The proposed fee changes include:

Existing Fee      Proposed Fee    Service Covered

$ 35.00                  $ 45.00              E-file single claim-author

$ 35.00                  $ 65.00              E-file other

$ 65.00                  $100.00            Paper form filing

$ 65.00                  $100.00            Paper filing/group

$760.00                 $800.00           S/H registration

$105.00                 $120.00             Record single title

$480.00                  $550.00            S/H recording

For those with large bodies of work, these administrative costs are a sizeable expense.   If, as a copyright owner, you have been debating whether to file for registration of your work, the pending increase in fees should give you an incentive to reach your decision sooner rather than later.  As with any business expense, it is important to weigh the pros and cons of spending money now or in the future.

If you conclude that your works may be infringed and that infringement could affect your bottom line, then regular registration of your works may be the most cost effective approach to take.  While copyright rights attach as soon as the work is fixed, effectively enforcing those rights requires additional effort and expense and, to enforce copyright rights in federal court, you must have registered your work for the court to hear your case.  At that critical time, you may be faced with paying the special handling fee ($760/$800) in addition to the regular filing fee.  Not a pleasant surprise.

Depending on the type and frequency of the works you produce, you may be eligible to file a group of works as part of one registration, saving administrative costs.  Examples of this kind of group coverage could apply to a serialized work (magazine or newsletter) or collection of published photographs by the same photographer in the same year. (See Copyright Office Circular 40 for more details.   http://www.copyright.gov/circs/circ40.pdf)  However, in most cases, each work will require its own registration in order to obtain the fullest protection offered by US copyright law.

This situation for Apple is not only awkward but could also have a profound effect on its bottom line.  Worse, since all of Apple’s iPad tablets are manufactured in China, its sales inside and outside of China could be halted.

Apple claims to have bought Proview’s rights in ten different countries including China.  But was that the case?  It appears that Apple dealt with Proview Taipei, a Taiwanese company affiliated with Proview in Mainland China.  Did the Taiwanese company have the requisite authority to bind its Mainland affiliate?  So far it seems that Proview is winning the dispute, although Apple has taken an appeal.

What about smaller firms? Can anyone other than a Fortune 500 company learn from Apple’s travails in China?  Yes! 

• Lesson 1: Just because you own trademark rights in the United States does not mean you own rights in the identical mark in any other country.   Registration of a mark with the United States Patent and Trademark Office (USPTO) offers protection only within the US borders.  If you plan to sell your goods or services in other countries, it is important to register your mark there. 

• Lesson 2:  You need to know exactly with whom you are negotiating a trademark deal.  Do they have the requisite authority to sell or license the rights that you are negotiating to purchase?  Apple’s agreement with the Taiwanese company surely contained representations and warranties (“reps and warranties”) as to authority, and may even provide for the indemnification of Apple should the reps and warranties prove to be untrue.  So what?  Regardless of the liability of the Taiwanese company for breach of the reps and warranties, Apple still has a problem.  The money it might get from the Taiwanese company in no way would compensate Apple for its loss of the large Chinese market or its ability to have the product manufactured on the Mainland.

• Lesson 3: Difficult as it is for large companies to protect their marks worldwide, it can also be a problem and a large expense for smaller firms.

If you hope to make a worldwide splash with your product or services, careful advance planning for how you will introduce your trademarks will be critical to avoid some of the dilemmas now being faced by Apple.

               For those of you who carry commercial general liability insurance, check to see whether and to what extent your coverage extends to IP infringement.  Your carrier may have specifically exempted most intellectual property claims from your coverage, to your surprise.  The facts of the following case illustrate the dilemma in which you could find yourself.

                In Santa’s Best Craft, LLC v. St. Paul Fire and Marine Insurance Co., the Seventh Circuit examined whether the insurer (“St. Paul”) had an obligation to defend Santa’s Best Craft (“SBC”) and others in an IP infringement matter.  http://caselaw.findlaw.com/us-7th-circuit/1529895.html?DCMP=NWL-pro_ip

                SBC was sued by JLJ, Inc., (“JLJ”) over how it marketed certain holiday lights.  JLJ alleged that SBC copied its “Stay Lit” lights packaging design and used false and deceptive language, thereby co-opting the look and slogans of JLJ’s Stay Lit Lights. 

                SBC settled with JLJ for $3.5 million.  In the SBC-St. Paul’s litigation, although St. Paul, which originally questioned its duty to defend SBC, was found to have the obligation.  However, the facts in the case were such that it is easy to imagine the Court ruling in St. Paul’s favor. 

