U.S. Trademark Office Refuses a Trademark Application for “Comfyballs” Citing Vulgarity

Underwear bearing the name “Comfyballs” was recently ruled too scandalous for the United States Patent & Trademark Office (“USPTO”). The USPTO rejected the trademark application of a Norwegian underwear company for the term “Comfyballs.” (Serial No. 85/952474).

The Office cited 15 U.S.C. §1052(a), which states that trademark applications may be denied if the mark “Consists of or comprises immoral, deceptive, or scandalous matter.” A mark is considered scandalous if a substantial portion of the public would find it offensive based on contemporary standards.1 Evidence that a mark is vulgar is sufficient to establish the mark is scandalous or immoral.2 TMEP § 1203.01.

The primary evidence the USPTO cited in the refusal was that Merriam-Webster, the Oxford English Dictionary, Random House, and the American Heritage Dictionary all list the term “balls” as a “vulgar” slang term for testicles.

What about Free Speech and the First Amendment?

Is the refusal of the mark “Comfyballs” a puritanical form of censorship? Speech is protected by the First Amendment. So, how can this be prohibited?

The answer is that U.S. law does not protect all types of speech equally.  A trademark is regarded as a commercial form of speech, and therefore is not entitled to the same heightened free speech protections afforded the press and of citizens to discuss opinions, politics, etc.

Also, according to the USPTO, the term “Comfyballs” is not being censored because the Norwegian company can still make and sell underwear called “Comfyballs” without fear of government fine or sanction. Whether this is true or not may be a question of philosophy and politics. Some would regard the refusal to register a trademark as denial of a valuable property right.

But, irrespective of politics, what the lack of registration means practically is the Norwegian company has fewer options if someone were to infringe the mark.

I have a mark I want to register that may be considered “scandalous.” How can I avoid a rejection like this?

The refusal by the USPTO hints at ways a company can avoid a similar rejection. Checking a dictionary to see if a term is “vulgar” before applying for a trademark could save an applicant many headaches.

Even if a term is labeled “vulgar” in a dictionary, the USPTO may still grant a trademark registration if there is a double entendre. Examples of registered marks containing the term “balls” include: “Got Dirty Ballz” for jerseys and sporting goods because “dirty ballz” could refer to dirty footballs, baseball, etc.; and “It Takes Balls” because this is a common synonym for “guts.”

The problem with “Comfyballs” was that in the context of underwear “balls” allegedly could only refer to testicles. Why a testicle is obscene is another question entirely. Maybe something was lost in the translation from Norwegian? Or, maybe the applicant should have tried a more anatomically accurate phrase? Is that possible? At any rate, the USPTO did not like the application.

The refusal of “Comfyballs” may seem a bit prudish, especially with the general acceptance in contemporary society of terms that once were considered vulgar. Since the standard for scandalous is based on contemporary standards, maybe one day in the near future “Comfyballs” might not be so shocking. But in 2014, the USPTO still bars the registration.

This article was written by Jennifer Blanton, JD and John Buche, JD. The law firm of Buche & Associates, P.C. is based in Southern California with offices in San Diego, Los Angeles, and Houston. The office specializes in acquisition and litigation of patent, trademark, copyright and other intellectual property rights. www.southerncaliforniapatents.com ©2014 Buche & Associates, P.C.

1 See In re Fox, 702 F.3d at 635, 105 USPQ2d at 1248 (quoting In re Mavety Media Grp. Ltd., 33 F.3d at 1371, 31 USPQ2d at 1925-26)

2 In re Fox, 702 F.3d 633, 635, 105 USPQ2d 1247, 1248 (Fed. Cir. 2012) (citing In re The Boulevard Entm’t, Inc., 334 F.3d 1336, 1340, 67 USPQ2d 1475, 1477 (Fed. Cir. 2003))

New Law Alert for California LLC’s

Effective January 1, 2014, the 1994 limited liability company (LLC) statute in California (the “Old Act”) was replaced by the California Revised Uniform Limited Liability Company Act (RULLCA) (the “New Act”). This new law may have an adverse affect on existing California limited liability companies by effectively rewriting the terms of their operating agreements. To avoid potential disputes among members and/or managers, the members of California limited liability companies should review, and if appropriate amend, their current operating agreements.

The New Act states that the Old Act continues to govern all contracts, including operating agreements, entered into by an LLC, its members or managers, prior to January 1, 2014, as well as any vote or consent by members or managers prior to that date. The New Act also provides, however, that any acts taken by an LLC, its members or managers on or after January 1, 2014, will be governed by the New Act. Thus, the New Act not only supplements pre-2014 operating agreements, but also in many cases may materially change the rights and obligations of the members and managers by subjecting any of their actions taken after January 1, 2014, to the requirements of the New Act.

Key Changes in the New Act

Default Rules: The Old Act had a minimal number of mandatory provisions and instead provided “default rules” which applied only if the operating agreement did not override them. The New Act, however, greatly expands the number of default rules, and pre-2014 operating agreements likely have not addressed all of these new or modified rules. Thus, per-2014 operating agreements may have new default rules interjected into them and, as a result, the LLC and its members would be subject to a default rule even if it was contrary to the intent of their business arrangement.

Management Authority: The Old Act contained only a few rules regarding when a manager would need to obtain the consent of members prior to taking action. Members could agree, in the operating agreement, to expand the number of actions for which a manager needed their consent or to keep the consent rights to a few important actions, such as making changes to the articles or the operating agreement, or entering into a merger. The New Act greatly expands the consent rights of members. Thus, depending on the language in the operating agreement, the New Act may effectively limit the authority of a manager to take actions that the manager could have taken prior to 2014.

Also note, many operating agreements were drafted with the intent of giving the manager (who often is the member with the greatest interest) absolute decision-making control over actions both in and outside the ordinary course of business. In light of the New Act, however, this scope of control could be materially changed and give a minority member a veto right where the members did not originally so intend.

