WHD Blog

Federal Circuit Raises the Stakes in Patent Marking Cases

Wed, 01 Sep 2010 18:00:00 GMT

On August 31, 2010, the United States Court of Appeals for the Federal Circuit issued its decision in Stauffer v. Brooks Brothers. In its opinion, the Federal Circuit held that the plaintiff patent attorney did have standing to sue Brooks Brothers as a qui tam plaintiff. The court also held that the United States had a right to intervene in the patent marking case.

This much anticipated decision is likely to embolden would-be patent marking plaintiffs and the number of patent marking lawsuits will undoubtedly continue to grow. If your company has not yet completed product review to ensure markings are correct and up-to-date, now is a very good time to do so.

To read the decision, click here.

Imitation is the Strongest Form of Flattery: Just How Strong is the FACEBOOK Trademark?

Tue, 31 Aug 2010 18:00:00 GMT

In what will be a test of just how broad the scope of protection of the FACEBOOK trademark is, Facebook, Inc. has filed suit against Teachbook.com LLC for trademark infringement and related causes of action in the Northern District of California. Teachbook.com LLC operates a social networking site for educators and teachers (http://www.teachbook.com/), which according to Facebook is deliberately and willfully misappropriating the FACEBOOK brand. Facebook is arguing that if third parties can use any "generic plus BOOK" mark for online networking services, the word "book" will become generic for online community services, thereby diluting the FACEBOOK trademark. Key to this argument is Facebook's position that the word "book" is highly distinctive as used in the context of online communities and networking sites. Further supporting Facebook's complaint, Teachbook touts its service as a substitute for Facebook on its website. However, the USPTO saw no likelihood of confusion when they approved Teachbook's federal trademark application in September of 2009. (Facebook has opposed this registration as well.)

This should be an interesting case in evaluating the scope of protection of famous marks.

Federal Data Security Law ... Take Three!

Mon, 19 Jul 2010 18:00:00 GMT

On July 14, members of Congress introduced a proposed federal data security law for the third consecutive Congressional session, even though the previous two versions of the bill were not acted on. The bill would require businesses to implement, maintain, and enforce reasonable data security policies and procedures, and would apply to all businesses regulated by Gramm-Leach-Bliley, businesses covered by the Fair Credit Reporting Act, and the big catch-all -- businesses that maintain or communicate sensitive account or personal information in providing services to covered financial entities. Importantly, the bill would pre-empt the 46 different state laws on data security that already exist - eliminating the conflicting standards that exist today, and closing the gaps where no such law exists. The bill would only require notification to consumers of breaches of security when harm was reasonably likely -- not automatically after any breach. A good idea whose time has come? We will see ...

False Patent Marking: There Must Be an Intent to Deceive

Wed, 16 Jun 2010 18:00:00 GMT

In December 2009, the U.S. Federal Circuit Court of Appeals issued a landmark decision, Forest Group v. Bon Tool Inc., holding that the statutory penalty of up to $500 for false patent marking should be imposed for each article falsely marked, as opposed to each patented product at issue. As a result of this decision which sanctions potentially huge damage awards, false patent marking lawsuits have begun pouring into the courts.

However, last week in Pequignot v. Solo Cup Company, the Federal Circuit held even though marking products with expired patent numbers does constitute false patent marking, a plaintiff cannot prevail in a false marking case unless the false marking was done with intent to deceive the public. The required intent must be more than mere knowledge that the patent marking is false. A defendant can rebut a presumption of intent to deceive by providing "credible evidence that [the] purpose was not to deceive the public." Such evidence could include relying on the advice of counsel, or reducing business costs when remarking products constantly would be heavily burdensome. This case does provide some good news for patent holders as it will be more difficult for patent mismarking plaintiffs to recover the large amounts of potential damages if there is no evidence of an intent to deceive the public.

D-Day for Nonprofits Starts on May 17

Tue, 11 May 2010 18:00:00 GMT

Nearly all tax exempt or nonprofit organizations (other than churches) are now required to file an annual information return or notice with the Internal Revenue Service (IRS)—even small organizations (those with annual gross receipts of $25,000 or less) that have not traditionally been required to file Forms 990 or 990-EZ and even non-charitable organizations. If any type of nonprofit organization does not file as required for three consecutive years (beginning with taxable years that began on or after January 1, 2007), then a provision that was tucked away in the Pension Protection Act of 2006 provides that the organization’s exempt status is automatically revoked by operation of law.