                St. Paul’s policy contained an IP exclusion disallowing coverage for “injury or damage . . . that results from any actual or alleged infringement or violation of any of the following rights or laws: “. . . trade dress . . .trademark, other intellectual property rights or laws.”  The St. Paul policy did provide coverage for “[u]nauthorized use of . . . any slogan . . . of others in your advertising.”

                Despite the fact that the JLJ complaint did not clearly allege an infringement of its slogan, luckily for SBC, the Court found enough facts in JLJ’s allegations to fall within the St Paul policy coverage.

                But can a business owner take much comfort from the outcome in this case?  Even if commercial liability insurance contains such an advertising exception to the general IP exclusion, is that enough to insulate you from potentially large damage claims by third parties? 

                The IP rights and laws typically covered in a commercial general liability policy include copyrights, patents, and trademarks.  It is therefore critical to determine to what extent your business activities rely on any IP.  Then, have a heart to hear discussion with your insurance agent that specifically focuses on your IP issues and to determine whether special insurance coverage is available and whether you should include such in your liability policy.

                A little effort now is better than to discover the limits of your coverage later — to your regret.

Before the wide acceptance of the Internet, a locally focused business would have to concentrate its efforts on its local market and thus could more easily become familiar with the relevant rules and regulations that would govern its business practices. As discussed in any earlier blog concerning nationwide cigarette sales, an e-business owner may need to know the rules of the road in all 50 states.  In Illinois v Hemi Group, LLC, http://caselaw.findlaw.com/us-7th-circuit/1538180.html?DCMP=NWL-pro_technology , the Seventh Circuit Court of Appeals concluded that Hemi, located in New Mexico, had sufficient voluntary contacts with Illinois residents, in addition to its interactive website, so that the state government could assert a claim that Hemi had failed to file reports of Illinois cigarette sales.  The decision of the trial court to assert jurisdiction was affirmed and the matter sent back for trial on Illinois’ claim.

By contrast, in Mobile Anesthesiologists Chicago LLC v Anesthesia Associates of Houston Metroplex, the Seventh Circuit did not find that a Houston anesthesiologist had sufficient contact with Illinois to allow an Illinois plaintiff to bring a federal Anti-Cybersquatting Consumer Protection Act (the “ACCPA”) claim based on the Houston doctor having selected a domain name very similar to that adopted and registered as a federal trademark by the plaintiff.  http://caselaw.findlaw.com/us-7th-circuit/1539920.html?DCMP=NWL-pro_technology .  However, although the Houston doctor only practiced medicine in Texas and thus was able to avoid being sued in Illinois, it appeared from the facts that the Illinois plaintiff, a large company, could nevertheless bring its domain name cybersquatting claim in Texas so that the locality of the doctor’s practice would not insulate him from ultimately answering for his domain name choice.

The third case, also reviewed by the Seventh Circuit, involves a well-known Internet player, namely, GoDaddy, the domain name registration company, who was found to have sufficient contacts with Illinois so that it was fair for it to be called upon to defend itself there.

The facts of uBid, Inc. v the GoDaddy Group, Inc., also involved an ACCPA claim.  uBid alleged that GoDaddy violated the ACCPA when it allowed third parties freely to register domain names confusingly similar to those of the trademarks and domain names of uBid, and thus profited in bad faith from sales when confused web surfers visited those parked pages.  http://caselaw.findlaw.com/us-7th-circuit/1539590.html?DCMP=NWL-pro_ip

The fact that GoDaddy took great pains to restrict its physical presence to Arizona (incorporation, headquarters, servers and employees all located there) did not insulate it from the Illinois court’s broad reach.  The Seventh Circuit looked at a myriad of factors such as:  GoDaddy’s nationwide and local advertising campaigns, which were not limited to the web but included advertising during Super Bowl broadcasts, celebrity endorsements and advertisements in the home parks of the Chicago Clubs, White Sox, Chicago Bulls and Blackhawks.  The result of GoDaddy’s aggressive campaign was to gain hundreds of thousands of Illinois customers and millions of dollars in profits from them.

