UnIntellectual Property (UnIP): Copyright for Individual Photographs in a Compilation Registration
The United States District Court for the Northern District of California decided a question which is pending before the United States Court of Appeals for the Ninth Circuit in two cases: whether compilation registrations must list the names of individual authors for the underlying works to also be copyrighted. In deciding that, yes, the names of the individual authors of the underlying works must be listed, the Court interpreted Section 409 of the Copyright Act, which requires that a registration application include the name of the claimant, the name of the author, and the title of the work. As such, the court agreed with Defendant’s position that the registrations relied upon by Plaintiff to cover the photographs at issue, all compilation registrations, do not not validly register the underlying works because they do not comply with Section 409. In particular, the “Court concludes that Pearson is entitled to summary judgment on these claims because while the photographs at issue were part of registered compilations, they were not themselves registered and therefore are not copyrighted, and MPI has provided no evidence to the contrary.”
This case highlights a relatively unsettled area of law with respect to registration requirements for compilations. In fact, this case disagrees with The Copyright Office’s position that the registration of a collective work also registers any independently copyrightable works within the collective work. As such, copyright attorneys would be well-served to ensure that the individual authors of any individual work within a compilation is listed, at least until the Ninth Circuit or United States Supreme Court says otherwise.
UnIntellectual Property (UnIP): Trade Secret for Customer List
The Supreme Court of Nebraska has clarified the difference between the Uniform Trade Secrets Act (UTSA) and Nebraska’s Trade Secrets Act (which interestingly enough was modeled off of UTSA but clearly not identical). In this case, Plaintiff, a crop insurance agency, sued its former insurance salesperson and the competing insurance agency to which she went to work for, among other things, misappropriation of trade secrets. In particular, the alleged trade secret was a customer list.
Defendant argued that the customer list was not a trade secret because it was “nothing more than each crop insurance client’s own insurance information, which was and is ascertainable by proper means and could never constitute a trade secret as a matter of law.” Plaintiff argued that the information was proprietary and valuable and that it was a trade secret. The Court held that because the customers’ identities and contact information were ascertainable from public sources, and because the other information on the list was also ascertainable by proper means, the customer list was not a trade secret. In so holding, the Court heavily relied upon language not present in Nebraska’s Trade Secrets Act’s definition of a trade secret. Under UTSA, a trade secret is something that derives independent economic value “ ‘from not being [generally] known to, and not being [readily] ascertainable by proper means by, other persons….’ ” Nebraska’s, however, deleted the qualifiers “generally” and “readily” from the statutory definition, and in doing so narrowed the definition of a trade secret. The Court recognized commentary that “[U]nder the literal terms of the … language, if an alleged trade secret is ascertainable at all by any means that are not ‘improper,’ the would-be secret is peremptorily excluded from coverage under the [Act].” Thus, the Court analyzed whether the information on the customer list was ascertainable by proper means.
A recent decision out of the United States District Court for the Eastern District of Pennsylvania highlighted an issue that is often confusing to clients, and possibly non-IP attorneys – the difference between a trade name and trademark. It is generally understood that a trade name represents the name a company uses for business purposes and a trademark is the distinctive identifier of the source of particular goods or services. However, can the identification of one versus the other affect a trademark infringement matter? The short answer is yes.
This case involved the, Plaintiff, the owner of a registered trademark for EVERLINA LAURICE and common law trademark LAURICE in connection with fragrances generally, suing Defendants over its use of “Laurice & Co.” (Saks Fifth Avenue was a named defendant having sold the product). The Court considered the likelihood of confusion factors in granting Defendant’s Motion for Summary Judgment. In doing so, it included, in a footnote, that there is indeed a distinction between a trade name and a trademark which shall be considered as part of the overall likelihood of confusion analysis in a trademark infringement matter:
“Defendants assert that they are entitled to summary judgment pursuant to Rule 56 because the undisputed factual record shows that “Laurice & Co.” has only been utilized as a trade or business name, not a trademark, and thus negates the likelihood of confusion element required in Plaintiff’s various trademark infringement and unfair competition claims. See Defs.’ Mem. in Support of Mot. Summ. J., 6–8, ECF No. 83–1. The court agrees that the use of “Laurice & Co.” as a trade name rather than a trademark is a relevant consideration when evaluating likelihood of confusion, but rejects the suggestion that such a distinction is dispositive. While the use of Laurice & Co. in the context of a trade name may suggest that consumer confusion between the parties’ products is less likely, the inquiry does not end there.”
