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By: Mark R. Malek

Ever since I started practicing patent law, one of the things that has continuously driven me nuts is when I hear people calling a patent a “monopoly” on a particular area of technology.  I’ll get into more detail below, but in essence, that is just not true.  This is one of the biggest mischaracterizations of patent law for a number of reasons.

First and foremost, the patent right does not provide someone with the right to make something, use something or sell something.  Close, but not exactly right.  All you have to do is ask yourself the following:  do I need a patent to produce something?  The answer here is a resounding NO.  The patent right provides the patent owner with the right to exclude others from making, using, selling, or offering to sell a product, process, etc. that is covered by the claims of the patent.  This is a very small distinction, but I always go back to the example that my professor in law school provided (many of you know this professor – Gene Quinn, founder of IPWatchdog.com and the partner in charge of our DC Office.  Incidentally, Gene Quinn posted a great article about this a couple of years ago). The example was “you can get a patent on a nuclear bomb – do you think that the government will ever let you make it?  Of course not.”

So here is that the patent right only gives you the right to exclude others from using your invention, it does not give you the right to make the invention.  I do understand some of the other arguments that support the fact that patents can be “monopoly like.”  In its purest form, a patent can act as a barrier to entry into the market.  In other words, the patent holder can bar others from entering the market, but to be fair, that barrier only encompasses the very specific space to which the claims of the patent are directed.  Due to the inventive nature of society, a great deal of people and companies are continuously improving technology.  That means that known technology is getting better every day.

Let’s take the cell phone, for example.  How far have we come in 15 or 20 years?  Do you remember the bag phones, or the phones that were like gigantic bricks (bringing back memories of Miami Vice, right?).  Now, due to the rapid advances in technology, I am able to achieve so much with my iPhone.  I could, if I have a ton of patience, even post this article from my iPhone.  Those of you who know me, however, know that such patience waived bye-bye to me years ago!

The point here is that it is not as though one company advanced the cell phone.  It is not as though there is only one cell phone manufacturer.  Why is that?  It is because the patent system does not really allow for a patent as broad as a cell phone to issue.  Claims are limited to very specific portions or programs or components of a cell phone.  Therefore, there is no “monopoly” on a cell phone, but there certainly is a monopoly like feeling to an Apple iPhone because Apple has several patents that protect the various features of the iPhone.  The answer to this is any phone that operates on the Android platform.

I guess what I am trying to say is that I do not believe that the term “monopoly” is accurate to use when discussing inventions that are protected by patent rights.  I really would welcome an open discussion on this.  I know that there are intellectual property haters out there that thing that patents and copyrights only serve to restrict the markets, and I will post more on that in future articles.  In the mean time, please feel free to share your opinion on this topic.

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By: Bill Harding

In my last post, I shared my experience selling a software line of business valued by the buyer entirely for the business’s intellectual assets rather than for its tangible assets.  As it turns out, my experience is not unique.

In today’s economy, intangible assets constitute nearly 80 percent of corporate value.  The other 20 percent of market value comprises physical and financial assets found on a typical business’s balance sheet.  Worldwide, the total asset value of patents (just one type of intellectual asset) is estimated at $1 trillion.  Intellectual asset licensing revenues in the United States alone increased from $15 billion in 1990 to $110 billion in 2000, and is expected to be $500 billion by 2015.  Clearly, intellectual assets are big business.

With so much company value on the line, Intellectual Asset Management (IAM) is absolutely critical to success in modern business.  IAM is the discipline of creating, managing and exploiting intangible assets to realize value for the owner.  Over a decade ago, practitioners in the IAM field adopted the Intellectual Property (IP) Value Hierarchy as a business leader’s roadmap for improving an organization’s IAM capability.  Not unlike process improvement models applied to improve organizational capability in other business disciplines, the IP Value Hierarchy consists of levels representing a continuum of intellectual asset process maturity that a business entity may attain.

The focus of organizations operating at each level may be summarized as follows:

- Defensive Level:  Identify the company’s assets, protect those assets from competitors, and avoid encroaching on others’ intellectual rights.

- Cost Control Level:  Minimize the cost to establish and maintain the company’s rights to intellectual assets.

- Profit Center Level:  Use intellectual assets proactively to generate revenue for the company, primarily through licensing or selling assets.

- Integration level:  Tie intellectual asset decisions to the company’s business plan, and embed the IP function into departments across the organization.

- Visionary Level:  Foster an IP culture throughout the organization, and proactively drive intellectual assets to exploit future trends and gain market share.

The key to a business improving its IAM capability is less a change in organizational practices than it is a transition in thinking.  Specifically, as a company graduates to higher levels of maturity in the IP Value Hierarchy, intellectual assets are viewed less as legal rights to be managed exclusively by the legal department and more as business tools to be strategically employed throughout the company.

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At first blush, it makes sense. You, the owner or chef of a restaurant, invest a lot of time, energy, and trial and error into a new creation, only to see a knockoff down the street scoop it up, perhaps after hiring your departed sous chef. Wanting blood, and some money too, you call a lawyer to find out your options, and sitting on your hands and watching your, ahem, trademark, recipe be mishandled and misappropriated just won’t do.

According to the United States Patent and Trademark Office:

A mere listing of ingredients is not protected under copyright law. However, where a recipe or formula is accompanied by substantial literary expression in the form of an explanation or directions, or when there is a collection of recipes as in a cookbook, there may be a basis for copyright protection. Note that if you have secret ingredients to a recipe that you do not wish to be revealed, you should not submit your recipe for registration, because applications and deposit copies are public records.

The USPTO provides further explanation: “Copyright law does not protect recipes that are mere listings of ingredients . . . Copyright protection may, however, extend to substantial literary expression—a description, explanation, or illustration, for example—that accompanies a recipe or formula or to a combination of recipes, as in a cookbook.” And don’t try to sneak your recipe in either, unless you want to give everyone in the free world a courtesy copy: applications and deposit copies are public records, so your secret ingredients will be forever available for use and abuse. In short, keep it in your pants.

