Free Software is Copyrightable; Open Source Train Rolls On

August 20, 2008 – 5:35 pm

A recent decision by the Court of Appeals for the Federal Circuit has reassured members of the open source software movement by declaring that software distributed for free is still protectable by copyright.

Open source software development thrives on continuous additions and improvements made by many different people, but attribution of preexisting code to the previous authors remains important.  Use of open source code for profit requires such attribution or at least description of any alterations made to the code.  The sharing of such information is the basis for the movement and helps perpetuate open source development.

Recently, a U.S. District Court in San Francisco had ruled that a plaintiff whose code had been taken and used for profit without attribution could only sue for breach of contract, not for copyright infringement.  The ability to sue for copyright infringement is important because it is typically easier to recover monetary damages in infringement suits (in certain instances) than those based on breach of contract.  Robert Jacobsen manages a software development company which created an application to help program computer chips used in model trains.  The group later discovered that KAM Industries was using their code in their competing product without attribution.

The decision was appealed to the Federal Circuit, which vacated the judgment of the lower court and returned the case for further proceedings.  The Federal Circuit held that “[t]raditionally, copyright owners sold their copyrighted material in exchange for money.  The lack of money changing hands in open source licensing should not be presumed to mean that there is no economic consideration, however.”

While the final decision from the district court is forthcoming, it will be consistent with the decision of the superior court, the Federal Circuit, so open source developers can rest easier knowing that the material they created remains copyrightable, and that they can use all the traditionally-available tools to defend their copyrights.

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Revamped Certification Mark is Kansas’ Latest Effort to Promote its Own

August 14, 2008 – 7:31 am

The State of Kansas is updating the stamp of approval it gives to local growers.  Now, products that have at least 75% of their ingredients from, or processing in, Kansas can apply to display the certification mark Simply Kansas.

For the past 30 years, a similar certification mark had been available: From the Land of Kansas.  In addition to the name and logo changes, the revamping includes an update to the services included in the program.

Governor Kathleen Sebelius voiced her approval of the change, announced on Monday by the Kansas Department of Commerce, saying that it would help smaller growers compete with their larger competitors.  Said Sebelius, “many…entrepreneurs don’t have the resources to promote their products on a large scale.  That’s where Simply Kansas can help, and that’s why we’re so excited about the program.”

Local news reports say that, in addition to the privilege of displaying the Simply Kansas logo, producers who qualify for the program will have access to marketing assistance and educational opportunities to help level the playing field for all Kansas growers.

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Certification marks are often confused with traditional trademarks, but the two forms of identification in fact carry very different meanings.  Trademarks are, in short, source identifiers.  They serve to inform consumers of who produced or manufactured a given product.  Certification marks don’t serve to identify the source of the product, but rather identify the product as possessing certain characteristics which a third party (owner of the certification mark) has decided are noteworthy.  These characteristics are often quality standards, but can also relate to area of geographic origin, mode of manufacture, or even the manufacturers themselves (that they all belong to a certain union, for instance).

Imagine a Eureka vacuum cleaner which has been given the Good Housekeeping Seal of Approval.  “Eureka” (as well as any accompanying logos) is a trademark, indicating that this particular vacuum cleaner was manufactured by The Eureka Company. 

The Good Housekeeping Seal of Approval is a certification mark; the vacuum cleaner was not produced by GH, but it fulfills certain standards set by GH, and so GH has given it an official “thumbs-up” of sorts.  Of course, the owner of the product (Eureka) needs to give permission for the certification mark to be displayed with the product, but in most cases a certification mark indicates positive qualities of the product, and so an owner would be happy to show that its product had surpassed certain standards.

To register a certification mark, an organization must provide the USPTO with, among other things, a copy of the guidelines by which it will decide which products or services are deserving of the mark.

