Tag: IP Law

You Streamed What? Copyright Infringement Pitfalls During COVID-19

In the sudden transition from in-person to online presentation of content precipitated by the COVID-19 stay-at-home orders, some educators and other presenters have run headlong into the digital world without a thought to the application of copyright law to their online presentations.  Scrambling to provide content, did some consider the sufficiency of their internet bandwidth and the security of their video-conferencing platform while overlooking copyright infringement issues?  Caution.  Those office webinars, college lectures, music lessons, and club meetings can be fraught with legal pitfalls.

Although we are slowly emerging from our bunkers and cautiously lifting our masks while maintaining social distance, some have predicted that online meetings and classes are here to stay—at least in some form.  Thus, these copyright infringement pitfalls merit consideration.  Granted, any attempt to treat this matter comprehensively in a 1500 word article is a fool’s errand.  And when it comes to these highly fact-specific matters, there’s no substitute for an attorney’s legal advice.  But some basic education on copyright law and some understanding of the distinctions between copyright as applied to education versus other areas might assist those unaccustomed to the online stage from stumbling into a battle over copyright infringement.

What is Protected by Copyright?

A copyright is a collection of rights that protect original works of authorship.  These works can include literary, dramatic, musical and artistic works.  A copyright does not protect facts, ideas, systems or methods of operation, although it may protect the way these things are expressed.  In general, a copyright exists from the moment the work is created and fixed in tangible form.  Registering does not create the copyright; but registering the copyright allows the owner to bring a lawsuit to enforce it and bears on the recovery that a copyright owner can obtain in the lawsuit.  Similarly, under the current law, neither the “©” symbol nor any other marking on an original work of authorship creates the copyright; but the copyright symbol or other marking can put the public on notice that the copyright owner claims his copyright.

What is in the Public Domain?

Works in the “public domain” can be copied.  These fall generally into three categories.

  • Works deliberately dedicated to the public without copyright protection.
  • Works for which the copyright has expired.
  • Works for which the copyright was not renewed.

The changes in the copyright legislation over the course of the past 40 years have made the rules about copyright expiration and renewal somewhat complex.  As of 2020, however, works published before January 1, 1925, entered the public domain.

What About Fair Use?

Most educators and presenters have some familiarity with the “fair use doctrine,” a defense to what is indisputably copying of an original work.  While some librarians have signed the “Public Statement:  Fair Use & Emergency Remote Teaching & Research” in which they boldly state that “making materials available and accessible to students in this time of crisis will almost always be a fair use”, as yet no legislature or court has carved out a “COVID-19” addendum or even a “public health emergency” addendum to the fair use doctrine.  Nevertheless, the fair use doctrine can provide a defense to presenters who exercise a modicum of discretion.

In considering an infringer’s reliance on the fair use doctrine as a defense to copyright infringement, courts consider the use made of the work in light of four factors:

1)   the purpose and character of the use, including whether the use is commercial or is for nonprofit educational purposes;

2)   the nature of the copyrighted work;

3)   the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

4)   the effect of the use upon the potential market for or value of the copyrighted work.

Consideration of these factors is highly subjective and fact-sensitive.  The first factor, besides asking whether the use is commercial or educational, looks at the purpose of the use.  Educational as opposed to commercial uses are favored.  But contrary to popular belief, educational use alone will not suffice as a defense to copyright infringement.  Generally, whether the use is commercial or educational, there must be something “transformative” about the use.  In other words, is there something new created?  Does the new work offer a new expression, meaning or message?  Is it serving as raw material for a new expression or insight?  In the education context, is the instructor adding something new such as commentary?  Is he tying the work into his own lesson or is he just using the work to replace his lesson?

While the first factor is often considered the “heart” of the fair use analysis, the other factors matter too.  Consider the second factor.  Is the original work creative or just an arrangement of facts?  Fair use has a broader scope where the original work is factual or informational.  Is it published or unpublished?  Greater latitude is afforded the alleged infringer claiming fair use where the work is published.

But even if the work is published, the third factor considers the portion used—in a quantitative as well as a qualitative sense.  Is the portion used a paragraph or several chapters?  The fair use defense will more likely shield copying a small portion of a work than a large section.  Despite efforts by advocates, courts have refused to specifically quantify how much is too much.  Furthermore, if a copier carves out the most memorable portion of the work, the “heart” of the work, no matter how small, fair use will offer no sanctuary—except in parody.  Where the new work is a parody of the original, the court has recognized that it is the heart of the work at which the parody takes aim.

Finally, how does the copied work impact the potential market for the original? If the copied work undermines the current or potential market for the original work, then this will undermine the use of the fair use doctrine as a defense.

In the education context, Congress has carved out some specific ways in which instructors can circumvent infringement.  House Report No. 94-1476, 94th Cong., 2d Sess. (1976) includes the Agreement on Guidelines for Classroom Copying in Not-For-Profit Educational Institutions (p.6).  Single copying of a chapter from a book or an article from a periodical, a chart or cartoon for use in teaching or preparing to teach, for example is considered fair use under the guidelines.  Multiple copying for the use of pupils in a class is similarly fair use where the copying meets tests of brevity and spontaneity (as defined in the guidelines), meets the cumulative effect test (as defined in the guidelines), and each copy includes a notice of copyright.  But copying cannot be used to replace anthologies or to replace books intended to be “consumable.”  Specific guidelines apply to music.  While there may be instances in which copying does not fall within the protection of the guidelines but nevertheless is permitted under the fair use criteria, compliance with the guidelines offers a safe harbor for educators.

Outside of this safe harbor, presenters employing copied works must navigate the more uncertain waters of fair use and consider other ways to avoid infringement.  But be forewarned that mere acknowledgement of the source material, while perhaps one factor to be considered in a fair use determination, will not absolve a copier for infringement.  Likewise, a disclaimer—effectively a “No Infringement Intended” notice—won’t work.

