Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Pay Me Now or Pay Me Later

    Tacori Enterprises v. Rego Manufacturing is such a meaty case that I’ll do separate posts on the various trademark and copyright issues in the case. This post is a lesson on how not to assign ownership of a copyright and register it – the plaintiff spent tens of thousands of dollars defending attacks on the validity of its ownership and registration during the lawsuit, instead of a few hundred getting legal advice way back in the beginning.
    Haig Tacorian is the President of Tacori Enterprises and Garo Karounian is an independent designer. At different times that are relevant in the case, Karounian was the sole proprietor of a business called Anais Fine Jewelry Mfg. and later Anais Designs, Inc. The lawsuit is about a very successful design for a ring, shown below:
    The history of the copyright in the ring is something like this:
    • 1994: Tacorian and Karounian began working together on ring designs. They had an oral agreement that Tacori would own any ring designs and Anais Fine Jewelry would manufacture the rings.
    • 1999: Tacorian and Karounian worked together to design the ring in suit.
    • September 30, 1999: the first ring was ordered.
    • November 16, 1999: the ring was shipped.
    • July 31, 2001: Tacori registered the copyright in the ring design. The application had four errors: (1) it listed Tacori as the author of a work made for hire; (2) it did not list Tacorian or Karounian as authors; (3) it did not state that Tacori was owner by virtue of assignment; (4) the dates of creation and publication were listed as 2000, not 1999.
    • May, 29, 2003: Karounian incorporated Anais Designs, Inc.
    • December 23, 2003: Tacori and Anais Designs, Inc. executed an assignment confirming the oral assignment, but the document did not list the copyright in the ring as one of the assigned works.
    • December 29, 2003: A Supplemental Registration was filed that listed Anais Designs, Inc. as a co-author of the ring design and that Tacori’s ownership was by assignment, not as a work-made-for-hire.
    • August 18, 2005: A second Supplemental Registration was filed, changing the dates from 2000 to 1999.
    • February 20, 2008 (During briefing on cross-motions for summary judgment) Tacori and “Anais Designs, Inc., as the successor-in-interest to Anais Fine Jewelry Mfg.” entered into an amended copyright assignment assigning the ring in suit and stating it was an inadvertent error that it was previously omitted.
    • Later in the litigation: Karounian signs a declaration stating that it was his intent that Tacori own the copyright in the ring.
    You’ve probably already seen where this is going. In what should have been a fairly routine copyright infringement case, defendant Rego was able to make all sorts of hay with the comedy of errors in the assignment and registration history for the ring. Luckily for Tacori, nothing worked.
    Rego’s theory was that Karounian as an individual was the sole author of the design and, since he was not employed by Tacori, he was the owner of it. Thereafter, Karounian never transferred his ownership interest to Tacori or Anais Designs, Inc. by a written assignment as required under section 204(a). Thus, the 2003 and 2008 assignments were ineffective because the assignor, Anais Designs, Inc., owned nothing to assign.
    The court wasn’t buying it. First, the court refused to even entertain the theory, finding that Rego had no standing to challenge the validity of the assignment where there was no dispute between the transferring parties – instead, the purpose of section 204(a) of the Copyright Act, requiring a written assignment, is to resolve disputes between owners and transferees.
    Second, even if Rego did have standing, and even if the 2003 and 2008 ratifications of the 1999 oral transfer weren’t effective, the declaration Karounian had signed for the litigation stating that he had transferred the ownership was good enough to serve as the writing for purposes of 204(a).
    Finally, for good measure and in a footnote, the court noted that Rego didn’t dispute that Karounian had the right to take actions on behalf of Anais Fine Jewelry, his sole proprietorship, or that Anais Designs, Inc. was the successor in interest of Anais Fine Jewelry. Since, though, the court had relied on the declaration for the assignment of ownership, it didn’t decide whether the 2003 and 2008 assignments were also therefore effective.
    So there was no question that Tacori owned the copyright in the work, but under U.S. law the owner must have a registration to bring suit. A collateral attack on the validity of a registration, and thus the plaintiff’s standing, is a popular tactic in a copyright litigation. Given the number of errors in Tacori’s registration, it was surely worth raising here.
    But still no luck for Rego. Even though the written assignments were executed after the work was initially registered, the effective assignment (in the court’s analysis, the declaration) was operative as of the date of the original transfer, in 1999. Therefore the owner as originally listed in the copyright registration was correct and the original registration valid.
    Rego also claimed that the registration was procured through fraud on the Copyright Office by Tacori’s fraudulent misrepresentations in its applications, original and supplemental, of its ownership claim. This argument didn’t work for three reasons: Rego hadn’t pleaded a fraud defense; it had provided no evidence of fraudulent intent; and, Tacori’s original misstatement that it came to be owner as a work made for hire wasn’t a material misrepresentation.
    A lot of opportunity for Rego to get rid of the infringement claim for reasons having nothing to do with the meat of the case, substantial similarity, but none that worked.
    Tacori Enter. v. Rego Mfg., Civ. No. 1:05cv2241, 2008 U.S. Dist. LEXIS 73686 (D. Ohio Sept. 25, 2008)
    © 2008 Pamela Chestek
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  • Political Signs

