Tuesday, November 26, 2013

The biggest college football story no one talks about: The Johnny Football trademark paradox.

By definition, a trademark is being used in commerce. To get a federally-registered trademark, the applicant must submit an affidavit of use stating that the mark is being used in commerce. An affidavit is subject to the penalty of perjury. If you submit an affidavit that you know is not true, you can be punished by up to five years in prison.
Use in commerce of a trademark entails making money from it. This is inapposite with the NCAA's principle of amateurism. Any college athlete with a federally-registered trademark admits to breaking NCAA rules. This can be easily alleviated by first filing an intent-to-use application and later filing an affidavit of use once the athlete is done playing college sports. This is not what Manziel did. He filed for a trademark on the Principal Register, and submitted an affidavit stating that "Johnny Football" is being used in commerce.
Apparently, the NCAA did not allow Manziel to obtain a federal registration, but just to protect his common law trademark rights until he could use the Johnny Football mark in commerce after he was done playing football at Texas A&M. Protecting common law trademark rights does not entail submitting an affidavit saying you are using a trademark in commerce. As it is, Manziel either committed a fraud on the United States Patent and Trademark Office by submitting the affidavit, or is admitting to breaking NCAA rules in submitting the same affidavit. The only other conceivable explanation is that the NCAA is allowing Manziel to play by a different set of rules than anyone else, by letting him have his trademark and play football too.

Monday, November 25, 2013

If you breach a contract, it is unlikely that you can simply walk away.

You should not sign a contract unless you are prepared to complete it, even if you encounter unforeseen circumstances. Things happen; people lose their job, die, and get sick. But if you sign a contract, you consent to the possibility of a lawsuit or arbitration to enforce its terms. It is common for people to sign an agreement without reviewing it, or to think they can rescind their acceptance after signing.

If you sign a contract but do not complete it, you may be forced to perform (specific performance). You may be forced to pay the other party the money it spent in relying on your completion of the contract  (reliance damages). Or you may be required to pay the other party the amount it would have received if you completed the contract without breaching it (expectation damages).

Expecting people to read the entire terms and conditions of every contract they sign is probably impractical. But every time you sign your name in exchange for something of value, you should consider what the contract requires. If you breach the contract's terms, it is highly unlikely that you can simply walk away.

Thursday, November 21, 2013

Student-athletes file motion for summary judgment in NCAA likeness antitrust litigation.

The student-athletes in the partially certified class action against the NCAA filed a recent motion for summary judgment. Summary judgment is granted when the parties agree on the important facts, and there is only one possible result from a legal perspective. Here, the student-athletes' motion for summary judgment will be denied, because even though there is no dispute on the important facts, more than one legal outcome can result from them. If NCAA rules were not upheld in the past, summary judgment may be granted. But courts have upheld NCAA rules before, and that precludes entry of summary judgment here.

Wednesday, November 20, 2013

The general prohibition on hearsay increases the importance of getting things in writing.

Tangible evidence is really important. Get things in writing when you can. If you are in a legal dispute, third parties typically do not want to get involved. This is true even though you can require them to testify with a subpoena. If you think a third party said something to support your case, they may not remember it that way. They may remember it differently, or not at all. This is common.

The general prohibition on hearsay compounds the importance of getting tangible evidence. The simplest definition of hearsay is that it is something someone else said, offered into evidence. There are some exceptions, but you can rarely testify to what someone else said.

Tuesday, November 19, 2013

If you are in a general partnership, make sure it is a limited liability partnership.

If you are in business with someone else, you do not want to form a general partnership. There is no limited liability for general partners, so you are personally liable for the actions of the partnership. A partnership agreement can be oral, so if you are in business with someone else and making money, you are likely in a general partnership (unless you purposely formed a different business entity).

If you have to be in a partnership, make sure it is a limited liability partnership. As you would guess, you get limited liability.

Thursday, November 14, 2013

What is a "fixed" work of authorship in copyright law?

