Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Bratz Stayed!!

    I consider myself the unofficial recordkeeper for the Bratz litigation (so it was fate that the Secret Santa I pulled was for a Moxie Girlz), but I must have been sleeping on the job because everyone has jumped on this one before me.

    So playing catch-up to what’s already been reported by the IPKat, Techdirt, Likelihood of Confusion, the WSJ Law Blog, the WSJ proper and BBC News, on December 9th the Court of Appeals for the Ninth Circuit heard oral arguments on the Bratz appeal and issued an order staying the district court’s order and ordering the parties to mediation. Here’s the gist of it:

    Press coverage of the hearing is here. Based on the report, it doesn’t look very good for Mattel.

    Full order available here.
    MGA Entertainment surprisingly sedate press release here.

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  • The Missing Schedule

    The Patent Prospector summarizes a decision from the Federal Circuit where the ownership of patents hinged on whether they were “related to” pending litigation at the time of an earlier intra-company assignment agreement. If the patents were related, they weren’t assigned and U.S. Surgical Corporation, not plaintiff Tyco Healthcare, remained the owner of the patents. Tyco Healthcare’s major problem was that the transactional documents were silent on what that litigation was:

    On its face, the Contribution Agreement purports to answer the question of whether any USSC litigation was pending at the time. Section 4.21 describes pending litigation:

    Except as set forth on Schedule 4.21 hereto, there are no actions pending or threatened by or against, or involving USSC (with respect to the Business only) or any directors, officers, or employees thereof in their capacity as such or which question or challenge the validity of this Agreement, or any action taken or to be taken by USSC pursuant to this Agreement in connection with the transactions contemplated hereby or thereby, and to the knowledge of USSC, there is no valid basis for any such Action.

    Thus, Schedule 4.21 was to list any USSC litigations then pending or threatened, but Schedule 4.21 is missing. Or it simply never existed, as Tyco Healthcare contends on appeal.

    Since there had been several suits pending at the time, the court assumed all the patents were excluded from the assignment. Therefore, Tyco Healthcare was not the owner and did not have standing.

    Judge Newman’s dissent compellingly points out several flaws in the majority’s reasoning even absent the schedule, concluding with this: “The court’s contrary reading produces the absurd result whereby no USSC patent, indeed none of the assets transferred by the Contribution Agreement, can be deemed to have been transferred, merely because Schedule 4.21, listing public information, was missing. That is not a tolerable reading of the contract, for it renders the contract ineffective for its purpose and defeats the plain intent of the contracting parties.” But at least the suit was dismissed without prejudice, giving Tyco Healthcare another chance.

    Tyco Healthcare v. Ethicon Endo-Surgery, Nos. 2008-1269, 2008-1270, 2009 WL 4546935 (Fed. Cir. Dec. 7, 2009)
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  • Everyone Owns the Mark, So No One May Use It


    Demonstrating rare insight into the fundamental principles of trademark law, the court in LunaTrex, LLC v. Cafasso granted both parties’ motions for preliminary injunction on the same issue, enjoining everyone from calling themselves “LunaTrex.” That’s not an inconsequential holding, since it means none of the parties may participate in the $30 million Google Lunar X Prize competition until they sort it out.

    At least five individuals, working for at least four different companies, formed a team to enter the contest to put a rover on the moon. The main contestants in the suit are plaintiff Pete Bitar, who was the primary money man, and Defendant Mary Cafasso, who brought her expertise in aerospace work to the project.

    The five met and picked a name, LunaTrex. They registered for the competition and later, as required by the rules of the contest, adopted a logo:

    There would be no story if there wasn’t a falling out. The court details promises of salaries never paid, accusations of incompetence at jobs, companies registered by one without telling the other, and dueling trademarks applications filed. Cafasso went for the jugular: she sent a letter to a major funder, Stihl Corporation, telling it that she, not Bitar, was in charge, the natural result being that Stihl pulled its funding. She also sent a letter to the X Foundation, the sponsor of the lunar competition, which then told both Bitar and Cafasso that the team was suspended effective immediately. The foundation said the suspension would remain in effect until it received clear evidence of ownership of the LunaTrex name and team registration, and a clear statement of who was authorized to speak for the team.

