SCOTUS tells the Federal Circuit to back off of patent damages rules. %CUT% Under the Patent Act, a court may increase the damages up to three times of a judgment. Last year, in two decisions, the Federal Circuit Court of Appeals imposed strict limits on the plaintiffs’ ability to get enhanced damages. The Federal Circuit required a plaintiff to show two things: (1) that there was a high likelihood that the infringer’s actions constituted infringement; (2) that the infringer knew the risk. Under this standard, any defense by an accused infringer that was not frivolous would get them off the hook. SCOTUS reversed the Federal Circuit recognizing that the Patent Act left enhanced damages to the discretion of the trial court. SCOTUS acknowledged that Federal Circuit’s test was trying to keep enhanced damages for egregious cases only. But the test was too rigid. Justice Roberts wrote: “[The] threshold requirement excludes from discretionary punishment many of the most culpable offenders, such as the “wanton and malicious pirate” who intentionally infringes another's patent—with no doubts about its validity or any notion of a defense—for no purpose other than to steal the patentee's business.” The two cases will go back to the trial courts to determine the availability of enhanced damages using a less rigid and more neutral test.

Sometimes, the last word isn’t really the last word. %CUT% Here are some updates for previous posts:

Just in time for summer, Mister Softee gets its just desserts courtesy of a federal judge. %CUT% The war started when Dimitrio Tsirkos decided to rebrand his “Mister Softee” trucks as “Master Softee”, including mimicking the graphic of the delicious ice cream cone. Tsirkos was a former vendor of the venerated purveyor of the taste of summer. As a vendor, Tsirkos had to pay royalties. As a non-vendor, he got out of having to pay Mister Softee. Mister Softee sued and obtained an injunction permanently enjoining Tsirkos from operating his rogue ice cream trucks using confusingly similar branding. Tsirkos refused to surrender. He continued to operate his Master Softee trucks despite the injunction. A federal court judge held Tsirkos in contempt repeatedly and ordered him to pay $329,000.00 in damages. When he still wouldn’t stop, the court entered another order adding $287,258.00 in attorney’s fees and $52,605.00 in costs.

A phantom trademark can be exorcised. %CUT%A 'phantom trademark' is in which an integral portion of the mark is represented by a blank or missing information. The USPTO will refuse registration of a phantom mark because it would be hard for someone to identify and distinguish the goods and services covered by the mark. Enterprise Holdings, Inc. got caught in the vortex of phantom marks when it tried to register this trademark for vehicle dealerships, fleet management services and vehicle rental services. The examining attorney refused registration on the basis that the mark was missing information. Part of the problem was that the specimens of use each separately showed the mark with added words “car sales”, “commercial trucks” and “fleet management” in the bottom white space. The examining attorney called this ‘mutilation’ of the mark. Enterprise Holdings, Inc. wouldn’t take no for an answer and appealed to the TTAB. The TTAB reversed the refusal. The TTAB held that the added terms were generic descriptions and could not function as a trademark alone. The added terms can be deleted from the mark without changing the commercial impression.

It looks pretty; but how protectable is it? %CUT% Two recent cases highlight how different types of IP law protect the structure of a product. In one case, In DeVinci Editrice S.r.l. v. Ziko Games LLC, a court held that the structure of the “Bang!” card game cannot be protected by copyright. While the plaintiff could copyright the artwork on the cards, the game structure, mechanics and rules are not protectable. Millennium Laboratories, Inc. v. Ameritox, Ltd., a court held that the structure of medical test reports can be protected as trade dress as long as the structure isn’t functional. In this case, the owner chose the structure because it didn’t look like any of its competitors’ reports.

President Obama signed the Defend Trade Secrets Act (“DTSA”) into law on May 11, 2016. It was a long time coming but we’re glad it’s here. %CUT%

Fake bad reviews are worse than real bad reviews. %CUT% A competitor of Romeo & Juliette Laser Hair Removal, Inc. posted fake bad reviews on Yelp.com and CitySearch.com using fake accounts. Romeo & Juliette sued the competitor because it was losing customers. The competitor’s defense was “hey, I’m out of business so you can’t touch me.” Not quite. Recognizing that false comments posted on the Internet have an immeasurable detrimental effect, the judge hearing the case entered a permanent injunction requiring the removal of the false reviews.

