Following the trend started by Hyundai Motor Co., and even going one better, automakers Ford are offering a bailout of their own: buy any new car from them between April 1st, and April 30th, and if you get pink-slipped GM will pay your car tab for up to 9 months and up to $500.00; Ford will pay up to $700.00.

But wait! There’s more: If you buy a car, drive it, make payments on it, and then bring it back for a trade-in, GM will credit you for what you own on the car, even if the National Automobile Dealers Association says the value is lower. You also get free On-Star service and a host of other little perks (including a low finance rate).

If you’re looking for a catch, there really isn’t one. So long as the buyer is employed at the time of purchase and the lay-off notice does not pre-date the car purchase (and the employee is not self-employed), the companies are ready to deal.

A similar program was offered by Hyundai this February wherein new car buyers could return their vehicles to Hyundai without further payments due in the event they were laid off within the first year of the purchase. Of course, Hyundai was footing the bill for its promotion: (and getting back the car). In the case of Ford and GM, the tax papers appear to be subsidizing the purchases.

Practice Note: Clients who wish to do “big splash” promotions should remember to review carefully all of the terms and conditions of the promotion, to make certain there are no ways for participants to take advantage of the program. Of primary importance is the institution of an “end date,” so that if there is a problem, the promotion has a limited life. Similarly, for a promotion such as this, there should be a limit on the number of cars one person can purchase. Provisions should be placed in the terms and conditions of the promotion that make clear the program will not be offered if, in the sole discretion of the sponsor, a person is trying to deliberately undermine the intent of the promotion.

Inhale, Inc., makers of hookahs and the INHALE vaporizer believes Oglesby & Butler was smoking something other than tobacco when it adopted the name I-INHALE for its vaporizer product, and Inhale put down its own hookah long enough to file suit in the Central District of California for trademark infringement of its name. Inhale has several federal trademark registrations for INHALE for smoking devices “used by individuals to smoke herbs such as tobacco” (not that anyone remembers).

It took less than 10 days for Oglesby & Butler to come out of its fog and change its name to iolite. After all, looks like Inhale had Oglesby head to rights.

It’s no secret: U.S. and international markets are in deep turmoil. Massive layoffs, historic stock market declines, and institutional failures remind us this no ordinary time. Even while companies look for ways to cut back and streamline institutional costs, now may be the best time to strengthen your intellectual property (IP) portfolio.

Although frequently overlooked, a company’s IP, including its trademarks, copyrights, and patents, is often its most valuable asset. There are several reasons why strengthening an IP portfolio now, even during the recession, not only makes good business sense but may be the key to a company’s future economic growth and recovery:

1. IP Assets May Be A Significant Source Of Revenue During (And After) The Recession.

Licensing or selling of IP assets has always been a way for companies to generate additional revenue. For example, during 2006 Neo-Magic recorded a $3.5 million gain on the sale of its unused patents, representing over 37% of the company’s total yearly revenue. A recent article in the Chicago Tribune reports “amid the recession, a growing number [of companies] are looking to generate cash by selling or licensing their dormant trademarks and patents.” If protected and maintained properly, your IP assets can offer significant revenue now and into the future. In fact, many lending organizations look to a company’s trademark portfolio as a means for determining the foundational strength of the organization.

2. IP Assets Are The Building Blocks To A Flexible Business.

The recession has brought significant restructuring and reorganizing of businesses. Mergers, acquisition, spin-offs, and new business units are a sign of the times, and strong IP portfolios are the building blocks for new business opportunities as companies transform their products and market positions. Perhaps this is why, historically, certain IP filings and litigation tends to increase during times of recessions (click here and here for historical figures). As a business continue to change, adapt and grow, so too must its IP assets.

3. IP Assets Will Set Companies Apart From The Competition.

Brand recognition by consumers not only increases product and service sales, but creates a significant barrier to entry for new competitors. Thus, the strengthening of a brand position in a downturn (through both IP filings and consumer marketing), provides an opportunity for companies to stand out when there is a smaller competitive market. Strong IP assets, such as trademarks, will help ensure brand recognition and differentiate companies from their competition.

4. IP Assets Have A Lifetime That Will Extend Well Beyond The Recession.

Perhaps the only thing we know about this recession is that it will end. Innovation, creation and entrepreneurism will continue to drive our economy forward, and as we emerge into the next profitable market cycle, IP assets will remain one of most valuable company assets. Failure to protect them now may have severe consequences for the future.

