Source: http://gct.law/blog?f%5Bpagenum%5D=7
Timestamp: 2019-04-19 14:37:34+00:00

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TVEyes, Inc. is a database that allows its subscribers to search and aggregate news in the media. Fox News didn’t like that at all. So, Fox News sued for copyright infringement. TVEyes successfully argued that its use of Fox News’ copyrighted material was fair use. The District Court in the Southern District of New York held that TVEyes did not duplicate or usurp the value of Fox News’ broadcasts. TVEyes’ use was transformative because it provides a unique “database of _everything _ that television channels broadcast, twenty-four hours a day, seven days a week”.
TAKE AWAY: This is dangerous ground. Not all information aggregators are equal. This case doesn’t really give us a bright line test for determining which type of aggregator is protected by fair use and which isn’t. The District Court seemed to be focused on the uniqueness of what TVEyes provides. But how unique do you have to be? What if you add your own content? What if you just provide links to content belonging to others? It would probably be best to treat the TVEyes situation as exceptional and not rely on it too much.
When the patent ran out for a Spiderman web-shooter toy, the licensor insisted that he was entitled to royalties anyway. Not so says the U.S. Supreme Court. A patent gives you a right to exclude others from using your invention. But that right only lasts 20 years. In the case of Kimble v. Marvel Enterprises (as in Marvel Comics), Kimble licensed the patented web-shooter toy to Marvel. When a dispute arose over the patent, the parties entered into a settlement agreement that provided for a lump sum payment and a 3% royalty. The agreement was silent about how long the royalty payments would last. When the patent ran out, Marvel got a judgment declaring that it didn’t have to pay royalties anymore. Kimble wasn’t happy and so he appealed. The case went all the way to the U.S. Supreme Court. SOCTUS decided that once the patent expires, the right to royalties expires too. So Marvel didn’t owe any more royalties.
TAKE AWAY: There could be any number of reasons why you would want royalties to last beyond the patent term. The obvious one is the availability of an income stream. But other considerations like tax consequences or estate planning can play a role. The best time to address those goals is when the license is being drafted. In a rare instance of practical advice from SCOTUS, Justice Kagen, writing for the majority, gave some examples of how this could work. For instance, the royalties could be limited by the patent term but amortized over a longer period of time. Or the royalties can be related to a non-patent right, like a trade secret or trademark. No doubt there are other creative solutions depending on the circumstances.
What if you allowed someone to use a trademark that is similar to yours for a pretty long time? The owners of the SMART ONES trademark for frozen foods, snacks and desserts can answer that question. When the owner of SMART BALANCE for heart healthy butter substitutes filed intent to use applications for frozen foods, SMART ONES opposed them citing a likelihood of confusion. The Trademark Trial and Appeal Board (TTAB) sided with SMART BALANCE and allowed the applications to go through. The TTAB found that a lot of factors weighed in favor of a likelihood of confusion, like channels of trade, relatedness of goods, goods sold to the same classes of consumers and a low degree of purchasing care when buying the products. But, the two marks have peacefully co-existed for 17 years with very little evidence of customer confusion.
TAKE AWAY: If someone is using a trademark that is similar to yours and likely to cause confusion, you need to address that as soon as possible. Sitting on your trademark rights can hurt you by barring your ability to stop the other user. BONUS TAKE AWAY: The TTAB also held that the common term, SMART, is laudatory and therefore too weak to overcome the visual and phonetic differences between the two marks. So, when choosing a trademark, try to stay away from laudatory or descriptive terms. They weaken your mark and make it harder to protect.
By show of hands, how many people actually read on-line terms and conditions before clicking “I agree”? I don’t have to see you to conclude that no one raised their hands. If you did, you can stop reading here. If you didn’t raise your hand, do you ever wonder what you’re agreeing to? How about the websites who tell you that you’re bound by the terms and conditions just for browsing. Is that enforceable? A recent case in the 9th Circuit Court of Appeals, Nguyen v. Barnes & Noble, Inc., answered that question. Nguyen bought a discounted tablet device from Barnes and Noble’s website. When B&N ran out of stock, Nguyen cancelled the order and sued for deceptive trade practices and false advertising. B&N said that Nguyen couldn’t sue because the website was governed by a browse wrap license that required arbitration. A browse warp license is basically a license to browse the website. The court sided with Nguyen. The browse wrap license had two primary problems. First, the customer didn’t have proper notice of the license. Second, the website didn’t have a way for the customer to take a positive step to accept the terms. So B&N had to defend the lawsuit in court and couldn’t require arbitration.
