Why Every Trademark Owner Should Care About B&B Hardware

Does a Trademark Trial and Appeal Board (TTAB) decision that there is a likelihood of confusion between two trademarks prevent federal district court trademark litigation?

The purpose of a trademark is two-fold: to identify the owner or “source” of goods and services, and to prevent consumer confusion in the marketplace. Therefore, the test for trademark infringement under the Trademark Act of 1946 (Lanham Act), is whether use of a trademark is “likely to cause confusion” with an existing, registered mark. A person generally may neither use nor register a mark that would be “likely to cause confusion” with an existing trademark. If a person uses a mark that one believes is likely to cause confusion, the owner of the registered mark may sue in federal court for trademark infringement. 15 U.S.C. § 1114(1). If a person seeks to register a mark that is likely to cause confusion with an existing registered mark, the owner of the existing registered mark may oppose the registration of the new mark before the TTAB. 15 U.S.C. § 1052(d); see id. §§ 1063, 1067(a).

In B&B Hardware, Inc. v. Hargis Industries, Inc., 134 S. Ct. 2899 (US 2014), the United States Supreme Court was asked to decide whether the TTAB’s determination of a likelihood of confusion precludes a trademark litigant from re-litigating that issue in a federal court infringement action involving a likelihood of confusion element.

Plaintiff B&B Hardware Inc. (“B&B”) produced industrial fasteners for the aerospace industry under the mark SEALTIGHT since 1990. B&B’s SEALTIGHT mark was registered with the PTO in 1993. Subsequently, Hargis Industries, Inc. (“Hargis”) adopted the mark SEALTITE for its self-drilling, self-taping screws for use in the metal-building industry. Hargis applied to register SEALTITE with in 1996, but its application was initially refused due to the existence of B&B’s registration. Hargis then sought to cancel the B&B registration alleging that the B&B mark had been abandoned. However, prior to a final decision by the Board, B&B sued Hargis in U.S. District Court alleging infringement of its registered SEALTIGHT trademark.

A jury in the District Court found in favor of Hargis that there was no likelihood of confusion between the marks. The parties appealed to the Eighth Circuit which affirmed the District Court decision and the issue was ultimately taken by the U.S. Supreme Court.

Reversing the Circuit Court, the Supreme Court remanded the case for further proceedings, holding that a likelihood of confusion determination by the TTAB should have preclusive effect as long as the ordinary elements of issue preclusion are met and the usages of the marks are materially the same.

“Issue preclusion” or “res judicata” is an important concept for both fairness and judicial economy. Essentially, litigants should not get two bites at the same apple. In the past, the TTAB would suspend its proceedings if a case was simultaneously pending in District Court.

The key take away for trademark practitioners is strategic since trademark oppositions and cancellations do not result in a damages award or determination of infringement. Yet, its decisions can now be used as the basis for finding infringement in District Court where an adverse decision may have far-reaching effects.

Copyright Ownership in Software & Other Independent Contactors Agreements: Can Work-For-Hire” Be Retroactive?

Regardless of industry, intangible assets are often the greatest drivers of business opportunity and shareholder value. Companies increasingly recognize intellectual property rights are a critical part of the value of the total assets of the company. Great care should be given to maintaining and enhancing their power and value. Innovative companies that outsource the development of copyrightable works such as computer software, creative or media content and other “tangible” works with the expectation of owning both the resulting product and the underlying copyrights must be mindful of ownership risks.

Successfully leveraging copyright rights and assets is critical to the opportunities presented by the current economic environment. Yet, without clear ownership of copyright rights, a company can not exploit the exclusive rights it believes it owns. Under U.S. Copyright law, only the copyright owner has the exclusive right to reproduce, distribute, public display/perform and modify a work. This leads to the inevitable question: who owns the copyright to a work made for hire?

To be effective, agreements that assign ownership of copyrightable works must be in writing. It is not enough that the company or client may have commissioned and paid for the work. Written agreements that vest copyright ownership commonly appear in two forms. In the first, the developer of the work “assigns” his or her rights to the new owner. Under U.S. law, specific language of assignment must evidence the transfer.

Many software companies, in their zeal to create and commercialize their products, fail to consider the need to clearly establish ownership of software copyrights when using developers and programmers. This begs the question, can a company retroactively secure copyright to a work by later designating it as a “work made for hire?”

The Seventh Circuit first addressed the issue in Schiller v. Nordisco Corp., 969 F.2d 410 (7th Cir. 1992). The Court held that a “work made for hire” agreement must precede the creation of the work, because the writing requirement under the “work made for hire” doctrine is not merely a statute of frauds provision “designed to protect people against false claims of oral agreements.”