How Does the TEACH Act Apply in the Online Classroom?

Addressing more specifically the online environment for education, the Technology, Education, and Copyright Harmonization Act of 2002, better known as the TEACH Act, addresses digital teaching materials used in both the classroom and in distance learning settings in 17 USC § 110(2).  This exempts from infringement certain performances and displays of works in an online classroom transmission under certain conditions.

What can be transmitted?

  • Performance of a nondramatic literary or musical work.
  • Performance of reasonable and limited portions of any other work.
  • Display of a work in an amount comparable to what would typically be displayed in the course of a live classroom session.

Under what conditions?

  • The transmission is under the actual supervision of an instructor.
  • The transmission is part of the instructional activities of the institution.
  • The work is related to the teaching content of the transmission.
  • The transmission is made solely for and is limited to the students officially enrolled in the course (as much as is technologically feasible).

What is not authorized?

  • Use of pirated copies.
  • Use of works normally marketed primarily for performance or display as part of online instructional activities.
  • Conversion of print versions of works to digital formats unless there is no digital version available, and even then, conversion is limited to the portions authorized by the size restrictions in the Act.

In order for an instructor to rely on the provisions of the Act, the institution must comply with certain requirements regarding policies and education of faculty and students and application of technological measures to reasonably prevent retention of the works by recipients of the transmission or further dissemination.  Posting class lectures that include copyrighted works on YouTube won’t qualify.

What about showing films?  In the face-to-face environment of a brick and mortar classroom, showing an entire film, video or TV program for educational purposes is allowed (17 U.S.C. § 110(1)), but not when the classroom goes virtual.  Showing portions of a film in an online classroom, may be considered fair use depending on how much of the film is shown and for what purpose.  If fair use does not apply and if the film is not in the public domain, however, students should view the film through a licensed streaming film provider.

What About Licenses and Releases?

Obtaining an author’s permission to use his work obviates the need to engage in the fair use or other analyses described above.  Whether the permission takes the form of a license (permission to use the work) or a release (promise not to sue for unauthorized use), however, many licenses and releases are limited to in-person presentation or distribution and do not extend to online presentation or distribution.  Presenters must carefully consider the scope of permission granted by a license or permission.

In the COVID-19 world, some publishers are offering educators temporary expanded permissions.  The key words here are “educators” and “temporary.”  These permissions do not extend to non-educators, and they are provisional.  Once the days of stay-at-home orders end, educators cannot assume that they can use the same works in the same way online.  In addition, the use of these expanded permissions comes with strings attached.  There are certain requirements that the publishers impose on the user.

Some creators offer their work through Creative Commons licenses.  These give creators standardized ways to grant the public permission to use their work.  Again, however, a user of a work offered under a Creative Commons license should carefully consider the scope of the permission granted.  Not all Creative Commons licenses allow the same types of use.

Obtaining permission to use works may seem daunting, but there are various organizations available online that streamline the process.  The Copyright Alliance offers a list of resources to assist those seeking licenses for works such as literary publications, music, photographs, software and motion pictures.

Conclusion

When it comes to copyright and online meetings, many well-meaning and well-educated people don’t know what they don’t know—until they do.  Unfortunately, that epiphany sometimes comes in the form of a takedown notice or a demand letter.  Thus, presenters would be well advised to evaluate their use of another’s work before posting, streaming, sharing or tweeting.

Copyright 2020 Summa PLLC All Rights Reserved

China’s New Civil Law Adds Right of Publicity

The Third Session of the 13th National People’s Congress (NPC) voted and passed the “Civil Code of the People’s Republic of China” on May 28, 2020. This law will come into effect on January 1, 2021.  Part IV of the law is dedicated to Personality Rights, which include portrait rights, which is similar  California’s right of publicity and right of publicity for the deceased.  Portrait rights in China were previously protected under the General Principles of Civil Law and the new law provides significant clarification on these rights and also codifies existing case law.

Article 990 defines personality rights as “the rights of life, body, health, name, portrait, reputation, honor, privacy and other rights enjoyed by civil subjects.” However, these rights cannot be waived, transferred or inherited per Article 992.  Even though there is no inheritance, a spouse, children and parents can enforce the deceased rights per Article 994.  This codifies existing law from the Supreme People’s Court  case Zhou Haiying v. Shaoxing Yuewang Jewellery and Gold Co., Ltd., which held a close relative was entitled to sue for a violation of Lu Xun’s portrait right after his death.

Article 995 confirms that plaintiffs are entitled to compensation and injunctions for the violation of personality rights.  Article 996 adds that the compensation may include damages for mental anguish. Article 997 adds preliminary injunctions are available when when “a civil subject has evidence to prove that the perpetrator is or is about to commit an illegal act that infringes on his personality rights, and if he fails to stop it in time, his legal rights and interests will be irreparably damaged.”

Article 1018 defines the right of portrait as “…image that can be recognized by a specific natural person reflected on a certain medium through video, sculpture, painting, etc.” and gives natural persons “…the right to make, use, disclose or permit others to use their own portraits in accordance with the law.”

Article 1019 expands on Article 995 by stating “it is forbidden to make, use or publish portraits of portrait right holders without the consent of the portrait right holders, except as otherwise provided by law.” However, exceptions are provided in Article 1020 including personal use, art appreciation, education or scientific research, news, government use with the required scope of their duties, images of public environments where it is inevitable that people will be present, and public interest.

