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Patent Wars

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It is difficult to read the business pages without running into a story about patent litigation.  It is, quite frankly, everywhere, and has become a significant element of long-term business strategy for businesses big and small.  We’ve written about this before, of course (in the ever popular post “Are you infringing someone’s social media patent? Probably!”) but given the landscape it is a subject worth returning to in somewhat greater detail. 

So what do I mean by “everywhere”?  Apple and Samsung are engaged in a series of major battles both here and around the world, while Google and Oraclefight it out in California.  I receive news each day listing the newest cases filed around the country, and it is rarely fewer than a dozen on any given morning.  There are publicly traded companies that do nothing other than buy patents and seek license fees.   There are literally thousands of lawyers across America litigating patent disputes at any given moment, and it is rare than a patent case is worth less than seven figures — in fact, litigating a patent case generally costs at least seven figures.

As you might imagine, these cases are not all the same,  and do not follow a “standard” format.  To be ridiculously simplistic about it, there are three different “categories” of cases, and anyone involved in new media needs to understand the substantive differences between them. 

The first type of patent case is the classic one: competitor v. competitor.  For most of American history, this type of action represented the vast majority of all patent disputes.  Kodak sues Polaroid.  Apples sues Samsung.   Historically, companies developed patent portfolios to defend themselves, and often countersued.  In many instances, the action would settle with a complex cross-licensing scheme.  This is the type of case that anyone can (and should) plan for if they enter a market defined by innovation.  You need to determine whether your own innovative activities can help you build a patent portfolio, and you need to determine whether your competitors are doing (or have done) the same.   While the patent system is not exactly transparent, a systematic effort to capture your own innovation and track the efforts of your competitors is simply smart business.

The second type of patent litigation has become quite significant in recent years, and is focused on so-called patent holding companies (or, when being pejorative, “patent trolls”).  These companies either buy patent portfolios.  Their goal: licensing revenue.  Many of these patents were developed by companies that have since gone under, or were purchased from companies that have left a market segment.  These “non-practicing entities” often sue in one of a handful of patent litigation meccas.  For many years, that was the Eastern District of Texas.  More recently, with changes to the patent laws, Delaware and California have become more popular.  The docket sheets are filled with this type of litigation, which rarely goes to trial.  After all, a settlement is the primary goal, rather than having a market impact.  Also in this category are cases brought by companies who suddenly discovery they have random patents in their portfolio that have nothing to do with their current line of business, or Universities looking to monetize some of their patent assets.

Finally, there is litigation spurred on by strange regulatory schemes, such as the ANDA litigationin the pharma space, or litigation brought through the International Trade Commission (which has no ability to award damages, but can exclude imported good from the United States).  These are less relevant in cyberspace, except to the extent that eCommerce platforms are either selling drugs or imported goods.

So what does this mean for all of us? It means that patent litigation is something that must be considered as a risk factor when launching new businesses or product lines.  Do you have competitors that may be developing a patent portfolio?  Have you been developing a patent portfolio?  Were there other companies in the space that have since failed that may have developed patents that could now have found their way into the hands of a licensing organization?  These are things to think about — they shouldn’t stop you, but they should remind you that patents are not just for IBM anymore.

Legally Social: Live!

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A great deal has been going on in the world of social media, ranging from the obvious (the continuing fight over SOPA and PIPA between content providers and the tech community) to the subtle (the Supreme Court’s decision yesterday that GPS tracking devices are 4th Amendment-regulated searches — a ruling that will have interesting implications for geolocation and the privacy policies yet to come).   As part of the Legally Social World Tour, 2012, I will be speaking about many of these issues at the following upcoming events:

1.  I will be moderating the panel on Social Media and Digital Rights tomorrow in Princeton New Jersey.  This event, sponsored by the New Jersey Technology Council, promises to be fascinating, with prominent panelists such as Paul Nolting, Senior Counsel at Verizon Wireless and Stephen J. Schultze, Associate Director, Center for Information Technology Policy, Princeton University.  If you’re in the neighborhood, I highly recommend the event.