    The same day as the X Foundation letter, Bitar sued. Both parties asked that the other be enjoined from using the LunaTrex name.

    The court found that the four principal contributors (and perhaps others) had formed a de facto partnership and the trademark was an asset of that partnership. There was no single contributor to the team who could claim ownership; rather “the entire team contributed to the creation of the mark’s value and protected status.” Bitar contributed money, but others contributed talent and effort. The promotional materials focused on the team as a whole, not any one individual, and there was no evidence that the relevant public believed that one individual in particular stood behind the LunaTrex name. The mark therefore belonged to all members of the team and no one was entitled to use the mark to the exclusion of any of the others.

    But the partnership had broken up. Normally then, the assets are distributed among partners, but the court had the good sense to understand that:

    A trademark, however, is not divisible. If it were shared among the different splintered partners, the resulting confusion would destroy the value that each partner worked so hard to create. Organizers of the Google Lunar X Prize are well aware of this risk and seem committed to preventing this confusion: they say they will disqualify the entire team if this dispute is not resolved, and they will not allow two “LunaTrex” teams to compete. Both plaintiffs and defendants have shown that they have an ownership interest in the mark and a right to veto unauthorized uses of the mark. Neither side has shown that it is likely to succeed in showing that the other side is not equally entitled to use the mark. To prevent confusion to the public, the best solution under the law is to prevent all parties from using the mark without the consent of all other parties who are entitled to share control of its use. In other words, the court will take the unusual step of granting each side’s motion for preliminary injunction to prevent the other from using the LunaTrex trademark without the moving side’s consent.

    Be still my heart, but it gets even better: “Nothing in this decision would necessarily prevent the parties from resolving the dispute by agreement, so long as they can avoid confusion for the relevant public as to the origin of an ongoing LunaTrex effort.” My goodness, allowing a trademark to do what it’s supposed to do.

    Disclaimer: The court cites my article “Who Owns the Mark? A Single Framework For Resolving Trademark Ownership Disputes,” available here. I suppose it’s not a surprise I like the decision so much.

    Lunatrex, LLC v. Cafasso, No. 1:09-cv-1272-DFH-DML, 2009 WL 4506321 (S.D. Ind. Dec. 1, 2009).

    © 2009 Pamela Chestek

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  • Sohmer v. Sohmer

    Ryan Giles at the Las Vegas Trademark Attorney blog tells the tale of two claimants to the piano brand “Sohmer.” It’s a law school exam, and I think Ryan gets an “A.”

    Read it here.

    © 2009 Pamela Chestek

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  • A Very Short License

    The Trademark Blog reports on a new case where two companies claim to own the same mark. In the complaint, the plaintiff and trademark registrant claims that it licensed the mark to the defendant but later terminated the license. The defendant’s website says that it acquired the business from the plaintiff. Here is the relevant agreement and termination letter, you be the judge:
    Scala License and Termination

    The defendant has also filed its own trademark application. One defense theory, based on the parties’ correspondence, will be abandonment.

    Complaint here.
    Full set of exhibits to complaint here.
    Motion for TRO here, thanks to the Trademark Blog.

    © 2009 Pamela Chestek

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  • Making Your Bed

    The 7th Circuit decision in Sunstar, Inc. v. Alberto-Culver Co. is interesting in two ways: it provides some insight into how one company is managing the Japanese market, and also provides a little education on Japanese trademark licensing law.

    Alberto-Culver, owner of the VO5 family of marks, wasn’t having any success in the Japanese market, so in 1980 it sold the Japanese marks to plaintiff Sunstar, Inc. for $10 million.

    Sunstar wasn’t allowed to keep them though; instead it had to transfer them to Bank One Corporation to hold in trust for 99 years. Bank One Corporation would grant back a senyoshiyoken license – exclusive-use right – to Sunstar royalty-free, and at the end of the license Sunstar would regain full ownership. If, though, during the 99 years Bank One Corporation

    had a “reasonable ground” for thinking Sunstar had committed an act that created “a danger to the value or validity of LICENSOR’s [i.e., Bank One’s] ownership and title in Licensed Trademarks,” Sunstar would have to stop using the endangered trademarks until the trustee “reasonably determined” that the danger had passed. In the event of an actual breach of the license by Sunstar, the trustee was to rescind the license and return the trademarks to Alberto-Culver.

