Chances are you have seen rumblings of creative, even (dare I say) funny cease-and-desist letters, particularly those aimed towards trademark or copyright infringement, popping up in the news. You know the ones: an actor playing a town crier pops in on a local brewery to read a cease-and-desist letter in ‘ye olde English; or a popular fast food joint sends a pun-filled letter to a local brewery demanding they cease from using the restaurant’s trademarked image. These kinds of cease-and-desist letters, especially in the copyright and trademark context, are becoming all the more prevalent.

But is this the best way to demand an entity stop infringing on your trademark? As anything goes, such a strategy can have very real pros, and very real cons.

First, a little background into what exactly cease-and-desist letters are, and the purposes they serve. Generally, a cease-and-desist letter is a notice to the entity receiving it that the activity they are participating in may be illegal, or more particularly in the case of copyright and trademark infringement, that their activity infringes. Although a cease-and-desist letter has no immediate legal effect, the entity receiving the letter may not use the excuse that it did not know the sending party believed its behavior was illegal, as the letter put it on notice of its potentially illegal activity. Notably for the sake of copyright and trademark infringement, if the entity persists in its illegal behavior after receiving the letter, such notice may aid in proving intent, willfulness, and bad faith.

Although cease-and-desist letters are often thought of as sternly worded letters from stuffy attorneys, creative and humorous cease-and-desist letters can have real benefits for a company. As alluded to above, creative cease-and-desist letters have received especially beneficial PR as of late. As companies become more and more of an open book in this age of social media and online news, crafting creative ways to assert a company’s legal rights helps show that the company is amiable, fair, and all in all fun. Not to mention, such exposure can turn in to free and hopefully beneficial press.

However, creative cease-and-desist letters must be drafted the right way, as they also carry credible risk. For one, if the creativeness is taken over the top, the recipient of the letter may not take it seriously. Ultimately, cease-and-desist letters are meant to be taken seriously and cause the recipient to stop its infringing action—if the recipient thinks the letter is simply a joke, it may continue on engaging in its infringing behavior. In that same vein, if the humor placed in the letter misses the mark, or muddles the issue, the recipient may have an argument that it was in fact not on notice of its allegedly infringing behavior. Finally, straightforward cease-and-desist letters are often quiet and discrete. By issuing a humorous letter, a company is taking a risk and opening itself up to potential public scrutiny. However, if a company is able to strike that perfect balance between informative and humorous, it is potentially a worthwhile risk to take.

All in all, creative and humorous cease-and-desist letters, if done right, are largely beneficial in the copyright and trademark infringement context. If you decide to send such a letter, make sure to do it right, and of course try to have the wittiest attorney you know write the letter for you (although some say witty attorneys are few and far between).

Earlier this month, the Canadian Intellectual Property Office (“CIPO”) published a new set of Trademark Regulations and announced that amendments to Canada’s trademark laws will go into effect on June 17, 2019.  The CIPO’s website describes the regulatory initiative as “accession to trademark treaties and modernization of Canada’s trademark regime.”  As summarized by the Canadian Trademark Blog, the amendments include:

  • Canada’s accession to the Madrid Protocol;
  • eliminating filing bases and use of a mark as a prerequisite;
  • introducing a requirement of grouping goods and services into Nice classes;
  • introducing a shortened 10 year term for registration and renewal; and
  • introducing new distinctiveness requirements for registration.

The Canadian Trade-marks Act is available here.  The new Trademark Regulations are available here.

Earlier this month, the European Court of Justice ruled that the taste of a food product is not eligible for protection under EU copyright laws.

The ruling by European Union’s highest legal authority, which is binding on all EU member states, came in a lawsuit brought by the Dutch manufacturer of a popular spreadable cheese dip in which the manufacturer accused a rival company of copyright infringement after it began producing a similar product.

