Property, intangible

a blog about ownership of intellectual property rights and its licensing

  • Lesson Learned

    This is a story that makes lawyers groan “if only I could’ve been there.” The plaintiff, Miller, had an idea for a four-way induction unit for an air handling system. He told his idea to Shutes, who introduced him to defendant M&I Heat Transfer Products, a company that designed and manufactured induction units. M&I, working with Miller, arranged four preexisting single induction units in a square. Miller didn’t believe it accomplished his goals, but continued to work with M&I on the product. M&I and Miller installed the prototype in a room to demonstrate it and Miller didn’t think it worked properly. Miller and Shutes subsequently bought four induction units from M&I and continued to work on the invention on their own.

    Miller (with Shutes) and M&I filed separate patent applications about two weeks apart. M&I’s application was for placing four air handlers in a square configuration; Miller’s presumably for an invention with more refinements. M&I initially listed Miller as an inventor and asked Miller to sign the power of attorney and assignment. Miller didn’t sign, mentioning something about getting no benefits in exchange for signing, and also saying “The patent application does a good job of describing your induction units, but other than showing them in a square configuration it does not have anything to do with my design and you don’t need to have my name on the application.” He didn’t mention the M&I application to his own patent lawyer. M&I took his name off the application.

    Several years later M&I threatened Miller with a lawsuit for patent infringement. Miller filed a declaratory judgment action.

    Miller tried several tactics to invalidate or claim some ownership of the M&I patent, none successful.

    Miller claimed the M&I patent, covering the fundamental premise of placing four induction handlers in a square, was obvious under § 103, but no luck. Miller asked to have the M&I patent corrected under § 256 to have his name added as an inventor, but was defeated by laches. He claimed that the M&I patent was invalid under § 102(g) on the basis that he was the first to invent and had not abandoned, suppressed or concealed it. There were documents that equivocated in both directions (in favor of Miller, a letter from M&I that credited Miller with the design; in favor of M&I, Miller’s use of the plural first person, meaning M&I and himself, and calling it “the M&I product”). Miller therefore couldn’t show that there was a substantial enough question of invalidity to avoid a preliminary injunction, so one model of his air handling unit (already discontinued) was enjoined. Fortunately, the other model, a different design, was not infringing and not enjoined.

    As the judge put it, “Before concluding its discussion of Plaintiff’s validity challenges, the court is constrained to note that had Miller timely informed his patent attorney of even the possibility that [M&I] would be filing a patent application for a design that included four induction units in a square configuration, this entire lawsuit may have been avoided.”

    Nuclimate Air Quality Sys., Inc. v. M&I Heat Transfer Prods., Ltd., 5:08-CV-0317 (NPM/GJD), 2008 U.S. Dist. Lexis 56708 (N.D.N.Y. July 24, 2008).

  • Mrs. Butterworth’s Right of Publicity

    In some jurisdictions the deceased have a right of publicity. Do you suppose Mrs. Butterworth does too?

  • Oklahoma City or Seattle Supersonics?

    There is some consternation in Seattle. The Seattle Supersonics are moving to Oklahoma City. One news report said “the SuperSonics are headed to Oklahoma City with Bennett leading the way, leaving behind the team name, colors and 41 years of history.” More accurately, another report said a binding agreement would “keeps the SuperSonics’ name, logo and colors available if Seattle gets a replacement franchise.” Nevertheless, the Seattle Trademark Lawyer reported that applications to register the trademark OKLAHOMA CITY SUPERSONICS were filed, albeit expressly abandoned shortly thereafter.

    The Memorandum of Understanding between the team and the City of Seattle says specifically that the team “agrees that it will not use the ‘Seattle Sonics/Supersonics’ team name or any logos, symbols, designs, trade dress (including, but not limited to, team colors) or other indicia associated with the Seattle Sonics/Supersonics (the ‘Intellectual Property’) for purposes of identifying its NBA team in game competition, marketing, promotional or other similar purposes following relocation of the team to Oklahoma City . . . .” It also says that if the NBA approves a new team for Seattle, the Oklahoma City team will “transfer at no cost all right, title and interest in the Intellectual Property” to the new owner in Seattle.

