Can't Sue -- Can't Settle

Tomorrow morning, the Supreme Court will hear oral argument on an interesting copyright jurisdiction case that promises to cast a long shadow over the ongoing Google book settlement negotiations. Tomorrow’s Supreme Court case, Reed Elsevier, Inc. v. Muchnick, deals with Section 411(a) of the 1976 Copyright Act. This section provides that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” In short, a copyright owner of a work subject to the U.S. Copyright Act cannot sue for infringement unless the work is preregistered or registered. There are several exceptions to this strict rule. Infringement of a work of visual art need not be preregistered or registered in order to sue. Owners of foreign, non-U.S., works can sue without registration. And, if registration has been properly applied for, but rejected by the Copyright Office, then the owner of the work can sue but only if the owner notifies the Copyright Office (in this event the Copyright Office has the right to become a party to the lawsuit on the issue of registrability).

The Reed Elsevier case arrives at the Supreme Court in an interesting context. Almost all of the parties now argue that Section 411(a) is not jurisdictional or that its requirements can be waived. Not having an adequate voice in support of Section 411(a), the Supreme Court asked Deborah Merritt, a professor at Ohio State’s Moritz College of Law and a clerk to former Justice O'Connor, to appear as amicus curiae in support of the badgered Section 411(a).

The litigation that is now Reed Elsevier commenced years ago in the Southern District of New York. Generally, freelance writers who submitted work to publishers complained when the publishers sold the work to electronic databases. The Supreme Court’s 2001 opinion in New York Times Co. v. Tasini held that such conduct on the part of publishers constituted infringement absent agreement from the freelancers. The Tasini case recommended that the publishers enter into direct agreement with freelancers so as to define agreeable expansion of publication rights that the freelancers would permit.

Following Tasini, many publishers did enter into new or revised publishing agreements with freelancers so as to permit the republication of freelance articles by electronic databases, or in other contexts, beyond the initial publication. But many freelance articles published by the publishers were not the subject of consent agreements with writers, and some publishers did a poor job keeping records of which freelancers they bought articles from and which of these freelancers consented to republication. As such, the class action litigation that has now become the Reed Elsevier case proceeded forward and the class representatives and publishers eventually entered into a class settlement agreement. The settlement sought to resolve royalty issues based, in part, on whether the freelancer had obtained copyright registration for the work. Unregistered freelance works received the lowest level of compensation under the class settlement.

The class settlement was approved by the district court over the objection of some writers. An appeal to the Second Circuit followed. Both the class representatives and the publishers argued that the difference in treatment between copyright registered works and unregistered works was justified in part because of Section 411(a). That is, the parties argued in favor of the class settlement by observing that unregistered works cannot sue for infringement and, as such, these owners are not entitled to the same compensation as registered copyright owners. The parties made other argument in support of their settlement, but this Section 411(a) issue is highlighted here because it now serves as the basis for the Supreme Court’s certiorari. The Second Circuit, noting the Section 411(a) prohibition on litigating infringement claims by unregistered copyright owners, rejected the district court’s approval of the class settlement agreement. The Second Circuit took the position that, with regard to the application of Section 411(a), a class party that cannot sue cannot be a covered party to the class settlement.

Now, before the Supreme Court, both the class representatives and the publishers are arguing against the position they took in the district court and the Second Circuit. They now assert that the Section 411(a) litigation limitation is not jurisdictional but can be waived. Because of the lack of advocacy in support of the Second Circuit’s holding, the Supreme Court invited amicus participation. The brief by court-appointed amicus curiae is set out here and provides a good background of both the Reed Elsevier litigation together with the history of the registration requirement.

As observed correctly by the court-appointed amicus, the overwhelming judicial view of the registration requirement is that it is jurisdictional and, as such, non-waivable. Indeed, the obligation to register in order to sue for infringement was contained in every copyright act since the founding of the country. Against this statutory and case background, it is hard to see how the Reed Elsevier parties are going to be successful in overturning some two hundred years of jurisprudence.

But consider what all of this may mean to the ongoing Google book settlement. Two weeks ago the parties in that case agreed to go back to the drawing board and renegotiate over the numerous issues that the public and the DOJ criticized. It appears that the issue of unregistered work should be right at the top of the redo list. If the Supreme Court upholds the Second Circuit and affirms that Section 411(a) establishes a non-waivable jurisdictional requirement, then how will it be possible for the Google parties to craft a settlement that includes nonregistered works? And if nonregistered works cannot be the subject of the Google settlement until these works pass into the public domain, any resulting settlement with Google will not be as beneficial to the extent a rather large subset of writings are not covered. In this circumstance, Google will not receive the settlement benefit it was hoping for as to all of the books it has copied, and hopes to copy in the future. Further, the desire to digitalize will not be as strong given the potential liability for nonpermitted copying.

Since we are now in the midst of the college football season and it is common to rate weekend games, I’m willing to rate the likely outcome of the Reed Elsevier case and its effect on the Google book resolution. I’m thinking that Section 411(a) will be upheld by two touchdowns and that the Reed Elsevier class settlement cannot include nonregistered works. I’m further thinking that the Google parties will view the Reed Elsevier case as providing a difficult challenge to a settlement modification. The big question is whether Google will still be willing to pay $125 million for a much smaller piece of the game.

61 in 61

On this date, the last day of baseball's 1961 regular season, Roger Maris blasted a home run over the right field fence at Yankee Stadium, besting Babe Ruth's single-season record of 60 home runs set in 1927. Three players have "officially" surpassed Maris' feat: Mark McGwire, Sammy Sosa and Barry Bonds. Each of these three are under suspicion for steriod use.

"As a ballplayer, I would be delighted to do it again. As an individual, I doubt if I could possibly go through it again." Roger Maris.

"Now they talk on the radio about the record set by (Babe) Ruth, and (Joe) DiMaggio and Henry Aaron. But they rarely mention mine. Do you know what I have to show for the sixty-one home runs? Nothing, exactly nothing." Roger Maris.

Ten Mistakes In Seeking A U.S. Trademark Registration

Today's post was prepared by my outstanding trademark paralegal, Mollie Roberts.

If you recall the last time one of your trademark applications sailed through the USPTO’s office without a hiccup, you probably wish you could also recall the magic sequence of events you followed to make it so.

I participated in INTA’s Trademark Administrator’s Conference held in Chicago last week, and attended an informative trademark presentation led by Daphne Maravei of Blake Cassels & Graydon in Canada, and former USPTO examiner Christopher Ott, now of Vorys, Sater, Seymour & Pease, LLP, in the United States. I took away the following list of 10 common mistakes that practitioners make when filing U.S. trademark applications with the PTO:

Mistake No. 1 - Inadequate searching

Your search should allow you to substantially answer the following questions with regard to the mark: Can you register it? Use it? Enforce it? Depending on what a knock-out search reveals, a full search may be advisable and, once you obtain your search results, get moving on the application. It is never a good idea to delay a filing once you receive the search results.

Mistake No. 2 - Wrong applicant name

Make sure you are confident that the correct entity is named as the owner/applicant. Double-check records with the secretary of state, where applicable, and don’t forget to simply ask the client. This is particularly true with regard to international filings where inconsistent trademark ownership is more common.

Mistake No. 3 – Inconsistent foreign registrations and U.S. applications

When you file a U.S. application based on a foreign registration, be wary of using a laundry list of goods and services. Rather, verify that each item is in use. Obtain a proper translation, and consider getting the foreign registration before filing in the United States.

Mistake No. 4 – Describing goods and services

Before you attempt to describe the goods and services associated with the mark, be confident that you have a clear understanding of what your client actually does with its mark.

Mistake No. 5 – Is the mark in use?

Establish a check-list of what “in-use” means and go over the list with your client before you file the application.

Mistake No. 6 – Improper specimen or outdated specimen

Educate your client about the importance of specimens. The specimen must be a substantially exact representation of the drawing, so ask for packaging and examples of use, then confirm that the mark is in use with the goods and services listed in the application. Further, ensure that the specimen is current.

Mistake No. 7 – Creative declarations

The USPTO provides a declaration for trademark applications. Use it. Then ask your client to sign it. Attorneys should avoid signing declarations on behalf of clients.

Mistake No. 8 – Unusual situations - Madrid Protocol mishaps

Be wary of using a laundry list of goods and services.
Remember that you cannot amend the mark in a Madrid registration. So, get it right the first time.
Educate yourself about statutory prohibitions.
Review the statute at least once before filing.

Mistake No. 9 – Maintenance filings

Maintenance filings offer an opportunity to correct prior mistakes, update information like client addresses, and prevent future mistakes.

Declarations of use must be filed by the owner of the mark and the mark must be used in the same manner as stated in the registration. If the mark is being used with fewer than all of the goods listed, review 37 C.F.R. § 2.161 to ensure that the proper form of declaration is filed.