That is, in short, why Coca-Cola (supposedly) keeps its recipe in a sealed vault. Should the formula escape, there’s no legal protection afforded it. However, the law sets the lowest bar for personal and business conduct. Ethics and common courtesy inform us that one should not use someone else’s idea, at least not without proper attribution. Just like your fourth grade research project, anyone lifting a recipe should, in my judgment, give credit where it is due.

Cookbooks are a different story. The introductory flourishes preceding each recipe, the illustrations, and other original works of authorship may be copyrighted.

What about that errant sous chef? The solution to employees running off with recipes is to ask all employees to sign an intellectual property assignment.  It’s never too late, but an IP assignment matters most before the recipes are invented. It’s trickier to get the genie back in the bottle, but in early stages of growth, make sure your employees assign all recipes developed during the course of their employment to your restaurant.  This is also important for the all-important sale of your restaurant, because the buyer will likely insist that you provide proof and/or assurances that your recipes are owned by the restaurant. The IP assignment should be an unimposing, short agreement. It’s important that your employees receive “consideration” when they sign to make it enforceable. A small bonus or promotion is sufficient.

Aaron Thalwitzer is an attorney practicing civil litigation and intellectual property law with Zies Widerman & Malek in Melbourne, Brevard County, Florida.

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By: Mark R. Malek

You may recall a while ago that I posted an article about how Facebook was suing Faceporn for trademark infringement. At the time that I wrote that article, Faceporn was taken down.  I believe that the Faceporn that was the subject of that article, however, was the .com version.

This case is about a Norwegian site called Faceporn.  To tell you the truth, I’m not even sure if they are the same site, but I’m sure they are peddling the same stuff.  I’ll give you three guesses about the content!  Be that as it may, according to this CNET article, the Court in California indicated that Facebook has no case against Faceporn because there was no evidence submitted that Faceporn has corrupted anyone in California with its product.  Really?

I suppose I am a bit surprised that Facebook was not successful this time.  As you know, Facebook is notorious for a little bit of over-enforcing its trademark rights.  For example, we know that Facebook as gone after all sorts of websites that use either “Face” or “Book” in anything that even remotely resembles social networking.  I remember them going after “Lamebook” which they settled (see this article) as well as “Shagbook” (see this article), the “Facebook Of Sex” (see this article) , “FriendFinder” (see this article) and, of course, my all time favorite, “Teachbook” (see this article).

I understand that there is a desire to protect the brand, but isn’t Facebook a victim of its own success?  Would anyone be trying to play off the name if it wasn’t successful?  Of course not.  I am a bit frustrated at the notion of companies thinking that they own words, but at the same time, I am somewhat surprised that the Judge in this case did not believe that there was any damage to the Facebook trademark.  It seems as though there was at least a potential claim for trademark dilution here.

This is the perfect example, however, of the ultimate litigation tactic – spend the opponent into the ground.  As we all know from the recent IPO, although it did not go as well as planned, Facebook still has a ton of money, and access to the resources to make anyone’s life a living hell.  Don’t kid yourself about the price of the stock being in the low $30’s after being initially offered at $38.  I think they are not going to have any trouble paying their attorney bills, and I think the attorneys on these cases are not going to have much trouble paying for college tuition for their kids.

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Although frequently an option of last resort, filing a patent infringement lawsuit is the most direct and aggressive manner of enforcing a patent.  By filing a lawsuit in federal court, you can command a response from an otherwise unresponsive party, stand up to an unreasonable and uncooperative party, or demonstrate a position of extreme assertiveness and willingness to go the distance.  In addition to posturing, there are a number of strategic implications to filing suit that should be fully weighed and considered before taking such a momentous step.

First, filing suit is widely considered to be an aggressive, even hostile, way to broach an alleged infringement.  In essence, it says “we are extremely confident in our case and are uninterested in negotiating outside the scope of a lawsuit.”  From the perspective of the target of the suit, they may not have ever heard of your company, your patent, or your competing product.  Needless to say, if this is the first event in the relationship between the two parties, it does not create a friendly atmosphere.

Making such an aggressive first move can have a number of consequences, depending on the character and resolve of the target party.  If they are more timid, more litigation-averse, and comparatively smaller than you, such an aggressive move may serve to frighten them into settling the lawsuit on terms favorable to you.  However, if they are not afraid to litigate and feel threatened, but not frightened, filing suit may serve only to strengthen their resolve against a perceived bully, making them less likely to be reasonable across the settlement table.

Filing suit right off the bat can, in some ways, be seen as a defensive maneuver.  Specifically, as discussed in my last post, sending a cease and desist letter can have the unintended consequence of enabling the recipient to file a Declaratory Judgment action, asking a court to determine the validity of the patent(s) asserted in the letter.  In order to head off this unfortunate circumstance, filing your own lawsuit before contacting the target party prevents you losing control of the litigation process.

A fair question is why is it so important as to who files suit first?  The decision to file a lawsuit brings with it a number of decisions that can be made by and large solely by the filing party.  Perhaps most important is what jurisdiction the suit is filed in.  Many believe there is a “home court advantage” in filing in your own jurisdiction when then opposing party is located outside the jurisdiction.  This is sometimes believed to curry favor with potential jurors who may become involved in the litigation process.  Moreover, it makes the opposing party do the traveling, potentially making them less comfortable than if they were litigating closer to their headquarters.  A second commonly held belief is that some jurisdictions tend to be patentee-friendly, meaning either the court or potential jurors tend to side with the patentee, who created, instead of the opposing party, who copied or stole.  The extent to which either of these perceptions are valid is continuously debated, but sometimes the mere perception of a strategic advantage can be a useful tool.

The decision to file a lawsuit comes with the consequence of ceding a significant degree of control to the court.  Once the suit is filed, a schedule will be made for all of the phases of trial, including discovery, preliminary motions, settlement negotiations, and trial.  Moreover, the judge and jury will have ultimate control of your fate, instead of what you are willing to agree to in negotiation.  Additionally, the cost of litigation, as it progresses, grows exponentially, often becoming a substantial fraction of the amount in controversy.  Frequently, taking a patent dispute through litigation makes little financial sense for either party, especially when the likelihood of success is considered.