To view the full article, click here.

Shortcomings of the UDRP and Domain Name Disputes

Sun, 02 May 2010 18:00:00 GMT

The Uniform Domain Name Dispute Resolution Policy (UDRP) was designed to provide a quick, low-cost arbitration-like process for resolving domain name disputes. Governed by the World Intellectual Property Organization, a UDRP complainant must establish that (i) the domain name at issue is confusingly similar to their trademark, and (ii) that the domain name is used in bad faith. While the UDRP is effective in many situations, the case Volvo Trademark Holding AB v. Volvospares.com illustrates one of its big problems – proving bad faith in "grey areas."

In this case, the domain name www.volvospares.com was used to sell low-priced parts for Volvo cars; the problem was that the registrant had no connection with Volvo. When Volvo filed a complaint under the UDRP, the arbitrator did not find the domain to have been registered in bad faith because the website had a disclaimer that it was not related to Volvo, and there was no other proof of misrepresentation. However, when Volvo filed a federal cyber-squatting complaint, where the discretion of the judge is far broader, Volvo won transfer of the domain name. The court found what should have been clear in the UDRP – there was intent to divert sales using the Volvo mark.

The case illustrates one of the problems with the UDRP. While the UDRP is very efficient and effective in open-shut cases, it is often better to file a cyber squatting complaint where more complex issues of fact will arise.

Yet Another Stopgap: COBRA Extension Presents Administrative Challenges (Expect More)

Tue, 23 Mar 2010 18:00:00 GMT

As we have reported, the American Recovery and Reinvestment Act of 2009 (ARRA) provides that certain assistance eligible individuals (AEIs) who lost group health coverage as a result of an involuntary termination of employment through February 28, 2010 (previously extended from December 31, 2009) pay only 35% of their COBRA premiums for up to 15 months (originally 9 months). The remaining 65% is reimbursed to the employer/health insurance provider through an employment tax credit. On March 2, 2010, the ARRA was amended by the Temporary Extension Act of 2010. To qualify under this extension act, individuals must experience a COBRA qualifying event between September 1, 2008 and March 31, 2010.

To view the full Special Report, click here.

Provena Covenant Loses Exemption Fight in Illinois

Mon, 22 Mar 2010 18:00:00 GMT

In a case that spanned eight years and was closely watched by hospitals and tax practitioners throughout the country, the Illinois Supreme Court ruled on March 18, 2010 in Provena Covenant Medical Center v. Illinois Department of Revenue, No. 107328, that the hospital in Urbana, Illinois was not entitled to an exemption from property taxes. As nonprofit organizations (and nonprofit hospitals in particular) come under greater scrutiny and pressure to justify their tax exemptions, the Provena decision sounds yet another alarm.

To view the full article, click here.

HIRE Act Signed into Law: Summary of Selected Tax Provisions

Mon, 22 Mar 2010 18:00:00 GMT

On March 18, 2010, President Obama signed into law H.R. 2847 as the Hiring Incentives to Restore Employment Act (HIRE Act). The HIRE Act contains hiring and business stimulus provisions that are intended to encourage businesses to hire and retain unemployed workers, and anti-abuse provisions that are intended to improve tax compliance by deterring individuals from hiding assets oversees. This article summarizes four of those provisions: (1) payroll tax holiday; (2) tax credit for retained workers; (3) increased Code Section 179 expense limits; and (4) disclosure of specified foreign financial assets.

To view the full article, click here.

Rescuecom Drops Google Adwords Lawsuit After Six Years of Litigation

Mon, 08 Mar 2010 18:00:00 GMT

After six years of battling with Google in the courtroom over Google's sale of Rescuecom's trademarked adwords, Rescuecom has dropped its trademark infringement lawsuit.

As we previously wrote, in April 2009, the Second Circuit Court of Appeals held that Google's sale of trademarked adwords constituted "use in commerce." This holding was a major victory for Rescuecom as some courts had previously been readily dismissing adwords cases on this issue at the very early stages of litigation. The case was remanded to district court where Rescuecom next had to prove that the sale of trademarked adwords also constituted "likelihood of confusion," the second prong of a trademark infringement action. The case has been closely followed by both the business and legal communities since the issue of whether use of trademarked adwords can constitute trademark infringement is largely unsettled.

So why would Rescuecom simply drop its important case after years of litigation?