Mistake No. 10 – Abandonment

“Use it or lose it” - Educate the client about continued use of the mark.
Licensing - Discuss proper licensing with your client – the licensor must always exercise control over the mark. Implied licenses may not be worth the paper they are (not) printed on.
Enforcement - Educate the client about proper enforcement of the mark so it doesn’t become generic.
Assignment – A mark cannot be assigned without corresponding goodwill.

No. 9

In 1941, on this date Ted Williams went 6 for 8 for the Red Sox in a season ending doubleheader, raising his season batting average to .405 and becoming the last player to average over .400 for a season. During the past 68 years, several players have come close but no one has achieved this milestone. Yet, as great as this accomplishment, Williams was not considered the MVP for 1941, that honor going to Joe DiMaggio in recognition of his 56 game hitting streak with the Yankees.

"Baseball is the only field of endeavor where a man can succeed three times out of ten and be considered a good performer." Ted Williams.

Random Thoughts

Am I the only one wondering why Borders is selling the Sony Reader? Won't this device cannibalize the sale of Borders' books, particularly since Borders does not appear to sell electronic book versions? I don't believe that Chevron sells batteries for electric cars. Perhaps Borders should follow the Chevron model.

Does anyone really believe that Google is going to be able to put a settlement together in its class action case without substantially increasing the cash it's willing to put into the deal? I'm thinking that Google needs to ante up something around $500 million. That should reduce the objections.

Why hasn't the administration nominated an IP czar, yet? Come to think of it, perhaps this is a good thing.

The last time I checked the U.S. Judiciary statistics on patent litigation, about one-half of all patent verdicts are overturned on appeal. In other words, litigants have about a 50-50 shot of obtaining a different decision from the Federal Circuit. Which raises the question, why is it taking so long to develop patent courts?

Would you want your son or daughter, after recently graduating from law school and passing the bar, to work for the PTO? Even if big law isn't hiring?

Why are there more IP stories in the news on Monday morning than on Friday afternoon? What, the law takes a holiday on Fridays?

Faulkner

William Faulkner was born on this date in 1897 in Mississippi, one year and one day after F. Scott Fitzgerald. Faulkner was part of the growing Southern literary heritage of the early Twentieth Century and his writing facility may have eclipsed his fellow Southern writers of that era, including Tennessee Williams, Robert Penn Warren, Margaret Mitchell, Sherwood Anderson, Carson McCullers, Harper Lee, John Kennedy Toole, and of course many others. Some of Faulkner's most known works include The Sound and the Fury (1929), As I Lay Dying (1930), Light in August (1932), Absalom, Absalom (1936), Requiem for a Nun (1951), The Reivers (1962), along with many other novels, novellas and short stories. Faulkner won the Nobel Prize for Literature in 1949. He passed away July 6, 1962 in Mississippi.

[This concludes major literary birthdays, at least for a while. It should not be too surprising that birthdays tend to stack up in late September, given the holiday period nine months previous. Never mind.]

Copyright Termination

Jack Kirby drew superhero cartoons for Marvel Comics. The recent article in the N.Y. Times, regarding the efforts by Kirby's heirs to terminate his prior transfer of copyright to his superhero artwork, raises an interesting question relating to the proper timing of copyright termination. Kirby drew a lot of superhero cartoons over the years, including X-Men and Fantastic Four. About the same time that Disney announced its proposed acquisition of Marvel, Kirby's heirs sent termination notices to Marvel and others seeking to terminate Kirby's prior copyright transfer of his artwork.

Kirby's heirs are not the only folks seeking to take back old copyright transfers. The granddaughter of A.A. Milne sought to do so as to a prior copyright grant but was unsuccessful. Some heirs of John Steinbeck also sought to terminate a prior copyright grant but were rebuffed. In fact, it is possible for heirs of a creator to terminate successfully prior copyright transfers. Last year, the heirs of Jerry Siegel, one of the original creators of the Superman comics, successfully terminated Siegel's prior copyright transfer to DC Comics. To terminate properly is a bit tricky and requires some mathematics and a calendar.

Section 304(c) of the Copyright Act allows termination of copyright transfers made prior to January 1, 1978, provided the copyright was in its first or renewal term as of that date, and provided further that the copyright was not created as a work for hire, or the transfer was not made by will. Subject to these limitations, any pre-1978 transfer can be terminated by an author, or by an author's statutorily defined heirs, at one or the other of the following periods of time:

1. Between the end of the 56th year through the 61st year after the copyright was secured (that is, following first publication). Or, if termination did not occur during this period, then

2. Between the end of the 75th year through the 80th year after the copyright was secured (after first publication).

In either of these cases, a statutorily required notice must be given at least two years prior to termination during one of these periods. The notice cannot be given more than ten years prior to the date of termination.

Let's see how this all works. Since today is September 24, 2009, and if the minimally required two year termination notice is given today, then the first date that a prior grant can be terminated pursuant to such notice is September 24, 2011. The oldest secured copyright that can be thus terminated under the first termination period would be for a work first published 61 years previous, in 1950. Any work first published by 1950 or later can be terminated under the first termination period, but nothing earlier.

If the first termination period is not available to terminate, then the second termination period may be. Under the second termination formula, if a statutory notice is given today for a termination on September 24, 2011, then the oldest secured copyright that can be terminated would be for a work first published 80 years ago, in 1931. Any work published after that date can be terminated under the second formula, but nothing earlier.

If an author or an author's statutory heir owns an interest in a cartoon, or other artwork, or other work first published in 1931 or later, and provided that the copyright remains valid and the prior grant was not a work for hire nor by will, then it is possible that a pre-1978 grant is terminable. But the termination is tricky and must be accomplished according to precise statutory requirements.

Hi ho silver, Lone Ranger. Up, up and away, Superman.

So we beat on

Francis Scott Key's cousin, F. Scott Fitzgerald, was born on this date in 1896. His significant novels, inspired by the Jazz Age, included This Side of Paradise (1920), The Beautiful and Damned (1922), The Great Gatsby (1925), Tender Is the Night (1934) and The Last Tycoon (published posthumously, 1942). He also authored many short stories. Fitzgerald suffered from alcoholism since his college days, and died of a massive heart attack on December 21, 1940. The opening line from his masterpiece The Great Gatsby is inscribed on his tombstone:

So we beat on, boats against the current,

Borne back ceaselessly into the past.

Oh Deceit, Thy Home Is Marketing

Two reports came out yesterday suggesting that folks forget the basic tenets taught to children -- don't lie or trick people.

First, there was the announcement about the yogurt settlement. Dannon, the maker of the Activia brand of yogurt, settled a class action claim alleging marketing misrepresentation. It agreed to refund $35 million to consumers harmed by its false advertising. The class plaintiff alleged that the commercials for Activia falsely touted the product's benefits to digestive health, falsely claiming that consuming this yogurt for two weeks would clear up what may clog you up, internally speaking. As a result of the settlement, consumers can apply for a cash refund (you need to fill in a form) and Dannon's ad agency will have to reinvent the marketing approach for this product, hopefully in line with reality.

Second, there was a settlement announcement of the class action case against Facebook. The class plaintiffs sued Facebook for tracking personal information about Facebook users through the Beacon feature. Apparently, Facebook thought that it would be a good idea to track the personal comings and goings of folks on the Internet, sometimes without consent or notice, and sometimes when Internet users were not online at Facebook. Facebook's spying device, Beacon, amassed this information for Facebook marketing purposes. When users became aware that their private Internet usage was in fact being traced, they sued. And now Facebook is throwing in the towel, terminating Beacon, and contributing $9.5 million in funding toward a new foundation to study Internet privacy. Facebook can certainly provide instruction as to what not to do.

These pesky class action cases sure have a way of spoiling a good marketing idea!

Google Book Settlement: A Procedural Suggestion

If ever there is need for a mulligan in litigation, the time is now.

The parties in the Google class action litigation have announced their intent to re-work their proposed settlement. Yet, it should be pointed out that any potential re-write may suffer from the same flaws as the present settlement arrangement. The DOJ observed last Friday that the plaintiff's class is seriously under-represented. There is no one in the plaintiff's class specifically aligned with present and future orphan work owners, with foreign rights owners or with future authors, heirs and distributors. Also, importantly, the class does not represent the interest of the U.S. government, which certainly has a role to play given its regulation in the copyright arena since 1790.

It is well that the class parties seek a re-do with the assistance of the DOJ. But there are a lot of other interest holders at stake, and the present class parties coupled with the DOJ cannot be expected to represent all competing and objecting interests. This anticipated pause in the litigation provides a good opportunity to address the lack of adequate class representation for all of the new, post-complaint issues that have been placed in the first proposed settlement and that will likely be the subject of negotiation for the re-write. Indeed, the court should insist that the parties brief the issue of adequate class representation now.

If You Don't Like the Present Google Book Settlement, Then Wait, There's More

The class action parties in the Google book settlement have thrown in the towel as far as the present settlement agreement is concerned. They recognize that the significant opposition, including some 400 filed objections to the proposed settlement, and including the important objections raised last Friday by the United States, all but doom the present iteration of the settlement arrangement. In their unopposed motion filed yesterday afternoon, the class plaintiffs suggest that the settlement will be renegotiated by the parties with the assistance of the DOJ.

