Eric S. Wachspress/Attorney-at-Law

Remedies in Trademark Litigation

In trademark litigation, a plaintiff can:

(1) potentially obtain injunctive relief, including a court order that the defendant cease its objectionable conduct, take affirmative steps to distinguish its products or services from that of the plaintiff, place corrective advertising or recall its product,

(2) obtain defendant’s profits, its own lost profits, damages and attorney’s fees. So

Why not litigate?

Most cases settle and the Plaintiff usually loses!

85% of trademark cases are either resolved through settlement negotiations or a default judgment. See http://abovethelaw.com/2017/12/3-lessons-on-data-from-trademark-cases/ In fact, according to one study of lawsuits in general, plaintiffs succeed at trial in less than 5% of filed cases. See http://scholarship.law.cornell.edu/cgi/viewcontent.cgi?article=1202&context=facpub

When litigation is necessary

Yet, litigation can sometimes be necessary, e.g., if you’re the Rolling Stones and you become aware on the night before your tour stops in Chicago that a truckload of counterfeit merchandise bearing your trademark or a poor copy of it is about to hit the streets the day of your concert. In order to stop the sale of that merchandise, you will need to go to court and get a temporary restraining order barring those sales. Otherwise, by the time you “lawyer up,” the unauthorized merchandise will be sold, and the Stones will be on to their next stop. Time will not be on their side and they will get no satisfaction if they don’t go to court ahead of time.

Settlement is a cheaper alternative to litigation

Litigation is expensive. In a trademark infringement case involving identical marks where I represented the defendant, I sought to engage a lawyer who had previously represented another defendant against that same plaintiff in a case involving the same mark. He requested a $100,000.00 retainer for his services. In a domain name dispute where my client refused to settle and I turned the matter over to litigation counsel, his legal fees ran over $100K. In the latter case he could have settled for under $20,000. In the former case, we decided to settle. The plaintiff got injunctive relief out of court in that my client had to cease and desist from using the mark, pull the infringing product off of store shelves and have it destroyed and pay monetary damages in an amount significantly less than that retainer amount plus a few thousand dollars in attorneys fees. In a copyright licensing matter that I handled for a defendant the plaintiff asked for close to half a million dollars. In settlement, we obtained an assignment from the plaintiff of the rights at issue in exchange for a payment of less than a tenth of the amount claimed. In a copyright infringement case where I represented a defendant and the plaintiff asked for hundreds of thousands of dollars in damages, while my client had to cease the production, marketing and sale of the alleged infringing products at issue, it got to sell off its inventory of those products before hand and pay a little over a tenth of that amount at settlement.

It works both ways. Where a defendant was using my client’s registered trademark to identify its similar products online, we succeeded in getting the defendant to stop using the mark at issue and actually rename its similar product without going to court. Where another defendant was using another client’s registered trademark to identify the same services that my client performed, that defendant agreed to restrict its use of that mark to use on unrelated products, to drop its federal trademark application for that identical mark and modify its advertising to avoid confusion in the future. In another case involving a major national retailer selling the same products as my client under its registered trademark, it agreed to cease using my client’s mark and rebrand those goods.

You can get the same relief by settling a case as you can by litigating it

So, without entering a courthouse and paying the costs of taking depositions, engaging in electronic discovery or lawyer travel and lodging, it’s possible to get relief in the form of an injunction against further manufacture or sale of the subject product, monetary relief and attorney’s fees, recall of a product and even corrective advertising.

But it’s not just the cost.

The difficulties at getting at the truth

As noted above, there’s also the uncertainty and the difficulty in winning a case at trial to consider.

In trademark cases, establishing an intent to copy is of significant assistance in proving likelihood of confusion. In my first trademark infringement case in private practice a major national consumer products company not only simulated our client’s product’s shape but placed their similar shaped product on store shelves immediately adjected to our client’s product. Between myself and my partner, we journeyed to Springfield, Missouri, Rochester, New York, Northern New Jersey and Palo Alto, California taking depositions in an effort to search for evidence of intent. We came up empty. To quote Robert Mueller, “When a subject of an investigation obstructs that investigation or lies to investigators, it strikes at the core of their government’s effort to find the truth and hold wrongdoers accountable.” See http://www.politico.com/story/2019/05/29/robert-mueller-statement-russia-investigation-text-transcript-1346453 When I was sitting on the other side of the table I was advised to tell deponents, unless they remembered the exact details of some event, not to guess or assume that certain events took place but respond with “I do not recall.” I’m not suggesting that the deponents in my infringement case lied; only that getting at the truth in litigation can be a long, slow, expensive slog that can be avoided by having some case law on your side and making a deal.

It sure beats the 5% odds noted above.

In Van Buren v. U.S., the Supreme Court in a 6-3 decisions handed down today, held that the Computer Fraud and Abuse Act (“CFAA”) didn’t apply where a Cumming, Georgia police sergeant used the department’s computer system to access federal and state crime databases to provide information about a woman his friend had met at a strip club. While the sergeant had authorization to access the computer he did not have authorization to access those databases for non-police purposes.

