by Mike Oliver | May 1, 2013 | Business Law, Government, In the News, Infotech, Internet, Technology and Privacy Law, Uncategorized
The article in Networkworld “Cisco network really was $100 million more” is a good example of the danger in responding to governmental requests for proposal (RFP) without considering the publicity downside of significant overpricing.
The article explains that in bidding on a large computer infrastructure project for California State University, Cisco’s bid was over 100 million dollars higher than the closest competitor for the same equivalent products and services. Cisco’s bid, in fact was more than 5 times the accepted bid price. While some premium might be attributable to Cisco’s products – superior quality, service or warranty, that difference is not likely to be worth more than 5 times any other manufacturer’s similar bid.
Government RFP responses in most cases become public. Also, because an RFP is an “apple to apple” response, at least on a unit/performance basis, the only justification for real bid differences normally comes in quality of service (perceived or real), or in product quality distinctions.
With the amount of due diligence that everyone is doing on companies – investors, potential targets, potential joint venture partners, licensees, customers – any business that is responding to an RFP should consider that the response, whether accepted or not, will become publicly available. The article suggests that Cisco might overprice on RFP responses when it senses it has no ability to win the bid. Why? It makes more sense to withdraw from the competitive bidding, than to overprice.
A similar risk presents itself for underpricing. Many companies ask for “most favored nations” (“MFN”) clauses – clauses that require post contractual price adjustments based on later favorable pricing offered to other customers. MFN clauses are dangerous for a host of reasons (one significant one is that if written incorrectly, they make literally every customer contract potentially relevant evidence in a dispute), but if a bidder underprices on an RFP response, in the hopes of later recouping the lower cost through add ons or change orders, that initial pricing is now public and can be used against the bidder if they had issued MFNs to other customers.
In short, many considerations must be reviewed in responding to any governmental RFP – not just pricing, units, metrics and services.
For more information, contact Mike Oliver.
by Mike Oliver | May 1, 2013 | Advertising, Infotech, Intellectual Property, Litigation, Patents, Uncategorized
We have all seen them – the short clips of video advertising we must watch before we are granted access to some other video content. A company known as Ultramercial claims that the “idea” of putting that short advertising clip in front of content was its novel, non obvious and hence patentable invention. A lower court disagreed, and invalidated the patent on subject matter grounds. Last September, however, in Ultramercial v Hulu, the Court of Appeals for the Federal Circuit reversed that decision and remanded the decision for further proceedings (the issue of whether the patent was even valid on novelty or non obvious grounds had not yet been decided).
On May 21, 2012 the Supreme Court of the United States granted certiorari and remanded the case back to the CAFC for further review in light of Mayo Collaborative Services v. Prometheus Laboratories, Inc., a decision in which the process and method of administering certain therapeutic drugs was held to be patent subject matter ineligible.
There has been a distinct level of Supreme Court review of patent cases recently, most of them restricting or limiting the validity and subject matter of patents. This latest remand indicates that the Supreme Court is expecting the CAFC to use these decisions in the internet area as well, to begin at least reviewing, and most likely holding invalid, many business method type patents that do not meet patent eligible subject matter requirements.
There are thousands of issued patents that cover basic functioning of the internet system (or, at least the commercial part of it) – that will be called into question in light of these recent Supreme Court decisions.
For more information, contact Mike Oliver.
by Mike Oliver | May 1, 2013 | Advertising, Intellectual Property, Trademarks, Uncategorized
Not so fast, says the 4th Circuit. Many lawyers and bloggers had assumed Google would win its case in which Rosetta Stone alleged that Google was contributing to the infringement of Rosetta Stone’s trademarks . . . but Google mostly lost on appeal.
The Rosetta Stone case involves use of “adwords” – Google adwords are purchased and give the user the right to place sponsored advertising on the front page and other pages, when a user searches for the term that was purchased. If the term is a trademark, often the advertising links to sites that are either not authorized to sell the goods, sell infringing goods, or sell competing goods.
