Category: Intellectual Property

UKIPO Knocks Undefeated Reds off Their Perch: The Liverpool Trademark and Lessons for Brand Owners

To the interest of many a scouser and football fan alike, Liverpool Football Club’s attempt to register as a UK trademark LIVERPOOL has been rejected by the UKIPO on the grounds that the word is of “geographical significance” to the city. Liverpool FC had filed its application in regards to various goods in relation to football and the filing had attracted significant public attention.

Other English football clubs (Everton, Chelsea and Tottenham) have managed to register several trade marks for each of their respective area names. In addition Southampton Football Club has managed to register SOUTHAMPTON as an EU trade mark. As a result, it is not surprising that Liverpool FC would seek to register a similar mark to help protect its valuable brand.

However, as a result of the filing the club received significant backlash from the people of Liverpool, including their own supporters, and – probably in a related move – Liverpool FC has said that it does not plan to appeal the refusal and it has withdrawn the application. An additional trade mark application for LIVERPOOL with different claims has also been withdrawn.

The matter presents a great case study for brand owners on balancing the need to protect their brand whilst being considerate of the potential adverse PR that will come with the application for certain trade marks.

Innovation in protecting your brand

Brand owners certainly need to adopt innovative tactics when looking to fight counterfeiters and to protect their brand and Liverpool FC has shown a keen eye to identifying new brand assets.

Liverpool FC may have been unsuccessful with this application but they recently successfully applied to trade mark the phrase “LET’S TALK ABOUT SIX BABY” in the UK. The saying was coined by Reds Manager Jürgen Klopp when he ended his run of six successive final defeats and claimed a first trophy as Liverpool FC’s manager with the UEFA Champions League triumph earlier this year. No doubt will form an important part of the club’s merchandise moving forward and is a cunning registration.

Consideration of PR implications

However, all innovative steps in brand protection must be considered in their context.

Liverpool FC argued that the trade mark application was purely “in the context of football products and services” and to stop counterfeiters from benefiting from the sale of counterfeit Liverpool FC products. However, this does raise the question as to why the existing portfolio of club name, mottos and logos would not be sufficient to defeat the majority of inauthentic products that are currently on the market.

In addition, the vitriol with which the application was greeted raises further queries concerning the club’s decision to apply to register the trade mark. The Liverpool FC supporters group ‘Spirit of Shankly’ called the UKIPO’s rejection of the application a “victory for common sense” and declared that the word LIVERPOOL belongs to the “city of Liverpool”. Supporters also took the decision to wear non-official items of clothing carrying the club’s name and logo during a match against Newcastle in protest.

As a result, the case highlights the perils brand owners face when pursuing a robust approach to protecting their brand, particularly when looking to register terms as trade marks with cultural significance. Applicants must bear in mind the negative PR that can accompany any new filing strategy.

Copyright 2019 K & L Gates

ARTICLE BY Simon Casinader and Niall J. Lavery of K&L Gates.
For more trademark law, see the National Law Review Intellectual Property law page.

A Dark Day for Franchising: Ninth Circuit Reinstates its Misguided Vazquez Decision, Undermining the Franchise Business Model

In the course of a politically-charged frenzy to eliminate the misclassification of employees as independent contractors, the franchise business model has been trampled without respect by both the courts and the legislature in California, disrupting commercial relationships that have been a vital driver of the state’s economy for more than fifty years.  Only five years ago, the California Supreme Court acknowledged the vital importance of franchising to the California economy in generating “trillions of dollars in total sales,” “billions of dollars” of payroll and the “millions of people” franchising employs.  Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474, 489.

Taking into account the “ubiquitous, lucrative, and thriving” franchise business model and its “profound” effects on the economy, the Patterson court held that the usual tests for “determining the circumstances under which an employment or agency relationship exists” could not be applied to franchises.  Id. at 477, 489 and 503.  To avoid disruption of the franchise relationship and turning the model “on its head,” a different test that took into account the practical realities of franchising had to be applied to franchise relationships.  Id. at 498, 499 and 503.  The “imposition and enforcement of a uniform marketing and operational plan cannot automatically saddle the franchisor with responsibility.”  Id. at 478.  A franchisor is liable “only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees.”  Id. at 497-98.  The special rule for franchising has been commonly referred to as the “Patterson gloss.”

On September 25, 2019, a panel of the Ninth Circuit Court reinstated an opinion it had previously published on May 2, 2019, then withdrew on July 22, 2019, recklessly undermining the delicate framework of the franchise business model in derogation of the California Supreme Court’s “Patterson gloss.”  Vazquez v. Jan-Pro, 923 F.3d 575 (9th Cir. May 2, 2019), opinion withdrawn, 2019 US App. Lexis 21687 (July 22, 2019), opinion reinstated, 2019 BL 357978 (9th Cir. September 24, 2019).

