Property, intangible

It Should Be In the Public Domain

noreply@blogger.com (Pamela Chestek) — Tue, 02 Mar 2010 00:10:00 +0000

Artist Frank Gaylord created the bronze figures that are part of the Korean War Veterans Memorial. He sued the U.S. Postal Service when a photo of the sculptures was used on a stamp. In take one, the Court of Claims split the baby, deciding that the photo was a fair use of the sculpture, but also found that the government was not joint owner of the sculptures. Now on take two, the Court of Appeals for the Federal Circuit gives Gaylord the full win - it affirmed on the ownership issue, reversed on the fair use defense, and sent the case back to the Court of Claims for a determination of damages. The unanswered question is how it can be that the copyright in a war memorial isn't in the public domain.

As a refresher, Cooper-Lecky Architects, P.C. was selected to create, build and install the Korean War Veterans Memorial. The Memorial includes 19 statues of soldiers, a mural, granite plates at the soldiers' feet representing the reflection of rice paddies, and landscaping. Cooper-Lecky sponsored a competition to select the sculptor for the human figures and plaintiff Gaylord won the competition.

Photo by clkohan.

A photographer, Alli, then took a photo of the statues in the snow. The U.S. Postal Service later used the photo, with Alli's permission, on a stamp.

Gaylord sued the US Postal Service in the U.S. Court of Claims.

On fair use, the Court of Claims had bootstrapped a questionable analysis on the first fair use factor into a successful fair use defense overall, but the Federal Circuit was not so gullible (a reversal that isn't so popular, but I leave it to others to argue what "fair use" really means).

The Government's argument that it was joint owner of the work was still futile. The Court of Appeals agreed with the Court of Claims that the government's contributions to the statues - changes in ethnicity, altering soldiers so they were clean-shaven, adding buckled chin-straps, putting ponchos on the soldiers, reducing the wind in the ponchos, removing wrinkles on the solders' faces, changing the position of the lead soldier from squatting to standing, and staggering the placement of the statues in formation - were just "suggestion and criticism," not joint ownership. But even if these suggestions had risen to the level of copyrightable contribution, joint ownership requires an intent to create a joint work. Gaylord and Cooper-Lecky had disagreed about ownership long before the statues were completed, so clearly Gaylord did not intend that anyone have joint ownership in the copyright.

But the real meat of the case is in the dissent. As some have recognized, how can it be that a private person owns the copyright in a public monument? Judge Newman points out in dissent that the majority's holding "is contrary to the contract provisions, contrary to statute for works done in the service of the United States, contrary to copyright law, and contrary to national policy governing access to public monuments."

The dissent and commenters are right to be outraged; Cooper-Lecky's contract said that "the Government shall have unlimited rights, in all drawings, designs, specifications, notes and other works developed in the performance of this contract, including the right to use same on any other Government design or construction without additional compensation to the Contractor. The contractor hereby grants to the Government a paid-up license throughout the world to all such works to which he may assert or establish any claim under design patent or copyright laws . . . ." Here is a 2000 letter to Cooper-Lecky from a government contracting officer stating in no uncertain terms that, in the government's opinion, it owns all copyrights in the work and demanding the assignment to the government:

and

The letter shows that Cooper-Lecky repeatedly claimed that it was the owner of the copyright in the work and required permission for others to reproduce it. The government threatened to take action if there was no assignment, but must not have done so.

The majority disposes of the dissent by pointing out that the issue wasn't raised by either party but only by the dissent sua sponte, and, further, Gaylord was not a party to the contract. Indeed, the contract language arguably doesn't require Cooper-Lecky to assign any copyright but only give a license to its own, not those of subcontractors, with a grant only to the government, not to third parties. But perhaps now the government will see fit to enforce the contract against Cooper-Lecky and put the ownership of the work where it belongs, with the government, and then the government can dedicate it to the public domain.

Gaylord v. U.S., No. 2009-5044 (Fed. Cir. Feb. 25, 2010).

Court of Claims decision here.

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The Real MG Stands Up

noreply@blogger.com (Pamela Chestek) — Sat, 27 Feb 2010 15:01:00 +0000

The IP Finance blog has risen to the occasion, updating us on the dispute over ownership of the "MG" trademark. It has been resolved, for the moment, in favor of Nanjing Automobile Corporation. Nanjing has worldwide rights to the MG mark and the English company that claimed to own it was ordered to change its company name to one without the letters "MG" and to transfer any "MG" domain names to Nanjing. IP Finance story here.

This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.

The Cloud Picks What Brand You Are Selling

noreply@blogger.com (Pamela Chestek) — Sun, 21 Feb 2010 14:34:00 +0000

Stanford Law School's Center for Internet and Society is not where I usually get content for my blog. But Larry Downs has written an interesting story about an experience with buying what could easily be characterized as a counterfeit camera battery on Amazon.com. The twist is that the vendor claims he didn't brand the battery, it was another seller facilitated by Amazon.com itself. Here's the explanation from an Amazon.com web page, as reported in the story:

The information displayed on an Amazon single detail page, called “reconciled” data, is drawn from multiple seller contributions. When a seller contributes product information to an existing item in our catalog, a decision is made about whether or not to display any changes to the product details on the single detail page. This decision is processed automatically according to business logic known as “Detail Page Control.” Detail Page Control determines which of the available product descriptions, features, titles, and additional details are displayed on the single detail page.
The selection is made based on which contributing seller has greater Detail Page Control as determined by our automated system. This could be Amazon or any seller offering the item. Detail Page Control rankings are not modified manually, but are regularly reviewed and updated automatically by our system. Some factors that affect Detail Page Control are a seller’s sales volume, refund rate, buyer feedback, and A-to-z Guarantee claims.

The original seller says he properly listed his battery as OEM, but that the above system changed it to a listing for an authentic battery.

Although the seller's story seems sympathetic, Amazon hasn't told its side yet. But it leads to interesting questions about liability, referential use by others, and overall control over your trademark and your brand in an automated world. It's highly recommended reading for anyone who has goods sold in the electronic market.

