On Monday the United States Supreme Court addressed a case of piracy about pirates. In a unanimous decision in Allen v. Cooper, the Supreme Court ruled that states have sovereign immunity against copyright infringement claims, based on both Court precedent and the language of the Copyright Remedy Clarification Act of 1990 (CRCA). The case centered on a videographer’s claims against the state of North Carolina. During salvage operations on the shipwreck of Blackbeard’s Queen Anne’s Revenge that lasted more than a decade, Frederick Allen recorded videos and photographs of the efforts, all of which he registered with the Copyright Office. When North Carolina published some of his videos and photos online, Allen sued for copyright infringement. The parties settled, but North Carolina then passed a law putting videos and photos of shipwrecks in the state’s custody into the public record. This lawsuit followed.

The Court somewhat begrudgingly ruled in favor of North Carolina – noting that precedent, “all but prewrote our decision today”. The court went so far as to create a road map for Congress to enact a statute that would correct this incongruous result. Justice Elena Kagan noted that this kind of “tailored statute can effectively stop States from behaving as copyright pirates. Even while respecting constitutional limits, it can bring digital Blackbeards to justice.” Allen was not happy with the Court’s decision. “The state of North Carolina routinely and vigorously enforces its own copyrights,” he said, “yet simultaneously hides behind sovereign immunity when it violates the intellectual property rights of its own citizens.”

It remains to be seen if states will change their behavior based on Monday’s ruling. The decision might save states from copyright infringement penalties, but it might also cost politicians votes and send them sailing.

The digital age has not only transformed the manner in which individuals listen to music, but also the ease by which businesses can stream music into their public spaces. However, the convenience of digital media players and music streaming providers such as Apple Music, Pandora and Spotify has also made it far easier to run afoul of the law as it relates to the public performance of recorded music.

Under U.S. Copyright Law, the copyright owner of a musical composition has the exclusive right to perform that composition in a public space, regardless of whether that “performance” is live or recorded. Any business that wishes to “perform” a work must first obtain permission from the owner and pay a royalty for the right to perform it. So how does a business owner go about obtaining permission?

In order to avoid potentially costly penalties associated with copyright infringement, businesses have the option to obtain “blanket” licenses from one or more of the major performing rights organizations (PRO’s) such as ASCAP, BMI and SESAC, organizations that administer and oversee the public performance rights of their member-artists. Each PRO typically requires exclusive affiliation from their member-artists, so a license from one PRO will only authorize music from artists included in that PRO’s catalogue. PRO blanket license fees vary based on a number of factors including the size and type of venue and whether live music is also performed.

The introduction of streaming music services has further simplified the licensing process for digital music performed through those platforms. Services like Pandora and Soundtrack Your Brand offer commercial subscriptions that are fully licensed for standard business use.

Apple Music, which does not yet offer a commercial subscription, appears poised to offer a similar product in the near future. Fees for these commercial subscriptions are generally higher than those for private use, but still less expensive than licensing from the PRO’s directly. Commercial subscriptions do come with some limitations, such as being restricted to a single venue and, in certain cases, a single location or “zone” within that venue. The selection of music streamed through these business subscriptions is also limited to the catalogue licensed by the PRO(s) with which that particular service has partnered. That said, many of the major streaming music providers have partnered with multiple PRO’s, resulting in a far more comprehensive catalogue of available music than can be obtained through a single PRO license.

If you ever forget what day it is, all you need to do is check out the Instagram account of Lebron James, and he can tell whether it’s “Taco Tuesday!!” On August 15, 2019, James took things a step further and filed a trademark application with the United States Patent and Trademark Office for the mark TACO TUESDAY. Reaction to news of the filing was mixed, and a spokesperson for James even felt the need to defend the application with the statement that, “It has nothing to do with stopping others from using the term.” Websites like LATaco.com criticized James’ attempt “to restrict the free market of taco related branding, marketing, and ideation.” The New York Times questioned whether anyone should hold a trademark for a phrase in wide use at Mexican restaurants around the country, while the Los Angeles Times went so far as to criticize James’ taco recipes. But why did James even need to defend his filing of this trademark application? Why was the initial assumption that he was applying for a trademark for the purpose of monopolizing the phrase? The answer is a mix of a misunderstanding of what a trademark is, and a misunderstanding of the other benefits a trademark registration provides.

