Business+Intellectual Property +Internet Law

Significant Cyberspace Developments of 2014

2015-01-21T00:30:00.000-05:00

It's a bit late for a year-end wrap-up, but better late than never, right? For those who may have missed some of these, here are my picks for some of the more important developments in Cyberspace law that occurred in 2014. This is not meant to be an exhaustive list, and there are certainly other important developments not on the list.

In no particular order:

· Data Breaches --- 2014 may be “the Year of the Data Breach”. Either that or we are just discovering and reporting them more. The Identity Theft Resource Center identified 783 data breaches in 2014, exposing over 85 MILLION records! One real problem is who pays for it. The retailers (Home Depot, etc.) just shrug and say “Not our problem. Banks, you pay for remediation” The banks are fighting back. Indemnification battles are getting fierce on data protection clauses in contracts. If the industry does not sort things out, we may need the regulators to step in.

· Alice Corp. v CLS Bank -- A major decision in patent law from the U.S. Supreme Court. The Court invalidated a patent that implemented an escrow process by using a computer, holding that the invention only covered an abstract idea and was not eligible for patent protection. The decision has already being used to invalidate over a dozen patents (including one to run a bingo game on a computer), and my guess is many more are no longer being enforced but will never see a formal decision. The decision is a bad one for patent trolls, who are often trying to enforce relatively weak or unenforceable patents.

· ABC V. Aereo --- Not a fair use case, but a corollary of the “Don’t build a business model based on fair use” theorem. The Supreme Court held that Aereo's system was just too contrived, and violated the broadcasters' exclusive right to perform copyrighted works by transmission. The Court's holding was narrowly drawn, probably due to a gut feeling that what Aereo was doing just was not kosher, and the Court avoided applying its decision broadly to "cloud computing" and other Internet business models. We shall have to wait and see how the decision is applied to new streaming services like Slingstream.

· I-O-T --- I don’t like the acronym, but it works. Everything is being connected to everything. In May, the White House Report on Big Data recognized opportunities and concerns about data collection. BUT WHO OWNS THE DATA??? In the absence of regulation, contracts will determine who can do what with the data. But vendors like Sirius need to learn how to do online contracting correctly. Once the vendors figure it out, mass market consumers may have little ability to say "No." Watch for the FTC to step in, at least to "encourage" transparency in data collection practices.

· Online Contracting --- Cases like Barnes & Noble (and others) reaffirm that there is a right way and a wrong way to obtain assent to online terms. Now Safeway also reaffirms Douglas v. California (9th Cir. 1997), that you can’t simply modify the terms at will without providing notice to the users and expect to be able to enforce the new terms. Despite the prevailing practice, the American Bar Association's Cyberspace Law Committee (disclosure: of which I am a member) has been preaching this for over a decade!

· Riley v California --- The U.S. Supreme Court recognized that a cell phone is not the same as a pack of cigarettes, and ruled that police cannot search the data on a cell phone without a warrant. This is a big victory for privacy. But where does the Supreme Court's analogy stop? Does it extend to personal content stored on the cloud (query how the police could get access)? What about personal data stored on a PC?

· Right to be Forgotten --- This is a big enough topic in Europe it needs to be mentioned. In May the European Court of Justice ruled that Google needs to comply with EU data privacy laws and must remove links to a 1998 story about the plaintiff. Whether the concept takes hold in the United States remains to be seen, especially with the tradition of robust First Amendment jurisprudence.

· ApplePay --- Fad or flop? Time will tell. I vote flop. Not enough vendors have the proper equipment, and there is not a huge installed base of iPhone 6 users yet.

What do you consider to be the top Cyberspace law developments of 2014?

(Edit) Here is Professor Eric Goldman's list of Top 10 Internet Law developments for 2014

http://www.forbes.com/sites/ericgoldman/2015/01/23/top-10-internet-law-developments-of-2014/

RHODE ISLAND. BEER. TRADEMARKS.

2014-12-03T09:00:00.000-05:00

Last week’s grand opening of the Tilted Barn Brewery in Exeter got me to thinking. The craft beer industry is exploding in Rhode Island. Branding and identification are very important to these companies. They spend a lot of time coming up with catchy and clever names for their companies and their brews. But are these companies doing enough to protect their brands? Probably not.

Trademarks are the most common form of intellectual property we encounter in our everyday lives. Everywhere we look, on our toothpaste and breakfast cereal in the morning, on the store signs and sides of buildings as we drive to work or school, on television and the Internet, and in the beer and wine and soda we drink, we see hundreds of trademarks a day. Trademarks influence consumers, help products or services stand out, and create a brand identity for a business

At last count, there are at least 14 breweries and brew-restaurants in operation in Rhode Island, with others rumored to be in the planning stages. Most of these breweries have multiple offerings available to the public. Yet, according to the records of the U.S. Patent and Trademark Office, there are only 22 registered trademarks or pending applications for beer owned by 10 companies in Rhode Island. Eleven (11) of these are owned by either Narragansett or Foolproof. This leaves 11 registrations owned by 8 other businesses. Let’s take a quick look.

NARRAGANSETT

Narragansett’s repurchase by local investors in the 1990’s heralded a new era of brewing in Rhode Island. Narragansett has registered 6 of its marks, some of which have been in use since the original Narragansett Brewery days, and has one pending application:

MADE ON HONOR, SOLD ON MERIT
OFFICIAL BEER OF THE CLAM
LOVECRAFT
HI-NEIGHBOR!
‘GANSETT

FOOLPROOF

Foolproof seems to be taking some active steps to protect itself. Foolproof has 4 registrations or pending applications. The company has registered FOOLPROOF, the name of the company, and its jester crown logo.

They have followed up with registrations for the mainstay product “RAINCLOUD” and for a newer product “LA FERME URBAINE (LFU).” But the company let pending applications for its BACKYAHD and BARSTOOL brands lapse. What’s up with that?

