New Federal Rules on Electronic Discovery

Amendments to the Federal Rules of Civil Procedure addressing the discovery of electronically-stored information are scheduled to take effect on December 1, 2006. With the Information Age in full swing, the roles of corporate IT departments and IT professionals have changed from merely keeping the company's computer systems up and running to acting as librarians and record keepers for all activities occurring on the company's computer system, including managing electronic data on networks spanning multiple servers, back-up tapes, hard drives, laptops and PDAs. Savvy litigants are increasingly pursuing electronic records of all types as part of the discovery process.

The amendments to the Federal Rules of Civil Procedure attempt to reduce costly discovery disputes pertaining to electronic discovery by offering structure, uniformity and guidance as to how electronic discovery should proceed. However, the rules also dictate a significant amount of work that must be done by litigants in the first 120 days after commencement of the lawsuit. From the beginning of the litigation, litigants must work closely with their IT departments and litigation counsel to ensure compliance with electronic discovery rules. Penalties for non-compliance with the electronic discovery rules can be devastating, ranging from significant monetary penalties to dismissal of lawsuits.

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U.S. Supreme Court to Rule on Issue of Patent Claim Obviousness

More than twenty interested parties have filed amicus curiae briefs in a recent patent case, KSR v. Teleflex (S.Ct. 2006, Docket No. 04-1350). Leave to appeal to the U.S. Supreme Court was granted to clarify the standard of obviousness for a patent claim as propounded by the Court of Appeals for the Federal Circuit. The question presented to the Supreme Court is whether the Federal Circuit has erred in holding that a claimed invention cannot be held "obvious," and thus unpatentable under 35 U.S.C. 103(a) in the absence of some proven "teaching, suggestion, or motivation" that would have led a person of ordinary skill in the art to combine the relevant prior art teachings in the manner claimed. Oral arguments in KSR v. Teleflex are set for November 28, 2006.

A Supreme Court holding that overrules the present Federal Circuit standard by eliminating the "motivation test" will profoundly and retroactively change how the U.S. Patent and Trademark Office and the courts view the standard of obviousness as applied to already granted patents. A reversal will call into question the validity of literally hundreds of thousands of patents, issued after the CAFC added the "motivation test" in 1993. Any arguments presented during patent application prosecution will undergo close scrutiny and any reliance on the Federal Circuit standard will provide a basis to attack patent validity, should the Supreme Court change the standard. The Supreme Court is expected to decide the KSR case during its present term, ending in June 2007.

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MPAA and the Boy Scouts Unveil New "Respect Copyrights" Activity Patch

The Los Angeles area Boy Scouts of America have added a new merit badge, developed in part with the Motion Picture Association of America. This activity patch is another effort to help combat illegal downloading and pirating of movies and music. Partnering with the area Boy Scouts, many of whom come from families that are involved in some aspect of the entertainment industry, is a strategic step for MPAA that aims to change attitudes about intellectual property theft. To earn the badge scouts will have to learn some copyright basics and will also be given the opportunity to visit a studio or to create public service announcements appealing to their peers to not participate in illegal downloading. These scouts may be facing a tall order though, as most of those who partake in pirated movies and music appear to be well aware of the illegal nature of their actions, and consider pirating an acceptable alternative to purchasing movies and music that they may not otherwise be able to afford.
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Artist Takes No Bull

Arturo Di Modica, creator of New York City's famous Charging Bull sculpture, is suing at least 10 companies in Manhattan US District Court, including Wal-Mart Stores, North Fork Bancorp, Art.com, and S.G. Martin Securities, for copyright infringement, alleging that the defendants are selling unauthorized photographs and lithographs of the sculpture or using images of it in advertising without his permission. The copyright was registered in 1998.

The snorting, pavement-pawing, 11-foot-tall, 7,000-pound bronze bull took two years and over $350,000 of the artist's own funds to complete. The sculpture was introduced in 1989, and has since become one of the world's best-known symbols of American capitalism and one of the biggest tourist draws in the financial district. Di Modica has received a fee in the past from film and television companies when he has authorized them to use the bull in motion pictures and television shows.

The sculptor is seeking an unspecified award of damages and part of the profits that resulted from the sales, as well as a court order to block continued use of the sculpture and its image.

