2011 was an interesting year for intellectual property law. Major revisions to patent law were passed by Congress, the Supreme Court addressed both copyright and trademark law, and Congress is debating several sweeping changes to intellectual property law as it applies to the internet. This first part will discuss some prominent developments for 2011. The second part will discuss pending legislation for 2012.

2011 Patent Reform Act

America Invents Act: Congress passed the Patent reform in the form of the America Invents Act supported by President Obama who spun it as a jobs bill, but everyone else mostly yawned and it quickly faded from the news. Politico coverage

The America Invents Act did make one major change to U.S. patent law. It changed U.S. patent law to a ‘first to file’ system from the ‘first to invent’ system. This is a major change. Indeed most intellectual property law contains the concept that a registration/filing is encouraged by granting certain benefits, but the right is conveyed by the first person to create the intellectual property. However, the U.S. is the exception in a world where almost all other countries follow ‘first to file’ rules. The America Invents Act now brings U.S. patent law in line with the rest of the world. Certainly this will make many patent disputes much clearer because so much patent litigation centers on resolving the ‘first to invent’ issue. However, the ‘first to invent’ system really was meant to serve the small inventor who did not have the resources to file patent applications. If small business create so many new jobs how does this law get pushed as a job creating law. On the other hand the law does create a new ‘micro-entity’ status for small-scale inventors (less than five previous patent applications). Greatly reduced filing fees will apply to such qualified applicants.

There are many other smaller changes to the patent law such as procedures for challenging patent, patent litigation procedures, and tax issues. However, most of the criticism revolves around the many issues not addressed by the law. The problems of patent trolls and forum shopping were not even touched by the law. For those interested in the details of the new patent law here are some suggested resources.

2011 Patent Reform Act Further Reading:
Just What You Need to Know (PCWorld)

Patent Reform Legislation Set to Become Law, but Will Make Few Meaningful Changes
Patent Reform and You by YourPatentGuy

2011 Copyright Developments

Supreme Court Decides Golan V. Holder: This was an important case for the Supreme Court to address but has yet to issue an opinion. The case arose from a conflict between U.S. copyright law and copyright law in foreign countries because under the Berne Convention, which the U.S. is a signatory member, each country must honor the intellectual property laws of each other. In 1994 Congress passed a law establishing copyrights for certain foreign works for authors who never had U.S. copyright protection. This was required to comply with the Uruguay Round Agreements to the Berne Convention. However this removed many works from the public domain in the United States and, of course, angered someone enough for them to sue. It should be noted that the 1994 law, under section 514, had several provisions to minimize the impact of the change. The Court will put the Berne convention into serious disarray if the court strikes down the law.

Copyright/trademarks- first sale doctrine and imports

Supreme Court splits 4-4 in Costco v. Omega, with Justice Kagan sitting it out, effectively affirming the lower court decision denying a first-sale defense under copyright law for unauthorized imports. I previously discussed this case which was decided December 2010 and the related subsequent Court of Appeals case John Wiley & Sons v. Kirtsaeng. The case is interesting because it really uses copyright law to do something for which trademark law was intended.

Costco imported Omega watches made with the consent of the copyright holder but were imported without the copyright holder’s consent for resale in Costco stores. The case hinged on the first sale doctrine of copyright law which provides that once a work is sold the purchaser may sell the work without permission from or compensation to the copyright holder. Also, among the ‘basket of rights’ granted to copyright holders is the exclusive right of importation thereby making unauthorized importation infringement. However, the lower courts had held that the first sale doctrine only applies within the U.S.

The Kirstaeng case clarified that this was the case under a different set of facts. Kirstaeng involved textbooks which are traditionally protected by copyright law unlike the Costco case where Omega included a copyright protected image on the watches specifically to control imports. The decision will give manufactures more power to limit stop grey market imports.

Copyright/Internet

United States (Yahoo/RealNetworks) v. ASCAP affirmed that music file downloads do not constitute a public performance of the work. The court rejected all ASCAP legal theories for declaring downloads as a public performance by reading the statute itself.

In answering the question of whether a download is a public performance, we turn to Section 101 of the Copyright Act, which states that “[t]o ‘perform’ a work means to recite, render, play, dance, or act it, either directly or by means of any device or process.” A download plainly is neither a “dance” nor an “act.” Thus, we must determine whether a download of a musical work falls within the meaning of the terms “recite,” “render,” or “play.”

