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ELECTRONIC NEWSLETTER

June 14, 2002

Volume 1, Issue 2

Topics: News

Trademarks

Patents

Domain Names

Discussions

Litigation

Trademarks

Trademarks in the News: What is a Trademark Worth?   top

See the news article "Millions to be Made with Your Words" at http://abcnews.go.com/sections/world/DailyNews/words020411.html

United States Patent and Trademark Office Proposes to Reduce Number of Trademark Examiners by 35%   top

The US Patent and Trademark Office has announced it will lay-off up to 135 trade mark examiners in the next few months. The Patent and Trademark Office currently has 383 trademark examiners. The move is in response to declining trademark application filings. 375,000 trademark applications were filed in 2000. 296,000 applications were filed in 2001. The Patent and Trademark Office anticipates 250,000 trademark application to be filed in 2002.

European Community: Hollywood S.A.S. v. Souza Cruz S.A.   top

Board of Appeal of the European Community Trademark Office uses the words 'dilution' and 'tarnishment' when considering whether the use of HOLLYWOOD on a Community Trademark application for cigarettes would damage the character of the French trade mark HOLLYWOOD for chewing gum.

Souza Cruz applied to register the mark HOLLYWOOD for cigarettes, tobacco products, lighters and matches. The application was opposed by Hollywood S.A.S. ("Hollywood"), owner of the HOLLYWOOD mark in France for chewing gum. Hollywood argued that Souza Cruz's use of the mark was calculated to take unfair advantage of and be detrimental to the reputation which Hollywood's mark enjoyed in France. Hollywood claimed that its mark was associated in the minds of its customers with youth, health and dynamism and this association would be damaged if the mark were used for the products for which registration was sought, which had negative health connotations.

The opposition was dismissed and Hollywood appealed to the Board of Appeal. The Board of Appeal found in favor of Hollywood in respect of the goods 'cigarettes, tobacco, tobacco products and smokers' articles' but rejected the opposition in respect of 'lighters and matches'. In reaching its decision, the Board of Appeals found that use of the HOLLYWOOD trade mark for tobacco products (but not lighters and matches) would produce an association with the health risks and other negative feelings generated by cigarette smoking, which was a form of 'dilution by tarnishment'. In addition, the Board held that Hollywood need not show actual damage to support its opposition, but damage may be inferred by the applicant's proposed use.

Patents

The Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc.   top

In a decision issued June 3, 2002 that is likely to send shock waves through the profession, the Supreme Court has determined that the Federal Circuit is not the only appeals court that can and should hear patent appeals. The case is discussed below in the "Discussion" section of this Newsletter.

Domain Names

Viacom loses domain name fight over MTV in Singapore   top

Viacom International Inc., owner of the trademark MTV, failed in its action to recover the domain name MTV.COM.SG in an administrative domain name dispute action in Singapore. Elitist Technologies, a Taiwan company engaged in sale of office equipment, registered the domain name MTV.COM.SG in Singapore. Viacom argued that MTV is an unusual mark and that Elitist has no legitimate interest in the mark given the nature of its business. Elitist countered that MTV is used by the public generically to describe Chinese music videos and that Elitist is engaged in establishing a web site to offer entertainment products.

The Singapore Domain Name Dispute Resolution Service held that the word MTV is descriptive and generic and found that Viacom had not proved that it had exclusive rights over the mark.

British American Tobacco loses UDRP dispute over domain name kool.com   top

British American Tobacco ("BAT"), owner of the trademark KOOL for cigarettes, was unsuccessful in recovering the domain name kool.com. BAT brought an administrative UDRP action before the World Intellectual Property Organization ("WIPO") The administrator appointed by WIPO held that BAT failed to establish that the current holder of kool.com has no legitimate interest in the domain name. The administrator said that BAT provided no evidence to show that the address had been registered with the aim of luring web surfers to a site associated with the cigarette brand.

