1 Advanced Technology Seminar - Intellectual Property Online (Continued) Cyrus Daftary & Todd Krieger February 11, 2013

2 Agenda n Administrative Discussion n Trademarks n Patents n Questions & Answers

3 Administrative Discussion Group Selection

4 Trademarks

5 Trademark: Definition n A trademark is a word, name, symbol, or device used to identify and distinguish the source of goods. n Focus is on consumer protection. n Rights are derived from use in commerce and enhanced by registration. 15 USC 1051

6 Who are Trademarks Designed to Protect? n Trademarks are for consumers’ benefit. n Help distinguish source of goods or services. n Provides consumers a way to ensure consistent quality. n Trademark holder has a right to prevent consumer confusion

7 Trademark Holder’s Other Rights n To prevent the appearance of affiliation, connection, association, or sponsorship. n To prevent misrepresentation of the nature, characteristics, or quality of goods or service. (15 USC 1125 (a))

8 Trademark Fair Use - registration does not confer absolute rights. n TM law seeks to protect consumers, not provide registrant with a monopoly of the English language. n Descriptive terms are not protected unless they acquire secondary meaning. (Park n Fly). (Secondary meaning does not automatically mean dilution). n Parody and commentary is protected by 1st Amendment ( n Comparative advertising in encouraged in the U.S., but not worldwide. n Often restricted to category of goods and services. Malted Barbie

9 Trademarks Online Potential areas of controversy: n Domain names. n Meta-tags and key words. n Brand names mentioned within the site. – Attribution – Bait and switch n Words hidden within the site.

10 Online Definitions n Domain names: – Unique Internet addresses which can be numeric ( ) or alphanumeric ( – Registrars listed at n Top Level Domains : ‘.com,’ ‘.edu,’ ‘.us,’ etc. n Meta tags / Key words: – Meta tags are part of the HTML (hypertext markup language) which is not visible within the web site without viewing the source code. – Used by some search engines to index sites ( AltaVista, HotBot, Infoseek and Webcrawler). AltaVistaHotBotInfoseek Webcrawler) n Other search engines may be sensitive to ‘invisible ink.’ – Key words are search terms that trigger advertising within a search engine.

11 Online Definitions (cont.) n ICANN: Internet Corporation for Assigned Names and Numbers. – Non-profit organization for domain name system management and other related functions. – Took over for government contractors. – Sometimes controversial (but it is hard to keep everyone happy!) n Whois: database of domain name registrants:

12 Hidden text within a site n Meta tag example. – n n Search term example ( n

13 Common Domain Name Disputes: n Cybersquatters n Multiple trademark holders, but one ‘.com’ available. n Generic terms (crew.com) n Misspelling of trademark (yahool.com) n Acronyms (Computer Design Services = CDS.com) n Parody, criticism, and “sucks” sites (peta.com) n Famous names (including fan sites) n Reverse Cybersquatting - corporation that was late sues lawful registrant.

14 Domain Name Controversy n Client owns “club.com” and used it as an server since Recently used for club listings in the New York area. n Winner Holdings PLC, makers of “The Club,” want client to cede ownership. Sends clients a strongly worded , followed by a threatening letter

15 Domain Name Controversy (Cont.)

16 Solution n They acquire “Theclub.com.”

17 New Problem - Ever hear of Club Magazine? n Adult magazine “club” claims that the public associates the term with their magazine:

18 Why Are Domain Names So Significant? n No comprehensive directory of web addresses, so consumers often guess the domain name. n Over 100 million domain names registered - not too many good ones left! (Source: WIPO) n Top level domains, aside from ‘.com’ have not attracted the same degree of prestige or attention. n Domain names have sold for over $1 million. n High profile sales (Greatdomains.com) : – $3,000,000 Loans.com – $1,000,000 Beauty.com – $835,000 forsalebyowner.com.

Business.com Domain name n Sold in 1997 for $150k n Resold in 1999 for $7.5 million n Resold in 2007 for $345 million n Purchaser files for bankruptcy in

20 Many Domain Names are Still Valuable n expensive-domain-names-of

21 Online Trademark Lawsuit Toolbox Causes of Action: n Federal and State Trademark infringement (likelihood of confusion) - same product class. n Federal and State Trademark Dilution - Blurring / Tarnishment - any product class. n State and federal unfair competition. n Federal Anti-cybersquatting statute n ICANN dispute resolution procedure.

22 Anti-Cybersquatting Consumer Protection Act n Remedies: – Potential damages for domain names registered after 11/29/99 (and perhaps prior – Sporty’s). – In rem jurisdiction where domain name is registered. – Domain names of a living person registered for profit and without consent

23 Trademark Cyberpiracy Prevention Anti-cybersquatting Consumer Protection Act n 15 U.S.C. §1125 (d)(1) - A person shall be liable in a civil action by the owner of a mark if… – bad faith intent to profit from the mark and – registers, traffics in, or uses a domain name that: n Identical or confusingly similar to a mark. n Identical, confusingly similar or dilutive of a famous mark… – Damages from $1,000 to $100,000. – S Intellectual Property and Communications Omnibus Reform Act of 1999

24 ICANN Dispute Resolution Policy n Effective for: – Domain name dispute under the primary top level domains (.com,.net,.org.,.edu., etc.). – Jurisdictions and registrars that adopt the ICANN policy. – Including names not in commerce. – Allows ‘in rem’ proceeding. (Porsche 51 F. Supp. 2d 707). – Does not allow suspension of a name during the dispute. – Must prove similarity with trademark; establish that there was no legitimate interest and prove bad faith.