Ultimately, this Court questioned the strength of the Plaintiff’s marks since they corresponded to the personal names of the Plaintiff. Combined with the fact that Defendant’s name was Laurice and questionable signs of actual confusion since Defendant’s use began over a decade earlier, the Court held that there was no cause of action here. As such, Defendants prevailed and its use of the Laurice & Co., including as part of a domain name, was not actionable.
A recent case out of the United States District Court, Middle District of Florida, highlights a trademark issue that clients regularly ask about – abandonment of a trademark. If a trademark is abandoned, the previous trademark owner no longer can claim exclusive trademark rights in that mark. The issue recently arose at the hearing of a motion for summary judgment in an effort by defendant suntan lotion provider, Australian Gold, to prove that Plaintiff Health & Sun Research’s Royal Flush and Purple Rain marks have been abandoned.
As the Court made clear, not only must the moving party prove that the trademark owner’s use has stopped, but it must also show that the trademark owner’s intent was to not resume any use. This is a heavy burden for the moving party because “if a trademark holder ceases using a mark with an intent not to resume its use, the mark is deemed abandoned and falls into the public domain and is free for all to use. Abandonment paves the way for future possession and property in any other person.”
In this case, the Court held that genuine issues of material fact, namely whether Plaintiff intended to resume use of Royal Flush despite its nonuse, prevented granting summary judgment. This is so even though, given a three year lapse in use, Australian Gold enjoyed a rebuttable presumption that Health & Sun does not intend to resume use of the Royal Flush mark. Ultimately, the Court distinguished a case where a CEO’s self-serving affidavit of an intent to resume use did not rebut the presumption. It did so based upon the fact that, here, there was additional evidence that could be used to show an intent to resume use, including the fact that Health & Sun continues to produce and distribute such lotions and demand still exists.
Trademark attorneys are well-served to advise their clients about abandonment issues and understand that the predominant view by Courts is that evidence of both no use and an intent to not resume use will be needed to prevail on any abandonment theory.
Health & Sun Research, Inc. v. Australian Gold, LLC, 8:12-CV-2319-T-33MAP, 2013 WL 6038748 (M.D. Fla. Nov. 14, 2013).
UnIntellectual Property (UnIP): Trade Secret for Donor List; Trademark for Non-Profit’s Name
This lawsuit in the United States District Court for the Eastern District of New York involved a dispute between the Defendant Alzheimer’s Disease and Related Disorders Association (the “Association”), a voluntary health organization dedicated to fighting Alzheimer’s disease, and the Plaintiff Alzheimer’s Disease Resource Center, Inc. (the “Former Chapter”), the former Long Island chapter for the Association. After these two entities disaffiliated from each other in late 2012, the Former Chapter filed a demand for arbitration against the Association seeking an order allowing the Former Chapter to retain the funds it previously raised for the Association. Thereafter, the Former Chapter commenced this lawsuit and asserted that the Association unfairly competed with the Former Chapter after the Former Chapter’s disaffiliation by sending out 15 mass mailings under the name “Alzheimer’s Association—Long Island Chapter.” On August 9, 2013, the Association moved pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ.P.”) 12(b)(6) to dismiss the complaint for failure to state a claim and to strike the Former Chapter’s request for punitive damages.
The Court granted the Association’s motion in part and dismissed, among other causes of action, two causes of action relevant to this blog. First, the Court dismissed the unfair competition claim holding that the Former Chapter enjoyed no trademark in the name “Alzheimer’s Association—Long Island Chapter .” Moreover, the Court held that the name of an organization’s executive and address does not neatly fit within the categories typically associated with a common law claim for unfair competition.
Second, the Court dismissed the trade secret misappropriation claim under New York law. The Court stated that “even assuming the donor lists constitute a trade secret, the Court finds that the ADRC has failed to allege that the Association used the former chapter’s donor information “in breach of an agreement, confidential relationship or duty, or as a result of discovery by improper means.” As noted above, the ADRC cannot claim that the Association breached the SOR by using the donor information after the agreement was terminated. Nor can ADRC allege that the Association acquired information improperly because the former chapter concedes in the complaint that it freely provided this information to the Association. Finally, the ADRC alleges no confidential relationship or duty between ADRC and the Associations; rather, only a contractual relationship between the parties. For these reasons, the Court grants that part of the Association’s motion to dismiss the complaint to the extent it asserts a claim of misappropriation of trade secrets.” Put simply, since the donor information was provided freely by the Association to the Former Chapter, it did not qualify for trade secret protection.
