Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • That’s How You Write It

    It’s always tricky to sell a business that uses your personal name. Probably a lot of the value of the acquisition is tied to the name — imagine selling Martha Stewart Living Omnipedia without getting full rights to the name “Martha Stewart.”

    But the person selling the name has made his or her living in the industry and, understandably, isn’t going to want to altogether give up the right to use his or her own name for a future business. Yet the acquiring company isn’t going to be too happy having to compete with, essentially, itself reformed. So you can see the tension in trying to craft the document that describes how the seller can use his or her name in the future.

    One example of how it played out was in JA Apparel Corp. v. Abboud (blogged here). In it, Joseph Abboud sold the trademark rights in his name but the trial court, on remand, ultimately decided he could use his own name for his new “jaz” brand as long as the use of his name was a fair use, that is “otherwise than as a mark.” Lanham Act § 33, 15. U.S.C. § 1115.

    We now have a similar situation in JL Powell Clothing LLC v. Powell — the caption is already a giveaway. Powell ultimately sold his business and started a new business under the name “The Field.” On the front cover of the catalog it said “In the Salt: Dispatch—J. Powell” and inside the front cover was a photograph of Powell and a message to customers signed “Josh Powell.”

    The Contribution Agreement Powell had signed said this about Powell’s future use of the JL Powell mark and name:

    JL Powell Clothing LLC v Powell Contribution Agreement snip
    para. 7.1(b)

    If you can’t read the image, it says:

    In connection with this Agreement and the transfer and assignment by JLP of all JLP Intellectual Property to [JL Powell LLC], Joshua L. Powell, (the “Founder ”) hereby grants to [JL Powell LLC] throughout the world the sole and exclusive right, license, and permission to use his name and endorsement to exploit, turn to account, advertise, and otherwise profit from [JL Powell LLC’s] goods and services bearing such name, image, and/or endorsement. The grant made hereunder shall be exclusive to [JL Powell LLC], and the Founder agrees that he shall not, on behalf of himself or any other person or entity, grant any similar right of any kind in connection with any business competitive in any respect with [JL Powell LLC] or any of its affiliates and/or subsidiaries. The Founder further agrees that he will not use his name or permit any other person or entity to use his name, and otherwise will not assert any right to use his name, including but not limited to any right to use his name under the doctrine of fair use, in connection with any business competitive in any respect to [JL Powell LLC] or any of its affiliates and/or subsidiaries.

    Powell made unsuccessful contract-based arguments trying to undo the effect of this clause, but the agreement successful wrote around the fair use defense:

    Section 7.1(b) of the Contribution Agreement is broader than the agreements at issue in Madrigal and Abboud. In Section 7.1(b) Powell grants the exclusive use of his name and agrees not to use his name or permit any other person or entity to use his name in connection with any business competitive in any respect to JL Powell LLC or any of its affiliates and/or subsidiaries. Powell’s grant in Section 7.1(b) goes beyond the conveyance of trademarks or trade names. Section 7.1(b)’s contemplation of the trademark concept of “fair use” itself adds support to the conclusion that Powell was conveying the use of his personal name in addition to a trade name. “In technical trademark jargon, the use of words for descriptive purposes is called a ‘fair use,’ and the law usually permits it even if the words themselves also constitute a trademark.” By agreeing not to assert a fair use defense, Powell is essentially giving up his right to use his name, even for descriptive purposes, in connection with any business competitive with JL Powell LLC and its affiliates and subsidiaries.

    (Emphasis in original.) Powell therefore breached the agreement by using his personal name for his new business and the court granted a preliminary injuction.

    JL Powell Clothing LLC v. Powell, No. 2:13-CV-00160-NT (D. Maine Jan. 30, 2014).

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  • One Cannot Put a Would-Be Franchise Back Together

    I was all stoked because one of the most complicated trademark ownership cases I’ve ever seen, C.F.M. Distributing Co. v. Costantine, was appealed to the Federal Circuit. Super! Clarification from a Court of Appeals on trademark ownership!

    Sigh. Affirmed under Rule 36 without an opinion. Oral argument here.

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  • Get Those Agreements Signed

    Where a work is a “work made for hire” by virtue of it being specially commissioned, there must be a writing saying so signed by both parties. And it really has to be signed.

    On July 10, 2010 Zenova signed an agreement to create a website framework for defendant Mobile Methodology, LLC (“MML”). The agreement defined the scope of work as “only that which is described in the Web Development Specifications and the [instant] Web Development Agreement.” (Brackets in original.) The agreement also provided that Zenova’s work would be “works for hire” for MML and that “upon full payment of all invoices due, copyright and all rights to page designs, web development source code, and graphic source files” would belong to MML. The agreement also said “to be valid, this agreement must be signed within 30 days of the date signed by [Zenova], and be accompanied by an initial deposit.” (Brackets in original.)

