In today’s economy many companies are going out of business.  What happens to the trademarks of a failed company—when are they abandoned?  Can abandoned trademarks be adopted and used by a competitor? 

 The beginning point for answering these questions is the Lanham Act, and particularly 15 USC §1127.  A mark is deemed “abandoned” when “[i]ts use has been discontinued with intent not to resume such use.”

 The landmark case re: trademark abandonment is Saxlehner v. Eisner Mendelson Co., decided by the US Supreme Court in 1900.  US Trademark laws of abandonment, codified in 1987 in the above-referenced statute (15 USC §1127) largely adopted rules of the Saxlehner decision. Read the rest of this entry »

Lawyers are decidedly NOT experts in branding (at least I am not), but a great deal of our work is in protecting our clients’ brands.

To address this area, I asked permission from Tim Negris to republish an excellent article he wrote on the subject.  Tim has a deep knowledge of the IT industry, having been (among other things) VP, Server Marketing at Oracle and VP, Software Sales and Marketing at IBM.  Tim is one of the best strategic thinkers I know, and gives great insight into the nuances of brands and branding.

Here is Tim’s Article, in full, as it appeared on the website: America’s Best Business Practices:

Brands and Branding Are Not the Same

Even if a business, big or small, has great branding – effective name, slogan, color scheme, etc. – they still might not have a great brand. In the language of marketing, branding is syntax (structure) and brand is semantics (meaning). A company’s “meaning” is its place in the marketplace and the customer’s business or life. Read the rest of this entry »

In Zombonodo Entertainment v. Falls Media, the Ninth Circuit Court of Appeals offers a great refresher course on the law governing trademark registrations.

The case involved a trademark issued to Falls Media, entitled: “WOULD YOU RATHER…?”  Based on the issued trademark, Falls Media sued Zombonodo for trademark violation and related claims arising from Zombonondo’s popular board games that included the mark “WOULD YOU RATHER…?”

The Central District of California, Chief Judge Audrey B. Collins, ruled that (despite the statutory presumption of validity) the mark was “merely descriptive.”  Chief Judge Collins entered summary judgment, cancelling the mark from the federal trademark registry.

The Ninth Circuit Court of Appeals reversed and remanded for trial.  In its step-by-step analysis of trademark registration law, the Court started by explaining the following:

Five Categories of Marks

Marks are generally classified in one of five categories of increasing distinctiveness:

(1) generic, (2) descriptive, (3) suggestive, (4) arbitrary or (5) fanciful. Which category a mark belongs in is a question of fact.

Suggestive, arbitrary, and fanciful marks are considered “inherently distinctive” and are automatically entitled to federal trademark protection because “their intrinsic nature serves to identify a particular source of a product.”  

Generic marks are not eligible for trademark protection. 

Merely descriptive marks are somewhere in-between; although they are not inherently distinctive and are therefore not entitled to automatic trademark protection, a merely descriptive mark can become protectable if it has acquired distinctiveness “as used on or in connection with the applicant’s goods in commerce.”  This acquired distinctiveness is referred to as “secondary meaning.”

Read the rest of this entry »

In PhotoMedex v. Irwin, the Ninth Circuit Court of Appeals ruled that false advertising claims under the Lanham Act extend to false representations made by implication or innuendo; and are not limited to literal falsehoods.

PhotoMedex, Inc. is a medical device manufacturer.  It competes against RA Medical Systems, Inc. 

 PhotoMedex had finished a new laser device for dermatological treatment.  Its competitor, RA Medical Systems, was also working on a completing product, but was late to market.  RA Medical Systems told its clients that its new laser device would be ready “in a few months.”  In fact, the laser device was not available for about 18 months.

 PhotoMedex brought Lanham Act claims against RA Systems for making “false and deceptive statements in a commercial advertisement” about the market readiness of its laser product.  RA Systems defended by claiming that its statements about the future readiness of the laser device was a matter of opinion, not reachable by Lanham Act claims.

The Southern District of California, Judge Janis Sammartino, agreed and issued summary judgment in favor of defendant.  The Ninth Circuit Court reversed, explaining that a statement of opinion may be actionable “if the speaker knew at the time the statement was made that it was false or did not have a good faith belief in the truth of what was said.”

On a related issue, the Ninth Circuit Court also held that the commercial depiction of a well-known device inventor, Mr. Irwin, as inventor of RA Systems’ laser was also actionable if misrepresented Mr. Irwin’s actual contribution to the invention.

