Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • There’s Always Your First Name

    From the caption you can guess the story in MacKenzie-Childs, Ltd. v. Victoria and Richard MacKenzie-Childs: Victoria and Richard MacKenzie-Childs started a business, didn’t have the business anymore, and then there was a dispute over who owned the name.

    The MacKenzie-Childs story is a little different from Joseph Abboud but still comes out the same. You remember Joseph Abboud, who sold his name as part of his business for $65 million plus, then, after his non-compete ended, tried to introduce a new line called “jaz: A New Composition by Joseph Abboud.” Ultimately, the court held that Mr. Abboud cannot use his name except nominally in a sentence. I have a hard time finding any sympathy for Joseph Abboud; he was very well compensated for his name. The MacKenzie-Childs have a more sympathetic story, but at the end of the day the result is the same, individuals may no longer use their own name.

    The story, as told by the MacKenzie-Childs, is that they started a business in 1983 making ceramic goods. The business started as “Victoria and Richard MacKenzie-Childs, Ltd.” and the business registered a design mark for it in 1989.

    In 1995 they dropped “Victoria and Richard” and allowed the registration to lapse. In 1997 the company filed two applications to register this logo:
    But the company ran into difficulty in 2000, which is where the sad story starts. It was several million of dollars in debt, so the bank installed a new president, MacDonell Roehm, Jr. He then approached third-party defendant Pleasant Rowland to solicit her investment in the company. Thereafter the bank sold the MacKenzie-Childs debt to Ms. Rowland and she called the loan. The company had to file for bankruptcy, Rowland offered to purchase the MacKenzie-Childs business, and the offer was accepted by Roehm on behalf of the company. Roehm then went to work at the new company.

    Rowland offered the defendants $10 million not to compete with their old business, which they rejected. Rowland then called in the MacKenzie-Childs’ personal debt, putting them into bankruptcy, which allowed her to acquire many of the couple’s personal assets also. Ultimately the MacKenzie-Childs started a new business using the mark “Victoria and Richard”; the new MacKenzie-Childs company sued.

    A sad story, but that didn’t help the MacKenzie-Childs’ trademark claim. The asset purchase agreement transferred “Intellectual Property,” defined this way:

    all intellectual property, including, without limitation, . . . all trademarks, service marks, trade dress, logos, trade names, brand names and corporate names (including, without limitation, the name “MacKenzie-Childs”, and all derivatives thereof), together with all translations, adaptations, derivations, and combinations thereof and including all good will associated therewith, and all applications, registrations, and renewals in connection therewith . . . .

    The only struggle for the court was what exactly the transferred marks were. The court previously denied summary judgment in 2008 largely because discovery had not even begun, but in 2010 it was easy going. There was no argument that the two newer marks as shown in the registrations were transferred. Although the court denied summary judgment on the ownership of “Victoria and Richard MacKenzie-Childs” in 2008 for lack of evidence, by 2010 plaintiffs dropped their claim of infringement against defendants’ use of “Victoria and Richard.” The unregistered mark “MacKenzie-Childs” was also in dispute, with defendants claiming there was no such mark despite the APA’s specific mention of it. In 2008 summary judgment was denied pending more discovery; by 2010 there was evidence that “MacKenzie-Childs” was a mark and consequently it was owned by plaintiff. A garbage can filled up with the remaining claims.

    You can’t help but think that there is more to the story about how the MacKenzie-Childs lost their company and how culpable they might also have been. But at the end of the day it didn’t matter how it happened, the company was gone and the marks with it.

    MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Jan. 9, 2008).
    MacKenzie-Childs, Ltd. v. Victoria MacKenzie-Childs, Richard MacKenzie-Childs and V& R Emprise, LLC, No. 06-6107T (W.D.N.Y. Feb. 1, 2010).

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  • Guide to Due Diligence

    Neil Wilkof at the IP Finance blog has a great post on due diligence on IP ownership. The post walks through the various ways that IP rights can be acquired and transferred, as well as modalities of default rules in different countries. Definitely something to keep in the file drawer, if not stuck on the bulletin board.