Accordingly, because the parties intend to amend the Settlement Agreement and need adequate time to negotiate amendments among themselves and with the DOJ, plaintiffs respectfully request that the Court adjourn the Fairness Hearing scheduled for October 7, 2009.

When One Million Eyes Don't Count

Is the Ninth Circuit correct that one million pairs of eyes are not relevant to a claim for copyright infringement?

The Ninth Circuit basically said as much in its opinion last Friday in Art Attacks Ink, LLC v. MGA Entertainment Inc. In this appeal of a copyright defendant’s motion for judgment as a matter of law, the Ninth Circuit considered the degree by which access exists when copyrighted goods are displayed and sold at a county fair. And not just any county fair, but county fairs in Southern California with millions of people coming through the gates.

The copyright plaintiff, Art Attacks Ink, claimed that it owned the copyright to a series of "Spoiled Brats" designs. "The Spoiled Brats collection features cartoonish, predominantly female characters with oversized eyes, disproportionately large heads and feet, makeup, and bare midriffs." Id. at *13443. The Bratz doll marketed by defendant MGA contained a similar design. "In 2001, MGA began selling “Bratz” dolls, which, like Art Attacks’ designs, feature large eyes, heavy makeup, oversized eyes, heads, and feet, and bare midriffs." Id. at *13445.

The copyright claim of Art Attacks Ink turned on whether the defendant copied its Spoiled Brats design. In considering the existence of wrongful copying, the Ninth Circuit presented a fairly typical copyright analysis, addressing the proof of copying when actual copying cannot be established. To prove copying, the plaintiff can produce evidence of actual copying or, alternatively, indirect evidence of copying by proving access and similarity.

It is often stated that two works can be developed independent of one another, and neither will infringe the other unless there is copying. To establish copying without direct proof requires “access.” The plaintiff can present a case of access by proving that the defendant possessed a reasonable probability of viewing the plaintiff's work. Access can be established circumstantially by producing evidence of a chain connecting the plaintiff's work with defendant's access, or by showing that the plaintiff's work was widely distributed.

Absent direct evidence of copying, proof of infringement involves fact-based showings that the defendant had ‘access’ to the plaintiff’s work . . . .” To prove access, a plaintiff must show a reasonable possibility, not merely a bare possibility, that an alleged infringer had the chance to view the protected work. Where there is no direct evidence of access, circumstantial evidence can be used to prove access either by (1) establishing a chain of events linking the plaintiff ’s work and the defendant’s access, or (2) showing that the plaintiff ’s work has been widely disseminated.

Id. at *13448, internal citations omitted.

The Ninth Circuit in Art Attacks Ink first observed that the plaintiff was not able to establish a direct linkage between its work and the defendant's access. It then discussed the evidence of wide dissemination. Art Attacks Ink is a small, family-owned business that displayed and sold its Spoiled Brats designs primarily at numerous county fairs in Southern California.

Art Attacks sold its wares primarily from a booth at several county fairs. Because Art Attacks is a small family business, it did business at only one location at a time. Art Attacks traveled to fairs in Orange County, San Diego County, Ventura County, Riverside County, San Bernardino County, and, after 1998, Los Angeles County. Art Attacks also did business at the Camp Pendleton Exchange, a convention in the Navajo Nation, and several malls, amusement centers, and Wal-Mart stores in Arizona. Art Attacks also sold its wares at Wal-Mart stores in California, including the Santee, Chula Vista, and Poway Stores.

Id. at *13444.

The Ninth Circuit noted that one million visitors were present at the Del Amo Fair. Art Attacks Ink had a 20 x 10 booth at the fair entrance and some 75% of the fair visitors passed by its booth. Millions more passed by its booths at other fairs. "Millions of fair attendees have walked past the booth over the years." Id. at *13445.

But, says the Ninth Circuit, this was not good enough to establish wide dissemination for purposes of proving access.

Although Art Attacks did not present any evidence of how many people saw or noticed the booth, Art Attacks showed that millions of people attend the relevant county fairs. Even so, there is no evidence that significant numbers of passersby would notice the Art Attacks booth among the many other similar booths at the fair or be able to view the Spoiled Brats displays.

Id. at *13450.

Let me repeat this. There was no evidence that significant numbers of passersby would notice the plaintiff's booth, says the Ninth Circuit. Why not? If Art Attacks Ink described its Spoiled Brats design on a radio station broadcasting at the Orange County fair, or the Ventura County fair, or the Del Amo fair, or any other venue with a million pair of ears, would that not be sufficient evidence of wide dissemination?

Consider the radio industry in my home state of Oregon, for example. There are over 230 radio station transmitters broadcasting in the state of Oregon. The only metropolitan area in Oregon with more than one million people is the Portland-metro market. Of these some 230 station/transmitters, only about 33 radio transmitters serve the Portland-metro market. All the rest, about 200 transmitters, serve markets in the rest of the state – all with less than one million pairs of ears in each market. Most of these transmitters belong to commercial stations, all of which sell varying amounts of time for commercials. How do we know this? Because the stations are still in business.

Would it not be clear enough that the radio stations in Oregon, outside of the Portland market, sell sufficient ad time to stay in business, and have a sufficient audience to develop market value? Of course. If a million pair of non-captive ears, unknown and undefined, in a radio station market can support ad time revenue and radio station value, why can't a million pair of captive eyes at a county fair – albeit a “large” county fair – support wide dissemination, particularly when these very eyes are connected to feet that walk right in front of the Art Attacks Ink booth at the fair entrance? What are we missing here? Why can a million non-captive people in a radio market constitute a sufficient size to support ad sales and market value, but if these same million people walk past a booth at the front entrance of a fair then such captive numbers do not support wide dissemination and, therefore, do not support access?

Certainly the Art Attacks Ink plaintiff had other evidence of wide dissemination, including modest sales and an Internet presence. But the Ninth Circuit explained that the number of sales in question, about 2,000, were too few in number. Prior authority established that some 6,000 sales were not sufficient to prove wide dissemination. The Ninth Circuit further did not like the plaintiff's Internet evidence. It pointed out that the plaintiff's website was slow to load because it was graphically intense, taking some two minutes, and that there were several designs displayed by plaintiff on its website in addition to its Spoiled Brats designs.

I cannot quarrel too much with the evidence of sales and Internet usage. Evidence of 2,000 sales over a several year period is pretty modest. And Internet evidence, without establishing the number of hits or Internet sales, is not very persuasive. But having a booth at the front entrance to a fair with millions of captive visitors walking past the booth – now that's evidence of wide dissemination in my view.

Importantly, the issue here is access, not sales. There is a big difference. There can be plenty of access even though sales are low. People may see but may not like and may not buy. The impression remains. Access exists.

Perhaps the Ninth Circuit panel does not go to county fairs in Southern California. Whether the panel has this type of experience or not does not mean that it is appropriate for an appellate court to dismiss the value of a million captive impressions made by a booth at the entrance gate. Most of the radio stations in my state would love to have this large of a market base. Indeed, in considering the connection between a radio market and a captive fair market, if the Ninth Circuit is so dismissive of proof of access to a million fair attendees, is any plaintiff safe in assuming that radio broadcasts to a sub-million market can safely prove access?

Can the PTO Save Money?

For years, the PTO's trademark side has had the technology to permit electronic filing and to generate electronic notices -- except for notices of publication. All sorts of notices emanate electronically from the trademark side, yet every notice of publication is mailed on a postcard bearing a postage stamp. At INTA in Chicago three years ago, I raised this issue with the attendant at the PTO's booth as I was being handed a cool PTO note pad. I was told that the PTO would look into forwarding notices of publication electronically.

I did not view this matter as being too technically difficult since the PTO places an electronic entry of the notice of publication on its electronic database, and since a copy of the electronic notice can be downloaded from the database. Three years later, the PTO has now developed a mechanism allowing electronic distribution in the first instance of notice of publication. But not just yet. These e-notices won't begin until October 6th. Further, they will be sent only to users who agree to receive e-mail notification from the PTO. Yes, progress!

The PTO's announcement explains that using the new e-notification system for notices of publication will save the PTO on postage. The postage for each postcard costs 28¢. If the production cost of a postcard is, say, 5¢, then the PTO saves 33¢ for each eliminated postcard notice of publication.  If the PTO mails out, say, 500,000 postcards per year, it may save about $165,000 annually with e-notice. Over the three years since INTA was last held in Chicago, the lost savings on notices of publication amounts to almost $500,000.

Here's hoping that the PTO will find an appropriate use for this cost savings.

Herbert George Wells

Happy birthday to H.G. Wells. I try, but am not always successful, in noting significant events in literature. The birth of H.G. Wells, who along with Jules Verne became renown as the fathers of science fiction, is significant. Wells, born in Kent, England, authored well-known works that kept us awake at night or sitting on the edge of our seats, including:

• The Time Machine
• The Island of Doctor Moreau
• The Invisible Man
• The War of the Worlds
• When the Sleeper Wakes
• The First Men on the Moon

Wells passed away on August 13, 1946 in Regent's Park, London.

