Branding Rules While Candy Bars Wage Battle ….

November 27th, 2013

WIPO 2013 If you ever doubted the economic importance of branding, take a look at the 2013 World Intellectual Property Report authored by the World Intellectual Property Organization (WIPO).  For the  period from 1987 to 2011, United States investments in branding accounted for close to a quarter of all intangible asset investments!  Brand ranking organizations value the top 10 brands to be worth between 46 and 91 billion dollars, and between 2008 and 2013, the total value of the top 100 global brands grew by between 19 and 24 percent.  Paralleling the enormous rise in value of the top brands is an equivalent “unprecedented” rise in the demand for trademarks.

It should come as no surprise then that along with increased competition, brand owners are constantly pushing the envelope in their quest to attract loyal customers.  Here’s a great example of a major brand’s recent attempt at expanding its trademark portfolio and the push back it received from a major competitor.  The Hershey Company recently filed a trademark application covering the cross section of its famed Snicker’s bar.

SNICKERS

 

Hersey believes that the cross-section of its candy bar is distinctive enough so when a consumer sees it, he or she immediately thinks “Hershey.”  How about that for ego?  Hershey met little resistance by the trademark examiner whose descriptiveness objection was swept aside by Hershey’s contention that the candy bar’s cross-section had acquired distinctiveness over time. The Examiner folded and moved the application on to publication.

Looking for sweet revenge, Mars, Incorporated (“Mars”) opposed the mark on grounds that it is merely descriptive, de jure functional, generic, and fails to function as a trademark. The opposition brief is a lesson on how to disqualify a trademark.  Here’s what Mars says:

  • The applied-for mark is descriptive, not distinctive.  Candy bars with similar cross-sections are not distinctive but are widespread even among Hershey’s own products: OH HENRY!, BABY RUTH, and PEANUT CHEWS;

OH HENRY!

  • The applied-for mark is “functional because it depicts a candy bar that results from a widely used and comparatively more efficient or less expensive method of manufacture for candy bars containing similar ingredients.”
  • The applied-for mark is generic and not capable of functioning as a trademark;
  • The applied-for mark does not indicate the source or origin of the product and, therefore, cannot function as a trademark.

This is a great example of the interaction between aggressive branding, trademark law, and competitive forces.  We will follow this story and let you know what happens.

– Adam G. Garson, Esq.

PTO’s ‘After Final Consideration’ Pilot Program

November 27th, 2013

USPTO Seal By filing a patent application and paying the filing fee, you are entitled to two reviews by the patent examiner.  The examiner has a very short and strict time limit to review your application.  If the examiner does not meet that time limit, then he or she may not meet productivity goals and may be denied raises and promotions.  If the examiner does not meet productivity goals three times, then he or she is out of a job.  By the second rejection of your application, the examiner likely has reached the end of the time allotted and can afford to give your application no more time.  In the past, when you received a ‘final’ rejection; that is, when the PTO patent examiner rejected your application for the second time, you generally had three options.  You could:

(1) File amendments that placed the application in condition for allowance.  Such amendments generally are limited to accepting what the examiner has decided that he or she will allow.

(2) File a ‘request for continuing examination’ and pay an additional filing fee for two more reviews.  In addition to the extra cost, this option generally defers final resolution for another six to nine months.

(3) File an appeal to the Patent Trial and Appeal Board.  The cost for an appeal is at least several thousand dollars and average time to resolve an appeal is three years.

You now have a fourth, and highly attractive, option: you can ask for additional consideration under the ‘after final consideration’ pilot program.  The ‘after final consideration’ program gives the examiner extra time to review your application and hence makes the examiner willing to further consider your application.  That further consideration may include an interview with the examiner and amendments to the claims.  There is no filing fee to take advantage of the program and no additional delay.  What’s not to like?

– Robert Yarbrough, Esq.

Six Strikes and You’re Out (of Internet Access) …

September 30th, 2013

baseball bat In February of this year, the Center For Copyright Information (CCI) — a group representing rights holders in the media industries — began a so-called “six-strikes” educational campaign to combat Internet piracy.  Leading Internet Service Providers  (ISP) — Verizon, Time Warner, Cablevision, Comcast and AT&T — are taking part.