Articles 1021 and 1022 cover portrait right contracts and are favorable to the portrait right owner.  Per Article 1021, if there is a dispute in the meaning of a term, the explanation should favor the portrait right owner.  Article 1022 covers term of the contracts. If no term is specified, either party may cancel at any time but provide reasonable notice. If a term is specified, the portrait right owner can cancel the contract before the end of term as long as reasonable notice is provided.

Article 1023 states the right to name and voice are also covered similarly by this section IV of Personality Rights with respect to portraits.

The new Civil Law may have a favorable impact on famous foreigners looking to protect their rights in China.  For example, Bruce Lee’s heir has recently sued a fast food chain for portrait right infringement and Michael Jordan has several long running disputes with Qiaodan Sports Co., Ltd. (Qioadan is the Chinese pronunciation of Jordan) over use of his name and likeness and recently won a victory on the trademark side.

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Trademark Applicant & Chinese IP Agency Fined for Malicious Registration of Coronavirus Related Trademarks

On March 26, 2020, the Shaoxing Market Supervision Bureau of Zhejiang Province fined a Chinese intellectual property firm, a trademark applicant and a trademark agent responsible for attempting to register a trademark for “Li Wenliang” (李文亮), a famous doctor that later succumbed to COVID-19 after earlier attempts to warn others of a possible new outbreak.   Specifically, the Bureau fined applicant Yang Mofang, the agency Shaoxing Intellectual Property Agency Co., Ltd. and the trademark agent Chen Mougang 2,000 RMB, 20,000 RMB and 10,000 RMB respectively. This is believed to be the first time a trademark applicant was fined for malicious filing of a trademark.  This is the second IP agency to be fined.

On March 3, 2020, the Shaoxing Market Supervision Bureau was informed that Shaoxing Intellectual Property Agency Co., Ltd.  represented the trademark applicant Yang Moufang for the trademark registration application of “Li Wenliang.”  On the 4th , the Municipal Bureau’s Trademark Advertising Office and the Comprehensive Administrative Law Enforcement Team conducted surprise inspections of relevant business establishments, conducted administrative interviews with relevant responsible persons  and required them to withdraw their applications immediately. In the afternoon, the agency quickly withdrew the trademark registration application. On the 5th, the Shaoxing Municipal Bureau filed an investigation on the applicant, agency and directly responsible person for the malicious registration of the “Li Wenliang” trademark. On March 26, administrative penalties were imposed on the relevant parties.

Per the Bureau, “Li Wenliang was a Wuhan Central Hospital ophthalmologist  unfortunately infected in the fight against new coronavirus epidemic. After his sacrifice, public opinion in the whole society was highly concerned and he had achieved a high degree of popularity and influence in the country. Several parties in the case knew or should have known these circumstances and still applied for trademarks on Dr. Li, which could easily cause significant social adverse effects.”

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more on IP and other COVID-19 affected industries, see the dedicated National Law Review Coronavirus News page.

Patent Trial and Appeal Board Provides Guidance on Timing of Requests for Certificates of Correction During PTAB Proceedings

The Patent Trial and Appeal Board (“Board”) recently issued a decision in Emerson Electric Co. v. Sipco, LLC (IPR2016-00984) (Jan. 24, 2020) that illustrates some important points for patent practitioners to consider when requesting a certificate of correction for a patent subject to a Petition for Inter Partes Review before the United States Patent and Trademark Office (USPTO).

The Board’s recent decision was the result of numerous proceedings before both the Board and the Federal Circuit, which began with Emerson Electric Co. filing a Petition for Inter Partes Review against Sipco, LLC (Patent Owner) on April 29, 2016.  The Board issued a final written decision that found all challenged claims unpatentable under at least one ground on October 25, 2017.  This decision was appealed by the Patent Owner to the Federal Circuit, and on appeal the Patent Owner requested that the Federal Circuit remand the case back to the Board based on a certificate of correction that had issued for the patent in question (8,754,780; “’780 patent”) after the date of the Board’s final written decision.  (Id.)  The Federal Circuit granted this request, and remanded the matter with an Order requesting the Board to address the issue of “what, if any, impact the certificate of correction had” on the Board’s final written decision.

On remand, the Board found that the earliest priority date to which the challenged claims of the ’780 patent were entitled was April 2, 2013, and refused to recognize the belatedly issued certificate of correction that would have changed the earliest priority to an earlier date in favor of the Patent Owner.  This was because the certificate of correction did not issue until March 27, 2018, which was five months after the Board’s final written decision and three months after the Patent Owner appealed to the Federal Circuit.  (Id. at 5.)

A patent owner is permitted to request a certificate of correction in accordance with 37 C.F.R. § 1.323, which allows patent owners to ask the Director to make corrections to “mistakes” in a patent.  See 35 U.S.C. § 255.  In this case, the Board noted a series of mistakes and oversights by the Patent Owner in seeking a proper certificate of correction.  Although the Patent Owner filed a certificate of correction with the USPTO Petitions Branch about one month after the filing date of the Petition for Inter Partes Review, the Patent Owner failed to seek permission from the Board to do so, either before or after this filing.  The USPTO dismissed the Patent Owner’s first request for correction, and although the Patent Owner’s second request was thereafter granted, the second request had no chain of priority to the first, and so the USPTO Petitions Branch treated it as a new request for correction.  (Id. at 7-8.)

The Patent Owner then made a third request for a certificate of correction, and this time made its request to the Board, but this request was ultimately denied.  (Id. at 8.)  The Board later permitted the Patent Owner to submit a request for a certificate of correction to the USPTO Petitions Branch, and the Patent Owner did so.  However, the USPTO Petitions Branch found there was no chain of priority to the first certificate of correction request, because the Patent Owner had again failed to “make a reference to the first (earliest) application and every intermediate application.”  (Id. at 9.)  Finally, and without any motion to the Board, the Patent Owner submitted a final request for a certificate of correction to the USPTO Petitions Branch, and this request was granted – leading to a certificate of correction issuing on March 27, 2018 that set forth a priority claim material to the final written decision of October 25, 2017.