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  • Off-Topic

    It’s off-topic, but I encourage everyone to go take a look at
    opensource.com, a web site launched today by my employer, Red Hat. It’s a place to talk about open source and the power of working openly and collaboratively. Come join the conversation.

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  • Can NBC Own the Intangibles?

    Law.com is reporting that Conan O’Brien will have to give up the intellectual property rights in the characters and recurring skits that he developed during his NBC career. It’s not all entirely clear who owns what and who’s giving up what. The New York Times reports NBC claims to be co-owner of Triumph the Insult Comic Dog with former writer Robert Smigel; The Hollywood Reporter says Smigel’s reps aren’t talking. The Smoking Gun reports that some of the music is “safe” because drummer Max Weinberg and guitarist Jimmy Vivino registered the copyright in it, but that’s not at all apparent from the database records – all that they show is that there is some document on record at the Copyright Office between NBC (and others) and EMI that involves 4993 titles, including four musical pieces for the Masturbating Bear and three for Pimpbot.

    (click to enlarge)

    Because television a collaborative business it’s a messy problem. But even once it gets straightened out, what will NBC really own? Everyone seems to be in agreement that the goal is to prevent Conan O’Brien from using the bits elsewhere, not that NBC is going to exploit them itself. It couldn’t; the characters and skits would be only an unfunny imitation without Conan. Everyone is also in agreement that it’s trivially easy for Conan O’Brien to take the same comedic concepts and apply them in a context different enough to avoid infringement. They won’t have the same titles and character names, but they will nevertheless be similar because they come from Conan’s unique sense of humor. Humor is one intangible property that can’t be assigned.

    More here and here.

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  • 15% of Sherlock Holmes Under Copyright

    Last Sunday’s New York Times published an article about copyright ownership of Sir Arthur Conan Doyle’s Sherlock Holmes character. The article is largely about the dispute between different parties who lay claim to the US copyright in the Sherlock Holmes stories. The general reaction is surprise that Sherlock Holmes can still be under copyright, but here’s the math.

    According to Wikipedia, the Sherlock Holmes stories were published between 1887 and 1927. Google Books offers that some are in the public domain (The Adventures of Sherlock Holmes, published in 1897, and The Hound of the Baskervilles, published in 1901, for example). But the last Holmes book published, The Case-Book of Sherlock Holmes, was published in 1927 and was a compilation of works previously published between 1921 and 1927. Two of the stories published in The Case-Book of Sherlock Holmes, “The Adventure of the Mazarin Stone” and “The Problem of Thor Bridge,” are also in the public domain. They were both first published in Strand Magazine and Hearst’s International Magazine in 1921 and 1922 respectively.

    It’s a take-it-to-the-bank fact (well, almost) that books published before January 1, 1923 are in the public domain, and Sherlock Holmes demonstrates why that date is the dividing line. First, assume that no copyright term has been forfeited in the US. So, take “The Problem of Thor Bridge,” published in 1922. At the time of publication, the term of copyright was an initial 28 years under the The Copyright Act of 1909. This means that the first term of copyright would have expired in 1950 and the renewal would have expired in 1978. By 1978, though, the Copyright Act of 1976, effective January 1, 1978, had passed, which extended the term of copyright. In the case of works in their renewal term, as this story was, section 304 of the Copyright Act set the copyright term at 75 years from date of publication. Therefore, the copyright was automatically extended until 1997 (1922+75) and thereafter the story entered the public domain.

    Now take “The Adventure of the Creeping Man” published in 1923. Same as above, the original term and extension were 56 years in total, taking the term through 1981, but the Act of 1976 shifting the expiration to 75 years after publication, or to 1998. This makes all the difference. According to section 305 of the Copyright Act, the term of copyright runs to the end of the calendar year in which it would otherwise expire, so the copyright in any work published in 1923 would have expired on December 31, 1998. But, enter the Sonny Bono Copyright Term Extension Act, effective on October 27, 1998. Rather than the 75 year extension previously provided originally under the 1976 Act, the Sonny Bono Act changed the extension to 95 years. So the copyright, rather than expiring on December 31, 1998, was extended for another 20 years and the copyright will now expire on December 31, 2018. The remaining stories, published between 1923 and 1927, will fall into the public domain between December 31, 2018 and December 31, 2022.

