Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Too Many Transactions

    Six inventors, four changes in ownership before the patent issued and four more after. That’s a recipe for a standing problem.

    In Mayfair Wireless LLC v. Cellco Partnership d/b/a Verizon Wireless, Mayfair Wireless did a lot of due diligence and even some extra clean-up — it had the six original inventors assign any rights to it to the extent the rights were not previously assigned and it had two individuals who owned seven of the prior owning entities execute assignments too. It seems like there shouldn’t have been many holes left.

    But the magistrate found some. Three changes in title were challenged and two failed.

    Mayfair first argued that there was a presumption that the assignee listed on the patent, Technology Alternatives, properly held legal title. The defendants rebutted the presumption by showing, as it turns out, that there was no record of four of the six inventors assigning their rights at all. Thus, the court examined the pre-issue assignments.

    The first challenged transaction was a sale pursuant to a security agreement. Hinsdale Bank & Trust Co. had extended financing to the first owner, Gooitech, and took a security interest in all existing and after-acquired assets, including “general intangibles.” Gooitech defaulted and Hinsdale foreclosed, then bought the secured assets itself. But there was no bill of sale of record in the litigation and no way of knowing whether the patent was one of the assets purchased. The court couldn’t know for sure what was sold and declined to assume that the rights to the application were included in the sale.

    Next we have an assignment from a company called 3P Networks to Technology Alternatives. A document called a “Notice of Assignment” was of record, but not the actual assignment itself.

    The court agreed with the plaintiff, though, that the Notice of Assignment was adequate to assign the patent even if there wasn’t an underlying agreement. This language was good enough to show there was an intent to transfer, and the past tense didn’t matter:

    [O]wnership in the same was transferred to Technology Alternatives, Inc…. This includes the entire right, title and interest in the Pending Patent Application and in and to all Letters Patent, of the United States and foreign countries, including any divisionals, continuations, reissues and extensions thereof, that may be obtained therefor.

    The third transaction was the most complicated: a company named TechAlt, by now Technology Alternative’s parent, pledged the patent as collateral to Services by Designwise, Ltd. (SBD), although the patent was still owned by Technology Alternatives. TechAlt defaulted, the state court entered an order of replevin in favor of SBD, and SBD took possession of the collateral and later resold it.

    Under Illinois law, a debtor can pledge another’s property as collateral “if the true owner of the collateral has agreed to the debtor’s use of the collateral as security.” But, the court found that this provision was preempted by § 261 of the Patent Act, which only allows assignment of patents in writing:

    [T]he court cannot overlook the absence of a written assignment between Technology Alternatives and TechAlt. The Federal Circuit has rejected the notion that common corporate structure can be used to overcome the writing requirement, holding that “even between a parent and a subsidiary, an appropriate written assignment is necessary to transfer legal title from one to the other.” Thus, TechAlt could not confer an interest in the ’441 patent to SBD because it did not possess legal title to the patent, and recognition of an indirect transfer between Technology Alternatives and SBD would thwart the congressional objective of requiring a writing to transfer ownership of patent rights…. Technology Alternatives’ alleged indirect transfer to SBD by operation of consent is preempted by the Patent Act….

    Finally, Mayfair is not entitled to the bona fide purchaser in good faith defense; the defense only applies if one has acquired rights from a predecessor that held legal title. That wasn’t the case here.

    This was a report and recommendation by the magistrate; the parties now have time to object.

    What I find interesting about this case is, while Mayfair Wireless is a patent troll, it was not responsible for any of the transactional problems. They all appear to have occurred while various companies were trying to make a go of it.

    And the next thought exercise will be to figure out who actually does own the patent.

    Mayfair Wireless LLC v. Cellco Partnership d/b/a Verizon Wireless, No. 11-772-SLR-SRF (D. Del. Aug. 30, 2013).

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  • Which Distributor Owns the Mark?

