by Tony Guo
Companies often undervalue their trademarks. Last June, Forbes asked Brand Finance to crunch numbers to determine how much certain trademarks are worth.
The Google mark was valued at over 44 billion dollars. Microsoft came in second at a little under 43 billion dollars. Walmart, IBM, Vodafone, Bank of America, and General Electric trademarks were each over 30 billion dollars. Apple, Wells Fargo, and AT&T’s trademarks were slightly under 30 billion dollars.
The value of a trademark lies in customer recognition. Customers that have a good experience with a product save the good-will in the trademark. The trademark is an important piece of information for the customer when he or she wants to replicate the same experience. Trademarks like Apple encompass more than one product. A good experience with the Ipod may convince a customer to buy the iphone or the macbook. Strong trademarks can improve or create sales and serve as the best marketing devices.
by Tony Guo
The generic top level domain (gTLD) program allows the creation of new gTLDs in the domain name space. Businesses and organizations interested in having their own dot brand/organization should consider the feasibility of obtaining the gTLD. There may be easier and cheaper alternatives to protecting a brand or trademark.
The application process is lengthy and arduous. Current predictions peg the time from application to ownership between nine and twenty months. But there is reason to believe the application will take longer. No one knows for certain how long a specific application will take. The .XXX gTLD, for example, was proposed in 2000. After facing strong adversity, it was finally approved this year, eleven years later.
The final cost of an application is also an unknown factor. The baseline application cost is 185,000 dollars; however this does not include many of the expenses an applicant faces. The longer the application process takes the greater the expenses. Further, if the gTLD becomes challenged, the costs can easily balloon into millions of dollars. Because this is the first time, it is difficult to predict how much money businesses and organizations will need.
Once an applicant is approved and gains the desired gTLD the applicant must take charge of the internet registry. Applicants can choose to pay someone to run the registry for them. In the large majority of cases, the registry earns more money than operating costs. The .XXX domain is predicted to make two hundred million dollars a year. Most of the money comes from registrants buying the domain name as defensive measures.
Although there is risk in applying, there may be greater risk not applying. The first round of applications begins January 12, 2012 and ends April 12, 2012. There is no set date for the next round of applications. It may be years down the road before businesses or organizations can apply for gTLDs again.
Applications can be objected to for many reasons. Government Advisory Committee (GAC) warnings give an applicant “an indication that the application is seen as potentially sensitive or problematic by one or more governments.” And while a GAC is not a formal warning it is notice to the applicant that the government may object at some stage.
In addition other applicants can make a string contention objection. Although applicants can coexist in the business markets, this does not mean they can coexist in the domain system. String contention is when two or more applicants file an identical or similar gTLD string and the strings create a probability of user confusion.
There are two types of applications, community based and standard. Applications that are community based are given preference. In a community based application the applicants are encouraged to work together. If for some reason they are unable, the gTLD will go to auction. The highest bidder wins the gTLD. Some of the more popular gTLDs are expected to go for millions of dollars if they go to auction.
For community based applications, any member of the specific community may lodge a community objection. In the proposed .bank, any bank may file an objection. Having a closed registry is beneficial for those who do not want to defensively purchase domain names. The cost of defensive purchases (see .XXX for an example) can become very high.
Life as a registry owner is not as glamorous as it first appears. Once an applicant accepts a gTLD they must follow certain guidelines. The registry owner signs a ten year term agreement specifying registry services. It is hard to predict what services should be named because they can evolve in time. Amendment of the services is fairly complex.
Businesses and organizations should carefully weight the costs of obtaining a gTLD with the costs of defensive measures. A well run gTLD can be profitable, but the initial cost creates a difficult barrier.
