Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Licensed Confusion

    Koninklijke Philips Electronics N.V. v. Cinram International Inc. is, for the most part, about whether an “essential” patent in a patent pool was necessarily an infringed one (it’s not – or the license would not have said “for the avoidance of doubt, in the event that the manufacture by Licensee of CD-Discs within the Territory would not infringe any of the Licensed Patents, Licensee shall have no obligation to report and pay royalties in respect of CD-Discs manufactured within the Territory and which are sold for final use within the Territory . . . .”).

    But the case also points out the perils of licensing in complex enterprise structures. The patent in suit, U.S. Patent No. 5,068,846, is owned by U.S. Philips Corporation. The patent license was in the name of the parent, Koninklijke Philips Electronics N.V. This made room for the defendant to argue that no one had standing to sue for breach of contract – Koninklijke didn’t because it didn’t own the patents, and U.S. Philips because it wasn’t a party to the contract.

    Koninklijke produced a “rabbit from the hat” in the form of a General Services Agreement, which said that U.S. Philips agreed to assign the patents at a future, unspecified date. The court agreed with the defendant that this was an impermissible attempt by Koninklijke to reverse pierce the corporate veil: “Under New York law, a parent corporation may not pierce the corporate veil it set up for its own benefit in order to advance the claims of the subsidiary.”

    Koninklijke was nevertheless successful because there is no requirement that one delegate the right to license intellectual property in writing, so Koninklijke had the authority to obligate U.S. Philips. “Under New York law, even if a party subjectively does not intend to be legally bound, if his actions, gauged by an objective standard, support the conclusion that he accepted the agreement, he will be legally bound to honor the contract.” Both the patent owner and the licensor were parties to the suit, and all necessary plaintiffs were parties to the suit.

    This isn’t the first time Philips has been vulnerable because the wrong entity acted. In U.S. Philips Corp. v. Iwasaki Elec. Co. Ltd., the notice of infringement of a patent owned by U.S. Philips was sent on Philips International B.V. letterhead. The district court held that the letter was not adequate to put the accused infringer on notice of infringement because of the misidentification, but, fortunately for Philips, the decision was reversed on appeal.

    Koninklijke Philips Electronics N.V. v. Cinram International Inc., No. 1:07-cv-00970-RJH, 2009 WL 783441 (S.D.N.Y. Mar. 27, 2009). U.S. Philips Corp. v. Iwasaki Elec. Co., Ltd., 505 F.3d 1371 (Fed. Cir. 2007).

    © 2009 Pamela Chestek

  • If a Web Site Falls In The Woods, Is It In Use?

    John Welch pointed me to a curious new site – “USTrademarkExchange.com.” According to the home page,

    USTrademarkExchange.com is a new website that connects registered trademark sellers and buyers. Many industry professionals view trademarks as a unique kind of intellectual property (IP), quite different from either patents or copyrights. As as a result we have created a dedicated trademark sales portal. Service marks which are a type of trademark are also represented. Owners can promote their trademarks and interested buyers, including investors can easily search a variety of available trademarks for sale on this website.

    It currently lists four trademarks for sale by three different owners. The owner of the “Featured Mark” (below, from the Certificate of Registration):
    also just happens to be the registrant of the USTrademarkExchange.com web site:


    The web site claims that the Featured Mark, “If not now, when?” is “currently in use.” Here’s the specimen:


    Note that the specimen lists a web site, www.senioradnet.com. At that web site, the only thing is the specimen (now with the ® after it) and a contact form. You probably saw this coming, “senioradnet.com” is also owned by the same guy:

    You tell me – would you consider this a registration with any value?

    © 2009 Pamela Chestek

  • http://en.wikipedia.org/wiki/Starfish#Regeneration

    Wikipedia is a registered trademark, owned by Wikimedia Foundation. A New York Times article says “nearly every time Wikipedia has come to a fork in the road where the project could have chosen to impose more restrictions on who could edit what — even insist on a bit of expertise — it has chosen not to. That has made all the difference.”

    Is Wikipedia a trademark? Why, or why not?

    © 2009 Pamela Chestek

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  • Starfish and Spiders

    I’ve been reading The Starfish and the Spider. The premise of the book is that some organizations are centralized and top-down, which is the spider – you cut the head off and it dies. But there are decentralized, non-hierarchical organizations that are like a starfish – if you cut it in half, it becomes two starfish. The book talks about a number of organizations that are “starfish” organizations, like Alcoholics Anonymous, the Animal Liberation Front, Al Qaeda, and Burning Man. If the heads – or even substantial parts – of these organizations are cut off, the organization will live on. That’s why Al Qaeda is so difficult to vanquish, each cell works independently.

