Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Sybersound Records Takes Some Hits

    Sybersound Records, Inc. v. UAV Corp. is a 2008 Ninth Circuit decision on joint copyright ownership that wasn’t well-received by either Nimmer on Copyright or Patry on Copyright. In Sybersound, the court held that the transfer of an interest by one joint owner of a copyright could only be a non-exclusive license, not an assignment or exclusive license. In a post entitled “Death of Divisiblity,” William Patry described the flawed reasoning in the Sybersound decision this way:

    Where there are multiple authors, Congress intended that one co-owner could offer non-exclusive licenses in the whole, but could not offer an exclusive license/assignment/conveyance in the whole without all co-owners’ permission . . . .  At the same time, Congress permitted one co-owner to convey his or her proportional share in the whole, regardless of whether that conveyance was called an assignment or a license. This follows from the plain language of the statute and from the lack of any process for resolving disputes among co-owners: what if one co-owner wants to sell his or her interest, but the other doesn’t want him or her to? Are co-owners stuck together in a marriage that isn’t working? Long after non-fault divorces became common, Congress provided for them through divisibility. All was fine for a long time, until a spate of bad decisions. Sybersound is the most recent.

    More recently two district courts, one in the Ninth Circuit and one in the Seventh, whittled away at Sybersound. First up, out of the Eastern District of Wisconsin we have Brownmark Films, LLC v. Comedy Partners, the “What, What, In the Butt” (“WWITB”) decision that is best known for a copyright fair use win on a motion to dismiss (original video here and South Park spoof here: best remark on the court’s decision here). However, before the court reached fair use it had to decide whether the plaintiff had standing to bring the infringement claim. The copyright in the video was originally owned by three individuals, but only two assigned their interest to plaintiff Brownmark Films. Under Sybersound, as a nonexclusive licensee Brownmark Films wouldn’t have standing.

    But the Wisconsin court wanted no part of Sybersound. It criticized the Ninth Circuit’s reasoning, concluding:

    In sum, while the Sybersound Records decision is most definitely authoritative, it is far from persuasive. Instead, this court agrees that “[t]he determination of whether a grant is exclusive or non-exclusive depends on the grant.” [Cites to Nimmer and Patry.] Here, accepting the allegations in the complaint as true, Messrs. Ciraldo and Swaint’s grant of their interest in WWITB was a complete assignment of rights to Brownmark and, accordingly, Brownmark has standing to sue for infringement of the underlying copyright.

    More recently, the District of Nevada had to deal with the same problem. Corbello v. DeVito is a meaty decision about the copyright ownership of an unpublished biography of defendant Tommy DeVito, one of the original Four Seasons. Plaintiff Donna Corbello is the widow and heir of Rex Woodward, the author of the biography (or co-author, more on that in another post) and alleges that the Broadway musical “Jersey Boys” is a derivative work of the book. Corbello sought a declaratory judgment that a purportedly exclusive license DeVito granted to the “Jersey Boys” production couldn’t have been exclusive under Sybersound.

    Since the District of Nevada is in the Ninth Circuit, the court had to work harder than in Brownmark Films to distinguish Sybersound – nevertheless, it managed to. It examined what the 9th Circuit meant by the term “exclusive,” deciding that the exclusivity is only as to the grantor of the right, not all the co-owners:

    In the context of intellectual property, the difference between “exclusive” and “nonexclusive” licenses concerns the continuing ability of the grantor to use or further license to others the licensed property during the period the license is in effect. An “exclusive” license is “[a] license that gives the licensee the sole right to perform the licensed act . . . and that prohibits the licensor from performing the licensed act and from granting the right to anyone else . . . .” Black’s Law Dictionary 1003 (9th ed.2009). A “nonexclusive” license does not impose this limitation on the licensor. A joint owner of a work may consistent with Sybersound grant a license that is exclusive as against him, i.e., he may no longer exploit or further license the work. But such a licensee cannot prevent the other joint owner(s) from using or further licensing the work. In a sense, then, such a license is both exclusive and nonexclusive.

    Therefore, DeVito could have granted an exclusive license as to his own rights, but not to the exclusion of the plaintiff’s right to exploit the copyright in the work, a situation that the court coined as a “selectively exclusively license.” The Corbello court rationalized the Sybersound court’s decision as “guilty at most of imprecise syntax or some minor equivocation, as opposed to outright copyright-law heresy. . . . Surely the Ninth Circuit will clarify that it meant something like this if given the chance, and perhaps it will have the chance in the present case.”

    But as a joint owners, DeVito owes Corbello a duty of accounting for her share of his profits from the licensing of the book. Which perhaps is not as easy as it seems, since he had licensed a number of works to the Jersey Boys production and Corbello is only owed royalties for the portion attributable to the unpublished book.

    Brownmark Films, LLC v. Comedy Partners, Civ. No. 10-CV-1013 (E.D. Wisc. July 6, 2011).
    Corbello v. DeVito, Civ. No. 2:08-cv-00867 (D. Nev. Oct. 27, 2011).

