Drone Patents

Drones, commonly known as unmanned aerial vehicles (UAV) or unmanned aircraft systems (UAS), are the subject of a rapidly increasing number of patents within the U.S. Patent and Trademark Office (USPTO).  These patents are directed to subject matter, such as the manufacturing of drones and drone components (e.g. U.S. 9,242,571); the use of drones for delivery (e.g. U.S. 9,244,147); the use of drones for agriculture (U.S. 8,731,836); the use of drones for inspection/surveillance (U.S. 9,242,728); and the use of drones for aerial refueling (U.S. 9,227,735).

 

Consequently, there are several ways to pursue patent protection for a drone-related invention.  Some examples include protecting a drone apparatus comprising specific hardware components; a method/process for using a drone to perform various applications; and/or a drone system involving the interaction of specific hardware and/or software components.  In addition, the aesthetic appearance of the drone (or its various components) may be eligible for patent protection via a design patent.

 

Prior to deciding the type of patent application to file or the subject matter to be included in the patent application, it is very important to identify the novel aspects of the drone invention.  As more patent applications continue to be filed daily in this industry, there is a growing number of potential prior art references to be considered.  Thus, it is critical to work with a patent attorney that can develop and implement a customized patent strategy for you based on your commercial and patent goals surrounding your drone invention.

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How to Remove Defamatory Search Results From Google

Online Advertising: Top 5 Things You Need to Know

Whether you are new to the online advertising game or an old pro, there are several things that you must take into consideration if you plan to advertise online (which, in today’s world, is basically everyone).  The Federal Trade Commission (“FTC”) is the governmental agency that regulates advertising and issues guidelines on how best to advertise within those regulations.  For your convenience, Traverse Legal has compiled the Top 5 Things you need to know if you choose to advertise online.

#1 – The Original Rules of Advertising Apply to Online Advertising

As with any type of advertisements, online advertisements must be truthful and not misleading; backed up by evidence (i.e. substantiated); and cannot be unfair (i.e. it is likely to cause consumer injury that is not outweighed by benefit to consumers).

#2 – All Disclaimers and Disclosures Must Be “Clear & Conspicuous”

The FTC’s main goal is to protect consumers from false and deceptive advertising.  To this end, the FTC requires that disclaimers and disclosures be “clear & conspicuous.”  In determining whether a disclosure is “clear & conspicuous” the FTC considers factors such as the proximity and placement of the disclosure to the claim; prominence of the disclosure; whether the language of the disclosure is understandable and audible; etc.  Another important thing to consider is whether the disclosure is clean & conspicuous across all devices the advertisement is accessed on (i.e. computer, tablet, and mobile phone).

#3 – Material Connections with Endorsers Must Be Disclosed

Want to have an actor or expert endorse your product? Maybe you want to indicate that your product has been tested by an independent lab?  Be prepared for more disclosures! The FTC requires advertisers to “clearly and conspicuously disclosure either the payment or promise of compensation prior to and in exchange for the endorsement.”

#4 – Comparative Advertising Cannot Bash the Other Brand

The FTC defines Comparative Advertising as “advertising that compares alternative brands on objectively measurable attributes or price, and identifies the alternative brand by name, illustration or other distinctive information.”  Comparative Advertising is not a green-light to bash another brand in favor of your own.   Rather, it is meant to be a source of information for consumers to help them make rational purchasing decisions.

#5 – Non Compliance Could Mean Big Trouble

If your non-compliant advertisement either gets reported or the FTC finds it themselves, you could be subject to an injunction, fines up to $16,000, and/or be responsible for issuing consumer refunds.  To avoid such ramifications, it is beneficial to make sure your advertisement complies with regulations prior to publication.

These five pointers are only the “tip of the iceberg” when it comes to FTC online advertising regulation.  It is important to remember that all advertisements are unique and are evaluated on a case-by-case basis.  However, keep these pointers in mind and you will be on you way to a legally sound online advertising.

