Wednesday, March 27, 2013

On express warranties: Watch what you say.

A warranty does not have to consist of writing on a piece of paper. It can be verbally created. If you are a merchant providing goods or services, you should take care to ensure that your employees are not unknowingly creating express warranties. Large companies have boilerplate disclaimers of implied and express warranties, but even those are not always successful. If the disclaimers are not conspicuous enough, or are against public policy, they will not effectively disclaim express and implied warranties. Article 2, Part 3 of the Uniform Commercial Code covers warranties in transactions among merchants. The Magnuson-Moss Warranty Act covers warranty disclosure requirements in consumer transactions.

An express warranty does not need to use the words, "warranty," or "guarantee," either. If your employee or colleague says anything about the goods or services that become part of the buyer's decision to purchase from you, an express warranty can be created.

Tuesday, March 26, 2013

If you think you have a trade secret, you must protect it.

Trade secrets are a form of intellectual property protected by state law. Copyrights, patents and trademarks are all protected by federal law. But most states have enacted the Uniform Trade Secrets Act, which provides a nearly de facto form of national trade secret protection. A trade secret is information that provides actual or potential economic value from not being generally known or easily discovered, and is subject to reasonable efforts to maintain its secrecy (under the circumstances).

The determination of whether information is a trade secret is not determined until it is contested. So, you would not know if you have a trade secret until the matter is contested at trial. Theoretically, one could file for declaratory judgment to determine whether the information is protectable as a trade secret, but that would be incredibly wasteful. It would resolve nothing, because a new inquiry into secrecy efforts would need to be done in a later trial.

If you think you have a trade secret, keep it secret. Do not allow people to access to the information unless they need it. Do not post the information for the general public to see it. If you keep it in a desk drawer, lock the drawer. Every little thing you do or do not do in protecting an alleged trade secret is important in determining whether it qualifies as a "trade secret" in the legal sense.

Sunday, March 24, 2013

We learned more about "augmented reality" this week in patent applications from Google and Sony.

In the movie Surrogates, a tribe of Luddites emerged in society when technology became so pervasive that people could remotely control good-looking proxies of themselves. These proxies went to work, dated, and did everything humans do, except eat, drink and the like. This week we learned of patent applications by Sony and Google about optical devices that look somewhat like glasses and function like smartphones. We knew about Google Glass. Google keeps us apprised of Project Glass. We found out a bit more about Glass this week. We were not so aware of a potential competitor in the market, Sony.

Google claims that Glass will provide for "augmented reality." It may even allow you to play video games in tandem with your daily tasks. Apparently, Google engineers are wearing prototypes already in the Mountain View, California, area. We may even see consumer availability yet in 2013. Although we are not to the point where they were in the sci-fi movie mentioned above, I cannot help but think how different the daily experiences of the technophiles adopting head-mounted displays (HMD) will be from those who do not. The price of Google Glass is rumored to be about $1,500 a set. With such a reasonable price, the divide between early adopters and Luddites will only continue to grow larger with the introduction of HMDs.

Trademark FAQs (from USPTO)

Here is a good link for FAQs about trademarks. I addressed many of the topics in other posts, but it does provide some good additional information.

Saturday, March 23, 2013

iPhone and iPad distribution practices under fire in Europe.

This is a good article outlining the European investigation into Apple's distribution practices. Apple is being investigated over complaints regarding its contract terms with cell phone companies (at least that is what it appears to be limited to at this point, although not much information is known).

The companies pay Apple in exchange for discounted prices on the iPhone and iPad. The companies then sell those devices to customers at discounted prices and tie them into multiple-year contracts. Market power is at the core of why Europe is investigating Apple, but the U.S. is not. Basically, market power consists of market share and a company's ability to influence pricing in a given market. Market power is an essential component of a monopoly. You cannot be a monopoly without market power.

Friday, March 22, 2013

A good IP Awareness Assessment for businesses and entrepreneurs.

This is a good intellectual property (IP) evaluation tool from the United States Patent and Trademark Office (USPTO) and National Institute of Standards and Technology. The assessment is designed to test the awareness of businesspersons and entrepreneurs about intellectual property. There are two assessments: a pre-assessment and full assessment. The pre-assessment consists of five questions. The full assessment takes 20-30 minutes, and provides more individualized results.

The assessments are not legal advice, so the individual circumstances of your situation may suggest a different form of IP protection than is suggested by these online assessments. These just provide some general guidance for what type of IP protection you might need. The assessments cover copyrights, patents, trademarks and trade secrets.

Thursday, March 21, 2013

How class certification works in connection with the NCAA student-athlete antitrust litigation.

Yesterday, I discussed the college basketball and football players' attempted class certification in antitrust litigation involving the publicity rights of current and former players. I will briefly go into the requirements for class certification. These are the requirements that the court is looking at in determining whether the current and former college basketball and football players qualify as a "class," for class action purposes. These requirements are the same for all federal cases.