    When was the last time that a political campaign had a logo that was famous enough no name was necessary?


    And have some fun at the same time?

    © 2008 Pamela Chestek

  • A Crocodile Has a Skinnier Snout

    For a foreign take on the amount of use needed to preserve trademark rights,  the IPKat offers a post on use of the word mark CROCODILE by Lacoste in the UK here.

    © 2008 Pamela Chestek

  • No Payments Should Have Been a Tip Off –

    A quick lesson in bringing a claim for copyright ownership – there’s a three year statute of limitations from when you knew or had reason to know about the disputed ownership, and a registration that covers your work but doesn’t name you as an author, a copyright notice not listing you, and no royalty income, are all tip-offs. Dressing your claim up as one for infringement of your own subsequent copyright registration doesn’t adequately hide that it’s really an ownership dispute that’s time-barred.

    Jose Ortiz composed the score for a motion picture called “Don Dinero – Su Vida y La Calle.” He was identified as one of the “producers” of the musical score in the closing credits and on the DVD packaging, which read “Original music scored by da compadres (JAO [defendants] and Noodles).” The DVD had copyright notices that said “(P) & (C) 2003 UNIVERSAL MUSIC LATINO/GUITIAN BROTHERS MUSIC.” The copyright in the motion picture was registered effective December 24, 2003, claiming the “Entire Cinematographic Work/Pictorial Matter/Line Notes.” There were three previously released, previously registered songs used in the motion picture; they were listed separately on the back cover of the DVD and identified as “Preexisting Material” in the copyright registration. Ortiz was never paid any royalties for his work.

    Ortiz obtained his own registration for the score on August 3, 2005. He sued for copyright infringement in May, 2007.

    Even though two of the three defendants defaulted, ownership was not conceded because the defendants had their own copyright registration for the work. Instead, copyright ownership was actually the gravamen of the complaint. The public distribution in November, 2003 of the DVD with a copyright notice on the DVD label and packaging that didn’t list Ortiz was enough to put Ortiz on notice of the defendants’ ownership claim and started the statute of limitations clock ticking. The registration in December, 2003 was also something that should have put Ortiz on notice; he should have exercised reasonable diligence in looking at the registration. Not getting any royalties from the public distribution should also have clued Ortiz in that there was an ownership dispute.

    Ortiz argued that the score was a preexisting work and therefore not covered by the defendant’s copyright registration; the facts, including the way that the three previously released works were listed on the DVD and his admission that he prepared the music for use as the “background instrumental score for the motion picture,” showed otherwise.

    Ortiz’s copyright infringement claim, in truth a dispute over ownership, was time-barred.

    Ortiz v. Guitian Bros. Music Inc., 07 Civ. 3897, 2008 U.S. Dist. LEXIS 75455 (Sept. 24, 2008).

    © 2008 Pamela Chestek

  • ConsumerInfo Owns the Mark

    Consumerinfo.com, Inc. v. Money Management Intl, Inc. is a short opinion with two of the rarer trademark ownership issues – whether the registrant is the true owner of the mark, and the quantum of use necessary to establish a date of first use of a mark.

    Unfortunately, the decision doesn’t contribute a lot to the jurisprudence. Discussion of the first issue is very brief; a few more facts explaining the defendant’s theory would have been helpful in understanding the court’s conclusion. Defendant MMI alleged that ConsumerInfo wasn’t the owner of its PLUS SCORE mark because the mark is promoted under the “Experian” brand name:


    My search found uses of the mark on pages that on first blush appear to be different sources with different look and feel, although on closer inspection they all bear the Experian mark:


    The court relied on Section 5 of the Lanham Act to find for ConsumerInfo. Section 5 says “Where a registered mark … is or may be used legitimately by related companies, such use shall inure to the benefit of the registrant …, and such use shall not affect the validity of such mark or of its registration…. If first use of a mark by a person is controlled by the registrant … of the mark with respect to the nature and quality of the goods or services, such first use shall inure to the benefit of the registrant . . . .” Note that Section 5 doesn’t require that the parent be the registrant in a parent-subsidiary relationship, only that there be control by the registrant. The court stated,

    Here, it is undisputed that ConsumerInfo is a wholly owned subsidiary of Experian Holdings, Inc., and that ConsumerInfo is also known as Experian Consumer Direct. (Def.’s SGI ¶ 2.) It is also undisputed that ConsumerInfo, as the registrant of the PLUS SCORE mark, controls the nature and quality of goods sold under the PLUS SCORE mark. (Def.’s SGI ¶¶ 5-9 (“The ConsumerInfo employees on the team specified the nature and quality of the scoring model…. [I]n its PLUS Score product, ConsumerInfo provides the consumer the three digit number in combination with analysis and other educational information supplied by ConsumerInfo that helps the consumer understand their credit score.”).) Accordingly, ConsumerInfo is entitled to the presumption of validity [because it owned a federal registration].

    Without proof that the mark isn’t actually controlled by ConsumerInfo, or that it has lost its significance as a mark, it’s validly owned by ConsumerInfo.

    Second, MMI alleged that it was the senior user of its mark, MY SCORE+. MMI claimed it had distributed brochures with the mark, advertised in the yellow pages and on its website, and taught educational sessions under the mark. Despite the fact that date of first use is a factual inquiry based on the totality of the circumstances, the court managed to find ways to discount all of MMI’s evidence and hold that no fact finder could find that MMI was the senior user of its mark.

    Since likelihood of confusion was admitted, summary judgment on the Lanham Act and common law trademark infringement claims was decided in favor of ConsumerInfo.

    Consumerinfo.com, Inc. v. Money Mgmt. Intl, Inc., CV 07-04275 SJO (Ex), 2008 U.S. Dist. LEXIS 79303 (Sept. 2., 2008).

    © 2008 Pamela Chestek

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  • Love Letters

    Martin Luther King’s heirs are arguing over the ownership of the love letters Dr. King wrote to his wife Coretta.  The King couple’s daughter, Bernice, is refusing to turn them over to her brother, Dexter, for use in a book to be published by Penguin Group.  Penguin has threatened to pull out of the book deal if it doesn’t get the letters. 

    The Atlanta Journal Constitution reports that in 1997 Mrs. King assigned the rights to any tangible or intellectual property involving Dr. King to King, Inc., the corporation that handles the rights to Dr. King’s works.  While Mrs. King was presumably the owner of the physical letters and could give ownership to King, Inc., the article does not say how she would have become the owner of the copyright, which would have originally vested with the author, Dr. King.

    HT to WSJ.com.

    © 2008 Pamela Chestek
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  • Patsy’s Restaurant Wars

    The never-ending saga of competing “Patsy’s” restaurants in New York simmers on. I count 13 decisions in the Westlaw database from at least three separate suits, plus there have been four petitions to cancel filed at the PTO. The latest decision, resolving all outstanding issues between the parties at the trial court level, starts this way:

    More than five years ago, the Court of Appeals for the Second Circuit admonished the major parties in this litigation “that henceforth they would be well advised to minimize the risk of confusion by identifying their restaurants by the complete names: ‘Patsy’s Italian Restaurant’ and ‘Patsy’s Pizzeria.’ This lengthy Opinion and Order is written because the parties have largely ignored that admonition. During the intervening years, the parties have instead continued on an oftentimes labyrinthine course of litigation. As noted by the Court of Appeals, one source of this litigation’s “unavoidable confusion” has been the fact that, for over sixty years, the major parties and their predecessors have shared the mark PATSY’S for nearly identical restaurant-related services, both within the same New York City market. Additional confusion occurred during proceedings before the Patent and Trademark Office (the “PTO”) and the Trademark Trial and Appeal Board (the “TTAB”). These proceedings have been alternately described as “protracted and convoluted,” and “a procedural morass,” “tortured” and “resulting in confusion and mistake.” Such was the muddled state of affairs that formed the starting point for this case.

    There were three Patsy’s Pizzeria locations involved in the lawsuit, the original location in East Harlem owned by the trademark owner, I.O.B. Realty, and licensees on Staten Island and in Syosset. The latter two were originally named as defendants in separate suits. The suits were consolidated and I.O.B. Realty intervened on the side of the Staten Island and Syosset defendants.  The first use of Patsy’s Pizzeria in East Harlem was senior to the plaintiff’s use of Patsy’s Italian Restaurant, and no infringement was alleged against the East Harlem location. The Staten Island location was open only about a year and Syosset is still in operation.