The “Patterson gloss” arose from the California Supreme Court’s subtle appreciation for the historical development of the franchise business model.  At the heart of all franchise relationships is a trademark license.  At common law, trademark licenses were seen as a representation to the public of the source of a product.  An attempt to license a trademark risked the forfeiture of any right to royalties and the abandonment of the licensed mark.  See Lea v. New Home Sewing Mach. Co., 139 F. 732 (C.C.E.D.N.Y. 1905); Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959).

Although the Trademark Act of 1905 did not allow for the licensing of trademarks, the Trademark Act of 1946, the Lanham Act, 15 U.S.C. § 1051, did allow a trademark to be licensed, but only where the licensee was “controlled by the registrant. . . in respect to the nature and quality of the goods or services in connection with which the mark is used.”  15 U.S.C. § 1127.   After the passage of the Lanham Act, a trademark could be licensed, as long as “the plaintiff sufficiently policed and inspected its licensees’ operations to guarantee the quality of the products they sold under its trademarks to the public.”  Dawn Donut, at 367.  After the Lanham Act had legitimized trademark licensing, the franchise model began to emerge in the 1950s, as the Patterson court noted (at 489), leading to the explosive growth of franchising over the last seven decades.

“Franchising is a heavily regulated form of business in California.”  Cislaw v. Southland Corporation (1992) 4 Cal.App.4th 1284, 1288.  Franchisors must provide prospective franchisees with detailed pre-sale disclosure documents under the California Franchise Investment Law, Corporations Code § 31000 et seq. and the FTC Rule, 39 Fed. Reg. 30360 (1974).  There are criminal, civil and administrative consequences for failure to comply.  Franchisees’ rights are protected by the California Franchise Relations Act, Business & Professions Code § 20000, et seq., which includes recently enhanced penalties for non-compliance.

Over the years, California courts have acknowledged the fundamental obligation of franchisors to impose controls over their licensees and have uniformly held that such controls do not create an employment or agency relationship.  See, e.g., Cislaw, 4 Cal.App.4th at 1295 (the owner of a brand may impose restrictions on a licensee “without incurring the responsibilities or acquiring the immunities of a master, with respect to the person controlled.”); Kaplan v. Coldwell Banker (1997) 59 Cal.App.4th 746, (“If the law were otherwise, every franchisee who independently owned and operated a franchise would be the true agent or employee of the franchisor.”).  This doctrine came to be known as the “Patterson gloss” and is the glue that holds the franchise business model together—allowing the franchisor to exert the controls necessary to license a trademark without incurring the responsibilities of an employer.

In its September 25, 2019 decision in Vazquez, the Ninth Circuit once again discarded the Patterson gloss like an extra part found in the bottom of an Ikea box after the hasty assembly of an end table.  According to the Vazquez court, Patterson had no relevance because it was just a vicarious liability decision, not an employment decision.  But Patterson was an employment case.

Patterson was a Fair Employment and Housing claim brought by a teenage girl after her supervisor had repeatedly groped her breasts and buttocks.  Patterson, at 479.  It is hard to understand why the Vazquez court considered the wage order claims before it to be more significant than Taylor Patterson’s right to pursue legal claims for sexual harassment.

Even more disturbingly, the Vazquez court disregarded the “Patterson gloss” because Dynamex [Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903] had favorably cited two Massachusetts decisions that applied the ABC test in the franchise context.  Id. at 39.  The Massachusetts cases were cited in Dynamex only as examples of cases where it had been more efficient to address “the latter two parts of the [ABC] standard” on a dispositive motion, rather than all three prongs.  Dynamex, 4 Cal.5th at 48.  The court never mentions franchising or the inconsequential fact that the parties in cited cases were franchises.  The Dynamex court could not be fairly understood to have abandoned its stalwart embrace of the franchise business model in its 2014 Patterson decision, without ever bothering to mention the case or to make any reference to franchising.  Yet the Vazquez court concluded that a passing citation to cases that happened to involve franchise companies in the Dynamex opinion—to make a procedural point that was unrelated to franchising in any way—was an occult signal from the California Supreme Court that the “Patterson gloss” had been abandoned by implication five years after its creation.

Nor was it valid for the Vazquez court to confine the “Patterson gloss” to vicarious liability cases.  As Witkin points out, California law on vicarious liability and employment developed together, so that most “of the rules relating to duties, authority, liability, etc. are applicable to employees as well as other agents.”  Witkin, Summary of California Law (10th ed., Agency & Employment, § 4).  The core obligation to control a trademark licensee—hard-wired by the Lanham Act into every franchise relationship—must be respected in both vicarious liability and employment cases if the franchise business model is to be preserved.