    There is one striking sentence about starfish organizations: “Many unaffiliated groups simply take the brand and use it.” It gives as one example Alcoholics Anonymous – AA is unified by the twelve steps, not any formal organizational structure. Anyone can start an AA chapter.

    This means that the marks of starfish organizations are more susceptible to attack. Traditional trademark doctrine ties the existence of a mark to having control over the quality of the goods and services with which a mark is used – or, more correctly, it ties the abandonment of a mark to the absence of control. But this concept of centralized control is a poor fit for the starfish organizations, which are nevertheless identified by trademarks and, as shown from the above examples, sometimes even famous ones.

    These organization have some commonality that unites them and provides their marks with sole source significance, but perhaps just not the kind of control that traditional trademark law is looking for. Instead, there’s a whole range of behavior that keeps this organizations unified. This Boston Globe article says that Osama bin Laden decides what groups may call themselves “Al Qaeda,” refusing permission to Zarqawi in Iraq until he became less publicly brutal. Some organizations are self-policed by the members, like Wikipedia.

    The only question on trademark validity should be whether the word, logo, device, etc., functions as an identifier, and in the above organizations there’s no doubt it does. In a starfish organization it may prove difficult to decide who has the right to use the mark, or who has the right to enforce the mark, but that’s a different question from whether there is a trademark in the first place.

    Maybe it doesn’t matter. Per the authors, citing Alcoholics Anonymous as an example, the downfall of a starfish is the acquisition of property. “Once people gain a right to property, be it cows or book royalties, they quickly seek out a centralized system to protect their interest. . . . The moment you introduce property rights into the equation everything changes: the starfish organization turns into a spider.”

    © 2009 Pamela Chestek

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  • The SCO Group Wins One -Trademark, That Is

    The effects of the infamous SCO Group copyright lawsuits ripple on and on. I can’t begin to summarize the complexities of the cases, but if you’re interested you can spend a few years perusing this site. In a sentence, The SCO Group claimed to be the owner of the copyright in one prong of the UNIX code. One of the consequent lawsuits was SCO Group v. Novell, brought in Utah by the SCO Group after Novell, Inc. said that the UNIX copyrights were not assets sold to the SCO Group’s predecessor. The Utah court agreed with Novell, granting summary judgment in Novell’s favor.

    This same transaction was significant in Gray v. Novell, Inc., a trademark lawsuit challenging the ownership of the UNIX mark. Novell, Inc. was also the owner of two registrations for the UNIX mark. In October, 1993, Novell, X/Open Company Limited, Digital, HP, IBM and Sun signed a term sheet for a future agreement between them to set up a single spec for UNIX. X/Open would be the sub-licensor of the UNIX mark, licensing it to companies whose products met the spec. In May, 1994 Novell and X/Open entered into a formal agreement that embodied the terms of the term sheet, granting X/Open the license to sublicense and agreeing to assign the mark at the end of three years or “at any time either earlier or later if Novell and X/Open agree.”

    Novell then sold some assets to The Santa Cruz Operation, a predecessor to The SCO Group, in an Asset Purchase Agreement dated September, 1995 – the same agreement examined by the Utah court on the copyright ownership claim. As to the trademark, the APA assigned the “trademarks UNIX and UnixWare as and to the extent held by [Novell].” The schedule of Excluded Assets listed “all copyrights and trademarks, except for the trademarks UNIX and UnixWare.”

    A year later, Novell, X/Open and SCO signed a Confirmation Agreement in which they expressly acknowledge that the 1995 APA conveyed the UNIX trademarks to SCO “subject to the rights and obligations established in a May 14, 1994 NOVELL – X/OPEN Trademark Relicensing Agreement . . . .” The agreement further provided that “SCO and X/Open desire to provide for the acceleration of the vesting of title in X/OPEN to the UNIX trademark, and the assignment to SCO of NOVELL’s rights under the 1994 [relicensing] Agreement.” The Confirmation Agreement also stipulated that Novell would be considered the legal owner of the mark for the purposes of the assignment and that the assignment would not be considered a breach of the 1995 APA between Novell and SCO. Two years later the assignment was executed with an effective date of November 13, 1998 and recorded at the PTO in June, 1999.