Here’s how it works.  When it knows of or suspects online infringing conduct, a content provider will send an ISP a notice of copyright infringement.  The ISP will in turn forward the notice in the form of an “alert” to the offending subscriber.  These alerts are supposed to be educational in nature.  Any subscriber may receive up to six notices after which the ISP may turn off his or her Internet connectivity.  An independent review process is available should a customer believe it has been wrongfully targeted.

Not everyone likes this system.  Infringers, of course, don’t like it but others would like to see an independent body to oversee the system and not permit the ISP to “serve as judge, jury, and executioner”.  The Electronic Frontier Foundation (EFF) is concerned that the program will undermine efforts to promote free wi-fi since the CCI states that “subscribers are responsible for making sure their internet account is not used for copyright infringement” and that the ISPs urge users to restrict access to their wi-fi connections.

This seems designed to undermine the open wi-fi movement,” said the EFF, referring to efforts to encourage users to share their wi-fi connections with others. It is suggested that free internet access can make locations more tourist-friendly and aid the emergency services.  Open wireless is widely recognized to be tremendously beneficial to the public.

So what effect has the program had on online piracy rates?  According to one blogger, absolutely no effect.  In fact, piracy rates are still growing and traffic to one of the largest peer-to-peer piracy sites, Pirate Bay, has been trending higher.  Another question is what effect the system would have on litigation against infringers by content providers.  In one example, an adult film organization, which had sued a Verizon subscriber for allegedly infringing its x-rated film productions, subpoenaed Verizon for copies of six-strike notices received by the subscriber, information on how much bandwidth the subscriber used, and a list of viewed pay-per-view films he watched.  Surprisingly, Verizon said “no” and the fight continued.  We’re not sure what the results were but it appears that the CCI program will become a litigation weapon despite the stated educational intent of the program.  To date, our firm has not had the opportunity to view first hand the effects of the CCI program so if you have received a notice from your ISP, let us know.  We would like to see it.

– Adam G. Garson, Esq.

Abusive Patent Enforcement – The States Step Up

September 30th, 2013

policeIn general, only the Federal government and Federal courts have jurisdiction over patent matters.   However, the Federal government does not have effective tools for protecting individuals and small businesses from abusive and unjustified bullying by patent owners.   A small business often cannot afford to defend against a threat of patent litigation and agrees to pay license fees, regardless of the merit of the claim.

In the absence of Federal regulation, the states are filling the gap.

The State of Vermont, of all places, is the pioneer.  Vermont enacted a new state consumer protection law to shield its citizens from bad faith patent infringement claims.   The Vermont attorney general filed suit to enforce the new law against MPHJ Technology Investments LLC, which claims to own patents to the technology of scanning to e-mail.  MPHJ sent letters to thousands of small businesses, demanding licensing fees of $900 to $1200 per worker.   According to court filings by the Vermont attorney general, the demand letters include several false statements and MPHJ allegedly performed no investigation to determine whether the recipients of the letters were infringing the patents.  The litigation is ongoing.

Minnesota’s attorney general subsequently extracted an agreement from MPHJ not to send demand letters in that state unless the letters are first approved by the Minnesota attorney general.  This result appears to be a complete victory for Minnesota.

Nebraska’s attorney general followed the lead of Vermont and Minnesota, but in a ham-fisted manner, without a targeted law and without a defendant as unsympathetic as MPHJ.  Nebraska’s attorney general took aim not MPHJ, but at  its Texas-based lawyers, Farley Daniels LLP.   Farley Daniels sent out patent infringement demand letters in Nebraska on behalf of a different client, Activision TV, which manufactures and sells flat panel displays.   The Nebraska attorney general then sent a letter to Farley Daniels  ordering the law firm to stop patent enforcement in Nebraska

Farley Daniels promptly added the Nebraska attorney general as a defendant in a pending Nebraska patent infringement lawsuit by Activision TV.  The Federal judge ruled that Farley Daniels could continue to file and prosecute patent infringement cases in Nebraska.  The judge did not decide whether Farley Daniels could continue to send cease-and-desist letters.  The Nebraska attorney general subsequently acknowledged that his complaint is not with Activision TV, which appears to actually make and sell products.