This post concludes my series on an introduction to patent enforcement.  I hope it serves as a quick reference to those dipping their toes into enforcement waters, and provides some answers to the most basic of questions.  If you are considering pursuing patent protection, or have a patent in hand and are seeking to enforce it, I strongly urge you to contact an attorney or patent professional who can discuss your individual circumstances and needs with you.  Patent law is a labyrinthine world that, with the right guide, can lead to significant reward.  Thanks for reading, and please continue to read my and all the other terrific authors who post on TacticalIP.com.

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An Office Action is issued by an examiner for the United States Patent and Trademark Office (USPTO), rejecting an application to register a trademark. They typically include issues with “informalities”, like an inadequate sample to show use of the mark, insufficient information regarding the nature of the entity seeking the mark, or insufficient information for the examiner to determine what goods and/or services the applicant provides.

An Office Action could also provide an actual basis for rejection of the mark, usually because of likelihood of confusion with an existing registered mark and genericness or descriptiveness of the mark for which registration is sought.

You have six months to respond to an Office Action. If your problem is “informalities”, you may just have to correct the deficiencies and/or provide additional information. If the examiner takes issues with the mark itself, such as likelihood of confusion, genericness, or descriptiveness, you may have to provide facts and argument to overcome the rejection. If the examiner still doesn’t approve the mark, a Final Office Action (aka a filing refusal) will issue, which you may appeal to the Trademark Trial and Appeal Board.

Office Actions are formal legal proceedings with rules, procedures, and consequences, which must be observed and followed. If the PTO refuses or rejects your application, the U.S. Government will be represented by a trained trademark attorney whose entire job is trademarks, and lots of ‘em. It can take years to resolve an Office Action, but there may be options for resolving your issues registering your mark of which the Examiner may not be aware.

The primary issue with trademarks is the concept of “confusion”. The PTO is concerned with protecting consumers from being sold goods or services from someone they think is someone else. In other words, they want to make sure that your competitor isn’t tricking people into thinking that he’s selling your stuff.

Your response to an Office Action is a permanent and public record, and they can and will be used against you in a Court of law! It’s not that you shouldn’t say anything like in criminal court, but you may be “estopped” from claiming anything beyond the scope of your response. Accordingly, it may be best to avoid arguments that compare your mark to another mark and claim that your mark won’t cause confusion between the marks.

This is but a precis of a primer. For more information, see the Trademark Manual of Examining Procedure or contact a trademark attorney.

Aaron Thalwitzer is an attorney with Zies Widerman & Malek in Melbourne, Brevard County, Florida who practices civil litigation and intellectual property law.

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Relax.  It’s not that kind of post.

Today I am christening a new TacticalIP blog category:  Intellectual Asset Management (IAM).  To introduce some terminology used in the field, I thought I would share the story of my initiation to the world of IAM.

Long before I became a patent attorney, I was a software engineer and entrepreneur.  My five-employee company licensed property insurance rating software to agents across the State of Florida.  One day, I called my only competitor and pointed out that the Florida rating software market “wasn’t big enough for the both of us” (yes, it was an awkwardly John Wayne-esque conversation between two computer geeks).  I eventually agreed to sell my software line of business to the competitor company.

No tangible property changed hands in our sales transaction, as my little software company owned no buildings, vehicles, furniture, nor even our rapidly-depreciating computing hardware.  To support the sale, I collected an inventory of all the intellectual property my company was to formally hand over to the buyer.  For example, our copyrighted software code, training manuals, and website content all qualified as intellectual property.  Also, the trademarked software product name, logo, and slogans I conveyed to the buyer were all intellectual property.  Had my company owned and transferred any patent rights to insurance-related inventions, those patents certainly would have qualified as intellectual property.

Immediately after the deal to sell my rating business closed, the buyer unceremoniously pitched all of my company’s inventoried intellectual property directly into his trash can (figuratively, if not literally)!  Why?  Refer to the beginning of my story:  the buyer was a competitor!  That company already had its own insurance rating source code, training manuals, website content, product name, logos, slogans, etc.  So what exactly did that competitor really buy if not formal, government-registered intellectual property?  It turns out the only asset my company had that was of value to that competitor was … our customers!

While my company was operating, we followed the common industry practice of keeping our customer database confidential to complicate, if not prevent, pilfering of those customers by competitors.  Proprietary information used in the operation of a business and that is maintained confidential for competitive advantage is called trade secret.  My company’s customers were not its property (no company can “own” its customers).  Nonetheless, that trade secret list of customers was certainly an intellectual asset and, in the eyes of that competitor anyway, it was the only asset my company had that was of any value at all to his business.

Moral of the story:  Intellectual assets certainly include formal intellectual property rights (e.g., patent, trademark, copyright), but also may include a vast array of intangibles that nonetheless are of value to the asset holder or to some interested acquirer.  Intellectual Asset Management (IAM) is all about creating, managing and exploiting such intellectual assets to realize value for the owner.  What constitutes an intellectual asset often is limited only to the eye of the beholder.

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By: Mark R. Malek

Sorry for the lack of articles on TacticalIP regarding basic IP rights, but duty called.  I’m going to get back to the series of articles directed to some of the nuances of patent law.  You may recall in my previous article on this situation I indicated that one option might be to enter into a mutually beneficial licensing agreement, or even a cross licensing agreement.

A licensing agreement (I am going to focus on patent licensing agreements for the sake of this article, but you should understand that it is possible to license any intellectual property) is one in where the patent holder grants the licensee (he/she who is the beneficiary of the licensing agreement) the right to make, use, sell, or offer to sell the invention covered by the claims of the patent.  I’ll get into details of licensing agreements in another article but, in short, there is normally some sort of fee for the right to use the patent.  These can be paid up licenses, i.e., the entire fee for the right to sue the patent is paid up front and the license is granted for a certain period of time.  License fees can be paid per use, or as a percentage of sales, or any number of combinations.

Another option is cross licensing.  This is when you and the patent holder license each other the rights to use one another’s patents.  Why would you want to do this?  Perhaps this is your best option.  The reason why the patent holder is interested in your patent is because it is likely an improvement of the original.  We all know that continued success in business does not come with one product.  Sure, there are some one product wonders, but what happens to those companies that do not do anything else, or try to update their products?  They are here today, gone tomorrow.  A couple of examples off the top of my head – beanie babies and silly bands.  Being a father of young children, I have seen these come and go…quickly.