The Vazquez court had it right when it withdrew and de-published its original decision on July 22, 2019.  When the court certified the retroactivity issue to the California Supreme Court that day, it could have also certified the franchise issue back to the court that created the Patterson gloss, but it did not do so.  Franchisors are now left to wonder how they are to maintain existing long-term commercial relationships and to continue to sell franchises after the Vazquez opinion has taken from them the fundamental right to license trademarks without incurring the unintended liabilities of employers.

© 2019 Bryan Cave Leighton Paisner LLP

Read more on the topic on the National Law Review Franchising Law page.

A Week of Surreal Headlines: A Charging Bull Smashed by Man Wielding Banjo, A Stolen 18-Karat Gold Toilet, and a $20 Million Consignment Decided by a Game of Rock, Paper, Scissors

UNITED STATES

Mercedes-Benz Suit Against Street Artists Allowed to Proceed

Mercedes-Benz brought a declaratory judgment action against four street artists who saw their work prominently displayed on social media as background for the automaker’s G-Class track ads. Mercedes is seeking a declaration that its use of the artworks was not a copyright infringement as it was either fair use or because the claim is precluded by the Architectural Works Copyright Protection Act (1990).

After a hearing last week, a Detroit court denied the artists’ motions to dismiss Mercedes’s claims. The artists contended, among other things, that Mercedes’s claim was not ripe as the artists have not yet registered their copyrights. Distinguishing the U.S. Supreme Court’s recent decision in Fourth Estate v. Wall-Street.com, this court concluded that copyright registration is not a prerequisite for an action seeking a declaration of non-infringement.

Los Angeles Police Department Seeks to Reunite Recently Discovered Artworks with Their Owners

The LAPD has uncovered a trove of more than 100 antiques and artworks that have been missing since a spree of thefts in 1993, including works by Pablo Picasso and Joan Miró. Two individuals involved in the thefts were captured in 1993, but it was not until this summer that an auctioneer’s tip led to the discoveries.

Charging Bull, a Symbol of Wall Street Power, Damaged by a Man with a Banjo

A man armed with a metal banjo bashed the famous Charging Bull on Wall Street, leaving it with a six-inch gash and several scratches. The attacker, who was arraigned and released without bail, gave no motive for his actions. He is due back in court on October 16. The artwork was installed in December 1989 by sculptor Arturo Di Modica, intended as a symbol of optimism after the Black Monday stock market crash in 1987.

EUROPE

Works of Art from the Collection of Nazi Collaborator Hildebrand Gurlitt to Be Exhibited in Israeli Museum

Artworks amassed by Hildebrand Gurlitt, noted Nazi collaborator, will go on view for the first time at the Israel Museum later this month. The collection includes works by Pierre-Auguste Renoir, Édouard Manet, Otto Dix and Max Ernst, among others. The show will include works declared “degenerate” by the Nazis and acquired by Gurlitt during the war, as well as works that have no red flags that might indicate ties to the Nazis. The exhibition, called “Fateful Choices: Art from the Gurlitt Trove,” reveals the historical circumstances behind the fate of art during the Third Reich and is intended to generate discussion about art and ethics.

Extreme Weather Leads to the Reemergence of a “Spanish Stonehenge”

This summer, an extreme drought in the Extremadura area of Spain has revealed the “Dolmen de Guadalperal,” a series of megalithic stones that were previously submerged. The Dolmen are 7,000 years old and are located in the Valdecañas Reservoir. They were last seen in 1963. A local group is working to move the Dolmen before they submerge again.

Police on the Hunt for Maurizio Cattelan’s 18-Carat Gold Toilet

Maurizio Cattelan’s America (2016), a fully functioning 18-carat gold toilet, was stolen from an exhibition at Blenheim Palace in Oxfordshire, UK. Blenheim Palace is the 18th Century home and ancestral seat of the Duke of Marlborough. The burglars caused significant damage and flooding while removing the toilet.

Gagosian Gallery Adds Estate of Simon Hantaï to Its Roster

Gagosian Gallery added the estate of postwar abstractionist Simon Hantaï. Gagosian will host its first Hantaï show in October at its gallery in France. Hantaï, who is well known for his surrealist and abstract expressionist works, died in 2008. He is beloved in France and represented the country at the Venice Biennale in 1982.