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  • Walter Mercado Still Losing

    Walter Mercado can’t get a break – but then he’s trying to fight two separate district court decisions that both went against him. Odds in the appeals court were slim and he didn’t beat them.

    The dispute is over an agreement between Mercado, an astrologer, and Bart Enterprises International Ltd., a company to which Mercado

    • “irrevocably assign[ed] … all right, title and interest, including all copyrights” to Preexisting Materials;
    • “grant[ed] … the exclusive right and license … to develop, produce, distribute and copyright” New Materials;
    • “irrevocably assign[ed] … all right, title and interest in and to the [WALTER MERCADO] Mark, together with that part of the goodwill of Mercado’s business connected with and symbolized by said Mark, for use in connection with the Pre-existing Materials and the New Materials“; and
    • “grant[ed] … the right and license … to use Mercado’s performance, name, signature, photographs, voice, picture, likeness and other indicia of his identity” subject to Mercado’s approval.

    Mercado was to provide psychic and astrological services for the creation of the new materials, but retained the right to conduct his radio, newspaper, magazine and personal consultation services. In exchange for all of this, Mercado was to get $25,000 per month, $5,000 per month for costumes, and some other monies.

    What $5,000 a month for costumes gets you
    The parties had a falling out, with Mercado refusing to provide the services and Bart Enterprises refusing to pay him. Two different federal courts held that the agreement assigned the WALTER MERCADO mark to Bart Enterprises and that the mark would revert to Mercado upon termination of the agreement, but the agreement had not been validly terminated (more details in a post here). Mercado was preliminarily enjoined from using the WALTER MERCADO mark. Mercado appealed.

    The court reviewed the opposing positions on whether the mark had been assigned:

    The district court adopted Bart’s view that Mercado fully assigned the trademark to Bart because the Agreement plainly uses the term “assign.” Section 2(b) of the Agreement states that “Mercado hereby irrevocably assigns to Bart . . . all right, title and interest in and to the Mark, together with that part of the goodwill of Mercado’s business connected with and symbolized by said Mark.” This unequivocal language is contrasted with Section 3(b), in which Mercado “grants to Bart the right and license . . . to use Mercado’s . . . Name and Likeness.”

    This contrast in language, the district court noted, suggests that the parties intended to grant Bart a full assignment of the trademark.

    Still, the district court acknowledged language suggesting otherwise: the text of Section 2(b) includes the subsidiary phrase “for use in connection with the Pre-existing Materials and the New Materials.” The district court reasoned, however, that this language is merely purposive and does not restrict the scope of the assignment.

    The district court also noted that the Agreement stipulates that Bart has the right to register the trademark in its own name and the right to enforce the trademark in court. Such rights typically inure to assignees, not licensees. There was evidence that the parties took actions consistent with this reading. Not only did Bart file an application for the “Walter Mercado” trademark with the U.S. Patent and Trademark Office (PTO) in 1996, but Mercado filed at least three documents that ratified Bart’s right to do so.[*]

    Mercado, however, urges adoption of the magistrate judge’s reading that the Agreement grants Bart only a limited license to use the trademark. The magistrate judge concluded that because the Agreement consistently limits the use of the trademark to uses “in connection with” the Preexisting and New Materials, the grant is a limited license.

    But on the deferential review of a preliminary injunction:

    We do not say that the issue of the scope of the trademark transferred has been resolved, only that there was no abuse of discretion as to preliminary injunctive relief.

    Further, even if Bart was only a licensee, not an assignee, it was entitled to a preliminary injunction, having demonstrated likelihood of confusion and irreparable harm.

    Mercado-Salinas v. Bart Enter. Int’l, Ltd., No. 10-2359 (1st Cir. Dec. 20, 2011) (Scrib’d link here).

    * One consent in this document.

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  • Just Another Skirmish or the War?

    Registrant’s goods

    Cancellation action Paul Audio, Inc. v. Zhou is just one glimpse of what clearly is a much larger dispute. Baoning Zhou, an individual, is the owner of a registration for the mark C-MARK for audio equipment. Petitioner Paul Audio, Inc., owned by Li Gong, had also applied to register the C-MARK mark for the same goods after its earlier registration lapsed in 2006, but the Baoning Zhou registration was blocking the way of the new application. Paul Audio petitioned to cancel the Baoning Zhou application on the bases that it was the senior user of the C-MARK mark, that the Baoning Zhou application was void ab initio because Baoning Zhou was not the owner of the mark, and that the registration was obtained through fraud. Paul Audio managed to cancel the application, but nevertheless lost the war – or maybe just this battle.