    Note that the MOU says specifically that the Oklahoma City team may not use “Seattle Sonics/Supersonics,” not “Sonics/Supersonics” or “anything confusingly similar to Seattle Sonics/Supersonics.” As the Seattle Trademark Lawyer points out, using the name OKLAHOMA CITY SUPERSONICS is “predictable,” which is why the MOU could be read to mean exactly what it says – if the intention of the parties was that “Sonics” or “Supersonics” were not to be used at all, the parties would have said so. There’s also no suggestion that the owners of the team were trying to pull a fast one by filing applications; the applications were filed by NBA Properties, Inc. (here and here), the NBA entity that manages trademark registration for all the teams.

    Who knows why the agreement was worded so narrowly, or why the applications were filed and then abandoned. It could be that the owners weren’t willing to give up the name and would only agree not to use “Seattle” as part of the name. But abandonment is also a potential concern. The agreement could have been worded this way to ensure that the Supersonics name was not expressly abandoned by the terms of the agreement. This situation is not like the Cleveland Browns‘, where there was a promise for a new Cleveland team before the old team moved to Baltimore, so manifestly an intent to resume use easily defeating an abandonment claim. And putting team spirit aside, isn’t a trademark in use stronger than one that’s not, so wouldn’t Seattle ultimately benefit from the use of SUPERSONICS by Oklahoma City during a period of non-use in Seattle? Couldn’t filing the applications also be merely a defensive move, to forestall a St. Louis Rams situation?

    But it’s an interesting law school exercise if the Oklahoma City team was to begin using OKLAHOMA CITY SUPERSONICS, a new SEATTLE SUPERSONICS team is started in Seattle, and Oklahoma City won’t give up its name. Would there be likelihood of confusion at that point? Consumers of professional sports teams goods and services are sophisticated about their teams, wouldn’t they know the difference? Would it depend on how many years it was before Seattle was hosting a new team? Assuming this is the only agreement governing the relationship, could the OKLAHOMA CITY SUPERSONICS claim abandonment of the SEATTLE SUPERSONICS marks and that the resumption of use by Seattle was an infringement of its rights in OKLAHOMA CITY SUPERSONICS (like this previous post)? Is Oklahoma City estopped from claiming abandonment? Or is the agreement evidence of an intent to resume use of the name? Certainly not by the current owners; the team is moving to Oklahoma City, and I’m not aware of any abandonment case that considers what an unrelated party, like the City of Seattle, thinks about the situation.

    Would instead the new Seattle team be able to tack on to the OKLAHOMA CITY SUPERSONICS use? There’s no question that formal rights must to be transferred back to Seattle and it appears all the elements for tacking are met, except perhaps the similarity of the marks. Would the Oklahoma City team be the infringer then? It’s all such interesting food for thought.

    Litigation over past and potential sports names happens so often that it might be considered a niche area of law. It happened in Baltimore (twice, see also Maryland Stadium Auth. v. Becker, 806 F. Supp. 1236 (D. Md. 1992)), St. Louis, New Jersey (National Football League Properties, Inc. v. New Jersey Giants, 637 F. Supp. 507 (D.N.J. 1986)) and New York (Major League Baseball Properties, Inc. v. Sed Non Olet Denarius, Ltd., 817 F. Supp. 1103 (S.D.N.Y. 1993), vacated 859 F. Supp. 80 (S.D.N.Y. 1994)). There’s even been a bill proposed, the Sports Heritage Act of 1996 (S. 1598, 104th Cong. 1996), sparked by the Browns threat to move to Baltimore.

    Seattle Trademark Lawyer posts here and here.

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  • More Bratz

    The Bratz story just keeps getting more interesting. Seems one of the jurors commented that Iranians are “stubborn, rude”, and as “thieves” who have “stolen other persons’ ideas.” The CEO of MGA, the company with the Bratz line of dolls, is Iranian. Juror dismissed, motion for mistrial filed.

