Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Wish There Was More Story

    A few days ago there was some cryptic news about a trademark dispute over the PUMA marks.  The press release says this:

    Sportlifestyle Company PUMA herewith declares that the former Spanish license holder Estudio 2000 S.A., which owned several PUMA trademark rights, has been obliged to vest these to PUMA according to the arbitration ruling. . . .  According to the arbitration ruling, the vesting of the trademark rights is subject to a one-time payment of up to 98 million Euros to Estudio 2000 S.A.

    I’m not familar with the Spanish trademark database, but did find a number of registrations that included the word mark PUMA with a design (many of them very primitive) owned by Estudio 2000 S.A.  It looks like the classic situation where a distributor appropriates the manufacturer’s trademark for itself.  What’s curious is that, while the arbitrator gave ownership of the marks to PUMA, PUMA has to pay a pretty hefty amount to Estudio 2000 S.A.  I’m curious under what theory PUMA owes Estudio 2000 S.A. any money at all.  I’d love to hear anyone’s insight.

    PUMA will appeal the arbitrator’s decision.

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  • Don’t Expressly Abandoned a Trademark You Allege is Infringed

    I don’t usually write about abandonment, but Commerce Bancorp LLC v. Hill is a good teaching moment – or maybe a not, since it looks like Commerce Bancorp dodged a bullet.  But it only survived summary judgment in a court that sets a low bar for finding a genuine issue of material fact.

    The facts here are a litigator’s nightmare.  In March, 2008 Commerce Bank was acquired by TD Bank Financial Group.  In May, 2008 (March, according to the court, May, according to TD Bank), various subsidiaries of the TD family and the Commerce family merged and were renamed TD Bank, N.A.  The merged subs then announced in July, 2008 that they would begin branding their retail operations under a new name, “TD Bank, America’s Most Convenient Bank.”  The original name was to be “TD Commerce Bank,” but, according to a TD Bank press release, they couldn’t use the name because of a legal challenge – a federal court had “provisionally prevented” the company from using the “TD Commerce Bank” name on signage and marketing materials in some Massachusetts counties.  Some PACER investigation shows that Commerce Bank & Trust Company was the plaintiff – here’s the preliminary injunction and here’s the agreed-to permanent injunction.  The Commerce Bancorp court says that the rebranding was completed by September 27, 2009.

    Here are the steps TD Bank took in its rebranding:

    • issued a press release announcing the name change;
    • invested millions of dollars in a re-branding campaign;
    • did so because it was legally unable to use “Commerce” in parts of Massachusetts;
    • gave up the Commerce Bank domain name (commerceonline.com);
    • voluntarily surrendered “the” federal registration for COMMERCE (I couldn’t find any registration expressly abandoned after March 31, 2008 or cancelled under Section 8 on the date the court gives);
    • abandoned applications to register various “COMMERCE” marks;
    • voluntarily withdrew oppositions against companies using other COMMERCE marks.

    As we all know, there are two elements of an abandonment claim, cessation of use and an intent not to resume use. The court had no problem finding cessation of use; while there was some continued internal use of the COMMERCE brand and some artifacts of the brand in some structural aspects of the banks, there was no a bona fide use in the ordinary course of trade.  But the court gave TD Bank a gift when it decided that, for purposes of summary judgment, it couldn’t say for sure that TD Bank had an intent not to resume use of the Commerce mark “as a matter of law by clear and convincing evidence.” 
     

    In this case, the short period of time that passed between alleged abandonment and alleged infringement weighs heavily against summary judgment. Hill’s alleged infringement through the BAI Presentations came less than four month after Plaintiffs’ press-release announcing its name change. Moreover, it is not clear whether re-branding was complete at the time of the BAI Presentations, and if it was not, what level of completion such re-branding had achieved in the eyes of the consuming public. Of course, the Court does not know when all of the other presentations that round-out the subject of this lawsuit were allegedly made by Hill, and this uncertainty also counsels against finding abandonment as a matter of law.