To get copyright protection, you must have a fixed and original work of authorship. To be "fixed," a work must be perceptible for more than a short period of time. For instance, if you are talking with a friend, your statements are not fixed. But if you have the same conversation and record your statements, they are fixed because they are perceptible after the conversation ends, by listening to the recording.

Wednesday, November 13, 2013

What is a "declaratory judgment"?

In earlier posts, I quickly mentioned declaratory judgments. A declaratory judgment is an action in state or federal court where a plaintiff requests determination of the rights of parties, either before a dispute arises or before a lawsuit. For instance, a defendant in patent or trademark litigation often counterclaims for a declaratory judgment of non-infringement and/or invalidity. "DJ" actions can also arise from contract disputes, when two or more parties disagree on the meaning of a contract, and they seek court intervention to resolve the dispute before a party breaches the contract.

Basically, DJ actions are available whenever parties are or will be involved in a civil dispute, they have a bona fide controversy, and a declaratory judgment would resolve the uncertainty. A court will not simply adjudicate a dispute unless there are rights at stake. In other words, if you have a disagreement with a friend, family member or colleague about something trivial, you cannot file a DJ action.

Trademarks in one minute (podcast).

Here is a one-minute podcast on the very basics of trademark law.

Tuesday, November 12, 2013

What is an "S Corp"?

You do not form an "S Corp" with your state government. It is an election you make through the federal government that allows your corporation to pass corporate income, losses, deductions and credit to its shareholders. This avoids double taxation on corporate income.

The decision to elect S Corp status is often best decided by your accountant, but the attorney who helped you form the organization will need to apprise you of the requirements so you are eligible for an S Corp election. An S Corp must have fewer than 100 shareholders who are individuals, estates, exempt organizations or certain trusts. Among other requirements, it must also have only one class of stock, no nonresident alien shareholders, a tax year meeting certain requirements, and each shareholder must consent to the S Corp election.

Monday, November 11, 2013

Trade dress must be nonfunctional and distinctive to be protectable.

Trade dress tends to be forgotten within intellectual property law. Trade dress is similar to a trademark, but different. It can be protected through federal registration, but does not have to be.

To be protectable, trade dress must be nonfunctional and distinctive. A great example of nonfunctionality is seen at right. The shape of the Mrs. Butterworth's pancake syrup container is completely nonfunctional. In other words, the shape of the bottle serves no purpose when a consumer pours the syrup on food.

Nonfunctional trade dress will usually be distinctive and thus protectable. If a company does not protect its trade dress, however, nonfunctional trade dress could be determined indistinct. For instance, see the Sue Bee Honey container at left. Much like the Mrs. Butterworth's bottle, the shape of the bottle serves no purpose when a customer pours honey on food. Provided it is source-identifying, the honey container would also be distinct and thus protectable.

By itself, the honey bottle is distinct, but there is a Des Moines barbecue restaurant that stores its barbecue sauces in empty honey bottles and serves them to customers. Allowing another company to do this diminishes the likelihood that you have protectable trade dress in a court of law, because you are allowing another company to be associated with your honey containers.

Wednesday, November 6, 2013

Proposing changes to contracts, if you are an individual or small business.

In arms' length transactions, red-lining is the process by which parties or their attorneys agree to a final contract. The first party sends a contract. The second party returns the contract with any proposed changes. The first party either accepts or rejects the changes, and the parties negotiate further modifications. It can take one exchange, or it can take a hundred before a final agreement is made.

If given a contract by a larger company, you can always propose changes to terms you do not like. The company is not obligated to accept those changes, but it might. Usually, the worst that can happen is that the proposed changes are rejected and you know you are dealing with an adhesion contract. If it is an adhesion contract, its enforceability is limited in court. It is unlikely that the company will rescind the contract simply because you proposed changes. If it does, you probably do not want to deal with that company anyway.

Just be aware that you can always propose changes to contracts that require your signature. You may or may not be successful.

In a lawsuit, time is often your best friend.

