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Most Important US Trademark Court Cases of 2015 (Personal and Very Unofficial Version)

This time of year most folks reflect on the year that passed, looking into the new year. Newspapers and magazines compile various rankings. Legal publications come up with lists of most important cases or events of 2015. The Sputnik Blog will not miss this opportunity and do some reflecting and ranking of its own.

The Sputnik Blog discussed many trademark cases in 2015. Some of those cases made it to various unofficial rankings of most important US legal cases. Take for example, Top 10 Trademark Rulings Of 2015 of IP360.

(IP360 is part of Law360, which is a daily online newsletter on various areas of law popular among American lawyers, particularly in Big Law.)

This Blog has recognized the importance and actually discussed 3 out of 10 in IP360’s top 10 trademark rulings, including two in top three. This Blog also got one case as an honorable mention (out of 4). Not bad, given that the Sputnik Blog focuses not just on trademarks, but on all IP and some litigation and even corporate law that impacts IP owners. And unlike the subscribers of IP360, this Blog’s readers do not have to pay for getting access to the Blog’s postings.

The Sputnik Blog agrees that number 1 should be B&B Hardware Inc. v. Hargis Industries Inc. This is a U.S. Supreme Court’s ruling in March 2015: decisions handed down by the Trademark Trial and Appeal Board (TTAB) could, in certain situations, later be considered binding on a federal court. See Sputnik Blog's posting.

The Supreme Court noted:

“When the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply… The fact that the TTAB and district courts use different procedures suggests only that sometimes issue preclusion might be inappropriate, not that it always is.”

B&B Hardware immediately increased the importance of registration disputes before the TTAB.

The case ranked number 2 in IP360—the Federal Circuit’s ruling In re: Simon Shiao Tam—came out on December 22, 2015, just before the Holiday season in the Western world. The ruling was in favor of a band called The Slants that was denied a registration on the grounds that its name was a racial slur. The Federal Circuit, an appeals court, overturned a pervious ruling that upheld the United States Patent and Trademark Office's (USPTO) rejection of the band's application by striking down a provision of U.S Trademark Act as unconstitutional, Section 2(a). Under Section 2(a), the USPTO could reject trademarks it deemed offensive or disparaging to others. The Court has said that a ban on federal trademark registrations for words that “disparage” people is a violation of the First Amendment to the U.S. Constitution (guaranteeing the freedom of speech, among other basic rights of an individual).


It was undisputed that the term “slants” refers to people of Asian descent. The Urban Dictionary defines “Slants” as “epicanthic fold or epicanthal fold or epicanthus is a skin fold of the upper eyelid, covering the inner corner of the eye.” In fact, the leader of the band, Simon Tam, who is of Asian descent, admitted to the derogatory meaning of the term. He explained that the band had chosen the name in order "to undercut slurs about Asian-Americans that band members heard in childhood, not to promote them."

It has been long since a federal court had invalidated a provision in U.S. Trademark Act. Many experts agree that the Slants case is headed to the U.S. Supreme Court. The Blog might still write about this case in more detail, as the analysis of the First Amendment might be interesting to many.

Also, one cannot but notice that the Slants decision may be a game-changer for the Redskins organization, an American football team based in Washington DC. The organization lost its trademark registrations for its REDSKINS based on the same provision in TTAB in 2014.

Earlier in 2015, in July, in Pro-Football, Inc. v. Blackhorse et al, U.S. District Judge Gerald Bruce Lee in Virginia affirmed the TTAB 2014 decision to cancel Washington Redskins’ trademark registrations on its controversial name and logo. The term “redskins” arguably is offensive to Native Americans.
RedskinsFootball.png
This case is number 3 according to IP360. The Virginia Judge also shot down the team’s protest that the federal ban on offensive marks is unconstitutional:

“Simply put, the court holds that cancelling the registrations of the Redskins marks ... does not implicate the First Amendment as the cancellations do not burden, restrict or prohibit [the team's] ability to use the marks.”

Did the Virginia Judge get that backwards? According to the Federal Circuit’s subsequent ruling in Slants, Yes, he did. Essentially the Federal Circuit’s Court shared Justice John Marshall Harlan’s famous expression "one man's vulgarity is another man's lyric."

But the Slants decision does not overrule the Redskins decision, although the inconsistency is obvious. Federal Circuit’s decisions are not directly binding on the court in another circuit such as Redskins’ court in Virginia. However, experts almost universally agree that the Supreme Court would take on the constitutionality of the Section 2(a) provision. So, it remains to be seen. Maybe the Federal Circuit got it wrong, not the Virginia Judge.

The Supreme Court’s decision on trademark tacking in Hana Financial Inc. v. Hana Bank made it to number 8 in IP360. In Hana Bank, the Court said that juries, rather than judges, should make the key ruling on whether to apply the doctrine of “tacking.” Tacking allows trademark owners to retain a priority first-use date even if they slightly modify their mark over the years, “tacking” the old date onto the updated the mark.

I would put Hana Bank in top 5 not only because it was the Supreme Court's first substantive trademark ruling in 10 years, but also because of the significance of this case for trademark registration purposes, not just for trademark litigation. Please see Sputnik Blog posting.

Another case discussed by the Sputnik Blog concerning the registration, which also achieved an “honorable mention” in IP360, was Couture v. Playdom Inc.

There, on March 2, 2015, the Federal Circuit said a service mark can only be deemed “used” in commerce, a key requirement for a registration, when the service has actually been rendered, not when it’s merely been advertised. This case is important in determining the date of first use of a service mark. This in turn is important for priority purposes. Also, remember, you generally cannot register a mark unless you used the mark in U.S. In the context of a service mark, this means you need to provide a service to a customer physically located in U.S.

Cases that did not make to the Sputnik Blog, but have been featured in various “Top Cases” are not necessarily less important. (Unfortunately, there is only 24 hours in a day.) In particular, one more case deserves discussion. The Federal Circuit’s ruling in Frito-Lay North America Inc. v. Princeton Vanguard LLC in May 2015 overturned a trademark office ruling that the Pretzel Crisps brand name was too generic to be registered as a trademark. IP360 ranks it as number 10, but I would put this case higher.

There, Snyder's-Lance uses Pretzel Crisps brand name for flat, cracker-like pretzels. The TTAB had canceled the mark as generic at Frito-Lay’s request. The Federal Circuit Court, on appeal, said the Board took “short cuts” in doing so, namely by considering each word rather than the mark as a whole:

“Where, as here, the record is replete with evidence of the public’s perception of the term PRETZEL CRISPS as a whole, it is unclear why the board would resort to analyzing the terms individually or why it would believe doing so would aid its analysis.”
PretzelCrisps.png

Federal Circuit’s ruling on Pretzel Crisps has important ramifications for registering trademarks that consist of two or more descriptive terms, but when the entire combination may be quite original or has acquired recognition among the purchasing public. In particular, this case helped our client, ArtsQuest, to register its Musik Fest brand (albeit on the Supplemental Register, for now), in connection with organizing and conducting its nationally acclaimed festivals in Lehigh Valley, Pennsylvania in August, although the USPTO’s trademark examiner would not admit.
MusikFest.png

What do you think were the most important decisions in 2015, and what cases (other than review of the Slants and Redskins) shall we watch for in 2016?

