Disparaging Trademarks: Upcoming Presentation

Denials and cancellations of trademarks as “immoral, deceptive, or scandalous matter” under Section 2(a) of the Lanham Act have made multiple headlines in recent years, with the cancellation of the Washington “Redskins” being only one famous example of a host of marks that have been cancelled or denied registration. But the recent Federal Circuit decision in In re Tam suggests all that may be changing.

As chair of the San Diego County Bar IP Section, I’m happy to say that we’ll be hosting John Sommer, Esq., general counsel for the popular apparel company Stussy, this next week to speak on the issue and the constitutionality of Section 2(a) when viewed in light of the First Amendment.  You can register for the presentation here.

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The Importance of Early and Effective Trademark Clearance Searches

Trademark protection in the United States operates on a first-come first-served basis.  All things being equal, if you are the first to use a given mark for a good or service in a geographic area, you’re going to have exclusive trademark rights to that mark for those goods and services in that area.

By the flip-side of the same coin however, if you’re looking at naming a new product, company, or service in a given market, you better make sure that there’s no one out there already using the same or similar name for the same or similar goods and services, aka a senior user.  If there is, and you proceed with using the name anyway, sooner or later it’s going to cost you.  That cost could come sooner, in the form of a threat of litigation from the senior user if you don’t stop using the mark.  Or it could come later, when your use has grown to a size that you’re looking to secure federal registration of your mark, only to find that someone has already beaten you to it or, by virtue of their senior use, has grounds to oppose or even cancel your federal registration.  It could also cost if you if you try to sell your company to someone else, as they’ll do their due diligence and see that they’re buying a company with problematic trademark rights.

The way to avoid these problems is to hire an attorney to help perform what’s called a trademark clearance search.  The goal of the search is to identify other companies and marks in use in your intended market that could potentially cause you problems, be it in the form of lost customers, brand confusion or dilution, or obstacles to registration.  By identifying problems from the outset, you’ll be able to intelligently decide if it’s worth the risk and potential costs of proceeding with a given mark, or if it’s a better idea to look for a different and less problematic mark.  The cost of trademark clearance searches vary based on the sophistication of the search and the number of goods and services you intend to use the mark with (the more classes of goods and services, the more extensive the search will have to be, and thus the more expensive).

Generally, there are two levels of clearance searches.  The more quick-and-dirty level search is known as a ‘knock out’ search.  These searches are quickly and easily performed by searching the United States Patent and Trademark Office’s database of registered and pending trademarks for any identical or phonetically similar trademarks.  If there’s no identical or similar pending or issued marks, then there’s at least the potential that you may be able to proceed with your mark.  For some companies, especially those operating on a tight budget for legal fees, or companies with a particularly arbitrary and fanciful mark that’s unlikely to be in use by anyone else, this sort of search can make sense.  However, these limited searches do not assure you that you will have exclusive rights to your trademark down the line, even if you are able to secure federal registration for the same.

For that level of assurance, a more complete search is required, which brings us to the second level of clearance searches: “comprehensive” commercial searches.  Several companies provide commercial level clearance searches that search hundreds of databases in addition to the trademark office.  These additional databases include web domains, common law unregistered marks, corporate registrations, trade name directories, and more – both for the United States and other international markets.

While the details and extensiveness of these commercial searches can be customized, the results provide companies with a much clearer picture of any and all similar uses of their intended mark in the market.  These searches are helpful not only from a potential registration standpoint, but also from a market research standpoint, helping you identify your potential competitors and obstacles you may face in establishing brand recognition in other markets.  The results can also help you and your attorney craft a legal strategy for successfully acquiring your desired trademark rights by highlighting what potential obstacles (or opponents) might come after you down the line.

The tradeoff of a commercial search is, of course, the increased cost (typically $500 or more).  For any serious brand launch however, the costs will almost always be less for a comprehensive search up front than facing problems with registration and/or litigation concerning a problematic mark down the road.  Nevertheless, many companies fail to learn this lesson until it’s too late, and their chosen name is already in trouble.

