Tipp Sheet 2.2

Will The Music Industry’s Trending Trademark Frenzy Undermine Trademark Law?

By Nicole Fagin

The music industry has significantly changed in light of the popularity of streaming media, making it harder for artists to monetize their music based on traditional models such as record sales and concerts. Merchandising has become a lucrative supplement to album sales and some artists are seeking to capitalize on this trend through the U.S. Patent and Trademark Office (USPTO). Popular singers like Taylor Swift and Beyoncé are ensuring that no one else may profit from using their likeness by filing for and asserting trademark ownership over any and everything that relates to their person or their work. However some think that this trademark frenzy may undermine the very purpose of trademark law—to prevent the likelihood of confusion.

Taylor Swift, a former country artist turned pop singer, has been stirring up a great amount of controversy for her recent attempts to monopolize the use of phrases from her 1989 album. She has filed trademark applications for phrases such as "this sick beat," "party like it’s 1989," "cause we never go out of style," "could show you incredible things," and "Nice to meet you. Where you been?" In all, Swift filed forty-one separate trademark applications across sixteen different classes for those five phrases. If approved, she could prevent others from legally commercializing the phrases on everything from home-decor, all-purpose carrying bags and wallets, to umbrellas, paper products (including transferable tattoos), Christmas ornaments, key chains, walking sticks, makeup and cooking appliances. However the trademarks are still pending approval and the USPTO has recently sent non-final office actions requesting additional information.

Despite her pending legal rights on 1989 phrases, Swift has received trademarks for common phrases such as "Speak Now" and "Fearless," and her attorneys have issued multiple cease and desist letters to the popular peer-to-peer e-commerce site, Etsy, for selling merchandise containing her verbatim music lyrics. Similarly, Beyoncé recently issued a cease and desist letter to Etsy for selling mugs containing the word "Feyoncé" (with the "o" shaped like an engagement ring). Most of the Etsy sellers were forced to remove the items in accordance with Etsy’s IP guidelines and DMCA requirements, although in some cases the issue of trademark infringement may have been contestable under the likelihood of confusion theory.

Christopher Sprigman, an Intellectual Property Professor at NYU School of Law, notes that trademark law exists to protect consumers from confusion at the time of purchase by allowing them to identify the source of products. Although this protection oftentimes allows trademark owners to profit from the exclusive use of certain trademarks, trademark law does not exist to protect the creator of marks from the loss of profits. So when it comes to Taylor Swift and Beyoncé suing Etsy sellers, the question should be whether people buying a Feyoncé mug or an ornament with "this sick beat" written on it from a do-it-yourself Etsy seller will think the item is being directly sourced (or licensed) by Beyoncé or Swift, respectively. Although Sprigman doubts that people would be confused in that context, according to him "the law in the books is different from the law in the streets" and trademark law often gives people rights in the real world that they do not legally possess. Since many people cannot afford to battle it out with Swift or Beyoncé’s lawyers, they simply give in to the cease and desist requests.

However, Sprigman cautions that if the USPTO constantly grants Taylor Swift and other famous musicians the rights to popular phrases and idioms such as "this sick beat," trademark law will be in big trouble. "[L]ife [will] evolve such that regular people walking around [will] begin to think that every time they see some phrase associated with a celebrity on a t-shirt, that shirt must be licensed by the celebrity." This would indeed defeat the purpose of trademark law, but only time will tell whether artists such as Taylor Swift will ultimately dictate whether we can "Speak Now" or would need to first request her permission.

Sources: Justia; Think Progress; Fast Company; USPTO

Innovation Act Proposed Again in an Attempt to Tame Patent Trolls

By Kimberly Li

One of the underlying tensions in intellectual property law is the struggle between providing adequate protection for the owner while ensuring that the processes to get these protections are not so burdensome that they either deter the owner from seeking protection for his intellectual property or unnecessarily restrict his right to remedy. For some time, patent trolls were the clearly targeted enemy. However, the Innovation Act, recently making its second appearance in Congress, would broaden the protection for defendants in patent litigation by requiring the plaintiff to jump through more hoops in the litigation process. Introduced by House Judiciary Committee Chairman Bob Goodlatte (R., Va.), the bill was originally presented in 2013, passing the House by a 325-91 margin but was eventually blocked by the Senate.

While the bill appears on its face to address the problem of patent trolls and any other entities hoping to extort profits exclusively through litigation, the bill casts a wide net that arguably creates a prohibitively high burden on plaintiffs who rightfully deserve to bring suit against a patent infringer.

The bill addresses the currently low hurdle to initiating litigation. There is little to prevent parties from entering vague information to file claims or from sending deceptive demand letters to alleged infringers. Victims of abusive pre-litigation action often find themselves paying licensing fees to avoid lawsuits. End-users may even be forced to answer a claim of patent violation before the company has made the product. To address this issue, the Innovation Act proposes that plaintiffs seeking relief under patent-related congressional acts must include with each claim of patent infringement: the accused instrumentality, the alleged direct infringer, the principal business of the claimant, each complaint filed asserting any of the same patents, and whether the patent may be essential to a standard-setting body.

