On June 21, 2016, we published a post discussing an effort by the State of California to obtain copyright protection for public records. The proposed legislation sought to give copyright protection to public records created using taxpayer funds (such as maps, hearing transcripts, legislative reports, etc.), and would have authorized state and county governments to control and even prohibit their use. The proposed legislation met with strong opposition, primarily from free speech and open government advocates. Fortunately, the author of the controversial legislation (Assemblyman Mark Stone of Monterey Bay) saw the error of his proposal and has abandoned the proposed legislation.
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.
Consider the following two situations:
- Two people form a California corporation as equal owners. One of the owners later decides he/she wants to dissolve the corporation but the other owner objects.
- Two people form a California limited liability company (LLC) as equal owners (members). One of the members later decides he/she wants to dissolve the LLC but the other member objects.
Under current California law, the owner who wants to dissolve the corporation in the first scenario can do so without having to resort to court action because a voluntary corporation dissolution can be initiated by 50% voting power. However, under current California law, the member who wants to dissolve the LLC in the second scenario must file a costly and potentially time consuming lawsuit to obtain a court order to dissolve the LLC since the vote a majority of the members of an LLC (not just 50%) must vote to initiate a voluntary dissolution of an LLC under Corporations Code sections 17707.01 and 17707.02. Such an anomaly clearly makes no sense.
Fortunately, Governor Brown recently signed legislation to end this anomaly. Effective January 1, 2017, the LLC dissolution law will be harmonized with the corporate dissolution law. Consequently, starting January 1, an LLC member with 50% voting power can initiate a voluntary dissolution of an LLC just as can be done with corporations. Of course, just as is true with most other aspects of LLC operation and management, the members of an LLC remain free to draft their articles of formation and operating agreements to require a higher voting percentage than 50% for a voluntary dissolution, to require judicial dissolution, or to have other terms and conditions for voluntary dissolution.
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:
Here’s an excellent post by our Of Counsel Ashley Franco:
As new technologies appear, so do laws that regulate them. Changes in technology usually outpace laws put in place to regulate them; as a result, there is usually a gap between the time the technology emerges and time a law is enacted to regulate it. Until recently, the increasingly popular e-cigarette went without regulation. On May 5, 2016, the U.S. Food and Drug Administration finalized a rule extending its authority to include e-cigarettes as part of the tobacco products it can regulate. The new rule, effective August 8, 2016, imposes disclosure requirements to companies selling and/or manufacturing the e-cigarettes and/or any of its affiliated products.
One major implication of the new rule is that e-cigarette manufacturers will have to undergo a premarket review in which they must disclose the ingredients in the e-liquids used in the e-cigarette. The FDA stated the new requirements are in the interest of the consumers who should have the opportunity to evaluate the potential risks associated with consuming the e-cigarette liquids, which usually contain nicotine derived from tobacco.
It comes as no surprise that the FDA has decided to regulate e-cigarettes, since there are obvious health risks associated with consuming tobacco products. Since the e-cigarette’s introduction, it has gone under the radar with little to no regulation. You will most likely find individuals smoking e-cigarettes in the non-smoking sections of restaurants and bars. It has become a way for smokers to get their nicotine fix in areas where the common cigarette is banned by regulation. That seems to be heading to an end with the new regulation because under the new rule the FDA will be able to evaluate the dangers of the e-cigarette.
Under the new rule’s premarket review requirement, the FDA will be able to evaluate the dangers of the e-cigarette. For example, tobacco smokers are prohibited from smoking regular cigarettes in certain areas because of the known health risks associated with second hand smoke. The effects of e-cigarette second hand smoke is not certain as of yet, but will be investigated as part of the new rule and will most likely have an affect on where e-cigarette smokers can enjoy their e-cigarettes.
Who should worry about the outcomes of the new rule? Small businesses should certainly start looking into the impact this new rule will have on them. The new disclosure requirements will most likely have a negative effect on small businesses that may not be able to cover the costs of the additional disclosure requirements. The premarket review requirement imposes a great costs to all businesses that sell and/or manufacturer e-cigarettes and affiliated products.