Arrests Made in Connection with a String of Forgeries of High-Profile Old Master Paintings

An arrest was made and an additional warrant issued in connection with a high-profile string of suspected forgeries of Old Master paintings uncovered in 2016. The scandal has involved such institutions at the Louvre, London’s National Gallery and the Metropolitan Museum. The forgery ring may have been involved in as much as $255 million in sales of fake Old Masters.

Banksy Gallerist Calls It Quits

Steve Lazarides, who started out as the driver, photographer and later dealer for street artist Banksy, is leaving gallery life. Lazarides said that he entered the art world to “promote a subculture that was being overlooked, and that’s gone now.” His first project post-gallery life is to sort through the 12,000 photographs he took over 11 years with Banksy and publishing a book titled Banksy Captured.

ASIA

Art Recovery International Calls for the Return of a Painting They Allege Was Stolen from a UK Residence in 1984

Art Recovery International seeks intervention from the International Council of Museums (ICOM) in the return on a painting, The Portrait of Miss Mathew, later Lady Elizabeth Mathew, sitting with her dog before a landscape, which was allegedly stolen from the home of Sir Henry and Lady Price in East Sussex in 1984. The painting is currently located at Tokyo’s Fuji Art Museum, an ICOM member. The museum is contesting the claim.

The Pushkin State Museum of Fine Arts Will Soon Take Over Russia’s National Centre for Contemporary Arts

Russia’s National Centre for Contemporary Arts (NCCA), which consists of nine branches, has begun merging with the Pushkin State Museum of Fine Arts in Moscow as part of Pushkin’s ambition to open a “Pushkin Modern.” Vladimir Medinsky, Russia’s minister of culture, announced the merger in July, saying that NCCA staff had requested the merger after a series of ideological and financial scandals.

How a $20 Million Consignment Was Decided by a Game of Rock, Paper, Scissors

In the spring of 2005, a Japanese electronics giant decided to auction off works from its art collection worth about $20 million. The collection included works by Paul Cézanne, Camille Picasso, Vincent Van Gogh, Paul Gauguin and others. Unable to choose whether to consign with Sotheby’s or Christie’s, the company president decided that representatives from each company would meet at the Tokyo office and compete in a game of rock, paper, scissors. Christie’s chose scissors and Sotheby’s chose paper, and we all know scissors cut paper

© 2019 Wilson Elser

WIPO Launches UDRP for .CN and .中国 ccTLD

The World Intellectual Property Organization (WIPO) launched a Uniform Domain-Name Dispute-Resolution Policy (UDRP) for .CN and .中国 (China) country code Top-Level Domain (ccTLD), the first non-Chinese entity to do so. Previously, the China International Economic and Trade Arbitration Commission Online Dispute Solution Center (CIETAC ODRC) or the Hong Kong International Arbitration Center (HKIAC) were authorized by the China Internet Network Information Center (CNNIC) to handle domain name disputes for these domains. The .CN and .中国ccTLD is among the largest in the world with over 22 million registered domain names.

The WIPO UDRP for .CN and .中国 ccTLD is only applicable to .CN and .中国domain names that have been registered for less than three years.  In contrast to the conventional UDRP, the Chinese UDRP applies to domain names that are identical or confusingly similar, not only to a mark, but to any “name” in which the complainant has civil rights or interests.

The complainant must prove that either registration or use of the disputed domain name is in bad faith, but not both as in the traditional UDRP.  Examples of bath faith provided by WIPO include:

  • The purpose for registering or acquiring the domain name is to sell, rent or otherwise transfer the domain name registration to the complainant who is the owner of the name or mark or to a competitor of that complainant, and to obtain unjustified benefits;
  • The disputed domain name holder, on many occasions, registers domain Names in order to prevent owners of the names or marks from reflecting the names or the marks in corresponding domain names;
  • The disputed domain name holder has registered or acquired the domain name for the purpose of damaging the Complainant’s reputation, disrupting the Complainant’s normal business or creating confusion with the Complainant’s name or mark so as to mislead the public;
  • Other circumstances which may prove the bad faith.

The language of proceedings will be in Chinese unless otherwise agreed by the parties or determined by the Panel.  More information is available at WIPO’s site.

© 2019 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more on internet IP concerns, see the National Law Review Intellectual Property law page.

Trade Mark Re-filing And Bad Faith – Go Directly To Jail. Do Not Pass Go, Do Not Collect $200

Hasbro Inc. (Hasbro), owner of the well-loved board game Monopoly, suffered a defeat on 22 July 2019, before the EUIPO Board of Appeal in relation to the MONOPOLY trade mark. The EU registration for the MONOPOLY trade mark was partially invalidated as it was found that Hasbro had acted in bad faith when filing the application as part of a ‘trade mark re-filing’ programme.