Are you thinking of developing online advertising for your brand or product and want to know the acceptable parameters? Do you need your current online advertisement reviewed to ensure continued legality? Traverse Legal can provide detailed research assessments catered to your particular advertisement so that you can breathe easy knowing that you are in compliance with the FTC.  Give Traverse Legal a call today!

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Entertainment Law and IP Rights: What Every Celebrity and Athlete Should Know

Entertainment law encompasses several areas of law applicable to celebrities, athletes, actors, musicians, models and entertainers, among others.  One of the most important involves intellectual property law.  IP rights come in many different forms, and “stars” (aspiring or otherwise) should know their rights.

1. Right of Publicity (i.e. one’s right to prevent the misappropriation of her name/likeness for commercial gain).  Each state has different laws related to this, with some states providing greater penalties (e.g. California and New York).  When a third party, such a product or service, utilizes your name or likeness (e.g. image, voice, etc.) for endorsement or other purposes with your permission, you may have a cause of action.  You may be entitled to damages, including royalties.
2. Copyright (i.e. one’s right to prevent the unauthorized copying or reproduction of her artistic expression).  While you immediately have copyright rights under common law the moment you create your original work of authorship, you may wish to secure a copyright registration.  You also need to understand whether you have licensed or assigned such rights to third parties.
3. Trademark (i.e. one’s exclusive right to her brand in order to avoid consumer confusion as to source).  Whether you are selling products/services under your name or another brand you have created, you will want to pursue trademark registration, monitor against unauthorized third party use and take action as needed to maintain your trademark rights.  Doing so will allow you to monetize your trademark, typically in the form of a trademark license agreement (perhaps as part of a Merchandise Licensing Agreement or otherwise).

Knowing these entertainment rights will allow one to secure her intellectual property, monetize it and enforce it.  Failure to do so can result in abandonment of rights.  More often than not, you will be in a better position to negotiate with talent agencies and third parties if you have secured your IP and are knowledgeable about how to properly license it.

Having represented athletes (including NFL players and PGA golfers), supermodels, authors, actresses, musicians (including post-mortem on behalf of family trusts), we recognize that your unique skills and talents have enabled your career, but all too often we see an inattention to the above IP rights create difficulties as you try to create additional streams of income or seek to capitalize on your legacy.  Given today’s explosion into social media and the Internet’s online world, you must be mindful of unauthorized use of your digital and media rights beyond what had traditionally been print, film, music, television or theater considerations.  As a celebrity or athlete, you will attract infringers and copycats, and you should know your rights.

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Reasons for Pursuing a Patent

A patent provides its patent owner with the right to exclude others from making, using, selling, offering for sale, and importing into the U.S. whatever is claimed in the patent.  However, there are a number of different reasons for pursuing a patent.  These reasons may vary depending on whether you are an independent inventor, a startup company, or a large/established company.  Just a few of the many reasons for pursuing patent protection are outlined below.

 

First, patents specifically prevent your competitors from making, using, selling, offering for sale, and importing into the U.S. your patented invention.  Many companies file patents for alternative ways of manufacturing that will never actually be used by the patenting company.  The only reason for such patent filings is to block competitors from manufacturing alternative competing products using alternative methods.  This will most certainly provide a crucial competitive advantage to companies within their respective fields.

 

Second, a patent will likely provide reasons for investors to invest in a business or technology.  Since patents are usually the strongest intellectual property asset of a business, investors often view patents as a general indicator of value.  As a result, a patent (or a pending patent application) will typically help convince potential investors of the growth potential of a business in order to make a lucrative deal.

 

Third, patents often serve as great marketing tools for products since marking your products as “patented” offers value in the eyes of many consumers.  Consumers commonly associate a patented product as being of high quality and technologically advanced.  Even using the term “patent pending” on a product provides significant marketing advantages for the product, while acting as a deterrent to potential infringers.

