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ELECTRONIC NEWSLETTER

November 15, 2002

Volume 1, Issue 5

Topics: News

Calendar (See Below)

News

Trademarks and Unfair Competition

Patents

Copyrights

Domain Names and Other Internet Matters

Discussions

Calendar   top

November 20-21, 2002 World Intellectual Property Organization (WIPO) - Seminar on the Madrid System of International Registration of Marks. Geneva, Switzerland.
November 22, 2002 WIPO - Seminar on the International Classification of Goods and Services for the Purposes of the Registration of Marks under the Nice Agreement and its use within the Madrid System. Geneva, Switzerland.
November 21-22, 2002 Practicing Law Institute (PLI) - Understanding the Intellectual Property License 2002. University of Chicago Gleacher Center, 450 North City, Front Plaza Drive, Chicago, IL.
December 2-5, 2002 Licensing Executives Society (USA &CANADA) Inc. (LES) - Fundamentals of Intellectual Property Asset Management. Philadelphia, PA.
December 4-5, 2002 International Trademark Association (INTA) and Office for Harmonization in the Internal Market (OHIM) - Community Trademark Forum. Alicante, Spain.
January 22-25, 2003 American Intellectual Property Law Association (AIPLA) - Mid-Winter Meeting. Marco Island Marriot Resort &Golf Club, Marco Island, FL
March 26-28, 2003 The Institute of Trade Mark Attorneys (United Kingdom) (ITMA) - International Meeting 2003: Pushing the Boundaries: Enlargement of Europe, Enlargement of Rights. London, United Kingdom.
May 3-7, 2003 INTA - Annual Meeting. Amsterdam, Netherlands.
May 6-9, 2003 LES - Spring Meeting. Philadelphia, PA
May 14 -16, 2003 AIPLA - Spring Meeting. The Westin Peachtree Plaza, Atlanta, GA.
June 2-6, 2003 Federation Internationale des Conseils en Propriete Industrielle (FICPI) - World Congress. Berlin, Germany.
June 11-14, 2003 European Communities Trade Mark Association (ECTA) - Annual Meeting. Salzburg, Austria.
September 14 - 16, 2003 Intellectual Property Owners Association (IPO) - Annual Meeting. The Fairmont Hotel, Chicago, IL.
September 16-19, 2003 Marques - Annual Conference. Intercontinental Hotel Istanbul. Istanbul, Turkey.
October 12-16, 2003 Interamerican Association of Industrial Property (ASIPI) - XV Congress. Mexico City, Mexico.

NEWS

Trademarks and Unfair Competition

United States: Dilution   top

SMALL DISPUTES CAN MAKE FOR MAJOR DECISIONS

Even what seems to be a low profile dispute can lead to a precedent setting decision.

One such case is set to be decided by the Supreme Court. Depending upon the outcome, the ruling will decide how trademark dilution cases are to be tried. The Court has agreed to address a key issue which has led to opposite conclusions among the Circuits - namely whether trademark owners seeking injunctive relief must prove that their mark has been diluted before a court can enjoin others from using it or whether only a likelihood of dilution need be shown.

On November 12, 2002 the Supreme Court heard arguments in Victor Moseley and Cathy Moseley, d/b/a Victor's Little Secret v. V. Secret Catalogue, Inc. et. al. and reserved decision.

The facts are simple enough. Approximately four years ago, Victor Moseley and his wife, Cathy opened a small store in a small town, Elizabethtown, Kentucky. The store carried adult clothing and paraphernalia, and was named "Victor's Secret." Victoria's Secret, which has held the trademark on its name since 1981 objected. In an attempt to placate the complainant, Victor added the word "little" to the name of his store. Victoria's Secret sued Victor and Cathy Moseley complaining that "Victor's Little Secret" was infringing and diluting the famous "Victoria's Secret" trademark. The Moseleys' defended.