Draft bills are under discussion in Congress to deal with the issue of abusive patent enforcement.   The draft bills would require patent owners to present much more information to defendants in the complaint.  In a provision that risks throwing out the  baby with the bathwater, the draft bill requires that the losing party in patent infringement litigation pay the attorneys fees of the prevailing party.   The legislation is being circulated for discussion, but is in a very early stage.

–Robert Yarbrough, Esq.

Loosely Organize those Loose Photos then Seek Copyright Protection …

August 30th, 2013

Old Photos by  Blue Elf Imagine how surprised some photographers are when we tell them  that the government fee for registering the copyrights of a complete photo shoot — comprising hundreds of photographs — is only $35.00 if you do it online.  It seems like nothing the government charges these days is only $35.00!  It represents one of the best bargains available for protecting intellectual property.  Registration gives photographers and other authors of original content access to federal courts, a presumption of validity, a public record of ownership and customs protection.

So, how do you record hundreds of unpublished works (i.e., each photo) in one single registration?  To do that, the registration must qualify as a “collection.”  The Code of Federal Regulations (37 C.F.R. Sec. 202.3(b)(4)) provides the rules:

(4) Registration as a single work. (i) For the purpose of registration on a single application and upon payment of a single registration fee, the following shall be considered a single work:

….

(B) In the case of unpublished works: all copyrightable elements that are otherwise recognizable as self-contained works, and are combined in a single unpublished “collection.” For these purposes, a combination of such elements shall be considered a “collection” if:

(1) The elements are assembled in an orderly form;

(2) The combined elements bear a single title identifying the collection as a whole;

(3) The copyright claimant in all of the elements, and in the collection as a whole, is the same; and

(4) All of the elements are by the same author, or, if they are by different authors, at least one of the authors has contributed copyrightable authorship to each element.

Registration of an unpublished “collection” extends to each copyrightable element in the collection and to the authorship, if any, involved in selecting and assembling the collection.

A photo shoot usually meets the above requirements.  It can bear a single title, e.g., “Photo Shoot August 30, 2013″; the claimant is the same for all the images, i.e., the photographer or, perhaps, the photographer’s employer; and all the elements are by the same author, i.e., the photographer. But what about the first requirement that all the elements be “assembled in an orderly form”?  Usually, numbering the images from one to whatever is deemed to be sufficient.  Recently, the U.S. Court of Appeals for the Seventh Circuit considered this question in Quincy Neri v. Melinda Monroe, No. 12-3204, (August 12, 2013, Cir. 7th).

In Neri, a defendant renovation company posted photographs of a completed architectural renovation on various Internet sites.  The photos included, without permission, images of the plaintiff’s sculpture.  This bought them a lawsuit by Neri for copyright infringement.

The magistrate dismissed the lawsuit because Neri had not registered her copyright in the sculpture — yes, registration is important but it must be done correctly! Neri had registered her copyright by submitting to the Copyright Office an application together with a collection of photographs  consisting of a bound booklet and some loose photographs of her unpublished works, the latter of which contained a picture of the sculpture.  The Magistrate judge, though, concluded that the application and resulting certificate were invalid because her submission was not in an “orderly form”.   The magistrate judge believed only a single bound book or booklet could meet the “orderly” requirement but not the loose photographs.

The Court Appeals wrote that it failed to see why only a single document can be orderly and why a court should set aside “an agency’s application of its own regulations without a strong reason.”  But just how much order is required?  No other court had addressed the question and the Court of Appeals was on its own.  The court wrote that the key question is “whether the submission [to the Copyright Office] is organized well enough to permit users and the court to pin down the “information” on which copyright enforcement depends.  The Court went on to hold that this “implies that loose photographs could suffice if numbered or labeled…”   Merely because Neri may have submitted loose photographs in support of her copyright registration was not a de facto reason to reject the registration.  Neither the copyright office nor the Court Appeals concluded that Neri’s submission was invalid.