Under Community for Creative Non-Violence v. Reid, 490 U.S. 730, 109 S.Ct. 2166, 104 L.Ed.2d 811 (1989), a work is “made for hire” only if it falls in one or more of the categories of intellectual property enumerated in section 101(2), of was specially commissioned and the parties had signed a statement to that effect.

The requirement of a written statement regarding the copyright on a specially commissioned work is not merely a statute of frauds, although that is the purpose emphasized by the cases. It is not only designed to protect people against false claims although there is authority that it must be signed before suit is brought. The signed-statement requirement in section 101(2) makes the ownership of property rights in intellectual property clear and definite, so that such property will be readily marketable.

The creator (author) of the property is the owner, unless he is an employee creating the property within the scope of his employment or the parties have agreed in a writing signed by both that the person who commissioned the creation of the property is the owner. The writing must precede the creation of the property in order to serve its purpose of identifying the (noncreator) owner unequivocally. Assignment under 17 U.S.C. § 201(d), conveys both the copyrights and with them the right to sue for infringement of them. SAPC, Inc. v. Lotus Development Corp., 921 F.2d 360 (1st Cir.1990).

The sale of the physical embodiment of intellectual property does not “of itself” transfer the intellectual property. 17 U.S.C. § 202. Obviously when a software programmer sells a CD-ROM to a customer (or uploads a software program to a Web-based vendor of downloads) it does not mean to transfer the copyright in them so that the distributor could copy the software and sell the copies without paying anything to the programmer. An agreement that divides ownership in this way would be inefficient Penn Central Corp. v. U.S. Railroad Vest Corp., 955 F.2d 1158, 1160 (7th Cir.1992)).

A Company’s ownership of copyright in works created by independent contractors may be a lesser concern than a company’s ability to sue for infringement of that copyright. “[T]he right to claim copyright in a non-infringing derivative work arises by operation of law, not through authority from the copyright owner of the underlying work.” 71 NIMMER ON COPYRIGHT § 3.06, at 3-34.34. We have cited Nimmer with approval on this point.

On this point Liu v. Price Waterhouse LLP, 302 F.3d 749, 755 (7th Cir.2002) is instructive. Price Waterhouse owned the copyright to a computer-software program, and Yang, an employee, was asked to help recruit a Chinese computer programmer to increase the speed of the program. Price Waterhouse entered into a series of agreements with Yang that provided Price Waterhouse would own the intellectual-property rights to the improved software. When Yang refused to give Price Waterhouse the source code to the improved software Price Waterhouse sued for infringement (and won) because the owner of a copyrighted work has the exclusive right to control the preparation of derivative works, the owner could limit the derivative-work author’s intellectual-property rights in the contract, license, or agreement that authorized the production of the derivative work.

Although the right to claim copyright in a derivative work arises by operation of law—not by permission of the underlying copyright owner— the parties may alter this general rule by agreement.

Companies must take the necessary steps to protect their intellectual property rights in outsourced development of copyrightable works (whether computer software, entertainment content or other “works of authorship”). First, understand the legal requirement that an agreements addressing ownership of copyrights must be in writing. Second, if a company intends to be the copyright owner, ensure that the company uses a written agreement establishing ownership of the work. Third, ensure that written agreements include appropriate “work made for hire” provisions, so the company will own the copyright in the work and in all derivative works for the full life of the copyright. Lastly, evaluate existing intellectual property to ensure that ownership of intellectual property rights has been effectively transferred to the company.

Copyright, Fair Use & Media

Digital Media

Digital Media

Media Creation & Consumption is Challenging Traditional Legal Notions.

At a time when #media creation & consumption has transformed, two recent cases, both involving Fox News Network on opposite sides of the “fair use” defense to copyright infringement, highlights the evolving and dynamic legal challenges facing business and content creators. In each case, Fox News loses on Summary Judgment.

Photographs, Fair Use & Social Media

The first case, North Jersey Media Group, Inc. v. Jeanine Pirro and Fox News Network, LLC, involves what many recognize as the “now iconic photograph of the firefighters raising the American flag on the ruins of the World Trade Center on September 11, 2001.” The photograph – which bears a striking resemblance to Joe Rosenthal’s World War II photograph of the Iwo Jima flag-raising – has become a similarly striking symbol of American patriotism.

That similarity was not lost on a production assistant for a Fox News program “Justice with Judge Jeanine” who posted the two images, unaltered, on the show’s Facebook Page, along with the phrase “#neverforget,” allegedly to commemorate the twelfth anniversary of the attack.

