Is there A Santa Claus?

VIRGINIA, your little friends are wrong. They have been affected by the skepticism of a skeptical age. They do not believe except they see. They think that nothing can be which is not comprehensible by their little minds. All minds, Virginia, whether they be men’s or children’s, are little. In this great universe of ours man is a mere insect, an ant, in his intellect, as compared with the boundless world about him, as measured by the intelligence capable of grasping the whole of truth and knowledge.

Yes, VIRGINIA, there is a Santa Claus. He exists as certainly as love and generosity and devotion exist, and you know that they abound and give to your life its highest beauty and joy. Alas! how dreary would be the world if there were no Santa Claus. It would be as dreary as if there were no VIRGINIAS. There would be no childlike faith then, no poetry, no romance to make tolerable this existence. We should have no enjoyment, except in sense and sight. The eternal light with which childhood fills the world would be extinguished.

Not believe in Santa Claus! You might as well not believe in fairies! You might get your papa to hire men to watch in all the chimneys on Christmas Eve to catch Santa Claus, but even if they did not see Santa Claus coming down, what would that prove? Nobody sees Santa Claus, but that is no sign that there is no Santa Claus. The most real things in the world are those that neither children nor men can see. Did you ever see fairies dancing on the lawn? Of course not, but that’s no proof that they are not there. Nobody can conceive or imagine all the wonders there are unseen and unseeable in the world.

You may tear apart the baby’s rattle and see what makes the noise inside, but there is a veil covering the unseen world which not the strongest man, nor even the united strength of all the strongest men that ever lived, could tear apart. Only faith, fancy, poetry, love, romance, can push aside that curtain and view and picture the supernal beauty and glory beyond. Is it all real? Ah, VIRGINIA, in all this world there is nothing else real and abiding.

No Santa Claus! Thank God! he lives, and he lives forever. A thousand years from now, Virginia, nay, ten times ten thousand years from now, he will continue to make glad the heart of childhood.

Thank you, Francis Pharcellus Church, New York Sun, Sept. 21, 1897.

Federal Circuit Allows Disparagement of Asians

The Federal Circuit Court of Appeals ruled this morning that it is illegal for the federal trademark office to refuse to register a trademark that disparages Asians. As pointedly explained by Judge Reyna:

The Majority holds today that Mr. Tam’s speech, which disparages those of Asian descent, is valuable political speech that the government may not regulate except to ban its use in commerce by everyone but Mr. Tam. 

Goodness. So, does this also mean that it is OK for the Washington Redskins to disparage Native Americans via the team's ongoing trademark registration? It certainly appears that way!

Happy Birthday America

Freedom, happiness, true voting rights, true religious liberty, and true free speech are keystones of a true, stable and strong democracy.

Happy Birthday USA on the Fourth of July!

ICANN Considers Eliminating Anonymity For Commercial Websites

ICANN is studying a proposal to eliminate the ability of owners of commercial websites from hiding their identity through alias registrations. Presently, a commercial website owner can register its domain with an alias so as to avoid identification by a WhoIs search. ICANN is considering changing its policy concerning alias registration by commercial website owners. Toward this end, ICANN is inviting public comment through July 7, 2015 on this issue. The title of ICANN's policy study is "Next-Generation gTLD Registration Directory Services (RDS) to Replace Whois Preliminary Issue Report." To provide comment, contact ICANN within the coming week via e-mail, at policy-staff@icann.org, attention Marila Konings.

What Does A Brand Owner Want From A Brand?

This brief essay on the meaning and power of brands to communicate with customers is provided by David Altschul of Character LLC. David advises brand owners on the development of brand character.

Subject: What kind of relationship do you want with a brand?

  

The whole point of using story as a strategic marketing tool is to help develop a relationship between the brand and its audience. But saying that begs some important questions: What kind of relationship are we talking about? And what kind of relationship is even possible?

I was thinking about these questions as I was rereading Predictably Irrational, Dan Ariely’s insightful and highly entertaining deconstruction of human decision making. At the beginning of the chapter on social norms, he describes what might happen if you offered to pay your mother-in-law a few hundred dollars in cash as an expression of your gratitude for a well-prepared Thanksgiving meal. The story is used to illustrate the difference between social relationships and commercial ones. The offer of cash—any amount of cash—makes the relationship a commercial one. Most relationships fit pretty clearly into one bucket or the other. In fact, presenting yourself as a friend when you actually have a selfish, mercenary motive is symptomatic of an unhealthy, perhaps toxic, relationship. And as Dan Ariely points out later in the same chapter, it doesn’t take much to subvert a social relationship, turning it into a commercial one, but it is a long, hard road to reestablish a social relationship once it has been undermined.

Brands want to have close relationships with their customers because it’s good for business. A customer who feels connected is more willing to pay a premium and more likely to forgive occasional lapses on the part of the brand. (Remember when the iPhone 4 was dropping calls if you held it a certain way? Steve Jobs called a press conference and said, “Don’t hold it that way,” and most Apple loyalists let it pass.) Loyalty is a quality we expect, to one degree or another, in all social relationships. In fact, loyalty is a defining quality of a good social relationship. But loyalty in a commercial relationship is kind of an odd duck. Why should you be loyal to a company that doesn’t know you, a company whose interest in you, as far as you can tell, is to make money by transacting business with you?

I recently heard a senior brand marketer describe the relationship he wants between his brand and its customers by comparing it to a strong relationship between good friends. But I think that’s a mistake, unless he’s the kind of person who is always trying to sell Amway products to his close friends at a backyard barbeque or routinely studying his friends to find out what they want so that he can be the one to sell it to them. Story theory suggests another model, however, which I think is much more useful:

Think about the relationship between your brand and its customers as if the brand were a character in a drama and your customers were the audience.

I know that the characters I encounter in a movie, a TV show or a book are fictional. But I willingly suspend my disbelief and begin to care about them if the story feels true and meaningful.

It is important to note that, in this metaphor, the brand is in a much better position to connect emotionally with its audience if it is the protagonist in the drama. An awful lot of brands, particularly CPG brands, do their archetype studies and end up defining themselves as some kind of helper or mentor. But here again, the profit motive gets in the way. A helper or mentor from a story who only gives his services in exchange for money is either a villain or a rogue who will later learn the error of his ways and begin to act more selflessly (think Han Solo).