The DOJ Does Not Like the Google Book Settlement Agreement

The United States has weighed in on the Google book settlement. The comments came this past Friday, but not from the Copyright Office. Rather, the Department of Justice and U.S. Attorney for New York filed a statement raising considerable caution to aspects of the proposed settlement. The comments provide substantial grist for the mill in considering the impact of a privately negotiated settlement on the public, on future authors, on unrepresented rights owners, and as a replacement for the deliberative mechanics of Congress.

The U.S. does not like the book settlement for reasons internal to the function of a class action proceeding, and for external reasons relating to the anti-trust and copyright laws. In considering the class action implications, the DOJ observes that this type of settlement is different than the typical class action settlement that seeks to settle historical claims defined in the plaintiff's complaint. By contrast, the primary thrust of the Google settlement relates to future conduct, future claims and future authors. Indeed, the effect of the settlement on future authors and publishers is significant.

The DOJ further notes that none of the class representatives come from key, discrete sub-classes that are impacted by the settlement: authors and owners of orphan works and foreign rights owners. Indeed, the DOJ points out that the settlement creates a conflict in treatment between non-orphan works and orphan works, not only in terms of the obligation to opt out in the future but also in terms of royalty distribution. As to foreign rights owners, not only is this entire subclass not represented in the class plaintiffs, but settlement treatment of foreign works may be in conflict with U.S. treaty obligations and with internal laws of foreign states.

The DOJ's comments relating to the effect on foreign rights owners mirrors much of the criticism filed by foreign governments (primarily France and Germany) and foreign rights owners (several foreign publishers have filed objections). Here, the DOJ points out that the significant impact on foreign rights owners, coupled with the absence of any foreign representation in the representative class, requires a robust notice to foreign rights owners together with a longer opt out period. To underscore this point, some foreign comments criticize the lack of foreign language translation of both the notice and the settlement agreement, implicating the effectiveness of the present notice.

The DOJ observes that the settlement flips traditional copyright concepts into an opt out regime for both present and future rights owners, a concept at odds with traditional exclusive rights principles under copyright law. The Register of Copyright has already observed in a statement to Congress that the "infringe first and ask questions later" structure of the settlement is at odds with 220 years of U.S. copyright legal history.

Finally, the DOJ addresses the antitrust thrust of the settlement. On this score, the DOJ points out that it is still examining the antitrust issues and no final decisions have yet been made. But at present it offers the following observations:

1. The settlement appears to violate the Sherman Act by constituting an agreement between the private parties as to wholesale distribution terms of present and future copyright work.

2. The settlement appears to restrict retail price competition, including the existence of an apparent floor below which retail price competition may not exist.

3. The settlement appears to give publishers the ability to control the future price of orphan works, including the pricing knowledge of a competitive product.

The DOJ points out repeatedly that the parties to the settlement agreement appear willing to re-open negotiations over key terms, and the DOJ expresses its willingness to participate so as to provide a public voice in addressing these numerous troubling issues. In its present form, the DOJ advocates rejection of the settlement agreement, coupled with efforts to recraft a regimen that may become the legal foundation for all digital rights distribution.

Cropping Photos - Cropping Truth: The Lack of Moral Rights Under U.S. Copyright Law

David Hume Kennerly, the White House photographer for President Ford, is upset, perhaps rightfully so, at the crop job by Newsweek to one of his photos. His article in the N.Y. Times, expressing frustration at misleading photo cropping, is here.

Kennerly submitted a photo of Vice President Cheney and his family in their kitchen, with the VP carving the family dinner. The magazine aggressively cropped the photo so as to show only the VP cutting up something bloody with a long knife. The cropped photo was used in an article criticizing the VP's stance on secret, aggressive CIA interrogation. Certainly worse, the magazine gave attribution to Kennerly for the cropped photo.

Kennerly's essay in today's N.Y. Times criticizes this type of gotcha journalism in that the cropping is misleading: it mischaracterizes the true meaning of the photo and the true circumstances depicted in the photo. But Kennerly's unstated point is broader and relates to the lack of practical "moral rights" present in U.S. copyright law.

Sect. 106A of the Copyright Act provides certain basic and very limited "moral rights" to an author of a work of visual art. A photograph can qualify as a work of visual art provided the photo is produced "for exhibition purposes only," in a single copy, or in a limited edition of 200 or fewer copies that are signed and consecutively numbered.

Kennerly's photo does not qualify as a work of visual art under the narrow statutory definition. Even if it did, Kennerly's "moral rights" would be exceedingly limited, including the right of attribution, the right not to have his name associated with his work in the event the work is distorted, mutilated or modified, and the right to prevent mutilation or distortion of the work in certain instances.

Kennerly's complaint, moreover, does not qualify for infringement purposes, likely for the same reason that Acuff-Rose Music lost its case against Two Live Crew. Accuff-Rose Music claimed that the taking of a portion of its copyrighted song "Pretty Woman" by Two Live Crew, who then produced a separate work strongly critical of the content and themes of "Pretty Woman," constituted copyright infringement. But the Supreme Court held that there was no infringement because the taking of a portion of the music resulted in fair use. In a similar manner, it is likely that the taking of a portion of Kennerly's family-friendly photo of Cheney, cropped to show only the VP cutting up something bloody, and then matching the cropped image to a statement attributed to Cheney about CIA interrogations, may be fair use for copyright purposes. But it certainly may not be fair for moral purposes.

The definition of "work of visual art" under U.S. copyright law is so limited that an author of a news photograph, not taken for purely exhibition purposes, cannot obtain any legal traction to prevent mutilation of the photo and, thereby, prevent mischaracterization of the work. It is unclear why the definition cannot be expanded to include all photos, including those taken for news purposes and not solely for exhibition purposes. If the definition were so broadened, then at least Kennerly could prevent his name from being associated with the mutilated photo. The misleading meaning of the cropped image would then not be attributed to him. This would be important to Kennerly, of course. And dropping Kennerly's name might perhaps cause Newsweek to rethink its cropping so as not to suffer the loss of Kennerly's authority and prestige. Bottom line, news photos should not be cropped if to do so becomes misleading.

The Blonde at The Bitter End

She was the blonde for a generation. She was part of “Two Beards and a Blonde” – Peter, Paul and Mary. They got their start at The Bitter End in Greenwich Village in 1961. Now, the blonde is gone. Mary Travers passed away yesterday.

Some of Mary’s hits with Peter, Paul and Mary:

Lemon Tree
If I Had a Hammer
Leaving On a Jet Plane
Puff, the Magic Dragon
Blowin' in the Wind
500 Miles
Where Have All the Flowers Gone
Day Is Done
Don’t Think Twice, It’s All Right
I Dig Rock and Roll Music
Too Much of Nothing

Open-Access Publishing

The publishing business is certainly changing. The advent of new portable reading devices, such as the Amazon Kindle, permits convenient downloading of books. But perhaps the distribution of knowledge is experiencing its greatest makeover on college campuses. It is no surprise that the economy has produced multiple financial challenges to colleges, placing enhanced pressure on their budgets. But while college budgets are restricted, the cost of acquiring professional academic journals has been increasing.

College instructors who work in a publish or perish environment, or who require access to academic and scientific literature for research purposes, face a hardship when their university is unable to pay the cost of all requested academic journals. One solution that has been discussed generally in the recent past relates to open-access publication of academic and scientific literature. One website provides a link to open-access journals in the field of education. The site is here. There are other open-access sources.

Last week, Harvard faculty voted to allow free open-access distribution of their scholarly work. Indeed, Harvard, Dartmouth, Cornell, MIT and UC Berkeley are participating in a program to make scholarly articles of their faculty freely available through open-access publishing.

There has been discussion of open-access for a while. The Budapest Open Access Initiative, the Bethesda Statement on Open-Access Publishing, and the Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities, have expressed principles for distribution of scientific and academic thought free from the constraints of copyright and publishing agreements.

Government now sees the value of open-access. The National Institute of Health requires peer-reviewed journal manuscripts funded through NIH grants to be submitted for public access distribution through a digital archive. Indeed, the recently introduced Senate bill S. 1373 requires government agencies to develop public access policies -- peer-reviewed papers developed from publically funded research are to be compiled into a publically available database.

Authors of academic literature have long quarreled with copyright's restrictions on free distribution of scientific literature. Some authors argue that they are pleased to allow free distribution of their academic writings, pointing out that it is the distributors and publishers of academic journals who restrict free distribution of important thought. A discussion of these views is contained in Princeton University Press v. Michigan Document Services, Inc. As pointed out by the dissent in Princeton, "The fair use doctrine, which requires unlimited public access to published works in educational settings, is one of the essential checks on the otherwise exclusive property rights given to copyright holders under the Copyright Act." Id. This was the losing view, of course, as the decision did not permit free copying of copyrighted academic writing.