    Moreover, although Plaintiffs’ voluntary cancellation of the “COMMERCE” mark might in different circumstances indicate an intent not to resume use, this particular surrender did not occur until well after the alleged BAI infringements. Thus, it remains an open question whether Plaintiffs intended to abandon the “COMMERCE” mark at the time of the alleged infringement and whether Plaintiffs intended to abandon the other Commerce Marks at all. Plaintiffs suggest that they have not yet decided whether to reuse the non-surrendered Commerce Marks as part of future marketing schemes. Given the short period of time that passed between re-branding and alleged infringement, this lack of certainty (if true) is understandable, and consequently it would be a mistake for this Court to interpret such indecision as clear and convincing evidence that Plaintiffs have no intent to resume use of the Commerce Marks and are instead attempting to hoard them for the sole purpose of excluding Hill.

    In Commerce Bank’s eyes, Hill’s wrong was using the trademarks to suggest he was still associated with Commerce Bank when he was not.  (There’s also a nominative fair use defense in the case which the court found had some merit, although not enough to grant Hill summary judgment.)  So I don’t know that it’s an incorrect outcome to allow the claim to proceed, but I suggest that it’s a rare case where this kind of evidence of abandonment wouldn’t be good enough for summary judgment.

    Commerce Bancorp, LLC v. Hill, Civ. No. 08-5628 (D.N.J. June 18, 2010).  Standing issue in case previously blogged here.

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  • Who Will Win – Doctrine or Pragmatism?

    Some cases make you wonder and UFA Holdings, Inc. v. Performance Acquisition Group Company is one of them.  It’s newly filed in Oregon, as reported by local news channel KTMR.com.

    The first “G.I. Joe’s” store opened in 1947 and ultimately grew to a chain of 27 stores.  As told in the plaintiff’s memorandum in support of its brief for preliminary injunction, G.I. Joe’s filed for bankruptcy in May, 2009.  Plaintiff UFA Holdings acquired the G.I. Joe trademarks at auction in July, 2009.  As these things have to go or lawyers wouldn’t be employed, four former executives of G.I. Joe’s subsequently opened a small, new store in a strip mall in January 2010.  They used the same name, the same slogan (“Seize the Weekend”), and had the same stuff in the store. And they did it after having been told by UFA Holdings that it objected.

    So what were they thinking?  You can see for yourself that the assignment of the trademarks is pretty clear. The transferred “Assets” are defined as “all of the trademarks, trade names, domain names and service marks (including logos) and related [i]ntellectual [p]roperty rights therein, and all goodwill associated.”  The last page of the Asset Purchase Agreement schedules the trademarks and domain names.  The defendants filed their own trademark applications for G.I. Joe’s only a few months after the assets were transferred, but the applications were refused registration as likely to be confused with the assigned registrations.

    One news article says the the executives “contend that because they have been using the name at the storefront since January, they would prevail in court.”  This seems to be coupled with the theory that the bankrupt store abandoned the name “G.I. Joe” in favor of using “Joe’s,” as can be seen in the defendant’s petition to cancel the original “G.I. Joe’s” registrations.  But an abandonment theory seems like quite an uphill battle: abandonment is difficult to prove; the registrations have not lapsed; the plaintiff claims a long period of use of both marks; even under the facts most favorable to defendants there was not three years of non-use; and courts disfavor stripping bankrupt estates of trademark assets on abandonment theories.  Here, plaintiff further alleges that the four defendants are responsible for representing in the bankruptcy that the trademarks were valid:

    PAGC’s petitions to cancel contradicted the representations by G.I. Joe’s, Inc. – under the direction of the Individual Defendants – that G.I. Joe’s, Inc. legally owned the Assets, including the G.I. Joe’s Marks; that it had a right to sell the Assets, including the G.I. Joe’s Marks; and that the Assets, including the G.I. Joe’s Marks, had good and marketable title.

    And what about likelihood of confusion?  Even if the original “G.I. Joe’s” is abandoned, the new use is junior to, and (one would think) likely to be confused with, the “Joe’s” mark that no one is claiming was abandoned.