This case could have dramatically shifted the balance of power between the music industry and websites. As the music industry sees that it cannot suppress internet distribution it is becoming more comfortable sites such as Spotify. The days of the 19.99 CD are gone forever. The future is the likes of Spotify and Bandcamp.

2011 Trademarks
No doubt the most notable trademark case for 2011 was Christian Louboutin v. Yves Saint Laurent America. In a slightly entertaining decision, the New York District Court decision denied Louboutin trademark claim for the color red used on the bottom sole of certain shoes. This was a strong blow against the fashion industry’s efforts to promote new ‘fashion rights’ in intellectual property.

Louboutin used a lacquered red coating on the outer soles of some of its shoes which distinguished them in the market although, as the court clearly noted, Louboutin was not the first one to do so. In fact, in 2008, the PTO granted trademark registration for the Louboutin soles described in the trademark application as “The mark consists of a lacquered red sole on footwear…” (Registration 3361597, approved 2008-1-1) Louboutin sued YSL after YSL release red soled shoes in its 2011 collection although YSL had used red soles in the past.

The court acknowledged that color may qualify as a trademark but only when it attains ‘secondary meaning’ as an identification of the manufacturer. This is logical because this is the function of a trademark- to identify the manufacture in the marketplace. A prime example is the pink for Owens-Corning Fiberglass (cited by the court (Owens-Corning decision) and a mark that was initially refused by the Patent and Trademark Office) and Tiffany Blue for Tiffany & Co jewelry box. Furthermore, color has often been a component of trademark consisting of other design elements, e.g. Burberry check pattern. The court concluded that here the color is not serving to identify the manufacture but is an ornamental and functional element in the marketplace. The red creates an image and commands higher prices that if granted trademark protection would hinder commerce by granting a monopoly on functional elements of the product. Louboutin has appealed the decision. It will be an interesting case to watch that already has the fashion world abuzz. And, of course, Louboutin has appealed the decision.

2011 Trade Secrets

International Business Machines Corp. v. Visentin

On November 2011 the 2nd Circuit Court of Appeals affirmed a lower court decision refusing to enforce a non-competition agreement between IBM and its former manager Mr. Visentin. The agreement provided that Mr. Visentin would not work for a competitor for on year after termination of employment at IBM. Mr. Visentin left IBM directly for HP and IBM sued. The case hinged on the inevitable disclosure doctrine. Under New York law,

“Only that confidential information or those trade secrets that the employee misappropriates or will inevitably disclose is protectable.”

The inevitable disclosure doctrine has three elements: 1- employers are direct competitors; 2- employees position is nearly identical to old position; and 3- trade secrets in question are highly valuable to both employers. The court held that although IBM and HP were direct competitors the new position was very different and his knowledge was not critical to HP such that HP would require him to disclose any trade secrets. The case is fairly unique because the lower court had an exhaustive 4 days of hearings on the facts. This made it clear to the court that IBM would not likely succeed and therefore refused to grant a preliminary injunction against Mr. Visentin.

Just after my last post on the Foreign Equivalents Doctrine I read on The TTABlog about a recent Trademark Trial and Appeal Board decision focusing on the doctrine. I will add my take below, but have a look at The TTABlog for more details.

The company Nicaragua Tobacco Imports, Inc. attempted to register the mark TATOO for cigar, cigarettes and related goods. Tatuaje Cigars, Inc. opposed the registration based on a likelihood of confusion with its registered trademark TATUAJE for cigars. Tatuaje is the Spanish word for tatoo and the two sound very similar. I would hazard to guess most Americans would guess the correct meaning of tatuaje regardless of their knowledge of Spanish. Indeed, Tatuaje asserted in its opposition, in addition to the translation that the sound and appearance of the two words are similar.

The Board reasoned

a) under the doctrine of foreign equivalents, foreign words from common languages are translated into English to determine whether they are confusingly similar;

b) the doctrine is applied when an ordinary American purchaser would ‘stop and translate the word;

c) ordinary American purchaser means someone who is knowledgeable in the foreign language.

d) whether the purchasers will stop and translate the word depends on the facts;

e) the Board concluded that in this case purchasers would translate Tatuaje and therefore the marks were identical and the registration denied.

Nicaragua Tobacco (TATOO) cited several cases where marks also had direct translations such as Paloma (Spanish for dove/pigeon) versus Dove and REPECHARGE and SECOND CHANCE were not found confusingly similar. However, the Board held the tatuaje clearly translated to tatoo, and the words sounded and looked similar. The Board clearly was not impressed by arguments to the contrary.