    Trademark from USPTO.govHold on, we’ve got a complicated one here. Save it for your “very long reading” queue. One trademark, three potential owners in the distribution chain with overlapping periods of time during which they claim ownership.

    The mark:

    “Smart Candle” (Smart Candles, SMARTCANDLE, SmartCandles, etc.) for electronic candles.

    The companies:

    Smartcandle.co.uk Limited (“SCK”) — non-party UK company; no dispute that Smartcandle.co.uk was the original owner of the mark.
    Excell Consumer Products Ltd. (“Excell”) — Plaintiff and former distributor for SCK.
    Structural Integrity Property Services, LLC (“Structural”) — Defendant, former distributor for Excell, and trademark registrant.

    The timeline:

    • 2002: SCK and Excell enter into a licensing agreement granting Excell an exclusive 5-year license to manufacture products under SCK’s patent and sell the products under the “SMARTCANDLES” mark.
    • 2004 (October): Oral agreement between Excell and Structural that Structural would distribute Smart Candles in the U.S.
    • 2004 (December): Letter agreement for the sale of some of the SCK assets to Excell; the scope is in dispute. Excell never paid the amount owed.
    • 2005: Structural files a trademark application for SMART CANDLE. The mark registers October 17, 2006. (The petition for cancellation is filed October 12, 2011. Timing is everything.)
    • 2006: SCK and Excell negotiate an agreement for satisfaction of the 2004 agreement; Excell produces a document that purports to memorialize the agreement but its genuineness is disputed.
    • 2007: SCK is administratively dissolved.
    • 2010: Excel sends the final payment and claims the final settlement is memorialized in a “Co-operation Agreement”; the document is questionable.

    The decision:

    The decision is after a bench trial, and the court starts out by setting the parameters:

    The parties in this case do not argue that the marks at issue lack distinctiveness. Furthermore, Structural has registered the marks, which means that they are “presumptively distinctive.” Neither do the parties dispute whether there is a “likelihood of confusion.” Therefore, the primary issue before us at trial with respect to liability under the Lanham Act is which party owns the disputed trademarks.

    Excell claimed that it acquired the rights to the trademark in 2002 because the license didn’t give SCK the contractual right to exercise control over the quality or production of the Smart Candle products, nor did SCK exercise control — in other words, SCK abandoned the mark. Not so, said the court; Excell was required to, and did, submit samples to SCK and that was good enough. I’m intrigued by the court’s take on how much quality control is required:

    The focus and ultimate purpose of this inquiry is the protection of consumers—the sufficiency of a certain level of quality control is determined by the expectations that the licensee’s use of the mark creates in consumers and the supervision that is reasonably necessary to insure that those expectations are not endangered. [So far, so good. – Ed.]

    In this case, the Smartcandle Products covered by the 2002 License were relatively simple pieces of electronics with a modest purpose. They were designed to resemble a candle and produce a flickering light. Consumer expectations of the products’ quality must have been likewise modest—as long as the products approximated the appearance of a candle and flickered, they would likely satisfy consumers.

    It might be that you buy these particular candles because they are more attractive, or better built, or have a good battery life, which are the kinds of attributes that one might associate with a particular brand, so the court’s reasoning isn’t sound. Nevertheless, a licensee should not be able to claim its own failure to meet quality control standards invalidates the trademark, so no harm in this little shortcut.

    Excell also argued that the 2004 agreement assigned the mark to it. The agreement expressly assigned to Excell two patent applications and the www.smartcandle.co.uk domain name, but Excell claimed that the 4-paragraph agreement implicitly assigned all the intellectual property assets for the candles, including the trademark.

    In applying UK law, the court couldn’t easily reconcile either view. The agreement was clear and normally one wouldn’t read the assignment of a domain name to mean the trademark too. But the agreement, if read literally, created an unworkable business arrangement.

    We are therefore faced with a choice between an interpretation in which the words of the contract mean what they say, but lead to very confusing results, and an interpretation in which the meaning of the words defy linguistic sense, but reach a sensible business outcome. Under the circumstances of this case, and on the record before us, we believe the correct course is to adhere to the ordinary meaning of the words in the contract, despite the difficulties this interpretation presents….