America Online wins the first Eligibility Requirements Dispute Resolution Policy for .name registration for instant.messenger.name   top

America Online ("AOL") won the first Eligibility Requirements Dispute Resolution Policy ("ERDRP") against .name registration. AOL uses the mark INSTANT MESSENGER for an electronic communication service. Adrian Paul Miles registered the domain names aim5.instant.messenger.name and instant.messenger.name. AOL brought an administrative action pursuant to the .name EDRP requesting cancellation of the domain names as registered in violation of .name Eligibility Requirements. The dispute administrator found that Miles did not meet the requirements for registration of these two domain names and ordered the domain name registrations to be cancelled. This was the first decision under the ERDRP procedure.

ICANN approves new generic top-level domain .pro exclusively for licensed professionalsnbsp;  top

ICANN, the administrator of the gTLD domain space, reached an agreement with RegistryPro, Inc. for operation of the new top-level domain ".pro" registry. The agreement is subject to review and approval by the US Department of Commerce. If approved, .pro will commence operation sometime late in 2002 or early 2003.

The .pro domain name will initially be offered to doctors (med.pro), accountants (acct.pro), and lawyers (law.pro), but eventually the plan is to extend this to architects and other professionals. Proponents of the plan say the domain will also help consumers who will be able to verify that the person they are dealing with is an accredited professional. The details of what documents will be required for filing applications is still be worked out.

US House of Representatives considers bill criminalizing filing of false contact information in domain name registrations   top

Internet users who knowingly submit incorrect contact information when registering Web addresses could face up to five years in jail under legislation recently introduced in the House of Representatives. The proposal would make it a crime to "knowingly and with intent to defraud" submit false information to an Internet domain name registrar. The bill was proposed by Reps. Howard Coble (R-N.C.) and Howard Berman (D-Calif.). Cybersquatters often submit false names and contact information when registering domain names.

Discussions

The Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc. (122 S. Ct. 1889) Jeffrey A. Schwab, Partner, Abelman, Frayne & Schwab   top

In a decision that is likely to send shock waves through the profession, the Supreme Court has determined that the Federal Circuit is not the only appeals court that can and should hear patent appeals.

In a June 3, 2002 decision the Supreme Court, in Holmes v. Vornado has limited appeals to the Court of Appeals for the Federal Circuit ("the Federal Circuit") only to cases in which the plaintiff, in its complaint brings the patent into issue. This is a radical departure from what has been perceived to be the jurisdiction of the Federal Circuit and may well reopen the forum shopping in patent cases that was prevalent prior to the creation of the Federal Circuit.

The Federal Circuit was created in 1982. At the time, it was generally believed that the court was given exclusive jurisdiction for all cases relating to patent validity and infringement. Over the years it became a super Court of Appeals, hearing appeals from all federal district courts throughout the United States. Since only a limited number of patent matters were accepted for appeal by the Supreme Court of the United States, the Federal Circuit has, for almost two decades been establishing most precedent in patent matters. As well, because litigations involving patents often contain other intellectual property issues as well (e.g., trademark, trade dress and copyright claims) the Federal Circuit has been involved in many, often controversial decisions in these areas of law.

In Holmes, the Supreme Court held that not all cases involving a patent law claim fall within the Federal Circuit's jurisdiction. Using the long accepted precedent, that jurisdiction is determined by what a plaintiff pleads in a "well-pleaded complaint," it held that a counterclaim which for the first time raises a patent issue will not result in appellate jurisdiction in the Federal Circuit.

The case began when Vornado lodged a complaint with the United States International Trade Commission against Holmes claiming that Holmes' sale of fans and heaters with a particular grill design infringed certain patent and trade dress rights allegedly owned by Vornado.

Several weeks later Holmes brought a declaratory judgment action in the United States District Court for the District of Kansas, seeking a declaration that its products did not infringe the trade dress. Significantly, Holmes did not seek any declaration relating to the patent rights. However, Vornado in its answer asserted the counterclaim of patent infringement. It was conceded that the patent infringement assertion was a compulsory counterclaim. Had it not been asserted, it would have been lost.

