On October 11, 2018, President Trump signed into law the long-anticipated Music Modernization Act (“MMA”), legislation focused on shepherding the existing music licensing system into the digital age.  Among the highlights, the MMA provides for blanket mechanical licensing and a licensing collective charged with managing mechanical license royalty payments to composers and publishers. The MMA is divided into three major titles, each focused on addressing certain perceived gaps in the existing structure.  Some highlights are discussed below.

Title I of the MMA (Music Licensing Modernization) establishes a blanket, statutory mechanical license for digital music providers to be administered by a non-profit organization called the Mechanical Licensing Collective (the “MLC”).  The MLC is charged with establishing  a publicly accessible database of copyright ownership information for musical compositions.  A digital music provider wishing to obtain a blanket mechanical license must file a notice of license with the MLC specifying, among other things, the covered activities.  The MLC will have 30 calendar days to review that notice, and a provider whose application for a license is rejected will have an opportunity to cure or seek further review in federal district court

Title II of the MMA (Classics Protection and Access) extends federal copyright protection to pre-1972 sound recordings previously excluded from the copyright protection.  The duration of protection for such works is set as follows:

  • For recordings published before 1923, the term of protection ends on December 31, 2021;
  • For recordings published between 1923 and 1946, the term of protection continues until December 31 of the year 100 years after publication;
  • For recordings published between 1947 and 1956, the term of protection continues until December 31 of the year 110 years after publication; and
  • For all other recordings (including unpublished recordings and ones published after 1956), the term of protection ends on February 15, 2067.

Title III of the MMA (Allocation for Music Producers) grants music producers a share of royalties collected when their sound recordings are played through online and satellite radio providers.  Such producer payments are to be allocated from the share of streaming royalties allocated to recording artists under the current statutory scheme.

Attention brand owners and users of the Amazon Brand Registry: you need to be aware of a scam currently happening at the United States Patent and Trademark Office (“USPTO”). Scammers are submitting fraudulent requests to change email correspondence addresses for trademarks owned by other parties. As soon as the email address is changed, the scammer contacts the Amazon Brand Registry to register the trademark using the scammer’s email address. This is a relatively new scam, but it has rapidly increased in scope in recent weeks. While the first few waves of this scam affected about a dozen marks each, the USPTO caught over seventy similar attempts on Monday of this week alone.

Losing control of one’s brand on the Amazon Brand Registry can have a serious business impact. In addition to potential lost sales for any downtime on Amazon, losing the Brand Registry can prevent trademark owners from addressing counterfeit sales. It can take days or weeks to resolve and correct these issues, which can further enhance the damages felt by trademark owners.

At the present time, these scams can be difficult to prevent. The only advance notice you would have would be an email from the USPTO alerting you that a request was submitted to change the email address for one of your trademark properties. The USPTO is now aware of the scam and is reviewing change of correspondence requests, but it is not possible for them to guarantee that every scam attempt will be prevented. Older trademark properties may have unused or forgotten email addresses associated with them, and the initial email notice may go unseen.

You should regularly monitor the email accounts associated with your trademark properties so that you can spot these attempts early in the process. The USPTO has noted that the bulk of fraudulent attempts have come from AOL, Gmail, 163.com, and Zoho email accounts, but the scammers have also used slight misspellings of United States law firm names. In the case of any suspicious change, the USPTO is recommending that you quickly file a new Revocation and Power of Attorney. They are recommending that you avoid using a standard Change of Correspondence form because those forms are now being closely monitored and as a result there will be a processing delay. You should also contact the Amazon Brand Registry to request that any incorrect registration be revoked. Finally, you should contact the USPTO at teas@uspto.gov to let them know that you think one of your trademark properties might have been compromised. An unexpected notice from the Amazon Brand Registry might also alert you to this situation, and you should check the “cc” area of any email you receive because it may list a scammer’s email address.

If you have received an unexpected “Change of Email” notice, or if you think that one of your properties might have been compromised, please do not hesitate to reach out to one of our trademark and branding professionals for help in formulating a quick response.

Two manufacturers of large inflatable swan-shaped pool floats made a splash in a New York appeals court earlier this month.  The Second Circuit rejected a New York company’s attempt to claim exclusive trade dress rights to a swan-shaped pool float, calling the endeavor “impermissibly overbroad.”

In August 2016, Long Island based pool products enterprise, Swimline International Corp., filed a claim for trade dress infringement against Funboy LLC, a California based pool float manufacturer, in the United States District Court, Eastern District of New York.  Swimline (formerly known as International Leisure Products, Inc.) alleged that Funboy was selling “knock-offs” of Swimline’s inflatable swan pool float. (Both products are pictured below).  While Swimline acknowledged that it holds no registered trademark in its swan design, Swimline alleged its swan float’s trade dress was a protectable composite of various swan-themed elements, including the orange coloration of the swan toy’s beak and the conical shape of the swan toy’s tail.  Ultimately, the District Court dismissed Swimline’s claim in November 2017 after concluding that Swimline failed to adequately allege protectable trade dress in its pool toy.  On appeal this month, the Second District agreed and affirmed the District Court decision.

Swimline’s Swan Float                                          Funboy’s Swan Float

To successfully state a claim for trade dress infringement, the plaintiff bears the burden of establishing protectable trade dress rights under trademark law.  A trademark is a name, mark, figure or symbol that distinguishes the goods and services of one seller from another seller.  Trademarks function as source identifiers, which allow consumers to know where a product came from and avoid confusion.  Trademarks also function as a way for trademark owners to build a reputation and brand loyalty in the marketplace.  Trademarks can exist in things like words, designs, colors, sounds, product shapes (as claimed here), and even scents. What trademark law doesn’t allow, however, is a company to try and monopolize words or symbols or product shapes that competitors might need to conduct their own businesses. This is where Swimline’s claim went belly up.

