data protection officer

Yes, Your Business Needs a Data Protection Officer

On May 28, 2018, new data protections laws and regulations go into effect for the European Union (“EU”). See recent news report here. The new regulations are called the General Data Protection Regulation (“GDPR”). See the full GDPR here.

The EU is getting serious about punishing companies that suffer data breaches. For the most serious breaches — like those recently allowed by Equifax — companies can be fined up to €20 million ($23 million) or 4% of global revenues for the preceding financial year, whichever is greater. For less severe breaches, authorities could impose fines of up to €10m or 2% of global revenues, whichever is greater. The new regulations are an expansion over the old framework which went into effect in 1990. The GDPR is, however, not just about security and preventing data breaches. The GDPR is also about regulating how data is processed, used, and stored.

The GDPR has some interesting lessons for US businesses struggling to deal with data hacks and cyber-security breaches. Among the more innovative concepts is the requirement that data protection officers be appointed.

Data Protection Officer

The GDPR carries forward from the old law a regulatory distinction between data “controllers” and data “processors.” In general, the “controller” is the entity that gathers, holds, and stores the data. On the controller are imposed all the obligations of obtaining consent and sending notification in the event of loss or theft of the personal data and information. As an analytic dichotomy, the distinction is useful for identifying risks and considering security needs and safeguards.

Under Article 37 of the new GDPR, both controllers and processors are required to appoint a data protection officer if there is any sort of large scale collection and processing of data. A data protection officer is required for all types of data collection and processing including for:

  • Use in sales of goods and services
  • Use by governmental officials for the purposes related to employment, social security, and social protection laws
  • Use for the purposes of preventive or occupational medicine, for the assessment of the working capacity of the employee, medical diagnosis, the provision of health or social care or treatment, or the management of health or social care systems and services
  • Use for “legitimate activities” by a foundation, association, or any other not-for-profit body with a political, philosophical, religious, or trade union
  • Use in legal proceedings
  • Use when “processing is necessary for reasons of substantial public interest”(h)
  • Use when “necessary for archiving purposes in the public interest, scientific or historical research purposes or statistical purposes”

Article 37 also requires that the data protection officer be designated on the “basis of professional qualities and, in particular, expert knowledge of data protection law and practices.” Contact information for the data protection officer must be provided to the appropriate governmental authority (which in the EU might be a EU official or an official of the member State).

Article 39 mandates the following non-exhaustive list of duties for the data protection officer:

  • Inform and advise what is required by the GDPR to management and the employees actually doing the data collection and processing
  • Monitor compliance with the GDPR, with other EU and Member State data protection laws and with the company policies with respect to the protection of personal data
  • Monitor and consult with respect to creation of company policies concerning the protection of personal data including the assignment of various responsibilities
  • Monitor awareness-raising and training of staff
  • Monitor compliance audits
  • Provide advice where requested, and where needed, with respect to any “data protection impact reports” and monitor performance pursuant to any report guidelines — under some circumstances, the GDPR requires a “data protection impact report” (similar in concept to an environmental impact report)
  • Cooperate with the governmental officials tasked with enforcing data protection laws
  • Act as the contact point for the governmental authorities on issues relating to processing, breaches, and any other issue

The GDPR also requires that companies and governmental entities that appoint a data protection officer must ensure that officer is involved in all issues which relate to the protection of personal data. Involvement must be timely and must involve access to the relevant data and processing operations and to the relevant employees. The data protection officer must also be supported with sufficient resources to do his or her job and to maintain his or her expert knowledge.

The data protection officer must also be given a free hand and is protected by the GDPR from retaliation.

The GDPR also states: “Data subjects may contact the data protection officer with regard to all issues related to processing of their personal data and to the exercise of their rights under this Regulation.”

Lessons for US Businesses

It is unlikely that US businesses will be legally mandated to hire data protection officers anytime soon. However, it is worth seriously considering designating a person to handle and to be an expert on issues related to data security. A single guiding vision can be invaluable because data security covers a very large landscape.

Data security begins when data is collected at the first interface with the customer. What a company is allowed to do with data often depends on whether the customer consented to give the data and ALSO consented to the use, storage, transmission and manipulation of the data. A data protection officer can help establish effective company protocols for tracking consent.

In May 2018, the GDPR will move to a very strict regime of explicit consent. Browsewrap and clickwrap are no longer going to be legally sufficient in the EU. If you use clickwrap or browsewrap agreements, those need to be reviewed and updated. Moreover, the GDPR will in soon mandate that entities provide an easy method of withdrawing consent. Thus, new policies are going to be needed to track, record, and organize the consents and withdrawals of consent via e-signatures, screenshots, email confirmations, etc. A data protection officer can be essential in establishing such policies.

A data protection officer is also in the best position to see the differing security needs of differing aspects of your company’s computer and data processing systems. This is why the distinction between “controller” and “processor” is useful: Each has its own unique type and level of security. Of course, protecting data processing and storage is related to but very different than protecting the integrity of email systems, money processing, file storage, security trade secret procedures, etc.

Finally, having a data protection officer is potentially invaluable from a public relations and a governmental relations perspective. Long before a breach occurs, the company has established the person, and that person has built up experience and expertise, to step in front of the microphone and take questions from reporters. The company has a person to meet with federal and local law enforcement, as well.

We have written previously on the high cost of data breaches, not only from fines for non-compliance, but through the loss of customer confidence in your business after a data breach. US businesses are unlikely to be legally mandated to hire data protection officers anytime soon. However, it is worth seriously considering designating a person to handle and to be an expert on issues related to data security in your business.

Contact Revision Legal Today

The data breach lawyers at Revision Legal understand the dynamic nature of cybersecurity. Revision Legal has worked with businesses of all sizes to assess data retention risks, implement reforms, put procedures in place to identify antiquated programming and equipment and, when necessary, provide counsel on breach notifications in all 50 states.

If your business has suffered a breach, contact us as soon as possible. Some frank discussions may be needed and those should be cloaked in the attorney-client privilege. Civil fines can be imposed in some states for a failure to notify those affected by breaches in a timely fashion. Federal investigations can be instituted by the Federal Trade Commission. If a breach has occurred, you need the an experienced and dedicated legal team. Call or write Revision Legal today. We can be reached by email or by calling us at 855-473-8474.

 

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Oil States Energy and SAS Institute: SCOTUS to Review Inter Partes Reviews

As we recently discussed with respect to the proposed STRONGER Patents Act of 2017, legal debate continues to swirl around inter partes reviews. The US Supreme Court has entered the ring recently by accepting certiorari on two cases: SAS Institute Inc. v. Matal and Oil States Energy Services LLC v. Greene’s Energy Group, LLC.

What is an Inter Partes Review?

An inter partes review (“IPR”) is a method of challenging the patentability of a patent granted by the USPTO. An IPR can be filed by any third-party after certain time period following the issuance of patent (in general, nine months). An IPR can challenge one, several, or all of the various claims made in the patent. The IPR/PGR challenge must be based on the criteria set forth in 35 U.S.C. §§ 102 (lack of novelty) or 103 (obviousness).

IPR proceedings are heard by the Patent and Trademark Appeal Board (“PTAB”). In practice, an IPR is a trial conducted via paper filings — that is, no direct oral witness testimony. The PTAB has two administrative divisions: an Appeals Division and a Trial Division. The former handles appeals when patents are rejected by patent examiners. The Trial Division handles IPRs and similar proceedings. There are over a 100 Administrative Patent Judges in both divisions. None of these judges are nominated by the President or confirmed by the US Senate. Administrative Patent Judges are appointed by the Secretary of Commerce.