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Dell’s Attempt to Trademark “Cloud Computing” Hits a Wall

August 13, 2008 – 12:06 pm

The software giant’s attempt to trademark the term “cloud computing” has been the topic of lots of recent tech buzz.  Cloud computing refers to a type of technology whereby software is accessed remotely by users who have no control over the infrastructure which supports the software.  Both this infrastructure and the software itself can be updated, improved, and expanded upon, and the new software can be implemented immediately thanks to the Internet-based nature of the system; ”The Cloud” is a long-standing nickname for the Internet in connection with this sort of setup.

Many participating in the discussion surrounding Dell’s attempt to trademark CLOUD COMPUTING decry the attempt, claiming that the term has been in wide use (though specific meanings of the term have varied somewhat) since at least the early 2000s.  Such “genericness” of a term is grounds for a refusal to register it, because if the public has adopted a term as the sole way to describe something, it can’t be taken out of the public domain and monopolized by a single party.  At least one other who isn’t concerned by Dell’s application disagrees, claiming that the term only came to widespread use in late 2007, and  isn’t generic.  Another point of contention amongst software companies is that Dell is by no means considered a leader in cloud computing development, and so its decision to attempt to control the term’s use is, in the eyes of some, a peculiar and presumptuous move.

Dell filed the application in March of 2007, asserting a bona fide intent to use the mark CLOUD COMPUTING in connection with:

“Custom manufacture of computer hardware for use in data centers and mega-scale computing environments for others” in Class 040, and

“Design of computer hardware for use in data centers and mega-scale computing environments for others; customization of computer hardware for use in data centers and mega-scale computing environments for others; design and development of networks for use in data centers and mega-scale computing environments for others; Consulting services for data centers and mega-scale computing environments in the fields of design, selection, implementation, customization and use of computer hardware and software systems for others; Consulting services for data centers and mega-scale computing environments in the fields of design, selection, implementation, customization and use of computer hardware and software systems for others” in Class 042.

After issuing one Office Action and considering Dell’s response, the PTO published the mark for opposition on April 15, 2008.  Such publication is an opportunity for those who feel they might be damaged by the registration to file their grievances with the PTO.  No oppositions were filed, so the PTO issued a Notice of Allowance on July 8, 2008.  At that point, Dell simply needed to show that it was using the mark in commerce in connection with the services listed above.

A visit to www.dell.com/cloudcomputing suggests that Dell would be able to show use in commerce.  But on Wednesday August 6th, before any Statement of Use was filed, the PTO cancelled the Notice of Allowance and returned the application to the examination phase.  It’s unclear at this point why exactly the PTO has decided to cancel the Notice of Allowance - perhaps it is reconsidering its conclusion that the term is registerable.

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Sony BMG Settles with Louis Vuitton

August 5, 2008 – 3:47 pm

The French fashion house filed suit last year against the recording company for allowing several of its artists to display unauthorized Louis Vuitton trademarks in their music videos and on CD literature.  The matter has reportedly been settled for about $156,000. 

Fashionphile has managed to capture stills from the infringing videos.

In Britney Spears’ music video for the song “Do Somethin’” she and her friends pilot a flying pink hummer through the clouds.  At one point, we see her drumming her fingers on the car’s dashboard, which is upholstered in LV’s famous cherry blossom print.  The dashboard shot is less than one second long, but it was long enough to draw the attention and ire of Louis Vuitton’s fiercely protective intellectual property team.

More overt use of LV’s trademarks comes in Da Brat’s video, which includes a Louis Vuitton beach umbrella and beach ball.

American Idol victor Ruben Studdard had printed liner notes for his new CD on LV-mongrammed paper.

The strength of LV’s case was bolstered by the fact that LV does not in fact produce any of the products shown in the infringing materials, which exacerbates the confusion generated by the misuse of the trademark.  As part of the settlement agreement, Sony BMG agreed, of course, to stop using LV’s marks in its videos, to pull Studdard’s CD from the shelves (at least until its layout is redesigned), and to educate its various record labels about unauthorized use of LV’s trademarks.

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Nickelodeon and Other Companies Not Clowning Around With Their I.P.