    The owner of the original store had sold it to an investment company, Gryphon Investors, in January 2007.  The four individual defendants blame Gryphon Investors for the bankruptcy – “This thing was built up over 57 years and was taken down by outsiders in two years.”  But while they may believe, and perhaps were, screwed throughout the sale to Gryphon and the ultimate bankruptcy, I just don’t see a court letting unhappy former executives subvert the systematic transfer of assets in bankruptcy. 

    But the case is only starting and there are two sides to every story.  It could be interesting to see how far this goes.

    UFA Holdings, Inc. v. Performance Acquisition Group Company, Civ. No. 10-639 ST (D. Or. June 7, 2010).

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  • Claims Left Barely Standing

    Commerce Bancorp LLC v. Hill is a meaty enough case on ownership issues alone it’s good for two blog posts.  First is a standing problem that cropped up, second an allegation of trademark abandonment.  I’ll do standing now and abandonment later.

    I am always somewhat baffled by changes in ownership of intellectual property when the rights are concurrently the subject of litigation, like in the Coinco granddaddy of cases. Does the left hand not know what the right is doing?  Or is it a calculated risk, where the reasons for the transfer outweigh the possible harm to the suit on standing, injunctive relief and damages?  And if it is a calculated risk, why don’t the assignment documents specifically address the litigation to put the transaction in the best frame possible?  M&A folks, do you ask whether the assets being assigned are involved in any pending litigation on your due diligence checklist?

    In this case, defendant Hill was the founder of Commerce Bank and built it up, as described by the court, to “monstrous proportions.” The Board of Directors then orchestrated Hill’s ouster and shortly thereafter, on March 31, 2008, TD Bank Financial Group acquired Commerce Bancorp.  The court’s explanation of the transaction isn’t particularly clear, but the TD Bank web page says that TD Bank Financial Group acquired all the outstanding shares of Commerce Bancorp, making Commerce Bancorp a 100% wholly-owned subsidiary.  Hill engaged in behavior that TD/Commerce didn’t like, so Commerce Bancorp filed the lawsuit against Hill on November 17, 2008 with claims of, inter alia, copyright infringement and trademark infringement.  Four months later, on March 20, 2009, Commerce Bancorp assigned the trademarks and copyrights asserted in the litigation to its parent, The Toronto-Dominion Bank.  There are three TD/Commerce plaintiffs in the case, but The Toronto-Dominion Bank isn’t one of them.  Hill moved to dismiss on the basis that the plaintiffs no longer had standing.

    Federal Rule of Civil Procedure 25(c), which allows for substitution of parties, is not the answer since it is procedural, not substantive.  The court then takes a several-page frolic through a couple of patent cases where patents were assigned out, then assigned back, during the course of a litigation.  It then concluded that the fundamental question was whether the plaintiffs had assigned the right to pursue the present action to the non-party corporate parent.  If so, Commerce Bancorp was left without standing.

    The answer lay in the intra-company assignments.  The operative language of the trademark assignment was an assignment of

    all [Commerce’s] right, title and interest in and to the Trademarks, together with the goodwill of the business associated with the Trademarks, and the right to sue and recover for past infringements, dilution, and other violations.

    Hill argued this assignment language included the present dispute since it was a “past infringement,” but the court disagreed.  It parsed the sentence above into two separate rights assigned: (1) ALL the right, title and interest in the Trademarks including the goodwill; and (2) the right to sue and recover for past infringements.  There’s no “all” in the part assigning the right to sue, so the court couldn’t say for sure that the trademark infringement claim had been assigned.  Further, since the lawsuit was already filed at the time of the assignment, the right to sue and recover on the instant action had already been exercised and therefore could not be assigned to the parent with this language.  Finally, because the agreement didn’t address the litigation, “which, given the timing and nature of the present suit, must surely have been on Plaintiffs’ collective radar screens,” the court decided that Commerce had not assigned the right to maintain the trademark action to The Toronto-Dominion Bank.

    The copyright assignments were in a separate document with, of course, different language.  In that assignment, Commerce assigned

    nunc pro tunc as of March 20, 2009 all right, title and interest, including copyright rights in and to the Works, including the right to sue and recover for past and future infringements, and other violations. 