Read the rest of this entry »

In Biliski v. Kappos the United States Supreme Court issued its long-awaited decision on business method patents.   The bottom line:  business method patents are still recognized as patentable inventions.  By implication, software patents (called into question by the Federal Circuit’s en banc decision in the case below) also remain alive.

Biliski involved a patent claim for hedging the risk of price fluctuations in the economy.  The patent examiner rejected the patent application, explaining it “‘is not implemented on a specific apparatus and merely manipulates [an] abstract idea and solves a purely mathematical problem without any limitation to a practical application, therefore, the invention is not directed to the technological arts.”

The examiner’s rejection was affirmed by the Board of Patent Appeals and by the Federal Circuit Court.  However, in its en banc decision (that produced 5 separate opinions), the Federal Circuit took the additional step of declaring that a method was only patent eligible if: (1) it is tied to a particular machine or apparatus, or (2) it transforms a particular article into a differentstate or thing.  This test is known as the “machine-or-transformation test.”

Because the vast majority of software applications are designed only for a “general purpose” computing machine, the question remained after the Federal Circuit’s Biliski opinion as to whether software patents were patentable at all.

The US Supreme Court affirmed the examiner’s rejection of this particular patent application, but rejected the “machine-or-transformation” test imposed by the Federal Circuit and, in its final opinion of the October, 2009 term, restored a degree of normalcy to patent practice in the United States.

Read the rest of this entry »

In Addington v. US Airline Pilots Assn., the Ninth Circuit Court of Appeals held that a duty of fair representation (“DFR”) claim brought by disaffected airline pilots against their union was not “ripe” for decision.  Aside from a discussion of jurisdictional ripeness, this case provides a fascinating view of complex legal strategies, and mistakes.  The case was won by a lawyer patiently playing a game of chess.

 Background

 In the airline business, pilots start their careers flying small aircraft (at low wages) and gradually move to larger aircraft (and high wages) as union seniority increases.   Therefore, a pilot’s position on the union’s “seniority list” is a very valuable asset to him or her.  Seniority accounts for a difference of many thousands of dollars in income over the course of a pilot’s career.   But in spite of best-laid career plans, a problem can arise when one airline buys another—and the respective seniority lists of each airline’s pilots are merged.   Read the rest of this entry »

In Melton v. Boustred, the California Court of Appeals, Sixth District, sustained a demurrer, without leave to amend, on negligence claims arising from a party hosted by defendant at his home where plaintiffs were attacked by unidentified individuals.

Plaintiff argued that “common sense” suggested the possibility of attack on party-goers where:

• MySpace was used to promote an “unrestricted and widely broadcast party invitation” to the general public,
• the party was known to include music and alcohol consumption, dancing, live music, and DJ services;
• no attempt was made to control admission or provide security or protection for attendees.

Plaintiffs asserted that these conditions made it “highly likely and substantially certain” to attract gang members–and therefore resulting violence.  The Court of Appeals rejected plaintiff’s proposed standard of duty of “common sense,” ruling that:

Common sense is not the standard for determining duty. [Citation omitted.] Nor is hindsight. [Citation omitted.] Instead, the “analysis must focus on the foreseeability of harm occurring, not its probability, a more stringent standard.”

Read the rest of this entry »

In Elsevier v. Muchnick, the US Supreme Court held: “a statutory condition requiring a party to take some action before filing a lawsuit is not automatically ‘a jurisdictional prerequisite to suit.’”

Elsevier involved a class action copyright case.  A class of freelance journalists was certified by the district court (SDNY) to finalize a settlement agreement involving class copyright claims against online publishers and electronic databases.  The class included both journalists who had registered their work with the US Copyright Office under 17 USC 411(a), and journalists who had not registered their work.

On appeal, the Second Circuit Court of Appeals raised a subject matter jurisdictional challenge to composition of the class, sua sponte, refusing to recognize class certification.  The US Supreme Court reversed, affirming the class certification.

17 USC 411(a) provides, inter alia and with certain exceptions, that “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.”  

The Court explained this precondition is part of the Copyright Act’s remedial scheme. “It establishes a condition—copyright registration—that plaintiffs ordinarily must satisfy before filing an infringement claim and invoking the Act’s remedial provisions.”