Background

Hasbro applied to register the trade mark MONOPOLY for goods and services in Classes 9, 16, 28 and 41 of the Nice Classification. The application was published on 9 August 2010 and the mark was registered on 25 March 2011. Kreativini Dogadaji d.o.o (KD) filed an application for invalidation of the trademark in 2015, arguing that it had been registered in bad faith on the basis that the mark was a repeat filing of three identical earlier trade mark registrations for MONOPOLY.

Acting in bad faith

The EUTM Regulation states that a trade mark shall be declared invalid where the applicant acted in bad faith at the time of filing the application for the trade mark. However, EU trade mark law does not provide a definitive clarification of bad faith and ‘bad faith’ is not defined in the EUTM Directive or Regulation. The most notable case from the CJEU dealing with bad faith is the Lindt Goldhase-case (C-529/07) which sets out three areas of consideration:

  1. the applicant knows that a third party is using, in at least one member state, an identical/similar sign for an identical/similar product or service for which the registration is sought

  2. the applicant’s intention of preventing that third party from using the sign, and

  3. the degree of legal protection enjoyed by the third party’s sign and by the sign for which registration is sought.

Nonetheless, these factors are only examples and are not exhaustive, ‘bad faith’ cannot be restrained to a limited set of circumstances.

Findings of Board of Appeal

The Board of Appeal found that Hasbro had a dishonest intention at the time of filing the contested EUTM on the basis that Hasbro had previously filed and successfully registered MONOPOLY as an EUTM on three previous occasions. This dishonest intention was found because Hasbro had repeated filings in effect to circumvent the legal risk of removal due to non-use after five years. Although Hasbro claimed it had been adding more goods and services with each subsequent re-filing, the Board of Appeal did not deem it an acceptable excuse. The Board therefore invalidated the MONOPOLY mark for all goods and services identical or similar to those covered by the earlier trade marks.

The Key Takeaways

Hasbro did try to argue that their re-filing tactic was common practice in maintaining ownership of a trade mark, which it is, but the decision highlights that a tactics popularity does not equate to acceptability or legality. Brand owners should carefully consider the risk of invalidation or opposition on the basis of bad faith when filing future trade mark applications for existing brands.

Copyright 2019 K & L Gates
ARTICLE BY Niall J. Lavery and Simon Casinader of K&L Gates.
For more trade mark cases, see the Intellectual Property law page on the National Law Review.

Claim Construction Disputes Must Be Decided Before Applying Alice

On August 16, 2019, the Federal Circuit issued a 2-1 decision holding that a lower court erred by adjudicating patent eligibility without resolving the parties’ claim construction dispute. See MyMail, Ltd. v. ooVoo, LLC et al., Nos. 2018-1758, 2018-1759 (Fed. Cir. Aug. 16, 2019).

The patents at issue in MyMail cover methods for modifying toolbars displayed on Internet-connected devices. In response to defendants’ motion for judgment on the pleadings that the patents claim ineligible subject matter, MyMail raised a legal dispute over the proper construction of “toolbar.” The district court granted defendants’ motions without addressing the parties’ claim construction dispute, and without construing “toolbar.” The Court found in a split decision that the district court erred.

The majority held that “[d]etermining patent eligibility requires a full understanding of the basic character of the claimed subject matter.”  Accordingly, “if the parties raise a claim construction dispute at the Rule 12(c) stage, the district court must either adopt the non-moving party’s constructions or resolve the dispute to whatever extent is needed to conduct the § 101 analysis.”  Because the district court never addressed the parties’ claim construction dispute, or otherwise construed “toolbar,” the Federal Circuit vacated and remanded for further proceedings.

In his dissent, Judge Lourie argued that the facts of the case demonstrate that the parties’ claim construction dispute is “little more than a mirage,” and the claims at issue are “clearly abstract, regardless of claim construction.”

Implications

This decision provides patentees with another tool to help delay early patent eligibility decisions by raising legal issues over the proper scope of the claims. It is important to note, however, that this decision does not mean that judges must always construe the claims before ruling on patent eligibility—only when the parties raise a dispute. Further, patentees should weigh the relative pros and cons of raising claim construction issues early in a case, as this may come with some risks including putting a stake in the ground without sufficient discovery concerning the accused products.

© 2019 Brinks Gilson Lione. All Rights Reserved.

For more on patent law see the National Law Review Intellectual Property law page.

How to Get a PTAB Decision Designated Precedential

This past year, we have seen the Patent Trial and Appeal Board (PTAB) designate a number of decisions as precedential and informative more so than in past years. This is directly a result of the USPTO’s revised Standard Operating Procedure 2 (SOP2). On September 20, 2018, the USPTO announced that Board decisions can now be designated as precedential or informative through either one of two tracks: (1) POP Review or (2) a “ratification” process.

