By Ruth Binger
Co-authored by Ruth Binger and Jeffrey L. Michelman
Suppose you plan to buy a large supply of Disney books from an overstocked Barnes & Noble retailer in Taiwan, and then offer your employees the opportunity to purchase the books at a deep discount as gifts for Christmas. You reason that if the employees don’t buy up all of the books, you can always sell the remainder to a discount book chain or on the Internet.
You are approached by the human resources department manager and advised that Disney is very litigious about protecting its copyrights. Because your company is not an authorized seller for Disney products, the manager fears losing an infringement lawsuit.
Fortunately, your legal counsel is familiar with this issue. Upon learning that you intend to make the initial purchase from an authorized Disney retailer in Taiwan, counsel advises that your company is protected by the “First Sale” Doctrine of the Copyright Act.
And the U.S. Supreme Court agrees. In Kirtsaeng v. John Wiley & Sons, the Court held that a legally obtained copyrighted work can be imported into the U.S. and resold without permission from the copyright owner even if it was manufactured and sold overseas. The ruling applies to sale of physical, tangible works and not digital works that are licensed and not easily resold because of license agreements. The Court explained that in a complex and interconnected world, buyers, sellers, and retailers should be able to import and sell products without having to search out the copyright owner to determine if the U.S. copyright owner approves of the sale.
The facts are simple. Kirtsaeng, a Thailand citizen, moved to the U.S. to study mathematics at Cornell University, and entered a Ph.D. program in mathematics at the University of Southern California. Continue reading »
04/1/13 2:48 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comment (0) |
Permalink
U.S. Supreme Court Backs Resellers in Physical Goods Copyright Case
By Jeffrey L. Michelman
The St. Louis Business Journal recently ran an article on how to select an Intellectual Property attorney, yet solely focused on patents. There are other areas of IP that are equally important. I’d like to focus on trademarks, which are a unique proprietary right for several reasons.
A brand or trademark never wears out; with reasonable care, it can be a perpetual asset. Unlike most forms of property, a trademark becomes more valuable with use. The trademark is a reasonably liquid asset that can be sold or licensed. It is also a powerful merchandising shortcut, inducing consumers to purchase the company’s goods or services.
Yet some myths abound. A business sometimes attempts to protect its name by incorporating, qualifying to do business, or reserving the name in various Secretary of State offices. However, the scope of brand name protection afforded by such measures is rather limited. Such methods do not mean that the company’s name is available for use as the brand on products or services because the company name may still infringe another’s pre-existing trademark. Further, incorporating or reserving a business name does not necessarily create the right to exclude others from using the same or similar name on goods and services. A better method offering more comprehensive coverage at a substantially lower cost is federal trademark registration.
You need not register a trademark to have a protectable, exclusive right to it. Under common law, you can acquire trademark rights in the narrow geographic area of your use. State registration of trademarks provides no more protection than is afforded by common law rights. Continue reading »
07/25/12 12:40 PM
Business Law, Intellectual Property, International, Manufacturing and Distribution | Comments Off |
Permalink
The Benefits of Trademark Registration
By Jeffrey L. Michelman
As a manufacturer, you will have “trade secrets.” But do you have a clear understanding of what is considered a trade secret?
Under Missouri law a trade secret can be any:
“… technical or non-technical data, a formula, pattern, compilation, program, device, method, technique or process that (a) derives independent economic value, actual or potential, from not being generally known to, and not being readily ascertainable by proper means by other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.”
Trade Secrets in Manufacturing
Typical trade secrets in manufacturing include tolerances, specifications, formulas, recipes, unusual applications for use of non-evident material, unusual combinations of materials or processing steps, use of non-evident devices, processes of manufacturing, drawings.
The remedies for misappropriation of trade secrets by others can include: getting an injunction against use and further disclosure; your actual losses attributed to the disclosure; reasonable royalty; attorneys’ fees; and punitive damages.
Where Are Your Trade Secrets Most at Risk?
The risk of losing your trade secrets in the manufacturing industry often comes from: Continue reading »
06/20/12 12:02 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comments Off |
Permalink
Protecting Your Manufacturing Trade Secrets
By Joseph R. Soraghan
The JOBS (Jumpstart Our Business Startups) Act (the “Act”), was signed into law by the President on April 5, 2012.