In the case of cross licensing, the original patent holder sees value in what you are doing and is hoping to improve their product line by being able to offer a product that is improved.  You may not want to be creating competition, but sometimes it may be your only option.  There are ways to work such agreements so that everyone wins.  For example, you can insert terms that you agree to a minimum retail price of the product (which prevents one party from drastically undercutting the price of the other party).  You can also set up territories, or include a number of different terms to make sure that the cross-licensing agreement works more like a partnership.

My next series of articles will deal with some mischaracterizations of patent protection, and a discussion about how patents are NOT monopolies!

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By: Mark R. Malek

Anyone who knows me knows that I am an avid (and sometimes rabid) fan of the New York Jets.  Therefore, it is no surprise that my email inbox this morning was flooded with links to a story that Tim Tebow’s attorney has sent a cease & desist letter to a T-Shirt company that is making the T-Shirt pictured below.  The letter can be found here.

As we indicated in some previous articles, cease & desist letters are a good starting point for enforcing your intellectual property rights.  For more information, take a look at the articles here, here and here.  Some of these articles are directed to protecting your patent rights, and some are directed to protecting your trademark rights. Either way, a cease and desist notice is one in which the intellectual property owner merely informs the alleged infringer of their rights, and demands that any further infringement be stopped.

Back to the story at hand, as you can see, the shirt in question changes the current New York Jets logo to read “MY Jesus” instead of “NY Jets.”  So I guess my question is what intellectual property right is Tim Tebow attempting to protect?  The letter indicates that the shirt makes it appear as if Tim Tebow endorses the T-shirt company. Really?  I am trying to figure out why that would be.  Is Tim Tebow the only Jets fan that believes in Jesus (I can say for a fact he is not – I’m one!!)

Of course, when my anti-Jets fan friends (especially the dang Dolphin fans and the Patriot fans) found out about the story, it made for the same joke over and over again – Even Tim Tebow thinks he’s Jesus!  Aghh!  Enough already.  I suspect that young Mr. Tebow does not really understand the ins and outs of intellectual property law and why his overzealous attorney is sending out letters like this.  Granted, Tim Tebow, like the rest of us, does enjoy a right to his own likeness, but it is not as though there is a trademark issue here for Tim Tebow, and if this is about a right to his likeness, then what likeness is being protected.  Does he really think that a reference to Jesus in connection with football is a reference to him?  News flash – there have been plenty of very talented NFL players that believe in and worship Jesus long before Tim Tebow came around.

At best, there may be a trademark issue for NFL Properties, who I believe is the owner of all the NFL logos, or perhaps even the NY Jets.  There is likely even a copyright issue here.  Technically, the NY Jets logo (in all its glory) is afforded copyright protection.  Therefore, this T-shirt can technically be thought of as a derivative work.  With that in mind, not one of these intellectual property rights is Tim Tebow’s to assert.  To the owners of Chubby Tees – I would be pleased to respond to Mr. Tebow’s attorney for you.  Side note – Before the Florida Bar asks, I am not soliciting business…I just want to have some fun with the response to the attorney that thinks the name of Jesus is the same as an endorsement by Tim Tebow!

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As mentioned in my previous post, one strategy in enforcing your patent is to send an entity that is potentially infringing your patent what is called a “Cease and Desist” letter.  The letter has a few core purposes.

First, it provides “actual notice,” which is notifying the allegedly infringing party that you believe they are currently or are about to infringe on your patent.  In patent law, if an entity is infringing your patent, in certain circumstances they may not be liable for the infringement before they are provided with actual notice.  More specifically, if you are not properly marking your product with your patent number, actual notice is required.  Therefore, two elements that should be included in your cease and desist letter are 1) the number of your patent and 2) identification of the products or processes you believe may be infringing.

Second, cease and desist letters often initiate licensing negotiations.  Aside from or in addition to asking/demanding the allegedly infringing party cease their infringing activity, you may offer them a license to your patent, which would reduce the risk to them of the potential infringement liability.
Needless to say, when asking a party to stop their commercial activity and pay you money, the correct tone must be struck in order to create a favorable environment.  However, the need for setting the proper tone goes beyond establishing a good relationship.  A cease and desist letter may be construed by the receiving party as creating an “actual controversy.”  An actual controversy is what is required by federal law before a law suit can be filed.  In this circumstance, the suit that could be filed by the alleged infringing party is a Declaratory Judgment action (“DJ action”), which requires the court to determine whether the allegedly infringing party is actually infringing the asserted patent.  As interpreted by the courts, cease and desist letters may create an actual controversy if it creates a reasonable belief of litigation based on “the totality of the circumstances,” as the Federal Circuit said in Hewlett-Packard Co. v. Acceleron LLC.  If that sounds vague to you, rest assured, you are not alone.  Patent attorneys nation wide struggle with what language to use in a letter to avoid giving rise to an actual controversy.

One might ask what is so bad about creating an actual controversy.  There are two ways it is unfavorable, each presenting a disadvantage depending upon your own enforcement strategy.  If you seek to avoid litigation, and the allegedly infringing party is not so adverse or actually is in favor of litigation, you have provided them with the means to initiate litigation against your own wishes.  If you are willing to litigate, you have given them the ability to file suit in their chosen forum.  Instead of filing in your home court, they may file in theirs, or in another district that they believe provides them with a strategic advantage.  In either case, a cease and desist letter that creates an actual controversy wrests control of the process from your hands, which nobody likes.

The crucial task becomes walking the fine line between providing actual notice without creating an actual controversy.  Courts have explicitly said that such a feat can be accomplished, but have provided little guidance on how to actually go about doing so.  However, certain principles have been construed based upon cases determining whether certain letters provide actual notice and whether certain letters create an actual controversy.

As noted above, tone is key.  If the tone of the letter conveys to the recipient that the patentee is willing to negotiate a license, that goes a long way in heading off a DJ action.  Establishing the correct tone requires the use of many vagaries, such as their product “may infringe” as opposed to “infringes.”  Additionally, the letter must not put the recipient’s back against a wall; they must be given time to investigate both the patent and their own product.  Therefore, establishing an appropriate timeline to initiate licensing negotiations is beneficial.  Providing a claim chart may further demonstrate the seriousness with which you believe they are infringing, as well as showing your commitment to addressing the perceived infringement.