He was charged with violation of the CFAA. That statute makes it a crime when a person “intentionally accesses a computer without authorization or exceed authorized access, and thereby obtains…information from any protected computer.” A “protected computer” includes any computer “which is used in or affecting interstate or foreign commerce or communication, including a computer located outside the U.S. that is used in a manner that affects interstate or foreign commerce or communication of the United States.”

The provision referring to “intentionally accessing a computer without authorization” was written to cover outside hackers,

The Court’s majority noted that the Act, if read otherwise would encompass everyday violations of terms of service, such as use of a work computer to order personal goods from Amazon, posting on Facebook, or checking last night’s sports scores. The Court held that such practices did not exceed authorized access related to computer structures., i.e., prohibitions against accessing certain files, folders or databases to which access does not extend.

So, if you’re an employer, your rules guiding computer use better be detailed and made explicit in personnel manuals, signage, and employee handbook if you want to keep your employees from using their time to surf the net.

See https://www.supremecourt.gov/opinions/20pdf/19-783_k53l.pdf

Beverly Hills police are playing copyrighted music during interactions with citizens in order to block those citizens’ videos of those interactions from being uploaded to social media. See https://www.vice.com/en/article/bvxb94/is-this-beverly-hills-cop-playing-sublimes-santeria-to-avoid-being-livestreamed

On December 29, 2020 the Shanghai Higher People’s Court issued a final judgment in a case involving counterfeit Lego toy products in which it sent the defendants to jail with sentences as high as six years and fines of up to 14 million dollars. The defendants sold nearly $50,000,000 worth of counterfeit Lego products. In rendering its decision the court ruled that the infringement caused serious financial, social and cultural damage.

These fines were the highest yet in a case involving copyright infringement involving counterfeit product sales in China. The Shanghai Higher Court found that the Lego sets embody expressions of unique aesthetic appeal and originality. It held that they were independent creations of the Lego company and the complete assembled models fall into the category of artworks, which are protected by Chinese copyright law. 

In addition, the court ordered the confiscation of all illegal income earned from the criminal enterprise and the seizure of all infringing products as well as any personal property used by the defendants in furtherance of the counterfeiting.

The case began when in April 2019 the Shanghai Police seized tools for duplicating Lego’s toys and toy products as well as toy packaging and instruction manuals that were basically identical to similar items sold by Lego.

On December 26, 2020, just three days before the final judgment in this case, the China’s National People’s Congress passed the Eleventh Amendment to the PRC’s criminal law, which, after March 1st, raised the maximum term of imprisonment for criminal infringement of intellectual property rights from seven years to ten years.

On January 29, 2013 I wrote a post entitled DIGITAL ESTATE PLANNING. See https://www.chicagotrademarkattorney.net/?s=digital+estate+planning

Call this post DIGITAL ESTATE PLANNING 2.0.

Since that date, effective August 12, 2016, the Illinois  Revised Uniform Fiduciary Access to Digital Assets Act came into being. See https://ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3728&ChapterID=60

That Act provides that an individual who has an account with a provider that stores or processes his electronic records may use an online tool to direct that provider to disclose to a designated recipient some or all of those records, including the content of electronic communications. If that individual has not used such an online tool, he may allow in a will, trust, power of attorney, or other record or the disclosure to a fiduciary of some or all of his electronic records, including the content of electronic communications sent or received by that individual.

Examples of such online tools include Facebook’s Legacy Contact which allows a third-party to view one’s posts, to share a final message on your behalf or provide information about a memorial service, respond to new friend requests, update your profile picture and cover photo, request the removal of your account and download a copy of what you shared on Facebook if the owner of that account had turned that feature on. However a Legacy Contact cannot log into your account, read your messages or remove any of your friends or make new friend requests. See https://www.facebook.com/help/1568013990080948

Starting June 1 Google will be deleting data from Drive, Docs, Sheets, Slides, Jamboard, Gmail, Photos, Drawings, Forms and Sites if your account has been inactive for two years. See https://tech.hindustantimes.com/tech/news/google-plans-to-delete-your-inactive-accounts-but-there-s-a-simple-solution-71608186815406.html

Note that a  fiduciary’s right to access this digital content may be modified by the provider’s terms of service if the user has not directed the provider to disclose his digital assets or provide for such a disclosure under a will or power of attorney to a fiduciary acting under such a document.

The provider may at its sole discretion: (1) grant a fiduciary or designated recipient full access to the user’s account, (2) grant a fiduciary or designated recipient partial access to the user’s account sufficient to perform the tasks with which the fiduciary or designated recipient is charged or (3) provide a fiduciary or designated recipient a copy in a record of any digital asset that, on the date the provider received the request for disclosure, the user could have accessed if the user were alive and had full capacity and access to the account. In addition, the provider may assess a reasonable charge for the cost of disclosing digital assets under the Act.

To obtain this digital content, the deceased user must have given his or her consent or if a court directs disclosure of the contents of electronic communications of the user, the provider shall disclose to the personal representative of the estate of the user the content of an electronic communication sent or received by the user if the representative gives the provider (1) a written request for disclosure in physical or electronic form, (2) a certified copy of the death certificate of the user, (3) a certified copy of the letter of appointment or a court order, (4) unless the user provided direction using an online tool, a copy of the user’s will, trust, power of attorney, or other record evidencing the user’s consent and, if requested by the provider the user’s user name or password or a finding by the court that the user consented to the disclosure of her electronic communications. 