In the end, no argument offered by GoDaddy was persuasive to limit its exposure to litigation in Illinois.  In overruling the trial court’s dismissal of uBid’s claim on the basis of finding a lack of personal jurisdiction, the Seventh Circuit’s opinion strongly hinted as to why GoDaddy could be held liable.  In reversing the trial court, the Seventh circuit said, “GoDaddy has continuously and deliberately exploited the Illinois market for domain name registration and has profited handsomely from it.  Now GoDaddy is being called to account for alleged harm to an Illinois resident arising directly from the services GoDaddy provides to its Illinois customers, at least two of whom registered domain names that contributed to the alleged harm.  There is no unfairness in requiring GoDaddy to defend that lawsuit in the courts of the state where, through the very activity giving rise to the suit, it continues to gain so much.”  While GoDaddy will certainly have its day in court to argue why it should not be held liable, having lost this round, it has a harder argument to make on uBid’s substantive claims.

Because policing your domain name can be as important as trying to protect your trademarks, do these cases give any comfort as to your ability to protect your domain name?  Appearing on the Internet gives businesses potentially access to a huge market at a relatively low cost, but are there other prices to be paid?

A large Chicago-based medical company that provided on-site anesthesia services in various cities throughout the USA (“Mobile/Chicago”) also owned a federally registered trademark,  MOBILE ANESTHESIOLOGISTS.   In 2003, Mobile/Chicago registered the domain name http://www.mobileanesthesiologists.com .  In 2008, a doctor (“Mobile/Houston”), who offered similar anesthesia services in the Houston area, launched his website using the domain name http://mobileanesthesia.com/Home_page.html .

Not much difference between the phrases “mobile anesthesia” and “mobile anesthesiologists,” right?  Not surprisingly, Mobile/Chicago sued Mobile/Houston in Illinois under the federal Anti-Cybersquatting Consumer Protection Act (the “ACCPA”) alleging that the Houston doctor was using a domain name that was confusingly similar to its registered trademark.  Never addressing the question as to whether the doctor’s mark was confusingly similar to that of Mobile/Chicago, the Seventh Circuit upheld the trial court’s decision to dismiss the case for lack of personal jurisdiction over the defendant.  The full text of the opinion can be found at http://caselaw.findlaw.com/us-7th-circuit/1539920.html?DCMP=NWL-pro_technology .

What factors existed to cause such a different outcome to that which resulted in the cigarette case?  Although the Mobile/Houston website could be viewed by Illinois residents, the site made clear that the services were being offered only in the Houston area.  Furthermore, the doctor was licensed only in Texas, where his professional activities all took place.  His contacts to Illinois consisted of his visiting there for vacation and the fact that some professional organizations of which he was a member were located in Illinois.

The Circuit Court did not view these kinds of activities as of sufficient connection to the state to give an Illinois court the authority to assert personal jurisdiction over the doctor.  Nor was the fact that Mobile/Chicago had sent a “cease and desist” letter enough to show that the doctor’s continued operation of his website was an intentional directing of tortuous activities to Illinois.

Thus, while the outcome of this case gives some guidance as to what kinds of activities would be insufficient for a court to obtain personal jurisdiction over a defendant located in another state, the decision did not address the underlying substantive issue of whether “mobile anesthesia” and “mobile anesthesiologists” were so similar as to violate the ACCPA.  I wonder whether the Houston doctor really should draw much comfort from the fact that at least, as to the actual defense of his choice of domain name, the matter would be heard on his home turf should Mobile/Illinois decide to continue pursuit of its claim.

For some answers about the variety of federal and state laws that may require compliance, visit the official website of the U.S. Small Business Administration (SBA) http://www.business.gov/business-law/online-business/.  This site provides useful general information about legal requirements which could affect your Internet business operations such as:  intellectual property protection, tax collections, truth in advertising and privacy.

One area not addressed on the SBA site, but which could have profound repercussions, was the subject of a recent U.S. Court of Appeals Seventh Circuit case entitled, Illinois v. Hemi Group, LLC.  The question asked and answered by the Circuit Court was whether an Illinois court could assert personal jurisdiction over an Internet business located in New Mexico.  Based on the facts in this case, the answer was “yes.”

In summary, Hemi Group, LLC, (Hemi) sold discount cigarettes through its website.  It paid federal sale taxes and notified its customers that they should check with their home state to find out if they needed to pay state tax.  Apparently Hemi was unaware that Illinois law not only required the customer to pay the applicable state tax for purchases over the Internet, but also required such businesses to file monthly reports of cigarette sales to Illinois residents.  Unfortunately for Hemi, not only did it sell cigarettes to the Illinois Department of Revenue, (I guess this was some kind of sting operation,) but it also failed to notify Illinois of the sales.  Ouch!

You may think, “Why should Hemi have to defend itself in Illinois?  Doesn’t that violate the due process clause of the U.S. Constitution?”  Well, the Circuit Court concluded that Hemi had sufficient contacts with Illinois to require the company to answer to complaints brought against it by the State of Illinois.