The enhanced development of an open-access initiative, structured by free distribution mechanics under development by these renown universities, perhaps suggests a new future for all of publishing. Certainly the focus of open-access to date is on free distribution of academic and scientific thought filtered by peer-review. While development of this process is influenced by the presently tight publication budgets of college campuses, this new form of distribution may serve as a model for other forms of book distribution not tied to the academic or to government funding.

There is no good reason why Internet-based free distribution can't be developed for authors who seek a voice and a public presence unrestricted by the cost and restrictions of paper publication. It will certainly be interesting to see how the ongoing scholarly open-access movement might develop enhanced distribution options for all forms of text-based thought. Perhaps the copyright pendulum will swing back a bit from the side of distributors and publishers toward the side of authors.

Foreign Trademark Searching

How should trademarks be searched?

Is it sufficient for a U.S.-based user of a newly developed trademark to search solely in the U.S.? Certainly a search of PTO records is important to determine if an existing application or registration for the same or similar mark is of record. Conducting a search of other U.S.-based sources is also common. But is this enough? Many people, both lawyers and clients, may believe so, but here are two reasons why limiting a trademark search solely to U.S.-based sources, or to U.S.-based users, may not be sufficient.

First, Section 44 of the Lanham Act permits a trademark filing to be made in the U.S. by a foreign applicant within six months of the foreign filing, and to thereby be deemed filed in the U.S. as of the same date as filed in the foreign state.

44 (d) Right of priority.—An application for registration of a mark under sections 1, 3, 4, or 23 of this Act or under subsection (e) of this section filed by a person described in subsection (b) of this section who has previously duly filed an application for registration of the same mark in one of the countries described in subsection (b) shall be accorded the same force and effect as would be accorded to the same application if filed in the United States on the same date on which the application was first filed in such foreign country: Provided, that—  

(1) the application in the United States is filed within six months from the date on which the application was first filed in the foreign country.

Under Section 44 (e), if the foreign application matures into a foreign registration, then the timely filed 44(d) U.S. application can be registered in the U.S. with the same priority as the foreign registration. This is the case even if the foreign registrant does not use the mark in the U.S. at the time of the U.S. filing or the U.S. registration. Sect. 44 (e) only requires that the foreign registrant declare its bona fide intent to use the mark in the U.S., "but use in commerce shall not be required prior to registration [in the U.S.]." Id.

As such, if the foreign trademark owner is not using its trademark in the U.S., what is there to search, particularly if the seach is limited solely to U.S. users? Limiting the search to U.S.-based search sources may produce a false sense of security.

Second, the existence of a foreign trademark, even a mark whose owner never intends to establish physical use within the U.S., can create problems for a U.S. user seeking to register the same or similar mark in the U.S. This problem is illustrated in the case of First Niagara Ins. Brokers, Inc. v. First Niagara Financial Group, Inc. (Fed. Cir. 2007). First Niagara Ins. Brokers is an insurance broker operating solely in Canada. It it not licensed or authorized to engage in insurance brokerage service in the U.S. It has no physical presence in the U.S. The Canadian firm employs unregistered marks in Canada featuring the words First Niagara. A similarly named firm, First Niagara Financial Group, provides financial services, including insurance brokerage services, in New York State and is not authorized to engage in business, and has no physical presence, in Canada. The N.Y. firm filed several Intent to Use applications with the PTO featuring the words First Niagara for financial services. The Canadian firm filed oppositions, arguing that the N.Y. firm's marks would likely cause confusion with the Canadian firm's unregistered First Niagara marks. The N.Y. firm argued that the Canadian firm's lack of use of its marks in the U.S. would not permit the Canadian firm to establish priority in the U.S. because the Canadian firm was not using the mark in commerce in the U.S. The TTAB ruled that the Canadian firm did not have standing to oppose since it was not using its First Niagara marks in commerce in the U.S.

The Federal Circuit disagreed with the TTAB and held that the type of use made of the unregistered First Niagara marks by the Canadian firm was sufficient to support an opposition even though it would not be sufficient use in commerce in the U.S. to permit U.S. registration by the Canadian firm. The Federal Circuit held that an opposer has standing to oppose if it uses its mark in the U.S., even though the use does not qualify as "use in commerce." In examining the type of use in the U.S. made by the Canadian firm, the court explained that the Canadian insurance brokerage:

• procures insurance for Canadians who travel into the U.S.,
• handles U.S.-based insurance claims of its Canadian customers,
• procures commercial liability policies for Canadian business regarding their U.S. operations,
• issues policy riders insuring goods shipped by Canadian customers into the U.S.,
• procures coverage for the Niagara Falls Bridge Commission that operates the bridge between the U.S. and Canada at Niagara Falls, and
• distributes advertising in Canada that features its unregistered First Niagara marks, and some of this advertising spills over into the U.S., among other uses.

Note the modest, attenuated use in the U.S. of the unregistered First Niagara marks by the Canadian firm. This tepid use by a foreign trademark owner is nevertheless sufficient to allow standing in a PTO opposition proceeding. Could a U.S.-based search have discovered this nominal use by the Canadian firm touching the U.S.? Likely not, since this use is generated within Canada.

The foregoing suggests that limiting a trademark search to the U.S. is not sufficient to adequately discover trademark danger from foreign users. Foreign entities have an ability to obtain priority over, or oppose, a newly developed U.S. mark. Indeed, the First Niagara opinion by the Federal Circuit appears so broad as to give opposition standing to a wide range of foreign-based mark users, including renown foreign bespoke tailors, renown foreign specialty retailers, and other foreign mark users who are known to U.S. travelers or who sell goods to U.S. tourists on a frequent basis. The list is endless. As is the risk that a foreign mark user, with insufficient usage in the U.S. to support registration in the U.S., can block the registration in the U.S. of a bona fide and meaningful U.S.-based user.

Foreign trademark searching is important. Just do it.

Ask Not What Copyright Can Do For You

The police in Sussex are fit to be tied. Sussex is a village outside of central London. Apparently, some local UK citizens have seen fit to publish on the Internet speeding photos taken from Sussex police speed cameras. The link is here. You know how these cameras work. The camera has an autofocus lens (or a fixed lens with a large depth of field) and is coupled with a radar-type device. If a car goes through the radar scan in excess of a set speed, a signal is sent to the trigger to snap the photo from the fix-mounted camera. Apparently, some of these photos have made their way onto Internet sites, and the Sussex constables are beside themselves. In order to regain control, the police are bringing a copyright claim. Sussex asserts a copyright in the photos.

Several years ago I was taking a tour of Kensington Palace, the home of Prince Charles and other sorts of upper crust. While on tour, I attempted to take a photo out the window from one of the palace rooms of a scene overlooking the palace's south gate. The attendant told me that taking a photo out the window was not permitted because, as explained, "the government owns the copyright of the view out the window."

I get a chuckle every time I think about the Kensington Palace visit. The idea that every image is protectable by copyright is just plain wrong. Neither a view out the window nor all photographs are copyrightable. Certainly, this is the rule in the United States. This rule follows from several basic principles of copyright law.

First, creativity is the sine qua non of copyright. The Supreme Court's decision in Feist Publications v. Rural Telephone Service instructs that the Constitution mandates the presence of minimal creativity in order for copyright to exist in a work. If no creativity, then no copyright.

Second, copyright has always required that a human exercise creative judgment in the creation of a work. As expressed in 1903 by Justice Oliver Wendall Holmes in the case of Bleistein v. Donaldson Lithographing Co., art is the "personal reaction of an individual upon nature." Indeed, the copyright law passed by the first Congress in 1790 provided that an author of a copyrightable work must be a citizen or resident of the United States. It is notable that many of the patriots who negotiated the provisions of the Constitution sat in that first Congress, and courts give respect to the laws of that first Congress as indicating the intent of the framers. The concept that a human force must create a copyrightable work has been imbued in the context of the U.S. copyright law to this day.

With the foregoing in mind, can it be said that a human exercises a minimal degree of creativity by pointing a camera to a space, flipping the On switch, then walking away -- particularly when everything that the camera does from that point on is rigidly controlled by mechanical or optical function? Who/what is exercising creative judgment; man or machine? Who/what is applying a personal reaction; the speed camera or the person who flips the switch? The lens focuses automatically or is fixed with a large depth of field. No film exists, as the image is saved digitally. The shutter speed is often fixed. The lens and light-sensitive computer chip can record images in all occasion of light and weather conditions. Where is the human creativity? There is none.