 

Fourth, patents (and filed patent applications) can sometimes be a quantifiable measure of an individual’s importance as an employee and as an inventor.  The number of patents an individual is named on an inventor on can be used for salary negotiations and other career milestones.  Also, depending on the company, individuals may even be eligible for bonuses or incentives from their employers.  Some companies like to reward employees that bring them new, commercial ideas.

 

Fifth, patents are often used as a potential revenue source to the patent owners.  Patents (and pending patent applications) can be sold or licensed for royalties.  A number of factors affect the value of patents, including the scope of the claims, the number of claims, and the years of life remaining on a patent.

 

Feel free to contact a Traverse Legal patent attorney today at 866-936-7445 for a free consultation to discuss your patent needs.

 

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Trademark License Agreement – Top 5 Considerations

Trademark owners, at one time or another, must consider whether to license certain rights in its trademark to others.  The reason to do so is simple: monetize the trademark rights in the form of licensing fees.  While a trademark licensing agreement may come in many forms (e.g. Merchandise License Agreement, Software License Agreement, etc.), it is important that it be documented in a written and signed (by both parties) agreement.  While there are numerous considerations when structuring a trademark license, with which a trademark license lawyer can help, trademark owners should, at a minimum, consider the following:

1. License Grant

Is it exclusive or non-exclusive?  Is it limited by geographic location/territory or worldwide?  Is it restricted to a particular product/service type?  Is it sublicensable, assignable?

2. License Fees

How much and will there be a minimum?  How will the amount be calculated?  Will there be audit rights or entitlement to an accounting?

3. License Term

Will it be a number of years or perpetual?  How does it renew?  How will it terminate?

4. License Quality Control

How will such licensed use be governed?  Will prior review of designation/markings be required?  Will samples be provided?

5. License Representations and Warranties

What will Licensor represent and warrant?  What will Licensee represent and warrant?  Will there be indemnification for breach of any such representation or warranty?

Making sure that these items are considered will make negotiating, drafting and finalizing a trademark license agreement far more efficient, and hopefully successful.  By properly documenting your trademark ownership, the scope of the license and other key terms, you will be in a better position to maintain your valuable trademark rights while mitigating against attempts to invalidate your trademark based upon naked licensing or other claims.  While forms may be available online, the devil is in the details and you would be well-served to understand what you are doing with what may be your company’s most valuable asset.  Far too many times one’s failure to heed the above considerations surfaces in trademark disputes and can be detrimental to maintenance of trademark rights and monetization of such trademark rights.

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Online Review of Your Employer

There are an ever increasing number of online review websites. One of the more popular online review websites relates to online reviews by employees of their employer. The most popular of these websites is one known as Glassdoor. Glassdoor has been online since 2007 and has become the most popular site for online reviews of employers by employees.

As one might expect there have also been an increase in the number of claims and disputes which are related to those reviews by employers against anonymous employees who post the reviews. The Glassdoor’s public policy is that it will seek to protect the anonymity of the posters to the extent that is reasonable. This means that if the employer files a lawsuit and issues a subpoena in an effort to identify the anonymous poster, Glassdoor will review the subpoena and the content of the review carefully and, in many instances, may oppose the subpoena and refuse to disclose the information that may reveal the identity of the employee absent a review by the Court and a Court Order.

When can an employer initiate suit for a bad online review? The law requires that the content of the review post must be defamatory. This means that the employee must have made a false statement of fact that portrayed the employer in a “poor light”. Many states will also require that the online review be maliciously false which requires proof that the employee knew or should have known that the information was false and posted it anyway. Simply expressing an opinion concerning the employee’s prior work place is generally protected speech under the First Amendment and is not considered defamatory.