First, the class must be large enough that joining all members is impracticable. Second, the background and/or the law to be applied in the case must be common to the class. Third, the arguments of the parties seeking class certification must be typical of the proposed class members. Finally, the parties seeking class certification must protect the interests of the class.

If the party seeking class certification can establish those four elements, the class may be certified. In the NCAA student-athlete case, the NCAA's argument is that the class members do not share enough in common to be certified as a class. This is a common argument in class actions. There is no magic number for how big the class must be, but that requirement is often met. I have seen classes as few as seven in number certified. The second requirement is often met as well, because if there is no common background or law to be applied, class actions are usually not even a consideration.

For a class action to be maintained, there must be a risk of inconsistent results among the proposed class members (if the cases are tried individually) or one party's case would basically decide how the other cases are resolved without giving the other parties an opportunity to participate. The court must also determine that a class action is the best way to resolve the cases.

There can be more than one class, which is the what the players are attempting in the NCAA student-athlete litigation. The current players and former players would be in different classes, because of the different remedies they are seeking. The former players want monetary damages, but the current players could not receive money and remain eligible. The current players also have potential rights in individual licensing that former players no longer have.

Wednesday, March 20, 2013

Publicity rights and NCAA student-athletes.

In the past few days, there have been stories regarding the NCAA and EA Sports' opposition to current and former college football and basketball players' motion for class certification in litigation that has been ongoing since 2009. If the players are allowed to certify, the stakes become higher for the NCAA, because the claims of all current and former players would instantly become legitimate. That is the power of a class action. There is power in numbers.

The players are not arguing that current players should get paid while in school. There are actually two different proposed classes: Former and current players. The former players want monetary damages. The current players would essentially be able to license their own names. The problem is that with current players, they would need to hire agents. Agents cost money. The players' motion for class certification states that they want any money for current players to go into a trust that the players can access upon graduation. So the agents would not get paid until graduation. I am not sure this can be done in practice, given the lack of scruples that some agents have shown in recent years.

The NCAA seems to argue that you cannot accurately determine damages among so many athletes with different levels of talent and publicity rights. Surely, Tim Tebow's publicity rights at the University of Florida were more valuable than an average player's rights. (I do not know if Tebow is in the proposed class.) This is not necessarily something that would have to be determined in the class certification stage, but the NCAA argues that it creates a conflict among the class members that should prevent class certification in the first place.

The NCAA retains the publicity rights of former players after their eligibility has expired. So the former players are asking for damages that include time periods after their eligibility has expired. This is probably the easiest issue on which the players can win. There is no reasonable justification for retaining former players' publicity rights after their eligibility has expired, and they have gone on to become professionals in something other than sports.

For instance, in EA Sports' NCAA Football series of video games, the running back for the 1983 Nebraska Cornhuskers cannot earn anything from his likeness being used in the video game, despite the fact that Mike Rozier's NFL career is long over and his NFL career pre-dates any royalties made from the NCAA Football video games. The NCAA retains Rozier's likeness for his time at the University of Nebraska in perpetuity.

The NCAA literally restrains competition. It is an organization comprised of individual schools -- horizontal competitors -- that compete in athletics. They have rules for effective competition. The limit of 85 scholarships for each Division I FBS school restrains competition, because some schools would easily be able to get more than 85 scholarship players. This rule does not offend anyone, because it promotes intercollegiate athletic competition. In some cases, the NCAA rules have been held to violate antitrust laws. Those for governing competition are generally considered okay.

Depending on how things play out with the class certification, the most likely chip to fall is the NCAA's ownership of publicity rights after the players graduate or their eligibility has expired. I think it is possible that the players could get a uniform rate of royalties that is placed in trust until they graduate, but to allow them to negotiate licensing rights while in school would completely obliterate college sports as we know it. It would turn college sports into the minor leagues. Giving players a piece of the revenue stream upon graduation, and allowing them to earn money from their likeness after their eligibility has expired seems the most reasonable resolution to this case, and maybe the most likely.

Tuesday, March 19, 2013

More clarification on deceptive and deceptively misdescriptive trademarks.

In previous posts, I discussed deceptive and deceptively misdescriptive trademarks. (On Deceptive and Deceptively Misdescriptive Trade Names, Deceptive and Deceptively Misdescriptive Marks Clarified.) Trademark Examiners at the United States Patent and Trademark Office (USPTO) decide whether a mark is deceptive or deceptively misdescriptive. Deceptive marks can never be registered with the USPTO. Deceptively misdescriptive marks can be registered with the USPTO upon secondary meaning.