OTHERS

Other RI brewers who have been using the registration system to protect their trademark rights include:

Farmer Willie
	GINGER WITH SOUL

Proclamation Ale	PROCLAMATION ALE

Providence Brewing Company	PROVIDENCE BREWING COMPANY
	THE GREAT PROVIDENCE BREWING COMPANY

Brutopia Brewery	BRUTOPIA BREWERY

Grey Sail Brewing Company	GREY SAIL

Trinity Beer Company

Newport Harbor Corp.	CASTLE HILL WINDWARD WEISS

J.H. Restaurants

Clearly, the breweries are not taking advantage of the opportunities the legal system provides to protect the marks and company names against others who adopt confusingly similar names or brands.

One reason may be the cost. A federal application can cost $500- 1000 or more if the application encounters problems. Many of these businesses are bootstrapping their way off the ground with sales of product and merchandise items funding the next batches. There is no spare cash for trademark registrations. But what the businesses are not taking into account is that the cost of trademark registration is modest when compared to the costs of advertising promotion and marketing over the years.

Aside from the cost, there are sometimes other reasons why companies do not apply to register their trademarks:

The product or brand is seasonal, and does not have a long enough shelf life to be worth protecting.
The mark is too descriptive, or refers to a geographic place (OCEAN STATE or PROVIDENCE) that is difficult to protect. But note that these marks can be registered in many cases.
The mark is similar to another mark that is already registered, and the company does not want to call attention to itself by filing an application

It is important to register trademarks as soon as possible. Later users may be able to register the mark, and keep the registration. The modest cost of obtaining a U.S. registration is far, far less than the amounts a business would spend litigating over the rights later.

Investments in RI Companies Rebound in 4th Quarter, Top $81 Million in 2013

2014-02-11T09:30:00.000-05:00

After a slow third quarter, venture capital investments rebounded in the last quarter of 2014, according to the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

Venture capital investments in New England companies rose to $917 million invested in 106 companies for the 4th quarter, an 7% increase over the 3rd quarter in terms of dollars invested, but a 5% decrease in terms of number of deals.

Three of those 106 companies are in Rhode Island, capturing a total of $27,356,000 in the last quarter. Over the entire year, venture investments in Rhode Island companies totaled over $81 million, a decrease from the $106 million invested in Rhode Island businesses in 2012.

The increase in investment levels in Rhode Island companies is encouraging, especially after the disastrous third quarter. Similar evidence of the increased attention to Rhode Island companies was announced recently by the Founders League, to the effect that approximately $140 million was invested in Rhode Island start up companies in 2013. (This number includes investments that are not reported in the MoneyTree survey).

Although those investment levels in Rhode Island companies are improving, they are just starting to approach levels of a decade ago. The high mark was in 2001, when over $119 million was invested in 11 Rhode Island companies. In 2002, venture capital investments in Rhode Island companies totaled about $96 million.

Similar trends are seen throughout the United States. Nationally, venture capitalists invested $8.4 billion in 1077 deals in the fourth quarter, and a total of $29.4 billion in 3955 deals for the entire year. This represents an increase of 7% in dollars and 4% in deals over 2012 levels. For the year, investments into the software industry (which includes Internet companies) reached the highest levels since 2000 with $11.0 billion invested in 1523 deals. Internet-specific companies captured $7.1 billion in 2013, marking the highest level of Internet investment since 2001.

Locally, the three companies to receive investments in the fourth quarter of 2013 are:

Greenbytes, Inc., of Providence, received a $3,500,000 follow on investment from existing investors Battery Ventures and Generation Investment Management. Founded in 2007, Greenbytes develops desktop virtualization storage optimization software to maximize the performance and capacity of virtual desktops.
Shape Up the Nation, of Providence, received a $3,856,000 investment in November from Cue Ball Group and Excel Venture Management. Founded in 2006, Shape Up is a leading provider of clinicaly-proven, social networking and incentives-based employee wellness programs that help people exercise more, eat healthier and improve their overall well-being. Shape Up will use a significant portion of the investment to build upon its existing mobile capabilities and launch its mobile app and device integration infrastructure.
Utilidata, Inc., of Providence, received a Series B financing of approximately $20,000,000 from existing investors Braemar Energy Ventures and American Electric Power, and from new investors Formation 8 Partners and Saudi Aramco Energy Ventures. Utilidata is a leading supplier of technology to help reduce energy waste from power lines between electric utilities' substations and their customers.

(Sources: MoneyTree Report and company websites)

Related posts:

What Happened? Venture Investments in RI Companies Plummet in Q3 2013 (November 8, 2013)

Venture Investments in RI Companies Jump in Q2 2013 (October 2, 2013)

Venture Investment Dollars in RI Companies Fall in First Quarter 2013 (July 5, 2013)

Venture Investment Dollars in RI Companies Soar in 2012 (February 19, 2013)

More Venture Dollars Find RI in 4th Quarter (February 3, 2012)

Quotes in BNA's Cyberlaw Review 2014

2014-02-06T15:27:00.001-05:00

Near the end of 2013, Bloomberg BNA asked leading attorneys, government officials, and online experts for their views on the most important legal developments in online law during 2013 and on what policy areas they believed would be the most important to their practices in 2014. The responses were supposed to be short, like tweets or sound bites. BNA complied the contributions into a report, essentially a collection of short thoughts and insights on various aspects of online law, organized by subject matter.

Two of my contributions appear in the Report, which was made available to the public today. One is under the Online Contracts heading, and one under the Digital Copyrights heading.

Thanks to Bloomberg BNA for permission to link to the report.

