The conventional wisdom is that in a foreign company v. Chinese company patent suit, the Chinese company will always win. Maybe not. %CUT% Danish company, Novozymes, had patented an enzyme for use in bioenergy and beverages. Novozymes sued two Chinese companies, Shandong Longda Bio Products and Jiangsu Boli Bioproducts for patent infringement. Novozymes brought the case in China. After six years of litigation, the Supreme People’s Court entered judgment against the Chinese companies. Two things make this victory even sweeter. First, certain types of biotechnology are harder to support under Chinese patent rules than patent rules in the U.S. and Europe. Second, the Chinese government devotes significant resources to Chinese companies’ research and development in the area of biotechnology.

Many 401(k) plan sponsors have wisely selected investment professionals to assist in selecting the plan’s investment menu, typically a listing of various mutual funds. Other plan sponsors may allocate this duty to company officers and other key employees. In either case, the resident plan fiduciaries (the company officers and key employees who act on behalf of the sponsor as plan administrator or trustee) have a legal duty to “select and monitor” plan investments and, in the case of sponsors who have hired investment professionals – to monitor not only investment performance but also the performance of the investment professionals.

When all else fails, file for Chapter 11. %CUT% ATopTech Inc., a software developer and Hampshire Group, Ltd., a menswear supplier, have some things in common. First, they both filed Chapter 11 bankruptcy to sell their assets. Second, Intellectual Property played a significant part in their cases. Their road to Chapter 11 was different, though. ATopTech lost a copyright action brought by Synopsys, Inc. and was facing a $30.4 million it had no hopes of paying. Hampshire Group owed $15 million to its creditors which included $7.4 million to its secured creditor, Salus Capital Partners. Hampshire Group’s primary assets are its trademarks.

False advertising in a judge’s election has consequences. %CUT% West Virginia judge, Stephen Callaghan, thought it would be a great idea to literally paint a picture of his opponent partying while their county lost jobs. Callaghan Photoshopped a picture of his rival next to President Obama, gave the President a glass of beer and strewed party confetti in the background. Callaghan knew that nothing of the sort had ever happened. Turns out; using a false ad to keep your seat as a judge isn’t such a good idea. After winning the election by 220 votes, Callaghan had to face the wrath of the Supreme Court of Appeals of West Virginia. Upon hearing about Callaghan’s campaign ad, the Court suspended Callaghan without pay for 2 years and fined him $15,000. In a written opinion, the Court stated that the ad was “in every sense, materially false.” Callaghan argued that the ad was “substantially true”, hyperbole or parody. The Court didn’t accept any of his arguments. Callaghan has now filed suit contending that the disciplinary action violated his First Amendment rights.

On Valentine’s Day, expressions of love do not belong in a black box. %CUT% The FTD black box may be a nice way to receive an elegant flower arrangement but it’s not a trademark. FTD wanted to register the color black on its packaging as a trademark. The examining attorney refused registration because the color was functional and non-distinctive trade dress. In other words, the proposed mark comprises a feature of the packaging for the identified goods that serves a utilitarian purpose.

The Affordable Care Act (ACA) has tied the hands of employers who would like to reimburse employees for the cost of their individual health insurance coverage. Under the ACA, tax-free reimbursement of employee health insurance costs was not permitted through a health reimbursement arrangement (HRA) unless it was “integrated” with an employer-provided group health plan. Stand-alone HRAs were prohibited even for small employers that were not subject to the ACA mandate to offer group health coverage.

Louis Vuitton found nothing funny about “My Other Bag is a Louis Vuitton”. %CUT% My Other Bag (“MOB”) manufactured and sold canvas bags that replicate pictures of famous and expensive brands. One of its bags replicated the Louis Vuitton bag. If you look at the picture of the bag, you can see that no one would mistake this for a real Louis Vuitton bag. The bag is meant to parody high priced leather goods and that not everyone can afford them. However, Louis Vuitton did not appreciate the humor. So it sued MOB for trademark infringement, dilution by blurring and copyright infringement. The District Court granted summary judgment to MOB stating that this was an obvious attempt at humor and is not likely to cause confusion. The Second Circuit agreed and affirmed the judgment. The Second Circuit noted that “A parody must convey two simultaneous – and contradictory – messages: that it is the original, but also that it is not the original and is instead a parody”.