Full story here.

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There's Always Your First Name

noreply@blogger.com (Pamela Chestek) — Wed, 17 Feb 2010 03:11:00 +0000

From the caption you can guess the story in MacKenzie-Childs, Ltd. v. Victoria and Richard MacKenzie-Childs: Victoria and Richard MacKenzie-Childs started a business, didn't have the business anymore, and then there was a dispute over who owned the name.

The MacKenzie-Childs story is a little different from Joseph Abboud but still comes out the same. You remember Joseph Abboud, who sold his name as part of his business for $65 million plus, then, after his non-compete ended, tried to introduce a new line called "jaz: A New Composition by Joseph Abboud." Ultimately, the court held that Mr. Abboud cannot use his name except nominally in a sentence. I have a hard time finding any sympathy for Joseph Abboud; he was very well compensated for his name. The MacKenzie-Childs have a more sympathetic story, but at the end of the day the result is the same, individuals may no longer use their own name.

The story, as told by the MacKenzie-Childs, is that they started a business in 1983 making ceramic goods. The business started as "Victoria and Richard MacKenzie-Childs, Ltd." and the business registered a design mark for it in 1989.

In 1995 they dropped "Victoria and Richard" and allowed the registration to lapse. In 1997 the company filed two applications to register this logo:
But the company ran into difficulty in 2000, which is where the sad story starts. It was several million of dollars in debt, so the bank installed a new president, MacDonell Roehm, Jr. He then approached third-party defendant Pleasant Rowland to solicit her investment in the company. Thereafter the bank sold the MacKenzie-Childs debt to Ms. Rowland and she called the loan. The company had to file for bankruptcy, Rowland offered to purchase the MacKenzie-Childs business, and the offer was accepted by Roehm on behalf of the company. Roehm then went to work at the new company.

Rowland offered the defendants $10 million not to compete with their old business, which they rejected. Rowland then called in the MacKenzie-Childs' personal debt, putting them into bankruptcy, which allowed her to acquire many of the couple's personal assets also. Ultimately the MacKenzie-Childs started a new business using the mark "Victoria and Richard"; the new MacKenzie-Childs company sued.

A sad story, but that didn't help the MacKenzie-Childs' trademark claim. The asset purchase agreement transferred "Intellectual Property," defined this way:

all intellectual property, including, without limitation, . . . all trademarks, service marks, trade dress, logos, trade names, brand names and corporate names (including, without limitation, the name “MacKenzie-Childs”, and all derivatives thereof), together with all translations, adaptations, derivations, and combinations thereof and including all good will associated therewith, and all applications, registrations, and renewals in connection therewith . . . .

The only struggle for the court was what exactly the transferred marks were. The court previously denied summary judgment in 2008 largely because discovery had not even begun, but in 2010 it was easy going. There was no argument that the two newer marks as shown in the registrations were transferred. Although the court denied summary judgment on the ownership of "Victoria and Richard MacKenzie-Childs" in 2008 for lack of evidence, by 2010 plaintiffs dropped their claim of infringement against defendants' use of "Victoria and Richard." The unregistered mark "MacKenzie-Childs" was also in dispute, with defendants claiming there was no such mark despite the APA's specific mention of it. In 2008 summary judgment was denied pending more discovery; by 2010 there was evidence that "MacKenzie-Childs" was a mark and consequently it was owned by plaintiff. A garbage can filled up with the remaining claims.

You can't help but think that there is more to the story about how the MacKenzie-Childs lost their company and how culpable they might also have been. But at the end of the day it didn't matter how it happened, the company was gone and the marks with it.

MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Jan. 9, 2008).
MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Feb. 1, 2010).

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Guide to Due Diligence

noreply@blogger.com (Pamela Chestek) — Fri, 05 Feb 2010 02:35:00 +0000

Neil Wilkof at the IP Finance blog has a great post on due diligence on IP ownership. The post walks through the various ways that IP rights can be acquired and transferred, as well as modalities of default rules in different countries. Definitely something to keep in the file drawer, if not stuck on the bulletin board.

This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.

Off-Topic

noreply@blogger.com (Pamela Chestek) — Mon, 25 Jan 2010 15:58:00 +0000

It's off-topic, but I encourage everyone to go take a look at
opensource.com, a web site launched today by my employer, Red Hat. It's a place to talk about open source and the power of working openly and collaboratively. Come join the conversation.

Can NBC Own the Intangibles?

noreply@blogger.com (Pamela Chestek) — Mon, 25 Jan 2010 02:29:00 +0000

Law.com is reporting that Conan O'Brien will have to give up the intellectual property rights in the characters and recurring skits that he developed during his NBC career. It's not all entirely clear who owns what and who's giving up what. The New York Times reports NBC claims to be co-owner of Triumph the Insult Comic Dog with former writer Robert Smigel; The Hollywood Reporter says Smigel's reps aren't talking. The Smoking Gun reports that some of the music is "safe" because drummer Max Weinberg and guitarist Jimmy Vivino registered the copyright in it, but that's not at all apparent from the database records - all that they show is that there is some document on record at the Copyright Office between NBC (and others) and EMI that involves 4993 titles, including four musical pieces for the Masturbating Bear and three for Pimpbot.

(click to enlarge)

Because television a collaborative business it's a messy problem. But even once it gets straightened out, what will NBC really own? Everyone seems to be in agreement that the goal is to prevent Conan O'Brien from using the bits elsewhere, not that NBC is going to exploit them itself. It couldn't; the characters and skits would be only an unfunny imitation without Conan. Everyone is also in agreement that it's trivially easy for Conan O'Brien to take the same comedic concepts and apply them in a context different enough to avoid infringement. They won't have the same titles and character names, but they will nevertheless be similar because they come from Conan's unique sense of humor. Humor is one intangible property that can't be assigned.

More here and here.

