Zombie Cinderella ‘Survives’ Walt Disney’s Cinderella Trademark- No Likelihood of Confusion

United Trademark Holdings, Inc. (“Applicant”) appealed a decision by the U.S. Patent & Trademark Office refusing registration of its “ZOMBIE CINDERELLA” trademark for dolls when the USPTO held that it was confusingly similar to the registered “WALT DISNEY’S CINDERELLA” trademark.

In any likelihood of confusion analysis, two key considerations are the similarities between the marks and the similarities between the goods at issue. Applicant demonstrated that the story of “Cinderella,” is a “well-known narrative … involving a beautiful young lady, her antagonistic stepsisters, a fairy godmother, a ball, a prince, and a pair of glass slippers, existing since at least as early as 1697.”

The USPTO cited to nine other doll lines that use the name “Cinderella” holding that: 1) the mark is weak, and 2) CINDERELLA is not the dominant component of the cited, registered mark. The court found that while the dominant part of the mark -the term CINDERELLA – was similar, use of the terms “Walt Disney” and “Zombie” differentiated the two. The USPTO also found that “the design element of “WALT DISNEY’S CINDERELLA” may function, for juvenile customers, as a stronger source indicator than the term CINDERELLA, because it depicts a specific version of Cinderella that is associated with the Walt Disney animated film” of the same name.

Lastly, although the word “zombie” has little significance or distinctiveness as a source indicator in the marketplace for toys, the combination of ZOMBIE with CINDERELLA creates a unitary mark with an incongruous impression.

GEAR UP FOR FALL! Now Is A Good Time To Take A Look At Those Contracts

One of the most important tools to protect your business – your ideas, customer relationships and talent pool – is your written contract. A solid contract is the foundation for a reliable relationship for you, your customers and your employees. More importantly, it helps to prevent misunderstandings and false expectations that can lead to a breakdown in your customer relationship, jeopardize the project and result in litigation.

Many companies start with a model or “form” contract adapted from forms available online or drafted when the business first started. As businesses develop over time, you may have revised your contracts, adding a little here, removing a little there. Maybe you read an article about an important case in your industry and decided to add some text from the contract discussed in the court’s legal opinion. In many cases, over time, the agreements become “Franken-contracts” an odd amalgamation of trade lingo, inconsistent terms and even contradictory conditions. At best these are ambiguous and confusing to read. At worst, they become unenforceable.

At some point, you should review, revise and generally “tighten” existing contracts. You should have your lawyer review them to make sure that there are no mistakes, ambiguities or omissions that could cost you or your customers. I urge clients to have their contract forms reviewed on an annual basis. Depending on changes in the law, changes in the industry or changes in your own business, this process should only take a few hours.

The following are six things to consider as you review your existing contract forms and business practices.

First, are you using a written contract? Simply having a written agreement in place will help prevent the often difficult, time-consuming and expensive dispute that comes down to a “he said / she said” situation.

Second, make sure that the key terms of your contract are consistent and understandable. Pricing and payment terms, clear descriptions of the services to be performed or the goods to be delivered, as well as due dates and acceptance criteria will go a long way toward preventing breach of contract claims. More importantly, ambiguous and internally-contradictory terms may expose you to fraud claims or claims under an unfair business practices act. These types of claims are typically much more difficult and more expensive to defend against.

Third, create a mechanism for changes in your contract. Circumstances change. When they do, make sure that you document them and that your customer initials and dates any additions or changes to the contract after it is signed.

Fourth, don’t overlook intellectual property (“IP”) rights, Many business relationships involve collaborative sharing or development of knowledge, skills and protectable IP assets such as copyrights, trademarks, patents and trade secrets. Intangible assets are often the most important drivers of revenue creation and value. Overlooking creation, ownership and control of IP rights may result in the loss of these assets.

Fifth, ensure that your contracts are up-to-date with respect to local laws and industry regulations. Recent developments in technology, e.g., BYOD, Social Media, Mobile commerce, and online privacy had produced a raft of state, federal and industry specific laws, rules and regulations. Do you regularly update your forms to make sure they comply with changes to local laws?

