Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • 1/10th

    Intellectual property law is generally considered a scheme for the protection of non-rivalrous, non-excludeable goods. In other words, because an idea once disclosed can be used by all, laws are needed to provide exclusivity so that the inventor can capture some reward for his or her work. Jefferson: “Society may give an exclusive right to the profits arising from [inventions], as an encouragement to men to pursue ideas which may produce utility.”

    Sun Pacific Farming Cooperative v. Sun World International, Inc., though, demonstrates that not all “intellectual property” would otherwise be without protection. Plant patents are for the invention or discovery of asexually reproducing distinct and new varieties of plants. 35 U.S.C. § 161. But plants aren’t ideas, they’re tangible goods. Nevertheless, a patent scheme was considered valuable for their development:

    No one has advanced a just and logical reason why reward for service to the public should be extended to the inventor of a mechanical toy and denied to the genius whose patience, foresight, and effort have given a valuable new variety of fruit or other plant to mankind.
    This bill is intended not only to correct such discrimination, but in doing so it is hoped the genius of young agriculturists of America will be enlisted in a profitable work of invention and discovery of new plants that will revolutionize agriculture as inventions in steam, electricity, and chemistry have revolutionized those fields and advanced our civilization.

    But the case demonstrates that for a plant patent, ownership of the patent may be less significant than control over the tangible goods. In 1972, Superior Farming bought real property, personal property, equipment, trademarks, plant patents and patent applications from several different owners. One of the defendants, Richard Peters, sold it two parcels of land. Superior Seedless/Sugraone grape vines, the subject matter of one of the plant patents, were growing on his property as well as the other sellers’ property. Richard Peters secretly took some of the grape vines and planted them at a friend’s farm, intending to use them for cross-breeding purposes after the patent expired. But for taking these vines, Superior Farming would have purchased all the existing vines.

    The Sugraone patent expired in 1989. In 1993, Peters sold the grapevines to declaratory judgment plaintiff Sun Pacific, which sold a small quantity of the grapes. In 2001 Sun Pacific brought a declaratory judgment suit against Superior Farming’s successor-in-interest, Sun World International.

    The court held in favor of Sun World on claims of conversion, intentional misrepresentation and declaratory judgment. The judgment states:

    The court declares that Counter-Defendants have no lawful right to possess, control, propagate, market, develop, or transfer Sugraone materials, that Sun World holds all right title and interest in the Sugraone Materials, that Counter-Defendants have no lawful right to hold themselves out as lawful owners or sellers of the Sugraone materials, that Counter-Defendants shall provide to Sun World a complete accounting of all Sugraone materials in the possession, custody or control of Counter-Defendants or any of them within 60 days of entry of judgment.

    Twenty years after the patent expired, Sun World has exclusive rights to the subject matter, perhaps indefinitely.

    2006 decision:
    Sun Pacific Farming Co-op., Inc. v. Sun World Intern., Civ. No. CVF01-6102 REC/DLB, 2006 WL 1716206 (E.D. Cal. June 16, 2006).

    2009 decision:
    Sun Pacific Farming Co-op., Inc. v. Sun World Intern., Civ. No. CVF01-6102 REC/DLB, 2009 WL 900751 (E.D. Cal. Mar. 31, 2009).

    © 2009 Pamela Chestek

  • Well, It Was Probably Assigned

    The TTABlog reports on a case about the mark RUSSKAYA for vodka that addresses two different attacks on trademark ownership. One is a fairly standard charge of abandonment. The second is a standing attack, based on a claim that the intent to use trademark application was improperly assigned.

    Under Section 10(a)(1) of the Lanham Act, an intent to use trademark cannot be assigned “except for an assignment to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing.” As pointed out at the TTABlog, the TTAB seemed a bit lax in requiring adequate proof that there was an assignment of the ongoing business, particularly because the proof of record was titled “Trademark Assignment.” The Trademark Assignment referred to an “Asset Purchase Agreement” dated a few weeks earlier, but the TTAB had stricken the Asset Purchase Agreement because it wasn’t timely filed.