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15% of Sherlock Holmes Under Copyright

noreply@blogger.com (Pamela Chestek) — Fri, 22 Jan 2010 02:39:00 +0000

Last Sunday's New York Times published an article about copyright ownership of Sir Arthur Conan Doyle's Sherlock Holmes character. The article is largely about the dispute between different parties who lay claim to the US copyright in the Sherlock Holmes stories. The general reaction is surprise that Sherlock Holmes can still be under copyright, but here's the math.

According to Wikipedia, the Sherlock Holmes stories were published between 1887 and 1927. Google Books offers that some are in the public domain (The Adventures of Sherlock Holmes, published in 1897, and The Hound of the Baskervilles, published in 1901, for example). But the last Holmes book published, The Case-Book of Sherlock Holmes, was published in 1927 and was a compilation of works previously published between 1921 and 1927. Two of the stories published in The Case-Book of Sherlock Holmes, "The Adventure of the Mazarin Stone" and "The Problem of Thor Bridge," are also in the public domain. They were both first published in Strand Magazine and Hearst's International Magazine in 1921 and 1922 respectively.

It's a take-it-to-the-bank fact (well, almost) that books published before January 1, 1923 are in the public domain, and Sherlock Holmes demonstrates why that date is the dividing line. First, assume that no copyright term has been forfeited in the US. So, take "The Problem of Thor Bridge," published in 1922. At the time of publication, the term of copyright was an initial 28 years under the The Copyright Act of 1909. This means that the first term of copyright would have expired in 1950 and the renewal would have expired in 1978. By 1978, though, the Copyright Act of 1976, effective January 1, 1978, had passed, which extended the term of copyright. In the case of works in their renewal term, as this story was, section 304 of the Copyright Act set the copyright term at 75 years from date of publication. Therefore, the copyright was automatically extended until 1997 (1922+75) and thereafter the story entered the public domain.

Now take "The Adventure of the Creeping Man" published in 1923. Same as above, the original term and extension were 56 years in total, taking the term through 1981, but the Act of 1976 shifting the expiration to 75 years after publication, or to 1998. This makes all the difference. According to section 305 of the Copyright Act, the term of copyright runs to the end of the calendar year in which it would otherwise expire, so the copyright in any work published in 1923 would have expired on December 31, 1998. But, enter the Sonny Bono Copyright Term Extension Act, effective on October 27, 1998. Rather than the 75 year extension previously provided originally under the 1976 Act, the Sonny Bono Act changed the extension to 95 years. So the copyright, rather than expiring on December 31, 1998, was extended for another 20 years and the copyright will now expire on December 31, 2018. The remaining stories, published between 1923 and 1927, will fall into the public domain between December 31, 2018 and December 31, 2022.

Out of four novels and 56 short stories, nine short stories are still under copyright. What that means about using the Sherlock Holmes character at all is another story.

Handy Copyright Office circular for calculating copyright term here.

Update 1/24: NY Time opinion piece on the issue here.

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Ball Bearing Trademark Rolling Free, Like a Fumbled Football

noreply@blogger.com (Pamela Chestek) — Sun, 17 Jan 2010 20:09:00 +0000

Both plaintiff and defendant sell ball bearings using the same four-digit codes. The codes provide information on the characteristics of the bearings. But this isn't a copyright case about the numbering system, it's a claim that the series numbers are trademarks.

The plaintiff, RBC Nice Bearings Inc., f/k/a Nice Ball Bearing Co. ("Nice"), started selling "1600" series bearings in 1946. The defendant, Peer Bearing Co. ("Peer"), began using the same series numbers in the early 60's. Peer says it used the same numbers because they were commonly used as "an industry standard." Plaintiff Nice also sells "7500" and "7600" series bearings, having begun at least as early as 1957; defendant Peer began selling the same series numbers in in 2002.

Since trademark ownership is based on priority of use, at first blush it doesn't look like there should be a question of who owns the series designations, only whether they function as a trademark (the PTO currently thinks not; see the final refusals in the applications for 1621, 1630, 1635, and 1641). But there's a wrinkle here: defendant Peer's parent, SKF, USA, used to own plaintiff Nice, sold Nice to its current parent in 1997, then acquired Peer in 2008.

The claim for infringement of the 1600 series was kicked on laches, but the claim for infringement of the 7500 and 7600 series marks survived summary judgment. The court found that there were issues of fact on laches, secondary meaning and infringement. But the court also spotted an ownership problem:

The issue is whether SKF actually transferred ownership of the 7500 and 7600 Series designations to Plaintiffs pursuant to the APA in 1997. Section 2.01(i) of the APA states that SKF is transferring to RBC "all of [Nice's] patents, copyrights, trademarks, trade names, service marks, service names, designs, know-how, processes, trade secrets, inventions, and other proprietary data[.]" However, the APA also includes a schedule purporting to list the trademarks being transferred to Plaintiffs, and this schedule does not list any Series terms or part numbers. In the context of their secondary meaning argument, Plaintiffs present an affidavit from Michael Gostomski, Executive Vice President of Roller Bearing Company. Mr. Gostomski states that, when SKF sold the Nice business to RBC, both parties agreed that SKF would transfer to RBC all intellectual property associated with the Nice business, including the ownership of the Series designations. According to Mr. Gostomski, during negotiation of the APA, there were "extensive discussions" regarding transfer of the Series designations at issue and that the ownership of these designations was a "key item." Notwithstanding the alleged centrality of these assets, the APA makes absolutely no mention of them, although it does list the specific trademarks which were intended to be sold. Relying on the declaration of SKF's former general counsel Allen Belenson, Defendants contend, on the other hand, that SKF never considered the Series designations or part numbers to be trademarks and thus did not contemplate or discuss transferring them to Plaintiffs. Therefore, marginally there is an issue of material fact with respect to whether the APA transferred ownership of the alleged marks to Plaintiffs. At trial, Plaintiffs will need prove that they own the designations at issue as a threshold matter.