    MML never signed the agreement but the parties nevertheless worked together within the scope of the work as defined in the contract. In January, 2011 MML signed a change order that modified the scope of the work and increased the contract price. MML wrote at the top of the change order “Change Order from 7/10/10 contract between Zenova and Mobile Methodology, LLC.”

    The relationship ended badly about seven months later, but after Zenova had delivered some of the project. Zenova demanded that MML cease and desist from using the project materials, MML did not, and we have a lawsuit. Zenova claimed that MML infringed the copyright in its work on the project and MML claimed that it owned the copyright in the work because it was a work made for hire.

    Zenova’s argued that there was a condition precedent to the agreement’s validity, that is, that MML sign the agreement within 30 days of Zenova’s execution, which it had not done. Therefore, the statutory requirement for a work made for hire was not satisfied. MML rebutted that the January, 2011 Change Order was signed and it expressly referenced the July, 2010; thus, this execution met the signature requirement.

    The court agreed with Zenova:

    In my view, Zenova’s argument presents a threshold question of common law contract formation rather than copyright law. Clearly, putting aside its legal enforceability, there was some contractual or quasi-contractual relationship between the parties; both had an expectation that Zenova would do some amount of work for which it would be, and at least in part was, paid. At some point in this case, it may be necessary to rely on extrinsic evidence as to what the agreement was, and that would include a review of both the July Agreement and the January Change Order. But the terms in toto of any potential quasi-contract are not before me.

    Viewed from the perspective of contract formation, the July Agreement became a dead letter 30 days after Zenova signed it and defendants did not. The provision was clear: “To be valid, this agreement must be signed within 30 days of the date signed by [Zenova].” Defendants did not meet that timetable. The conclusion is unavoidable that defendants did not countersign the agreement within 30 days because they wanted a firm agreement on the specifications, or modifications to them, before they would sign, and that second agreement was not reached until the January Change Order. Although they signed the January Change Order, they did nothing that would have been legally sufficient to revive the expired July Agreement….

    Etshtien could write on the change order that it was pursuant to “7/1/10 contract between Zenova and Mobile Methodology, LLC” – he could write whatever he wanted – but he had no right to unilaterally change the condition precedent to the validity of that contract. In other words, he could not by his own dint relate a change order to a contract that had never come into being. At most, the January Change Order constituted either a proposal by Etshtien for Zenova to do work based on the specifications in that change order, or a new agreement between the parties to do so. Which, if either, of those scenarios eventuated between them is not before me on this motion; it suffices for present purposes that neither of them contained an express, written, mutually signed work for hire clause.

    Wow. What if the new Change Order was signed 11 days later and the parties had worked together for two years afterwards? Wasn’t Zenova’s work, before and after the change order, waiver of the deadline for execution?

    The reasoning also misses a step, which is whether the work by Zenova could be considered a work made for hire in the first place. Under the definition relied on by Zenova, the work must be “a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas.” The court never examined that aspect of the statute. And if the work isn’t a work made for hire because it doesn’t fit the statutory category, was the intent of the parties instead that the work be assigned?* If so, an assignment requires only one signature, by “the owner of the rights conveyed.” Zenova, the company creating the copyrighted work, signed the agreement. It might have been enough.

    *This was the situation in Vergara-Hermosilla v. Coca-Cola Company: the parties referred to the work being a “work for hire” but the court found there was an assignment.

    Zenova Corp. v. Mobile Methodology, LLC, No. 13 Civ. 745 (BMC) (E.D.N.Y. Feb. 4 2014).

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  • Winning With No Trademark at All

    In the United States we often think of “unfair competition” as a claim that is for infringement of an unregistered trademark, but the theory is broader than that. Los Defensores v. Gomez is the rare case where there was an unfair competition claim not involving a trademark, and it was successful.

    Plaintiff-respondent Los Defensores is an “attorney joint advertising group” focusing on the Spanish-speaking market in Southern California. It has spent $123 million since 1984 advertising the telephone number “1-800-636-3636.” When a focus group was asked if they “knew of the telephone number of any group of lawyers,” according to the complaint the “overwhelming response was ‘636-3636.’”

    Defendants Rosa Gomez and Armando Vero registered a number of 636-3636 telephone numbers in different area codes. When they received a call, they would answer “Law office — how can I help you?” and avoid clarifying when asked whether they were associated with Los Defensores. They referred the calls to the law firm of Amamgbo & Associates and were paid salaries of approximately $12,800 a month for the referrals.

    Los Defensores sued Gomez, Vero and Amamgbo. Gomez and Vero were deposed, so there is some evidence in the case, but the court ultimately defaulted Vero and Gomez as a sanction for failing to produce financial documents. The court awarded damages to Los Defensores and Gomez, Vero and Amamgbo appealed on varous bases, including that the complaint did not state a claim upon which relief could be granted.