The Sussex incident raises a profound question as to how much control a human must exercise over a machine so as to create a copyrightable work. Certainly humans employ machines and other tools to assist the creation of copyrightable work. In doing so, the human maintains control by exercising judgment. As suggested by Justice O'Connell in Feist, it may not be possible to determine the degree of copyrightable creativity present in any particular work, but it can be determined when none exists. The Feist court dealt with an alphbetical arrangement of phone listings in a phone book. Justice O'Connell pointed out that, nothwithstanding the considerable degree of human labor required to compile the phone listings, the point is that the listings were arranged in the only logical manner permitted to accomplish the purpose of the phone book -- in alphabetical order by name of the phone subscriber. If there is no other logical way to present the listings in a phone book, then there is no creativity in presenting the listings in the only logical manner appropriate for the function of the phone book. The same is true for a speed camera. There is only one way to take a photo of a speeding car. The radar records the speed and if it exceeds a predetermined number then the trigger causes the camera to take a set photo. The lens must be set at a large enough angle to obtain all necessary information about the car and driver. The computer chip must be fast enough to record in all light conditions. There is no other way to do it so as to accomplish the purpose or function of the speed camera device.

The Sussex police may have a complaint, but it is not copyright based. Perhaps they could attempt to determine how the images escaped their grasp to begin with.

Elizabeth and Robert

Today in 1846, Elizabeth Barrett and Robert Browning, both renown poets from the Victorian Age, were wed.

From Sonnets from the Portuguese:

How do I love thee? Let me count the ways.
I love thee to the depth and breadth and height
My soul can reach, when feeling out of sight
For the ends of Being and ideal Grace.
I love thee to the level of everyday's
Most quiet need, by sun and candlelight.
I love thee freely, as men strive for Right;
I love thee purely, as they turn from Praise.
I love thee with the passion put to use
In my old griefs, and with my childhood's faith.
I love thee with a love I seemed to lose
With my lost saints,—I love thee with the breath,
Smiles, tears, of all my life!—and, if God choose,
I shall but love thee better after death.

"Infringe First and Ask Questions Later"

The Copyright Office has finally been heard from in relation to the proposed Google class action book settlement. All sorts of amici and other interested persons have commented on the good and bad of the proposed settlement except for the Copyright Office -- until now. As reported in the New York Times, the register of copyrights, Marybeth Peters, told the House Judiciary Committee that she really, really does not like the proposed Google settlement deal.

The register pointed out several flaws that she observes in the proposed settlement. First, in granting what appears closely aligned with a compulsory license, the proposed settlement usurps the authority of government to establish principles that regulate the use of copyright. Congressional debate and oversight are thereby ignored in this process. Second, the proposed settlement is structured to appear to give Google the ability to 'infringe first and ask questions later." Third, the proposed settlement would place stress on U.S. diplomacy in that the settlement would impact foreign rights owners for whom the U.S. holds treaty obligations.

The Department of Justice's Antitrust Division continues to investigate the underlying antitrust implications flowing from this proposed settlement and has not yet filed a report of its position with the court.

There are certainly all sorts of policy issues that are affected by, and flow from, the proposed settlement that are distinct from the legal issues pending in the class action. Given the weight and preeminence of these overriding public policy questions, is the N.Y. federal court the best place for resolution of these class action issues?

IX.XI.MMI

Remembering.

I was in Windows on the World a few months prior to September 11. I was in New York in May 2001 on business and had concluded my meetings one day by early afternoon. Somehow I was able to catch an unoccupied cab and, with no apparent goal in mind, somehow ended up heading to the south of Manhattan. The cab dropped me at the lower level entrance to the North Tower of the World Trade Center. I saw the line waiting for the express elevator to the top floor. The attendant explained that it was too windy that day to allow visitors onto the roof. I remember the attendant. I bought a ticket and took the longest direct elevator trip that I had ever been on up to the top floor. I remember the ticket salesperson and the elevator operator. Windows on the World occupied the 106th and 107th floors of the North Tower.

I got off at the top floor and walked through the darkened dining room and into the bar area. The lounge occupied a large, open area that was quite bright. The sky was overcast that afternoon but the many windows allowed considerable natural light to flood the room during mid-day. The bar serving area covered one side of the lounge. I remember the bartender. The opposite side of the lounge had a band stand with a drum set, microphones and other gear set up and ready. The band stand was made of black wood, and in front of the band stand was an oak colored, woodened dance floor.

There were not many people in the lounge at that time of the afternoon, it being too early for happy hour and the financial markets not having closed. I remember the waitress who took my drink order. I remember the few people sitting at the bar and at side tables. I carried my drink around the room, looking out the windows. I walked over to the southeast side of the floor and saw the South Tower so close that I could almost reach out and touch it. I had never seen the horizon before from that high up, except in a plane. I looked directly down and, from that height, could not see the too small people at street level. I got a bit of acrophobia and quickly moved away from the windows. I walked over to the south side of the floor and, looking out the window from a few feet distant, saw the Statute of Liberty and Staten Island. The boats in the harbor were miniature toys.

Sometime after I returned to Portland from that trip, I attended a dinner function in Portland sponsored by the University of Oregon. I ran into a good friend from law school days whom I had not seen for some time. I asked him where he was on September 11. He explained that his office at that time was in the Pentagon and that he was supposed to be at his desk that morning. However, he and his wife had returned to Washington late the prior evening from an extended trip to Europe. As such, he got up later than normal. He saw the smoke from the Pentagon attack from the front of his home.

Of course, the attacks on the Twin Towers and the Pentagon were not the first sneak attacks by an enemy on U.S. soil.

In the late 1990s, I was in Honolulu and took a tour of the Arizona Memorial. The tour was offered by the National Park Service and included a land-based news reel and audio presentation of the 1941 Japanese attack on Pearl Harbor. The tour also included a boat ride across the harbor and out to the Arizona Memorial, were you could see the bubbles of oil still floating to the surface from the sunken ship, with the dead seamen remaining at rest in the metal wreckage below the water line. An older member of this tour became emotional and asked the park attendant how the country can avoid a similar incident in the future. I recall him asking "What can we do so that this never happens again?" The green uniformed park official, wearing his Smokey the Bear hat, must have received similar inquires during the course of his duty, and responded that the government had much more sophisticated radar equipment to prevent another surprise attack from occurring. The emotional tour member, and all the rest of us, were comforted by the response.

We now know that the attack on December 7th and on September 11th did not occur due to the lack of radar or other forms of intelligence. Lower level information gatherers had access to revealing data prior to each of these attacks. Higher level intelligence analyzers, however, failed to connect the dots.

McDonald's Doesn't Wear Tartans

News Flash: McDonald's Corporation of Oak Brook, Illinois loses trademark fight to prevent use of "McCurry" by Kuala Lampur restaurant. Link to news story here.

Ode to Macqueen
By MacRatoza

Wind swept past the Firth of Froth that brought
The clans at dusk; nay come for naught
But fun and joy amid the families; and with some food
And ale with light heart doeth set the mood.

Knoweth:

There was MacAlister, MacAuley, MacBrain and Macbrayne,
The MacDonalds from Clanranald to Keppoch a' b'twain,
MacDougall, Macdowall, MacDuff and MacEwen,
And Macfarlane and family arrive at near noo’n.

Comes Macfie, Macgillivray, MacInnes, and MacIntyre,
MacIver, Mackay, Mackenzie, and Mackie,
Mackinnon, Mackintosh, Maclachlan, Maclaren
MacLea, Maclean, MacLellan and MacMillan.

But don't be so fast, for he does hold his part,
As comes Ol' Macnab a-driving the whobbly ale cart.
Diddly dum Macqueen, diddly dee to thee,
I’m stung in the knee by a middling bumble mc-bee.

Past Macnaghten, MacNeil, Macpherson, Macquarrie,
Soon comes Macrae, MacTavish, MacThomas and Makgill-rie.
Seeking the spirits and toast from our Jason Macqueen
As he sets ne'r his long-legged ale making machine.

The best from Macqueen a'nigh fore the start,
Along with his ale comes Macqueen's bar-b-que cart.
Macqueen's burgers are rare, his burgers are nigh well,
His burgers are eaten up river and down the low dell.

His ale and his meal hath Macqueen a well-do jolly
As other clan members seek to out-nix his wit folly,
In making his burgers upon his name-sake,
Without so much as a trademark, nay go on, f'christsake!

But don't be so fast, for he does hold his part,
Comes Ol' Macqueen driving the whobbly ale cart.
Diddly dum Macqueen, diddly dee to thee,
I’m stung in the knee by a middling bumble mc-bee.

Fraud in the Eye of the Beholder

"Fraud is the ready minister of injustice." Edmund Burke

Judge Michel's opinion last week in the Federal Circuit case of In re Bose resets the cornerstone for cancellation of a trademark registration based upon fraud. Sect. 14 of the Lanham Act (15 U.S.C. Sect. 1064) provides that a registered trademark can be cancelled in certain instances, including if the registration is the result of fraud. Since 2003, the Trademark Trial and Appeal Board has been actively cancelling trademark registrations based upon a broad definition of fraud. The TTAB's 2003 opinion in Medinol v. Neuro Vasx, Inc. defined fraud to include both knowing mistatements in PTO filings based upon an intent to deceive, plus mistatements in which the falsity "should have been" known.