Text © Maxim A. Voltchenko 2016

* This piece is not intended to be a review of U.S. court cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Trademark Owners: Be Aware of Fraudulent Solicitations

Trademark owners routinely receive solicitations that are either scam or, at best, offer services that the trademark owners do not need. In most cases, the trademark owners either figure out the scam on their own or ask their attorneys and get usually the following response: trash those solicitations.
It would not be worthwhile to write about trademark solicitation fraud, if most recently one of our clients did not fall victim of such fraud. Hence, this Blog has decided to remind brand owners about trademark solicitations and provide some tips how to recognize them.

This particular trademark owner received a notification concerning a so-called Section 8 Declaration of Continued Use to be filed with the US Patent and Trademark Office (USPTO) to keep the trademark registration in force for the balance of the ten-year period. Under U.S. law, the trademark owner must file such a declaration, along with a current sample of use of the mark and payment of official fee, between the 5th and 6th year after the registration. This is a unique US requirement. Because the notification and invoice came from “Patent and Trademark Office” and otherwise looked official, the client thought it came from the U.S. Patent and Trademark Office and paid the invoice. This is how one of the forms looked like:
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The form looks like an official document. True, the form on its face says that “Patent & Trademark Office is private business that is not endorsed by the U.S. government.” However, this “disclaimer” is buried in the middle of a long paragraph and in smaller print than the rest of the text. Needless to say that the client overlooked the fine print.

Of course, a more attentive trademark owner would have noticed something else wrong with this form. For example, that the internet address does not end with .gov and the telephone number contains an area code for Manhattan, New York (212). The owner should have at least asked itself, why is it New York, not Washington DC. Of course, those trademark owners who are savvy, know that the US Patent and Trademark Office is in Alexandria, Virginia (VA).

Had the trademark owner went online and visited the website of “Patent & Trademark Office,” the owner would not have necessarily realized that it is dealing with shady businesspeople, if not fraudsters. The PatentTrademarkOffice.US website looks legit, and in fact contains mostly accurate substantive law information.
PTO_website.png

However, nowhere does the PatentTrademarkOffice.US website state that this is a private company, not connected with real Patent and Trademark Office in any way. It’s “About us” page says the following:

About us
For many businesses, the process for registering and renewing patents and trademarks can be difficult, complicated, and fraught with chances for error. Every year, businesses and individuals lose millions of dollars in valuable intellectual property because of missed deadlines and procedural mistakes. The Patent Trademark Office provides the expertise that modern businesses need to navigate the Trademark and Patent renewal processes.
You need experienced, professional assistance to protect your assets. Don’t let your hard-earned property go to waste!
Headquartered in New York City, the Patent Trademark Office is the nation’s premier Trademark and Patent renewal service.

Do you see the difference? “The Patent Trademark Office is the nation’s premier Trademark and Patent renewal service.” Can it be more subtle than this?!

By far “Patent & Trademark Office” is not the only dubious scheme out there, and probably not even the worst. My favorite scam operators are the ones in Eastern Europe: Registration of International Trademark WDTP in Prague, Czech Republic and WIPT World Patents Trademarks in Bratislava, Slovak Republic. For a hefty sum in Euros, they offer you to include your trademark in “World Registry of Trademarks.” Finally, many businesses’ wish came true. You can now get a worldwide trademark. I am being sarcastic of course. Seriously, you don’t need to be included in any unofficial “registry.” You might as well write in your handwriting “My Brand XYZ is a Registered Worldwide Trademark” and post in your unfinished basement. That basement notice probably would reach even more people than registration in a bogus registry.

These fraudulent companies usually use names that resemble either the USPTO or World Intellectual Property Organization (WIPO), an international organization based in Geneva, Switzerland that administers international trademark applications under the Madrid Protocol and Agreement. In case of fraud on US trademark owners, such companies, for example, would contain one or more of the terms "United States," "U.S.," "Trademark," "Patent," "Registration," "Office," or "Agency." Increasingly, like in the PatentTrademarkOffice.US example, some companies attempt to make their solicitations mimic the look of official government documents rather than the look of a typical commercial or legal solicitation by emphasizing official government data like the USPTO application serial number, the registration number, the International Class(es), filing dates, and other information that is publicly available from USPTO records. Many refer to other government agencies and sections of the U.S. Code. Most require "fees" to be paid.

A word of advice to trademark owners, whether in US or elsewhere. Be sure to read trademark-related communications carefully before making a decision about whether to respond. All official correspondence will be from the "United States Patent and Trademark Office" in Alexandria, VA, and if by email, specifically from the domain "@uspto.gov." Of course, it would be best to ask a qualified US trademark attorney regarding the legitimacy of the form you received. Usually the USPTO does not communicate directly with trademark owners if that owner designated the attorney or record and, in case of foreign owners, a domestic representative (who usually is the same as the attorney of record.)

Relatively recently, the USPTO began sending courtesy reminders to trademark owners directly, by email, about renewals. The Sputnik Blog® wrote about USPTO’s courtesy reminders.

What to do if you already paid such a “renewal” company? As strange as it sounds ask the company directly for a refund, especially if you have paid recently. Our client did just that, and the PatentTrademarkOffice.US’ customer service (yes, they do appear to have a real customer service) promised to refund our client after the Holidays and New Year’s. (I am curious to see if they really do.)

The USPTO cannot help you obtain a refund from these private entities if you have been misled into paying money or signing up for their services based on a misleading communication. The USPTO encourages trademark owners to file with the Federal Trade Commission (FTC) an on-line consumer complaint. Although the FTC does not resolve individual consumer complaints, it may institute, as the nation's consumer protection agency, investigations and prosecutions based on widespread complaints about particular companies or business practices. In addition, the USPTO encourages recipients of deceptive trademark-related solicitations to contact their states' consumer protection authorities. Many, if not all, states have the authority to issue investigative subpoenas and file complaints against companies engaged in deceptive practices directed toward state residents. Of course, the question is how mush hassle do you want to go through? Some, perhaps many, would not necessarily want to throw good money in going after bad money.

The USPTO itself warns you that by paying to these companies you are not guaranteed that your registration will in fact be properly maintained. So, in the example of filing a Section 8 Declaration of Continued Use, you still want to contact your trademark counsel and most likely make the proper filing.