Victoria's Secret argued that without regard to trademark infringement which requires a likelihood of confusion, it should succeed on its "dilution" claim because there was a likelihood of dilution. The district court judge agreed with Victoria's Secret and the Moseleys were found liable for trademark dilution. After the issuance of the court's order, the Moseleys operated their business as "Cathy's Little Secret," without objection from Victoria's Secret. However, the Moseleys appealed the decision to the Sixth Circuit.

The Sixth Circuit upheld the dilution finding. The matter was then appealed to the Supreme Court which granted the petition for certiorari.

There has existed a difference of opinion in the various circuits about the Lanham Act provisions relating to dilution (referred to as the Federal Trademark Dilution Act). The problem hinges on the question of whether the statute, which does not use the word "likelihood" -- requires a finding of actual dilution before a preliminary injunction will issue. Indeed, our firm has argued successfully to the Fifth Circuit that the "likelihood" criteria should apply. The Second Circuit also has reached that conclusion. However other circuits, such as the Tenth disagree.

The Supreme Court will now decide the issue. Numerous amicus briefs have been filed. The bar now holds it collective breadth as we may soon know what the law of the land on the issue will be - and with it end the "dilution" forum shopping that now prevails.

China: Well-Known Trademark Registration Suspended   top

The 1996 Provisional Regulations on Well-Known Trademarks have been suspended. Pursuant to the Provisional Regulations, hundreds of domestic brands had been registered as well-known trademarks in China, but not one application from foreign companies has been examined.

Patents

United States: Filing Fees   top

The U.S. Patent and Trademark Office did not raise any other official filing fees when the new FY 2003 schedule was issued effective October 1, 2002. Apparently, the criticism of the Commissioner's proposal for substantial fee increases in many areas was sufficient to quell changes for the current fiscal year.

There is also a rumor that the long-planned move by the PTO to new offices may be on hold while the Office of Homeland Security considers the space.

Europe: Electronic Filing of Patent Applications   top

The President of the European Patent Office (EPO) has issued a Decision effective November 1, 2002 providing rules for the electronic filing of patent applications. The electronic submissions need not be confirmed with a hardcopy paper version of the filing.

Over the past decade, electronic filing of patent and trademark applications has advanced steadily in the major arenas of intellectual property (IP), namely the United States, Europe and the World Intellectual Property Organization (WIPO), the latter being the arm of the United Nations that implements intellectual property treaties. In addition to providing improved software for electronic submission of patent and trademark applications via the Internet, the respective IP offices of the U.S., Europe and WIPO have also adopted regulations establishing and clarifying the electronic filing procedures.

The recent EPO Decision establishes that electronic patent filings are permissible under the existing rules of the European Patent Convention. Such electronic filings are to be prepared and submitted using software provided free of charge by the EPO.

Furthermore, other application-related documents can be submitted electronically. These include computer files designating inventors and standard EPO application forms. In the future, other types of documents will be subject to electronic filing.

Recognizing technical issues and the need for security, the Decision also states that it will not deem as received any illegible or incomplete documents, or any electronic files that contain computer viruses or the like. The EPO software will encrypt electronic patent applications for confidential and protected transmission over the Internet. Documents requiring signature can be signed electronically; that is, by fax, by a text string having a prescribed format, or by enhanced electronic signatures, so that a signature submitted electronically is deemed as valid as though on paper.

Under this Decision, the rules of the EPO advance and make uniform throughout Europe the ability to electronically file for a patent in all signatory nations to the European Patent Convention. Additionally, the Decision includes electronically-filed patent applications sent to the EPO through WIPO's electronic implementation of the global Patent Cooperation Treaty.

Copyrights

United States: Distance Learning Obtains a Foothold    top

On Saturday, November 2, 2002, President Bush signed into law the 21st Century Department of Justice Appropriations Authorization Act (H.R. 2215), which includes the Technology, Education, and Copyright Harmonization (TEACH) Act as well as technical amendments to the Copyright Act. The TEACH Act amends the Copyright Act to provide increased flexibility for accredited nonprofit educational institutions, as part of "mediated instructional activities," to use the internet to provide copyrighted materials to students enrolled in distance education programs.