    It’s not entirely clear what the relationship is or was between Paul Audio and Baoning Zhou, but there must have been one. Li Gong testified he created the C-Mark mark in 1989 and that it was later used by Shenzhen World Music, of which Li Gong had been General Manager and owner. Li Gong says that he started a U.S. company C-Mark Light and Sound, Inc. in 1993, then started petitioner Paul Audio, Inc. in 1996 and closed C-Mark Light and Sound, Inc. “because of internal management issues.” Perhaps not coincidentally, it was also about 1996 that Li Gong’s relationship with Shenzhen World Music ended. Thus C-Mark Light and Sound, Inc., was the first to use the C-MARK mark in the United States in 1993 and Paul Audio continued to use the mark when it was established in 1996. Li Gong claims continuous use of the C-MARK mark.

    Respondent Baoning Zhou is the Chairman of the Board and owner of Shenzhen Bao Ye Heng Industrial Development Company Limited, which wholly owns a U.S. company called U.S.A. C-Mark Light and Audio Inc., also selling C-MARK goods in the U.S. Largely incidental to the main events in the cancellation, we also learn that another company owned by Baoning Zhou, Shenzhen Ao Chuang Company, had been the distributor for Li Gong’s Shenzhen World Music, but that Shenzhen Ao Chuang Company ultimately ended up with the Chinese registration. So there is also a tantalizing story here about a distributor gaining ownership of a manufacturer’s mark, but we don’t learn any of the details in this decision.

    The TTAB comments that “this petition for cancellation is one battle in a worldwide trademark dispute between the parties.” In addition to the suggestion above that something happening in 1996, Baoning Zhou also appears to have won a battle in 2004. In that year Baoning Zhou and Li Gong, on behalf of Paul Audio d/b/a C-Mark Light and Sound, were exhibiting in booths next to each other at the 2004 NAMM (National Association of Music Merchants) trade show. The Paul Audio booth displayed a sign that said “C-Mark change to CSP in the world.” Li Gong testified that the banner was up so Baoning Zhou could “take pictures to China, stating whatever. That’s why we put the banner, for him. It was solely for the purpose to let them see it.” He further testified that the name change to “CSP” was for China only and “in the United States, in the U.S. market, we still use C-Mark as the name of the company. We didn’t change the company’s name to CSP.” Nevertheless, Li Gong couldn’t produce any evidence of use of the C-Mark mark in the U.S. after that.Which spelled the end of Paul Audio’s claim of priority. The TTAB found that, lacking any reliable evidence of use after 2004, Paul Audio’s petition to cancel on likelihood of confusion failed because Paul Audio had abandoned the mark.

    Which would seem to then be clear sailing for the Baoning Zhou registration, but that wasn’t the case either: the TTAB held that the Baoning Zhou application had indeed been void ab initio. In closely-held corporations there is often a blurry line between individual ownership and corporate ownership of assets, but this didn’t turn out to be such a tough call. First, there was the ownership history of the Chinese registration for C-MARK, which went from Shenzhen World Music to Shenzhen Ao Chuang Company (mentioned above, of which Baoning Zhou was the General Manager), to Shenzhen Hongda Development Company, to Shenzhen Bao Ye Heng Industrial Development Company Limited, another of Baoning Zhou’s company. There were also a number of pieces of documentary evidence stating that Shenzhen Bao Ye Heng Industrial Development Company Limited was the source of the products; that C-MARK was its registered trademark; and that Paul Audio was infringing the rights of Shenzhen Bao Ye Heng Industrial Development Company. Baoning Zhou also testified:

    I am the shareholder to begin with. So the trademark was owned by me, is owned by me, so I have the full right of giving the usage right to the company…. I actually own this trademark, and I, as the Chairman of the Board of this Company, and I am actually the shareholder of this company – so of course, by all reasons, that Shenzhen Bao Ye Heng Industrial Development Company Limited will be the company who will manufacture and sell this product.
    The TTAB’s conclusion:

    As of the September 25, 2006 filing date of the application for Registration No. 3252760, Baoning Zhou himself was not using and had not used the mark sought to be registered. All use of the mark prior to and as of the filing date was by Shenzhen Bao Ye Heng Industrial Development Company Limited both in the United States and in China. Therefore, there was no use of the mark by Baoning Zhou upon which he can rely as a basis for establishing that he was the owner of the mark and thus that he was entitled to file the application for registration of the mark…..

    To the extent that respondent may be arguing that his ownership of Shenzhen Bao Ye Heng Industrial Development Company Limited is so complete that Shenzhen Bao Ye Heng Industrial Development Company Limited is the alter ego of Baoning Zhou (i.e., the two are one-and-the same), there is insufficient evidence to support that argument. Moreover, the fact that respondent may be the majority shareholder of Shenzhen Bao Ye Heng Industrial Development Company Limited does not prove that respondent and the company constitute a single entity such that respondent may claim ownership of the mark through the company’s use of the mark. With respect to respondent’s claim that he actively participates in the control of the nature and quality of the goods is insufficient in and of itself to demonstrate that he is the owner of the mark, and moreover his statements regarding control is conclusory and unsupported by any facts or evidence.

    As one could predict, the fraud claim failed for lack of evidence of an intent to deceive the PTO.

