Friday, June 28, 2013

How do you know if an employee creates or invents something "within the scope of his or her employment"?

Yesterday, I discussed the suit involving EA Sports and an original designer of the Madden video game franchise. The video game was a work-made-for-hire, because it was created by the employee within the scope of his employment. If he was a volunteer or independent contractor, it may not have been a work-made-for-hire and would depend more on the language of the contract.

In determining whether conduct is within the "scope of employment," courts use general principles of agency. If a work is designed to serve one's boss, it is likely within the scope of employment. For instance, if you are a software developer and write code as part of your job, it is within the scope of your employment. If you are a software developer and you write an unrelated fictional novel on your lunch break, it is most definitely not within the scope of your employment. It largely depends on the facts of each case.

Thursday, June 27, 2013

Madden NFL video game's breach of contract suit with an original designer of the franchise.

An original designer of the John Madden football video game franchise sued Electronic Arts (EA) for breach of contract for unpaid royalties in connection with the development of the game. The designer purports to have compelling evidence that EA used his code and design elements as a basis for past and present Madden NFL video games. If true, it might mean that EA violated the designer's right to prepare derivative works. It also might mean that the designer's work was made-for-hire, in which case EA would own the copyright.

A "derivative work" is based on one or more preexisting works that can be from a number of different forms in which a work is recast, transformed or adapted. Editorial revisions, annotations or elaborations constituting works of authorship are examples of derivative works. A "work-made-for-hire" includes work prepared by an employee within the scope of his or her employment.

Here, the designer almost certainly developed the game within the scope of his employment, but the suit survived a motion to dismiss in April 2013. So there must be some merit to the designer's claim. Time -- and the contract -- will tell on this one.

Monday, June 24, 2013

Wednesday, June 19, 2013

A trademark does not have to be a word, logo or symbol.

This article illustrates some of the more unique trademarks in the marketplace. People generally think of a trademark as a word, phrase, logo or symbol, but it can basically be anything that identifies a particular good or service. For instance, UPS has a trademark on the color brown for delivery services, and Tiffany has a trademark on the robin's egg blue color in connection with jewelry and handbags.

Tuesday, June 18, 2013

The University of Kansas's current battle in policing its trademark.

Elsewhere, I discussed the economic decision universities must make when deciding whether to enjoin or allow local businesses to use their trademarked nickname in business names. In and near college towns, it is common to see a school's nickname emblazoned on a variety of business names in all types of industries. Universities must police their trademarks, and if they lose control over the mark, it loses distinctiveness and then would lose its status as a valid trademark. But if a university presses a local business too hard, it risks upsetting a person or business who likely donates money to the school and attends sporting events.

In some cases, the economic decision is an easy one, because the use of the school's nickname is not in good faith. In this example, the University of Kansas is trying to get a local website to stop selling infringing merchandise that dilutes the school's "KU" mark. It is a clear cut case of dilution, and possibly infringement, but the University is taking a fairly diplomatic approach, at least initially.

Monday, June 17, 2013

The importance of Thursday's class certification hearing in the NCAA student-athlete likeness antitrust litigation.

For the time being, Thursday's (6/20/13) hearing is still scheduled over former student-athletes' motion for class certification in the NCAA student-athlete likeness antitrust litigation. This link has a great summary of the legal issues involved for both the student-athletes and NCAA. It does a good job of explaining the consequences of an NCAA loss, at the class certification stage and at trial. This is the most significant issue affecting college sports since NCAA control of television appearances was deregulated in 1984. The 1984 decision was the precursor to current conference realignment.

If the student-athletes get what they want, it could affect the ability of smaller Division I programs to compete at the highest level of intercollegiate athletics. If the student-athlete classes are certified, they will get at least part of what they want, because the NCAA would have to make concessions in any settlement. If the student-athletes get all of the relief they want (which would not happen unless the case goes to trial), it is possible that only 20-60 major college sports programs could survive to compete in Division I.

Now, this would be the NCAA's "worst case scenario," but it is a possibility. Simply, you cannot predict the future of college sports until this matter is resolved, in settlement or at trial. Here are other posts in which I have either directly or indirectly discussed this case:

- Publicity rights and NCAA student-athletes.
- How class certification works in connection with the NCAA student-athlete likeness antitrust litigation.
- More on NCAA student-athlete likeness antitrust litigation.
- Recent U.S. Supreme Court case has implications for NCAA student-athlete likeness antitrust litigation.
- The unlikelihood of class decertification.

Keep in mind that only the hearing is scheduled for Thursday. A decision likely will not come until 2-6 weeks later.

Friday, June 14, 2013

The benefit of early discovery in defending trade secret claims.

