Tuesday, May 29, 2012

An Offensive Vodka Label

An Ogden, Utah distiller, Ogden's Own Distillery, is having a problem distributing its vodka in the state of Idaho. After obtaining approval from ATF (Bureau of Alcohol, Tobacco, Firearms & Explosives) for its label, and after obtaining federal trademark registration for its mark FIVE WIVES, the distiller has encountered the sensitivities of Idaho's liquor division.

Idaho will not permit the distribution of Five Wives vodka because the concept "is offensive to a prominent segment of our population." There is no explanation of what this means, how it was determined, or what specifically about the product is offensive to the prominent segment. The problem cannot lie with the vodka itself, since Idaho permits the sale of many other brands of vodka. The shape of the bottle cannot be the problem, one would think. So, the only remaining option centers on the label. But ATF has determined that the label is fine, and the PTO (which is prohibited from registering a mark that is immoral or scandalous) has registered FIVE WIVES as a federal trademark. So, what can it be that has the Idaho liquor division so intoxicated?

Sunday, May 27, 2012

A Memorial Day for Vietnam -- At 50 Years

The Wall

This Memorial Day 2012 marks the remembrance of the 50th anniversary of the U.S. involvement in the Vietnam War. President Obama will mark the beginning of a 13 year war remembrance on Monday, May 28th.
NOW, THEREFORE, I, BARACK OBAMA, President of the United States of America, by virtue of the authority vested in me by the Constitution and the laws of the United States, do hereby proclaim May 28, 2012, through November 11, 2025, as the Commemoration of the 50th Anniversary of the Vietnam War.
The U.S. was involved militarily in Vietnam one way or another since the mid-1940's, including assisting in what became a disastrous French defeat by the Viet Minh at Dien Bien Phu in 1954.

The first American soldier killed in Vietnam during the U.S. war? Air Force T-Sgt. Richard B. Fitzgibbon Jr. His is the first name on the extreme western panel of the Vietnam War Veteran's Memorial.

Sunday, May 20, 2012

Paul Horn's "Dream Machine" and Copyright Termination

Last week, a federal court judge in San Diego ruled that Victor Willis, the cop in the Village People music group, had the right to terminate his prior transfer of interest in certain musical compositions, including Village People hits.

I was not a big fan of the Village People, although it was difficult not to listen to their all-prevalent music in the 1970s. But I was, and continue to be, a fan of Paul Horn, the flutist. My favorite Paul Horn album is "Dream Machine" on Mushroom Records, that came out in 1978. Just what does the ruling favoring Victor Willis' copyright transfer termination have to do with Paul Horn and "Dream Machine" ?

The present Copyright Act permits the termination of prior copyright transfers in certain instances. The rules for termination differ for transfers occurring prior to January 1, 1978 and after that date (the present Copyright Act took effect on January 1, 1978). For post-1977 copyright transfers, the U.S. Copyright Act permits termination during a five year period only, commencing 35 years following the execution of the grant. To effect termination, a notice of termination must be provided to the grant recipient at least two years prior to the date of termination.

Because this coming January 2013 represents 35 years following the effective date of the present Copyright Act, the first wave of terminations is expected to begin this coming January for transfers occurring in 1978, so long as at least a two year advance notice of termination is given. Willis gave his notice of termination timely, with the intent to effect a termination of his post-1977 copyright grants in his musical compositions to Scorpio Music and Can't Stop Productions. Not being pleased to lose ownership of valuable music rights, Scorpio Music and Can't Stop Productions brought a declaratory judgment action, seeking a court determination that Willis did not have the right to terminate his prior transfer.

Willis won. The court ruled that the statute means what it says. If a person makes a transfer of copyright post-1977, then the transfer can be terminated during a five year window beginning 35 years following the date of the transfer, provided at least a two year advance notice of termination is given. Willis complied with the notice requirement, and come 2013 he will be permitted to recapture his copyright interest in previously transferred music compositions. And because the termination cuts off the rights of the grant recipients, Scorpio Music and Can't Stop Productions, Willis' recapture is not restricted by the royalty limitations included in the grant.

It may come as a bit of a shock to learn that an asset bought and paid for can be lost after 35 years with no reimbursement. Copyright transfer is a limited right. The court explains that one purpose of the copyright termination provision is to"safeguard authors against unremunerative transfers" and address "the unequal bargaining position of authors, resulting in part from the impossibility of determining a work's value until is has been exploited."