In Rosetta Stone, Ltd. v Google, the 4th Circuit held that Rosetta Stone’s claims for direct trademark infringement, contributory trademark infringement and dilution arising from Google’s adword program could proceed to trial.
On direct infringement, the Court “assume[d] […] that Google’s policy permitting advertisers to use Rosetta Stone’s marks as keywords in the AdWords program and to use Rosetta Stone’s marks in the text of advertisements constituted an unauthorized use “in commerce” and “in connection with the sale, offering for sale, distribution, or advertising of any goods or services.” That left only likelihood of confusion to be addressed. In reviewing the lower court decision, the 4th Circuit agree that not all of the 9 factors must be used, particularly where the competing use is nominative – that is, where the use actually identifies the trademark owners’ goods. So, it focused on three factors – intent, actual confusion, and sophistication of the consuming public.
Evidence was presented that showed that Google believed that allowing use of trademark Adwords might cause some confusion (based in part on Google’s change in policy that allowed trademarks also to be included in titles and on ads – something it did not permit until 2009), and this was enough to overcome the intent element weighing solely in favor of Google as the lower court had found.
On actual confusion, evidence was presented both anectodally – by consumers who were confused, and by survey evidence. Google itself had done internal confusion studies, that showed 94% of users who saw ads with trademark terms in them were confused at least once.
Finally on the sophistication of the consuming public element, the 4th Circuitheld that the lower court wrongfully rejected evidence of lack of sophistication based solely on price (the product is expensive) noting that “[t]he evidence also includes an internal Google study reflecting that even well-educated, seasoned Internet consumers are confused by the nature of Google’s sponsored links and are sometimes even unaware that sponsored links are, in actuality, advertisements.”
Hence, after rejecting other defenses such as the functionality defense, the direct infringement claim was permitted to go to trial.
On the claim of contributory infringement, Google lost because evidence was presented that Rosetta Stone notified Google that known infringers were purchasing adwords for sponsored links – however, Google never terminated such users.
Finally, Google lost on the dilution claim, largely because the lower court had applied a defense (the defense that the defendant must have used the mark on its own goods and service and such use must have been fair), as an affirmative element of the claim. If anything on this point, which Google might win at trial, the case stands for the proposition that a plaintiff need not plead or prove the absence of statutory defenses, as a part of its claim.
If Google allows this to go to trial (unlikely) and loses, it could be subject to substantial damages, and worse, could open the door to many other claims by other trademark holders.
For our clients, this decision bolsters the ability to assert that Google might be directly and contributorily infringing a trademark when it allows adwords and advertising to be placed on its site that causes customer confusion. Not every use of a trademark term will do so, but if a trademark owner can obtain such information on confusion, this case would support at least a notice and demand to Google to cease such use. In addition, this case certainly supports an active trademark protection effort – to police misuse of trademarks and report them to Google (and any other search system provider) as the failure to remove such infringing content can constitute indirect contributory infringement.
For our clients that provide such portals and search services, this case essentially reinforces what our advice has been all along – that you must build into the system a means to remove allegedly infringing content upon notice. While there is no equivalent DMCA protection for trademarks, the failure to remove infringing content after notice can lead to a lawsuit like this.
For more information, contact Mike Oliver.
by Kim Grimsley | May 1, 2013 | Business Law, Intellectual Property, Internet, Technology and Privacy Law, LegalEase, Uncategorized
Dilemma: You find out that a company has copied an article that you created from your website, and it is using it on its website as if it had written the article itself. You want to stop them from using your article but you do not have a copyright registration for anything on your website. What can you do to stop them?