This case confirms that, despite the altruistic mission of non-profits, the law of trademarks and trade secrets apply the same nonetheless. This acrimonious dispute clearly involved several causes of action, but I wonder whether each should have been included.
Alzheimer’s Disease Res. Ctr., Inc. v. Alzheimer’s Disease & Related Disorders Ass’n, Inc., 13-CV-3288 ADS ARL, 2013 WL 5960748 (E.D.N.Y. Nov. 8, 2013).
An appeal from a judgment of the Superior Court of San Diego County highlights what is typically a hotly disputed topic with regard to trade secret misappropriation litigation involving an employer and former employee (and that new employee’s employer, who more often than not is a competitor of the former employer). Commonly, a plaintiff will allege multiple counts in its Complaint, beyond merely violation of the Uniform Trade Secrets Act (UTSA). The question becomes whether those other claims are displaced by UTSA.
In this unfair competition lawsuit, the plaintiff, a large scale laundry business that provided linens to local hospitals and other health care facilities, sued a new competitor in the laundry business and one of its own former employees on a variety of theories, including a claim under California’s Uniform Trade Secrets Act (Civ.Code, § 3426 et seq.; UTSA). Prior to trial, the trial court granted the defendants summary adjudication on all of the plaintiff’s non-UTSA claims. The trial court found those claims were pre-empted or displaced by UTSA. The issue on appeal was whether these other claims, which included violations of California’s Business and Professions Code section 17200, breach of contract, breach of fiduciary duty, unfair competition, and interference with business relations, and conversion were displaced by UTSA. The trial court had held that none of the nformation that the plaintiff asserted had been wrongfully appropriated was a trade secret within the meaning of UTSA. However, on appeal, this court held that, even so, UTSA did not displace the other theories for relief.
In particular, this court held that “UTSA does not displace breach of contract claims, even if they are based in part on the alleged misappropriation of a trade secret. Moreover, UTSA does not displace other claims when they are not based on an alleged misappropriation of a trade secret.” The court found that the other claims were based upon violation of a non-compete rather than the trade secret. Moreover, the conversion claim was based upon the former employee’s taking tangible documents. Thus, consistent with California precedent, it held that these other claims, “although related to a trade secret misappropriation, are independent and based on facts distinct from the facts that support the misappropriation claim.”
Having litigated this issue in other states, the facts are so important. UTSA has language that specifically excepts certain claims from displacement. However, there does need to be a set of facts and arguments apart from the trade secret in order to avoid such displacement. When in doubt, talk to a trade secret attorney before filing the lawsuit with the laundry list of claims that typically are included. PS: I love the first footnote in this opinion that makes the distinction between preemption and displacement, especially since I regularly see lawyers use both terms with regard to this issue.
Angelica Textile Services, Inc. v. Jaye Park et al., 2013 WL 5797605 (Cal. Fourth District October 29, 2013).
UnIntellectual Property (UnIP): Copyright for an Average Percentage
The United States District Court of the Southern District of New York has granted Defendant summary judgment with regard to, among other things, Plaintiff’s claim that it has a valid federal copyright in the percentage 3.95% or the series of percentages of national average interest rates. Plaintiff, Banxcorp, sued Defendants Costco (a large retailer) and Capital One (a large bank) for allegedly unlawfully copying those percentages in a series of individual advertisements about how much higher their particular deposit rates were than the national average, as reported by Plaintiff.
Although the Court had previously determined, at the motion to dismiss stage, that Plaintiff may have a protectable copyright in the percentage, with the benefit of evidence, it held that “averages are unprotectable because they are uncopyrightable facts, because they are too short to be copyrighted, and because the so-called merger doctrine—which applies where there is “only one … or so few ways of expressing an idea, that protection of the expression would effectively accord protection to the idea itself,” id. at 608 (internal quotation marks and alterations omitted)—bars copyright protection.”
I really appreciate this opinion, not because of the holding, which I would have predicted, but because of the way it was written. Read the first paragraph and you immediately inclined to read more because it does not read like a boring opinion. Instead it says:
“Consider the percentage “3.95%.” It seems to be a totally ordinary percentage. It is the amount by which Eastern Michigan University increased its tuition and fees for the 2012–13 school year relative to the previous one.It is how much the Mayor of Poughkeepsie proposes to increase the city tax levy for 2014. It is the amount by which sugar prices rose in India one day in November 2012.And, according to Plaintiff Banxcorp, it was the United States national average interest rate for five-year certificates of deposit as of December 21, 2005.”