    AP story here.

    Previous entries on Bratz here.

  • Who Owns a Dead Mark? Ask River West Brands

    We’ve all encountered clients who believe that when a mark is unregistered, or the registration lapses, the client can immediately start using the trademark and take advantage of its residual goodwill. Brand significance can live on for many years and a newcomer may see an opportunity to leverage the goodwill in an unused mark to its advantage.

    It’s really a policy balancing that plays out in the trademark law of abandonment. Do we protect a company’s original investment, but one that is going to waste and may entirely dissipate, or do we allow another company to leverage from an asset it has not built? And what role should consumer protection have?

    River West Brands LLC, profiled by the New York Times here, is one company that deliberately identifies unused trademarks that have strong consumer association and creates new product lines for them (see a River West PowerPoint that includes a case study for the Coleco brand here). River West’s business model is bold: it files intent-to-use applications for marks that are still active on the register and, after receiving an office action refusing registration, files a petition to cancel the mark on an abandonment theory. See River West application for BURGER CHEF and cancellation action against the Hardee’s Food Systems registrations for BURGER CHEF; River West application for MISTER DONUT and cancellation action against the Mr. Donut of America registrations for MISTER DONUT. Sometimes River West readily abandons its application upon proof that the mark is still used by the original owner (see HAI KARATE and GAINES). No River West action has yet been decided on the merits.

    River West isn’t always so concilliatory. It was sued in federal court by the J.M. Smucker Co. when Smucker objected to River West’s attempted “revival” of the PURITAN brand of cooking oil (complaint here). The district court case was filed in May, 2008, after a contested cancellation proceeding against the Smucker trademark registration had been going on for some time. The district court case was provoked by a fair showing of hubris by River West, which had demanded that Smucker cease using the PURITAN brand. There’s nothing wrong with the River West legal theory as follows: Smucker abandoned the mark, River West filed an intent-to-use application giving it a constructive use date, and Smucker’s resumption of use after that date was an infringement. River West could not have gotten an injunction to force Smucker to stop until its mark was registered, but there’s no reason not to put a future infringer on notice. Nevertheless, arguing that a mark was abandoned and then protesting its use is pretty provocative. The district court case settled 11 days after it was filed (copy of docket here) and River West expressly abandoned its PURITAN application the same day.

    Smucker found some interesting legal theories for its complaint, too. River West hadn’t started using the mark itself yet, so there was no straight infringement theory. Instead, Smucker’s allegation of infringement was “Defendant’s use of the PURITAN mark, in connection with its scheme to traffic in the marks and goodwill owned by others, is likely to deceive and cause confusion and mistake among consumers as to the source of origin of the goods provided by Smucker and the sponsorship or endorsement of those goods by Defendant.” (highlighting added). It’s an interesting theory, raising the same problem currently causing disarray in the internet world “keyword” cases, which is whether and when there is “use” of a mark qua mark.

    There are some other interesting points in the Smucker complaint. It alleges a dilution theory, at first blush an odd theory for a potentially abandoned mark, but one that makes sense since River West picks marks exactly because they are arguably famous. Smucker also argued fraud, caused by River West’s execution of a declaration stating that to its knowledge no other entity had the right to use the mark. Presumably River West had plenty of evidence that it believed the mark was abandoned; one assumes it does a lot of investigation before taking on this kind of challenge. The documents it files when dismissing petitions to cancel often have self-serving language that mentions how little use the trademark owner has made of a mark, e.g., “After discussions with the Attorney of Registrant, Registrant provided invoices showing the T.V. Time mark has been discontinued, but was sold within the last three years.” (Available here).