The Benefits to Entrepreneurs
Probably, to entrepreneurs, the most important change in the “Act” is the elimination of the ban on “general solicitation”. This elimination in effect allows advertising of small (heretofore “private”) offerings of investments in their businesses. For companies seeking pre-seed, seed and angel investment, this step creates or implements essentially two new types of offerings:
- Accredited investor offerings, in which the investments may be sold only to accredited investors (those who meet significant net worth or income requirements), which offerings are not new, but in which now the issuing company may advertise the offering in mass settings, such as newspapers, broadcast, and most importantly, on the Internet and in social media; and
- “Crowdfunding” offerings, also generally solicited, in which non-accredited investors may purchase the investments, but only (a) up to the lesser of $10,000 and 10% of their annual income; (b) with the assistance to the company of “intermediaries” who must meet certain requirements; and (c) with maximum sales in each offering limited to $1 million in any 12 month period (hereinafter called “crowdfunding”).
It is my belief that perhaps the most beneficial of the above two “new” offerings will be the first, that which simply removes the prohibition on advertising on offerings to accredited purchasers only. The removal of that prohibition will allow an issuer to reach many more possibly interested persons, and therefore many more accredited investors. And although those offerings will not require the use of registered brokers dealers or unregistered intermediaries, the entrepreneur offering companies will now be able to use “intermediaries” (or “portals”) who no longer must be fully registered as broker-dealers, to assist in finding and working with accredited investors. This will be a huge advantage to entrepreneurs seeking capital. And this type offering will place no restrictions on the dollar amount which the purchasers may acquire or the amount which the entrepreneurial business may raise.
Continue reading »
05/17/12 3:14 PM
Business Law, Emerging Business, Intellectual Property, Manufacturing and Distribution | Comments Off |
Permalink
Crowdfunding is Not the Best Thing in the Jobs Act for Entrepreneurs
By David R. Bohm
Part of a series on issues related to Manufacturers, Distributors and International Trade
Co-authored by David R. Bohm and David A. Zobel
A major change involving subpoenas to non-parties has hit the business world in the state of Missouri.
A new amendment to the Missouri Supreme Court Rules now requires non-party record custodians to physically appear at deposition to produce subpoenaed items, unless all parties to the litigation have agreed that the subpoenaed party may produce the items without appearing.
The amendment changes the prevailing practice where parties send out subpoenas to third parties with a letter explaining that they will be excused from appearing at deposition if they produce the requested items along with what is known as a business records affidavit.
Rule 57.09, as amended, now requires parties to first obtain consent from all other parties to the litigation before a subpoenaed witness may produce documents without attending the deposition. This agreement must be communicated to the witness in writing. Absent this agreement, a witness must appear to produce subpoenaed items at deposition.
What does this mean to you? If you receive a subpoena, you may only produce the documents to the party serving the subpoena without appearing at deposition if that party represents to you in writing (e.g., in a letter) that all other parties have consented to production of the documents without need for you to appear at the deposition. Such a letter should protect you from allegations that you improperly produced records by mail, instead of bringing the documents to the deposition. You do not need to see the actual agreement. If you have any questions as to whether you can simply mail the documents, instead of appearing at deposition, you should either call your attorney for advice or simply wait and bring the documents at the time and place designated in the subpoena.
Continue reading »
03/28/12 12:30 PM
Banking and Finance, Bankruptcy, Business Law, Employment Law, Healthcare, Intellectual Property, Litigation, Manufacturing and Distribution, Real Estate, Tax, Workers' Compensation | Comments Off |
Permalink
Is This by Consent? Changes to Missouri Supreme Court Rule Affect Use of Non-party Subpoenas
By David R. Bohm
Part of a series on issues related to Manufacturers, Distributors and International Trade
In order to prevail on a claim of trademark infringement under the Lanham Act (the federal trademark law), a common law claim of trademark infringement, or a claim of unfair competition, a plaintiff is required to show that the infringing use be “likely to cause confusion or to cause mistake.” 15 U.S.C. § 1114(a).
In Sensient Technologies Corp. v. Sensory Effects Flavor Co., 636 F.Supp.2d 891, 899 (E.D.Mo. 2009), the Court set out determine whether such a likelihood of confusion existed. To make the determination, the Court
“… [considered] six nonexclusive factors.” Everest Capital Ltd. V. Everest Funds Management, LLC, 39 F.3d 755, 759 (8th Cir. 2005). These factors are:
“(1) the strength of the owner’s mark; (2) the similarity of the owner’s mark and the alleged infringer’s mark; (3) the degree of competition between the products; (4) the alleged infringer’s intent to ‘pass off’ its goods as the trademark owner’s; (5) incidents of actual confusion; and (6) the type of product, its cost, and conditions of purchase.”
Luigino’s Inc. v. Stouffer Corp., 170 F.3d 827, 830 (8th Cir. 1999).