Toughlove American LLC (“TLA”) filed suit this month against MTV High Noon Productions, and Drew Barrymore’s Flower Films (“Defendants”) claiming trademark infringement and false designation of origin based upon the production of a new reality show, TOUGH LOVE.

TLA, founded by two therapists, claims to have been using the mark TOUGHLOVE for peer-to-peer, self-help, and psychological counseling programs, along with educational materials about self-help since the last 70′s and gained national acclaim after its services were recommended in an Ann Landers column. It also claims to be in the development process for a television talk show. TLA has registrations for the mark TOUGHLOVE in the appropriate categories.

Notwithstanding the lawsuit, the show TOUGH LOVE aired on March 15, 2009. The show has a romance theme, and centers around several women who have had a bumpy dating life and who, for the most part, blame the opposite sex for it. The host uses a “tough love” approach to address the root of the women’s problems.

author’s note: As luck would have it, I was privy to the pilot episode of this train wreck of a show. Fans of reality dating shows will no doubt salivate over the level of public humiliation doled on these women. Perhaps TLA should add tarnishment to the claim.

Stephen Colbert has won NASA’s International Space Station module naming contest. NASA held a contest allowing the public to decide on the new “living room” module aboard the orbiting outpost of the International Space Station. In keeping with the other modules, called Unity and Harmony, scientists and space employees were urging the name Serenity.

Problem was, the contest allowed write-in suggestions. Leave it to Colbert to game the system. Using his daily faux-news show, he urged his supporters to write-in the name Colbert. According to the Guardian, Colbert received more than 40,000 more votes than the name NASA scientists preferred.

Hedging a little, a NASA spokesperson has stated that the name Colbert will be given the most consideration, but he stated, NASA reserves the right to give the module a more appropriate name.

Practice Pointers:
• Promotion sponsors should always assume that someone is going to “game” their promotion, as Stephen Colbert did, and make adjustments to the rules accordingly.
• In this case, if NASA really didn’t want write-in names, it should not have given voters the option; clients should be advised to only put forth the contest they can tolerate.
• In promotions that involve public voting, such voting should be limited to an intermediate round of voting with the top 5 winners going to a final round, judged by the sponsor.

With U.S. President Barack Obama in the White House a change in U.S. – Cuba relations may be on the horizon. According to a recent Reuters story, U.S. companies have an estimated 5,000 products trademarked in Cuba, “waiting for the day they might finally land on the island separated from the United States by the Florida Straits and a vast ideological gulf.” Indeed, as recently as December 2008, the Cuban Office of Intellectual Property registered trademarks for new products for Coca-Cola, Google, and Ford Motor Co.

Hasn’t the United States imposed a commercial, economic, and financial embargo against Cuba since the early 1960s? Yes, but under the Clinton administration an exception was enacted exclusively for the protection of trademarks, patents, commercial names, copyrights belonging to U.S. individuals or corporations. Thus, U.S. trademarks and other IP is can be protected under Cuban law. Likewise, U.S. government will protect intellectual property assets belonging to the Cuban government.

While trademark applications filed in Cuba by U.S. companies fell by 36 percent during the George W. Bush administration, under Mr. Obama’s administration U.S. companies are sensing new market opportunities. Mr. Obama is the first U.S. president in half a century who has evidenced a willingness to talk with Cuba’s leaders, and he has promised to ease the trade embargo.

Right now, U.S. trade groups are trying to avoid a repeat of events that occurred in South Africa, following the end of apartheid. There U.S. companies found their trademarks had been registered by someone else. Fortunately, Cuban authorities have honored trademarks and awarded rights to legitimate owners.

For those U.S. companies believing “change” may involve a thawing of economic relations between the governments of Cuba and the U.S., then further discussions with your trademark counsel is warranted.

This is big news in the world of internet domain names. Trademark holders have expressed concerns about ICANN’s decision to soon allow custom Top-Level Domains (e.g., .google, .disney, .newyork, .cars, etc.). Companies and other interested parties now have a bit more time to prepare for the change and decide whether to apply for new Top-Level Domains themselves, including domains that may contain their trademarks. The public will also have an opportunity to make further comments to the proposal this Summer.