If you have a powerful brand, don’t use your power to alienate your fans. %CUT% Last year, CBS and Paramount Studios sued Axanar Productions for copyright infringement. Using a 20 minute short film, Axanar had raised over $1 million through Kickstarter and Indiegogo to finance a full length fan fiction film (https://www.youtube.com/watch?v=1W1_8IV8uhA). The proposed film was to follow the story of Captain Kirk’s hero, Garth of Izar. CBS/Paramount, who own Star Trek, had a problem with it. This wasn’t the first fan fiction spinoff and CBS/Paramount usually encouraged it. Fan films can enlarge the universe, attract new fans and build loyalty among the current fan base. But Axanar got too close. Commentators speculate that the Axanar’s production values were too good and would have commercial potential. Star Trek fans were appalled at CBS/Paramount’s aggressive tactics. Even J.J. Abrams and Justin Lin, directors of the most recent Star Trek films, supported Axanar. CBS/Paramount tried to calm some of the bad press by coming out with guidelines for producing fan films (http://www.startrek.com/fan-films). Meanwhile, CBS/Paramount continued its lawsuit against Axanar. Last week, CBS/Paramount and Axanar announced that they have settled the dispute. In exchange for CBS/Paramount dropping the suit, Axanar has agreed to follow the fan films guidelines which include a restriction on the length of the films, requiring the use of official merchandise and keeping them family friendly.

If you don’t own it, asking for a preliminary injunction is the wrong strategy. %CUT%VitaVet Labs, Inc. sells horse vitamins. Its website was old and clunky. VitaVet hired Integrated Software Solutions, Inc. to update the site. According to the terms of the agreement, VitaVet owned the source code and had an absolute right to access it. VitaVita was to pay Integrated on an incremental basis upon receipt of deliverables. From almost the beginning, things went wrong. Integrated didn’t reach its project development goals. VitaVet paid some of the installments but VitaVet was not pleased with Integrated’s work. Meanwhile, VitaVet’s website was getting clunkier and harder to use. Integrated asserted that the software was finished but VitaVet didn’t agree. So VitaVet refused to pay the remaining installments. Integrated filed suit and sought a preliminary injunction. VitaVet countersued for a preliminary injunction seeking turnover of the source code. Usually, a preliminary injunction just maintains the status quo. The status quo was that Integrated had the source code and wouldn’t have to turn it over to VitaVet. But in this case, the trial court entered a preliminary injunction order that changed the status quo and ordered Integrated to turnover the source code to VitaVet. In affirming the decision, the California Appellate Court reasoned that the balance of equities favored disturbing the status quo in VitaVet’s favor. VitaVet owned the source code and VitaVet had a dire need to upgrade its website. So much for Integrated’s aggressive strategy against VitaVet.

The year 2016 had its share of notable people who got the attention of federal criminal authorities. Here are the winners. %CUT% As we enter awards season, we recognize those who put considerable time and effort into criminal activity involving Intellectual Property. The awards go to:

Entrepreneurs who work hard and build a business over decades realize that, at some point, they need to think about slowing down and stepping back. Frequently, planning and specific decisions about transition are put off. Entrepreneurs worry about two things that can make delay an attractive option. Number one is a concern about their standard of living if they sell their business. Number two is facing the prospect of disposing of the entrepreneur’s legacy business that may represent a lifetime of work and achievement.

Extra. Extra. Popular art posting website steals an artist’s works and sells it to Hot Topic. Actually that didn’t happen. %CUT% DeviantArt (“DA”) operates a website that features the works of visual artists. The artist submits a picture or photograph and DA posts it for the entire world to see. Under DA’s terms and conditions, the artist agrees to give DA a world-wide, non-exclusive license to publish, resize, make collages and use the work for DA marketing and promotion. The terms and conditions specifically state that the artist retains the copyright in the work and no one can use it without the artist’s permission. What could go wrong? A DA user discovered that his Adventure Time fan art (see the picture) appeared on a t-shirt sold by Hot Topic. A flurry of anguished and angry social media postings accused DA of selling the art to Hot Topic. DA denied selling the art to Hot Topic. DA pointed to its terms and conditions where it said that no one can download and use the art for commercial purposes without permission from the copyright owner. So the artist will have to follow up directly with Hot Topic.

These are not the Apple damages that you are looking for. %CUT% On December 6, 2016, a unanimous U.S. Supreme Court reversed a Federal Circuit ruling that Samsung had to pay Apple $399 million for infringing on Apple’s smartphone design patent for its interface. The judgment was calculated using Samsung’s profit on its entire phone and not just the profit related to the interface. At issue was how to interpret 120 year old design patent case. In the older case, the court held that a design patent infringer who applies any “article of manufacture” would be liable to the owner for its total profit. SCOTUS clarified this holding. In the case of a multicomponent product, the relevant “article of manufacture” for arriving at damages award, could be the end product. It could also be only a component of that product. SCOTUS refused to articulate a bright light test for determining whether the entire product or just the interface should be the basis for damages. The case has been remanded to determine the damages issue.