The Board determined that the belatedly issued certificate of correction was well after its initial final written decision and should not be given retroactive effect so as to alter its initial decision.  In considering both sides’ arguments, the Board turned to analyzing the language of 35 U.S.C. § 255, and whether or not it permits retroactive effect of a certificate of correction in an Inter Partes Review proceeding.  The Board ultimately found that section 255 does not authorize such a retroactive effect.  In other words, under the facts presented, the Patent Owner’s corrections of its mistakes in priority claims through a certificate of correction issued after the date of the Board’s final written decision did not apply back to the time when the Petition for Inter Partes Review was filed.  Further, the Board made clear that “once a petition for inter partes review of a patent has been filed, the Board may exercise jurisdiction over a request for a certificate of correction, and may stay the request,” citing to 35 U.S.C. § 315(d), 37 C.F.R. §§ 42.3 and 42.122.  (Id. 22.)  The Board noted that its decision that the finally issued certificate of correction had no impact on its earlier final written decision was consistent with the Board’s exercise of exclusive USPTO jurisdiction over a patent once Inter Partes Review is instituted.  (Id. at 22-23.)

Key Takeaway

Although non-precedential, the Board’s decision illustrates that it is best to file a request for a certificate of correction of a patent before Inter Partes Review is instituted.  After institution, the Board has discretion to stay, and effectively deny, a patent owner’s ability to request a certificate of correction that can determine the outcome of the Inter Partes Review proceeding before the USPTO.

© 2020 Brinks Gilson Lione. All Rights Reserved.

For more PTAB decisions, see the National Law Review Intellectual Property law section.

Amazon Takes Aim at Patent Infringement in its Marketplace

Amazon CEO Jeff Bezos recently disclosed that gross merchandise sales in the Amazon Marketplace by independent third-party sellers (as opposed to sales made directly by Amazon itself) had grown to 58% of total sales. According to data company Statista, 73% of those sellers were small businesses with between 1-5 employees. For many of them, sales on Amazon comprise their entire revenue.

Discussion of the opportunity Amazon Marketplace represents for small business, however, is joined by the voices of many retailers complaining about sales of counterfeit and stolen goods. To better police its online sales, Amazon has launched initiatives such as Project Zero which allows owners of brands to delete counterfeit products.

The online retail giant’s latest enforcement effort—designed to combat patent infringement—has been dubbed the Utility Patent Neutral Evaluation Procedure (UPNEP). Under this new trial program, a company that believes certain products for sale on the Amazon Marketplace infringe its patents can request an evaluation by depositing $4,000. If the seller does not dispute the accusation, Amazon removes the infringing products from the marketplace, and refunds the deposit to the patent owner. If the seller decides to fight the claim, it also deposits $4,000. Amazon then assigns a lawyer with patent expertise to resolve the dispute. The patent owner submits an opening brief, the merchant files a response, and then the patent owner may submit a reply. The lawyer reviews the submissions, and decides whether the listing should be removed or maintained. The winner gets its money back, and the loser’s $4,000 gets paid to the lawyer. There is no discovery, and no appeal or request for reconsideration. The whole process takes just a few months from start to finish.

Many stakeholders in the Amazon ecosystem have applauded the UPNEP as providing both patent owners and Amazon merchants with a quick and cost-effective mechanism for resolving infringement disputes arising from third-party listings. While participation in the program does not prevent a patent owner from commencing a lawsuit, many sellers do not reside in the United States, and thus may not be subject to service of process in a U.S. federal court. Without UPNEP, patent owners would have little to no recourse in such cases.

Law firms with IP litigation expertise are already offering to represent both patent owners and accused sellers in connection with the program. One such firm told The Information that his client boosted sales by 700% after using UPNEP to remove listings that were knockoffs of the client’s patented product. Consultants who advise Amazon sellers are also positioning specialized services. One such consultant advised The Information that a cup manufacturer client had used UPNEP to remove 170 product listings that it believed were infringing its patents.

There are some detractors, however. Deriding the new initiative as “the District of Amazon Federal Court,” Paul Morinville of IP Watchdog says the new initiative is a symptom of a broken patent system. He questions, among other issues, whether the lawyers evaluating the claims will be impartial, or beholden to Amazon’s interests.

Expert Peter Kent, who has served as an expert in several Amazon-related cases, is monitoring developments closely. “A critical question in my mind about the UPNEP program,” explains Kent, “is whether it will be exploited by larger companies trying to knock out competitors using spurious patent claims. For instance, if a small merchant who can’t afford the $4,000 doesn’t respond, their product listings are automatically removed, regardless of the merits of the petitioning company’s patent claims.”

We’ll continue to monitor whether UPNEP—and the model it represents—becomes popular for resolving disputes between patent owners and merchants. With experience on more than 5,000 patent matters in the past decade, proprietary intelligence systems, and the best-in-class network of top experts from complex areas ranging from 5G, artificial intelligence, and virtual reality, IMS stand ready to connect you with the expert best-aligned for your needs.

© Copyright 2002-2019 IMS ExpertServices, All Rights Reserved.

Federal Circuit Uphold TTAB Ruling on Specimens of Use

Part of the trademark registration process is submitting a specimen of the mark as used in commerce (“specimen of use”). Recently, the U.S. Court of Appeals for the Federal Circuit (CAFC) upheld the decision of a split Trademark Trial and Appeal Board (TTAB) panel that refused to register the trademark “CASALANA” for “knit pile fabric made with wool for use as a textile in the manufacture of outerwear, gloves, apparel, and accessories,” stating that Siny Corp. (the applicant) did not submit an acceptable specimen of use. See In Re: Siny Corp. (Fed. Cir. Case. No. 18-1077).

