By now, most of the world has heard about this: The latest app on the Apple App-Store, which sold for $0.99 invited buyers to “See how long you can endure his or her adorable cries before you just have to find a way to quiet the baby down!” Shake your phone, and the baby stops crying. Almost as soon as it went up, it came down, and for good reason.

Outrage was swift and response was swifter. Apple removed the application from its store. Many bloggers and commentators wondered how such an application could get past the eagle-eye of the computer giant, who claims to review each applet uploaded to the App-Store.

The lessons here extend past the boundaries of good taste, or discussions about the state of moral decay in our society that we think a shaking baby game is funny (this harkens back to the “hot coffee” patch for Grand Theft Auto that allowed game players to rape and murder a prostitute). It underscores the importance of making clear what a company’s obligations are to match their public statements with their legal obligations.

Apple says it reviews each applet that goes into its App-Store, but for what, exactly? The public statement implies a general review for everything from operability to appropriateness. Its actual terms suggest a much more narrow scope of review, limited to profanity and operability. This is actually a reasonable limitation; what is not reasonable is to imply something else. The press seems to think that’s what happened here.

Whether Apple is guilty of giving the wrong impression or merely the victim of a witch-hunt is not important: the lesson for large companies is this: make a “terms of use” policy you can live with, and instruct marketing folks to stay within the lines of that policy.

The attached is a presentation I gave at the Food Marketing Association Legal Conference in San Antonio.

We had a good time and covered lots of topics. At the end of the day, we hit upon a few important take-away pieces of information:

1. The Social Networking/Social Media (“SM”) boom is not going away. People are going to find more ways to communicate digitally, and as the world’s psychographic changes (younger people start coming into adulthood), vendors who don’t assimilate SM into their plans are going to be left behind.
2. Currently, the legal issues are the same ones we’ve been addressing for the past few years with regard to blogging, domain hosting and user-generated content (third party trademark use; defamatory statements, hijacking of profiles, etc.).
3. In the long run, current law is going to require some tweaks, and we’re beginning to see them (be patient):
— The FTC has already come out with new “affiliate marketing/testimonial” guidelines (clear response to “fake” social networking sites).
– Likely change in SM sites will be clear disclosure of company-sponsored social sites (right now, if you get “busted” for fabricating a site, you’ve just got egg on your face). Legislation likely coming relating to origin.
– Affiliate SM sites likely to have to disclose that they have been paid for their testimonials. This is consistent with existing law regarding testimonials, but not currently enforced.
4. As technology advances, a greater burden will be placed on ISPs to protect against access by children; on the flip-side, parents are going to have to take more responsibility for what their kids are doing online.
The sky is not falling (see my last slide of “babies-booze-betamax”):
– People still (generally) make babies the same way, so online social networking will not replace direct communication.
– Young people will quickly learn how to interact, and in a difficult job market, interpersonal skills will separate out those who don’t have them.
– When new technologies are brought forth, some folks imbibe to excess. Much like the steep rise in alcoholism after prohibition, social mores and legislation over time made most folks use alcohol sensibly; the same thing is true for technology.
– Lawyers out there: relax and take a philosophical view: the fear that everything as we know it will change is unfounded (remember, we thought that the BetaMax would make real-time TV and advertising obsolete). Things will change slowly and over time, but companies will be able to get out their message.

Social Media 1

In a huge victory for U.S. copyright owners (including Warner Bros, Sony Music Entertainment, EMI, and Columbia Pictures) in their longstanding battle against The Pirate Bay, the largest BitTorrent file-sharing web site, a court in Stockholm, on Friday, convicted the four site owners to one year in prison and a fine of about $3.5 million for copyright violations. The Court found that the defendants knew that the content being shared was protected by copyright.

With over 20 million reported users and millions of files exchanged every day, The Pirate Bay is one of the most high-profile facilitators of P2P file-sharing on the internet. The Pirate Bay, based in Sweden, was set up in 2003 by the anti-copyright group Piratbyran (“The Piracy Bureau”). The site does not technically host copyrighted content on its servers, but indexes and links to BitTorrent files (music, movies, TV shows, etc.) on its users’ computers. The site is known for its militant (and sometimes humorous) opposition to copyright laws and the Hollywood industry, and has been involved in many lawsuits. Some countries, like Denmark, have banned access to the site altogether. The site was also blocked by Facebook a few weeks ago after The Pirate Bay tried to create a “Share on Facebook” application.