It's an interesting question. What the court is suggesting is that in 1997 SKF might not have transferred the 1600, 7500 and 7600 designations with the rest of the Nice assets, but SKF didn't acquire Peer until 2008. There was evidence that in 2004 there were at least 25 other companies using the 1600 series of designations; one can assume that at least some of those were using 7500 and 7600 series designations. If SKF retained ownership of the series designations, whose use of the series names would have inured to its benefit so that SKF could maintain ownership for the 11 year gap? Nice? One of the other 25 companies? If SKF instead abandoned the mark during those 11 years, wouldn't it have been available for any of those others, Nice and Peer included, to adopt?

This case is a demonstration of the parallel universes of trademark ownership, the paper trail universe and the consumer perception universe. If it was a cleaner situation, i.e., that only Peer and Nice were using the designations, the paper trail might win. Where there are so many using the same numbers, though, the consumer perception track should be the relevant one.

The case has settled, but Nice still has a long row to hoe to prove ownership of the series names.

RBC Nice Bearings, Inc. v. Peer Bearing Co., No. 3:06-cv-1380 (VLB), 2009 WL 3642770 (D. Conn. Oct. 29, 2009).

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These Economic Times

noreply@blogger.com (Pamela Chestek) — Wed, 06 Jan 2010 00:59:00 +0000

In catching up on my reading over the holidays, I ran across three separate opinions where the licensee estoppel defense was raised (score: trademark owner 2, licensee 1). I don't recall the last time I read another opinion on licensee estoppel. Is it a sign of these economic times? Are licensors looking for more income? Are licensees not paying?

HSW Enter., Inc. v. Woo Lae Oak, Inc., No. 08 Civ. 8476(LBS), 2009 WL 4823920 (S.D.N.Y., Dec. 15, 2009) (licensee ceased paying royalties: "having weighed the relevant public interests, the Court concludes that WLO is estopped from challenging HSW's ownership of the mark pursuant to the doctrine of licensee estoppel.")

Kebab Gyros, Inc. v. Riyad, No. 3:09-0061, 2009 WL 5170194 (M.D. Tenn. Dec. 17, 2009) (licensee opened additional restaurants: "licensee estoppel does not stop Defendant's [ ] claim that Plaintiff [ ] abandoned the trademark and trade name through naked licensing to a third party. . . . In light of all of this, the court finds that the licensee estoppel doctrine should not bar the defendant from offering evidence as to the protectibility of the mark at issue.")

Eureka Water Co. v. Nestle Waters N.A., Inc., No. CIV-07-988-M, 2009 WL 5083577 (W.D. Okla. Dec. 21, 2009)(licensor terminated license: "Having carefully reviewed the parties' submissions, the Court finds that all of the conduct on which plaintiff bases its abandonment/naked license argument occurred during the life of the license. Accordingly, the Court finds that licensee estoppel bars plaintiff from asserting its abandonment defense.")

List of trademark suits filed by Dunkin' Donuts/Baskin Robbins here.
List of trademark suits filed by Subway here.

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Famous Brands, Now Barely Breathing

noreply@blogger.com (Pamela Chestek) — Fri, 01 Jan 2010 19:12:00 +0000

I've previously written about the deathly ill POLAROID brand. In a compilation of the Twelve Most Tarnished Brands, Technologizer ranks it number 1:

But if Polaroid can fall this far, no name is sacred. Apple and Google, take heed–and give thought to where you might wind up come 2060 or so if you aren’t careful.

The article is an interesting reminiscence on some great, almost late, technology brands.

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Act Two

noreply@blogger.com (Pamela Chestek) — Tue, 22 Dec 2009 01:02:00 +0000

In Act One of Third Education Group, Inc. v. Phelps, we had Richard Phelps versus Bruce Thompson, an informal partnership that turned sour. In the first decision, the court held that the registration for the mark they were both using, T hird Education Group, was void because it was filed in the name of Richard Phelps but was actually owned by the unincorporated association.

After the court's easy escape on the first trademark ownership theory, we now have Act Two. Here, the successor to the unincorporated association, Third Education Group, Inc. (“TEG”), alleges that Phelps' continued use of “Third Education Group” is an infringement of the corporation's unregistered trademark. Not so fast says Phelps; while the unincorporated association may have owned the mark, it was never assigned to TEG and instead remained with the unincorporated association. Since he was one of two members of the unincorporated association, his continued use was not an infringement.

The court therefore had to determine under Wisconsin law what happened to the trademark when the unincorporated association later incorporated. After a stroll through several cases in various states, the court held that

in Wisconsin, determining what happened to a joint venture or voluntary association upon incorporation will depend upon the unique circumstances of each case and whether the parties "clearly expressed" the intention for the association to survive incorporation. In the present case, TEG, the association, incorporated as a result of the unanimous consent of its members. The evidence demonstrates that Phelps and Thompson intended TEG, Inc. to succeed the unincorporated association; there is absolutely no evidence to permit the court to conclude that Phelps and Thompson intended the unincorporated association to coexist alongside the corporation and to retain control of the trademark or any other property. The evidence demonstrates that in every way, the parties intended TEG, Inc. to be the successor to the unincorporated association. There no longer was an unincorporated association once TEG, Inc. was created.

Therefore, the property of the association passed to the corporation . . . .

The dominos fall after that: the mark was suggestive, not descriptive, and Phelps' use was likely to be confused with TEG's use.

But the court at least understood Phelps obstinacy and didn't punish him for it:

[T]he court finds that the actions of Phelps were not taken in bad faith. To the contrary, Phelps had much more than a mere good faith belief that he was entitled to use the mark. This was not a case of an individual, for example, mistakenly believing he had a license. Rather, in the present case, the objective evidence was on Phelps' side. He was the one who undisputedly came up with the mark. He was the one who paid to register the mark. He was the one in whose name the mark was registered. And he was the one primarily responsible for establishing the use of the mark. He did this, not as one person in a large organization, but rather as an individual who had joined with another collaborator and in doing so, likely without an understanding of the legal ramifications, formed an unincorporated association. As the person who invested so much in creating the mark, it is not surprising that Phelps felt passionately about the mark and the organization he was primarily responsible for creating, as is reflected in some of his correspondence with Thompson. But the fact that he spoke passionately in defense of what he believed to be his mark does not make this case exceptional.