    In 1989, the two parties had a dispute over whether Sunstar could use this modification to the mark:


    Sunstar thought it didn’t need permission but Bank One Corporation said it did, so ultimately another $10 million was forked over. Ten years later Sunstar adopted this mark:

    Again Alberto-Culver said it couldn’t. This time, though, Sunstar sued.

    At trial, Alberto-Culver argued that it hadn’t really granting a senyoshiyoken license, but instead used the term to mean that Sunstar could register the trademarks with the Japanese Trademark Office. The district court agreed and didn’t instruct the jury on what rights a licensee in a senyoshiyoken license would have. The jury returned a verdict for Alberto-Culver, so the district court ordered the agreement terminated and the marks returned to Alberto-Culver.

    But not so fast, said the Court of Appeals; the appeals court disagreed that the use of the term “senyoshiyoken” as the term is used under Japanese law didn’t describe the license granted. The court therefore had to decide whether, under Japanese law, a senyoshiyoken licensee could make this type of alteration to the mark.

    According to the court, a senyoshiyoken licensee can modify the mark if the change is insignificant enough that one could tack on to the earlier use. This rule makes sense particularly in the case of a 99-year license, where the mark would need to change to remain effective in the market. Indeed, the court even speculated that Sunstar might have created “a danger to the value or validity” of the marks if it hadn’t modernized the mark.

    So from the case we learn that a senyoshiyoken license is exclusive within the geographic scope even as to the licensor, and that it confers the right to register the mark and to sue in the licensee’s name. The Court of Appeals includes another right – to make small variations to the mark.

    And the inimitable Posner, J.: “Apparently Sunstar has done better in Japan than Alberto-Culver expected, and, as in 1989, Alberto-Culver has tried to use a hypertechnical, but more important an unsound, interpretation of the licensing agreement to extort additional compensation.” Indeed, it’s a bit unbelievable that a licensor would grant a 99-year license, with the licensee to acquire full ownership at the end, and not allow the licensee to update the mark for a century. If Alberto-Culver is concerned that the VO5 mark in Japan will be different from the rest of the world, that’s the natural result of the deal that Alberto-Culver struck in 1980 when it assigned the marks in all but name.

    Sunstar, Inc. v. Albert-Culver Co., Nos. 07-3288, 07-3289, 08-3835, 08-3836, 08-3931, 08-3936, 2009 WL 3447450 (7th Cir. Oct. 28, 2009) (Posner, J.)

    © 2009 Pamela Chestek

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  • The Twenty Year Registration Is Dead*


    No more twenty year registrations.

    *Well, except for the grace period. Docket six months.

    © 2009 Pamela Chestek

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  • Copyright Infringement Masquarading as Ownership

    The Tennessean, in an article entitled “‘Atomic Dog’ singer wins claim to phrase,” reports that “The phrase ‘bow wow wow, yippie yo, yippie yea’ belongs exclusively to funk legend George Clinton, a panel of federal judges ruled this week.”

    Well, no. The question was whether three musical elements – the use of the word “dog” in a low voice as “musical punctuation,” rhythmic panting, and the refrain “Bow wow wow, yippie yo, yippie yea” – were original enough to be copyrighted, to which the answer was yes:

    As noted previously, the standard for originality is a low one, and the “vast majority of works make the grade quite easily.” Feist, 499 U.S. at 345. In this case, expert testimony presented at trial was sufficient to permit the jury to conclude that Clinton’s use of the three disputed elements in “Atomic Dog” met this minimal standard.

    There’s a big difference between owning words and finding that a particular combination of words and music has been infringed. George Clinton has no exclusive right to barking, panting, “bow wow wow, yippie yo, yippie yea-ing,” or even his particular expression of those phrases. The case only says that Public Announcement’s use of George Clinton’s work was unexcused infringement. There no “ownership” here, even in the loosest meaning of the word.

    Original work here:

    Accused work here:

    Bridgeport Music, Inc. v. UMG Recordings, Inc., No. 07-5596 (6th Cir. Nov. 4, 2009).