TAKE AWAY: This case is particularly instructive for e-commerce websites. A typical e-commerce website invites customers to browse and then buy. Back in the dark ages, before the Internet, this kind of relationship often involved a written agreement that everyone had to sign. The equivalent for commerce over the Internet has developed over time. Now, you can post your contractual terms and conditions on your website. But, it looks like you need to go a couple of steps further to make it a binding contract. If you want to avoid B&N’s result, then you have to give your customer notice and an opportunity to accept the terms and conditions.
Can a hashtagged key word or phrase in a Tweet be registered as a trademark? For the uninitiated, Twitter is a social networking service where people communicate with each other with short messages (a “Tweet”). A Tweet can be tagged using a hashtag symbol (#) before a relevant keyword or phrase to categorize the Tweet and help it show up in a search. A business can generate buzz by using a hashtagged key word or phrase. For example #android and #SNL. There have been a couple of hashtag wars this year. One involved two taco restaurants over #tacotuesday. The owner of the hashtagged phrase tried to stop the other restaurant from using “Taco Tuesday” in an ad. The social media backlash caused the owner to back down. In another case, the Fraternity Collection brought suit against a competitor for using #fratcollection and #fraternitycollection. The court denied the competitor’s motion to dismiss the complaint deciding that the competitor’s use of the trademarks with the hashtagged phrases could cause customer confusion.
TAKE AWAY: The answer to the question is yes, a hastagged key word or phrase in a Tweet can be registered as a trademark. The USPTO adopted rules in 2013 that allow the registration of words and phrases that are preceded by the hashtag symbol. But the words and phrases without the # have be the proper subject matter for trademark registration.
Before:Anyone who transferred data containing personal information from Europe to the U.S. was protected from liability for data breaches as long as they complied with Safe Harbor standards created by the European Commission. Thousands of companies "self-certified" themselves as having complied with the Safe Harbor standards. The Event: This month, the Court of Justice of the European Union issued its ruling in Schrems v. Data Protection Commissioner that the Safe Harbor is no longer available. The Court cited Edward Snowdon’s surveillance practices as proof that the Safe Harbor standards don’t protect European citizens. After: Anyone who transfers data containing personal information from Europe to the U.S. has to find new ways to protect themselves from liability for data breaches.
TAKE AWAY: Companies who do business with the European Union and use the personal information of employees or customers should examine their data protection procedures. Alternative sanctioned methods of data security are out there. They range from using model contractual provisions to getting the individual to opt-in consent to transfer the data. Will using sanctioned methods work the same as the Safe Harbor did? That’s an open question. The U.S. and the European Union are working on a new version of the Safe Harbor standards but there’s no timetable for when we’ll see it.
Utah State Supreme Court’s decision in InnoSys v. Mercer gave a boost to plaintiffs in trade secret misappropriation cases by laying out a presumption of harm. But what’s interesting about this case is that Mercer didn’t use InnoSys’ trade secrets to compete with it. Mercer had been employed by InnoSys. She had signed a non-disclosure agreement. At some point, she e-mailed and downloaded confidential trade secrets to a thumb drive. Mercer disclosed the trade secrets in an administrative unemployment hearing after she was dismissed by InnoSys. She eventually deleted the trade secrets from her storage devices. But according to the Utah State Supreme Court, her misappropriation of the trade secrets had already caused harm to her employer. Bottom line is that Mercer was liable for trade secret misappropriation even though she didn’t use the trade secrets for competitive purposes.
TAKE AWAY: Mercer made a grave mistake by disclosing InnoSys’ trade secrets. What could Mercer have done differently? First, she shouldn’t have e-mailed and then saved the trade secrets on a thumb drive. That alone was actionable. Second, if Mercer felt it was absolutely necessary to her case, she could have told the hearing officer why the trade secrets were relevant without revealing them. Third, if the hearing officer thought knowing the trade secrets were important, either the hearing officer, Mercer, or InnoSys, or any combination of the three, could have worked out an agreement to allow the hearing officer to review the trade secrets under seal. Thanks to my Employment Law gurus, Laura Balson and Ashley Orler for their help with this take away.