Finally, a fiduciary acting within the scope of the fiduciary’s duties is considered an authorized user of the property of the decedent for the purpose of applicable computer-fraud and unauthorized-computer-access laws; also a provider shall comply with a request under this Act from a fiduciary or designated recipient to disclose digital assets or terminate an account no later than 60 days after a proper request.

To take advantage of these provisions, the person planning your estate should make reference to these digital assets or provide consent in a power of attorney, will or trust document to access these assets to the person who is to act on your behalf upon your death.

As I wrote previously, you don’t wan’t to put your passwords and user names in these documents as, at least your will becomes a matter of public record. When my Father passed last May he left me a three page list of passwords, most of which I would never use and the ones that I needed didn’t work.

Here, I would recommend a Password Manager, keep it current, and let the person who has your Power of Attorney have access to it.

Alternatively, if you use Google Chrome as your browser, it keeps a record of your user names and passwords. Let that person know how to access that record. Also, people back things up in the cloud; my Father used Carbonite for example. The person who will be responsible for your assets upon your incapacity or death should be able to access whoever your cloud storage provider is, whether it be Dropbox, iCloud, Google Drive, Microsoft 365, etc.

Also, note that many of these services auto-renew, as do domain names, and internet service provider contracts, so you need to determine which of these services the decedent is a subscriber to and cancel those services, or they will continue forever and bills for these will continue to show up.

In addition, after you as a fiduciary has accessed those records, the hard drives on any computing devices from which you retrieved this information need to be destroyed. For Windows see https://www.pcmag.com/how-to/how-to-wipe-your-hard-drive For an Intel-based Mac see https://support.apple.com/en-us/HT208496Note that new Macs use an Apple chip. 

To be completely safe, you can remove the hard drive and destroy it. See the following article from Family Handyman. https://www.familyhandyman.com/article/how-to-destroy-a-hard-drive/#:~:text=There%20are%20many%20more%20creative,will%20get%20the%20job%20done

A digital trail can be good and bad. As I noted previously, I really don’t want my survivors or anyone else to have access to my Google browser history, my Netflix viewing history, or my attorney-client communications.

When my Father passed, on the good side, he left a detailed record of all of his financial transactions for the past almost 20 years on Quicken files which I was able to access and digitized all of the 8 millimeter family home movies years before his death. On the bad side, he left us with an eight foot tall stack of slide carousels, undigitized.

My wife had the good sense of digitizing all of our photo albums and putting them in the “cloud” a few years ago. On the flip side, we still have 22 or so slide carousels waiting to be digitized. 

When I got my first digital camera, all of those images were automatically digitized and saved. However, that doesn’t include the data on my phones which need to be dealt with as well.

People’s whole lives exist in ones and zeroes and most people are not computer scientists.

The days of finding your family’s archives in a cardboard box in the attic, a safe deposit box or fireproof box are long gone.

They may be accessible at your fingers but your fingertip may not be the key that opens the digital lock that contains those records so unless you plan to cut off your dear old parent’s fingertip, you better find a way of accessing those records. 

The “Long March” was the strategic retreat of the Red Army led by Mao Zedong in 1934. It has become glorified by the People’s Republic of China as an example of the Communist Party’s strength and resilience. 

China has come a long way since 1934 becoming the world’s second largest economy and it has gotten that way not just by harnessing the know-how of the Chinese people but the know-how of the American people as well.

While there is talk of decoupling our economies today, for the last several decades, major American companies have introduced their technologies to China, for cash and for the opportunity of getting a share of a market of nearly one and a half billion people. 

This is not an all-inclusive list. For example, it does not include Apple on whose MacBook Air this blog post is being written. See https://nyti.ms/2UcwiKw 

General Instrument

Taiwan Semiconductor Manufacturing Company (TSMC) is the world’s most valuable semiconductor company, with a factory in Shanghai. Its customers include AMD, Apple, Broadcom and Qualcomm. See https://en.wikipedia.org/w/index.php?title=TSMC&oldid=985082323 On July 13, 1964 the New York Times reported that General Instrument, which was my late Father’s former employer, was rushing to complete a million-dollar (Note that this was 1964 dollars.) semiconductor plant to compete with Japan on the American electronics market. See https://nyti.ms/1RBCBOC   TSMC was founded in Taiwan in 1987 by Morris Chang. From 1958-1983 Chang was at Texas Instruments where he became the Vice President responsible for its semiconductor business.  The next two years he was President and COO of General Instrument. The government of Taiwan then recruited him to become head of its Industrial Technology Research Institute in charge of promoting industrial and technological development in Taiwan. He then became head of TSMC. Morris pioneered the then controversial idea of pricing semiconductors ahead of the cost curve, or sacrificing early profits to gain market share and achieve manufacturing yields that would result in greater long-term profits and was honored for doing this by an American university, Stanford.