    [T]here is no question that the literal meaning of this contract leads to a confusing result. But it is not an impossible result. A reasonable person possessing the relevant background knowledge could conclude that Excell and SCK simply negotiated an ill-conceived bargain, one that transferred certain specified assets without coherently defining the parties’ subsequent rights and obligations. That conclusion is obviously not preferable to a reasonable interpretation that leads to a sound business outcome, but it is better than assigning a contract meaning to which the language is not susceptible. We therefore conclude that Excell did not acquire the Smartcandle trademark in the 2004 Agreement.

    Excell also tried to use an assignment-in-gross theory offensively, i.e., that because it was using the mark “in real continuity with the past” it must be the owner of it. “Assignment in gross” is a challenge that there has been a loss of trademark rights because a trademark was assigned without the goodwill, the test being whether the acquirer is using the mark “in real continuity with the past.” In a situation where only part of a business’s assets are acquired, the party trying to defeat a claim of an assignment-in-gross most also show that the assignor divested itself of the trademark rights and business activity involving the mark. Here, the court didn’t decide whether the theory of assignment-in-gross can be used to claim acquisition of rights, but instead found that Excell failed to show that SCK divested itself of the trademark rights and business activities involving the mark. SCK therefore didn’t own the mark under this theory.

    The subsequent agreements in 2006 and 2010 didn’t change anything. The court found the 2006 agreement was not genuine and so there was insufficient evidence of what was actually decided in 2006 to hold that the mark was assigned. The 2010 agreement failed because the parties to the agreement didn’t have the authority to assign the trademark.

    But SCK went out of business in 2007. The court found that this was the point in time where SCK abandoned the mark and Excell’s use of the mark from 2007 forward established its ownership of the mark.

    At the risk of making a long post even longer, I’m curious about tacking in this scenario. Could Excell have argued that it succeeded to the rights that SCK abandoned and therefore that it’s priority date was 2000 or so, defeating Structural’s 2005 filing date for its application?

    But Excell was fine without going back that far, as we finally reach Structural’s claim that it was the owner of the mark. It made the claim based on a theory that it was presumptive owner because it had a registration and that Excel had no valid claim of ownership pre-dating the registration. The court acknowledged that Structural had a significant role in developing the brand, but the court applied the well-defined law for manufacturer-distributor relationships and held that Structural was only ever a non-exclusive licensee who, as such, could never own the trademark:

    This outcome is entirely consistent with the fundamental purpose of trademarks, to “signify that all goods bearing the trademark come from or are controlled by a single, albeit anonymous, source,” and to “signify that all good bearing the trademark are of an equal level of quality.” Given our finding that Excell had the right under the Distribution Agreement to sell not only through Structural, but also directly to retailers independently of Structural, then it is Excell, not Structural, that is ultimately the single source of all Smartcandle Products in the U.S. Moreover, Structural did not have any means of controlling or maintaining the quality of the goods that Excell sold independently to other retailers. Excell is the only company that could ensure an equal level of quality under these circumstances, because Excell is the source of all Smartcandle Products sold in the U.S.

    Excell is therefore the owner of the “Smart Candle” trademark. The court entered an injunction against Structural but did not award money damages because Structural did not engage in willful deception (I quibble here because it seems like a free ride; since Structural was a former licensee it should have to pay on whatever terms it had paid while a licensee), and Structural’s trademark registration was cancelled because Structural was not the owner of the mark.

    And believe it or not, I grossly simplified the case.

    Excell Consumer Prods. Ltd. v. Smart Candle LLC, No. 11 C 7220(MEA) (S.D.N.Y. Sept. 10, 2013).