Siny Corp. had submitted a specimen where the mark was not shown on images of the goods or on images of the packaging. Also, the Siny Corp. website did not allow direct ordering. Instead, it listed a phone number and e-mail “for sales information.” Nonetheless, Siny Corp. maintained that its website qualified as a display of goods at their point-of-sale because its web-page specimen had the phrasing “for sales information” (i.e., it was a “display associated with the goods” that should be considered a specimen of use sufficient to purchase those goods).

During prosecution the examining attorney disagreed with the reasoning of Siny Corp., stating that the phrasing “for sales information” was not enough to enable customers to make the sale. Rather, it was just a way to obtain more information and lacked details to complete the order – such as cost, quantity, payment and shipping.

The TTAB panel, in reviewing the determination of the examining attorney, found that even though Siny Corp. customers would need the support of sales staff because their goods were industrial materials for use in manufacturing, nearly all details needed to complete a transaction were not present on the website. Thus, the website could not be considered a display for point-of-sale.

On appeal to the CAFC, Siny Corp. maintained that its website specimen established a “display associated with the goods” and argued that the Board used “overly rigid requirements” in determining that the specimen did not qualify as a display associated with the goods.

The CAFC agreed with Siny Corp. about the Board holding of In re Sones, 590 F.3d 1282 (Fed. Cir. 2009), cautioning against bright-line rules in this context. However, it disagreed with Siny Corp. that the Board in the instant case had used improperly “rigid” requirements stating, in fact, that the TTAB had prudently considered the website specimen’s contents and ruled the specimen does not cross the line from advertising to suitable display associated with the goods.

In hindsight, the website could have been modified a few ways that may have been acceptable: (1) providing pricing information on the site; (2) providing an e-commerce option to purchase; (3) putting the mark on the images of the goods or on images of the packaging rather than just the surrounding website text; and/or (4) changing the general “for sales information” statement to “call to purchase, pricing available on request.” Alternatively, documentary evidence of the sales process may have been acceptable, showing that purchasing consumers saw the website, called the number, and in fact bought the goods. The foregoing are all considerations to keep in mind when presented with issues regarding specimens which claim use in commerce.

 

Copyright 2019 K & L Gates
Article by Stewart Mesher of K&L Gates.

Protecting Your Brand and Trademarks in the Cannabis Space Following the 2018 Farm Bill

The 2018 Farm Bill [1] relaxed restrictions covering hemp-based cannabis products, and it is causing a shift in business strategies in the industry. Instead of a full prohibition of trademark registrations covering cannabis goods or services, a narrow range of filings is now permitted, so long as they conform to the requirements of the Farm Bill and the latest USPTO guidelines. While the regulatory framework is still being developed, cannabis-related business owners who could not previously receive federal trademark protection are now reconsidering their trademark strategies.

The principal change from the 2018 Farm Bill is that while all cannabis products derived from marijuana are still prohibited by federal law under the Controlled Substances Act (CSA), those derived from hemp are now permitted, albeit still tightly regulated. Hemp-based cannabis products are defined as those that contain no more than 0.3 percent THC, the primary active ingredient in marijuana. Accordingly, certain products and services derived from hemp are now legal under federal law, and the USPTO has published guidelines that allow narrow federal trademark registrations covering them.

The USPTO had previously refused any trademark application that covered cannabis products or services. In response, many businesses have filed state-law trademark applications in jurisdictions in which marijuana has been legalized, although this provides only limited protection. Businesses have also tried to circumvent the federal prohibition by filing for goods and services tangentially related to marijuana or cannabis, such as apothecary or pharmacy services for medical marijuana, or services for the provision of information and/or advocacy for cannabis and its uses. The policy at the federal level is still to refuse these applications that cover goods and services that are legal on their face but are in fact related to marijuana. But that policy is now moot for certain hemp-related applications that conform to the new guidelines.

Even for applicants that have succeeded in registering trademarks for cannabis-based products under facially legal goods and services descriptions, attempts to enforce these marks can be hollow. During the course of litigation, it may become clear that the activities of the trademark owner are not permitted under federal law. These registrations are still valuable to block other filers as well as to signal that a business is adopting and is willing to enforce a particular mark, but the new USPTO regulations can provide substantially more protection to businesses that sell qualifying hemp-related products or services.

Under the new USPTO guidelines, marks covering hemp-based cannabis products and services are permitted to be registered as long as they contain no more than 0.3 percent THC and are otherwise legal under federal law. Accordingly, there are certain exceptions and requirements, which include the following:

  • The 2018 Farm Bill left jurisdictional responsibility for regulating certain products to the FDA. As of now, the FDA does not permit cannabidiol (CBD) to be sold in food or drug products. Accordingly, registrations for marks that cover “foods, beverages, dietary supplements, or pet treats containing CBD” are still prohibited. This restriction applies only to CBD at this point. Other non-CBD hemp-based food or drug products would be permitted registration so long as they conform to the applicable FDA guidelines. Also, CBD products that are not a food or drug may still be permitted registration as long as they do not fall under the FDA’s jurisdiction or are not otherwise prohibited by other federal laws.  See USPTO Examination Guide 1-19.
  • For marks covering cultivation and other services related to hemp-based products, applications will be examined not only for compliance with applicable USPTO requirements but also for compliance with the 2018 Farm Bill and applicable state laws. Applicants must show that they have an applicable state license to provide their services, as not all states follow the 2018 Farm Bill’s guidance for hemp products, and in many states, these products are still illegal for commercial purposes or highly restricted.[2]

The new guidelines also allow for applicants to amend pending applications covering cannabis products to conform to the new requirements. To do so, the applicant must limit the list of goods and services to products that contain no more than 0.3 percent THC and submit any required documents showing that the goods and services covered are legal. The application’s filing date would also be amended to coincide with the legalization of hemp-based products, and the USPTO would conduct a new search of the register for prior marks to account for the later filing date.