Sixth, understand your “escape” options. Not every relationship is meant to last forever. Your contracts should have clear and concise terms for ending the relationship such as failure to perform, failure to pay or adverse business conditions.

To find out more about how the Adler Law Group can help you tighten your contracts, or even draft new ones, contact us for a free, no-obligation consultation.

AEREO LOSES COPYRIGHT CASE

Technology Continues to Test The Bounds of Copyright Law

The Internet is an unprecedented source of disruption. From retail services (e.g. Amazon) to media and entertainment, almost every industry has been forced to rethink its business model due to the accessibility, ubiquity and democratizing force of the Internet. Aereo was positioned to disrupt the traditional media distribution model by giving consumers greater control over what were otherwise “free” over-the-air transmissions.

The Aereo service was premised on the idea that consumers should be able to watch and record over-the-air broadcast television programming via the Internet. Major broadcast networks that owned the content made accessible through Aereo challenged the model on the grounds that Aereo was violating the exclusive “public performance” right guaranteed by the Copyright Act.

Copyright law provides copyright owners six exclusive rights. One of those rights is the exclusive right to publicly perform the copyrighted work. Because this right is a statutory construct, one must look to the statute to determine its meaning. To “perform” and to perform “publicly” means “to transmit or otherwise communicate a performance or display the work to a place … or to the public, by means of any device or process, whether the members of the public capable of receiving the performance or display receive it in the same place or in separate places and at the same time or at different times.”

While many reacted by asking whether the case would stifle innovation and have a chilling effect on start-ups, this case does highlight the increasing tension between technological advances and copyright law.

From a practical standpoint, one need not be alarmed about the impact of the decision on most types of innovation. For one thing, the Court went to some lengths to craft a reasonably narrow decision, which applies only to broadcast TV retransmitted over the Internet.

As with any type of innovation, there are different types of risk. On the one hand, there is technology risk: the risk that whatever technology is necessary for some business plan simply won’t work. On the other hand, there is legal risk, highlighted by the Aereo decision: the risk that the entrepreneur’s interpretation of some act or case law won’t ultimately prevail. That’s what happened to Aereo.

As an IP lawyer, I am somewhat perplexed. It is hard for me to understand why Aereo made such a bold move. However, at least the district court agreed with Aereo’s interpretation.

Launch Designer Workshops By EDITOR-AT-LARGE: Contracts

Contracts for Interior Design Professionals

This crash course on legal contracts is designed for interior designers who are drafting a contract for the first time or wanting to make an existing one airtight.

There’s a reason you became a designer, and it probably didn’t have anything to do with lawyers and contracts.

You’re the expert in color, fabric, floor plans, and furniture schemes, not intellectual property and arbitration provisions. If you’re already confused, don’t fret. This crash course is designed for those drafting a contract for the first time or wanting to make an existing one airtight. Led by David Adler, an actual lawyer who understands the ins and outs of the design industry, this workshop will cover the clauses you need to protect yourself in the unfortunate event that something doesn’t work out as planned. Clients can be difficult enough. Don’t let legal trouble slow you down.

In this class, you will learn how to:

  • Define what you are doing for your client, as well as NOT doing for them
  • Make sure you get paid on time and in full
  • Protect yourself against outside factors that may affect cost and ability to complete a project
  • Give yourself a way to get out of your contract if things aren’t working

By the end of class, you will have:

  • A basic understanding of key contract terms and the reasons as to why they are there
  • A basic client agreement that you can use or customize