Domain Names and Other Internet Matters

China: New Rules Governing Registration and Disputes    top

Effective September 30, 2002, it is possible to register domain names in the top-level .CN domain space (e.g., YOURTRADEMARK.CN). A local presence in China is no longer required.

In addition, disputes revolving around foreign-owned .cn domain names provide for arbitration by the Hong Kong International Arbitration Centre and the China International Economic and Trade Arbitration Centre.

Soviet Union: Possible Revocation of ccTLD .SU    top

In 1990, the Internet Assigned Numbers Authority assigned the country-code top-level domain (ccTLD) .SU to the Soviet Union. Later. There estimated to be more than 28,000 .SU registered domain names.

In the wake of the dissolution of the Soviet Union, ICANN is considering dissolution of the .SU domain space which would result in the cancellation of the existing registrations.

United Arab Emirates: Individuals May Register Domain Names    top

United Arab Emirates UAE Network Information Centre has introduced a new policy, effective on September 15, which allows individuals to register country-code top-level domain names. UAE companies had until then to register their brand names and trademarks in the '.ae' domain space so as to avoid future claims of cybersquatting.

ICANN Creates Uniform Online Interface to Report Inaccurate or Incomplete Whois Data    top

The Internet Corporation for Assigned Names and Numbers ("ICANN") is the entity responsible for management of the Generic Top Level Domain Names (e.g, .com, .net, and .org). Under the terms of the contracts between ICANN and ICANN-authorized domain name Registrars, the Registrars are required to maintain and provide accurate and complete Whois information for each domain name registration. In response to complaints regarding the Whois information currently available, ICANN has created a website to report instances of inaccurate or incomplete Whois information. The online form is available at http://www.internic.net/cgi/rpt_whois/rpt.cgi.

FTC Warns Search Engines Regarding Pay For Placement of Ads    top

The Federal Trade Commission has issued a warning to internet search engines regarding their practice of substituting top query results with paid advertising. In the culmination of a year-long investigation, the Commission warned some of the web's largest search engine providers, including AOL Time Warner, Microsoft and Lycos, that the use of "pay-for-placement" ads as a viable source of revenue, would have to be disclosed to consumers. In exchange for payment by companies to search engine providers, search engines would provide links based not only on the relevancy of the query, but on who paid the most money to have their sites rank above others. A study released in April by the Consumers Union found that sixty percent of the public is unaware that some commonly used search engines are paid to list some sites more prominently than others.


Discussions

Character Trademarks    top

Frank Terranella, Associate, Abelman, Frayne &Schwab

Some of the most effective trademarks that American businesses have adopted are characters created by Madison Avenue. Characters like Juan Valdez (Reg. No. 866,500) and Tony the Tiger (Reg. No. 1,303,983) are more than great trademarks, they are true Americana. And the best thing about them is that they live to sell. Character trademarks are among the most memorable. Why are Mr. Clean and Green Giant brands best-sellers? Part of the reason is a beloved pitchman-a character trademark.

Character trademarks are not a new phenomenon. CRACKER JACK (Reg. No. 197,337) has featured a sailor boy since 1919. And in 1933 an obscure Philadelphia company began to sell its auto supplies using three characters named Manny, Moe &Jack (Reg. No. 310,199). The PEP BOYS brand instantly became a winner.

Over the years, we have seen the DUTCH BOY (Reg. No, 1, 995,725) selling paint and BUSTER BROWN (Reg. No. 176,970) and his dog selling shoes. Some of these characters have been so real to consumers that they were thought to be real people. An example is BETTY CROCKER (Reg. No. 536, 524), created by General Mills in 1924. Another is TOM BODETT who hawks for Motel 6. Some have been given familial names like UNCLE BEN (Reg. No. 437,176) and AUNT JEMIMA (Reg. No. 51,056). Others, like CAP'N CRUNCH (Reg. No. 813,548) and COUNT CHOCULA (Reg. No. 1,511,150) are clearly not part of the family. But they all share one thing-they are warm, fuzzy characters who, like all good trademarks, are ready repositories of corporate goodwill. RONALD MCDONALD (Reg. No. 874,861) even has a foundation named after him.