Further, true helpers and mentors tend to be secondary characters. They don’t struggle, they aren’t particularly vulnerable, and they don’t grow. We may like Gandalf or Mr. Miyagi or Obi-Wan Kenobi, but we don’t identify with them; we don’t see ourselves in them. The protagonist, however, is the “point-of-view character”; we see the world through this character’s eyes, and identify with the character because he or she struggles with the same internal issues that we struggle with. Protagonists feel relevant and meaningful to us because we recognize ourselves in them and we learn from what they’re going through.

When Jim and I were still at the animation studio, we used to say that we knew an animated character was successful when we felt as if we could see it feel and think. A brand is just as fictional as an animated character, and a brand comes to life for me when I have a sense that I know how it’s feeling, what it’s thinking and how it is likely to respond to whatever the world throws at it.

So that’s our suggestion for how to think about the way your brand relates to its customers. Don’t imagine your brand as their helper, mentor or favorite aunt. All of those relationships seem fake if they turn out to be based primarily on financial considerations. Instead, think of your brand as a character engaged in a struggle that is meaningful and relevant to your audience. Your job isn’t to fake a close, personal relationship with your customers but to show them what you believe in and care about. Customers who share your beliefs will find your brand relevant (in fact, that’s the only useful definition of relevance for a marketer), and they may reward you with their loyalty.

I’d love to know what brands you feel loyal to and how you think about your relationship with them.

Regards,

David

David Altschul

Character LLC

503.223.3999

www.characterweb.com 

Mein Kampf Copyright Expires This Year

Hitler died 70 years ago, in 1945. The term of copyright under German copyright law expires 70 years following the author's death. And since copyright terms run to the end of the year of termination, the copyright to Mein Kampf will pass into the public domain by the end of this year. The Bavarian State has used German copyright law to inhibit the distribution of Hitler's and Nazi writings. But copyright law will no longer be availing next year and Mein Kampf can be freely copied. The bigger question is, why?

Trademarks and License Plate Law

The Supreme Court ruled today that the State of Texas does not have to issue a license plate bearing a privately proposed design if it does not want to. Some citizens of Texas desired to obtain a state issued specialty license plate bearing an image of the Confederate battle flag. The Texas Department of Motor Vehicles Board has the authority to approve and issue license plates bearing privately proposed graphics and slogans. The board said No to the Confederate flag's adornment on Texas plates. And the Supreme Court today holds that the State of Texas can decline to issue a plate for speech that it disapproves of because license plates represent government speech. Government cannot be compelled to adopt speech that it does not agree with.

What does this have to do with trademarks? Recently, the Federal Circuit elected sua sponte to hear en banc the appeal of Simon Tam taken from the refusal of the federal trademark office to register the mark THE SLANTS for an Asian American music group. The PTO took the position that the mark disparages Asian Americans, a portion of which found the slang term offensive. The Federal Circuit panel upheld the PTO's refusal to register based on disparagement. But one week later, on April 27, 2015, the court sua sponte entered its order vacating the panel opinion and ordering a rehearing. Oral argument en banc will likely occur later this year.

So, is there not an interesting connection between the compelled issuance of a license plate bearing a symbol that Texas finds offensive and the issuance of a federal trademark registration certificate for a mark that the PTO finds offensive? And would it not be interesting for the Federal Circuit to strongly consider today's license plate decision in reviewing the demand of Simon Tam to compel the PTO to issue a registration certificate for an offensive slang term?

The Statute of Liberty Was Patented

The Statute of Liberty, designed and crafted by Frederic Auguste Bartholdi of Paris, was patented in the U.S. on February 18, 1879. The patent applied for pertained to the design of the statute, bearing the title Liberty Enlightening The World.

Bartholdi used the patent to assist in fund raising efforts for the statute, selling six inch replicas for $1.00.

Bartholdi (1834-1904)

Bartholdi created many other pieces of public art that are still on display in the U.S., including the Bartholdi Fountain in Washington, DC, the Marquis de Lafayette statute in Union Square, New York City, and icons on the Brattle Square Church tower in Back Bay, Boston.

Intent To Use Trademark Filings Require An Objective Bona Fide Intent

U.S. trademark law permits the filing of a trademark application based either upon an actual present use of the trademark in commerce or upon a good faith intent to use the proposed mark in commerce in the future. But too often as to the latter, these "Intent To Use" applicants do not possess the necessary bona fide intent.

In a case of first impression the Federal Circuit recently addressed the meaning of bona fide intent. The court ruled that an Intent To Use applicant must possess an objectively established intent to use the mark in commerce as of the date of its application. A generalized intent to reserve the trademark will not suffice. A subjective intent to use the mark some day is not acceptable. The necessary intent to use must be objectively "demonstrable and more than a mere subjective belief."

An Intent To Use applicant must be in possession of documents prior to the date of the application showing a good faith and firm intention to develop an in-commerce use of the proposed trademark. Alternatively. the applicant must provide good faith testimony demonstrating the firm action undertaken prior to the filing to develop an in-commerce use of the proposed trademark. Documents developed merely to assist in the prosecution of the application are insufficient to establish bona fide intent. And conflicting testimony from the applicant's employees creating confusion surrounding steps taken to use the mark will not support a bona fide intent.

In the recent Federal Circuit case, the Intent To Use applicant, M.Z. Berger & Co., manufactured, imported and sold watches, clocks and personal care products. It filed an Intent To Use application for the proposed trademark iWatch for watches, clocks and associated goods (e.g., watch bands, etc.). Swatch AG filed an opposition, claiming that the proposed iWatch mark was confusingly similar to its mark SWATCH, and that Berger lacked the necessary bona fide intent to use its proposed iWatch mark.

In attempting to establish the existence of its bona fide intent to use iWatch, Berger offered both testimonial evidence of its staff and documentary evidence from its files. But the staff testimony was conflicting, and the staff "failed to tell a consistent story about the company's intent at the time the application was filed."

The documentary evidence was of three types: (1) a trademark search, (2) internal company e-mails relating to the application, and (3) internal company e-mails relating to "images of watches and a clock bearing the iWatch mark." These documents, however, only related to the trademark application and did not establish an objective business intent to use the mark in commerce. That is, the trademark search was not undertaken as a step to begin use of the mark, but rather as a step to make the trademark filing. The internal documents relating to images of the mark and watches were prepared to support the trademark application and not for commercial purposes.

