Readers may be surprised to learn how often we are consulted by clients who face the following predicament: an individual or group of people get together to start a business. Working out of a home, or a garage, or a small workspace, they create a product or come up with a service that they think they can sell and proceed through sheer will and hard work to get the product or service to a point where the product really takes off.
Sounds like a success story, right? And it is. But then what too often happens is problems arise. Infighting starts about who created what, who owns what rights and who is entitled to what payments. And of course competitors notice the success of the product or service and before long knock-offs start appearing.
To do as much as is possible to protect against the foregoing problems and other intellectual property issues, we offer the following tips:
- Protect your intellectual property before you do anything else – consult with an experienced intellectual property attorney who can help identify what intellectual property rights exist and how best to protect them. Make sure you budget sufficient funds for legal advice and intellectual property protection – it will be money well spent in the long run.
- Put agreements in place to define specifically who created what intellectual property, who owns what and who gets what payments – such agreements can include corporate shareholder agreements, LLC operating agreements, license agreements, and assignment agreements. Also address at the front end what will happen if one or more of the founders wants out or if the success of the business fades – it is important to consider at the front end what will happen to the business assets and intellectual property down the road. The key is everything must be in writing – do not rely on trust, handshake agreements, oral agreements or any non-written agreement!
- A non-disclosure/confidentiality agreement is essential and must be in place before you discuss your product with anyone – and this includes not only potential vendors, business partners, etc. but also visitors to the place of business, friends, etc. if any protected details of products or services will be disclosed.
- Make sure to protect ownership through appropriate agreements – all employees and independent contractors should execute appropriate assignment agreements and work made for hire agreements. This is especially important with respect to website design and maintenance, marketing activities, outside sales people, and customer lists. It bears repeating: everything must be in writing!
- Put appropriate agreements in place if others will use your intellectual property to make sure there is no question who owns what and what uses can be made of the intellectual property.
One of the most frequent questions we must address in our practice is what is the difference between business entity names, trademarks and domain names in terms of legal protection and intellectual property status. A recent article in Forbes Magazine (republished from an article in Entrepreneur Magazine) has a good discussion on this topic. The article can be found at this link: http://fortune.com/2016/07/05/domain-names-trademarks.
We highly recommend this article to gain insight on this important subject.
The Rules of Practice for the Trademark Trial and Appeal Board (TTAB) are changing effective January 14, 2017. The new rules will be applicable to all proceedings, including those filed before January 14, 2017 and pending on that date. The new rules will apply to inter partes proceedings (oppositions, cancellations, concurrent use) and ex parte appeal proceedings.
More information about the new rules can be found on the TTAB website at this link:
Launching A Website Or Commencing Advertising By Itself Is Not Sufficient Use In Commerce Of A Service Mark
Trademark owners often mistakenly assume that they merely have to put up a website or commence advertising to gain trademark rights in a service mark used on the website or in the advertising. By its March 2015 decision in Couture v. Playdom, Inc., the Federal Circuit Court of Appeals confirmed that such activity, without actually providing the services offering on the website or in the advertising, does not constitute sufficient trademark use.
In Couture, the Federal Circuit tackled the question of “whether the offering of a service, without the actual provision of a service, is sufficient to constitute use in commerce under Lanham Act§ 45, 15 U.S.C. § 1127.” Section 45 provides that a service mark is used in commerce “when it is used or displayed in the sale or advertising of services and the services are rendered in commerce, or the services are rendered in more than one State” (emphasis added). Citing decisions in the Second, Fourth and Eighth Circuits, the Federal Circuit held that Section 45 requires the actual rendering of services for there to be use in commerce.
The Couture decision highlights what can happen when a trademark owner does not do sufficient strategic planning. The trademark owner in Couture filed its application in May 2008 and registration was granted in January 2009. The trademark owner’s application was under Section 1(a) of the Trademark Act (i.e. based on actual use) even though the trademark owner had only placed the service mark at issue on a website that was “under construction” at the time of the application and registration. The trademark owner did not actually begin rendering services until March 2010. Under such circumstances, the trademark owner could have better protected his trademark rights by filing an application under Section 1(b) of the Trademark Act based on an “intent to use.”
Make Sure There Is Evidence Of A Bona Fide Intent To Use Before Filing That Intent-To-Use Application!
In the recent case of MZ Berger & Co. v. Swatch AG, the US Court of Appeals for the Federal Circuit affirmed a decision by Trademark Trial and Appeal Board (TTAB) to sustain an opposition to MZ Berger’s intent-to-use application for the trademark “iWatch.” By way of background, an intent-to-use application allows an applicant to essentially reserve a trademark so long as it has a “bona fide intent to use” the trademark in the future. The issue that has arisen in numerous cases over the years is what exactly is required to establish the requisite bona fide intent to use.
In the MZ Berger case, the evidence showed that MZ Berger only had an “aspiration” to reserve trademark rights in the iWatch name in case in decided to develop an associated watch. MZ Berger had never sold watches before, and there was no evidence that MZ Berger had ever taken any steps towards developing a watch product. The Federal Circuit therefore concluded that there was no evidence of a bona fide intent-to-use the iWatch mark.