RI TrademarkTracker™ --- 2013 RI Trademark Filings Down 14% Over 2012 Filings

2014-01-14T10:00:00.000-05:00

Applicants with Rhode Island addresses filed 172 applications to register trademarks with the U.S. Patent and Trademark Office (PTO) during the fourth quarter of 2013. This represents a 17% decrease over the 208 trademark applications filed by Rhode Island owners during the fourth quarter of 2012, and a 27% decrease over the 235 trademark applications filed for the fourth quarter of 2011.

For the year, Rhode Island applicants filed 908 applications with the PTO. This represents a 14% decrease over the 1053 Rhode Island trademark applications filed in 2012, and a 19% decrease over the 1127 trademark applications filed by Rhode Islanders in 2011.

Nationally, the slight upward trend in filings continues. A total of 73,998 trademark applications were filed with the PTO in the fourth quarter of 2013, representing a 0.6 % increase over the 73,540 trademark applications filed in the fourth quarter of 2012. A total of 319,002 applications were filed with the PTO in 2013, representing a 1.2 % increase over the 315,375 applications filed during 2012.

The most likely explanation for the downward trend in filings in Rhode Island remains the sluggish economy in Rhode Island. Companies are watching budgets carefully and only filing where necessary to protect their major brands. Nationally, the economy is picking up, but the trend has not really been felt here yet.

The top five Rhode Island filers during October, November and December of 2013 are 3 consumer product companies, one financial services company and one educational institution. RBS Citizens Financial Group filed the largest number of applications among Rhode Island applicants with 27 filings. Providence College was next with 15 applications. CVS Pharmacy, Inc. was third with 10 applications, followed by Hasbro (8 filings) and Alex and Ani (7 filings).

For the year, the top Rhode Island filer was Hasbro with 61 applications. RBS Citizens Financial Group was next with 39 applications. CVS Pharmacy was third with 28 applications. Alex & Ani, The Big East Conference (now known as The American Athletic Conference), and Wizards of the Coast (a Hasbro subsidiary) each filed 27 applications.

Data supplied by PTO.

Related Posts:

RI Trademark Filings Down 12.9% Through 3rd Quarter 2013 (October 18, 2013)

RI Trademark Filings Decrease 9% in First Half of 2013 (August 15, 2013)

RI IPCaseTracker™ --- 2013 Was a Typical Year

2014-01-06T09:30:00.000-05:00

2013 turned out to be a typical year for new intellectual property (patent, trademark and copyright) case filings in the U.S. District Court for Rhode Island. We got off to a fast start, with 10 new intellectual property case filings in the first six months of 2013 at the, 6 filings in June alone. But filings dropped dramatically in the second half of the year, with only 1 new trademark filing in the fourth quarter.

In the end, 2013 saw 7 new patent case filings, 3 new trademark case filings, and 3 new copyright case filings. This matches the 2011 total of 13 new filings, and just barely exceeds the 2012 total of 12 new case filings.

Let’s hope for more intellectual property case filings in 2014. Then there will be more cases to highlight here!

These numbers only include cases that have been designated in the court's database as a patent, trademark or copyright case. There are other cases pending where the complaint may include trademark or other intellectual property claims, or where intellectual property counterclaims may have been asserted. But unless the case is designated as such in the court's database, we are not counting it here.

6 New IP Cases Filed in RI in June2013

Is it Software? Is it a Service? It Matters for Purposes of Trademark Registration.

2014-01-02T11:00:00.000-05:00

NetJets Inc. v. IntelliJet Group, LLC, No. 2:12-CV-0059 (S.D. Ohio Dec. 19, 2013)

This recent decision highlights the importance of spending some time thinking about whether a mark used in connection with software is being used on a product (software), is being used for “software as a service,” or is merely incidental to the underlying service.

In NetJets, the federal district court cancelled an incontestable, 18 year old registration for INTELLIJET for “computer software for managing aircraft leasing and sales” as void ab initio and as abandoned, even though:

· NetJets had used the mark as the name of its internal software since 1995;

· NetJets had spent over $20 million to upgrade its software;

· NetJets launched a “portal” in 2013 where clients could log in and see the INTELLIJET name displayed on the screen, but the mark was not displayed to non-customers who access the NetJets website;

· NetJets included discussion of the IntelliJet’s software functionality in newsletters to owners and in literature provided to passengers on its planes;

· NetJets brochures have mentioned the IntelliJets software;

· Several magazine articles about NetJets have mentioned the IntelliJets software;

· NetJets demonstrates the software for customers and potential customers.

The court determined that NetJets did not have enforceable rights in the INTELLIJET mark because it did not use the mark in commerce as the term “use in commerce” is defined in the federal Lanham Act. Section 45 of the federal Lanham Act, 15 U.S.C. § 1127, defines “use in commerce,” in relevant part:

The term “use in commerce” means the bona fide use of a mark in the ordinary course of trade, and not made merely to reserve a right in a mark. For purposes of this Act, a mark shall be deemed to be in use in commerce – (1) on goods when – (A) it is placed in any manner on the goods or their containers or the displays associated therewith or on the tags or labels affixed thereto; or if the nature of the goods makes such placement impracticable, then on documents associated with the goods or their sale; and (B) the goods are sold or transported in commerce ...

Key factors in the court’s determination that the use of the INTELLIJET mark on NetJets’ software was not a “use in commerce” were:

· NetJets is not in the business of selling software;

· The IntelliJet software is simply the conduit through which NetJets provides a high level of service to its customers;

· NetJets does not promote the software as a separate product, but only as part and parcel of the services NetJets provides;

· NetJets does not sell the IntelliJet software separately from the services that NetJets provides.

As a result, the court concluded that NetJets’ use of the INTELLIJET mark is not a “use in commerce” on the software, and cancelled the registration.

As a result of the NetJets decision, and similar decisions in other courts, a trademark owner that uses software in its business should take care in determining whether to file a trademark application at all to cover the software, and what goods or services are covered in any trademark application that is filed. To be safe, especially in close situations, the trademark owner may want to consider filing separate applications to register the mark for the software and for the underlying services. This strategy would still provide for registration and protection of the mark for the services in the event that the registration of the mark for software is challenged or cancelled.

