Some of you may recall I did some posts about “Moose Tracks” ice cream, a registered trademark but a generic flavor name in my book. So I couldn’t resist posting today’s comic from one of my favorite cartoonists, Hilary Price and Rhymes with Orange:
The text of this work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
The TTABlog reports on a case involving a fairly common type of dispute, between a manufacturer and importer, albeit with a twist. I’ll elaborate a little more on the claim that relates to the ownership of the mark.
The importer was the registrant of the mark ZYTNIA for vodka; the Polish manufacturer filed a petition to cancel the registration. Strike one against the manufacturer was that it brought the cancellation action almost 11 years after the mark was registered, well after incontestablity is established. Incontestability means, of course, that there are limited bases for cancelling a registration, and incorrect ownership isn’t one of them. The manufacturer therefore had to rely on fraud as its basis for cancellation, i.e., the manufacturer
| claims that respondent fraudulently obtained the registration by asserting that it was the owner of the mark when, in point of fact, petitioner owned the mark. Because petitioner has alleged and attempted to establish a willful withholding of ownership information by respondent when it prosecuted the underlying application that matured into the involved registration, the ownership question may be addressed, but only in the context of fraud. |
(italics in original.) Fraud has to be “proven to the hilt,” showing that a statement was false, the falsity was intentional, and that the false statement was material to obtaining or maintaining a registration.
So you be the Board member (these are the facts recited in the opinion; I’m not sure they’re all relevant):
What’s your verdict? Kind of a trick question, remember the manufacturer has to prove fraud, not just who the owner should be. That makes it an easy case:
| Given these facts, it is unreasonable to infer that respondent filed the application with intent to deceive the Office as to ownership. Even if we were to find that petitioner were the owner of the mark, cancellation on the ground of ownership is not permissible inasmuch as the petition was filed long after the five-year anniversary date of the registration. |
What if the manufacturer didn’t have to prove fraud, just incorrect ownership? Personally, I think this is the rarer case where the importer wins. The Board calls out what I think are the facts that tip the call in the importer’s favor:
| [V]odka is made according to respondent’s recipe; presumably, respondent is the one exercising control over the nature and quality of the ZYTNIA vodka. The labels reflect as much when they indicate “Produced for and imported by [respondent].” Further, it is respondent that advertises and markets the ZYTNIA vodka in the United States. Thus, to the extent that consumer perception may be relevant to ownership, it is likely that the public believes that respondent is responsible for the vodka sold under the mark ZYTNIA. |
Add to it that there was an effort to assign ownership that never materialized. An assignment might make sense from a documentation standpoint, i.e., there is a chain of ownership for the old (and incontestable) registration. If instead the 2005 agreement was styled as a surrender of any claim of ownership, then the registration may be invalid. But styling it as an assignment concedes validity of ownership in the assignor, another nail in the coffin for me.
Either way, at the end of the day no luck for the manufacturer. Just too late.
Slaska Wytwornia Wodek Gatunkowtch “Polmos” SA v. Stawski Dist. Co., Inc., Can. No. 92044806 (TTAB July 27, 2010)
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
It’s old news now that a gentleman named Paul Ceglia claims to own 84% of Mark Zuckerberg’s Facebook web site. Ceglia coughed up a contract that purports to pay Zuckerberg $1000 to write code for a project Ceglia called StreetFax and also to pay Zuckerberg $1000 towards the development of “The Face Book” in exchange for an ownership interest.
It’s the strangest contract. Any thoughts on it’s origin?
For more about what is suspicious about the whole affair, go here.
Full complaint here.
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Co-inventor Mundi Fumokong was married to Fonda Whitfield when he filed for two related patent applications. In California, all property acquired by a married person during marriage is presumed to be community property, including patent applications. Fumokong and Whitfield later filed for a “quickie” divorce (those are the court’s words), more formally called a summary dissolution. In a summary dissolution, a divorcing couple either has to state that there is no community property or file a property settlement dividing all assets and liabilities. The Fumokong/Whitfield couple took the former route, declaring in their petition that they had no community assets or liabilities. After the appropriate waiting period, the court granted the divorce.
Defendant Sprint Nextel claimed that plaintiff Enovsys LLC, successor-in-interest to Fumokong and his co-inventor’s interest in the patents, did not have standing because Whitfield was an unjoined co-owner of the patents. The court of appeals explained that under 28 U.S.C. § 1738, state judicial proceedings “shall have the same full faith and credit in every court within the United States . . . as they have by law or usage in the courts of such State, Territory, or Possession from which they are taken.” Thus, the court of appeals had to abide by any decision the state court made about the disposition of the patents.