    Sometime in late 1998 or early 1999, Wayne R. Gray adopted the mark iNUX. On April 29, 1999, he filed an application to register it for “Computer operating system software for use in consumer hardware systems.” X/Open sent a cease and desist letter and opposed the application. Gray started digging, decided that X/Open wasn’t the owner of the UNIX mark, and ultimately filed this action in the District Court for the Middle District of Florida. He alleged that Novell and X/Open had a fraudulent scheme to hide Novell’s true ownership and that the documents were backdated as part of the scheme. (You need to read the opinion to get the full flavor of the allegations, I’m trying to summarize them as briefly as possible.) Gray claims that he was targeted because the defendants want the iNUX mark and domain names for themselves.

    Based on these facts, the court held that the trademark is owned by X/Open and dismissed all of Gray’s claims, since they were all rooted in the false ownership rationale. The court found that the UNIX mark was sold to SCO subject to the 1994 license to X/Open. This encumbrance was acknowledged in and modified by (or clarified by) the 1996 Confirmation Agreement, which superseded the 1995 APA to the extent that Novell would be the owner of the UNIX mark for purposes of assignment, rather than SCO.

    The court disregarded a statement in the SCO Group v. Novell case in Utah. The Utah court, in looking at this same 1995 APA to decide who owned the copyright in the UNIX software, stated “It is undisputed that trademarks did transfer.” The Florida court here rightfully recognized the statement as non-binding dicta, but also that it was correct, just not with respect to the UNIX mark.

    Thus the assignment in 1998 by Novell to X/Open was a valid transfer of ownership of the mark and all claims were dismissed.

    Gray v. Novell, Inc., No. 8:06-cv-01950-VMC-TGW, 2009 WL 425958 (M.D. Fla. Feb. 20, 2009).

    © 2009 Pamela Chestek

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  • Tweeeeet!!


    HT to Marty on the story about the bird graphic on the home page of Twitter. I hesitate to call it a “trademark,” although I would have but for the story.

    Wired reports that Twitter got the design from iStockPhoto and paid the usual licensing fee for an editorial use of the design. (I looked on iStockPhoto and found a number of similar designs by the same artist – File #: 4681613 looked closest to me.) Twitter’s use is within the scope of the license, in part because it’s not selling any promotional goods with the logo.

    But the license isn’t exclusive, which means that anyone else can come along and use the same image in exactly the same way – or not?

    Nothing says that you need to own the copyright in a work to use it as a trademark. (Think of all those musical source identifiers – I ticks me off that I can’t hear “Rodeo” anymore without thinking that “Beef is What’s for Dinner.”) Twitter would only need to prove the same thing any other trademark infringement claimant needs to prove – at the time of the junior user’s adoption of the same logo, there was trademark significance in the logo already accruing to Twitter and potential consumers would be confused by the junior use. One doesn’t have to own the copyright in a logo to own the trademark significance in it.

    The T-shirt above (not quite the Twitter use, since the bird here is black rather than white) is being sold by the artist, not Twitter. Is it strengthening, diluting or to be confused with the Twitter use? The mischief possible makes this trademark lawyer shudder –

    © 2009 Pamela Chestek

  • Can POLAROID Still Survive?

    I previously reminisced about the grand brand that used to be Polaroid. It’s still is an income-producing mark in at least China, India and Brazil. We know, because Polaroid Corp. brought an adversarial proceeding to avoid the transfer of the Polaroid marks to Ritchie Capital Management L.L.C. Thomas Petters had used the marks to secure loans from Ritchie Capital days before Petters was arrested for allegedly running a Ponzi scheme. Polaroid claims that Richie Capital “knowingly, purposefully and systematically subjected Polaroid and its assets to liens, claims, encumbrances, contractual obligations and liabilities for which Polaroid obtained no or inadequate value” and asks the court to avoid the transfer. Richie Capital retorts that the security interest in the trademarks was legitimate, to cover a bridge loan for the sale of the marks that fell though.

    If Polaroid is unsuccessful Richie Capital will sell the marks; if successful the trustee is scheduled to sell them. Another blow to a brand barely hanging on.

    Polaroid complaint here; Richie answer and counterclaims here. Security interest here and here (two parts).

    © 2009 Pamela Chestek

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  • Scope of the MOU

    Memorylink Corp. v. Motorola, Inc. is a fairly routine story of a joint development agreement gone wrong, with the small, independent inventors at Memorylink complaining they were mistreated by the far larger Motorola. Most of the claims were rightly kicked on statute of limitations grounds, but there was one theory that I thought the court copped out on.