As the fall 2012 launch date approaches for the new top level domain .XXX, trademark owners should carefully consider whether to use the services of a vendor to “block” others from registering their valuable brands in the adult field domain space. In exchange for the payment of a fee, a vendor may block registration of strings matching the brand owner’s existing trademarks for at least the next 10 years. The period during which brand owners can block registrations runs for 50 days starting September 7th. Certain vendors are taking early orders to place brand owners’ blocking requests.
by Tony Guo
TorrentFreak claims that around 200,000 BitTorrent users are in some stage of lawsuit for illegal downloading. Most infringers are expected to settle for around 2,500 dollars and not risk the 100,000-200,000 dollars fine.
From the TorrentFreak statistics it appears users downloading music are much more likely to be caught than users downloading movies or television episodes. There are a few explanations for this. Music is easier to download (fewer megabytes) and is downloaded more frequently than other forms of entertainment.
Supporters of BitTorrent labeled-infringers claim the person downloading the illegal file is often not the person being taken to court. The most common way this occurs is over an open network. A neighbor or complete stranger logs into an open network without a password and begins downloading. The internet address is traced back to the person paying for the internet service. At this stage the rights’ holder sends a letter to the corresponding address.
While it is unfair to hold innocent users accountable, if the burden of proof shifts to the rights’ holder, the rights’ holder faces the impossible task of proving exactly who downloaded what.
Open networks are the most common defense for labeled-infringers who choose not to settle. They present a difficult issue of proof and have strong community implications.
If everyone used open networks in good faith, then open networks are a great idea to increase community productivity. But in this scenario even one infringer can ruin it for everyone.
The future of Bit-Torrent is connected with the future of open networks. If open networks become popular than the defense “someone was downloading over my internet connection” is stronger. On the other hand, in the extreme case that there are no open networks (or that a reasonable person would not install an open network), the defense becomes obsolete.
Bit-Torrent’s heydays are over; however its popularity may depend on the popularity of open networks. Without open networks, the childlike excuse “I didn’t do it, someone else must have done it but I do not know who” loses validity.
The other option for Bit-Torrent is to evolve into something else. Rights’ owners have largely been turned off by the idea of using Bit-Torrent as a means of reaching an audience. The idea has been explored and rejected numerous times.
The future of Bit-Torrent is linked to the future of open networks and both are dependent on the behavior of individual members of the community.
by Tony Guo
Before I entered law school, I was an avid fan of World of Warcraft or in nerd WoW. I would spend hours roaming the virtual lands with my elite guild. My guild comprised of my business school roommate, a film student suitemate, the guy down the hall, and several people I honestly have never met. We used our New York University education to increase our guild’s influence across the WoW universe. The business school friend was in charge of the guild’s gold. The film friend was in charge of our battle formations. The guy down the hall was, well, the guy down the hall. Eventually we all stopped playing WoW that year. I gained one valuable skill from my WoW experience: the ability to predict the next expansion of a game. In the gaming community, this ability can impress many people. How did I do this? I used TESS.
TESS is short for Trademark Electronic Search System. On Tess, you can search for trademarks by owner. What happens is gaming companies like Blizzard file for expansion trademarks before release. There is substantial danger in releasing the expansion first and then filing for the trademark. Although trademark squatters are not likely to win, they can delay or make the trademark process more expensive.
WoW’s first expansion, Burning Crusade, was released January 16, 2007. Blizzard filed for the Burning Crusade trademark in May 3, 2005. The “published for opposition” date was January 31, 2006.
WoW’s released its second expansion Wrath of the Lich King on November 13, 2008. The Wrath of the Lich King trademarks were filed on July 28, 2007 (there were three trademarks filed). The “published for opposition” date was January 15, 2008.
WoW’s released its most recent expansion Cataclysm on December 7, 2010. Blizzard filed for three Cataclysm trademarks on June 26, 2009. The “published for opposition” date was September 15, 2009.