The first reaction of many people to news of a trademark application is that someone is trying to prevent others from using a word or phrase. Indeed, Patriots quarterback Tom Brady was recently in the news saying that he regretted filing a recent application for the trademark TOM TERRIFIC. Brady was quoted as saying that, “I was actually trying to do something because I didn’t like the nickname and I wanted to make sure no one used it because some people wanted to use it.” But trademarks serve much more of a purpose than granting a monopoly over the use of a term or phrase (and, in fact, they don’t grant a monopoly at all). At their core, trademarks symbolize the connection customers have with a business. Far from serving as some type of “magic talisman”, trademarks allow businesses to make connections with their customers and quickly identify a single source of the products. For that reason, trademarks are inextricably connected to the particular goods or services of a specific business. This is also why a trademark is not equivalent to a monopoly. TACO TUESDAY as used with a Mexican restaurant has a different connotation and consumer connection than TACO TUESDAY used for running shoes or TACO TUESDAY used for podcasting.

This source-identifying function is where the other benefits of a trademark originate. Trademarks can protect consumers from knock-offs or cheap imitations. When functioning properly they can help ensure that the goods and services customers buy are of a consistent quality. A strong trademark can allow a business owner to expand their business through the use of trademark licenses. Trademark registrations provide a presumption of ownership and validity that can protect business owners from weak or baseless lawsuits (a benefit also hinted at by Lebron James’ spokesperson). Some online retailing tools like the Amazon Brand Registry are not available to those without a trademark registration.

In this case, James’ TACO TUESDAY trademark application was filed covering a variety of goods and services such as advertising and marketing services, podcasting services, and a website featuring non-downloadable videos and social media posts. James may be interested in ensuring that his fans can always get their authentic Taco Tuesday memes. Or he may be looking to turn this fad into a social media side-business. Or he may be looking to protect himself from lawsuits from others who would claim exclusive rights in the phrase TACO TUESDAY. Believe it or not, there has been fairly extensive litigation in the past over the phrase TACO TUESDAY, and new applications are still being filed (including one filed just days before James’ own application.

There are many reasons for filing a trademark application, and trademarks confer a range of benefits on their owners. While it’s fun for media and social media to look for nefarious motives in a silly meme, wiping a term or phrase from the English language is difficult or impossible to do with a trademark – especially one with years of prior use. The far more likely scenario is that the lettuce Lebron James is thinking about is money from a future business and not the topping on your dinner taco.

UPDATE: On September 11, 2019, the USTPO issued a preliminary refusal on the TACO TUESDAY trademark application. This is a little surprising because the USPTO typically takes about three months to review an application and in this case acted on it in under one. The two main issues raised in the refusal are that the phrase is commonly used and is thus less likely to identify only one source (which doesn’t explain the numerous other applications and registrations already allowed for the phrase), and that James’ application may conflict with an earlier registration for TECHNO TACO TUESDAY. We will keep an eye on this ongoing taco battle!

Beginning August 3, 2019, all foreign-domiciled trademark applicants, registrants and parties to Trademark Trial and Appeal Board (TTAB) proceedings must be represented by an attorney who is licensed to practice in the United States, according to the final rule recently issued by the United States Patent and Trademark Office (USPTO).  This means that all new applications, renewal filings and TTAB disputes filed on behalf of any foreign entity or individual must be filed by a U.S.-licensed attorney.  For purposes of this final rule, “foreign-domiciled” means either an individual with a permanent legal residence outside of the United States or its territories, and/or an entity headquartered outside the United States or its territories.