A legal brief can be protected by copyright. %CUT% Ezra Sutton represented Sakar International in a patent infringement case in Texas. Sakar and its co-defendant, Newegg, Inc. won at the trial level. They brought a motion for attorney’s fees which was denied. They separately appealed the denial to the Federal Circuit Court of Appeals. As time approached for filing their opening appellate briefs, Newegg agreed to provide Sutton a draft of its brief only if Sutton agreed in writing that he would only use it for reference purposes and not copy any excerpts. On the day before Newegg filed its brief, Sutton filed a brief on behalf of Sakar that was virtually identical to Newegg’s draft brief. Newegg sued Sutton for copyright infringement. Newegg brought a motion for partial summary judgment that Sutton couldn’t use fair use as a defense. The court granting summary judgment by analyzing the four fair use factors. (1) The purpose and character of the use weighed in favor of Newegg because Sutton’s brief was identical to Newegg’s brief. (2) The nature of the copyrighted work weighed in favor of Sutton because the briefs were functional presentations of law and fact. (3) The amount and substantiality of the copyrighted work used weighed in favor of Newegg because Sutton used the entire work and not just what was needed for a specific purpose. (4) The degree of harm to the potential market, weighed in favor of Sutton because Newegg couldn’t identify a market for its brief. The court tipped the balance with its own factor. Sutton could have used federal appellate rules that allow a party to either join in or adopt by reference a part of a co-party’s brief.

SPECIAL EDITION - IP News for Business has been honored by the ABA Journal as one of 100 best legal blogs. %CUT% Here’s what the Journal had to say:

One is nice. Two is better. You may not have to get to three. %CUT% Christian Faith Fellowship Church in Zion, Illinois registered the name and design mark “ADDAZERO” for its fundraising campaign. Adidas, the international sportswear powerhouse, tried to register “ADIZERO” for clothing. The USPTO refused registration based on a likelihood of confusion with the Church’s trademark. Adidas thought it found a chink in the Church’s registration because the Church had only sold two hats to out-of-state residents. So Adidas brought a cancellation proceeding before the Trademark Trial and Appeal Board. The TTAB held that two sales were not enough and cancelled the trademark. On appeal, the Federal Circuit Court of Appeals reversed the TTAB. The Court held that trademark law only requires use in commerce that is an activity regulated by commerce. The two sales to out-of-state residents were enough.

As the Cubs neared their historic World Series win, opportunists saw a way to cash in. %CUT% Imagine if you will, it’s September 2016. Cubs are on their way to breaking a 108 year losing streak. The streets of Chicago are lined with euphoric fans. Tables full of Cubs merchandise are everywhere. Street vendors are encouraging fans (whether die hard or fair weather) to purchase logo branded merchandise to support the Cubs. But there’s a problem with this picture. Some of those vendors don’t have a license from the Cubs. So, their blue, red and white merchandise is counterfeit. The Cubs filed suit against 84 counterfeit vendors seeking an injunction. The suit was settled with a confidential settlement agreement and a permanent injunction. What isn’t confidential is that the vendors acknowledged that their products bear “substantially indistinguishable” or “confusingly similar” imitations of the Cubs’ marks. The vendors also admitted they have no legitimate right to use those marks.

If you don’t own the rights to your content, it could go places you don’t want it to go. %CUT% Actor and musician, Jared Leto’s production company, Sisyphus, hired Naeem Munaf to shoot a video of Leto’s band for promotional purposes. The parties didn’t have a written agreement. In the video, Leto made some disparaging remarks about Taylor Swift. Realizing that he had a celebrity dis gold mine, Munaf sold the offending video to TMZ.com for $2,000. Two days after TMZ.com posted the video, Sisyphus had Munaf sign a non-disclosure agreement. Sisyphus’s team then registered the video with the U.S. Copyright Office and sued Munaf for copyright infringement. The court granted summary judgment for Munaf.

Criminal copyright infringement can get you kicked out the U.S. %CUT% Raul Zaragoza-Vaquero has been in the U.S. for less than 5 years. Raul sold bootleg CDs. Raul’s business model got him convicted of criminal copyright infringement. But his troubles didn’t end there. The Immigration and Nationality Act allows the deportation of someone who engages in crimes involving moral turpitude. So immigration authorities started proceedings to deport Raul. Raul appealed to the U.S. Dept. of Justice’s Board of Immigration Appeals to allow him to stay in the U.S. He lost. Although there was little precedent for it to rely on, the Board ruled that copyright infringement is a crime involving moral turpitude. The Board relied heavily on precedent in criminal trademark infringement cases and other theft type cases. The Board also looked to the legislative intent that copyright infringement enforcement was an important priority.