While all of the above suggestions on drafting a cease and desist letter may facilitate avoiding creating an actual controversy, certain facts about the parties may make the task more difficult.  More particularly, if the patentee’s sole source of revenue is the licensing of patents, and the allegedly infringing party is aware of this, then the belief of impending litigation may be more substantial and reasonable.  Similarly, if a patentee has ongoing litigation with other parties related to the same patent, that too may create an actual controversy.  The bottom line is that based on the absence of a bright-line rule from the courts, use your best judgment when considering you, the allegedly infringing party, and the tone created in your letter to avoid undesired outcomes while still moving forward with enforcing your patent.

Next week’s post will deal with a more aggressive tactic; filing suit.

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By Daniel Davidson

As if Mark Zuckerberg wasn’t already anticipating a landmark birthday, not because of age but because of Facebook’s anticipated IPO, he can now add a victory over a potential payout to self-proclaimed Facebook co-founder Aaron Greenspan. 

In the lawsuit which was filed with Massachusetts’ U.S. District Court, Greenspan alleged that he was not properly named in Ben Mezrich’s book  The Accidental Billionaire and was completely misplaced in the big screen story of Zuckerberg’s success, The Social Network.  Unfortunately for him, the judge dismissed the case with prejudice in favor of Defendants Benjamin Mezrich, Random House, Inc., Mezco, Inc., and Columbia Pictures Industries, Inc.

Allegations, in addition to the “defamation” cause above, included copyright infringement, contributory copyright infringement, and vicarious infringement.  Greenspan’s claims copyright infringement of his book Authoritas: One Student’s Harvard Admissions and the Founding of the Facebook Era which was granted a copyright in 2008.  In the judge’s opinion, which can be seen in its entirety here, the notion that ideas cannot be copyrighted is discussed.  The judge conveniently lays out examples of what can be copyrighted and what cannot.  For example, the judge writes, “As to Greenspan’s description of Summers’ assistant in (6), the fact of her ethnicity is not protected; however, the plaintiff’s original expression of the idea of an assistant taking notes should enjoy copyright protection.”

The defamation claim is a somewhat backwards theory for him to sue on.  As some may know, defamation is the publication of false statements against someone which are capable of damaging the reputation of someone, and have caused that person economic loss.  Greenspan argues that by being left out of the movie and being referred to by a different name in the book, he was being defamed.  The judge thought otherwise and states that Greenspan would not be held up to “scorn, hatred, ridicule or contempt” due to the name change and omission.

Greenspan, the last of the Mohicans against Facebook, has already noticed the court that he intends to appeal the decision entered on May 9.

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A recent article on Ars Technica decried abuses by the judge in a copyright case in which $100 million in damages plus vast injunctive relief was granted to the plaintiff, Hermes, a French high fashion house alleging counterfeiting by way of trademark infringement. The judgment was granted by default because the defendants failed to respond, the author Venkat Balasubramani (with comments from Eric Goldman) is not pleased, not pleased at all with this result.

Mr. Balasubramani  concludes that “there was no evidence of damages whatsoever” and that the judge should have “given[n] the defendants a chance and warn[ed] them before making a decision.” According to Mr. Balasubramani, “ party’s failure to respond to lawsuit documents that were emailed to them—particularly where there’s no proof even that the documents have been received by the defendants—is not the type of scenario where courts typically smack defendants for frustrating the judicial process.”

I disagree.

I won’t claim to know with certainty whether the damages were inflated, but according to Wikipedia, Hermes made $2.401 billion in revenue in 2010, netting $421.7 million. I never heard of them before I read the article, but they’re big, and while $100 million is a big number, it doesn’t seem patently absurd that they might be damaged in $100 million. Under the circumstances, I don’t think it’s “laughably” large. Bear in mind, this is coming from someone with his fair share of legal knowledge, but without an ounce of fashion knowledge.

But the damages number is not really what interests me. It’s the impassioned cries that the judicial system has failed the defendants that get me. In this case, the defendants were apparently served by the appropriate means. They failed to respond. The judge is a neutral party. He or she hears facts, argument, and law, and decides accordingly. When one one party doesn’t make any argument or fails to appear to contest allegations, it is not the judge’s role to advocate on their behalf. To do so would violate the due process rights of the plaintiff. Think about what the author is suggesting here. Rather than scales of justice held by Lady Justice, the author would have the Lady prop up one side — even though that side has failed to stand up for itself. That is not fair and it asks too much of our judges. How can they possibly remain neutral and partisan simultaneously?

Now, I’m not suggesting that the defendants shouldn’t have a chance to explain their failure to respond. We have mechanisms and avenues for that, and if they care to utilize them, they probably will. It will be an uphill battle, but my experience suggests that if they have a good reason, the judgment will be vacated.

Mr. Goldman implies that decisions such as this are not good for anyone, missing the point entirely in his attempt to force this decision into a rant about SOPA. The decision is good for one party and bad for the another. Mr. Goldman then says that “[t]rademark owners look like greedy SOBs making pie-in-the-sky demands using procedural shortcuts that almost certainly negate any possibility of opposition.” Obtaining a default judgment is not a shortcut. Our rights often must be asserted or lost. That’s a default judgment, and there’s nothing wrong with it. As for “pie-in-the-sky”, see above. Should plaintiffs ask for less than they think they’re due?

Mr. Goldman concludes that decisions such as this breed “distrust” in our judicial system, but he would have judges assume the role of defense attorneys, to some degree. I would not trust such a judge.

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Congratulations!  Your claims have been allowed, you’ve paid your issue fee, and you’ve received the seal and red ribbon! It’s been years in coming, and now you can kick back and relax, both your mind and your legal budget.  Right?  Maybe not.  The decision of how to utilize a single patent or an entire portfolio of intellectual assets can dictate vastly different steps to be taken by you, your company, and your legal counsel, not to mention potential infringers.  This post is intended to be the first in a series for a newly minted patentee, giving them an overview of how they might choose to proceed with enforcement of their patent, identifying potential pitfalls, and describing alternative strategies to allow the patentee to make a more informed decision.