This is a good article on the benefits of early discovery in defending trade secret claims. The author's justification centers around requiring the plaintiff to define exactly what he or she considers a trade secret. Early discovery often surprises the other party, but it also makes early settlement more difficult. Requesting discovery draws the proverbial battle lines. So if you propound early discovery requests, expect the battle to be at least temporarily prolonged.

Thursday, June 13, 2013

Adidas against a church in a trademark dispute.

This is an interesting case: In 2005, a church trademarked "Add-A-Zero," which unashamedly prods church patrons to give more money to the church. In 2009, Adidas filed a trademark application for "adiZero" on sports clothing and shoes. The application was rejected due a likelihood of confusion between "Add-A-Zero" and "adiZero." The church is willing to give up the mark for $5,000, but apparently Adidas does not want to pay that much.

Adidas unsuccessfully petitioned to cancel the mark, but this does not seem like the type of case that will go to trial. Adidas might have to add another zero or two, but these parties should settle in the near future.

Tuesday, June 11, 2013

Principles regarding the fair use exception to copyright infringement.

Here is a good article on principles regarding the fair use exception to copyright infringement. It is directed to journalists, but the same principles generally apply to non-journalists. It is a lengthy article, but there is some good information in it.

Wednesday, June 5, 2013

Why trademarks are granted or denied.

This is a good article illustrating why trademarks are granted or refused. All forms of intellectual property -- except trade secrets -- are rewards for creativity, progress and innovation. That reward, however, does not come at public expense except when it is an incentive for further innovation (i.e., 20-year patent terms). This is why trademarks are refused for indistinct marks; there is no public benefit to grant ownership over a word or symbol when people do not recognize it. On the other hand, it protects the public to grant ownership over a distinctive mark, because the public is confused if others are allowed to use something readily identifiable with a certain person or company.

Tuesday, June 4, 2013

How secret must a trade secret be?

I previously discussed trade secrets, and the importance of maintaining the confidentiality of your proprietary information. Unlike patents, copyrights or trademarks, there is no federal registry for trade secrets. So, trade secret status can only be determined at trial. Consequently, large companies typically take every precaution imaginable in safeguarding proprietary information, in the event of later litigation. The more evidence a company has that it protected its proprietary information, the more likely it will be considered a trade secret.

The Uniform Trade Secrets Act requires "reasonable efforts under the circumstances" to maintain secrecy. The reasonableness of efforts is determined by the facts of each case. Every little thing matters. If you think you have a trade secret, you should do everything you can to protect it, in the event of later litigation. You should not just take a "belt and suspenders" approach, but a quadruple belt and quintuple suspenders approach to ensure that you are making reasonable efforts under the circumstances to protect your proprietary information.

Trade secret cases have hinged on such things as keeping the information in a locked desk as opposed to an unlocked desk, or keeping information in an unlocked office to which numerous people had access. It matters whether all of your employees have access to it, or only those that need it. It matters whether the employees sign a nondisclosure or confidentiality agreement. It matters whether you post too much information about it on your website. Again, everything matters. Any measure you can implement to persuade a jury that the information was confidential and proprietary is valuable in a later trial.

Monday, June 3, 2013

Economic considerations in suing for trademark infringement: The college sports example.

So, let's say you run a successful collegiate athletics department in a small, relatively rural state. Most of the denizens of your state cheer for your college's athletic programs, notably basketball and football. As a consequence, the nickname of your local sports team, let's call them the Fighting Bichons, is used throughout the area. There are numerous businesses that use the Bichons' name, such as "Bichon Electric," "Bichon Plumbing," a bar named "The Fighting Bichon," and so forth.

For years, the "Fighting Bichons" trademark has been federally registered by the college. When local businesses use the "Bichons" mark, it is trademark infringement, because it gives the impression that the proprietor of the business is the college. At the very least, it is trademark dilution.

In running the school's athletics department, do you sue these businesses for using the Bichons' name? Many schools do not, because the proprietors of those businesses are typically supporters of that school. They donate money and attend sporting events. If they were sued for using the Bichons' mark, they would likely become disenfranchised and would discontinue donating money and attending sports events.

On the other hand, if you do nothing, you lose control of your trademark, and it could lose its distinctiveness and meaning. All of your hard work in building up the "Fighting Bichons" mark could be lost.

I chose the example of college sports teams, because it is one of the clearer examples of trademark infringement, and the balance between the cost and benefits of suing for infringement or dilution. There is no "right answer" in deciding whether to let local businesses use a school's nickname or not. You risk alienating your fan base, but also risk losing the distinctiveness of your trademark. Probably the most correct answer is to "split the baby," and use gentle pressure to persuade local businesses to change their name. You may upset a few people, but you may also get those people to change the business name and continue to donate money to the school.