Some of these character trademarks have no name, but they are nevertheless powerful marks based on their image alone. Examples of this are the MARLBORO man (Reg. No. 1,191,744) and the MAYTAG repairman (Reg. No. 1,692,215).

Although human characters like MR. WHIPPLE often catch the public's fancy, perhaps the most beloved of the character trademarks are the cartoon characters. Think of trademarks like the PILLSBURY POPPIN' FRESH DOUGHBOY (Reg. No. 908,171), MISS CHIQUITA BANANA (Reg. No. 508, 492), SPEEDY ALKA-SELTZER (Reg. No. 596,275) and that elfin trio-SNAP, CRACKLE &POP (Reg. No. 391,602).

The lesson to be learned from the success of these characters is that while a trademark like EXXON and KODAK may serve to identify your products in a memorable manner, they aren't warm and cuddly like character trademarks. A trademark that can be the object of affection is one that generates its own goodwill in a way that no other type of trademark can. That's why if you have a new consumer product to sell, you would be well-served in considering whether a character trademark may be your best pitchman.

Australia: Product Shapes as Trademarks    top

Natasha J. Finlen, Associate, Abelman, Frayne &Schwab (admitted in New York and Australia)

Under the Trade Marks Act 1955 (Cth), shape trade marks were not registrable in Australia on the grounds that a trade mark was considered something separate and apart from the goods. Three-dimensional objects were considered more properly registrable under the Designs legislation.

Unlike the 1955 Act, the Trade Marks Act 1995 (Cth) expressly recognizes that a trade mark may consist of a "shape", "sound", "scent" and "aspects of packaging" and allows for the registration of shape trade marks.

In considering whether a shape was capable of being registered as a trade mark, Australian trade mark law first required the Applicant show that the shape was able to function as a trade mark. Generally, unless a shape had been used and the public had come to identify the shape as an indicator of source, a shape could not act as a trade mark. Accordingly, to register a shape as a trade mark, the Applicant would be required to submit evidence of use or reputation.

The landmark decision of Kenman Kandy v Registrar of Trade Marks [2002] FCAFC 273 has overturned this position and deleted the requirement that the Applicant first show that the shape is able to function as a trade mark. The issue in the Kenman Kandy case was whether a 3D shape mark was registrable per se without showing that the shape had acquired distinctiveness as a trademark through use or reputation.

Kenman Kandy applied to register a 3D "bug"-shaped candy - the "MILLENIUM BUG" (see image, below). The Australian Trade Marks Office refused registration on the grounds that the shape was not registrable as a trade mark without evidence of use. The majority of the Full Court of the Federal Court of Australia found that the "bug" shape candy was capable of distinguishing the Applicant's goods on the basis of its inherent character. The test to be applied is whether the shape is question is one which other traders were likely to want to use:- the same test which is applied in considering word and 2D design marks. Shape marks may be considered prima facie distinctive and registrable without evidence of use or reputation.

However, not all shapes will qualify as a trade marks. In the Kenman Kandy case there was no question that the shape was unusual and novel. The court also expressly stated that features "vital" to the functioning of the product would not be granted trade mark protection referring to the decision of Phillips v Remington (2000) 100 FCR 90. Nevertheless, the decision does path the way for the registration of those shape marks that are unusual and are not dictated by function. Good on ya, mate!

[Editor's note: The author of this discussion note was directly involved in the Phillips case in Australia.]

Proposed Legislation Regarding Reexamination Proceedings
May Provide a More Practical Means to Contesting Patent Validity Anthony A. Coppola, Partner, Abelman, Frayne &Schwab   top

Legislation which most agree will soon be signed into law, will significantly alter existing patent reexamination procedures and may serve to change the way in which the validity of patents are contested.