The U.S. film industry, led by the Motion Picture Association of America (MPAA), has worked tirelessly with Swedish authorities to shut down the site since its creation and filed a criminal complaint against The Pirate Bay’s owners in 2004. In 2006, the Swedish police raided The Pirate Bay offices for copyright violations, ceased their servers and shut down the site for a few days. Last year, the four Pirate Bay owners were charged by a Swedish court with “promoting other people’s infringements of copyright laws.”

The defendants have maintained that the site is not illegal under Swedish laws because they do not store copyrighted material on their servers but instead act as a directory for users who wish to exchange files. The defendants say they plan to appeal; in the meantime, the sentences are suspended. Their response to the sentencing is available here (for now!).

On March 16, 2009, Parfums Nina Ricci filed suit against National Entertainment Collectibles Association, Hot Top, and others, for design patent infringement, trade dress infringement, and other common law unfair business practices, stemming from Nina Ricci’s rights in an apple-shaped bottle containing the fragrance “Nina” (the “Nina Bottle”), for which it has a U.S. design patent.

Ricci took the first bite, alleging defendants began marketing their Twilight perfume using an exact replica of the Nina Bottle without Ricci’s permission, thus infringing Ricci’s patent rights and trade dress rights in the bottle. Judging from the pictures above, one of these actors appears to be a rotten apple.

The Nina Bottle, on the right, was the first market entrant and, and Nina Ricci protected its unique apple design with a design patent. It also claims common law trade dress rights in the appearance. A brief online search revealed upwards of 6 other perfume bottles with the apple design, but none (other than the defendant’s) particularly similar to the Nina Bottle.

This suit presents an interesting question regarding the issue of whether one can protect identical intellectual property elements under both patent and trademark. Perry Saidman of Saidman Design Law Group, which specializes in design patents, notes that the prevailing view is that an owner can get design patents for market-entry protection, and later, when secondary meaning attaches, secure trade dress protection for roughly the same configuration. Saidman also commented that the issue of whether an owner can get both patent and trademark protection for a design is ripe for the Supremes, who have thus far side-stepped the issue in other patent cases.

On March 19, 2009, The Hershey Company, et al. filed suit in the Northern District of West Virginia against Reese’s Nursery and Landscaping, alleging federal trademark infringement, false designation of origin, federal trademark dilution, and unfair competition. At issue is the Defendant’s alleged use of the REESE’s trade dress, i.e., “the REESE’S brand name in distinct yellow script letters outlined in brown.”

In its Complaint, Hershey alleges it has used its distinctive trade dress in commerce for “nearly 100 years in connection with REESE’S brand candy.” At the rich, creamy center of this controversy is Hershey’s allegation that Defendant has adopted a business logo that is nearly identical to the Reese’s trade dress.

What really sticks to the roof of Hershey’s mouth is its belief that Defendant adopted its logo in “a deliberate attempt to trade on the valuable trademark rights and substantial goodwill established by Hershey.” Moreover, Hershey contends Defendant has “traded on and profited from the enormous goodwill an d reputation established by Hershey.” Where “the rubber hits the road” in this Complaint, or more aptly, where “the peanut butter meets chocolate,” is the following allegation: Defendant has “continued to use REESE’S trade dress despite previously representing to The Hershey Company that [it] would cease use of the REESE’S trade dress.”

The Defendant has not yet filed a responsive pleading, but a quick review of its website, reveals a new black and white logo.

Practice Note: Although early in the litigation process, there is much to learn from Hershey’s Complaint. First, it appears as though Hershey previously reached out to the Nursery, seeking a modification of its logo. When Defendant’s (likely multiple) assurances that it would modify its logo went unfulfilled, Hershey filed its suit. The lawsuit appears to have gotten the attention of Defendant, as it has now removed color elements from its logo. Time will tell whether this change will satisfy Hershey’s.

Hershey’s Complaint does a nice job of laying out facts necessary to establish that its trade dress is “famous” under the Lanham Act. Finally, the case may negatively impact Hershey’s public image. For example, what was once a legal filing in West Virginia, is now a blogosphere entry, and may be written about by others in less than glowing terms. Some may view this lawsuit as a “big guy v. little guy” case and not feel as fondly for Hershey as they once may have. Moreover, one has to ask how much damage Hershey has really suffered here? To this eye, the Nursery logo reminds me of the Reese’s logo, but I’m not confused as whether the nursery is a business venture of the chocolatier. In fact, it makes me want to walk to my reception desk and pluck a REESE’s peanut butter cup out of our candy dish!