Impact of “Transferees”: Under the Old Law, the person to whom any portion of a membership interest is transferred is referred to as an “assignee.” Unless admitted as a member, the assignee would not have any of the rights of a member other than to receive distributions associated with the assigned portion of the membership. The New Act retains this same concept, however uses the term “transferee” instead of “assignee.” Further, the New Act includes a new default rule. Specifically, the New Act states that an amendment to the operating agreement made after a person becomes a transferee is effective with regard to any obligation of an LLC or its members to the transferee. Thus, because the transferee would not have a right to approve an amendment (unless that right is stated in the operating agreement), this new default rule seems to give members the ability to amend an operating agreement to modify, reduce or eliminate obligations owed to transferees.

Unintended Change in Status and Loss of Member Rights: Under the New Act, certain events can result in the “dissociation” of a member. This change in a member’s status would result in the member no longer enjoying the statutory rights of a member, but only the more limited rights of a transferee. Pre-2014 operating agreements typically do not contain language maintaining a member’s status upon the occurrence of dissociation events or negating the default rules relating to dissociation.

Certain Dissociation Events: Dissociation events under the New Act include the following:

  1. The death of a member who is an individual;
  2. If the LLC is managed by its members, the appointment of a guardian or conservator for an individual who is a member;
  3. If the LLC is member managed, a judicial order that a member who is an individual is incapable of performing the member’s duties; and
  4. If the LLC is member managed, a member becomes a debtor in bankruptcy.
    If the members do not want any of these events to result in the dissociation of a member, they should amend their operating agreement.

Impact of Transferee Status on Dissociated Members: Under the New Act, a dissociated member is subject to the same risk as a transferee, namely that the members may amend the operating agreement to modify the obligations owed by the LLC or its members to the dissociated member. Further, a dissociated member, by reason of its transferee status, no longer has the right to participate in the management or conduct of the activities of an LLC. A dissociated member also no longer has a right to have access to records or other information concerning the activities of the LLC other than the right to an accounting from the date of the LLC’s dissolution.

Unintended Change in Manager Status if Member-Manager Dissociates: If a member who serves as a manager becomes a dissociated member, the New Act provides that the member is removed as a manager.

Indemnification and Reimbursement: The Old Act provided the default rule that an operating agreement may provide for the indemnification of any person acting on behalf of the LLC. The default rule under the New Act is that the LLC must indemnify members of member-managed LLCs and managers of manager-managed LLCs, so long as the member or manager has complied with its statutory duties.

The New Act also has a default rule requiring an LLC to reimburse members of member-managed LLCs, and managers of manager-managed LLCs, for payments made by them in the course of their activities on behalf of the LLC, provided that they have complied with their statutory duties.

*The above discussion is intended to serve only as a summary of certain matters relating to the New Act and its potential impact on existing operating agreements for California LLCs. This is not an exhaustive list of changes in the New Act and your existing operating agreement may or may not be affected by the New Act. For questions about the new California LLC law or assistance evaluating your current LLC agreement, please contact Buche & Associates, P.C. at 858-459-9111, or email John Buche at jbuche@buchelaw.com.

© 2014 Buche & Associates, P.C. All rights reserved.
www.pacificpatentlawyers.com

FEATURED CLIENTS: JEAN-LOUIS & JEAN-CLAUDE HECHT – TOP HONOR IN INTERNATIONAL INVENTION EXHIBITION, FRANCE’S CONCOURS LÉPINE

Hecht Pani_Award

On May 12, 2014, one of the firm’s clients, Jean-Louis Hecht and Jean-Claude Hecht received the highest honor in France’s annual invention exhibition, Concours Lepine of the Foire de Paris.

http://www.concours-lepine.com/palmares/prix-du-president-de-la-republique-concours-lepine-international-paris-2014/

Concours Lepine is a prestigious traditional event that first started in 1901 to showcase innovative and cutting edge inventions to the world. http://translate.google.com/translate?hl=en&sl=fr&u=http://fr.wikipedia.org/wiki/Concours_L%25C3%25A9pine&prev=/search%3Fq%3DConcours%2BLepine%26client%3Dfirefox-a%26hs%3Dear%26rls%3Dorg.mozilla:en-US:official

Every year, many inventions are recognized, but only one receives the highest honor, President of the Republic Award.

Annually, crowds of people flock to Foire de Paris to witness and participate in the exciting event. Last year, the city welcomed more than 2,000 exhibitors and 620,000 visitors. Not only is this event perhaps the world’s leading trade fair, it has historically introduced groundbreaking inventions that have changed our lives: the ballpoint pen (1919), the steam iron (1921), the two-stroke engine, contact lenses, and a wheelchair lift for automobiles (1994).

This year, the President of the Republic award went to Buche & Associates’ clients, Jean-Louis Hecht and Jean Claude Hecht, for their truly innovative Pani Vending machine. They are the 114th winner of the competition.

The Pani Vending machine dispenses hot, freshly baked baguettes 24 hours a day. The vending machine can store baguette dough, bake it, and keep it warm in anticipation of passing customers wishing to purchase freshly baked bread. The customer only waits ten seconds after inserting money into the machine and is soon walking away with a hot baguette.

The Pani Vending machine is already in operation with 20 installed machines in the northeast of France, one in Paris, and four in Russia. With this groundbreaking success, the Hecht brothers are now looking overseas to expand their innovative machine so that more people may enjoy freshly baked hot baguettes.

Buche & Associates, P.C. is proud to represent Jean-Louis and Jean-Claude Hecht in their United States intellectual property matters as well as their international ones. The firm has already successfully secured 1 United States utility and a design patent for the Pani Vending machine, and additional patents are in progress.

Pani_Design_Patent

This innovative machine may soon revolutionize the way people purchase freshly baked bread in the United States like it has in Europe. Special congratulations to Jean-Louis and Jean-Claude Hecht for their award-winning idea.

