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Fiskars has registered the orange of their scissors.

Many products use a particular color to distinguish themselves.

The definition section of the Lanham Act, 15 U.S.C. § 1127, defines trademarks as including “any word, name, symbol, or device, or any combination thereof”. Further, the Court held that a product feature is only functional, and thereby barred from trademark protection, “if it is essential to the purpose of the article or if it affects the cost or quality of the article”. 514 U.S. at 165. Under this case, products with potentially confusing colors would be denied protection under the so-called “functionality doctrine”.

There are generally two reasons for this, which often overlap. First, the color may be useful or have a function, for example, chewing gum may match color with flavor — think red cherry gum. Second, the color may purely aesthetic, like a black iPhone; color here serves no functional purpose but is an aesthetic consideration. The United States Supreme Court in Qualitex Co. v. Jacobson Products Co., Inc., 514 U.S. 159 (1995) held that a color could meet the legal requirements for trademark registration under the Lanham Act, provided that it has acquired secondary meaning in the market. That means that a color alone could be a trademark, if it isn’t a useful feature of the product (and usefulness doesn’t include identifying the product’s brand).

This leads to problems that defy common sense. Why should you be forced to pick a less useful color in order to get trademark-type protections? The flip side of this is that there are only so many colors distinguishable by the human eye. We all know Coca-Cola red, but if that red was shifted only slightly, you’ve got a new color, but is there a likelihood of confusion? US intellectual property law is behind the times on this issue. Colors have been increasingly used as trade marks in the marketplace, but color was was not considered to be a distinctive ‘trademark’ until the World Trade Organization Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) was ratified. TRIPS created minimum standards of protection and regulation for most forms of intellectual property in all member countries of the WTO. TRIPS also broadened the legal definition of trademark to encompass “any sign…capable of distinguishing the goods or services of one undertaking from those of other undertakings” (article 15(1)).

Most if not all major corporations have registered trademarks with the USPTO, and why not? Trademark protection is some of the best bank for your buck around relating to property rights. When I drive around my hometown of Melbourne, Florida, I can’t help but think of all the businesses that should register at least some aspect of their trademark.

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By Rene Dial

What a week in the world of intellectual property protection!

Okay I am trying to figure this one out.  Legislation is/was being pushed through with regard to SOPA and PIPA.  Read Danie Roy’s article here.  Then a couple of days after Wikipedia, Craig’s List, Google, and a bunch of other sites were down in protest to SOPA and PIPA the government shows that they do have the power to stop online piracy overseas. On Thursday the US Justice Department and FBI shut down Hong Kong based company Megaupload, seized $50 million in assets, and begun extradition proceedings in New Zealand for the company founder according to Robot6.comicbookresources.com.

Let me get this right the government has the ability to shut down a site for alleged copyright infringements, freeze assets, extradite those involved from other countries but yet we need SOPA and PIPA to allow us to basically do what was just done to Megaupload.  Not sure about you but how about we utilize the laws we already have in place instead of enacting new broader legislation.

To be honest I never heard of Megaupload before this hit the news.  I am one of those guys that believes in paying the artist so that the artist can continue to put out music or movies that I love.  A lot of the problems with the industry now is getting the product to the masses in a cheaper and more efficient way.  The music industry has done a great job but movies are a different story.  A person can go to a Redbox and rent a movie for a dollar but if they want to stream the movie from a website or cable provider the provider wants somewhere between $5 to $7 to stream the same movie and they do not have to deal with inventory or with maintenance of a box somewhere. Okay I will stop my rant and get back to Megaupload.

According to ABCnews.go.com the indictment alleges that Megaupload caused a half-billion dollars in copyright losses.  A copy of the indictment can be found at onlinewsj.com.  As this is a criminal indictment I am curious to see how this plays out and if the hearings will occupy the news stations as some other well known criminal trials have in the past.  On ABC.com the article had a quote that was placed on Megaupload before the site was taken down. “Ira P. Rothken, a lawyer for Megaupload in Novato, Calif., said “the allegations do not appear to have support in the law, and the company is going to vigorously defend against them.”"  Something tells me that they really do not have a choice but to vigorously defend themselves as they are facing criminal not civil charges.

Have a great weekend!

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So, you want to make money from your intellectual property? First, read this article by Mark Malek here. Now that you’re primed like a lawnmower, I’m sure you’d agree that making money is more likely to happen if you’re not losing money, no? Stay with me. If you get sued, the best you can usually hope for is breaking even, and, usually, legal fees and the time you waste will result in a net loss, even if you win. If you lose, and judgment is entered against you, or you decide it is in your best interests to settle, cash is still flowing the wrong way. One of the considerations in deciding upon a settlement amount is the potential net loss. If you have no assets, you have less to lose. If you have assets (intellectual property among them, and possibly the most valuable), you have much to lose, and the other party(ies) knows this. Therefore, each and every one of you should educate yourselves on protection your assets, especially if  they are valuable.

The area in and around Melbourne, Florida and Brevard County, Florida, where I practice law, are densely packed with technology and media companies, for whom intellectual property is often the substance of their business. Many of these companies know that patents, trademarks, copyrights, and trade secrets are their primary income source, without which they could not thrive or even survive. The most obvious, common, and often cheapest way to protect your IP is to properly transfer it to a separate limited liability company (LLC). For example, your company could create a business structured as follows. The founder of a company create a holding company structured as corporation. The corporation then two LLCs, one which owns and holds the IP, and one which has contact with the public.