If you manufacture e-cigarettes the rule requires you to:
- Submit an application and obtain FDA authorization to market the e-cigarette
- Register establishment(s) an submit the product listing to FDA by December 31, 2016
- Submit a list of the ingredients associated with your e-cigarette and affiliated products
- Submit information on the harmful and potentially harmful constituents (HPHCs)
- Submit tobacco health documents
- Manufacture your tobacco product with the required warning statement on packaging and advertisements
- Market your tobacco product in compliance with the other applicable statutory requirements, rules and regulations.
If you sell e-cigarettes or their component parts that are made or derived from tobacco you are also subject to certain FDA requirements.
Complying with the law may be a long and complex process. We recommend you consult with a lawyer to help you understand and comply with the FDA regulations and policies.
The California Assembly recently passed a measure that would allow the state government to obtain copyrights for materials that it creates. Critics, such as the Electronic Frontier Foundation, claim that this measure could suppress the dissemination of government funded works. The measure, AB 2880, was passed by a vote of 76-3. Peter Scheer, Executive Director of the First Amendment Coalition, says that the assembly is stepping into a hornet’s nest, noting that the federal government itself does not claim copyright protection in its public works. Jim Ewert, General Counsel for the California Newspaper Publishers Association, says that his concern is the potential for an agency to use copyright as a means to limit the public’s ability to use records that a state or local agency has created. The California Chamber of Commerce has also come out against the proposed legislation.
Copyrights are very powerful rights but often are not fully understood or protected by business owners. Here are some important tips about copyrights with which all businesses should be familiar:
- Register: Businesses should identify and register their copyrights within 90 days of the publication of the copyrighted work.
- Notice: Even though not required, we strongly recommend that businesses place an appropriate copyright notice on all copyrighted works to discourage infringement and cut off the “innocent infringer” defense.
- Rights: All businesses must make sure that they have the right (documented in writing) to use any copyrighted materials created by others. Copyright issues sometimes can be hard to spot so we strongly recommend that businesses retain an experienced intellectual property attorney to conduct a periodic intellectual property audit.
- Agreements: All businesses must make sure they have appropriate written agreements in place with employees and other creative personnel regarding ownership and use of copyrighted materials (including, most particularly, materials created by employees and contractors) as well as agreements establishing the right to use copyrighted materials owned by others.
- Insurance: Businesses involved in any way in areas that involve the creation and use of copyrighted materials should explore obtaining insurance for infringement claims. Please note that most commercial general liability policies do not cover intellectual property claims – the purchase of separate coverage usually is required.
- Infringement: Businesses should take seriously any infringement of its copyrighted materials as well as claims of infringement asserted by third parties. In both situations, the business should promptly consult with an experienced copyright lawyer to determine an appropriate and cost-effective course of action.
On September 30, 2015, we posted about a recent case that addressed whether decorative aspects of cheerleader uniforms could be the subject of copyright protection. Our September 30 post can be found here: https://affinitylaw.wordpress.com/2015/09/30/three-cheers-for-the-wood-flooring-recent-cases-confirm-copyright-protection-for-cheerleader-uniforms-and-wood-flooring-pattern/
The United States Supreme Court recently decided to review the case. More information can be found in this recent article in The Hollywood Reporter: http://www.hollywoodreporter.com/thr-esq/supreme-court-hear-fight-cheerleader-889321
As the article notes, while the case nominally is about cheerleader uniforms, the Supreme Court’s decision could have far-reaching implications for Hollywood and could set boundaries on the copyright protection afforded to costumes. Stay tuned to this space for updates.
Many of our readers may have read with interest the recent media about the copyright litigation concerning Led Zeppelin’s iconic “Stairway to Heaven” where the owners of the rights to a song entitled “Taurus” put out by the 60s band Spirit have sued Led Zeppelin for copyright infringement by the song “Stairway to Heaven.” This is just the latest in a long line of lawsuits involving alleged infringement and plagiarism of the rights to popular songs. Accusations of musical plagiarism are a recurring phenomenon, but only rarely end up being heard in formal legal proceedings. Many readers will remember the 2015 case where a jury awarded damages of $7.2 million against Robin Thicke and Pharrel Williams for infringing the copyright in Marvin Gaye’s “Got to Give It Up.” These artists settled out of court because their songs too closely resembled songs by other artists:
Given the enduring popularity of “Stairway to Heaven,” the potential infringement damages could be massive – it will be interesting to see if Led Zeppelin chooses to litigate or settle out of court. Stay tuned.
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.”