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.

Whole Foods recently garnered attention when its trademark application for World’s Healthiest Grocery Store was rejected by the U.S. Patent and Trademark Office.  The trademark examiner focused on the “World’s Healthiest” part of the proposed mark and found the phrase simply described an alleged benefit of Whole Foods’ products, rather than indicating a source of the products.

Descriptive terms, like “healthiest” or “best,” cannot serve as trademarks without some showing that the term has acquired a secondary meaning of being distinctively associated with a particular source.  That is, a term that describes a quality of a product is used on a particular company’s products so much that the term becomes more widely recognized as indicating the source rather than describing the quality.  An example is American Airlines®.  In Whole Foods’ case, the Trademark Office left the door open for the grocery store to try to develop secondary meaning in its proposed mark by registering it on the so-called Supplemental Register.

Some commentary on Whole Foods’ rejection was focused on whether the assertion by Whole Foods – that it was the World’s Healthiest Grocery Store – was true.  The Trademark Office did not analyze the truth of the proposed mark because World’s Healthiest was viewed as a form of “puffery” or a “laudatory” statement.

Sometimes assertions boasting of characteristics like this must be true, other times not.  What is required under the circumstances is largely determined by how consumers are expected to react to it.  A statement will usually not require proof if it is just a broad claim of superiority that can only be interpreted as an opinion.  In contrast, a statement that is deemed “deceptive” will be barred from registration entirely.  The Trademark Office distinguishes between statements that are merely expressions of opinion from, for example, statements that would induce a consumer’s purchasing decision.  Phrases that are viewed as potentially influencing a purchasing decision includes words that indicate a product characteristic like superior quality, better pricing, societal beliefs (an example of which is the term “vegan”) or, as in the case at hand, phrases indicating a health benefit.  One example that falls in a few of these categories is “organik,” which was found to be deceptive when used on clothing made from cotton that was neither organically grown nor free of chemicals.  In re Organik Technologies, Inc., 41 U.S.P.Q.2d 1690 (TTAB 1997).

From the perspective of choosing a mark for use in your business, the characterization of a phrase like “World’s Healthiest Grocery Store” affects more than just whether a trademark can be obtained.  Such phrases can also run afoul of advertising guidelines set industry organizations, or even result in claims by the FTC.  The National Advertising Division of the Better Business Bureaus (NAD) has guidelines for determining whether a statement is acceptable puffery, rather than an improper claim.  In one NAD case, NAD found the claim that a baby food uses “the best ingredients nature has to offer” was acceptable puffery, but claims that implied conventional, non-organic baby food products were less nutritious should stop (such as, “some studies show that organic product contains more antioxidants…”).

With the Whole Foods’ claim to being the “World’s Healthiest,” the Trademark Office apparently was not concerned about what it viewed as general boasting.  Or, as the FTC might say, it’s okay to talk smack, just as long as it is an obvious exaggeration.

The Daily Fantasy Sports industry has been under siege over the past several months as several states’ Attorneys General seek to have online fantasy sports contests classified as “illegal gambling” and banned under state law. The two industry giants – FanDuel and DraftKings – are at the forefront of this ongoing battle. The fight over legitimacy, however, may prove to be only the tip of the iceberg of FanDuel’s and DraftKings’ legal issues.

On January 27, 2016, Akeem Daniel, a former college football player for Northern Illinois University, filed two proposed class actions against FanDuel and DraftKings in Illinois federal court. Daniel alleges that FanDuel and DraftKings knowingly exploited as many as 2,000 or more collegiate athletes whose names they “market and sell as ‘fantasy’ athletes available for sale to members of the general public.” According to Daniel, FanDuel and DraftKings “routinely use the names and likenesses of these college players to promote [their] commercial enterprise, amassing millions of dollars in revenue from entry fees, without the athletes’ authorization.” The complaints characterize FanDuel’s and DraftKings’ daily fantasy contests as a “virtual stock market” that rises and falls “in direct proportion with the [athletes]’ endeavors.” Both lawsuits assert claims for, among other things, violation of the Lanham Act and seek both treble damages under the statute, as well as an injunction prohibiting FanDuel and DraftKings from the future use of Daniel’s and the Class Member’s names and likenesses.

It is unclear whether other collegiate athletes will join Daniel or whether professional athletes will follow Daniel’s lead and file similar lawsuits. What is clear is that at least one athlete believes that these companies are improperly profiting from his athletic prowess. Considering both companies are valued at or close to $1 billion, expect more of these lawsuits to surface in the near future.

What’s the value of a person’s name? A grocery chain just found out that if you’re Michael Jordan, a Chicago jury thinks your name is worth $8.9 million.

In 2009, a local Chicago grocer, Dominick’s, ran an advertisement congratulating Jordan on his imminent induction to the Basketball Hall of Fame. What got Dominick’s in trouble was the $2 coupon it attached to its advertisement. When Jordan saw the advertisement, he concluded that Dominick’s was impermissibly using his name for commercial purposes without his permission and sued.

The “right of publicity” in many circumstances protects against the use of another’s name or likeness for commercial purposes. Dominick’s conceded it should not have used Jordan’s name without permission, but it did resist the amount of his claim. Unfortunately for Dominick’s – and its parent company, Safeway – the law awards damages based on the amount that Jordan typically obtains for an endorsement, not the benefit Dominick’s reaped from the advertisement. That benefit was modest indeed. Only two people used the coupon.

The lessons: First, while not always impermissible, using a person’s name without their permission carries significant risks; and second, seemingly innocent and minor legal errors can have costly unanticipated consequences.

In this third and final blog of our series on social media promotion we are looking at use of content posted by others, particularly in the context of “linking” and “framing.”

“Linking” is a well-known method of providing an Internet user with the ability to jump from one site or page to another via hyperlink.  The link may redirect the user to content posted by others with no connection to the host site.  “Framing” is similar to linking but the user views the third-party content in a window or “frame” on the host site.  This distinction may be significant because without redirection the user may be unaware that the framed content is being generated by a third party.

There are a number of legal issues that may be implicated by linking and framing, including contract, trademark and copyright law.  Many social media providers include terms of use that place restrictions on the use of content available through their service.  Linking or framing may violate those restrictions, which could lead to account deactivation and the like.  Deactivation can be a significant problem for commercial users who use those sites for promotion and customer interaction. Continue Reading Social Media Promotion: Dos and Don’ts with Content Posted by Others