So, photographers out there, you can submit your loose photographs to the Copyright Office but just make sure they are numbered or labeled for identification purposes.

– Adam G. Garson, Esq.

Beware of the On-Sale Bar

August 30th, 2013

police If you are a regular reader of this newsletter, then you know that a sale or offer for sale of your invention will terminate your patent rights unless you first file a patent application.   Did you know that the on-sale bar also applies to commercial sales of the invention to you, as from a contract manufacturer or prototype-maker?

Hamilton Beach recently learned to its sorrow that the on-sale bar applies not only to sales by the patent owner but also to purchases by the patent owner.  Hamilton Beach invented an improved slow cooker.  Hamilton Beach did not manufacture the slow cooker itself and instead negotiated with a foreign manufacturer.  The foreign manufacturer offered to sell the improved slow cooker to Hamilton Beach.  Hamilton Beach subsequently filed an application and obtained a patent for the improved slow cooker.  Hamilton Beach later sued Sunbeam for patent infringement.  Sunbeam argued that the Hamilton Beach patent was invalid because of the offer to sell the invention by the manufacturer to Hamilton Beach.

The U.S. Circuit Court for the Federal Circuit ruled that the offer by the manufacturer to sell the slow cookers to Hamilton Beach was an ‘offer of sale’ that tripped the ‘on sale’ bar and invalidated the patent.

Why is this decision important to small businesses and individual inventors?

The hidden risk of the Hamilton Beach decision lies in the production of prototypes.  The on-sale bar requires (a) a commercial sale or offer for sale of (b) an invention that is ready for patenting.  An estimate from, say, a machine shop to produce a prototype of an invention could be a commercial offer to sell the invention triggering the on-sale bar if the invention is ready for patenting.  An invention is ‘ready for patenting’ when (a) the inventor has a working prototype or (b) the invention is described in drawings or in written descriptions sufficient to allow a knowledgeable person to build and use the invention.

The only way sure way to avoid the on-sale bar is to not buy or sell the invention until after you file a patent application.  The Hamilton Beach case is yet another reason to file provisional patent applications early and often.

– Robert Yarbrough, Esq.

Ask Dr. Copyright

July 31st, 2013

Dr. Trademark Dear Doc:

I know you’ve explained the legal concept of “fair use” before, but I have a question about that. Does it infringe an author’s copyright in a book to paraphrase one sentence from the book in a movie, if you give credit to the author, or is it fair use?

Sincerely,

Absolom Absolom,  Mississippi

Dear AbAb:

Funny you would ask that question, since it is a paraphrase of one asked by United States District Judge Michael P. Mills in his recent decision in Faulkner Literary Rights LLC v. Sony.  In that suit, the heirs of William Faulkner sued Sony Pictures, which distributed Woody Allen’s movie Midnight in Paris. In the movie, Owen Wilson’s character paraphrases Faulkner’s novel, Requiem for a Nun, when he says, “The past is not dead. Actually, it’s not even past. You know who said that? Faulkner, and he was right. I met him too. I ran into him at a dinner party.”

The actual sentences from the novel are, “The past is never dead. It’s not even past.”

Given the obvious and serious legal issues at stake, the Faulkner heirs sued for violation of the Lanham Act and the Copyright Act. On a motion by Sony to dismiss the case, the judge read the book, watched the movie, and expressed his gratitude that he had not been asked to compare The Sound and the Fury with Sharknado.

The legal question, however, turned on what the Court saw as, “(1) whether the affirmative defense raised to the copyright infringement claim can properly be considered on a motion to dismiss; (2) whether the use in Midnight is justified under a de minimis copyright analysis; (3) if the alleged infringement is not de minimis, whether or not it constitutes fair use; (4) whether Faulkner’s Lanham Act claim has merit.”

Judge Mills, in his 17 page memorandum opinion, gives a textbook lesson in fair use analysis. It all really comes down in the end, however, to his belief that Woody Allen has created a, “transmogrification in medium” by taking a sentence from the novel and using it in a different medium (film) and for a different literary purpose. According to the Merriam-Webster Dictionary, “transmogrify” means, “to change or alter greatly and often with grotesque or humorous effect.” Ahhhh… so THAT’s what Woody Allen did!