    The decision is long and complex, but of interest to me in particular was the court’s discussion of the naked licensing doctrine, which was spot on. I’ve blogged before that the naked licensing doctrine is not a doctrine unto itself but should be grounded in the law of abandonment.
    The court instructed the jury that, as a matter of law, the Staten Island and Syosset defendants had entered into a valid license agreement with I.O.B. Realty that allowed them to use the marks PATSY’S and PATSY’S PIZZERIA in connection with operating a pizzeria. The jury found, though, that the Staten Island and Syosset defendants used the marks PATSY’S and PATSY’S PIZZERIA beyond the scope of their license agreement with I.O.B. Realty (because they offered broader services) and the jury also found that I.O.B Realty abandoned its mark. The court concluded that it was abandonment through naked licensing, since this was the only theory of abandonment presented to the jury. Plaintiff Patsy’s Italian Restaurant argued that the jury’s finding should act as a forfeiture of all rights in PATSY’S and PATSY’S PIZZERIA. 
    The court first correctly identified the three bases for abandonment described in the two subsections of the Lanham Act: (1) intentional non-use; (2) actions or omissions that cause the mark to become generic; and (3) actions or omissions that cause the mark to lose its significance. It was the last basis that the court considered relevant here.
    Quoting McCarthy, the court said “uncontrolled licensing in some cases may be of such a limited nature that it has little impact of weakening the mark and thus does not result in a loss of all rights.” (emphasis in original). It then held that:

    I.O.B. Realty has not engaged in conduct that necessitates a finding of total abandonment of all rights in the marks PATSY’S and PATSY’S PIZZERIA. Most crucially, Plaintiffs have failed to submit any evidence that the marks PATSY’S and PATSY’S PIZZERIA as used by the original East Harlem location have lost their significance as an indicator of the source of Defendants’ pizzeria services. See Lanham Act § 45, 15 U.S.C. § 1127. The Court therefore grants, in part, Defendants’ motion to limit the jury’s finding of abandonment to only the incidents of naked licensing as described above [i.e., at the Staten Island and Syosset locations, but not other locations].
    The Court is also persuaded that, to hold otherwise, would turn the marks PATSY’S and PATSY’S PIZZERIA as used for pizzeria services into the public domain, when these marks have been continuously associated with the East Harlem Location for over seventy-five years. This would cause undue hardship to not only Defendants, but also to consumers. Such a result would therefore be egregious and is not supported by the facts presented at trial.
    The Syosset location’s use of the mark for restaurant services other than for a pizzeria could not claim the benefit of East Harlem’s senior use because it was outside the scope of the license. Since Syosset’s use was confusing similar to Patsy’s Italian Restaurant’s use, the use of PATSY’S and PATSY’S PIZZERIA for other than a pizzaria by the Syosset defendants was enjoined.
    The abandonment finding also rippled through to the petitions to cancel both parties’ trademark registrations. The Patsy’s Pizzeria registration was cancelled because the jury found it was obtained through fraud and because of the naked license, but the loss of the registration was not fatal – the two Patsy’s Italian Restaurant registrations were also cancelled as likely to be confused with the pizzeria’s senior common law, unabandoned trademark.

    It’s a complicated case procedurally but the trial court seems to have resolved it all carefully and correctly. Patsy’s Italian Restaurant, Inc. v. Banas, Civ. No. 06-CV-0729 (RER), 06-CV-5857 (RER), 2008 WL 4146212 (E.D.N.Y. Sept. 9, 2008). More blogging on the case here.

    © 2008 Pamela Chestek

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  • “Lebanon Claiming Only It Owns Hummus, Falafel, Tabouleh And Baba Gannouj”

    Here.  Nothing I could add.
    HT to Gap.

  • “Museum Agrees to Ax Lizzie Borden Name”

    Not my headline, this newspaper’s.  Defendant True Story of Lizzie Borden Gift Shop and Museum, sued over the use of “Lizzie Borden” by plaintiff Lizzie Borden Bed and Breadkfast (case previously blogged here), will change its name.  The museum can mention Lizzie Borden in a tagline and can phase out sales of promotional goods.  More news reporting here.