If you use a phrase to describe your product, it probably isn’t a trademark. %CUT% Simone Kelly-Brown registered the phrase “Own Your Power” in a special form (see the first picture). When Oprah Winfrey’s “O” Magazine used the same phrase on its cover (second picture), Kelly-Brown sued for trademark infringement. The case took a tortured path up and down from trial court to appellate court to trial court and back to appellate court. In the end, the Second Circuit Court of Appeals affirmed summary judgment for Oprah and her publisher. The Court held that Kelly-Brown’s use of the phrase was merely descriptive of her products and services. Oprah demonstrated that the phrase had been in use since at least 1981. Oprah, herself, used the phrase in a 1993 commencement address which predated Kelly-Brown’s use of the phrase. Kelly-Brown tried to argue that the mark had acquired secondary meaning because the consuming public had come to identify the mark with her goods and services. But, the trial court held that Kelly-Brown didn’t have enough proof to support her position.

Translating a word incorrectly can put a trademark registration at risk. %CUT% Aachi Spices & Foods brought a proceeding before the TTAB to cancel Kalidos Raju’s trademark registration for “Aachi” for various food products. Aachi alleged that Raju’s registered trademark interfered with its prior rights in a mark using the same word. Raju defended the proceeding by claiming that Aachi Spices & Foods was guilty of “unclean hands”. “Unclean hands” is an equitable doctrine that prevents a party from relying on its registration if it made a false statement during the trademark application process. According to Raju, Aachi Spices & Foods translated the word “Aachi”, to mean ‘distinguished lady’. Raju said that the word really means ‘grandmother’. The TTAB found evidence that the word is translated in different ways including both of the proposed translations. Aachi Spices & Foods’ petition to cancel Raju’s registration was granted.

A link to another website might get you in trouble. %CUT%Many websites include links to other websites. It’s a useful way to build browser traffic to the website and to benefit the linked website. But what happens if clicking on the link sends your user to a website that’s infringing on someone’s copyright? In the U.S., most courts have held that linking isn’t contributory copyright infringement because there’s usually no way to control or stop the infringement on the linked website. Due to a recent case in Europe, the same may not be true in the E.U. The Court of Justice of the E.U. ruled in GS Media BV v. Sanoma, that linking to a website that contained infringing material was infringement. The E.U. court held that the defendant was liable because it knew or had reason to know that the link sent a user to a website with infringing material.

Copyright Law may be the key to who owns the design of a video game promotional item. %CUT% In the popular video game, the Sims, a green icon called a “PlumbBob” identifies the character in play. The game’s manufacturer, Electronic Arts, Inc. decided it would be a great idea to include a USB drive that looked like the PlumbBob as a promotional item to be sold with the games. EA hired Lithomania who hired Direct Tech to make up a prototype and eventually manufacture the item. Lithomania then sent the prototype to a Chinese company to manufacture the USB for less than what Direct Tech was going to charge. Lithomania didn’t tell Direct Tech. Instead, it strung Direct Tech along with a series of agreements including an agreement to assign the IP in the USB. Direct Tech didn’t realize it lost the sale when the PlumbBobs appeared in stores. Direct Tech sued Lithomania for breach of contract and they settled. Then Direct Tech sued EA for copyright infringement and trade secret misappropriation. The district court granted summary judgment to EA. The 9th Circuit Court of Appeals affirmed summary judgment on the trade secrets claim. But the Court reversed and remanded on the copyright claims. There were two issues of fact, namely: (1) whether the USB design was copyrightable because it was conceptually different from the utilitarian aspects of a USB; and (2) whether the USB design is a sufficiently original and non-trivial version of the original to be considered a derivative work.

AT&T announced a loyalty program called “AT&T Thanks”. Citibank had some problems with that. %CUT% Citibank thought the “AT&T Thanks” trademark would cause customer confusion with its loyalty program called “Thank You”. Citibank brought suit. Citibank argued that if anyone complains about AT&T’s rewards program, it would reflect badly on Citibank’s loyalty program. The court determined that the factors of customer confusion are either neutral or weigh against it. The court pointed out that customers seemed to be able to tell the difference among a wide variety of customer loyalty programs that use “Thank You” or some variation of it. So, they should be able to see the difference between a loyalty program for telecommunications services (AT&T) and one for financial services (Citibank). The judge denied Citibank’s motion for preliminary injunction.

Carpenters have a saying: "measure twice, cut once”. This opening line from a recent 7th Circuit Opinion says it all. %CUT% Final Call sold over a hundred copies of Jesus Ali’s portrait of Nation of Islam leader, Louis Farrakhan, without Ali’s permission. Ali sued Final Call for copyright infringement. The trial court relied on authority from the 7th Circuit that, through a typo, incorrectly shifted the burden of proof of an affirmative defense from the defendant to the plaintiff. While taking some responsibility for the error, the 7th Circuit reversed and remanded for assessment of damages.