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  • Attorney-Client Privilege and Patent Assignment

    Here’s an interesting tidbit to keep in mind—the assignee of a patent may be able to claim that a legal opinion given to the original owner of a patent is privileged despite the assignment of the patent. The case is SimpleAir, Inc. v. Microsoft Corp., and the challenger to the claim of privilege is Google.

    Both parties relied on a district court case for their law, Soverain Software LLC v. Gap, Inc., 340 F. Supp. 2d 760 (E.D. Tex. 2004). The question is one of the totality of the circumstances. On one end is where there has been a “mere assignment” of the patent, in which case the attorney-client privilege does not transfer. But:

    If the practical consequences of the transaction result in the transfer of control of the business and the continuation of the business under new management, the authority to assert or waive the attorney-client privilege will follow as well.

    In SimpleAir, the assignment of patents was the consequence of the original company, AirMedia, going bankrupt. A patent application, trademarks and domain names went to a non-party and the remainder, two patents and 25 applications, went to a predecessor of the plaintiff. There was an order of magnitude difference in how much each paid for their share of the assets. The plaintiff-assignee was formed by the inventors, John Payne and Tim von Kaenel, who had also been president and employee at the original company.

    Plainly, there is a significant degree of continuity in the areas of corporate knowledge, management, and experience between AirMedia and SimpleAir. Likewise, John Payne and Tim von Kaenel’s interest in preserving their privilege claims on behalf of SimpleAir is unchanged from their former interest in such privilege as representatives of AirMedia. The Court finds that these realities weigh against Google’s assertion that SimpleAir’s acquisition is nothing more than “a mere transfer of some assets.”

    SimpleAir therefore was entitled to the claim of privilege.

    SimpleAir, Inc. v. Microsoft Corp., No. 2:11-cv-416-JRG (E.D. Tex. Aug. 27, 2013).

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  • And the Answer Is ….

    The last post posed a question: who is, or are, the proper plaintiffs after the assignment of the copyright?

    If you said both the artist and his company, you would be right. You would have spotted that the assignment of the copyright did not expressly assign any past infringement claims, so the claims for infringement before the assignment remained with the artist. “Copyright assignments are generally construed not to assign existing causes of action unless such causes of action are expressly included.” Nimmer on Copyright, § 12.02[B].

    Indeed, both Beasley and his company were originally plaintiffs (along with Beasley’s wife). But the court granted the defendant’s motion for summary judgment that Beasley had no claim. I trust that judicial estoppel will prevent the defendant from now arguing that the company doesn’t have standing for the earlier claim.

    One twitterer also spotted a statute of limitations problem but that didn’t appear to play any role in the decision. Beasley claimed only to have learned of the 2003 infringement during discovery, which perhaps is why there wasn’t (at least in this opinion) a dismissal of the 2003 infringement based on the statute of limitations.

    Beasley v. Commonwealth Ed. Co., No. 11 CV 4973 (N.D. Ill. Aug. 28, 2013).

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  • It’s Quiz Time!

    Beasley imageThis is a copyright case. Here is the sequence of events according to the plaintiffs’ timeline:

    1995: Image created by artist Beasley
    1997: Image used by defendant with permission
    2003: Image used by defendant without permission
    2009: Image used by defendant without permission
    2009: Assignment of the copyright in the image from Beaseley to his wholly-owned company, Ideas N Mind
    2009: Image used by defendant without permission (corrected)
    2009: Copyright in image registered
    2011: Lawsuit filed

    Here is the assignment language; no one disputes that it is effective language to assign the copyright:

    Beasley assignment
    (click for larger image)

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

    These icons were sold on apparel in the years of 1994-present day as separate iconic images. Only the artwork titled “The Worker and Management Handshake Logo” shall be transferred by this written agreement in Ideas N Mind, Inc., an Illinois Corporation ….

    Who has a claim for copyright infringement?

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  • Sometimes You’re Just Stuck With Bad Facts

    Sometimes you just have to remind yourself that the facts are the facts, and no amount of sharp lawyering is going to change them.