Perhaps the most controversial part of the bill relates to shifting attorney’s fees. If a presiding judge finds that a lawsuit is not "reasonably justified in law and fact," the plaintiff will be required to pay the defendant’s legal fees. While the idea seems beneficial to both parties in theory—the plaintiff loses nothing under the assumption that the plaintiff had good reason to bring suit, and the defendant receives some financial insurance against abusive litigation—its consequences in practice are still unclear, as is its effectiveness in preventing frivolous patent infringement lawsuits.

The divided opinions on the Innovation Act extend to industry lines as well as to business size. Many software and computer technology companies support the proposed changes, while those in the biotech industry have opposed the claim that such measures have already been enacted through the Leahy-Smith America Invents Act of 2011. Because of the many requirements that would be imposed on prospective plaintiffs, smaller businesses and individuals are disadvantaged when bringing suit, even when they have good reason to pursue legal action. Inventors who are trying to protect their patents against infringement by larger companies cannot compete in terms of the resources, including both time and money, for litigation. The tipping of the scales in favor of large businesses and corporations seems inconsistent with the purpose of the bill to prevent excessive litigation and patent troll extortion, since disadvantaging smaller businesses might open another door for patent trolls to buy up patents in their scheme.

Source: Wall Street Journal

May the Device Be With You: YODA Reforms Copyright Resell Rights

By Kimberly Li

Copyright does not apply in the same way to computer code and software as it does to literary works and works of art. For example, if you purchase a book from a bookstore, you obtain usage rights through the "first-sale" doctrine of copyright law. This means that you have the right to resell the book either privately or through a third-party system. However, in computer-related fields, developers often impose an end-user-license-agreement (EULA) that restricts the user’s rights to a limited or personal license. Such agreements have become industry standard tools to limit ownership rights in digital media

As digital devices take center stage in our daily lives, there is greater incentive to limit how EULAs and other restrictive licenses on software provide a cause of action for copyright violations through resale. Spearheading the legislative efforts, Representatives　Blake Farenthold (R-TX) and Jared Polis (D-CO) reintroduced the "You Own Devices" Act (YODA) on February 11, 2015. YODA, which is a proposed addition to Section 109 of the Copyright Act, would effectively prevent copyright infringement claims under EULAs and similar agreements by establishing a right to transfer a device:

[I]f a computer program enables any part of a machine or other product to operate, the owner of the machine or other product is entitled to transfer an authorized copy of the computer program, or the right to obtain such copy, when the owner sells, leases, or otherwise transfers the machine or other product to another person. The right to transfer provided under this subsection may not be waived by any agreement.

Under YODA, if you originally had the right to receive the latest patch on a piece of software for your smartphone, but then sold your phone to someone else, that new owner would have inherited the same rights as when the purchase was completed.

Not only does YODA help standardize the application of transfer rights across all forms of expression protected under copyright law, but also it embodies the long-held fixture rule from property law. Dennis Crouch, a law professor at the University of Missouri School of Law and author of the popular patent blog "PatentlyO," provides the rationale—that once personal property has been fixed to a certain piece of land, that property becomes a part of the land and can be sold with it. As the law stands today, EULAs create an issue akin to selling several acres of farmland, but refusing to sell the barn sitting in the middle of the field. YODA seeks to rectify this absurdity.

While YODA’s focus and end goal is limited to transfer rights for devices, it at least sparks the conversation on the merits of broadening the current limitations on software and digital media.

Source: Gigaom

Teva v. Sandoz: The New Standard Could Greatly Impact Patent Litigation Strategy

By Nicole Fagin

The recent Supreme Court ruling in Teva Pharmaceuticals USA, Inc. v. Sandoz, Inc. makes it clear that if the Federal Circuit wishes to reconsider a district court’s decision on factual matters underlying a patent claim construction dispute, it may do so only if the district court’s ruling on that matter was clearly erroneous. This holding has the potential to significantly change the patent litigation game, as it makes it much more difficult for the losing party of a claim construction dispute to overturn an unfavorable district court decision.

Plaintiff Teva Pharmaceuticals, an international pharmaceutical company headquartered　in Israel, developed and patented the manufacturing method for the drug Copaxone, which is used to treat multiple sclerosis. The patent was set to expire in September 2015, but defendant Sandoz (and several other firms), the generic pharmaceuticals division of Swiss multinational pharmaceutical company Novartis, had already started advertising a generic version of the multi-billion dollar drug months before the patent expired. On its face, this would definitely constitute patent infringement. However, one cannot infringe upon a patent unless said patent is valid.

