What Every Startup Needs To Know: IP Pitfalls- Failure to Identify Third-Party Rights- Part Eight

By Debby Winters

Next in this series, we will discuss the failure of the startup to recognize thrid-party rights. When we think about third-party rights in the IP, we are thinking about competitors who may have a patent for a technology within a product. Every startup should be cognizant that its company commercialization may be blocked by this type of third-party right. Accordingly, startups, at an early stage, should consider a “freedom to operate” (FTO) search or clearance to assess litigation risks. A FTO is performed to make sure that commercial products, marketing and use of the product, process or service do not infringe the IP rights of third-parties.

An FTO analysis begins by searching issued patents or pending applications and obtaining a legal opinion from a licensed patent attorney knowledgeable in that field as to whether the product, process, or service may be considered to infringe one or more patents owned by others. Patents that limit the startup’s FTO can be addressed by buying or licensing the underlying technology or patent, by cross-licensing the technology or patent, or by creatively “inventing around” the patented invention by altering the startup product or process, thus avoiding infringement.

An example of how to “invent around” would be in software development, where a startup chooses to incorporate open source software into its code. However, open source licenses also need to be carefully reviewed to ensure compliance with license terms. In some instances, the use of open source code in a startup product may transform the startup’s proprietary code into open source software resulting in public disclosure of the proprietary code. It is always best to consult a licensed patent attorney.

A startup will sometimes use third-party photographs, images, or text in marketing or product support materials. In such cases, the startup should investigate if permission is required to use the material, identify the rights needed, and contact the owner for permission or a license. Startups should make sure the copyright permission or license agreement is in writing.

Comprehensive trademark searches should be conducted early in the business planning process to make sure that the desired business, product, or service name does not conflict with a registered trademark. A startup that fails to conduct a proper trademark search risks receiving a cease and desist letter or even being sued.  This may necessity a need to rebrand after launch and incur the tangible and intangible costs associated with rebranding.

Businesses need broad awareness when hiring new employees, especially those that may have knowledge of competitor’s trade secrets. This is another way to infringe on a third-party’s IP rights.  New employee agreements should include clauses that prohibit employees from transferring or using proprietary information or materials from previous employers. The startup should also verify that the new hire is not subject to any binding non-compete agreements from former employers.

In dealing with third-party rights, startups are well-advised to consider their options at an early stage. In some cases, minor product or service changes, payment of a small licensing fee to the patent or copyright owner, and/or changing potentially problematic trademarks early on and implementing careful employee hiring practices may be sufficient to avoid future disputes and can improve a startup’s chances of attracting business partners and investors to support its business development plans.

In our next blog we will discuss the pitfalls of using poorly drafted agreements to cover IP, and the danger of not using a written agreement at all.

What Every Startup Needs To Know: IP Pitfalls- Part One

By Debby Winters

On their path to success startup companies often face significant risk and liability with respect to Intellectual Property (IP). The failure to adequately address IP issues can potentially lead to the permanent loss of these rights and could possibly create a litigation risk. Insufficient or nonexistent IP protection can also hamper business transactions, including seed funding and status as a desirable acquisition target.

In a series of blogs, we will look at some of the common IP pitfalls startups face and possible steps that startups can take to avoid those pitfalls and protect their valuable IP assets while at the same time reducing the risk of litigation.

Let’s start out by defining what an IP asset is.

The term “intellectual property” can be thought of as creations of the mind that are given legal rights commonly associated with real or personal property. These rights can and do have real economic value. These property rights are generally a result of either federal and/or state laws and include the commonly understood rights belonging to patents, trademarks, copyrights and trade secrets.

All businesses have some form of IP that provides a competitive advantage and helps generate profits. Many companies mistakenly believe that patent protection is the only form of IP protection and ignore the value of non-patent IP. However, startups should identify both patent and non-patent related IP assets when evaluating their IP portfolio.

Startups, no matter whether small or large, should develop an IP plan. This IP plan should identify both existing and future IP assets. In the next of this series, we will talk more about the IP plan; what it should include and how to put it together. Stay tuned!

 

A Little Thanksgiving IP

By Debby Winters

Does your Thanksgiving Day routine involving watching the MACY’S THANKSGIVING DAY PARADE? Ever wondered if Macy’s has trademarked that name? Well, wonder no more. They received trademark protection from the USPTO on December 1, 1998 for entertainment services, namely, organizing and conducting a parade. They claimed first use in 1924. That means there is one and only one MACY’S THANKSGIVING DAY PARADE. And since that is true Macy’s generates millions of dollars for that one day parade. They charge approximately $20,000 per float, and their additional revenue for balloons and exclusive broadcasting rights to the parade and the performances that are given right in front of the store.

This year, however, Macy’s is in decline. The original R.H. Macy & Co. was a dry goods emporium that opened in downtown Manhattan not long before the Civil War. What’s now known as Macy’s was once Federated Department Stores Inc., which had acquired many of the department stores that might sound familiar to people born before 1970 or so: Burdines, Bullock’s, I. Magnin & Co., and Lazarus, to name a few. The company bought Macy’s in 1994 and a decade later took its name and rebranded its other department stores with the Macy’s name, too.

In the middle of last year, Macy’s decided to close 100 of its 730 stores, eliminating 3,900 jobs. (After a disappointing 2016 holiday season, Macy’s said it would cut 6,200 more jobs.) About half of the 70 stores it’s shut down this year are within 10 miles of another Macy’s.

There have been struggles with large department stores, but Macy’s is trying to make a comeback and is dedicated to keeping its MACY’S THANKSGIVING DAY PARADE going and going. If they stop having the parade they will be in danger of losing the trademark, because as we all know, with the Trademark Office it is Use It or Lose It!

Happy Thanksgiving!