The lesson learned from this recent case is that, notwithstanding the relatively simple process of applying for trademark protection in the U.S. based on a future intent to use, it is necessary at the time the application is filed for the applicant to have an objectively demonstrable intent to use the mark in commerce. Necessary proof of bona fide intent requires that the applicant possess documents and consistent testimony establishing plans to undertake actual use, and not merely documents to support a trademark application.

Reverse Image Search Technology Will Increase Infringement Claims Over Photographs

It used to be the rule of dumb luck that accounted for the happenstance detection of a wrongful use of a photographic image. The owner of a photo previously had little ability to detect an infringing use unless the owner happened to stumble upon an unauthorized image. But today's technology significantly expands the ability to detect the misuse of an image on the Internet. Services such as TinEye, Google Images, and others, now allow fairly sophisticated detection of images. These services can have a panorama of applications. Not only can a photographer detect misuse of a protected image, but a business can prevent misuse of product images wrongfully taken from its on-line product catalog. And misuse of trademark logos can be more easily targeted, along with the right of publicity misuse of a person's image.

The sophistication of new reverse image search technologies will likely increase the number of infringement and right of publicity claims related to unauthorized use of personal and product images.

Creating Something Out Of Nothing -- Copyright In A Compilation

There are many things that can serve as subject matter for a valid copyright, including music, text, photos, motion pictures, sound records and architectural works. But there is one additional area of copyright -- a compilation copyright -- that is perhaps the strongest, the most powerful, type of copyright. This is so, in part, because a compilation copyright can create something out of nothing.

A compilation copyright is a "super duper" copyright.

A compilation is a work created from preexisting material. A compilation copyright exists when the preexisting material is selected, coordinated or arranged in a creative way so that the resulting work, as a whole, is creative. For example, creating a fabric print from preexisting zebra stripe designs can be copyrightable as a compilation of preexisting zebra stripes provided that the zebra stripes are selected, coordinated or arranged in a creative manner. Or, for example, the creation of fabric designs from preexisting third party art can be copyrightable if the selection, coordination or placement of the preexisting art is itself creative.

Section 103(b) of the Copyright Act provides that a copyright in a compilation does not extend to the preexisting material, but it does cover the newly contributed material. That is, the compilation copyright covers the selection, coordination or placement of the preexisting material. And Section 103(b) provides that the copyright in the compilation of preexisting material is independent of the preexisting material.

In other words, the compilation copyright exists by the use of common items, over which there may not be any originality or the right to copyright, in a work produced by the selection of the items, coordinating the items or arranging the items. It is the selection, coordination or arrangement that is protected by the compilation copyright.

Two recent cases from the Ninth Circuit underscore the tremendous power of the compilation copyright. In Meridian Textiles v. Topson Downs of California, issued on May 22, 2015, the Ninth Circuit reversed a dismissal of a case involving fabric print of zebra stripes.

The Ninth Circuit stated that the selection, coordination or arrangement of designs in the fabric could itself serve as a basis for a compilation copyright independent of any preexisting design: "and the district court may not say as a matter of law that 'the differences in the placement of geometric shapes should be regarded as trivial.'”

In ITC Textile v. Wal-Mart Stores, issued June 1, 2015, the Ninth Circuit held that the compilation of design elements in a fabric print can be copyrightable even if the elements consist of preexisting design. In this case, there was evidence that plaintiff's fabric designs consisted of paisley graphics taken from third party sources:

The Ninth Circuit held that the selection, coordination or arrangement of preexisting designs can be separately creative and copyrightable.

But the declaration submitted by Appellees to rebut the presumption of validity did not actually show that the designs were unoriginal in the relevant sense, because it presented no evidence that the compilation of elements in either the Symphony Sweet or Medallion Art design lacked originality. 

Further supporting the super duper status of a compilation copyright, this type of copyright is one of the limited number of works that is a work-for hire. Plus the transfer of a compilation copyright, as a work for hire, is not subject to early termination.

So, a compilation copyright is super duper, indeed.

225th Anniversary of First U.S. Copyright Law

This Sunday, May 31st, marks the 225th anniversary of the first U.S. copyright law enacted under the new Constitution. The Copyright Act of 1790 is set out here. The first federal law allowed for the registration of copyright in "books, maps and charts" by filing with the U.S. District Court in the district where the author or copyright proprietor resided. Registration lasted for 14 years, and could be renewed for an additional 14 year term.

The following week, the very first copyright registration made under the new law was a book entitled "Philadelphia Spelling Book," registered in the U.S. District Court in Philadelphia on June 9, 1790.

Lack of Knowledge That A Patent Is Valid Is NOT A Defense To Patent Infringement

The U.S. Supreme Court ruled today, in a case of first impression, that a purported infringer's lack of knowledge that a patent is valid is not a defense to an induced infringement claim. In today's case of Commil USA v. Cisco Systems, the Supreme Court pointed out that an issued patent is presumed to be valid, and that a claim for infringement of an issued patent is a strict liability claim. As such, whether or not an infringer believes that the issued patent is invalid, the good faith believe in invalidity is not a defense. And the defendant infringer cannot introduce evidence of good faith belief of invalidity.

Can Parmesan Cheese Exist Outside of Parma, Italy?

Trademarks can be tricky, particularly if the trademark contains the name of a geographic region. And more certainly so when the geographically-based name represents a common descriptor for a product.

Consider Scotch whiskey, or parmesan cheese, or Darjeeling tea, Kobe beef, or Roquefort cheese. Each of these products, and numerous others, are described by a geographic region. Many of these products originate and take their names from regions in Europe; Scotch from Scotland, parmesan from Parma, Italy, Darjeeling from an area in West Bengal, India (OK, not Europe, but still), Kobe from Japan's Hyogo Prefecture (ditto), and Roquefort for a region in southern France.

And many of these product originating regions are concerned that similarly named products are manufactured outside of their historical originating zones. For example, the U.S. Department of Agriculture lists some 20 plants in the U.S. that manufacture parmesan cheese.

Today, the World Intellectual Property Organization (WIPO) based in Geneva is enacting what is referred to as the Lisbon Agreement that expands the protection for geographical indicators. This agreement is set out here. The agreement is not being signed by a majority of WIPO members, but by a subset who are extremely concerned with extending legal protections for geographical indicators.