    The TTAB nevertheless held that “we cannot conclude on this record that the assignment of the ‘600 RUSSKAYA application did not comply with the requirement of Trademark Act Section 10(a)(1)” because “specific reference to an expansively-titled ‘Asset Purchase Agreement’ suggests that the assignment of the RUSSKAYA application was merely part of a broader assignment of A.V. Imports, Inc.’s business.” (Emphasis added.) The TTAB contrasted this situation to The Clorox Co. v. Chemical Bank, 40 USPQ2d 1098 (TTAB 1996), where, as had been common practice, the assignment was to secure a loan and expressly not a transfer of the business. Note the burden-shifting; between this and accepting a “suggestion” that more than the trademarks were assigned, the attack was readily fended off.

    It may have been a pragmatic decision in two ways – first, there was probably little doubt that the assignee could have proven that the ongoing business was assigned (particularly since the TTAB could look at the Asset Purchase Agreement). Second, it now looks like a challenger has to prove that the ongoing business was not assigned, rather than the assignee proving that it was. That’s one way to reduce the number of arguments that need to be decided in future cases.

    TTABlog post here. A.V. Brands, Inc. v. Spirits Int’l, B.V., Opp. No. 92043340 (March 31, 2009).

    © 2009 Pamela Chestek

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  • Mattel $100 Million Richer, For Now

    Yesterday the Bratz court dealt with a boatload of motions, most importantly MGA Entertainment’s motion for remittitur of the $100 million verdict. MGA Entertainment claimed that the $100 verdict was duplicative, and that the jury really meant that the verdict should be $20 million.

    The MGA parties argue that Mattel had a singular theory of recovery – disgorgement of profits – and the amounts set forth by the jury as to each of the three state-law claims are duplicative. This is not a completely unappealing argument. For each of three state law claims – intentional interference with contractual relations, aiding and abetting breach of fiduciary duty, and aiding and abetting the duty of loyalty – the jury indicated that Mattel should be awarded $20 million as to MGAE and $10 million as to Isaac Larian. Totaled, this award is $90 million. Viewed pursuant to the MGA parties’ theory, it would be the same $30 million awarded three times. Relatedly, the MGA parties contend that the copyright damages of $10 million (allocated among three defendants) are also duplicative of this $30 million, even though the number is not exactly the same.

    But the court had to defer to the jury: “The fact is the evidence not only supported a verdict of $100 million, this Court could have, under the remittitur standard, easily sustained a verdict many times this amount.” Luckily for MGA though, the $31,500 portion of the verdict for conversion of drawings was remitted because the court ordered the drawings returned to Mattel.

    The court addressed 11 other motions in the same minutes order. The BRATZ name belongs to Mattel, “even if it was not a proper trademark at the time it was conveyed and even though it is not subject to being copyrighted.” Non-party Omni 808 Investors LLC was allowed to intervene for the limited purpose of protecting its assets in the receivership; the court will later consider whether

    Omni’s purchase of the Senior Bank Credit Facility from Wachovia was a straightforward, arms-length business deal between non-parties to this action, or whether, as counsel for Mattel contends, the purchase was by entities formed for the improper purpose of attempting to leapfrog over Mattel’s claims and shield their assets from creditors and other rights-holders such as Mattel.

    The court also, as requested by Mattel, appointed a temporary receiver. Lucky for us, though, the order

    permit[s] retailers who receive Bratz products pursuant to the authority of the Temporary Receiver, and who pay the Temporary Receiver monies due and owing for such Bratz products, to not remove such products from the shelves until January 10, 2010.

    The court seems to be growing a bit weary of the case. One later docket entry sniped:

    Finally, the Court must take issue with counsel for the MGA parties assertion that it is highly unlikely that either the Court or its staff will review Mattels reply papers between May 22 and May 26, 2009, which is the Memorial Day weekend. Regrettably, counsels perception that this Court will not be consumed by reviewing and considering papers during the Memorial Day weekend as it is on just about every other weekend of the year on numerous and various cases is mistaken.

    The Trademark Blog post here. Minute Order available here.

    © 2009 Pamela Chestek

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  • Pressing Onward



    Sometimes assigning the trademark isn’t enough. In the 1950’s, Société des Anciens Etablissements Martin S.A. (“Martin”) owned the design patents for and distributed the “Chambord” and “Melior” French press coffeemakers. In 1983, Viel Castel, a majority shareholder of Martin, and Jrgen Jepsen Bodum established Bodum, Inc. (“Bodum”). Bodum had the distribution rights to the Chambord pot for the United States. Viel Castel was also the owner of Household Articles Limited, which distributed a coffee pot in the Chambord design under the name La Cafetière in the United Kingdom, with a limited presence in Australia and, as alleged by Castel, also in the United States.