Check Out the Providence Startup Map

2013-12-12T16:08:00.002-05:00

Courtesy of the Founders League, we have the first iteration of the "Providence Startup Map." While there are inevitable omissions, and it is not clear how the creators define a "startup," the map demonstrates the tremendous growth in startups in Rhode Island over the past few years. Most of the companies appear to have been founded in the last 3 years, although some (like Andera) are longer in the tooth.

To quote from the Founders League announcement:

Just a few years ago, the landscape looked much different, with far fewer companies and entrepreneurs calling Rhode Island home. Several entrepreneurship support programs have also emerged, showing a growing optimism that our progress is sustainable and that we are just at the beginning of our startup revolution.

No one person or organization is responsible for the growth reflected on this map. The startup community is building momentum because many among us are rowing in the same direction and contributing in important ways.

Here's to lots more rowing and contributing over the next few years!!!

Please report any omissions to: info (AT) foundersleague (DOT) co

RI VentureTracker™ --- What Happened? Venture Investments in RI Companies Plummet in Q3 2013

2013-11-08T09:00:00.000-05:00

Venture capital investments in New England companies jumped to $870 million invested in 109 companies in the third quarter of 2013, according to the Money Tree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

But only one of those companies is in Rhode Island, netting a total of $499,000. The third quarter dollar amount represents a 98.5% decrease over investments in Rhode Island companies in the second quarter, when $33,308,000 was invested in 6 deals.

What happened? A total of $53,508,000 had been invested in 9 Rhode Island companies in the first half of 2013. This is the lowest investment level in Rhode Island companies since 2007, when only $5 million was invested in the entire year! Is it just a random occurrence? Or is it a sign that, despite all the hype, Rhode Island government and institutions still are not really invested in creating an environment in which start-up companies can flourish similar to those in Massachusetts and California?

At the same time, investment levels across the U.S. climbed. Nationally, venture capitalists invested $7.8 billion in 1005 deals in the third quarter. This represents an increase of 12% in dollars and a 5% increase in deals compared to the second quarter of 2013, when $7.0 billion was invested in 956 deals. The Software, Biotechnology and Medical Device sectors received the most investment dollars for the quarter. Investment in Internet companies also held steady, with $1.5 billion being invested in 252 deals.

Locally, the only company to receive an investment in the third quarter of 2013 is:

· Neurotech USA, of Cumberland, received a follow-on investment of $499,000 from Versant Ventures Inc., after receiving a $7,000,000 investment in the second quarter. Neurotech is developing sight saving therapies for chronic retinal disease.

RI TrademarkTracker™ --- RI Trademark Filings Down 12.9% Through 3rd Quarter 2013

2013-10-18T11:17:00.000-04:00

Applicants with Rhode Island addresses filed 230 applications to register trademarks with the U.S. Patent and Trademark Office (PTO) during the third quarter of 2013. This represents a 21% decrease over the 291 trademark applications filed by Rhode Island owners during the third quarter of 2012, and exactly the same number as the 230 trademark applications filed for the third quarter of 2011.

Through September 30, Rhode Island applicants have filed 737 applications with the PTO in 2013. This represents a 12.9% decrease over the 846 Rhode Island trademark applications filed for the first 9 months of 2012, and a 17.3 % decrease over the 891 trademark applications filed by Rhode Islanders for the first nine months of 2011.

Nationally, there is a slight upward trend in filings. A total of 78,945 trademark applications were filed with the PTO in the third quarter of 2013, representing a 1% increase over the 78,176 trademark applications filed in the third quarter of 2012. A total of 242,085 applications have been filed with the PTO in 2013 through September 30, representing a .2 % increase over the 241,628 applications filed during the first 9 months of 2012.

The most likely explanation for the downward trend in filings remains the sluggish economy in Rhode Island. During economic downturns, there are fewer new start up companies to file new applications, and mature companies are watching budgets carefully and only filing where necessary to protect their major brands. Nationally, the economy is picking up, but the trend has not really been felt here yet.

The top five RI filers during July, August and September of 2013 are 4 consumer product companies and one financial services company. Hasbro filed the largest number of applications among Rhode Island applicants with 20 filings. Alex and Ani was next with 17 applications. Hasbro subsidiary Wizards of the Coast was third with 9 filings, followed by RBS Citizens Financial Group (8 filings) and CVS Pharmacy, Inc. (8 filings).

Data supplied by PTO.

Related Posts:

RI Trademark Filings Decrease 9% in First Half of 2013 (8/15/2013)

RI IPCaseTracker™ -- Only 2 New IP Cases Filed in RI in 3rd Quarter 2013

2013-10-08T10:00:00.000-04:00

We knew it was too good to be true. We saw 10 new intellectual property (patent, trademark and copyright) case filings in the first six months of 2013 at the U.S. District Court for Rhode Island, 6 filings in June alone.But things returned back to normal levels in the third quarter, with only 1 new patent filing (which actually is a transfer from another judicial district) and 1 new copyright filing. Still, we are enjoying a 20% increase over the number of IP case filings for the first 9 months of 2012, and over the number of IP case filings for the first 9 months of 2011 as well.

Overall, patent filings lead the way so far in 2013, with 7 new case filings. There have also been 2 new trademark case filings, and 3 new copyright case filings. We will attempt to highlight some of these filings in upcoming blog posts.

These numbers only include cases that have been designated in the court's database as a patent, trademark or copyright case. There are other cases pending where the complaint may include trademark or other intellectual property claims, or where intellectual property counterclaims may have been asserted. But unless the case is designated as such in the court's database, we are not counting it here.