On the other hand, the term “jurisdiction” refers to a court’s adjudicatory authority. “Accordingly, the term ‘jurisdictional’ properly applies only to ‘prescriptions delineating the classes of cases (subject matter jurisdiction) and the persons (personal jurisdiction)’ implicating that authority.’” Read the rest of this entry »

In two recent Federal Circuit Court cases, Comaper v. Best Buy and Theronese v. Beckton Dickson, the district courts below erroneously applied patent law defenses of “anticipation” and “obviousness.” The Federal Circuit’s discussion of each case provides a useful framework to understand these inter-related defenses. 

The Federal Circuit Court explained:

“Anticipation” [under 35 USC §102] is a patent defense that must be based on a single prior art reference.  For a claim to be anticipated, each claim element must be disclosed, either expressly or inherently, in a single prior art reference, and the claimed arrangement or combination of those elements must also be disclosed, either expressly or inherently, in that same prior art reference.

“Obviousness” [under 35 USC §103] is a patent defense that may be based on multiple prior art references. Determining obviousness requires considering whether two or more pieces of prior art could be combined, or a single piece of prior art could be modified, to produce the claimed invention. This analysis typically invokes the familiar teaching-suggestion-motivation (“TSM”) test, asking whether a person having ordinary skill in the art would have found some teaching, suggestion, or motivation to combine or modify the prior art references.

“Anticipation” requires only one step to prove, if a single prior art reference is available.  If a single document teaches all elements of a patent, in the same arrangement, the single prior art reference can invalidate the target patent. (Subject to a clear and convincing evidence standard for issued patents).

“Obviousness” requires two steps to prove.  Even though multiple patents can be used as prior art references, there must also be a “teaching” that suggests a “motivation” to combine the prior art references into a single new invention (the “TSM” test).  The “suggestion” to combine can be provided by the references themselves, through another document, or via affidavit or declaration testimony of a person of ordinary skill in the art of the invention.
Read the rest of this entry »

In Daniels v. Robbins, the California Court of Appeals addressed a claim of malicious prosecution against opposing counsel.  Malicious prosecution requires three elements of proof:

1. A lawsuit was filed by or at the direction of the defendant, and was pursued to a legal termination in plaintiff’s favor;
2. The prior lawsuit was brought without probable cause; and
3. The prior lawsuit was initiated with malice.

As an initial matter the Fourth District Court of Appeals, Division 3, explained:

Malicious prosecution is a disfavored action. “This is due to the principles that favor open access to the courts for the redress of grievances.” (Downey Venture v. LMI Ins. Co.) “[T]he elements of the [malicious prosecution] tort have historically been carefully circumscribed so that litigants with potentially valid claims will not be deterred from bringing their claims to court by the prospect of a subsequent malicious prosecution claim.” (Sheldon Appel Co. v. Albert & Oliker).

The present case arose from a defamation lawsuit filed by a Mr. Young against Ms. Daniels. The defamation lawsuit was terminated when discovery sanctions were ordered against Mr. Young. The present case followed: Ms. Daniels sued the attorneys for Mr. Young alleging the attorneys had brought the underlying case against her without probable cause, and with malice.

Mr. Young’s attorneys countered with a motion to strike under California’s anti-SLAPP statute, arguing that Ms. Robbins could not prove malicious prosecution against them as a matter of law. The Superior Court granted the anti-SLAPP motion, dismissing Ms. Robbins claims against the opposing attorneys. In affirming the anti-SLAPP dismissal order, the Court of Appeals traversed the three elements of a malicious prosecution claim: Read the rest of this entry »

In Hertz Corp. v. Friend, the US Supreme Court adopted the “nerve center” approach to determining a corporation’s “principal place of business” for diversity jurisdiction under 28 USC in §1332(c)(1).

The Court explained the phrase “principal place of business” refers to the place where a corporation’s high level officers direct, control, and coordinate the corporation’s activities, i.e., its “nerve center,” which will “typically be found at its corporate headquarters.”

The decision resolved a split in authority among the Circuit Courts of Appeal. Some Circuit Courts of Appeal had applied the “nerve center” test– other courts, including the Ninth Circuit Court, had applied a “business activity” test. Read the rest of this entry »

Jury trial in the case of SCO v. Novell is set to begin March 8, 2010. Among other things, SCO claims:

• SCO owns the UNIX software copyrights; and
• Novell slandered SCO’s title in the UNIX software copyrights by publicly claiming ownership of the copyrights, even though Novell actually knew copyright ownership was held by SCO. 

Under a ruling issued today by the trial court, Judge Ted Stewart, these questions will be decided by the jury.