There are many companies that employ a defensive posture to their patent portfolio.  This is a strategy most commonly adopted by corporations offering multiple products, often that are very different in their makeup and function.  However, to many, this represents an underutilization of the value offered by patents.  Indeed, patents grant you a “negative” right – the right to prevent others from making, using, or importing the invention described by your patent.  So, if you’re going to  enforce your patent, what is the best way to go about it?

A first, very common action is to send a “Cease and Desist” letter.  A Cease and Desist letter, or “C&D,” notifies the recipient that you believe they are engaged in an activity or are making a product the includes all the elements of your patent.  Sending a C&D is a very effective way to accomplish a number of things.  First, it makes the recipient aware of your patent.  This is a requirement for some remedies in a patent suit that will be discussed in a later post.  Second, it presents you with the opportunity to initiate licensing negotiations with the recipient.  Whether you want a license or not is a strategic decision that must be made before sending the C&D, although other alternatives will be discussed if a license is not in your plan.

It is important to be aware of the risks involved in sending a C&D.  Most importantly, it does notify the recipient about your patent, at which point they may decide to design around your patent, thus potentially ceasing their allegedly infringing activity.  Were they not aware of the patent, they may have continued with the activity, increasing their exposure and, potentially, their liability.  Secondly, depending on the wording used in the C&D, the recipient may have cause to seek a Declaratory Judgment, which is essentially asking a court to decide whether the patent(s) included in the C&D are valid.  There are a number of strategic implications resulting from this that will be discussed in a later post in this series.

An alternative to sending a C&D is filing suit in Federal Court.  The only remedies for patent infringement are in the federal court system.  Filing suit conveys a very strong message, that you seriously believe the target of the suit infringes your patent, and that you are willing to litigate the matter.  However, such a strong move can have negative consequences.  Someone who has been served with a lawsuit might feel threatened to the point that they become less willing to negotiate a license.  Moreover, a significant risk of any patent suit is the risk of having your patent invalidated by the court.  Indeed, much as with choosing a C&D, there are many strategic ramifications in filing a suit as your opening salvo.

A third option is to file suit, but not serve the defendant with the suit.  In many jurisdictions, the plaintiff may wait up to thirty days before serving their complaint on the defendant.  This tactic offers a middle ground between the two options described above.  First, it is a rather significant show of strength and commitment of the plaintiff’s willingness to enforce their patent rights.  Second, it might not provoke as strong a reaction on the part of the defendant, as the suit is not active until the defendant has been served.  Moreover, this tactic also imposes a rather firm time frame on any settlement negotiations.

Each of the above strategies offers a number of strategic advantages and disadvantages that will be discussed in coming posts.  Until then, consider your own preference for adversity, what your desired outcomes are, and what reputation you want to make for yourself when deciding on a course of enforcement.

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The BitTorrent lawsuits (otherwise known as copyright troll lawsuits, often involving porn-related plaintiffs), have been smacked down again. I’ve spoken about these cases many times before, including the basics of pre-suit strategy, defenses both procedural and on the merits, and even the discovery shenanigans that go into such cases.

Those trolls just got smacked down. New York Judge Gary Brown spelled it out in a 26-page order dated May 1, 2011. I highly recommend reading the entire order. It’s a great read and provides an outline for other courts to deal with the onslaught of copyright troll litigation. Judge Brown recites some of the factual defenses presented by defendants:

The factual defenses presented are vastly different and highly individualized. One movant, John Doe #16 has stated that he was at work at the time of the alleged download. John Doe #2 states under oath that he closed the subject Earthlink account, which had been compromised by a hacker, before the alleged download. John Doe #29’s counsel represents that his client is an octogenarian with neither the wherewithal nor the interest in using BitTorrent to download Gang Bang Virgins. John Doe #10 represents that downloading a copy of this film is contrary to her “religious, moral,ethical and personal views.” Equally important, she notes that her wireless router was not secured and she lives near a municipal parking lot, thus providing access to countless neighbors and passersby.

(internal citations omitted).

Judge Brown also found that since a single IP address could be used by many different computers, the trolls’ quest for names associated with IP addresses disingenuous:

An IP address provides only the location at which one of any number of computer devices may be deployed, much like a telephone number can be used for any number of telephones . . . Thus, it is no more likely that the subscriber to an IP address carried out a particular computer function here the purported illegal downloading of a single pornographic film than to say an individual who pays the telephone bill made a specific telephone call.

Judge Brown notes that different members of the same household could additionally have performed the alleged downloads, as well as neighbors or passersby (if the wireless routers were unsecured). Citing a case from just a few months ago, the Court chastised counsel for their extortionist practices:

The Court is concerned about the possibility that many of the names and addresses produced in response to Plaintiff’s discovery request will not in fact be those of the individuals who downloaded “My Little Panties # 2.” The risk is not purely speculative; Plaintiff’s counsel estimated that 30% of the names turned over by ISPs are not those of individuals who actually downloaded or shared copyrighted material. Counsel stated that the true offender is often the “teenaged son … or the boyfriend if it’s a lady.” Alternatively, the perpetrator might turn out to be a neighbor in an apartment building that uses shared IP addresses or a dormitory that uses shared wireless networks. This risk of false positives gives rise to the potential for coercing unjust settlements from innocent defendants such as individuals who want to avoid the embarrassment of having their names publicly associated with allegations of illegally downloading “My Little Panties # 2.”
Digital Sin, Inc. v. Does 1-176, — F.R.D. –, 2012 WL 263491, at *3 (S.D.N.Y. Jan. 30, 2012).
Other courts have found that the litigation tactics indicate:
[T]hat the plaintiffs have used the offices of the Court as an inexpensive means to gain the Doe defendants’personal information and coerce payment from them. The plaintiffs seemingly have no interest in actually litigating the cases, but rather simply have used the Court and its subpoena powers to obtain sufficient information to shake down the John Does.” Raw Films, 2011 WL 6182025, at *2.
The Judge sorted through the BS and found that all they trolls really wanted was a name, someone to threaten and extort and from whom they could make a few thousand dollars.