July 31, 2008 – 11:23 am

It seems like just yesterday a kid’s birthday party could be put over the top by the appearance of a regular old birthday clown.  Some of the kids would be entertained, most would be petrified, and the party would be a success regardless.  These days, writes Katherine Rosman of the Wall Street Journal, the perfect birthday party is getting harder to pull off.

Disney and Nickelodeon and Marvel and other similar companies have succeeded in capturing the rapt attention of children.  Rosman quotes an author as writing that, since 1990, the number of television shows aimed at two- to five-year olds has quintupled.  The characters on these shows quickly become adored by near-maniacal throngs of children, who come to desire every possible exposure to Nemo or SpongeBob or Spider-Man.

In most cases, the characters’ creators happily oblige, providing everything from Nemo socks to SpongeBob backpacks.  But the companies have thus far been unwilling to authorize the use of adult-size costumes of the characters, which makes it difficult to grant a five-year-old’s birthday wish to have Dora the Explorer at her party.  Finding Nemo is harder than you think.

The sticking point for owners of the rights in the cartoons is the difficulty of policing and regulating the use of their characters.  Rosman aptly describes this fear: “they don’t want Dora to show up at a party with a cigarette dangling from her mouth.”  This concern is a valid one; any divergence from the character’s TV appearance, personality, interests, or other traits risks confusion, disillusionment, or even revulsion on the part of the adoring children.

Ineffective regulation of a trademark’s use can result in its abandonment.  While it may sound cruel to deprive children of their favorite TV characters on their special day, the risk of losing rights in a character through ineffective policing and abandonment is far too great a risk for companies to please small groups of children at a time.  So, companies instead opt to keep tight grips on their characters, arranging appearances only at more public (and more expensive) places like theme parks, where both the ease of regulation and the level of exposure are higher.

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Gucci and the Godfather: Counterfeit Purses May Fund Organized Crime

July 30, 2008 – 3:16 pm

Federal agents are stepping up efforts to curb the proliferation of counterfeit purses.  Designer knock-offs have become so ubiquitous that the Immigration and Customs Enforcement agency (”ICE”) is concerned that their sale is a key revenue source for organized crime syndicates.

In a news story here, Nebraska TV station KETV7 says it snuck hidden cameras inside a handbag-selling get-together, a so-called “purse party.”  Among the designer brands of which replicas were sold at this party were “Coach, Prada and Chanel.”  The story quotes William Wallrapp of the ICE as saying that some counterfeit handbag sellers can make upwards of six figures.

These knock-offs can rob legitimate companies of millions of dollars a year.  But while this is a serious issue, Wallrapp says that a more serious issue is that many times organized crime rings around the world are the actual producers of the fakes.

That means that while fashion-frenzied shoppers feed their need to sport the latest style (or something closely resembling it), they may be unwittingly funding crimes far more serious than counterfeiting.

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Apple Seeks to Torpedo Attack of the Clones

July 25, 2008 – 4:10 pm

Florida corporation Psystar Corp., owned by brothers Rudy and Robert Pedraza, has been sued by Apple Inc. for copyright infringement, trademark infringement, and breach of contract.  Psystar builds and sells so-called “cloned” computers which run on Apple’s most recent operation system, Mac OS X “Leopard.”

In the complaint, filed last month in U.S. District Court in California, Apple alleges breach of its software licensing agreement, which prohibits use of Apple software on non-Apple computers.  Additionally, Apple highlights its own rave reviews for innovation and helpful technical support and points out a large amount of negative feedback Psystar’s products and tech support have received.  These bad reviews, Apple argues, harm Apple’s own goodwill because of Psystar’s use of Apple products.

Apple seeks monetary damages, an injunction prohibiting Psystar from selling cloned computers and a recall of all previously-shipped units. 

Miami Herald story here.

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EBay wins Trademark Tangle with Tiffany & Co.

July 23, 2008 – 9:26 am

A federal court ruling last week absolved EBay, Inc. of any liability for contributory infringement of Tiffany & Co.’s registered trademarks.

