The trademark balancing act: Protecting your rights without enraging your customers

Trademarks symbolize the character and reputation of their owners and the quality of those finished products offered to the consumer. It typically takes years of careful cultivation to build a valuable trademark. This cultivation can include registering the mark with the U.S. Patent and Trademark Office, using the mark in a consistent and continuous manner, and taking action to prevent others from using the mark without permission. However, trademark owners often need to walk a thin line between strong enforcement and overly aggressive enforcement tactics (sometimes called “trademark  bullying”). One mis-step (or overstep) can quickly tarnish a mark’s goodwill and inflame consumers. Within days, the reputation of a strong brand built over decades can be destroyed by one over-zealous demand letter or lawsuit that finds its way from the recipient or courtroom to the Twittersphere.

AnLagunitas IPA example of this is the recent case of Lagunitas Brewing Co. v. Sierra Nevada Brewing Co.  In the case, Lagunitas alleged that Sierra Nevada’s new Hop Hunter IPA used a label that infringed on Lagunitas’ family of registered trademarks that each incorporate a stylized image of the acronym “IPA.” The complaint asserted that Sierra Nevada’s label used similar fonts to those of the Lagunitas mark, with the phrase “IPA” appearing in “prominent all-capital, large, bold, black, centralized” letters. The case included questionable legal grounds and aggressive tactics, including (i) a brewery seeming to claim rights to the acronym IPA (albeit the design only), and (ii) a preemptive lawsuit filed against an intent to use trademark application, and is informative as a guidepost for those in the craft beer industry or any industry with an educated, social media-savvy customer base willing to call out trademark owners for overly aggressive tactics. Lagunitas quickly dropped the suit after a social media firestorm erupted, in which the brewery was accused of trying to claim exclusive rights to the term “IPA” alone. In one day’s time, Lagunitas nearly destroyed two decade’s worth of goodwill by its mis-step. The next day, Lagunitas’ founder Tony Magee announced the company’s retreat on Twitter: “Today was in the hands of the ultimate court; The Court of Public Opinion.”

In some EatMoreKalesituations, aggressive trademark assertion may not alienate core customers, but it can arguably benefit the alleged infringer by bringing more attention to a fledgling brand. This happened when a Vermont company’s applied to register the EAT MORE KALE mark for use on apparel and other products. Chick-fil-A sent the company a letter demanding that it withdraw the application and stop using the mark, asserting that the use conflicted with Chick-fil-A’s EAT MOR CHICKIN mark. After the Vermont company shared the accusations on social media, the story was spread on many news outlets. The Vermont company received its registration in December 2014. While Chick-fil-A was probably not harmed by this action (the organic/vegan customers of an “eat More Kale” t-shirt are not likely to be fast food customers), the action certainly drew more attention to the Vermont company than Chick-fil-A intended.

Aggressive trademark enforcement can result in unexpected “social shaming” in a variety of online and other media, including Facebook, Twitter, and even websites like http://www.chillingeffects.org, which publishes demands to take down infringing content online. Many small businesses have been especially effective in using social media to gain public support for their cause, as well as public disdain for the perceived aggressor (especially when the aggressor is a large corporation).

So when it comes to trademark enforcement, it’s important to choose battles wisely, and pause before acting to consider whether the action will offend your core customer base. Step back, consult your marketing people, talk to your attorney, or ask a friend either inside and outside your industry. Trademarks are important, and their value is in the way that they represent the goodwill of your product and your company. That value can quickly be lost by poor decision making. If aggressive enforcement can cause more harm than good, companies should consider alternative strategies for preserving the value of their marks.

NOTE:  Special thanks to my Fox Rothschild colleague Chris Olszyk, who co-authored this post. Chris handles U.S. and international trademark portfolios, and he counsels a wide variety of corporate clients in risk assessment, trademark adoption and clearance for branding, rebranding, and new product or service launches. 

Are food recipes protected by copyright?

WPlatehen a chef develops a menu for a new restaurant, can the chef or the restaurant protect the recipes under copyright laws?