Many other gaming companies do what Blizzard does: file for a trademark first then release the expansion. Blizzard takes about a year and a half to go from filing date to releasing date. Blizzard’s announcement that there will be a fourth expansion and its July 28, 2011 filing for the trademark Mist of Pandaria have many speculating that Mist of Panadaria will be the new expansion. I predict that Mist of Pandaria will be the fourth expansion of WoW. The time line matches up and predicts an early 2012 release date.
by Tony Guo
In a previous blog we discussed the interaction between “work for hire” and copyright laws. The results of a “work for hire” agreement may have unforeseen consequences for the artist. One of the saddest stories in this genre is Jack Kirby’s.
Jack Kirby helped design the Fantastic Four, Captain America, Thor, Iron Man, X-men, the Hulk, and the Avengers for Marvel Comics. He left Marvel over working conditions. Before leaving he created many of Marvel’s most famous superheroes and villains. He created them however under a “work for hire” agreement. The Federal Court denied Kirby’s heirs of any copyrights to his creation at Marvel. The decision by Judge McMahon was a lengthy one. Within the fifty page commentary was the Court’s ruling that Kirby’s superheroes were indeed covered by a “work for hire” agreement.
Judge McMahon was careful with her words and set the moral issue apart from the legal issue: “Contrary to recent press accounts, this case is not about whether Jack Kirby or Stan Lee is the real ‘creator’ of Marvel characters, or whether Kirby (and other freelance artists who created culturally iconic comic book characters for Marvel and other publishers) were treated ‘fairly’ by companies that grew rich off the fruit of their labor.”
The legal issue was not difficult to understand. The burden of proof rested with the plaintiff (Kirby’s heirs) to prove that the creations were not “work for hire.” Unable to meet this bar, Kirby heirs were out of luck. Had Kirby still been alive, there may have been greater media support and pressure for Marvel to settle.
The real issue is the money Kirby’s estate lost. Assuming a 1 percent royalty on all movie productions the breakdown must be unnerving for Kirby’s estate.
Title Gross Date 1 Percent
X Men: 157,299,717 (USA) (19 November 2000) 1.57 million
X 2: 214,948,780 (USA) (21 September 2003) 2.15 million
X-Men Last Stance: 234,360,014 (USA) (24 September 2006) 2.34 million
X-Men Origins: 179,883,016 (USA) (27 September 2009) 1.80 million
X-Men First Class: 144,210,364 (USA) (24 July screen 2011) 1.44 million
Thor: 437,077,239 (Worldwide) (30 June 2011) 4.37 million
Hulk: 245,284,946 (Worldwide) Most Recent 2.45 million
Incredible Hulk: 263,427,551 (Worldwide) Most Recent 2.63 million
Iron Man: 318,298,180 (USA) (28 September 2008) 3.18 million
Iron Man II: 312,057,433 (USA) (15 August 2010) 3.12 million
Fantastic Four: 330,120,875 (Worldwide) Most Recent 3.30 million
FF Silver Surfer: 131,920,333 (USA) (14 October 2007) 1.32 million
Captain America: 65,058,524 (USA) (24 July screen 2011) .65 million
Avengers: ???,???,???
Counting only recent movies (2000 and later), Kirby’s estate could produce its own Marvel movie (we probably know who the villain would be). The most glaring statistic is that Marvel made five X-men movies. Marvel made two Hulk movies (strange considering that first one was a disaster), two Fantastic Four movies, two Iron Man movies, and it would not be surprising if they produced another Thor or Captain America movie.
With copyright power, Kirby’s estate could limit the “dilution” of his characters. With a new Avengers movie on the docket and the recent flood of superhero movies, we can look forward to future movies such as: X-Men Origins Gambit; X-Men Teenage Times; The Really Incredible Hulk; Fantastic Four Galactic’s Revenge; Loki’s Love Story; and Avengers II featuring Spiderman and Wolverine.