The line between deceptiveness and deceptive misdescriptiveness is thin. Different examiners can come up with different results when faced with the same marks. Examiners are taught to refuse registration on both grounds when they are unsure if a mark is deceptive or deceptively misdescriptive. The materiality of the misdescription is what separates a deceptive mark from a deceptively misdescriptive one. Materiality depends on how consumers value the characteristic of the good or service being misrepresented.

Examiners look at objective factors in determining materiality. Trademark Manual of Examining Procedure (TMEP) 1203.02(d) (2012). Material factors are those on which consumers objectively base their purchasing decisions. If a trade name suggests superior quality, health benefits, enhanced performance or function, or difference in price, it is deceptive. Id.

"Gold" in a trade name describing non-gold jewelry, is deceptive. TMEP 1203.02(a). Fake gold jewelry marketed as real gold jewelry suggests superior quality. "Hide," used in connection with synthetic fabric products, is also deceptive. Id. "Lamb" is deceptive when used in connection with fake lambskin vehicle seat covers. "Hide" and "Lamb" also suggest superior quality when connected with the goods in the two previous examples.

A mark in commerce today that might be deceptively misdescriptive is "Muscle Milk," the protein drink and powder. The mark misdescribes the goods to which it relates, because there is no milk in the product. If the misdescription is likely to lead consumers to believe that there is milk in the protein drinks, then it would be deceptively misdescriptive. "Muscle Milk" is not a deceptive trademark, because there is a federal registration on the mark. But if the deceptive misdescription of "Muscle Milk" was a material factor in consumers' decisions to purchase the drink, it would be deceptive.

The "Muscle Milk" mark was first used in commerce in 2001, and the applicant filed for federal registration in 2003. So, there was time for the mark to gain secondary meaning. It is also not deceptive because consumers do not base their decision to buy protein drinks on the presence or absence of milk in the product. "Milk" in the mark but not in the product does not suggest superior quality, or any other objective factor on which consumers base a purchasing decision. If it did suggest such an objective factor, then it would be a deceptive mark.

Monday, March 18, 2013

Being "litigation-ready."

Litigation-readiness is a concept used by big companies that face multiple lawsuits at any given time. It means that a company is always prepared for litigation. When it arises, the company does not miss a beat in preparing documentation and prioritizing other tasks necessary to the litigation process.

Litigation-readiness is a good concept for small businesses and individuals to implement into their daily lives. Unfortunately, many people face litigation or threats of litigation at some point in their lives. It makes the process easier if you are prepared and can minimize the obstruction that litigation causes to your daily life. Being litigation-ready requires no drastic changes from your current lifestyle. It does not mean that you are willing to sue anything that moves. It suggests nothing about using the legal process offensively. But if you are a defendant or respondent in a lawsuit, litigation-readiness minimizes the stress and anxiety over litigation. Two of the most important things that you can do to be "litigation-ready" are:

  • Use a calendar on your smartphone. Put important events in your smartphone and do not delete them after they have passed. Make sure that your calendar is backed-up on occasion, so if your phone breaks, your events are not lost. Past events, even if irrelevant, can rekindle other memories and help create a relevant timeline of events. If you do not have a smartphone, keep a calendar and write important events on it.
  • Write stuff down, and get stuff in writing. If you are wronged and the person admits it, get them to write it down. They will be reticent to do this, but if they trust you, they may be willing to do so. This does not mean that you will sue them, but if something happens and you find yourself in litigation, written admissions are extremely powerful pieces of evidence. On the other hand, do not make an admission to someone else if you wronged them, unless you are prepared to write it down. If you do not feel comfortable writing it down, do not make the admission in the first place. This principle extends beyond written admissions: 100 percent of the time, written evidence is better than oral evidence.

Of course, there are other things you can do to be litigation-ready. These are just two of the most important.

Sunday, March 17, 2013

Is your company's trade name federally registered by someone else?

If you work in a company that has not registered its trade name with the United States Patent and Trademark Office, has another business already registered that name? You can check here.

If another company has registered the same trade name, you may still be able to register as well, as long as the other business or businesses provide dissimilar goods or services from yours. If there is not another company with the same trade name, it does not automatically guarantee you can use the name throughout the U.S. There may be pockets of the country where other unregistered businesses have common law trademark rights. This is where more searching is required.

This is simply a starting point for determining whether any future company growth will be stunted by a trademark infringement suit.

Saturday, March 16, 2013

Do you have a business entity? Do you have a valid registered agent?

If you have a business entity, it is important to have a valid registered agent. This is not just a contact person for the company. This is a contact person in the event of a lawsuit. In the event of litigation, due process requires that there is a person on whom notice of the lawsuit can be served. If your registered agent is no longer valid, it nullifies an essential requirement of a valid business entity. If the Secretary of State finds out about it, your business entity could lose its status.

Often, the registered agent is the attorney that helped form the business. If there is no attorney, or if the registered agent is someone else, it is imperative to file an amended Articles of Incorporation, Certificate of Organization or other applicable document whenever the registered agent's information changes.