Judge Beach labels mass-BitTorrent lawsuits a “waste of judicial resources” and recommends that other judge do likewise. Lastly, Judge Beach also found that the “swarm” joinder of unnamed defendants violated Rule 20, further wasting judicial resources and improperly avoid paying filing fees.

The Court granted subpoenas to John Doe 1 only in each of the cases and recommended that each John Doe be filed as a separate lawsuit in the future. If the severance recommendation become the rule of law nationwide, we would likely see the end of this type of copyright troll. The filing fees aren’t worth it for them.

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Danie Roy

After ignored requests to voluntarily block The Pirate Bay, UK Internet Service Providers (ISPs) are now being ordered by the High Court to block the popular link site.

Like any good internet provider, the UK ISPs did not take blocking sites lightly. Even though The Pirate Bay is a site infamous for infringing copyright, requests to block content should always be considered a big deal. Not simply acquiescing to anyone who requests a content block does, after all, prevent innocent sites from being blocked (although I think we can all agree that The Pirate Bay is anything but innocent).

So, what happens now? Well, the UK ISPs will block The Pirate Bay, probably using a redirect. How will they enforce it?Well, after that, there’s not a whole lot the ISPs are required to do… which is why they probably won’t be held accountable when tech savvy pirates bypass it. Now, keep in mind, I don’t condone bypassing blocks to The Pirate Bay… and I’m quite sure we all know I don’t condone the use of The Pirate Bay. However, as someone who has been on the internet for longer than 10 minutes and also has a basic understanding of how the internet works, I know that those blocks are very easy to bypass. You don’t even need to be a “1337 H4X0RZ!1″ to do it, either. And no, I’m not going to tell you how.

I tend to agree with Virgin Media, who pretty much summed up the most reasonable take on this whole thing:

As a responsible ISP, Virgin Media complies with court orders addressed to the company but strongly believes that changing consumer behaviour to tackle copyright infringement also needs compelling legal alternatives, such as our agreement with Spotify, to give consumers access to great content at the right price.

We’ll see how this plays out.

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Last month, the USPTO released  a reporttitled “Intellectual Property and the U.S. Economy: Industries in Focus”. Weekend reading material! The report “aims to promote a better understanding of the industries where IP plays a particularly important role.” The report goes on to note that “[t]he entire U.S. economy relies on some form of IP, because virtually every industry either produces or uses it.” So they may have gotten a little carried away with themselves — or did they? I defy you to identify an industry that doesn’t produce or use IP. I can’t think of one, though there are industries which are certainly more IP-intensive. According to the report, “75 industries (from among 313 total) [are] IP-intensive.” These IP-intensive industries directly accounted for 18.8 percent of all employment in the U.S. economy, in 2010.

The breakdown is even more interesting. Off the top of my head, I might have guessed that patents would lead the way. Nope. Trademark-intensive industries provided 22.6 million jobs, patent-intensive industries accounted for 3.9 million jobs, and copyright-intensive industries provided 5.1 million jobs (all data 2010). The report states that these industries accounted from “about $5.06 trillion in value added, or 34.8 percent of U.S. gross domestic product (GDP).” Note the distinction. They’re not saying IP independently added trillions in value; the industries did. But without the protections afforded by IP, would those industries generate so much revenue?

Since many IP-intensive industries are in the manufacturing sector, which has long been on the decline in terms of jobs created (but not productivity), these numbers are actually low, particularly for patent-intensive industries. Another surprise to me was that “[w]hile trademark-intensive industry employment had edged down 2.3 percent . . . copyright-intensive industries [grew] by 46.3 percent between 1990 and 2011.” Another fun fact for you to ponder this Monday morning.

Not surprisingly, IP has been recovering from the Great Recession at a higher rate than non-IP intensive industries. “[B]etween 2010 and 2011, the economic recovery led to a 1.6 percent increase in direct employment in IP-intensive industries, faster than the 1.0 percent growth in non-IP-intensive industries. Growth in copyright-intensive industries (2.4 percent), patent-intensive industries (2.3 percent), and trademark-intensive industries (1.1 percent) all outpaced gains in non-IP-intensive industries.”

Furthermore, these are good jobs, on average 42 percent higher than the average weekly wages in other (non-IP-intensive) private industries. And the discrepancy is growing, having “nearly doubled from 22 percent in 1990 to 42 percent by 2010.” Much of this corresponds to the fact that these workers are better educated than their non-IP counterparts.

Importantly, merchandise exports of IP-intensive industries accounted for 60.7 percent of total U.S. merchandise exports. The U.S. doesn’t manufacture goods, it manufactures innovation (I should be in marketing).

The report sums up the importance of IP. It’s an ideal, and hopefully one which the USPTO and Congress will seek to facilitate:

One important way to help encourage innovation is through the protection of intellectual property (IP). The investments necessary to develop IP are often quite substantial. Firms and individuals, in order to invest the necessary resources, need some assurance that they will benefit from and recover the costs of the creation of intellectual property. IP rights help protect authors, inventors, and merchants of goods and services from having their creations and innovations quickly and easily exploited by other firms or individuals, diminishing the benefits to the inventor of the IP. This reduction in private benefits to be gained from the underlying innovation could, in turn, reduce the incentives to undertake the investments necessary to develop the IP in the first place.

Here, here!

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Today has been designated by the World Intellectual Property Organization as IP Day, the anniversary of the day WIPO came into force.  This celebration is provides an opportunity to appreciate how intellectual property is inextricably embedded into so many aspects of our lives.  More and more, the various forms of intellectual property, and the laws governing them, are entering into the public eye and media.

It is undeniable that the public at large is getting more involved in IP issues.  The somewhat noticeable spike in Google searches for SOPA in January of this year is not likely due to an increased interest in fried pastries.  Blogs, articles, and involvement in IP matters have been on the increase.  What’s more, there has been a noticeable uptick in IP-related cases being granted certiorari by SCOTUS.

Given this preamble, one must ask what the best way to celebrate this ever increasingly important holiday?  I have a few suggestions.

There are innumerable top ten lists about weird and strange IP registrations.  A recent favorite of mine is Context-Free Patent Art which, well, should just be experienced.  Or, you can always just take a gander at the most recently issued patents and trademarks (in the U.S., at least).  Or engage in a lively discussion with this guy.  No matter what, know that merely by engaging in your own edification and contributing to the ongoing discussion, you elevate IP practice and direct its progress towards a more perfect system.