    The complaint, in California state court, alleged common law unfair competition and passing off. The court summarizes the theory this way:

    Although the term “unfair competition” applies to several types of misconduct, the tort of unfair competition pertinent here is the act of passing off one’s goods as those of another. That tort developed as a equitable remedy against the wrongful exploitation of trade names and common law trademarks that were not otherwise entitled to legal protection. Injunctive relief and damages are available for common law unfair competition involving fraud or an intent to mislead consumers.

    The purpose of the equitable doctrine is to prevent unfair competition through misleading or deceptive use of a term exclusively identified with claimant’s product and business, affording judicial protection whenever the name and the business through continued association become synonymous in the public mind; and submerges the primary meaning of the name in favor of its meaning as a word identifying that business. The crucial element is the mental association in the buyer’s mind between the mark used in connection with the product and a single source of origin.

    Under the doctrine, even a term or mark with a common meaning may trigger the crucial mental association when it acquires a “secondary meaning,” that is, becomes identified in the relevant marketplace with a product from a unique or particular source. … Thus, secondary meaning is a shorthand phrase which describes the existence of conditions from which public confusion will flow if the defendant is permitted to pursue his deceptive scheme. If words have been used or employed in such a manner that the public has learned to associate them with the thing described, they acquire a secondary meaning. If an association is thereby formed in the minds of the public which fixes plaintiffs as the source of something of a particular nature to be available in a particular place, this is sufficient.

    (Lots of quotation marks removed; emphasis added.) The court elaborated on how this differs from trademark infringement:

    Appellants contend that the unfair competition claim is premised on the “flawed theory” that respondent has rights of ownership or control over appellants’ own telephone numbers. We disagree. Respondent’s claim is predicated not on its ownership or control of phone numbers containing the pertinent numerical string, but on its right to prevent deceptive conduct aimed at consumers by exploiting the numerical string after it has acquired a secondary meaning. As our Supreme Court has explained, an unfair competition claim “does not depend on the ownership by plaintiffs of any particular word, phrase, or device, as a trademark…. The right of action in such a case arises from the fraudulent purpose and conduct of the defendant and the injury cause by the plaintiffs thereby, and it exists independently of the law regulating trademarks or of the ownership of such trademark by the plaintiffs. The gist of such an action is not the appropriation and use of another’s trademark, but the fraudulent injury to and appropriation of another’s trade.”

    (All sorts of ellipses and quotation marks removed.) Thus, a claim for unfair competition does not require proof that one owns a word or phrase capable of trademark significance, only that there is an association and that the defendant acted with culpability. It therefore is a claim that can be brought for use of a generic term that has “de facto secondary meaning” if there is deception by the defendant.

    Here, on a default judgment, the plaintiff showed that there was secondary meaning in the telephone number. The defendants’ conduct was also misleading; they used the number string to pass themselves off as affiliated with the plaintiff and engaged in misleading conduct — while they hadn’t affirmatively represented themselves as the plaintiff, they had a duty to disclose material facts but did not do so, which was fraudulent. Thus the plaintiff had successfully stated a claim for unfair competition and the damages award stood.

    Los Defensores, Inc. v. Gomez, B240725 (Cal. App. Ct. Jan. 24, 2014)

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  • Someone Else Can Have Registered the Copyright

    Spank LP imageThe nice thing about appeals court decisions is that they’re often short. The court generally doesn’t have to plow through a kitchen sink of claims and instead gives us a brief education on a fine point of the law. In Smith v. Casey from the 11th Circuit, the issue is exactly who has to have registered the copyright for purposes of standing.

    Ronald Louis Smith, Sr., now deceased, wrote a song called “Spank.” Sunshine Sound produced a recording of the song and in the Recording Agreement Smith agreed he would “sell[ ], assign[ ], and deliver[ ]” his rights to the composition in exchange for royalties. Smith never executed an assignment. Nevertheless the copyright in the composition was registered by Harrick Music, an affiliate of Sunshine Sound, identifying Smith as the composer.

    Smith and Sunshine Sound had a falling out. The dispute was settled with Sunshine Sound retaining rights in the sound recording and Smith retaining the right to be paid royalties. The agreement was silent, though, on who owned the copyright in the composition.

    After the settlement, Harrick Music administered the rights but, according to Smith, never paid him any royalties. Shortly before his death Smith sent a cease-and-desist letter to Harrick revoking its authority to administer the rights. Smith’s son, on behalf of the estate, sued Harrick but the district court dismissed the suit on the basis that Smith hadn’t registered the copyright in the song.

    But the facts are a bit of a head fake—you’d think that the outcome turns on who owned the copyright after the settlement, but it doesn’t. To bring a copyright infringement suit, one must be a legal or beneficial owner of the copyright. 17 U.S.C. § 501. Smith was a beneficial owner because he had a royalty stream, so he had standing, albeit subject to the registration requirement.