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Trademark Dilution Revision Act of 2006 ready for Bush to sign

What has previously been a muddled area of trademark law may get some clarity when, as expected, President Bush signs H.R. 683, known as the Trademark Dilution Revision Act of 2006. This act sets the standard of proof in dilution claims as "likelihood of dilution," and not actual dilution. The Act provides for injunctive relief for famous marks when a likelihood of dilution by blurring or by tarnishment exists, regardless of the actual or likely confusion, competition, or economic injury. 'Dilution by blurring' is association arising from the similarity between a mark or trade name and a famous mark that impairs the distinctiveness of the famous mark. 'Dilution by tarnishment' is association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark. Additional remedies, along with fair use and other exclusions may also be available.
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DARJEELING No Ordinary Cup of Tea

In Tea Board of India v The Republic of Tea, Inc., (opposition No. 91118587), a citable TTAB precedent, the Board set out certain standards concerning the degree of control that the owner of a certification mark (and mark owners in general) must exercise in order to maintain their rights.

Applicant sought to register DARJEELING NOUVEAU for tea ("DARJEELING" disclaimed) and was opposed by owner of the certifications marks DARJEELING and DARJEELING & Device. Applicant had argued that registrant had lost control of its mark so that it had become generic, and pointed to numerous instances of third party misuse.The board noted that "the statute does not define control or indicate the degree of control required, but it is clear that absolute control would be impractical, if not impossible...The owner of a mark is not required to constantly monitor every nook and cranny of the entire nation and to fire both barrels of his shotgun instantly upon spotting a possible infringer. The question is whether the control is adequate...the owner must take reasonable steps...to prevent the public from being misled. Even if control is not maintained and misuse occurs, it must be shown that the misuse was of such significance to permit an inference that the mark is generic." Finding that the registrant had indeed taken action upon learning of misuse and had upgraded its monitoring program to prevent misuse, the Board found that applicant's evidence did not support a finding that registrant had lost control of its mark.

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Patent Reform Legislation Likely Delayed

Patent Law Reform and proposed changes to the USPTO rules and regulations have been a hot topic in the IP field for at least the last year. Both the House (H.R. 2795) and Senate have taken up different bills to enact legislation for patent reform. On September 19, 2006, the Senate's Hatch-Leahy patent reform bill (S. 3818) was placed on the Senate Judiciary Committee's agenda. Legislative news services report that the Senate bill might be taken up by the committee in the week of October 2, but most observers believe the committee likely will not reach the subject of patent reform before the Congress recesses on October 6 for the November election. Even if Congress takes up patent reform legislation during the "lame duck" session following the election, the general expectation is that no patent reform legislation will be signed this year. The implementation of changes to USPTO rules and regulations is also not assured, as the proposed rules have come under fire from the patent bar and industry.
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Transcribing Music by Ear and Derivative Infringement

The Music Publishers' Association and the National Music Publishers' Association have launched a campaign to eradicate websites that offer free guitar tablature. Operators of popular tablature sites, including olga.net, guitarzone.com and guitartabs.com have been approached. So far, the tactic has worked, since most sites are privately owned and lack the financial backing needed to effectively carry a fight of this nature, but the alleged infringers are regrouping. As there appears to be no legal precedent, it remains to be seen how the courts will interpret the issue. While the parties may agree that outright copying is illegal, most tablature is the result of "reverse-engineering" efforts by guitarists, whereby one tries to match the sound by ear. Trade groups allege copyright infringement, arguing that even when not copied outright, tablature is a derivative work at best; meaning it still cannot be legally produced without the copyright holder's permission. Tablature promoters, on the other hand, may challenge the derivative-work argument by demonstrating that each allegedly-infringing piece is meaningless (stripped of lyrics, each given tab can correspond to a number of different songs), as well as advancing first amendment and fair use defenses.
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Scandal Causes Suspension of 74,000 .eu Domain Names

EURid, the organization that administers the .eu domain names, filed a lawsuit against 400 American registrars, and suspended 74,000 .eu domain names, after accusations of "warehousing." Registrars are only permitted to purchase domain names on behalf of their customers, but they allegedly were speculatively buying .eu domain names for resale at a higher price. EURid claims that three companies, Ovidio Ltd., Fausto Ltd. and Gabino Ltd., held all of the domain names that were suspended, and were also acting as a front for a number of registrars. While these domain names are "on hold," legitimate purchasers of .eu domains have not been affected. Proceedings on the lawsuit are scheduled to begin in October.
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Malaysia Joins the Patent Cooperation Treaty

The Patent Cooperation Treaty (PCT) has become effective in Malaysia as of August 16, 2006. A patent application filed under the PCT now covers 131 countries, including all of the major industrial countries, in a single filing. Filing a PCT patent application provides valuable time (up to two and a half years) before nationalization is required in each of the contracting states. The decision of entry into a member state, as well as consequent translation and filing fees, can be delayed until business interests arise and/or until the patented technology is validated.
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TTAB Has No Taste For Flavor Marks

In re N.V. Organon (Serial Number 76467774), the TTAB affirmed the refusal to register an orange flavor for pharmaceuticals and set the bar very high for any future attempts to register a flavor, providing that "any registration of a flavor requires a substantial showing of acquired distinctiveness."