Don’t make the same mistake.  A bit of forethought and expense, in the form of hiring competent trademark counsel before you select your new trademark, will save you a world of trouble down the line.

Ninth Circuit Upholds Federal Copyright Registrations for Individual Works Submitted as Part of Collective Works

In a notable decision for photographers, musicians, and other copyright owners of large collective works, the Ninth Circuit ruled yesterday in Alaska Stock, LLC v. Houghton Mifflin Harcourt Publishing Company, et al. that rightsholders who submit collective works for federal copyright registration in compliance with the Copyright Office’s procedures also hold valid federal registrations for the individual works submitted as part of the collection.  The decision echoes a recent Fourth Circuit decision reaching the same result (Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc.).  As with that case, the argument against valid registration in Alaska Stock was that no individual registration could be granted because the “failure to identify names of creators and titles of individual works as required by 17 U.S.C. § 409(2) and (6) limits the registration to the Database itself.”  In other words, valid registrations should only be issued on the individual works submitted as part of the collection if the authors and titles of each individual work were submitted as well.  The Ninth Circuit rejected the argument, deferring to the Copyright Office’s procedures which didn’t require such a one-by-one approach:

We are affecting the fortunes of people, many of whose fortunes are small. The stock agencies through their trade association worked out what they should do to register images with the Register of Copyrights, the Copyright Office established a clear procedure and the stock agencies followed it. The Copyright Office has maintained its procedure for three decades, spanning multiple administrations. The livelihoods of photographers and stock agencies have long been founded on their compliance with the Register’s reasonable interpretation of the statute. Their reliance upon a reasonable and longstanding administrative interpretation should be honored. Denying the fruits of reliance by citizens on a longstanding administrative practice reasonably construing a statute is unjust.

The Ninth Circuit then spelled out its ruling in several examples, likening registration for a photo collection with individual photos to an album comprised of individual songs:

The statute required identification of the author and title of the “work,” which was the collective work, and extended registration to the component parts if the party registering the collective work owned the copyright to the component parts, as Alaska Stock did…Registration by a songwriter and singer of a CD of his songs registers both the collection and the individual songs, and registration by a stock photo agency of a CD collection of images the copyright to which the stock agency owns, registers both the collection and individual images.

The full opinion can be read here.

Think Twice Before Sending That Take Down Request

The law, like any other industry, is subject to pendulum shifts.  This is also true for online enforcement of intellectual property rights.  Whereas the past several years have been typified by ever-increasing (what many call) over-enforcement of intellectual property rights by large content owners (baseless youtube takedown requests, lawsuits against individual music sharers, etc.), now it seems the ‘fair users’ are striking back.  Any business looking to protect its rights online by sending a takedown request or cease & desist letter should sit up and take note before doing so, lest it find itself a defendant in federal court.

In June 2010, Professor Lawrence Lessig, co-founder of the Creative Commons, a nonprofit with the mission of expanding works available in the public domain, gave a 49-minute presentation at a conference in South Korea in which he, during various parts, displayed multiple amateur video clips set against the pop song “Lisztomania.”  The clips were displayed during the lecture as exemplars of the cultural phenomena of derivative amateur videos and youth culture’s emphasis on communication over the internet.  Further, only approximately 47 seconds of the 4 minute song were used.  When a video of the presentation was then uploaded to YouTube in 2013 however, the record label with the rights to the song, Liberation Music, subsequently issued a DMCA takedown notice, which caused YouTube to shutdown the video and warn Lessig against future posting of copyrighted material.

In response, Lessig filed suit against Liberation Music in Federal Court, seeking declaratory judgment, an injunction, and damages for misrepresentation under the DMCA.  Represented by the Electronic Frontier Foundation and Jones Day, Lessig argued that the video of his presentation constituted ‘fair use’ and that as a result, Liberation Music had knowingly and materially misrepresented the contents of Lessig’s video as infringing.