Thus, while it may appear to be relatively easy and profitable to conduct an e-business that is national in scope, you need to learn about and comply with the particular laws of each state in which you make your sales.  Keep in mind, given our troubled economy, state governments are hungry for money and, like Illinois, they may be willing to invest in this kind of aggressive enforcement effort.

Because of the perceived threat that a costly lawsuit could have on those asserting their First  Amendment rights to express their ideas or participate in public debate, twenty-eight states have passed laws that offer varying levels of protection in what has come to be called “Anti-SLAPP Statues.”  SLAPP, shorthand for the objectionable lawsuits, stands for “strategic litigation against public participation.”  (See  http://www.legal-project.org/149/anti-slapp-statutes-in-the-us-by-state for a list of state laws.)

Generally, where such laws exist, a defendant faced with what she believes is a SLAPP suit, namely trying to discourage her from speaking her mind, could file with the court a motion to strike the lawsuit.  If she then shows that the lawsuit arose due to speech or actions that were protected under the Anti-SLAPP act, mainly First Amendment expressions of idea, then the plaintiff is suddenly placed in a defensive posture.  To overcome the Anti-SLAPP motion, the plaintiff must show the probability that he will prevail on the merits.  However, because under some of these laws, discovery is frozen, the plaintiff is not necessarily in a good position to make such a showing.

While the principal reason for the enactment of Anti-SLAPP laws was in reaction to lawsuits brought to discourage public discourse about legislative, executive or judicial proceedings, their breadth, especially in the case of California’s statute, could offer some protections to those who operate in the commercial arena.  In order to put some meat on the bones, consider the following real life cases:

Hallmark Cards adopted a birthday card showing a caricature of Britney Spears as a waitress based on her appearance in a reality show and quoting her USPTO trademarked phrase, “That’s hot.”  While Hallmark was able to meet the qualifications that its activity was “speech” and was addressing a “public issue,” its motion to strike was denied.  This was because Ms. Spears was able to show the likelihood of success to her claim that Hallmark violated her right of publicity and Hallmark could not overcome this with any affirmative defense.  So, in this case the “right of publicity” trumped caricature.

Another situation involved ABC’s 20/20 Show which broadcast a story questioning the transparency of certain Christian ministries.  In the piece, ABC used a film clip of televangelist Dr. Frederick Price, who preaches “prosperity gospel.”  In the clip Dr. Price made the following statements, “I live in a 25-room mansion. I have my own $6 million yacht.”  While these were Dr. Price’s actual words, it turns out that he said them in the context of telling a parable.  He later sued ABC for defamation.  ABC’s Anti-SLAPP motion to strike was unsuccessful because, while it was true that Dr. Price was rich and had made similar statements about himself, the quotation that ABC used was taken out of context.  In this case, ABC would have been better served if it had found a quote from Dr. Price speaking about himself.

These cases illustrate that while it is important that the First Amendment Right encouraging public discourse be protected, there is another important competing interest, namely to allow people to bring their good faith grievances to court.  If you are aware of this balance of interests, you will be in a better position to speak out, even if your speech has a for-profit element to it as in the Hallmark case.

When advising artists, authors and song writers about ways to protect their interests in their creative works, I encourage them to file for copyright registration.  But even if you follow all of the rules and register your copyright, you may still come up short when it comes time to enforce against infringers.

While the exclusive rights associated with copyright ownership attach as soon as the work is fixed so that others can perceive it, registration with the Copyright Office is necessary in order to enforce those rights in court.  Additionally, registration offers some other benefits to the copyright owner, namely the opportunity to ask for statutory damages and attorney fees.

As a copyright owner, you want to be in a strong bargaining position when confronting an infringer.  Being able to threaten to seek statutory damages and attorney fees can be a big stick.  However, even when you appear to have a clear-cut case of infringement, there will be hurdles that you must surmount if you are to achieve meaningful relief.  A recent case decided by the U.S. Court of Appeals for the Second Circuit illustrates well what problems a copyright holder may face.

The facts are that songwriters, Bryant and Bernfeld (“B&B”), wrote and produced two albums of songs, each containing 10 songs. B&B registered with the Copyright Office not only the two albums but also each of the songs individually.  They entered into an agreement with Media Right Productions (“Media”) authorizing Media to market the albums, but not to make copies of them.  If Media needed more albums, B&B would give them the copies.  Media, in turn, contracted with Orchard Enterprises (“Orchard”), a music wholesaler, to sell the music.

