measures to keep the trade secrets from public disclosure; (3) if you’re going to sue for trade secret misappropriation, make sure you did (1) and (2); and (4) if you find out that no misappropriation took place, back off immediately.

Marco Guldenaar Holding BV filed a patent application for a casino dice game. The claims in the patent covered unique markings on the dice and the rules of the game. Guldenaar Holding threw snake eyes when the United States Patent and Trademark Office rejected the application and the rejection was affirmed on appeal to the Federal Circuit of Appeals.

According to the Court, the US Supreme Court’s decision in Alice Corp. v. CLS Bank International prohibits patents for abstract ideas like Guldenaar Holding’s casino game. The game rules and markings on the dice lacked an “inventive concept” sufficient to transform the claimed subject matter into a patent-eligible application of that idea. Guldenaar Holdings argued that the dice markings aren’t conventional and the game isn’t just an abstract idea because it involves physical game-playing steps versus just mental game-playing steps. The Court disagreed, ruling that a game can still be abstract even if there are physical steps to playing the game. But, the Court was careful to say that not all games are ineligible for patent protection. In a concurring opinion, Circuit Judge Haldane Robert Mayer wrote, “While games may enhance our leisure hours, they contribute nothing to the existing body of technological and scientific knowledge. They should therefore be deemed categorically ineligible for patent”.

WHY YOU SHOULD KNOW THIS. All types of Intellectual Property Law have limitations on what they protect. Guldenaar Holdings butted up against the patent limitation for abstract ideas. Guldenaar Holdings is not alone. Owners of business process and software have watched their patent applications be denied and the issued patents be cancelled in light of the Alice decision. So if patent protection isn’t available, what then? Assuming the elements exist, other types of Intellectual Property such as copyrights and trade secrets could be available.

The shape of your next burger may be protected by a trademark registration.

Configuration trademarks are not easy to get. So Bubba Foods should rejoice that the USPTO approved its trademark application to register the unusual shape of the Bubba Burger. To show the USPTO that the shape could be registered as a trademark, Bubba Foods presented evidence that it was more costly and less efficient to use the unusual shape so the shape was not functional. The company wrote, "Producing hamburgers utilizing the 'Bubba Burger' design mark requires applicant to fabricate an expensive custom mold and maintain same rather than using an off-the-shelf standard round mold." Bubba Foods also had to prove that the shape acquired secondary meaning, i.e. over the 25 years of its use, customers connect the shape to the Bubba Burger product. Bubba Foods used its millions of dollars in sales and its advertising to show that customers identify the shape with the product. The application will now be published for opposition.

WHY YOU SHOULD KNOW THIS. Configuration trademarks are a species of trade dress. Trade dress is a legal term of art that generally refers to characteristics of the visual appearance of a product or its packaging (or even the design of a building) that signify the source of the product to consumers. Trade dress is not inherently distinctive. That’s why Bubba Foods had to prove 2 things. First, that the design was unusual and memorable and conceptually separable from the product. Second, the design served as a designator of origin of the product.

Anyone with a legitimate interest can oppose the registration of a trademark. But what does “legitimate interest” actually mean. It looks like Rapunzel may help answer that question.

United Trademark Holdings Inc. filed an application to register the name “Rapunzel” as a trademark for dolls. Professor Rebecca Curtin filed an opposition to registration with the Trademark Trial and Appeal Board (TTAB). Professor Curtin argued that the name belonged to a centuries old fairy tale princess so it was too generic to be registered as a trademark. United Trademark Holdings moved to dismiss the opposition. It argued that the Professor wasn’t a competitor and so she didn’t have standing to oppose the registration. The TTAB denied the motion to dismiss saying: “Consumers, like competitors, may have a real interest in keeping merely descriptive or generic words in the public domain, to prevent the owner of a mark from inhibiting competition in the sale of particular goods and to maintain freedom of the public to use the language involved.” This decision allows the Professor to continue the fight. We’ll have to wait and see if Rapunzel can’t be registered because it’s merely descriptive of a princess with the long hair who lived in a tower until she was rescued by a handsome prince.

WHY YOU SHOULD KNOW THIS. Fairy tales can come true. You probably already know that. But you should also know that anyone, even a member of the general public, can oppose the registration of a trademark that will interfere with a general right to use the name. This helps to keep generally accepted expressions and terms in the public domain.

A board of review decision can also be appealed directly to a circuit court. It’s an option that taxpayers often overlook!