    So Baoning Zhou is left without a registration, but the TTAB has also held that Paul Audio is not the senior user of the mark. Any guesses on what will happen to the Paul Audio application? Will Paul Audio appeal this decision? Will Paul Audio abandon its application or will Shenzhen Bao Ye Heng Industrial Development Company Limited have to oppose? It doesn’t look like this one is close to over.

    HT to John Welch for the case.

    Paul Audio, Inc. v. Zhou, Cancellation No. 92049924 (TTAB Dec. 7, 2011).

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  • Giving An Idea to Your Employer

    If an employee has a pre-existing idea that he or she brings to the employer, who owns it? At first blush it seems pretty easy, that the employee would own it. What, though, if the employer puts time, effort and money into developing the idea, then what?

    This is the situation in Woodfords Family Services, Inc. v. Casey. Woodfords provides support and educational services to people with special needs. Woodfords hired Laura Casey as a Program Director for early childhood services. Well before Casey started working at Woodsfords she had conceived of an idea for a video product to assist children with autism in learning appropriate behavior. The product would superimpose the autistic child’s face on the body of a child exhibiting appropriate behavior, so the autistic child would see him or herself modeling the behavior.

    While Casey was employed at Woodfords she encouraged Woodfords to develop the product. Woodfords applied for and received two grants for the project from which part of Casey’s salary was paid, and one of the grants specified that Casey had to work on the project. One 2-minute video of Casey’s son brushing his teeth was filmed. The amount of time spent on the project by other employees was disputed. Casey also didn’t have a non-compete agreement with Woodfords.

    Casey resigned and her lawyer sent a letter to Woodfords stating that any work Casey created relating to video self-modeling was Casey’s exclusive property and that she owned all copyright, patent, trade secret and other intellectual property rights to it. Woodfords therefore brought claims against her for, and moved for a preliminary injunction on, misappropriation of trade secret, misappropriation of idea, breach of confidential relationship or fiduciary duty, and unjust enrichment.*

    The Restatement (Third) of Unfair Competition, § 42 cmt. e says this about ownership of idea:

    In the absence of a contrary agreement, the law ordinarily assigns ownership of an invention or idea to the person who conceives it. However, valuable information that is the product of an employee’s assigned duties is owned by the employer, even when the information results from the application of the employee’s personal knowledge or skill:

    If, however, one is employed to do experimental work for inventive purposes, it is inferred ordinarily, although not so specifically agreed, that patentable ideas arrived at through the experimentation are to be owned by the employer. This is even more clear where one is employed to achieve a particular result which the invention accomplishes. On the other hand, if one is employed merely to do work in a particular line in which he is an expert, there is no inference that inventions which he makes while so working belong to the employer.

    Restatement, Second, Agency § 397, Comment a.

    I expected the court to consider who initially owned the trade secret and, if Casey, whether ownership was transferred to Woodfords, but it didn’t. Instead, the court went straight to whether there had been a misappropriation by Casey, with the only dispute over whether Woodfords had taken reasonable measures to guard the secrecy of the idea. The court considered the following factors in deciding whether the efforts were reasonable:

    (1) the extent to which the information is known outside the plaintiff’s business; (2) the extent to which employees and others involved in the plaintiff’s business know the information; (3) the nature and extent of measures the plaintiff took to guard the secrecy of the information; (4) the existence or absence of an express agreement restricting disclosure; and (5) the circumstances under which the information was disclosed to any employee, to the extent that the circumstances give rise to a reasonable inference that further disclosure without the plaintiff’s consent is prohibited.
    This is where the pre-existence of Casey’s idea made a difference, though. On the first factor, while no one else in the industry was creating this type of self-modeling, Casey had told a number of individuals about her idea, including her father, a volunteer, two former colleagues, and unnamed friends. Most critically, on the third factor, Casey was never told to maintain the secrecy of the project, although she did attend meetings where third parties were told the concept was confidential and some were asked to sign “work-for-hire” and nondisclosure agreements. The court weighed heavily that Woodfords never told Casey to contact individuals to whom she had previously disclosed the idea and tell them that the idea was confidential information of Woodfords, concluding that

    Notwithstanding [Woodfords Executive Director] Farnsworth’s admonition to members of the [internal] WFRD Committee and the non-disclosure agreement with [videographers] Current Motion, Woodfords’ failure to notify [volunteer] Meehan to maintain confidentiality and its failure to specifically instruct Casey about the secrecy of her idea lead me to conclude on this record that Woodfords has not shown a likelihood of success on the proposition that it took reasonable steps under these circumstances to maintain secrecy of the idea and thus that it was a trade secret belonging to Woodfords.