Under both tracks, a newly formed Precedential Opinion Panel (POP) comprising of at least three members will decide whether the decision should be designated as precedential or informative. Members of the POP will be selected by the Director and, by default, will comprise the Director, the Commissioner of Patents and the Chief Judge. The three members of the POP may each decide to delegate their authority in certain circumstances.

POP Review

POP Review under the first track is a rehearing of an issue in a pending trial. A party to a proceeding or any other member of the Board may recommend POP review—or a rehearing—of a particular Board decision. The request for POP review should be limited to situations where the Board decides issues of exceptional importance involving policy or procedure. A screening committee will review the recommendations and forward its recommendations to the Director. The Director will then convene with the POP to decide whether to grant rehearing, and if rehearing is granted, to render a decision on rehearing of the case.

If POP review is ordered, the Order will identify the issues the POP intends to resolve, may request additional briefing from the parties and, in some cases, may authorize amicus briefs. The POP may also order, at its discretion, an oral hearing. The decision resulting from POP Review will then be designated precedential, informative, or “routine.”

At this time, only two decisions have been issued by the newly formed POP:

  • Proppant Express Investments, LLC v. Oren Techs., LLC, Case IPR2018-00914, Paper 38 (Mar. 13, 2019) (designated: Mar. 13, 2019)

  • GoPro, Inc. v. 360Heros, Inc., Case IPR2018-01754, Paper 38 (Aug. 23, 2019) (designated: Aug. 23, 2019)

Please see my latest blog post on the GoPro decision regarding the one-year time bar under 35 U.S.C. § 315(b).

To request POP review, a party to the proceeding must submit a request by email to Precedential_Opinion_Panel_Request@uspto.gov. The email must identify with particularity the reasons for recommending POP review along with a request for rehearing filed with the Board under 37 C.F.R. § 41.52(a) or 42.71(d). In addition, counsel must also include a statement that the Board’s decision for which rehearing is requested was contrary to law or is a question of exceptional importance.

“Ratification” process

Under the second track, the public may nominate already issued decisions to be designated precedential or informative. Under this track, the Board is relying on the public to recognize which decisions are valuable to post-grant practice. This is the more traditional path for which a decision may be designated as precedential or informative. In this past year, there have been more than a dozen decisions that have been designated as precedential or informative through this ratification process. As above, a screening committee will review the recommendations and the Director will then convene with the POP to decide whether to designate the decision as precedential or informative.

Nominations should be submitted by email to PTAB_Decision_Nomination@uspto.gov and must set forth with particularity the reasons for the requested designation.

To learn more about the process under either track described above, I recommend reviewing the revised Standard Operating Procedure 2 (SOP2) online which provides the detailed procedural requirements for nominating a decision as precedential or informative.

© Polsinelli PC, Polsinelli LLP in California
ARTICLE BY Margaux A. Savee of Polsinelli PC.

Celebrity Entertainer Sues Over Video Game Avatar

As real-world celebrities continue to expand the reach of their persona into the digital realm, the potential benefit for advertisers, game developers and esports event promoters is exceedingly high. But with increased opportunity comes increased risk.

A New York Supreme Court recently addressed this risk when it construed the State’s right of publicity statute[1] in a dispute over an NBA 2K18 video game avatar. In Champion v. Take Two Interactive Software, Inc., celebrity basketball entertainer Phillip “Hot Sauce” Champion sued the video game developer, alleging violation of his right to privacy for Take-Two’s use of his name and likeness. The Court ultimately dismissed the lawsuit, but not before it provided a helpful discussion of New York’s publicity statute and its modern application to the esports industry.

A Primer on New York’s Publicity Statute

New York publicity law allows both criminal charges and civil liability for use of a person’s “name, portrait or picture” for advertising or trade purposes without prior written permission. This right to publicity extends to any recognizable likeness that has a “close and purposeful resemblance to reality.” Courts have already held that video game avatars are within the scope of the statute’s reach.

However, while seemingly broad at first pass, this statutory right is actually more narrow than similar rights in other states where the right to publicity is recognized only at common law (i.e., in states that have no black-letter publicity statute). For example, in New York, neither “incidental” use of a person’s name or likeness, nor use that is protected under the First Amendment, are violations.

Further, unlike the words “portrait” and “picture,” the word “name” in the statute is construed literally. In fact, New York courts find liability only for uses involving an individual’s full name, and not just a surname, nickname, or business name. The statute does, however, protect certain “stage names” in limited situations, such as when the individual has become known by a stage name virtually to the exclusion of his or her real name.