The U.S. is not a signatory to the Lisbon Agreement, and the U.S. Ambassador to the U.N., Pamela Hamamoto, strongly objected to the Lisbon Agreement in that it does not respect IP rights already developed by U.S. businesses. A copy of Ambassador Hamamoto's letter to WIPO is here.

WIPO's Lisbon Agreement does not alter U.S. trademark law, but it could lead to modification of trademark law in European countries that are signatories. U.S. producers of products bearing geographical indicators should be cautious in trading with these signatory countries, and should clearly understanding local IP law.

Judge Kozinski Forgot About Oscar Wilde, But The Ninth Circuit Didn't

Napoleon Sarony was a well-known photographer operating in New York during the middle part of the 1800s. He was renowned for taking photos of very famous people, including Samuel Clemens, William T. Sherman, Oscar Wilde and others.

Napoleon Sarony

Sarony took a photograph of Oscar Wilde in 1882, and a dispute thereafter developed over Sarony's ability to claim copyright protection -- and thereby control -- of the photograph. In 1884, in the case of Burrow-Giles Lithographic Company v. Sarony, the Supreme Court determined that a photograph represents copyrightable subject matter and that Sarony, as the photographic author, owned the copyright in the Oscar Wilde photograph.

Sarony's Photo of Oscar Wilde (1882)

The Copyright Office remains in possession of the Sarony photograph submitted as part of Sarony's copyright application, and the photo is displayed periodically in the Copyright Office, located about two blocks from the Supreme Court building in Washington, D.C.

Judge Alex Kozinski of the Ninth Circuit may not have seen the Sarony photo, and may not have remembered the Sarony decision, Contrary to the Supreme Court's 1884 decision, Judge Kozinski maintains that the subject of a photograph owns the copyright and not the photographer. Judge Kozinski's wrong headed views were overturned by the Ninth Circuit.

The case from earlier this week out of the Ninth Circuit reaffirms a basic tenet of copyright law relating to photographs: they are copyrightable, and the author of the photograph is the photographer and not the subject. The Ninth Circuit's recent case does not involve still images, however, but a sequence of still images that is a film that became internationally infamous and despised. But the Sarony principle still applies.

In July 2011, a small time actor, Cindy Lee Garcia, was cast in a cameo role in a film initially entitled Desert Warrior. She was paid $500 to speak two sentences: "Is George crazy? Our daughter is but a child?"

After the film was completed and heavily edited, the original concept of an action-adventure film of Desert Warrior became converted into an anti-Islam polemic and retitled Innocence of Muslims. Garcia's innocently spoken words were overdubbed into "Is your Mohammed a child molester?" Garcia only appeared on screen for five seconds.

Innocence of Muslims was uploaded to YouTube, translated into Arabic, and was blamed for fomenting unrest across the Middle East. Garcia claimed to receive multiple death threats for her role.

Garcia sued to enjoin YouTube from displaying the film online, claiming that she owned a copyright in her performance. The trial court was not impressed and denied the injunction. But on appeal to a three judge panel of the Ninth Circuit, Judge Kozinski granted the mandatory injunction and posited that Garcia would likely have a copyright interest in her photographed performance. "... Garcia might have a copyright interest in her performance ...She can claim copyright in her own contribution ..."

So, back to 1884. The Supreme Court held in the Sarony case that copyright in a photograph belongs to the photographer. The Supreme Court held that Sarony, as the photographer, was the author of the Oscar Wilde photo. Oscar Wilde, the subject, was NOT the author.

"[P]laintiff (Sarony) made the same ... entirely from his own original mental conception, to which he gave visible form by posing the said Oscar Wilde in front of the camera, selecting and arranging the costume, draperies, and other various accessories in said photograph, arranging the subject so as to present graceful outlines, arranging and disposing the light and shade, suggesting and evoking the desired expression, and from such disposition, arrangement, or representation, made entirely by plaintiff, he produced the picture in suit. 

"These findings, we think, show this photograph to be an original work of art, the product of plaintiff's intellectual invention, of which plaintiff is the author ..."

Yet, Judge Kozinski ignored the 1884 Sarony decision by recognizing a performance copyright by an actor in a film, Remember that a film is nothing more than a sequence of related photos. So, if the Sarony decision denied a copyright to the subject of a single photo, then it is difficult to understand how Judge Kozinski can find a copyright in the actor's presentation when multiple photos are taken and laid end to end in a film.

The Ninth Circuit reversed Judge Kozinski the other day, and strongly so. The court noted that the Copyright Office refused to register a copyright in Garcia's performance because "longstanding practices do not allow a copyright claim by an individual actor or actress in his or her performance within a motion picture." The Ninth Circuit determined that an actor cannot claim a copyright in his or her performance independent from the film as a whole. And further held that the actor did nothing to fix his or her performance into the film. The copyright requirement of fixation was accomplished by someone else, perhaps the director or producer, but not the actor.

The Ninth Circuit also noted an important difference between U.S. copyright law and the copyright law of many European countries. In Europe, authors have "moral rights" "to control the integrity of their works so as to guard against distortion, manipulation, or misappropriation." The U.S. copyright law does not recognize a similar moral right for performers. The World Intellectual Property Organization (WIPO), based in Geneva, has attempted unsuccessfully for several years to organize the world's countries into recognizing performance rights in audiovisual works. To date, no treaty recognizing performance rights has developed from WIPO's leadership.

Perhaps some day this may all change. But at present, the Supreme Court's 1884 view that the photographer, not the subject, owns the photographic copyright is being respected by the Ninth Circuit, and not disregarded as by Judge Kozinski.

No Does Not Mean No, When It Comes To Copyright Legal Fees

In a case of first impression, the Ninth Circuit held today that attorneys' fees may be awarded to a prevailing copyright owner even though the Copyright Act prohibits an award of fees.

Section 412 of the Copyright Act prohibits an award of attorneys' fees to a prevailing copyright owner if the claimed infringement occurs after first publication and prior to registration of the work, unless the work is registered within three months of first publication. In other words, if the work is not registered within three months of first publication, then no attorneys' fees are awarded as to any infringement that occurs prior to registration. This prohibition is intended to encourage prompt registration of a work following publication.

In today's case of Ryan v. Editions Limited West, the copyright owner failed to register her work within three months of first publication, and the defendant's acts of infringement occurred prior to registration of the work. So, the copyright owner was not awarded attorneys' fees under Section 412.