    That was the situation for defendant ABN AMRO Bank N.V. (“ABN”). It had hastily negotiated a sale of certain assets to Bank of America (“BAC”) in an unsuccessful attempt to avoid a hostile takeover by the Royal Bank of Scotland. One of the assets sold was a subsidiary, ABN AMRO Information Technology Services Company, Inc. (“IT”), the company that was the licensee of plaintiff Complex Systems, Inc.’s (“CSI”) “BankTrade” software.

    IT had licensed the BankTrade software for use by the ABN enterprise as a whole. The license agreement allowed assignment of the license to IT’s subsidiaries, affiliates and any direct or indirect parent or any subsidiary or affiliate of the parent; however, the license was not formally assigned to a family member before ownership of IT was turned over to Bank of America. ABN continued to use the BankTrade software pursuant to a transition services agreement (“TSA”) after the transaction and tried, unsuccessfully, to negotiate a new license with CSI. CSI eventually sued ABN for copyright infringement; ABN’s defense was that the TSA had actually assigned the license to ABN. These are the facts that ABN had to deal with:

    • The TSA said that Annex 1(a)(vii) of the TSA was a list of applications where the “Book Owner” column stated the owner of the application. There was no column for “Book Owner” on the Annex, but a column called “Application Owner” listed ABN for the BookTrade application. A witness testified that the Annex did not address legal ownership.
    • A pre-closing letter from ABN to CSI said that the license would remain with IT. ABN said that the “letter reflects the misunderstanding that software licenses nominally held by [IT] would automatically transfer to BAC” in the transaction.
    • A post-closing progress chart listed ABN as “Application Owner” and the “Contract Owner” was “TBD.” The rest of the document indicated that ABN would use the BankTrade application until its subsequent “exit,” at which point ABN would negotiate with CSI to have the license assigned back to it. This post-closing progress chart also had two other applications where ABN was listed as the “Application Owner” but where ABN nevertheless negotiated with the licensor for the assignment of the license to it.
    • A post-closing email mentioned a number of software applications where ABN was listed as the “Application Owner,” including BankTrade, that needed to be assigned from BAC back to ABN. ABN said the document was “generated during a period of confusion.”
    • A post-closing email from BAC to CSI stated that it was the owner of the BankTrade license. ABN said this email also was a “misunderstanding.”
    • A post-closing internal email written by ABN stated “As you all know, BAC still owns the BankTrade software” and that ABN should not be manipulating the source code. ABN says this email reflects the author’s “incorrect and uninformed assessment of how software applications were allocated in the transaction.”
    • After the Royal Bank of Scotland acquired IT, the Royal Bank of Scotland and CSI agreed that IT was the owner of the license and would like it transferred to ABN. ABN claims that this also reflects a “misunderstanding.”
    • The last document in time was an email from ABN stating that it was trying to convince BAC that there had been an implicit assignment of the license to ABN, and, once BAC was onboard, BAC would approach CSI.

    There’s more, but you see where this is going. The court charitably refers to the theory that the TSA assigned the license to ABN as “counterfactual.” So you don’t need to read the discussion portion of the opinion to know where this comes out for ABN, instead the court’s introduction will do:

    ABN continued to need BankTrade post-closing, and it was too late to take advantage of what pre-closing had been a clear ability to assign without cost or penalty. Post-closing the world changed in that regard—what was not done could not be retroactively accomplished without the involvement and agreement of BankTrade’s owner, plaintiff Complex Systems, Inc. And, as it happened, CSI exercised its right to simply say “no”—or, more correctly, “no, without significant additional payment.” Such payment was not forthcoming. Instead, ABN, which acknowledges that it has continued to use BankTrade without interruption since the 2008 sale transaction, tried to reinterpret pre-closing events to include an assignment of the BankTrade license. Such an assignment would indeed have been easy to effect pre-closing. But it was not effected—and the law does not credit revisionist history with the weight of truth.

