You may know that “aspirin,” the word commonly used to describe acetylsalicylic acid, was once a trademark ­– i.e., brand name – for the acetylsalicylic acid made by one company: Bayer.  The word “aspirin” lost its trademark status because the public came to use the word to mean acetylsalicylic acid made by anyone, not just Bayer.  In trademark-speak, “aspirin” became “generic,” and Bayer’s “aspirin” trademark fell victim to “genericide.”  Other familiar victims of genericide are “cellophane,” “thermos,” and “xerox” (though “xerox” was resurrected through the efforts of the brand owner, Xerox Corporation).

Is “Google” the latest victim of genericide?  Two individuals in a lawsuit in federal court in Arizona claimed it is.  They argued that the public uses “google” as a generic word for the act of searching on the internet (as in, “I googled it”).  They sought to cancel Google’s trademark registration in an effort to defend their registration of hundreds of domain names containing the word “google.”

In Elliott v. Google, No. 15-15809 (9th Cir. May 16, 2017), the Arizona district court rejected the argument that “google” had become generic, and the Ninth Circuit Court of Appeals affirmed.  According to the court, the question is not whether the public sometimes uses “google” generically to refer to an Internet search.  The question is whether the primary significance in the public mind of the word “google” is to identify the act of searching on the Internet or a particular search engine provider.  As long as the primary significance is to identify “who” is providing the service – for example, to distinguish Google from Microsoft (which offers the “Bing” search service) – the mark is safe from genericide. The court held that the plaintiffs had failed to prove that “google” had become generic and rejected the effort to cancel Google’s trademark registration.

Proving genericide is difficult.  This case is a reminder, however, that trademark owners – especially those whose product or services become well-known – should be vigilant to ensure the public understands that their trademarks indicate the “who” that provides product or service rather than the product or service itself.

All too often parties lack the foresight to contractually address potential intellectual property issues.  When those issues bubble over into full-fledged disputes, it often falls to the courts to fill the void in contractual language.  Two primary tests have been used by courts to determine ownership of an unregistered trademark between a manufacturer and distributor where there is no dispositive agreement: the “first use test” and the “McCarthy test” (for the well-known trademark law author).  In Covertech Fabricating, Inc. v. TVM Building Products, Inc., Case No. 15-3893 (3d Cir. Apr. 18, 2017), the Third Circuit joined a number of its sister courts and chose to adopt the McCarthy test.

Covertech involved a dispute where a manufacturer and an exclusive distributor worked in concert to sell the manufacturer’s product from its inception.  The Court held, per McCarthy, under these circumstances there is a rebuttable presumption that the manufacturer of the product owns the mark.  It then falls on the distributor to rebut the presumption using McCarthy’s multi-factor balancing test.

Under the McCarthy test, a court weighs six factors to determine if the presumption is rebutted:

   1.                “[w]hich party invented or created the mark;”

   2.               “[w]hich party first affixed the mark to goods sold;”

   3.               “[w]hich party’s name appeared on packaging and promotional materials in conjunction with the mark;”

   4.               “[w]hich party exercised control over the nature and quality of goods on which the mark appeared;”

   5.               “[t]o which party did customers look as standing behind the goods, e.g., which party received complaints for defects and made appropriate replacement or refund;” and

   6.               “[w]hich party paid for advertising and promotion of the trademarked product.”

The Court explained it is inappropriate to apply the factors in a mechanical fashion.  Rather, each element’s weight is evaluated in light of the specific facts of the case.  If a court determines the factors are in equilibrium, then the distributor did not overcome the presumption, and the manufacturer owns the trademark, as was held in Covertech.

The Court’s holding is clearly a positive for manufacturers, and distributors must now take care to use formal contracts if they want to ensure they will have rights to the trademark being used.  The decision is beneficial to both manufacturers and distributors because it establishes a definitive test for federal District courts to apply, and it provides clear guidance for attorneys and their clients when structuring manufacturer/distributor relationships.  The holding also offers the benefit of greater uniformity across the US for parties operating in multiple states.  Courts of the Second, Fourth, Seventh and Ninth Circuits apply the McCarthy test in some form to determine the ownership of a trademark in this context.  This benefit is particularly significant for companies doing business in states neighboring those in the Third Circuit (New Jersey, Pennsylvania and Delaware), like New York, Virginia, and Maryland.

While the holding clearly has its benefits, one disadvantage is the potential for increased litigation costs resulting from the need to collect facts in discovery pertaining to each of the McCarthy factors.  This is yet another reason business partners need to establish their respective trademark rights contractually, thereby avoiding the McCarthy test altogether.

In what some perceive as a major shift from decades of precedent, the United States Supreme Court held last week that laches – unreasonable delay – is no longer a valid defense against a claim for patent infringement so long as the patent owner brings suit  within the 6-year look-back limitation period prescribed in 35 U.S.C. § 286.

In SCA Hygiene Products Aktiebolag v. First Quality Baby Products, LLC, SCA, held a patent concerning the manufacture and sale of certain adult incontinence products.  In October 2003, SCA sent a letter to First Quality asserting that First Quality was infringing SCA’s patent rights.  In response, First Quality maintained that the patent at issue was invalid and could not support an infringement claim.  SCA took no further action until July 2004 when, without notifying First Quality, asked the Patent and Trademark Office (PTO) to initiate a reexamination proceeding to determine whether the relevant patent was valid in light of certain pre-existing patents.  Three years later, in March 2007, the PTO issued a certificate confirming the validity of the relevant patent.

Over three years later, in August 2010, SCA filed a lawsuit for patent infringement against First Quality.  First Quality moved for summary judgment based on laches and equitable estoppel, and the District Court granted the motion on both grounds.  SCA appealed to the Federal Circuit, which affirmed the District Court’s holding that laches can be asserted to defeat a claim for damages incurred within the 6-year period set out in the patent statute.

On appeal, the Supreme Court reversed, in part, basing its decision on the plain language of the statute, which it found evinced a judgment by Congress that a patentee may recover damages for any infringement committed within six years of the filing of the claim.  The Court went on to find that it “would be exceedingly unusual, if not unprecedented, if Congress chose to include in the Patent Act both a statute of limitations for damages and a laches provision applicable to a damages claim.”  Thus, the Court held, that the doctrine of laches cannot bar an otherwise timely claim for damages under the patent statute.  The Supreme Court did note, however, that the doctrine of equitable estoppel can still provide protection against some of the problems that may arise when patentees induce potential targets of infringement suits to invest in the production of arguable infringing products.

In view of this decision, parties accused of patent infringement should be cognizant that they are potentially liable for six (6) years from the time of alleged infringement, regardless of how diligent the patent owner is in pursuing its claim.

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.

Capture

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.