L’Oreal’s Fight Against Ebay, A Sign of Things to Come for Google Adword and the Rosetta Stone Case.
by Tony Guo
The European Court of Justice (ECJ) ruled that if eBay played an “active role” in promoting infringement it could be liable for damages. This decision could influence the Fourth Circuit as it ponders whether the purchase of a trademark as an adword constitutes infringement (the Rosetta Stone case). The ECJ ruled that if eBay intentionally directed users to infringed goods it would be liable for damages. This logic can be extrapolated to the use of Google adword. In Google adword an infringer buys a search term such as Tiffany and redirect searches for this term to its own website. The infringing company would use Tiffany’s famous mark to confuse buyers. The ECJ’s ruling comes as good news for Rosetta Stone.
The rapid expansion of online services has largely outpaced corresponding intellectual protection. Companies like L’Oreal and Rosetta Stone have not stopped fighting. Under L’Oreal’s urging the European Courts are taking a more staunch approach on identifying infringement. European Courts in the past focused on whether the infringer has an “active role.” The Court in the L’Oreal case ruled that an operator infringes “if it was aware of facts or circumstances on the basis of which a diligent economic operator should have realised that the online offers for sale were unlawful and, in the event of it being so aware, failed to act promptly to remove the data concerned from its website or to disable access to them.” The subtle wording is important. Companies like Google and eBay are no longer able to hide under the “I didn’t know” doctrine and now must operate under the “reasonable operator” standard. If the Fourth Circuit uses the “reasonable operator” standard, Google could be in trouble.
L’Oreal was content with the decision and their spokesperson said: “This decision is in line with the position L’Oreal has taken for several years and is applicable in courts throughout the European Union.” More surprising was eBay’s support of the ECJ decision. eBay seemed relieved that some of the vague guidelines were now cleared up. The best result for Rosetta Stone and Goggle may be for the Fourth Circuit to clear up the vague language that surrounds the issue.
by Tony Guo
The goal for many artists is to continue creating. In order to do so, an artist has to sell or license his or her artwork. In a recent post, Copyright Law: Who Owns a Photograph or Piece of Artwork: Work Made for Hire, we discussed work made for hire. If a piece is a work made for hire, it typically means that the employer or the commissioner owns the artwork. The artist trades the rights away at inception for monetary security down the road. In this blog entry we discuss a different type of artist, the artist who sells his or her artwork after it is completed.
In this scenario the artist keeps his or her bundle of rights for the artwork and must try to sell or barter the sticks in the bundle. Selling individual sticks in the bundle (such as limited use licenses) may be difficult because an artist has to understand what each stick means and how selling one stick may affect another. The easiest way for an artist to make a profit is to sell the entire bundle. Imagine a collection of a hundred comics. You could sell each comic on ebay individually. Some comics may sell well (Spiderman Issue 1) while others do not sell at all (Marville Any Issue). The point is that while you may come out a head by selling individually you are still left with comics that did not sell. But the more important factor is you spent a great deal of time selling. Remember you are a comic collector (not a comic seller), you should be spending most of your time discovering comics.
The goal of many artists is to keep creating. If the artist spends too much time selling it hurts the creating aspect. In the worst case the artist becomes a Sell-Out (legal humor). The artist could hire an agent to help him or her sell. But most artist are not profitable enough to pay for an agent (imagine your neighborhood photographer or the local painter). Or the artist could enroll in an online service that sells prints (however profit margins are low). The easiest method may be to sell the entire bundle or the most valuable sticks as quickly as possible and then return to creating new pieces of artwork. The more the artist creates the more the artist will become recognized (a popular theory among artists).
The above assumes that it is a seller’s market. However, in real life artists are nickled and dimed from the true value of their work. The most common way artists are tricked is when a buyer purchases the most valuable stick at a discount. Imagine a buyer telling an artist: “I only want to buy the right to use this image in my book and nothing else. I know that your price for this image is 1,000 dollars but I do not want to buy the entire bundles of rights (I am assuming the buyer is a lawyer). I will give you 50 dollars to use the image. I am not stopping you from selling the image to other parties.” If the artist accepts the offer thinking that he or she can sell another 19 sticks of this type, the artist has made a grave mistake. The mistake is once the first stick is sold the value of the remaining sticks plummet. Imagine bargaining for an image where the artist told you someone was using in a book. There are rare scenarios where the book may make the image famous and more valuable but in many cases the buyer will not want to use an image someone else has used.