The take-away from the MZ Berger case is that a mere subjective intent to use a trademark in the future is not a sufficient basis to establish a bona fide intent to use. Instead, if an intent-to-use application is challenged, the applicant must be able to produce objective evidence showing that concrete steps had been taken as of the date the application was filed to start commercializing the product or service to be marketed and sold using the proposed mark.
The Washington Redskins’ ongoing battle to try to preserve its’ “Redskins” trademark was dealt a serious blow, and Washington appears to be at grave risk of losing its trademark rights in the iconic team name, because of a federal court decision issued today.
Several years ago, a Native American named Amanda Blackhorse commenced an administrative proceeding with the litigation branch of the United States Patent and Trademark Office called the Trademark Trial and Appeal Board (TTAB), by which Ms. Blackhorse challenged the Redskins trademark. In June 2014, the TTAB ruling in favor of Ms. Blackhorse and cancelled six Redskins trademarks owned by the Washington team, finding that Washington could not have trademark rights in the “Redskins” name because such name was offensive and disparaging.
Washington appealed the TTAB ruling. On July 8, 2015, a federal district judge in Virgina upheld the TTAB decision. An article discussing the district judge’s decision can be found here: http://talkingpointsmemo.com/livewire/washington-redskins-mascot-trademarks-cancelled
Losing trademark rights in the “Redskins” name would be a huge problem for the Washington team. According to the Washington Post, Washington’s lawyers assessed the team’s value at $2.4 billion in August 2014, with $214 million tied to brand management and the Redskins brand. So an appeal from the district judge’s decision is likely if not inevitable. It should be noted that Washington lost trademark rights in the “Redskins” name in the Trademark Office in 1999, but was able to regain the rights through court litigation. So even though Washington is behind, the game is only in the third quarter and there still is a lot of litigation left – stay tuned!
Those readers who use social media will be familiar with “hashtags” – words or short phrases preceded by the # symbol that are used to identify and give context to social media posts. Various social media services (like Twitter, Instagram and Pinterest) enable users to use a hashtag to search for and group posts about a specific topic, so hashtags perform an important function in the social media world as well as helping to make social media posts interesting and fun.
A number of companies have recently sought to register as trademarks with the United States Patent and Trademark Office hashtags used to identify and describe their goods and/or services. As a general proposition, there should be no reason why a hashtag cannot serve as a trademark so long as the hashtag satisfies the requirements for trademark protection – primarily, the hashtag must not be generic and must serve as a source indicator to identify the source of a particular product or service. Keep in mind, however, that the # symbol used in front of a phrase to signify the phrase as a hashtag has no trademark significance – the phrase incorporated into the hashtag claimed to be a trademark must stand on its own as a protectable trademark. For example, one could not obtain trademark protection for the phrase “sandiegofood” simple by converting the phrase to the hashtag “#sandiegofood” because the underlying phrase is generic.
While a hashtag likely can function as a trademark in the appropriate case, the question remains about the value and practicality of registering a hashtag as a trademark. The owner of the hashtag trademark likely could prevent competitors from using its hashtag trademark to promote the competitor’s goods and services under a traditional trademark infringement analysis. However, the essence of hashtags is to facilitate the collaborative sharing of information on social media. Consequently, the owner of a hashtag trademark likely could not prevent social media users from using the hashtag in social media discussions even if the hashtag is a registered trademark.
As probably is apparent, there is significant gray area about how hashtags can function as trademarks and what will and will not be acceptable use of the hashtag trademark. It will be interesting to see how the law develops in this interesting and important area.
Trademark Protection Has Its Limits – The Taste Of Baked Ziti Cannot be Protected No Matter How Delicious!!
As we have explained in many of our blog posts, a trademark, reduced to its essence, is an indicator of the source of a good. Since the advent of trademark law, creative trademark owners and their attorneys have sought to push the envelope (often successfully) by claiming trademark rights in such non-traditional things as color (think about the color brown for UPS) and sound (thing about the sound used by United Airlines).
But a recent case out of the Southern District of Texas entitled New York Pizzeria, Inc. v. Syal shows that there are limits to how far the trademark law can be stretched to offer protection to non-traditional trademarks.
The issue in the New York Pizzeria case was whether the taste and other attributes of Italian food dishes could function as trademarks. The plaintiff (a franchisor of New York Pizzeria restaurants) claimed among other things that the flavor of its Italian food dishes was entitled to protection under the trademark laws. Interestingly, the court held that there was “no special legal rule” that prevented flavor from serving as a trademark and opined that “almost anything” could serve as a trademark in an appropriate case. However, the court ultimately found that the flavor of the Italian food served in New York Pizzeria restaurants could not serve as a trademark because it was functional and could not serve as a source indicator.
Given the decision in New York Pizzeria, flavor may represent the outer limits of trademark protection. However, such a conclusion must be tempered by certain language used by the court in the New York Pizzeria case, where the court said it did not doubt that flavor could “carry meaning,” in an appropriate case, thereby suggesting that perhaps flavor could in a very special case be a trademark. It will be interesting to see whether any trademark owner ultimately can get flavor protected as a trademark.
A copy of the full New York Pizzeria decision can be found at this link: http://www.jurisnote.com/Case/new3335.pdf
An interesting article about the New York Pizzeria case in a recent edition of Forbes magazine can be found here: http://www.forbes.com/sites/ericgoldman/2014/10/22/food-flavor-cant-be-trademarked-even-if-the-baked-ziti-is-delicious/