So you see, Ab, it’s fair to misquote a famous author of serious literature, if you do it in film, with comic effect. So I guess, we can try it in a law firm newsletter, too… As Woody Allen once said, “I believe there is something out there watching us. Unfortunately, it’s the government.” (But then again, that’s a real quote.)

If you need to paraphrase a famous person, it would be good to check with the attorneys at LW&H – they’re not quite famous, but they do know a lot about copyright law.

Until next month…

The “Doc”

– Lawrence A. Husick, Esq.

The DMCA to the Rescue (Maybe) …

July 31st, 2013

copyright In a recent embarrassing broadcast by KTVU television of San Francisco, the morning anchor, Tori Campbell, identified the pilots of the recent San Francisco Asiana airline crash as “Captain Sum Ting Wong,” “Wi Tu Lo,” “Ho Lee Fuk,” and “Bang Ding Ow.”   As she read the names, Campbell didn’t flinch and, even more perplexing, why didn’t the station snag the racist script before airing it?  To its credit, KTVU made a quick public apology and fired some employees.  The station was still faced with a newscast gone viral.  Just how would they remove all the copies of the broadcast on YouTube and other popular web sites?

Digital Millennium Copyright Act (DMCA) to the rescue!  Under the DMCA, a 1998 amendment to the US Copyright Act, copyright owners may request online service providers to take down works, which have been posted online without the owner’s permission.  We have written about take down notices in previous posts.  Service providers generally obey such requests to avoid liability for the illegal acts of their online subscribers.  And so, under the theory that the video posters had essentially stolen copies of the embarrassing newscast, KTVU undertook a “successful” campaign of sending “take down notices” to various web sites such as YouTube.  But how successful were they?  Well, if you really wanted to see the broadcast, you could find it on Bit Torrent and other file sharing sources but for the mainstream web surfers, KTVU’s campaign appeared largely successful.

KTVU may have been satisfied, but copyright lawyers were not.  There is a very compelling argument that the KTVU newscast was not protected by copyright law at all.  Section 107 of the U.S. Copyright Act places limitations on the exclusive rights granted by the Act.  Copies of works used for purposes such as criticism, comment (including parody), and news reporting are not, under the Section 107, infringing.  Rather, such use constitutes “fair use.”  Certainly, most people who posted copies of the broadcast did so for no  purpose other than criticism, comment, news or parody even it they thought it was funny.   If they were posted for racist purposes, perhaps, KTVU has an argument but many, if not the majority of postings, were comments upon the stupidity and poor management of the KTVU newsroom. Based on the fair use theory, bloggers at The Desk submitted counter-notifications with YouTube demanding that the KTVU videos be reinstated. They were apparently successful given that the broadcast is still available here.   The KTVU incident, nevertheless, demonstrates how creative use of copyright law can be used for reputation management even if the results are short-lived.

– Adam G. Garson, Esq.

New Rules, New Strategies for Innovators

July 31st, 2013

coke bottle patent The past 15 years have seen an unprecedented attack on patents and patent-owners in the United States. Orchestrated by foreign nations, multinational corporations, and a variety of other groups, largely funded by similar vested interests, this attack has reduced much of the value formerly associated with patented innovations. In past issues of our newsletter we have described how patent owners can no longer realistically expect to block sales of products that infringe their patents through the injunction process, how infringers can conspire to divide patented processes among several actors to avoid infringement, how multiple infringers must now be sued separately, rather than joined in a single action, and how delays at the Patent Office and increasing fees put university researchers, solo inventors, and small companies at a disadvantage. We have also been counseling our clients to help them construct valuable patent strategies.