2.  I will also be moderating a panel for the second straight year at the McCarthy Institute Symposium on Trademark Law and its Challenges.  Information on the symposium can be found here.  This is one of the best, and most provocative, symposiums on intellectual property law going on today, and features a keynote speech from Professor Thomas McCarthy, the dean of intellectual property law in America.  I will be hosting a panel on “Government and Quasi-Government Efforts to Protect IP,” including the current Chairman of ICANN, Steve Crocker. 

2012 is shaping up to be another dynamic year for social media, intellectual property and the law.  Stay tuned for further developments…

The Future of Social Media: Chose Your Fiction

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My sabbatical from blogging this year was quite busy (unfortunately, vacations from blogging usually result from too much activity, rather than a desire to “get away from it all”).   Specifically, I found myself at three different trials (ranging in subject matter from girl’s dolls to rivet cassettes).  It has been a hectic year, indeed, for IP and advertising attorneys.

But in addition to my normal activities as a lawyer (as though that were not enough!), I have spent my spare time over the past several years writing a novel.  All lawyers, as you may be aware, are required at some point in their career to write a novel.   Or at least threaten to write one.   To the relief of my family, mine is done (it is called The Secret Root, and trust me, you’ll be hearing all about it later on….)

But in any event, in the course of writing this novel I have been forced to act like a futurist, imagining what the world would be like 25 years from now, and then 25 years after that.  How would our interactions be sculpted by social media in the years to come.  Would Facebook (now with a $100 billion valuation) still be a player 25 years from now?  What about Google, or Twitter or any number of other significant brands that shape our world today?  How would we live our lives?

Recent books have tried to tackle this subject with a variety of different conclusions.  The acclaimed Super Sad True Love Story imagines a media saturated world where the lowest common denominator renders us helpless, pathetic wretches in thrall to pointless and worthless technology.  Neal Stephenson’s bestseller REAMDEsuggests that the videogames of today will morph into the new economy of tomorrow — that world-building for fun and world-building for profit are largely the same, and that as our ability to interact with electronic worlds improves we will begin to substitute our “real” life for a simulation.  Other works imagine transhumanism, dystopia and crime.

But while speculation is fun, it is also important.  The rules we set today will inevitably shape the technologies we get 20 years from now, and the attitudes we adopt will direct our actions.   It really will matter whether Protect IP and/or the Stop Online Piracy Act are passed into law — whether you support them or not.  It really will matter whether cybercrimecontinues to be a focus of law enforcement.  Will geolocation and couponing and rebates and environmental marketing all merge into some amorphous repository of your personally identifiable information?

Actually, my suspicion is exactly that — as advertising becomes more sophisticated, and consumer marketing is fed more data, more and more things will be free in exchange for data about you.  More and more marketing practices will be focused on customization and personalization, and more of that will be tied to your online persona.  While we have a few years before you live your life as an avatar, you only need look at how 12 year-0lds communicate today to realize that in-person interaction is diminishing rapidly as an attractive choice for the next generation.   As massive as Facebook may be today, the potential for synthetic currencies (the logical end-point for Facebook Credits and Linden Dollars, and other “payment systems” that are simply stalking horses for “real money”) and synthetic identities bodes well for the future of social media — even if it will also make it a far more slippery place.

When I look back at where technology was in the early 1990s, and how far it has come in the two short decades that have intervened, I cannot help but think that we are grossly underestimating how much we have changed, and how much we will change once again.  Like the hipster narrator of an LCD Soundsystem song, we were there when things began to change, but we will soon be left behind by “the kids” and things that we cannot even imagine today.

Trademarks and Social Media (Pt. 2)

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Earlier this week, I talked a bit about trademarks and how they work.  Today, however, I’d like to discuss the real way they work on social media platforms. 

The answer: very, very well.

In fact, they work almost too well.  You see, trademarks are all about control.  They are about ensuring that everyone knows exactly who is standing behind a good or a service, and if you lose control of your trademark, it will cease to mean anything.  If your trademark ceases to mean anything, then it ceases to be a trademark. 