Apparently Rescuecom found itself on both sides of the adwords action. Rescuecom purchased the Google adwords "geek squad" to optimize its own search engine ranking. In October 2009, Best Buy demanded that Rescuecom stop using "geek squad" as an adword. Rescuecom then quietly brought a declaratory judgment action in the Northern District of New York claiming that its use of the "geek squad" adwords was legitimate. Best Buy counterclaimed, alleging trademark infringement and substantially the same allegations Rescuecom had asserted in its Google case. That case is still pending. It appears, however, that Rescuecom found it difficult to argue both sides of the issue. Unfortunately, this means the Rescuecom case will not result in the precedent many were waiting for.

Interestingly, however, this issue is still percolating internationally. In September 2009, the European Court of Justice's Advocate General issued an advisory opinion which held that use of trademarked keywords by Google or third-party users through Google's AdWords program did not constitute trademark infringement. Instead, the Advocate General found that Google was providing information society services. The advisory opinion, however, is not binding and several cases are still pending in European courts, including the heated adwords lawsuit between Louis Vuitton and Google.

Stay tuned.

Does Your Company Have a Social Media Policy? You Should ...

Wed, 10 Feb 2010 18:00:00 GMT

The use of social media in the workplace (Facebook, Twitter, Myspace, LinkedIn, etc.) is fraught with legal issues. Questions regarding ownership of information and data, potential copyright infringement risks, and personal privacy issues all intermingle when employees use employer-owned equipment to access and use social media. Concerns about confidentiality and trade secret information are raised when employees discuss company actions, plans, or decisions on social media. Additionally, the decision about how a company should interact with its customers in the social media marketplace is a difficult one. At the end of the day, there may be no one "right" answer -- but there certainly are some wrong ones.

It is important that every company have a social media policy to address the risks and rewards of this new communication medium. Even the Florida State Bar is weighing in on the issue, issuing an opinion on November 17, Op. 2009-20 whereby a majority of the Florida Supreme Court judicial ethics committee found "friending" between judges and lawyers to be inappropriate! While there is significant disagreement on whether this position is correct even among legal scholars, it illustrates the increasing importance of social media in all industries. Use of social media is a cutting edge issue that requires some significant thought by businesses of all size.

Another Step Towards Requiring More Security In Online Transactions?

Thu, 04 Feb 2010 18:00:00 GMT

The case Patco Construction Co. Inc. v. People's United Bank d/b/a Ocean Bank, D. Maine, No. 2:09-CV-00503-DBH, 1/19/10) is one of several recent cases alleging breaches of online security in financial transactions that may provide some guidelines as to what constitutes "reasonable care" in online financial transactions. The case alleges that use of several "challenge questions" added no practical safety beyond a password, and that additional mechanisms such as authentication tokens are required to meet the commercially reasonable standard. (Commercial banks are required to take "commercially reasonable" steps to protect customers against fraud.)

This case could be one more step towards a requirement of multi-factor authentication in financial transactions.

Gifts and Grants to Foreign Organizations

Sun, 31 Jan 2010 18:00:00 GMT

In today’s global economy, charitable activities, like business activities, often go international. The recent earthquake in Haiti serves as just one example. However, there are unique issues that arise in the context of international charitable giving and grant making for the donor and the organizations the donors choose to support.

Charitable contributions that are made directly to a foreign organization by a U.S. individual are generally not deductible for U.S. federal income tax purposes. The same rule of non-deductibility applies to charitable contributions that are earmarked (or solicited by a U.S. organization) specifically for the use of a foreign organization. Some exceptions exist for contributions made to certain charities in Canada, Israel and Mexico.

However, a U.S. organization may solicit charitable contributions for its own exempt purposes and, in turn, choose to make gifts or grants to foreign organizations (e.g., Haitian relief). The U.S. tax treatment of those gifts and grants will generally turn on whether the U.S. organization has discretion and control over the contributions it received—in other words, in receiving or soliciting the funds, the U.S. organization cannot be legally bound to use the funds abroad if the donor is to be entitled to a charitable deduction; whether the foreign organization has a determination letter from the Internal Revenue Service (recognizing the organization’s tax exempt status); how the foreign organization intends to use the grant; and/or whether the U.S. organization is a public charity or a private foundation.

To view the full article, click here.