As a result of the TTAB's "knowing or should have known" fraud standard, all sorts of trademarks have been denied registration. Two illustrations may suffice. Last December, the TTAB cancelled the foreign registration for MONTELVINI VENEGAZZU because the Italian registrant mistated in its Sects. 8/15 filing that its mark was in use on all listed goods when, in fact, it was not. It appears from the facts of that case that the registrant (an Italian farmer) was not aware of the PTO filing standards and that, at most, the registrant's mistatement relating to the use of its mark was reckless without an intent to deceive. In my August 26th post, I wrote about a recent TTAB cancellation in the case of Honda v. Wilkelmann, in which it appears from the facts that the registrant's mistatement of intent to use its mark on all listed goods was beyond reckless, and intentional.

The Federal Circuit explained it decision last week in Bose in a straightforward manner, relying on a standard definition for fraud requiring scienter: knowledge or intent.

We have previously stated that “[m]ere negligence is not sufficient to infer fraud or dishonesty.” Symbol Techs., Inc. v. Opticon, Inc., 935 F.2d 1569, 1582 (Fed. Cir. 1991). We even held that “a finding that particular conduct amounts to ‘gross negligence’ does not of itself justify an inference of intent to deceive.” Kingsdown Med. Consultants, Ltd. v. Hollister Inc., 863 F.2d 867, 876 (Fed. Cir. 1988) (en banc). The principle that the standard for finding intent to deceive is stricter than the standard for negligence or gross negligence, even though announced in patent inequitable conduct cases, applies with equal force to trademark fraud cases. After all, an allegation of fraud in a trademark case, as in any other case, should not be taken lightly. San Juan Prods., 849 F.2d at 474 (quoting Anheuser-Busch, Inc. v. Bavarian Brewing Co., 264 F.2d 88, 92 (6th Cir. 1959)). Thus, we hold that a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO.

In re Bose, at p. 6-7.

In the Bose case, the registrant's general counsel and corporate officer, Mark E. Sullivan, signed a joint Sects. 8/9 renewal filing declaring that Bose's mark WAVE was in use on all goods, when in truth this was not the case. The Federal Circuit reversed the TTAB's decision to cancel Bose's WAVE registration for all goods and remanded the case to the TTAB to restrict the registration to goods for which the mark is in use.

It is difficult to quarrel with the fairness of the restated fraud definition applied in the Bose opinion. It is unfair to cancel a registration when the registrant's mistatement was based on mere error, as with the Montelvini Venegazzu mark. The degree of fault by the farmer-registrant in the Montelvini Venegazzu case is much less than appears to exist in the Honda v. Wilkelmann case. But it seems that the Bose decision lies between these two extremes. A finding that the false declaration of a corporate general counsel and assistant corporate secretary, trained in the law and guided by experience, is a far cry from the type of innocent mistatement made by an Italian farmer. If a registrant is permitted to rely on false legal analysis provided by counsel, thereby benefitting from an innocent mistatement defense, then the number of false filings that directly lead to trademark registration is certain to increase. And since the fraud standard is now based on an intention to deceive, keeping a blind eye to the law allows a registrant to practice deceipt while arguing that the fraud standard has not been met.

It is difficult for the average trademark applicant to fight over a registration when the mark appears not in use on all described goods. The lack of challenge over a non-use registration supports a registration in gross and reduces the number of available marks to good faith users. If the answer does not lie in a broadened definition of fraud, as reasoned by the Federal Circuit, then perhaps the PTO must examine the level of detail required in trademark application filings under Sects. 1(a) and 1(b), in Section 44 filings, maintenance filings under Sects. 8, 9 and 15, and Madrid filings. Perhaps the PTO must require more detail in the statement of use and in the statement of bona fide intent to use in the future. Perhaps the PTO must require that specimens for all listed goods must be submitted, rather than submitting only one specimen for any one of multiple goods in one class, as in now the standard.

Perhaps, further, applicants and registrants must be mindful of what is achieved by making a false statement, deliberate or not, in a PTO filing. Any resulting registration may come at high risk. That is, if a mark is to be licensed or assigned, the applicant or registrant of the mark may be required as part of the license or assignment transaction to provide warranties of title, use, registrability and noninfringement. If the mark owner is a public reporting entity covered by the Sarbannes-Oxley Act, it may be required to provide a heightened level of investigative due diligence and reporting detail to its equity owners, acquirers or other parties relating to its trademarks.

While the PTO's lower statement of use standard may suffice presently for registration purposes, the heightened standard of a contract warranty or in SOX may require an applicant or registrant to re-examine its entire registration basis, including all filings and supporting documentation.

"Rather fail with honor than success by fraud." Sophicles

More About Google's Book Settlement

The opt out period is over. If you are in, you're in. If out, you're out.
The European publishers don't like the Google settlement and want out.
Books users are complaining over the lack of privacy and that Google is not prevented from recording user's book preferences.
Some people think that the settlement is good in that it will allow enhanced access and distribution of hard to find titles and of orphan works.
Some people believe that the settlement will result in a monopoly position for Google over many old and orphan works.
Many people do not like a settlement that does not require that Google obtain consent to distribute in the first instance.
In the meantime, the Justice Department is investigating all of this under an antitrust microscope. No idea, yet, what it has found or what it is thinking.
The Copyright Office has not been heard from. Perhaps it has no idea what to do?
The Congress is trying to figure out whether a co-pay is a good thing or a bad thing. Who knows?
In the meantime, the SOLE decision to approve or reject the settlement rests with one person -- a federal judge who is not an expert in publishing or book distribution, not particularly renown for copyright, and not elected for this position.
Is this any way to run a publishing business? Is this any way to design copyright law? Is anyone in control around here?

Pres. Cleveland's Labors

A tip of the hat to Pres. Grover Cleveland for pushing through legislation making Labor Day a national holiday. September's honor of labor sets off the U.S. from most other countries. Canada honors labor on the first Monday in September, as well. Indeed, Pres. Cleveland's legislation was modeled in large part on the then-existing labor holiday in Canada. In many other countries, May Day is the International Workers' Day.

Oh, Babe

Babe Ruth owns today. On this date in 1914, the Bambino threw a 9-0 shutout AND hit his first pro home run, playing for the AAA Providence Grays against the Toronto Maple Leafs at Lake Ontario's Toronto Islands. Four years later, Ruth was the winning pitcher in the first World Series game of 1918. Ruth's Boston Red Sox team beat the Chicago Cubs in a game played at Cominsky Park (due to Cominsky's larger seating capacity over Wrigley Field). The Red Sox went on to win the series from the Cubs, four games to two. This would be the last World Series victory for the Red Sox for 86 years until 2004 due to the Curse of the Bambino, attributed to the trade of the Babe in 1919 to the Yankees. And the Cubs? They have not won a World  Series in over 100 years (the last was in 1908).

To Be Both a Judge and a Literary Critic

Many people have heard about the attempted publication in the U.S. of a follow-up to J.D. Salinger's The Catcher in the Rye. Salinger's hermit-like refusal to discuss his renown work, and to license the work to others for derivative use, is well known. The work from foreign writer Fredrik Colting, entitled 60 Years Later: Coming Through the Rye is the subject of litigation brought by Salinger seeking an injunction against publication in the U.S. of a work that Salinger claims takes too much from his copyrighted masterpiece. The trial court in New York found that Colting's book wrongfully copies from Salinger's book and granted an injunction prohibiting publication in the U.S. The case is presently on appeal to the Second Circuit.

[Note that Colting does not characterize his work as a sequel to Salinger's work.  Rather Colting argues that his work is not a sequel but a transformative work of literary criticism, thereby subject to the fair use defense.]

The forgoing is by way of background. The oral argument before the Second Circuit was held this week. Judge Guido Calabresi, a long serving member of the Second Circuit, sat on the appellate panel. There has been wide spread reporting of an interesting comment made by Judge Calabresi during oral argument. It is reported that he questioned whether Colting's work is good enough to harm Salinger, describing the Colting work as "a rather dismal piece of work if I may say so."

Judge Calabrisi's comment on the quality of Colting's work produced a chuckle, and raises the question whether a poor copy of a highly regarded literary work can be so poorly written that there is no liability for copying. Can Salinger's pedestal be so high that any minor work, including a dismal work, cannot create copyright harm? On this issue, the caution of Oliver Wendell Holmes on a jurist's artistic talent is worth noting. In Bleistein v. Donaldson Lithographing Co., 188 U.S. 239 (1903), Justice Holmes wrote on the question of whether a common circus advertisement was protectable under copyright as art. Justice Harlan believed that a common advertisment design is not "useful art" (as authorized under Art. I, sect. 8, cl. 8 of the U.S. Const.) and is not copyrightable. Holmes observed:

It would be a dangerous undertaking for persons trained only to the law to constitute themselves final judges of the worth of pictorial illustrations, outside of the narrowest and most obvious limits. At the one extreme some works of genius would be sure to miss appreciation. Their very novelty would make them repulsive until the public had learned the new language in which their author spoke. It may be more than doubted, for instance, whether the etchings of Goya or the paintings of Manet would have been sure of protection when seen for the first time. At the other end, copyright would be denied to pictures which appealed to a public less educated than the judge.