But social media only works if you give up a degree of control.  In the pre-Internet world, if you were to see someone using your trademark without permission, you would immediately send them a demand letter and (if they ignored you) sue them.  Today, the calculus is a bit more complicated.  First, your demand letter may very well end up posted online, and you may well be subject to public mockery.  Second, depending on what exactly is being done with your mark, stepping in may do more to harm your brand than to help it.  You miss out on the viral power of social media and the insidious ways that it can burrow into the tastes of the public.

So, how can you tell when a social media use should be stopped, and when it should be ignored?  Of course, there is no bright line rule (the facts can always have an impact on whether taking action is justified) but there are some rules of thumb that are worth keeping in mind as you watch third parties use your trademark on Facebook, or some other powerful media platform that didn’t even exist a few years ago.

(1)  Is someone pretending to be you.  This is obviously the most serious type of online trademark infringement, and should almost always be addressed aggressively.  In a wired world, the amount of damage a rogue actor pretending to be you can accomplish in a few short days cannot be overstated.

(2) Is someone pretending to be affiliated with you?  This is a bit more subtle.  Are they really trying to imply association, or are they simply big fans?  Are there ways to work with them to alter their positioning so that it is clear that while they like you, they aren’t actually you?  If someone is trying to get a free ride off of your good will for their own commercial purposes, or saying things that are either wrong or troubling, that can be a serious problem, but you have to calculate whether you are benefiting too. 

(3) Is someone counterfeiting your products?  This falls into the same category as (1).  This can cause real harm, and should be stopped.  Few people would even consider this controversial, as it is very much in the spirit of consumer protection. 

(4) Is someone trying to direct traffic to themselves using your name?  This is, again, a bit more complicated.  Much of what is considered “domain name infringement” or “cybersquatting” falls here.  Some of this can be quite nefarious, and in fact is redirecting traffic that should honestly be yours.  That is something that is best addressed on a case by case basis, but shouldn’t be ignored.  It can also arise in the context of keyword advertising purchases — someone buys your trademark as a search term and tries to get consumers to visit their site instead of yours.  This issue is still being actively litigated, but while many of the cases seem to imply that keyword buys are perfectly legitimate in a great many contexts, there are still scenarios that may present issues and are worthy of discussion with counsel.

(5) Is someone trying to talk about you?  This is, without a doubt, the most common “trademark” issue on social media platforms.  The whole point of brand participation in social media is to inspire conversation.  But not all conversation is positive.  Some of it may be wrong, or harsh, or filled with annoying comparisons.  But that is often the price of admission.  And many of these uses are “fair” uses privileged under either the Lanham Act or the First Amendment.  Being seen as an online bully can often be worse than whatever is being said about you, and trying to make tenuous trademark arguments to stop it can often backfire.  Meeting bad speech with more speech is often a better solution in this context.

So in other words, the basic approach to trademark use on social media platforms is “think before you do anything you may later regret” but don’t necessarily let that stop you from protecting your rights where it is appropriate.  The same laws apply online — the only real change is that everyone now has a megaphone, including your consumers.  Remember that, and everything will work out in the end.

Promotion Marketing Association Law Conference – Live Tweeting

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As interesting things arise during this year’s PMA Marketing Law Conference in Chicago (held today and tomorrow) I will try to jump in with some live tweets at @legallysocial.  Also check out the hashtag #pmalaw11.  This is the key conference covering issues of promotion law, sweepstakes, contests and other marketing practices (online and offline).   Privacy, virtual currency, geolocation, coupons, sweepstakes, gaming — you name it.  So stay tuned!

Trademarks and Social Media (Pt. 1)

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Each year I attend the enormous International Trademark Association Annual Meeting, this past year held in rainy San Francisco.  INTA (as it is popularly known) has grown from having  a few hundred attendees roasting marshmallows around a fire in the 1970s (then it was known as the USTA), to housing more that 9000 lawyers today in every hotel within a mile of the Moscone Center.  This coming year, it will be in D.C., which will be swarming with even more lawyers than is typical on a beautiful spring day in our capitol city.

As different as they may be (and they come from all over the world, from countries both significant and profoundly obscure) many of these lawyers share an important characteristic: they are disturbed by social media and what it means for branding.  In this, they are no different than many of our clients, most marketers, and just about anyone who bothers to think about these things.