Technology & Marketing Law blog post here.

Third Education Group, Inc. v. Phelps, Nos. 07-C-1094, 07-C-1095, 2009 WL 4544127 (E.D. Wis. Nov. 25, 2009).

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Does the Parent Own the Mark?

noreply@blogger.com (Pamela Chestek) — Fri, 18 Dec 2009 00:25:00 +0000

The TTABlog reports on a decision invoking In re Wella to try to escape a likelihood of confusion refusal. In re Wella is a 1986 Federal Circuit decision which held that corporate family members (in that case, parent and subsidiary) may own substantially similar marks without a likelihood of confusion so long as there is

a unity of control over the use of the trademarks. ‘Control’ and ‘source’ are inextricably linked. If, notwithstanding the legal relationship between entities, each entity exclusively controls the nature and quality of the goods to which it applies one or more of the various ‘WELLA’ trademarks, the two entities are in fact separate sources.

In In re Federal Express Corporation, one of Federal Express Corp.'s marks was refused registration under §2(d) because of a likelihood of confusion with a mark owned by a sister company, FedEx Custom Critical, Inc. It is a "substantial burden" to show a unity of control when it is a sibling relationship, rather than a parent-subsidiary relationship, TMEP §1201.07(b)(iii), and one that Federal Express Corp. wasn't able to meet. Likelihood of confusion is then a foregone conclusion.

There was one glaring part of the Federal Express Corp. argument that I would have avoided, though. The TTAB quotes Federal Express Corp. as arguing:

... because Fedex Corporation directly owns Applicant (Federal Express Corporation), FedEx Custom Critical, Inc. and Fedex Office and Print Services, Inc., control over the mark at issue in this case and the cited marks resides in a single source. There is no likelihood of confusion as to source between services offered by Federal Express Corporation, FedEx Custom Critical, Inc. and Fedex Office and Print Services, Inc. because they all are wholly owned and controlled by Fedex Corporation. Purchasers will know that services emanating from subsidiaries of Fedex Corporation emanate from a single source. Because Applicant (Federal Express Corporation), FedEx Custom Critical, Inc., and Fedex Office and Print Services, Inc. are wholly owned and controlled by the same parent company, Fedex Corporation, all use of marks owned by these subsidiaries inures to the ultimate benefit of Fedex Corporation.

But In re Wella has some “additional comments” offered by Judge Nies that one should be mindful of when arguing for unity of control:

There is, however, a different question, not addressed in the initial prosecution of the application, with respect to ownership of U.S. rights in the WELLA marks. Is Wella A.G. the owner of such rights or is its subsidiary, Wella U.S., the owner? Under section 1 of the Lanham Act, only the owner of a mark is entitled to apply for registration.

Federal Express Corp. says directly “all use of marks owned by these subsidiaries inures to the ultimate benefit of Fedex Corporation.” This sounds to me like a statement that parent FedEx Corporation, not Federal Express Corporation, controls, and thus owns, the applied-for marks.

In re Federal Express Corporation, Serial Nos. 78726298, 78726303, 78726306, and 78726310, (TTAB December 7, 2009).

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Bratz Stayed!!

noreply@blogger.com (Pamela Chestek) — Wed, 16 Dec 2009 01:03:00 +0000

I consider myself the unofficial recordkeeper for the Bratz litigation (so it was fate that the Secret Santa I pulled was for a Moxie Girlz), but I must have been sleeping on the job because everyone has jumped on this one before me.

So playing catch-up to what's already been reported by the IPKat, Techdirt, Likelihood of Confusion, the WSJ Law Blog, the WSJ proper and BBC News, on December 9th the Court of Appeals for the Ninth Circuit heard oral arguments on the Bratz appeal and issued an order staying the district court's order and ordering the parties to mediation. Here's the gist of it:

Press coverage of the hearing is here. Based on the report, it doesn't look very good for Mattel.

Full order available here.
MGA Entertainment surprisingly sedate press release here.

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The Missing Schedule

noreply@blogger.com (Pamela Chestek) — Sun, 13 Dec 2009 19:21:00 +0000

The Patent Prospector summarizes a decision from the Federal Circuit where the ownership of patents hinged on whether they were "related to" pending litigation at the time of an earlier intra-company assignment agreement. If the patents were related, they weren't assigned and U.S. Surgical Corporation, not plaintiff Tyco Healthcare, remained the owner of the patents. Tyco Healthcare's major problem was that the transactional documents were silent on what that litigation was:

On its face, the Contribution Agreement purports to answer the question of whether any USSC litigation was pending at the time. Section 4.21 describes pending litigation:

Except as set forth on Schedule 4.21 hereto, there are no actions pending or threatened by or against, or involving USSC (with respect to the Business only) or any directors, officers, or employees thereof in their capacity as such or which question or challenge the validity of this Agreement, or any action taken or to be taken by USSC pursuant to this Agreement in connection with the transactions contemplated hereby or thereby, and to the knowledge of USSC, there is no valid basis for any such Action.

Thus, Schedule 4.21 was to list any USSC litigations then pending or threatened, but Schedule 4.21 is missing. Or it simply never existed, as Tyco Healthcare contends on appeal.

Since there had been several suits pending at the time, the court assumed all the patents were excluded from the assignment. Therefore, Tyco Healthcare was not the owner and did not have standing.

Judge Newman's dissent compellingly points out several flaws in the majority's reasoning even absent the schedule, concluding with this: "The court's contrary reading produces the absurd result whereby no USSC patent, indeed none of the assets transferred by the Contribution Agreement, can be deemed to have been transferred, merely because Schedule 4.21, listing public information, was missing. That is not a tolerable reading of the contract, for it renders the contract ineffective for its purpose and defeats the plain intent of the contracting parties." But at least the suit was dismissed without prejudice, giving Tyco Healthcare another chance.