Increasingly, foreign words are used on trademarks in the United States. This brings us to a slightly obscure part of trademark law- the doctrine of foreign equivalents. The doctrine of foreign equivalents is used to evaluate a foreign language trademark. As a doctrine it guides the analysis more than controls it. This has created a wide range of conflicting rulings and criticism.

The Trademark Manual of Examining Procedure (‘TMEP’) states that the doctrine of foreign equivalents is only applied when the “ordinary American purchaser” who is familiar with the foreign language would actually translate the mark. There must also be a clearly be one English translation that would be used. It doesn’t need to be a literal translation, but must convey the same meaning. The doctrine is a method for dealing with a foreign language. It does not automatically mean a trademark is invalid because the doctrine of foreign equivalents can be used. The usual factors for trademark infringement must still be evaluated using the English translation if the doctrine of foreign equivalents applies. Furthermore, trademarks may not be registered if the English translation has already been registered or used.

In one case the Italian word LUPO (Italian for wolf) used on clothing was found to infringe on WOLF also used on clothing. In another case the Trademark Trial and Appeals Board (‘TTAB’) found BUENOS DIAS (used on a soap product) invalid because of a likelihood of confusion against GOOD MORNING (on shaving cream). In another case, the TTAB applied the doctrine to evaluate two marks using the French terms BIEN JOLIE (‘quite pretty’) and TRES JOLIE (‘very pretty’). The Board determined that most Americans with even the most basic French would understand words and therefore applied the doctrine of foreign equivalents. However, the Board did not find there was infringement. The Board decided not to use the doctrine in another case where it evaluated the French terms VEUVE ROYALE and VEUVE CLICQUOT PONSARDIN, but did find infringement based on a likelihood of confusion.

Finally, the doctrine may be used to compare two marks in two different foreign languages. However this occurs rarely because it would require a finding that the ‘ordinary American purchaser’ is familiar with two foreign languages. In one case the Board did apply the doctrine to evaluate marks in two different languages. The Board evaluated DUE TORRI (Italian for ‘two towers’) and TORRES and TRES TORRES (Spanish for ‘towers’ and ‘three towers’ respectively). In this case, the Board applied the doctrine of foreign equivalents and also found a likelihood of confusion.

A 2008 TTAB ruled on a case involving the mark MOSKOVSKAYA, which basically means “from Moscow”. The primary issue in the case did not involve the doctrine of foreign equivalents but the court did address the doctrine. The decision explained that it is important to define the market. The “ordinary American consumer” are consumers to whom the product is market. A product may target speakers to a foreign language or may target a broader audience. This is important in determining whether to apply the doctrine of foreign equivalents as well as the “likelihood of confusion” test for trademarks. Therefore a Polish meat product may clearly be target to the Polish speaking community, where as a Russian vodka may have a much broader audience including many familiar with the Russian language. However, this does not necessarily mean the Russian speakers are a significant proportion of the total market and therefore not the definition of the “ordinary purchaser”.

Conclusion:
Trying to understand the doctrine of equivalents can be difficult because first one needs to determine if the TTAB or USPTO will use it. It may be easier to first follow ordinary trademark analysis and focus on the market definition for the product. If the market is very broad and includes a substantial number of people not familiar with the language then, as the “ordinary purchaser” they are not going to translate the word– because they can’t! Then the mark can be judged on its own like any other. Conversely, if the market has a substantial number of purchasers familiar with the language the doctrine of foreign equivalents is more likely to be used. One last twist, is the language in question. If it is one of the Romance languages it is much more likely the doctrine may be used just because English is a Romance language.

Further Reading:
United State Patent Office Examination Guide 1-08

Bitlaw

Wikipedia on Doctrine of Foreign Equivalents (not well written)

The recent brouhaha over Bob Dylan’s art exhibition brought up the subject of fair use. The Bob Dylan controversy has been covered extensively elsewhere and is not a new criticism. As Joni Mitchell said, “Bob is not authentic at all. He’s a plagiarist, and his name and voice are fake. Everything about Bob is a deception…” More about the recent Dylan controversy here:

New York Times Artsbeat Blog

Daily Beast Blog

Expecting Rain (a Bob Dylan forum)

Copyright protection is now easily obtained- just create something original. (The notice requirement was removed by the 1976 Copyright Act.) However, the defense of ‘fair use’ often makes the copyright protection more elusive. Contrast this to the patent right which grants an absolute monopoly for a given period. Copyright protection is much more fluid. A person may copy a protected work under certain circumstances. This is called ‘fair use.’ Fair use originated from case-law but is now written into the Copyright Act in Section 107.