    In 1996 Memorylink and Motorola entered into a MOU for the development of wireless transmission of realtime video. There was also a document entitled the “Wireless Multimedia Core Technology Overview” which described that Motorola would create the “first commercially viable integrated circuitry to provide high speed, digitally formatted data transmission” and Memorylink would create a “highly integrated, multimedia processor and communication control circuit utilizing a proprietary audio-video data transfer format.” Memorylink was able to develop a working prototype using Sharp cameras, its video compression technology, and Motorola’s radio technology. Memorylink demoed it for Motorola, which was “blown away” by the demonstration.

    When the time came for patenting, the story told in the case is that Motorola acted like a heel. Memorylink didn’t have a lawyer and willingly agreed that Motorola could file and prosecute a patent application. When preparing the application, Motorola’s patent attorney sent a letter saying that it was his understanding that Motorola engineers had participated in developing the invention so should be named as inventors, and Memorylink didn’t disagree. Two days after the jointly-owned application was filed, Motorola filed a second application with just the Motorola inventors listed. The first patent application ripened into Patent No. 6,522,352.

    Memorylink alleged a variety of tort-based claims, like fraud and breach of fiduciary duty. These were all kicked on a 12(b)(6) motion, on the basis that Memorylink’s claims were untimely. But the court also held that, by saying too much, Memorylink had “pleaded itself out of court” on a count asking for the correction of inventorship on the first patent. The court cited the Technology Overview, the letter from the patent attorney listing the inventors, a patent agreement which said that the parties were “in the process of defining a specification … in which a Motorola design of a 5GHz radio will be incorporated,” and the patent application as proof that Motorola contributed to the development of the invention described in the patent.

    The problem is that the court never undertook an analysis of the scope of the claims of the invention. There’s no suggestion in the case that the invention described in the MOU or Technology Overview was congruent with the invention described in the patent application. Companies can agree to collaborate on commercializing technology, but that doesn’t mean that inventors from both companies necessarily participated in every invention arising out of the collaboration.

    Perhaps Memorylink will be able to turn this theory against Motorola; a claim for correction of inventorshop on the second patent withstood the motion to dismiss. Seems like what’s sauce for the goose is good for the gander on this.

    Memorylink Corp. v. Motorola, Inc., No. 08 C 3301 (N.D. Ill. Feb. 23, 2009).

    © 2009 Pamela Chestek

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  • Coining a Geographic Identifier


    If you’re appealing a decision that “OBX” is generic for oval stickers with “OBX” printed on them, is it a good sign or a bad sign that the appeals court decision starts out “James Douglas cleverly invented ‘OBX’ as an abbreviation for the “Outer Banks” of North Carolina”?

    Bad. In a well-reasoned and well-written opinion, the court explained the difference between a term that everyone recognizes, even though it was coined by the trademark registrant, and a trademark. I can’t summarize it better than the court said it:

    In this case, the letters OBX had the potential of becoming a valid and enforceable trademark to identify an OBX brand product and OBX-Stock as the source of the product. But from the beginning, Douglas, the inventor of “OBX,” never intended that OBX become associated with a product as its brand or source. Rather, Douglas intended solely that OBX become associated with and descriptive of a geographical location, the Outer Banks. He repeatedly stated this fact in his deposition, and he continues to maintain it in arguments made to us. As he states in his briefs, “OBX-Stock created a new term that would suggest the Outer Banks”; “Douglas wanted to print and sell white oval stickers like the ones used in Europe to display country of origin but with a mark that would suggest the Outer Banks of North Carolina to customers”; “Although Douglas wanted to conjure images of the Outer Banks, he did this through a fictional word without prior meaning.” (Citations omitted).

    And just as important, OBX-Stock affixed the letters OBX to stickers, souvenirs, and other sundries not to label an OBX brand product produced by OBX-Stock, but to indicate an association with the Outer Banks. Douglas testified that this purpose had its effect—persons learning of the significance of OBX did indeed associate OBX with the Outer Banks. Most dramatically, OBX did, as intended, become a commonly accepted abbreviation for “Outer Banks,” and thus became a geographically descriptive abbreviation. Bicast produced overwhelming evidence in the district court demonstrating that OBX entered the “linguistic commons” as an often-used, everyday abbreviation of “Outer Banks.” Indeed, many Outer Banks businesses sell clothing, bottled water, and various other goods and services bearing “OBX.” When affixed to any product or service, the evidence suggests that OBX merely denoted the geographical origin, Outer Banks. Thus, at bottom, when OBX-Stock affixes the letters “OBX” to stickers, souvenirs, and other products, it is merely communicating the fact that the sticker or product comes from the Outer Banks, and that was Douglas’ intent all along.