How to register for the Mechanics' Notice and Lien Registry.

Over the last several days, I discussed mechanic's liens, and how Iowa lien law changed in 2013. I discussed the importance of registering for the Mechanics' Notice and Lien Registry (MNLR), and posting Notices of Commencement of Work for residential construction projects. The 2013 Iowa Code provides that a person or company cannot enforce a mechanic's lien if proper notice is not provided in residential or commercial constructions projects.

Courts have not decided whether a person or company can enforce a mechanic's lien under the new Iowa law if proper notice was not provided at the beginning of a project. The law is too new for courts to have decided the issue. Not many contractors know about the new law, so it is a near certainty that courts will hear the issue in the next year or two. The way it is written, you cannot enforce a mechanic's lien if you do not provide proper notice. It does not matter if you were not aware of the new law.

In order to register for the MNLR, you need to fill out this form. Then, you need to post commencement of work notices within 10 days of beginning work for residential construction, and provide written notice within 30 days of beginning work for commercial projects. Once you get a handle on the new requirements, I am confident that they will be easy practices to implement. None of the requirements are too burdensome or onerous, but you do need to follow them in order to enforce a mechanic's lien.

Thursday, March 14, 2013

Navigating the new mechanic's lien requirements in Iowa.

As discussed in other posts, the State of Iowa imposed new requirements for obtaining and enforcing a mechanic's lien in 2013. These new requirements went into effect at the beginning of 2013. There are different requirements for residential and commercial construction. For residential construction, you have to post notice of commencement of work within 10 days to the secretary of state's website. You also have to furnish the homeowner with the following notice in 10-point font or larger:

"Persons or companies furnishing labor or materials for the improvement of real property may enforce a lien upon the improved property if they are not paid for their contributions, even if the parties have no direct contractual relationship with the owner. The mechanics’ notice and lien registry provides a listing of all persons or companies furnishing labor or materials who have posted a lien or who may post a lien upon the improved property."

Additionally, the contractor must provide the website address for the Mechanic's Notice and Lien Registry (MNLR), so the owner can see who has lien rights on their property in connection with a particular project. Then, if the homeowner does not pay, they know who can file a lien against them. The notice must also provide the toll-free number for the MNLR: 888-767-8683.

Here is the fee schedule for filing to the MNLR in Iowa. The process is slightly different for commercial work. The general contractor must provide to the owner (or the subcontractor to the general contractor) in writing a notice within 30 days of first beginning work with the general contractor's contact information. When you provide this notice, you should make a copy of it just before sending, because it will help support your lien claim in the event you end up in litigation.

For reference, here is the new mechanic's lien form for residential construction. Here is the new mechanic's lien form for commercial construction.

Do you have a business entity? Have you filed your biennial reports?

If you have a business entity, keep in mind that there are ongoing requirements for maintaining your business entity. You must file biennial reports, which as the name suggests, are typically filed every two years. In the biennial report, you include the same information (if nothing has changed) that was included in prior biennial reports or your Certificate of Organization (for an LLC), Articles of Incorporation (for a corporation), or Certificate of Limited Partnership (for a limited partnership).

It is not simply every two years from the formation of your business entity during which a biennial report must be filed. For an LLC, the first biennial report must be filed with the secretary of state in the first three months of the first odd-numbered year following the calendar year in which your LLC was formed. So, if you formed an LLC in 2012, you must file your first biennial report yet in March 2013. If you formed an LLC in 2010, your first biennial report was due in 2011. Subsequent biennial reports must be filed every two years, during the first three months of odd-numbered years.

For a corporation, the first biennial report must be filed with the secretary of state in the first three months of the first even-numbered year following the calendar year in which the corporation was formed. So, if your corporation was formed in 2012, you must file your first biennial report in 2014. If you formed a corporation in 2011, your first biennial report was due in 2012. Subsequent biennial reports must be filed every two years after the first one, in the first three months of even-numbered years.

For a limited partnership, the timetable for filing biennial reports is the same as an LLC. The first biennial report must be filed in the first three months of the first odd-numbered year following the calendar year in which the limited partnership was formed. So, if you formed a limited partnership in 2008, the first biennial report was due in 2009, and every two years after that.

It is important to keep in mind that the "first odd-numbered year" and "first even-numbered year" nomenclature and requirements refer to Iowa law. Other states will require biennial reports, but the years in which an LLC, corporation or limited partnership must file them may differ.

Wednesday, March 13, 2013

Substantial confusion over new mechanic's lien procedures in Iowa.