Have you ever had one of those really good soft oatmeal cookies that comes in the pretty red package that looks like this:

Well, the company, Archway Bakeries, LLC, invested a lot of time and money in creating and marketing its trade dress (i.e. the look and feel of it packaging) and was piping hot when it discovered that a competitor, Voortman Cookies Limited, began packaging its cookies like this shortly after Archway filed for bankruptcy:

Prior to Archway’s bankruptcy filing, Voortman’s packaging creating a completely distinct commercial impression and looked like this:

Pulling the plug on Voortman’s activities, Archway and Lance Manufacturing, the company that purchased Archway’s assets (including all intellectual property rights) during the bankruptcy proceeding (collectively “Archway”), filed suit against Voortman for trademark infringement and related claims in Lance Mfg., LLC v. Voortman Cookies (WD NC 3/24/09).

In a bittersweet ruling against Voortman, the North Carolina district court issued a preliminary injunction prohibiting Voortman from advertising, distributing, selling, or offering to sell its cookies in the Voortman packaging. Carefully measuring the arguments, the court found that Archway’s trade unregistered trade dress was: 1) non-functional – i.e. not essential to the use or purpose of the product; and 2) created an overall distinctive impression.

Voortman attempted to stir things up by arguing that the case was moot because it had already ceased using the packaging and had begun production of a modified packaging following a cease and desist letter it received from Lance; however, the court wouldn’t bite. It noted that the allegedly infringing packaging still remained on the shelves and and that Voortman could, at any time, re-release the packaging.

The court also found that Archway was likely to succeed in proving the Voortman packaging was likely to cause confusion with Archway’s packaging. The packages were virtually identical in many respects. Moreover, Archway presented evidence that the Voortman packaging was an intentional copy and nearly identical to its trade dress. In light of the overall evidence, the court found that Archway had made an adequate showing of a likelihood of confusion.

In its narrowly tailored injunction, the court did offer Voortman a nice-sized crumb by refusing to require Voortman to remove, destroy and/or recall the existing packaging from the marketplace. Citing the financial hardship to Voortman and relatively short shelf life of the existing cookies inventory, the court ruled that Voortman could sell-off its remaining inventory in the existing packaging. Voortman fans better get them while they’re hot!

The FTC has, since the 1980’s, been actively involved in regulating endorsement and testimonial advertising that is designed to entice consumers into choosing products based upon “real life” experience (or the promise of success from a reputable source). Its guidelines help define the scope of testimonial and endorsement advertising. They point out, generally, if a single user’s experience is not typical of the average consumer, then a company may not imply that potential buyers of the product will get the same result. Now, the FTC has determined its rules about testimonials and extreme results need to be updated.

In an attempt to keep up with consumer complaints about dishonest advertising, online social networking and other internet venues that reach consumers, according to the Financial Times, the FTC is proposing legislation that could make companies liable for testimonials written by bloggers and parties who receive free samples or other incentives to try products and subsequently write good reviews.

According to Richard Cleland at the FTC, these new updated guidelines are designed to curb the use of terms like “Results Not Typical,” to justify putting up extreme and untested consumer outcomes for products and services. The new guidelines are also designed to hold companies responsible both for encouraging third party testimonial information it knows to be false, or for using spokespersons who have achieved extreme results for products, knowing the results are outrageous.

If the new guidelines are adopted, companies will not only have to consider how they use spokespersons and social networking sites, but also how they develop their “influencer” programs. Influencer programs are those programs designed specifically to attract a certain target market by paying (or giving free samples to) loyal product users in exchange for spreading the word about their personal experience through social networking (both online and offline) groups. At the very least, it’s likely that contracts between companies and third party influencers will see some changes.

Notwithstanding the spotlight that has hit the FTC proposal and the resultant uproar from many companies and marketing associations, there have been other attempts to regulate third party claims about products and services. Law professor and prolific blogger (and Twitter®er), Eric Goldman, has cited to other attempts at third party testimonial regulation.

For instance, points out Goldman, the Florida State Bar treats consumer reviews of attorneys as regulated testimonials. Goldman even remarks on his Technology and Marketing Blog that the SEC’s recent proposed hyperlinking guidelines may contravene 47 U.S.C. 230 which immunizes websites from liability for third party content.

Regardless of what happens in the short term, issues of agency will be important if the FTC truly wishes to hold companies and bloggers liable for third party content. It is impractical (and likely impossible) for companies to police what third parties write about their products. In all likelihood, therefore, the FTC would limit liability to cases where the company links to or endorses information on a third party site, or where the influencer is retained without a contract provision about outlandish statements.