Over the course of time, Orchard started to sell copies of the albums and individual songs in digital format.  The actual sales were very modest generating only a few hundred dollars.  Eventually, B&B learned of this development and sued both Media and Orchard for copying and selling the works without permission.  Clear copyright infringement, right?

The Copyright Act allows a judge to award statutory damages between $750 and $30,000 for all infringements with respect to any one work.  Because B&B had registered their works with the Copyright Office before any infringement took place, they were eligible to seek statutory damages.  Given that the actual damages would have been meager, seeking statutory damages was the way to go. But what constituted a “work” in this case to calculate damages—the two albums or the twenty songs?

The Second Circuit concluded that because the plaintiffs had issued their works as two albums, in other words as a “compilation” work, rather than as individual songs, they could receive statutory damages only for infringement of the two albums.  The Court was not persuaded by B&B’s argument that in the digital age it was easier for infringers to make parts of albums separately available.

Other examples of situations where plaintiffs were limited to one statutory damage award are:  computer generated clip art issued in one package; and photographs of plant seedlings included in a catalog.

As this case study shows, it is hard to anticipate how best to protect artistic works from copyright infringement.  Also, choosing to release each work independently may not be feasible given that the real value of each work exists only in being part of a collection.  Faced with such a dilemma, your enforcement options could be limited, even with the best set of facts.

If having a logo is an important part of your brand development, I suggest that you consider your design carefully, with an eye toward selecting a strong mark, so that you can effectively protect it against competitors.  One company has learned the hard way that even with a service mark logo successfully registered with the United States Patent and Trademark Office (USPTO), it could not prevent a direct competitor from using a similarly designed mark.

Here are the bare facts.  Amazing Spaces, a self storage company in Houston, Texas, registered with the USPTO a five-pointed star in a circle as one of its marks.  Its rival in the same geographic market, Metro Mini Storage, adopted a five-pointed star in a circle for its service mark.  Metro Mini refused to back down when Amazing Spaces demanded it cease and desist.  You might think this is a no brainer.  The registered mark should win, right?  Well according to the Fifth Circuit Court of Appeals, Amazing Spaces had a non-protectable mark and dismissed the claim against Metro Mini.  The Court’s reasoning is important and goes to the core of what really constitutes a trade mark.

A trademark exists only if in the mind of Ms. Q. Public, it successfully acts as an identifier of the source of the goods or services being sold.  In the case of a logo, it is important to avoid adopting ordinary geometric shapes because they can be considered by a consumer as mere decoration.

Even if you successfully were to register such a logo with the USPTO, it later could be cancelled by a challenger under the theory that the design or symbol you adopted was common and likely to be perceived by consumers as ornamentation rather than indicating you as the source of the goods or services.  The only way you could defend your mark against such an attack would be by proving that it had acquired “secondary meaning.”  In other words, consumers viewing the mark know it refers to you, in the way that the swoosh means NIKE.  So while NIKE’s simple curved bar shaped logo upon its introduction in the 1970’s may not have withstood a challenge similar to that raised by Metro Mini, due to NIKE’s longstanding promotional efforts, the swoosh has acquired the necessary secondary meaning.

The clear lesson is that even in the case of a big player like NIKE, having simple geometric shapes acquire the strength to withstand a direct challenge by a competitor could depend on how much time and money you have spent in getting the public to understand that the logo is not merely ornamentation but stands for you.

If you were considering the adoption of a logo for your goods or services, what characteristics would you want the design to have?  Do you have any war stories to share related to selecting your logo?

Google TV combines the functions of Internet with high definition television.  Currently, the hardware consists of Sony televisions and Logitech set-top boxes and will be available in Best Buy stores this fall.

As a website or app developer, you should care because to maximize the user’s experience, it will be important to have specially designed custom web pages for Google TV. Also, because the Google TV device will be powered by a 1.2 gigahertz processor,  designers will be able to create new experiences for the viewers.

To get ahead of the curve, check out the tools that Google has provided to help developers design web pages and apps for its TV platform.  (http://www.google.com/tv/developer/)

As is pointed out in MIT’s Technology Review article (http://www.technologyreview.com/computing/25371/?nlid=3032&a=f) Google does not have any strong content providers on board.  However, once some dynamite apps are created for the new platform and are embraced by viewers,  the content owners are bound to follow.

Given all of the hand-held devices being marketed, do you think Google is on the right track?  What legal issues do you foresee if you would like to program for this new platform?    One thought that I have is that as a website or app designer entering this arena, just be sure to read and understand the small print in the licenses under which you will be designing.