Employers over the past several years have initiated lawsuits for reviews on Glassdoor to reveal the identity of employees and make claims for defamation against the employee, or in a case where it is obvious that the employee can be identified without a subpoena, are simply filing suit against the employee. Generally, these employer suits are challenging as Courts tend to favor the finding that a post on a review site, such as Glassdoor, is a matter of opinion or hyperbole despite an arguable false statement of fact. Given that online reviews carry some weight, according to many surveys that assess the persuasiveness of online reviews, employers are finding it increasingly difficult to simply ignore the online reviews. The best practice is to have the matter carefully reviewed by an attorney to weigh both the pros and cons before initiating a lawsuit concerning an online review of your company by a former employee.

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Revenge porn victim?

Has someone posted explicit photos of you on the internet without your consent?   You may be the victim of revenge porn.

What is revenge porn?   Revenge porn is usually defined as revealing or sexually explicit images or videos of a person posted on the Internet, typically by a former sexual partner, without the consent of the subject and in order to cause them distress or embarrassment.   Simply put it is typically  the non-consensual sharing of nude photos on the internet.

Revenge porn is a serious problem and there are an ever growing number of states that have adopted civil and/or criminal penalties for individuals who post revenge porn.  As of this writing there are 34 states that have revenge porn laws on the books  that make revenge porn a criminal offense and 7 more states with bills pending.  There are 11 states that have revenge porn laws with civil remedies.  Revenge porn laws and their remedies vary widely from state to state so it is necessary to consult your own state laws concerning the available remedies you may have as a victim of revenge porn.  Remedies may include damages sustained against the poster and an order to remove the explicit photograph from the site where it appears.

There is also discussion afloat that a new federal revenge porn law and a bill was recently introduced in Congress and if adopted would have nationwide application and broaden remedies available for revenge porn victims.  The bill would carry civil penalties and up to five years in prison for a violation.  Sites such as Reddit, Facebook, Google and Twitter have all recently banned non-consensual nude photos as part of their policies and others are certain to follow.

As a victim of revenge porn a priority for you may be the removal of the explicit photos online.  If you can assert facts to establish the posting is as a result of revenge porn then the posting may violate the terms of service and a well crafted letter from an attorney may result in the removal of the revenge porn from the site.   If you are the owner of the explicit photograph, which is often the case, and can establish the poster posted the explicit photograph without your consent you may be able to claim copyrights to the photograph and send a notice under the Digital Millenium Copyright Act (DMCA) demanding removal of the photograph from the website.

If you are the victim of revenge porn, you may have revenge porn or other remedies available to assist in the removal of your sexually explicit photos online.  Contacting an experienced attorney to assist you is often the best path to success in removal of online revenge porn photos.

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Actual Damages, Presumed Damages and Defamation Claims

A false and defamatory statement published about you or your business does not necessarily translate into a valid legal claim unless you can prove actual damages arising from the defamatory statements.  There are classifications of libel and slander, often referred to in many jurisdictions now collectively as defamation, that will allow a defamation claim to proceed without proof of actual monetary damages, under what is known as the doctrine of presumed damages that suggests that there is at lease some harm to reputation that results from the publication of defamation without necessity of proving actual monetary harm.  Usually, but not always, the published defamation must be classified as defamation per se,  which comprise special categories considered under the law as particular harmful defamation.  False statements imputing lack of chastity to a female, impugning business reputation, falsely alleging a loathesome disease, or falsely accusing one as guilty of a criminal act, are traditionally considered defamation per se where no actual provable monetary loss is required in order to pursue a defamation claim.

Some states such as Missouri no longer have defamation per se categories and require proving actual or special damages in order to recovery in a claim for defamation.  California and many states continue to recognize all four traditional defamation per se categories of defamation under which damages may be presumed, though some states further restrict damages so “nominal” damages if actual or special monetary damages cannot be proven.  Other states take a middle ground approach and adopt some but not all traditional defamation per se categories such as Michigan which recognizes lack of chastity or false claims of criminal conduct as defamation per se claims but importantly not claims relating to business reputation which in Michigan requires proof of actual or special damages.