As discussed in other posts, mechanic's lien law has many requirements. In Iowa, some of these requirements changed in 2013. For one, mechanic's liens are no longer filed with the district court in which the work occurred. It has come to my realization there is substantial confusion among contractors over the new procedures. There is more opportunity to get things wrong with the new procedures. There are procedures that must be followed before a dispute ever arises to properly obtain and enforce a mechanic's lien. If you do not get it right, you could be out of luck. If you are in a business that regularly or occasionally deals with mechanic's liens, it behooves you to understand the new procedures.

Tuesday, March 12, 2013

The low-bar for copyright protection.

The grant of copyright protection comes from the Patent and Copyright Clause of the U.S. Constitution. It secures the right of authors to protect their works from usurpation. The requirements for a copyright are pretty minor. The work must be "fixed," and "original." To be "fixed," the work must be sufficiently permanent for perception or communication. This requires fixation for more than a short or fleeting period. To be "original," the work must be independently created and have a minimal degree of creativity.

Copyright protection does not necessarily require registration, but it is required to commence an infringement suit. To have copyright protection, one should provide notice, in the form of the circled "C," or "Copyright," followed by the year of first publication. Even if you have not registered, you should provide this notice. Ideally, you should register, because that entitles you to seek statutory damages and attorney fees in the event of later infringement. If you do not register initially, and only register when infringement arises, then you cannot receive statutory damages and attorney fees.

Now, attorney fees may not seem like a big deal to you, but it effectively adds to any total award you receive, because you would presumably pay your attorney out of your winnings. It is as if you received an additional award for the amount of the attorney fees and paid the attorney with it, rather than paying the attorney from your award without attorney fees. If you have spent a lot of time on a work, the prudent thing to do is to register it within three months of first publication.

People tend to be surprised when they find out that copyright protection theoretically attaches the moment something is "fixed" and "original." Undoubtedly, you have created something with copyright protection in your lifetime. You just likely have not registered it with the Copyright Office.

Monday, March 11, 2013

Why is ICANN creating new generic top-level domains?

Later this month, the Internet Corporation for Assigned Names and Numbers (ICANN) is beginning a Trademark Clearinghouse to prepare for the implementation of new generic top-level domains (gTLDs) later this year. ICANN is the organization that manages domain names. The Trademark Clearinghouse will allow owners of registered trademarks to purchase the new gTLDs before the general public.

If the mark owners do not purchase the domain name with the new gTLDs and someone else does, the only recourse is to sue under the Anticybersquatting Consumer Protection Act, or to give the domain registrant whatever they want. The Clearinghouse will notify the mark owner if someone else registers a domain with their trademark, but it will not prevent anyone from registering the domain. Paying a domain registrant after they registered a domain would likely cost more than buying the domain in the first place. So, it essentially forces companies with famous and distinctive trademarks to purchase domains they do no want or need, just to prevent cybersquatters.

The new gTLDs do not add anything. Is it easier to visit "" instead of ""? By now, ".com," and ".org" are well-understood. Available domains are not the issue either. If you have a famous mark, for instance Pepsi, you will need to buy domains in all of the new gTLDs when they become available to prevent cybersquatting. Effectively, this does not add any new domains, because Pepsi will ostensibly purchase all of the available gTLDs. It just creates consumer confusion by having a higher number of similar domains when there is not a registered trademark using the domain.

The FTC is concerned about the extra domains too, because it makes it easier to perpetrate fraud. For instance, if Wells Fargo does not pay ICANN for the new gTLDs, then someone else can register domains under Wells Fargo's mark and better deceive consumers with whatever scheme they have hatched.

When there is no plausible non-monetary justification for an action and the actor financially benefits from the action, the reasonable conclusion is that the action is a cash grab. That is the situation with ICANN's implementation of new gTLDs. There are no benefits and the new gTLDs are almost certain to cause problems.

Sunday, March 10, 2013

Why does Major League Baseball have an antitrust exemption?

Unlike other professional sports organizations, Major League Baseball (MLB) benefited from an antitrust exemption throughout the 1900s. The exemption has been curtailed in recent years, and likely will be completely eliminated in the next several decades. The exemption comes from a 1922 decision of the U.S. Supreme Court. The 1922 decision stated that MLB was not subject to antitrust law, because it was a game and not interstate commerce.

In the late 1800s and early 1900s, National League (NL) baseball owners benefited from a "reserve clause," in which players could be sold and traded, but were not able to sign with other teams of their own volition. Basically, if an owner wanted to keep a player for his entire career, the player had no say in the matter. Players lamented the practice in those days, well over half a century before full-fledged free agency began. When the American League (AL) and NL combined in 1903, the newly formed MLB adopted the reserve clause.

Federal courts expanded regulation of interstate commerce throughout the 1900s, but baseball remained largely exempt from antitrust law. On two occasions, in 1953 and 1972, the Supreme Court heard arguments attacking the antitrust exemption. The court followed precedent from the 1922 decision (stare decisis), even though the court viewed the 1922 reasoning as spurious.