Tyco Healthcare v. Ethicon Endo-Surgery, Nos. 2008-1269, 2008-1270, 2009 WL 4546935 (Fed. Cir. Dec. 7, 2009)

This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.

Everyone Owns the Mark, So No One May Use It

noreply@blogger.com (Pamela Chestek) — Thu, 10 Dec 2009 13:30:00 +0000

Demonstrating rare insight into the fundamental principles of trademark law, the court in LunaTrex, LLC v. Cafasso granted both parties' motions for preliminary injunction on the same issue, enjoining everyone from calling themselves “LunaTrex.” That's not an inconsequential holding, since it means none of the parties may participate in the $30 million Google Lunar X Prize competition until they sort it out.

At least five individuals, working for at least four different companies, formed a team to enter the contest to put a rover on the moon. The main contestants in the suit are plaintiff Pete Bitar, who was the primary money man, and Defendant Mary Cafasso, who brought her expertise in aerospace work to the project.

The five met and picked a name, LunaTrex. They registered for the competition and later, as required by the rules of the contest, adopted a logo:

There would be no story if there wasn't a falling out. The court details promises of salaries never paid, accusations of incompetence at jobs, companies registered by one without telling the other, and dueling trademarks applications filed. Cafasso went for the jugular: she sent a letter to a major funder, Stihl Corporation, telling it that she, not Bitar, was in charge, the natural result being that Stihl pulled its funding. She also sent a letter to the X Foundation, the sponsor of the lunar competition, which then told both Bitar and Cafasso that the team was suspended effective immediately. The foundation said the suspension would remain in effect until it received clear evidence of ownership of the LunaTrex name and team registration, and a clear statement of who was authorized to speak for the team.

The same day as the X Foundation letter, Bitar sued. Both parties asked that the other be enjoined from using the LunaTrex name.

The court found that the four principal contributors (and perhaps others) had formed a de facto partnership and the trademark was an asset of that partnership. There was no single contributor to the team who could claim ownership; rather “the entire team contributed to the creation of the mark's value and protected status.” Bitar contributed money, but others contributed talent and effort. The promotional materials focused on the team as a whole, not any one individual, and there was no evidence that the relevant public believed that one individual in particular stood behind the LunaTrex name. The mark therefore belonged to all members of the team and no one was entitled to use the mark to the exclusion of any of the others.

But the partnership had broken up. Normally then, the assets are distributed among partners, but the court had the good sense to understand that:

A trademark, however, is not divisible. If it were shared among the different splintered partners, the resulting confusion would destroy the value that each partner worked so hard to create. Organizers of the Google Lunar X Prize are well aware of this risk and seem committed to preventing this confusion: they say they will disqualify the entire team if this dispute is not resolved, and they will not allow two "LunaTrex" teams to compete. Both plaintiffs and defendants have shown that they have an ownership interest in the mark and a right to veto unauthorized uses of the mark. Neither side has shown that it is likely to succeed in showing that the other side is not equally entitled to use the mark. To prevent confusion to the public, the best solution under the law is to prevent all parties from using the mark without the consent of all other parties who are entitled to share control of its use. In other words, the court will take the unusual step of granting each side's motion for preliminary injunction to prevent the other from using the LunaTrex trademark without the moving side's consent.

Be still my heart, but it gets even better: “Nothing in this decision would necessarily prevent the parties from resolving the dispute by agreement, so long as they can avoid confusion for the relevant public as to the origin of an ongoing LunaTrex effort.” My goodness, allowing a trademark to do what it's supposed to do.

Disclaimer: The court cites my article “Who Owns the Mark? A Single Framework For Resolving Trademark Ownership Disputes,” available here. I suppose it's not a surprise I like the decision so much.

Lunatrex, LLC v. Cafasso, No. 1:09-cv-1272-DFH-DML, 2009 WL 4506321 (S.D. Ind. Dec. 1, 2009).

© 2009 Pamela Chestek

Sohmer v. Sohmer

noreply@blogger.com (Pamela Chestek) — Wed, 02 Dec 2009 22:15:00 +0000

Ryan Giles at the Las Vegas Trademark Attorney blog tells the tale of two claimants to the piano brand "Sohmer." It's a law school exam, and I think Ryan gets an "A."

Read it here.

© 2009 Pamela Chestek

A Very Short License

noreply@blogger.com (Pamela Chestek) — Thu, 26 Nov 2009 00:16:00 +0000

The Trademark Blog reports on a new case where two companies claim to own the same mark. In the complaint, the plaintiff and trademark registrant claims that it licensed the mark to the defendant but later terminated the license. The defendant's website says that it acquired the business from the plaintiff. Here is the relevant agreement and termination letter, you be the judge:
Scala License and Termination

The defendant has also filed its own trademark application. One defense theory, based on the parties' correspondence, will be abandonment.

Complaint here.
Full set of exhibits to complaint here.
Motion for TRO here, thanks to the Trademark Blog.

© 2009 Pamela Chestek

Making Your Bed

noreply@blogger.com (Pamela Chestek) — Wed, 18 Nov 2009 02:15:00 +0000

The 7th Circuit decision in Sunstar, Inc. v. Alberto-Culver Co. is interesting in two ways: it provides some insight into how one company is managing the Japanese market, and also provides a little education on Japanese trademark licensing law.

Alberto-Culver, owner of the VO5 family of marks, wasn't having any success in the Japanese market, so in 1980 it sold the Japanese marks to plaintiff Sunstar, Inc. for $10 million.

Sunstar wasn't allowed to keep them though; instead it had to transfer them to Bank One Corporation to hold in trust for 99 years. Bank One Corporation would grant back a senyoshiyoken license - exclusive-use right - to Sunstar royalty-free, and at the end of the license Sunstar would regain full ownership. If, though, during the 99 years Bank One Corporation

had a "reasonable ground" for thinking Sunstar had committed an act that created "a danger to the value or validity of LICENSOR's [i.e., Bank One's] ownership and title in Licensed Trademarks," Sunstar would have to stop using the endangered trademarks until the trustee "reasonably determined" that the danger had passed. In the event of an actual breach of the license by Sunstar, the trustee was to rescind the license and return the trademarks to Alberto-Culver.