If you file your defamation claim you need to be aware that unless it fits into a defamation per se category that merely alleging false and defamatory statements is not enough, and that you will need to plead and prove actual damages to sustain you defamation claim which in many instances is not an easy task.

A thorough review of your defamation claim is advised before investing the significant funds required to engage in a lawsuit to insure that you will be able to prove the damages necessary to succeed in your defamation case.

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Top 10 Startup Considerations

Startups face a multitude of decisions: some have to be made at the outset and many along the way. Having experienced legal counsel assist with making those decisions at the start can go a long way to ensure that the decisions made down-the-line are in furtherance of achieving the company’s goals, rather than fixing issues that could have been avoided if properly addressed during the earliest stages. Below is a list of ten considerations we, as startup lawyers, feel that every entrepreneur needs to carefully evaluate when launching a startup.

1.  Entity Selection

The first decision for any entrepreneur with a new business idea is to select the type of business entity to form in order to run the business, limit liability and achieve desired tax treatment. Corporations and LLCs are the typical options, though not the only ones. Experienced corporate counsel can outline the pros and cons of the various options and help entrepreneurs choose the best entity structure for their startups.

2.  Selecting State of Incorporation/Forming

Many founders might think that geographic location would dictate where they should incorporate. However, most startups, especially those with an eye on raising capital (either now or later), should utilize their legal counsel to understand the benefits of forming in a state like Delaware versus their home state. Fortunately for many Texas startups, there are numerous similarities between the Texas and Delaware laws that govern corporations and limited liability companies (LLCs). If founders do incorporate in a state outside of the state where their startup’s principal place of business is located, they need to be sure to register to do business as a foreign entity in the state where the principal place of business is located and may need to consider tax implications.

3.  Founders Agreement & Vesting Schedule

At the outset (and hopefully throughout the startups life-cycle), all the founders are fully committed and devoted to spending the necessary time to turn their startup into the best company possible. Unfortunately, as tends to be the case, some founders end up being more committed than others and if not properly accounted for initially, it can be a nightmare to remove an absentee founder. However, one way to ensure commitment from all founders and to mitigate against the risks if things change is to enter into an operating agreement (founder’s agreement) defining the relationship between the founders. Typically, this includes a vesting schedule for the founders’ equity, voting rights, lock-up provisions, veto rights on company sale and provisions for removal of a founder. Furthermore, many investors will insist that the founders’ equity be subject to a vesting schedule before making an investment and if one already exists, investors are more likely to accept it than negotiate for implementation of a different schedule.

4. Debt or Equity Financing

Startups looking to raise have a multitude of avenues through which they can raise funds. The first question founders need to answer is should the company issue debt, like a convertible promissory note, or should the company issue preferred equity (e.g. stock) to investors? Understanding the pros and cons of the various types of fundraising methods is crucial in making the right decision for a startup because the fundraising method chosen will have implications throughout the entire life-cycle of the company.

5. Securities Laws Compliance

Many entrepreneurs may think that they can take money from family and friends without triggering any securities laws issues. The thinking is that “these people want to support my business, help me grow and they fully understand the risks.” However, even a friends and family raise requires compliance with both federal and state securities laws. It is imperative that entrepreneurs utilize legal counsel to ensure compliance with securities laws, regardless of how they raise their money and from whom they raise it.

6. Employee Compensation – Equity Compensation Plans

An option or equity compensation plan is a great way for a startup to attract and retain skilled employees, especially when cash on-hand to pay salaries is limited. Implementing an incentive mechanism is a complicated process that has both tax implications and requires compliance with securities laws. Experienced legal counsel can assist with creating a plan that enables companies to retain their key contributors.

7. Intellectual Property Protection

A company’s intellectual property is one of the most precious assets it has. This is especially true with startups who are pioneering new products and concepts. Startups are well-served to have experienced intellectual property attorneys that can advise them on securing, protecting and monetizing their patents, trademarks, service marks, copyrights and trade secrets. Startups should not forget the importance of structuring agreements with employees and service providers to ensure that intellectual property produced for the company stays with the company. In the event of infringement or disputes, these steps will help the company.