Related Posts:

6 New IP Cases Filed in RI in June 2013 (7/2/2013)

RI VentureTracker™ --- Venture Investments in RI Companies Jump in Q2 2013

2013-10-02T09:00:00.000-04:00

Venture capital investments in New England companies jumped to $823 million invested in 114 companies in the second quarter of 2013, according to the Money Tree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

Six of those companies are in Rhode Island, netting a total of $33,308,000. This represents a 62% increase over investments in Rhode Island companies in the first quarter, when $20,500,000 was invested in 3 deals. A total of $53,508,000 has been invested in 9 Rhode Island companies in the first half of 2013.

At the same time, investment levels across the U.S. also climbed. Nationally, venture capitalists invested $6.7 billion in 913 deals in the second quarter. This represents an increase of 12% in dollars and a 2% increase in deals compared to the first quarter of 2013, when $6.0 billion was invested in 896 deals. The Software, Biotechnology and IT Services sectors received the most investment dollars for the quarter. Investment in Internet companies also increased, with $1.9 billion being invested in 270 deals.

Locally, the six companies to receive investments in the second quarter of 2013 are:

· Greenbytes, Inc., of Providence, closed a Series C expansion round investment of $7,000,000 in April from Generation Investments Management LLP and Battery Ventures. Greenbytes develops desktops virtualization storage optimization software to maximize the performance and capacity of virtual desktops.

· Mnemosyne Pharmaceuticals Inc., of Providence, received a $5,166,000 early stage investment from existing investors Atlas Venture Advisors Inc. and Clol Biotechnology Industries, Ltd. Mnemosyne is developing small molecule therapeutics to treat schizophrenia and other cognitive and neuropsychiatric disorder.

· Neurotech USA, of Cumberland, received a later stage investment of $7,000,000 from Versant Venture Management LLC. Neurotech is developing sight saving therapies for chronic retinal disease.

· Swipely Inc., of Providence, closed a Series B expansion investment in May of $12,000,000. The round was led by Shasta Ventures, with participation from existing investors Greylock Partners, Index Ventures and First Round Capital. Swipely provides a payment processing platform and online tools to help businesses understand their customers through analyzing their credit card and debit card usage.

· Teespring Inc., of Providence, allows non-profits and others to create and sell custom t-shirts with zero upfront costs. Teespring received an undisclosed amount from FoundersClub Inc., as part of an overall investment of $1.1 million across 11 companies in Silicon Valley’s Y Combinator startup accelerator program.

· VoltServer, Inc.., of Charlestown, closed on Series A investment of $2,142,000 in June. Investors included Rhode Island’s Slater Technology Fund, Marker Hill Capital, Natural Resources Capital Management, Angel Street Capital and the Clean Energy Venture Group. VoltServer has developed a digital power solution that enables telecom providers to remotely power remote equipment over existing communications wiring.

Venture Investment Dollars in RI Companies Soar in 2012

More Venture Dollars Find RI in 4th Quarter

Venture Dollars Find RI in Second Quarter 2011

Register Your Trademarks Early ... Or Else!

2013-09-17T09:30:00.000-04:00

Dorpan, S.L. v. Hotel Melia, Inc., No. 12-1679 (1st Cir., Aug. 28, 2013)

A recent case from the First Circuit Court of Appeals, the federal court whose rulings cover Maine, New Hampshire, Massachusetts, Rhode Island and Puerto Rico, demonstrates how important it is for business owners to register their trademarks as early as possible, and the consequences of not doing so.

The case involves a dispute between two hotels over the right to use the mark “Meliá” in Puerto Rico. Hotel Meliá, Inc. (HMI) has operated the Hotel Meliá in Ponce, Puerto Rico, at the same location without interruption since 1895. The hotel has achieved some reknown, and has attracted many famous guests over the years, including President Theodore Roosevelt. Although HMI claims that the Hotel Meliá is the oldest continuously operating hotel in Puerto Rico, HMI never registered its name as a trademark with either the Puerto Rico Department of State, or the U.S. Patent and Trademark Office.

Sol Meliá, a public Spanish company, owns and operates the largest hotel chain in Spain and the third largest in Europe, as well as several hotels in North America using variations of the Meliá mark. Since the late 1990’s, Sol Meliá and its affiliated company Dorpan, S.L. (collectively, Dorpan), have registered 11 variations of trademarks containing Meliá with the U.S. Patent and Trademark Office for their hotel and resort services. In 2007, Sol Meliá renovated and reopened a luxury beach resort in Coco Beach, Puerto Rico, called “Gran Meliá,” about 80 mles from Ponce. HMI predictably objected, negotiations between the two companies broke down, and the dispute moved to court in 2008. The district court granted summary judgment for Dorpan, finding that “these two marks can co-exist within Puerto Rico without causing substantial confusion to the reasonable consumer.” HMI appealed.

On appeal, the First Circuit noted that, in the United States, trademark rights derive from use of the mark, not from registration, and analyzed the contours of Dorpan’s trademark rights under federal law and HMI’s trademark rights under common law. Dorpan’s trademark registrations had become “incontestable” under Section 15 of the Lanham Act, which creates a presumption that the holder of the mark is entitled to exclusive use of the mark throughout the United States if certain conditions are met. In this case, however, HMI raised a so-called “Section 15 defense.” Section 15 explicitly limits the incontestable right of a federal trademark holder to the extent, if any, to which use of a mark infringes a valid common law or state trademark right acquired by continuous use of a mark from a date prior to the date of Dorpan’s registration. As a result, Dorpan’s rights under federal law are limited to the extent of any rights HMI acquired under Puerto Rico common law before Dorpan’s federal registration issued.

In analyzing HMI’s rights under common law, the First Circuit correctly noted that HMI, as the senior user, does not automatically acquire exclusive right to use the mark throughout Puerto Rico. Rather, HMI is entitled to exclusive use of the mark in the area where it “currently do[es] business” using the mark. The First Circuit equated this area to the “one in which the use of a similar mark would create a likelihood of confusion.” As a result, the First Circuit treated the inquiry into the scope of HMI’s pre-existing common law trademark rights and the likelihood of confusion analysis between HMI’s and Dorpan’s marks as one and the same.