©2014 Buche & Associates, P.C. www.southerncaliforniapatents.com

Featured Startup Client: Scar Designs, LLC Jumps in the Shark Tank

On April 11, 2014, one of the firm’s clients, Scar Designs, LLC, and its founder, Matt Scarpuzzi made an appearance on the hit ABC reality TV show “Shark Tank.”

The series showcases entrepreneurs and inventors who pitch their ideas to celebrity venture capitalists, such as Mark Cuban and Jeff Foxworthy, among others.
QUICKSTOP_FIRESPRINKLER_TOOLS
Matt Scarpuzzi is a professional firefighter in San Diego, California and developed revolutionary new ways for firefighters to stop fire sprinklers from pouring endless amounts of water into buildings after false alarms, or after a fire has been extinguished.

The technology can not only prevent millions in property damage, but saves time and energy for fire departments and property managers across the world. The firm has filed various patent applications for Scar Designs, LLC on the technology and to protect the revolutionary designs.

At the conclusion of a very thorough pitch, the sharks made an offer to Scarpuzzi, but since it would have entailed handing over 50% of the business in exchange for some funds, he respectfully turned down the offer and thanked the show for the opportunity to make a pitch. Scar Designs is pressing ahead with its established business and has already made significant inroads to supplying firehouses across the country.

An important take away from the show is that whether on a reality show or elsewhere, venture capital can be “expensive” money and must be carefully considered. Not everyone on the show is offered a deal, or walks away with a deal, but the show is hugely popular and does highlight the importance to entrepreneurs of publicizing an invention, and making strategic alliances to maximize distribution and profits for a technology.

Article written by John Buche, Esq. John Buche is a patent attorney and specializes in helping inventors and startups. www.southerncaliforniapatents.com. © 2014 Buche & Associates, P.C., all rights reserved.

As New gTLDs Are Launched by ICANN, Are You Protecting Your Brand?

alertFor those of you that do not know, the Internet Corporation for Assigned Names and Numbers (ICANN) is launching new generic top-level domains (gTLDs). This program is going to create hundreds of new “dot-somethings” such as:

.donut

.food

.cars

.music

.party

.paris

 As of today, over 175 new gTLDs have already been delegated by ICANN. You can see the new delegations thus far here. According to ICANN, over 1,300 new names or “strings” could become available in the next few years.1 This is the most significant expansion of the domain name system ever and you and your business need to be prepared. Failure to prepare can result in cybersquatting and trademark infringement issues as third parties will have the ability to register new gTLDs with your trademark.

So, how can you be proactive and protect your trademark? Have your trademark attorney register your trademarks with the Trademark Clearinghouse.2

What is the Trademark Clearinghouse (TMCH)?

The Clearinghouse was created by ICANN and is a mechanism built into the new gTLD Program which functions by authenticating information from rights holders and providing this information to registries and registrars. The key benefit to registering a trademark with the Clearinghouse is that it enables you access to the Sunrise registration period with new gTLD registries. The Sunrise Period is a mandatory initial period of at least 30 days before domain names are offered to the general public. Trademark owners can take advantage of this pre-registration period to safeguard the domain name that matches their trademark. All new gTLDs have to hold a Sunrise Period, and having a verified trademark entry in the Clearinghouse is the minimum requirement to participate in this pre-registration period. Current Sunrise Periods are located here.

To obtain a domain name registration during a Sunrise Period, an applicant must provide proof of actual use of the mark. Proof of actual use can be submitted during the TMCH registration process. All trademarks submitted to the Trademark Clearinghouse for registration are independently validated prior to TMCH registration.

Trademark owners who do not register domain names during the applicable sunrise period still have an opportunity to register desirable domains during the general registration period, which is available on a first-come, first-served basis.

Once registered, you will receive notification from the Clearinghouse when a domain matching your trademark has been registered. When and if you receive a notification from the TMCH, contact your trademark attorney to discuss options for enforcing your trademark.

What are the Limitations of the TMCH?

It is important to note that Trademark Clearinghouse registration has some significant limitations, including the following:

  • Registration with the Trademark Clearinghouse does not prevent a third party from obtaining a domain name that includes a registered mark.

  • In general, only nationally and regionally registered marks are eligible for Trademark Clearinghouse registration. A common law or unregistered mark is eligible only if the mark has been validated by a court or is protected by a statute or treaty.

  • The Trademark Clearinghouse provides protection only against exact matches. For example, the TMCH will not send notifications of plural or sound-alike domain name registrations.

  • Only words in marks are eligible for registration; design marks and graphic or design elements are not eligible for TMCH registration.

  • Marks that include any of the existing top level domain names (e.g., .com) or that include a dot (“.”) are not eligible for TMCH registration, unless the “dot” functions as punctuation or an abbreviation.

  • TMCH registration will not prevent an infringer from obtaining an infringing domain name. But it will give the brand owner notice of the new, infringing domain name. Then the brand owner will need to take further action to protect its mark.

If you have any questions about the Trademark Clearinghouse or protecting your brand, please contact John Buche, jbuche@buchelaw.com or 310.593.4193.

© 2014 Buche & Associates, P.C. All rights reserved. www.pacificpatentlawyers.com

 

Notice: This post may be considered attorney marketing and/or advertising. The information contained in this post is for informational purposes only and is not intended and should not be considered to be legal advice on any subject matter. As such, recipients of this post, whether clients or otherwise, should not act or refrain from acting on the basis of any information included in this post without seeking appropriate legal or other professional advice. Transmission is not intended to create and receipt does not establish an attorney-client relationship.