Contribute Now for Haitian Relief and Claim the Deduction Last Year

Sat, 30 Jan 2010 18:00:00 GMT

Charitable contributions of money made on or after January 12, 2010 and before March 1, 2010, for the relief of victims in areas affected by the earthquake in Haiti, are deductible on taxpayers’ 2009 federal income tax return, thanks to a change in federal law. Contributions of money include contributions made by cash, check, money order, credit card, charge card, debit card or by a cell phone text message (as long as the taxpayer retains a copy of the telephone bill showing the name of the donee organization, and date and amount of the contribution). The contribution must be made to a qualified organization and meet all other requirements for charitable contribution deductions.

For more information, visit the Internal Revenue Service Web site, at which you may also search for qualified charitable organizations. The state income tax treatment of charitable contributions may differ from the federal income tax treatment. In fact, the Wisconsin Department of Revenue announced that taxpayers are not entitled to claim on their 2009 state income tax returns a deduction for charitable contribution made in 2010, regardless of the change in federal law.

IRS Releases New Check Sheet for Audits of Nonprofit Organizations

Thu, 14 Jan 2010 18:00:00 GMT

The Internal Revenue Service (IRS) recently released a “check sheet” for use by its exempt (or nonprofit) organization auditors to “capture data” about nonprofit organizations’ governance practices and internal controls as part of a long-term study into the relationship between nonprofit governance and tax compliance. A copy of the check sheet may be viewed at http://www.irs.gov/pub/irs-tege/governance_check_sheet.pdf. While the stated goal of the check sheet is to capture data for a study, the check sheet will likely serve as a road map or guide by auditors to probe deeper into an organization’s governance and management in an effort to ensure that the organization is organized and operated exclusively for its exempt purpose, that the organization serves a public purpose, that the organization’s assets are not inuring or benefiting private interests, and that the organization has not engaged in excess benefit transactions during the period(s) under audit. This article identifies the areas covered by the check sheet and concludes with recommendations to help ensure that your organization receives a passing grade.

The check sheet focuses on six areas. To view the full article click here.

To Scrip, or Not to Scrip, such may be the question. . .

Thu, 14 Jan 2010 18:00:00 GMT

In recent years as a part of fund development efforts, many charities, particularly churches and private schools, have taken to participating in Scrip sales programs. Scrip programs involve the sale of certificates by or on behalf of the charity which may be redeemed at various commercial vendors for goods or services. Scrip brokers arrange with commercial vendors for the purchase or issuance of certificates whereby the merchants receive a payment below the face value of the certificates either directly from the charity or the broker. The charity then undertakes to sell the certificates to supporters for the face value. This generates a rebated benefit, often approximately ten percent (10%) of the face value.

The programs have come into question in that a series of tax concerns are posed by the process.

To view the full article, click here.

Illinois to Allow the Organization of Low-Profit Limited Liability Companies

Thu, 14 Jan 2010 18:00:00 GMT

Effective January 1, 2010, Illinois will begin allowing the organization of low-profit limited liability companies or L3Cs. An L3C is a hybrid business structure that offers an alternative to for-profit and nonprofit companies by combining the pass-through tax advantages of a traditional limited liability company with the social advantages of a nonprofit. Michigan, Vermont, Wyoming, Utah and North Dakota have also adopted statutes allowing the organization of L3Cs.

The L3C structure also provides a vehicle for attracting investment in companies founded by social entrepreneurs who may be more interested in promoting social, cultural or environmental changes than making a profit. Moreover, the L3C structure is intended to facilitate program-related investments (PRIs) by private foundations in for profit companies.

To view the full article, click here.

Technology Transfers Involving Nonprofit Organizations: Special Tax Considerations

Thu, 14 Jan 2010 18:00:00 GMT

Many larger nonprofit research institutions have offices that are devoted to the transfer, development and commercialization of intellectual property, such as patents and copyrights. In today’s regulatory environment, however, the activities of nonprofit organizations (in particular, colleges and universities) are being closely scrutinized by the Internal Revenue Service (IRS) and other state and federal government agencies. For example, in 2008, the IRS mailed compliance questionnaires to more than 400 colleges and universities to identify the types and amount of revenue generated by various activities, management and governance practices, and other areas that may be ripe for future compliance efforts. The survey of colleges and universities serves as one additional example of the growing emphasis on nonprofit governance.

Against this backdrop, nonprofit organizations that are engaged in technology transfer activities (and their commercial partners) should keep in mind some of the special tax considerations that may arise in connection with incoming and outgoing transfers of intellectual property.

To view the full article, click here.