Now this is all something that we have mentioned before, but it is worth discussing again because the problems continue to grow more complex and more distressing, and the opportunities grow more vivid and more intricate.

It used to be that trademark use took place by you, and only you.  If someone else used your trademark it was not only a bad thing, but it could be devastating for your brand and the viability of your trademark.  Heck, even licensing your trademark wasn’t permitted in the early days of modern trademark law.  Today, however, while trademark owners still must guard against their mark becoming generic and unprotectible, marketing consultants will now badger you and claim that you actually wantyour brand to be the subject of third-party use on the web.  According to just about everyone, you should allow your trademark to be used by others, every day, all over these fine intertubes.  And most importantly, the use of trademarks in social media is uncontrolled, often confusing, and subject to laws that were first developed in a time when the founder of IBM still (allegedly) believed that “there is a world market for maybe five computers.”  What is a poor, besieged trademark owner to do?

Thankfully, however, all of the panic over trademark use on the Internet and through social media channels is to a certain extent undeserved.  While trademark law has not exactly caught up to the complexities of a modern networked world, trademark law is in the end about confusion, and confusion is an idea that easily translates across any media platform.

The first thing to understand is that trademarks (unlike copyrights and patents) are not property.  No, really, it’s true.  Instead, they are consumer protection devices, intended to protect the public.  Obviously, as the years have gone by and guild marks have slowly mutated into a crazy quilt of unconventional trademarks, it can often seem like they are no different than any other asset.  But in fact, they are fragile things that can easily become generic if too popular, or abandoned if not used assiduously, or damaged if not used consistently. 

What all of this means is that simply because someone else is using the same word that you have been using to identify yourself does not necessarily mean that they are “infringing” anything.  You can have “Jones” as the trademark for industrial screws, and “Jones” as a trademark for women’s clothing, all at the same time.  That said, some trademarks are so famous that they can seemingly occupy the field — try calling your new car brand “Coca-Cola” and see what happens.

In other words, all of these things are subject to the equities of a given situation, and multi-part tests weighing the strength of the mark, the similarity of the goods, and a whole host of other elements are used to determine whether a likelihood of confusion exists.  And that is the case whether or not you are online, or not.

But while confusion is the same irrespective of whether you are selling hamburgers or bytes, the web has changed one thing fairly dramatically — it has virtually eliminated geographic isolation.  When I first started practicing, the idea that a trademark use could be limited to, say, New Jersey was taken for granted.  Local businesses were genuinely local, and if someone else used the same trademark in Arizona they would likely never run into each other or create any chance of confusion.  Today, a search engine doesn’t care where you are, and it may pull up results right next door or across the globe.  For that reason, while trademark infringement is arguably the same as it has always been, the trademark clearance process has become even more of an art.  How much is enough, and what types of things are neessary in order to feel comfortable with the choice of a trademark?  And on the other side of it, how concerned should you be if another party adopts a trademark similar to yours in another part of the country, or even the world?

So while general panic is not warranted, even as these complexities grow ever more entangled with each passing step into the cloud, it is important to realizse that trademarks are a central part of your identity online — in many cases the only one — and attention must be paid to these issues from the very start.

More to come on how this specifically matters in the world of social media — and whether that is different from online use more generally.

New Rules For Kid Privacy From the FTC

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The FTC is seeking comments on its new (just released!) revisions to their rules for administering the Children’s Online Privacy Protection Act (COPPA).   The current Rule has been in place since 2005, and a few things have transpired online in the meantime (things like geolocation, the rise of social media, and a host of other things now too pervasive even to warrant a mention).  This most recent review began in 2010, and is genuinely a big deal for any industry that either deals with kids under the age of 13, or specifically does not want to deal with kids under the age of 13.  In other words, pretty much anyone doing anything online.

The big changesinclude definitions that take geolocation and tracking cookies into account, new parental notice mechanisms (a long-needed change), and increased oversight of safe harbor programs. 

Obviously, the comment periodwill bear watching (comments are due by November 28, 2011), and we will all look closely as the Rule comes into being sometime in the next few months.  Privacy on the Internet is always a major concern for adults, but regulator focus on children’s privacy cannot be overstated.

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