Fiat-Chrysler

In 1979, American Motors, which then owned the Jeep brand and was subsequently acquired by Chrysler initiated discussions with the Chinese (not the Taiwan government) about building Jeep branded vehicles in China. The Chinese government agreed, the joint venture was called Beijing Jeep and in 1985 manufacture of the Jeep Cherokee commenced in China. Chrysler was subsequently purchased by Fiat and on November 20, 2014, Fiat Chrysler Automobiles (FCA) and Guangzhou Automobile Industry Group (GAC) announced a preliminary agreement to expand their current joint venture, including a second plant in Guangzhou, that would be responsible for all sales, marketing, product planning and after-sales support of a full line of Jeep, Fiat, and Chrysler vehicles, both locally made and imported. See https://www.allpar.com/world/china.html

General Motors

Fiat Chrysler’s competitor, General Motors, isn’t at all shy about its involvement in China. See https://www.gmchina.com/company/cn/en/gm/company/about-gm-china.html On that website GM writes, “GM and its joint ventures in China have more than 58,000 employees. GM, along with its joint ventures, offers the broadest lineup of vehicles and brands among automakers in China. Products are sold under the Buick, Cadillac, Chevrolet, Baojun and Wuling nameplates.” As for its technology, GM gloats that its “GM China Advanced Technical Center (ATC) is the most comprehensive and advanced automotive development center in China. It includes research and development, advanced design, vehicle engineering, powertrain engineering and OnStar laboratories. As a member of GM’s global engineering and design network, the ATC is developing solutions for GM on a domestic and global basis while supporting the company’s vision. The first phase of the facility opened in September 2011 and the second phase opened in November 2012.”

IBM

Another American corporate stalwart, IBM, sold its ThinkPad line of business-oriented laptop computers as well as its personal computer division to Beijing-based Lenovo in 2005. Lenovo’s founder said about that acquisition, “We benefited in three ways from the IBM acquisition. We got the ThinkPad brand, IBM’s more advanced PC manufacturing technology and the company’s international resources, such as its global sales channels and operation teams. These three elements have shored up our sales revenue in the past several years.” See https://en.wikipedia.org/w/index.php?title=ThinkPad&oldid=988007023 But that wasn’t the end of IBM’s sales of technology to Beijing-based Lenovo. IBM’s sold its Intel-based server lines, including IBM System x and IBM BladeCenter, to Lenovo in 2014. See https://en.wikipedia.org/w/index.php?title=Lenovo&oldid=987899309

Motorola

Motorola invented the first commercially available cellular phone small enough to be easily carried which was commercially released in 1984. Before the iPhone came out Motorola sold the wildly popular Razr, the best-selling clamshell phone ever made. Motorola’s cell phone business became Motorola Mobility, which was, from 2012-2014 part of Google, when it was sold to Lenovo. Lenovo originally sought to acquire Blackberry but that purchase was blocked by the Canadian government. See https://en.wikipedia.org/w/index.php? title=Motorola_Mobility&oldid=986872000

Tesla

The U.S. government made no objection to Lenovo’s acquisition of Motorola together with 2000 patents nor to any of the above transactions nor to Tesla’s construction of a car plant in Shanghai. See https://www.bbc.com/news/business-50080806

Blackberry (Note this is a Canadian company.)

Incidentally, Blackberry ended up licensing the manufacture of its phones to TCL Technology, located in Guangdong province in China. That license expired this past Summer.

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You may have noticed that there is an election coming up, at least in the United States. So I thought that I’d write about political branding. No, I’m not referring to branding your political opponent as a/an [fill in the blank] but rather redefining a policy or a phenomenon so as to make it more or less acceptable to voters. 

I consider the political consultant, Frank Luntz, to be the best at doing this but anyone can play this game. See http://en.wikipedia.org/w/index.php?title=Frank_Luntz&oldid=978941637 For example, Luntz renamed the “estate tax” as the “death tax” to make it more unpalatable to voters and replaced use of the phrase “global warming” with “climate change” to make the effects of that phenomenon sound less toxic. He advised the Israeli government to refer to Palestinian “talking points” as “demands” as “demands” would, by definition, be less acceptable to the American public.

For example, don’t want to institute a national “sales tax,” then call it a “value-added tax” or a “consumption tax” as a consumable is considered to be something that is used relatively quickly, i.e., it’s a tax on wasteful spending.

“Slum Removal” has traditionally been referred to as “Urban Renewal.”

The Affordable Care Act (a/k/a Obamacare) was originally written to pay physicians for providing voluntary counseling to Medicare patients about living wills, advance directives, and end-of-life care options. That provision was coined establishing “death panels” and never made it to the final Act.

And there’s more…when a politician proposes “revenue enhancers” she is proposing raising your taxes.

When your boss announces that he is eliminating redundancies he plans on laying you off.

When your city cuts transit services it is rationalizing transit schedules.

And so on, so go out and vote, if you haven’t already; just realize that politics is another form of advertising, except consumers are called constituents, purchasers are called voters, purchases are called elections and TV ads are media buys. 

Here’s the trademark dilemma: 

The Dilemma!

You own a trademark that you have used for almost twenty years. Another entity has registered a similar trademark. 

The second half of both trademarks are virtually identical. The first half of both trademarks, while different in appearance, sound and meaning, both identify parts of the body in connection with which both products, which are nearly identical, are intended to be used.