Step One in the determination of a claim of trademark infringement involves the strength of the owner’s mark. If a mark is generic, it is entitled to no protection. If the mark is descriptive (which is the weakest category of protectable marks), it is only entitled to protection where the mark has developed secondary meaning; i.e., where the mark is widely recognized as identifying the source of the goods.
A generic term can never function as a trademark because it refers to the common name or nature of the article. Id. A generic term does not identify the source of a product, but rather indicates the basic nature of the product. See id…. “Because a generic term denotes the thing itself, it cannot be appropriated by one party from the public domain….” Likewise, descriptive terms are generally not protectable because they are needed to describe all goods of a similar nature. Such a term describes the ingredients, characteristics, qualities, or other features of the product…to be afforded protection, then, a descriptive term must be so associated with the product that it becomes a designation of the source rather than a characteristic of the product. Schwan’s IP, LLC v. Kraft Pizza Co., 460 F.3d 971, 974 (8th Cir. 2006).
“A strong and distinctive trademark is entitled to greater protection than a weak or commonplace one.” SquirtCo v. Seven-Up Co., 628 F.2d 1086, 1091. (8th Cir. 1980).
Strong marks are those that are suggestive, fanciful or arbitrary, with the last classification (essentially made up words) being the strongest.
Continue reading »
03/27/12 2:35 PM
Business Law, Intellectual Property, Manufacturing and Distribution | Comments Off |
Permalink
To Prevail on a Trademark or Unfair Competition Claim There Must Be a Likelihood of Confusion
By Jeffrey L. Michelman
The Internet Corporation for Assigned Names and Numbers (ICANN) opened the application window on January 12, 2012 for its New Generic Top Level Domain (gTLD) program. This process allows successful applicants to create their own equivalent of a “dot com.” For example .lawyer, .bookkeeper, .toyshop, .womansfashion, .investing, etc. Then the owner of that top level domain can choose to run its own domain registry business, such as Network Solutions or GoDaddy, and charge a fee to others wanting to use the new top level domain.
This move by ICANN could potentially raise the number of available gTLD domains from its current level to over 1,000 new options. Simply put, the Internet is changing and there are key dates all brand owners should keep in mind:
- April 12, 2012: New gTLD application window closes.
- Early May, 2012: Public Application Information will be posted to ICANN’s website.
- From April through November: Application Review, Initial Evaluation and an Objection Filing period will occur.
Brand owners should not ignore what is going on in the Domain Name game and lose a competitive advantage in the Internet marketplace. Businesses would be foolish to fail to review the posted applications to monitor for possible infringement or any other potential competitive harm. The should discuss the findings with counsel to identify the harm and develop a remedy.
Any dispute resolution proceedings must be based upon a complaint brought by one of the following four types of entities, and filed with the specific organization contracted to handle the dispute:
- String Confusion Objections – objector must be a current TLD operator or gTLD applicant in the same round
- Legal Rights Objections – objector must be a legal rights owner whose rights are being infringed
- Limited Public Interest - objections may be filed by any member of the public
- Community Objections – objector must be an established institution clearly defined with a community
- October, 2012: ICANN expects to release the details and procedures for trademark owners to file their registered marks within the Trademark Clearinghouse.
- Early 2013: Timeframe for first new registries to go live.
Now is the time to determine whether your business could be helped by having a new generic top level domain attached to your URL — and whether you could get it if you do want it.
If you and counsel believe the new gTLD is worth it, get that application on file quickly to meet the April cut-off date.
Lastly, be sure to schedule a prompt review of the new gTLDs so timely objections can be filed.
Posted by Attorney Jeffrey L. Michelman, who concentrates his practice on Trademarks and Copyright matters as well as e-Commerce and Social Media issues.
02/7/12 1:15 PM
Business Law, Intellectual Property | Comments Off |
Permalink
New Top Level Domain Name Application Period Opens: Will There Be Another as Successful as “.COM”?
By Marcia Swihart Orgill
Part of a series on issues related to Manufacturers, Distributors and International Trade
The overseas theft of trade secrets is a major concern of companies with business operations outside of the United States. A recent decision by the Court of Appeals for the Federal Circuit provides U.S. companies with a new weapon to protect against trade secret misappropriation that occurs completely outside the United States. While welcome news for U.S. businesses, it is important that they remain vigilant in developing and implementing preventive measures for the international protection of their trade secrets.