Previously Vornado had sought to enforce this same trade dress against another competitor, but its claim of protectable right was rejected by the Tenth Circuit. Vornado believed it could re-litigate the issue because of a subsequent trade dress ruling by the Federal Circuit. By counterclaiming for patent infringement in the Kansas case Vornado asserted that the Federal Circuit, not Tenth Circuit precedent on the trade dress issue should prevail.

The District Court in Kansas (which is in the Tenth Circuit) followed the precedent in the Tenth Circuit and rejected Vornado's trade dress claim. Vornado appealed to the Federal Circuit.

Holmes argued that the Federal Circuit did not have jurisdiction. The Federal Circuit nevertheless asserted jurisdiction, heard the appeal and reversed the decision of the Kansas Court on the trade dress issue. The Supreme Court agreed to hear the appeal to determine whether the Federal Circuit properly asserted jurisdiction based upon the patent infringement counterclaim in the case. Since the patent claim was not adjudicated by the Kansas district court, the Supreme Court could have ruled that the Federal Court had no jurisdiction on that basis. Indeed, one concurring opinion believed that would have been the better approach. However, the ruling went further. The Supreme Court rejected the notion that the patent counterclaim in any way supports Federal Circuit jurisdiction.

The Supreme Court's main concern was any use of counterclaims to obtain jurisdiction-- a position it long rejected in cases of transfer of state litigations to federal courts. Whether a case "arises under" a particular law, "must be determined from what necessarily appears in the plaintiff's statement of its own claim..." It is the plaintiff who decides how the case "arises" and whether the complaint provides a court with jurisdiction. Holmes' action did not arise under the patent laws. It was based upon a trade dress violation. Vornado's counterclaim thus cannot serve as a basis for "arising under" jurisdiction.

The Supreme Court acknowledged Congress' goal of seeking patent law uniformity when it created the Federal Circuit. Nonetheless it held that this "did not make it an exception to the general rules in determining what basis a case arises under."

In a concurring opinion, Justice Stevens noted that other circuits will now have a role to play in a development of this area of law. Moreover, in what some may consider a criticism of the Federal Circuit, he indicated that in his view this can be beneficial in creating occasional conflicts which would identify questions and merit the Supreme Court's attention and provide "an antidote to the risk that a specialized court may develop an institutional bias." We may well be entering a new era in the development of U.S. patent law.

The Sound of Trademarks   top

Frank Terranella, Associate Attorney, Abelman, Frayne & Schwab

Did you know that sounds can be trademarks? That's right. More than 50 years ago, NBC registered the three-note G-E-C chime that it used to identify itself on the radio. Since then, the Merrie Melodies cartoon theme, the Tarzan yell, and even the sound of blowing a kiss have all been registered as trademarks. In fact, one of the most famous sounds in movies, the MGM lion's roar, was registered by this firm back in 1986.

Sounds can identify a company as well as any design can. Some might argue that they do an even better job. That's why in recent years companies have turned more and more to sound trademarks. For example, there's the famous Jolly Green Giant's "Ho-Ho-Ho" and the little AT&T chime you hear on the telephone when using their service. Both are registered, as are the "Intel Inside" theme and the "Yahoo" yodel. With cellular phones in such widespread use, the opportunities for sound trademarks to make an impression are increasing. Some manufacturers like Nokia have distinctive sounds and rings in their phones.

Searching the availability of a certain sound involves a very specialized search, because the titles of these registrations does not always indicate the nature of the sound content. However, once we clear the sound, the U.S. Trademark Office readily accepts these applications and more than 70 sounds have been registered. Instead of a drawing, the application simply describes the sound. If it is musical, a score for the music can be submitted. Specimens can consist of tapes of the sound in use.

While intellectual property protection for musical scores has been around in the form of copyright for many years, the use of trademark registrations is a relatively new development. The biggest advantage to having a trademark registration in addition to a copyright for something like the Merrie Melodies theme is that while a copyright expires, a trademark can be renewed forever as long as it is in use.

Most trademark applications still are for words alone or words with designs, but more and more, we are seeing design-only trademarks like the Nike "swoosh" elegantly conjure up an identification with its owner. Sound marks are just an extension of that phenomenon. Increasingly, we are perceiving trademarks not just with our eyes, but with our ears. Sports fans know when they hear "Da-Da-Dum Da-Da-Dum" it's ESPN. Trademark watchers recognize it as Registration No. 2,450,525. Just as ESPN executives rest easy knowing that no one else can use the same sound to identify sports programming, the same confidence can apply to the sound of your business. All you have to do is register it.

Chinese Character Trademarks: Traditional v. Simplified Characters Wayne Gu, Associate Attorney, Abelman, Frayne & Schwab   top

The Chinese language is the official language used in China, Hong Kong (additional official language - English), Macao (additional official language - Portuguese), Singapore (additional official languages - Malay, English, and Tamil), and Taiwan. Although numerous different dialects of the Chinese language are spoken in different regions of these countries, only one written Chinese language, the Chinese characters, is used in these countries.

The Chinese characters have two different forms, the traditional characters (a form of characters with complicated strokes which are difficult to learn to read and write) and the simplified characters (a form of characters with fewer and less complicated strokes).

In the past, China, Hong Kong, Macao, Singapore, and Taiwan all used the traditional characters. However, after the founding of the People's Republic of China in 1949, in an effort to improve the general public's literacy rate, the Chinese government adopted the simplified form of the Chinese characters as the official written Chinese language. Nowadays, most people in China can write only the simplified characters, but can read both the simplified and traditional characters. The simplified form of the Chinese characters was also adopted by the Singapore government.

Unlike Singapore, Hong Kong, Macao and Taiwan did not follow China in adopting the simplified characters. The traditional form of Chinese characters is still the official written Chinese language in Hong Kong, Macao and Taiwan and the only form of Chinese characters recognized in these countries. However, after the reunification with China in 1997, the simplified characters have been gaining gradual recognition in Hong Kong.

To file a trademark in Chinese language in China, Hong Kong, Macao, Singapore, and Taiwan, it is important that the appropriate form of characters be filed for, i.e., the simplified form in China and Singapore, and the traditional form in Hong Kong, Macao and Taiwan (although both the traditional and simplified forms are registrable in all these countries). As the simplified characters are gaining recognition in Hong Kong and the local practice allows registration of a series mark (in a single application), it is recommended that both the traditional and simplified forms be filed for in Hong Kong as a series mark.

The following tabulation illustrates the accurate forms of Chinese characters to be filed for in different countries:

COUNTRY FORM OF CHARACTERS

China Simplified
Hong Kong Traditional & Simplified (as a series mark)
Macao Traditional
Singapore Simplified
Taiwan Traditional

Note: When a Chinese mark is used or planned to be used in only one of the above countries, it is advisable to file for the mark in all these countries as goods commonly circulate in the markets of these countries.

European Union grey market (parallel) imports/exports Robert E. Lee, Jr.   top

Trade between EU countries and non-EU countries has recently garnered a lot of press. Of particular interest is grey or parallel imports of trademarked products. The gist of the matter seems to be that the public wants low priced grey market goods available while the trademark proprietors want the goods excluded. Rights conferred by registered trademarks include the right to prevent importing or exporting. However, the trademark proprietor is not entitled to prohibit the use of a mark on product that has been exported from or imported into the EU by the proprietor, or with his consent, except where there are valid reasons to oppose further commercialization.

In the 1998 landmark case, Silhouette. V. Hartlauer, the European court confirmed the principle of exhaustion of rights whereby once a trademark owner has sold or authorized the sale of a trademarked product, the owner can not use the trademark to prohibit subsequent sales of that product. You are in charge of a national charitable fund raiser and have ordered from London twenty-five New Horizon sedans built according to UK/ EU specifications that you intend to offer as lottery prizes in major US cities. There is nothing the proprietor of the New Horizon trademark could have done to preclude this. However, import into the EU large numbers of grey market goods, whether blue jeans, shoes, perfume bottles or computer chips and this will spark an immediate controversy. Key issues revolve around (1) the territorial aspect of the principle of exhaustion of rights ; (2) whether the grey units being imported were produced under authority of the trademark owner; and (3) whether there are special circumstances such as passing off, repackaging or health and safety concerns that would justify blocking their importation.

Several cases on exhaustion of rights were decided in the wake of Silhouette. In 1999, the court in Seabago, which involved shoes manufactured in Honduras by an American Company and imported into the EU, confirmed the holding in Silhouette that the principle of exhaustion applies only to the EU and there is no international trademark exhaustion and further suggested that the proprietor's consent must be given incrementally with each shipment. And finally in 1999, in Levi Strauss, an unreported case before the Patent Court, a series of questions were proposed to the ECJ seeking clarification of the Trademarks directive and its impact on the principle of exhaustion of rights. Then, in 2000, in Davidoff,, J. Laddie, acting for the English High Court, confirmed the thrust of the preceding cases and although blocking the trademark owner from importing grey market perfume into the EU, provided dicta to the effect that the trademark owner could have contractually prevented its distributors from making parallel imports. This suggestion by J. Laddie was seized on by the trademark proprietors as if they were drowning and it was a life preserver.

Finally in 2000, in the Glaxo Group drug cases, which were also heard by J. Laddie, several brands of pharmaceutical products were re-packaged and re-imported into the EU. While this action was considered insufficient to void the exhaustion of rights rule, instances of passing off were found which were sufficient to justify the products being excluded. And things are just getting started as there are still many loose ends to sort out and every answer seems to provide several questions. For example, the issue of when one trademarked product is incorporated into another, or another is incorporated into it, so that the original identity is lost, hasn't been addressed. Also, we have yet to encounter any situations involving service marks or collective membership marks which will be tricky because goods are also involved. More particularly, how is the flow of goods affected to which service or collective membership marks have been attached? Stay tuned.

The Emerging Protection of Traditional Knowledge Alan J. Hartnick, Adjunct Professor, New York University, School of Law, and Partner, Abelman, Frayne & Schwab   top

(This article first appeared in the New York Law Journal of December 13, 2001)

Diversity has expanded beyond Western horizons. The theory is that there is no predominant and superior culture. Therefore, there is no longer any hierarchy among diverse cultures because the prevailing attitude is that all cultures have equivalent aesthetic values.

Diversity, then, has called Western values into question. More importantly, multiculturalism has revised old patterns of exclusion and brought voices into the mainstream that have not been there before.

If uncopyrightable data bases may be protected, as the developed nations believe, then why not protect "folklore", as the developing nations believe? In the absence of armies, the poaching of the white colonial elephant hunter is over!

What is "folklore" or "traditional knowledge"? Is it an elastic term that will cause endless disputes and litigation? Is the "public domain" gone? Is a children's book based on Ashanti myths covered? Must Paul Simon pay royalties on a South African native beat that he incorporated in the album "Graceland"?

The African Group, in a submission to the World Intellectual Property Organization (WIPO) defined traditional knowledge as "that held by members of a distinct culture and/or some times acquired by means of inquiry peculiar to that culture, and concerning the culture itself and the local environment in which it exists". According to such definition, indigenous knowledge fits neatly in the traditional knowledge category, but traditional knowledge is not necessarily indigenous.

Traditional knowledge is therefore dynamic, is transmitted from generation to generation and is, as the African's say, the totality of all knowledge and practices, whether implicit or explicit, used in the management of the socio-economic and ecological facets of life. Folklore, representing the artistic heritage developed by the community, is part of traditional knowledge.

It is difficult to be precise with such a laundry list definition. Notwithstanding, there has been international recognition of traditional knowledge before an enlarged audience, whatever traditional knowledge may be.

International Recognition   top

181 nations have signed the 1992 Convention on Biological Diversity. The United States signed but has not ratified. In Article 8(j) is the provision that each Contracting Party shall, as far as possible "subject to its national legislation, respect, preserve, and maintain knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles as is."

There are a number of limitations in Article 8(j). The protection is subject to national legislation, and does not require protection of such knowledge but merely "respect". And so, even though indigenous and local communities have no rights in traditional knowledge, it does represent the beginning of a consensus.

The December 1996 WIPO Performance and Phonogram Treaty, acceded to by the United States, represents another consensus. In Article 2, Definitions, "performers" are defined as actors and other persons "who act, sing, ... or otherwise perform literary or artistic works or expressions of folklore". Again, "folklore" is recognized.

In the preparatory meetings for the World Trade Organization Seattle Ministerial Conference of 1999, a number of groups of countries submitted proposals that would allow sui generis protection for the traditional knowledge of local or indigenous communities. This again elevated to an international level the national precedents for such protection, such as the laws of Ghana, Nigeria, Tunisia, Venezuela, Brazil and the Philippines.

The Merck Agreement   top

In 1991, there began a collaboration between Merck & Co., Inc. and Costa Rica's National Biodiversity Institute (INBio).

The terms of the agreement gave Merck access to a limited number of plant, fungal and environmental (soils, sediments, vegetation, water, insects, dung) samples from Costa Rica's protected areas for scientific analysis to determine their viability as potential drug candidates. In turn, INBio received financial resources to support its ongoing effort to identify and classify Costa Rica's diverse biological species and to demonstrate the socioeconomic importance of biodiversity conservation.

If any samples result in a marketed product, INBio and the Costa Rican government will share in the royalties. Although the formal agreement has expired, Merck continues to maintain a positive relationship with INBio. This agreement represents a significant breakthrough.

The United States government agency that has taken the lead in bioprospecting is the National Cancer Institute (NCI) of the National Institutes of Health. The NCI is involved in several ongoing overseas bioprospecting efforts, including collaborative projects in Brazil, Cameroon and Suriname. Countries hosting these projects can expect financial rewards for local people, investment in research in priority diseases, a share in royalties from the sales of drugs and strengthening of local institutions engaged in research and traditional medicine. This policy matches the government's bioprospecting policy concerning Yellowstone Park in which the U.S. received from Diversa Inc. payment, for sample collecting and collaborative research.

The hit rate from bioprospecting, according to a paper entitled "United States Bioprospecting Policy" by Dr. Robert Wolkow of Pfizer, is extremely low, while the transaction costs are quite high. The Philippines have developed clear guidelines for bioprospecting activities, while other countries, like Brazil and Columbia, have increased regulations, thereby hardening their positions and discouraging foreign interest. The future of bioprospecting may be made more secure under the umbrella of the United Nations Conference on Trade and Development.

Current Developments   top

The WIPO, in 1998 and 1999, conducted fact finding missions to 28 countries to identify the intellectual property needs and expectations of traditional knowledge holders. At WIPO's 26th General Assembly Session in the Fall of 2000, member states established a special body to discuss intellectual property issues relating to generic resources, traditional knowledge and folklore. This body, the Inter-governmental Committee on Intellectual Property and Genetic Resources, Traditional Knowledge and Folklore, held its two Sessions in Geneva from April 30 to May 3, and from December 10 to 12, 2001. WIPO Report of the first Session runs to 74 pages!

It is noteworthy that the official position of the Delegation of the United States is that "there were so many different expectations, goals, and native systems for approaching ownership and the transgression of ownership of traditional knowledge that a useful, enforceable global system would be virtually impossible to create."

Notwithstanding such official position, something indeed is happening. United States lawyers must beware of a completely revolutionary approach, to us, of protection of what we believe is public domain material. It is quite possible that the United States can be out-voted by the developing nations. That may be another price of globalization!

To the developing world, traditional knowledge may have no limit. To the Western world, it represents the public domain knowledge that belongs to no one. But, if one pays for oil, why not traditional knowledge? Is not Merck paying for traditional knowledge?

The open matters are:

  1. the proper definition of the subject matter to be protected;
  2. the acts against which a possible protection should apply;
  3. the beneficiaries of the protection; and
  4. the nature and scope of such protection, including to which extent the existing intellectual property protection systems could apply.

Consideration may be given to a regime comparable to the domaine public payant (fee-paying public domain), and also to systems for the collective management of the exploitation of the knowledge, including the creation of funds in which the proceeds from economic exploitation would be deposited.

Conclusion   top

Quite an agenda. And compromise may be difficult, but statesmanship may provide workable definitions and rules, as well as diminished expectations. There is now increasing international recognition that indigenous and local communities do not share, at least in a fair and equitable manner, benefits arising from the appropriation of their knowledge and its subsequent commercial use. The possibility of protecting traditional knowledge and folklore is becoming legitimized. To those readers shaking their head, be aware that the European Community is committed to participate actively in the discussions on how to establish proper protection of expressions of folklore. Brave New World!

ENDNOTES

  1. WIPO/GRTKF/IC/10, May 1, 2001, Annex, 1-2.
  2. Convention on Biological Diversity, Text and Annexes, United Nations Environment Programme, November, 1994.
  3. The WIPO Performances and Phonograms Treaty was adopted by a WIPO Diplomatic Conference on December 20, 1996. The WIPO Copyright and Performances and Phonograms Treaties Implementation Act of 1998 is Title I of the Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860.
  4. Document submitted by GRULAC, WIPO/GRTKF/IC/1/5, March 16, 2001, ANNEX 1, p. 4.
  5. Merck Press Release dated February 4, 1997 and Dow Jones News, February 5, 1997.
  6. WIPO/GRTKF/IC/1/13 Prov., May 3, 2001.
  7. Supra, at paragraph 20, p. 7.

When You Are Sued: Insurance Coverage for Trademark and Copyright Litigation Stephen J. Quigley, Associate Attorney, Abelman, Frayne & Schwab   top

At the onset of any trademark or copyright litigation there should be a review of the accused infringer's insurance policy to ascertain whether it will cover some or all of the costs of defending the lawsuit.

Advertising Injury Clause

Most commercial general liability policies include an "Advertising Injury" clause which may entitle the policy holder to both defense and indemnity payments for trademark, trade dress and copyright infringement. (Patent infringement is not within the scope of advertising injury, although a design patent could be sufficiently similar to trade dress to be covered.)

Abelman, Frayne & Schwab includes the following paragraph in our retainer letter:

Prior to our undertaking any significant activities on your behalf, we suggest that you review your insurance coverage policies. Generally, the types of policies which might have applicability are your commercial general liability policy; a directors and officers policy; an errors and omissions policy; or an employment professional liability policy. Whether these or any other insurance policies which you may have would be applicable should be referred to your insurance counsel. If you wish to provide us with a list of the insurance that you have, we will, at your request, advise the various carriers of the litigations involving the claims.

Infringement as Advertising Injury

Advertising injury is defined as: 1. Defamation of a person or organization or disparagement of goods or services. 2. Violation of a person's right of privacy. 3. Misappropriation of advertising ideas or style of doing business. 4. Infringement of a copyright, title or slogan.

Proving advertising injury requires a showing that the alleged harm occurred in the course of the defendant's advertising or promoting its goods or services. For the most part, courts have viewed the misappropriation of advertising ideas or style of doing business clause as encompassing allegedly infringing trade names, trademarks and trade dress. The underlying premise is that a trademark is a form of advertising which is used to call the public's attention to one's product or service.