    Here, in contrast to the trademark assignment, there is only one category or rights being assigned, with the right to sue for past infringement as only an example. But the court falls back on the “right to sue and recover” language and decided that since Commerce had already sued at the time of the execution of the assignment (or nunc pro tunc date?), the court did not read the assignment as including the present copyright infringement action.  But it does throw a somewhat unintelligible bone to Hill:

    Without being convinced that Plaintiffs no longer possess the right to maintain their claims for trademark and copyright infringement, the Court cannot conclude that Plaintiffs lack standing.[4]

    Fn[4] Should further evidence come to light tending to prove that Plaintiffs no longer own the relevant trademarks and copyrights [What? Isn’t that what the assignments were all about?] the Court would, on a proper motion, reconsider the factual basis of its jurisdiction as well as consider any motion to substitute under Rule 25(c).

    I think the court probably gave Toronto-Dominion and Commerce Bancorp too much credit for being thoughtful in the language of the assignment documents, particularly with respect to suggesting that they were crafted with the ongoing litigation in mind.  It all looks like boilerplate to me; I doubt that the distinction between the language in the copyright assignment and the trademark assignment was deliberate, it was just the stock language in whatever form was grabbed.  Nevertheless the court wasn’t wrong in its approach just because the language was probably thoughtless; that’s all the court has to work with and what it’s supposed to do.

    So Commerce Bancorp’s claim to standing barely survives.  But since it is not the present owner of the rights, is a remedy of injunctive relief available? 

    Commerce Bancorp, LLC v. Hill, Civ. No. 08-5628 (D.N.J. June 18, 2010).Creative Commons License

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  • Trademark License or Trademark Assignment?

    In suit is what’s styled as a license to use the mark BUTTERNUT for bread in parts of Illinois.  Interstate Bakeries (IBC) is the record owner of the BUTTERNUT mark and Plaintiffs Lewis Brothers Bakeries Inc. and Chicago Baking Company (LBB/CBC) use the BUTTERNUT mark.  Interstate is currently in bankruptcy, which means it can reject executory contracts, but Interstate’s rejection would be no small matter for LBB/CBC.  As described in their brief

    27.    If IBC rejects the License and LBB/CBC lose the ability to use the Butternut trademark and the other trademarks under the License, LBB/CBC’s sales volume would shrink substantially, the companies would lose trademarks having a potential value of $100 million, and CBC itself “would not be able to continue to operate as an ongoing company.”

    28.    LBB/CBC’s expert confirms that the loss of the Butternut and other trademarks would have dire effects on LBB/CBC beyond the loss of more than $21.3 million in annual net sales – it would cause the collapse of CBC’s Chicago store delivery system, the insolvency of CBC and its affiliate, North Baking Company (which makes private label bread for Jewel grocery stores, the largest grocery chain in the Chicago area, thus leaving Jewel without its private label bread supplier), the closure of at least one bakery owned by Holsum of Fort Wayne Incorporated (another affiliate), and the loss of more than 500 jobs.

    29.    Rejection and LBB/CBC’s loss of the Butternut and other trademarks would even jeopardize the solvency and viability of LBB itself – and the jobs of its 2,100 employees – because LBB would lose 23 percent of its sales and directly incur $23.3 million of additional liabilities, including more than $13 million in severance pay and under-funded union pension liabilities, and $7.1 million in truck lease guaranty liabilities.

    LBB/CBC also claims that Interstate Bakeries has reason to reject the contract:

    30.    Richard Seban, IBC’s chief marketing officer and executive vice president, acknowledges that LBB/CBC are competitors of IBC in the Upper Midwestern area, and that IBC’s sole intent in rejecting the License is to take back and use the trademarks it relinquished pursuant to the Judgment (including those in the Central Illinois Territory that IBC itself was a licensee of and the rights to which it has already surrendered) in order to gain market share in Chicago.

    After LBB/CBC filed its motion, Interstate withdrew its own motion to reject the contract. The bankruptcy court characterized the question remaining as whether the trademark license was executory.  But it doesn’t look like that was the real question; instead LBB/CBC had fundamentally argued that the original transaction was really an assignment, not a license.  Indeed, it looks about as clear as mud.