In the latest round of anti-patent actions, a committee of the Federal Courts including some noted judges and attorneys has issued a model order that they recommend be adopted by federal trial courts to govern patent suits. Such model orders are usually adopted quickly and without significant change by courts around the country. What is troubling about the present document, “A MODEL ORDER LIMITING EXCESS PATENT CLAIMS AND PRIOR ART” is that for the history of our patent system, which dates back to the time of Thomas Jefferson, inventors have always been able to present claims in as much detail as they wish, so that their patents would clearly and particularly cover all aspects of their inventions, and, at least since the 1950s, inventors and their attorneys have been required by both the Patent Law and the rules of the Patent Office to submit every relevant item of prior art of which they were aware. The background of the model order cites a study that shows that litigated patents contain an average of 24 claims, and cite 31 prior art references, which the committee calls, “problematically excessive.”

Some recent cases have seen individual judges impose limits on patent owners, requiring that they limit the number of patents in a suit, and that they throw away claims in the patents that they assert to reach some arbitrarily small number. In other cases, the number of products accused of infringement has been limited by court order. All of this trimming is claimed to streamline cases and to promote the administration of justice. In reality, however, such rules are evidence that our judicial system often fails to handle the technical complexity of our modern technological world. When it takes teams of hundreds of researchers years of effort to develop and commercialize complex inventions such as synthetic proteins, chips with millions of components, and software with tens of millions of lines of code, the refusal of our courts to expend the mental energy needed to understand and to protect such innovations harms innovators. For courts to say to inventors, you have done the hard work of creating value, but we require you to be able to explain it to judges and juries in monosyllabic terms, and to choose, “not more than ten claims from each patent, and not more than a total of 32 claims,” means that for some inventors, they will have a more difficult task to defend the value that they create.

Inventors must and will respond. Already, we are counseling clients to submit more patent applications with fewer claims per application. In litigation, the proposed limits will mean that separate law suits will have to be filed on small groups of patents against the same defendant. The erosion of the patent system has caused some innovators to opt for trade secrecy, at least in part, rather than patenting every aspect of their inventions, and this impoverishes our entire society, because it keeps technical advances out of the public view, which slows follow-on innovation.

We are confident that Americans will continue to innovate, despite the limits being imposed on the patent system. We are confident that we, and others who value our tradition of individual innovation will continue to find strategies to protect the value generated by inventors. Because we believe in the long-term value of innovation and the patent system that protects innovation, we at LW&H continue to develop new strategies for our clients, and particularly university researchers, garage inventors, startup companies, and established concerns to implement effective and efficient legal strategies for protecting their inventions.

– Lawrence A. Husick, Esq.

So You Think Your Trade Secrets Are Protected…

July 31st, 2013

safe It’s time for a story.  We’ll start with the moral – read your non-disclosure agreements and comply with ALL of the requirements of the agreement to keep your information secret.  Back to the story:

In license negotiations for an invention,  Convolve and another party signed a non-disclosure agreement.   Like many non-disclosure agreements, the agreement required that the person disclosing secret information designate the information as confidential.   Convolve revealed trade secrets to the other party in reliance on the agreement, but failed to designate the trade secrets as confidential.   The license negotiations fell through and, predictably, the other party used the trade secrets.   Convolve sued, arguing that the trade secrets were protected by the non-disclosure agreement and also by trade secret law.

Convolve  lost on the trade secret claims, both at trial and on appeal.   The Federal Circuit Court of Appeals held that Convolve’s failure to designate the trade secrets as confidential according to the agreement meant that the trade secrets were not covered by the agreement.  The other party was free to use the trade secrets in any way that it desired.

Convolve also lost on its trade secret law claims.  The Federal Circuit held that the agreement trumped trade secret law.   In short, Convolve waived its other trade secret rights by signing the non-disclosure agreement.

In the give-and-take of a business negotiation, information can be disclosed in all sorts of ways – verbally over lunch, in e-mails or texts, in demonstrations and plant tours.   Some of the information disclosed will be confidential and some will not.  You and every person on your team who communicates with another party under a non-disclosure agreement MUST be aware of what information is confidential and the necessary steps to protect the confidential information under a non-disclosure agreement.

If you are the party disclosing information, another way to protect yourself is to make sure that the agreement protects all disclosed information without requiring a specific designation and that the rights of the disclosing party are in addition to its rights under trade secret law.

– Robert Yarbrough, Esq.