The most notable of the proposed changes to the Patent Act give the right to those challenging a patent in a reexamination proceeding to appeal decisions of the Patent and Trademark Office ("PTO") directly to the U.S. Court of Appeals for the Federal Circuit ("CAFC"). Another amendment to the Act allows reconsideration during a reexamination proceeding of documents (patents or printed publications) which pre-dated the patent and were previously considered or cited to the PTO during the original prosecution of the application.

I. THE PRESENT PROTOCOL FOR REEXAMINATION PROCEEDINGS

Under current reexamination procedure any person, including the owner of a patent can (i) cite to the PTO prior art patents or printed publications which are believed to pertain to the validity of one or more claims of a patent and (ii) request that the PTO "reexamine" any claim of that patent on the basis of the prior art. If the PTO Commissioner determines that the cited prior art raises "a substantial new question of patentability," a reexamination of the patent will take place.

There are two types of reexamination, ex parte and inter partes. Ex parte proceedings were criticized because the Requestor only had a limited opportunity to participate - literally at the outset in determining whether a reexamination should be ordered. Thereafter the Requestor could not participate. In an attempt to have more patent disputes resolved in the PTO, the law was changed in 1999 and the Requestor was given the option to participate, if it chose to do so in an inter partes proceeding. However, there were severe restrictions binding the Requestor in later court proceeding and the Requestor could not directly appeal an adverse decision of the PTO to the CAFC. For this reason, the procedure was scarcely used.

(a) The Type of Prior Art Which May be Cited During Reexamination

Presently because of a decision by the CAFC, prior art that was cited or considered during the original prosecution of a patent cannot in and of itself serve as the basis for a substantial new question of patentability justifying reexamination of the patent. Moreover, previously cited prior art can only be considered by the PTO during a reexamination proceeding if it is combined with prior art which has not previously been before the PTO. Thus, under the present law, a third party cannot argue during a reexamination proceeding that the PTO overlooked or that the PTO made a mistake in its consideration of prior art during the original application process.

II. THE PROPOSED CHANGES OF THE NEW LEGISLATION

(a) Rights of Appeal to the CAFC

Depending upon the outcome of the reexamination proceeding, there are separate and distinct appeal rights for the patent owner seeking reexamination and a third party Requestor who has instituted a reexamination proceeding.

The patent owner may appeal any adverse ruling by the patent examiner as to patentability to the PTO Board of Patent Appeals and Interferences ("the BPAI"). If the decision of the BPAI is adverse to the patent owner he or she may appeal to the CAFC in accordance with existing appellate procedures.

Presently under the law, the appeal rights of a third party are much more limited. The third party can appeal an adverse decision by the PTO to the BPAI. However, third parties are expressly prohibited from seeking court review of a BPAI decision. This prohibition had a chilling effect on potential claimants because a challenge to a patent in the PTO was deemed to be too risky and an "all or nothing" proposition. If the BPAI were to find the patent valid in light of the prior art, the third party challenger had no other venue for reconsideration of this finding and would be helpless to rebut an infringement allegation in a judicial setting with a contention of invalidity.

Section 13106 of H.R. 2215 provides that third parties in reexamination proceedings will now have the same rights of appeal as patent owners. Thus, once H.R. 2215 is signed into law, a third party challenger will be able to resort to the CAFC to contest adverse decisions by the BPAI as well as to be party to any appeal to the CAFC brought by a patent owner.

(b) Request for Review of Previously Cited Prior Art

In an attempt to maintain the legislative intent in the creation of the reexamination process permitting efficient resolution of questions about the validity of issued patents without the recourse to expensive and lengthy infringement litigation, H.R. 2215, § 13105 proposes that patent statutes 35 U.S.C. §§ 303(a) and 312 (a) be amended to state that "[t]he existence of a substantial new question of patentability is not precluded by the fact that a patent or a printed publication was previously cited by or to the [PTO] or considered by the [PTO]."