About three years after the 1972 decision, players were able to eliminate the reserve clause through collective bargaining, which paved the way for free agency. Following the baseball strike of 1994, the antitrust exemption was repealed in part, when it came to labor matters. But baseball remains exempt from antitrust law in regard to a few matters. For one, minor league players are tied to the MLB franchise that signed them much like players were under the reserve clause.

Saturday, March 9, 2013

Back to basics: Do you need copyright, patent or trademark protection?

It is common for non-lawyers to confuse the subject matter of copyrights, patents and trademarks. The Patent and Copyright Clause of the U.S. Constitution grants authors and inventors protection in their works and inventions. The Commerce Clause grants protection to those who own source identifying marks used in commerce. Today, the distinction is of no great consequence. Copyrights, patents and trademarks all constitute valid intellectual property.

Copyright protection extends to original works of authorship in any tangible medium of expression, including:
  • literary works,
  • musical works,
  • dramatic works,
  • choreographic works,
  • pictorial works,
  • graphic works,
  • sculptural works,
  • motion pictures and other audiovisual works,
  • sound recordings, and
  • architectural works.
Copyright protection cannot extend to any idea, procedure, process, system, method of operation, concept, principle or discovery, regardless of how it is described. Basically, copyrights protect the embodiment of ideas or their expression, but not the ideas themselves.

Patent protection extends to new or improved, useful and non-obvious processes, machines, compositions of matter or articles of manufacture. I am not licensed to discuss patents in great depth, as I am not a patent attorney. Patents are much more technical than copyrights and trademarks, and require special licensing. Patents involve a written specification and claims. The latter describes the metes and bounds of the patent and exactly what is protected.

Trademark protection basically extends to anything that identifies a mark owner's goods or services in commerce. Typically, a trademark is a name, word, phrase, symbol, color or design. It is important to emphasize that trademarks must be used "in commerce." If you are not using a mark in commerce, as in directly connected to a good or service for sale, you cannot gain trademark protection. You can file an intent-to-use application, but eventually there must be a bona fide use in commerce. A token use in commerce simply to reserve rights is insufficient. As long as a trademark is used in commerce, you can gain trademark protection if it is source identifying. Source identification of a mark is established through inherent distinctiveness or secondary meaning.

Friday, March 8, 2013

The "Redskins" mark should not be entitled to federal trademark protection.

On Thursday, the legitimacy of the Washington Redskins' trademark was argued in the Trademark Trial and Appeal Board (TTAB) at the United States Patent and Trademark Office. At issue was whether "Redskins" is entitled to federal trademark protection. The court has not decided and likely will not decide for some time.

In 1999, the TTAB heard the same issue. In that case, the court determined that if a substantial composite of the general population associated the mark with something other than its racist connotation, then the mark is capable of federal trademark registration. The court found that continuous use, recognition and acceptance of "Redskins" in connection with the football team outweighed the racist meaning of the word.

The last sentence of that decision noted that the Redskins' trademark will be cancelled at some point in the future. The court recognized that society inexorably becomes more sensitive over time.

In the 1999 decision, the court essentially said that because the "Redskins" mark is more identifiable with the football team than as a derogatory ethnic term, it is acceptable. Following this logic, any term used long enough as a football nickname would be entitled to federal trademark protection, no matter how offensive it is. "Redskins" was first used in the 1930s. There were a lot of derogatory words used in the 1930s that are no longer acceptable today. Imagine a team named the [insert slur referring to African Americans], or the [insert slur referring to Irish people], or the [insert slur referring to Catholics], or the [insert slur referring to Asians], or the [insert slur referring to Jewish people]. Following the court's reasoning, any of those nicknames would still be registered with the trademark office today, based on the Washington football team's continuous use of the "Redskins" mark.

The court's reasoning in 1999 was bad. A lot of words from the 1930s are not acceptable in society today. Simply because Washington's football team has used the name continuously does not mean it is any less offensive.

If the TTAB determines that "Redskins" is no longer entitled to federal trademark registration, it does not mean the team would automatically change their name. It means that they would no longer be entitled to federal trademark protection. They would still have common law rights. They would still have customer recognition among fans. But they would likely change their name, in order to protect their intellectual property going forward.

Thursday, March 7, 2013

Avoiding allegations of business interference.

Previously, I provided a list of little things you can do to help yourself from a legal perspective. The list was not principles to follow when a legal dispute arises, but before a legal dispute arises. That way, you will be prepared in the event of litigation. Being prepared for litigation is key to being successful in litigation. It is difficult for an unprepared client to become prepared once a dispute arises.