But wait. The parties entered into an agreement, prior to the claimed infringement, by which Ryan granted a license to Editions Limited West to sell posters of Ryan's art work. The agreement contained a clause that awarded attorneys' fees to the prevailing party in the event of breach. Ryan eventually sued for copyright infringement, among other things, claiming that Editions Limited West violated the license by allowing a third party to sell derivative works -- wall murals -- of Ryan's art. The trial court determined that copyright infringement had occurred. The court also determined that Ryan was entitled to an award of her attorneys' fees under the license even though she was not entitled to an award of attorneys' fees under Section 412 of the Copyright Act.

Editions Limited West appealed to the Ninth Circuit, arguing among other things that the Copyright Act preempts conflicting state law. Because the prohibition on fees under Section 412 is in conflict with a fee shifting clause of a license agreement, Editions Limited West argued that there can be no recovery by Ryan of attorneys' fees at all.

The appellate court acknowledged that this issue -- the preemption conflict between Section 412 and a fee shifting clause -- had not previously been reviewed by the Ninth Circuit and was largely an unanswered question. But the Ninth Circuit determined that there is no conflict -- and no preemption under the Copyright Act -- because rights under the license agreement are not exactly the same as rights under Section 412. That is, the contract contains an extra element not present under a copyright claim; the extra element of consent.

So even though Congress sought to punish a copyright owner for registration delay by denying attorneys' fees, the parties can work around the Congressional prohibition by their private agreement. No other circuit court has specifically determined that the Section 412 prohibition on fees does not work a preemption as to a fee shifting clause in a private agreement. But at least for now in the Ninth Circuit, No does not mean No when it comes to recovering attorneys' fees on a copyright infringement claim when a fee shifting agreement is in place.

California's Compelled Resale Royalty on Fine Art is Ruled Unconstitutional on Sales Outside of California

The Ninth Circuit today ruled that California cannot reach outside of its borders to compel the reseller of fine art to pay 5% of the sales price to the artist.

Like the never ending pour of beer into the bottomless stein, California believes that the artist of a piece of fine art should receive 5% of the price on resale of the art -- forever; regardless of the number of times that the art is resold following the first sale, and regardless whether the art is resold outside of California.

Note that the artist was presumably paid when the fine art sold for the first time. The issue here is whether California can compel that additional royalties be paid to the artist for an undetermined number of future resales.

Cal. Civ. Code Sect. 986(a) is part of California's Resale Royalty Act. This section provides that whenever a piece of fine art is sold, the seller is required to pay 5% of the sale price to the artist. If the seller fails to do so, then the artist can sue the seller for this statutory royalty plus legal fees. This section applies by its terms even as to sales that occur wholly outside of California, provided that the artist resides in California.

The Ninth Circuit had no trouble determining that this Section 986(a) violates the dormant commerce clause and must be stricken from the statute as unconstitutional. Specifically, only Congress has the power to regulate interstate commerce, and a state does not have the authority to interfere with interstate commerce when the regulated conduct occurs entirely outside the state's boundaries. This is so even if the impact of the foreign conduct is felt within the state. This is the "dormant" commerce clause.

So, the compelled royalty on out-of-California sales of fine art is stricken and severed from the statute. Yet to be determined is whether this statute can require the payment of a compelled royalty on sales inside of California.The en banc Ninth Circuit remanded the case to the court's three judge panel to determine whether the rest of the California statute is preempted by federal copyright law.

Loose (Customs) Lips Sink Ship(ment)s

The import or export of goods through a U.S. port of entry is challenging enough for shippers, but the inability of Customs to preserve confidential shipping information makes transit through a U.S. port even more unnerving.

A vessel manifest contains much information that might be confidential to an importer or exporter, including the identity of trademarks, goods, quantities and consignees. How helpful would it be to Pepsi, for example, to learn the quantity and sourcing of sugar shipped by Coca Cola? Or, for addidas to learn of Nike's recent shipments. You get the idea.

Certainly, information in a shipping manifest is important data for Custom's regulatory control purposes. At the same time, the public release of the vessel manifest information, that may contain a trade secret which should be kept secret, can lead to unfair competition and anti-competitive effects.

But U.S. law recognizes that the shipping information is generally subject to public disclosure. As Customs explains --

"According to privacy statute, 19 CFR 103.31 (d), the public is allowed to collect manifest data at every port of entry. Reporters collect and publish names of importers from vessel manifest data unless an importer/shipper requests confidentiality."

Customs does permit vessel manifest data that is confidential to be treated confidentially. Confidential information will not be sold by Customs to publishers provided that an importer or exporter files a form with Customs identifying the "names and numbers" to be kept secret. This confidential information can include the names of importers, exporters, consignees and trademarks. In theory.

But whether vessel manifest data is truly confidential depends on whether Customs timely processes the confidentiality request. Currently, Customs is incredibly S L O W to input these requests into its system. The Customs website cautions that it may take "60 - 90 days" to process these requests. Don't believe this. In reality, it has been taking up to six months!

Customs is really sorry about this delay and has been sending this notice recently to upset shippers:

"This is to acknowledge that U.S. Customs and Border Protection (CBP) has received and processed your vessel manifest confidentiality request. We have been understaffed and have a backlog of requests that we are working. Thank you for your patience."

Customs has the staff to sell the vessel manifest information to publishers, but does not have the staff to filter out confidential shipping information from public disclosure.

Nice.

This coming week, President Obama will be in Portland, Oregon attending an event at Nike's world headquarters, seeking to boost support for his free trade policies. Oregon's Senator Ron Wyden, the Senate's free trade siren, will likely be in attendance providing support. But, why would any importer or exporter prefer to ship through a U.S. port when Customs cannot timely do its job and prevent public dissemination of confidential shipping data? Perhaps the President should fix Customs as the first step in improving free trade. Because the wrongful disclosure by Customs of trade secrets means that, as a practical matter, trading with the U.S. may have regrettable consequences.

De Novo Review of a Trademark Registration Rejection Imposes BIG Penalties

The U.S. trademark office is an administrative agency and not a court. Yet it makes judicial decisions by accepting or rejecting a trademark for registration. If a trademark applicant desires that a "real judge", a judge appointed and confirmed under Article III of the Constitution, determine whether a trademark should be registered, the applicant has an important choice to make.

If a trademark is denied registration, and if the applicant seeks a judicial determination as to the correctness of this decision, the applicant can either appeal the refusal to register to the Federal Circuit or the applicant can sue the PTO Director in a de novo proceeding in federal district court.