1http://newgtlds.icann.org/en/program-status/delegated-strings, accessed 4/9/2014

2 http://newgtlds.icann.org/en/about/trademark-clearinghouse, accessed 4/9/2014

How to Not “Hashtag” Your Way into A Lawsuit – #IHATEGETTINGSUED

While using a hashtag on social media has become commonplace and even a “cool” new way to market your brand – when you are a company you need to be aware of the type of hashtags that can get you sued.

What is a Hashtag (#)?

First, for those that do not use social media and do not know what a hashtag is, a hashtag is a word or an unspaced phrase prefixed with the hash symbol (“#”).1 For example, #ILOVENY is a hashtag.

Why use hashtags?

On social media, such as Twitter and Facebook, a hashtag turns any word or group of words that directly follow it into a searchable link. This allows you to organize content and track discussion topics based on those keywords. For example, if you wanted to post about the Game of Thrones finale, you would include #GameofThrones in your tweet to join the conversation. You would then be able to click on a hashtag to see all the posts that mention the subject in real time.

How are hashtags used by companies?

The use of hashtags has become a marketing tool for companies. While some campaigns were a flop, others have been successful.2 For example, electronics retailer RadioShack welcomed Verizon Wireless in September 2011 with a hashtag campaign that made tweeting #kindofabigdeal into a real-time interactive game. In short, Verizon phones were arranged on a table and whenever anyone tweeted that hashtag, the phones would vibrate. Eventually, and due to the vibrations, a tweet would send a phone off the table, in which case the final tweeter would get the phone. The campaign netted more than 80,000 mentions of @RadioShack.3 Great marketing.

What do I need to know about using hashtags?

While hashtag campaigns can be great, companies need to be careful. Here’s what you need to know:

  1. You Can Be Sued for Trademark Infringement, False Advertising and False Association.

Use of a hashtag before a trademarked word or phrase does not make you immune from trademark infringement, false advertising or false association under federal and/or state laws. The ultimate questions you should be asking yourself are (i) “does my company’s use of the trademark lead people to believe that the trademark owner has given my company permission to use their trademark?” and (ii) “will people think my company is affiliated with the trademark owner?” Some examples of infringing uses are:

#NIKE (trademark infringement)

#MYCOMPETITORSPRODUCTHASPOISONINIT (false advertising, unfair competition)

While there is only one reported case on this topic, it is still instructive. In AvePoint, Inc. v. Power Tools, Inc., the plaintiffs alleged that the defendants had “engaged in a campaign of making false, defamatory, and deceptive claims and statements” regarding competitor AvePoint’s software products and services both via online social networking services and in direct communications with customers and prospective customers.4 These statements allegedly include asserting on Twitter and other social media sites that AvePoint is a Chinese company instead of an American company, that Axceler’s software is “Microsoft recommended” over that of AvePoint and that AvePoint’s software is maintained in India.5 In its opinion denying a motion to dismiss by defendants, the court held that (i) a hashtag can be considered commercial speech, and (ii) you do not need to directly refer to a competitor in order to falsely advertise.6

  1. There Are Strategies to Mitigate Your Risk

As a way to minimize your risk for liability, the first rule is to avoid using registered trademarks in hashtags. If you do need to use them, however, there are some considerations that you will need to make. For instance, you will need to consider whether the mark you are using is sponsored by any of your competitors – if so, this raises your risk of liability. You will also need to consider whether the trademark owner is particularly litigious and actively enforces its intellectual property.

The second rule is to avoid suggesting any sort of endorsement of affiliation with brands (unless, of course, you are actually affiliated or sponsored by them).

© 2014 Buche & Associates, P.C. All rights reserved. www.southerncaliforniapatents.com

1 http://en.wikipedia.org/wiki/Hashtag, accessed 3/26/2014

2 http://mashable.com/2012/03/23/twitter-hashtag-campaigns/, accessed 3/26/2014

3 Id.

4 AvePoint, Inc. v. Power Tools, Inc., 7:13CV00035, 2013 WL 5963034, *1 (W.D. Va. Nov. 7, 2013).

5 Id.

6 AvePoint, 2013 WL 5963034, *18 (“Based on these allegations, the court concludes that the plaintiffs have adequately asserted that the Twitter messages constitute commercial advertising.”. . . “Taking AvePoint’s allegations as true, the statements about the “Red Dragon” and “SinkingREDShip” can be fairly understood to refer to AvePoint and its products and services, and Axceler’s representatives made the statements with the intent to target AvePoint’s customers, by creating the impression that AvePoint is a Chinese company and its products and services are not made, developed, or supported in the United States.”).

Cybersquatting – What It Is and How To Stop It

What is Cybersquatting?

As defined by the Anticybersquatting Consumer Protection Act, cybersquatting is the “the registration as domain names of well-known trademarks by non-trademark holders who then try to sell the names back to the trademark owners.”

For instance, in 2007 a man named J. Taikwok Yung developed four websites each with the following domain names: trumpmumbai.com, trumpindia.com, trumpbeijing.com, and trumpbudhabi.com.1 The websites were registered by Yung right after the Trump Organization announced it was going to build Trump-branded hotels and condominiums in Mumbai and Bangalore, India. Thus, the websites were registered to profit off of Donald Trump’s federally-registered trademark for TRUMP, which is associated with high-profile business ventures. When Trump demanded that Yung turn over the websites, Yung filed suit against Trump seeking to keep the domain names citing fair use and First Amendment rights. Trump, however, filed a countersuit against Yung seeking damages for “federal cybersquatting.”

Recently, the federal judge ruled that Yung must pay Trump $32,000 in damages and turn over the websites to Trump because Yung was illegally cybersquatting.2

How to Get Rid of A Cybersquatter

A victim of cybersquatting has two options:

  1. File a lawsuit under the provisions of the Anticybersquatting Consumer Protection Act (ACPA); or

  1. Use the Uniform Domain Name Dispute Resolution Procedure (UDRP) through the Internet Corporation of Assigned Names and Numbers (ICANN).