The Instructor, David Adler, is an attorney, nationally-recognized speaker, and founder of a boutique law practice focused on serving the needs of creative professionals in the areas of intellectual property, media, and entertainment law. He provides advice on choosing business structures, protecting creative concepts and ideas through copyright, trademark, related intellectual property laws and contracts, and structuring professional relationships. He has 17 years experience practicing law, including drafting and negotiating complex contracts and licenses with Fortune 500 companies, advising on securities laws (fundraising) and corporate governance, prosecuting and defending trademark applications, registrations, oppositions, and cancellations before the US Patent & Trademark Office (USPTO), and managing outside counsel. Currently recognized as an Illinois SuperLawyer® in the areas of Media and Entertainment Law, he was also a “Rising Star” for three years prior. He received his law degree from DePaul University College of Law in 1997 and a double BA in English and History from Indiana University in Bloomington, Indiana. Outside the practice of law, David is an Adjunct Professor of Music Law at DePaul College of Law, formerly chaired the Chicago Bar Association’s Media and Entertainment Law Committee, and is currently a member of the Illinois State Bar Association Intellectual Property Committee.

Identifying Intellectual Property Issues in Start-Ups – Live Webcast!

Do you work with start-up companies and need a basic understanding of the various intellectual property issues that can arise?

I will be co-presenting in this online seminar that will help you:

  • understand the trademark and copyright problems your client may encounter with branding;
  • learn how to protect your client’s branding once established;
  • familiarize your practice with patents, including what they protect, timing, and strategies to prevent inadvertent loss of patent rights before filing the application;
  • understand trade secrets and the importance of non-disclosure and confidentiality agreements;
  • recognize intellectual property issues relating to technology, including open source code and the cloud;
  • establish a proactive approach toward intellectual property ownership between cofounders, employees, and vendors; understand business names, domain names, promotional issues, and website content concerns.

The program qualifies for 1.5 hours MCLE credit.

I would like to personally invite you to attend the upcoming Law Ed program titled, “Identifying Intellectual Property Issues in Start-Ups,” which I will be co-presenting via live webcast on Tuesday, May 27th.

Presented by the ISBA Business Advice and Financial Planning Section

Co-Sponsored by the ISBA Intellectual Property Section

Success = Scrutiny: recent trends in FTC actions against affiliate/online marketers

Online marketing continues to evolve and affiliate marketing can be a great method of building brand awareness. Online marketers need to stay ahead of legal and regulatory compliance trends. This article looks at recent Federal Trade Commission (“FTC,” “Commission,” or “agency”) activity that impacts online marketing.

Given the lack of a comprehensive federal regulatory scheme, and the increasing awareness of deceptive marketing practices, it is not surprising that the FTC has ramped up enforcement efforts against entities not covered by existing, industry-specific federal regulations over the last decade. Notably, one company has defended itself against the FTC by challenging the FTC’s authority to pursue such broad enforcement.

Jurisdiction

The widely-watched case of FTC v. Wyndham Worldwide Corp is not just about Cybersecurity.

The Federal Trade Commission (FTC) has just won the first major round of its fight with Wyndham Hotels over data security. However, the importance of the case has more to do with the FTC’s jurisdiction, challenged when Wyndham moved to dismiss the FTC’s case. Affirming the FTC’s broad jurisdiction, the federal judge overseeing the controversy noted that the case highlights “a variety of thorny legal issues that Congress and the courts will continue to grapple with for the foreseeable future.”

Affiliate Marketing: A Roadmap for Compliance: Text Message Marketing

The Commission is cracking down on affiliate marketers that allegedly bombard consumers with unwanted text messages in an effort to steer these consumers towards deceptive websites falsely promising “free” gift cards.

For example, in eight different complaints filed in courts around the United States, the FTC charged 29 defendants with collectively sending more than 180 million unwanted text messages to consumers, many of whom had to pay for receiving the texts. The messages promised consumers free gifts or prizes, including gift cards worth $1,000 to major retailers such as Best Buy, Walmart and Target.

By now, many in the Affiliate Marketing industry are familiar with the Legacy Learning Systems case. In March, 2011 the FTC settled charges against Legacy — which sells instructional DVDs — that Legacy represented, directly or indirectly, expressly or by implication, reviews of their products were endorsements reflecting the opinions of ordinary consumers or independent reviewers, when many of the favorable endorsements were posted by affiliate marketers who received a commission from Legacy for sales they generated.

Regardless of the form of affiliate marketing – email campaigns or text message campaigns – there are a couple key take-aways here.