    So the trade secret claim was decided on the basis that there was no trade secret, rather than who owned it. The court did recognize the latter issue in dicta, though:

    FN10. Moreover, in order to prevail on its claim for misappropriation of trade secrets, Woodfords must establish that it owns that which it is striving to keep secret. The only support for Woodfords’ ownership is found in Nau’s affidavit where he makes the ambiguous statement that “[a]ll of Ms. Casey’s work on the conceptualization and development of the video self-modeling product was within the scope of her employment as Program Director.” Nau Aff. ¶ 31. This may have been so, once Casey started working for Woodfords. But given Casey’s specific statements about conceiving and sharing the idea with colleagues and friends years before joining Woodfords, Woodfords must provide more to support its assertion that her work on it at Woodfords gave rise to Woodfords’ ownership.

    The misappropriation of idea claim didn’t work because Maine hasn’t recognized the tort. The breach of confidential relationship claim wasn’t viable: “If Woodfords cannot establish that the idea is a trade secret or that Maine law recognizes appropriation of an idea, the confidential relationship cases will not allow it to bootstrap its way into a likelihood of success for the temporary restraining order and preliminary injunction.” On the breach of the fiduciary duty of loyalty that an employee owes to an employer,  while an employee may not actually compete during the course of employment, there is no prohibition against preparing to compete. Casey indeed prepared to compete while she was still employed by Woodfords, but she didn’t actually compete so this claim failed also. Finally, at this stage there was no unjust enrichment because there was no showing that Casey has yet to be enriched by the use of the idea. Thus the court did not enjoin Casey from developing her business using the video self-modeling idea.

    Woodfords Family Services, Inc. v. Casey, No. 2:11-cv-445-DBH (D. Me. Dec. 14, 2011).

    * There is also a copyright infringement claim but it was not part of the motion for preliminary injunction. However the copyright claim was the basis for federal jurisdiction, with the notable comment by the court that a registration isn’t required before the court will have jurisdiction over a claim for determination of ownership of a copyright.

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  • Beneficial Owners Don’t Have Standing

    The Eastern District of Virginia recently held that a beneficial owner of a patent has standing to bring an infringement claim. It appears the Federal Circuit disagrees.

     The ‘451 patent was invented by Mayer Michael Lebowitz and James Seivert, both deceased. The Lebowitz Trust now owns Mr. Lebowitz’s ownership interest in the patent. The Trust sued Telular Corporation, which filed a motion to dismiss for lack of standing because not all patent owners were plaintiffs. The Trust valiantly, but unsuccessfully, tried to show it owned the Seivert interest in the patent.

    First up was an argument that Seivert was Lebowitz’s employee and had transferred his rights to Lebowitz. However, the only document was an unsigned “Agreement for Consulting Services,” which had this assignment clause:

    [A]ny and all ideas, discoveries, inventions, [etc.] … developed, prepared, conceived, made, discovered or suggested by [Mr. Seivert] when performing services pursuant to this Agreement … shall be and remain the exclusive property of Cellular Alarm. [Mr. Seivert] agrees to execute any and all assignments or other transfer documents which are necessary, in the sole opinion of Cellular Alarm, to vest in Cellular Alarm all right, title, and interest in such Work Products.
    (Brackets in original.) The court punted on whether an unsigned agreement satisfied the writing requirement for assignment of an invention, on the basis that there are other means for transferring patents besides assignment. (Seivert is deceased, so the patent ownership must have been conveyed to someone in his estate.)

    The court punted because there was a bigger problem, which was the assignment language. The court held that the language “shall be and remain” was a future duty to assign, not a present assignment. The legal transfer of title would occur when Seivert actually executed the necessary documents, which didn’t happen. Therefore the Trust had, at best, only an equitable interest in the patent and an equitable interest isn’t good enough for standing.

    The Trust’s second argument, that Seivert was “hired to invent,” failed for the same reason – “this doctrine is expressly equitable, and creates only an obligation for the employee to assign to his employer.” Thus the Trust did not have standing and the district court decision was affirmed.

    The Trust seems to be in a bit of a morass at this point. Now it has to figure out who owns Seivert’s interest and how to get that party or parties to satisfy Seivert’s duty to assign.

    Practice tip:  “I agree to assign” and “I shall assign” are a no-go on assignment.  “I do hereby assign,” “I hereby convey, transfer and assign,” and “does hereby grant” are a go.

    Teva Pharmaceutical appealed the opinion in the Eastern District of Virginia case mentioned above. It should do pretty well in the appeal.

    Patently-O’s coverage of the case.

    Gellman v. Telular Corp., No. 2011-1196 (Fed. Cir. Nov. 30, 2011).

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  • Zombie Department Stores Rise (as ugly t-shirts)

    There’s been a fair amount written about “heritage,” “dead” or “zombie” brands, including by me. These are brands that aren’t being used anymore by the original owner, but they still have resonance with consumers. A third party comes along specifically with the intent of exploiting the consumer recognition by creating a new offering around the old product name. The most well-known of these companies is River West Brands, but it seems to have become a cottage industry.

    Defendant Strategic Marks, LLC is also one of those companies. It has two major businesses, candy and department store names, and it’s the latter that got the company into trouble. Strategic Marks LLC was just sued by Macy’s Inc. in the Northern District of California for infringement of the JORDAN MARSH, BULLOCK’S, ROBINSONS-MAY, FILENE’S, ABRAHAM & STRAUS, THE BROADWAY and THE BON MARCHÉ department store marks.