Using the UDRP

The UDRP policy provides a mandatory, low-cost administrative procedure primarily to resolve claims of abusive, bad faith domain name registration.3 The UDRP policy was adopted in 2000 and applies to all global top level accredited registrars (i.e., .biz, .com, .info, .name, .net, and .org top level domains). According to the rules of ICANN, all those who reserve a domain name in one of the foregoing top level domains must agree to abide by this dispute resolution policy.4

According to the ICANN website, complaints alleged to arise from abusive registrations of domain names (for example, cybersquatting) may be addressed by expedited administrative proceedings that the holder of trademark rights initiates by filing a complaint with an approved dispute-resolution service provider.5 To invoke the policy, ICANN instructs that the trademark owner may either: (a) file a complaint in a court of proper jurisdiction against the domain-name holder (or where appropriate an in-rem action concerning the domain name) or (b) in cases of abusive registration submit a complaint to an approved dispute-resolution service provider.6 Examples of approved dispute-resolution service providers include the World Intellectual Property Organization (WIPO) and the Asian Domain Name Dispute Resolution Centre. More providers can be found on the ICANN website, http://www.icann.org/en/help/dndr/udrp/providers.

Disputes are decided by independent panelists drawn from the WIPO Center’s global list of trademark specialists. The domain name registration in question is frozen suspended during the proceedings. After reviewing a case, panelists submit their decision within a period of 14 days. If a panelist’s decision to transfer a domain name is not challenged in a competent court within a period of ten business days, the registrar is legally bound to implement the panelist’s decision. The entire case normally takes no more than about two months.7

In 2012, trademark holders filed a record 2,884 cybersquatting cases covering 5,084 Internet domain names with WIPO under procedures based on the UDRP.8 Parties settled around one out of five WIPO cases before reaching panel decision and WIPO panels in 2012 found evidence of cybersquatting in 91% of all decided cases.9

In sum, why would you want to use UDRP? Because the proceedings are:

  1. Inexpensive: no evidentiary requirements, discovery, testimony, hearings or motion practice of the type common in federal court proceedings, thereby significantly decreasing costs compared to federal lawsuits.

  2. Faster.

  3. Readily accessible: no jurisdictional issues since domain registrants agree contractually to be bound by the UDRP, and service of process issues are generally non-existent as proceedings are conducted via email.

What are the disadvantages of using the UDRP?

  1. No appeal process to correct erroneous decisions.

  2. No monetary damages, only limited to cancellation or transfer of a domain name.

  3. No precedent.10

  4. No guarantee that the decision by the panel is the final adjudication of the issue since parties can file a federal lawsuit as well.

  5. No evidentiary guidelines.

Notwithstanding the above, where the dispute is more complex or is likely to involve evidentiary issues that cannot be adequately explored in an expedited UDRP proceeding, an ACPA action may be the better choice and is explained in more detail herein.

The ACPA

Enacted in 1999, the Anticybersquatting Consumer Protection Act, or “ACPA” has been inserted into Section 43(d) of Lanham Act, the U.S. federal trademark statute. Specifically, Section 43(d) of the Lanham states as follows:

(d) Cyberpiracy prevention

(1)(A) A person shall be liable in a civil action by the owner of a mark, including a personal name which is protected as a mark under this section, if, without regard to the goods or services of the parties, that person—

(i) has a bad faith intent to profit from that mark, including a personal name which is protected as a mark under this section; and

(ii) registers, traffics in, or uses a domain name that–

(I) in the case of a mark that is distinctive at the time of registration of the domain name, is identical or confusingly similar to that mark;

(II) in the case of a famous mark that is famous at the time of registration of the domain name, is identical or confusingly similar to or dilutive of that mark; or

(III) is a trademark, word, or name protected by reason of section 706 of Title 18 or section 220506 of Title 36.

15 U.S.C. § 1125

The ACPA provides a list of nine factors to aid in determining whether bad faith is involved.11 The ACPA also includes a “safe harbor” for would-be defendants, providing that where the domain registrant “[b]elieved and had reasonable grounds to believe that the use of the domain name was a fair use or otherwise lawful,” the claim will fail.12

Successful plaintiffs under the ACPA can select from a range of remedies available under the Lanham Act, including, but not limited to, a preliminary injunction as well as statutory damages of between $1,000 and $100,000 per domain registration.13

Why file a lawsuit under ACPA?

  1. By filing a lawsuit under ACPA, prevent a potentially adverse decision in a UDRP proceeding from being rendered or implemented.

  2. It can also serve to reverse a final UDRP ruling and either prevent or require the transfer of the disputed domain.

  3. The ACPA expressly provides protection for personal names, whereas the UDRP policy does not, absent a showing that the individual has developed service mark rights in their name.

  4. The ACPA also provides, for the first time, for in rem actions, or actions against the domain itself, where the cybersquatter is beyond the personal jurisdiction of the court or cannot be located despite the trademark owner’s diligent efforts to do so.14

  5. Federal courts are better suited to address and evaluate complex issues, especially where there are competing rights at issue.

What are the disadvantages of filing a lawsuit under ACPA?

  1. The U.S. court system is expensive and time consuming, burning a lot of money and resources for the filing and prosecution of a federal lawsuit.

  2. No guaranteed a well-reasoned or consistent final judgment, even if the federal courts have greater resources.

  3. The decision can be appealed, resulting in more expense.

  4. Monetary damages and injunctive relief is not guaranteed and they are typically only granted in especially egregious cases.

© 2014 Buche & Associates, P.C. All rights reserved. www.southerncaliforniapatents.com

1 http://www.cnn.com/2014/03/01/studentnews/trump-cybersquatting-lawsuit/, accessed 3/24/2014.

2Id.

3 http://www.icann.org/en/resources/compliance/complaints/dndr/filing-udrp, accessed 3/24/2014.

4See Paragraph 4 of the policy at http://www.icann.org/en/help/dndr/udrp/policy, accessed 3/24/2014.