In the Swimline case, the Second Circuit reasoned that the swan float was not protectable as trade dress for two reasons.  First, the swan float is generic – i.e., that it was a swan-shaped pool float shaped like a swan.  As the Second Circuit put it, trademark protection is “not intended to protect innovation by giving the innovator a monopoly over a useful product feature.”   The purpose of the trademark should be to identify the product’s source, and here, the court said the swan-shaped pool float represents the type of design choice that is “almost invariably” intended “to render the product itself more useful or more appealing” rather than to “identify the [product’s] source.”  Second, the court said that Swimline could not identify the elements and features that actually distinguished its trade dress.  Swimline “[appeared] to be seeking protection for a trade dress that would encompass any bird-shaped pool float with even a passing resemblance” to Swimline’s float, and trade dress rights should not be extended for the purpose of protecting “an idea, a concept, or a generalized type of appearance.”  Swimline’s use of subjective phrases to describe its trade dress like “a pleasing appearance” or “aesthetic proportion” left the Court to guess at what was actually claimed.  For those reasons, the court called Swimline’s claimed trade dress “impermissibly broad,” and affirmed dismissal of Swimline’s case.

When used correctly, trade dress can be a powerful tool to enable consumers to build special connections with products.  Trade dress is not to be used, however, as a way to monopolize on a product’s shape in an anti-competitive manner.  A protectable trade dress needs to be distinctive, non-generic, and definite enough to allow competitors, customers, and the courts to recognize it as a trademark.  So, in the end, although Funboy may have ruffled Swimline’s feathers by designing a similar swan float, Swimline did not have protectable trade dress rights to the swan float in the first place.

The U.S. Copyright Act permits, but does not require, registration of copyright-protected works with the U.S. Copyright Office.  Nevertheless, under the U.S. Copyright Act, registration by the Copyright Office (or ruling by the Copyright Office refusing to register) is, among other things, a prerequisite to bringing a copyright infringement action.  The federal courts have long disagreed about whether an application for registration satisfies the rule.  In other words, does the copyright owner have to wait for the Copyright Office to rule on the registration application before suing?

The United States Supreme Court has now agreed to hear a case that could resolve this long-disputed issue.  Fourth Estate Public Benefit Corporation v. Wall-Street.com, LLC., Case No. 17-571.  The appeal is from the Eleventh Circuit Court of Appeals, which held – recognizing the disagreement among the courts – that a registration application is insufficient to sue.

Whichever way the Supreme Court rules, early registration has distinct advantages for the copyright owner.  Advantages includes easier proofs at trial on liability and damages and the possibility of collecting attorneys’ fees for registration applications filed before infringement begins or, for published works, within three months of publication.

In the globalized economy, it can be hard for businesses to know what country’s laws apply.  The stakes can be especially high in patent cases, which often involve millions and even billions of dollars.

The United States Supreme Court gave patent owners a victory on one aspect of this controversy last week. In Westerngeco LLC v. Ion Geophysical Corp., Slip Op. No. 16-1011 (June 22, 2018), the Court held that an owner of a United States patent can be awarded lost profits that a competitor earns outside the United States.

Westerngeco owned U.S.  patents for a system used to survey the ocean floor.  A competitor, ION Geophysical Corp., began selling competing systems.  ION made some of those competing systems in the United States; they were found to infringe Westerngeco’s patents, and a trial jury awarded Westerngeco $12.5 million in royalties.  That award was not at issue before the Supreme Court.

What the Supreme Court did consider was the jury’s additional award of $93.4 million in lost profits for sales outside the U.S.  ION made some specialized components inside the U.S. and then shipped them overseas, where there were assembled into systems that would infringe Westerngeco’s U.S. patents if made or sold in the U.S.  ION sold these systems to foreign customers who, presumably, would otherwise have purchased from Westerngeco.

Patents are issued on a jurisdiction-by-jurisdiction basis.  Generally, an owner of a U.S. patent cannot recover for conduct in a foreign country, even if that conduct would infringe the U.S. patent.  In other words, conduct outside the U.S. generally cannot infringe a U.S. patent because the U.S. patent owner’s rights are limited to the U.S.  To recover for conduct in a foreign country, that conduct generally must infringe a valid patent issued in that foreign country and the patent owner must sue the infringing party in that foreign country.

The Patent Act, however, has a section that arguably gives U.S. patents “extraterritorial” effects in specific circumstances. One of those circumstances is when someone “especially make[s] or especially adapt[s]” components of a U.S.-patented invention “for use in the invention” knowing it will be used overseas in a way that would infringe the U.S. patent if made or used on U.S. soil.  35 U.S.C. § 271(f)(2).  Under this provision, a person who makes a specially designed component in the U.S. with the intention that it be used outside the U.S. in a way that would infringe the U.S. patent is an infringer of the U.S. patent.  That is what the jury found ION did.

The question before the Supreme Court was whether Westerngeco could recover lost profits that the infringer, ION, earned from sales abroad.  The Supreme Court held that it can.  The Court reasoned that the infringing activity – the manufacture of the specially-made components on U.S. soil – was a domestic, not a foreign, act.  The Court held the statute permitted recovery of lost overseas profits for that domestic act of infringement.  The Court therefore affirmed a $93.4 million foreign lost profits award that dwarfed the $12.5 million in royalties awarded for ION’s sales on U.S. soil.

The Supreme Court’s decision was arguably narrow.  It turned on a particular section of the Patent Act that seeks to redress clear efforts to evade U.S. patent law.  It remains to be seen whether the decision will be given a wider interpretation.  Nonetheless, as Westerngeco  itself shows, the dollar consequences of splitting otherwise infringing conduct among multiple jurisdictions can be substantial.