    Out of four novels and 56 short stories, nine short stories are still under copyright. What that means about using the Sherlock Holmes character at all is another story.

    Handy Copyright Office circular for calculating copyright term here.

    Update 1/24: NY Time opinion piece on the issue here.

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  • Ball Bearing Trademark Rolling Free, Like a Fumbled Football

    Both plaintiff and defendant sell ball bearings using the same four-digit codes. The codes provide information on the characteristics of the bearings. But this isn’t a copyright case about the numbering system, it’s a claim that the series numbers are trademarks.

    The plaintiff, RBC Nice Bearings Inc., f/k/a Nice Ball Bearing Co. (“Nice”), started selling “1600” series bearings in 1946. The defendant, Peer Bearing Co. (“Peer”), began using the same series numbers in the early 60’s. Peer says it used the same numbers because they were commonly used as “an industry standard.” Plaintiff Nice also sells “7500” and “7600” series bearings, having begun at least as early as 1957; defendant Peer began selling the same series numbers in in 2002.

    Since trademark ownership is based on priority of use, at first blush it doesn’t look like there should be a question of who owns the series designations, only whether they function as a trademark (the PTO currently thinks not; see the final refusals in the applications for 1621, 1630, 1635, and 1641). But there’s a wrinkle here: defendant Peer’s parent, SKF, USA, used to own plaintiff Nice, sold Nice to its current parent in 1997, then acquired Peer in 2008.

    The claim for infringement of the 1600 series was kicked on laches, but the claim for infringement of the 7500 and 7600 series marks survived summary judgment. The court found that there were issues of fact on laches, secondary meaning and infringement. But the court also spotted an ownership problem:

    The issue is whether SKF actually transferred ownership of the 7500 and 7600 Series designations to Plaintiffs pursuant to the APA in 1997. Section 2.01(i) of the APA states that SKF is transferring to RBC “all of [Nice’s] patents, copyrights, trademarks, trade names, service marks, service names, designs, know-how, processes, trade secrets, inventions, and other proprietary data[.]” However, the APA also includes a schedule purporting to list the trademarks being transferred to Plaintiffs, and this schedule does not list any Series terms or part numbers. In the context of their secondary meaning argument, Plaintiffs present an affidavit from Michael Gostomski, Executive Vice President of Roller Bearing Company. Mr. Gostomski states that, when SKF sold the Nice business to RBC, both parties agreed that SKF would transfer to RBC all intellectual property associated with the Nice business, including the ownership of the Series designations. According to Mr. Gostomski, during negotiation of the APA, there were “extensive discussions” regarding transfer of the Series designations at issue and that the ownership of these designations was a “key item.” Notwithstanding the alleged centrality of these assets, the APA makes absolutely no mention of them, although it does list the specific trademarks which were intended to be sold. Relying on the declaration of SKF’s former general counsel Allen Belenson, Defendants contend, on the other hand, that SKF never considered the Series designations or part numbers to be trademarks and thus did not contemplate or discuss transferring them to Plaintiffs. Therefore, marginally there is an issue of material fact with respect to whether the APA transferred ownership of the alleged marks to Plaintiffs. At trial, Plaintiffs will need prove that they own the designations at issue as a threshold matter.

    It’s an interesting question. What the court is suggesting is that in 1997 SKF might not have transferred the 1600, 7500 and 7600 designations with the rest of the Nice assets, but SKF didn’t acquire Peer until 2008. There was evidence that in 2004 there were at least 25 other companies using the 1600 series of designations; one can assume that at least some of those were using 7500 and 7600 series designations. If SKF retained ownership of the series designations, whose use of the series names would have inured to its benefit so that SKF could maintain ownership for the 11 year gap? Nice? One of the other 25 companies? If SKF instead abandoned the mark during those 11 years, wouldn’t it have been available for any of those others, Nice and Peer included, to adopt?

    This case is a demonstration of the parallel universes of trademark ownership, the paper trail universe and the consumer perception universe. If it was a cleaner situation, i.e., that only Peer and Nice were using the designations, the paper trail might win. Where there are so many using the same numbers, though, the consumer perception track should be the relevant one.