Copyright registrations offer numerous benefits, including the benefits of bringing an action for copyright infringement to enjoin the infringing company from using your work and obtaining statutory damages. A copyright registration is required to file a lawsuit for copyright infringement. However, even at this stage where a company is using your work and you do not have a registration, you could file an application for copyright registration on an expedited basis and then file an action for infringement. Regarding damages, those are limited in this situation to actual damages, whereas if you had previously obtained a copyright registration, typically you could obtain statutory damages and be eligible attorneys’ fees, which could be significantly higher than actual damages.
In addition, even without a registration, you are still protected under United States copyright laws, and there are options available to you to stop others from using your material without your permission without filing a lawsuit.
One option is to send the infringer a demand letter stating that you are the owner the work, that they are using your material without your authorization, and that they must take it down immediately. Such a letter could cause the infringer to immediately take down the work. Another course of action is to send a notice and takedown letter to the web hosting company (i.e. GoDaddy) indicating that the site is infringing upon your copyright and requesting that the web hosting company take the work down. Additionally, many web hosting companies have their own policies in place, which can typically be found on their website and which will assist a party when their work has been infringed upon.
Also keep in mind that if the possibility of a working relationship could exist between the of the infringer and you or if the exposure may actually be helpful to you by giving you credit for your work, you could try a telephone call first to see if an arrangement can be made where the company can be given a license to use your work. If that does not work, you can proceed with the other options.
For more information, please contact Kim Grimsley.
by Mike Oliver | May 1, 2013 | Intellectual Property, LegalEase, Trademarks, Uncategorized
“The previous play is under review.”
San Francisco 49er’s quarterback Colin Kaepernick is the latest on a long list of celebrities and sports figures to turn to trademark law in the effort to protect something believed to be rightfully theirs.
These efforts are sometimes fleeting, and they often bring the ire of fans. However, the reactions are frequently created by internet and media hype generated from legal analysis that is incorrect. What Colin Kaepernick has actually done is apply for a trademark on the standard character phrase “Kaepernicking” for “Clothing, namely shirts.”
The legal intention of this is most likely not to prohibit fans from “Kaepernicking” themselves, or either saying or using the phrase in general. Rather, Kaepernick is presumably attempting to solidify legal grounds for his own personal business activity profiting off of “clothing, namely shirts” using the term. Applying for a trademark is a basic legal practice for those looking to protect business interests on something proprietary.
A product can be created and made available for sale almost instantaneously using computer tools and sites that perform sales and fulfillment. Celebrities have had their hands practically forced in these issues by the emergence of unscrupulous vendors that rush to create and sell unauthentic products profiting off of their fame.
That would presumably be his intention. The outcome of the actions he is taking is more questionable. The red challenge flag has been thrown.
“Kaepernicking” is his surname turned into a verb. Appropriate trademark use generally requires the mark to be used as an adjective. That is, to describe a noun representing a product or service. The International Trademark Association describes this by stating “never use a trademark as a verb. Trademarks are products or services, never actions.”
At first glance this does not appear to be a valid trademark because the mark itself is a verb. What difference does that make you might ask?
In other words (pun intended), people use the term “FedEx” to identify the service provided by FedEx for fast reliable delivery. If you were to say “I was FedExing,” or “please FedEx this box” you are no longer describing a product or service. You are instead stating an action and describing it generically.
There is additional case law pertaining to a trademark that is comprised primarily of a surname, as in the case of Kaepernick. A surname is capable of acting as a trademark as long as it has been used for a sufficient time to gain secondary meaning- which typically is at least 5 years. Kaepernick may need to have a longer career in the limelight prior to counting his eggs in that basket, as merely adding “ing” to a surname may not be enough to avoid this rule.
However, there was a similar effort last year after Tim Tebow revived the Denver Broncos and “Tebowing” almost broke the internet in the process. According to United States Patent and Trademark Office records, a flood of trademark requests were filed and all of them were initially refused because of a false connection with a living individual. That is, until Tebow’s own company XV Enterprises LLC began filing trademarks. His company has since successfully registered a trademark for “Tebowing” for shirts.