In the next case, you own a trademark that was refused registration by the U.S. Patent and Trademark Office for the reason that the entirety of your mark forms the dominant element in a prior registered mark owned by someone else. The goods involved in this case and sold by both parties are closely related.

In both cases the complaining parties believe that the confusingly similar registered trademarks are no longer being used by their respective owners. 

What should the complaining parties do?

Pick a hired gun!

In both cases they hire highly respected law firms; in the first case a large national law firm with offices throughout the country; in the second case a long-established intellectual property boutique law firm with a single office in a major U.S. city.

The Large Law Firm Attorney

The lawyer for the large national law firm pays the U.S. Patent & Trademark Office a $400.00 filing fee and prepares a Petition for Cancellation of the similar registered trademark with multiple exhibits which he files with the Patent Office’s Trademark Trial and Appeal Board in February. He guesses correctly that the owner of the U.S. Trademark Registration that he sought cancellation of no longer uses its mark. That owner ignores the Petition for Cancellation and the Patent Office issues a Judgment by Default in the Cancellation Proceeding in late August and, simultaneously, the U.S. Patent & Trademark Office cancels the trademark registration that he objected to.

The Intellectual Property Boutique Firm Lawyer

In the second case, the I.P. boutique lawyer emails the lawyer for the owner of the registered trademark a page and a half letter in which she asserts that that registrant is no longer using its mark, states that her client is exploring its options as to whether to file a Petition for Cancellation of that trademark but states that she prefers to resolve the matter amicably. After being advised of this communication, the registrant’s lawyer determines that, in fact, the registrant has ceased the use of the complained of registered trademark and seven days after receiving the initial complaint about it, for a zero dollar filing fee with the U.S. Patent and Trademark Office, obtains the cancellation of that  trademark registration, thereby resolving the second attorney’s complaint.

The Same Results Achieved in Highly Different Ways!

So, attorneys need to choose their weapons wisely and consumers of legal services need to ask their attorneys, whether it’s a trademark matter, a divorce matter, a real estate matter, etc., what the most cost-effective and efficient means are to obtain the result that they desire. See https://www.chicagotrademarkattorney.net/why-litigation-may-not-be-your-best-remedy-to-resolve-a-trademark-dispute/

Commerce

Electronic commerce (e-commerce) law governs commerce, trade, and sales. This field of cyberspace law deals with issues such as security, contracts, and human resources. The manufacture of products and their sale can also fall under e-commerce law. Security laws protect consumers and providers of goods and services as well as contractual parties. A section of e-commerce law that arises from contract formation deals with the liability of Internet providers for outages, which can be substantially damaging to contracting parties. Human resources are subject to laws designed to ensure fair hiring practices. Merchandising is also a part of e-commerce law. Product and service providers, as well as consumers, can benefit from learning about legal issues and protections governing online commerce.

Cybercrimes

Cybercrime law encompasses issues such as network intrusion (hacking) and other crimes that take place online. Hacking may be the most publicized cybercrime, and things like malicious viruses and the use of encryption to contribute to or cover up a crime are covered by cybercrime law. There are laws against fraud and identity theft, and some of the most difficult free expression issues are also covered in cybercrime law. Some of these are obvious, such as laws against child pornography and regulation of pornography that is not intrinsically illegal. Bullying is rapidly becoming an issue in the area of cybercrime, as online bullying behavior becomes more virulent. Cybercrime may be one of the most important areas of cyberspace law for everyone to understand.

Freedom of Expression

Freedom of expression as it applies to cyberspace law is a very controversial subject. Although free speech is a right in America, there must be a law against some of the most hurtful things that can happen on the Internet. It can be very difficult to draw the line between free speech and harmful activities. U.N. guidelines have been set to forbid activity when it impinges on human rights. According to Frank La Rue, who has served as the U.N. special rapporteur on freedom of expression, “Expression such as child pornography; incitement to genocide; advocacy of national, racial, or religious hatred that constitutes incitement to discrimination, hostility, or violence; and incitement to terrorism are all prohibited under international law.”

Intellectual Property

Intellectual property in cyberspace is a burgeoning area of law. As more illegally reproduced documents and images make the rounds on the Internet, copyright law is particularly important to understand. Copyright law protects materials by making it illegal to reproduce someone else’s work. It also prevents the distribution of the copyrighted work, public display of the material, and public performance of the work. Patented inventions and trademarks are protected as well.

Privacy

Privacy in cyberspace law means that people have the right to decide what is done with their personal information. This is largely disregarded, as many do not take the time to discover what is done with their information on the Internet. Social media, such as Facebook and Twitter, put information online for everyone to see, often with the consent of those who post on these platforms. Privacy is also an issue with purchasing goods and services online, as some suppliers sell personal information to other businesses, resulting in large amounts of spam. Insecure transmissions over the Internet, logs of emails, data trails, and Web page tracking are all privacy hazards that people meet with online every day. Another complex privacy issue is that of government surveillance.

General Cyberspace Law

It can sometimes be difficult to avoid getting into situations online that could bring legal entanglements, but the most important thing to remember is that the laws of the real world apply online. If you’re not allowed to do something in the “real world” without ramifications, chances are good that you’re not allowed to do it online, either.