The lawsuit, in which Tiffany alleged that most of the supposedly genuine Tiffany jewelry appearing for sale on eBay were in fact fakes, was initiated in 2004.

Judge Richard Sullivan, a U.S. District Judge in New York, said that Tiffany and other companies are responsible for policing their trademarks if and when they appear on eBay, and that eBay’s generalized knowledge that some of the goods for sale on its site might be fake is not sufficient to impose contributory liability.

This ruling was a welcome change for eBay from an earlier court ruling involving luxury goods.  Last month, a French court awarded designer Louis Vuitton $61 million in connection with counterfeit products.  eBay is appealing that judgment.

While Tiffany was considering an appeal of this week’s ruling, eBay was of course pleased with the outcome, taking the opportunity to emphasize the anticounterfeiting procedures it already has in place.  The online auction company says it spends tens of millions of dollars each year fighting counterfeiting, and actively removes auctions for, and sellers of, reportedly counterfeit goods from the site.  In 2007, close to 100,000 sellers were either kicked off of eBay or, having previously been removed, prevented from returning.

Notwithstanding these procedures, the lesson for trademark owners is clear: it is crucial to be vigilant and to actively police and protect your brand.  Relying on counterfeit protection measures imposed by sites like eBay is very risky, and as this ruling indicates, the onus is ultimately on you to defend your investment.

 AP story here.

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Former IBM Exec. Pleads Guilty to Trade Secret Theft

July 23, 2008 – 9:24 am

Atul Malhotra, 42, faces up to 10 years in prison and a $250,000 fine after pleading guilty to one count of theft of trade secrets.

Malhotra was a director of sales and business development in IBM’s Global Services Division for nearly a decade, from 1997-2006.  He obtained confidential pricing info regarding IBM’s products and materials, then, two months later, took a job as a Vice President with Hewlett-Packard Co.  Shortly after arrival at HP, he emailed the information (”good stuff,” he called it) to two of his superiors, professing that it would give HP a competitive edge.

HP immediately fired Malhotra and turned the information over to authorities.

While HP’s behavior is admirable, trade secret owners cannot expect all companies to act so nobly.  In an earlier post, we detailed the (Illinois) requirements that must be satisfied in order for information to be deemed a trade secret.  Once trade secret status is acquired, the legal recourse available to the owner increases dramatically, but that may still be little consolation if the trade secret is nevertheless stolen and disclosed to a competitor or the public.

The need to protect confidential information is not relieved once a trade secret is established.  Trade secret owners should constantly be ensuring the continued secrecy of the information through confidentiality agreeements with their employees and anyone else who might come in contact with the information.

AP story here.

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Crocs Copycats? Skechers Sued.

July 22, 2008 – 1:12 pm

An earlier post detailed foam footwear manufacturer Crocs Inc.’s subsidiary’s legal defense of its intellectual property.  This time, the parent company is alleging illicit mimicry of its designs and logo by Skechers USA, Inc.  in its new Nano Lite foam shoes.

In a complaint filed July 10 in U.S. District Court in Denver, Crocs alleges that “Skechers’ [Nano Lite foam shoes] are substantially similar to several Crocs-issued design patents [and] bear a confusingly similar imitation of the Crocs’ trade dress. In short, they are knock-offs of well-known Crocs styles.”

The general counsel for Skechers has vowed that the company will “vigorously” defend itself against the “baseless accusations.”

Crocs provided the court with side-by-side comparisons of the two companies’ products, highlighting what it believes to be patent- and trade dress-infringing similarities.  Further, Crocs alleges that the logo on the Skechers shoes, a cartoon bear inside a circle, is confusingly similar to Crocs’ logo, which features a cartoon crocodile inside a circle.

While the outcome of this case is likely a while off, Crocs has demonstrated the proactive defense of its intellectual property that is encouraged of all IP owners.  Intellectual property represents a substantial investment, and companies should not tolerate the misappropriation of revenue derived from those investments.  Experienced counsel can help organize and protect a valuable portfolio of intellectual property rights to help a company succeed.

Footwear News story here.

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