    As to the registration requirement, the Court of Appeals for the 11th Circuit held that the registration by defendant Harrick Music was good enough:

    Harrick Music registered a claim to copyright in the “Spank” composition, specifically identifying Smith as the composer and informing the Copyright Office the work was not made for hire. Nothing in § 411(a) indicates that a composer who has agreed to assign his legal interest in a composition, along with the right to register it, in exchange for royalties, may not rely on the registration his assignee files. Where a publisher has registered a claim to copyright in a work not made for hire, we conclude the beneficial owner has statutory standing to sue for infringement….

    Were we to … hold otherwise, redundant registrations would be necessary for statutory standing purposes every time legal and beneficial ownership of the same exclusive right rested with two distinct parties, even if they joined together in filing suit against an alleged infringer. Absent clear statutory language requiring it, we do not believe Congress would have intended such a result. We hold the Smith estate has adequately alleged facts to support its statutory standing to sue for infringement of the “Spank” copyright.

    Smith v. Casey, No. 13-12351 (11th Cir. Jan. 22, 2014).

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  • You Need to Schedule Worthless Trademarks

    Thanco Products and Imports, Inc. v. Kontos is a case that intrigues me. It’s an adversarial proceeding in a bankruptcy, not having to do with who owns the trademarks exactly, but what happens when one lies about it.

    In 2006 and 2007 Debtor George Kontos filed six trademark applications that ultimately registered, for GREEK AMERICAN PRINCESS, GOT OUZO?, GREEK BY MARRIAGE, GREEK TIME, WHAT HAPPENS AT THE GREEK FESTIVAL … STAYS AT THE GREEK FESTIVAL,* and OFFICIAL MEMBER GREEK MAFIA. The were all registered for apparel and Kontos had a business selling T-shirts at festivals run by Greek Orthodox Churches.

    Plaintiff Thanco Products also sold shirts at the same venues displaying “got ouzo?”, and so petitioned to cancel Kontos’ registration at the PTO. The dispute ultimately ended up in federal court in the Southern District of Texas, Kontos defaulted, the registration for GOT OUZO? was cancelled, and Kontos was ordered to pay Thanco $30,843 in treble damages. Thanco then brought proceedings in North Carolina, where Kontos lived, to collect on the judgment. In response, Kontos filed a Chapter 7 bankruptcy but didn’t list the remaining five registrations as assets. Thanco Products filed an adversarial action claiming that Kontos should be denied discharge of his bankruptcy under §727(a)(4)(A) because he made a false statement about ownership of the trademarks.

    Kontos had a very fluid tale about why he didn’t make a false statement on his petition. First, he claimed at the 341 meeting of creditors on March 2, 2012 that he had sold them in October, 2009 to a Greek company called BGA Hellas, but he didn’t know who they were. Oh wait, when testifying in June, 2012 Kontos remembered that BGA Hellas was owned by Kick Yiannakopoulos, who was like a father to him. But Kontos hadn’t seen Yiannakopoulos since 2009 or early 2010. Oh wait, when testifying at the trial on October, 2013, Kontos remembered that he had gone to Greece in December of 2011 (a mere three months before the 341 meeting) and learned Yiannakopoulos had died. At that time, he found Yiannakopoulos’ daughter and had the daughter assign the trademarks to Kontos’ mother’s company, Buy Greek Art. There’s much more detail in the decision,** but, as you can imagine, none of that sat too well with the court:

    The court is satisfied that the foregoing testimony by the defendant regarding alleged transfers to and from a purported entity named BGA Hellas is untrue and that the purported transfers are a fabrication created by the defendant to hide and shield the trademarks from creditors.

    And, thus satisfied, the court denied Kontos’ discharge of the bankruptcy.

    As entertaining as the story is, what intrigues me is why Thanco took it this far. I’m not a bankruptcy lawyer, so I could be missing something simple. Is Thanco’s next step to try to generate some income through selling the trademarks? But that seems like a fool’s errand to me: the registrations are for banal phrases that were printed on T-shirts. They likely wouldn’t have stood up to challenge (as Kontos’ GOT OUZO registration didn’t withstand Thanco Products’ challenge) before the bankruptcy. Now, given their history, they are entirely worthless, or certainly not worth whatever Thanco paid in attorney’s fees to bring the adversarial action, much less the $30,000 award in the Texas action.

    Or was the strategy simply to avoid the discharge and the failure to list the trademarks just the vehicle for the attack? Konstos listed these assets in his bankruptcy: “a small checking account balance, an Ipod, CDs, DVDs, personal pictures, clothing, shoes, a pistol and a malpractice claim against his attorney in the Texas Proceeding.” It doesn’t look like Kontos is going to be in any shape to pay $30,000 anytime soon. Or was forcing him to acknowledge ownership of the trademarks a way to force an income stream to him based on royalties from the sales of goods currently being sold at his mother’s site buygreekart.com?***

    Anyone have any ideas?