5 http://www.icann.org/en/help/dndr/udrp

6Id.

7 http://onlinedomain.com/2013/04/15/news/wipo-2012-review-2884-udrps-filed-up-4-5-for-5084-domain-names-74-8-of-which-were-com/, accessed 3/24/2014

8Id.

9Id.

10 For example, compare Julia Fiona Roberts v. Russell Boyd, Case No.D2000-1210 (WIPO May 29, 2000) (awarding Ms. Roberts the <juliaroberts.com> domain based on her common law service mark rights in her name) with Reverend Dr. Jerry Falwell v. Gary Cohn, Case No. D2002-0184) (WIPO June 3, 2002) (holding that claimant’s rights in his personal name were not protectable under the UDRP).

1115 U.S.C §1125 (d)(1)(B)

12 15 U.S.C. §1125(d)(B)(ii)

13 15 U.S.C. § 1117

14 15 U.S.C. § 1125 (d)(2)

How to Avoid Trademark Infringement

As the economy is on the rise and competition heats up, trademark disputes have increased, especially against start-ups. Trademark infringement lawsuits filed in the past year include Pininterest, Inc.’s lawsuit against Pintrips, Inc., a personal travel planning start-up, and FlipBoard’s lawsuit against Flowboard, a Seattle-based startup that makes an iPad storytelling application 1. Both lawsuits are still pending in federal court.

Since start-ups typically have limited resources, fighting back against claims of infringement is sometimes out of the question. Thus, the best option is to avoid any claims of trademark infringement in the first place. So, how do you do this? Below are some basic recommendations to minimize the possibility of infringing another’s trademark.

1. Know What A Trademark Is (and What It Is Not).

According to the United States Patent & Trademark office, a trademark is “a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs, that identifies and distinguishes the source of the goods of one party from those of others.” Some examples of registered trademarks are as follows:

trademark1 2   PINTEREST® 3   trademark3 4   trademark4 5

Trademarks are not patents or copyrights. Copyrights protect the expression of ideas but not the ideas themselves. Patents protect ornamental designs (design patents) or processes, machines, articles of manufacture, or compositions of matter that are deemed new, useful and non-obvious (utility patents). By of example and distinction, Apple® has a design patent on the design of its iPhone interface (D604,305) and J.K. Rowling has a copyright for all of her Harry Potter books.

2. Do Your Research.
Before adopting a trademark or building a brand, do your research. For example, search the Internet for similar names that are already being used. Search for as many permutations as you can think of using your favorite search engine. If there is someone out there using a similar mark in a similar industry, stay away. Find a new name. There is nothing worse than spending thousands of dollars in advertising and building a brand just to have to give it up down the line after being sued for trademark infringement. If you find nothing in your search, go to the second step and hire an attorney to conduct a more comprehensive search.

3. Hire an Attorney to Conduct a Trademark Search
After some basic due diligence on your part, hire an experienced trademark attorney to clear your trademark for use by conducting a trademark search. When conducting a trademark search, your trademark lawyer searches what trademarks are registered and what trademarks are used under common law, and how that may affect the trademark you intend to use. Your trademark attorney will also analyze whether or not your intended use creates what is known as a “likelihood of confusion.” In other words, will consumers be confused between your mark and someone else’s?

While the “likelihood of confusion” test differs in each jurisdiction, the underlying purpose of the test is to determine whether or not trademark infringement has occurred under federal and state trademark laws. In analyzing likelihood of confusion, your attorney will look at various factors but the most important ones are the similarity of the goods and services and the similarity of the marks. If your proposed trademark is very similar to another mark that’s already in use, that similarity could create what is called consumer confusion. For example, use of the mark “APPLE” for computers would be trademark infringement, as Apple, Inc. owns the mark APPLE® for computers (U.S. Reg. No. 3,928,818). On the other hand, use of the same mark in different fields can be okay. For example, the word “DELTA” is trademarked for cigars (U.S. Reg. No. 4,459,110), welding torches (U.S. Reg. No. 4,478,759), faucets (U.S. Reg. No. 3,062,101) and airlines (U.S. Reg. No. 2,058,985). While all the same trademark, they are used in connection with different goods and services. Thus, there is no likelihood of confusion, as it is unlikely that consumers would be confused as to the source or origin of those distinct goods and services.

After a search is conducted, your trademark attorney can advise you whether or not you face any risk by using and applying for federal registration of the mark. Failure to take these steps can put your company at significant risk, as defending a federal lawsuit can cost hundreds of thousands of dollars and can yield five-figure judgments against your company. In short, taking these simple steps can save you a lot of heartache and a lot of money down the line.

*Note: If you started using a trademark already and have received a cease and desist letter from a company alleging infringement, contact an experienced trademark attorney to discuss your options.

Notes:

  1. http://www.geekwire.com/2013/board-battle-flipboard-accusing-flowboard-trademark-infringement/, accessed 3/4/2014.
  2. U.S. Trademark Reg. No. 3,252,896.
  3. U.S. Trademark Reg. No. 4,145,087.
  4. U.S. Trademark Reg. No. 3,473,652.
  5. U.S. Trademark Reg. No. 4,345,516.

Linking To Third-Party Websites And/Or Content – What You Need to Know

It is common for websites to “link” to third-party websites or content, but what is your liability if you link to a page or document that is copyrighted? In short, it depends. 1

Types of “Linking”

“Linking” between websites and/or content is the connecting of two different files. A link may lead either to another file in the same website, or to a file on a different computer located elsewhere on the Internet. 2 Currently, there are three types of “linking”: (i) deep linking, (ii) inline linking, and (iii) framing.

Deep linking is when you place a link on your site that leads to a particular page within another site. 3

Inline linking is when you place a line of HTML on your site so that your webpage displays content direction from another site. 4 This is also called “embedding.” By way of example, bloggers embed videos or images on their blogs.