In its most recent effort to dismiss the slander of title claim before trial, Novell filed a motion in limine to disallow evidence or argument by SCO on slander of title under the “mandate rule.”  Judge Stewart denied this motion. Read the rest of this entry »

In State Farm v. JT’s Frames the California Court of Appeals, Second District, revisited guidelines for interpreting insurance policies in California, and ruled that “fax blasts” were not a covered advertising loss where there was no private information broadcast to third parties.

The insurance coverage case arose from an underlying Illinois class action lawsuit.  In the underlying case, a State Farm insured, JT’s Frames, was sued for invasion of privacy for its transmission of over 74,000 unsolicited faxes to class members.

JT’s Frames settled the class claims against it and turned to its insurer, State Farm, for reimbursement under its CGL policy. In response, State Farm filed a declaratory judgment action of “no coverage” in Los Angeles Superior Court.

JT’s Frames argued a provision in the insurance policy defining “advertising injury” as “oral or written publication of material that violates a person’s right of privacy” was broad enough to cover fax blasting.

The California Court of Appeals disagreed and rejected coverage. Because the fax blast in the underlying Illinois case was broadcast to the class members themselves, not to third parties, there was no advertising injury. In effect, the fax broadcasts may have annoyed the class members, but did not disclose private facts about the recipients to third parties.

The California Court of Appeals relied on, and explained, the “last antecedent rule,” the “context rule” and other basic rules of contract construction. Read the rest of this entry »

“Whoever actively induces infringement of a patent shall be liable as an infringer.” 35 USC §271(b).

But what does it mean to “actively induce” infringement? 

Inducement requires a showing of specific intent to encourage another’s infringement. The Federal Circuit is now developing the definition of “intent” required for active inducement, one case at a time. Read the rest of this entry »

Are Twitter broadcasts protected under US copyright law?  This becomes an interesting question as social networking moves into the business world.

Attorney Kyle-Beth Hilfer has written an excellent article on the subject; recommended reading for anyone whose business involves social networking on sites such as LinkedIn (my favorite), Facebook or Twitter. Her article is here.

The short answer to whether Tweets are given copyright protection is “probably no.”  Read the rest of this entry »

In Stewart v. Rolling Stone, a purported class of 168 indie rock musicians sued Rolling Stone magazine for an article about the musicians that featured a Camel cigarette ad.
 

The musicians claimed that Rolling Stone had laid out the 2007 Indie Rock Universe article and Camel ad in such a way to suggest the named musicians endorsed Camel cigarettes.

 The Rolling Stone article / advertisement was displayed in a “foldout” configuration, with the Camel advertisement being the left and right cover of the top “foldout” pages.  Inside the Camel foldout pages were additional pages identifying the 168 indie musicians.

Rolling Stone argued that the article did not cross the line to commercial speech and therefore qualified for full First Amendment protection.

 The Superior Court judge denied Rolling Stone’s motion to dismiss under the California anti-SLAPP statute, holding a jury “could find Rolling Stone had ‘inextricably entwined’ Indie Rock Universe with the surrounding Camel advertisement and that Indie Rock Universe therefore became unprotected commercial speech.”

 The Court of Appeals, First District, reversed—dismissing the case under the anti-SLAPP statute—holding the article / advertisement was noncommercial speech as a matter of law. Read the rest of this entry »

In New York City Employees’ Retirement System v. Jobs, a stock backdating scheme by Apple CEO Steve Jobs (and others) allegedly caused a 20% dilution in the issued shares of Apple, Inc., not authorized by shareholder vote. 

A shareholder class action lawsuit alleged a related proxy statement did not adequately disclose the backdated options.  The class action case sought (a) rescission of management’s vote for the backdated options and (b) compensatory damages to shareholders for the resulting 20% share dilution.

The Ninth Circuit Court of Appeals allowed direct class claims against Steve Jobs (and others) holding: ”Where a shareholder has been denied one of the most critical rights he or she possesses—the right to a fully informed vote—the harm suffered is almost always an individual, not corporate, harm.”

But the Ninth Circuit Court rejected any remedy for rescission of the vote or for compensatory damages for the 20% share dilution under the Private Securities Litigation Reform Act (PSLRA).

Shareholders argued for rescission of the backdated options in an effort to plead around the narrow economic loss rule of the PSLRA.

The Ninth Circuit Court rejected this distinction, holding: “the PSLRA does not differentiate between plaintiffs seeking legal and equitable remedies, and thus, without an allegation of economic loss, no remedy, equitable or otherwise, is available.”