With the signing into law of H.R. 2215, patent validity challenges based on previously cited or considered prior art will be able to be made in the PTO in a reexamination proceeding and permit a patent challenger to request that an examiner re-read a previously cited piece of prior art which is believed to be critical to patentability. In such instances, this alternative to contesting patent validity by litigation in the federal courts may provide a less costly and more expeditious means of mounting challenges to patent validity.

In the past, the inability to seek judicial review of adverse decisions in reexamination proceedings has discouraged third parties wishing to challenge a patent's validity from filing reexamination requests. Now however, given that third parties can appeal an adverse reexamination decision to the CAFC, H.R. 2215 should make the relatively inexpensive option of a reexamination procedure more attractive to anyone contemplating a validity challenge to a patent based upon prior art regardless of whether or not it was previously cited to the patent examiner.

European Union: Industrial Design Protection   top

Robert E. Lee, Jr., Of Counsel, Abelman, Frayne &Schwab

If you have found filing EU trademark applications to your liking, you are going to take to the new EU industrial designs like ducks to water. In several years applying for a Community design when you market a newly designed product will likely become as automatic as applying for a domain name to correspond to a proposed trademark. And as in the case of EU trademarks, you can obtain inexpensive blanket protection in all EU countries merely by filing a single application. Under a second part of the law, which is already in effect, you have automatic protection for novel designs beginning with first public use and extending for three years even if you do nothing. However, don't let this apparent option fool you - the benefits of design registration are so biased toward registration that as a practical matter you have no choice but to register. Registered Community designs have a substantially longer term, i.e., 5-years , renewable for four additional terms of five years each, and protect against the marketing of any design that does not create a different overall impression. (This is an extremely wide range of equivalence.) With an unregistered Community design you only get protection against the marketing of a design that is a copy of your original, and in addition, you will have to prove that the original design was yours and that it predated the infringer. The decision to register is a no brainer if you consider that applications for registered Community designs are examined for form only, that you can include multiple related designs in a single application and that you can defer publication of the design up to 30 months.

Community designs protect the appearance of the whole or part of a product (including its inside) as may arise from the lines, contours, colors, shape, texture, material or ornamentation of the product - viz, everything you wish US laws covered but don't. As with copyrights, a design is protected in the abstract and exists independently of any substrate or particular application. Only a single filing is needed instead of multiple filings in different classes as with Community trademarks, and works created by employees belong to the employer. Almost any object commonly found around a home or business will qualify for design protection so long as the design is novel and non-functional. Community group classifications include by way of example: foodstuffs for people and animals; articles of clothing, including outer and undergarments, neckties, gloves and clothing accessories; suitcases, brief cases and walking sticks and umbrellas; booms and brushes; lace, embroidery, and ribbons and braids; carpets, mats, rugs, blankets, linens, mattresses and cushions; household appliances and utensils; tools and implements; bottles, flasks, pots; crates, pallets and ropes; watches and clocks; jewelry; games and toys; automobiles, planes, trucks , locomotives and ships and boats; etc.

No doubt about it - the EU is a step or two ahead of the U.S. in providing meaningful intellectual protection and now we have some catching up to do. False designation of origin claims under Section 43(a) of the US Trademark Act potentially could be adapted to protect industrial designs as trade dress, but each legal skirmish would be an uphill battle with the burden being on the plaintiff to establish a cause of action and prove that each design is inherently distinctive. Also, copyrights fail as a general vehicle to protect industrial designs because copyrights do not protect shapes or designs of three-dimensional objects other than for buildings that qualify as architectural works and certain pictorial, graphic and sculptural works. And design patents don't do the trick because they are limited to articles of manufacture, require both novelty and creativeness, are limited to a maximum term of 14 years (too short for many commercial designs) and are difficult to obtain because you have to wage trench war with the USPTO.

The Community design laws represent a significant step forward in protecting intellectual property and should be applauded.

Key dates: On Dec. 12, 2001, the Council of the European Union adopted the Community Design. Unregistered designs became available March 06, 2002. Indications are that applications for registered designs can be filed beginning Jan. 01, 2003. The first design registrations are expected to issue in March. 2003.
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