The First Circuit next undertook a traditional multi-factor likelihood of confusion analysis, and, with one exception, reached the same conclusion as the district court on the factors. The only factor where the First Circuit and the district court reached a different conclusion was on the strength of the marks. Here, the First Circuit found errors in the district court’s analysis. The court felt there were genuine issues of material fact on the relative strength of the two competing marks. The court noted that a reasonable jury could find that Dorpan would be able to use its greater financial strength to flood the market with advertising, thereby causing HMI to lose control over its brand and reputation. The court also noted that, on the other hand, a reasonable jury could conclude that “Hotel Meliá” was so strongly associated with historic downtown Ponce that consumers are unlikely to associate it with a hotel in Coco Beach. As a result, the court vacated the summary judgment ruling, and remanded the case for further factual determinations on the issue of likelihood of confusion.

The case is instructive for several reasons:

· It serves as a reminder that trademark owners should file trademark applications as early as possible. If HMI had filed its applications prior to the time Dorpan filed its U.S. applications in the 1990’s, Dorpan probably would not have been able to obtain U.S. registrations, and the position of the litigation would have been much different. The modest cost of obtaining a U.S. registration is far, far less than the amounts HMI must have spent litigating this issue in the federal courts.

· By not registering its trademarks before Dorpan, and by not petitioning to cancel Dorpan’s registrations before they became “incontestable,” HMI’s use of its MELIÁ mark is limited to use where it “did business” prior to the date of Dorpan’s Certificate of Registration. The First Circuit noted that, for a hotel, this area is much larger than the city in which it operates. Unlike other service providers, hotels seek to attract customers physically distant from the point of service, so HMI’s rights even may extend outside of Puerto Rico. But for most service providers, the area in which it “does business” is going to be limited.

· The decision also reminds us that the first user of a trademark can never be stopped from using its mark, even by a junior user who obtains an incontestable U.S. registration, at least to the extent the mark was in use on the date that the junior user obtains its U.S. Certificate of Registration.

· The scope of the senior user’s common law rights are more or less co-extensive with the area in which there is likelihood of confusion. In other words, if there is likelihood of confusion in an area, then the senior user has trademark rights there. In an actual dispute, survey evidence would probably be required to demonstrate likelihood of confusion.

RI Trademark Filings Decrease 9% in First Half of 2013

2013-08-15T09:00:00.000-04:00

Applicants with Rhode Island addresses filed 505 applications to register trademarks with the U.S. Patent and Trademark Office (PTO) during the first half of 2013. This represents a 9% decrease over the 553 trademark applications filed during the first 6 months of 2012.

The top five RI filers during the first half of 2013 are all consumer product or entertainment organizations, which is not surprising. Hasbro led the way with 33 filings. The Big East Conference was next with 27 filings, in support of its search for a new name and identity for the members who did not split off and retain the Big East name. Hasbro subsidiary Wizards of the Coast was third with 18 filings, followed by CVS Pharmacy, Inc. (10 filings) and DécorCraft, Inc., the Providence-based consumer product design and distribution company (8 filings).

Data supplied by the PTO.

Introducing Italian Technology and Gaming Attorney Giulio Coraggio

2013-07-09T10:00:00.000-04:00

I am pleased to introduce Giulio Coraggio, an Italian attorney in DLA Piper's Milan office, who specializes in gaming law, Internet law and technology law issues, and who writes a blog called "GamingTechLAW" (subtitled: "The Blog on Gaming and Technology Law and Whatever Sounds Interesting").

Giulio has written a series of articles for his blog dealing with the legal issues with clauses in outsourcing agreements. In particular, recently he has written a post on the importance of Intellectual Property clauses that anyone who negotiates or reviews outsourcing agreements should read.

Even though Giulio writes from an Italian law perspective, his advice also is sound for those of us who draft and negotiate these clauses in the United States. It is interesting that, despite differences in the common law and civil law legal systems, the provisions in these agreements address practically all of the same concepts and issues.

If you enjoy the post on intellectual property clauses, here are links to the other posts in the series so far:

Liability Clauses

Termination Clauses

SLA's and Penalty/Liquidated Damages Clauses

Forum Selection and Applicable Law Clauses

Venture Investment Dollars in RI Companies Fall in First Quarter 2013

2013-07-05T10:53:00.001-04:00

Venture capital investments in New England fell to $677 million invested in 88 companies in the first quarter of 2013, according to the MoneyTreeReport by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters. This represents a 22% decline from the fourth quarter of 2012.

Three of those companies are in Rhode Island, netting a total of $20,500,000. However, one long-standing biotechnology company, Nabsys, Inc., received $20,000,000 of those funds.

At the same time, investment levels across the U.S. continue to decline. Nationally, venture capitalists invested $5.9 billion in 863 deals in the first quarter. This represents a decrease of 12% in dollars and a 15% decrease in deals compared to the fourth quarter of 2012, when $6.7 billion was invested in 1,013 deals. The Software, Biotechnology and Medical Device sectors once again received the most investment dollars for the quarter. Investment in Internet companies declined, with only $1.4 billion being invested in 231 deals.

Locally, the three companies to receive investments in the first quarter of 2013 are:

Absolute Commerce, Inc., of Providence, received an early stage investment of $250,000 from the State’s Slater Technology Fund. Absolute Commerce is developing electronic procurement technology designed to speed the process of integrating suppliers’ product catalogs with buyers’ electronic resource management (ERP) computer systems.

Care Thread, Inc. (formerly called Consano Inc.), of Providence, also received a $250,000 early stage investment from the Slater Fund. Care Thread delivers a HIPAA-compliant mobile messaging solution that provides every member of a patient’s health care team with real-time information detailing a patient’s status and treatment.