    Instead, ABN must live with the events that, in fact, occurred—not what could have occurred, or should have occurred. That such failure to assign was perhaps an oversight, or that such a failure to assign has resulted in significant economic exposure, is not the issue. The issue is whether there was a pre-closing assignment. There was not.

    One wonders how much the license cost, making the litigation seem like a more economically rational choice.

    And M&A lawyers: was this lawsuit just incidental fallout from trying to create a very complex transaction quickly, or was getting ownership of the (apparently, very cheap) BankTrade license part of the value of the deal to Bank of America?

    Complex Sys., Inc. v. ABN AMRO Bank N.V., No. 08 Civ. 7497(RBK) (S.D.N.Y. June 21, 2013).

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  • Yeah, What He Said

    If you think that there is any way around the prohibition in Section 10 of the Lanham Act restricting the assignment of intent-to-use applications,* just give up on the idea. The registrant in Central Garden & Pet Co. v. Deskocil Manufacturing Co., having assigned intent-to-use applications from a wholly-owned grandchild subsidiary up to the parent, tried every argument and none succeeded.

    It’s not “hypertechnical” to prohibit the transfer of ITU applications in the same way that use-based applications and registrations can be transferred; the statute expressly treats ITU applications differently. The “goodwill” in a mark is not the same thing as “the business … or a portion thereof” because goodwill is always transferred, so the Section 10 requirement must mean something more. A transfer between a subsidiary and a parent is not equivalent to an assignment from one co-owner to another; “the existence of a corporation cannot be turned on or off at will to suit the occasion.” And finally, it doesn’t matter that the transfer in question is not one that Congress was concerned about, “while applicant might be of the opinion that Congress employed a larger hammer than necessary too hit that particular nail, we are not in the business of rewriting statutes to more narrowly effect what we suppose might have been Congress’ intention.”

    John Welch at the TTABlog has the full scoop on the assignment, and more.

    *

    [N]o application to register a mark under section 1051 (b) of this title shall be assignable prior to the filing of an amendment under section 1051 (c) of this title to bring the application into conformity with section 1051 (a) of this title or the filing of the verified statement of use under section 1051 (d) of this title, except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing.

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  • Do Your Homework

    Rhodes inventionSince the Acacia Research Group‘s business model is based on acquiring patents, you would expect them to be fairly diligent about ensuring that the chain of title is solid. But it wasn’t in Endotach LLC v. Cook Medical Inc.

    Endotach claimed to be an exclusive licensee of two patents, having acquired its rights from Acacia. The original patent owner was the inventor, Dr. Valentine Rhodes. He died with a will, but the will didn’t mention the patents. The residuary clause bequeathed “all the residue of [Dr. Rhodes’] estate, real and personal,” to a Trust of which he and his wife, Brenda Rhodes, were trustees. On his death, his daughters would become co-trustees with his widow.

    Mrs. Rhodes later granted an exclusive license to Acacia for one patent, executing the document as “patent owner.” Acacia assigned the license to plaintiff Endotach. Three days before the lawsuit was filed, Mrs. Rhodes executed another document to add a second patent. About three weeks after suit was filed, the exclusive license was amended to make the trust the license grantor and was signed by Mrs. Rhodes along with the two daughters. Cook Medical moved to dismiss, claiming that Endotech didn’t have standing because the original license grant was defective, having been granted by Mrs. Rhodes personally rather than by the trust.

    Endotech conceded that the patents passed to the trust on Dr. Rhodes’ death, but didn’t have much to offer after that. It claimed that Mrs. Rhodes was acting on behalf of the trust, but Mrs. Rhodes admitted that when she executed the agreements she thought she was the patent owner, and the daughters said the same.

    [T]his mistaken belief cannot be corrected by an attorney’s argument that Mrs. Rhodes was really acting on behalf of the Trust and with the consent of one or more of her Co-Trustees. Both things cannot be true: she cannot both believe she owned the patents in fee simple and have signed the relevant agreements in her representative capacity as a Trustee.