Yesterday, news spread that Liberation had settled with Lessig.  As part of the settlement, Liberation agreed to pay Lessig an undisclosed sum and required Liberation to adop new policies for its enforcement efforts in order to respect fair use.  As further part of the settlement, Liberation was forced to admit that its content takedown procedure consisted of having a single employee use YouTube’s automatic Content ID system to initiate the takedown process and, when the takedown was challenged by Lessig, threaten a lawsuit–all without having reviewed the actual video in question.

Regardless of the merits of the case, the important takeaway from this saga for businesses with interests in protecting their content online should be to take a careful review of their own internal content-enforcement procedures.  While it is clear most users, whether they be fair or infringing, won’t have the same resources to file a lawsuit as Lessig and the EFF, the cost of defending such an action–particularly if it is filed with good cause–could easily outweigh any harm posed by the original posting in the first place.

China Trademark Trolls: Not Just a Problem for the Big Fish

For the past several years, one of the surest signs that your consumer brand had “made it” was being targeted by trademark trolls. As has happened with patents however, trademark trolling is no longer just a problem for the big fish companies.  The trolls are setting their sights on smaller brands, armed with the knowledge that the smaller players are far less likely to have significant international IP portfolios, or the stomach and budget to fight the trolls overseas.  This problem has been so significant that China passed a new trademark law this year specifically aimed at curbing trolls.  But the law only goes so far.  The safest and, by far, the cheapest way to avoid problems for your brand and your manufacturing partners, both now and in the future, is still beating the trolls to the trademark office and getting your registration first.

But what exactly is trademark trolling and why is it so bad?  The most classic example of profiting off the brand of another is counterfeiting–i.e., someone literally slapping your mark or design on their own product and selling as their own.  While this can be egregious in itself, the steps to bringing such activity to an end are relatively straightforward.  More importantly, the law in most countries is on your side.  Trademark trolling is far more insidious because it turns the tables and uses the law against you.  Like the troll of legend who sits under a bridge, waiting in shadow to pounce on the unsuspecting passerby, a trademark troll looks for both new and established brands who haven’t registered their marks in all of the countries and territories where the brand is actually used or, more commonly, where products bearing the mark are manufactured. When the troll finds a vulnerable brand, it forms a dummy corporation and uses that corporation to register a trademark for the brand before the proper rights-holder does.  Once the application is granted and the mark registered, the troll begins the shakedown and demands payment(s) to go away.  The rights-holder is then left with the undesirable choice of either paying off the troll for them to transfer the registration (sometimes the troll demands individual payments for specific shipments, and is unwilling to transfer the registration itself), or attempting to invalidate the troll’s registration.

The problem is, if you choose the latter course, the troll can wreak havoc on your business while you wait for China’s trademark office to decide your case.  The troll can recover exorbitant fines for infringement of what should be your mark.  More importantly, the troll can have China’s customs halt exports of your products.  If you manufacture or partner with manufacturers in China, this is where the real pain occurs. Trolls have hit some the biggest brands in the world (Tesla, Apple, etc.) already–companies who you would think would have international ip portfolios to avoid this.  Most famously, Apple reportedly paid $60 million to a China trademark troll to secure the iPad trademark. In that case, $60 million was a pittance compared to the damage the troll would have done by blocking shipments or removing iPads off shelves.  That kind of settlement was simple for Apple, a company with billions in reserves, to address.  But what about companies without such generous reserves?

The troll trend has, unfortunately, now reached the stage where medium sized (and soon perhaps eventually smaller sized) brands and companies are becoming targets. While China’s recently adopted trademark law institutes a myriad of measures aimed at reducing trolling and infringement, all of these measures still fundamentally require the significant expense of retaining overseas counsel to take legal action that can take months, if not years, to resolve in your favor.  In the meantime, the troll can wreak havoc on you and your manufacturing partners.  This is a perfect example where a bit of forward thinking and IP lawyering now can protect your business from a world of future costs and disruption.