Nabsys,Inc., of Providence, closed a $20,000,000 Series D follow on investment in March. The financing was led by new investor from Bay City City Capital, with participation from existing investors, including Point Judith Capital and Stat Venture Partners. The money will be used to support the commercial launch of the company’s positional sequencing platform used in DNA analysis, genome mapping and genome sequencing.

6 New IP Cases Filed in RI in June 2013

2013-07-02T09:30:00.000-04:00

There were 10 new intellectual property (patent, trademark and copyright) case filings in the first six months of 2013 at the U.S. District Court for Rhode Island, 6 filings in June alone! This is a 150% increase over the number of IP cases filings for the first six months of 2012, and an 11% increase over the number of IP case filings for the first 6 months of 2011.

Overall, patent filings lead the way so far in 2013, with 6 new case filings. There have also been 2 new trademark case filings, and 3 new copyright case filings. Some of these filings will be highlighted in upcoming blog posts, where we will see if we can determine any reasons for the uptick in filings in the Ocean State.

Trademarks Are Everywhere in Dallas!

2013-05-07T15:20:00.000-04:00

As in every city, trademarks are everywhere in Dallas. Because I am here attending the Annual Meeting of the International Trademark Association, it is only fitting that I show a few that I spotted on a brief walk in the sunshine:

"Intellectual Property Protection for Small Businesses" Presentation

2013-04-26T10:30:00.000-04:00

On Tuesday, I had the pleasure of co-presenting a workshop at the "Beacon for Small Business Expo," sponsored by Beacon Mutual for its policyholders and the general public. My presentation was titled "Intellectual Property Protection for Small Businesses." Here is a copy of the slide deck.

My co-presenter was Ted Howell, of Partridge, Snow & Hahn. Ted spoke about strategies for protecting corporate assets in the broader sense, including confidential business information and relationships with customers and vendors.

FTC Updates Rules for Internet and Mobile Advertising

2013-03-18T10:16:00.000-04:00

Does your company advertise online or on mobile devices? Do you promote your company on Twitter and Facebook? If so, you should take note that the Federal Trade Commission last week updated its guidelines for digital advertising. Titled: ".com Disclosures: How to make Effective Disclosures in Digital Advertising," the new guidelines reflect changes in digital advertising practices since the FTC issued the last set of guidelines in 2000.

The new guidelines consist of 28 pages of guidance and an Appendix of 22 mock ads illustrating the points from the guidelines. Four key points emerge:

Consumer protection laws apply to online and mobile advertising just as they do to print, radio and TV advertising. Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices in advertising, is the touchstone here.
It has always been the law that, if disclosure of information is needed to prevent an ad claim from being deceptive or unfair, the disclosure has to be clear and conspicuous. The new guidance from the FTC affirms that the disclosures must be clear and conspicuous on all devices and platforms on which consumers may view the ads. This means that if an ad would be deceptive without a disclosure, and the disclosure cannot be made conspicuously on a particular device or platform, then the ad should not run on that device or platform.
The FTC now feels that disclosures should be "as close as possible" to the relevant claim. Hyperlinks for disclosures involving key categories of information, such as pricing or health and safety information, are discouraged, and in any event should be labeled as specifically as possible.
The FTC acknowledges that space constraints can be a challenge to advertisers on certain devices and platforms. But companies still have to make the necessary disclosures clearly and conspicuously. The use of pop-ups is not a good idea, because there are so many technologies that block pop-ups.

The new FTC guidelines close with some food for thought: instead of spending time on making disclosures meaningful and conspicuous, perhaps advertisers should rewrite the ads so the disclosures are not needed at all.

Other helpful advertising guidance for small businesses:

--- Advertising FAQ's: A Guide for Small Business

--- Advertising and Marketing Basics

Governor Nominates 5 to Economic Development Corporation

2013-03-11T09:55:00.000-04:00

Last Friday, Governor Chafee nominated five people to fill vacancies on the Rhode Island Economic Development Corporation (RIEDC):

Shannon Brawley, Executive Director of the Rhode Island Nursery and Landscape Association;

Dr. Nancy Carriuolo, President of RI College;

Roland Fiore, President of South County Sand & Gravel Co., Inc.

Jason Kelly, Executive Vice President of Moran Shipping Agencies; and

George Nee, President of the Rhode Island AFL-CIO and an existing Board member.

In supporting the nominations, Governor Chaffee stated that “[t]hese nominees reflect my commitment to changing the focus and priorities of the EDC. We are going to do all we can to help existing Rhode Island businesses – many of them small businesses – succeed and grow. And we are going to continue to improve our economy by building upon Rhode Island’s strengths and assets and investing in the fundamentals, such as education. These nominees bring with them valuable experience in a number of our state’s key industries. This is a new direction for the RIEDC and, I believe, a more promising path to a stronger economy for Rhode Island.”

The nominees remain subject to confirmation by the RI Senate. Chaffee's nominees expired last year because the state Senate never held confirmation hearings before adjourning.

While the position of Executive Director remains vacant, and the nominees remain unconfirmed, it may be difficult for the RIEDC to move forward with its mission to create jobs and help companies expand and relocate to RI. Let's hope that politics will be set aside soon so that the RIEDC can get back to work itself.

Venture Investment Dollars in RI Companies Soar in 2012

2013-02-19T21:01:00.000-05:00

Venture capital investments in New England rose to $790 million invested in 114 companies in the fourth quarter of 2011, according to the MoneyTree Report by PriceWaterhouseCoopers and the National Venture Capital Association based on data from Thomson Reuters.

Four of those companies are in Rhode Island, netting a total of $35,599,900. Over the entire year, venture investments in Rhode Island companies totaled over $106 million, a huge increase over the $43.3 million invested in RI companies in 2011.