The Plaintiff and the Video Game

Phillip Champion is a prominent street basketball entertainer known professionally as “Hot Sauce.” Champion claims that he is widely recognized as both “Hot Sauce” and “Hot Sizzle” in social media, and is regularly depicted on television and in blogs, movies, YouTube videos, sports magazines and live halftime shows. As a result, Champion is able to license his celebrity persona through sponsorships and endorsement deals with prominent consumer brands like AND1.

Photographs of Champion filed with the Court.

Take-Two created the NBA 2K18 basketball simulation video game, which realistically depicts the on-court competition and off-court management of the National Basketball Association. Users can create a custom player avatar, or select from existing player avatars modeled after real-life professional athletes. The game’s “MyCareer” mode allows the user to create a custom basketball player, and then design and play through the character’s entire career, competing in games and participating in off-court activities. The “Neighborhoods” option, which ties to the off-court activities in the MyCareer mode, lets users explore an off-court urban world while interacting with other basketball players—most of which are non-playable characters controlled by the computer—in scenarios like exercising in public gyms and playing casual basketball games on city courts.

Champion’s Claims

Champion’s lawsuit stems from one of the non-playable characters in the game’s Neighborhood mode, who is depicted as a young, African-American male with a mohawk, wearing all-white hi-top sneakers, a tank-top, and black shorts with white piping. On the front and back of the tank-top is the numeral “1,” and on the back are the words “Hot Sizzles.”

Images of the “Hot Sizzles” avatar filed with the Court.

Champion alleged that the look of the “Hot Sizzles” avatar incorporated numerous personal aspects of his life and identity in violation of the New York publicity statute, and further that the avatar’s “Hot Sizzles” name was itself a violation because Champion is “ubiquitously” known as “Hot Sizzle.”  Take-Two responded that its “Hot Sizzles” avatar does not sufficiently resemble Champion, whether in name or image, under New York law.

On Champion’s claims to his likeness, the Court found no physical resemblance between Champion and the “Hot Sizzle” avatar, and determined that the only reasonable commonalities are that “both are male, African-American in appearance, and play basketball.” The Court compared this case to two similar cases (Lohan v. Take-Two Interactive Software, Inc.  and Gravano v. Take-Two Interactive Software, Inc. ), both involving Take-Two’s Grand Theft Auto video game, in which the avatars exhibited many closer similarities to the plaintiffs in clothes, hair, poses, voice, and life stories. Finding no similar likenesses in this case, the Court ruled that, at least from a visual perspective, the Hot Sizzles avatar in NBA 2K18 is not recognizable as Champion as a matter of law.

On Champion’s claim to the name “Hot Sizzles,” the Court recognized that the use of a person’s celebrity or “stage” name with a video game avatar could aid in recognition of the avatar as that person’s likeness. However, the Court determined that Champion’s “primary performance persona” is actually “Hot Sauce,” which is entirely distinct from the NBA 2K18 avatar’s name, “Hot Sizzles.” Champion was not able to show that he is widely known as “Hot Sizzle” to the public at large—as opposed to just in the sporting or gaming circles—so the Court ruled that, without this level of connection between Champion and the name “Hot Sizzle,” Take-Two’s use of “Hot Sizzles” does not aid in the visual recognition of the NBA 2K18 avatar as Champion.[2]

Incidental Use and the First Amendment

Take-Two also defended against Champion’s claims by alleging that the “Hot Sizzles” character falls within the “incidental use” exception to liability under New York’s statute. After reviewing the NBA 2K18 game content and related advertising, the Court seemed to agree that the avatar “is a peripheral non-controllable character” that “adds nothing of true substance to a user’s experience in the game.” However, the Court declined to make an affirmative ruling on this component of the lawsuit.

Finally, Take-Two argued that its NBA 2K18 game is protected speech under the First Amendment, and as such, it does not constitute “advertising or trade” under New York’s law. In response, the Court declared that, while video games may conceptually qualify for free speech protection, not every video game constitutes “free speech” fiction or satire. In comparing NBA 2K18 to games that contain a detailed story with pre-defined characters, dialogue and unique environments created entirely by the game designers, the Court determined that here, the users create their own basketball career and completely define their character. Accordingly, the Court found that categorizing NBA 2K18 as “protected fiction or satire” under the First Amendment is “untenable.”

What it Means

As novel sponsorship and endorsement opportunities are created through the advent of esports, advertisers, game developers, and event promoters must be certain they have the appropriate content and publicity licenses in place. However, because publicity laws, in particular, are enforced at the state level, doing this without expert guidance can be daunting. Using the right tools and a proactive licensing and review strategy, brands and marketing agencies can capture (and keep) a broader share of the esports industry’s revenues, and keep the competition on the court, not in it.