    The license-in-suit dated from 1996.  In that year, Interstate and LBB/CBC entered into an Asset Purchase Agreement with a number of related documents.  The transaction was by court order: Interstate was acquiring Continental Baking Company and Interstate had to divest itself of certain assets to avoid antitrust problems.  Interstate was ordered to “grant to one or more purchasers a perpetual, royalty-free, assignable, transferable, exclusive license to use the Relevant Labels . . . .”  “Label” was defined as “all legal rights associated with a brand’s trademarks, trade names, copyrights, designs, and trade dress; the brand’s trade secrets; the brand’s production knowhow, including, but not limited to, recipes and formulas used to produce bread sold under the brand; and packaging, marketing and distribution knowhow and documentation, such as customer lists and route maps, associated with the brand.”  U.S. v. Interstate Bakeries Corp., Civ. A. No. 95 C 4194, 1995 WL 803559, 1996-1 Trade Cases P 71,271 (N.D.Ill. Aug. 7, 1995).

    The APA describes the trademarks as “assets purchased,” but it also said that Interstate would grant a “perpetual, royalty-free, assignable, transferable exclusive license” to use the Butternut trademark and other trademarks. (This is the opinion’s description; I wonder if instead the APA recites the court’s language about a license to the “Labels,” a definition considerably broader than the trademarks.)   A trademark license was executed at the same time, granting a “perpetual, royalty-free, assignable, transferable, exclusive . . . license” for BUTTERNUT and other marks.

    The trademark license had a number of typical provisions: Interstate reserved its rights to the marks outside of the territory; the license was not sublicensable; LBB/CBC could not register the marks and all goodwill inured to Interstate’s benefit; and a recitation for of quality control (“Goods sold or otherwise distributed by Licensee under the Trademark shall be substantially of the same character and quality as the goods currently sold by IBC under the Trademarks. . . .  Licensee shall use raw materials, ingredients and packaging supplies of a quality at least as high and consistent with the quality previously used by IBC in connection with the same or similar products.”).

    But for tax purposes, Interstate had internally accounted for the transaction as a sale of trademarks.  The plaintiff’s brief also claimed that Interstate’s former general counsel testified that Interstate was required to sell the trademarks by the Justice Department, Interstate’s intent was to sell the BUTTERNUT trademark to LBB/CBC, and that’s what it did.  His testimony was that Interstate divested itself of the Butternut and other trademarks by means of a perpetual, exclusive, royalty-free license to LBB and CBC because Interstate used the Butternut and other trademarks it owned in other territories.

    The bankruptcy court made easy work of the fact that this was an executory contract, as an ordinary trademark license would be.  But the plaintiff’s story (some of it parol evidence) rings true.  How many trademark licenses have you seen that are perpetual, royalty-free, assignable, transferable, and exclusive?  Interstate had to fully divest itself of everything needed to make the bread as sold at the time of the Continental acquisition.  With a federal registration for BUTTERNUT but a geographically limited divestiture, and a number of types of intangible property interests in addition to trademarks (copyrights, trade secrets, recipes, know how), perhaps everyone assumed the only thing that would work was a license.  But it would be interesting to see who acted more like the trademark owner in the territory.

    LBB/CBC have appealed.

    Update 3/27/11:  Appeal denied.

    In re Interstate Bakeries Corp., Bankr. No. 04-45814, Adv. No. 08-4238 (Bankr. W.D. Mo. June 4, 2010).  Plaintiff’s brief here.

    More information on the effect of a licensor’s bankruptcy at the Licensing Law Blog.

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  • Law and the Speed of Business

    Vergara Hermosilla v. The Coca-Cola Company demonstrates that probably the most significant role of a contract is to make sure that everyone is on the same page.  But business happens fast, so the writings aren’t always in place as fast as they should be.  Here, Coca-Cola was whacked with a preliminary injunction all because of a misunderstanding about the fundamental terms of the agreement.