    Smucker also makes the argument that River West can’t even fundamentally be a brand owner (all emphasis in original):

    24. Upon information and belief, RWB does not have any manufacturing or production facilities.
    25. Upon information and belief, RWB does not actually make, sell, or distribute any goods.
    26. While it maintains no capacity to make, sell or distribute anything, since 2002 RWB has filed no fewer than 121 intent-to-use trademark applications according to records maintained by the United States Patent and Trademark Office (“USPTO”).
    27. An intent-to-use application permits a company, or individual, to seek protection for a trademark even though that person or company has not yet sold a product in commerce in connection with the trademark. Significantly, a required element of every intent-to-use application filed with the federal government is a sworn statement that the party seeking it has a “bona fide intention to use the mark in commerce.” Prior to the actual registration of an intent-to-use trademark, the party must also submit a sworn statement attesting to its actual use of the mark in commerce.
    28. While RWB has submitted a sworn statement regarding its intent-to-use trademarks no fewer than 121 times, it has failed to file any statement of actual use in connection with more than half of those applications [ed. comment – this doesn’t strike me as a particularly low percentage for many companies regularly filing ITU applications].

    The River West web site shows that, if doing what it claims, it may well be performing all the acts of a trademark owner. It has several brand-specific joint ventures (see third slide here) and appears to be no different from any other trademark holding company that we find legitimate. The real controversy about River West is the origin of the trademarks it is exploiting, not what it does with them.

    But Smucker saved it strongest language for its vehement disagreement with River West’s business model:

    29. Upon information and belief, unlike Smucker, RWB core beliefs have little to do with either quality or ethics.
    30. Upon information and belief, RWB’s entire business model is premised upon the pirating of the goodwill developed by others in an attempt to deceive the consuming public.
    31. As stated on RWB’s website, the company’s sole purpose is to:

    [A]cquire rights to dormant consumer brands, revitalize them for modern relevance, reconstruct the business model for today’s marketplace, and ultimately return these brands to the consumer.

    32. RWB admits on its website that its business model is premised on using the previously developed goodwill in these “dormant” brands to sell new products to unsuspecting consumers:

    If you’re a manufacturer and are developing a better mousetrap, and you think that a base of consumer awareness and excitement can help your product launch and line extension, or if you are a retailer or distributor or you think that a proven credible real brand can help you drive pricing, turns and consumer loyalty, we look forward to hearing from you.

    33. The RWB business model is contrary to the very purpose of the Lanham Act. The Lanham Act was enacted to protect consumers and competitors from a wide variety of misrepresentations related to products and services in commerce. Indeed, as specifically set forth in the Lanham Act:

    The intent of this chapter is to regulate commerce within the control of Congress by making actionable the deceptive and misleading use of marks in such commerce…to protect persons engaged in such commerce against unfair competition; to prevent fraud and deception in such commerce by the use of reproductions, copies, counterfeits, or colorable imitations of registered marks…

    34. Indeed, RWB has admitted on its website and in numerous interviews to the press, that its business model is premised on deceiving the public as to the source and nature of new, unrelated goods sold in connection with famous brands. As RWB’s own Founder and President, Paul W. Earle, Jr., admitted in an interview in 2004, “you can uninstall software from a computer but you can’t uninstall a brand name from someone’s head.”

    If River West stays around long, it could generate some interesting new case law on trademark rights and abandonment.

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  • POLAROID

    I’ve been driving past the former Polaroid building in Waltham, Massachusetts on my way to work. The building is empty, the windows taken out, and what caught my eye is that the POLAROID sign is down. The company moved its headquarters to Concord at the end of 2007. Polaroid had already sold its landmark Art Deco building in Cambridge in 2000.

    The latest move is from 864,000 square feet to 30,000 square feet and the company is down to between 100 and 200 employees, from 17000 people in the late 70’s and 8800 people before declaring bankruptcy in 2001. Polaroid is remembered in this area for underfunding its pension plan, which meant that when Polaroid filed for bankruptcy former employees lost substantial pension benefits they had worked decades for.

    Polaroid announced in February that it was ceasing manufacture of its instant film; it had already discontinued the cameras. There are Polaroid-branded, foreign manufactured DVD players, TVs and other electronics, and now a new Polaroid-branded palm-sized printer manufactured by Zink called Pogo. But no more instant cameras or film.