This Board first concluded that orange flavor was functional since flavors are a standard addition to pharmaceutical products to increase palatability and patient compliance. The board next noted that this particular flavor is unable to function as a trademark because it is likely to be considered merely "another feature of the medication, making it palatable" and not an indicator of source. Moreover, practical difficulties would arise in examination and from the fact that consumers generally have no access to a flavor before purchasing a product.

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Cat's Domain Name Gets Nipped for Bad Faith

In a recent Domain Name UDRP decision, Complainant, Morgan Stanley, was successful in obtaining a transfer of the domain name "mymorganstanleyplatinum.com" from feline Respondent, Meow, Baroness Penelope Cat of Nash DCB.

Morgan Stanley alleged that the disputed domain name is confusingly similar to its MORGAN STANLEY trademark. Meow registered the domain name through its owner, Michael Woods, a business consultant, as a means to teach a seminar to demonstrate how large companies fail to register obvious domain names. The Panel found that, in addition to the domain name being confusingly similar to Complainant's mark, the Respondent was not using the disputed domain name in connection with a bona fide offering of goods or services. Since a cat cannot speak, read, or write, a common cat could not have submitted a Response or register the disputed domain name. Therefore, the Panel found the third necessary element of bad faith, by Respondent's assertions that it is a cat, and providing incorrect WHOIS information. Having established the required elements of a domain name dispute, the domain name was ordered to be transferred to the Complainant.

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Section 44(e) basis does not survive assignment to a US successor

In Karsten Manufacturing Corporation v. Editoy AG; Editoy B.V.; Pingu V.V.; and Joker, Inc., (91101408 and 91108831) the TTAB held that an assignee of an application originally filed by a foreign corporation under Section 44(d) could continue to claim the benefit of the priority filing date, even though the assignee's country of origin is the United States. The assigned application, however, could not proceed to registration under Section 44 (e).

The original foreign based Section 44 applicant assigned the mark to a subsequently incorporated United States subsidiary. Even though the new United States company was foreign owned and controlled, it did not have bona fide commercial facilities outside of the United States and so it was not a "foreign applicant" for the purposes of 44(e). On the other hand, the assignment did not invalidate the 44(d) priority claim since the claim was properly made by the original applicant. An applicant stands in the shoes of its assignor and since applicants can amend or add a substitute basis for registration before or after publication, the 44(d) priority claim survives the assignment provided that the applicant also amends the application to assert a proper Section 1 basis for registration.

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Initial Interest Deception

The Board recently analogized and extended the doctrine of initial interest confusion In re ALP of South Beach Inc., (Serial Number 75819306), to include initial interest deception for the purposes of Section 2 (a). Applicant sought registration for CAFETERIA Stylized on the Supplemental Register for "restaurants providing full service to sit-down patrons, excluding cafeteria-style restaurants". Applicant had argued that the mark was not deceptively misdescriptive because everyone who comes to its restaurant knows in advance the true nature of the establishment, namely that it is a trendy sit-down full service restaurant. The board found that the critical point for the purposes of determining whether the mark was deceptively misdescriptive was not when customers walk into the restaurant, but when they first encounter the mark in an advertisement or sign. The mark here was deceptively misdescriptive because it might serve to improperly lure potential customers by indicating that the establishment was a cafeteria, when that is not the case.
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Proposed Changes in TTAB Rules Appear Likely to Add Complexity

The extended comment period for the proposed changes to the Rules of Practice before the Trademark Trial and Appeal Board closed May 4, 2006. Generally, the proposed changes would conform TTAB procedure to the Federal Rules of Civil Procedure, particularly with respect to the Discovery process. The changes would mandate certain "initial disclosures" including the origin and history of the use of a mark, evidence of any actual confusion, evidence of awareness of third party use, marketing efforts, and, if applicable, information regarding any other proceedings involving the parties' rights in the subject marks. The new rules would also require a discovery conference between the parties in addition to the long list of mandatory disclosure. These changes would bring a TTAB proceeding more in line with a federal court proceeding. The bulk of the comments submitted during the open period agree that the changes will make the process more cumbersome, rather than simplifying the process, and increase the costs to pursue matters before the TTAB. The detailed rules can be reviewed at http://www.uspto.gov/web/offices/com/sol/notices/71fr2498.pdf
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STARBUCKS Fails To See The Humor Of LESSBUCKS