In a word, no. As a federal judge in Ohio recently explained, copyright protects the particular layout of a recipe in a published recipe book, or the photos that accompany the recipe. But copyright does not protect the idea or instructions that the recipe embodies.

In the case, two Cleveland restaurateurs opened a pair of restaurants serving casual fare like sandwiches, pizza, wings and salads. After three years, the founders split. The departing founder soon opened his own restaurant serving similar menu items. The remaining founder sued the departing founder, bringing claims of copyright infringement, breach of contract and misappropriation of trade secrets, among other things.

When addressing the copyright claim, the court quoted an unpublished Sixth Circuit opinion which stated:

The identification of ingredients necessary for the preparation of food is a statement of fact…. Thus, recipes are functional distinctions for achieving a result and are excluded from copyright protection.

The federal court declined to address the trade secret or breach of contract claims, which were more appropriate for state court.  Because of that, the federal court dismissed the remaining claims.

The court could have — but did not — mention the Copyright Office’s fact sheet on this issue, which states:

Copyright law does not protect recipes that are mere listings of ingredients. Nor does it protect other mere listings of ingredients such as those found in formulas, compounds, or prescriptions. Copyright protection may, however, extend to substantial literary expression—a description, explanation, or illustration, for example—that accompanies a recipe or formula or to a combination of recipes, as in a cookbook.

The case illustrates that restaurateurs who seek to protect recipes should consider avenues other than copyright law. Other types of intellectual property — such as trade secrets, agreements of nondisclosure and non-use, or even patents — can provide various levels of protection. While it may be difficult to protect recipes for what the court called “basic fare” like sandwiches and salads, less obvious creations such as sauces and condiments may find some coverage in these other intellectual property areas.

The Ohio case is Tomaydo-Tomahhdo LLC et. al v. Vozary et. al (N.D. Ohio 1/29/2015).

[Image credit:  http://www.123rf.com/profile_faysalfarhan]

What does the USPTO’s 2014 Interim Guidance on Patent Subject Matter Eligibility mean for software inventions?

At the end of a year in which the patent eligibility of software inventions came under fire like never before, the USPTO finally issued its long-awaited 2014 Interim Guidance for Subject Matter Eligibility, which describes how patent examiners should assess whether a patent application includes patent-eligible subject matter. While the new Interim Guidance may not satisfy many inventors who wish to patent their software, it can help inventors identify the types of inventions that have a chance of success, as well as those for which a patent application may be an exercise in futility.

The new Interim Guidance was prompted in part by several U.S. Supreme Court decisions, including the Court’s June 2014 decision in Alice v. CLS Bank. In  Alice, the Court established a two-part test for patent eligibility. Under the Alice test, one must first “determine whether the claims at issue are directed to a patent-ineligible concept.” Then, one must determine whether there are sufficient limitations present in the claim “to ensure that the patent in practice amounts to significantly more than a patent upon the ineligible concept itself.” Since Alicecourts have overturned a significant number of patents covering software and business methods as lacking patent-eligible subject matter.

When it comes to software, the Interim Guidance provides direction almost exclusively by example, listing cases in which various courts have overturned or upheld patents relating to software.  However, some general themes are apparent throughout the document: Continue reading

Kimble v. Marvel Enterprises: a patent licensing case to watch in 2015

Expired2015 could prove to be a time of change for patent licensing law, as the Supreme Court recently agreed to review the long-standing rule that a patent holder may only receive royalties during the term of a patent, and not after it expires.

In the case that is the subject of the appeal, Kimble v. Marvel Enterprises, Inc., the inventors of a toy with Spider-Man-like web-shooting capabilities sold a patent covering the toy to Marvel Enterprises. The agreement imposed Continue reading

How long does patent and trademark prosecution take? (2014 edition)

At the end of each fiscal year, the USPTO releases a Performance and Accountability Report, which is loaded with data about patent and trademark allowance rates, average pendency, and other details. The USPTO recently released its Performance and Accountability Report for Fiscal Year  2014. This means that it’s time for IP Spotlight’s annual review of the question:  “how long does it take to receive a patent or trademark registration?”