Ultimately, the opinion is rather detailed and longer than what I would have expected for such a legal issue. Nonetheless, this Judge and/or law clerk clearly did their. Score one for the lawyers. Lawyers 1 – Mathematicians/Statisticians 0
UnIntellectual Property (UnIP): Trade Secret for Customer Identity, Customer Information, and Customer Lists
The Michigan Court of Appeals has affirmed a trial court’s granting of summary disposition (the equivalent of summary judgment under other state law) to defendant, and, in doing so, dismissed plaintiff’s claims. Plaintiff, an industrial repair provider, sued defendant, an industrial repair company. Both plaintiff and defendant had entered into a written agreement for submitting joint proposals for complementary business services to customers. The agreement contained language identifying confidential information and language concerning non-solicitation of employees and/or independent contractors. Thereafter, they entered into a Purchase Agreement that also contained a confidentiality section dealing with, among other things, “customer information.” An employee of Plaintiff resigned and accepted a position with Defendant, who eventually terminated the employee. Nonetheless, Plaintiff filed a lawsuit alleging, among other things, Violation of the Michigan Uniform Trade Secrets Act. Plaintiff was granted preliminary injunctive relief to prevent defendant from soliciting any of plaintiff’s customers in the asset management business.
After affirming the trial court’s finding that the Purchase Agreement superseded the prior agreement and that no breach had been found, the Court made clear that there was no ruling that the plaintiff’s customers and contacts could not qualitfy as confidential information. However, it did rule that the customer information did not qualify as a trade secret under Michigan law, namely MUTSA.
In particular, the Court stated: “The trial court noted in its opinion that “[t]he gravamen of ICR’s MUTSA claim is that McBroom misappropriated Plaintiff’s trade secrets when it hired Young, and allowed him to solicit business on behalf of McBroom utilizing certain information he obtained while employed by ICR, including the identity of ICR’s customers, and the contacts at those customers.” The trial court concluded that “the customer information compiled by Young simply does not qualify as a ‘trade secret’ under the MUTSA.”
In affirming the trial court, this Court noted the plaintiff’s failure to identify the alleged trade secret with specificity. It went on to hold that “To the extent that plaintiff identified any specific information it believes was a trade secret, such information falls into the category of customer identity, customer information, and customer lists. Such information, although protectable by a confidentiality agreement, is not a trade secret under MUTSA.” In reaching its conclusion, it relied upon, what it deemed to be, black letter law, including: “A list of customers compiled by a former employee from personal and public sources available to that employee is not protectable as a trade secret. This is true even if the former employee has learned about the “peculiar needs of particular clients” from his employment; although such information may be protectable by a non-competition agreement, such information is a not a trade secret.”
This case reiterates that customer identity and information related thereto, even if specific to the customer, is not a trade secret under Michigan law and the best way to protect such information is via a non-compete agreement. However, there still needs to be misappropriation, or in this case, a breach by disclosing or using such confidential information in order to have an actionable and recoverable claim. Assuming this occurs, damages need to be proven, which this Court did not analyze given that it affirmed the trial court’s decision regarding the merits themselves. So, employers should read this to mean they need non-compete agreements, but at the same time, such an agreement can not make what is otherwise not confidential or available elsewhere the impetus for a trade secret or breach of contract lawsuit.
Indus. Control Repair, Inc. v. McBroom Elec. Co., Inc., 302240, 2013 WL 5576336 (Mich. Ct. App. Oct. 10, 2013).
UnIntellectual Property (UnIP): Trade Secret for Business Goals (among other items)
This is a dispute in the United States District Court for the Southern District of New York over intellectual property pertaining to marketing and advertising analytics. While this case involves patents and other intellectual property, I am focusing on TRA Defendant’s countersuit and alleged trade secrets, namely:
UnIntellectual Property (UnIP): Copyright Ownership of Film Directed
The United States District Court for the Southern District of New York made quick work of a copyright dispute over copyright ownership. Plaintiff sought declaratory judgments respecting the ownership of the copyright to a short film that Plaintiff produced and Defendant Merkin directed.
Merkin had registered a copyright with the US Copyright Office in the Film. The Court agreed with the Plaintiff’s request to invalidate the registration. In doing so, it reiterated some black letter law regarding copyright registration and invalidation of the same: