We have all seen the stands set up in international train stations and subway stops, the booths in flea markets, and the blankets spread over the sidewalk, all featuring faux luxury goods. The enterprising management of these booths and stands do a rousing business in counterfeit merchandise, such as Louis Vuitton handbags, pirated CDs and DVDs, Dior perfume and Tory Burch flats. Not only can the lesser quality goods impinge the reputation of the companies’ products they copy, they are also hurting business; counterfeiting is a multi-billion dollar industry.
When it comes to fashion, there is little protection available: clothing designs are not copyrightable and design patents are expensive and require too long to be granted. Trademarks, however, provide valuable protection to fashion merchandise. A handbag style may generally be copied, if not protected by trade dress or a design patent or the fabric or art protected by copyright, but a manufacturer may not legally affix another company’s registered logo. Trademarks identify the source of goods, so applying someone else’s trademark to one’s goods misidentifies the source and deceives the public, obviously illegal under trademark law. However, without the logo or trademark, the public has little interest in the goods; therefore, the legally-copying manufacturers have become counterfeiters. Companies are taking action to prevent the sale or punish the sale of the pirated merchandise.
In fact, action has been taken close to home – Coach, Inc. and Coach Services filed suit last week in the U.S. District Court of the Eastern District of Missouri against retailers, FYI Trading Company, et al and Didi’s and Gigi’s Purse Strings N’ Things, et al. The complaint alleges infringement by FYI and Didi’s of Coach’s trademarks, trade dress, and copyrighted design elements. By selling counterfeit goods, a retailer is in violation of the Lanham Act [15 U.S. §1117], and the trademark owner can be awarded treble damages or statutory damages, and attorneys’ fees. Statutory damages can be hefty, $1,000 to $200,000 per counterfeit mark or not more than $2,000,000 per mark if the use was willful. For its trademark claims alone, Coach has requested the full statutory $2 million or a trebling of the actual damages. It is in addition to its other federal and state claims, including: unfair competition, copyright infringement, unjust enrichment, and common law trademark dilution. Trafficking in counterfeit goods can even result in liability under RICO, definitely not a position a shop owner would like to find himself in.
The moral of the story is, in short, do not sell counterfeit goods. If you aren’t sure whether they are real, i.e. a good fake, ask. You may still be liable for selling counterfeit goods under the theory of “willful blindness.” Selling counterfeit merchandise is illegal and may become very costly.
To follow the case against FYI Trading, it is case number, 4:10cv -1545.
The Library of Congress now means something to millions of teenagers.
With all the hubbub surrounding the July 26 announcement of “Rules for Exemptions Regarding Circumvention of Access-Control Technologies” to the Digital Millennium Copyright Act by the Librarian of Congress, the reasoning behind the rules, the source of the authority to promulgate the exemptions, and the existence of prior exemptions have become lost. Admittedly, the news that a previously illicit activity, “jailbreaking” a phone, now has the stamp of government approval, is enough to make one forget about the whys and wherefores of how that came to be. The Librarian of Congress has never received so much press.
From whence does the authority to make the exemptions derive and why was that authority granted? Authorization originates in the Digital Millennium Copyright Act[1], DMCA to its friends, which enacted Chapter 12 of the copyright law found in Title 17 of the US Code. Chapter 12 provides for “Copyright Protection and Management Systems,” making it illegal for anyone to circumvent the technological procedures put in place to prevent unauthorized access to or copying of copyrighted works. To ensure that this addition is not over-inclusive and onerous for those wishing to make non-infringing use of copyrighted work, a procedure for carving out exceptions was built into the DMCA. The procedure, as outlined in §1201(C), involves the Librarian of Congress , upon the recommendation of the Register of Copyrights, in consultation with the Assistant Secretary for Communications and Information of the Department of Commerce, determining every three years whether there are those adversely affected by the prohibition on circumvention. The Librarian will take under advisement: the availability for use of copyrighted works, availability for use for nonprofit archival, preservation, and educational purposes, the impact of the prohibition on the ability to criticize, comment, research, etc., the effect of circumvention on the market for or value of the work, and whatever else the Librarian deems pertinent.
The rulemaking procedure was set to begin 2 years after the implementation of the DMCA in 1998, then every 3 years thereafter. It follows, then, that classes of exemptions were published in 2000, 2003, and 2006. The latter were to expire in October of 2009, but the new set was not yet ready, so the October expiration date was stricken from the code. This week the [long?]-awaited classes of exemptions were announced by the Librarian. Headlines broadcast the most celebrated exemptions, numbers 2 and 3, pertaining to wireless phones, essentially allowing the phone owner to jailbreak it. What much of the public may not realize was there were four other exemptions. Though they received less attention, they are interesting nonetheless. These are the basics on the others: Exemption 1 – allowing circumvention of copy protection on DVDs to permit fair use for the purpose of criticism or comment in educational uses, documentary filmmaking, and noncommercial videos. Exemption 4 – good faith security investigation and testing of video games accessible on personal computers. Exemption 5 – allowing circumvention to use a computer program without the necessary dongle, where the dongle is obsolete. Exemption 6 – evading access controls to allow enabling read-aloud or specialized text functions of ebooks, where all ebooks contain such controls.
For those interested in more of the background on Exemption 4, see the comment submitted by J. Alex Halderman, an Assistant Professor of Electrical Engineering and Computer Science at the University of Michigan. In brief, he was a proponent of an exemption due to the harm caused by Sony’s rootkit and Macrovisions’s SafeDisc software. If you know what a dongle is, admittedly I didn’t until a month ago, then you understand the reasoning behind Exemption 4. The comment submitted by Joseph Montoro Jr. highlights that reasoning. This exemption was essentially in place in 2000, then renewed in 2003 and 2006. Similarly, Exemption 6 on ebooks has been in place since 2003. Other exemptions can also be found in closely-related prior incarnations, such as Exemption 3 in 2006, Exemption 4 in 2006, and Exemption 1 in 2006. I appreciate the fluidity of the law in this area, as it requires the flexibility to change along with technology. However, it seems to be somewhat inefficient to continue to propagate the same exemptions, that have already been established, every three years. For example, clearly, the dongle exception is necessary, and changes in technology will not alter that fact. Yet comments and responses must be fielded in its favor every three years, 2010 makes the fourth time the exemption appears. In light of wasted time and resources, it is unfortunate. On the other hand, in making sure our country is not stuck with anachronistic laws, the current system is doing fine.
[1] Pub. L. No. 105-304, 112 Stat. 2860
To St. Louis patrons of live music, BMI once again appears to be the bad guy. This week, BMI filed suit in the United States District Court of the Eastern District of Missouri against The Jive and Wail, a dueling piano entertainment venue located in Maplewood. The Jive and Wail, self-described, features professional piano players, “performing all your favorite hits from every era imaginable.” BMI believes the Jive and Wail has been performing those hits without authorization (read: without paying licensing fees). That may be. Regardless, in these situations, BMI, ASCAP, and SESAC take the heat for pursuing fees, which may result in the closure of the business once statutory damages are tacked on, angering patrons of the defunct venue. Unsurprisingly, the PROs have gotten a bad name. Deservedly so? It is worth taking a look at what the performance rights organizations do and how their existence benefits songwriters.
ASCAP was formed in 1914, and BMI was formed as competition in 1939. Since that time, they have licensed the work of their members, songwriters and publishers. To the extent one feels they are evil (see above), at present, they are a necessary evil. ASCAP and BMI, both non-profits, provide services that writers and publishers require and are unable, without substantial difficulty, to supply for themselves. The performance rights organizations provide amenities for their members who may not be in a traditional job, with the availability of benefits. For example, those registered with ASCAP and BMI may obtain health, life, and property insurance, have access to financial services, and take advantage of career development tools and discounts. In addition, and most notably, PROs monitor who is using their members’ music – television, radio, airlines, websites, bars, cafes, etc. – and collect licensing fees from those establishments. Those licensing fees are then divided among the member writers and publishers according to the organization’s own distribution schedule. Imagine the supreme difficulty for a writer in assessing who is playing his songs and how often, then tracking down the royalties for those performances. ASCAP and BMI rigorously monitor and collect on behalf of their members, for which they are often derided by the public. [Sometimes they bring it upon themselves, see prior post.] However, without their efforts, the songwriters would be unable to enjoy the majority of the fruits of their creative efforts.
For live entertainment venues, such as Jive and Wail, their bread and butter is the performance of popular songs. Each night, patrons expect to hear catchy music, especially music with which they can sing along. In return, those patrons spend money on covers, food, and drinks. It is a business. When the venues fail to pay proper license fees, they are free-riding on property belonging to someone else. Until the kegs are paid for, they are not the property of the bar. Bars would not think of not paying their liquor distributor; they know they will come collecting. Similarly, unless ASCAP and BMI come collecting, where is the incentive to pay? When bars that do not pay face reprisal, it is easy to condemn the big guys. But remember, they also represent the little guys.
Complaint filed as, Broadcast Music, Inc. et al v. The Jive & Wail, LLC et al, E.D.Mo., case number, 4:2010cv01352
“Don’t tase me, bro!”
That phrase, uttered during Senator Kerry’s address at the University of Florida, will live on, probably long after we have forgotten who the unfortunate youth who exclaimed it was. An interesting consideration is, when Andrew Meyer yelled what has become a catchphrase, was that a foreshadowing that public use of the “TASER” trademark will cause it to soon become generic?
A death sentence for a trademark is when it becomes “generic.” Even after proper registration, meaning it was not generic from the beginning, a mark can become generic through use. Once a mark becomes generic, the registration can be cancelled and competition can use it to refer to the type of product they offer. A few examples of registrations cancelled due to genericity: “You’ve Got Mail,” “thermos,” “aspirin,” and “dry ice.” What is usually a highly sought after result for a company, popularity, can have the unfortunate byproduct of lessening the distinctiveness of the mark.
The examples listed above are just a few of the many companies that have lost the uphill battle to protect their trademarks. It may appear impossible to prevent a mark from becoming generic, for how do you control how the public refers to your product and others like it? Nevertheless, it is possible, and here are a few tips to keep in mind, subject of course, to the guidance provided by your intellectual property lawyer.
The best way to manipulate how the public uses your trademark is through your public relations department. In marketing, monitor carefully the terminology and phraseology of the advertisement. For example, emphasize the fact that your product is not just a type of product, but a brand. Folgers has a little jingle, “the best part of waking up is Folgers in your cup.” The use of Folgers in that sense does not differentiate between the type of product (coffee) and the brand (Folgers.) To protect its mark from becoming generic by referring to the type of product, Folgers could say, “the best part of waking up is Folgers brand coffee in your cup.” Now, admittedly it loses a little of catchiness with the addition, and as Folgers is not likely to be used interchangeably with coffee, they can keep their jingle as it is.* However, the distinction is important when you offer a product that the world is not already familiar with, and public use of the brand name will then blur the line between the trademark and the type of product, which can then result in a generic mark. Think, “pass me a coke,” used in reference to any soft drink.
A more indirect method of influencing public perception and use is the action taken by Xerox, contacting Hollywood. Xerox placed an ad in The Hollywood Reporter to encourage screenwriters to use their trademark as an adjective only, not a verb. From now on, the alluring secretary should not say, “I am going to Xerox these top-secret plans,” but rather “I am going to make a photocopy of these top-secret plans on the Xerox copy machine.” Of course that is unrealistically corny, but, in practice, making small changes similar to the above can affect the public’s use of the trademark.