Or, you could do without the holding company and just have the operating company lease the IP from the IP holding LLC See a lawyer for this. There are no ifs ands or buts; it is not hard to mess up the formalities which make possible the asset protection in the first place. There might even be tax advantages to such an arrangement, see a lawyer or accountant on that.

Of course, NastyCo sues your holding company, you lose big, and the holding company decides to file bankruptcy. With the asset protection structure we set up, it will probably be much more difficult for creditors (i.e. the people you owe money to) to reach your IP. As long as everything is done correctly, the LLC’s assets are reachable only by charging order — meaning the creditor gets any distributions otherwise allocated to members, but doesn’t actually control the assets. Even better, if the LLC allocates profits without distributing them , the creditor must pay taxes on those profits, even though he/she can’t touch them! Fun stuff.

There are other advantages to separating your IP assets from your operating company. You may retain more control over the assets if your company loses control to a private equity firm who lent you money. Again, more leverage. The corporate veil is tough, and expensive, to pierce, but, for experienced attorneys, relatively easy and inexpensive to create. In Florida, you can check out sunbiz.org for the basics of creating LLCs and other business entities, but to realize the full benefit of these entities, contact an attorney.

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By: Rene Dial

While I was perusing the web I ran across an article with regard to Dr. Pepper suing its oldest distributor over the Dr. Pepper trademark.  Yes, that is exactly what I was thinking… Why are they suing their own bottling company over the trademark if they are selling the corporation’s product and if there is an issue, why not pull their contract to bottle Dr. Pepper.  Okay yes, it took me a few minutes to realize they were talking about Dublin, Texas not Dublin Ireland as well.

It seems that the bottler was adding the Dublin name to the Dr. Pepper mark resulting in, you guessed it, Dublin Dr. Pepper which is causing dilution of the Dr. Pepper mark.  Using the mark in this manner would make Dublin the trademark and Dr. Pepper the generic name for the drink which as a trademark owner you do not want.  If the mark is used in this manner there is the potential for the mark to go the way of aspirin and become the name for the type of product instead of the source of the product.

According to the article I read on WSJ.com Dublin makes their Dr. Pepper from cane sugar unlike most other bottlers that use high fructose corn syrup.  Funny as I always thought that the different manufacturers all had to use the same formula to make the product.  The bottling company has agreed to stop bottling and distributing Dr. Pepper as part of the settlement.

I do not have a copy of the complaint or settlement so I am not sure as to how long Dublin has been using the name with the trademark to sell Dublin Dr. Pepper and related paraphernalia or else I would go a little more in detail about the case.  The coffee mugs and other related items were supposedly being sold over the internet and I can only assume that Dublin Bottling not Dr. Pepper Snapple Group was receiving the proceeds.

With the historic value of being the oldest bottler, the surrounding town’s tourism, why not come to some other agreement.  I wonder if Dr. Pepper will force the town to take down their signs?

Have a great weekend.

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By Rene Dial

It never ceases to amaze me how often we hear of lawsuits over comic book characters once the studio decides to turn it into a movie. Most recently the creator of Ghost Rider lost in court to Marvel Entertainment in a copyright lawsuit that was filed in 2007.

Not long ago I wrote an article dealing with the same subject with regard to the Avengers and the X-Men.  The family of Jack Kirby filed suit to terminate copyright grants to Marvel.  The ending in both cases was that the characters were created as works for hire belonging to the employer.  Since this subject keeps popping up I think we should have a better understanding of what a work for hire is.

A “work for hire” defined under Section 101 of the Copyright Law is

  1. a work prepared by an employee within the scope of his or her employment

or

  1.  a work specially ordered or commissioned for use as a contribution to a

collective work, as a part of a motion picture or other audiovisual work, as

a translation, as a supplementary work, as a compilation, as an instructional

text, as a test, as answer material for a test, or as an atlas, if the parties

expressly agree in a written instrument signed by them that the work shall

be considered a work made for hire. For the purpose of the foregoing sentence,

a “supplementary work” is a work prepared for a publication as a secondary

adjunct to a work by another author for the purpose of introducing,

concluding, illustrating, explaining, revising, commenting upon, or assisting

in the use of the other work, such as forewords, afterwords, pictorial illustrations,

maps, charts, tables, editorial notes, musical arrangements, answer

material for tests, bibliographies, appendixes, and indexes; and an “instructional

text” is a literary, pictorial, or graphic work prepared for publication

and intended to be used in systematic instructional activities.

What it boils down to is unless you have an agreement stating otherwise and someone requests and pays you for creating a work of art such as a comic book character there is a pretty good chance that the person that hired and paid you owns your creation.  I feel for artists that create these awesome characters.  Out of the hundreds if not thousands of characters they create one sticks and becomes famous and the creator gets their agreed upon paycheck while the studio makes millions if not billions of dollars.  The good is that the artist gets paid to do what they love and create while the employer foots the bill.  Bad news is they do not own their creations and have no control over the future of their creation or profits.  These artists need to take a lesson from photographers because you hire them to take pictures and somehow they still charge you for the copyright to the pictures you paid them to take!

Have  a great weekend!

 


THURSDAY, MAY 17, 2012

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