Certainly the copyright issue relating to Colting's work does not turn on Calabresi's literary likings, whether dismal or robust. An artistic copy, notwithstanding the literary merit, can still infringe. This issue, as taught by Justice Souter and as learned by 2 Live Crew, is whether Colting took too much of the creative, protectable elements of The Catcher in the Rye and whether the portion used is appropriately transformative. The issue is not whether Colting's work is good enough to be placed next to the pillar of Salinger.

Sen. Wyden Responds to Broadcast Radio Performance Right Royalty Issue

My blog post of August 7th deals with the ongoing Congressional proposal to require over-the-air radio stations to pay a performance rights royalty for broadcast music. A copy of that blog post was forwarded to Sen. Wyden, and his response follows:

Dear Mr. Ratoza:

Thank you for contacting me about the Performance Rights Act. I appreciate hearing from you on this important issue and apologize for the delay in my response.

As you know, the Performance Rights Act has been introduced in both the House of Representatives and Senate, as H.R. 848 and S. 379 respectively. The bill has recently passed the House Committee on the Judiciary and awaits further action by the Senate Committee on the Judiciary. This legislation amends federal copyright law to grant performers of sound recording equal rights to compensation from terrestrial broadcasters.

I share your concerns about the sustainability of the broadcasting industry. I have worked for years to ensure that there is a level playing field for all mediums of audio transmission, both traditional and new technologies. Unless this is accomplished, I remain hesitant to support a fee on broadcasters that could jeopardize the viability of radio stations. Should this legislation come up for a full vote in the Senate, I will certainly keep your views in mind.

Again, thank you for keeping me apprised of issues that are important to you. If I may be of further service, please do not hesitate to contact me.

Sincerely,

Ron Wyden
United States Senator

Green Green

Green Green is the title of a big 1960's hit for The New Christy Minstrels, but the words represent an overwhelming theme for new business in the 21st Century. Consumers are exposed to all sort of green products, from environmentally safe detergents to environmental sensitive buildings. How does the consumer know that a particularly represented "green" product is, in fact, environmentally friendly. Exactly, how green is green?

Enter the Federal Trade Commission. The FTC has published its Guides for the Use of Environmental Marketing Claims. These Green Guides provide safe harbours for marketers who seek confidence that their green marketing claims will not create liability for misrepresentation relating to certain environmental claims.

Sect. 260.5 of the Green Guides makes clear the scope of the FTC's concern relating to deceptive advertising:

In addition, any party making an express or implied claim that presents an objective assertion about the environmental attribute of a product, package or service must, at the time the claim is made, possess and rely upon a reasonable basis substantiating the claim. A reasonable basis consists of competent and reliable evidence. In the context of environmental marketing claims, such substantiation will often require competent and reliable scientific evidence, defined as tests, analyses, research, studies or other evidence based on the expertise of professionals in the relevant area, conducted and evaluated in an objective manner by persons qualified to do so, using procedures generally accepted in the profession to yield accurate and reliable results.

In other words, a marketer must have an objective basis to believe that its representations of green qualities for its goods or services are accurate.

Sect. 260.6 sets out basic guidance for marketers relating to environmental claims for goods or services. If there are qualifications or disclosures, then these must be clear and understandable. If a representation is made, then it must be clear whether the representation applies to the packaging of a product, the product itself or an offered service.

Sect. 260.7 makes clear that generalized claims regarding environmental benefits are not acceptable. Further, specific environmental claims or features must be substantiated. "As explained in the Commission's Advertising Substantiation Statement, every express and material implied claim that the general assertion conveys to reasonable consumers about an objective quality, feature or attribute of a product or service must be substantiated."

Sect. 260.7 further sets outs FTC marketing rules relating to use of claims for degradable, biodegradable and photodegradable. There are rules regarding composable and recyclable claims, as well. A marketer is directed to consult the Green Guides, and its own counsel, to determine whether its practices qualify for safe harbour treatment.

By the way, the FTC has maintained enforcement litigation recently against K-Mart, Tender Corporation and Dyna-E International, Inc. for deceptive advertising in relation to environmental claims for their products and/or services. Information about this litigation is available on the FTC website.

A marketer concerned with liability for environmental marketing claims pertaining to its products or services should consult the Green Guides, local consumer protection law and its own legal counsel for complete guidance in this area.

Does Google's Book Settlement Open the Door to Book Spying?

The opt-out deadline for the Google class action "book copying" litigation is this Friday, September 4, 2009. There have been many objections filed to the settlement and the court will be tasked to determine how and whether the settlement fairly treats book copyright owners, distributors and the public. One observation made by the Electronic Frontier Foundation, the ACLU of North California and the Samuelson Clinic at the University of California at Berkeley relating to public privacy rights is interesting and bears mention.

The concern deals with how Google may track the public search of the anticipated vast digital book files residing on Google's computers. At present, a book browser can walk through aisle after aisle of books in libraries and book stores, examining books of interest without having the browser’s conduct tracked. No one maintains data on which aisle the browser walks down or which books the browser examines and reads. But Google is different. We already have familiarity with Google’s tracking methods for monitoring a web user’s search inquiries and web viewing habits. There is no reason to believe that Google’s digital book catalog will not have similar capabilities to track a user’s browsing interests, and to record the types of books a person examines and downloads.

Is this right? Is this what the public expects when it comes to browsing and reading books? Is the public willing to allow Google’s big brother website monitoring habits to apply to the public perusal of books? Recall that in 1953 Ray Bradbury published Farenheit 451 about the control of public thought and expression via the control of books.

It does not appear that Google’s settlement agreement speaks to its intention to monitor reading habits. This suggests, of course, that unless Google is forced not to monitor book viewing and selections then there is no good reason to believe that Google won’t track the public’s review and reading of books. More information about the position of the EFF, ACLU of N. Cal. and the Samuelson Clinic at Berkeley is available online at this link.

Transfer of Patent Without a Writing

The Federal Circuit ruled last week in Sky Technologies LLC v. SAP AG that a patent can be transferred without breaking the chain of title even though the transfer occurred without a writing. Sect. 261 is the Patent Act’s version of the statute of frauds. It provides that a patent shall be treated as personal property and a patent, or patent application, “shall be assignable in law by an instrument in writing.” Further, Sect. 154(a)(1) of the Patent Act appears to limit patent ownership to one of three classes of entities: a patentee, a patentee’s heirs or a patentee’s assigns. “Every patent shall contain a short title of the invention and a grant to the patentee, his heirs or assigns, of the right to exclude others from making, using, offering for sale, or selling the invention throughout the United States or importing the invention into the United States * * *.” Id.

Last week’s Federal Circuit case challenged the right of involuntary assignment in a foreclosure under UCC Article 9 when there was no written assignment and when the recipient of the patent is not the patentee, heir or assignee. In particular, the patent owner granted a written security interest in the patent to a lender as collateral for a loan. The loan became in default and the lender foreclosed pusuant to the UCC Article 9 foreclosure obligations under state law. While there was no writing expressly transferring the patent, the Federal Circuit held that an assignment is not the only method of transferring a patent. Rather, ownership of a patent may be transferred by operation of law; in this case, by forclosure under state procedures following a default of a security interest. The Federal Circuit went on to explain that ownership of a patent is not limited to the three classes of entites described in Sect. 154(a)(1) (patentee, heir, or assignee).

The Federal Circuit’s ruling last week is consistent with the understanding that the Patent Act does not preempt, and is not inconsistent with, UCC Article 9 methods for acquiring title through state foreclosure rules. The Federal Circuit held that the Patent Act is not in conflict with local law relating to collateralization and foreclosure of personal property. Lack of a writing does not void a transfer by foreclosure, including a transfer to someone other than the patentee, heir or assign.

The Federal Circuit explained its policy reasoning:

The policy justifications for permitting transfers of patent ownership through operation of law without a writing also support our holding. First, if foreclosure on security interests secured by patent collateral could not transfer ownership to the secured creditor, a large number of patent titles presently subject to security interests may be invalidated. Any secured creditor who maintained an interest in patent collateral would be in danger of losing its rights in such collateral. Second, by restricting transfer of patent ownership only to assignments, the value of patents could significantly diminish because patent owners would be limited in their ability to use patents as collateral or pledged security. Lastly, it would be impractical to require secured parties to seek out written assignments following foreclosure from businesses that may have ceased to exist.

Sky Technologies, at 12.

The goal of the UCC Article 9 is to work in tandem with federal law so as not to create a conflict. UCC 9-104(a) provides that Article 9 does not apply “to a security interest subject to any statute of the United States, to the extent that such statute governs the rights of parties to and third parties affected by transactions in particular types of property.”

The result of the Federal Circuit’s Sky Technologies decision permits a consistent and functional treatment of a patent as possessing all “attributes of personal property,” including the right of collateralization and involuntarily transfer by foreclosure.