The case is noteworthy for its analysis of the “fair use” defense in a social media context. While the Copyright Act grants authors certain exclusive rights, including the rights to reproduce the copyrighted work and to distribute those copies to the public (17 U.S.C. § 106(1), (3)) one often quoted and widely misunderstood limit to those rights is the doctrine of “fair use,” which allows the public to draw upon copyrighted materials without the permission of the copyright holder in certain circumstances. The fair use doctrine is an after-the-fact defense to infringement, not a pre-emptive justification to use another’s work without permission.

Educated in journalism and media studies, the production assistant acknowledged that she understood a copyright to be something that is owned by someone else although she had no training in copyright law either in college or during her tenure at Fox News. She had been working at Fox News for approximately three years, had previously sought legal advice regarding use of photographs on the broadcast, but never in connection with posting images to the program’s Facebook page.

The key take-away for businesses and digital marketers alike is the need for vigilance when using third-party content on social media. Employee education and training on what copyright protects, what it doesn’t, and how it works may help prevent your business form facing a similar situation.

Media Monitoring, Digital Content & Copyright Fair Use

The second case, Fox News Network, LLC v. TVEyes, Inc., involves a company that monitors and records all broadcasts by more than 1,400 television and radio stations twenty-four hours per day, seven days per week. This content is indexed and organized in a searchable database that allows subscribers to search terms, determine when, where, and how those search terms have been used, and obtain transcripts and video clips of the portions of the television show that used the search term.

Fox News Network, LLC sued to enjoin TVEyes from copying and distributing clips of Fox News programs. TVEyes asserted that its system and services are permitted under the doctrine of “fair use.”

The court found that TVEyes service was a fair use. Unlike other services that simply “crawl” the Internet, culling existing content available to anyone willing to perform enough searches to gather it, the indexing and excerpting of news articles, where the printed word conveys the same meaning no matter the forum or medium in which it is viewed, the service provided by TVEyes is transformative. By indexing and excerpting all content appearing in television, every hour of the day and every day of the week, month, and year, TVEyes provides a service that no content provider provides. Subscribers to TVEyes gain access, not only to the news that is presented, but to the presentations themselves, as colored, processed, and criticized by commentators, and as abridged, modified, and enlarged by news broadcasts.

The key take away for technology companies that rely on content is what the court says about features of the Services (as opposed to the technology itself, e.g. the software/platform): the issue of fair use is for the full extent of the service, TVEyes provides features that allow subscribers to save, archive, download, email, and share clips of Fox News’ television programs. The parties have not presented sufficient evidence showing that these features either are integral to the transformative purpose of indexing and providing clips and snippets of transcript to subscribers, or threatening to Fox News’ derivative businesses.”

In other words, evidence that certain features are essential to the use of a service, may be sufficient to show how the features (service) exist above- and-beyond what stale or static content can show.

You Don’t Have to Muddle Through

When it comes to understating evolving technology legal risks, your business can’t simply muddle through. The professionals at the Adler Law Group can help you adopt conduct risk assessments, provide employee training and methodologies for approaching these challenges by setting objectives, determining scope, allocating resources, and developing practices that will efficiently and effective manage risks, while keeping pace with the business.

For a free consultation, call us at (866) 734-2568, send and email to info@ecommerceattorney.com or visit our web site www.adler-law.com

The New Wave of Data-Breach Outrage

You can almost feel it, like a power-line buzz in the air. If 2014 was the year that consumers and legislators woke up to the real threat to privacy and information security, 2015 may be the year that sees a shift in both enforcement and penalties.

On February 5, Anthem, Inc., the country’s second-largest health insurer by market value announced a security breach resulting in unauthorized access to tens of millions of current and former customer and employee accounts, Bloomberg reports.

Of particular concern is that the compromised data included social security numbers and birth dates, etc. Very different than having a credit card number stolen.

Last week, a group of 10 state attorneys general (AGs) sent a letter chastising Anthem for the length of time it took to notify the public of the breach. The letter was written on behalf of Arkansas, Connecticut, Illinois, Kentucky, Maine, Mississippi, Nebraska, Nevada, Pennsylvania and Rhode Island.

Some observers have commented that current encryption technology can limit the amount of data that even “authorized users” can view at one time, making it more difficult to compromise massive amounts of data.

In this situation, the breach occurred through misuse of an authorized user’s credentials, so encryption alone would not have worked. While most companies give universal access to data to some employees (senior level or IT), for the encryption approach to work, no one person or set of credentials should allow access to all data.