    Bodum eventually bought out Martin. After several rounds of drafts, the stock purchase agreement ultimately said:

    In consideration of the compensation paid to Stockholder [i.e., Castel] for the stocks of [Martin,] Stockholder guarantees . . . that he shall not–for a period of four (4) years–be engaged directly or indirectly in any commercial business related to the manufacturing or distributing of [Martin’s] products . . .

    Notwithstanding Article 4 [Bodum] agrees that Stockholder through Household . . . can manufacture and distribute any products similar to [Martin’s] products outside of France. It is expressly understood that Household [ ] is not entitled, indirectly or indirectly to any such activity in France, and that Household [ ] furthermore is not entitled, directly or indirectly, globally to manufacture and/or distribute coffee-pots under the trade marks and/or brand names of “Melior” and “Chambord” held by [Martin]. Stockholder agrees that Household [ ] is not entitled to use for a period of four (4) years the importers, distributors, and agents which [Martin] uses and/or has used in the last year. Any violations of these obligations will constitute a breach of Stockholder’s obligations according to Article 4.

    The La Cafetière pots were sold in the United States and Bodum sued for trade dress infringement. Bodum argued that the the agreement only allowed the sale of similar products, not identical products.

    Construing the agreement under French law, which emphasizes intent over text, the court found that Bodum was aware that Household was selling the same pot in the United Kingdom and Australia. The only restrictions, however, in the agreement related to the geographic territory and the use of the trademarks “Chambord” and “Melior,” none for the appearance of the pots. Household can sell the same pot.

    Bodum “Chambord” pot for sale here. Household “La Cafetière” pot here.

    © 2009 Pamela Chestek

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  • The Unmentioned

    Here’s a patent assignment, in its entirety:

    I, JACK BENNETT, . . . do hereby sell and assign to VECTOR CORROSION TECHNOLOGIES LTD. . . . all my interest in the United States, Canada and in all other countries in and to my US, Canadian, and European applications for patents and issued U.S. patent, namely:

    1. Issued U.S. Patent 6,033,553. This patent claims the specific use of LiNO3 and LiBr to enhance the performance of metallized zinc anodes;

    2. US Application No. 08/839,292 filed on April 17, 1997,

    3. US Application No. 08/731,248, filed on October 11, 1996 (now abandoned),

    4. EPO Application No. 99122342.1, filed November 9, 1999, and

    5. Canadian Application No. 2288630, filed November 8, 1999,

    any and all divisional applications, continuations, and continuations in part together with the entire right, title and interest in and to said applications, any and to all divisional applications, continuations, and continuations in part thereof, the right to claim priority therefrom under the International Convention, and any and all Letters Patent which may issue or be reissued for said invention to the full end of the term for which each said Letters Patent may by granted; and hereby authorize the issuance to said assignee of any and all said Letters Patent not already issued as the assignee of entire right, title and interest in and to the same, for the sole use and benefit of said assignee, its successors, assigns or legal representatives; and hereby covenant and agree to do all such lawful acts and things and to execute without further consideration such further lawful assignments, documents, assurances, applications, and other instruments as may reasonably be required by said assignee, its successors, assigns or legal representatives, to obtain any and all Letters Patent for said invention and vest the same in said assignee, its successors, assignees or legal representatives.

    SIGNED AT: Chardon, Ohio, U.S.A.

    This 20th day of December, 2001

    The problem? Patent No. 6,217,742 was a continuation-in-part of the ‘533 patent but had already issued at the time of the assignment and wasn’t mentioned in it. Was the ‘742 assigned to Vector or not? The district court said yes, the Federal Circuit reversed:

    At bottom, we cannot give the Assignment a “definite legal meaning.” Under one reasonable interpretation, the Assignment includes the ‘742 patent, because it issued from a continuation-in-part of the ‘553 patent. But under another reasonable interpretation, the Assignment excludes the ‘742 patent, because it was an already issued patent, not an application, at the time of the assignment. We therefore conclude that the Assignment is susceptible to at least two reasonable interpretations and is therefore ambiguous under Ohio law.

    Summary judgment vacated and remanded.