But there is another justification supporting copyright termination. This brings me to Paul Horn's "Dream Machine." This jazz-funk-fusion album came out in 1978, featuring Paul Horn, Joe Sample, Emil Richards, Dean Parks, Ernie Watts, Jim Keltner, and a host of other fine musicians. The album was composed, arranged and conducted by Lalo Schifrin (he composed the themes to Mission Impossible and The Man From UNCLE, music for Cool Hand Luke, Dirty Harry, and other well-known music). Dream Machine is magic. And it is out of print. There are a few albums available from resellers. But the label, Mushroom Records, is out of business and new vinyl, CDs, and electronic versions are not available. This is a great album, which new listeners will not be able to enjoy.

Perhaps Paul Horn and Lalo Schifrin have given their notices of termination to Mushroom Records, or to whoever now owns the rights to that label's assets. If so, perhaps they may be able to reclaim ownership and control of this great music. Of course, there is a question about ownership of the original recording tapes, but these tapes will not have much value without ownership of the underlying copyright. Perhaps one day, the termination right in the Copyright Act will permit the reintroduction of music that has been buried or out of print for too long. But, the period to deliver the notice of termination is short -- five years. Then the termination window slams shut, forever.

Monday, May 14, 2012

When Does The U.S. Government Not Own The Rights To A War Memorial?

The City of Washington perhaps has more memorials, including war memorials, than any other American city. But does the federal government really own the rights in these memorials? The ongoing litigation between sculptor Frank Gaylord and the United States reveals what happens when the U.S. fails to adequately secure the copyright, or at least a perpetual license, in its war memorials.

Frank Gaylord is a prominent sculptor of "The Column," a group of 19 sculptures depicting a platoon of U.S. foot soldiers in the Korean War. "The Column" is the centerpiece in the Korean War Veterans' Memorial on the west end of the National Mall in Washington, DC.

The Korean War was as brutal as World War II. Some sources peg the U.S. war dead in excess of 33,000, plus more than 8,000 MIAs. In honor of the sacrifice and service to the U.S. during the Korean conflict, Congress in 1986 passed legislation putting in process a mechanism to develop a Korean War memorial. The Army Corps of Engineers was responsible for selecting the memorial's design team, Cooper-Lecky Architects of Washington, DC. Frank Gaylord, a well-regarded sculptor, was selected to craft the sculptural works. He began working on this project in 1990. His sculpted soldiers were assembled into the memorial, and depicted on a sunny day as follows:

The memorial was dedicated in July 1995 and has become a favorite venue on the National Mall. In 2002, the U.S. Postal Service elected to issue a stamp to acknowledge the 50th anniversary of the Korean War armistice. The stamp, depicted below, --

-- was financially successful. By 2005, the Postal Service sold nearly 48 million stamps, earning over $17 million. The Postal Service also sold retail goods, including commemorative panels and framed art, bearing the stamp's image.

Frank Gaylord sued the United States in 2006 for copyright infringement. Following trial in the Court of Claims, the Federal Circuit in February 2010 determined that Gaylord was the copyright author of The Column and that the U.S. government was liable for infringement. The case was remanded to establish damages. The first Federal Circuit opinion is located here.

During the damages case, Gaylord sought a 10% royalty on approximately $30.2 million in total revenue earned by the Postal Service in using The Column image. The Postal Service countered that Gaylord should receive at most a nominal amount since the Postal Service would never have entered into a 10% royalty arrangement. The Postal Service further argued that it never agreed previously to license an existing image for more than $5,000. The Court of Claims awarded Gaylord $5,000 for copyright infringement damages.

On appeal for the second time, the Federal Circuit reversed the nominal monetary award. A copy of the second appellate opinion is here. The Federal Circuit criticized the Court of Claims for limiting its analysis of the damage award solely to the Postal Service's position that it would never pay a 10% royalty. On the contrary, the Federal Circuit explained that, in establishing a copyright damages award against the federal government, "the court should not arbitrarily cap this award at $5,000 simply because the Postal Service claims it has never paid more to license a copyright for use on a stamp."
"Defendants cannot insulate themselves from paying for the damages they caused by resting on their past agreements and by creating internal 'policies' that shield them from paying fair market value for what they took."
The Federal Circuit observed that the test for copyright damages is not based on what the infringer would prefer to pay. Indeed, the amount of damages for this present claim of infringement may be unrelated to prior royalty agreements of either of the parties.
"The court should keep in mind that Mr. Gaylord's recovery is not limited to the Postal Service's actual profits. * * * Indeed, the court may find that a hypothetical negotiation between the parties would result in a higher ongoing royalty that the rate earned by Mr. Gaylord or the Postal Service under past agreements."
The Federal Circuit further determined that an award of prejudgment interest on the damages sum was appropriate. "Mr. Gaylord is entitled to prejudgment interest because it is necessary to make his compensation complete." The Federal Circuit vacated the trial court's decision and remanded for a new damages determination.