The court therefore assessed it as a question of collateral estoppel. In California, the four elements to collateral estoppel are: (1) the issue sought to be precluded from relitigation is identical to the issue decided in the earlier proceeding; (2) the issue was actually litigated in the former proceeding; (3) the issue was necessarily decided in the former proceeding; and (4) the person against whom collateral estoppel is asserted was a party, or in privity with a party, to the earlier proceeding. Here,
| In a divorce proceeding, property rights are put at issue by (1) specific allegations describing such property, or by (2) an allegation that no community property existed. Fomukong and Whitfield alleged that they had no community property. The judgment of dissolution entered by the California court was based on this admission; under California Family Code § 2404, the judgment constituted a complete and final adjudication of Fomukong and Whitfield’s property rights. Accordingly here, although the final divorce decree was silent as to particular property, it nevertheless adjudicated the parties’ rights with respect to that property because it was based on an uncontested complaint which alleged that there was no community property.
The final requirement under California law for collateral estoppel is met because Sprint Nextel is in privity with Whitfield. In this case, privity arose from Whitfield’s express assignment of any property interest she had in the patents to Sprint Nextel. Sprint Nextel is thus barred from relitigating Whitfield’s property rights in this case. |
Plaintiff Enovsys therefore had complete ownership of the patents and standing to bring suit. Sprint Nextel fared no better on the judgment of infringement.
Enovsys LLC V. Nextel Communications, Inc., No. 09-1167 (Fed. Cir. Aug. 3, 2010)
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
I’ve carefully avoided blogging about copyright termination rights, but only because the cases are so mind-numbing. Luckily, though, Tamera Bennett at the Create Protect Blog isn’t afraid to take the subject on. She’s summarized the 2009 and 2010 Cases of Interest.
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
There’s a tale here. Unfortunately for plaintiff, not enough to make a federal case.
The plaintiff, G & F Licensing Corporation (GFLC), claims to be a successor company to the Gordon & Ferguson Company, the original owner of the mark FIELD & STREAM for apparel. The current record owner is Field & Stream Licenses Co., LLC (FSLC). Here’s the history of the mark and the licenses, as related by GFLC (the only storyteller) in the complaint and exhibits, and in the PTO databases:
– Gordon & Ferguson, Inc., founded in 1871, first registered FIELD & STREAM in 1926 with a first use date of 1915.
– Gordon & Ferguson, Inc. assigned the mark to Gordon & Ferguson Company in 1962.
– Gordon & Ferguson Company assigned the mark to Gordon & Ferguson Merchandising Company in 1984.
– Gordon & Ferguson Merchandising Company assigned the mark to Field & Stream Licenses Company in 1987. Field & Stream Licenses Company was a wholly-owned subsidiary of Gordon & Ferguson Merchandising Company.
– Gordon & Ferguson of Delaware, Inc. became an exclusive licensee of the mark for outerwear on October 28, 1988. The license would be essentially fully paid-up after $1.5M in royalties and then also freely assignable.
– Gordon & Ferguson of Delaware, Inc. transferred the license to Gordon & Ferguson, Inc. (presumably a different company than the original owner) around February, 2006. Field & Stream Licenses Company acknowledged that the license was paid up and no consent to the assignment was required.
– Field & Stream Licenses Company became FSLC by way of merger in August, 2006. The company was “purchased by an investor group specifically to enhance and re-launch the Field & Stream brand . . . . [M]anagement is now executing on its vision to re-position the brand by expanding the presence of Field & Stream products at upscale retailers.”
– Gordon & Ferguson, Inc. transferred the license to plaintiff GFLC around June, 2007.
– FSLC claims that the license was terminated as the result of a default by – well, who knows exactly which company, FSLC lumps them all together – around June or July, 2008.