TASER International has paid attention to the difficulties previously faced by companies, where a distinctive, strong mark became generic due to the manner of use by the public. They are striving to protect their intellectual property, their TASER trademark and others, by describing proper use of their trademarks on their website. The problem is Americans love efficiency, and Americans love verbs. It is much quicker and easier to say “the security guard tased the baseball fan,” than it is to say “the security guard deployed his TASER device on the baseball fan.” A trademark is more likely to continue to be applied as an adjective, e.g. Xerox copier, where there is an appropriate verb to use, e.g. photocopy. Until TASER International educates journalists, screenwriters, and the public on a suitable substitute, tase, taser, and tasered, are going to be used as verbs, and TASER may cease to be a distinctive mark. Proper use and protection can prevent the genericide of a registered mark, but it requires proactivity!
*The Best Part of Wakin’ Up is Folgers in Your Cup, is actually a registered slogan of the Folger Coffee Company
For a list of marks that have become generic, and marks that are in danger of becoming so, check out the very well done Wikipedia page.
As a frequent user of Shazam’s app for the iPhone, I have recently become skeptical of the performance rights organizations’ future ability to correctly identify the frequency of songs played on the radio. For those who are not familiar with Shazam, it is an application that ”listens” to approximately 10 seconds of a song – playing in a restaurant, a store, in your car – and then tells you the the artist, the name of the song, and the album. My country-music-aficionado father shocked my twenty-something brother when he correctly identified a song by Snoop. Other than amazing your friends with your music identification prowess, it comes in handy for those times when you love a song that is playing, but don’t know what it is. Shazam’s self-described method is to run the clip through its database of 8 million tracks to find an “exact fingerprint match.”
Contrary to what you may think at this point, this post is not a plug for Shazam. In fact, I am highlighting one of its imperfections, which is sometimes songs are not recognized. When that happens, it says, predictably, ”unrecognized.” The details indicate that the music is unable to be tagged because it is either unrecorded or not loud enough for the microphone to pick up. One of the last times I used the application, I tried to tag a few songs in a row and each were unrecognized, but they clearly loud enough and popular songs that had been recorded. However, the songs had been mixed somewhat by a DJ. I began to wonder. If the songs, being mixed, were made unrecognizable to Shazam, does the same situation occur with the technology used by ASCAP, BMI, or SESAC? The former use Mediaguide, BlueArrow, and BDS, respectively, to identify radio play. Interestingly, Mediaguide, though a watermarking method, describes it’s process like Shazam as finding the “fingerprint match” and BlueArrow is the technology used by Landmark, owned by BMI, which resulted from an acquisition of Shazam Entertainment Ltd. BDS is a division of Niesen, which uses its own patented digital recognition technology.
In order to calculate the frequency of works performed, the three performance rights organizations utilize the above technologies. In addition, ASCAP and BMI, and possibly SESAC, also incorporate some measure of station logs and/or actual broadcast recordings in their calculations. However, as the progressive methods of digitally recognizing songs have become more sophisticated, it makes it takes less human supervision, i.e. funds, to operate. It follows then if there is a cheaper, less time intensive process to calculate air play, that method will be frequently more employed and relied upon. The question is whether the technology is up to the task. If BMI is using patents obtained in its acquisition of Shazam, and Shazam continues to use the same technology in its app, which as I said drops the recognition ball at times, is BMI getting an accurate reading of track frequency on the radio? If the PROs continue to be reliant on and incorporate the prior methods of calculation, that is to say “the old-fashioned way”, then the slip-ups in digital recognition may be a non-issue. On the other hand, if ASCAP, BMI, and SESAC are putting more and more of their eggs in the technology basket, songwriters and publishers may not be getting the credit, and the resulting royalties, they deserve. This is especially true of tracks that make great mixes – the mixed version, which may not be recognized by the system, becomes more popular than the original. The resulting numbers, without the independent confirmation of logs, are skewed.
The performance rights organizations do a great job; computing, across the nation, the air time of songs of its members is a huge task. To begin relying increasingly on the digital technology could be attractive an alternative to more hands-on calculation methods, but technology can also be a crutch that hinders the system. I recommend continuing to employ the current method, where digital recognition technology is just another tool in the arsenal in performance calculations.