The biggest challenge, depending on how the guidelines are written, may ultimately be to advertisers who use spokespersons with unusual outcomes, who have until this point, gotten by with a disclaimer of “Results Not Typical,” or “Your Results May Vary.” The long running commercials involving Jared, who claims to have lost hundreds of pounds by eating Subway sandwiches, may have seen their last days.

Practice Note: Despite the current feeling about the proposed guideline changes, the sky is not falling. Advertisers have weathered advertising regulation in the past, and at the end of the day, we still manage to get a fair number of commercials (and testimonials) out there. In truth, and regardless of whether there will ever be another Jared to enable Subway to point to a pattern of weight loss, he won’t go away, and the FTC is not going to find liability with companies or bloggers that are generally engaged in appropriate disclosure practice.

This article from the Daily Princetonian reports that the University “grossed roughly $266,000 [in] 2008… for the commercial use of Princeton trademarks and logos.” The University reportedly has over 100 licensing agreements with third parties, which grant limited rights to produce, use and/or sell products under the University’s marks (anything from baseball caps to mugs), in exchange for quality control and a royalty. As it should, the University owns and maintains a number of trademark registrations at the U.S. Patent and Trademark Office.

Practice Note: As Lezlie pointed out in her excellent post last week, a company’s IP is often it’s most valuable asset, especially in these tough economic times. This story is an example of a trademark owner (Princeton in this case) “doing it right.”

Trademarks can be a valuable income-generating asset, if properly maintained and managed. With reasonable policies and proper oversight procedures in place, licensing and co-branding deals represent great opportunities for generating regular revenue, as well as strengthening your client’s brand.

As a starting point, clients may want to keep in mind these basic guidelines to maximize these licensing opportunities:
- Register your marks domestically, as well as in the countries where you intend to do business. Being pro-active about trademark protection saves money and headaches in the long run. Also think about keeping your trademark counsel in the loop of new marketing and branding strategies, to make sure you’re covered;
- Maintain your marks and use them properly and consistently; be practical but don’t be lazy or you may lose rights (and licensing opportunities) over time. Your trademark counsel is there to assist you in this process, for example by talking with your marketing staff about proper trademark use and ways to create strong brands;
- Police your marks consistently, which may include having an enforcement plan in place and following it. If you don’t enforce your trademarks, you may lose rights. A pro-active policy is also a good way to establish your rights without having to send a demand letter every time.
- Explore licensing and royalty-generating opportunities and have those agreements vetted by your intellectual property counsel. Contracts that don’t include certain “magic (legal) words” (for example, quality control provisions) may weaken your rights significantly.

It’s tempting to do, but according to the Federal Circuit, use just ain’t use in commerce until it’s a bona fide offer for sale to the actual intended purchasing public. Theoretical ability to provide the service, brochures that never got sent, and business plans showing intent are not sufficient to establish use.

Aycock Engineering, Inc., founded under a previous name in the 1940’s, was created for the purpose of offering a chartered air transportation service under the mark AIRFLITE. The business plan suggested that the company would need at least 300 air taxi operators in the U.S. to make a go of the enterprise.

In March of 1970, through brochures and letters advertising the AIRFLITE service, Aycock invited all FAA certified air taxi operators to join his AIRFLITE service. In August of 1970, Aycock filed a service mark application to register AIRFLITE, and attached as specimens of use the brochures he used to entice pilots to join his network. Ultimately, in 1974 after a lengthy prosecution fight with the examiner, Aycock’s mark was registered on the Supplemental Register for “[a]rranging for individual reservations for flights on airplanes.”

Aycock continued to market his service to the pilots who would charter his planes, but never actually marketed the service to the general public, notwithstanding his establishment of a customer toll-free number listed on the brochure and a collection of 12 pilots (far short of the 300 the business plan said were necessary to run the service). The evidence did not show that Aycock ever arranged a flight for a passenger.

In 2001, Airflite, Inc. (“Petitioner/Appellee”) filed a petition to cancel Aycock’s registration on the ground of nonuse. The TTAB found that Aycock has failed to offer the services listed in the application and on appeal, the Federal Circuit affirmed.

Although the court addressed numerous factors that led it to affirm the TTAB ruling, its primary focus was on the offer of the service listed in the application. It noted the service was simply not offered to those who would ultimately buy it – the purchasing public. It was not enough to establish a toll-free number and collect pilots to ferry people as intended. Neither was it sufficient to use the mark on the brochure that could eventually go to consumers. The fact that Aycock had never marketed the actual service to the intended consumer was sufficient to establish nonuse of the mark for those services, and subsequently, to cancel his registration.