This post is courtesy of Jonathan Rosenfeld of Rosenfeld Injury Lawyers.

In an April 23rd decision written by Justice Neil Gorsuch the Supreme Court decided that trademark infringement did not have to be willful for a Plaintiff to be entitled to Defendant’s profits.

In that case Appellee Fossil sold a variety of leather goods and watches. See www.fossil.com. Those goods used fasteners manufactured by Appellant Romag Fasteners, Inc. Romag discovered that Chinese factories making Fossil products were using counterfeit versions of its fasteners and subsequently sued Fossil and several retailers of its products for trademark infringement under Section 43(a) of the Trademark Act. 

That Section provides in part that “Any person who, on or in connection with any goods, uses in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin or false or misleading representation of fact, which is likely to cause confusion as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods by another person, shall be liable in a civil action by any person who believes that he or she is likely to be damaged by such act.”

Romag alleged under that Section that Fossil, by using counterfeit versions of its fasteners, infringed its trademark and falsely represented that its fasteners originated with Romag. While a jury held that Fossil had acted “in callous disregard” of Romag’s rights it rejected Romag’s’ accusation that Fossil had acted willfully, therefore entitling it to Fossil’s profits under Sections 35 and 43(a) of the Trademark Act.

In interpreting these relevant provisions of the Trademark Act Gorsuch found that its statutory language did not require a showing of willfulness to win a defendant’s profits where a violation of Section 43(a) has been proven to exist.

The prior Trademark Act of 1905, the predecessor to the current Trademark Act, did not mention a requirement of willfulness. Further, the case law under that Act is inconsistent in requiring that a defendant be guilty of willful fraud for profits to be obtained by the complaining party.

Gorsuch wrote that, “a defendant’s mental state is relevant to assigning an appropriate remedy. That principle arises not only in equity, but across many legal contexts…It’s a principle reflected in the [current Trademark Act’s] text, too, which permits greater statutory damages for certain willful violations than for other violations.”

Here, Fossil went around the supplier with which it had a contract to provide component parts for its goods and substituted for those parts cheaper counterfeited copies “in callous disregard” of its supplier’s rights. 

Clearly those acts were willful and with knowledge of Fossil’s violation of Romag’s rights. With those facts in mind, the Supreme Court held that Romag should not be constrained by a narrow interpretation of the Trademark Act to be denied an appropriate redress of its rights.

When you create a brand identity, you should think of the trademark that you adopt to identify your product or service and distinguish it from your competitors’ products and services as one tool among others in the toolbox that you use to get purchasers to buy your product or service. Those other tools may include your advertising, how you display your product or service in the marketplace, and how you relate to your customers.

For example, if you are selling beer to men in their twenties, that sector of consumers who usually buy beer, you want to get their attention.  If sex is on men’s minds a good part of the time, then sex is probably a good way to get their attention and, therefore, beer ads frequently display very attractive women showing significant amounts of bare skin in close proximity to bottles of that frothy beverage.

If you are selling frozen pizza, television or print advertising stating that that product is as good as pizzeria pizza will likely bring your pizza to the buyer’s attention but it probably won’t close the sale.  Most pizza consumers who eat pizza out likely assume that frozen pizza is a pale imitation of the real thing.  Therefore, you will need something more to close the sale, to get them to buy your product.  Here, placing the product at the end of the aisle in the supermarket, introducing it at a discount, or providing coupons to the buyer will help close the sale.

And if the product you’re offering isn’t pizza but is instead a new automobile brand from a country that isn’t known for manufacturing automobiles that are sold in the U.S., say China?  Buyers will be justifiably concerned whether the Chinese, who have not been manufacturing cars for export to the United States as long as the Japanese, have the same level of expertise in doing so.  So, how do you get over that hurdle?  Your car make, in the beginning, will not have a good reputation.  It won’t have a bad reputation either, rather, it will have no reputation at all.  So what do you do?  You offer the car buyer a long term and comprehensive warranty on the car, promising to fix the car for free.  By doing this you can immediately tag the product with a brand identity, that of a manufacturer that stands behind its product.

Finally, how you relate to your customers is important.  Suppose you sell a commodity; cellular phone service or airline service, for example, where you have several competitors.  You can compete on price but, if you do so, you run the risk that a competitor will undercut your price and grab your customers.  Or you can make the experience of using your product more enjoyable.  In the case of both cell phones and airlines, one way to do that is to make television available to your customers as part of your product, as both Verizon and Jet Blue have.  However, if you leave your customers sitting in a jetliner for numerous hours out on the runway going nowhere, the entertainment offered by television will soon fade to black as may the goodwill that your brand has appreciated over the years.

Whatever you do to sell your product, you need to call it something.  In selecting a trademark, you need to pick a mark that others in your business are not using.  Otherwise your purchasers may buy your competitor’s product when they mean to buy your product or vice versa and more than likely your competitors will sue you.  Then you should pick a mark that will help sell your product.  Here, you can go two ways; you can pick a mark that describes a desirable feature of your product or you can pick an arbitrary or fanciful mark.