In that post, I noted that you should be careful about what you say regarding other people and businesses. If you make a third party break a contract with a competitor, you could end up as a defendant in a business interference suit. Business interference is an easy claim to assert, but a hard one to prove. The definition is broad, basically encompassing three scenarios:
  • Party A interferes with a contract between Parties B and C, causing Party C to not perform the contract.
  • Party A interferes with a contract between Parties B and C, causing Party B's performance of the contract to be more burdensome or expensive.
  • Party A interferes with a prospective business or contractual relationship between Parties B and C, causing Party C to not enter the contract or continue the relationship.
Even if you did not interfere with a contract or prospective business relationship, you may still get sued because of an assumption that you interfered. Defending a business interference case costs a lot of time and money. It is much easier to refrain from saying or doing anything that might even suggest business interference.

If you are accused of business interference but did not do anything wrong, you stand a good chance of winning the case. Improper motivation is a factor courts examine in determining whether a defendant is guilty of business interference. Even without improper motivation, being sued is a headache not worth having. It is better to refrain from talking about another person or business to a third party, regardless of how innocuous you think the comments may be.

Wednesday, March 6, 2013

Against OPEC: Why OPEC is so detrimental to international commerce.

In my last post, I touched on the act of state doctrine, and OPEC. In a previous post, I discussed the court's rationale for affording OPEC the benefit of the act of state doctrine.

In 1981, OPEC was afforded the benefit of the act of state doctrine. The court's reasoning for applying the doctrine was sound, but the doctrine should not have applied. It is time for a change in the applicability of the act of state doctrine. I have no issue with applying the doctrine to conduct of a single country when it has minimal or minor effects on international commerce. But the doctrine causes substantial problems and consumer harm when individual countries cartelize to affect international commerce.

Now, it is not likely that the Vitamin C litigation will be OPEC's undoing. But OPEC's time is limited, because its constituent countries will be unlikely to adapt to compete with and invent alternate methods of energy. So as alternative energy becomes more economical to produce and use, the more difficult it will be for OPEC to compete.

To get an idea of how detrimental OPEC is to international commerce, consider an alternate scenario: The U.S. and other Western nations cartelize and form an Organization for Technology Exporting Countries (OTEC). OTEC fixes and strives to stabilize prices for technology-based products like computers, smartphones and tablets. Companies in OTEC countries must conspire to fix prices for technology-based products, despite the fact that consumers throughout the world are harmed by having to pay higher prices.

Simply because a foreign government chooses to act in a certain way does not mean that it should be afforded any exemption when it affects the global market in such a detrimental way. OTEC would have that effect. There are two reasons that OPEC is tolerated. First, it has been historically accepted. Organizations that have existed for a long time become accepted no matter how detrimental they are to society or commerce. Second, the U.S. does not want to cause any more international friction in the Middle East and North Africa than there is already. Six of the 12 OPEC members are in the Middle East. Two of the 12 OPEC members are located in North Africa, and another two are located elsewhere in Africa.

Some may argue that my opinion on OPEC is myopic and typical of an American. But there are about 200 countries in the world, and only about six percent of those are members of OPEC. The other 94 percent or so use oil, and only a small number of them can handle increased oil prices and maintain a high standard of living. OPEC affects all countries, but the really detrimental effects are felt in second and third-world nations that either cannot afford oil due to OPEC's cartelization of the oil market, or only a small number of people in those countries can afford oil. So my opinion is not just an American one.

Tuesday, March 5, 2013

Extraterritorial price fixing: The Vitamin C example.

Trial begins this week for four Chinese companies accused of price fixing of Vitamin C. This case is fascinating, because the Chinese Ministry of Commerce actually submitted an amicus brief in 2008 supporting the defendants, which was unprecedented. The litigation has been ongoing for quite some time. In 2008, the Chinese companies filed a motion to dismiss on the grounds that the act of state and foreign sovereign compulsion doctrines provided a defense to the price fixing. The motion was denied, because there was no "act of state" by the Chinese government, and there was really no evidence of compulsion by the Chinese government against the companies, although that is disputed.

As discussed in my post on OPEC and cartels, the act of state doctrine provides that courts of one nation may not judge the public acts of another sovereign nation within its own borders. The foreign sovereign compulsion doctrine provides that international companies sometimes find themselves in situations where the laws of the country in which they are headquartered conflict with the laws of another country where they conduct business. In such situations, the companies are unable to comply with the law of both states. The doctrine allows deference for companies when they have no choice but to violate laws of either the country in which they are headquartered or the country seeking to enforce its antitrust laws.

The act of state doctrine focuses on the acts of governments. Foreign sovereign compulsion focuses on the acts of companies and how they are influenced by the government where the company is headquartered, as well as the government seeking to enforce its antitrust laws in the given instance.

What makes this case interesting is that the courts may further interpret the act of state and foreign sovereign compulsion doctrines. If they do, it could effect geopolitical change, most significantly with OPEC. It is not likely that the Vitamin C litigation will have such far-reaching consequences, but it is possible.