Trade dress can help protect the look and feel of a website. %CUT% Many businesses put a lot of time and effort into their websites. With good reason. A website is the perfect place to show what the business can do and how it does it. But how can a business protect its well-designed website from being mimicked by a competitor? In Ingrid & Isabel, LLC v. Baby Be Mine, LLC, a California federal court denied the defendant’s motion for summary judgment on the issue of whether the plaintiff’s website could be protected as trade dress. In doing so, the court acknowledged that the "look and feel" of a website qualifies for trade dress protection.

The FTC had a problem with Machinima, Inc. for not telling anyone that it paid people to post endorsements. %CUT% Machinima describes itself as the dominant network for fandom and video gamer culture. Its services include distribution, support and monetization of YouTube channels. Things went sideways for Machinima when it paid ‘influencers’ to post YouTube videos that were supposed to be objective opinions about Microsoft’s Xbox One system. The FTC issued an administrative complaint against Machinima for failing to adequately disclose that the influencers were being paid for their opinions. Jessica Rich, Director of the Bureau of Consumer Protection summed it up well. “When people see a product touted online, they have a right to know whether they’re looking at an authentic opinion or a paid marketing pitch. . . That’s true whether the endorsement appears in a video or any other media.” The FTC and Machinima have agreed to settle. Machinima will be prohibited from similar deceptive conduct in the future and it must ensure its influencers clearly disclose when they have been compensated in exchange for their endorsements.

The passive licensor can find itself on the receiving end of a huge strict liability judgment. Or not. %CUT% Strict liability means if you’re anywhere in the chain of commerce of a defective product, you’re liable for damages caused by it. This can be really harsh for passive trademark licensor who does nothing more than license a name of the product. Tort reform has been trying to find ways to lessen the hit on anyone who is in the chain of commerce but really had nothing to do with the design or manufacture of the product. The defendant in Shukrullo Dzhunaydov v. Emerson Elec. Co., et al., licensed the trademark of what turned out to be a defective product. The license allowed the defendant/licensor to inspect the use of the trademark and have some control over the product. But it didn’t exercise those rights. The court held that the defendant/licensor wasn’t liable for damages caused by the defective product.

The answer to being ousted from the wonderland of patents is to go through the looking glass to copyrights. %CUT% Since SCOTUS’ 2014 decision in Alice Corp. v. CLS Bank International, over 70% of software patents have been struck down as being too "abstract". In answer to this, Synopsys registered its software code for static timing analysis (STA) with the U.S. Copyright Office. When AtopTech started selling STA that was eerily close to the one belonging to Synopsys, Synopsys sued for copyright infringement. A jury awarded Synposys over $30 million in damages against AtopTech.

The New York Yankees were not amused when someone tried to register parodies of its famous trademarks %CUT%. IET Products thought it would be funny to register trademarks that parodied the New York Yankees longtime logo and catch phrase. IET replaced the bat on the logo with a syringe referring to alleged steroid use by the players. Not willing to stop there, IET also sought to register “The House that Juice Built” as a parody of the famous catch phrase “The House that Ruth Built” (meaning Babe Ruth for the initiated). The TTAB refused to allow registration of IET’s marks. The TTAB reasoned that IET wasn’t really interested in making commercial use of the marks because they were going to be used as an “ornaments” on IET’s goods.

Sometimes, the last word isn’t really the last word. Here are some updates for previous posts: %CUT%

If you don’t use your trademark, it could become a zombie. %CUT% Macy’s Department Stores has been absorbing local department stores and their trademarks for decades. Once Macy’s takes over, it rebrands the store. But, those old department store trademarks still exist in the minds of the consuming public. In other words, the dead trademarks became zombies. Seeing the marketing potential of zombie trademarks, Strategic Marks started selling T-shirts using them. Macy’s filed a trademark infringement suit against Strategic Marks and won. It helped that Macy’s hadn’t really abandoned most of the trademarks. It was using them in its “Heritage Collection”. In the end, the parties settled and Macy’s transferred some trademarks to Strategic Marks.