In the end, the new “best practices” approach may be a combination of encryption plus controls to limit the amount of data that any one set of credentials can access.

When it comes to addressing data privacy risks, it is often difficult to determine whether you should slow down, change course, signal for help, or simply muddle through. Often, teams tasked with managing privacy need to quickly identify potential issues, assess the risk, and implement controls to steer clear of unneeded exposure. The privacy professionals at the Adler Law Group can help you adopt Privacy Impact Assessments – or similar tools – and standardize a methodology for approaching these challenges by setting objectives, determining scope, allocating resources, and developing practices that will efficiently and effective manage privacy, while keeping pace with the business. For a free consultation, call us at (866) 734-2568, send and email to info@ecommerceattorney.com or visit our web site www.adler-law.com.

DATA PRIVACY DAY 

Do You Understand Your Data Privacy Rights?

Data Privacy Day was started in 2007 in response to widespread lack of understanding about how personal data was being protected. Today, 91% of adults “agree” or “strongly agree” that consumers have lost control over how personal information is collected and used by companies, according to a recent Pew Research Center Survey.

Data is one of the natural resources of the 21st century. It should be treated like all other precious resources. Understanding, responsibility, and accountability are key. Ubiquitous Internet connections, unprecedented processing power and speed combined with staggeringly large databases have the ability to help both the private and public sectors. However, there is a growing split between the benefits of data-driven activities and perceptions of decreased privacy rights needs to be addressed. There is a balance that needs to be found between the responsibility of governments and that of businesses in ensuring an adequate level of protection to citizens and consumers, while supporting technological innovation.

The purpose of Data Privacy Day is raise awareness among digital citizens and empower them with understanding how their data is being collected, stored and consumed. Often, that starts with being educated about the privacy policies of online companies and web properties.

The National Cyber Security Alliance (NCSA) officially kicked off today’s Data Privacy Day events with a broadcast from George Washington University Law School featuring Federal Trade Commissioner Maureen Ohlhausen and privacy and security experts from industry and government.

Whether you are a consumer, an application developer, a technology platform provider, consultant, or enterprise that relies on the collection, analysis and commercialization of data (who doesn’t these days) Adler Law Group can help you navigate this emerging area by 1) assessing and prioritizing privacy risks, 2) creating a baseline understanding of data assets, data flows and contractual commitments, 3) developing internal Privacy Polciies and processes, and 4) creating and delivering training programs for executives and employees that increases awareness and mitigate risk.

Contracts & Copyright: Issues for Authors, Writers & Creative Professionals

To find out more about how the Adler Law Group can help your business identify risk and issues related to intellectual property ownership, corporation or LLC formation, or just assess risk associated with your business, contact us for a freeno-obligation consultation by emailing David @ adler-law.com, visiting our web site www.adler-law.com, or calling toll free to (866) 734-2568.

Three Things To Improve Your Law Firm’s Social Media Marketing in 2015

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When I committed myself to social media marketing a few years ago, like most lawyers, I wasn’t quit sure what I was getting myself into. One thing I knew for sure: I had to just start.

I’m sure my early posts were fairly mundane and added little value, let alone acted as a catalyst for a conversation. As most social media experts will posit, social media is about identifying and engaging with customers, employees and prospects. Over time, I increased my engagement, learned to participate and learned what worked and what didn’t. What follows are a couple of things that I try to keep in mind as part of my legal social media marketing efforts.

1. Have a voice. As lawyers we have instant credibility. Use this to your advantage. Whether you are a personal injury lawyer or in house counsel to a pharmaceutical company, you probably follow certain topics or have expertise in a particular area. You can use your area of expertise to talk about events, trends or interesting developments. Even if all you do is post a link to something that interests you, you are developing your online persona.

2. Cultivate your followers. One of the most powerful aspects of social media marketing is the network effect. As followers like, share or favorite your content, your message gets spread exponentially. Don’t be afraid to engage with those followers to cultivate and strengthen those relationships.

3. Always evaluate. Sometimes I am shocked that a post gets shared or favorited. For whatever reason, the subject matter resonates with my followers and my followers’ followers. When I see that, I try to note the subject area or topic, how it was shared an by whom. Focusing on content that others find useful enhances the value of my voice and my content.

As we look forward to 2015, now is an opportune time to take a look at what work last year, what didn’t and how we can improve our focus going forward.

If you find my posts uself, I encourage you to share, comment, follow or just get in touch.

Best of luck for your legal marketing efforts in 2015!