The USPTO has made this rule change to address a growing number of filings from foreign pro se parties that are either inaccurate or even fraudulent and that do not comply with U.S. trademark law or the USPTO’s rules. The USPTO hopes that this final rule will increase USPTO customer compliance with U.S. trademark law and USPTO regulations, improve the accuracy of trademark submissions, and safeguard the integrity of the U.S. trademark register.

In the short term, this final rule might be seen by international entities and individuals outside of the U.S. as an inconvenience or an unnecessary added expense. Assuming the rule accomplishes the USPTO’s stated goals of tightening compliance with U.S. trademark law and USPTO rules, and reducing fraudulent documents and applications submitted to the USPTO, however, the final rule could reduce costs for applicants across the board by eliminating the need for applicants to challenge fraudulent registrations or respond to likelihood of confusion refusals based on fraudulent applications and registrations. By implementing this rule, the USPTO could make the trademark system more efficient, more reliable, and more consistent, which will have the ultimate effect of helping everyone who uses or relies on the USPTO.

Note that this requirement of a U.S.-licensed attorney does not apply to the filing of Madrid applications through the World Intellectual Property Organization. For Madrid applications submitted with all formalities and statutory requirements already satisfied and in condition for publication, the USPTO will waive the requirement until the Madrid system is updated to allow for the designation of a US-licensed attorney. In the event of an office action on a Madrid application, a U.S.-licensed attorney will still need to be retained, as usual.

In March, news broke that stationary bike maker Peloton Interactive had been slapped with a copyright infringement lawsuit seeking more than $150 million in damages (Downtown Music Publishing LLC, et al. v. Peloton Interactive, Inc., Case No. 1:19-cv-02426 (S.D.N.Y.). The lawsuit, filed by ten music publishers, claimed that “more than 1,000 musical works” were used in Peloton’s [cycling videos] without appropriate synchronization licenses. The publishers’ original complaint painted Peloton as a $4 billion tech giant raking in money on the backs of copyright holders all while willfully ignoring its obligations to those copyright holders.

On Tuesday, Peloton slapped back, filing Counterclaims against both the music publisher plaintiffs and the National Music Publisher’s Association (“NMPA”) for anti-trust violations of the Sherman Act and tortious interference. Contrary to the claims of the Complaint, Peloton argues in its Counterclaims that it did attempt to negotiate appropriate licensing, and that it has entered into licenses with publishers and the performing rights organizations for the use of the songs, but that its efforts were stymied by the anticompetitive behavior of the NMPA and the named music publishers.

The problem, Peloton claims, is that the publishers’ synchronization license structure (traditionally done on a song-by-song basis) is ill-suited to Peloton’s situation where a catalog-wide license would be more appropriate. In the copyright world, synchronization licenses allow a licensee to synchronize music with visual media of some kind. Peloton alleges that it invested tens of millions of dollars building systems and an infrastructure to enable licensing mechanisms appropriate for its business. It attempted to negotiate with NMPA for these sync licenses even while the NMPA would not identify the specific publishes on whose behalf it was negotiating, and even while the NMPA insisted on payment for song licenses from every publisher regardless of whether Peloton had any desire to actually use that publisher’s songs. When license negotiations ultimately broke down in early 2019, Peloton attempted to pursue licenses directly with the music publishers whose works Peloton desired to use on its service. However, these negotiations suddenly ceased “in a near-simultaneous and identical fashion”, which Peloton believes was the result of pressure from NMPA and its leadership.

The lawsuit, and Peloton’s counterclaims, highlight issues that have long existed in the copyright world, including the concentration of publishing rights in a relatively small number of entities, a great imbalance of negotiating power for businesses both small and large looking to license copyrighted works, and even a lack of transparency as to who owns rights to various musical works. While the Music Modernization Act of 2018 sought to address some of these issues, some of its key components (like a centralized ownership database) have yet to be established. Time will tell whether this lawsuit will bring further changes to the copyright industry or whether Peloton will be forced to bend its practices to match the current licensing structure.