Framing refers to the practice of dividing a web page into multiple sections that use HTML code to pull content from different sources. 5

Liability of Linking

Regardless of the type of linking, in certain situations, links can be used in a way that may violate federal and/or state laws such as copyright infringement, trademark infringement, misappropriation, unfair competition, breach of contract and/or defamation. A breakdown of the different types of liability are set forth in the below paragraphs.

A. Copyright Infringement
Copyrights attach automatically to all original and creative works in a tangible and/or digital form. Copyright infringement occurs when someone violates the exclusive rights granted to a copyright owner under the Copyright Act (i.e., the right to reproduce the work, the right to publicly perform or display the work, the right to prepare derivative works, and the right to distribute copies of the work.).

i. Direct Copyright Infringement.
While there is some uncertainty on this point, the Ninth Circuit Court has held that inline linking does not directly infringe a copyright because no copy is made on the site providing the link; the link is just HTML code pointing to the image or other material. 6 Specifically, the Ninth Circuit has adopted the “server test,” which addresses what it means to “display” a work for purposes of the Copyright Act. In short, the “server test” states that “a computer owner that stores an image as electronic information and serves that electronic information directly to the user is displaying the electronic information in violation of a copyright holder’s exclusive display right. Conversely, the owner of a computer that does not store and serve the electronic information to a user is not displaying that information, even if such owner in-line links to or frames the electronic information.” 7

ii. Contributory Copyright Infringement
If you knowingly link to works that clearly infringe somebody’s copyright (i.e., pirated music files or video clips of commercially distributed movies and music videos), you may be liable for “contributory copyright infringement.” Contributory copyright infringement occurs by “intentionally inducing or encouraging direct infringement” of a copyrighted work. 8

As long as you do not know that a work infringes someone’s copyright, then you typically cannot be held liable for contributory infringement for directing users to that work, as “contribution to the infringement must be intentional for liability to arise.” 9 Notwithstanding the foregoing, courts have also imputed the element of intent when someone should have known the content would infringe. For example, in Perfect 10, the Court held that “under Grokster, an actor may be contributorily liable for intentionally encouraging direct infringement if the actor knowingly takes steps that are substantially certain to result in such direct infringement.” 11

Thus, use your common sense – it not safe to simply claim you “didn’t know” when the facts show otherwise.

iii. Vicarious Infringement
“One infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” 12 An example of vicarious infringement is the Napster case where Napster had a closed system that allowed its users to download and upload copyrighted music. 13 Because Napster’s system required user registration and could terminate its users’ account, the court held that Napster had the right and ability to prevent its users from engaging in infringing activity. 14

B. Trademark Infringement
A trademark is a word, slogan, image, or other device that is designed to identify the goods of a particular person or organization. Trademark infringement occurs when one party uses the mark of another that creates a likelihood of confusion, mistake and/or deception with consumers. In the context of linking, any use of a trademark on your site or a link to another’s site that falsely leads a visitor to think there is an association, affiliation, approval and/or sponsorship between your site and the linked site can be trademark infringement.

C. Misappropriation
Misappropriation is a type of unfair competition in which a competing party misappropriates (i.e., takes) the property of a competitor that the competitor has invested substantial time, skill and money. Note, however, depending on the relevant state law misappropriation theory, this cause of action may or may not be preempted by federal law.

D. Breach of Contract – Terms of Use
Most websites have a “Terms of Use” policy that dictates the terms under which a user can access and browse its website. In these terms of use there are typically provisions regarding ownership and use of the website’s content and intellectual property. There are also typically provisions regarding jurisdiction and venue for disputes regarding the use of content on the website. Thus, if you violate the terms of use by embedding a copyrighted image or work from the website into your own website, the owner of the image or work can sue you for breach of contract in the forum indicated in the terms of use.

E. Defamation
Defamation, which consists of both libel and slander, is defined by case law and statute in California. In short, defamation is a false statement that harms a person’s reputation. See Cal. Civ. Code §§ 44, 45a, and 46. In the context of linking, can you be liable for defamation when you hyperlink to a defamatory statement?

In 2006, in Barrett v. Rosenthal (2006) 40 Cal.4th 33, 63, the defendant posted to two websites a copy of an allegedly defamatory article written by another. The California Supreme Court held, similar to most courts addressing the issue, that bloggers are immune from being sued for “distributor” liability under defamation law. Specifically, the Barrett Court held that “intermediaries” who simply pass on information accessible on the Internet are immune from liability under the Communications Decency Act of 1996, which provides: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” 15 Thus, according to Barrett, republication of a defamatory article is not a basis for liability, as CDA immunity applies.

F. Summary
In light of the above, it is best to know the origin and ownership of the website and/or content that you link to or include on your website. Although this body of law is still evolving, website owners still need to be aware of the risks in linking (or embedding) content on their own website.

Notes:

  1. This blog article does not contain an inclusive list of potential liability and is only limited to the Ninth Circuit. Moreover, this blog article is based on general principles of law and is intended information purposes only.
  2.  http://www.bitlaw.com/internet/linking.html, accessed 2/26/2014.
  3.  http://www.dmlp.org/legal-guide/linking-copyrighted-materials, accessed 2/26/14.
  4. Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1156 (9th Cir. 2007)(“The process by which the webpage directs a user’s browser to incorporate content from different computers into a single window is referred to as ‘in-line linking.’”)
  5. Id.; see also Perfect 10, 508 F.3d at 1156 (“The term ‘framing’ refers to the process by which information from one computer appears to frame and annotate the in-line linked content from another computer.”)
  6. Id.
  7. Perfect 10, 508 F.3d at 1159 (citations omitted).
  8. Perfect 10, 508 F.3d at 1170; see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd, 545 U.S. 913, (2005).
  9. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1020 (9th Cir. 2001)(“Contributory liability requires that the secondary infringer “know or have reason to know” of direct infringement. “)
  10.  Id. at 1171.
  11.  Id. at 1171.
  12. Id. at 1169.
  13.  Napster., 239 F.3d at 1010.
  14.  Id. at 1023.
  15. See 47 U.S.C. § 230(c)(1); Barrett v. Rosenthal (2006) 40 Cal.4th 33, 63; McVey v. Day, B205465, 2008 WL 5395214 (Cal. Ct. App. 2008).