Further, IPRs are handled by these administrative judges only; no juries contemplated or allowed. This is part of the issue raised by Oil States Energy.

To start an IPR, the challenger files a petition identifying the patent and all the claims in that patent that are being challenged. The PTAB reviews the petition and makes a decision on whether the IPR will be instituted. The PTAB says “yes” if the Board finds that there is a reasonable likelihood that at least one of the challenged claims is unpatentable. Currently, the PTAB says “yes” if at least one claim is likely unpatentable. This is a so-called “partial” or “selective” institution of an IPR. The issue in SAS Institute is whether such “partial” institutions” are acceptable.

The PTAB’s decision to say “yes” is not appealable. As we discussed recently, the proposed STRONGER Patent Act of 2017 would change this, allowing immediate appeal of the PTAB’s decision to institute an IPR.

After completion of the IPR trial, the PTAB produces a final determination within one year of start of the IPR.

SAS Institute v. Matal.

As noted, SAS Institute Inc. v. Matal raises questions about whether the PTAB can partially institute IPR proceedings. In the underlying proceeding, SAS Institute, Inc. was the third party who filed an IPR challenging the patentability of a US patent held by a company called ComplementSoft (the ‘936 patent). The PTAB Board instituted an IPR proceeding on some, but not all, of the claims challenged. The patent at issue involved processes for generating, maintaining and editing computer source code. SAS Institute challenged 16 claims in the ‘936 patent. The PTAB instituted a partial IPR for nine of the challenged claims (claims 1, 3-10) based on obviousness. Ultimately, the PTAB rejected the challenge to claim 4, but found the other eight claims to be unpatentable. SAS Institute appealed to the Federal Circuit which upheld the PTAB on its decision to institute a partial IPR, but reversed the PTAB on claim 4 on a procedural ground.

In its writ of certiorari, SAS Institute directly challenges whether the PTAB can institute “partial” IPRs. SAS Institute cites language from the AIA that states: the PTAB “shall issue a final written decision with respect to the patentability of any patent claim challenged by the petitioner.” 35 U.S.C. § 318(a). According to SAS Institute, that language requires the PTAB to say “yes” or “no” to whole petition for IPR. The Federal Circuit rejected that argument in an earlier case: Synopsys Inc. v. Mentor Graphics Corp., 814 F.3d 1309 (Fed. Cir. 2016) (“In summary, we find no statutory requirement that the Board’s final decision address every claim raised in a petition for inter partes review. Section 318(a) only requires the Board to address claims as to which review was granted.”)

In both SAS Institute and Synopsis, Circuit Judge Pauline Newman filed dissents on the issue of “partial” institution of IPRs by the PTAB. The main thrust of her argument is that the America Invents Act of 2011 was intended to streamline and speed up the process of challenging patents and to eliminate uncertainty once the process is completed. The Board’s final determination creates estoppel effects preventing further challenges to the patent claims. However, partial IPRs defeat the goal of certainty since the unselected claims remain dangling, as Judge Newman said, “… lacking both finality and estoppel …”

It will be interesting to see how the Supreme Court resolves these issues. The solution may be simple, actually: hold that the PTAB’s decision to not select certain claims for IPR is, in effect, a “final determination” that those claims are valid. In theory, the PTAB decided not to select a given claim because the PTAB determined that there was no reasonable likelihood that the given claim was unpatentable. As such, that could be considered a “final determination.”

Oil States Energy Services LLC v. Greene’s Energy Group, LLC.

In Oil States Energy, the Supreme Court granted certiorari on this question:

Whether inter partes review – an adversarial process used by the Patent and Trademark Office (PTO) to analyze the validity of existing patents – violates the Constitution by extinguishing private property rights through a non-Article III forum without a jury.

This issue goes back to McCormick Harvesting Mach. Co. v. Aultman & Co., 169 U.S. 606 (1898) where the Supreme Court held that a patent “is not subject to be revoked or canceled by the president, or any other officer of the Government” because “[i]t has become the property of the patentee, and as such is entitled to the same legal protection as other property.” The argument being made is that the PTAB is an “other officer of the Government” and that it is revoking patents with constitutional due process and the right to a jury.

The precise question taken by the Supreme Court in Oil States Energy was answered in the negative by the Federal Circuit in MCM Portfolio LLC, v. Hewlett-Packard Co., 812 F.3d 1284 (Fed. Cir. 2015). In MCM Portfolio, the Federal Circuit discussed at length Supreme Court and Federal Circuit precedent. With respect to McCormick, the MCM Portfolio court said that McCormick “… did not address Article III and certainly did not forbid Congress from granting the PTO the authority to correct or cancel an issued patent.” The MCM Portfolio court likened patent validity challenges to other examples of disputes by private parties over public rights. The courts have long held that Congress has the power to designate resolution of such “public rights” disputes to non-Article III decision-making bodies. Examples mentioned in MCM Portfolio include:

  • Agency resolution of fair rents in under Washington, D.C. statute
  • Mandatory arbitration of customer-broker disputes under the Commodity Exchange Act
  • Non-Article III court resolution of import disputes between competing businesses
  • Binding arbitration of proper monetary compensation for use of data related to pesticides

Moreover, according to the MCM Portfolio court, agency resolution of disputes is even more appropriate where Congress creates a seemingly “private” right and closely integrates that right into a “public regulatory scheme.” Given the close integration, it is expected that the agency will have a high level of expertise and can efficiently resolve disputes with limited involvement by the Article III judiciary. The MCM Portfolio court felt that its review of Supreme Court and Federal Circuit precedents “… compel the conclusion that assigning review of patent validity to the PTO is consistent with Article III.”

It will be interesting to see how the Supreme Court addresses the question of whether patents are more like disputes by private parties over public rights or whether patents are deeper private rights more akin to property. Seven or eight of the current Justices have expressed or signed onto various opinions that have described a patent as an “exclusive property right” or “valuable property right.” Thus, it is not clear that the Supreme Court will follow the reasoning of the MCM Portfolio court.

Contact Revision Legal.

Revision Legal is a full-service law firm handling business law, internet law, trade secrets, copyrights, patents, trademarks and all types of litigation. We can be reached by using the form on this page or by calling us at 855-473-8474.

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bona fide intent

Intent to Use Trademark Applications: 7 Factors to Consider

As we discussed here, section 1(b) of the Lanham Act allows a person to file a trademark application prior to using the mark in commerce. 15 U.S.C. § 1051(b)(1). To do so, an applicant must have a bona fide intent to use the trademark in commerce, and, as discussed previously, we typically advise that our clients should be ready to use their mark in commerce within six months. Lack of bona fide intent to use will result in denial.

The question arises, what is a bona fide intent to use? Recent court decisions have provided guidance.

Lack of Bona Fide Intent to Use is Grounds for Denial

Lack of a bona fide intent is proper statutory grounds on which to deny or challenge a trademark application. See MZ Berger & Co., Inc. v. SWATCH AG, 787 F. 3d 1368 (Fed. Cir. 2015). For many years, the USPTO has used lack of bona fide intent as a basis for denial and as a basis on which an opposer can challenge an applicant’s registration during the opposition period. The MZ Berger court confirmed the USPTO position.

Case-by-Case and Totality of the Circumstances

The MZ Berger court also held that a determination of bona fide intent is to be made on a case-by-case basis. No bright line rules are to be provided. Further, whether the bona fide element is satisfied, is to be based on the totality of the circumstances. The USPTO and any opposer to the application are free to look beyond the verified statements and other materials provided by the applicant in the application.