    It’s an interesting complaint. First off, Macy’s Inc. mentions only three registrations in its Complaint, FILENE’S, ROBINSONS-MAY and MAY. In other words, Macy’s Inc. has trademark registrations for only two of the seven department store names. Here’s a screenshot of the current and former registrations for the department store names – note there’s a lot of “DEAD” in the status column:

    (Here’s a printout of the original search so you can see the search query)
    The reason there are so many dead trademark registrations is because Macy’s quite publicly ceased using these marks a number of years ago, often to the great unhappiness of the local shoppers. From the Macy’s website:

    A & S Department Stores were converted to the Macy’s nameplate in May 1995. Also in 1995, Federated acquired The Broadway Department Stores, bringing Broadway, Emporium and Weinstocks to the Macy’s family, as well as six former I. Magnin stores. Some 46 stores were converted to the Macy’s nameplate. . . .

    Macy’s entered 2005 with about 240 locations, primarily on the East and West Coasts. With the conversion of all Federated’s regional store nameplates in March 2005, Macy’s grew to about 425 locations across the country. In September 2006, with the conversion of stores acquired from The May Department Stores Company, Macy’s now serves customers through more than 800 stores in virtually every major geographic market in the United States . . . .

    Macy’s, Inc. now has only two major brands: Macy’s and Bloomingdales. Here are the Wikipedia entries for each of the disputed stores describing the cessation of the use of their marks, from as early as 1995 with none later than 2006:

    Nevertheless, Macy’s wraps up all the department store names into one package that it euphemistically calls “Heritage Marks” and claims that Strategic Marks is infringing a generalized “Macy’s” brand, to wit:

    44. As more fully set forth above, the Heritage Marks have come to have a secondary meaning indicative of origin, relationship, sponsorship, and/or association with Plaintiffs. The purchasing public is likely to mistakenly attribute to Plaintiffs the use by Defendant of the Infringing Marks as a source of origin, authorization, affiliation, and/or sponsorship for Defendant’s retail department store services, online retail store services, and related goods and services and, therefore, to use Defendant’s services and purchase Defendant’s products in that erroneous belief.

    ***

    50. The Heritage Marks are famous marks that are of inestimable value to Macy’s and are relied upon by the trade and the purchasing public to identify and designate Macy’s retail department store services, online retail store services, and related goods and services and to distinguish them from the goods and services of others.
    Macy’s has some skanky product on its website – a T-shirt and cheap bag – for the various store names, which I’m told were recently added to the site (token use, anyone?):

    (click for larger image)

    [Ed. note – As a former Filene’s shopper, I am appalled on Filene’s behalf that its brand is treated so abysmally – a cheap black men’s cut T-shirt, really? Surely Strategic Brands’ supposed “tarnishment” as alleged by Macy’s couldn’t be more offensive than what Macy’s has done itself. Former shoppers of Abraham & Straus, The Broadway, Jordan Marsh, Bullock’s, Robinsons-May, and The Bon Marché I trust will be equally appalled.]

    Well, I think it’s a stretch. Quite a stretch. Although Macy’s mechanically recited in its Complaint that it has not abandoned the marks, it will be interesting to see what evidence it might be able to cough up to rebut that it has ceased use and/or intended to abandon the marks.

    Macy’s, Inc. v. Strategic Marks, LLC, No. 11-cv-6198 (N.D. Calif. Dec. 9, 2011).

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  • Must All Trademark Owners be Joined?

    Yesterday’s post covered the relative ownership of the trademarks YOGI and YOGI TEA between cross-claimant Bibiji Inderjit Kaur Puri (“Bibiji”) and Golden Temple of Oregon (“GTO”), where an arbitration held that Bibiji was the owner of the trademarks. GTO therefore dropped its infringement claim against defendant Wai Lana Productions, but Bibiji’s claim against Wai Lana remained.  It turns out that there’s still a long way to go; Bibiji’s claim of sole ownership of the YOGI trademarks is also being challenged.

    It comes before the court on Wai Lana’s motion to dismiss for failure to join a party under Rule 19. It turns out that Bibiji owns only 50% of the trademarks outright; ownership of the remaining 50% is being disputed in New Mexico in two different actions, a probate action brought by the trustees of Yogi Bhajan’s trust and a state court action brought by Bibiji. The court doesn’t provide any details on the merits of the cases, but informs us that the possible owners of the other 50% are (1) Bibiji; (2) the trust; and (3) an entity the court calls “Staff Endowment LLC.”  (The arbitration mentions a “Staff Trust” that was set up for the benefit of women who helped Yogi Bhajan handle administrative tasks; perhaps Staff Endowment LLC is a successor to the trust.)

    On a Rule 19 motion, the moving party must first show that the missing party is necessary to the litigation. If the party is, but the joinder will destroy jurisdiction, then the court must decide whether the case can proceed without the absent party or if the party is indispensable. If the party is indispensable, then the case must be dismissed.