We can now sing the Happy Birthday song without paying a royalty. For decades, Warner/Chappell Music Inc. claimed to own, and demanded royalties to use, the lyrics to Happy Birthday song. The royalties ran between $1,500 to hundreds of thousands of dollars. The plaintiffs in Good Morning to You Productions Corp. v. Warner/Chappell Music, sued claiming that Warner/Chappell’s copyright in the lyrics was invalid (the melody was already in the public domain). A judge recently ruled in the plaintiff’s favor. The reason for the ruling? It isn’t clear cut. The judge only ruled that Warner/Chappell didn’t have the copyright. Some commentators are saying that the ruling means that the lyrics are in the public domain. Not exactly. There was evidence that the lyrics were written in 1893 which means the copyright had long expired. That means that the 1934 copyright registration could be invalid or forfeited because the lyrics weren’t an original work of authorship. And, there was no evidence that Warner/Chappell’s assignor ever got an assignment from the two sisters who wrote the lyrics. Does that mean that someone else could step up and claim ownership of the copyright? It’s a possibility but they’d have to explain why they’ve been sitting on their rights for decades.
TAKE AWAY: The saga of the Happy Birthday song shows the importance of due diligence. If you’re going to acquire someone else’s copyright, or any Intellectual Property for that matter, make sure they own what they say they own. Warner/Chappell’s due diligence failed at some point and it’s now facing a class action suit. If Warner/Chappell loses the next phase of the litigation, it might have to return millions of dollars in royalties.
How is Barclay's Brokerage Services Like Edward Scissorhands?
TAKE AWAY. This is a good example of trying to hold onto something that might not benefit your company. I have questions for both parties in this case. Barclays, does the infamous trademark build trust and confidence in your goods and services? Tiger Lily, why would a wine and spirits company want to use a "toxic" name for its products? The value of parody only goes so far.
Following up on last week’s Dancing Baby post, it’s worth exploring the Digital Millennium Copyright Act (DMCA) a little more. Put code here The DMCA can protect websites from claims of copyright infringement. The DMCA protects four categories of Internet service providers: (1) new media services and websites that host servicers; (2) simple conduits that simply pass data; (3) services that cache information temporarily for users; and (4) information location services like search engines. The protection works like this. A website invites users to post content. The user uploads content that violates a third party’s copyright. The third party notifies the website with a “Take Down Notice”. The website has a reasonable time to remove the offending content. If the website removes the offending content, it’s protected from a copyright infringement law suit. In order to get the advantage of DMCA, the website has to register an agent with the Copyright Office.
Who would have thought that literal and figurative music icon Prince would go after Stephanie Lenz who posted her adorable children dancing to his “Let’s Go Crazy” on YouTube. Well, he did. And litigation ensued. Prince, who is notorious for protecting every facet of his art, sent a takedown notice to YouTube under the Digital Millennium Copyright Act (“DMCA"). The DMCA allows a copyright owner to ask that content be removed from a website if he has a "good faith" belief that the use of the work interferes with his copyright. YouTube complied stating that the video infringed. Stephanie sent a counter-notification claiming that the video was not infringing. YouTube reposted the video . Stephanie sued on the basis that YouTube misrepresented in the take down notice that the use was infringing. The case made its way to the Ninth Circuit Court of Appeals which held that, before sending a takedown notice under the DMCA, the copyright owner’s “good faith” belief requires consideration of fair use. The case now goes back to the trial court. Dance on baby, even though you are probably about 10 years old by now.
TAKE AWAY. The DMCA can be a powerful tool for protecting the copyright holder against unauthorized use of a work. But consumer advocacy groups have pointed out that the takedown procedure in the DMCA favors the major media companies at the expense of those who cannot afford to fight them. The DMCA bars the improper use of the takedown procedure. But before Stephanie, it was rarely enforced by the courts. Hopefully, Stephanie’s win will make aggressive copyright owners think twice before using the DMCA as a sword instead of a shield.
The great Michael Jordan can teach us all some things about how to exploit our Intellectual Property. Most recently to the tune of $8.9 million. MJ obtained a jury verdict against the now defunct Dominicks food stores for violating his Right to Publicity which is the right to protect one's persona from unauthorized commercial use. Dominicks had placed an ad in a Sports Illustrated magazine that commemorated MJ's career. The ad used MJ's name and image and included a coupon. The court held that the ad went too far into commercial use without MJ's permission. Then the issue of damages was decided by a jury. They didn't give MJ all he asked for. But it's still a lot of money. MJ says he's going to donate any recovery he gets. MJ also has a suit pending against Jewel Food Stores for an ad it placed in the same magazine. We'll see how that goes.
TAKE AWAY: So how does MJ's protection of his persona help owners of other types of Intellectual Property? The answer lies in MJ's licensing strategy. MJ testified that he is very careful about endorsement deals. He doesn't accept every single one he's offered. That drives up the value of the deals he does take. MJ's obvious lesson is that licensing deals, whether for trademarks, copyrights or patents, should be carefully reviewed for how they fit into an overall strategy. If you license your Intellectual Property to too many licensees, you effectively drive your own price down.