Filing an Application is, in Itself, NOT Evidence of Bona Fide Intent to Use

The MZ Berger court also established that the filing of an application is, in itself, not evidence of an intent to use. The USPTO and opposer are free to demonstration that images and information contained in the application were created with an intention to advance the prosecution of the trademark application rather than an intention to use the mark or marks on an actual product in commerce. A prime facie case involves the seven factors discussed below.

What is Bona Fide Intent to Use?

The MZ Berger case is instructive on what factors are considered in determining when bona fide intent exists. In MZ Berger, the applicant was/is a manufacturer, importer, and seller of watches, clocks, and related products. In 2007, it filed an intent-to-use application seeking to register the mark “iWatch” for over thirty different goods covering watches, clocks, clock dials, watch bands, and watch straps. The USPTO approved the application, but in 2008, during the opposition period, a competitor, Swatch AG filed a Notice of Opposition on the basis that “iWatch” is confusingly similar to its mark “Swatch” and that MZ Berger lacked a bona fide intent to use. The Trademark Trial Appeal Board (“TTBA”) agreed with respect to the intent to use argument and denied the application. The TTAB was affirmed by the Federal Circuit. MZ Berger & Co., Inc. v. SWATCH AG, 787 F. 3d 1368 (Fed. Cir. 2015).

MZ Berger identified seven factors to be considered in determining the existence of a bona fide intent to use.

Factor One: Statements Indicating Mere Intent to Reserve

According to MZ Berger, the “evidentiary bar is not high” for showing bona fide intent to use. However, some evidence must be supplied and the evidence must be objective.

According to the court, the use of the word “circumstances showing the good faith” means that the applicant’s intent must be demonstrated with objective evidence of intent. Evidence that is “a mere subjective belief” will be insufficient to clear the low evidentiary bar. The objective evidence must show that the applicant’s intent to use the mark was not merely its intent to reserve a right in the mark. The MZ Berger court found against the applicant on this factor.

The case of Kelly Services, Inc. v. Creative Harbor, LLC, 846 F. 3d 857 (6th Cir. 2017) is also instructive here. In Kelly Services, the company testified that it asked its attorney to file the trademark applications in order “to protect this brand … in case the brand got bigger; in case it diversifies a little bit.” (emphasis in original). The court held this to be evidence of an intent to reserve a trademark; not evidence of an intent to use.

Factor Two: Do Products Exist?

A crucial factor is whether actual products — or prototypes — exist. The existence of a bona fide intent to use is less likely if the products to be sold are merely theoretical or “on the drawing board.” In MZ Berger, there were no products or prototypes in existence.

Factor Three: Technological Feasibility

Along a similar vein, the courts ask: is the product feasible? If no physical examples of the product exist, the courts might still inquire as to technological feasibility. Can the product be produced? Are there technological limitations? How quickly can product be produced and brought to market? In MZ Berger, there was no evidence on these issues.

Factor Four: History With the Particular Product or Similar?

In the MZ Berger case, as noted, the court held there to be no bona fide intent to use. In so holding, the court considered MZ Berger’s history in the watch industry. In particular, while MZ Berger had made watches, it had never made a “smart” watch or anything similar to the iWatch described in the application. As such, this factor — lack of history — weighed against finding the existence of a bona fide intent to use particularly in the absence of a prototype.

Factor Five: Have Customers Been Located, Consulted, Identified, Etc.? What is the Market?

Next, potential customers are relevant to whether a bona fide intent to use exists. Have customers been located, identified or consulted? If there is no evidence showing such, this is a factor to be used to make an adverse ruling by the USPTO and the courts. Again, in the MZ Berger case, no evidence was produced showing customers had been identified or consulted, etc.

Factor Six: Have Firm Decisions Been Made?

In holding that no bona fide intent to use existed, the MZ Berger court also noted that the applicant had not made firm decisions with respect to (i) which type of watch it was planning to bring to market or (ii) whether to use the proposed mark. MZ Berger was deciding between what was called a “technology watch” or an “information watch” or a “smart watch.” But no decision had been made at the time of filing or thereafter. The lack of decision on what type of watch to make weighed against finding bona fide intent to use. But further, statements in the record indicated that there was also no firm decision to use the mark regardless of the type of watch selected. See also Kelly Services, where the evidence showed no “firm” intention to use the proposed mark with respect to several of the goods and services listed in the application.

Factor Seven: Have Steps Been Taken Since Filing the Application?

Finally, in holding that no bona fide intent to use existed, the MZ Berger court noted that no evidence had been presented showing that MZ Berger had taken any steps to develop or manufacture the product described in the application.

Taken altogether, the Federal Circuit concluded that the USPTO properly sustained the opposition to MZ Berger’s application.

In our experience, filing an intent to use application allows an applicant to avoid the risks associated with arbitrary decisions by USPTO examining attorneys. USPTO examining attorneys are not infallible, and, in our practice, we have received many seemingly arbitrary refusals (and allowances) from examining attorneys. When an applicant files an application based on a current use in commerce, and where that applicant has invested significant resources into its brand prior to filing a trademark registration, a refusal by an examining attorney can be devastating to the applicant’s business. If the applicant files an intent to use application, however, and the USPTO examining attorney refuses the application, the applicant can simply rebrand because it has not yet invested significant financial resources in the trademark.

Contact the Knowledgeable Trademark Attorneys at Revision Legal

As can be seen, legal principles and rules related to trademarks can be complicated and overwhelming if you do not have a lot of experience in trademark law and in intellectual property law. If you need help deciding how to register a trademark or assistance with filing an intent-to-use trademark, retain the services of a knowledgeable trademark attorney like those at Revision Legal today. We can be reached by using the form on this page or by calling us at 855-473-8474.

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Importing Products From China: Beware FCC Regulations

There are many startup and already successful e-commerce entrepreneurs who are importing products from China and then make good profits by re-selling them on Amazon and/or on similar online sales platforms.

However, special care should be taken with electronic devices because such must comply with the Communication Act of 1934, as amended, and with regulations promulgated by the Federal Communication Commission (“FCC”). Electronics emit radio signals that are regulated by the FCC. It is not just the computer or the tablet or the phone that must comply. Surprising components like the power transformer must comply with the regulations. You need to know what you are doing; you need your proper:

  • Certification OR
  • Verification OR
  • Declaration of Conformity

If your products ever get seized by US Customs, you are in a world of hurt.

What is the Communications Act?

The US federal government has been regulating broadcasting and communication technology since at least 1910 when Congress passed the Mann-Elkins Act that regulated telephone service. In 1934, Congress passed the Communications Act now codified at 47 U.S.C. § 151 et seq. The Act combined and reorganized several existing law including the Mann-Elkins Act, the Radio Act of 1925, parts of the Federal Interstate Commerce Act, etc. The Act created the Federal Communications Commission (“FCC”) to replace the Federal Radio Commission and transferred some regulatory authority away from the Commerce Commission.

What Does the FCC Have to do With Electronics?

The Communications Act of 1934 authorizes the FCC to regulate all broadcasting and communications by radio, television, wire, satellite, and cable in the United States. As such, the FCC is the agency that regulates the emission of radio frequencies, whether those emissions are intentional or unintentional.

Many people do not know this, but almost all modern electronics create and emit radio frequencies. Obviously, many times the emissions are by design. Your cellphone or your wireless tablet emits radio signals on purpose. Otherwise, the device would not function as intended. However, many components of computers and devices radiate frequencies unintentionally such as circuit boards and power supplies. The unintended “broadcasting” can occur as the component itself radiates the frequencies or as the frequencies are conducted over accidental broadcast “antennas” like the attached cords and cables (all of which contain copper and other highly conductive metals).