    The case has settled, but Nice still has a long row to hoe to prove ownership of the series names.

    RBC Nice Bearings, Inc. v. Peer Bearing Co., No. 3:06-cv-1380 (VLB), 2009 WL 3642770 (D. Conn. Oct. 29, 2009).

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  • These Economic Times

    In catching up on my reading over the holidays, I ran across three separate opinions where the licensee estoppel defense was raised (score: trademark owner 2, licensee 1). I don’t recall the last time I read another opinion on licensee estoppel. Is it a sign of these economic times? Are licensors looking for more income? Are licensees not paying?

    HSW Enter., Inc. v. Woo Lae Oak, Inc., No. 08 Civ. 8476(LBS), 2009 WL 4823920 (S.D.N.Y., Dec. 15, 2009) (licensee ceased paying royalties: “having weighed the relevant public interests, the Court concludes that WLO is estopped from challenging HSW’s ownership of the mark pursuant to the doctrine of licensee estoppel.”)

    Kebab Gyros, Inc. v. Riyad, No. 3:09-0061, 2009 WL 5170194 (M.D. Tenn. Dec. 17, 2009) (licensee opened additional restaurants: “licensee estoppel does not stop Defendant’s [ ] claim that Plaintiff [ ] abandoned the trademark and trade name through naked licensing to a third party. . . . In light of all of this, the court finds that the licensee estoppel doctrine should not bar the defendant from offering evidence as to the protectibility of the mark at issue.”)

    Eureka Water Co. v. Nestle Waters N.A., Inc., No. CIV-07-988-M, 2009 WL 5083577 (W.D. Okla. Dec. 21, 2009)(licensor terminated license: “Having carefully reviewed the parties’ submissions, the Court finds that all of the conduct on which plaintiff bases its abandonment/naked license argument occurred during the life of the license. Accordingly, the Court finds that licensee estoppel bars plaintiff from asserting its abandonment defense.”)

    List of trademark suits filed by Dunkin’ Donuts/Baskin Robbins here.
    List of trademark suits filed by Subway here.

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  • Famous Brands, Now Barely Breathing

    I’ve previously written about the deathly ill POLAROID brand. In a compilation of the Twelve Most Tarnished Brands, Technologizer ranks it number 1:

    But if Polaroid can fall this far, no name is sacred. Apple and Google, take heed–and give thought to where you might wind up come 2060 or so if you aren’t careful.

    The article is an interesting reminiscence on some great, almost late, technology brands.

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  • Act Two

    In Act One of Third Education Group, Inc. v. Phelps, we had Richard Phelps versus Bruce Thompson, an informal partnership that turned sour. In the first decision, the court held that the registration for the mark they were both using, Third Education Group, was void because it was filed in the name of Richard Phelps but was actually owned by the unincorporated association.

    After the court’s easy escape on the first trademark ownership theory, we now have Act Two. Here, the successor to the unincorporated association, Third Education Group, Inc. (“TEG”), alleges that Phelps’ continued use of “Third Education Group” is an infringement of the corporation’s unregistered trademark. Not so fast says Phelps; while the unincorporated association may have owned the mark, it was never assigned to TEG and instead remained with the unincorporated association. Since he was one of two members of the unincorporated association, his continued use was not an infringement.

    The court therefore had to determine under Wisconsin law what happened to the trademark when the unincorporated association later incorporated. After a stroll through several cases in various states, the court held that

    in Wisconsin, determining what happened to a joint venture or voluntary association upon incorporation will depend upon the unique circumstances of each case and whether the parties “clearly expressed” the intention for the association to survive incorporation. In the present case, TEG, the association, incorporated as a result of the unanimous consent of its members. The evidence demonstrates that Phelps and Thompson intended TEG, Inc. to succeed the unincorporated association; there is absolutely no evidence to permit the court to conclude that Phelps and Thompson intended the unincorporated association to coexist alongside the corporation and to retain control of the trademark or any other property. The evidence demonstrates that in every way, the parties intended TEG, Inc. to be the successor to the unincorporated association. There no longer was an unincorporated association once TEG, Inc. was created.