    Coca-Cola engaged Universal Music Group to assist it with creating a revised version of a single called “Wavin’ Flag (Coca-Cola Celebration Mix).”  Coca-Cola wanted a version with Spanish language lyrics it could use during the 2010 FIFA World Cup games.  Jose Puig, at Universal Latin America, contacted plaintiff Rafael Vergara Hermosilla by telephone (uh-oh) to ask him to create the translation and mix  the new version.  Puig testified he said it would be a work made for hire for $6,000; Vergara testified it wasn’t going to be a work made for hire and he has never written a work made for hire in his career.

    Vergara completed the translation, as well as audio files demonstrating how the lyrics were to be sung, the next day.  More work was done over the next few weeks and the final product was first published in the iTunes Mexican download site and on Coca-Cola’s Mexican website.  Enjoy a video of the work:

    Then the fighting begins.  The parties disputed the terms of the agreement.  Vergara finally wrote:

    But because I am a man of my word and honor, that is not moved by economic motives, my only request is that my credits are respected as producer and adapter of the Spanish version (that every time the name of any composer of this version appears, my name appears as adapter), and obviously, the credits for the production that are detailed in the invoice sent for this production, which I have detailed below.

    For the adaptation, you may consider it a work for hire with no economic compensation to that respect. I believe what’s legal is a dollar.

    I hope that this leaves clear what my work was and what my good intentions were from the beginning.

     Universal then botched this gift.  It sent a draft agreement, but apparently one that didn’t incorporate the terms Vergara described:

    I appreciate your sending me the contracts. However, my proposal was clear and it was just that, a proposal, since you requested my help because you knew things had not been done right. My only request regarding said proposal was a series of things that are not included in what you sent me. Moreover, nothing of what I proposed to you is included in the contracts.

    I want you to know I’m very upset and rather dissapointed [sic], because my proposal was based more on our friendship than anything else, and what I got does not honor the agreements.

    Taking into account the above, I hereby inform you that the proposal of last Friday from which the contracts would supposedly derive is revoked as of now and without effect.

    Lawsuit commenced.

    Coca-Cola raised the three common defenses to copyright ownership disputes: it had an implied, nonexclusive license; it owned the work as a work-made-for-hire; and Coca-Cola was a joint author.  It also argued that the work wasn’t registered with the U.S. Copyright Office.

    Nothing worked.  With respect to the lack of registration, under Section 411 of the Copyright Act only a U.S. work must be registered before a lawsuit can be filed.  This work was first published in Mexico, so no registration needed.

    As to the nonexclusive license defense, there was a nonexclusive license when the work was first published, but a nonexclusive license is revocable until the licensor accepts consideration.  Here, Vergara had not accepted any consideration and the license was revoked by filing the lawsuit.

    It also couldn’t have been a work-made-for-hire; since Vergara wasn’t an employee under section 101(1) there would have to be a written instrument stating that the work was a work made for hire.  No writing, so no work made for hire.

    Finally, Coca-Cola wasn’t a joint author.  Neither Coca-Cola nor Universal worked with Vergara with the lyrics.  Instead, Vergara created an authorized derivative work, but Coca-Cola’s ownership of the parent work didn’t give it any ownership interest in the derivative.  Coca-Cola loses its weak case on all four theories.

    But there was no injunction.  The court agreed with Vergara that, as a songwriter, Vergara’s irreparable harm was the loss of credit for having worked on the song.  But Coca-Cola testified that it would lose $15,050,000.00 if it could not use the song in the U.S., outweighing Vergara’s name recognition interest.  There would be no harm to Coca-Cola if Vergara was given the name recognition, so it was

    ORDERED AND ADJUDGED that, by June 11, 2010, Defendant Coca-Cola and any individuals or entities acting under its direction or control cease advertising, selling, distributing, or otherwise disseminating “Wavin’ Flag (Coca-Cola Spanish Celebration Mix)” unless adaptation credit is given to Vergara whenever his lyrics are used and either: (1) the original English composer is credited or (2) a composer is often credited with such a use. It is further

    ORDERED AND ADJUDGED that, by June 11, 2010, Defendant Coca-Cola post on its website on the page offering “Wavin’ Flag (Coca-Cola Spanish Celebration Mix)” for download, a conspicuous notice indicating Vergara’s contribution to the song.