These intentional and unintentional emissions cause interference with other nearby devices that are transmitting and receiving radio signals. When you are taking an airplane flight, everyone is told to power-down their electronic devices prior to take off and prior to landing. This is because a plane-load of electronics is giving off a substantial amount of radio emissions which can interfere with the signals being sent to and received by the equipment in the cockpit.

FCC Regulations: Testing, Certifications, and Verifications

In general, the FCC stipulates that “devices may not cause interference” with radio and other broadcast communications. The FCC regulations require that personal computers and digital devices must be designed to contain the “radio noise” to prevent the harmful interference.

To ensure that computers and devices do not emit harmful “radio noise,” the equipment must be tested and shown to be compliant before they can be marketed for sale. Two levels of compliance are available – certification granted by FCC and verification. Some electronics (like personal computers) must be certified and cannot be sold without the FCC-authorized label. Many other devices require only verification. A long summary of the process can be found here.

Third-party testing is needed in either case. The lab testing evaluates the specific frequencies being emitted, at what quantity and via what vector (direct or conducted through the cords and/or cables). The test also measures distance and, ultimately, the ability of the device to interfere with other nearby devices.

What Should You do?

If you are planning on importing products from China or from any overseas manufacturer, there are several steps you should take to ensure compliance with FCC regulations.

  • Select suppliers with good compliance track records — FCC compliance is common among many overseas manufacturers partly because the European Union and Japan have similar regulations
  • Research your supplier’s track record for your specific device — your chosen manufacturer might have good FCC compliance generally, but the compliance must be specific to what you want to resell on Amazon or eBay
  • Get documentation — a supplier with good compliance will have extensive documentation
  • Beware of fake documentation — manufacturers who insist on using their home-town small obscure testing company are probably trying to hide something
  • Confirm which authorization procedure applies to your product — as noted, personal computers require certification and other devices only require verification; you have to know which is required for the device you want to sell
  • Buy a small sample and conduct third party testing (unless you have the technological capability to conduct the testing yourself) — even with good documentation from the manufacturer, it is wise to have the electronics tested
  • Be aware of labeling requirements — the FCC has stringent labeling requirements violation of which is non-compliance

What Happens if I Sell Non-Compliant Digital Devices?

Selling non-compliant digital devices subjects the seller to the following:

  • Forfeiture of all non-compliant equipment
  • Possible $100,000/$200,000 criminal penalty for an individual/organization
  • Possible criminal fine totaling twice the gross gain obtained from sales of the non-compliant equipment
  • Possible civil fine of $10,000 per day per violation

Remember that the FCC regulations apply to the company importing the digital devices. The importer is responsible for ensuring compliance. Note also that you cannot avoid FCC compliance by having the products shipped directly from the manufacturer to the buyer. If you are selling them, the products must be compliant. And — bottom line — the only way to ensure compliance is by submitting samples for third-party testing.

Contact Revision Legal Today

If you have questions or need more information about complying with FCC regulations, contact Revision Legal. We are experienced business and internet attorneys with the skills and dedication to help if your import business avoid violating laws and regulations. Hire the firm that knows your e-commerce business. Contact us via email or call us at 855-473-8474.

 

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trademarking a scent

Trademarking a Scent: Hasbro Not Succeeding Yet

It was reported back in March 2017 that Hasbro, Inc., submitted an application to trademark the distinctive scent of Play-Doh, the Hasbro-owned toy modeling clay that we all probably remember playing with as children. Hasbro describes Play-Doh’s smell as “a unique scent formed through the combination of a sweet, slightly musky, vanilla-like fragrance, with slight overtones of cherry, and the natural smell of a salted, wheat-based dough.”

Trademarking a scent is allowed under the Lanham Act. However, obtaining a scent trademark is rare. A review of the files shows that the two biggest hurdles are proving the non-functionality of the scent and proving that the scent either is or has acquired distinctivenessAccording to research done by online journal MentalFloss.com, as of October 2015, only 10 scent trademarks have been approved by the USPTO, although only two were approved for the principal registry. The two registered on the principal registry are one for a cherry scent added to engine oil lubricants made by Manhattan Oil, Inc. and one for bubble-gum scent added to the packaging for flip-flop shoes and bags. See here.

Lessons From the First Approved Scent-Mark: OSEWEZ

The first trademarked scent was issued in 1990 to a California company, called OSEWEZ, for flower-scented yarn and embroidery thread. According to the company, using scented yarn made sewing “oh, so easy” — or maybe “oh, sew easy.” In the case of OSEWEZ, the company added the fragrance. In other words, the fragrance was NOT inherent in the nature of the yarn or thread.

The Trademark Examiner rejected the trademark application, but was reversed on appeal by the Trademark Trial and Appeal Board (“TTAB”). See here.

The TTAB found the following facts significant in holding OSEWEZ’s scent was trademarkable:

  • OSEWEZ was the only company that marketed these products — yarn and embroidery thread — with a fragrance
  • Fragrance is/was not an inherent attribute or natural characteristic of yarn and thread
  • Fragrance was a feature supplied by OSEWEZ
  • OSEWEZ promoted the scented feature of her goods in advertising
  • OSEWEZ demonstrated that customers, dealers and distributors recognized the scent as an identifier of OSEWEZ as the source of these goods

Based on the foregoing, the TTAB concluded: “Upon careful review of this record, we believe that applicant has demonstrated that its scented fragrance does function as a trademark for her thread and embroidery yarn. Under the circumstances of this case, we see no reason why a fragrance is not capable of serving as a trademark to identify and distinguish a certain type of product.”

Lessons From Orange-Scented Fracking Fluid: Flotek Industries

Since 1990, another criterion can be added:

  • Fragrance added cannot be useful or otherwise add functionality

In the case of OSEWEZ, the chemical added to create the fragrance did not add any functionality (like acting as a lubricant and thereby making the thread easier to pull).

By contrast, in 2015, the USPTO rejected a scent trademark application for orange-scented fracking fluid for Flotek Industries. See Wall Street Journal report here.

Flotek was a Texas-based producer of hydraulic-fracturing fluids which are used to extract natural gas and oil from underground. Flotek added a chemical called D-Limonene to its fracking fluids and the chemical gave its fluids an orange-like fresh-fruit smell. The USPTO rejected the registration of Flotek’s scent mark because the chemical that created the scent also had functional advantages, namely, they made the fracking fluids more biodegradable and helped ease the flow of well products to the surface. The Trademark Examiner cited Flotek’s own statement to Investor’s Business Daily wherein Flotek management was quoted as saying that their fracking fluids were “… potentially more environmentally friendly and can boost well output.”

Since the scent had functionality, the Examiner denied registration on the grounds that the scent failed to function as a trademark — that is, failed to function as a identifier of origin.

Play-Doh Application Rejected

On May 26, 2017, Hasbro’s trademark application was rejected. See here. The Trademark Examiner rejected the application because, generally, a scent for a toy modeling clay-type compound is not a unique identifier of modeling clay-type compounds. According to the Examiner, consumers are aware that such added fragrances are common and that such are intended to render the modeling compounds more useful or appealing, rather than to identify the source of the goods.

In this respect, the Examiner wrote:

“In the instant case, scented toy modeling compounds are common, as indicated by the attachments from Reallygreattoys.com, Specialneedstoys.com, Lakeshorelearning.com and Amazon.com (showing BoJeux Tutti Frutti Scented Modeling Dough). Thus, the practice of adding scents to toy modeling compounds is not distinctive in marketplace. Therefore, when purchasers are confronted by the scent of applicant’s goods, they will likely to perceive it as an incidental feature of the goods rather than perceiving it as a source indicator.”

The Examiner also held that Hasbro had not provided sufficient evidence that the fragrance had acquired distinctiveness despite being sold in commerce for more than 65 years. Hasbro was given the opportunity to offer more evidence that the scent had acquired distinctiveness. However, to date, Hasbro has not added to its application.