GFLC says it was a former licensee that went out of business so there was no default, and sues for declaratory judgment of ownership and infringement by FSLC and others. GFLC’s principal theory was that the exclusive, virtually paid-up (except for $1 a year) license was actually a de facto assignment. But as smelly as the deal sounds (one can see why FSLC would have reason to try to ditch GFLC), there’s no getting around the plain words of the license:
 |
| (click for larger image) |
Its infringement claim against FSLC is also estopped by the license:
 |
| (click for larger image) |
as well as against the co-defendants, for lack of notice:
 |
| (click for larger image) |
So there’s just no federal remedy here. Rather:
| it is essentially a contract dispute between an exclusive licensee and licensor over the right to use the trademark[s] at issue. The dispute should be determined by the principles of contract law, as it is the contract that defines the parties’ relationship and provides mechanisms to redress alleged breaches thereto. The Lanham Act, in contrast, establishes marketplace rules governing the conduct of parties not otherwise limited. This is not a case of either the licensee or licensor attempting to protect a trademark from unscrupulous use in the marketplace by third parties. Rather, this case involves the alleged breach of a license agreement. |
But even aside from that, think of the lessons here. Recall that GFLC claims that the trademark was transferred from the owner to a wholly-owned subsidiary. Whether the later sale to an unrelated party was forced (for example in a bankruptcy) or intentional, putting ownership of the marks in a different company leaves that much more room for mischief. This is also a really bad license; the licensee’s use was virtually without discretion once the royalty was paid up. That may have been well and good if, as it appears possible, the original parties were sister companies. But they’re not anymore, leaving everyone in a terrible state of affairs, perhaps with an efficient breach the only recourse.
G & F Licensing Corp. v Field & Stream Licenses Co., LLC, No. 09 Civ. 10197 (LTS) (GWG) (S.D.N.Y. July 16, 2010).
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Microsoft is getting some press for announcing that it is giving its 93,000 employees Windows 7 phones. An email announcing the plan to the employees was posted on TechFlash:
| I am thrilled to announce that a new Windows Phone 7 will be made available to every Microsoft employee as we launch in each market around the world. … There is also a lot you can do while we are heading to launch even before you get your phone including: … Develop! With the help of the developer division, we just shipped the Final Beta of the Windows Phone Developer Tools. They absolutely rock…. The package includes everything you need to start building apps. In addition, we’ve introduced a new employee developer program which makes it much easier for you to develop apps for Marketplace in your spare time. … |
Ah, “in your spare time.” My last post was on Mattel v. MGA Entertainment, a $100 million case that explores whether a Mattel employee’s design of the Bratz doll, even though it was done on his own time, was nevertheless owned by Mattel by virtue of an employment agreement. While copyright law gives the employer ownership of copyrightable material created by an employee only “in the scope of his or her employment,” employers may also create agreements that are more expansive. So if Microsoft employees are creating apps in their “spare time,” who will own them?
Below is a portion of a 1998 Microsoft employment agreement, available here from a University of Washington, Department of Computer Science and Engineering website. I’m not suggesting this is what Microsoft is currently using, but simply using it as an example:
 |
| (click for larger image) |
The agreement says that employees will assign to Microsoft all rights to “copyrightable material” produced “during my employment with MICROSOFT.” This suffers from the same problem as the Mattel assignment, that is, is spare time considered one’s “employment”? The paragraph continues, though, by describing what would NOT be assigned, suggesting that anything else will be assigned. The exclusion is quite narrow, and Windows 7 app work probably would not fall within it even if it was done during an employee’s “spare time”: while the phone may not be “equipment” of Microsoft or the development kit the “supplies” or “services” of Microsoft, any app would certainly “relate directly to the business of Microsoft.”
Any more clues on who might own the employee-created apps? One comment (to an unrelated article, go to Wednesday, July 07, 2010 5:07:00 PM) says that Microsoft has told its employees that their apps will be Microsoft’s property:
| – Your employee agreement … anything you create that is related … thus you have no right to build an app or game that profits from those inventions. – If you want, you can get a license from Microsoft for your intellectual property to be used in WP7 apps and games – The goal of the program is for you to have fun – It is NOT a goal of this program to enable Microsoft employees to get rich, launch startups, or compete with Microsoft. |
So you get the phone, and can develop apps “in your spare time,” but you’re not going to be retiring on the income from them.
Personally, it’s not so much the free phone – are they picking up the data plan too?
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Be still my heart, my title is the opening line in the 9th Circuit decision about the long-standing dispute over the Bratz dolls, a title I have somehow thus far missed using. More background than you could ever want on the case is here.
As we all know, MGA Entertainment lost in a big way. The district court imposed a constructive trust for the trademarks “Bratz” and “Jade,” as well as the copyright registrations for the dolls. The court of appeals (Kozinski, who better) summarized the results at the trial level thusly: “In effect, Barbie captured the Bratz.”