    In re Kontos, No. 12–50156C–7W (Bankr. M.D.N.C. Jan. 13, 2014).

    *You can guess what ultimately happened to this one. Yup, the Las Vegas Convention and Visitors Authority petitioned to cancel the registration and it was ultimately assigned to the Convention Authority.

    **This is one of my favorites: “In most instances the defendant was unable or unwilling to provide any information concerning BGA Hellas, disclaiming any familiarity with the company. Yet, when the defendant was asked whether the ‘BGA’ in BGA Hellas stood for ‘Buy Greek Art’ (a name tied to the defendant) the defendant was quick to respond that it stood for ‘Being Greek Always’ despite his avowed lack of familiarity with the company.”

    ***I wonder was the Las Vegas Convention and Visitors Authority thinks about the sale of the “What Happens at the Greek Festival … Stays at the Greek Festival” shirt on the site.

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  • It’s 17% That’s Under Copyright

    "The Works of A. Conan Doyle"I goofed, by a count of one. I previously said that there were nine (out of sixty) Sherlock Holmes works that were still under copyright. Turns out that there are ten, or 17%. And the Conan Doyle Estate’s efforts to extend the copyright life of the Sherlock Holmes character because a small number of stories are still protected by copyright didn’t work.

    It’s really not that remarkable a decision. The parties agreed that 50 of the Sherlock Holmes works were published before January 1, 1923 and therefore in the public domain. This left the Doyle Estate having to make a creative argument and, like most creative arguments, it didn’t work.

    Conan Doyle proffers a novel legal argument that the characters of Sherlock Holmes and Dr. Watson continued to be developed throughout the copyrighted Ten Stories and therefore remain under copyright protection until the final copyrighted story enters the public domain in 2022….
    Conan Doyle argues that the effect of such a holding [that the pre-1923 story elements are free for public use] will be to dismantle Sir Arthur Conan Doyle’s characters into a public domain version and a copyrighted version. This is, however, precisely what prior courts have done. Silverman and Pannonia Farms instruct that characters and story elements first articulated in public domain works are free for public use, with the further delineation of the characters and story elements in protected works retain their protected status. Conan Doyle argues that the precedent exemplified in Silverman should pertain only to two-dimensional, “flat” characters and not to complex, three-dimensional characters such as Sherlock Holmes and Dr. Watson. Conan Doyle fails to offer a bright line rule or workable legal standard for determining when characters are sufficiently developed to warrant copyright protection through an entire series, nor does it provide any case law that supports its position. Conan Doyle’s proposed distinction runs counter to prevailing case law. The effect of adopting Conan Doyle’s position would be to extend impermissibly the copyright of certain character elements of Holmes and Watson beyond their statutory period, contrary to the goals of the Copyright Act.

    Thus, the works published before 1923 are in the public domain and anyone is free to copy them; those story elements that are in the post-1923 works are still protected by copyright.

    Klinger v. Conan Doyle Estate, Ltd., No. 13 C 1226 (N.D. Ill. Dec. 23, 2013).

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  • If There’s No Evidence, How Do You Decide?

    I often write about cases where there are two claimants to the same trademark. We’re still struggling with the fundamental doctrine that should apply in the situation, and because we’re struggling it means that the litigants may not capture or offer evidence that the fact finder needs in order to decide.

    Which is what happened in the trademark opposition Cooley v. Cooper. So what does the TTAB do when the litigants don’t give it the facts that are relevant to the decision it has to make?

    Opposer Cooley, co-applicants Cooper and Irby, and some other women were members of a band called “Klymaxx.” They were successful in the 80’s,

    quit performing, and then various combinations of members started performing again, still as Klymaxx. Cooper and Irby filed a trademark application which Cooley ultimately opposed.

    Here are the facts the TTAB had to work with:

    • 1987: Opposer left the band
    • 1988: Both applicants left the band
    • 1990: The band ceased performing altogether for 10 years
    • 2002: Opposer Cooley auditioned musicians and started rehearsing
    • May 17, 2003: Cooley had her first performance as “Klymaxx featuring original guitarist Cheryl Cooley”
    • November 21, 2003: Applicants Cooper and Irby claim to have started performing as Klymaxx
    • A statement that the original band had no formal legal entity
    • Documentary evidence purporting to show the use of “Klymaxx” for reunion performances by the original members in 2003 and 2004*
    • A copy of a letter purportedly on behalf of three of the original band members not involved in the opposition stating “we question [applicants’] proposed ‘ownership’ of this business name.”