By James W. Chipman

Boards of review don’t have the final say about property tax assessments, however they’re a necessary stop in the appeal process. Taxpayers who are unhappy with their board decision have two options: appeal to the state Property Tax Appeal Board (PTAB) as described in my Aug. 24, Sept. 12 and Nov. 27 blogs; or, file a tax objection complaint in the circuit court. You cannot file appeals in both venues. The good news is that taxpayers who miss the 30-day filing deadline for taking an appeal to the PTAB still have time to pursue the tax objection remedy.

Filing a tax objection complaint, the lesser known of the two alternatives, involves a formalized legal process that’s full of conditions, requirements and deadlines that make it a potential minefield for inexperienced taxpayers or attorneys. While tax objection cases are more common in Cook County than elsewhere in the state, here’s what a taxpayer can expect if they choose this remedy.

Before going to court

Prior to filing a tax objection complaint, the taxpayer must pay the entire tax due on the property* on time and have filed an appeal with the board of review at the appropriate time**. Once these requirements are met and a complaint is filed, 100% of the taxes are considered paid under protest.

The court process

The process begins when a complaint is filed in the circuit court of the county where the property is located. The complaint must specify the reasons why the assessment is excessive. Any number of factual and legal arguments can be made, but in most cases, it’s about whether the fair market value of the property is accurate. The county collector or treasurer is named as a defendant but is not required to file a response to the complaint. The state’s attorney, who acts as legal counsel for the county, generally represents the collector. A tax objection case is subject to rules of practice and procedure, including discovery. This means each party can subpoena documents and witnesses.

Taxpayers face an uphill battle. When a case goes to trial, there’s a rebuttable presumption that the property assessment is correct and legal and taxpayers must overcome this presumed correctness by clear and convincing evidence.*** That’s the highest burden of proof in a civil matter. A judge sitting without a jury hears the case de novo, or anew, and will make one of the following rulings:

• Confirm the assessment.

• Grant a reduction and order a refund, in which case the taxpayer is entitled to interest.

• Or, in certain instances, increase an assessment if it’s felt the evidence tendered by the taxing body is superior to that filed by the taxpayer.

After the court’s ruling

The taxpayer or the collector can appeal an adverse ruling through the court system just like in any other civil matter.**** However, with any court appeal, there are strict time limits and procedural rules that govern the process.

Taxpayers have choices when it comes to appealing their property tax assessments. Going to court is one worth considering as it can actually result in a faster decision being made than if the case had been appealed to the PTAB.

If you want to learn whether filing a tax objection complaint may be your best alternative, please contact Donald T. Rubin at DTRubin@GCT.law or 312.696.2641.

Sources:
*35 ILCS 200/23-5 (The process is different in Cook County – see 35 ILCS 200/23-5 & 23-10)
**35 ILCS 200/23-10
***35 ILCS 200/23-15(b)(2)
****35 ILCS 200/23-15(c)

In my blog post of August 1, 2017, I posed the copyright litigation dilemma: “To File or Not to File”. On March 4, 2019, the US Supreme Court resolved the dilemma once and for all.

The Supreme Court affirmed the Eleventh Circuit Court of Appeals’ decision in Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC. The Eleventh Circuit held that plaintiffs must register a work with the Copyright Office before bringing suit. Applying for registration is not enough. In a unanimous ruling, Justice Ruth Bader Ginsburg, writing for the Supreme Court, confirmed that “registered” means, well, “registered” and not just to apply for registration. Fourth Estate argued that a plaintiff might lose the right to enforce a copyright while waiting for the Copyright Office to register the work. Justice Ginsberg wrote that this fear is overrated. The Copyright Office’s average processing time is down to seven months and that’s more than enough time to file suit. Justice Ginsberg acknowledged that the administrative wheels of the Copyright Office might be slower than a litigant would like. But that isn’t a problem that the Supreme Court can solve.

Why You Should Know This. Now there’s no question that a plaintiff must register the infringed upon work with the Copyright Office before filing suit. The problem is that the infringement will continue while the plaintiff is waiting to get a registration certificate. Seven or more months of infringement is a long time to wait for a remedy. The best practice is to register a work as soon as it’s complete and not wait for the work to be infringed upon. The application process is pretty straightforward and the Copyright Office fees are very affordable ($35 to $55 per application). Failing that, the Copyright Office can expedite the process for a filing fee of $800.00 which can shorten the lead time to three weeks. Either way, copyright registration is a “need to have” for copyright owners if they want to protect their valuable works of authorship.

Department of Labor proposed regulations would allow certain employers (including employer groups or associations) and business owners with no employees to share a single 401(k) plan. This arrangement would transfer administrative and compliance responsibility to the sponsor of the retirement plan under a multiple employer plan, or “MEP.”