The Hasbro case presents a nice contrast to the OSEWEZ case. In applying for trademark status with respect to scented yarns and embroidery thread, OSEWEZ presented evidence that they were the only company adding fragrance, that they actively promoted the fragrance as a product identifier and that customers had come to recognize the fragrance as an identifier of OSEWEZ’s products. By contrast, with modeling clay-like compounds, adding fragrance is common in the marketplace. Hasbro offered no evidence that it marketed Play-Doh on the basis of its scent and Hasbro did not offer enough evidence that customers recognized the Play-Doh scent as an identifier or indicator of origin.

Contact Revision Legal

If you need more information about scent-marks or about any other type of trademark, call the experienced trademark attorneys at Revision Legal today. We can be reached by using the form on this page or by calling us at 855-473-8474.

 

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hacking statistics

2017 Security Breaches: Frequency and Severity on the Rise

We periodically update this post with recent data breach statistics. Now that we’re into the final quarter of 2017, it’s time to look back at the largest data breaches of 2017.

We shouldn’t be surprised at the number of security breaches that have already happened in 2017, looking back at the hacking statistics from 2015 and 2016. Nor should we be surprised about how rapidly cybersecurity attackers are evolving their techniques to affect more computers and devices than ever before. Hackers’ reaches will only keep expanding as time goes on.

Reflecting on Hacking Statistics From 2015 and 2016

Data from the two previous years clearly indicates a pattern in which cyber security breaches are occurring ever more frequently. In 2015, for instance, there were more than 177,866,236 personal records exposed via 780 data security breaches, according to the ITRC Data Breach Reports. In 2015, hacks occurred in every single state in the US, and the breakdown of the breached targets by type of entity is as follows:

  • Businesses were the target of 40% of the security breaches (312 breaches).
  • Medical and Healthcare entities made up 35.4% of data breach targets (276 breaches).
  • Government or military targets made up 8.1% of cybersecurity breaches (63 breaches).
  • Educational institutions accounted for 7.4% of data breaches (58 breaches).

In 2016, hackers not only logged an uptick of 38% in their use of phishing type security attacks according to Key findings from the Global State of Information Security® Survey 2017 by PricewaterhouseCoopers, but it also became well-known that hackers were finding devices to target beyond computer systems and networks. Unsecure wireless medical devices, mobile devices, and even cloud architecture all came under attack in 2016. With security breaches arising on multiple fronts, companies, healthcare systems, governmental and educational entities, and individuals started to realize how real the threat of cyber security attacks was. In order to combat attacks, people began to increase their use of data security protection measures in 2016:

  • 52% of individuals, businesses and entities utilized intrusion detection tools.
  • 51% actively monitor and analyze security information for their vulnerable systems.
  • 48% conduct vulnerability assessments.
  • 47% utilize security information and event management tools.
  • 47% regularly conduct cyber security threat assessments of their systems.
  • 45% are subscribed to a threat intelligence service.
  • 44% engage in data system penetration testing.

2017 High-Profile Breaches

Cyberattacks are happening in 2017 at double the rate that they occurred in 2016. According to Hackmageddon.com, there are dozens of cyberattacks each month, affecting the personal and user information of literally billions of internet users worldwide.

Below is a list of the biggest 2017 data breaches and hacks month-by-month from records tabulated and compiled by Hackmageddon.com.

January 2017 – 89 Cyberattacks

Winner: The Big Asian Leak

185 billion customers were affected by these hacks. Technically, these hacks took place from October 2015 to the end of 2016. However, the data was first offered for sale on the Darkweb in January 2017 by a dark web vendor called “DoubleFlag.” DoubleFlag offered to sell account information hacked from the most popular Chinese websites including NetEase, Inc, 126.com, 163.com, Yeah.net, QQ.com, Tom.com, Sina.com/Sina.com.cn, Sohu.com and eYou.com. The account information included names, addresses, usernames, passcodes, other personal information and some financial information for 1.85 billion customers — yes, billion. See report here.

The companies owning or running the websites have either denied they were hacked or have refused to comment.  

Honorable Mention: DC Police Department

In late January, the District of Columbia Police reported that ransomware infected 70% of the storage devices that record data from D.C. police surveillance cameras eight days before inauguration day. As reported here, city officials announced that the ransomware incapacitated police cameras between January 12 and January 15 and affected 123 of 187 network video recorders for public spaces across the city. Law enforcement was forced to reinstall software for all the cameras in a frantic effort in the lead-up to the inauguration.

February 2017 – 76 Cyberattacks

Winner: FunPlus

FunPlus, the company that makes a popular free-to-play mobile game called “Family Farm Seaside,” was hacked, compromising information on 3.3 million users. The hacker also stole product source code from the company. The hacker reportedly talked to reporters for Vice.com and said: “I decided I’m just gonna publish everything and let their investors see what a joke their security and s**t is.”

Runner-Up: Hitachi Payment Services

Hitachi Payment Services confirmed that, in mid-2016, malware hacked its servers and stole personal and financial data for 3.2 million customers in India including credit card information. This data breach was first reported in February 2017. The hack was particularly problematic because the malware securely deleted various tracing/tracking information making it impossible to know exactly what data was exfiltrated by the malware. The breach led to a massive downturn in credit card use and significant damage to revenues and profits.

March 2017 – 64 Cyberattacks

Winner: Dun & Bradstreet.

According to report, a 52GB database was stolen containing information on 33.7 million people. The data was arranged in searchable fields and contained specific details about each of the people involved from job title to email address, etc. According to the report, the employees in the database were from thousands of companies and government agencies, representing a large swath of the US corporate and government population. For example, the Department of Defense had over 100,000 employee records on the database, followed by the US Postal Service with over 88,000. AT&T, Boeing, Dell, FedEx, IBM, and Xerox were among the most named companies in the database, with tens of thousands of employee records each.

The database was used by marketers for targeted email promotions. So the data was not necessarily particularly personal in nature. But it was a sizable and large financial loss to Dun & Bradstreet to have the database stolen.

April 2017 – 85 Cyberattacks

Winner: R2Games

More than a million accounts were hacked and compromised from the servers of the online gaming company. Leaked data included usernames, passwords, email addresses, IP addresses, and other optional record fields, such as instant messenger IDs, birthdays, and Facebook related details. See report here.

May 2017 – 67 Cyberattacks

Winner: WannaCry Ransomware

While not a data breach, no 2017 cyberattack list would be complete without listing WannaCry. The ransomware infected computers and servers in 74 countries and, as the report says, affected hospitals, businesses like Fedex, rail stations, universities, at least one national telco, etc. Millions of users were impacted worldwide. See report here.

June 2017 – 64 Cyberattacks

Winner: 8Track

According to reports, 8Track, the most popular internet radio service provider, suffered a data breach which compromised 18 million user accounts. The data hacked included usernames, email addresses, and partially encrypted passwords. According to the owner of 8Tracks, the only accounts compromised were accounts that were authenticated through Github. When created, those accounts were not secured using two-factor authentication. Purported, accounts authenticated via Google or Facebook authentication were not affected by the hack.

July 2017 – 69 Cyberattacks

Winner: Reliance Jio

120 million customers of Reliance Jio had their personal data hacked. Reliance Jio is one of India’s largest mobile phone carriers. This was the largest breach of personal data ever in India. Among the data stolen was customer names, mobile numbers, email addresses, and the unique ID number of the phone. The hacked data was offered for sale. See report here.