In either case, the denial of registration by the trademark office is examined by an Article III judge. But the consequences are different, as is made clear in last week's decision from the Fourth Circuit in Shammas v. Focarino. The Fourth Circuit pointed out that an appeal to the Federal Circuit will overturn a registration rejection only if the PTO's refusal to register is not supported by substantial evidence. On the other hand, the applicant's institution of a new lawsuit in federal district court will permit the applicant to introduce new evidence, will force compliance with the federal rules of evidence, and will permit the Article III trial judge to review the issues de novo.

So, why would an applicant not want de novo review, rather than substantial evidence review, by an Article III judge? Because the Fourth Circuit explains that the Lanham Act imposes a significant financial penalty on the applicant in doing so. That is, the applicant is required to pay the PTO's expenses, including reimbursement of the costs of PTO lawyers and staff, whether the applicant wins or loses in district court.

The Federal Circuit explains that --

"... §1071(b)(3) imposes a unilateral, compensatory fee, including attorneys fees, on every ex parte applicant who elects to engage the resources of the PTO when pursuing a de novo action in the district court, whether the applicant wins or loses ..."

The Fourth Circuit underscores that the Lanham Act penalizes an applicant who seeks to have a judicial determination made de novo by an Article III judge as opposed to an Article II appointed administrator. So, even if the federal trademark office is completely wrong in its refusal to register a trademark, the right of the applicant to seek de novo review pursuant to the federal rules of evidence will cause the imposition of a substantial financial burden -- even if the applicant wins!

In the Shammas case cited above, the penalty imposed on the applicant amounted to some $36,000, representing the time incurred by the PTO's staff attorneys and paralegal. This was the price imposed on the applicant who merely wanted de novo review pursuant to the federal rules of evidence by an Article III judge. 

More News on THE SLANTS

The Federal Circuit today vacated its decision from last week and elected to have the full court conduct an en banc review. See my blog post of April 20th for background information about last week's court decision.

The issue on en banc review is: "Does the bar on registration of disparaging marks in 15 U.S.C. § 1052(a) violate the First Amendment?" Note that the Lanham Act prohibits the registration of trademarks that "consists of or compromises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connect with persons living or dead ..."

Under the existing legal test, the Federal Circuit last week determined that the name The Slants for an Asian band is disparaging to a prominent number of Asian Americans and therefore cannot be registered as a trademark, although the band can continue to use the name without registration for its band.

So, more to come.

No Registration for Highly Descriptive -- Generic -- Trademarks

The Trademark Trial and Appeal Board (TTAB) confirmed again two days ago what we should all know, that generic trademarks will not be allowed to register. In In re Meridian Rack & Pinion dba buyautoparts.com, the applicant sought registration of "buyautoparts.com" for an online auto parts retail store service. The TTAB refused to allow registration. The opinion points out that marks that are so descriptive as to be generic cannot register as trademarks. 

Generic marks, observed TTAB, are "common names that the relevant purchasing public understands primarily as describing the genus of particular goods or services." The important issue turns on whether the consuming public views the applied-for trademark as constituting the "central focus" or "key aspect" of the service set out in the application.

The TTAB "has often held that a term that names the 'central focus' or 'key aspect' of a service as generic for the service itself."

The TTAB opinion finds buyautoparts.com as generic for the service of operating an online retail store where consumers can buy auto parts. The opinion gives other examples of applied-for trademarks that were previously rejected for genericness, either because the mark describes the genus of the entirety of the goods or services, or describes the genus of the key element of the goods or services:

• BUNDT for a cake mix
• ATTIC for a sprinkler system used in attics
• CHOCOLATE FUDGE for a diet soda flavored drink
• HOTELS.COM for an online hotel reservation system
• TIRES TIRES TIRES for retail tire stores
• CANDY BOUQUET for candy gift packages
• RUSSIANART for the sale of Russian artwork
• MATTRESS.COM for online retail sales of mattresses
• LAWYERS.COM for online information about law and lawyers
• ADVERTISING.COM for online advertising services

Skyrocketing Patent Filings in the Eastern District of Texas

One would think that the propensity of the Federal Circuit in mandating transfer of patent cases out of the Eastern District of Texas (Tyler, Texarkana, Sherman, Marshall, Lufkin and Beamont, Texas) would cause a slow down in new patent case filings in that district. Indeed, out of apparent exasperation with what it describes as an "unrestrained and improper" use of mandamus by the Federal Circuit, EON Corp. IP Holdings, a patent troll, filed a petition for writ of certiorari to the Supreme Court seeking review of perceived mandamus abuse. That petition was denied yesterday.

But EON has it all wrong. Whether or not the Federal Circuit is overly aggressive in compelling the transfer of patent cases out of the Eastern District of Texas, the fact remains that this one judicial district is the recipient of more new patent case initiations than any other individual federal district in the country.

The administrative arm of the U.S. Courts published recently its annual statistics for the period ending September 2014. Regarding patent cases, the numbers show that there has been a skyrocketing increase in new patent cases filed in the Eastern District of Texas during 2014, which continues an ongoing trend. Here are the numbers:

Eastern District of Texas - New Patent Case Filings By Year

(period ending September 30)

2011     2012     2013     2014

738       1061     1386     1620

A line chart is revealing:

There has been over a 119% increase in new patent case filings in the Eastern District of Texas during the past four reporting years. No other judicial district has received this much new business from patent plaintiffs. Indeed, out of 5,686 new patent cases filed nationwide in 2014, this one district received 28% of these new filings. 

So, whether or not EON is unhappy, it appears that plenty of other plaintiffs are satisfied with the Eastern District of Texas.

THE SLANTS: No Registration for a Disparaging Trademark

The Slants found no respect at the federal trademark office, and now they have no respect from the Federal Circuit Court of Appeals.

The Asian American rock music group The Slants has sought to obtain a U.S. trademark registration for THE SLANTS for some time. But the group was turned down initially by the federal trademark examiner under a Section 2(a) finding of disparagement.

The federal trademark law prohibits registering a mark that "consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute."

The trademark examiner determined that the mark would be disparaging to people of Asian descent. The group appealed to the Trademark Trial and Appeal Board (the Board), which upheld the examiner's rejection, stating that "it is abundantly clear from the record not only that THE SLANTS ... would have the 'likely meaning' of people of Asian descent but also that such meaning has been so perceived and has prompted significant responses by prospective attendees or hosts of the band's performances."