In 1989, the two parties had a dispute over whether Sunstar could use this modification to the mark:

Sunstar thought it didn't need permission but Bank One Corporation said it did, so ultimately another $10 million was forked over. Ten years later Sunstar adopted this mark:

Again Alberto-Culver said it couldn't. This time, though, Sunstar sued.

At trial, Alberto-Culver argued that it hadn't really granting a senyoshiyoken license, but instead used the term to mean that Sunstar could register the trademarks with the Japanese Trademark Office. The district court agreed and didn't instruct the jury on what rights a licensee in a senyoshiyoken license would have. The jury returned a verdict for Alberto-Culver, so the district court ordered the agreement terminated and the marks returned to Alberto-Culver.

But not so fast, said the Court of Appeals; the appeals court disagreed that the use of the term "senyoshiyoken" as the term is used under Japanese law didn't describe the license granted. The court therefore had to decide whether, under Japanese law, a senyoshiyoken licensee could make this type of alteration to the mark.

According to the court, a senyoshiyoken licensee can modify the mark if the change is insignificant enough that one could tack on to the earlier use. This rule makes sense particularly in the case of a 99-year license, where the mark would need to change to remain effective in the market. Indeed, the court even speculated that Sunstar might have created "a danger to the value or validity" of the marks if it hadn't modernized the mark.

So from the case we learn that a senyoshiyoken license is exclusive within the geographic scope even as to the licensor, and that it confers the right to register the mark and to sue in the licensee's name. The Court of Appeals includes another right - to make small variations to the mark.

And the inimitable Posner, J.: "Apparently Sunstar has done better in Japan than Alberto-Culver expected, and, as in 1989, Alberto-Culver has tried to use a hypertechnical, but more important an unsound, interpretation of the licensing agreement to extort additional compensation." Indeed, it's a bit unbelievable that a licensor would grant a 99-year license, with the licensee to acquire full ownership at the end, and not allow the licensee to update the mark for a century. If Alberto-Culver is concerned that the VO5 mark in Japan will be different from the rest of the world, that's the natural result of the deal that Alberto-Culver struck in 1980 when it assigned the marks in all but name.

Sunstar, Inc. v. Albert-Culver Co., Nos. 07-3288, 07-3289, 08-3835, 08-3836, 08-3931, 08-3936, 2009 WL 3447450 (7th Cir. Oct. 28, 2009) (Posner, J.)

© 2009 Pamela Chestek

The Twenty Year Registration Is Dead*

noreply@blogger.com (Pamela Chestek) — Tue, 17 Nov 2009 05:01:00 +0000

Copyright Infringement Masquarading as Ownership

noreply@blogger.com (Pamela Chestek) — Sat, 14 Nov 2009 17:05:00 +0000

The Tennessean, in an article entitled "'Atomic Dog' singer wins claim to phrase," reports that "The phrase 'bow wow wow, yippie yo, yippie yea' belongs exclusively to funk legend George Clinton, a panel of federal judges ruled this week."

Well, no. The question was whether three musical elements - the use of the word "dog" in a low voice as "musical punctuation," rhythmic panting, and the refrain "Bow wow wow, yippie yo, yippie yea" - were original enough to be copyrighted, to which the answer was yes:

As noted previously, the standard for originality is a low one, and the “vast majority of works make the grade quite easily.” Feist, 499 U.S. at 345. In this case, expert testimony presented at trial was sufficient to permit the jury to conclude that Clinton’s use of the three disputed elements in "Atomic Dog" met this minimal standard.

There's a big difference between owning words and finding that a particular combination of words and music has been infringed. George Clinton has no exclusive right to barking, panting, "bow wow wow, yippie yo, yippie yea-ing," or even his particular expression of those phrases. The case only says that Public Announcement's use of George Clinton's work was unexcused infringement. There no "ownership" here, even in the loosest meaning of the word.

Original work here:

Accused work here:

The Coinco Strategy

noreply@blogger.com (Pamela Chestek) — Fri, 13 Nov 2009 02:37:00 +0000

Mars, Inc. v. Coin Acceptors, Inc., first blogged here, demonstrated what can go wrong with ownership of patents within a corporate enterprise. As a refresher, in Mars the defendant, "Coinco," successfully attacked the chain of title of the patents in suit. Mars had transferred ownership of the patents between family members during the lawsuit, a move that Coinco used to successfully challenge standing and limit Mars to reasonable royalty damages rather than lost profits. Mars subsequently had to defend itself agains a similar challenge in another suit, blogged here and here.

Plaintiff Novartis in Novartis Pharmeceuticals Corp. v. Teva Pharmeceuticals USA, Inc. is having similar problems. The chain of title was this:

* Pre-issue: Inventors assign to Beecham Group PLC
* August 30, 2000: Novartis Pharma, AG (NPAG) and Novartis Pharmeceuticals Corp. (NPC) purchased assets, which included the patent in suit, from SmithKline Beecham PLC, SmithKline Beecham Corp. and SmithKline Beecham (Cork) Limited (SKB) in a document entitled "Asset Sale Agreement"
* December 20, 2000: SKB assigned the patent to Novartis International Pharmeceutical Ltd (NIP)

The identity of the original assignor (whether it was Beecham Group PLC or SKB) was not an issue, but the ownership within the Novartis family was. All three of the Novartis companies were plaintiffs: NIP is a holding company (but perhaps a manufacturing company), NPAG is a manufacturer, and NPC is a distributor. Teva moved to have NPAG and NPC dismissed from the suit for lack of Article III standing since they weren't owners of the patent. The benefit to Teva would be the remedies angle; with the operating companies out of the picture both injunctive relief and lost profits would be off the table.