Whether placing the trademarks in a constructive trust for the benefit of Mattel was appropriate depends on whether Carter Bryant, the doll designer, had, by virtue of having signed his employment agreement with Mattel, assigned them to Mattel before jumping ship to MGA Entertainment. He could only have done so if the trademarks were “inventions,” defined as
| includ[ing], but [] not limited to, all discoveries, improvements, processes, developments, designs, know-how, data computer programs and formulae, whether patentable or unpatentable. |
For those “inventions,” the assignment was of
| all my right, title and interest in such inventions, and all my right, title and interest in any patents, copyrights, patent applications or copyright applications based thereon. |
Note that the word “ideas” appears nowhere in the definition. Nevertheless, the district court instructed the jury that Bryant’s “ideas” had been assigned to Mattel and all the jury had to decide was which ideas Bryant developed while at Mattel. The appeals court therefore reversed, concluding that the trial court erred in not considering extrinsic evidence to clarify whether “inventions” included “ideas.”
But even assuming “inventions” included “ideas,” the constructive trust imposed was too broad. The Law Vegas Trademark Attorney gives the lowdown on the court’s reasoning, an important lesson to remember on those many occasions when one deals with a constructive trust.
The copyrighted content in the constructive trust didn’t fare any better. The designs Bryant created while employed by Mattel clearly fell within the definition of “inventions” (given Mattel is a toy company, that would have been a HUGE screw-up if it hadn’t). The question, though, was whether the works were created “at any time during my employment.” The phrase is ambiguous; it could mean anytime day and night while employed by Mattel or just during work hours. On summary judgment the trial court decided that it meant any time day or night, but the appeals court held the contract was ambiguous even after considering the extrinsic evidence, so the question should have been given to the jury. Since Mattel’s ownership of the copyrights was vacated, its infringement case against subsequent versions of the Bratz dolls fell too.
So momentum swings back in MGA Entertainment’s direction. But this case was filed in 2004 and still has years to go, and perhaps many more swings to go.
Mattel, Inc. v. MGA Entertainment Inc., No. 09-55673 (9th Cir. July 22, 2010).
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
There’s a pretty interesting older decision about ownership of the “MG” (as in cars) trademark that serves up some good drafting lessons. The story starts with the failure of the MG Rover Group, owner of the “MG” mark. The Nanjing Automobile (Group) Corporation (“NAC China”) bought the MG brand, but a man named William Riley claimed to have purchased the “MG X Power” brand. The battle was on.
The “X Power” trademark was for a new vehicle, also known as the “MG SV” and “MGX80,” that had been under development. NAC China did not take the X Power business. Instead, William Riley got the completed vehicles, chassis, spare parts and other assets for this vehicle. He also named his acquiring company “MG Sports and Racing Europe Limited” (SREL), very similar to the name “MG Sports and Racing Limited” previously used by the predecessor company for this portion of the business. So, the question was whether he got the right to use “MG” with this part of the original MG car business.
The England and Wales High Court (Chancery Division) examined the two relevant transactions, the NAC China acquisition in 2005 and the subsequent SREL acquisition in 2007. It had nothing positive to say about Riley’s claim that he acquired any rights to use “MG” at all:
The court exhaustively evaluated and rejected all the defendants’ contractual arguments. It was particularly unhappy with the trademark schedule, where, it turns out, Mr. Riley omitted the letters “MG” from the description of the scheduled “X Power” marks. The court didn’t mince words:
So Mr. Riley loses in a big way his argument that the rights were conveyed to him. What’s more interesting to me is that there was enough ambiguity in the 2005 NAC China transaction to leave a gap he could exploit. Since NAC China did not want to acquire the X Power portion of the MG business, its acquisition excluded:
| (i) the business and assets (including intellectual property) relating solely and exclusively to the MG Sport and Racing business … including MGSV, MGXPower and MGX80 and (ii) all intellectual property rights (including design rights but excluding trade marks) to MGSV and its variants; |
This exclusion, referring to “MGSV,” “MGXPower” and “MGX80” in subparagraph (i), but only “MGSV” in subparagraph (ii), leaves room for the argument that subparagraph (ii) does not claw back the MG X Power mark to NAC China since that subparagraph related only to “MGSV,” something different from “MGXPower.” Worse, the MG X Power marks were also not scheduled as trademarks NAC China acquired.
