Netflix, the web based DVD rental service, launched as contest in 2006 offering a 1 million dollar prize to team that develops a recommendation algorithm that is shown to be 10% better that Netflix’s current recommendation engine. To those in the programming community, the challenge has been compared to scaling Mount Everest. Has the summit been reached?

It seems the two contest front runners, Team Pragmatic Theory and Team Bellkor in BigChaos, have joined forces and submitted an algorithm that was 10.05 percent better than the one Netflix uses to recommend movies to its subscribers. The result was published on the Netflix Prize leader board on June 26, 2009.

From a promotion law point of view, the contest winner must grant to Netflix, an irrevocable, royalty free, worldwide non-exclusive license under the contest entrant’s copyrights, patents or other intellectual property rights in the winning algorithm. In addition, a description of the algorithm, but not the source code, will be published on the Netflix site. I.e., the winners will “describe to the world how [they] did it and why it works.” Like all well conceived contests, the official rules provide a mechanism for determining the contest entrants actually created the entry submitted. It appears however, that the winners are not prohibited patenting their entry and winners are not prohibited from charging others for the use the algorithm.

This contest, where competitive incentives are offered as an alternative to in-house research and development, looks like a new, workable model to foster innovation.

In a long and hard fought battle, the Second Circuit Court of Appeals has given renowned fashion designer, Joseph Abboud, a chance to reclaim his name.

Issuing a sweeping injunction in June 2008, a Southern District of New York court enjoined Abboud from using his name to sell, market or promote his own business, goods and/or services, finding Abboud’s intended use constituted a breach of contract and would constitute trademark infringement. The Second Circuit, in J.A. Apparel Corp. v. Abboud, et al No. 08-3181-cv (Second Cir.) found here reversed and remanded.

J.A. Apparel Corporation (“JA”), a former joint venture of Joseph Abboud, sued the designer in federal court alleging breach of contract, trademark infringement, and related claims over Abboud’s plans to use his name in the marketing and advertising of his then new JAZZ line, which he intended to promote using with such phrases as “a new composition by designer Joseph Abboud.”

Underlying the dispute, in 2000 JA entered into a sales agreement with Abboud, paying Abboud 65 million dollars for the exclusive rights to the ABBOUD label and related JOSEPH ABBOUD trademarks. While Abboud claimed the agreement only transferred rights in the ABBOUD trademarks but not the rights in his name, JA asserted the contract sold both the trademarks and the exclusive rights to use the Joseph Abboud name for commercial purposes. The district court ruled Abboud had unambiguously conveyed to J.A. all of Abboud’s rights to use his personal name, trademarks, and trade names for commercial purposes and also found Abboud’s planned use of his name would constitute trademark infringement, as it was likely to cause consumer confusion.

Vacating the injunction, the Second Circuit remanded the case, ruling the district court: 1) erred in ruling the sales agreement unambiguously conveyed all of Abboud’s rights to use his name commercially; and 2) erred in rejecting Abboud’s fair use claim as a defense to trademark infringement. The appellate court specifically found that given the conflicting interpretations of the sales agreement, the district court should have considered the parties’ extrinsic evidence to more fully understand the parties’ intent and that the district court should have examined Abboud’s actual or proposed use to resolve his fair use defense.

COMMENTARY: This case highlights the risks inherent in licensing or selling a brand name which also happens to be an individual’s name. Because the parties failed to clearly and precisely define the scope of their agreement, Joseph Abboud stands to lose the right to his very valuable name. Granted, he was paid 65 million dollars, which may seem like more than adequate compensation….but how much is your name worth, and what would it take for you to sell it? As some might say, “priceless.” Take the time to get it right.

St. Louis Cardinals manager Tony La Russa has sued Twitter, the popular micro-blogging service in San Francisco Superior Court alleging: Trademark Infringement, False Designation of Origin, Trademark Dilution, Cybersquatting, Misappropriation of Name, and Misappropriation of Likeness. In the Complaint, Mr. La Russa states the defendant owns the domain name twitter.com, and pursuant thereto, twitter.com/TonyLaRussa. Mr. La Russa contends an unknown user, pretending to be La Russa, began posting updates as Mr. La Russa. One line of the “profile” suggested it was all a fake: “Bio Parodies are fun for everyone.”

According to the San Francisco Chronicle, La Russa’s attorney tried to contact Twitter before filing the lawsuit, but got no response. Hours after the lawsuit was filed, Twitter removed the fake La Russa page and its postings. It is being reported that the case has already settled. “La Russa said Friday [6/5/09] that Twitter has agreed to pay legal fees and make a donation to his Animal Rescue Foundation. The organization is likely to take control of the name www.twitter.com/TonyLaRussa. However, the Wall Street Journal is reporting the opposite.

The truth is out there.

Trademark Note: Using a trademark and then simply claiming “parody” is not a “get outta jail free card.” In trademark cases, when a parody defense is raised, the defendant justifies his use on the grounds of humorous social comment. Funny or not, a defendant’s use may still be enjoined if it is likely to cause confusion with plaintiff’s trademark. Courts must balance the public interest in poking fun at trademarks and the institutions they represent, with the trademark owner’s investment and good will. Courts must also protect consumers from likely confusion.

As of last Saturday, Facebook users have been able to register personalized URLs of their choice for their Facebook home page (e.g., facebook.com/myusername). Approximately 5.75 million users signed up for their own URL over the weekend (also called “Vanity URLs”).

These new usernames could potentially be anything, including someone else’s trademark. To help trademark owners prevent hijacking of their marks, Facebook put in place a temporary procedure for trademark owners to “reserve” their registered trademarks with Facebook in advance and prevent the creation of URLs associated with those marks. Facebook has now closed this reservation period.

So what can trademark owners do who did not register their trademarks with Facebook and discover unauthorized URLs? They can request removal by contacting Facebook via this notice form. The procedure is fairly straightforward. You do not need to be registered on Facebook to use it.

So go to Facebook, check possible URLs containing your marks and, if you discover unauthorized uses, take action sooner rather than later.