If you recently filed a trademark application in US, you may receive an email communication from a service that may not necessarily be fraudulent, but offering some services. Trademarkia is one of them. Trademarkia, a Silicon Valley company, claims to be the largest “free” U.S. trademark search engine. They also offer a variety of paid services, some of them may well be helpful or even needed. Because Trademarkia is somewhat a competitor, I would not say anything bad about it. At least in this blog posting.

If you have a story you wish to tell about Trademarkia or any other solicitation mail or email including those mimicking USPTO and WIPO, please feel free to comment here or write to the Sputnik Blog® in private. We would love to hear from you!

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a review of USPTO or WIPO fraud. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

He Who Doesn’t Risk Never Gets to Drink Champagne: The USPTO’s Board of Trademark Appeals Holds REUBEN’S BREWS for Beer is Not Confusable with RUBENS for Wine

The owner of the REUBEN’S BREWS mark took the risk, appealed the US Patent and Trademark Office’s (USPTO) refusal to the USPTO’s Trademark Trial and Appeal Board (TTAB or the Board) and won. It can now drink the Champagne as the victor.

"Beer [or wine?] is proof that God loves us and wants us to be happy"
Ben Franklin

The Sputnik Blog® does not often discuss TTAB decisions, and even less frequently write about ex parte appeals. (An ex parte appeal is essentially a dispute between the owner of a refused trademark application and USPTO examiner.) However, one recent TTAB case caught my attention. The USPTO refused registration of the mark REUBEN’S BREWS & Design for "beer," finding it likely to cause confusion with the mark RUBENS for "wine" under Section 2(d) of the Trademark Act. The owner of the beer mark appealed to the Board. And the Board reversed the refusal finding no conflict, even though the Board did conclude that beer and wine are related products. In re Reubens Brews LLC, Serial No. 86066711 (October 27, 2015) [not precedential].

Reubens Brews.png

rubens.png

Yours Truly co-leads a Continued Legal Education Program of trademarks for The Benjamin Franklin American Inn of Court in Philadelphia on November 17, 2015. The program will focus on use of a surname for craft beer and wine. So, we will discuss this case.

inn of court.png
In re Reubens Brews stands out because the Board tends to uphold USPTO examiners’ Section 2(d) refusals, but here it did not. This case is also interesting because just a couple of months before, the Board, in another beer/wine case, did find a likelihood of confusion between WINEBUD for wine and well-known BUD brand for beer. That case was a so-called inter partes proceeding involving two parties, when one party opposed another party’s application. A nheuser-Busch, LLC v. Innvopak Systems Pty Ltd., Opposition No. 91194148 (August 17, 2015) [precedential].

In In re Reubens Brews, Applicant, the beer company, concedes that the marks REUBEN’S BREWS and RUBENS sound the same, at least in part, but argues that the marks are sufficiently distinct due to differences in spelling, connotation, appearance and the fact that Applicant’s mark indicates that the mark is for beer, not wine.

To this latter point Applicant emphasizes the differences between beer and wine.

humor.png
The Examiner maintains that the marks and goods are similar, and that the goods move in the same trade channels to the same classes of purchasers.

The Board considered this case based on an analysis of all of the facts in evidence that are relevant to the factors bearing on the likelihood of confusion. In re E. I. du Pont de Nemours & Co., 476 F.2d 1357, 177 USPQ 563 (CCPA 1973). In any likelihood of confusion analysis, two key considerations are the similarities between the marks and the similarities between the goods.

The first factor—the similarities between the goods—favored finding a likelihood of confusion, the Board noted, but only slightly. The Board acknowledged that beer and wine are different in nature, ingredients and method of production. However, the Board pointed to overwhelming precedents holding that beer and wine have been found related products.

As evidence that the goods are related, the examining attorney submitted approximately 20 excerpts of third-party websites showing that beer and wine can emanate from the same source, usually a combination winery/microbrewery, often under the same mark. These include the following: Charleville Winery & Microbrewery offering “hand-crafted wines and microbrewed beers” (charlevillevineyard.com); Von Jakob Winery & Brewery (vonjakobvineyard.com).

In response, Applicant submitted evidence showing that at the end of 2013 there were an estimated 7,762 wineries (winesandvines.com) and 2,822 breweries (brewersassociation.org) in the United States. The Board has found that Applicant’s evidence somewhat diminishes the probative value of the examining attorney’s evidence, and that there is merit to Applicant’s argument that “while there may be a few instances where wine and beer are both created at the same location, the frequency is statistically insignificant when, collectively, over 10,500 wineries and breweries exist throughout the United States.”

With respect to another core du Pont factor—the similarity of the marks—the Board noted that we must compare the marks in their entireties as to appearance, sound, connotation and commercial impression to determine the similarity or dissimilarity between them. The proper test is not a side-by-side comparison of the marks, but instead ‘whether the marks are sufficiently similar in terms of their commercial impression’ such that persons who encounter the marks would be likely to assume a connection between the parties. Although marks must be considered in their entireties, it is settled that one feature of a mark may be more significant than another, and it is not improper to give more weight to this dominant feature in determining the commercial impression created by the mark.

The Board has found that the marks at issue here are sufficiently different in appearance and meaning and overall commercial impression, even though that they are similar in sound. The Board has noted that in comparing the marks we cannot overlook the prominent design portion of Applicant’s mark, most specifically the presence of a barley stalk (barley being a key ingredient in beer) that serves to reinforce the term BREWS.

BREWS specimen.png

Further, the REUBEN’S and RUBENS portions are depicted in very different styles of lettering. In sum, the marks, when considered in their entireties, are visually very different.

As to meaning, the term REUBEN is defined as “a son of Jacob and the traditional eponymous ancestor of one of the tribes of Israel; a grilled sandwich of corned beef, Swiss cheese, and sauerkraut usually on rye bread.” RUBENS, on the other hand, is the surname of the Flemish painter Peter Paul Rubens (1577-1640). Registrant’s wine labels bearing the registered mark also display reproductions of Baroque-style paintings, thus suggesting that consumers are already familiar with the painter and will make this association. The Board thus has concluded that the marks convey different meanings.

However, perhaps the most significant was the thirteenth du Pont factor—the factor which rarely comes into play in most other cases, but did help Applicant in this case—relating to “any other established fact probative of the effect of use.” Applicant highlights the fact that the USPTO has registered identical or substantially similar marks, one for beer and the other for wine, that are owned by separate entities. Third-party registrations for wine and beer examples of peaceful coexistence with the same name include:

3d party marks.png

Although the Board was somewhat skeptical of the evidentiary value of these examples, they apparently did sway the Board in favor of Applicant. It reversed the refusal, and allowed REUBEN’S BREWS application to proceed in registration process.

I am curious whether the owner of the RUBENS wine label would consider opposing the REUBEN’S BREWS application, and if it does oppose, how the opposition would play out. What do you think?