Indeed that was Sandoz’s defense, as it argued that Teva’s patent was invalid based on 35　U.S.C.　§112, which requires Teva’s patent claims to specify in a written description the manner and process of making the drug in "full, clear, concise, and exact terms as to enable any person skilled in the art . . . to make and use [the drug]." According to Sandoz, one of the claims in the patent was fatally indefinite due to the allegedly ambiguous use of the term molecular weight within the context of the patent claim. After hearing expert testimony from both sides, the district court determined that the word molecular weight was sufficiently definite and that the patent was therefore valid. However, the U.S. Court of Appeals for the Federal Circuit reversed the district court’s decision after reviewing the case, including any factual determinations made by the lower court, on a de novo basis.

In the past, the Federal Circuit has had a wide range of latitude and was given complete deference in determining patent claim construction cases based on precedence established in Markman v. Westview Instruments. In Markman, the Supreme Court held that the ultimate question of claim construction is for the judge, not the jury. However, in its January 20, 2015 ruling, the Court made it clear that Markman "neither created, nor argued for an exception to Federal Rule of Civil Procedure 52(a)(6)" by stating that a court of appeals must not set aside a district court’s findings of fact unless they are clearly erroneous. Therefore, the Court held that while the general issue of claim construction is a matter of law, subject to de novo review, the Federal Circuit must give deference to any factual findings made in the course of construing those claims. Thus, factual findings, such as the molecular weight finding in the Teva case, can only be reviewed on a clearly erroneous basis.

After all is said and done, Teva v. Sandoz boils down to a simple proposition: first impressions are hard to overcome.

Source: Globes

Trademarking Tragedy: Je Sui Charlie

By Rui Li

Can tragedies be trademarked?

After the Paris massacre at Charlie Hebdo’s office in early January, the U.S. Patent and Trademark Office (USPTO) received two applications to trademark "Je Suis Charlie" ("We Are Charlie"), a phrase embraced internationally in response to the January terrorist attack. One of the applicants is a trust from California who is seeking the trademark for charity purposes. The other, a trading group in Florida, aims to use the phrase commercially in apparel, accessories, and dining ware.

Trademarking well-known phrases from contemporary events is not a new occurrence. After the Boston Marathon bombings, the phrase "Boston Strong" became popular and the USPTO received the trademark application shortly afterwards. Similarly, following Eric Garner’s death from an apparent chokehold by a police officer, a woman from Illinois applied to trademark Garner’s last words, "I can’t breathe."

Such applications, though some still pending, have not seen many positive results. The USPTO rejected the "Boston Strong" application and explained that the mark could not indicate or distinguish the source, but rather merely convey an informational message.

Another relevant example involves the ALS Association’s application for an "Ice Bucket Challenge" trademark. The application received tremendous public criticism, accusing the association of attempting to derive commercial benefits from charity. Reacting to this social pressure, the ALS Association ended up withdrawing the application. Although the ALS application is not perfectly analogous to terrorism or a similar tragedy, the impact of public response to trademarking popular humanitarian or charitable phrases may shed some light on the currently pending applications.

Despite the failure of the precedents, the applicants for "Je Suis Charlie" are still optimistic that they will obtain the trademark. In fact, the Californian applicant has even sent a cease-and-desist letter to Charlie Hebdo over its use of the phrase five days after the attack. Currently, the applications are still pending, so we will have to wait and see whether such tragedies can actually be trademarked.

Source: Washington Post

A New Kind of Troll Rears its Head

By Rui Li

Freeplay is a website that boasts "15,000 songs, free music for YouTube and more." On February 9, 2015, two YouTube producers, Machinima and Collective Digital Studio, filed suit against FreePlay for (1) violation of unfair competition laws and (2) declaratory judgment stating that Plaintiffs are not infringing copyright despite Freeplay’s actions. 

The YouTube producers accused Freeplay for its "bait and switch with extortion." Their complaints allege that Freeplay lured in the producers by promising "free" music for YouTube. However, after they used the music on YouTube multi-channel networks (MCNs), the website unilaterally altered its terms and conditions of use and proclaimed that the free use of its music on YouTube is inapplicable on YouTube multi-channel networks (MCNs). Following the change, Freeplay started issuing outrageous monetary demands to consumers who had used its music on MCNs by alleging that the music is subject to Freeplay's copyright.

The producers demonstrate Freeplay’s illegitimate interest by also noting two facts. First, Freeplay, unlike most content owners, does not simply issue a takedown notice to request the removal of the content, but rather sends a shakedown demand, threatening litigation if the consumer does not pay for the license fee. Second, the third party that monitors the website for potential infringement and makes monetary demands is the same person. These facts, the producers claimed, indicate that Freeplay is not running a content license business, but a copyright troll.

Freeplay disagrees. Its attorney, Oren Warshavsky, said the allegations were "baseless." Warshavsky affirmatively said in an e-mail: "Freeplay intends to zealously protect its rights and reputation and is committed to doing the same for the artists it represents."

While the case is still in its preliminary stages, it will be heard before Judge Ralph Zarefsky and stands to influence both current and forthcoming copyright trolls. If the court comes down strongly on Freeplay, it can deter a troll-like proliferation seen with patents and can prevent the negative repercussions from such trolls.

Source: Ars Technica