    The case was dismissed without prejudice, but Endotach hadn’t waited—it had already filed the new complaint.

    Endotach LLC v. Cook Medical, Inc., No. 1:12-cv-01630-LJM-DKL (S.D. Ind. Aug. 6, 2013).

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  • The Court of Appeals Confirms “Registrant” Means What It Says

    I’ve already written a couple of times about Federal Treasury Enterprise Sojuzplodoimport v. SPI Spirits Ltd. The plaintiff in the case, FTE, manages the STOLICHNAYA trademark on behalf of the Russian government.

    The first time the case went to the Court of Appeals, the appeals court reversed the trial court and held that the incontestability provision of the Lanham Act does not prevent an attack on the validity of an assignment. On remand, the trial court next dismissed the case, holding that FTE did not have standing under § 32 of the Lanham Act (I said previously, and still wonder, why the case didn’t state a claim under § 43(a), but it didn’t). The Second Circuit has now reviewed and affirmed the district court decision.

    For standing under § 32, one must be a “registrant,” a term which § 45 tells us encompasses “the legal representatives, predecessors, successors and assigns of such … registrant.” What is somewhat unusual about the posture of the case is this:

    FTE acknowledges—as it must—that the Russian Federation is the “true owner” of the Marks. See Am. Compl. ¶ 78, J.A. 270. It contends nonetheless that it falls within the Act’s definition of
    “registrant.”

    FTE made a number of arguments why it should be allowed to bring a claim under § 32. I won’t go over them all, but I think the case is significant for a couple of legal principles.

    First, FTE claimed that it was an “assign” of the Russian government. Section 10 of the Lanham Act states that an assignment must be “an instrument in writing duly executed.” There were several documents FTE relied on; one didn’t expressly mention trademarks and another stated only that the Russian government was conveying the right to “use and dispose” of the mark, without mentioning assignment, transfer of ownership, or conveyance of the goodwill. The court concluded that the documents defining the relationship between FTE and the Russian government “do not resemble an assignment under United States law, even taking them flexibly and as a cumulative whole.” Therefore, the mark* had not been assigned.

    I don’t recall any other case where a court examined the formalities of trademark assignment and concluded that there was no assignment because the writing requirement wasn’t met. The writing requirement is generally not even mentioned—often, as here, there are writings, but the writing (like a lease) doesn’t expressly mention the trademark; nevertheless, a court will conclude there was an assignment. There are also many cases finding that a trademark was assigned when there was no writing at all. Here, the court  relied on the Restatement of Contracts, copyright law and Trademark Office rules in its analysis, suggesting to me that this is indeed a pioneer legal analysis.

    The second interesting part of the decision is FTE’s argument that it was a “legal representative” of the Russian Federation and therefore had standing. This was question of first impression at the court of appeals level. The district court held that for one to be a “legal representative,” the representative has to have legal authority from the registrant and the registrant must be unable to appear itself. FTE argued that the district court applied too narrow a rule by requiring the incapacity of the registrant, but in a thorough analysis the Court of Appeals agreed with the district court.

    Federal Treasury Enterprise Sojuzplodoimport v. SPI Spirits Ltd., No. 11-4109-CV (2d Cir. Aug. 5, 2013).

    *I still haven’t figured out what registration FTE or the Russian Federation claim to be registrant of.

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  • Del Monte vs. Del Monte

    My last post was on the Legal Rights Objection (LRO) between Merck KGaA and Merck & Co., and today it’s the one between Del Monte Corp. and Del Monte International GmbH. Both are proceedings between parties that have a common history and an ongoing relationship defined by agreements. Nevertheless, in Merck, the Panel found that the Respondent was entitled to the domain name, but in Del Monte we have the very first and, thus far, only valid objection to registration of a top level domain.  We’ll do a little compare-and-contrast on the two cases.