    Judge Newman concurred that the district court erred in granting summary judgment, but also disagreed that a trial was necessary at all, since clearly the ‘742 patent was not assigned. The two patents were directed at two different forms of the technology, one for “metallized” or “distributed” zinc anode technology and the other for “embedded” or “discrete” zinc anode technology. It was clear from the assignment and other related documents that the assignment was of only the “metallized” zinc anode technology, as the assignment itself states. In fact, the metallized zinc anode technology was expressly disclaimed in the ‘742 patent: “The ‘742 specification describes the invention as for ’embedded anodes comprised of individual elements that are spaced apart from one another, as opposed to distributed anodes that essentially cover the entire concrete structure surface.’” Judge Newman chided the majority for thinking that the patent could have been assigned when it wasn’t even mentioned in the assignment document:

    It is a truism of patent practice that transfers of patent property require specificity as to the property transferred. The practice requiring specificity of identification of transferred patents is so entrenched, that it would smack of misfeasance to have omitted the known ‘742 patent from the list of assigned properties, if the parties had intended that it be assigned.

    Euclid Chem. Co. v. Vector Corrosion Techs., Inc., Civ. No. 08-1170, 2009 WL 838276 (Fed. Cir. April 1, 2009)

    © 2009 Pamela Chestek

  • Broken Chain

    (Read yesterday’s post below if you haven’t yet)

    The court identified two breaks. The easy one was the last one – the oral assignment from Marx Toys, Inc. to the plaintiff. Of course, under § 204(a), a transfer of copyright ownership must be in writing or by operation of law.

    There was a second break though, higher in the chain. The plaintiff didn’t produce a document establishing that Chemical Bank owned the copyrights when it transferred them. The subsequent Bill of Sale stated that the copyrights were “repossessed by the Seller from Louis Marx & Co. or its affiliated companies in the exercise of its rights under a security agreement,” but there was no documentation of the actual transfer of ownership to Chemical Bank.

    The question with no answer – why the defects weren’t corrected before summary judgment.

    American Plastic Equipment, Inc. v. Toytrackerz, LLC, Civ. No. 07-2253-DJW, 2009 WL 902422 (D. Kan. Mar. 31, 2009).

    © 2009 Pamela Chestek

  • Can’t Break Away From Those Chains

    You have the following transactional events:

    • Registering of copyrights for toy action figures with authorship by Louis Marx & Co.
    • Bill of sale of Louis Marx & Co. to The Quaker Oats Company
    • Bill of Sale of Louis Marx & Co. to Dunbee-Combex
    • Change of Name from Dunbee-Combex to Dunbee-Combex-Marx d/b/a Louis Marx & Co.
    • Petition for Bankruptcy filed by Dunbee-Combex-Marx d/b/a Louis Marx & Co.
    • Bill of Sale of copyrights from Chemical Bank to plaintiff American Plastic Equipment, Inc.
    • Bill of sale of copyrights from American Plastic Equipment to Marx Toys, Inc.
    • Administrative dissolution of Marx Toys, Inc.
    • Oral assignment of copyrights to American Plastic Equipment, Inc.

    The court held that the plaintiff could not prove ownership of the copyrights, so its copyright infringement claim failed. Spot the break in the chain. Answer this time tomorrow.

    © 2009 Pamela Chestek

  • Laid to Waste

    The always informative John Welch, TTABlog reporter, blogged on a pure trademark ownership contest at the TTAB in an opposition proceeding. It was a bit of a lengthy and confusing read, 41 pages, although the TTAB does bless us with generous double-spacing and Courier New.

    The case is a lesson in how not to manage your manufacturing and distribution relationships. The TTABtale picks up when two entities claim to own the mark WASTEMAID for food waste disposers; one was the manufacturer and the other was the distributor. The factual background is convoluted, since neither was actually the first to use the trademark. Instead, the mark was initially adopted by a wholesaler, the manufacturer made the disposers for the wholesaler, and the distributor was the middleman. Eventually the wholesaler sold the trademark to the distributor, the distributor applied to register in the U.S., and the manufacturer opposed, claiming it was the owner of the mark.

    My problem with cases of this type is that the fact finders look at it as a question of priority, but there’s only one trademark that two entities are fighting over. Cases exploring whether trademark rights exist at all may not be the best guidance when the question is, rather, who owns trademark rights both parties acknowledge exist.