While investment levels in Rhode Island companies are improving, they are just starting to reach levels of a decade ago. The high mark was in 2000, when over $100 million was invested in 11 Rhode Island companies. In 2001, venture capital investments in Rhode Island companies totalled $46.9 million for the entire year.

At the same time, investment levels across the U.S.are on the decline. Nationally, venture capitalists invested $6.4 billion in 968 deals in the fourth quarter, and a total of $26.5 billion in 3698 deals for the entire year. This represents a decrease of 10% in dollars and a 6% decrease in deals over 2011. The Software, Biotechnology and Medical Device sectors received the most investment dollars for the year. Internet companies scored their second highest level of investment since 2001, with $6.7 billion being invested in 976 deals.

Locally, the four companies to receive investments in the fourth quarter of 2012 are:

• Illuminoss Medical, Inc. of East Providence, a company that is developing minimally invasive solutions for the stabilization and treatment of bone fractures, received an expansion investment from Foundation Medical Partners.

• The NanoSteel Company, of Providence, received $10,000,000 in investments from EnerTech Capital and Fairhaven Capital Partners. The NanoSteel Company develops nano-structured steel alloys designed to deliver superior performance.

• PreCision Dermatology Inc., of Cumberland, received $25,599,900 in expansion investments from Essex Woodlands Health Ventures, Frazier Healthcare, Longitude Capital Associates L.P., and NovaQuest Capital Management LLC. PreCision Dermatology is developing innovative therapies to physicians and patients that demonstrably improve the skin.

• TranslateAbroad Inc., of Providence, a company that provides a mobile application that allows users to point their phone camera at any Chinese text (like a food menu) and receive real-time translations, received an early stage investment from 500 Startups L.P.

Let's hope 2013 continues the upward trend of more investment dollars to Rhode Island!

FTC Provides Privacy Guidance for Mobile App Developers

2013-02-11T09:00:00.000-05:00

With about 100 new mobile apps being released every day, how do you keep track of how your personal information is being used? Mobile apps have been notoriously slow in adopting privacy policies and user-friendly privacy settings. After some recent pronouncements by the California Attorney General, the Federal Trade Commission issued a new Report on Mobile Privacy Disclosures and some best practice guidelines for mobile app developers last week..

While a great deal of the report is directed at platform developers (such as Apple, Google, Microsoft and Blackberry), there are some recommendations for app developers as well. These include:

Having a privacy policy and making sure the policy is available through the platform's app store
Providing just-in-time disclosures and obtaining affirmative express consent when collecting sensitive data outside the platform's API (such as financial, health or children's data) or sharing sensitive data with third parties

While app level disclosures do not need to repeat the platform level disclosures on data the app collects, if the app developer decides to share that data then the just-in-time disclosures and consents should kick in

App developers need to understand the third party apps they integrate (particularly those that facilitate advertising and analytics) in order to provide truthful disclosures
App developers should consider participating in self regulatory programs, trade associations, and industry organizations, which can provide industry wide guidance on how to make uniform, short-form privacy disclosures

The FTC also issued some tips to mobile app developers. These are more in the nature of suggestions and best practices, such as understanding the platform and libraries you are using and how they collect data, and considering encryption for sensitive data.

The thrust of the FTC's concerns is that privacy be incorporated by design, not by afterthought. The FTC has demonstrated that it is serious about these issues, and has initiated enforcement actions against companies whose apps do not comply. For example, the FTC recently settled with the social media company Path. Path was collecting birth dates as part of the registration process, but its original app did not prevent children under 13 from registering. Path caught the error on its own and revised the app to kick out children under 13 who tried to register. But the FTC still enforced an $800,000 penalty for Path's violation of COPPA with its initial design, and is requiring Path to obtain independent privacy assessments every other year for the next 20 years.

The FTC publications, following the California Attorney General's pronouncements last month, make it clear the the state and federal regulators are watching the mobile industry closely. All participants --- app developers, app platforms, and app advertisers --- should carefully review their privacy and data collection policies and those of the apps from which they collect information to make sure that the privacy practices are following the current guidelines and that the data collection practices are consistent with the privacy policies.

ICANN to Reveal New Generic Top Level Domains Tomorrow

2012-06-12T18:56:00.000-04:00

Just a brief update of what is going on with ICANN's plan to add new top level domains (in addition to .com, .net. org, .biz, etc).

ICANN has received over 1900 applications, generating in excess of $350 million in filing fees
ICANN will reveal the complete list of applications and applicants tomorrow (June 13, 2012), but in the meantime some of the applicants have disclosed their applications
There will be a process for lodging objections for concerns of trademark infringement or otherwise

After ICANN publishes the complete list of new gTLD applications, there will be a 60 day period in which anyone may file comments with ICANN concerning the applications. There will also be an opportunity for third parties to file formal objections.

Once the list of applications is revealed, companies should review the list and determine if there are any proposed names that would infringe its trademarks or would otherwise be of concern.

More to follow after the complete list is revealed.

Saving Costs in the U.S. Trademark Registration Process

2012-05-14T10:00:00.000-04:00

Because of the complexities of the U.S. trademark registration system, many trademark owners from other countries, and their counsel, are reluctant to file national or international applications in the United States. One of the reasons often given is the higher cost of obtaining trademark protection in the United States due to the statutory requirements and the formalities that must be observed. It is frequently overlooked, however, that a U.S. trademark registration covers a largely monolingual (English), highly sophisticated market of over 310 million people.

There are opportunities for international applicants and their counsel to save money and time in the United States registration process. Here is a link to an article I have written, that was recently published by the World Patent and Trademark News, and distributed to over 9500 attendees at the International Trademark Association annual meeting in Washington, D.C. Comments, especially from outside the United States, are especially welcome, as I am thinking into turning this into a longer, more detailed work.