In TianRui Group Co., et al. v. ITC et al., 661 F.3d 1322 (Fed Cir. Oct 11, 2011), the U.S. Court of Appeals for the Federal Circuit held that the U.S. International Trade Commission (ITC) has the authority to exclude imports of products into the United States that are manufactured outside the United States using a misappropriated trade secret process, even when the misappropriation occurs outside the United States and there are no goods being manufactured in the U.S. using the protected process.
The Court held that in determining whether a trade secret has been misappropriated, the ITC should apply U.S. federal common law of trade secret misappropriation rather than the law of any particular U.S. state or of the country where the misappropriation occurred. The application of federal common law in actions brought before the ITC involving the overseas theft of trade secrets will make it easier in many cases for U.S. companies to prove the theft of their trade secrets, because proving trade secret misappropriation is generally more difficult under the laws of many other countries.
The holding in TianRui has no bearing on the sale or importation of goods outside the United States that were manufactured using misappropriated trade secrets of a U.S. manufacturer. Consequently, U.S. companies will still need to think globally when adopting trade secret protection measures.
The definition of what constitutes a trade secret and the elements for proving trade secret misappropriation vary from country to country. Additionally, there are regional competition laws that affect trade secret protection. Taking into account these laws when drafting confidentiality and non-compete provision is necessary to ensure trade secret protection and the enforceability of the provisions or agreements. Post-employment restrictive covenants need to be drafted to take into account the relevant statutory and judicial law, because if they are drafted too broadly they will be unenforceable.
In many countries a post-employment non-compete clause is not valid unless there is separate compensation for the restrictive covenant (e.g., China and Germany). In other countries, non-compete agreements are prima facie void on public policy grounds, and therefore, particular care is required when drafting a non-competition agreement in order to ensure that it will be considered reasonable under the applicable country’s laws.
To prove access to confidential information, it is advisable for a company to require written acknowledgement of the receipt of company information from employees, consultants, subcontractors and any other third parties at the time of disclosure, as well as having these individuals sign confidentiality agreements. In some countries, having a signed confidentiality agreement is not sufficient to prove access to a trade secret.
As a result of the decision of the U.S. Court of Appeals for the Federal Circuit in TianRui, U.S. companies have a powerful enforcement mechanism to protect against the imports of competitor products into the United States if the foreign manufacturer engaged in conduct that constitutes an unfair trade practice under U.S. law.
However, when drafting confidentiality agreements, trade secret preventive measures and post-employment restrictive covenants, U.S. companies still need to consider carefully the statutory and judicial laws of the relevant foreign country and region.
Posted by Attorney Marcia S. Orgill. Orgill concentrates her practice in the area of business and personal taxation—especially complex domestic and international tax strategies.
01/31/12 9:41 AM
Intellectual Property, International, Manufacturing and Distribution | Comments Off |
Permalink
Protecting Against the Overseas Theft of Trade Secrets
By Jeffrey L. Michelman
Politicians constantly speak of the small business entrepreneur as the backbone of America, and in fact many of our largest companies today started out as small businesses. Thus, it is surprising that the same politicians who boast of American small business would allow passage of “The America Invents Act.” It is likely to impact small businesses and certainly the individual garage/basement inventor in ways that the politicos haven’t yet considered.
Prior to this new Act, the law in the United States was that the first person to invent a new patentable product is the one who deserved to get the patent, thus giving that person the 20 years (from filing) a monopoly accorded to inventors who successfully achieved patents protection. This meant that there was time to do further research and development and prototype testing; there was time to raise money for achieving patent protection; and the small business owner had every opportunity to be first in line with rights to the monopoly granted under the patent statute. But now that standard has been changed by law. We are witnessing a transition from a first-to-invent system to a first-to-file system used in many foreign countries. Thus an inventor who races to the Patent and Trademark Office (PTO) to file an invention application may well be the one who successfully obtains the monopoly of patentability over a party who actually came up with the idea and invented the product first.
What’s the difference, you say. The difference is very plain to those who understand the patent system. Large corporations have in-house, or at their disposal, plenty of patent lawyers standing by ready to file for patents any new invention or twinkle in the eye of management that seems to be inventive and to get it on file quickly as a provisional patent application which requires limited filing of actual claim elements or filing as a full blown utility patent. The search for money in order to obtain patentability is not an issue for the large corporation. Thus by the time the small business entity perfects the invention and then seeks the money for the expense of patentability, the small business entity may lose in the battle for its place in line giving big business the opportunity to be successful in keeping the small business and, of course, others out of the marketplace once granted the monopoly.
Continue reading »
11/11/11 2:50 PM
Business Law, Emerging Business, Intellectual Property | Comments Off |
Permalink
Is The New Patent Statute Patently Unfair to Small Business?