First, identify and disclose a material connection between a product user or endorser and any other party involved in promoting the product. A “material connection” is a relationship that affects the credibility of an endorsement and wouldn’t be reasonably expected by consumers. See our article about complying with the endorsement guides here.

Second, set up and maintain a system to monitor and review affiliates’ representations and disclosures to ensure compliance. For example, Legacy looked at its top 50 revenue-generating affiliates at least once a month, visiting their sites to review their representations and disclosures. It has to be done in a way designed not to disclose to the affiliates that they’re being monitored.

Third, understand he requirements for conducting legally-compliant text message marketing. The Telephone Consumer Protection Act (TCPA) makes it unlawful to make any call (other than a call made for emergency purposes or made with the prior express consent of the called party) using any automatic telephone dialing system or an artificial or prerecorded voice … to any telephone number assigned to a . . . cellular telephone service … or any service for which the called party is charged for the call. The prohibition on calls to cell phones applies to text messaging.

Amended California Do Not Track Disclosure Law Requires Websites Disclose Do Not Track Signal Response

At the end of August, the California passed an amendment to the California Online Privacy Protection Act that will require commercial websites and services that collect personal data to disclose how they respond to Do Not Track signals from Web browsers.

AB 370, as introduced by California Assemblyman Al Muratsuchi, requires a business that discloses a customer’s personal information to a third party for direct marketing purposes to provide the customer, within 30 days after the customer’s request, as specified, in writing or by e-mail the names and addresses of the recipients of that information and specified details regarding the information disclosed.

This bill, available here, would declare the intent of the Legislature to enact legislation that would regulate online behavioral tracking of consumers.


Owning Design: Protecting Original Design in an Age of Knock-Offs

A presentation on what goes into creating original designs and how these differ from copycats.

WHERE: Decoration & Design Building, J. Robert Scott Showroom, Suite 220

WHEN: Wednesday, October 2,2013 !2 p.m.

WHAT: From film to fashion, creative industries are taking steps to protect and promote original work. Designers and manufacturers need to know what steps they can take to protect their designs, their businesses, and their profits. The discussion will address issues related to how to protect original design (copyright & design patent) and the manufacturers (trademark, unfair competition).

WHO:

INTERIORS Magazine Editorial Director Michael Wollaeger

J. Robert Scott Founder Sally Sirkin Lewis

Designer Laura Kirar [Web Site]

Intellectual Property lawyer David Adler

Showroom reception to follow.

 

Download the full Fall Decoration & Design Building Market Brochure Here.

Copycat Conundrum: Tips For Protecting Original Furniture & Textile Designs

On October 2, 2013, I will be attending the Decoration & Design Building Fall Market where I am giving a presentatIon on protecting original furniture & textile designs. Those in attendance share a belief that style and design matter.

As designers and purveyors of good taste, you may spend months developing a concept, selecting materials, agonizing over the exact curve of the arm of a chair. Manufacturers may refine the design, invest in tooling to build it, promote it, and get it to market. Merchandise buyers may spend months reading, researching, attending events such as this to obtain and fill your showrooms and catalogue with ineffable elements of style. This is original, authentic design. Authentic designs—pieces produced by designers or their authorized manufacturers—are investments.

Therein lies the problem for today’s furniture designers and retailers. It takes intellectual and financial capital to conceive, create and produce good design. Yet, today’s consumer driven, price-focused economy is making it more and more difficult for a designer to protect and profit from the investment of this intellectual capital.

This presentation will focus on why certain designs are protectable, how to protect them, and how to defend against knock-offs.

Latest Illinois Case on Restrictive Covenants Increases Uncertainty, Burden For Employers

English: A customer signing the at A Stone's T...
English: A customer signing the at A Stone’s Throw Jewelers in . (Photo credit: Wikipedia)

Fifield v. Premier Dealer Services, Inc.