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A man with a big heart, and just as large of fists said, “service to others is the rent you pay for your room here on earth.”  Zies Widerman & Malek feels just as strongly about service to others as a left hook from Muhammad Ali.  That is why we have put a team together and are participating in the walk for babies.

The March of Dimes, a national charity with their focus on the awareness of premature birth, has organized a walk this coming weekend in Brevard County to raise money and eyebrows about the growing problem.  On Saturday, April 28, 2012, at 5:00 p.m. in Jetty Park of Port Canaveral, a walk is being held to raise money for research to find treatments and prevention of babies being born too soon.  To find out more about attending the walk, please visit Team Zies Widerman & Malek’s walk page here. Donations are very welcome too.

Although I am new to this charity, I have been reading up on the issue.  According to the March of Dimes website,  the cause of most premature births is unknown.  Over the past 6 years, more than $15 million has been granted to look further into premature births.  Variables such as genetics, environment, and infections have been associated with possible explanations for a baby coming into the world too early.

In addition to their strides in the prevention spectrum, they also contribute to the treatment of preemies.  Since not much is known about the reasons, March of Dimes’ commitment to the prolonging of life is second to none.

I am thrilled that such a noble cause will be benefitted by the giving hands of Brevard County this weekend.  I encourage all to pay their rent, whether it be this weekend, or in a walk near you.  Cheers.

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I’ve written previously on using the virtues of judo when responding to a cease and desist without going overboard. What about when you’re faced with someone infringing or diluting your trademark? What options are there, other than the C&D?

Understandably, many trademark owners, after the initial rage subsides, will call up their brother’s ex-girlfriend’s cousin who once knew a lawyer in Omaha and have them write a nasty C&D and “see what happens”. That might work. It is certainly cheaper on the front end. Or is it? Whether to send a C&D is not a simple question.

For many product and service providers (i.e. businesses), their brand is their stock in trade. Without trademark protection, their brand may as well be your competitor’s brand. I’m fond of saying that only McDonald’s could serve billions of crappy burgers in every corner of the globe. John Doe’s Burgers could never pull that off. It’s all in the brand. Infringers are taking shortcuts, cheating, and basically capturing your goodwill, as embodied in trademarks, which are worth fighting over. The question is whether a fight is necessary, and if so, how and when should you start the fight.

Most trademark owners know, at a gut level, that an infringer must be stopped, or at least put on notice that they are infringing. Failure to do so causes the trademark to lose its integrity and legal protections. C&Ds are cheap, and especially for small businesses and startups, are a cost-effective way to enforce their rights.

A C&D is not unlike most demand letters. The trademark owner states that she owns certain rights, the recipient is infringing on said rights, such infringement creates certain causes of action for damages and injunctive relief (e.g. trademark infringement, unfair competition, cybersquatting or dilution under federal and state laws); and litigation may ensue if the infringement does not cease.

You are well advised to consider a C&D prior to litigation, for obvious reasons. Litigation is expensive, time-consuming, stressful, and uncertain. On top of that, if you sue without first making demand to cease, the judge may believe you are being a hasty litigant.

However, sending a C&D can have unforeseen consequences. Your competitor could read your letter and decide that rather than bothering with negotiation or waiting to be sued by you, it should take the offensive and sue first. A suit in federal court for declaratory relief — basically a court order stopping you from infringing on the infringer, could ensue.

In a declaratory judgment lawsuit, the alleged infringer would ask the court to “declare” that it is not infringing your rights. They might ask the judge to hold that your trademark is unenforceable. Now you’re on the defensive — though you can, and maybe should, counter sue.

There are advantages to suing first. You can pick the most favorable venue for your case, probably your home turf. This advantage is greater if your adversary is far away, or if they have a smaller war chest with which to litigate. Of course, the other party can move to transfer the case, but then you’re already behind the eight ball.

Additionally, dispensing with the customary C&D and suing on your home turf, while possibly more costly at first, certainly sends a stronger message. Your adversary might be unable or unwilling to defend a lawsuit.

A third option might be to send a different sort of letter. Rather than demanding that the infringer cease and desist and accusing them of infringement, you might simply inquire as to their use of the mark and make clear your intent to resolve the matter amicably. Before sending any letter, be sure that you have higher priority rights to the trademark. Nothing is worse than sending a C&D full of bravado, then learning that your competitor has better rights to the mark. Do your homework. If it turns out that the would-be infringer has better rights, sending out the first C&D could foreclose defenses that the marks do not overlap.

So, next time you spot a potential infringer, think hard before sending a C&D. You have options, so use them.

Aaron Thalwitzer is an attorney with Zies Widerman & Malek practicing civil litigation and intellectual property law in Melbourne, Brevard County, Florida.

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By Daniel Davidson

German Brew Masters, Duff Beer UG, are putting News Corp’s Twentieth Century Fox’s (“TCF”) European trademarks for “Duff” to the test.  In a recent suit filed by Duff Beer UG, the actual beer maker, which does not have anything to do with The Simpsons, is asking a European court to reverse a previous decision, by the EU trademark office, that the beer maker could not register “Duff.”

Is it fair to say that it is a little absurd that a trademark exists for a fictional beer?  Don’t get me wrong, the Simpsons has made me chuckle for a long time now, but seriously?  I’m no expert on EU trademark law, but I would have to assume that it is somewhat similar to U.S. trademark law.  If not, I apologize.  So, how is it that TCF was able to allege use of their mark for beer?  Are they selling their “Duff” beer in commerce?  I’ve never bought one (though that would be awesome).

It doesn’t seem to be crazy that TCF could come out on top.  In 1996, TCF was able to cease an Australian beer distributer from “cheersing” their “Duff” beer.  I did a quick google search to make sure that TCF isn’t selling “Duff” beer.  In doing so, I came across an article in which they claim that the creator of the Simpsons, Matt Groening, is against making a real beer called “Duff” because it would encourage kids to drink.

It will be fun to see which way the European court goes with this one.  Here is to the weekend.  Cheers.


SATURDAY, JUNE 02, 2012

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