The Court explained that to be eligible for copyright protection, the subject matter must be expressed “in a manner which makes it identifiable with sufficient precision and objectivity.”  Unlike works of literature, art, or music, which offer “a precise and objective expression,” a food’s taste “is identified primarily on the basis of subjective sensations and experiences which depend on factors particular to the subject person, such as age, food preferences and consumption habits, as well as on the environment or context in which the food is consumed.”

The Court also noted a lack of any technical means for precisely and objectively identifying the taste of a food product which enables it to be distinguished from other tastes.

The National Labor Relations Board (“NLRB”) is seeking comment through mid-December on its proposed rule establishing a joint employer standard, as set forth in 83 FR 46681.  One of our Fox Rothschild partners, Tami McKnew, submitted the following comment to the NLRB, which speaks to the implications of the joint employer rule on trademark licensors/licensees:

“The proposed rule specifically acknowledges the effects of the 2015 shift in joint employer analysis evident in the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (“Browning-Ferris”). Following the Browning-Ferris decision, franchisors, temporary employment firms, contract employers and others whose businesses necessitate some degree of interaction with and arguable control over non-employed workers found themselves as joint employers, despite decades of precedent otherwise. The effect on such businesses was immediate and profound.

With this proposed rulemaking the NLRB more clearly defines the conditions under which joint employment may be evident, and largely restores the pre-Browning-Ferris analytical framework. This is entirely appropriate, given the decades of business relationships and industries whose very structure incorporated and depended upon the prior established analytical framework. As recognized in the Notice, the proposed rule also reflects the pre-Browning-Ferris well-established and long-standing joint employment analytical framework.

However, that the Notice fails to adequately address, by specific acknowledgement or by example, the concerns of licensors and licensees of intellectual property, in particular patent, trademark or service mark licensors. Owners of such intellectual property rights must police and protect those rights; failure to do so may render such rights unenforceable. In legal jurisprudence, a patent owner’s policing obligations have been whittled down, especially given the elimination of a laches defense in infringement actions, SGA Hygiene Products Aktiebolag v. First Quality Baby Products, 137 S.Ct. 954 (2017), but affirmative action must be undertaken by the licensor to protect against infringement. The policing obligation remains for trademark owners, however. 15 U.S.C. §1064(5)(A).

Patent and trademark owners may license rights to practice patented technology or use trademarks or service marks. Such licenses require the licensee to abide by standards and/or to adhere to particular practices. Certain types of patents, for instance, process or method patents, may dictate an entire process and all the operations required to perform the method or process; the licensee has little or no choice as to the operations governed by the patent license.

Similarly, trademark or service mark licenses may dictate extensive quality control standards, processes and procedures. The most obvious example is the central role that trademark and service mark licensing have in a franchise system. But such licenses are not limited to the franchise industry. A dealer or distributor may sell products bearing the trademarks of one or more licensors; it may service products pursuant to licenses from different licensors; and it may lease products under license from yet a third licensor. The scenario is not unlikely. A tire dealer may be licensed to sell multiple brands; it may be licensed to provide recapping services, as directed in the license, by a different licensor; it may lease products under the service marks of yet a third licensor. Each of the licenses will include mandated procedures and operations over which the dealer has no control.

In each of these cases, control over significant operations in the licensee’s business is dictated by the licensor. Will the efforts of the licensors to police and enforce the licensed rights expose them to the risk of being considered the joint employer of the licensee’s employees whose employment is to perform such operations? And for a licensee who holds licenses from multiple licensors, as in the distribution example above, are multiple licensors potential joint employers? In each situation, the licensor can be said to offer “direct and immediate” control over the licensee’s employees, in that the licensor dictates the operations that form the central part of their employment. The ability of an owner of intellectual property to reap the potential financial benefits of a patent or trademark/service mark is ephemeral at best if enforcing those rights exposes one to the risk of becoming a joint employer of the licensee’s employees. More importantly in the context of the NLRB’s proposed rulemaking, it makes little sense to include such licensors at the bargaining table. Absent specific recognition in the proposed rule of the unique position of intellectual property licensors and licensees, the application of the joint employer analysis is unclear.