    The first question then is whether all trademark owners must be parties to an infringement claim. It’s not so clear, but the court ultimately concluded that

    when ownership of a trademark is the central issue in a case, the trademark owner is a necessary party. Parties do not cite, and I have yet to find, a case in which the trademark owner was not necessary in an action for infringement.

    Once the court reached that conclusion, the denial of the motion was clear.  Without knowing who the other half owner or owners might be, the court couldn’t decide whether they could feasibly be joined or were indispensable.  The motion to dismiss was denied.

    I wonder if they’ll ever get to the infringement part of the case?

    Golden Temple of Oregon, LLC v. Wai Lana Productions, LLC, No. 03:09-CV-902-HZ (D. Or. Dec. 5, 2011).

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  • Who Owns the Mark Used by a Bunch of People?

    Like life, trademark ownership can get complicated.  About a year and a half ago I reported on a brewing dispute over the ownership of the trademark YOGI TEA. Golden Temple of Oregon (GTO) sued Wai Lana Productions for trademark infringement of its YOGI and YOGI TEA mark. Wai Lana defended itself on the basis that GTO was not the owner of the YOGI TEA mark but instead Bibiji Inderjit Kaur Puri (“Bibiji”), the widow of Yogi Bhajan, owned it. Wai Lana’s ploy was unsuccessful; it only mattered whether GTO’s rights were superior to Wai Lana’s, not to the world.

    Bibiji then entered the fray herself, joining the suit against both GTO and Wai Lana and accusing them both of trademark infringement. Bibiji claimed (as had Wai Lana) that GTO was only a licensee of the YOGI mark, not its owner. Bibiji and GTO then went to arbitration over their relative ownership rights.

    You know that there’s a rat’s nest of a problem when the analysis starts with “The notion of ownership within the 3HO community is fluid.” That’s a bad sign in a trademark case; trademark law doesn’t cope well with “fluid” organizational structures.

    “3HO” stood for “Healthy, Happy, Holy Organization” and was a loose association of people who wanted to lead a spiritual life as led by Yogi Bhajan. The arbitration decision details the various business organizations in the community. Most relevant was the Golden Temple Tea Company, a predecessor to GTO. Golden Temple Tea Company started independently but was later (under another name) donated to a non-profit owned by Yogi Bhajan. There were also Golden Temple restaurants, which weren’t under common control with the tea company.

    Ultimately GTO entered into a series of license agreements, the last in 2004 with a living trust for which Yogi Bhajan and Bibiji were trustors. The parties agreed that the license was for the name, likeness and signature of Yogi Bhajan as marks, but disagreed about whether it was also a trademark license for YOGI and YOGI TEA. Yogi Bhajan died shortly after the agreement was signed and Bibiji revoke the trust and became its successor. In 2008 GTO ceased using Yogi Bhajan’s name and likeness and stopped paying royalties, but continued to use the YOGI TEA mark and introduced the YOGI brand for other goods. Thus the counterclaim and arbitration.

    The decision has an extensive statement of facts, which I won’t recount here.  Then the ride begins:

    While the parties agree that the phrase Yogi Tea originated with Yogi Bhajan, the close-knit relationships among the 3HO community entities make it difficult to identify traditional trademark milestones such as “adoption,” “first use,” “first use in interstate commerce,” “consent,” and “quality control,” all of which are relevant to trademark ownership.

    Nonetheless, upon review of the evidence – that the restaurants were the first to use YOGI TEA but it may not have indicated single source at the time because so many were using it, that Yogi Bhajan was generally recognized as having the right to control the use of the YOGI TEA mark, and that Yogi Bhajan’s trust received a stream of royalties from the tea because of the license agreement – the panel found that “substantially all of the use of YOGI TEA by the Golden Temple restaurant, and by GTO and its predecessor, was with the express or implied permission of Yogi Bhajan, and that Yogi Bhajan’s heirs own the trademark YOGI TEA.”

    The nail in the coffin was GTO’s claim that the use of Yogi Bhajan’s name and likeness would infringe his company’s use of YOGI TEA and YOGI for its goods – but GTO had agreed in the 2004 agreement that Yogi Bhajan owned the trademark rights in his name and likeness.  GTO couldn’t have it both ways; to the extent there could be confusion, and Bibiji was the owner of the name and likeness trademarks, then she must be the owner of the YOGI TEA and YOGI trademarks too:

    Over the years GTO and its predecessors created a “family” of Yogi marks for tea, including “YOGI TEA,” “Yogi Bhajan,” the likeness of Yogi Bhajan, the phrase “The Yogi behind Yogi Tea is Yogi Bhajan,” “YOGI BHAJAN’S YOGI TEA,” and the more recently adopted “YOGI,” and represented to the public that tea and other products sold under this family of marks come from a single source. It cannot now claim ownership of some of the marks in the family while acknowledging that other marks in the family are owned by Claimant.