If you go with a descriptive mark, that mark will go to work right away, on its own, and help you sell your product.  For example, suppose you offer an allergy medication that doesn’t make you sleepy and you want to extend that brand to an allergy medication that you take at night that does make you sleepy and to distinguish between the two products you add P.M. to the brand name.  P.M. merely describes when you would take that medication, that is, at night, and therefore, that trademark would be a weak one.  From a marketing standpoint your adoption of such a mark would be fast acting and you could get a lot of initial bang for your marketing bucks;  it would not take a lot of advertising other than putting P.M. on your packaging to identify your product to consumers as a nighttime remedy.  However, because it would be a descriptive mark, your competitors could adopt the same or a similar mark and once this occurs, you will need to come up with some other marketing magic to convince customers that your product is better.

On the other hand, you could select an arbitrary or fanciful mark.  A fanciful mark would be a coined word such as Exxon.  An arbitrary mark would be a mark such as Apple which when it is used on computers or personal music players means nothing but has all the meaning in the world when it is applied to fruit.  Initially, when you select such a mark, it would have no immediate significance to consumers.  You would affix it to your product and display it in your advertising and it would, by itself, accomplish nothing in selling your product other than identifying that product as coming from you and not your competitors.  But use the other tools mentioned above to build a strong brand recognition for your product and once consumers recognize your product as working better, looking better or lasting longer than your competitors’ products, that mark will become easily remembered and your rights in it more readily enforced as a fanciful or arbitrary trademark is given greater protection by the courts not only against competitors using the same mark on the same products but against competitors using the same mark on related and, in some cases, if that mark becomes famous, unrelated products.

So what route should you take?  Should you select a descriptive mark for its immediate marketing benefits or a fanciful or arbitrary mark?  You decide, but here are a few examples of fanciful or arbitrary marks; APPLE, STARBUCK’S, GOOGLE, AMAZON, YAHOO, VERIZON, and here are some not so fanciful marks; GENERAL MOTORS, NORTHWEST AIRLINES, UNITED STATES STEEL, TOYS ‘R US.

As a business, you want to be able to protect your product designs. That’s because an attractive, distinctive product design can attract buyers, increase sales and enhance your goodwill. But that same distinctive design, once copied by a competitor, can become commonplace, siphoning off sales and prospective customers.

How can you protect your distinctive product design? One way is through trademark law. Trademark law makes it possible to obtain indefinite exclusive rights to a non-functional product design as long as that design is not the subject of a patent (except a design patent), is not advertised or promoted as improving the function, operation or ease of use of the product, is not the result of a simpler or more inexpensive manufacturing process, is not essential to the use or purpose of the product or affects the cost or quality of the product.

If a product design meets these conditions, and the product bearing the design is used in interstate or foreign commerce, the design can be registered in the United States Patent and Trademark Office on the Supplemental Register. A Supplemental Registration will put subsequent applicants and others on notice that you are claiming trademark rights to your design, and later applicants will be barred from registering confusingly similar designs for related products. If, additionally, you can prove to the satisfaction of the United States Patent and Trademark Office that your design is distinctive, it may be registered on the Principal Register. A trademark registration on the Principal Register is prima facie evidence of your ownership of and exclusive right to use the registered design and it can be used to get the Customs and Border Protection Agency to stop the importation of competing products featuring your design. It will also place subsequent applicants and others on notice that your design is claimed as a trademark and bar later applicants from registering confusingly similar designs in the U.S. Trade¬mark Office.

In order to prove to the satisfaction of the United States Patent and Trademark Office that your product is distinctive, you will need to submit to the Office examining attorney sales figures and advertising expenditures for your product containing the design. You will also need to submit examples of your product advertising that highlights the design. These examples should call attention to your design in a manner which will cause customers to recognize it as your trademark. If, however, your advertising instead draws attention to any functional features of the product design, it will likely defeat your quest for trademark protection.

Should your sales figures and advertising expenditures prove sufficiently substantial; if they include advertising and promotion in relevant trade and customer publications and at trade shows, and if this advertising draws attention to your design, you will be able to obtain recognition and protection of your design as a registered trademark. Examples of distinctive designs which have been protected as trademarks include the external design for the receiver portion of a Browning automatic shotgun, the shape of a plastic spray dispenser and the round design of the Honeywell thermostat as well as the configuration of McDonald’s original golden arches.

A U.S. trademark registration is valid for a period of ten years and can be renewed for future ten year periods of as long as you continue to use the trade¬mark in interstate or foreign commerce on the products that are described in the registration certificate.

Remember that prior to filing an application to protect a product name, logo or design, a search should be undertaken to determine if a mark or design similar to the one that you are seeking to protect has already been applied for or registered.

For years on this page I have discussed the risk of cyberattacks or cyberwar. But it you want a list of bad actors ready, willing and able to attack the homeland via cyberattacks, you need not look any further than this website.