The New York Times Small Business Blog published an article about the fate of non-disclosure agreements (“NDA”) for emerging and seed companies (Why More Start-Ups Are Sharing Ideas Without Legal Protection, New York Times, July 2, 2014). The article makes it appear that initial stage companies shouldn’t bother with a written NDA. This is dangerous advice. Sharing ideas without some protection could put an entire business model at risk. The article has some good suggestions like (a) make sure you have something to protect and (b) know your audience. But the article also suggests filing a provisional patent. The problem is that not every great idea is patentable. The article also doesn’t cover a critical issue which is how a lack of confidentiality would destroy protection for your trade secret.
TAKE AWAY: Keep in mind that articles like this are giving general advice. The writer doesn’t know your business. If you’re shopping an idea around to potential investors, vendors and customers, you need to protect it. Always have an NDA on hand. If you get push back, then at least tell the other side that you have an expectation of confidentiality and confirm it in writing later. If you don’t have an NDA or they won’t agree to respect your expectation of confidentiality, then only disclose the high concept. Then tell them you can’t say more without an NDA. If you still get push-back, then you need to consider how valuable this relationship is going to be. Does the benefit of the potential business relationship outweigh the detriment of losing legal protection for your great idea?
Two Federal Appellate Courts are duking out whether putting your own spin on someone else’s copyrighted work is enough for a fair use defense. The Copyright Act gives us four factors to look at for fair use: (1) the purpose of the use; (2) the nature of the work; (3) how much of the work is used; and (4) the effect the use has on the market for the original work.
The Second Circuit Court of Appeals says that any transformative use of a copyrighted work is fair use (Cariou v. Prince). I've included a comparison of one of Cariou's original photos and Prince's changes to the photo. Do you think the second photo is fair use of the first?
The Seventh Circuit Court of Appeals thought the Second Circuit went too far in hinging everything on transformative use. In a more recent case, the Seventh Circuit says that fair use isn’t designed to ‘protect lazy appropriators’ (Kleintz v. Sconnie Nation LLC).
So you shouldn't let transformative use trump all of the other factors.
Can you use a photo you got from Google Images on your website?
Can you quote someone else’s book?
Can you use a movie clip you got from YouTube in your PowerPoint presentation?
Can you copy your competitor’s catalogue but change the name of the company and the contact information?
Answers: (1) Probably not. Just because it’s on the Internet doesn’t mean it’s free. If you’re using it on your website, you’re making commercial use of someone else’s work without their permission; (2) Probably. It will depend on what you’re using it for and how much you’re using; (3) Maybe or maybe not. It will depend on what you’re using it for and how much you’re using; and (4) No.
As you can see, the answers aren’t always easy. If you’re serious about using someone else’s images, photos, content etc., it’s worth getting a right to use opinion.
What is the McLikelihood of McConfusion Anyway?
McDonalds Corporation won a victory before the Trademark Trial and Appeal Board (TTAB) against a food company named McSweet LLC. McSweet wanted to register its name for pickled vegetables. McSweet argued that the mark was a play on the company founder’s name, Leo McIntyre. The TTAB rejected the argument. It held the public is likely to associate “McSweet” with McDonald’s family of “Mc” marks. The TTAB also rejected McSweet’s argument that no one would be confused between fast food and pickles.
TAKE AWAY: Trademark law protects the consuming public from a likelihood of confusion about the source of products and services they buy, use or consume. This case is a good example of a likelihood of confusion. If you saw “McSweet” on a grocery shelf, you’d probably think that McDonald’s is selling the warm pickles they put on their burgers. This case also points out that a trademark protects not only the specific goods and services associated with the mark, but any overlapping goods or services. Food is food.
Intellectual Property. Patents, copyrights, trademarks, trade secrets, domain name, right of publicity! I know what you’re thinking. What do these things have to do with my business? This blog is going to answer that question. In short bites, I want to let you know what’s going on in the legal world around Intellectual Property. For an Intellectual Property geek like myself, that can be enough. But, I’m going to take it one step further. I’m going to give you a TAKE AWAY that shows how this news helps your protect your business and make it more productive. My posts will be relevant to your business whether your revenues are $500,000 a year or $5 million a year.
But first, a little about myself. I’m attorney who practices primarily in the area of Intellectual Property. I hold a legal masters in Intellectual Property and also teach at John Mashall Law School in Chicago. Over the years, I have found that an informed client is the best client. A well informed client can make better decisions about their business in the short term and long term. In order to promote that, I started a column in my firm’s quarterly newsletter that has now evolved into this blog. I look forward to sharing information with you.
Interested? Read on. I've posted a few starter items for you.

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