While it will be interesting to learn how the trial court resets the sum that the Postal Service will be required to pay Gaylord for nonpermitted use of The Column images, a much more fundamental question presents itself. Why must the government ever be required to pay for use of the image of a beloved memorial, particularly when the memorial was undertaken pursuant to federal legislation, involving federal money, located on federal ground, and depicting federal military personnel in U.S. sponsored military action? There is no question that Frank Gaylord's creativity and artistic talents resulted in a magnificent war memorial honoring brave wounded, dead and missing military personnel. But why did the government lawyers and procurement staff not include a perpetual copyright license or, better yet, a copyright release to the federal government for use of The Column?

Monday, May 7, 2012

The Branding Message From Leonard Lauder

The International Trademark Association (INTA) annual meeting is occurring this week in Washington, DC. Providing the key note address this year was Leonard Lauder, Chair Emeritus and son of his company's namesake Estée Lauder. Leonard's company sells such well-known brands as Estée Lauder, Clinique and Aramis, enjoying annual world-wide revenue in excess of $7 billion. The messages provided by Leonard Lauder to the assembled trademark practitioners were profound:
  • Brands stand for a promise between the product and the consumer. Consumers come to know a product by this promise. Does a brand adequately protect this promise?
  • Companies must seek a broad view of what constitutes a brand. A brand is not only a product name, but also product color, design, packaging and a domain. Have all of these brand elements been protected?
  • A company's intellectual property counsel must be involved in licensing and transactional negotiations. This is particularly true in that IP impacts so many aspects of a company's product and brand.
  • The image of a company's product can be key to product success because it is the image that sells.
One element that Leonard did not mention, but that was presented during the course of INTA's educational offerings, is the sobering reality that over 50% of people under 20 years of age look to social media for brand information. As such, and to the above important branding issues addressed by Leonard Lauder, it should be asked whether a company's brand is adequately being developed on-line and in social media.

The Old False Marking Statute Is Dead -- Really, Truly Dead

Prior to the recent amendments to the U.S. Patent Act, it became common for anyone to bring a claim in federal court accusing a manufacturer of mislabeling based on false patent marking. Former section 292 of the Patent Act allowed anyone to sue for up to $500 per item when a patent number was falsely applied to a product, or on advertising for a product. Numerous lawsuits erupted claiming $500 for hundreds of thousands of items bearing false patent numbers. But this is now behind us with the recent patent amendments contained in the America Invents Act. The present section 292 no longer allows anyone to bring a claim for false patent marking. Now, only a plaintiff who suffers a competitive injury caused by the false marking is permitted to sue.

Congress made the amendment retroactive to pending cases, and the retroactive application is made clear in the Federal Circuit's new decision in Rogers v. Tristar Products, dismissing a pending false patent marking claim. In Rogers, the plaintiff sought $500 per falsely marked item but conceded that he was not a competitor to Tristar Products and did not suffer a competitive injury. He argued, nonetheless, that the amendments to section 292 should not be made retroactive because, to do so, constitutes a governmental taking of his litigation rights in violation of the Fifth Amendment. The Federal Circuit quickly disposed of Roger's argument, pointing out that a litigant does not have a vested right in a statutory-based claim until entry of final judgment. Statutory amendments can be made retroactive so as to negatively impact pending litigation. The Federal Circuit observed that Congress had a real good reason to make the section 292 amendments retroactive: to protect companies from having to expend resources to defend themselves from claims that they intentionally sought to harm consumers.
"By making the False Marking Act amendments retroactive, Congress was in significant part attempting to reduce the litigation expenditures in the large number of complaints filed but not yet subject to final judgment. 
* * * 
This was a legitimate justification * * *."
Recalling that the former false marking statute prohibited the fraudulent use of false patent markings, the Federal Circuit's new Rogers decision confirms Congressional elimination of an important tool preventing fraud on consumers.