    © 2009 Pamela Chestek

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  • The Coinco Strategy

    Mars, Inc. v. Coin Acceptors, Inc., first blogged here, demonstrated what can go wrong with ownership of patents within a corporate enterprise. As a refresher, in Mars the defendant, “Coinco,” successfully attacked the chain of title of the patents in suit. Mars had transferred ownership of the patents between family members during the lawsuit, a move that Coinco used to successfully challenge standing and limit Mars to reasonable royalty damages rather than lost profits. Mars subsequently had to defend itself agains a similar challenge in another suit, blogged here and here.

    Plaintiff Novartis in Novartis Pharmeceuticals Corp. v. Teva Pharmeceuticals USA, Inc. is having similar problems. The chain of title was this:

    * Pre-issue: Inventors assign to Beecham Group PLC
    * August 30, 2000: Novartis Pharma, AG (NPAG) and Novartis Pharmeceuticals Corp. (NPC) purchased assets, which included the patent in suit, from SmithKline Beecham PLC, SmithKline Beecham Corp. and SmithKline Beecham (Cork) Limited (SKB) in a document entitled “Asset Sale Agreement”
    * December 20, 2000: SKB assigned the patent to Novartis International Pharmeceutical Ltd (NIP)

    The identity of the original assignor (whether it was Beecham Group PLC or SKB) was not an issue, but the ownership within the Novartis family was. All three of the Novartis companies were plaintiffs: NIP is a holding company (but perhaps a manufacturing company), NPAG is a manufacturer, and NPC is a distributor. Teva moved to have NPAG and NPC dismissed from the suit for lack of Article III standing since they weren’t owners of the patent. The benefit to Teva would be the remedies angle; with the operating companies out of the picture both injunctive relief and lost profits would be off the table.

    The Novartis companies first argued that the “Asset Sale Agreement” was the grant of an exclusive license to NPAG and NPC. The court didn’t buy it; it would have been an exclusive license from SKB, not NIP. The license would have also been undone by the subsequent assignment of the “entire right, title and interest” from SKB to NIP. Alternatively, NIP would have taken ownership subject to the undefined licenses. Thus, there was at least a question of fact on the exclusive license theory.

    Next the Novartis parties claimed NPAG and NPC had an implied exclusive license from NIP based on their behavior. But the court didn’t have sufficient evidence to decide whether NPAG and NPC were exclusive licensees or bare licensees, so the the issue would remain to be tried to the fact finder.

    The court also offered this insight on why it wasn’t going to dismiss NPAG and NPC:

    At the same time, if each entity holding an interest in the patent is a wholly owned subsidiary of the parent corporation, resolution of this issue may not be of immediate need. “Another policy consideration is to prevent a party with lesser rights from bringing a lawsuit that may put the licensed patent at risk of being held invalid or unenforceable in an action that did not involve the patentee[,]” or by extension, the parties with a right to relief under the patent. Therefore, if each entity controls a divided, but undefined interest in the patent, policy favoring the prevention of multiple lawsuits and inconsistent judgments disfavors dismissal of NPC and NPAG at this time.

    Teva also tried to get an early take from the court on the remedies question, but no luck there either: “the Court will not speculate as to the scope of remedies available in this matter until the foregoing issues of fact have been resolved.”

    Teva’s Coinco strategy isn’t dead, but the issues remain to be tried to the factfinder. But it’s a good strategy if it works, and I anticipate a lot of close examination of corporate family ownership in the future.

    Novartis Pharm. Corp. v. Teva Pharm. USA, Inc., No. 05-cv-1887, 2009 WL 3447232 (D.N.J. Oct. 21, 2009).

    © 2009 Pamela Chestek

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  • The Restaurant Owns It, of Course

    When the dispute over the ownership of the name of the famous restaurant “Tavern on the Green” started, I posted a poll asking whether the restaurant or New York City owned the name. The results are in, with responses overwhelmingly in favor of the restaurant, 93% to 6% (okay, well there were only 15 votes). I’m a bit surprised, I thought it would be a little closer than that.

    © 2009 Pamela Chestek

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