25 Domain Name Dispute Resolution is Unpredictable and Potentially Biased n Approximately 85% of complainants prevail in arbitration (ICANN statistics): – Many do not even respond to the arbitration notice. – Others quickly cede their domain names without a dispute. – Some settle before the parties arbitrate. n Biased toward trademark holders. n Decision can be appealed to a court of competent jurisdiction.

26 ICANN Dispute Resolution (cont.): n Class discussion: Icann website n Compare Pueblo.net to Pueblo.com - should a small grocery chain prevail over the domain name registrants? n What about First Amendment rights - “Walmartsucks.com” - would the results have been different in another forum? Should consumers be able to register ‘sucks’ sites?

27 Trademark Disputes Case discussion n Electronics Boutique v. Zuccarini - Cybersquatter made a significant profit from affiliate advertisements on his site. Court awarded landmark damages. n Zuccarini later landed in jail. – S.151 – Child Abduction Prevention Act - outlaws misleading domain names

College Source Case Discussion n Keywords and the likelihood of confusion 28

29 Search Engine Keywords n Can Google auction ‘Rosetta Stone’ trademarks as keywords? – Rosetta Stone Ltd. v. Google Inc. (Case No. 09cv736, E.D. Va., 8/3/10) Rosetta Stone Ltd. v. Google Inc n Google keyword program:

30 Trademarks: Registration n No registration is required but…. – Federal registration allows you exclusive nationwide use of a name within a product class. – State registration provides additional causes of action against infringers. – Registration provides notice to anyone trying to use the name in the same product class. – For info on registering domain names as TMs -

31 Patent - Scope “Any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof” 35 U.S.C. § 101 n Articles of Manufacture n Machines n Compositions of Matter n Processes n Ideas n Scientific Principals n Methods of doing business n Natural Substances Types of work protected:Not protected:

32 n Patentable subject matter n Novelty n Utility n Non-obviousness n Lots of capital Requirements for a valid patent

33 n U.S. average: >$10,000 – 97% of patents generate less revenue than the cost of filing the patent. n Japan: $14,000 n European Union (8 states): $44,000 – 25% of the cost is for translation fees. n (Costs include legal fees) Filing Patents Can Be Expensive

34 n Early cases held that an algorithm is like a law of nature, which cannot be the subject of a patent. n Later cases recognized patents which contained algorithms. n The State Street algorithm case opened the flood gates for Internet related patents by raising awareness and affirming their validity. n Bilski gutted most of State Street in 2010, but left the door open for the registration of intangible technology beyond the ‘machine or transformation’ test. – “Software, advanced diagnostic medicine techniques, and inventions based on linear programming, data compression, and the manipulation of digital signals.” – Must not be too abstract. Computer related patents are relatively new

35 n Internet related patents went from 433 in 1997 to 3,512 in 1999 and over 5,000 in Some of the obscure patents occasionally threaten to impact online activities. n IBM earned more than $2 billion in patent licensing in n The pace of registration may have slowed with fewer companies playing in the same arena. Companies were on patent registration frenzy

36 n “Method and apparatus for a cryptographically assisted commercial network system designed to facilitate buyer-driven conditional purchase offers.” n In other words: Priceline.com’s business model for reverse auctions. n Is this novel or non-obvious? Patent # 5,794,207

37 n “Information handling system and terminal apparatus therefor. A central computer means in which plural blocks of information are stored at respectively corresponding locations, each of which locations is designated by a predetermined address therein by means of which a block can be selected.” n British Telecom v. Prodigy – hyperlinking. n Dismissed. Other patents claimed to threatened the Internet as we know it (4,873, )

38 n One click shopping (Amazon) n Reverse auctions (Price Line) n Online music sales (Sight Sound) n Internet coupons (Cool Savings) n Online auctions (E-bay) n Video downloading (adult & other sites) n What other patents are dormant but could disrupt e-commerce? Online Patent Disputes

39 n Patent owner who enforces patent rights but doesn’t actually manufacture the patented product (or service). n Some emerged by buying patents during the dot com bust. n Often send an offer for a nuisance level license fee. n Threat of injunction pushed settlement. Patent Trolls

40 Supreme Court Reiterated Injunction Standard for Patent Infringement n Plaintiff must demonstrate: – It has suffered irreparable injury; – Remedies at law are inadequate; – The balance of the hardships weigh in favor of permanent injunction; – Public interest would not be disserved by permanent injunction. eBay vs. MercExchange

41 Online Patents: Next Steps n Technology patent parameters are still evolving. – eBay case gave some justices a forum to complain. n Be aware of patent issues when advising clients to help them: – avoid infringement – protect a novel, unique process n Patent suits can cost millions to defend – even for a weak claim.

42 Questions & Answers