    The surviving museum
    © 2008 Pamela Chestek

  • Patent Ownership and Joint Development Agreements

    It was big news when Lucent Technologies won a $1.5 billion patent infringement suit against Gateway, Dell and Microsoft.  Less memorable was when the jury award was tossed on a motion for judgment as a matter of law (Lucent Technologies Inc. v. Gateway, Inc., 509 F.Supp.2d 912 (S.D.Cal. 2007)).  Now, the Court of Appeals for the Federal Circuit has affirmed the JMOL.  Of interest for this blog, the case discusses the intersection of patent and contract law in exploring whether technology is the fruit of the joint development work and, if so, who will own how much of the patent rights.
    In 1988, AT&T Bell Labs, now Lucent Technologies, entered into a joint development agreement (JDA) with a German company, Fraunhofer Gesellschaft, to work on digital compression technologies.  The JDA defined the parties’ “Existing Technology” as that which was “the result[] of” each parties’ independent prior work in the field, described in exhibits to the agreement in papers with technical information, patents, and patent applications.  Each party was to continue to solely own their respective existing technologies.  The “New Work,” technology developed under the JDA after April, 1989, was to be jointly owned:
    All New Work is treated as a joint work.  The intellectual property rights to that work will be jointly owned by AT&T and [Fraunhofer].  Each party has the nonexclusive right to make use of the results of New Work (including intellectual property rights), and may grant nonexclusive licenses to others to use the results of such New Work.
    A Fraunhofer scientist, Brandenburg, worked with James Johnston of AT&T under the JDA.  Johnston and Brandenburg worked on setting the industry standard for MP3 coding and implementing it.  By 1997 Frauenhofer was licensing companies to software for the standard and Microsoft became a licensee, using it in the Windows Media Player.
    James Johnston had been an inventor on a patent application filed in 1988 before the joint work under the JDA, the 598 application.  Johnston was also listed as the sole inventor of the 938 patent, filed in 1994 (claiming priority to a 1992 application), which later reissued in 2006 during the litigation as the 080 patent.  Claim 2 of the 938 patent was cancelled during the reissue and at the same time the patent was amended to claim priority as a continuation-in-part to the 598 application, giving it a priority date of 1988 for some of the claims.
    Lucent Technologies sued Gateway, Inc. and Dell, Inc. in separate suits for infringement of the 938 patent and another.  Microsoft intervened as the manufacturer of the accused software and the cases were consolidated.
    Microsoft argued that Lucent had no standing to sue on the 938 patent in the absence of Frauenhofer – it claimed the asserted claims 2 and 4 of the 938 patent were New Work, so Frauenhofer should be a joint owner of the reissue 080 patent and thus a necessary party to the suit.  If the 938 patent consisted only of Existing Technology, however, Frauenhofer would have no ownership interest and Microsoft would be an infringer.  
    Lucent disagreed; even though the matter claimed in claims 2 and 4 wasn’t described in the 598 application, Lucent argued it was in the public domain before April, 1989 and therefore, because it was “the results of” the Existing Technology, it was not New Work.  The court sided with Microsoft; nothing in the attachments suggested that the agreement should be interpreted so broadly. Second, the specification showed that the material was New Work; since the 598 application was only a continuation-in-part, whether the claims could benefit from the priority of the 1988 application had to be ascertained.  Since the original 598 application did not show possession of the subject matter claimed in the 938 patent, even though it might have been obvious, the court concluded claims 2 and 4 could not claim priority to the 598 application.
    Claims 1 and 3 of the 938 patent were Existing Technology and 2 and 4 were New Work, so the court continued by examining exactly what Frauenhofer owned.  Lucent argued Fraunhofer was a mere licensee of the patent – some of the claims were to Existing Technology, which were to be exclusively owned by Lucent, but one can only own an entire patent, so Fraunhofer must only have a license to the claims covering the New Work. Not correct; the court held that Frauenhofer was an owner because the claims were invented during the period covered by the JDA and were New Work.   Since Lucent was in control of filing applications it could have segregated the Existing Technology out in a separate patent to avoid giving Fraunhofer any ownership of claims covering Existing Technology.  Further, it could have cancelled claim 4 during the reissue, as it had done with claim 2, to eliminate Fraunhofer’s ownership interest, but did not.
    Frauenhofer therefore was an owner of the 938 patent and its reissue 080 patent; Lucent did not have standing to bring suit for infringement of the 938 patent.  The Court of Appeals didn’t discuss Microsoft’s license defense.
    A discussion of the noninfringement of a second patent-in-suit can be found here.  Analysis of the implications of this decision on patent drafting here.
    © 2008 Pamela Chestek

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