Intellectual Property Basics for Startups

Over the past few years the Southern California startup community has grown by leaps and bounds. In fact, Fast Company has reported that Los Angeles alone is the home to more than 2,200 startups as of 2013. 1 While exciting, the early stages of developing a new business can be a complete whirlwind and intellectual property is easily overlooked either because it is too expensive or time consuming. However, overlooking this critical asset can be detrimental to your startup. There are three types of intellectual property that a startup needs to understand and protect, quickly.

1. Patents
What are patents and why would you need them?

While there are three different types of patents (plant, design, utility), for non-agricultural businesses, only two are particularly relevant to most startups: (1) the design patent, and (2) the utility patent.

Utility patents are available for processes, machines, articles of manufacture, or compositions of matter that are deemed new, useful and non-obvious. For example, Facebook was granted a utility patent on its News Feed Feature, US Patent No. 8,171,128, titled “Communicating a newsfeed of media content based on a member’s interactions in a social network environment.”

A design patent, on the other hand, may be sought to protect ornamental (non-functional) designs. For example, Apple® has a design patent on the design of its iPhone interface (D604,305).

Patents are important because they protect your business and your invention(s). Although they can be expensive and time-consuming, patents are worth the investment since they often can provide the best scope of protection for ideas. Further, for startups, a robust patent portfolio is attractive to investors. Patents also may allow a startup to generate revenue through licensing. Finally, the “patent pending” or “patented” disclaimers often deter would-be competitors from developing identical products.

How long do patents last?

Utility patents currently last 20 years from the effective filing date. Design patents currently last 14 years from the issue date.

*Warning: It is critical to know that there are certain bars to receiving a patent, namely the one year on sale bar. An inventor has one (1) year to file for a United States patent from the time an invention is patented or published anywhere in the world or sold or known of in the United States. If a patent application is not filed within this one-year grace period, you lose the right to apply for a patent forever. Further, this one-year grace period is not the standard in most foreign countries, therefore, if international patent protection is sought, it is important to file a U.S. patent application prior to making, using or selling a new invention.

2. Trademarks
What are trademarks?

Trademarks are words, symbols, logos, slogans or product packaging and design that identify the source of goods or services. In other words, a trademark is a brand name. Famous trademarks include Coca-Cola®, Nike® and Apple®. The purpose of trademarks is to build brand awareness and goodwill with consumers. Startups should protect their brand early by clearing and registering key trademarks (i.e., company name or company service/product line).

How do you get a trademark?

Trademark rights are acquired through use. Federal registration of your trademarks with the United States Patent & Trademark Office for your trademarks is highly recommended.

Although federal registration of a mark is not mandatory, it has several advantages, including notice to the public of the registrant’s claim of ownership of the mark, legal presumption of ownership nationwide, and exclusive right to use the mark on or in connection with the goods/services listed in the registration. 2 Without federal registration, the symbols “TM” or “SM” may be used to accompany trademarks or service marks to designate products or services. Only registered marks may be accompanied by the “®” symbol. Federal registration is quicker than a patent – generally 8 months to a year – and can cost a few thousand dollars.

As the startup grows, it will become increasingly important to police your trademark rights so you do not lose business to consumer confusion and knock-offs.

*Warning: Prior to filing for registration of any trademark, it is highly suggested that you engage an experienced trademark attorney to search for existing uses of your proposed trademark to limit the possibly that (i) your trademark gets denied by the Trademark Office or, (ii) you get sued for trademark infringement.

3. Copyrights
What do copyrights protect?

Copyrights protect the expression of ideas not ideas themselves. For example, a copyright can protect a particular photograph of a car, but others may still create their own photographs of the same type of car. Books, music, art, websites, advertising materials, photographs, architecture and computer software are protected by copyright.

How do you get a copyright?

As soon as a work is written or recorded in a tangible form, it is considered to be copyrighted. In the United States, the law provides six exclusive rights to copyright owners, including the rights to reproduce the work, prepare derivative works and distribute copies.

Why should I register my copyright with the Copyright Office?

Although not required, it is suggested that you register your copyrights with the U.S. Copyright Office (www.copyright.gov), which can be done online for just $60.00. Registration is inexpensive, easy and provides procedural benefits. Most importantly, federal registration of a copyright is required in order to file a lawsuit in federal court for copyright infringement. Federal registration is also necessary to receive certain remedies, such as statutory damages and attorney fees. Finally, federal registration provides a presumption of originality and ownership, and it allows U.S. Customs to stop the importation of infringing or counterfeit works.

Whether a copyright is registered or not, businesses should include the “©” symbol or the word “Copyright” with all materials it distributes. They should also include the year of first publication, the name of the owner, and the language “All rights reserved.”

*Warning: Startups should be careful to avoid using third-party photos, music, or writings on their website, marketing materials or products. Such use could lead to a potentially costly infringement dispute with the copyright holder.

Conclusion

Startups should be aware of the types of intellectual property that can impact their business and consider pursuing patent, trademark and copyright protection as appropriate. The significance and value of intellectual property mandates that companies strategically approach intellectual property protection. Startups that do strategically protect their IP create significant value.

Notes:

  1.  http://www.fastcompany.com/3020056/analysis-finds-las-tech-scene-outgrowing-hollywood, Accessed 12/16/20-13
  2.  http://www.uspto.gov/trademarks/basics/index.jsp, accessed 12/16/2013