Under the proposed regulations, the MEP sponsor would be responsible for ERISA reporting and disclosure requirements for all of the participating employers. So, there would only be one ERISA bond and one annual report no matter how many employers participate in the MEP plan. MEP sponsors would also be responsible for general fiduciary duties although each participating employer would continue to be responsible for choosing the MEP plan, reviewing its performance, and arranging for employer and employee contributions to the plan.

MEPs can also be offered through qualifying professional employer organizations (“PEOs”), which are businesses that perform certain employment-related functions for its employer clients, such as hiring, payroll, employee benefits and HR functions.

So, the proposed regulations are intended to expand availability of 401(k)-type plans to smaller employers with the prospect of making such plans available at a lower cost. But bear in mind that the availability of MEP retirement plans is subject to a number of requirements, principally:

• MEP sponsors must have a business purpose other than just providing retirement plan benefits to its member employers.

• MEP members must have a “commonality of interests” such as (1) being in the same trade, business or profession, or (2) having a principal place of business in the same state or city as the other MEP members.

So, MEPs might work to expand the availability of 401(k)-type plans at a cheaper price for smaller employers. They could also protect member employers from responsibility for much of the plan’s administrative compliance. But bear in mind that the above is just a brief summary of the requirements for MEP members and MEP sponsors. Any specific MEP arrangement should be carefully reviewed before entering into a MEP participation agreement.

Takeaways:

Smaller employers who find that candidates in a competitive labor market need to have 401(k) benefits may find a MEP plan to be a simpler, cheaper alternative to adopting their own plan. Also, employers with 25 or more Illinois employees who do not currently have a retirement plan will be required to adopt an Illinois “Secure Choice” plan by no later than November 1 of this year (click here for details on the Secure Choice program). Adopting an available MEP plan might prove to be an attractive alternative.

Public information can’t be a trade secret because it’s, well, public. But a combination of public information arranged or organized in a unique, economically advantageous way, can be a trade secret. That’s what Diego DeAmezaga learned to his chagrin. Diego worked for AirFacts, Inc. a software company that licenses auditing software for air fare comparisons. Diego worked painstakingly and expertly to create flow charts that AirFacts used in its software development. When Diego left AirFacts, he attached the flow charts to his resume. AirFacts brought suit against Diego for trade secret misappropriation under the Maryland Uniform Trade Secrets Act (MUTSA). The Maryland District Court dismissed the complaint. The Fourth Circuit Court of Appeals reversed the dismissal. The Court held that the flow charts had independent economic value separate from the public information they contained. AirFacts had taken reasonable measures to keep the flow charts secret by requiring employees to sign confidentiality agreements and giving only a few employees access to certain accounts. So the public information in the flow charts were trade secrets.

WHY YOU SHOULD KNOW THIS. The beauty of trade secrets is that they can encompass a wide range of economically advantageous methods, formulas, business process etc. There’s even room from taking information that everyone knows or is readily accessible and finding new ways to use it. Mark Halligan, the trade secret law guru, calls this the “Combination Analysis”. When does the Combination Analysis qualify as a trade secret? The nuances are many and varied. Experienced trade secret counsel can help with the analysis.

In the olden days, you’d buy an album and when you grew tired of it you’d sell the album to a used record store. That’s because you owned the physical record and once you bought it, that record was yours to do with as you please. This is called the “First Sale Doctrine”. Nowadays most people download their tunes. They still buy or rent it but now they don’t have a physical embodiment of the music. Relying on the First Sale Doctrine, ReDigi Inc. had offered a service whereby you could upload your digital music that you legally purchased from iTunes and resell it. Capitol Records LLC had a problem with that. Capitol Records sued ReDigi for copyright infringement arguing that the First Sale Doctrine doesn’t apply to digital files. The act of uploading the files to ReDigi’s server was creating a copy without permission. The Second Circuit Court of Appeals affirmed a judgment in Capitol Records’ favor. ReDigi also argued that its use was Fair Use. The court held against ReDigi on that as well because ReDigi was commercially motivated, made no changes to the copyrighted works, used the entire works, and resold the digital music files in the same market as the copyright owners.

WHY YOU SHOULD KNOW THIS. This is a good example of ownership in the copyright world. You can own the physical embodiment of a copyrighted work but you don’t own the copyright. You can do what you want with the album, the book or the painting, etc. The problem for ReDigi was that there was no physical embodiment of the music. It was all digital. And the only way to resell the digital file was to copy it and distribute it. Both of those rights belong exclusively to the owner of the copyright.