    Wow, how eminently sensible. Thus, Bibiji is the owner of the undifferentiated YOGI mark, that is, not only for tea but also for the related goods of granola and cereal.  This is what you’ll find on the GTO website now:

    As a result of the arbitration decision, GTO dismissed its district court suit against Wai Lana because it had no trademark rights.  But the claims by Bibiji against Wai Lana survive, and are the topic of tomorrow’s post.

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  • Bratz Copied, But Didn’t Infringe

    Awhile back I reported on a new infringement lawsuit involving the Bratz dolls, this time a claim by a photographer that the dolls infringed an ad the photographer created for apparel and footwear company Steve Madden:

    Carter Bryant, the designer of the Bratz dolls, gave the ad to the sculptor who created the first “sculpt” of the doll design:

    The court found that while a discerning eye could see differences,

    the similarities between the sculpt and the Devil/Angel image are significant. If MGA were selling the sculpt as a final product, there might well be a triable issue of fact regarding copyright infringement. But Belair’s complaint alleges that it is the Bratz line of “dolls, toys, games, and videos” that infringes on his copyrighted image. The sculpt is not available for purchase. It is only one component of some of the Bratz dolls and is not incorporated at all into many of the Bratz toys, games, and videos.

    When we reach the comparison between the Angel/Devil image and the actual dolls, any similarity has reached a non-infringing level:

    The Bratz dolls and the figures in Angel/Devil Girl do share similarly large heads, long limbs, and thin waists. That is no surprise. The Bratz dolls were initially modeled after the Belair figures. But in their transformation from a photograph to tangible figures, the Bratz dolls have been molded, painted, and dressed so that they no longer look like the Devil and the Angel.

    It is undisputed that MGA was aware of the Steve Madden look and sought to capitalize on it. But that is not enough to justify a finding of infringement. “Stirring one’s memory of a copyrighted character is not the same as appearing to be substantially similar to that character, and only the latter is infringement.”  Although the Bratz dolls may indeed bring to mind the image that Belair created, Belair cannot monopolize the abstract concept of an absurdly large- headed, long limbed, attractive, fashionable woman. He has a copyright over the expressions of that idea as they are specifically articulated in the Angel/Devil image, but he may not prevent others from expressing the same idea in their different ways.

    Belair v. MGA Entertainment, Inc., No 09 Civ. 8870 (SAS) (S.D.N.Y. Nov. 16, 2011).

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  • When You Can Change the Name of the Registrant

    A short primer from the TTAB on when one can correct the name of an incorrectly named registrant and when instead the application is void ab initio.  In Key West Innkeeper’s Association, Inc. v. The Popular House, Inc., the application was filed in the name of “Carlson,Jody,E”, a corporation, then the applicant was changed during examination to “Key West Bed & Breakfast,” which was a fictitious name for Popular House, Inc.  The TTAB squares it all away:

    If an application is filed in the name of a non-existent entity or under an applicant’s trade name, the application may be amended to correctly identify the applicant. See TMEP Sections 1201.02(c)(1) and 1201.02(c)(7). The evidence that applicant submitted during ex parte prosecution of its application for Registration No. 2946931 establishes that there is no genuine issue of material fact that there is no Florida corporation named “Carlson,Jody,E” (or Jody E. Carlson) and that Key West Bed and Breakfast is a fictitious name for Popular, which is registered with the Secretary of State of the State of Florida under which Popular does business. Accordingly, notwithstanding that such application was filed by a non-existent entity that has the same name as Popular’s president and that the identity of that applicant was then amended to the proper applicant’s trade name, i.e., another non-existent entity, there is no genuine issue of material fact that the application for Registration No. 2946931 is not void ab initio and that the applicant was merely misidentified in that application.

    FN4. The circumstances in this case are distinguished from Huang v. Tzu Wei Chen Food Co. Ltd., 849 F.2d 1458, 7 USPQ2d 1335 (Fed. Cir. 1988), upon which petitioner relies in support of its claim that the application for Registration No. 2946931 is void ab initio. In Huang, the application at issue was filed by the mark owner’s president as an individual, two days after ownership of that had transferred to a newly formed corporation. Here, the application was filed by a non-existent Florida corporation that has the same name as Key West’s president. Because the identification of the applicant as a corporation with the same name as the applicant’s president created an inconsistency, allowance of the amendment to correct this inconsistency was appropriate. See TMEP Section 1201.02(c)(3).

    Bonus question:  The TTAB commented that “Indeed, based on the evidence that was submitted during ex parte prosecution of the application for Registration No. 2946931, the identity of the applicant for that registration could have, and at least arguably should have, been amended to The Popular House, Inc., during ex parte prosecution of that application.”  Here’s the evidence: What do you think, if you were the examining attorney would you have caught it?

    Key West Innkeeper’s Association, Inc. v. The Popular House, Inc., Cancellation No. 92048825 (TTAB March 17, 2010).  It’s an old decision; not sure why Westlaw popped it out now.

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