8. Investor Due Diligence

This may not seem significant to a first-time entrepreneur eager to close a round of funding for their startup, but given the level of research investors conduct on potential investments in startups, it only makes sense that founders take the same approach with potential investors. Founders should understand the industry experience their potential investors have and ensure that these are the right long-term partners to help the founders’ vision for the startup become a reality. Founders need to determine whether they want passive money or active money.

9. Business Contracts

As the startup grows, it will be entering into a multitude of contracts: employee contracts, user agreements, licensing agreements, service agreements and possibly franchise agreements. Startups typically need a set of standard documents that can then be tailored for specific needs. Some examples for any business with a website include website agreements, namely a Terms of Use (or Terms of Service) Agreement and Privacy Policy for the website. Having a set of standard documents on hand increases efficiency and puts the startup in an advantageous bargaining position during negotiations.

10. Legal Counsel

Expenses are a big concern for any business, especially a startup where the founders have often bootstrapped their idea to prove its concept and may have incorporated themselves or used a national doc-in-a-box company to provide them with the basic documents needed for formation. However, as outlined above, good legal counsel is integral to a startup’s success and is not something to be brushed aside to do later down the line when there is more money. Seek attorneys that will work to structure an engagement that makes sense for both parties. Set budgets and have your counsel prioritize your legal needs, which can be handled as your funds allow. An experienced startup lawyer is a good place to start.

 

 

 

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Commercial Non-Competes

The Michigan Supreme Court recently established a new rule clarifying that non-competes, which are of a commercial nature, and in this case a non-compete between two businesses, are to be evaluated for the reasonableness under a new standard. Traditionally, non-competes in Michigan were evaluated under a reasonableness statute, MCL 445.774(a), which was a statute, under the Michigan Trust Law, relating to the establishment of non-competes between employers and employees. The Michigan Supreme Court in Innovation Ventures v Liquid Manufacturing, decided on July 14, 2016, determined that as between two businesses, that the correct standard was under a section of the Michigan Antitrust Reform Act, MCL 445.772, which is the general contract provision of the Michigan Antitrust Act. The Michigan Supreme Court announced that Court’s evaluating non-compete agreements between two business entities, must look at the federal interpretation of comparable statues under Federal Law.

The Michigan Supreme Court explained to invalidate a contract under the Antitrust Rule of Reason requires more than simply an unreasonable impact on the party, which was an analysis traditionally used for evaluating non-compete. The proper focus, as between businesses, includes whether the non-compete may suppress or even destroy the competition and that merely injury to a contracting party will not suffice.

The Court further explained, the test under the Rule of Reason, whether competition in the overall market has been harmed.

Now this will be, under the present pronouncement, a very difficult standard to meet in an effort for validating non-competes, including businesses. Essentially, it appears that the court an enunciated a standard that will require an adverse impact on the relevant market, in order to invalidate a non-compete. In practice, it would appear that will be extremely difficult hereafter in Michigan to invalidate non-compete between two business entities. The reach of the new decision has not been determined. Commentators have argued that this new rational applies to all commercial non-compete agreements defined as everything other than a non-compete agreement between an employer and employee, and can also include the sale of a business, or buy out situation where an owner of a company is bought out and executes a non-compete agreement.

The Innovation Ventures decision, remanded the case to the lower court for an evaluation under the new standard annunciated by the Michigan Supreme Court, and there may be yet further guidance on this case on how this standard may be applied to the real world. Stay tuned for updates.

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What is Reverse Domain Name Hijacking?