Kaepernick can overcome the connection to the living individual issue by consenting to the trademark. The key, however, is must use the mark to identify his product – shirts. In the case of Tebow, the word is actually used as a mark on clothing and not merely to describe an action, so it was properly registered as a trademark.
To date, Kaepernick does not seem to be using the term to identify a good. Initially, it was reported he was simply trying to trademark the act of kissing his muscles after doing something. That is not a trademark usage.
A quick look at the application filed for “Kaepernicking” shows what could be an attempt to take a similar approach to that of Tebow in order to gain ownership of a trademark for the term. It describes showing the term in large letters at the top center of a shirt.
While this would better satisfy the use of the mark in trade, there is a variety of case law that suggests this particular strategy might not be sufficient. When used on merchandise, “the size, location, dominance and significance of the alleged mark as applied to the goods” are all relevant factors to be considered in determining whether it also functions as a trademark[1].
Large lettering across the center of a shirt is most commonly denoted as the design of the shirt. Although there is no prescribed method or place for affixation of a mark to goods, the location of a mark on the goods “is part of the environment in which the [mark] is perceived by the public and . . . may influence how the [mark] is perceived.[2]”
With respect to clothing, consumers have been conditioned to recognize small designs or discrete wording as trademarks if placed, for example, on the pocket or breast area of a shirt; however, consumers typically do not perceive larger designs or slogans as trademarks, especially when such matter is displayed in a different location on the clothing[3].
When it is not perceived as an indicator of the source of production, cases are commonly dismissed due to what is known as ornamental refusal.
It will be up to the real referees at the United States Patent Office to make the final call. However, a closer look suggests that the quarterback may have been sacked on this play.
For more information contact
[1] ., In re Pro-Line Corp., 28 USPQ2d 1141, 1142 (TTAB 1993); In re Dimitri’s Inc., 9 USPQ2d 1666, 1667 (TTAB 1988); In re Astro-Gods Inc., 223 USPQ 621, 623 (TTAB 1984); see TMEP §1202.03(a)
[2] In re Tilcon Warren Inc., 221 USPQ 86, 88 (TTAB 1984); see In re Paramount Pictures Corp., 213 USPQ 1111, 1115 (TTAB 1982).
[3] See TMEP §1202.03(a), (b), (f)(i), (f)(ii); see, e.g., In re Pro-Line Corp., 28 USPQ2d at 1142 (finding “BLACKER THE COLLEGE SWEETER THE KNOWLEDGE,” centered in large letters across most of the upper half of a shirt, to be a primarily ornamental slogan that is not likely to be perceived as source indicator); In re Dimitri’s Inc., 9 USPQ2d at 1667-68 (finding “SUMO,” used in connection with stylized depictions of sumo wrestlers and displayed in large lettering across the top-center portion of t-shirts and caps, to be an ornamental feature of the goods that does not function as a trademark).
by Mike Oliver | May 1, 2013 | Case law, Intellectual Property, Litigation, Patents, Uncategorized
In ACTIVEVIDEO NETWORKS, INC. v. VERIZON COMMUNICATIONS, INC., case available here Verizon mostly lost its appeal after a jury awarded the plaintiff substantial damages related to infringement of patents plaintiff held on video on demand services. The trial court also had awarded a permanent injunction against Verizon, which had it been upheld, Verizon would have had to remove VOD services for its subscribers. However, the appeal court held that a permanent injunction was not justified, primarily because money damages would be sufficient (the plaintiff had previously negotiated with another provider and licensed its patents).
Even though the injunction was overturned, Verizon will end up paying a significant per subscriber amount for the license, on the order of 20 times the royalty rate negotiated with a prior licensee.
This case contains a very good analysis of many issues that are presented in patent trials ( which themselves are rare) including marking, hypothetical negotiation, and the requirements of expert testimony. Indeed, Verizon lost much of the case because most of its expert testimony was excluded because it was conclusory.
For more information, contact Mike Oliver.