Top-Level Domains (TLDs) are the portion of a domain name that is to the right of the dot (e.g., .net, .com, etc.). TLDs that are not country codes (e.g., .cn or .uk), are called generic TLDs (gTLDs). ICANN is the body that approves and recommends new gTLDs.

Currently, TLDs are limited to 21 generic top-level domains (like .net, .com, .org or .info). After allowing a few limited expansions (for example, .mobi), ICANN announced last year that it would dramatically expand this system and allow custom gTLD, subject to an elaborate application and evaluation procedure (and, of course, a fee). The new gTLDs can consist of almost anything, including trademarks, geographic locations and generic terms, as well as non-Roman characters. Applicants will have a limited time period to apply for new gTLDs.

The official launch of the program was originally planned for June 2009. After receiving a number of objections and comments from trademark holders and the business community, ICANN just announced that it will delay the program until at least December 2009. A committee is evaluating, and developing solutions in response to the “overreaching issues” with the program. Some of those concerns include: skyrocketing costs for trademark holders, and increased opportunities for malicious behavior and infringement online.

So what’s next? A further report and draft guidebook are scheduled to be published by ICANN in May and June 2009, at which point a new comment period will open. Under the current schedule, it appears that the publication of the “Final Application Guidebook” is planned for December 2009 or the first quarter of 2010. Applications for new gTLDs will be open for 45 days from that date.

Further information is available on the ICANN web site

The estate of rock legend Jimi Hendrix won a trademark infringement lawsuit against a Seattle, Washington-based businessman who used the star’s name and image to promote his brand of vodka. In Experience Hendrix LLC et al v. Electric Hendrix LLC et al, Case No. 2:07-cv-00338-TSZ (W.D. Wash. 2009). a U.S. District Court judge ruled HENDRIX ELECTRIC VODKA infringes on the estate’s trademarks.

Experience Hendrix and Authentic Hendrix, which owns and licenses Hendrix’s likeness and music won a $3.2 million judgment against Craig Dieffenbach and his Electric Hendrix Spirits. Electric Hendrix Spirits had described the liquor as inspired “by the innovative spirit of legendary musician Jimi Hendrix.”

A legal purple haze has surrounded the deceased guitarist for years. In this case, Hendrix’s sister Janie Hendrix, CEO of Experience Hendrix LLC, alleged trademark infringement and false advertising for its “tasteless promotion” of Hendrix Electric Vodka, sold in purple-tinted bottle. Plaintiffs further alleged that Hendrix’s name and likeness were used without permission. Janie Hendrix, however, isn’t the only Hendrix in this fight. Leon Hendrix, Jimi’s biological brother, who has been engaged in a long-running legal dispute with Janie Hendrix over Jimi’s assets, is a partner in defendants’ venture. Indeed, Mr. Dieffenbach, has helped Leon Hendrix finance his court fight over Jimi’s estate. Here’s a story about the lawsuit and the Hendrix family’s squabbles over who has the right to make money off the late rock star.

In its February 12, 2009 order, the District Court ordered the company to cease using Hendrix products for commercial purposes and ordered the vodka and any related advertising be withdrawn. And the beat goes on . . . .

Don’t forget to check the fine print (with your attorney). If you don’t want to view the entire episode, read below:

Michael Scott wants to sell paper. Borrowing an idea from the Roald Dahl book, Charlie and the Chocolate Factory, he decides to put 5 Golden Tickets in pallets of paper to be randomly shipped to existing clients. The tickets allow a company getting the ticket to receive 10% off its paper order. Problem is, Michael decides to seed them himself and all the tickets end up with the same company. Worse, there are no restrictions: no limit to the number of tickets one company can have; no time restrictions; no restriction on the number of orders to which the ticket applies; no limitation on minimum or maximum orders. There go the Dunder-Mifflin profits (and Jim’s commission).

Like a Curious George book, it all works out in the end, but in difficult economic times, clients often make rookie errors when rolling out a promotion that can be easily dispensed with by first “role playing” the promotion, and then, spending a little time with an attorney, who may know about various state and local laws that could affect the outcome. At a minimum, the client should ask itself these questions before proceeding:

– Does this promotion attract the right clientele?
– If I where the target, would I care?
– Is it impossible to “game” the promotion (take advantage of a loophole)?
– Will this have an overall positive impact on the bottom line?