The fate of the MG X Power marks was sufficiently ambiguous that NAC China had to do some repair work after the fact. An in house attorney, originally with MG Rover Group and then with the UK subsidiary of NAC China, noticed that ownership of the UK and CTM registrations for the MG X Power marks had been changed in the trademark registry even though they weren’t scheduled. This led to returning the record ownership to MG Rover Group until the matter was straightened out. Then NAC China learned that the X Power business was to be sold, but made it clear to the liquidators that it believed it owned the MG X Power marks. The liquidators agreed not to sell them without NAC China’s prior approval.
Ultimately the court held that the 2005 transaction transferred the MG X Power marks to NAC China, but acknowledged the problem:
The little mistakes that come back to haunt you.
IP Finance article on this and other pitfalls in acquiring trademarks out of a liquidation.
Nanjing Automobile (Group) Corp. v. MG Sports and Racing Europe Limited, [2010] EWHC 270 (Ch) (19 Feb. 2010).
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Fifty Six Hope Road Music Limited, Inc. is the legal entity that owns the rights to reggae singer Bob Marley’s name, likeness and trademarks. It’s pretty familiar with defending those rights and pretty successful at it.
Massachusetts case Jürek Zamoyski v. Fifty-Six Hope Road Music Limited, Inc. gives us some insight into what steps Fifty-Six Hope Road takes to protect its assets. Plaintiff Zamoyski was an artist who created three visual images of Bob Marley. He was aware, though, that he couldn’t commercially exploit the images without permission from Fifty-Six Hope Road. He therefore partnered up with Richard Rogala to create a company, Jürek Graphic International (JIG). Rogala then pitched Fifty-Six Hope Road’s licensing agent, Bob Marley Music, Inc. (BMMI), with the one of the designs, Rasta Dreads:
Rogala was successful; JIG became a licensee and was allowed to make shirts with Rasta Dreads and the other two images.
The 1995 BMMI agreement was unequivocal that the ownership of the copyright in the images was to belong to BMMI:
| Upon the termination or expiration of this Agreement, Licensee [JIG] will be deemed to have assigned, transferred and conveyed to Licensor [BMMI] any trade rights, equities, good will, title or other rights in and to the Artist which may have been created or obtained by Licensee or which may have vested in Licensee in pursuance of any endeavors covered hereby, and Licensee will execute any instruments requested by Licensor to accomplish or confirm the foregoing….
Licensee acknowledges that the Licensor is the sole owner of all right, title and interest in and to the Artist [Marley]; that any copyright and trademark right or any other rights which may be created in any article, label, design or other material bearing or including the Artist, are and shall be the sole and exclusive property of Licensor; that Licensee has and will hereby acquire no rights in the Artist; that design or other material bearing or including the Artist, other than the right to use the same as herein provided, shall be the exclusive property of the Licensor; and that at no time will Licensee, either during the Term of this Agreement or thereafter, claim any rights therein or register any word, device or symbol confusingly similar to the Artist or any similar or related mark or any copyright or other rights which may be created in any article, label, design or other material bearing the Artist or any similar or related mark, except pursuant to this Agreement…. |
It seems a pretty easy case for BMMI and Fifty-Six Hope Road. The wrinkle was that the license agreement was with JIG, not Zamoyski directly. BMMI therefore had to demonstrate that Zamoyski knew of and assented to the license agreement, that is, that JIG had apparent authority to agree to the terms of the license on Zamoyski’s behalf. In BMMI’s favor was testimony that Zamoyski was aware of and approved of JIG entering into some form of licensing agreement; that he was paid by JIG for the sale of the Marley items; and that Zamoyski himself submitted two of the designs for approval. But, the Licensing Agreement was signed by Rogala on behalf of JIG, not Zamoyski; there was no written agreement between Zamoyski and JIG; Zamoyski never saw the agreement itself until and 2005 and claimed to never have know that the copyright was to be transferred; and Zamoyski registered the copyright in the images but neither BMMI nor Fifty-Six Hope Road had. So the court denied summary judgment and punted it back to parties as a question of fact. Zamoyski is completely in the hole at this point, though; his own copyright infringement claim against Fifty-Six Hope Road and BMMI was time barred and his claim for unjust enrichment preempted. Trial on copyright ownership set for November 15, 2010.
Jürek Zamoyski v. Fifty-Six Hope Road Music Limited, Inc., Civ. No. 08-30125-KPN (D. Mass. June 2, 2010).
This work is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.
Learn more about me at my website, Chestek Legal