It is becoming vanishingly difficult to plead ANY claim under the PSLRA.

Read the rest of this entry »

In The SCO Group v. Novell, the trial court issued two orders that send SCO’s claims against Novell for slander of copyright title to trial, along with the general ownership dispute involving the UNIX software copyrights.

Jury trial is set for March 8, 2010 in Utah Federal District Court.

In the first ruling, the court denied Novell’s motion to set aside a judgment that was entered before appeal of a summary judgment decision to the Tenth Circuit, but not made part of the appeal.

In the second ruling, the court held that SCO’s special damages claims for slander of copyright title against Novell may include lost sales, but may not include any decrease in stock value resulting from the alleged slander of title.

If SCO prevails on claims that Novell slandered its copyright title in UNIX (by claiming ownership when it knew that ownership had already passed to SCO), attorney’s fees associated with removing the cloud placed on the title of the copyrights would be recoverable; while fees not associated with removing the cloud placed on the title would not. Read the rest of this entry »

Gregg Michael Gillis, better known as “Girl Talk,” is an American musician who produces mashups, digital sampling and compilations of other peoples’ music, often without copyright permission. Gillis is seen by some as a test case for music mashups in the Internet Age.

But Michael Gillis is not alone. The ease of combining two or more digital tracks has lead to an explosion of mashup songs and videos on YouTube.

Many online commentators say only that mashups fall into a “gray area” of copyright law.

However, the 1994 landmark US Supreme Court case, Campbell v. Acuff-Rose Music, provides a fairly clear roadmap to evaluate 3 of the 4 factors for deciding whether music mashups and other compilations are “fair use” under copyright law. Read the rest of this entry »

In Hemi Group, LLC v. City of New York the United States Supreme Court majority rejected RICO damages causation based on traditional “foreseeability analysis” and held that the plaintiff’s RICO damages must “directly” come about “by reason of the RICO violation.”

The test for this seems to be that if the RICO conduct caused a more direct injury to someone else, then the plaintiff cannot show a “direct causal relationship” between its damages and the conspiracy, even if the injury was otherwise a foreseeable consequence of the RICO defendant’s conduct. Read the rest of this entry »

In Superior Dispatch v. Insurance Corp. of NY, a duty was imposed on an insurance company to notify its insured of a one-year limitation period for filing a coverage lawsuit on a denied claim, EVEN THOUGH the insured was represented by its own counsel at the time coverage was denied.

This decision is interesting not so much because of the result, but because of the way the appellate court reached the merits of its ruling. Read the rest of this entry »

In Catch Curve v. Venali, the plaintiff owns five patents covering a fax transmission technology. The first patent was filed in 1988, well before commercialization of the Internet.

All five patents referred to a common specification. The specification makes clear that fax messages are sent and received over a switched telephone network using fax protocol. At the Markman hearing, the district court limited the patents to communications routed over a switched telephone network.

The defendant has a later-generation fax technology that relies on IP protocol instead of fax protocol. The defendant’s system converts messages into formats other than fax protocol before storing or forwarding the messages and then transmits the messages to their intended destinations via SMTP, HTTP, or HTTPS protocol over the Internet.

Based on this difference in protocols, the district court entered summary judgment of non-infringement. Read the rest of this entry »

In Total Call v. Peerless Insurance, the California Court of Appeals, Second District, ruled an insurance company did NOT have a duty to defend claims for deceptive business practices and false advertising under a CGL insurance policy. The underlying claim was that the insured had falsely advertised the quality of its own phone cards, not the quality of the phone cards of another company. Read the rest of this entry »

As reported today by Justin Gray at his patent blogsite, Gray on Claims, a new Patent Damages Handbook has been prepared at the direction of Fed. Circuit Chief Justice Michel for use by federal district court judges in patent cases.

Needless to say, this new Patent Damages Handbook is required reading for all patent litigation attorneys.  A free copy of the Handbook can be downloaded from Gray on Claims, here.

Highlights of the 34-page handbook are outlined below under the following headings: Read the rest of this entry »

In University of South Carolina v. University of Southern California, a case of local interest, Southern Cal beat South Carolina in a PAC-10 / SEC Trademark shootout before the Federal Circuit Court of Appeals. The Southern Cal legal team was quarterbacked by Scott Edelman (Stanford undergraduate and Boalt Hall JD) in a PAC-10 collaboration. Read the rest of this entry »