If a client can answer the foregoing questions affirmatively, it’s taken the first step to a promising promotion.

Kia Motors America, Inc. v. Autoworks Distributing, Civil No. 06-156 (February 26, 2009).

Plaintiff Kia Motors America was none too pleased that Defendant Autoworks was selling “KIA” parts for below dealer net prices. It sued under the Lanham Act, claiming the parts were either gray market goods (parts authorized by Kia but not intended for the U.S. Market) or were counterfeit goods. Defendant filed for Summary Judgment on the grounds that its admittedly gray market goods were substantially identical to the Plaintiff’s goods and thus, their sale in the U.S. did not violate the Lanham Act.

Employing the Nestle test, the court looked at whether the goods being sold by Defendant were (1) not intended for the U.S. Market; and (2) materially different than those that were intended for the U.S. Market. Once both of these are established, the burden shifts to the Defendant to show that the difference is not the kind consumers would consider in purchasing a product.

The parties did not dispute that Defendant’s parts were not intended for the U.S. market; neither did they dispute that there was a difference between the warranties of each party. Defendant pointed out that its warranty covered all parts. Plaintiff’s warranty expressly excluded Defendant’s part. Thus, Defendant argued, the distinction was not one likely to affect the purchasing decision of its product. The court disagreed, finding that such a different (even though in Defendant’s favor) would be relevant to dealers purchasing the products for use in customers cars, and thus denied Defendant’s motion.

Practice Note: There is a distinction between parallel imports and grey market goods, though the terms are used interchangeably. Parallel imports are those goods that – while not intended for the U.S. market – are identical to the goods sold in the U.S. Courts have routinely held that if the goods are identical to those in the U.S. market, their sale in the U.S. will not constitute infringement. If, however, there is a material distinction between the goods sold elsewhere and those sold abroad, sale of those items may constitute trademark infringement because their sale creates a presumption of consumer confusion.

Fairey et al v. The Associated Press, Case No. 1:09-cv-01123-AKH (S.D.N.Y, filed 02/09/2009)

Shepard Fairey is a contemporary visual artist who created the iconic red, white and blue “Hope” poster that became the symbol of Obama’s campaign and, arguably, a cultural phenomenon (have you Obamicon-ed yourself yet?).

Fairey doesn’t dispute that he used a photograph taken by AP photographer Mannie Garcia at a 2006 National Press Club conference as a “visual reference” for creating the series of “Hope” posters and related merchandise. The AP owns a copyright registration in the photograph (Registration No. VA 1-356-885).

After the AP threatened to sue Fairey for copyright infringement for using the photograph without permission, credit or notice, the artist and his companies filed for declaratory relief. Fairey asserts that his use is protected by the Fair Use Doctrine because: 1) the photograph was used for a “highly transformative purpose;” Fairey “altered the original with new meaning, new expression, and new messages;” 2) the photograph was published “well before” Fairey used it and it is a factual work; 3) Fairey only used a cropped portion of the photograph, and the portion used was reasonable in light of his expressive purpose; and 4) the use not only does not harm the value or market of the photograph or any derivatives, but it has enhanced the photograph’s value “beyond measure.”

In its answer and counterclaim, filed yesterday, the AP asserts that Fairey’s series of posters and merchandise based on the photograph “copy all the distinctive and unequivocally recognizable elements of the [photograph] in their entire detail, retaining the heart and essence of [the photograph], including but not limited to its patriotic theme.” In response to Fairey’s fair use arguments, the counterclaim also alleges that the posters and other merchandise “do not alter any of the distinctive characteristics that make the [photograph] so striking — from the selection of subject matter, to the composition, to the exacting details of the photo.” AP’s counterclaim further points out that licensing of photographs “is an important source of revenue” for news and photo agencies and gives the following as an example of a photograph licensed by the AP for commercial use:

The AP seeks damages and injunctive relief for copyright infringement, contributory infringement and DMCA violation.

To be continued…

Note: Ownership of the copyright in the photograph (and, therefore, the AP’s standing to sue) may become an issue in this case. The AP asserts in its answer that Mannie Garcia was a “full-time salaried staff employee” when he took the 2006 photograph, making the photograph a work-made-for-hire under 17 U.S.C. sec 101. Mr. Garcia, however, claims that he was a freelancer, not an employee.