This recognition of trademark infringement as an advertising injury, however, is not universal. In at least Michigan and Minnesota, insurers have successfully argued that the misappropriation of advertising ideas/style of doing business clause should not be so broadly construed to include trademark or trade dress infringement. This interpretation appears to be the minority view and has been subjected to criticism by some courts. Nonetheless, the conflicting positions serve as a reminder that the judicial interpretation of insurance policies relies on each state's law of contracts. Accordingly, the scope of coverage and exclusions will vary from jurisdiction to jurisdiction.

Generally, coverage will be denied where the defendant used the disputed mark with "knowledge of its falsity". In addition, actions which arise solely from a breach of contract (e.g, license agreement, exclusive right-to-sell agreement), will not be covered even though trademark issues are involved. However, where there is doubt as to whether a duty to defend exists, the doubt will be resolved in favor of the insured.

If an unfair competition clause is included in the policy, it will be broadly interpreted and has been held to include unlawful, unfair or fraudulent business practices as well as unfair, deceptive, untrue, or misleading advertising. In some instances, even if not specifically stated in the policy, courts have recognized unfair competition claims as advertising injuries entitled to coverage. However, unlike trademarks, acts of unfair competition do not always implicate the advertising of a product or service and, thus the causal link to advertising injury is more tenuous.

When You are Sued

Inquiry concerning insurance coverage should be made as soon as the complaint is served as the claim could be denied if (1) it is not timely made, and (2) the carrier can demonstrate that it has been prejudiced by the delay, i.e., it was not given the opportunity to participate in the preparation of the defense strategy.

Trademark Registration: The Beginning of a Beautiful Friendship Frank Terranella, Associate Attorney, Abelman, Frayne & Schwab   top

Trademark owners file applications for registration with the hope that the public will embrace their brand and it will come to be a long-lasting one. It is quite remarkable how many United States trademark registrations issued more than 75 years ago are still active.

The oldest active U.S. trademark registration belongs to Samson Ocean Systems Inc. It is for the name SAMSON as a brand of rope. It dates back to May 27, 1884 and has been active ever since.

There are just six active registrations from the 1880s, but there are 112 marks registered in the 1890s which are still active. Among these are GRAPE-NUTS (1898), HEINZ (1897), JOHN DEERE (1897) and QUAKER (1895).

The first decade of the 20th Century brought an increase in marks with longevity. There are 869 marks registered between 1900 and 1909 which are still active. In this group are CREAM OF WHEAT (1900), GULDEN'S MUSTARD (1906), DOMINO (1909), DICTAPHONE (1908), and SMITH BROTHERS (1906).

The decade of 1910-1919 brought the United States into a world war which cut down on the number of new trademarks. But still there are 725 registrations from this decade which are active. These include: CAMEL cigarettes (1919), the PARCHEESI board game (1918), OREO cookies (1913), SCHLITZ beer (1912), CHAMPION spark plugs (1913), FANNY FARMER candy (1919), LISTERINE mouth wash (1912) and BURBERRYS suits and overcoats (1913).

But it was the 1920s which saw the fruits of the post-war boom. There are still 3,483 active registrations dating from the 1920s. That is more than twice as many active trademarks than there are from all the decades preceding the Roaring '20s. These boom years produced such famous trademarks as MAXFLI golf balls (1923), PALMOLIVE soap (1926), BLACK FLAG insecticide (1926), VELVEETA cheese (1923), SANKA coffee (1923), RAY-O-VAC batteries (1921), BRILLO scouring pads (1921), MASTER locks (1926), MACK trucks (1921) and KELLOGG'S cereals (1921).

In all, there are 5,195 active U.S. trademark registrations dating from before 1930. They each represent an American business success story, and they are still providing a return on the small investment of the cost of a trademark application so many years ago.



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