Practice Note: Many practitioners tell their clients that printing business cards and creating stationery is sufficient to show use in commerce. Still others advise that the creation of brochures that contain a price list are sufficient to establish use. This case suggests (and this firm has always maintained) that there is a distinction between use anywhere and actual bona fide use in commerce. Use in commerce, to be above reproach, must be a bona fide offer for sale of the product for which you are claiming use to the target consumer.

If we didn’t learn the Trademark Trial and Appeal Board was prickly when it comes to procedure from the Blue Man case, we just got another lesson. The Board is handing out some more tough love on counsel. In the precedential decision, Syngenta Crop Protection, Inc. v. Bio-Chek, LLC (Opposition No. 91175091, March 12, 2009), the Board tossed out Opposer’s 2(d) claim on the ground that it had improperly submitted its registration. Without considering its registration for AGROMETER, Opposer was unable to produce sufficient evidence at common law to show priority over applicant’s AGMETER mark, and thus was unable to sustain the 2(d) opposition.

Opposer submitted a photocopy of its licensor’s original registration certificate, dated 2004. A photocopy of a registration certificate may not be adequate proof of the current status of a registered mark. Under Trademark Rule 2.122(d)(2), a trademark registration document submitted should be “issued by the Patent and Trademark Office and show both the current status of and current title to the registration.” The 2004 copy did not confirm the status of the mark in 2007 or 2008.

In addition, Opposer, did not properly introduce the registration, as specified in the Trademark Rules. It did not attach the copy to the opposition; neither did it did not introduce it during testimony; and because applicant never admitted or stipulated to the current ownership and validity of the registration, the registration was not authenticated by waiver.

Because the Board did not consider the registration as prima facie evidence of ownership and first use, the Opposer was forced to rely solely on proof of its prior common law rights, which, the Board established, it had not done sufficient to establish priority.

To make matters worse, the Opposer improperly submitted notices of reliance for some of its documents, such as press releases, internet articles, and sales and marketing materials it wanted to produce. The Board noted that notices of reliance are strictly limited and may be used to introduce only discovery deposition, interrogatory responses, admission or written disclosures of an adverse party, and printed publications or official records. Other evidence must be authenticated by testimony. Accordingly, much of Opposer’s evidence common law evidence was not considered.

As a result of the limited evidence Opposer was allowed to submit, the Board found that it has not established priority and dismissed the case.

Practice Note: This case presents a veritable cavalcade of interesting issues and can serve as a laundry list for what not to do. That said, it’s important to note that even good and careful attorneys can get tripped up on the rules regarding submission of documents and evidence in a TTAB proceeding. There but for the grace of a good associate go any of us.

Non-trademark attorneys, more accustomed to fighting in federal court assume (and tell their clients), that the process at the TTAB mirrors that of federal court proceedings. While the basis of that statement is true, there are myriad distinctions that must be taken into account, as this case illustrates. Counsel should learn those distinctions and advise clients that availing itself of TTAB proceedings is no “walk in the park,” and federal court methods cannot simply be cloned. The good news is, failures by parties work both ways. If your opponent has been sloppy in its submission of evidence, the TTAB has shown that it will not consider it. Careful reading of pleadings, discovery, and motions can be a gold mine for a summary judgment motion.

Procedurally, the Opposer in this case can do what Blue Man Group did in its own matter and appeal the decision in district court. In all likelihood, like Blue Man, it will be able to properly introduce its evidence and – at the very least – establish priority in its mark. Then the question will hinge on confusion.

Finally, this case underscores the importance of a valid federal registration for clients’ important marks. When push comes to shove, a registration, properly introduced, saves time and money, because it is prima facie evidence of a first use date. Moreover, after 5 years of continuous use of the mark after a registration is issued, the mark’s registration becomes incontestable, except under limited circumstances (fraud, abandonment, genericness).

The new logo (shown above next to the old one) is representative of the phone company’s radically new “so very Verizon” campaign.

Further images of the clever campaign are available here.

No word yet on whether the old CAN YOU HEAR ME NOW? tagline will be replaced by the VERY awesome: IS IT HOT IN HERE?

Practice Notes: Rebranding efforts can be effective for companies to update their image and gain new consumers (although they can sometimes backfire, as Tropicana learned recently). Clients should involve their trademark counsel in the rebranding and marketing efforts, so as to assess potential risks (such as likelihood of confusion with existing marks, say, in this case, the SKYPE logo) and protect the new marks, including new trade dress, if applicable.

Tsan’s Comment: Naturally, rebranding efforts that take place on April Fool’s Day and are gone the next day should be suspect (unless you’re introducing New Coke).

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.