Opposite of domain hijacking (more commonly known as cybersquatting, whereby an individual registers a domain name that is confusingly similar to a registered trademark and then attempts to sell it to the trademark owner), Reverse Domain Name Hijacking (“RDNH”) “occurs where a trademark owner attempts to secure a domain name by making false cybersquatting claims against a domain name’s rightful owner.”  Under the ICANN’s Uniform Domain Name Dispute Resolution Policy (“UDRP”) Rules, RDNH means “using the Policy in bad faith to attempt to deprive a registered domain-name holder of a domain name.”

The UDRP was developed to assist trademark owners in regaining domain names that had been cybersquatted in bad faith.  However, some trademark owners – typically large companies or famous individuals with deep pockets – have viewed the UDRP as an easier means than litigation to gain control over domain names that incorporate their trademark.  World Intellectual Property Organization (“WIPO”) panels are apt to find RDNH in instances where the domain name registration predates the trademark; where there is no evidence of bad faith registration; or where the UDRP is used as a back-up for failed business negotiations.

RDNH has increased significantly in the recent years.  One famous example of RDNH was in 2013 against politician Ron Paul when he attempted to utilize the UDRP to secure RonPaul.com and RonPaul.org, websites actually registered and owned by avid Ron Paul supporters.  As the owner of the RON PAUL trademark, Ron Paul alleged that the website registrants had tried to sell the domains to him for an “exorbitant” price and were selling merchandise.  WIPO denied Ron Paul’s complaint and found that him guilty of RDNH because there was evidence that the website registrants had actually offered the RonPaul.org domain to Ron Paul for free and that the registrants’ use of the domains was noncommercial fair use as a fan site.  The registrants still have the domains today.

As a good faith domain registrant, you have a right to stand up against trademark owners who try to bully you through the UDRP process.  If you believe that someone is attempting to secure your legitimate domain through RDNH, Traverse Legal’s Attorneys have the expertise to help you navigate the UDRP and WIPO process.   Give us a call today!

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Commercial Non-Compete Agreements

How Animals Like Grumpy Cat Use Copyright & Trademark to Protect Their Brand

“I had fun once – it was awful”; “It’s not me – It’s you”; and “Nope” are phrases commonly associated with Grumpy Cat, the frowning feline who became an internet sensation for her mean mugging memes.  Unless we are dealing in patent law, intellectual property and animals do not frequently overlap.  Even though a Federal Judge has ruled that a monkey cannot own the copyright to his selfie, there are other ways that animals (or rather, animal owners) can utilize intellectual property law to protect their originals works and brand.  Grumpy Cat, for example, is protected by several federal copyrights and trademarks.

With Grumpy Cat originating as a picture on Reddit before going viral, her owner’s would have difficulty combating infringement activity without registered IP protection.  While actually policing memes is a difficult and sometimes controversial task, Grumpy Cat most benefits from her IP protection in regards to merchandise.  After Grumpy Cat’s popularity skyrocketed, her owners began producing items such as magnets, mugs, socks, shirts, plush toys, cards, phone cases, and more.  With such mass production of merchandise, it is only a matter of time before someone else tries to capitalize on the popularity.

Most recently, Grumpy Cat sued Grenade Beverage for copyright and trademark infringement stemming from a line of Grumpy Cat roasted coffee, which Grumpy Cat claims was unauthorized under a License Agreement entered into between the entities.  Over the course of a year, the parties have exchanged counterclaims and motions without any substantive outcome.  Hopefully it will be determined soon as to whether Grumpy Cat is successful in her enforcement endeavor or not. The important thing is that the copyrights and trademarks are in place for Grumpy Cat to adequately protect her brand far into the future.

While no animal has achieved the same level of popularity as Grumpy Cat, the opportunity exists for other famous animals to have robust IP protection as well.  Now we just have to wait for the next internet animal superstar to take off before we can realize the full potential.