If you get in a legal dispute, the hardest thing to do is wait. You want the situation resolved immediately, and it is understandable why. Litigation is very stressful. That being said, the best thing for your case is often the elapse of time. It takes time for the truth to work itself out.

For example, let's say you file a lawsuit. The defendant answers your complaint with a version of events inapposite with yours. This is standard, but it stresses you out. Through discovery requests, depositions and nonlegal factors like the defendant's economic situation, the truth will come out. It just takes time.

Where a lawsuit involves preliminary injunctive relief, or in a business dispute with multiple and varied economic considerations, a "rocket docket"may be preferable. Otherwise, time is usually your friend.

Tuesday, November 5, 2013

Reverse engineering of a trade secret or patent.

As discussed elsewhere, a trade secret is confidential information deriving independent economic value from being a secret, is not easily discoverable using proper means, and is subject to reasonable secrecy efforts. A patent includes the discovery or invention of a new and useful process, and must be disclosed. Patentable information can be protected as a trade secret. Before a patent application is filed, it starts out as a trade secret. Confidential information protectable as a trade secret can often be patented.

The discovery or invention cannot be both a trade secret and patent. Trade secrets require secrecy, while patents require disclosure. A proprietor of such information must choose one or the other. If the invention or discovery has been on-sale or otherwise in the public for one year, it is no longer patentable. If it is not new and useful, but it derives economic value from being a secret, it is not patentable but is protectable as a trade secret.

Whether to seek patent protection or protect the information as a trade secret is an economic consideration. If your information is likely to be discovered within 20 years by reverse engineering, then you should seek patent protection. If you have a patent and someone reverse engineers it, they are still guilty of patent infringement. You would be able to get damages from infringers and licensing revenue from competitors during the 20-year period.

If you choose not to seek patent protection, and protect the information as a trade secret, it is theoretically protectable in perpetuity. This is much longer than the 20-year period for a patent. That being said, there is risk in that another party can reverse engineer your discovery or invention. Reverse engineering is a proper means of discovering a trade secret, and you would have no recourse against that party.

Monday, November 4, 2013

Placing "TM" next to your company name or logo when you do not have a registered trademark.

I previously discussed in greater depth the distinction between "TM" and R-Circle, when placed immediately next to a logo or trade name. Keep in mind that R-Circle can only be used if you have a registered trademark with the United States Patent and Trademark Office. But if you have a pending application with the USPTO, or simply want to claim common law trademark rights in your logo or business name, you can use "TM."

Friday, November 1, 2013

The power of the affidavit, even in everyday life.

An affidavit is submitted in state court. A declaration is submitted in federal court, but they are the same thing. They are sworn testimony, subject to the penalty of perjury. Both support a plaintiff or defendant's position. The person who signed the affidavit [or declaration] must testify consistently in a courtroom with what the written testimony in the affidavit says.

An affidavit does not need to be submitted in connection with a lawsuit. It can be submitted independently of a lawsuit to give more credibility to someone's position. For instance, let's say you are in a dispute with a company over one of its products, and you claim the product is defective. The company is skeptical about your claim, and thinks you may have caused the defect. To support your position, you could offer to submit an affidavit stating that you did not cause the defect and it was present when you purchased the product. This adds immense credibility to your position, because this is what you would say if the issue found its way into court. And as the affidavit would say, if you are lying, you could get into a lot of trouble.

Conversely, if you own a company and are skeptical about a customer's claim, ask them to submit an affidavit with their version of events. If they are reticent, they may not be telling the truth, although it is possible they just do not understand what an affidavit is. If they do not have an issue with it, it suggests that they may be telling the truth.

An affidavit is simply the adult version of a kid telling another kid, "I swear on ________'s life, that this is true." Contrary to popular belief, an affidavit does not always to have to be notarized. In many jurisdictions, including federal court, it only needs to include language like the following above the signature: "I certify under penalty of perjury and pursuant to the laws of the state of ______, that the foregoing is true and correct."