I wrote about the question of registering THE SLANTS as a potential disparaging trademark in my January 7, 2015 blog post.

The band appealed the Board's refusal to register to the Federal Circuit, and today the appellate court affirmed the refusal. In a unanimous opinion, the Federal Circuit panel had little problem addressing the band's contentions under established trademark law. The band argued that the mark, THE SLANTS, is not disparaging. But the Federal Circuit agreed with the Board's finding that one meaning of the term "slants" refers to people of Asian descent, and that this meaning may be disparaging to a substantial composite of these people.

The band raised several constitutional issues, all of which were rejected by the Federal Circuit. The band argued that the refusal to register violated its First Amendment free speech rights in that the refusal suppresses the band's expression. The court, however, pointed out long standing case authority that a refusal to register is not a prohibition of use, and that the band can continue to use the mark and exercise its expression without a registration.

The band next argued that the standard to determine whether a mark is scandalous or disparaging is vague. But the Federal Circuit, while acknowledging that it may be "inherently difficult in fashioning a single objective measure like a substantial composite of the general public from the myriad of subjective viewpoints," nonetheless determined that the standard was not unconstitutionally vague.

The band argued that it was deprived of due process, arguing that the trademark office applies the disparagement standard arbitrarily and without clear guidelines in that the PTO has registered other marks that contain slurs against homosexuals, such as DYKES ON BIKES. But the Federal Circuit pointed out correctly that the band had a full opportunity to prosecute its trademark application and to appeal the refusal to register, so its procedural due process rights were not denied.

Lastly, the Federal Circuit addressed the band's contention that the rejection of its trademark application violated its equal protection rights. Here, the band argued that the trademark examiner rejected its application based on the race of the band members. The court, however, determined that the refusal to register was not based on the band's ethnicity but on the disparaging use of the term. The court observed that the use of the same term in the same manner by an all white band would receive similar treatment.

Pi Day

March 14th is PI day. As in π. As in the ratio of the circumference of a circle to its diameter. As in  22÷7. As in 3.14.15...

In the 13th century, the infinite number pi was calculated by the mathematician Ludolph van Ceulen to 35 digits. Here is a website that expresses pi to a million digits. Computers have determined pi to a trillion digits, apparently (but who knows for certain!). 

And special pi occurs at the time 9:26:53 (both a.m. and p.m.) on March 14th, when we'll pass through time reflected in the first ten digits of pi: 3.141592653 ... These calendar and time numbers will not be repeated for 100 years. So enjoy tomorrow at 26 minutes and 53 seconds past 9 a.m. and 9 p.m.

How many digits of pi did you memorize in school? How many do you still remember? 

A Valid Service Mark Requires Actual Service

The Federal Circuit determined for the first time that the validity of a registration for a service mark requires both that the applicant publicly offer the service and actually render the service at least as of the date of the application. Offering services under a service mark without actually rendering the service will not support registration.

In Couture v. Playdom, Inc. decided yesterday, the applicant filed a use-based application for the service mark PLAYDOM, and submitted as a specimen his webpage that provided:

Welcome to PlaydomInc.com. We are proud to offer writing and production services for motion pictures film, television, and new media. Please feel free to contact us if you are interested: playdominc@gmail.com.

The website included this disclaimer: Website Under Construction.

The applicant did not actually render any offered services until well after the application was filed. The registration eventually issued. Thereafter, a competing service provider sought to register the same service mark PLAYDOM for the same writing and production services. The competing service provider filed a petition to cancel the registered PLAYDOM mark, arguing that the applicant had not done anything other than advertise and offer his service at the time the application was filed. The cancellation was allowed by the TTAB and, following appeal to the Federal Circuit, the TTAB's cancellation was affirmed.

The Federal Circuit observed that it had not previously addressed whether the mere offering of a service, without actual rendering of the service by the application filing date, is sufficient to constitute "use in commerce under Lanham Act §45." But the Court now confirms that use in commerce of a service mark requires both that the mark be publicly "used or displayed in the sale or advertising of services" and that the services must actually be provided. The bad news is that the first applicant lost his registration because he had not provide the service by the application filing date. The double bad news is that he lost his registration to a direct competitor.

Triskadekaphobia All Over Again

Those sufferers of triskadekaphobia will experience a double dose of Friday the 13th this month, and a triple dose this year. There is a Friday falling on March 13, as there was a Friday falling on February 13. And there will be another Friday falling on the 13th during November this year.

The last time Friday the 13th fell on two consecutive months was six years ago in 2009. Prior to that, it occurred in 1998. This double whammy can only occur in a February - March combination, and only during certain non-leap years. No more than three can occur during any one year. For more information on how Pope Gregory XIII's calendar causes this interesting phenomenon, click here.

Intel Is The Top Contributor To The Linux Kernel

The Linux Foundation reports today that Intel is now the top contributor to the Linux kernel. To place this in a bit of perspective, the foundation reports that "Since 2005, some 11,800 individual developers from nearly 1,200 different companies have contributed to the kernel." The foundation further reports that since 2011 Linux open source software has been deployed in more computer systems than Windows software. More information concerning Linus Torvalds is available on my prior post, here.

Presently, the top contributors to the present kernel release are:

Company	Changes	Total
Intel	10108	10.5%
Red Hat	8078	8.4%
Linaro	5415	5.6%
Samsung	4290	4.4%
Unknown	3842	4.0%
IBM	3081	3.2%
SUSE	2890	3.0%
Consultants	2451	2.5%
Texas Instruments	2269	2.4%
Vision Engraving Systems	2089	2.2%
Google	2048	2.1%
Renesas Electronics	2004	2.1%
Freescale	1690	1.8%
Free Electrons	1463	1.5%
FOSS Outreach Program for Women	1418	1.5%
Oracle	1166	1.2%
AMD	1109	1.1%
Nvidia	1078	1.1%
Broadcom	1001	1.0%
Huawei Technologies	971	1.0%
ARM	788	0.8%

U.S. Design Patent Protection under the Hague Agreement

It has become a little bit easier to protect U.S. design. Plus, sometimes good things occur on Friday the Thirteenth!