    ORDERED AND ADJUDGED that, by June 12, 2010, Defendant Coca-Cola file with the Court a Notice, stating that Coca-Cola has complied with the above requirements.

    Notice filed; compliance with the order shown below:

    Coca-Cola Mexico web site



    Coca-Cola is appealing.  Not sure why; the preliminary injunction is pretty mild.  And watch for Coca-Cola’s case against Universal for failing to deliver on the agreed-upon terms.

    Vergara Hermosilla v The Coca-Cola Co., No. 10-21418-CIV (S.D. Fla. June 2, 2010).

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  • Someone Screwed Up

    The Patent Prospector summarizes a Federal Circuit review of a botched effort to claim priority to an earlier-filed application. The child was filed without the first page, so there was no express claim of priority to its parent. Result? Patent invalid because it was anticipated by the factual, but not legal, predecessor.

    Post here.

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  • You Can’t Fire Me, I Own the Copyright

    This is an old case I’ve been hanging on to for awhile. It’s a situation where the rights asserted are in lieu of an entirely different claim. Here, the plaintiff was ticked off he was fired and retaliated through copyright law.

    Pro se plaintiff Joseph Valdez was a real estate salesman working for defendant Coldwell Banker Laffey Associates, a real estate broker. Valdez had signed an independent contractor agreement with Laffey Associates and the relationship was governed in part by New York state law. Valdez listed three properties for sale while employed by Laffey Associates, but only one sold before they canned him. Anyone who has bought or sold a house knows that the real estate agent takes photos of the house and the photos are a significant piece of a sales listing. Valdez was a savvy player; he had registered the copyright in the photos even before uploading them for the listing. So after he was fired he sued Laffey Associates for copyright infringement.

    Laffey Associates claimed that Valdez didn’t own the copyright in the photos, it did as works made for hire. But a work-made-for-hire theory was a non-starter. Valdez was not an employee under § 101(1) since he was an independent contractor. Section 101(2) failed too, since the photos didn’t fall into one of the nine categories of works listed in § 101(2) nor was there a written instrument as required by § 101(2).

    Laffey Associates’ second effort was a contorted claim based on the Multiple Listing Service (MLS) listing agreement. In it, the homeowner agrees to assign to the real estate agency the copyright in any of the homeowner’s photos used for a listing. The court pointed out that this agreement is between the homeowner and the real estate agency, not the listing salesman and the agency, so doesn’t affect the latter relationship.

    But Laffey Associates scored with its last effort, a claim under New York state law. New York Code, Rules and Regulations § 175.14 states:

    a real estate salesman shall, upon termination of his association with a real estate broker, forthwith turn over to such broker any and all listing information obtained during his association whether such information was originally given to him by the broker or copied from the records of such broker or acquired by the salesman during his association.

    The court decided that:

    A photograph of a property provides information about that property just as does a textual description of the property. A potential buyer uses a photograph of the property for the same purpose as the other supplied information in the listing–to learn about the property in order to consider whether to inquire further and ultimately to buy it. Plaintiff’s photographs were acquired by him, the salesman, during his association with defendant, Coldwell Banker Laffey. Therefore, plaintiff’s photographs are included in the definition of “listing information.” Under § 175.14, plaintiff relinquished ownership of the photographs when he was required to turn them over to defendants upon his termination.

    I doubt that copyright in photos was something the legislature thought about when it wrote the statutory section; it was undoubtedly contemplating factual information like number of rooms and measurements. The court’s loose language also seems to confuse the tangible photos with the copyright in the photos. So I think it’s a bit of a cheat to read this all the way to an assignment of ownership of the copyright rather than perhaps a license, but then again the result seems fair enough. The photos are a negligible part of why a house sells, so it seems unfair to allow a salesman to leverage a routine snapshot into statutory damages or a piece of the seller’s commission.