§ 107. LIMITATIONS ON EXCLUSIVE RIGHTS: FAIR USE
Notwithstanding the provisions of sections 106 and 106A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include—
(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;
(2) the nature of the copyrighted work;
(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
(4) the effect of the use upon the potential market for or value of the copyrighted work.
The fact that a work is unpublished shall not itself bar a finding of fair use if such finding is made upon consideration of all the above factors.

Of course, the devil is in the details. What exactly is fair use is often very hard to say for sure, no matter how often you say ‘reasonable person’, because these factors are largely subjective. Furthermore, a defendant- not the plaintiff- is required to prove fair use once the plaintiff proves infringement because it is an affirmative defense. Lastly, 107 factors must be considered, but are not exclusive, other factors may also be considered although courts tend to stick to the listed factors.

Courts usually first look at the purpose of copying. As stated in 107, “[fair use] for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright.” However, the statute is a bit misleading because it is defining a term with the term itself and is largely repeated in the first factor (purpose). Just because one of the listed purposes are used does not make it fair use. It must be a fair use in the first place. Finally, the purposes, like the factors, are not exclusive but suggestive “for purposes such as”.

Section 107 Factors for Fair Use Analysis
In practice a court will closely look at the purpose of the infringement and then the amount of change applied- the legal word used is ‘transformative’. The less commercial and more transformative the work, the better chance for fair use. The devil is in the details; every case depends on the facts. For example, the use of copyright protected works by internet search engines were a fair use although a commercial purpose and not very transformative. Also, the internet has not changed the copyright law. I still see people saying if it is on the internet it is ‘fair game’- not so. Just because an image is one the internet does not mean you can freely use it whether it is on the CNN website or a student’s blog. So how does one make sense of this. One should think about reason behind the Copyright Act. Why do we give these protections?

The Copyright Act finds originate from clause 8 of the U.S. constitution, as discussed in a prior post, to promote the‘useful arts.’ One the other hand the fair use purposes stated in the preamble of section 107 also are strong factors. Therefore, a parody or news report likely be considered fair use of a highly original work. For example, in 2011 a court held a parody of “Gone with the Wind” was fair use and copying for the purpose of news reporting is liberally considered fair use.

A court will also consider the quantity and substance of what was copied. Was it just a small reference or was the essence of the original copied? Keep in mind this is just one factor this is a qualitative as well as quantitative factor. A total copy may be considered fair use and a small portion may not.

Finally, the court will look at the market effect of the copy. The market includes not just the original itself but all potential derivative works. Therefore unauthorized translations or adaptations will be considered. It would by unjust to allow a filmmaker to profit from a novelist’s creativity by adapting a novel to film. On the other hand, the market effect must displace the original work. A secondary market effect is not considered a market effect. Therefore a parody may harm the demand for the original by altering the public’s opinion of the original and still maintain a fair use defense.

Let’s look another artist who, like Dylan allegedly has, copied another artist work to create his own strikingly similar work in another medium. In 1988 Koons made a sculpture that essentially copied a photograph taken by Rogers. Koons admitted the photograph was the basis for his sculpture but claimed a fair use defense because he was commenting on everyday culture. The sculpture was made as part of an exhibit of such works called the ‘Banality Show”. The court analyzed the two works following the four factors stated in Section 107 and found Koons did not have a fair use defense.

Judge for yourself here are the two images from Rogers v. Koons.

This may an extreme case because the two works are strikingly similar. Most cases are not as clear-cut. What always bothers me about these cases is why an artist doesn’t make an effort to create something new even if it inspired by the original. As the Koons court stated,
“had appellant simply used the idea presented by the photo, there would not have been infringing copying. But here Koons used the identical expression of the idea that Rogers created; the composition, the poses, and the expressions were all incorporated into the sculpture to the extent that, under the ordinary observer test, we conclude that no reasonable jury could have differed on the issue of substantial similarity.”

Fair Use Resources
Chilling Effect Website (highly recommended)
Standford University Copyright and Fair Use Center
Wikipedia on Art Appropriation

UPDATE: check out this story of a screenwriter who sued the writers of the movie The Expendables for copyright infringement.