BACKGROUND

The plaintiff in this declaratory judgment action had been employed by a subsidiary of an insurance company that marketed finance and insurance products to the automotive industry. After a sale of that business, plaintiff’s employment was terminated, but he was offered employment conditioned upon his acceptance of an “Employee Confidentiality and Inventions Agreement” (the agreement) which included non-solicitation and non-compete provisions. The agreement states in pertinent part:

“Employee agrees that for a period of two (2) years from the date Employee’s employment terminates for any reason, Employee will not, directly or indirectly, within any of the 50 states of the United States, for the purposes of providing products or services in competition with the Company (i) solicit any customers, dealers, agents, reinsurers, PARCs, and/or producers to cease their relationship with the Company *** or (ii) interfere with or damage any relationship between the Company and customers, dealers, agents, reinsurers , PARCs, and/or producers *** or (iii) *** accept business of any former customers, dealers, agents, reinsurers, PARCs, and/or producers with whom the Company had a business relationship within the previous twelve (12) months prior to Employee’s termination.”

Plaintiff successfully negotiated with Premier a provision that the restrictive covenants would NOT apply if he was terminated without cause during the first year of his employment (the first-year provision). Three months later, plaintiff resigned, began working for a competitor and sued to have the restrictive covenants held unenforceable stating that plaintiff had no access to confidential and proprietary information. The trial court held that the restrictive Covenants were unenforceable for lack of “consideration” – a legal term of art that generally means a bargained-for exchange of value. The appeals court affirmed.

ANALYSIS

Defendant argued that the non-solicitation and non-compete provisions were enforceable because the offer of employment was adequate consideration, there was a mutual exchange of promises (employment in exchange for restrictions), and the covenants were pre-employment, not post- employment. Defendant further argued that “the purpose of Illinois law regarding restrictive covenants is to protect against the illusory benefit of at-will employment” which was “nullified by the inclusion of the first-year [non-enforcement] provision in the agreement.”

Plaintiff countered with the argument that the provisions in the agreement are unenforceable because Illinois law requires employment to continue for a substantial period of time and that “Illinois courts have repeatedly held that two years of continued employment is adequate consideration to support a restrictive covenant…regardless of whether an employee is terminated or decides to resign on his own.”

The appellate court agreed with plaintiff citing Brown & Brown, Inc. v. Mudron, 379 Ill. App. 3d 724, 728 (2008) which held that the promise of continued employment in the context of post-employment restrictive covenants may be an illusory benefit where the employment is at-will. “Illinois courts have held that continued employment for two years or more constitutes adequate consideration. Id. at 728-29.”

TAKE AWAYS

The Fifield decisions has already generated a great deal of discussion from corporate board rooms to legal blogs. Unfortunately for businesses and their lawyers, the case leaves many unanswered questions.

For example, the court does not discuss whether the outcome would have been different if the employee were a high-level executive with immediate access to a wide range of highly sensitive confidential and proprietary information. At best,mother court simply mentions the plaintiff’s allegations that he had no access to such information.

Another area of uncertainty impacts start-up and early stage businesses. Very young businesses are often highly dynamic and early employees have access to a broad swath of the company’s Intangible assets such as business and revenue models, marketing plans, computer software and hardware and prospective customers, regardless of whether they serve a customer service function or “C-suite” executive function. The requirement that an employee have two years continued employment before a restrictive covenant becomes enforceable ignores the very real dynamic of start-up companies.

Lastly, an important question that went unanswered is whether the employer can offer some other “consideration” besides two years continued employment. For example, is there a pure monetary consideration that would support enforcement of the covenant? What if the covenant only lasted as long as the period of the departing employee’s employment?

NEXT STEPS

If you have restrictive covenants in your agreements with employees, it is strongly recommended that you meet with your lawyer to discuss the impact of this case on these agreements and your business. At the very least, you should carefully review your non-compete and non-solicitation agreements to see if they are supported by adequate consideration. If you have questions or concerns, or just don’t know how to begin, feel free to contact the lawyers at Leavens, Strand, Glover & Adler for a free, in-person or over-the-phone consultation. You can also email the author here: dadler@lsglegal.com.