    Pro se Valdez made an unintentional run at preemption, which the court entertained. His theory was that the copyright vested with him as the author of the work. The court agreed that was true enough, but also pointed out that § 201(d)(1) of the Copyright Act permits assignment of a work “by any means of conveyance or by operation of law.” In the Second Circuit the author must give his or her express or implied consent to an assignment by the operation of law, but that happened here since Valdez willingly became a salesman for Valdez and in doing so entered into a legal relationship governed by state law. He may not have realized that assigning his copyright would be the result, but he is chargeable with the provisions of state law that affect his business. A bit of a stretch again, I think, since the court acknowledged that there was no existing legal interpretation of the meaning of NYCRR § 175.14 when it was deciding that the state law was an assignment.

    So a bit squirrely on the reasoning all around, but I have no heartburn over the outcome. Valdez has appealed, docket no. 10-1740, so the Court of Appeals might.

    Valdez v. Laffey Associates, No. 07-cv-4566 (BMC) (LB) (E.D.N.Y. Mar. 26, 2010)

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  • AU Optronics Indeed Has Standing

    So who owns the patent? “On the record presented, the Court concludes that AUO has demonstrated by credible chain of title evidence that it is the assignee of” U.S. Patent No. 6,689,629.

    Apparently realizing its potential problem, IBM US had also filed assignments from the inventors to IBM US in May 2007 (the lawsuit was filed in December, 2006). The court didn’t need these assignments, though, for its decision on the chain of title.

    Personally, I would have liked more information about the Japanese and U.S. assignments. The assignment from IBM Japan to IBM World Trade was not automatic; the grant was the right “to file or have filed on its behalf or on behalf of such designees, and to own such applications for patents and the patents issuing thereon …” There was no mention in the case of whether IBM World Trade, or IBM US on its behalf, filed the US application. But at the end of the day IBM US owned the patent and properly assigned it to AU Optronics. Patent infringed, by the way.

    LG Display Co., Ltd. v. AU Optronics Corp., Nos. 06-726-JJF, 07-357-JJF (D. Del. Feb. 16, 2010).

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  • Astaire v. Astaire

    My favorite kind of spat, family. In the plaintiff’s corner we have Robyn Astaire, widow of Fred Astaire. How could I not have a gratuitous embedded video of the master:

    In the defendant’s corner we have her stepdaughter, Phyllis Ava Astaire McKenzie, along with two other individuals and Career Transition for Dancers, Inc. What is the evil stepdaughter up to? Why, running an award show for Broadway dancers called the Fred and Adele Astaire Awards. Robyn sued her stepdaughter (who is two years older than Robyn – no hard feelings there) to try to stop the award show. The New York Times reports:

    According to the complaint, Fred Astaire in 1982 authorized use of his name on what were then the Astaire Awards (his sister, Adele, was added later). After Mr. Astaire’s death in 1987, Ms. Astaire periodically authorized use of the name for the event, but, as of 2006, stopped giving permission because of what the complaint described as a change in its “nature and character.”

    Bummer that the complaint isn’t on PACER, but some details and perhaps some of the court’s reasoning can be found in the defendant’s motion to dismiss.

    No luck for Robyn, though. She was told tersely by the court that

    Essentially, plaintiff claims a right of publicity in the name Fred Astaire. The Lanham Act does not create a right of publicity without either secondary meaning or likelihood of confusion, the essential elements of a trademark claim. Plaintiff has made no showing that an “Astaire Awards” presentation has acquired a secondary meaning. Plaintiff has not shown that consumers will be deceived into believing that the late Fred Astaire endorsed defendants’ awards, which are described as “in tribute” to Fred and Adele Astaire. Accordingly, plaintiff has not shown a likelihood of success on the merits or irreparable harm from the presentation of an award in memory of two great dancers, Fred Astaire and his sister Adele.

    Robyn had to settle for a huffy press release and the show went on. Discuss amongst yourselves how the court could conclude that consumers wouldn’t be deceived into believing that Fred endorsed the award show when he had while he was alive.

    Fred and Adele Astaire

    Astaire v. McKenzie, No. 10 Civ. 4305 (S.D.N.Y.).

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