General Business Information

Arguably one of the “most vexing” questions in all of copyright law will be answered this year.  Or at least that is what many in the furniture and fashion industry are hoping.

The question is what test should be used to determine when a feature of a “useful article” is protectable under the copyright laws.  As of now, ten different tests have been established by the different federal Circuit Courts of Appeals.  In Star Athletica, LLC v. Varsity Brands Inc., the US Supreme Court is expected to decide which of those tests is the right one, or it could choose another test altogether.

“Useful articles” include furnishings, fixtures, clothing, toys, and many other items including cheerleading uniforms, as presented in the Star Athletica case.  A useful article, in so far as its purely utilitarian features go, is not capable of copyright protection.   However, non-utilitarian features of such items can benefit from copyright protection, if that feature can be identified “separately” and exist “independently” from the useful aspect of the item.  How to determine this – whether the feature is separable in this way – is the question being decided by the Supreme Court.

The articles in the Star case are cheerleading uniforms, and the feature at issue is the two dimensional designs on those uniforms.

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Given the size of some of the industries involved, the Court’s decision could have huge consequences.  Spending on apparel was estimated at more than $250 billion annually in the US alone, and the value of the US furniture market has been estimated at nearly $100 billion.  By setting parameters on what features of useful articles can be protected, the decision could result in strategic shifts among industry participants engaged in creating, using or protecting unique designs.  Stay tuned!

Last week I was fortunate to attend the Managing the Trademark Asset Lifecycle Conference, hosted by World Trademark Review.  The topics discussed throughout the day touched on everything from assessing portfolio strength and valuation to leveraging the financial value of a brand.  Although it is impossible to touch on all the points covered during this full-day conference, there were several high-level takeaways worth sharing.

  • The Three F’s of Intellectual Property Audits: Foresight, Fluidity And Flexibility. As with many facets of corporate life, too many companies wait to audit their Intellectual Property (“IP”) until the need arises.  This approach often leads to unnecessary scrambling, stress and lost opportunities.  Rather than taking a defensive or reactive approach to auditing, companies should think proactively, instituting budget-appropriate processes whereby data is routinely collected and maintained in accessible form.
  • Getting Rid Of The “IP Department” Mentality. One of the biggest mistakes a company can make is to limit the involvement of in-house IP counsel or the portfolio management team in the day-to-day management of the company.  IP affects all aspects of the company, from marketing and sales to international tax and finance, and IP counsel should be involved in all meetings where such issues are being discussed.
  • In-House Counsel As Brand Ambassadors and Educators. IP counsel and portfolio managers should be acting as brand ambassadors, not enforcement agents.  Although there may be instances where reactive steps must be taken, every effort should be made to continuously and positively educate company personnel regarding the use and importance of IP which, at the same time, should create additional enthusiasm regarding the brand.
  • The New IP Portfolio: Not Your Grandparents’ IP. Although obvious to some, companies need to recognize that IP is no longer simply about trademark and copyright registrations.  IP touches all aspects of a company’s public persona, from its customer lists and goodwill to its website, internet domains/extensions, and social media handles.  These valuable assets can no longer be ignored.
  • Attorneys As Revenue Generators: Help Me Help You. Attorneys are often brought in when an issue arises (the reactive/defensive approach).  However, IP attorneys are uniquely equipped with the insight and experience to add value and identify potential opportunities that may be overlooked by corporate decision-makers.  IP attorneys cannot identify opportunities if they remain in the dark as to the day-to-day operations and goals of the company.  Taking time to brainstorm with counsel is an investment worth making.
  • Adjusting To The Times: The Evolution of a Brand. Companies that refuse to recognize change or are resistant to evolving their brands will be left behind.  One great example came from Colm Dobby, Associate General Counsel for Mastercard Inc., who discussed the evolution of the “Master” brand in light of the fact that “Cards” are no longer the only or preferred mechanism to purchase goods and services with credit.
  • Beware Of Domain-Driven Branding. The Internet has revolutionized the way companies market and sell their goods and services.  As a result, many companies now consider an Internet domain more important than the overall brand itself.  In some cases, companies will look to the availability of a particular domain when considering a new brand.  Others have initiated a process of buying up all potentially similar domains (and domain extensions) to discourage others from building a brand based solely on the availability of a particular domain.  Although domains are undeniably important, companies should not be blind to other considerations when analyzing the strength of a brand.

Are you relying on your insurance policy to cover unauthorized or unintended electronic disclosure of confidential information?  If so, you may want to take a closer look at your policy with an eye towards objections to coverage raised by an insurance company in a recent Fourth Circuit case.

In Travelers Indemnity Co. of America v. Portal Healthcare Solutions LLC, the Fourth Circuit Court of Appeals affirmed the Eastern District of Virginia’s decision requiring the insurance company defend its insured against improper disclosure claims.¹  The case arose after a class-action lawsuit was filed in New York against the insured alleging failure to adequately safeguard confidential medical records.  According to the pleadings, patients of the hospital found their medical records available on the Internet upon Google searches of their names.  Portal Healthcare and Travelers disagreed over whether the insurance policies obligated Travelers to defend the class-action and filed cross-motions for summary judgment in the Eastern District of Virginia.

According to the Eastern District decision, the insurance policies covered “electronic publication of material that . . . gives unreasonable publicity to a person’s private life” or “discloses information about a person’s private life.”  Given that the insured stored confidential medical records, it doesn’t seem unreasonable that the insured would have thought it had coverage for data disclosure types of claims.  However, the insurance company took the position that defense of the insured was not required.

As grounds for not defending against the class action suit, Travelers asserted that there could be no publication as required under the policy because “the entire purpose of the services [the insured] provided was to keep the medical records private and confidential.”  According to the insurance company’s argument, the fact that the records ended up available on the Internet did not mean they were published. In a similar vein, the insurance company argued that the policies at issue would only provide coverage if the insured had taken steps intending to attract the public, and further that there was no publication (and therefore no coverage) because no third-party was alleged to have actually viewed the information.

Although Travelers’ arguments were rejected and the Court found defense required, engaging in these types of disputes over policy language has potential for undesirable consequences in the underlying action (e.g., an insured might end up having to argue that there was a publication of confidential information to get insurance coverage, when that might be one of the elements of the very claim against the insured).  The case goes to show how important it is to review your coverages for data disclosure and cybersecurity types of claims, lest you find yourself surprised to fighting two battles instead of one.

¹See Travelers Indemnity Co. of America v. Portal Healthcare Solutions, LLC, Case No. 14-1944 (4th Cir. April 11, 2016) at the District Court, 35 F.Supp.3d 765 (E.D. Va. 2014).