Copyright law is tricky. When navigated corrected, it protects artists and their artwork. But artists need to be wary of buyers and publishers who try to entice them into selling the most important rights and leave behind a rotting bundle of sticks.
by Tony Guo
Artists often have stronger copyrights then they know. As soon as a work takes a tangible medium, the artist gains a copyright over the work. It is not difficult for a work to become tangible. When a photographer takes a picture with a digital camera, the work becomes tangible (saved to a memory card) as soon as the picture is taken. There is nothing else the artist has to do to ensure that he or she has copyright; copyrights are elegantly automatic for each photo.
Copyrights can and should be viewed as a bundle of sticks (each stick symbolizing a right). An artist can exchange her entire bundle or certain sticks within the bundle for compensation. This is an important concept because unless the artist knows what each individual stick is, the artist will not know what they are selling away. Are you selling a license stick? Are you selling a one use stick? Or are you selling a multiple use stick? Each stick is different in texture and value. There are many online websites that will sell a photo or picture for you or to you. Although many policies are similar, small differences may become important.
However, if the work is considered a work for hire, the bundle of sticks may not belong to the artist.
Section 101 of the copyright law defines a “work for hire” as a work prepared by an employee within the scope of his or her employment or a work specially ordered or commissioned for use as a contribution to a collective work, as a part of a motion picture or other audiovisual work, as a translation, as a supplementary work, as a compilation, as an instructional text, as a test, as answer material for a test, or as an atlas, if the parties expressly agree in a written instrument signed by them that the work shall be considered a work made for hire. For the purpose of the foregoing sentence, a “supplementary work” is a work prepared for a publication as a secondary adjunct to a work by another author for the purpose of introducing, concluding, illustrating, explaining, revising, commenting upon, or assisting in the use of the other work, such as forewords, afterwords, pictorial illustrations, maps, charts, tables, editorial notes, musical arrangements, answer material for tests, bibliographies, appendixes, and indexes; and an “instructional text” is a literary, pictorial, or graphic work prepared for publication and intended to be used in systematic instructional activities.
Whether a particular piece is a work for hire depends on what the artist and employer agreed to. Work for hire was defined by the Supreme Court in Community for Creative Non-Violence v. Reid (490 U.S. 730 1989).
The first step is to determine whether the work was created by an employee or an independent contractor.
If an employee created the work it will often be considered a work made for hire. In this context employee means an employee as defined by agency law.
If the work was created by an independent contractor and the work was specially ordered or commissioned than it is often a work made for hire. There are two additional requirements. The work must be one of nine possible types listed in the above definition and there must be a written agreement explicitly stating the work is a work made for hire.
If the Court finds the work is a work made for hire this means the employer or person commissioning the work owns the bundle of sticks. In most cases, the Court will determine the owner based on the language of the contract and what can be reasonably implied.
By Tony Guo
As Nightly News and Adrienne Mong report (see here) entire Apple stores can not be counterfeited in China. China is not just counterfeiting pursues and DVDs. The fake store was found courtesy of a blog. The blogger posted several pictures of the store. The store looks like a real Apple store from the trendy sitting areas to what the employees are wearing. But as the blogger notes, the devil is in the details. The store is called “Apple Store” which would be like Facebook going back to being called “the Facebook.” Apple doesn’t refer to itself as a store; it isn’t trendy. The biggest clue that the store is fake is the cheap building materials that are likely safety hazards. However if you never visited a real Apple store you wouldn’t be able to tell this store was fake. And ironically the products might be real (either that or they are so well counterfeited that even a discerning Apple fan could not tell the difference).
The most disturbing thing about this store is that the employees honestly believe they are working for Apple (large egos and hipster attitudes included).
Gavin Law's Blog 