On February 9, 2006, in a Citable Decision, the TTAB upheld an opposition by Starbucks U.S. Brands, LLC and Starbucks Corporation to Marshall S. Rubens' application to register the trademark LESSBUCKS COFFEE for, among other things, "coffee" and "retail store services featuring coffee". The board had little difficulty in determining that STARBUCKS COFFEE is a famous mark and noted that "there is no excuse for even approaching the well-known mark of a competitor in as much as '[a] strong mark...casts a long shadow which competitors must avoid". The applicant had suggested that there would be no likelihood of confusion as its mark would likely be perceived as a parody of the STARBUCKS mark, however, the TTAB saw no refuge in this for the applicant as "joking use of trademarks are deserving of less protection when the object of the joke is the mark of a directly competing product". Perhaps the "topping" on this case was the fact that the Opponent's mall intercept survey found that almost half of the ordinary consumer participants who would have encountered the applicant's mark believed that there was a connection to the Opponent's mark.
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When the scotch is not Scottish....it's an infringing misnomer

On April 20, 2006 the High Court of New Delhi permanently prohibited an Indian company, Golden Bottling Ltd., from selling its whisky under the designation RED SCOT and any word similar thereto. The Scotch Whisky Association of the U.K. successfully contended that 'SCOT' or 'SCOTCH' is a geographical indication within the meaning of the World Trade Organization's Trade Related Intellectual Property Rights Agreement Article 22. The High Court's ruling is the first of its kind to be based on the TRIPS agreement. Article 22 defines geographical indications as "indications, which identify a good as originating in the territory of a Member, or a region or locality in that territory, where a given quality, reputation or other characteristic of the good is essentially attributable to its geographical origin." Article 22.3 specifically refers to "identifying spirits ...not originating in the place indicated" and can be enforced "even where the true origin if the goods is indicated". The defendant whisky manufacturer was held guilty of passing off their product as Scotch Whiskey or as product otherwise originating in Scotland by using 'RED SCOT' as a misleading designation. The SWA, who were awarded damages and litigation costs, are also currently pursuing over fifty cases worldwide to protect SCOTCH as designation for whiskey originating in Scotland.

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First .eu Domain Name Dispute settled by the ADR

On April 18, 2006 the first .eu domain name dispute was settled by the ADR Center for .eu domains. The controversy involved dueling applicants for the PST.EU domain, where the junior domain name applicant was the owner of a senior Benelux trademark registration for PST. The successful domain name applicant based its claim on a Benelux trademark registration that was filed on November 22, 2005 and issued to registration under Benelux's expedited registration system. The one-man panel confirmed that the successful applicant had met all of the criteria for registration and since EURid operates on a "first come, first serve" basis, the domain name was properly awarded even if the successful applicant was the junior trademark right holder. Interestingly, the panel noted that there were no outstanding challenges to the successful applicant's trademark registration and in saying so seemed to leave open the possibility that it might have ruled differently had an opposition been pending on the applicant's trademark registration at the time EURid awarded the domain.
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SEPTEMBER 11, 2001 Deceptively Misdescriptive as a mark

In re Mori Shniberg (Serial Number 78083495), the TTAB upheld a refusal of an application for SEPTEMBER 11, 2001 under Section 2(e)(1) on the basis that the mark was deceptively misdescriptive of "books in the field of history; and entertainment in the nature of radio programs in the field of news" not relating to the events of September 11, 2001. The board noted that any mark would be deceptively misdescriptive where the mark misdescribes the goods or services to which it is applied and consumers are likely to believe that misdescription and consider it relevant to the purchasing decision. The board said that the mark would be outright deceptive if the misdescription were material to the purchasing decision. Here, the board found the mark misdescriptive in the context of the goods and services since "September 11, 2001" had become recognized as a shorthand for the tragic events of that day and given the numerous books and shows about those events, consumers upon seeing the mark would believe that applicant's goods and services were also on the subject of the terrorist attacks.
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Battle of the Bubbles in Europe — Legitimate fair use or not

British mobile phone network Hutchison 3G was cleared of trademark infringement and unfair comparative advertisement claims by rival operator ‘O2’in the UK High Court on March 23, 2006. The case was one of the first to consider how trade mark laws should interact with a more recent European directive on comparative advertising. The Hutchinson advertising campaign explicitly compared the price of the parties’ mobile phone services, making use of the bubble imagery which O2 trademarked and had used in high profile marketing campaigns over the previous five years. Hutchinson’s use of the bubbles "to identify O2 and compare the parties prices" was held to be "legitimate, fair and not misleading to consumers". The Hutchinson 3G advertisement therefore did not infringe O2’s rights under the Trade Marks Directive 97/55/EC or the British Trade Marks Act of 1994. "Taking the advertisements as a whole", the court found no confusion was created between the parties’ trademark and service. Though the O2 bubbles were held to have obtained inherent and acquired distinctiveness as trademarks, O2 failed to persuade the court this gave them a monopoly over the use of bubbles as a source identifier. Allegations that 3G misused the bubbles to attract consumers and thereby damaging O2 were dismissed.
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