    But that is not the secondary meaning that allows a geographically descriptive word to indicate, by usage and promotion, a product or source of product. A T-shirt with OBX on it does not indicate that the consumer bought an OBX brand T-shirt or that the T-shirt was a product of OBX-Stock. Rather, the letters OBX indicate that the T-shirt was purchased at the Outer Banks of North Carolina or is promoting the Outer Banks.

    It’s a short and succinct opinion, well worth reading. There is a troubling portion of the opinion, though; a claim that the North Carolina congressional delegation aided in the registration of the mark.

    Moreover, whatever support OBX-Stock might be able to claim from the registrations is in this case undermined by the fact that the PTO only grudgingly issued the registrations after intervention by North Carolina’s congressional delegation. As Douglas told the Outer Banks Sentinel, “Things really started to happen after we contacted their offices. We are very fortunate to have extremely efficient and powerful legislative representatives.” Before then, the PTO examiners rejected OBX-Stock’s application five times because the letters OBX had become nothing more than an alternative to Outer Banks and the terms were used “interchangeably.” . . . In the patent context, the courts have taken into consideration analogous circumstances as non-technical evidence of patent obviousness and hence invalidity. This reasoning also applies to the progress of a trademark application for inclusion on the Principal Register.

    (Internal citation omitted). This is interesting in two ways. One hopes that it was only coincidence that led the trademark owner to think that his congressional representatives had an effect on his effort to register. I looked at the file histories for the four registrations cited in the appeals court decision; all were registered under Section 2(f) based on a claim of more than five years of continuous use. The plaintiff has three more registrations on the Supplemental Register but no suggestion in any of those files that they weres anything but routine prosecutions, albeit ultimately unsuccessful at proving secondary meaning.

    The lengthy prosecution to which the court refers appears to be in one of the Supplemental Registrations, No. 2,610,784. It’s a 251-page file but just an ordinary prosecution, with two substantive non-final office actions on the basis of geographic descriptiveness, a final action, and a post-final response amending to the Supplemental Register. I have not before seen a statement in a trademark case that a lengthy prosecution means the registration is less valid. It seems particularly inapt where the referenced registration is only on the Supplemental Register anyway. Hopefully this particular part of the case will soon be forgotten.

    Nevertheless, the outcome was easily correct and the court did a nice job explaining how a term that, although coined, can be without trademark significance, even though registered.

    OBX-Stock, Inc. v. Bicast, Inc., No. 06-1769 (4th Cir. Feb. 27. 2009). District court decision here.

    © 2009 Pamela Chestek

  • But Wait – Meet WHICH Bloggers?

    While I can’t claim attendance at all the Meet the Bloggers events, I do claim attendance at the very first one (okay, I’m not in the picture – I must have been getting another cold one. I was there, really I was). I haven’t yet gotten my official invitation to participate as a blogger at this year’s festivities, but I plan on being there.

    When: May 18th, from 6 to 9 PM
    Where: Offices of Graham & Dunn, Pier 70, 2801 Alaskan Way, Suite 300

    See host Seattle Trademark Lawyer’s post to RSVP.

    Since John called, I did a little research. In this corner, we have, from the TTABlog, Meet Two Bloggers, Meet the Bloggers II, Meet the Bloggers III, Meet the Bloggers IV, and a dysfunctional family member Meet the TTABlogger. Building secondary meaning? Or just a lack of imagination?

    Marty, however, has shown resistance to the extreme left end of the Abercrombie spectrum, as well as the hobgoblin of consistency that builds brand: Trademark Blogger World Tour, Trademark Blog Live in Toronto, Trademark Blog Live in Chicago, and finally Blogfest Berlin.

    Then there’s the rest of the, um . . . licensees? (in the finest Bucky Badger sense of the word), with Likelihood of Confusion’s Meet the Bloggers and the IPKat’s invitation to Meet the Bloggers.

    But wait – maybe I’m Meeting the wrong Bloggers! Should I be here, or here, or here, or here, or here, or here, or here?

    I think greater minds than mine have to ponder the question. Looking forward to seeing all you there.

    © 2009 Pamela Chestek

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