    Here, the TTAB roamed through several theories to find that the manufacturer did not own the mark. Somewhat surprisingly, it didn’t use the fairly well-developed law for manufacturer-distributor disputes (where, incidentally, the presumption goes to the manufacturer). Instead, it first looked at whether the opposer had used the mark in a way to establish a “trade identity” in the mark, i.e., whether it was functioning as a trademark, and decided inexplicably that because it was a “private placement” it was not.

    Next, the TTAB said that priority would be established by a use that was “open and notorious, reaching to prospective purchasers of the goods in which the mark is claimed for use.” The problem was that the manufacturer had; it used the mark on a label that would have satisfied the most difficult examination of a trademark specimen. There was no explanation for why this use wasn’t sufficiently “open and notorious.”
    Finally though, the TTAB resorted to weighing the “evidence as a whole,” numbered paragraphs and all, which indicated that the manufacturer was a private labeler, not the owner of the mark. Based on the facts recited the conclusion seems right in the end. Nevertheless, the case gives little guidance on how these disputes can be decided more predictably in other cases.

    Anaheim Mfg. Co. v. Joneca Corp., Opposition No. 91171906 (March 26, 2009).

    © 2009 Pamela Chestek

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  • Faithless Servant Indeed

    Asociación de Industriales de Puerto Rico v. MarketNext, Inc. is a classic trademark ownership dispute. The plaintiff, Asociación de Industriales de Puerto Rico (AIPR), also known as the Puerto Rico Manufacturer’s Association, is a trade association representing businesses in the manufacturing and service sectors in Puerto Rico. It was commonly referred to as “los Industriales” and published a trade magazine, “Industriales.” In 2001 it twice published the magazine as a supplement in the daily newspaper El Nuevo Día but was unhappy so sought a new publisher, next contracting in 2003 with the defendant, MarketNext, Inc. MarketNext was to use its best efforts in developing, publishing and promoting the publication and was to keep a portion of the profits from advertising as its compensation. The contract put restrictions on what MarketNext could publish and gave a number of controls to AIPR, particularly content review. There was no mention of intellectual property rights in the contract.

    MarketNext published the magazine from 2003 to 2008. The first issue of the magazine (it’s unclear whether subsequent issues were similar) had “Asociación de Industriales de Puerto Rico” and the AIPR web address on the cover, and stated “INDUSTRIALES is published quarterly by MarketNext for the Puerto Rico Manufacturer’s Association.” MarketNext registered the copyright in the magazines in its own name.

    In February, 2008, MarketNext sent a letter to AIPR asking to renegotiate the contract and demanding that AIPR recognized MarketNext’s rights in the intellectual property. AIPR refused. MarketNext then filed an application to register “Industriales” as its trademark with the Puerto Rico Department of State, claiming first use since 2003. AIPR gave notice to terminate the contract in November, 2008. MarketNext continued to publish the magazine after the contract was terminated, taking references to AIPR off the masthead. AIPR sent a cease and desist letter, dueling federal trademark applications were filed (MarketNext first, AIPR second), dueling magazines were published, and confusion ensued.

    Based on the facts, there was little question that AIPR should own the mark, the only question was how the court would get there, and the law of agency was the vehicle. Although the first use of the mark in interstate commerce occurred when MarketNext published the magazine, MarketNext was acting as AIPR’s agent in doing so, so the fruits received in the course of the relationship belonged to the principal, AIPR.

    The eight likelihood of confusion factors in the First Circuit were disposed of in four short paragraphs. Irreparable harm, balance of the equities and public interest mandated an injunction against MarketNext’s continued publication.

    The court was not pleased with MarketNext’s perfidy:

    “[MarketNext’s President] effectively confessed his disloyalty in open court when he testified that he considered his advertising customers to be the chief clients for MarketNext. Furthermore, MarketNext should have known that any customer relations that it had developed under the Contract were for Plaintiff’s benefit and that it ought not wrest members away from Plaintiff. In attempting to cement its usurpation of Plaintiff’s proprietary interests by its abuse of legal procedure, and in breaching its duty of loyalty to Plaintiff, MarketNext has proven itself to be a faithless servant indeed.”

    Asociación de Industriales de Puerto Rico v. MarketNext, Inc., Civ. No. 09-1122 (JAF), 2009 WL 793619 (D.P.R. Mar. 23, 2009).

    © 2009 Pamela Chestek

  • Caught in the Crossfire

    Patently-O revisits the half-millionth design patent, the design of the Chrysler Crossfire, and its assignment history. Now pledged to the government.

    © 2009 Pamela Chestek

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