    Therefore, the property of the association passed to the corporation . . . .

    The dominos fall after that: the mark was suggestive, not descriptive, and Phelps’ use was likely to be confused with TEG’s use.

    But the court at least understood Phelps obstinacy and didn’t punish him for it:

    [T]he court finds that the actions of Phelps were not taken in bad faith. To the contrary, Phelps had much more than a mere good faith belief that he was entitled to use the mark. This was not a case of an individual, for example, mistakenly believing he had a license. Rather, in the present case, the objective evidence was on Phelps’ side. He was the one who undisputedly came up with the mark. He was the one who paid to register the mark. He was the one in whose name the mark was registered. And he was the one primarily responsible for establishing the use of the mark. He did this, not as one person in a large organization, but rather as an individual who had joined with another collaborator and in doing so, likely without an understanding of the legal ramifications, formed an unincorporated association. As the person who invested so much in creating the mark, it is not surprising that Phelps felt passionately about the mark and the organization he was primarily responsible for creating, as is reflected in some of his correspondence with Thompson. But the fact that he spoke passionately in defense of what he believed to be his mark does not make this case exceptional.

    Technology & Marketing Law blog post here.

    Third Education Group, Inc. v. Phelps    , Nos. 07-C-1094, 07-C-1095, 2009 WL 4544127 (E.D. Wis. Nov. 25, 2009).

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  • Does the Parent Own the Mark?

    The TTABlog reports on a decision invoking In re Wella to try to escape a likelihood of confusion refusal. In re Wella is a 1986 Federal Circuit decision which held that corporate family members (in that case, parent and subsidiary) may own substantially similar marks without a likelihood of confusion so long as there is

    a unity of control over the use of the trademarks. ‘Control’ and ‘source’ are inextricably linked. If, notwithstanding the legal relationship between entities, each entity exclusively controls the nature and quality of the goods to which it applies one or more of the various ‘WELLA’ trademarks, the two entities are in fact separate sources.

    In In re Federal Express Corporation, one of Federal Express Corp.’s marks was refused registration under §2(d) because of a likelihood of confusion with a mark owned by a sister company, FedEx Custom Critical, Inc. It is a “substantial burden” to show a unity of control when it is a sibling relationship, rather than a parent-subsidiary relationship, TMEP §1201.07(b)(iii), and one that Federal Express Corp. wasn’t able to meet. Likelihood of confusion is then a foregone conclusion.

    There was one glaring part of the Federal Express Corp. argument that I would have avoided, though. The TTAB quotes Federal Express Corp. as arguing:

    … because Fedex Corporation directly owns Applicant (Federal Express Corporation), FedEx Custom Critical, Inc. and Fedex Office and Print Services, Inc., control over the mark at issue in this case and the cited marks resides in a single source. There is no likelihood of confusion as to source between services offered by Federal Express Corporation, FedEx Custom Critical, Inc. and Fedex Office and Print Services, Inc. because they all are wholly owned and controlled by Fedex Corporation. Purchasers will know that services emanating from subsidiaries of Fedex Corporation emanate from a single source. Because Applicant (Federal Express Corporation), FedEx Custom Critical, Inc., and Fedex Office and Print Services, Inc. are wholly owned and controlled by the same parent company, Fedex Corporation, all use of marks owned by these subsidiaries inures to the ultimate benefit of Fedex Corporation.

    But In re Wella has some “additional comments” offered by Judge Nies that one should be mindful of when arguing for unity of control:

    There is, however, a different question, not addressed in the initial prosecution of the application, with respect to ownership of U.S. rights in the WELLA marks. Is Wella A.G. the owner of such rights or is its subsidiary, Wella U.S., the owner? Under section 1 of the Lanham Act, only the owner of a mark is entitled to apply for registration.

    Federal Express Corp. says directly “all use of marks owned by these subsidiaries inures to the ultimate benefit of Fedex Corporation.” This sounds to me like a statement that parent FedEx Corporation, not Federal Express Corporation, controls, and thus owns, the applied-for marks.

    In re Federal Express Corporation, Serial Nos. 78726298, 78726303, 78726306, and 78726310, (TTAB December 7, 2009).

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