To answer that question, here are a few highlights from the USPTO’s 2014 report:

Patents:  After several years of steep reductions in patent application pendency, the USPTO’s efforts appeared to plateau in fiscal year (FY) 2014. The average time between filing and first office action was 18.4 months, which was slightly above FY 2013’s average of 18.2 months. The USPTO fared better in reducing average total pendency from 29.1 months in FY 2013 to 27.4 months in FY 2014, but this was still short of the USPTO’s goal of 26.7 months.

The USPTO acknowledged that it faces challenges in continuing to reduce pendency. The challenges include the redirection of resources to other initiatives, such as and initiative to reduce the backlog of unexamined Requests for Continued Examination (RCEs), and the development of guidance relating to the changing law relating to patent-eligibility. The USPTO also received more patent applications and granted more patents in FY 2014 than in any previous year.

The pendency rates vary depending on the technology covered by the patent application. For example:

  • applications relating to biotechnology and organic chemistry (USPTO Technology Center 1600) have an average wait time of 15.0 months to first action, and an average total pendency of 26.2 months;
  • applications relating to chemical and materials engineering (USPTO Technology Center 1700) have an average wait time of 19.5 months to first action, and an average total pendency of 28.8 months;
  • applications relating to networking, multiplexing, cable and security (USPTO Technology Center 2400) generally wait 18.6 months to first action, and have an average total pendency of 30.8 months;
  • applications relating to communications technologies (USPTO Technology Center 2600) have an average wait time of 17.8 months to first action, and an average total pendency of 28.7 months; and
  • applications relating to mechanical engineering products (USPTO Technology Center 3700) have an average wait time of 21.3 months to first action, and an average total pendency of 31.1 months.

The total average pendency is highest for applications involving computer architecture, software & information security (USPTO Technology Center 2100), where total pendency averages 31.7 months.

The overall patent allowance rate was 54.4% in FY 2014– a slight decrease from FY 2013’s 55.2%.

Other interesting statistics include:

  • The number of appeals filed against final rejections declined by over 10% in FY 2014.
  • The USPTO’s efforts to reduce the backlog of RCEs appear to be paying off. The number of unexamined RCEs dropped by over 40% in the past year.

Trademarks:  In FY 2014 the average time from filing to first Office Action in a trademark application was 3.0 months, and the average total pendency was 9.8 months.  These numbers are similar to the statistics for the past three years, and better than the USPTO’s goals of 3.5 months to first action and 12.0 months of overall pendency.

It’s not just the holiday season, it’s also H-1B season

This post is more about the “business” than the “intellectual property,” but I thought that IP Spotlight readers would be interested in a recent blog post by my partner Catherine Wadhwani, who reminds tech companies and other employers that hire talented foreign professionals who may need H-1B sponsorship about an upcoming deadline for filing H-1B petitions.

Companies who are hiring (or who plan to hire) a foreign professional should be aware that the timing of a cap-subject H-1B petition is extremely sensitive. The time to file an H-1B-cap subject petition is fast-approaching and it’s best to be prepared.

For more information, here is a link to Catherine’s post discussing the upcoming “H-1B cap season”.

License agreement tips: pay attention to the definition of “affiliate”

When licensing a patent, software, copyrightable work or other intellectual property, it’s common for the agreement to license the property to a particular entity and its “affiliates.” The agreement may define the term “affiliates.” But are the parties always sure that the definition includes all parties that they actually intend to include?

Following on the heels of a recent, similar decision from United States District Court for the Central District of California, the Court of Appeals of the State of New York held that a license granted to an entity and its “affiliates” is limited to affiliates that were in existence on the effective date of the license agreement, unless the agreement expressly states otherwise.

Although the licensee typically benefits when the agreement contains a broad definition of affiliates, the new case is unique because it shows that a licensor can also benefit from a broader definition in certain situations.

The New York case, Ellington v. EMI Music, Inc., involved the terms of a royalty provision found in a 1961 copyright renewal agreement between the legendary musician Duke Ellington and a group of music publishers, Continue reading