Honorable Mention: HBO

Hackers obtained 1.5 terabytes of data from the computers of HBO. The hackers claimed to have released then-upcoming episodes of Ballers and Room 104. The hackers also claimed to have released a script from a then-upcoming episode of Game of Thrones. No ransom was demanded.  See report here.

August 2017 – 90 Cyberattacks Tabulated

Winner: Misconfigured Spambot

User data was leaked with respect to 700 million web users worldwide on many and various worldwide internet platforms. See report here. The misconfigured spambot essentially left the door open to anyone that knew the door was there and who wanted to download the data. It is unknown how many times the data was taken. Data leaked was email addresses, passwords and lesser amounts of personal contact information associated with the email addresses.

September 2017 (Through 9/15/17) – 41 Cyberattacks

Winner: Equifax

143 million customers of the credit reporting service had their personal and financial information stolen. The hack occurred over several weeks in May and June 2017 and was disclosed in late July. Since the first reports, Equifax has reported an additional 2 million customers were affected by the hack. See here. The Equifax data breach has subjected Equifax to government investigation.

Take Steps to Protect Your Business From Cyber Security Breaches

Most data security breaches are the result of an oversight somewhere in the system. Companies large and small are being hacked due to vulnerabilities in their computer systems that are identified and exploited by hackers. Companies need to follow cyber security best practices to protect themselves and their customers’ personal information. They need to give cyber security the time and resources necessary to rebuff cyber attacks and to neutralized cyber threats or face growing liability and higher fines.

Since the area of cybersecurity is constantly changing and evolving, cybersecurity needs to be regularly evaluated to determine whether particular security measures are effectively addressing threats and risks. Only through diligent and consistent efforts can business rise to the challenge posed by hackers invading their computer systems.

Contact Revision Legal

Cyber security breaches are a real threat, whether it is to your business, the institution that you work for, or to your own personal computer system and devices. When you are hacked, or information that was entrusted to you was potentially accessed in a data security breach, you need to act quickly to understand your rights and obligations concerning notification of potential victims. You should retain the assistance of an experienced cyber security attorney like the professionals at Revision Legal. Contact us today using the form on this page or by calling us at 855-473-8474.

Photo Credit to Flickr user Jim Kaskade.

Editors note: this was originally published in December, 2016. It has been updated for clarity and comprehensiveness.

7 Lessons in Trademarks: Smashburger/In-N-Out Burger Battle Royale

According to recent news reports, fast-food hamburger chain, In-N-Out Burger (“In-N-Out”) has filed a federal lawsuit alleging trademark infringement against Smashburger, another fast-food hamburger chain. The trademark fight is over names for various burgers. The case has an interesting history and provides some useful lessons about trademark procedure and law.

In-N-Out was founded back in the 1940s in California. It has slowly expanded over the years and now has restaurants in six states, mostly in the US south and southwest. Since the 1960s, In-N-Out has held registered trademarks for its sandwiches called “DOUBLE-DOUBLE” and the “TRIPLE TRIPLE.”

Smashburger, by contrast, is only about 10 years old. Smashburger began operating in Denver and has quickly expanded, now operating more than 350 restaurants, including 36 restaurants in California. In July of 2017, in celebration of its 10-year anniversary, Smashburger began selling a sandwich called the “TRIPLE DOUBLE” burger. The “double” and “triple” adjectives are referencing layers of cheese and beef. For example, the DOUBLE DOUBLE is two beef patties and two slices of cheese whereas the TRIPLE DOUBLE is two beef patties and three slices of cheese.

In its lawsuit, In-N-Out claims that TRIPLE DOUBLE infringes on its trademarks because it is likely to confuse and mislead the consuming public. In-N-Out also alleges trademark dilution and unfair competition under federal and California state law.

Lesson One: Lead Time is 9-12 Months for Intent-to-Use Applications

As noted, Smashburger wanted to launch its new menu item as part of its 10-year anniversary. It filed its intent-to-use applications on November 14, 2016 with the U.S. Patent and Trademark Office (“USPTO”). This offers some guidance in terms of lead time; if all goes well, an application might be finalized within nine to 12 months. In particular, the applications were filed November 16th and approved for publication by the Examiner on April 2, 2017.

Lesson Two: Conceptually Weak Marks can be Registered

In general, trademarks can be ranged on a spectrum of distinctiveness. At one end are marks that are entirely generic, without distinctiveness (such as colors). At the other end of the spectrum are marks that are fanciful and inherently distinctive (like “Exxon”). The purpose of a commercial mark is to identify your business as the source of that particular good or service.

In this respect, DOUBLE-DOUBLE and similar marks are somewhere in the middle of the spectrum, leaning towards conceptually weak. There is nothing about the DOUBLE-DOUBLE mark which, in the abstract, would make a typical consumer think “oh, that’s a burger from In-N-Out.”

However, that did not preclude In-N-Out from registering its various marks. AND it did not preclude Smashburger from obtaining a favorable result for “TRIPLE DOUBLE” from the trademark examiner at the USPTO.

Lesson Three: Monitor USPTO Publishings and be Prepared to Oppose

As noted, in this case, the USPTO approved Smashburgers’ applications on April 2, 2017. Smashburger’s application was published in the April 4, 2017 Gazette. See here.

In-N-Out, presumably had/has a trademark monitoring regime that regularly checks the USPTO Gazette and other publicly available databases for similar marks to guard against possible trademark infringements.

In this case, In-N-Out’s monitoring regime discovered Smashburger’s applications for TRIPLE DOUBLE and In-N-Out began an aggressive defense of its trademarks. Normally, the opposition period is 30 days. But, extra time can be obtained, and, based on the dates, In-N-Out asked for extra time. On June 2, 2017, In-N-Out filed its Notice Of Opposition. See Notice here.

Lesson Four: What is Notice of Opposition?

As the name suggests, a trademark opposition is a third-party’s opposition or objection to the registration of your trademark. The Notice of Opposition initiates an administrative proceeding similar to a civil lawsuit filed in federal court. The Notice serves the same function and looks similar to a Complaint. The proceeding is handled by administrative judges working for the Trademark Trial and Appeal Board (“TTAB”). The applicant has an opportunity to respond and file counterclaims. The case proceeds via documentary filings and transcriptions of testimony.

In this case, In-N-Out challenged the Smashburger applications on the grounds that TRIPLE DOUBLE would “…. likely to cause confusion, cause mistake, or deceive …” This is a claim of infringement under the Lanham Act, 15 U.S.C. § 1052(d).

In-N-Out also alleged that “[e]ach of Applicant’s Marks is likely to dilute the distinctive quality of Opposer’s Marks under Section 43(c) of the Lanham Act, as amended, 15 U.S.C. § 1125(c).” This is a claim of trademark dilution. “Dilution” is defined as “the lessening of the capacity of a famous mark to identify and distinguish goods or services, regardless of the presence or absence of (1) competition between the owner of the famous mark and other parties, or (2) likelihood of confusion, mistake or deception.” 15 U.S.C. § 1127.

Lesson Five: Aggressive Response to Aggressive Litigation — Burger Battle Royale

As noted, the applicant must file an Answer to the Notice of Opposition and has the opportunity to file counterclaims. In the case, Smashburger filed an Answer and a counterclaim seeking to invalidate several of In-N-Out’s trademarks on the grounds of abandonment. See here.

Lesson Six: What is Trademark Abandonment?

Under the Lanham Act, a trademark is considered abandoned if “its use has been discontinued with intent not to resume such use.” The Act further provides that “[n]onuse for 3 consecutive years shall be prima facie evidence of abandonment.” 15 U.S.C. § 1127. Note that two elements must be shown: no use and intent not to resume use.