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Patent Exhaustion and Sale of Patented Item

The U.S. Patent Act (35 U.S.C. § 271(a)) grants a patent owner the right to prevent others from making, using, selling, offering for sale or importing a patent invention within the U.S.  The doctrine of patent exhaustion limits the patent owner’s ability to control the use of patented items after those items have been sold.  In other words, the first authorized sale of a patented item terminates/exhausts all patents rights to that item.  As a result, the purchaser of the patented item has the right to use or resell the patented item without it being considered infringing of the patent owner’s rights.

 

In Impression Products, Inc. v. Lexmark International, Inc., 816 F.3d 721 (Fed. Cir. 2016), cert. granted, 84 U.S.L.W. 3563 (U.S. Dec. 2, 2016) (No. 15-1189), the Supreme Court decided to review the Federal Circuit’s decision regarding patent exhaustion.  The main issue that the Supreme Court will examine is whether a patent owner can implement post-sale restrictions on the use or resale of a patented item to avoid the application of the patent exhaustion doctrine.  Thus, the Supreme Court’s decision could potentially expand the rights of the patent owner.

 

In this case, Impression Products, Inc. bought printer cartridges from a third party for resale in the U.S.  These cartridges were first sold by Lexmark and some of them were subject to the single-use/no-resale restriction.  Impression Products, Inc. acquired a modified version of the cartridges from a third party and sold these cartridges.  Lexmark sued Impression Products, Inc. for patent infringement and Impression Products, Inc. argued that the patent exhaustion doctrine applies.

 

The Supreme Court’s decision in this case will affect both patent owners and authorized purchasers of patented products.  The scope of a patent owner’s rights in these types of matter will likely be more clearly defined.  Along with the rest of the patent community, we will be keeping a close eye on the outcome of this case.

 

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The Importance of Trademarks to NonProfit Organizations

A nonprofit organization (NPO) is a type of entity that has a purpose other than making a profit, such as a social cause.  Put another way, rather than distributing profit to shareholders, as is typical in a corporation, any additional revenues are used to further the nonprofit’s mission.  That said, make no mistake about it, nonprofit organizations are not always charities and it is typically equally important to maintain organizational sustainability.  As such, nonprofits will identify ways to generate revenue so as to allow them to continue to invest time and resources into furthering their mission.  Some examples of nonprofits include UNICEF, Rotary, Kiva, Ted Talks, LPGA, United Way, Livestrong and Goodwill.  These nonprofits own registered trademarks and attend to them just as a for-profit organization does.

As one can imagine, just like a for-profit business seeks to leverage its brand and identity in order to further garner goodwill and generate revenue, nonprofits also are well-served when they do the same.  In addition, nonprofits want to avoid public confusion with like-minded nonprofits and, even worse, non-affiliated entities that try to profit off the consumer recognition of the nonprofit.  So, just like for-profit organization, as a nonprofit you should:

1. Identify your marks, including character mark, logos and taglines
2. File trademark applications with the United States Patent and Trademark Office (USPTO) and other government bodies in geographic locations in which you operate or intend to operate.  You should be particularly mindful to file in connection with your particular services, such as in International Classes 35 and 36 for charitable fundraising services” for solicitation of donations, promoting public awareness of . . .” or “public advocacy to promote awareness of . . .” for advocating a particular cause or issue or the interests of a group’s members or a certain class of people.
3. Ensure proper usage of your trademarks via licensing agreements and otherwise.  However, be mindful of the potential to create unrelated business income tax” (“UBIT”) on income earned from activities regularly carried on that are not substantially related to the organization’s tax exempt purpose (typically pursuant to 501(c)(3)).  Also, it is important to avoid any private inurement or benefit that may again impact the nonprofits tax exempt purpose.
4. Monitor unauthorized third party usage of your trademarks.
5. Take action in the event of trademark infringement, dilution of your brand or other unfair competition that adversely effects your nonprofit.

If you are nonprofit, you can not ignore the importance of sound business decisions, which necessarily includes proper management of intellectual property.  Remember, trademarks are important to furthering your mission and part of a sustainable organization.

 

 

 

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