Text © Maxim A. Voltchenko 2015
* This piece is not intended to be a review of USPTO and TTAB practices. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

EU’s Decision Invalidating the US-EU Safe Harbor Agreement on Data Transfers Forces Businesses Reconsider Their Compliance Programs

“Trust but verify” the Russian proverb says, as President Reagan made that proverb famous to the rest of the world regarding arms-control agreements in late 1980s. On October 6, 2015, the Europeans told the US: “we cannot trust you anymore with what you are doing with our personal data. Hence, we will verify first and then trust you. Maybe.”
EU data.png

On October 6, 2015, the European Court of Justice (ECJ) invalidated the European Commission’s Decision 2000/520/EC of 26 July 2000 “on the adequacy of the protection provided by the safe harbor privacy principles...,” which declared the adequacy of the Safe Harbor agreement between the US and EU.

Europe has a long history of personal data protection and has traditionally been seen as having a higher standard than the rest of the world. European data protection legislation therefore builds in a standard of protection for personal data that is being transferred outside of Europe. The EU’s Data Protection Directive of 1995 (Directive 95/46/EC) states that transfer of an EU citizen’s personal data from any EU member state to a country outsides the EU (third country) may only take place if the third country ensures an ”adequate” level of privacy protection.

The EU and the US negotiated the Safe Harbor agreement in 2000. Under the Safe Harbor, US companies could self-certify that the protections they provide are equivalent to the requirement under EU’s privacy laws. Many companies involved in the cross-border transfer of personal data from the EU to US relied on the Safe Harbor. Largely due to Edward Snowden’s revelations about the US surveillance program, the Europeans began to doubt the safety of their personal data. An Austrian privacy activist Max Schrems commenced the legal proceedings challenging the US privacy practices and the Safe Harbor, which ended up in the ECJ.



The October 6, 2015 ECJ’s lengthy decision provides a background on this matter and explains why the Europeans can no longer trust us or rather cannot trust our legal system. However, what is more important are the ramifications for businesses. US companies now must review their data safety compliance programs other than under the Safe Harbor.

Experts agree US tech giants such as Facebook and Google have enough resources to comply with the changed landscape of international data transfers regulations. It is small and medium enterprises (SMEs) that will be most impacted. Prior to the Safe Harbor’s invalidation, more than 4,500 US companies relied on the Safe Harbor to ensure adequate compliance with EU personal data laws.

The European regulators and enforcing agencies admit that they will not immediately start banging on the next door to bring no-complaint companies to book. They recognize that businesses will need some time to access the impact of the EU decision and make alternative arrangements. SMEs involved in US-EU data transfers, though, should act promptly.

Many SMEs keep their data on cloud. Perhaps the first thing that SME owners or managers should do is to contact their cloud providers based in US to see if they are Safe Harbor registered, and if so, make alternative arrangements. They might need to renegotiate their agreements or consider using an alternative legal method of data transfer.

Alternative methods of data transfer include: consent, EU model clauses and binding corporate rules (BCRs). All these methods present their own risks and challenges.

EU data protection laws permit the transfer of personal data outside EU where an individual has given his or her fully informed, explicit, voluntary and unambiguous consent. European jurisdictions vary as to what constitutes a valid consent. In this context, US companies would have to seek consent retroactively, which may or may not be possible.

Another alternative is to use model contract clauses. The European Commission has approved such clauses that may be incorporated into agreements between exporting and receiving entities. So, US companies must renegotiate with their EU partners to incorporate the appropriate model clause into their agreement.

In essence, parties to model contract clauses must warrant and undertake that they have complied with data protection standards which meet the requirements of the EU Data Protection Directive in respect of the data.

Among other things, a data importer cannot subcontract without the prior written consent of the data exporter and then only by way of a written agreement imposing the same obligations on the subprocessor as the model clauses impose on the data importer. The data importer remains fully liable for the activities of its subprocessor. Where subprocessors are involved, the data exporter must have a list and copies of all subprocessor agreements.

The data exporter and importer must accept liability to data subjects for breach of those standards, with cross indemnities to ensure that the one responsible for the actual breach meets the cost of the breach.

Some EU member states require model clauses to be filed with or even approved by, regulators, thus making compliance costly. Some speculate that the model clauses could be scrutinized and invalidated under the same theories that invalidated the Safe Harbor, bringing their long term effectiveness into question.

BCRs are a compliance basis for EU companies wishing to share personal data with US companies that are a part of their same corporate group. Some EU experts say that the process for implementing BCRs is the most time-consuming and difficult of the alternative options.

Thus, as of now, use of model clauses probably provides the most effective alternative way of compliance with EU data protection laws.

Text © Maxim A. Voltchenko 2015
* This piece is not intended to be a review of EU and US data protection and privacy laws. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog®, readers are urged to check independently on matters of specific concern or interest.

Apple v. Samsung: Utility Patents, Design Patents and Trade Dress – You Need All to Protect Your Innovation—This is a Takeaway from Appeal

On May 18, 2015, the Federal Circuit decided the appeal in the much-publicized Apple v. Samsung case. This Blog wrote about that case in the September 2012 post.

The Court reversed the jury verdict that Apple’s trade dresses—the look of iPhone—are protectable and vacated the damages award against Samsung for trade dress dilution. However, the Court upheld the jury’s verdict on the design patent infringements, the validity of two utility patent claims, and the damages awarded for the design and utility patent infringements appealed by Samsung.

Samsung Apple.png

The upheld part of the verdict accounted for much of the $930 million damages jury award in this case. Crucially the court rejected Samsung’s argument that the damages should be based only on the part of its profits attributable to infringement. Rejecting Samsung’s apportionment argument, the Court ruled that the 1887 design patent statute states that Apple is entitled to all of Samsung’s profits.

Trade dress is a type of a trademark that refers to characteristics of the visual appearance of a product or its packaging that signify the source of the product to consumers. For example, the shape of a classic Coca-Cola bottle is protectable trade dress. The appearance and décor of a chain of Mexican-style restaurants is another example.

Generally, to be protectable a trade dress must not be functional. In general terms, a product feature is functional if it is essential to the use or purpose of the article or if it affects the cost or quality of the article. That is, the configuration of shapes, designs, colors, or materials that make up the trade dress in question must not serve a utility or function outside of creating recognition in the consumer’s mind. For example, the color red in a line of clothing probably, say, located on a pocket of a garment, is not functional (and thus part of protectable trade dress), whereas the same color on a stop sign would be functional because the color red serves the function of putting drivers on alert (and thus would not be part of a protectable trade dress).

In the Apple v. Samsung case, there were two trade dresses at issue: registered and unregistered. The registered trade dress is shown in Registration No. 3,470,983 (‘983):

Apple trade dress.png

The mark consists of the configuration of a rectangular handheld mobile digital electronic device with rounded silver edges, a black face, and an array of 16 square icons with rounded edges. The top 12 icons appear on a black background, and the bottom 4 appear on a silver background….

The Court described Apple’s unregistered trade dress as follows:

a rectangular product with four evenly rounded corners;
a flat, clear surface covering the front of the product;
a display screen under the clear surface;
substantial black borders above and below the display screen and narrower black borders on either side of the screen; and
when the device is on, a row of small dots on the display screen, a matrix of colorful square icons with evenly rounded corners within the display screen, and an unchanging bottom dock of colorful square icons with evenly rounded corners set off from the display’s other icons.

In order to establish nonfunctionality the party with the burden must
demonstrate that the product feature serves no purpose other than the source identification.

The Court accepted Samsung’s arguments that almost all of these elements carried some function. For example, rounded corners improve “pocketability” and “durability” and rectangular shape maximizes the display that can be accommodated. A flat clear surface on the front of the phone facilitates touch operation by fingers over a large display. The bezel protects the glass from impact when the phone is dropped. The borders around the display are sized to accommodate other components while minimizing the overall product dimensions and so on.

Although Apple pointed out to alternative designs, specifically tiles in Windows-based phones, the Court noted that Apple failed to show that any of these alternatives offered exactly the same features as the asserted trade dress.

With respect to the registered trade dress, the Court noted that individual elements claimed by the ’983 trade dress are functional. For example, there is no dispute that the claimed details such as “the seventh icon depicts a map with yellow and orange roads, a pin with a red head, and a red-and-blue road sign with the numeral ‘280’ in white” are functional. The Court further noted that Apple failed to explain how the total combination of the sixteen icon designs in the context of iPhone’s screen-dominated rounded-rectangular shape—all part of the iPhone’s “easy to use” design theme—somehow negates the undisputed usability function of the individual elements.

Thus, the Court reversed the district court’s denial of Samsung’s motion for judgment as a matter of law that Apple’s trade dresses are functional and therefore not protectable.

On the appeal, Samsung won a battle, but lost the war. The Appeals Court upheld the district court’s verdict on utility patents and design patents. The infringed utility patents claim certain features in the iPhone’s user interface. One utility patent relates to a user’s double tapping on a portion of an electronic document that causes the portion to be enlarged and “substantially centered” on the display. The second infringed utility patent involves a computer-based method for distinguishing between scrolling and gesture (such as zooming) operations on a touch screen.

The infringed design patents claim certain design elements embodied in Apple’s iPhone:
AppleDesign1.png
AppleDesign2.png AppleDesign3.png

Unlike utility patents, design patents cover new, original, and ornamental designs of articles of manufacture. Design patents, thus, complement, but do not replace, utility patents in litigation and offer several practical advantages in litigation involving articles of manufacture. In cases where an accused infringer literally copied the patented product, a design patent may be especially useful.

Samsung contended that it should not have been found liable for infringement of the asserted design patents because any similarity was limited to the basic or functional elements in the design patents. Samsung raised this issue in the context of the jury instructions and the sufficiency of evidence to support the infringement verdict. However, the Court did not find Samsung’s arguments persuasive. The Court found that Samsung failed to show prejudicial error in the jury instructions as a whole that would warrant a new trial and upheld the verdict.

There are several lessons that can be learned from this decision. Perhaps the most important one is that businesses should utilize all forms of IP to protect their innovation. Many experts particularly note design patents as one of most often overlooked tool of protecting innovation. In fact, Apple v. Samsung illustrates that point vividly.

Here is why design patents may be useful for businesses. First, design patents are typically obtained very quickly in comparison to utility patents. While the average utility patent now takes approximately three years to obtain after filing, the average design patent takes only a year and a half to obtain. Consequently, it may be possible to obtain a design patent that can be asserted in litigation against a copycat product years before a corresponding utility patent on the same product is available.

Second, design patents are subject to much less scrutiny during prosecution than utility patents, yet are entitled to very large damage awards. Much of the nearly $1 billion damages award to Apple was based on design patents rather than utility patents. (Samsung said in its appeal brief that trade dress accounted for $382 million of the damages, while Apple argued most of that figure was still supported by the evidence even if the trade dress finding was reversed.)

Whether businesses will heed the teachings of Apple v. Samsung remains to be seen.

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a review of Federal Circuit or other courts’ cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog, readers are urged to check independently on matters of specific concern or interest.

See full text of decision in Apple Inc. v. Samsung Electronics Co. Ltd. et al, Case 14-1335, Fed. Cir. May 18, 2015 below.

New GTLDs: Jury is Still Out On Them From A Business Standpoint, But Trademark Clearinghouse Has Largely Lived Up To Its Expectations

We are almost a half way through the roll-out of the new gTLD (generic top level domains) space. As of April 17, 2015, out of 1930 submitted applications for new gTLDs, 593 have been completed, i.e., delegated – “introduced into Internet.” 551 applications have been withdrawn or otherwise will not proceed. 786 are currently still in the process. See ICANN stats.

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From a business standpoint, new gTLDs have been a disappointment so far. Real businesses and the public at large are yet to embrace them. I have not seen a single functioning website with a URL residing on a new gTLD.

Most experts, while generally agree that .com will remain the king of the internet for the foreseeable future, suggest that it could take at least 4-5 years for us to see the results of the largest domains’ real estate expansion. See Expert roundup: What’s the future for the new gTLDs?

What have been working relatively well though is the defensive legal mechanism—for the benefit of trademark owners—introduced together with the roll-out of new gTLDs. The central place in that mechanism occupies the Trademark Clearinghouse or TMCH.

TMCH.png

The TMCH, in its own words, is the central repository for validated trademarks for the purpose of protecting brands in the new gTLD program. The TMCH provides brand owners the ability to protect their trademarks in all new TLDs. Eligibility in the TMCH is limited to active registered trademarks from a national or multinational jurisdiction, as well as to trademarks that are validated by a court order or treaty. To participate in the TMCH, trademark owners or their representatives must file their marks and submit TMCH registration fees directly with the TMCH.

The two main benefits available to trademark owners who register with the TMCH are the Trademark Claims Service and the Sunrise Service.

Sunrise Service. To take advantage of a Sunrise Period, trademark owners must be registered in the TMCH and must also submit a proof-of-use of the mark, that is, a sample of current use. A proof-o-use could be either a label, tag, or container from a product or advertising and marketing material such as a catalog or product manual. Once the proof-of-use is accepted by the TMCH, the trademark holder is able to participate in all TLD sunrise periods for which its mark is eligible.

For example, eligible members of the global banking community that have registered their trademarks in the TMCH may take advantage of the Sunrise Period for .bank in May 18 – June 17, 2015. By comparison, other eligible members of the banking industry will be able to register domains only in the General Availability period starting on June 24, 2015 and on. Since domains will be awarded on a first-come, first-served basis in all registration periods, the implication is that you will be much better positioned for a desirable domain, if you have a TMCH registration.

Incidentally, many hope the general public will appreciate some of the advantages of new gTLDs with the introduction of .BANK and .INSURANCE. A coalition of banks, insurance companies and financial services trade associations partnered to establish fTLD Registry Services (fTLD) in order to apply for and operate the .BANK and .INSURANCE gTLDs on behalf of the global banking and insurance communities. The founding organizations claim that the .BANK gTLD has enhanced security requirements that exceed that of most existing and new gTLDs. As a result, they say .BANK will be a trusted, verified, more secure and easily identifiable space on the Internet for the global banking community and the customers it serves.

Trademark Claims Service. Even if a mark owner does not wish to purchase any domains in any of the new gTLDs, it can still use the TMCH registration defensively. In fact, most trademark owners who register their trademarks with the TMCH use the TMCH registrations precisely for that purpose. The key advantage is, by registering a mark with the TMCH, the trademark owner receives email notices when another party registers a domain name that matches their mark. In addition, the party buying a domain name in a new gTLD also receives notice that a trademark exists on the domain name they seek to purchase, essentially putting the domain name buyer on notice. You are effectively warning others of your trademark rights.

Also, you will be able to monitor the new gTLD domain zone and be able to identify a party that is registering a new domain with your brand. In most cases, you probably would not care. For example, if your brand were TDAmeritrade (a US online broker for online stock trading, long-term investing, and retirement planning), you probably would not care if somebody registered domains such as TDAmeritrade.plumbing or TDAmeritrade.bike. But in some cases, you as a brand owner may want to take action against undesirable purchases (or rather purchasers) of domains with your brand.

All in all, arguably the TMCH has been the only relative success of the new gTLD program so far. I say “relative” because the registration procedure with the TMCH itself is not free from glitches. For example, I have had cases when the TMCH would not accept as proof of use specimens (samples of use of the mark) that the U.S. Patent and Trademark Office has accepted. Also, the TMCH’s customer service experience could be much better, again as compared as to that of the USPTO. But overall, the TMCH has been functioning. And wouldn’t you agree that that in itself can be regarded as a success?

Text © Maxim A. Voltchenko 2015
* This piece is not intended to be a review of Internet Law or technology and domain names industry. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog (SM), readers are urged to check independently on matters of specific concern or interest.

US Supreme Court: What Happens at TTAB Need Not Stay There and Rules that TTAB Decisions May Have Issue Preclusive Effect on District Courts

On March 24, 2015, the US Supreme Court handed down a long-anticipated opinion in a trademark case. It held that decisions of the US Trademark Office’s Trademark Trial and Appeal Board (TTAB) may, in some cases between the same parties, have preclusive effect on likelihood of confusion issues and therefore be binding on a district court in a subsequent case:

So long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before a district court, issue preclusion should apply.

The Sputnik Blog already wrote about the facts of B&B Hardware, Inc. v. Hargis Industries, Inc. and the issue that was before the Supreme Court. (Click here.)

The facts can be summarized as follows (using Justice Alito’s account of the facts). B&B owns SEALTIGHT, while Hargis owns SEALTITE. B&B manufactures fasteners for the aerospace industry, while Hargis manufactures fasteners for use in the construction trade. Although there are obvious differences between space shuttles and A-frame buildings, both aerospace and construction engineers prefer fasteners that seal things tightly.

B&B had prior use of its SEALTIGHT mark and registered it in 1993. In 2002, the Trademark Office published Hargis’ SEALTITE mark and B&B opposed it. B&B argued that SEALTITE could not be registered because it is confusingly similar to SEALTIGHT. B&B explained, for instance, that both companies have an online presence, the largest distributor of fasteners sells both companies’ products, and consumers sometimes call the wrong company to place orders. Hargis responded that the companies sell different products, for different uses, to different types of consumers, through different channels of trade.

Invoking a number of the DuPont factors, the TTAB sided with B&B. The Board considered, for instance, how the two products are used (differently), how much the marks resemble each other (very much), and whether customers are actually confused (perhaps sometimes).

The TTAB considered a number of likelihood of confusion factors and determined that SEALTITE for drilling metal screws for use in the manufacture of buildings is confusingly similar to SEALTIGHT used in connection with fasteners and other related hardware . . . for use in the aerospace industry. Despite right to do so, Hargis did not seek judicial review in either the Federal Circuit or District Court.

All the while, B&B had sued Hargis for infringement. Before the District Court ruled on likelihood of confusion, however, the TTAB announced its decision. B&B argued to the District Court that Hargis could not contest likelihood of confusion because of the preclusive effect of the TTAB decision. The District Court disagreed, reasoning that the TTAB is not an ordinary court (as contemplated by the US Constitution). The jury returned a verdict for Hargis, finding no likelihood of confusion.

B&B appealed to the Eighth Circuit, the appellate circuit where the district court in the state of Arkansas is located. The Eight Circuit affirmed for the following primary reasons: because the TTAB uses different factors than the Eighth Circuit to evaluate likelihood of confusion and because the TTAB placed too much emphasis on the appearance and sound of the two marks, and did not give enough consideration to actual use of the respective parties’ marks.

The Supreme Court took this case for its review, reversed and remanded the case back to the Eight Circuit for further proceedings, consistent with the Supreme Court’s opinion.

The Court noted:

There is no categorical reason why registration decisions can never meet the ordinary elements of issue preclusion. That many registrations will not satisfy those ordinary elements does not mean that none will…

Contrary to the Eighth Circuit’s conclusion, the same likelihood-of-confusion standard applies to both registration and infringement. The factors that the TTAB and the Eighth Circuit use to assess likelihood of confusion are not fundamentally different, and, more important, the operative language of each statute is essentially the same…

Hargis claims that the standards are different, noting that the registration provision asks whether the marks “resemble” each other, 15 U. S. C. §1052(d), while the infringement provision is directed towards the “use in commerce” of the marks, §1114(1). That the TTAB and a district court do not always consider the same usages, however, does not mean that the TTAB applies a different standard to the usages it does consider. If a mark owner uses its mark in materially the same ways as the usages included in its registration application, then the TTAB is deciding the same likelihood-of-confusion issue as a district court in infringement litigation. For a similar reason, the Eighth Circuit erred in holding that issue preclusion could not apply because the TTAB relied too heavily on “appearance and sound.”
The Court went on:

The fact that the TTAB and district courts use different procedures suggests only that sometimes issue preclusion might be inappropriate, not that it always is. Here, there is no categorical “reason to doubt the quality, extensiveness, or fairness” of the agency’s [TTAB’s] procedures. In large part they are exactly the same as in federal court.

When registration is opposed, there is good reason to think that both sides will take the matter seriously. Congress’ creation of an elaborate registration scheme in the Lanham Act, with many important rights attached and backed up by plenary review, confirms that registration decisions can be weighty enough to ground issue preclusion.