Under the new regulations, cannabis businesses should consult a trademark attorney to consider their options to protect their trademarks on a federal level. Although the law is in flux and uncertainty abounds, there are several points from a trademark-filing strategy perspective to keep in mind when considering filings under the new guidelines:

  • The new, narrow USPTO guidelines will not be helpful to every business operating in the cannabis space. Businesses that will be helped either already offer or are considering offering hemp-derived goods and services that contain less than 0.3 percent THC, goods that do not constitute food or drug products that contain CBD, and goods that are not otherwise in conflict with FDA or other federal laws or guidelines.
  • A large number of trademark applications will likely be filed for hemp-based products soon, regardless of their applicants’ qualifications. Businesses should explore their options and file quickly, and keep in mind that it will be difficult to show prior use to oppose a third-party filer, as any such use was likely illegal under federal law.
  • Because the USPTO can suspend applications for good cause, it is logical to expect the USPTO to grant suspensions of applications while applicants are in the process of obtaining a license to cultivate hemp-based products.
  • Creating even more uncertainty, the 2018 Farm Bill has directed the U.S. Department of Agriculture (USDA) to derive regulations for hemp-related activities that fall outside of the FDA’s jurisdiction. The USPTO is expected to quickly adopt new guidelines to conform to the USDA.
  • Narrowing an existing application to conform to the new requirements will significantly narrow the filing. After such an amendment, the application cannot be amended back to cover the previous broader range of goods and/or services. If an applicant anticipates a change in law and can draw out the application process to wait for such a change, it may be advisable to file a new application that conforms to the new guidelines rather than amending the old one. The applicant can then keep the broader application alive to preserve their options.
  • In some cases, existing registrations may have made it through the examination process, even if they cover goods and services that were prohibited under federal law at the time of filing. If this is a possibility, businesses should consider their options for re-filing based on the new guidelines which on their face do not apply to amending existing registrations.

The new marijuana legalization framework being put in place state by state, most recently in Illinois, has raised more questions than answers in the state-regulatory sphere. However, until now, the federal guidelines were clear, as all cannabis-related products were prohibited under federal law. After the passage of the 2018 Farm Bill, this is no longer the case. As the law in the cannabis sphere unfolds, businesses should work closely with a trademark attorney to explore options for protecting their valuable brands.

© 2019 Dinsmore & Shohl LLP. All rights reserved.
More on Cannabis & Marijuana law developments on the National Law Review Biotech, Food & Drug law page.

Federal Court Narrows Claims Surrounding “HAPPY BIRTHDAY TO YOU” Copyright Suit

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Following up on a previous post regarding the lawsuit winding its way through federal court seeking clarity on whether the music publisher Warner Chappell owns or has the exclusive right to license the copyright in the ubiquitous “Happy Birthday to You” song, U.S. District Judge George H. King (Central District of California) has ordered that certain tangential claims be stayed until further notice, while the case will move forward on the central claim, essentially whether Warner’s copyright in the song is valid and enforceable or not.

Judge King’s order confirms the parties’ agreement at an October 7th hearing to bifurcate (separate) the central claim from the remaining claims (seeking an injunction against Warner, and a variety of related claims such as unfair competition, false advertising, and breach of contract) at least through the summary judgment phase of the central claim.  The central claim alone will proceed for the time being allowing the parties and the Court to focus on what is truly the dominating question in this case.

In his order Judge King also declined to apply a four-year statute of limitations to the central claim instead of the traditional copyright infringement three-year period.  Plaintiffs claimed that unlike a traditional copyright infringement action where a plaintiff alleges a defendant infringed its copyright, this is a “declaratory judgment” action involving a copyright, that is to say one where plaintiffs are preemptively bringing suit so the Court can decide whether Warner even has rights it can assert.  Basically instead of asserting its purported rights, Warner is being forced into a suit to defend its rights.  Despite the procedural change however, the analysis and issues are very similar to a traditional copyright infringement action.  The question Judge King has to resolve was, since the Declaratory Judgment Act (which permits this type of suit) does not contain its own statute of limitations, plaintiffs argued that the Court should instead use the four-year period applicable to California’s unfair competition claims (one of those ancillary claims Judge King stayed in this same order).  Judge King declined, holding that because the Declaratory Judgment Act is merely a procedural vehicle and the substantive rights being challenged are copyright-based under the Copyright Act, the best statute of limitations period is not California’s four-year period, but rather the Copyright Act’s three-year period.  He therefore dismissed two plaintiffs whose claims were time-barred by the new shorter period and gave them three weeks to re-file if they can/chose to.

Judge King’s order is clearly going to focus the parties and the court on the central issue, whether Warner has a valid enforceable copyright in the “Happy Birthday to You” song.  We will continue to closely watch this one as it proceeds.

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To Track or Not to Track Re: Digital Advertising

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Digital advertising based on tracking users’ interests and related privacy concerns have been the subject of many recent news articles.  What does this mean for businesses?  Evolving industry practices and new legislation relating to online privacy and user tracking likely require changes to online privacy practices and policies.