    There were procedural complications in the opposition too; at some point applicant Irby disappeared, and so while Cooley and Cooper agreed on abandoning the application, the application couldn’t be abandoned because Irby was a joint owner and hadn’t formally agreed. (Demonstrating once again, should you have had any doubt, that joint ownership by individuals is a bad, bad idea.)

    So how do you decide who owns the mark? Cooley would make it a question of priority in 2003 only, but it’s not that simple. First, the parties hadn’t provided enough information to determine whether there was an abandonment between 1990 and 2003. Just because a band ceases to perform doesn’t mean that they weren’t still using the name to promote previously recorded albums.

    As to the competing ownership claim, the TTAB cited Rick v. Buchansky, Wrist-Rocket Mfg. Co. v. Saunders and yours truly as suggesting questions courts might consider when deciding which competing party is the owner of a disputed trademark. The information that is missing here:

    • because neither the Solar Agreement nor any other agreement between the parties is of record, it is unclear whether there are any contractual rights relating to the ownership, use or registration of the KLYMAXX trademark and service mark;
    • while opposer is not aware of any “corporation, limited liability company or other legal entity … in which Opposer and Applicants had or have any joint ownership interest,” that does not mean that there is no such entity which owns or has the right to control the use of the KLYMAXX mark;
    • the record is devoid of any evidence regarding which, if any, of the parties has or had the right to control the parties’ band(s) or any band’s use of the KLYMAXX mark;
    • there is no evidence regarding who “conceived” of the KLYMAXX mark or paid for the band’s advertising and promotion, or which, if any, of the group’s members’ names or likenesses were featured in KLYMAXX’s
      promotional materials;
    • there is no evidence regarding whether the relevant public associates the mark KLYMAXX with one or more of its current or former members, or whether the relevant public instead associates the mark with a style of music or performance, regardless of which individuals make up the band at any particular time.

    Ultimately the decision rested on one Request for Admission that applicant Cooper didn’t dispute at her deposition:

    the Original Members warranted, represented and agreed that the Original Members had the sole and exclusive ownership of all right in and to the name KLYMAXX.

    Irby had said essentially the same thing in a cease and desist letter she sent to Cooley when Cooley was forming her new band, and the settlement that Cooper was willing to sign was consistent with this position also. Thus, because the two applicants Cooper and Irby were not the sole owners of the mark

    but were instead, at most, co-owners of the mark with other band members, who have not provided their consent to applicants’ registration of the mark, the involved application is void ab initio.

    And if there had been an abandonment, Cooper and Irby were not the first users or sole owners of the mark either.

    HT to John Welch at TTABlog for the case.

    Cooley v. Cooper, Opp. No. 91189474 (TTAB Nov. 4, 2013).

    *The applicants didn’t make any hearsay objections, but the Board made a general statement that it only considered admissible evidence in its decision.

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  • Whoa, Harsh

    Not necessarily wrong, but harsh. The outcome is clearly contrary to the contracting parties’ intent, and a third party, an accused infringer, reaps the benefits.

    Non-party Roman Martinez, Sr. was the author of two songs, Buscando Un Cariño and Morenita de Ojos Negros. On June 5, 1981, he and his band El Grupo Internacional de Ricky and Joe (which included his children) recorded, at defendant Hacienda Records & Recording Studio, 10 songs for an 8-track tape and 45s. Buscando and Morenita were two of the songs on the 8-track. Martinez paid $1900 for the session and received 300 8-tracks and 300 45s that the band passed out and sold at their concerts: “There wasn’t … much money made in this. Almost all, if not all, of the 45 singles were used as promotion[s]. Pretty much the same thing for the 8-tracks. [Some] sold, but most were given as promotion.”

    About six months later Martinez and his band recorded another 8-track at the same studio, and a few days after that Martinez and his kids entered into an “Option Agreement” with the studio that gave Hacienda the right to promote and distribute – well, something; the parties dispute whether the distribution right includes the earlier-recorded Buscando and Morenita.

    Fast forward to 1994, when Martinez and some of his kids are now performing as The Hometown Boys. The Hometown Boys made a new recording of Morenita and Martinez assigned the copyright to the song to the publishing company Musica Adelena. In 1999 the same thing happened with Buscando, that is, the band was going to re-record the song so Martinez assigned the copyright to Musica Adelena. Both Songwriters Contracts used this language:

    Tempest Pub Songwriter Agreement clip

    If you can’t read it, it says:

    (1) The Writer [Martinez Sr.] hereby sells, assigns, transfers and delivers to the Publisher, its successors and assigns, all his rights, title and interest in and to certain heretofore unpublished original musical works, as annexed hereto, written and/or composed by the Writer, now entitled,

    stating the name of each song underneath it.

    In 2000 Musica Adelena sold all the rights in its song catalog to plaintiff Tempest Publishing, Inc. The agreement was clear that the copyrights to Buscando and Morenita were transferred.