    When I drive past the building I think about how strong the Polaroid brand was. “‘Polaroid,’ plaintiff’s trademark and its trade name, is a coined or invented word, it has never been used as a trademark or trade name by any other individual or corporation, and it has acquired the status of a famous-brand trademark. . . . Plaintiff’s trademark, ‘Polaroid,’ has acquired such fame that it has appeared in many dictionaries, encyclopedias and textbooks, has been referred to in a number of United States patents issued to other than plaintiff, and has been coupled with ‘Kodak’ and other famous trademarks as an outstanding example of a technically strong, coined famous mark.” Polaroid Corp. v. Polaraid, Inc., 319 F.2d 830, 831-32 (C.A.Ill. 1963). I think it still is, a testament to the remarkable resiliency of a brand. Here’s hoping for its survival.

  • When Not to Assign Intent-to-Use Applications

    The TTABlog reports on a successful trademark opposition because of an invalid assignment of an intent-to-use application. I mentioned yesterday that U.S. trademarks can be assigned without any tangible assets, but the U.S. trademark system has a carve-out for intent-to-use applications – they can’t be assigned without at least part of the ongoing business to which the trademark pertains. The TTABlog tells the story of some New Mexico government agencies who didn’t appear to be aware of that.

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  • Invention Made for Hire

    The Patent Prospector reports on an inventor who invented, changed companies, and the new employer filed the patent applications. Didn’t work out so well for the patent infringement claim, but that’s not even the end of the worries.

    Patent Prospector here.
    News story here.

  • Assigning “Goodwill”

    In the United States, an assignment of a trademark is invalid if the “goodwill” is not also assigned with the mark, but there’s no requirement that any tangible assets be transferred. So what exactly does it mean when agreements recite something like “Assignor does hereby assign to Assignee all rights, title and interest in and to said mark, including the goodwill of the business symbolized by said mark”?

    What makes a “trademark” more than just a word or a pretty picture is the goodwill, its association in the consumer’s mind with a particular entity. In the U.S. case Bouchat v. Baltimore Ravens, a court found that the Baltimore Ravens football team logo was a copyright infringement of a design Bouchat had submitted to the team. Bouchat claimed damages for the sales of goods with the Ravens logo, but the court held that the revenue from logoed goods was attributable entirely to factors other than the infringement of the copyright, specifically, to business and consumer interest in NFL football. It’s this consumer association that is the “goodwill” in the mark.

    Assigning the “goodwill” in a mark is therefore a redundancy; what else would the assignee getting when it acquires a “mark” rather than a word or design? But in some countries trademarks are assigned expressly without the goodwill, which is contrary to this understanding: how could one be getting a “mark” if one is not getting the goodwill?

    I can think of several answers: first, the “goodwill” NOT assigned in other countries is not the goodwill associated with the mark, but other business goodwill, i.e., arising from location, customer lists, favorable trading or governmental relationships, etc. The statement that the goodwill is not being assigned means only that these other types of goodwill remain with the assigning business. Or it could be simpler; it means simply that the trademark is being assigned without any tangible assets (but then why call it “goodwill”?). Another theory is that an assignment without the goodwill is just the equivalent of obtaining a forbearance from suit from the original trademark owner; the former owner will be barred from making a trademark-based claim against the assignee but is not ratifying that the consumer association necessarily exists or that the assignee will be able to successfully exploit the benefits of it (such as, for example, a case where it is using the mark for unrelated goods). Third, and somewhat related, is that the assignment is only of the government grant of rights and all the advantages arising from it.

    What does it mean in various countries to assign a mark without the goodwill? Is there really any difference between U.S. practice and practice in other countries, other than we have to insert specific words in our agreements?

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  • Who Owns the Mark?

    There are few disputes more difficult to solve than deciding who owns a trademark after co-owners have a falling out. Family businesses seem particularly susceptible, my guess would be because they are started more casually without formal documents that even contemplate trademark ownership. European trademark blog Class 46 reports one way to solve the problem – an auction. Two brothers argued over who owned the trademark, so the court auctioned it off. It sold for 17.2 million Euro, but the good news is that the brother who bought it only had to pay half, since he already owns half. Class 46 report here.

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