The Seventh Circuit is puzzled how anyone could confuse Land O’ Lakes dairy products with Land O’ Lakes fishing tackle. %CUT% It all started when Land O’ Lakes (the dairy guys) wanted Land O’ Lakes (the fishing tackle guy,) to license the name. The fishing tackle guy refused.  So the dairy guys opposed the fishing tackle guy’s trademark application. Then the fishing tackle guy filed suit. In the end, the Seventh Circuit affirmed the district court’s judgment dismissing all claims. Judge Posner stated: “Can one imagine Land O' Lakes advertising: ‘we sell the finest dairy products and the best fishing tackle?’ . . . So in this unusual case two firms sued each other though neither had been, is, or is likely to be harmed in the slightest by the other. The suit was rightly dismissed.”

Someone registered the trademarks associated with Yosemite National Park and it wasn’t the National Park Service. How could that happen? %CUT% Until recently, the National Park Service had a concessions contract with Delaware North Parks & Resorts Inc. to run Yosemite National Park attractions, including the Ahwahnee Hotel, the Wawona Hotel, Curry Village and Badger Pass. Delaware North lost the contract in an open bidding process. Delaware North filed suit claiming that the bidding process was unfair. Then Delaware North pointed out that one of its subsidiaries had registered the trademarks associated with Yosemite. Now Delaware North won’t let the National Park Service and the successful concessions contractor use the trademarks. The National Park Service has brought a proceeding before the Trademark Trial and Appeal Board seeking cancellation of the registrations based upon “False Association”, “Abandonment” and “Dilution”.

In 1991, the U.S. Supreme Court decided that the standard of creativity for copyright protection required a minimal level of creativity. Over the last year, numerous decisions explored how low that level of creativity can go. %CUT% The First Circuit Court of Appeals held that a chicken sandwich and its recipe are not copyrightable (Norberto-Colon Lorenzana et al. v. South American Restaurants, Corp.). The Ninth Circuit Court of Appeals held that series of yoga poses is not copyrightable (Yoga College of India LP et al. v. Evolution Yoga LLC et al.). However, the Ninth Circuit Court of Appeals held that the Batmobile is copyrightable because it is considered a “character” (DC Comics v. Towle).

After the shootings in San Bernardino last December, the FBI recovered an iPhone used by one of the shooters. The FBI doesn’t know the password and can’t unlock the phone. The FBI wants Apple to hack its own software by creating a back door into the phone. %CUT% No denying that the FBI has a serious problem. If it tries different passwords looking for the right one, the iPhone might lock down. The FBI wants Apple to create a new operating system that will allow the FBI access to the phone. But it’s not so simple. As Apple CEO, Tim Cook said in an open letter to customers, “Specifically, the FBI wants us to make a new version of the iPhone operating system, circumventing several important security features, and install it on an iPhone recovered during the investigation. In the wrong hands, this software — which does not exist today — would have the potential to unlock any iPhone in someone’s physical possession.” See the entire letter at http://www.apple.com/customer-letter/.

The New York State Division of Human Rights used a licensed photo of Avril Nolan in an ad about HIV. Now it’s dealing with a judgment for defamation. What went wrong? %CUT% It all started when Avril posed for a photo that was going to be used for an article about New Yorkers who are interested in music. Imagine her surprise when the New York State Division of Human Rights (“NYSDHR”) used her photo with the caption “I Am Positive (+), I have Rights,” implying that she was HIV positive. Avril is not HIV positive. She sued NYSDHR for defamation. NYSDHR argued that it licensed the photo from Getty Images so it shouldn’t be liable for defamation. Avril won against the NYSDHR. Avril also sued Getty Images for violating her right of publicity. Getty Images argued that the photo was used in violation of the license so it wasn’t liable to Avril. Getty settled with Avril after its motion to dismiss was denied.