    Tempest discovered that Hacienda was selling albums using the 1981 recordings of the two songs. And we have a lawsuit.

    You’d think the dispute would be over the scope of Hacienda’s license to the two works, but you’d be wrong. The problem is with the assignment of the copyright from Martinez to Musica Adelena. The assignment was of “certain heretofore unpublished original musical works,” only there weren’t any such thing—both Buscando and Morenita had been published before Martinez assigned the copyright.

    State law, in this case, Texas law, governs the construction of copyright assignments. Under Texas law, the instrument will be deemed to express the objective intention of the parties. And if the agreement is worded so the court can ascertain a certain or definite meaning, it is not ambiguous.

    Under this standard, the Songwriters Contract was not ambiguous. Martinez testified that he thought “unpublished” meant he had not previously entered into a publishing agreement but the court didn’t buy it:

    Under the Copyright Act, “publication” is a defined term. See 17 U.S.C. § 101 (” ‘Publication’ is the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending.”); compare 17 U.S.C. § 408(b)(1) (“[T]he material deposited for registration shall include … in the case of an unpublished work, one complete copy or phonorecord[.]”), with 17 U.S.C. § 408(b)(2) (“[T]he material deposited for registration shall include … in the case of the published work, two complete copies or phonorecords of the best edition[.]”). Commonly used, to “publish” means “to prepare and produce for sale”; “to make generally known”; or “to disseminate to the public.” Merriam Webster, Merriam–Webster.com, available at http:// www.merriam-webster.com/dictionary/publish.

    Martinez’s testimony as to his subjective understanding of the term “published” is inconsistent with its meaning under both the Copyright Act and common usage. The agreements are not ambiguous, and the court cannot use parol evidence to create an ambiguity. Under the agreements, Musica Adelena, and therefore Tempest, did not acquire rights to the previously published songs, including the two at issue. Tempest cannot sue Hacienda for infringement for its use of the 1981 versions of those two songs under the Copyright Act.

    Hmmm. Martinez’s understanding of “published” is quite colorable in the music industry, though, where a “publisher’s agreement” is a term of art used specifically for the composition rights. Martinez might also not have appreciated that producing and selling a sound recording is “publishing” the underlying composition too.

    But it didn’t matter to the court; the songs were published. There was no mutual mistake since Musica Adelena knew what “unpublished” meant. And a unilateral mistake does not warrant reforming a contract absent inequitable conduct.

    The court did a nice job shooting down a Billy-Bob Teeth theory. It’s actually the Eden Toys theory (but “Billy-Bob Teeth” is so much more fun), that is, a defense that has become broader and broader and now, when unexamined, stands for the proposition that a defendant doesn’t have standing to challenge an earlier transfer that the parties to the agreement don’t themselves contest. The court examined the original facts of Eden Toys, where the exclusive license at issue had been an informal one later memorialized in writing:

    Tempest’s reliance on this line of cases is misplaced. Eden Toys is important, but limited. Under that case, an “after-the-fact writing can validate an agreement from the date of its inception, at least against challenges to the agreement by third parties.” But Eden Toys allows a prior, otherwise valid, agreement that does not satisfy § 204 to transfer the copyright interests at issue if an after-the-fact writing memorializing that agreement does satisfy § 204.

    …

    This case is different…. When, as here, the earlier agreement satisfied the § 204(a) writing requirement from the outset, Eden Toys does not affect the analysis or outcome.

    So we have a harsh outcome for Tempest, even though it seems pretty clear that Martinez meant to assign the copyright in the two songs to Musica Adelena. The court recognized the harshness, but that can’t change the outcome:

    Neither result the parties advocate is without problems…. The approach Hacienda takes, which this court finds required under the Copyright Act and case law, does present the problem of allowing a third-party to avoid liability for its alleged infringement of a transferred copyright even when the contracting parties agree that they wanted to transfer that copyright. The approach Tempest takes, which this court finds inconsistent with the Copyright Act, allows parties who have agreed in writing to transfer a specified copyright interest to later revise that agreement to expand the interests they transferred through declarations and oral testimony and then seek damages for intervening uses that allegedly infringe the expanded transfer. Tempest has not pointed the court to a case in which the Fifth Circuit has allowed a plaintiff to sue for copyright infringement without a document memorializing ownership of that right, as the statute requires.

    A motion to reconsider was also denied: “The new assignment contracts Tempest drafted and Martinez signed after the court ruled on the motion for partial summary judgment are not newly discovered evidence; they are newly created evidence.”

    While I applaud the court’s interpretation of Eden Toys, I’m very unsatisfied with this opinion. If under Texas law “we presume that the parties to a contract intend every clause to have some effect,” Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex. 1996), how can it be that an entire contract can be nullified, on summary judgment, by the use of a word that is susceptible to so many different meanings? The court didn’t even mention in passing “you know, this whole publication thing under copyright law is kind of a conundrum,” not to mention the specialized definition of a “publisher” in music copyright I mentioned above.