The legal doctrine of abandonment is premised on the concept that trademark rights flow from use in commerce. If a mark owner stops using a mark, the mark falls into the public domain and is free for all to use. That is, “[a]bandonment paves the way for future possession and property in any other person.” McCarthy on Trademarks, § 17:1 (4th ed.2001)

Thus, in this case, if Smashburger successfully proves abandonment, then Smashburger will be free to use In-N-Out’s mark (if it wanted to) and, more importantly, the “confusingly similar” issue will vanish. Smashburger is seeking to cancel In-N-Out’s registrations related to TRIPLE TRIPLE and QUAD QUAD since, as Smasherburger claims, In-N-Out no longer uses the marks.

Lesson Seven: Off to Federal Court

As noted, in late August 2017, In-N-Out filed a lawsuit in federal court. This essentially removed the case from the TTAB. This is not uncommon in Opposition proceedings and the Opposition proceedings before the TTAB will be held in abeyance until resolution of the case in federal court.

Contact Revision Legal

We here at at Revision Legal will be watching the case with interest. Revision Legal offers a wide array of legal services related to intellectual property and business law, including all services related to trademarks. We can be reached by using the form on this page or by calling us at 855-473-8474.

 

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Copyrighting Design Elements of a “Useful Item”: Lessons From Star Athletica

In general, no copyright protection is available for the design of something that is “useful.” “Useful” is defined by the Copyright Act as something with “an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” 17 U.S.C. § 101. For example, the designs for claw or ball peen hammers are not eligible for copyright protection.

However, there is an exception for copyrighting design elements of a useful article “if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.” 17 U.S.C. § 101. These are the so-called “separate-identification” and “independent-existence” requirements for copyrighting the design features of a useful article.

Star Athletica: Clarifying “Separate-Identification” and “Independent-Existence”

In March of 2017, the US Supreme Court handed down its decision in Star Athletica, L.L.C. v. Varsity Brands, Inc., 137 S. Ct. 1002 (2017). We discussed the lead-up to the case here.

Star Athletica concerned two-dimensional designs on the surface of cheerleading uniforms. The court held that the designs were copyrightable and, in the process, clarified how the “separate-identification” and “independent-existence” requirements should be applied.

The court articulated that the first requirement in this manner: “The first requirement — separate identification — is not onerous. The decision maker need only be able to look at the useful article and spot some two- or three-dimensional element that appears to have pictorial, graphic, or sculptural qualities.” With respect to the cheerleading uniforms, this was easy. The surface of the uniforms had an “arrangement of colors, shapes, stripes, and chevrons on the surface” that one could identify as having pictorial, graphic, or sculptural qualities.

The court then defined the second requirement thusly: “The decision maker must determine that the separately identified feature has the capacity to exist apart from the utilitarian aspects of the article. … In other words, the feature must be able to exist as its own pictorial, graphic, or sculptural work as defined in § 101 once it is imagined apart from the useful article.” Again, the court found this easy. If the colors and stripes and chevrons were separated and then applied to a painter’s canvas, according to the court, said canvas would qualify as a two-dimensional work of art and would be copyrightable. In addition, applying the designs to another medium would not replicate the uniforms. As such, the decorations are separable and could exist independently from the uniforms and were eligible for copyright protection.

The court made it clear that these inquiries are made from the vantage of the perceiver, that is how the article and the design elements are perceived. The court rejected any need to consider how or why the articles were designed.

Concurrence and Dissent

The majority’s opinion was signed by five Justices. As for the remaining three Justices, Justice Ginsburg concurred in the result but not in the opinion. Justice Ginsburg felt that the majority’s analysis was unnecessary because, for her, the designs at issue are not designs of useful articles but were themselves copyrightable pictorial or graphic works reproduced on useful articles

Justices Breyer and Kennedy dissented arguing that the designs could not be separated out from the uniforms. As Justice Breyer phrased it, if you painted the designs on a canvas, you would only have “… pictures of cheerleader uniforms. And cheerleader uniforms are useful articles.”

The core issue seemed be a difference of opinion concerning how to define the “usefulness” of a cheerleading uniform. The majority took the view that removing the designs did not make the uniforms useless. Even blank all-white uniforms can still be used by cheerleaders to lead cheers. The dissent took the view that what makes a cheerleading uniform is the particular arrangement of colors, stripes and chevrons. As such, the designs cannot be separated out.

Recent Lower Court Decisions on Copyrighting Design Elements

Since the Supreme Court’s decision in March 2017, at least two lower federal courts have had occasion to apply the Star Athletica test.

In the case of Design Ideas, Ltd., v. Meijer, Inc., No. 15-cv-03093 (US Fed. C.D. Ill. 2017), the plaintiff claimed that Meijer, a chain of grocery and general merchandise stores, infringed on its copyright for Sparrow Clips. A Sparrow Clip is a clothespin with a silhouetted bird design on top with a beak. Plaintiff claimed copyright only in the separate bird portion and the color selection shown in each set of Sparrow Clips.

The lower court applied the Star Athletica test and found that the bird portion of the Sparrow Clips was subject to copyright protection. The court said that the first requirement was met. The bird portion could be perceived as a three-dimensional work of art separate from the useful article. The bird portion also met the second requirement: the bird portion would qualify as a protectable sculptural work on its own if it were imagined separately from the useful article and if it had it been originally fixed in some tangible medium other than a clothespin.

The court also rejected the defendant’s additional argument that the separated bird portion was, by itself, useful because the separate bird portion could be hung from a rod or on a string by its beak. The court rejected that argument essentially saying: “What is the use of a bird beak hanging on a rod or by a string?”

The second case was Jetmax Limited v. Big Lots, Inc., No. 15-cv-9597 (KBF) (US Fed. S.D. NY). This case involved ornamental covers for a light set comprised of a series of molded, decorative tear shaped, wire frame covers over a string of lights. The plaintiff alleged that Big Lots, a chain of retail stores, sold a light set that was substantially similar. Everyone agreed that the light set was “useful” with the intrinsic utilitarian function of providing light. The parties however disagreed about whether the covers contained artistic elements that were sufficiently separable and independent to warrant copyright protection.

The court applied the Star Athletica test and concluded that the design elements of the plaintiff’s light set were copyrightable. The court noted that the designs on decorative covers could be identified separately from, and were capable of existing independently of, the utilitarian aspects of the article. The court concluded: “The primary purpose of the cover is artistic; once the covers are removed, the remainder is a functioning but unadorned light string.”

Lessons

It is always tough to judge how much impact any given Supreme Court decision will have. But the Star Athletica simplifies how to determine if design elements are protectable. As such, it is likely that more artistic works and designs will receive copyright protection.

Contact Revision Legal

If you want more information or need legal guidance related to copyrights, contact the professionals at Revision Legal. Revision Legal offers a wide array of legal services related to intellectual property and business law. We can be reached by using the form on this page or by calling us at 855-473-8474.

 

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trademark genericide

Trademark Genericide: How To Protect Your Brand

Xerox, aspirin, thermos, and hoover were all once trademarks that lost their protected status because their names became generic. Most recently, Google’s trademark status was challenged unsuccessfully as reported here.

The US Court of Appeals ruled this month that Google still retains its trademark even though “google” has become synonymous with searching the internet. While “google” has become a verb for many, Google is a whole lot more. The court also noted that trademark genericide occurs when the name has become an “exclusive descriptor” that makes it difficult for competitors to compete unless they use that name.

What is a Trademark?

A trademark is a name of a product or service that is used in commerce so that customers can identify the source of the good or service. There are several categories of trademarks. The most successful trademarks are often suggestive (e.g., MicroSoft for software for microcomputers), arbitrary or fanciful (e.g., Apple for laptops and computers), as the distinctiveness of the trademark sticks in the memory of the consumer.