Way back on May 30, 2007 I discussed Russia’s distributed denial-of-service attack on Estonia which forced Estonia’s biggest bank to shut down its online service temporarily, which bank suffered losses of at least $1,000,000. See https://www.chicagotrademarkattorney.net/cyberwar/

On April 15, 2010 I discussed China’s work in the cyber field and, quoting James Fallows from The Atlantic, I wrote, “China may not be our biggest cyberwar threat. Quoting a former diplomat who worked on security and intelligence issues, that former official stated that our #1 electronic threat was Russia, #2 was the Israelis, who are looking for political advantage, tied with the Israelis is China, but the French, who are looking for economic advantage, and the Brazilians, who are involved in financial crime, are also countries to be concerned about.” See https://www.chicagotrademarkattorney.net/cyberwar-cont/

On August 27, 2013 in a piece entitled, “Asymetric Warfare, Cyberwar & The Blowback” See https://www.chicagotrademarkattorney.net/asymmetric-warfare-cyberwar-the-blowback/ I wrote that, “a group calling itself the Syrian Electronic Army, an online group that supports Syrian president Bashar al-Assad, has claimed responsibility for taking down the New York Times website.” See http://www.nbcnews.com/technology/new-york-times-hacked-syrian-electronic-army-suspected-8C11016739

So, now we got the Russians, Chinese, the Israelis and even the Syrians posing a threat to the systems that we rely on for banking, trading, shopping, streaming as well as our national security and, earlier this month, as tensions ramped up between the U.S. and Iran, in a tweet I added the Islamic Republic to the list. See http://www.smartbrief.com/branded/8F5F957D-57FD-4533-BD54-E4386ED388CE/341EDE63-BB94-4D8F-A44F-D243D3030A13

On January 27th of this year I received the following list of attempted attacks on this website:

Top 10 IPs Blocked

Top 10 Countries Blocked

Of 15 IP addresses blocked, four were from Russia, two were from the Islamic Republic of Iran and five were from China. The vast majority of attempts to hack this site came from the People’s Republic of China. So, to learn who our biggest cyber threats are as a nation I need not look any further than who my biggest cyber threats are as a website owner. Apparently, they’re one and the same and if I’m a target you may be one too.

On June 16, 2012 in a post labeled https://www.chicagotrademarkattorney.net/new-domain-names-bring-new-challenges-to-protecting-your-brand/ I alerted trademark owners to the establishment of new generic top level domains. Among those new domains were .XXX, .ADULT, .PORN & SEX and I wrote that “When the .XXX domain was created for adult sites last year, operators of adult businesses had the opportunity to identify themselves as adult businesses by using that domain suffix. At the same time, non-adult businesses could park .XXX domains and thereby make them unavailable for use by adult businesses thereby preventing what might be an unsavory association, e.g., GOOGLE.XXX. Now both owners of adult websites and owners of non-adult websites that wish to avoid such associations will have to deal with .ADULT and .PORN as well.”

Now, the domain name registry responsible for the .XXX, .PORN, .ADULT and .SEX domain names, the ICM Registry, has come up with a new mechanism to protect brands at a lower cost than filing a defensive domain name registration. An example of a defensive domain name registration would be, in the case of Apple, Apple registering the domain names APPLE.XXX, APPLE.PORN, APPLE.ADULT and APPLE.SEX so as to prevent another entity from diluting its brand by registering an “adult” suffix domain name incorporating their registered house mark.

The ICM registry is now offering a service called AdultBlock. It lets brand owners block the registration of terms registered in the Trademark Clearinghouse and will block that term in all four TLD’s, namely, .XXX, .PORN, .ADULT and .SEX, and will even block the adoption of confusingly similar marks with that those suffixes. It will not block existing domain names but will block future domain names. When the problematic “adult” suffixed domain name becomes available, both the AdultBlock and AdultBlock+ service will add the newly available domain name to the block for the remainder of the service period. Once a domain name is blocked by the AdultBlock or AdultBlock+ service no other users can register the domain name during the service period.  In addition, the AdultBlock+ service will block confusingly similar characters, such as replacing an “L” with a “1” and an “E” with a “3”. See http://adultblock.icmregistry.com/ for further information.

Note that to use this service you will need to obtain a Signed Mark Data (SMD) file from the Trademark Clearinghouse. Any trademark holder can submit a trademark record to the Clearinghouse. A trademark record is a registered trademark, a court validated trademark, or a trademark protected under statute or treaty. A Signed Mark Data (SMD) file is similar to a token. It is a file generated by the Trademark Clearinghouse once the trademark record and Proof of Use of that mark have been verified. This SMD has a public and encrypted identification part and allows trademark holders access to Sunrise Periods for new GTLD’s and to request other services such as to initiate a URS proceeding to recover a cybersquatted domain name. Detailed information on how to submit Proof of Use of your mark and obtain your Signed Mark Data file (SMD) may be found at http://www.trademark-clearinghouse.com/sites/default/files/files/downloads/how_to_submit_and_change_a_proof_of_use_0.pdf See also the following videos http://www.trademark-clearinghouse.com/content/how-register-clearinghouse , http://www.youtube.com/watch?v=aL0n_pNTVgE&feature=youtu.be , http://www.youtube.com/watch?v=kxHDrOS6qYI&feature=youtu.be &http://www.youtube.com/watch?v=FaW-S5G6y6A&feature=youtu.be          

Registering a trademark with the Clearinghouse costs $150.00 for the first year and can be registered for up to five years at a discount based on the length of the term. Up to ten trademark registrations can registered with the Clearinghouse on a single credit card.

If you need additional information, please let me know.