Trademark practitioners and litigators differ on the propriety of this Supreme Court’s decision and its consequences. Some disagree with it and argue that it poses more questions than answers, which may be true. Yet many have welcomed the decision because they consider the TTAB as a tribunal who has the experience and expertise to provide rulings with issue preclusive effect.

However, there is consensus that parties to TTAB proceedings will take them more seriously and likely invest more resources in them or skip them altogether in favor of litigation in district courts. The stakes have become much higher. Those who would prefer a district court over the TTAB would do so largely because they would want an all-out battle as opposed to a slow-moving TTAB proceeding. They would want a decisive forum rather than a piece-meal quasi-litigation.

Yet in some cases litigating in a district court might not be an available option. For example, when a junior party that is trying to register the mark is not actually using the mark but only holds an intent to use application that was approved by the US Trademark Office and published for opposition. In fact, probably a majority of applications filed by foreign trademark owners are in fact such applications. Domestic applicants also increasingly file such applications. Of course, perhaps those disputes—in which one party is not using the mark—might not exactly qualify for issue preclusive effect. The Supreme Court did not specifically address that or other situations as examples of a TTAB ruling, which should not have an issue preclusive effect.

Consider another example. If a TTAB proceeding is decided by default (for instance, defendant failed to respond), such as decision will not have a preclusive effect. Preclusion requires that the issue decided was actually and necessarily decided as part of a valid final judgment. A default judgment has no issue preclusive effect, since no particular issue has been decided on the merits, which is a pre-requisite for the application of issue preclusion. (A default judgment does have claim preclusion effect, in that the losing applicant cannot get a registration by re-filing the same application.)

What a party to a TTAB proceeding should do, if it is not satisfied with a TTAB decision and wishes to avoid the preclusive effect of it? Appeal it. Simple as that. You could appeal the TTAB decision to seek review in the US Court of Appeals for the Federal Circuit or you can file a new action in district court. Often infringement claims are added to the action. Once the appeal is filed, the TTAB decision will unlikely have any preclusive effect.

These are just a few possible scenarios. No doubt, once this decision sinks in, practitioners will develop new strategies.

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a review of U.S. Supreme Court cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog(SM), readers are urged to check independently on matters of specific concern or interest.

US Federal Circuit Clarifies that a Service Mark is Not in “Use” Until the Services Are Provided: Advertisement Alone is Not Enough

On March 2, 2015, the U.S. Court of Appeals for the Federal Circuit (CAFC) affirmed a decision of the Trademark Trial and Appeal Board (TTAB) in which the TTAB cancelled the registration of David Couture for the PLAYDOM service mark for entertainment services. CAFC agreed with the TTAB that actual rendering of services is required for a service mark to be considered to be “used in commerce” under the U.S. Trademark Act (also known as Lanham Act). Under U.S. Law for a trademark or service mark of a domestic U.S. applicant to be registered, the mark must be “used in commerce.” In a precedential decision, CAFC has explained what it means for a service mark to be “in use.” Couture v. Playdom, Inc., Appeal No. 2014-1480 (Fed. Cir. March 2, 2015) [precedential].

Mr. Couture filed a use-based trademark application in May 2008. It submitted a screen capture of a website offering writing and production services for movies, etc. The screen capture of the website submitted as a sample of use included only a single page, which stated: “[w]elcome to PlaydomInc.com. We are proud to offer writing and production services for motion picture film, television, and new media. Please feel free to contact us if you are interested: playdominc@gmail.com.” The webpage included the notice: “Website Under Construction.”
playdom.png

The TTAB latter established that Mr. Couture did not have his first customer until March 2010, almost two years after the filing.

The Patent and Trademark Office (PTO) registered the mark, but the problem for Mr. Couture arrived when somebody else, namely, Playdom, Inc., tried to register the identical mark-PLAYDOM. Playdom, Inc. is an online social network game developer popular on Facebook, Google+ and MySpace. The PTO cited Mr. Couture’s registration as a conflicting, and Playdom, Inc. petitioned to cancel Mr. Couture’s blocking registration.

Playdom, Inc. argued, among other things, that Mr. Couture registration was void ab initio (at the time of filing) because he had not used the mark in commerce as of the filing date of his application. On February 3, 2014, the Board granted the cancellation petition, stating that Mr. Couture “had not rendered his services as of the filing date of his application” because he had “merely posted a website advertising his readiness, willingness and ability to render said services,” and the registration was therefore void ab initio. Mr. Couture appealed to CAFC.

The law itself is clear on its face. To apply for registration under Lanham Act §1(a), a mark must be “used in commerce.” 15 U.S.C. §1051(a)(1). A mark is used in commerce

on services when [1] it is used or displayed in the sale or advertising of services and [2] the services are rendered in commerce, or the services are rendered in more than one State or in the United States and a foreign country and the person rendering the services is engaged in commerce in connection with the services.
However, unlike, for example, Canada, surprisingly there has not been a significant case that directly has addressed whether the offering of a service, without the actual provision of a service, is sufficient to constitute use in commerce under Lanham Act. CAFC acknowledged that. CAFC agreed with the TTAB’s literal reading of the law that actual rendering of a service is required.

The significance of this decision may be going beyond the filing of applications. Some applicants file on the basis of their intention to use the mark in commerce. So, there is no requirement to use the mark (actually render services) at the time of filing the application. However, when such applicants file a statement of use, they tell the PTO that the mark is now in use, please register the mark. Obviously the requirement that the underlying services under the mark be actually rendered applies to those situations as well under this case.

Two more points to consider. Mr. Couture filed his application as a pro se applicant, without the representation by an attorney. In October 2014, this blog wrote about another pro se applicant in Nationstar who got in trouble, although on different legal grounds.

But even for a pro se applicant it is probably surprising that he left such a huge red flag: submitted a screenshot of his website that says “Website Under Construction.” No doubt that invited opposing counsel’s inquiry as to whether the mark was actually in use at the time of the filing.

Another moral of the story is that many problems with filings often do not appear at the PTO’s examination level, but mostly if there is a conflicting party. Thus, that fact that your application successfully passed the PTO examination and was approved or even registered is not a guarantee that you will not have problems later, down the road.

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a review of TTAB or CAFC cases. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog(SM), readers are urged to check independently on matters of specific concern or interest.

"Yelp me to yelp you”: A Company that Publishes Customer Reviews About Local Businesses Says It Does not Need Any Help from Others and Sues Sites That Allegedly Sell Bogus Reviews

Many of us wonder how reliable “crowd-sourced” review sites like Yelp, TripAdvisor, and Angie’s List are. After all, who really takes the time to write a review? We also wonder what the business model of these review sites is. Do they take “advertising” money from restaurants and other service providers to let them have higher rankings and be featured in top search results, just like if you purchase Google Ad Words you can appear in sponsored ads in Google search results? If they do, can we still trust these sites?