Trademarks can also be considered descriptive, or generic, but these marks are often not legally protectable under trademark law.  

Can a Protected Trademark Become Generic?

When a registered trademark owner fails to police and enforce the unauthorized use of their trademark, the trademark owner risks losing the mark through a form of abandonment known as genericide. Genericide is when a protected mark becomes a generic term for the item it is associated with over time. A trademark suffers genericide when the trademark or tradename becomes so commonly used by the general public that the trademark becomes synonymous with the product, and if the entity that owns the trademark does not fight to keep the trademark protected, the trademark or tradename can become a generic term, i.e., it can lose its legally protectable distinctness.

Genericide is when a protected mark becomes a generic term for the item it is associated with over time.

Genericide has happened to many unfortunate trademarks in the past. Some examples of generic terms that are used commonly today that were once trademarks include:

  • Xerox, commonly used to refer to photocopy.
  • Aspirin, generic for acetylsalicylic acid, which is commonly used to treat headaches.
  • Laundromat, for a coin operated laundry store.
  • Thermos, commonly used to refer to a vacuum flask thermal insulator.
  • Videotape, generic term used for the cartridge used in VCRs.

Avoiding Trademark Genericide

There are many things that a trademark owner can do to protect trademark rights from genericide. Some ways to help avoid a trademark from becoming generic include:

  • Monitoring the use of the trademark.
  • Enforcing trademark rights.
  • Educating companies and the public about the proper use of the trademark.
  • Always presenting the trademark in the proper form, i.e., always in the proper font/stylization, or all capital letters, and with the appropriate trademark symbol (e.g., ® or ™).
  • Never using the trademark in a generic manner.
  • Make clear to consumers that the trademark represents the brand and not the product itself.

Registered trademarks can often be the most valuable assets of your business and, unless you enforce your trademark rights consistently and regularly, you may lose those assets. Through internal education and external enforcement, your company and ensure that you protect your company’s assets and ensure that they do not become generic.

Contact a New York Trademark Attorney

Trademark genericide is a tragic way for a mark to lose its protected status. When you need assistance securing, protecting and enforcing trademark rights, you can contact the experienced trademark lawyers at Revision Legal. We can be reached today by using the form on this page or by calling us at 855-473-8474.

protect trade secrets

How to Protect Trade Secrets Under Federal Law

Trade secrets are among the most valuable forms of intellectual property owned by any business. Those trade secrets should be and must be protected from misappropriation and unauthorized disclosure. As recently reported here, trade secret litigation is on the rise, particularly in federal courts since the passage of the Defend Trade Secrets Act of 2016. Given the rise workforce mobility, marketplace pressures, and technological advances, how to protect trade secrets is a growing concern. Recent changes in patent law suggests a weakening in the protections provided by patent law. Consequently, use of trade secret law has increased.

How to Protect Trades Secrets Under Federal Law

To protect trade secrets, two federal statutes are particularly relevant – the Economic Espionage Act of 1996 (“EEA”) and the Defend Trade Secrets Act of 2016 (“DTSA”) both of which are now codified at 18 U.S.C. § 1831 et seq.

The EEA is a criminal statute. It criminalizes economic espionage and theft of trade secrets. The economic espionage provisions punish those who knowingly steal trade secrets, OR attempt, OR conspire to steal trade secrets with the intent or knowledge that such theft will benefit a foreign government or agent. 18 U.S.C. § 1831.

The more general theft of trade secrets provisions punishes theft of trade secrets when the theft is intended to economically benefit someone other than the owner of the trade secret, is intended to harm or injure the owner thereof related to goods or products produced for or placed in interstate or foreign commerce. 18 U.S.C. § 1832.

The DTSA is a civil statute. The DTSA provides a civil remedy if trade secrets are stolen and if such trade secrets relate to goods or products produced for or placed in interstate or foreign commerce. 18 U.S.C. § 1836.

For both the EEC and the DTSA, “trade secrets” are created by the interplay of three components;

  • Information, specifically”… all forms and types of financial, business, scientific, technical, economic, or engineering information, including patterns, plans, compilations, program devices, formulas, designs, prototypes, methods, techniques, processes, procedures, programs, or codes…” IF
  • The owner of the information has taken reasonable measures to keep such information or device secret AND
  • The information “derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable through proper means by, the public.” 18 U.S.C. 1839(3).

“Misappropriation” is defined as an unconsented disclosure or use of a trade secret by one who used improper means to acquire the secret, or, at the time of disclosure, knew or had reason to know that the trade secret was acquired through improper means, under circumstances giving rise to a duty to maintain the secrecy of the trade secret, or derived from or through a person who owed such a duty. 18 U.S.C. § 1839(5). Note, however that reverse engineering and independent derivation are not considered theft of trade secrets. 18 U.S.C. § 1839(6).

Note that, unlike the EEC, the DTSA does not allow civil prosecution of attempted theft of trade secrets or conspiracies to steal trade secrets.

Note also that the DTSA is similar to the Uniform Trade Secrets Act which has been enacted in various forms in 48 states. See here.

If you have a claim for trade secret misappropriation, it is highly recommended that trade secret owners sue under both federal and state laws.

Remedies Under DTSA

Under the DTSA, civil actions can be filed in federal court seeking a number of remedies including:

  • Injunctive relief
  • Ex parte seizure of property (e.g., computers) containing the alleged trade secrets or the trade secrets themselves (e.g., customer lists) where Rule 65 injunctive relief is insufficient
  • Damages
  • In lieu of other damages, royalties for future use of the trade secret “in exceptional circumstances” where an injunction is “inequitable”
  • Punitive damages (if theft is willful/malicious)
  • Attorneys’ fees (if theft is willful/malicious)

Obligations Imposed by the DTSA: Changes to Employee and Nondisclosure Agreements

While the DTSA provides positive legal protections for trade secret owners by creating a federal cause of action, the DTSA also creates immunities where disclosure is made to the government and imposes obligations with respect to notice of such immunities.

Government, Attorney, and Court Access to Your Trade Secrets

The DTSA provides for immunity from criminal and civil prosecutions for disclosure of trade secrets under certain circumstances, including:

  • Disclosure in confidence to a federal, state, or local government officials, directly or indirectly, for the sole purpose of reporting or investigating a suspected violation of law
  • Disclosure in confidence to an attorney for the sole purpose of reporting or investigating a suspected violation of law
  • Disclosure made, under seal, in a document filed in a lawsuit
  • Disclosure to a person’s attorney in a retaliation lawsuit by said person’s employer

See 18 U.S.C. § 1833.

Notice Required of the Immunities

The DTSA mandates that employers “… shall provide notice of the immunity set forth in this subsection [18 U.S.C. § 1833] in any contract or agreement with an employee that governs the use of a trade secret or other confidential information.” An employee is defined to include consultants and contractors. Although not defined, it is likely that courts will broadly construe a “contract or agreement with an employee.” It is probably wise to include the notice provision in any contract or agreement that relates in any way to trade secrets. Likewise, if your company owns trade secrets, it is also probably wise to review the employee handbook.

If your company has trade secrets, it is highly recommended that you seek legal advice and review of employee and nondisclosure agreements.

Contact Revision Legal

If you have any concerns about whether your employee contracts, employee handbooks or nondisclosure agreements comply with the DTSA or if you need more information on trade secret protection, contact the professionals at Revision Legal. Revision Legal offers a wide array of legal services related to intellectual property and business law. We are experienced in conducting IP audits to identify what IP you have and how best to provide the most expansive and solid legal protections. We can be reached by using the form on this page or by calling us at 855-473-8474.

 

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Image credit to Mark Williams