Online privacy and user tracking are in the news almost daily.  Consider these highlights from the past few weeks about online tracking of California minors, big data brokers, California legislation addressing “do not track,” new mobile and online interest-based advertising technology, and a warning to all website operators from the Better Business Bureau:

New Privacy Rights for California Minors

On September 23, 2013, Governor Brown signed into law new Sections 22580 through 22582 of the California Business and Professions Code titled “Privacy Rights for California Minors in the Digital World.”  The new law, which goes into effect January 1, 2015, requires an operator of a website (including online services and applications, such as a social media site) or mobile application that is “directed to minors” to allow minors (defined as anyone younger than 18 years old residing in California) who are registered users the opportunity to un-post or remove (or request removal of) their posted online content.  The operator also must provide minors with notice and “clear instructions” about how to remove their posted content.  The operator is not, however, required to remove posted content in certain specific circumstances, such as when the content was posted by a third party.

This new law also prohibits website and mobile app operators from advertising to California minors certain products and services that minors cannot legally purchase, such as alcoholic beverages, firearms, ammunition, spray paint, tobacco products, fireworks, tanning services, lottery tickets, tattoos, drug paraphernalia, electronic cigarettes, “obscene matter” and lethal weapons.  Operators also are prohibited from using, disclosing or compiling certain personal information about the minor for the purpose of marketing these products or services.

Senator Rockefeller Expands Investigation of Data Brokers

On September 25, 2013, Governor Rockefeller (W.VA) announced that he sent letters to 12 operators of popular family-, health- and personal-finance-related consumer websites requesting details about whether and what information collected from consumers is shared with data brokers.  In his letter to the operator of self.com, for example, Rockefeller noted that “[w]hile some consumers may not object to having their information categorized and used for marketing purposes, before they share personal information it is important that they know it may be used for purposes beyond those for which they originally provided it.”

California Adds Do-Not-Track Disclosure Requirements Effective January 1, 2014

On September 27, 2013, California Governor Brown signed into law amendments to the California Online Privacy Protection Act (CalOPPA), a 2004 law requiring all commercial websites and online service providers collecting personally identifiable information about California residents to “conspicuously” post a “privacy policy.”  The amendments to CalOPPA, which take effect on January 1, 2014, add two new disclosure requirements for privacy policies required by CalOPPA:

  • The privacy policy must explain how the website “responds to ‘Do Not Track’ signals from web browsers or other mechanisms that provide California residents the ability to exercise choice” about collection of their personally identifiable information (Cal Bus and Prof Code §22575(b)(5)).
  • The privacy policy must disclose whether third parties use or may use the website to track (i.e., collect personally identifiable information about) individual California residents “over time and across third-party websites” (Cal Bus and Prof Code §22575(b)(6)).

The “Bill Analysis” history indicates that CalOPPA amendments are not intended to “prohibit third-party or any other form of online tracking” but rather to “implement a uniform protocol for informing Internet users about tracking . . . and any options they may have to exercise choice . . .” (6/17/13 – Senate Judiciary).

A website operator may meet the “do not track” disclosure requirement by including a link in the privacy policy to “an online location containing a description, including the effects, of any program or protocol the operator follows that offers the consumer that choice” (Cal Bus and Prof Code §22575(b)(7)).

The reference in §22575(b)(7) to “an online location” suggests that businesses already complying with the “enhanced notice link” requirements of the Self-Regulatory Program for Online Behavioral Advertising of the Digital Advertising Alliance (DAA) will comply with amended CalOPPA.  Among other requirements, the DAA’s self-regulatory program requires website owners/operators (called “First Parties”) to provide “clear, meaningful and prominent” disclosure about data collection and use for advertising purposes, and to offer consumers a way to opt out of tracking, such as through the DAA’s consumer choice page.  As noted in the Bill Analyses, while the DAA’s consumer choice mechanism enables consumers to opt out of receiving advertising based on online tracking data, it only works for companies that participate in the DAA’s program and “does not allow consumers not to be tracked.”

User Credentials Subject to California Breach Laws Effective January 1, 2014

Governor Brown also signed into law amendments to California’s breach notification laws on September 27, 2013.  As amended, the definition of “personal information” that triggers breach notification requirements includes consumers’ online credentials: “user name or email address, in combination with a password or security question and answer that would permit access to an online account.”

Mobile Advertising: Mobile Telephone as Tracking Device

In the October 6, 2013, edition of the New York Times, an article titled “Selling Secrets of Phone Users to Advertisers” describes sophisticated profiling techniques for mobile phone users that feed on data collected through partnerships with other various online service providers.  These companies are developing alternatives for cookies, which do not work on mobile devices and, as the new California law illustrates, are increasingly irrelevant as an online tracking technique because users can block or delete them.

New Tracking Technology from Microsoft and Google

On October 9, 2013, AdAge reported that Microsoft is developing a new kind of tracking technology to replace cookies.  The new technology would function as a “device identifier,” allowing user tracking across devices that use Microsoft Windows, Xbox, Internet Explorer, Bing and other Microsoft services.  Similarly, USA Today reported that Google is developing its own digital tracking mechanism known as “AdID.”  While both of these new trackers will be used to collect and aggregate date for advertising and marketing purposes, they purportedly will offer users more control over how and what online activity is tracked and who has access to their personal data.

Better Business Bureau Issues Compliance Warning to Website Operators

On October 14, 2013, the Better Business Bureau issued a Compliance Warning noting that a “significant minority of website operators” are omitting the “enhanced notice link” (as required by the DAA’s Self-Regulatory Program for Online Behavioral Advertising) when ad networks and other third parties collect data for interest-based advertising purposes but cannot provide their own notice on the website on which the data collection occurs.  The Better Business Bureau operates the Online Interest-Based Advertising Accountability Program, through which it monitors businesses’ advertising practices and enforces the DAA’s self-regulatory program, even for companies that are not participating in it.

All of this news has created consumer confusion.  While consumers are increasingly aware of being tracked, they don’t know what exactly it means or which websites are doing it—and they are not happy about it.  A study from data privacy company TRUSTe found that 80 percent of consumers are aware of being tracked and 52 percent don’t like it.