    A Legal Rights Objection is the vehicle whereby one can object to the award of a proposed generic top level domain name (“gTLD”) based on a likelihood of confusion with an existing trademark. In Merck v. Merck, we had two companies that, despite a common heritage, have been entirely separate entities for 100 years. In Del Monte Corp. v. Del Monte International GmbH, the applicant, Del Monte Corp., is only a licensee of Del Monte International. (We’ve seen a spat between the two companies before.)

    But, nevertheless, the same legal standard applies, and that legal standard requires an element of bad faith:

    In order to prevail, the Objector must establish (under Section 3.5.2 of the Guidebook) that the potential use of the applied-for gTLD by the Respondent:

    1.takes unfair advantage of the distinctive character or the reputation of the Objector’s registered or unregistered trademark or service mark (“mark”); and/or
    2. unjustifiably impairs the distinctive character or the reputation of the Objector’s mark; and/or
    3. otherwise creates an impermissible likelihood of confusion between the applied-for gTLD and the Objector’s mark.

    The Panel did not find any bad faith in the Merck case. In the Del Monte case, however, considering the eight, non-exclusive factors used to aid in deciding whether the registration should be allowed, the panel found bad faith several ways.

    Most damning perhaps is that Del Monte Corp., the licensee, didn’t own any trademarks except some in South Africa, but even those were suspect:

    The Panel majority concludes it is at least arguable … that the assignment of the South African registrations into the name of the … Respondent, was in breach of the Licence Agreements and therefore, for the purposes of the Guidebook and the Procedure, not bona fide.
    …
    The Panel majority would also query whether it is possible that … the Respondent sought to have these registrations assigned to it to bolster an eventual gTLD application for the gTLD string.

    And unlike the Panel in the Merck LRO, which did not find it necessary to examine the coexistence agreements between the two parties, the Panel here dug in:

    The Panel majority rejects the Respondent’s assertion that, as the Licence Agreements do not expressly prohibit the registration of the applied-for gTLD string by the Respondent, therefore the Respondent is free to do so under the terms of the License Agreements, or otherwise.

    To the contrary, the terms of the Licence Agreements clearly express the intention of the parties that the Objector would retain sole control over issues relating to the registration and enforcement of the Trade Mark worldwide. This, in the opinion of the Panel majority, clearly extends to the right to control the registration of domain names and gTLDs comprising or incorporating the Trade Mark, or similar marks.

    Thus allowing the registration of the gTLD would create an “impermissible” likelihood of confusion, and the objection to the .delmonte gTLD was upheld.

    One panelist dissented; he was not satisfied that the South African registrations were improper and would instead have found that, more likely than not, the applicant had bona fide trademark rights in South Africa. His opinion was also that of the Panel in Merck v. Merck, that is, let the parties sort it out themselves:

    Another factor weighing in favor of Respondent is, as the Panel majority puts it, “the 24 year history of coexistence in the global marketplace of food products manufactured, marketed, sold and distributed under the [DEL MONTE] Trade Mark by the Objector, the Respondent and the other licensees.” Whereas the majority apparently finds that such coexistence supports the Panel majority decision to uphold the Objection, I respectfully disagree.

    In my view, Respondent has a bona fide basis for owning this gTLD, even if Objector would also have had a bona fide basis if it had been the applicant for this gTLD.

    …

    Moreover, in the event Respondent’s actual use of the gTLD turned out to be violative of the trademark rights of Objector and/or its other licensees, then Objector would have recourse under the various license agreements or applicable laws.

    Two fairly similar situations, i.e., a common history and a later relationship defined by agreements: co-existence agreements in one case and licenses in the other. I don’t know that the two types of relationships, while named differently, are, in these two situations, so different that they militate a different outcome in an LRO. I tend to agree with the outcome in Merck v. Merck and the dissent here—these are not legal strangers, which is the relationship that the LRO was designed for; this is much more complicated. The parties already have (dysfunctional) relationships, so let them sort it out for themselves. But that’s litigation for you.

    Del Monte. Corp. v. Del Monte International Gmbh, No. LRO2013-0001 (WIPO July 29, 2013).

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