When does a trademark become generic? Part 2

By Debby Winters

Recently we talked about the possibility of the trademark for Google to become generic, meaning any internet search not just one conducted with the Google search engine.  Well, the folks at Velcro are at risk of the same thing.  So they have gotten creative and made a video to remind the public not to use their trademarked name in a generic way since some people might be referring to hook and loop-type fasteners made by other companies as “velcro.”

When this happens, most trademark owners take some kind of action to remind the public that their mark represents a brand, not a generic term.  It works best if your action is one that people might like well enough to pay attention to, rather than just ignore.  Velcro has done that with a new campaign that features the entertaining video, “Don’t Say Velcro.”  The video features people purportedly from the Velcro legal team, singing and dancing while instructing you on the proper use of their mark.

Not only can you enjoy the video, but they also have a behind the scenes video of its making. If you want to understand more about this process of being generic, check out the videos!

When does a trademark become generic?

By Debby Winters

When the public generally uses the name of a specific product as a generic term, it becomes a case of “genericide” – a killing of the trademark by becoming generic. That’s not good for the product because generic terms do not get any trademark protection.

The situation is not common, but it happens.  Common words have begun as trademarks but passed over into the world of unprotectable generic terms.  Examples include aspirinescalator, cellophanedry ice, flip phone, kerosene, thermos, trampoline, and videotape to name just a few.  For some of those, there are other words we could use for the product, but it’s easy to see why we prefer to call aspirin just “aspirin,” rather than “acetylsalicylic acid.”  For others, the term is so ingrained that it’s hard to think of what else we would call the product: what’s the alternative to “trampoline” as a springboard for jumping?

For obvious reasons, owners of dominant trademarks are not keen to have marks cross over the line to become generic terms.  When that happens, the formerly valuable mark, which only they could use on their product, becomes fair game for everybody to use.  That is why the owners of dominant marks often make efforts to “police” use of their marks, or at least to remind the public that it’s a trademark, not a generic term.

We used to see ads every so often reminding us that “Xerox” was a trademark, so you could ask someone to “make a photocopy” of a document, but you shouldn’t ask them to “xerox” it.   Other product names that have fought this battle include “Kleenex,” “Clorox,” “Gore-Tex” and “BoTox.” In addition to Google and its battle, Coke is undergoing the same dilemma. If I asked you whether you wanted a Coke and handed you a Pepsi, would you be surprised or be expecting it? Would you reply with “yes, I’ll take a Pepsi” thinking that Coke was the generic term? The world of generics can be tricky and the companies that own them don’t want people to confuse the trademark with all products or they lose that special protection.

What’s a generic term? Can we google it to find out?

By Debby Winters

This story of generics began because David Elliott and Chris Gillespie registered over 700 domain names that contained the word “google” plus the names of companies, products, people, places, etc. For example, they registered “googledisney.com,” “googlefit.com,” and “googlemexicocity.com.”  Their argument in Arizona federal court was that, because people use “google” as a verb meaning “to perform an internet search,” thus making the mark generic.  Google objected to this and won. That’s when Elliott And Gillespie countered by trying to get Google’s registrations for the GOOGLE trademark cancelled saying that it has become a generic term by filing papers asking the Supreme Court to consider whether the term “Google” has become generic.Google’s response was that even if people use the term generically as a verb, that doesn’t mean that it is generic for search engines.  The federal trademark law allows a registration to be cancelled when the mark “becomes the generic name for the goods or services . . . for which it is registered,” but as Google pointed out, its registrations cover “computer hardware; computer software for creating indexes of information, indexes of web sites and indexes of other information resources” and other, longer descriptions.  The point is that the registrations cover providing a search engine, not the act of searching the internet.  Because all of Elliott And Gillespie’s evidence went to the use of “google” as a verb rather than the use as the name of the goods and services Google’s mark is registered for, Google argued that the evidence didn’t prove anything about the real question in the case.  The district court in Arizona agreed and dismissed the case, and the Court of Appeals for the Ninth Circuit affirmed the dismissal.On Aug 14, 2017 Elliott And Gillespie prepared their last shot by filing a petition for writ of certiorari at the U.S. Supreme Court.  It will be a while before we know anything about whether the Court will even take the case.  The Court denies most petitions without even requesting a response from the other party.  But if the Court is at least somewhat interested, it will ask Google to file a response, and then determine whether to take the case.  Even if the Court decides to hear the case, that’s no guarantee that Elliott and Gillespie will win.  There’s a long way to go before we ditch the term “search engine” and officially start referring to the act of searching as “google.” If you want to keep up with what happens next in this case, continue to read this blog or just “google it!”

DON’T BE FOOLED-The USPTO does NOT issue Invoices to trademark owners/applicants

By Debby Winters

Many trademark owners and applicants have fallen victim to the ever-growing problem of paying a fake or misleading invoice, which looks convincingly authentic and from the USPTO.  Not only do they look like they come from official government offices, they reference the particular trademark registration number and mark, hoping to cause further confusion. The companies sending these fake invoices use names like U.S. Trademark Compliance Office or the Patent and Trademark Bureau.  To help consumers, the USPTO keeps a list of fake invoice senders and welcomes reports of ones they don’t know about.

These fakes invoices claim to be for things like renewal fees, monitoring, customs recordation, or to place your mark in a database that turns out to be a fake database.  The invoices may contain tiny, fine print that explains what they are actually doing and that they are not part of the USPTO, but this is often overlooked.  More often, the fees are paid by unsuspecting folks who want to protect their trademarks.

The USPTO is making strides to educate people about these misleading invoices. If you use a trademark attorney to do your filings, all necessary filings and fees due to the USPTO will go through your attorney. If you do not use an attorney, check with one before you pay and get fooled.