[1] New York Civil Rights Law, §§ 50-51.

[2] The Court determined that “Hot Sizzle” is, at best, Champion’s secondary “nickname.”

Copyright © 2019, Sheppard Mullin Richter & Hampton LLP.

Not So Fast And Furious – Executive Indicted for Stealing Self-Driving Car Trade Secrets

Back in March, 2017, we posted about a civil lawsuit against Anthony Levandowski, who allegedly sped off with a trove of trade secrets after resigning from Waymo LLC, Google’s self-driving technology company. Waymo not only sued Levandowski, but also his new employer, Uber, and another co-conspirator, Lior Ron. Since our initial post, things have gotten progressively worse for the Not So Fast and Furious trio: (1) Levandowski was fired in May, 2017; (2) Uber settled, giving up 5% of its stock, which totaled $245 million dollar;  and (3) the case against Levandowski and Ron was sent to arbitration, where the arbitration panel reportedly issued a $128 million interim award to Waymo.

Just when things couldn’t seem to get any worse, they did.

On August 15, 2019, a federal grand jury indicted Levandowski on 33 counts relating to trade secret theft. Levandowski has pled not guilty, has been released on $2 million dollars bail, and  is currently wearing an ankle monitor.

This legal saga is a reminder that trade secret theft is serious… it not only has civil consequences, but also criminal ones.  Unfortunately, trade secret theft happens every day.  And regardless of whether your company has trade secrets regarding self-driving car technology, worth hundreds of millions of dollars, or customer information worth less than a hundred thousand dollars, it’s important to make sure your company’s information is protected.

Equally important is knowing how to investigate potential trade secret theft. Some helpful tips as you launch your investigation:

1. Secure and preserve all relevant computing devices and email/file-sharing accounts.

2. Consider enlisting the help of outside computer forensic experts.

3. Analyze the employee’s computing activities on company computers and accounts.

4. Determine whether there is any abnormal file access, including during non-business hours.

5. Examine the employee’s use of external storage devices and whether those devices have been returned.

6. Review text message and call history from the employee’s company issued cell phone (and never instruct anyone to factory reset cell phones).

7. Enlist the help of outside counsel to set the parameters of the investigation.

© 2019 Jones Walker LLP
For more on trade secret law, see the National Law Review Intellectual Property law page.

Bronze, Shape, Glow: A Copyright Tale Destined For Broadway

Stores like Aldi are increasingly popular with UK consumers as a result of offering “copycat” products of well-known brands at drastically lower prices. However, with this rise in popularity, brand owners and creatives are being increasingly frustrated by finding their products and ideas at the mercy of imitation products.

One such aggrieved party was well-known makeup brand Charlotte Tilbury (Tilbury), who found their “Starburst” lid design and the “Powder Design” of their “Filmstar Bronze and Glow” set had provided the ‘inspiration’ for Aldi’s own “Broadway Shape and Glow” set. Tilbury filled a UK High Court claim for copyright infringement over the products shown below, with Aldi adamantly rejecting that any copyright had been infringed in their ‘inspired’ makeup set.

The main difficulty Tilbury faced was the fact that it is notoriously hard to claim copyright in mass produced 3D products as English Courts have historically been reticent to consider them “sculptures” or “works of artistic craftsmanship”.

However, Tilbury was successful in arguing that the “Starburst” lid design and the “Powder Design” on their product were original artistic works and as such the product was protected by copyright. Tilbury were able to establish their artistic copyright as “a work need only be ‘original’ in the limited sense that the author originated it by his efforts rather than slavishly copying it from the work produced by the efforts of another person.” Once establishing the existence of copyright in the artistic work the Court had little difficulty in finding that it had been substantially copied by Aldi for its “Broadway Shape and Glow” set and summary judgement was granted in Tilbury’s favour.

This case not only marks a success for the aggrieved brands and creatives who feel short changed by “Like brand inspiration” products but also provides some interesting learning opportunities for brand owners in the quest to protect their designs. Tilbury was successful in arguing copyright infringement due to the original artistic “starburst” element in its product design, the elements where the copyright lay. Brand owners may consider incorporating similar artistic elements into their products to act as a form of protection against imitators or at least provide ammunition for a copyright infringement claim should they need it.

Click here for the Judgement.

Copyright 2019 K & L Gates

Article by Serena Totino and  Daniel R. Cartmell of K&L Gates.
For more copyright cases see the Intellectual Property law page of the National Law Review.