I will discuss in greater depth in a future post why the act of state doctrine should not apply to OPEC.

Monday, March 4, 2013

Improving your chance of success in foreclosing a mechanic's lien.

The lien foreclosure process begins before a dispute arises. If you begin protecting your rights before a dispute arises, it can go a long way toward improving your chances of successfully foreclosing a lien. If you are engaged in structural, mechanical, electrical or plumbing construction or improvements, you probably have either filed or thought about filing a mechanic's lien. There are a number of requirements for filing and enforcing a mechanic's lien. But there are things you can do before a dispute arises to make the process easier.

First, when you begin a project, provide the proper notice of commencement of work with the Secretary of State. Second, if possible, take pictures of exactly what is covered in your scope of work, before you begin working. When the project is complete, take pictures of what you did. Now, if you did it wrong or poorly this can come back to bite you. But if you adhered to industry best practices and the contract's scope of work, it will go a long way toward proving that you are owed the amount you are claiming in the lien. A mechanic's lien is not like a contract. You do not need to prove a contractual breach. You only need to prove that you did work and did not get paid.

Third, keep a journal of the days you worked on the project, the time you spent each day, and what you did each day. This will provide more credibility when you are testifying in a lien foreclosure proceeding about what you provided.

Saturday, March 2, 2013

Surprisingly, the rapper "Pope Emeritus" has virtually no chance in a trademark infringement suit against Benedict XVI.

I am sure it comes as a surprise to readers of this blog that a rapper with "ain't" in his vernacular does not understand the nuances of trademark law. The furor began when it was announced that the outgoing Pope Benedict XVI would be called "Pope Emeritus" upon leaving the papal office. As a matter of fact, the rapper does not have "Pope Emeritus" registered with the United States Patent and Trademark Office. He may not even have been able to do so if he tried, because Section 2 of the Lanham Act covering trademark law prohibits registration for marks suggesting a connection with institutions or beliefs.

Without a federal registration, the rapper's only recourse would be common law trademark rights. Even then, his rights would only extend over the geographic area in which the mark was used. Assuming the rapper had a federally registered mark, or had common law trademark rights, and brought an infringement suit he would lose very quickly by virtue of the fact that Benedict does not use the mark in commerce. Unless he goes on large speaking tours, or markets t-shirts or other goods with the mark, then the rapper never would win a suit against Benedict.

If Benedict began doing those things -- using "Pope Emeritus" in commerce -- and if the rapper had a federally registered mark or common law rights, the rapper would still have to prove consumer confusion, which is as unlikely in this scenario as you would expect.

The rapper would have sounded less cretinous if he had threatened a dilution suit, because that does not require consumer confusion. There are two types of dilution: Blurring and tarnishment. But still, dilution requires that the mark be used in commerce to try and promote one's own goods at the expense of the famous or distinctive mark's goodwill. So the rapper would lose here too.

As it is, the only conceivable way that the rapper could bring suit would be to hope that Benedict adopts a confusingly similar website domain name to one that the rapper may already have (I did not check if the rapper has a website). If the domain names would be similar and people trying to visit the rapper's website would instead be directed to Benedict's, then it would at least be somewhat plausible for the rapper to bring suit. He would still lose, because the Holy See would have no bad faith intent to profit, as required by the law of cybersquatting.

Friday, March 1, 2013

Liens revisited: Nonstatutory and artisan's liens.

In addition to mechanic's liens, agricultural and harvester's liens, there are a few other liens worth mentioning: nonstatutory and artisan's liens. The liens I have discussed do not constitute an exhaustive list. But mechanic's liens are the most common, and most attorneys will never encounter the others in practice. It does not hurt to know what unconventional remedies may be out there for you.

A nonstatutory lien is a common law lien. Ironically, nonstatutory liens are generally provided in a statute. If you think you have lien rights but the facts do not fit within another lien type, you can file a nonstatutory lien. You would file in district court, and then there would be a hearing to determine the lien's validity. If valid, you would then file the lien with the county recorder, which would effectively "perfect" the lien.

If you worked on personal property (movable property) and did not get paid, you can file an artisan's lien. Mechanic's liens attach to buildings on property. Artisan's liens attach to personal property. To enforce an artisan's lien, you would need to have possession of the personal property, and you cannot commit a trespass to obtain possession of the personal property.

There are notice requirements, but if you follow those you would be able to sell the personal property on commercially reasonable terms. You would also only be able to sell items to repay the amount owed. If you are owed $2K and there are multiple items involved, you cannot sell more than $2K. You are only entitled to the amount you are owed. It is important to stress that if you do not follow the notice provisions, you would be in big trouble and possibly liable for conversion.

If this sounds too onerous, you could likely sue for breach of contract. Even when it does not involve liens or a breach of contract, if you have been wronged, there probably are multiple legal processes you can use to obtain payment.