What to Do?

A check-up for the privacy policy (or “privacy statement,” which is the increasingly popular industry term) posted on your company’s website is a good way to start evaluating your company’s digital advertising and privacy practices.  The online privacy statement is the primary means by which website operators (also known as “publishers”) communicate their privacy practices to users.

These Four steps can help you successfully evaluate your company’s privacy statement:

First, find out if your company’s marketing strategy includes advertising based on consumer information collected through cookies or other tracking technology.  Even if this type of advertising is not part of current plans, your company’s website still may have third-party tracking activities occurring on it, and these activities must be disclosed in the privacy statement as of January 1, 2014.

Second, review the privacy statement displayed on your company’s website(s) and/or mobile application(s) and make sure it accurately, clearly and completely discloses the information collected from users, how it is collected (e.g., by your company or by third parties), how your company uses the information, and whether and how the information is disclosed to third parties.  If you use information that you collected from consumers for targeted advertising, make sure the privacy statement says so.  A federal judge in the Northern District of California recently reviewed a company’s online privacy policy to evaluate whether users reading the privacy policy would understand that they were agreeing to allow user profiles and targeted advertising based on the contents of their e-mails.  The court found that the lack of specificity in the company’s privacy policy about e-mail interception meant that users could not and did not consent to the practices described in the online privacy policy.

Third, find out when and how the privacy statement is or was presented to users who provide personal information through the company website(s) and/or mobile application(s).  Is the privacy statement presented as a persistent link in the footer of each webpage?  Are users required to agree to the privacy statement?  If not, consider implementing a mechanism that requires users to do so before providing their personal information.

Finally, if your privacy statement needs to be updated, make sure you notify all consumers in advance and ensure that the changes you propose are reasonable.  Unreasonable and overbroad changes made after the fact can cause reputational harm.  Instagram learned this at the end of 2012 when it tried to change its terms of service so that users’ photos could be used “in connection with paid or sponsored content or promotions, without any compensation to [the user].”  After a hail of consumer complaints, Instagram withdrew the revised terms and publicized new, more reasonable ones.

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Another Software Patent Horror Story Unmasked and Debunked: This One You Won’t Believe

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I have noticed lately that the anti-software patent PR machine is trying pretty hard to find examples of start-ups “crushed” by software patents.

Ok, so here is the latest laugher example they came up with:  FindTheBest.com, a company that is nearing its fifth birthday and handling 20 million visitors a month, is supposedly a “start-up” being unfairly targeted by a patent troll  (see http://www.latimes.com/business/la-fi-hiltzik-20131011,0,704586.column).

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As far as I can tell from their web site, FindTheBest is doing a land-office business, and probably has a valuation better than 95% of all software companies.  For starters, in my opinion, pretty much every software entrepreneur on the planet would gladly endure a challenge from a troll if they could get 20 million visitors a month in web traffic.  But that is just the beginning of the irony of this anti-patent sob story.   The leader of this particular start-up at present, Kevin O’Connor, sold a previous start-up he co-founded, Doubleclick, to Google for $3.1 billion in 2008.  Doubleclick, and indeed O’Connor himself, named as an inventor on at least four software patents acquired by Google (http://www.patentbuddy.com/Inventor/O%27Connor-Kevin-Joseph/5640460#More), had aggressively filed patents to protect its innovations (http://www.seobythesea.com/2007/04/doubleclick-google-looking-at-some-of…).   Those patents weighed heavily in the valuation of Doubleclick when it was sold to Google.  So, is it not a little ironic that FindTheBest.com would be outraged about software patents impeding their progress, after one of their founders profited mightily from the patent filings of his own prior company?  Well, I sure think many would think so.  This is not to say I don’t have nothing but the utmost admiration for Mr. O’Connor’s entrepreneurial talents.  And, its not to say that he may very well be legitimately frustrated to have to deal with a patent infringement issue.  But, these are the problems that go with the kind of success few entrepreneurs are ever lucky enough to achieve, not the problems of the vast majority of true start-ups still trying to find enough customers to survive another round of financing.

Here is another injustice of this story: Eileen C. Shapiro, the inventor of the so-called troll patent in question, is no slacker. She has an undergraduate degree from Brown University and an MBA from Harvard University.  According to her LinkedIn profile, she holds 14 patents and has been actively involved in many start-ups.  Is this really an example of some undeserving “troll” inventor with no right to exclusive rights in her inventions?  Is it so improbable that someone that likely has a genius level IQ would be awarded a valuable patent for her ideas, which mind you appear to have come to her a good while ago before the site FindTheBest.com was even a notion in its founder’s imagination.

So, is this really an example of a “start-up” getting drummed out of business by underserving troll?  The Electronic Frontier Foundation would like you to believe that — “Trolls do a really good job of targeting start-ups at their most vulnerable moments,” says Julie Samuels, a staff attorney at the Electronic Frontier Foundation and holder of its Mark Cuban Chair to Eliminate Stupid Patents.”  (LA Times, October 13, 2013).   Or, is this an example of a large, successful, well established and fast growing company nearing its fifth birthday, that some time ago left “start-up” mode behind?  Wouldn’t most five year old companies be embarrassed to say they were still “starting up”?  This is a label only those desperately in need of contriving the facts to suit their hypothesis would dare to come up.

Moreover, is this not a great example of how Mr. O’Conner’s patents helped him get a fair return for the sale of Doubleclick to Google, so he could reinvest some of his gains in FindTheBest.com, rather than an example of how Ms. Shapiro’s innovations are a poster child for patents underserving of a reward.

If this is the best software patent horror story the anti-patent forces can come up with this Halloween, they should give it a rest for a while.

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