    Tempest Publ’g, Inc. v. Hacienda Records and Recording Studio, Inc., No. H-12-736 (S.D. Tex. Nov. 7, 2013).

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  • Does an Incorrect Claimant Invalidate a Copyright Registration?

    Awhile back I reported on Kunkel v. Jasin, an unpublished decision out of the Third Circuit. In it, Kunkel, who was in bankruptcy, filed copyright applications in his own name rather than the name of the estate. His case was dismissed, and the dismissal affirmed, because the certificates named the wrong owner.

    We now have the same fact pattern in the Northern District of Ohio, but with a different outcome. In Mowder v. Permanent General Assurance Corp., plaintiff David Mowder registered a copyright in his own name while in bankruptcy and then sued defendant Permanent General Assurance Corp. Permanent General moved to dismiss the case on the theory that Mowder was judicially estopped from pursuing the claim because he didn’t list the copyright as an asset in his bankruptcy. In response, Mowder reopened his bankruptcy and had a trustee appointed. The court then substituted the trustee as the real party in interest in the copyright infringement case.

    So to sum it up, we have a certificate of registration in the name of Mowder filed when the estate owned the copyright. Permanent General moved for a judgment on the pleadings on the theory that the trustee does not have a valid copyright registration, a prerequisite for the suit.

    As to the original judicial estoppel theory, that died with the appointment of the trustee: a bankrupt plaintiff’s failure to disclose claims in a bankruptcy petition does not bar the trustee from pursuing them.

    As to the validity of the registration, the district court parted ways with Kunkel v. Jasin:

    Title 17 United States Code section 411(b) states that a copyright registration is valid “regardless of whether the certificate contains any inaccurate information” unless the applicant knew that the information was inaccurate and “the inaccuracy of the information, if known, would have caused the Register of Copyrights to refuse the registration.”

    First, reading the pleadings most favorably to the Trustee, there is no indication that Mowder knew that he technically did not own the copyright when he filed his application. Permanent General does not even suggest in their motion that Plaintiff Mowder knew he did not own the copyright when he filed his application. Kunkel v. Jasin is, therefore, distinguishable: in that case, the defendant moved for summary judgment, not a judgment on the pleadings when all inferences are based solely on the pleadings. Accordingly, under 17 U.S.C. § 411(b), the mistake on the copyright registration does not invalidate the registration.

    Moreover, even if the pleadings did show that Mowder knew he did not own the copyright, Permanent General makes no showing that this technical misstatement was material. It is unclear why the Copyright Office would care whether Mowder owned the copyright or his bankruptcy estate owned the copyright. Although the Third Circuit has held differently, that decision is not binding on this Court, nor is it persuasive on this issue. The Kunkel Court did not explain why the Copyright Office would deny a registration if the Copyright Office knew that the estate, not the individual, owned the copyright; the court merely asserted that the error was material. The only support for this assertion was another Third Circuit decision which held that a misstatement of the type of work to be copyrighted—such as a song or video—was a material misstatement. This does not show that the error in this case—naming the individual as the owner instead of his bankruptcy estate—was material. Therefore, Permanent General has not shown that even if there were a knowing misstatement, that misstatement was material.

    What the Kunkel court also seems to have missed is that it had to ask the Register of Copyrights whether the inaccurate information, if known, would have caused the Register to refuse registration. 17 U.S.C. § 411(b). I couldn’t find any opinion where a court asked for the Register’s opinion on an incorrect ownership question, only one on other factual statements made in a certificate of registration. Olem Shoe Corp. v. Washington Shoe Co., 09-23494-CIV (S.D. Fla. Dec. 1, 2011) (requesting opinion whether status of publication or nondisclosure that a work was a derivative work would affect registrability). The Olem Shoe response from the Register said that, had the Office been aware that an unpublished work was published, it would have corresponded with the applicant, allowed the applicant to correct the information, and then granted the registration. In the case of a work that was claimed as original but was instead derivative, the Office would have followed the same procedure. After some more shenanigans with supplementary registrations and more challenges, the Olem Shoe court ultimately held the registrations were valid.

    But we may have some insight from the Register of Copyrights soon. In DeliverMed Holdings, LLC v. Schaltenbrand, the 7th Circuit instructed the district court to ask the Register whether an intentional misstatement of authorship and assignment invalidates the registration, which it has done.

    There’s also a nice discussion on whether the trustee should use the same lawyer Mowder hired for the copyright infringement suit. The district court deferred to the bankruptcy court’s opinion that it was fine, but the district court wouldn’t have allowed it.

    Mowder v. Permanent General Assurance Corp., No. 1:13-CV-00082 (N.D. Ohio Oct. 31, 2013).

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