This past Friday, February 13, 2015, the U.S. deposited with WIPO (the World Intellectual Property Organization) in Geneva its instruments of ratification to the Hague Agreement. As a result, the U.S. will become a full member of the Hague Union in 90 days, as of May 13, 2015. The Hague Union will grow to 62 countries and territories by this May 13th.

Once the Hague Agreement goes into force, U.S. design patent applicants (and non-U.S. applicants who seek design protection in the U.S.) will obtain two significant advantages. First, applicants can file a single design patent application with the PTO or with WIPO and thereby seek extended design protection with all other Hague Union members. Second, U.S. design patent protection will have a 15 year term from the date of grant for applications filed on or after May 13, 2015. 

Presently, and prior to May 13, 2015, it is not possible for a U.S. design patent applicant to obtain design protection outside of the U.S. without separately filing in all relevant jurisdictions. And presently, the term of a U.S. design patent is 14 years from date of grant.

The PTO has not yet issued rules of practice under the Hague Agreement, but final rules are expected from the PTO by May 13, 2015.

More information concerning the U.S. accession to the Hague Agreement is available here form the PTO.

Copyright in a War Memorial

The Korean War continues to cost the federal government money.

In 2012, my blog post addressed the copyright infringement claim brought by Frank Gaylord against the U.S. Postal Service for printing a photo of The Column -- the Korean War Memorial standing on the National Mall in Washington, D.C -- on U.S. postage stamps.

The Memorial

Mr. Gaylord, a World War II veteran and renowned sculptor, was selected to create the central focus of the Memorial -- 19 statues depicting an infantry squad on patrol. Mr. Gaylord was paid $775,000 for his work. But the U.S. government never obtained a license to use the statues for any purpose other than as a display on the National Mall.

In 2002, the Postal Service wanted to issue a stamp commemorating the 50th anniversary of the Korean War armistice. For this purpose, the Postal Service paid a photographer $1,500 for the right to use a photograph of The Column, but did not pay Mr. Gaylord a royalty for the use of the statues. Nor did the Postal Service seek Mr. Gaylord's consent to use a photo of the statues.

The Stamp

Mr. Gaylord held a copyright interest in the statues by virtue of his creation, and his contract with the federal government did not transfer the copyright interest or give the government any rights other than to display the statues. The government certainly did not have the right to use a photograph of the statues on a postage stamp. But it did. The Postal Service printed 86.8 million stamps of The Column at a cost of $181,412. The stamps had a face value of 37 cents each for a total of $31.82 million. At least 47.9 million stamps were sold.

Mr. Gaylord sought copyright damages from the Postal Service for its profits in copying The Column without a license. The stamps were used for three purposes: to send mail, as an image on commercial merchandise, and on unused stamps sold to collectors. The parties agreed that no damages would be awarded for use of the stamps to send mail (the Postal Service regularly loses money on its postal operations), and agreed to a per-unit royalty of ten percent for commercial merchandise. But the parties disagreed on the amount and type of royalty for the stamps sold to collectors.

The Court of Federal Claims determined that a reasonable royalty for the collector stamps was a per-unit royalty of ten percent, based on its finding of what a reasonable licensor and a reasonable licensee would agree to in a hypothetical negotiation. The Postal Service disagreed and sought a limited up-front, one-time lump-sum payment of $5,000. The trial court determined that $5.4 million was earned by the Postal Service on the collector stamps and that virtually this entire sum represented a profit. The court awarded Mr. Gaylord a royalty on the collector stamps of $540,000, plus an additional $33,092 in royalties for the commercial merchandise. The Postal Service appealed to the Federal Circuit, which upheld the trial court's determination.

Three things are noted by this case. First, Mr. Gaylord as a private citizen owns the copyright in a renown and beloved memorial to the veterans of the Korean War. Second, the U.S. government failed to secure any right of use of the statues apart from the display on the National Mall. Third, a per-unit royalty of ten percent is reasonable for this particular form of special edition, collector memorabilia -- a postage stamp. Why Mr. Gaylord should have been paid $775,000 to create the statues and allowed further to own the copyright is beyond belief. And why the federal government did not retain any meaningful use interest apart from the Mall display compounds the disbelief. And why the U.S. government cannot control the central component of the memorial that honors the veterans and war effort of a significant post-World War II conflict is befuddling.

Patenting Food -- And Controlling Access To Food

Today's new patent opinion from the Federal Circuit reminds us that:

1. Food can be patented;

2. New food plants developed with public monies by the USDA does not necessarily benefit all US citizens equally; and

3. Wrongful disclosure by an inventor's employee of confidential information concerning a newly discovery invention does not necessarily start the one year on-sale bar ticking.

In Delano Farms v. California Table Grape Commission, plaintiffs sought to invalidate a USDA patent on new varieties of table grapes: the Scarlet Royal and the Autumn King.

Scarlett Royal           Autumn King

Plaintiffs asserted that the new grape varieties were in public use more than one year prior to the filing of the patent application. These new grape varieties were developed by the USDA, a government agency spending public monies. The USDA obtained a patent on the new grapes and then granted an exclusive license to the California Table Grape Commission. The grape commission in turn sublicensed the new grape varieties to California growers for a license fee that was split between the grape commission and USDA.

An employee working for the USDA in the office that developed the grape varieties secretly gave plant material to friends, California grape growers. This occurred more than one year prior to the filing of the USDA's patent application. The employee knew that he was not authorized to provide the plant material outside of the USDA and so did his friends, the California growers.

Plaintiffs in this case were California grape growers who did not want to pay the patent fee to the grape commission. They sought to invalidate the patent in the hope of obtaining the patent benefits for free. The Federal Circuit easily disposed of plaintiffs' contention that public use occurred more than one year prior to the filing of the patent application. Since the transfer of the plant material occurred without the consent of the USDA and in violation of its employee's confidentiality obligations, and since the recipients of the plant material knew that the material was secret and should not have been disclosed, then the public use never commenced at the time of the wrongful disclosure.

While the holding of this case is pretty straight forward, it nonetheless reminds us that:

1. It is critical for an inventor to maintain secrecy over the invention, and to liberally use confidentiality and nondisclosure agreements with those people who assist in the development of the invention.

2. Government agencies use public money to develop new food crops, but do not necessarily grant free use to the public of the very food that public money was used to develop.

3. Food can be patented, and use of food can thereby be restricted (here the USDA granted an exclusive license to the California grape commission but not to non-California growers!).