Court Confirms that No Trademark Registration is Required to Pursue an Anticybersquatting Case

Sun, 20 Dec 2009 18:00:00 GMT

The US District Court for the Central District of California confirmed that the trademark ownership that is necessary to pursue a claim under the Anticybersquatting Consumer Protection Act (ACPA) does not require ownership of a federal trademark registration. (See Monex Deposit Co. v. Gilliam, C.D. Cal., No. CV 09-287, 12/3/09.) In making this decision the court recognized that common law trademark rights and ownership will support an ACPA claim even if the trademark owner has not obtained a federal trademark registration. While this decision is not surprising based on the language of the ACPA statute, (which requires trademark ownership, not specifically registration), it provides case law for common law owners to rely on in asserting these claims.

The court also held that the fact that a third party may own a registration for the same mark at issue but on different and distinctive goods and services, (thus preventing confusion between the marks), will not prevent assertion of an ACPA claim by a common law trademark owner. This decision is also consistent with federal trademark law, but provides further ammunition for common law trademark owners in ACPA suits, and presumably in UDRP actions and other domain name dispute resolution procedures.

Beware of Trademark Registry Scams

Tue, 17 Nov 2009 18:00:00 GMT

Have you recently received an invoice for an international trademark registration fee and wondered in which country the mark was registered? Was the invoice legitimate looking, yet somewhat confusing? Were you wondering why you received the invoice directly rather than through your trademark attorney? Hopefully you thought about all of the above and inquired into the situation a bit more. The sad reality is that there are several overseas organizations, such as http://www.patentonline.org/, which use these types of letters and their hoax Web sites to extort money from unwitting businesses. You are more likely to become duped if you have a large, international trademark portfolio, so registration and maintenance costs are nothing out of the ordinary; or if you typically handle all such fees directly in house.

A client recently received an invoice for the registration fee of one of its marks for almost $2,500 from the "Register of International Patents and Trademarks." It contained a drawing of the client's trademark with a registration number (which coincidentally corresponded with the client's U.S. Reg. No. for the mark) and a "Published" date (which corresponded to the U.S. Registration Date). The fine print:

"Dear madam, and sir, the publishing of the public registration of your patent is the basis of our offer. We offer the registration of your Patent dates in our private Database. ... Our offer will be accepted, with the payment of the amount, and becomes a binding contract between you and ODM srl, is irrevocably binding for one year. Please notice that this private registration hasn't any connection with the publication of official registrations, but is a solicitation without obligation to pay, unless our offer is accepted...."

Had they paid the fee, they would have received registry in nothing more than an unofficial, private registry. It was a scam. The clear lesson is to always carefully review invoices and correspondence such as this. If you receive any invoices for trademark or patent fees, carefully review the invoice to ensure it matches up with your company's trademark portfolio. Be vary of invoices that do not clearly indicate a known patent and trademark registry, such as the U.S. Patent and Trademark Office. If your attorney has assisted you with the trademark application/registration, you should not be receiving invoices directly. Last but not least, always read the fine print. Of course, if you have any doubt, be sure to consult with your trademark attorney to verify whether it is legitimate. While you would never want to miss an important fee deadline, you certainly do not want to fall prey to this type of scam.

Court Rejects Settlement Proposal for Data Breach Case Stating There is No Benefit to the Victims

Tue, 03 Nov 2009 18:00:00 GMT

The District Court for the Northern District of California rejected a proposed settlement in a class action data breach case against TD Ameritrade Inc., stating that the settlement provided no value to the class. (In re TD Ameritrade Accountholder Litig., N.D. Cal., No. 3:07-cv-02852-VRW, 10/23/09.) TD Ameritrade suffered a data breach in 2007 where the personal date of approximately 6 million customers was hacked into. The rejected settlement provided approximately $1.9 million in attorneys' fees but no financial award to the class. The judge stated that requirements in the settlement for TD Ameritrade to conduct data security tests and hire independent experts to analyze the breach were measures any responsible company would take independent of litigation, and that the data security software that would be provided to the victims was available at no charge online already. TD Ameritrade suffered a data breach in 2007 where the personal date of approximately 6 million customers was hacked into. The rejected settlement provided approximately $1.9 million in attorneys' fees but no financial award to the class. The judge stated that requirements in the settlement for TD Ameritrade to conduct data security tests and hire independent experts to analyze the breach were measures any responsible company would take independent of litigation, and that the data security software that would be provided to the victims was available at no charge online already.

In a rapidly evolving area of law, this case indicates that it may be harder than you think to "get out of" a data breach case once it is initiated, providing yet another reason to get the right security in place at the outset.