The Novartis companies first argued that the "Asset Sale Agreement" was the grant of an exclusive license to NPAG and NPC. The court didn't buy it; it would have been an exclusive license from SKB, not NIP. The license would have also been undone by the subsequent assignment of the "entire right, title and interest" from SKB to NIP. Alternatively, NIP would have taken ownership subject to the undefined licenses. Thus, there was at least a question of fact on the exclusive license theory.

Next the Novartis parties claimed NPAG and NPC had an implied exclusive license from NIP based on their behavior. But the court didn't have sufficient evidence to decide whether NPAG and NPC were exclusive licensees or bare licensees, so the the issue would remain to be tried to the fact finder.

The court also offered this insight on why it wasn't going to dismiss NPAG and NPC:

At the same time, if each entity holding an interest in the patent is a wholly owned subsidiary of the parent corporation, resolution of this issue may not be of immediate need. "Another policy consideration is to prevent a party with lesser rights from bringing a lawsuit that may put the licensed patent at risk of being held invalid or unenforceable in an action that did not involve the patentee[,]" or by extension, the parties with a right to relief under the patent. Therefore, if each entity controls a divided, but undefined interest in the patent, policy favoring the prevention of multiple lawsuits and inconsistent judgments disfavors dismissal of NPC and NPAG at this time.

Teva also tried to get an early take from the court on the remedies question, but no luck there either: "the Court will not speculate as to the scope of remedies available in this matter until the foregoing issues of fact have been resolved."

Teva's Coinco strategy isn't dead, but the issues remain to be tried to the factfinder. But it's a good strategy if it works, and I anticipate a lot of close examination of corporate family ownership in the future.

Novartis Pharm. Corp. v. Teva Pharm. USA, Inc., No. 05-cv-1887, 2009 WL 3447232 (D.N.J. Oct. 21, 2009).

© 2009 Pamela Chestek

The Restaurant Owns It, of Course

noreply@blogger.com (Pamela Chestek) — Thu, 12 Nov 2009 01:08:00 +0000

When the dispute over the ownership of the name of the famous restaurant "Tavern on the Green" started, I posted a poll asking whether the restaurant or New York City owned the name. The results are in, with responses overwhelmingly in favor of the restaurant, 93% to 6% (okay, well there were only 15 votes). I'm a bit surprised, I thought it would be a little closer than that.

© 2009 Pamela Chestek

Contract Interpretation Quiz

noreply@blogger.com (Pamela Chestek) — Sun, 01 Nov 2009 17:57:00 +0000

Interpret this contract, reproduced below in full:

In consideration of the sum of One Dollar ($1.00) and other good, valuable, and adequate consideration, the receipt and sufficiency of which is acknowledged, the undersigned does hereby sell, assign, transfer, and set over to Bridgeport Music, Inc., its respective successors and assigns, fifty percent (50%) of his interest now owned or subsequently procured in the universe-wide copyright in and to the following musical composition(s) set forth in Exhibit A attached hereto, and all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement of the copyrights whether now or hereafter existing, for the maximum terms of copyright, including any extensions and/or renewals thereto, throughout the universe.[*]

The assignor sues for copyright infringement. Does the assignor have standing, or did it assign all claims for copyright infringement to the assignee?

According to the Eastern District of Texas, the assignor didn't have standing. According to the Fifth Circuit, it did.

The appeals court said that the assignment had two clauses, the clear assignment of half interest in the copyright and the second clause assigning "all of the universe-wide right, title, and interest of the undersigned, vested or contingent, therein and thereto, including all claims for infringement." The district court concluded that the plain language of this second clause assigned all interest in copyright infringement claims, but the appeals court decided that the lower court's interpretation "ignores the language of the clause as a whole and renders the contract contradictory."

If the second clause is read to mean that [the assignor] assigned all of its rights to pursue copyright infringement claims related to the compositions, then it would also necessarily mean that [the assignor] had assigned all of its interest in the compositions, given that the second clause also stated that [the assignor] assigned 'all of [its] interest' in the compositions. This result would contradict the clear language of the first clause, which states that [the assignor] assigned only 50% of its interest in the musical compositions.

The court explained that "The proper reading of the two clauses is that the second clause operates as a clarification of the 50% interest assigned in the first clause. Thus, the second clause clarifies that the 50% share is a full share, rather than an income, participation, royalty, or some other limited share in the copyright."

Ambiguous is an understatement for the contract, but it does seem the intent was that the second clause was meant to explain exactly what kinds of interests were assigned in half, i.e., all of them. Therefore, the plaintiff had standing. The assignee was also to be joined, so all parties in interest were represented in the suit.

* See here for discussion of assignments "throughout the universe."

In re Isbell Records, Inc., No. 09-40343, 2009 WL 3386546 (5th Cir. Oct. 22, 2009).

© 2009 Pamela Chestek

Memorylink Gets to Fight Another Day

noreply@blogger.com (Pamela Chestek) — Fri, 30 Oct 2009 00:37:00 +0000

Last February, plaintiff Memorylink was on the losing side of a motion to dismiss almost all counts of a complaint against Motorola, a company with which it had a joint development agreement. During their relationship, Motorola filed a patent application that had both Motorola and Memorylink inventors listed, then filed a second application with just Motorola inventors listed.

Count I of the complaint was for correction of inventorship on the first patent. The court originally held that Memorylink had "pleaded itself out of court" because the documents showed that Motorola contributed to the project, but, as explained in my previous post, the court didn't analyze whether the patent itself was the product of joint inventorship. So Memorylink filed a motion for reconsideration.

The court reversed the dismissal of the claim on patent inventorship, as well as some other claims. Memorylink successfully convinced the court that none of the documents the court originally relied on to decide inventorship actually showed that Motorola was an inventor on the patent itself. The court reversed and Memorylink's count for correction of inventorship is alive.

Memorylink Corp. v. Motorola, Inc., No. 08 C 3301, 2009 WL 3366974 (N.D. Ill. Oct. 15, 2009).

© 2009 Pamela Chestek