Kyle Wilson had a great idea for a cereal breakfast bar. So he submitted to Kellogg Co.’s "G-r-reat Ideas” portal. When Kellogg used the idea without paying him, Wilson sued. %CUT% Kellogg’s portal allowed submissions of ideas. But the terms and conditions said that Kellogg wasn’t obligated to pay for a submitted idea; even if Kellogg decided to use it. Wilson lost his suit against Kellogg. The court held that Kellogg’s terms and conditions clearly warned idea givers, like Wilson.

The owner of the PLAYDOM trademark learned that trademark use and “website under construction” don’t play nice together. %CUT% David Couture got a registered trademark in 2008 for PLAYDOM. His specimen of use was a website page that described his company’s services. But it also said “Website under construction”. Years later, another company tried to register PLAYDOM. The applicant, Playdom Inc. (later acquired by Disney Co.) was refused registration based upon a likelihood of confusion with Couture’s trademark. Playdom Inc. brought a cancellation proceeding and won. The Federal Circuit Court affirmed the TTAB cancellation holding that the website advertised Couture’s readiness to perform services but he didn’t render any services until 2 years later. This decision has come under fire because prior case law saw “offering services” to be the same as “rendering services”. Critics also argue that the Lanham Act (15 U.S.C. §1053) establishes a different standard for use for services; a standard that Couture met. So the fact that Couture was offering his services should have been enough.

David Bowie, a musical and cultural icon known for pushing boundaries, passed away on January 10, 2016. Did you know that he also pushed the boundaries on monetizing Intellectual Property? %CUT% In 1997, Bowie was looking for a new revenue stream. With the help of investment banker, David Pullman, Bowie issued asset-based securities for current and future revenues from 25 of his albums recorded before 1990. And thus the term ‘Bowie Bonds” came into being. Bowie used some of the money he raised to buy back songs from his former manager. Although revenue from the bonds suffered some bumps in the road acclimatizing to digital downloads, Bowie Bonds are still considered a success. So successful that other famous musicians, such as James Brown and Iron Maiden, also used the Bowie Bond model to raise revenue.

Thanks to The Slants, the Washington Redskins’ trademark may live to fight another day. In June 2014, the Washington Redskins lost the trademark of their name because the term “redskins” was offensive. The Slants, an all Asian American dance rock band, tried to register their name as a trademark. The USPTO refused registration on the basis that the mark was “offensive” and “disparaging”. The Slants appealed the ruling. The Federal Circuit Court overturned the ruling. The court acknowledged that disparaging marks can be considered hurtful speech that harms members of oft-stigmatized communities. But the First Amendment protects even hurtful speech. According to the court, the government (in the form of the USPTO), cannot refuse to register disparaging marks because it disapproves of the expressive message conveyed by the marks. That means, the Washington Redskins may have a good shot at getting their trademark reinstated.

Caterpillar, Inc. is dealing with a $74 million trade secret verdict for misappropriating a supplier’s trade secrets. The supplier, Miller UK Ltd., had an agreement with Caterpillar to sell components. Miller brought suit against Caterpillar alleging that Caterpillar used its power as Miller’s largest customer to force disclosure of Miller’s trade secrets. Apparently, Caterpillar’s strategy was to cancel Miller’s contract and then produce its own components without having to pay Miller. The jury found in favor of Miller.

The heirs of the composer of “Santa Claus is Coming to Town” got an early Christmas present from the Second Circuit Court of Appeals. The song was composed in the 1930s. The 1976 Copyright Act allows a copyright owner to terminate a license during a five year period beginning 35 years after the date of execution of the license. The composer’s heirs served a notice of termination on the publisher, EMI. Due to confusion created by the intricacies between pre and post 1976 copyright law, plus the existence of two license grants that were signed 30 years apart, EMI refused to accept the termination. The Second Circuit held in the heirs’ favor. The heirs are going to get holiday royalties until 2029.