A recent lawsuit suggests that Yelp appears to take the “integrity of its platform” seriously, and sued companies that claim that they can improve your rating on Yelp. Yelp filed a complaint in federal court in California on February 13, 2015 against the operators of YelpDirector, Revpley, and Revleap.me. These three companies apparently are connected. Yelp accused them of trying to “game the system” and “undermine the integrity of Yelp’s platform” by writing “fraudulent” reviews to boost the ratings of businesses that fork over cash. (Yelp claims it has a proprietary algorithm that attempts to evaluate whether a review is authentic and filters-out reviews that it believes are not based on a patron's actual personal experiences, as required by the site's Terms of Use.)
In particular, Revleap.me advertises its services as follows:

Our Service [allows]:
⦁ [m]ost [to] achieve a 4 or 5 Star rating inside 2 months.
⦁ Keep your positive reviews on the first page while pushing your negative to the back.
⦁ 4 & 5 Star are posted to review platforms you designate. 3 Star and below are withheld in the Control Center for your quality control.
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Very interesting. What does it mean that 3 star and below reviews “are withheld in the Control Center for your quality control”? Does it mean that you can essentially remove poor reviews? Yelp argues that’s exactly what it means and that you cannot and should not do that.

Indeed, when you look closely at the Revleap.me site, it does not explain that aspect of its business. Instead Revleap.me focuses on what it calls the “aggregation of existing positive reviews about your business.” But it do not necessarily explain how it does that aggregation either.

Yelp alleges that Revleap.me and its affiliated sites (“Defendants”) spam its customers. Yelp says in its complaint that Defendants send business owners unsolicited spam email and text messages inviting them to use their services. Yelp alleges that the promises that Defendant give to its customers are false and fraudulent.

The legal tools that Yelp uses to stop Defendants are noteworthy: its trademarks and breach of contract.

First of all, Yelp uses its trademark rights to stop Defendants. Indeed, Revleap.me displays the Yelp logo on its home page (obviously without the permission of Yelp), along with the logos of Google Plus, TripAdvisor, and Facebook. See the screen shot below.
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The word Yelp is also used in messages that Revleap.me sends to its customers. Yelp also accuses Defendants of domain name cybersquatting because the domain <YelpDirector.com> contains the word mark YELP.

Defendants have not yet filed their answer, but they will probably raise the defense of nominative fair use. They will say, just like an independent auto mechanic can legally say it repairs AUDI, Volkswagen and Toyota cars, Defendants can use the YELP name in advertising their services. After all, Defendants do provide services that are allegedly improving the profiles on Yelp.

Another legal tool Yelp is using is a breach of contract. Yelp argues that Defendants have violated Yelp’s Terms of Service (TOS). When a user logs into the Yelp Site or creates a Yelp account, the user must agree to the Yelp TOS, which govern access to and use of the Yelp Site. Each Defendant created a Yelp user account and has accessed the Yelp Site to contribute reviews and other content. As such, Defendants have agreed to and are bound by the Yelp TOS. Yelp argues that Defendants breached numerous provisions of the Yelp TOS and Content Guidelines.

Yelp’s choice of legal claims can teach you a lesson. Usually trademarks are used to prevent a competitor from trading on your goodwill and unfairly competing with you. Yelp’s use of its trademarks show how a business can stop someone’s undesirable activity, which is not in fact directly competing with your business, if at all. Likewise, many online businesses create TOS as an afterthought, if at all. Yelp’s use of TOS shows that TOS can come in handy.

Incidentally, you can also find an attorney on Yelp. Scary? Not really. Avvo-rated profiles and client reviews, anecdotally, are more influential. However, no online tool can probably replace the offline word of mouth, at least for finding a good lawyer…

Many players in the so-called online reputation management industry are watching closely how the Yelp case is going to develop. One study found that having an extra star on Yelp causes the revenue of a business to rise by 5 to 10 percent. So, there’s a direct connection between Yelp ratings and a business’ bottom line. Thus, there is a lot at stake for everyone involved.

Yelp’s legal victory (or failure) will not necessarily result in fewer (or more) manipulations in the crowd-sourced local business online review industry. Interestingly, in previous years Yelp itself was accused of manipulating its reviews, but the court never established that.

Curiously, does this case make you want to use a Yelp service more or less?

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a review of reputation management industry. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog (SM), readers are urged to check independently on matters of specific concern or interest.

USPTO Reduces Filing Fees for Electronic Filing of Trademark Applications

On January 17, 2015, the US Patent and Trademark Office (USPTO) reduced certain trademark fees, namely it introduced the new filing option “TEAS Reduced Fee” or TEAS RF application filing option. (For you, acronym buffs, TEAS stands for Trademark Electronic Application System.) On November 23, 2014, this Blog wrote about USPTO courtesy reminders regarding the deadlines. In addition to adding value to its services, the USPTO now reduces the cost of its services.

So, you can now file a trademark application electronically for $275 per class, not for $325 per class. There is no catch. You would have to continue to correspond with USPTO electronically, via TEAS. (Many trademark practitioners and trademark owners do everything electronically anyway.) The option for paper filings remains available for those dinosaurs who are still out there. $275 for TEAS RF is not as good as $225 for TEAS Plus, but TEAS RF has one significant advantage. Unlike TEAS Plus, you can identify the listing of goods and/or services freely, without the terms prepopulated by the USPTO’s Identification of Goods (ID) Manual. My prediction is that the New TEAS Reduced Fee option will quickly become the most popular option.
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$50 in savings does not seem like a big deal. True, for most companies and businesses it isn’t. However, if you as a small business owner file a multiple-class application or file multiple single class applications, you will definitely appreciate the reduction. It would have been even nicer, if the USPTO also reduced the official fees for maintaining and renewing the registrations. But, as far as I know, this is not in the works.

Curiously, the European Union also has trademark fee reduction initiative in the works. However, like everything in Europe, things are moving very slowly. While the proposals seeking to modernize the EU’s existing system, both at EU and at national level, were introduced in March 2013, those proposals are still going through the labyrinths of the EU bureaucracies. Do not expect the changes until later this year, perhaps toward the end of 2015.

Back to the USPTO, it is more good news. On February 5, 2015, the USPTO launched its newly redesigned website. The USPTO website now looks more like a 2010’s site than the site from 2000s. The important stuff—portals on Patents, Trademarks and Learning and Resources—is right on top of the page, in larger font. Clutter is removed. The text is streamlined. All in all, the site became more user-friendly. Check it out.
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E-government in the U.S. continues to improve. Stay tuned.

Text © Maxim A. Voltchenko 2015

* This piece is not intended to be a USPTO practice review. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in the Sputnik Blog(SM), readers are urged to check independently on matters of specific concern or interest.