I respectfully suggest amending the proposed rule to include language which provides that the status of joint employment is inappropriate based solely on a licensor’s policing or enforcement of its patent, trademark or service mark requirements and standards. Intellectual property owners should not be dissuaded from enforcing their rights to control, police and enforce their patent, trademark or service mark rights.”

Credit: Tami’s comment was originally posted on Fox Rothschild’s Franchise Law Update blog.

 

This post is authored by Fox Rothschild associate Rashanda Bruce.

The National Advertising Division (NAD) announced revisions to its procedures governing advertising industry self-regulation during its Annual Conference on September 24-25. The revisions are in response to recommendations by the ABA Antitrust Section’s Working Group.

NAD is a branch of the Council of Better Business Bureaus (CBBB) responsible for monitoring the truthfulness and accuracy of all media advertising. NAD works to increase and maintain the public’s confidence in advertising by independently examining advertising claims that breach these standards. In addition to its independent review, NAD accepts consumer complaints about misleading advertisements and provides a forum for competitors to resolve advertising disputes.

The most recent revisions relate to NAD’s handling of competitors’ advertising claims that were previously recommended for modification or discontinuation. In the past, when NAD found that an advertising claim was unsubstantiated, it issued a decision recommending discontinuation or modification of the claim. NAD refused to reopen a case if an advertiser later proved its claims and wanted to resume advertisement. Under the new revisions, advertisers who believe they have developed new substantiation for their original advertising claims may now either resume use of the disallowed claim and request that NAD consider the new evidence, or the advertiser may seek NAD’s review of the new evidence prior to resuming the claims.

NAD made additional revisions to its procedures including: (1) identifying who should be contacted about a pending or closed case; (2) increasing the filing fee for challengers who have been National Partners of the Council of Better Business Bureaus for less than one year; (3) amending the construction of the Advertiser’s Statement to remove the option for advertisers to state that they will not comply with NAD’s recommendations; and (4) adding language to the section governing compliance decisions.

Laura Brett, the National Advertising Division Director, said NAD believes “the change balances allowing advertisers to make truthful, substantiated claims with the need for speed and finality in the self-regulatory process for competitive challenges.” Read the full text of revisions here.

This post is authored by Fox Rothschild associate Paul Fling:

Met with widespread support, the Music Modernization Act was signed into law on October 11, 2018. The Music Modernization Act (“MMA”) largely came about as a reaction to music streaming services’ domination of the music consumer market. In fact, streaming services such as Spotify and Pandora have more than doubled in revenue since 2015. As a result, a new system for distributing royalties was sorely needed.

So what does the MMA do? Generally, the MMA will set up a new, and (hopefully) more efficient way of paying mechanical royalties to songwriters when a musical composition is reproduced. Prior to the MMA, no central database or organization existed to facilitate music services filing for and obtaining a mechanical license to use a particular song. Because the growth of streaming services has led to a drastic increase in entities seeking mechanical licenses, the pre-MMA system no longer met the needs of songwriters/owners and streaming services alike. Essentially, services claim it is too difficult to find and pay the correct author for every song, while song owners claim services use such an excuse to avoid paying royalties.

To address these issues the MMA will set up a centralized entity to collect royalties and distribute them to the proper songwriter or owner. This group, for the time being, is called the Mechanical Licensing Collective. To participate in this system, digital services will pay the MLC and receive a blanket license allowing them to use any song without threat of infringement. In turn, the MLC will then seek to find the proper owner of songs that are played and pay those owners in accordance with the volume services have used the owner’s song.

Ultimately, musicians and music consumer services are hoping the MMA succeeds in creating an efficient and fair way of providing mechanical licenses and distributing royalties to the proper owners.

You can read the act in its entirety here.

As I previously blogged about, there is a circuit split as to whether, when a trademark owner/licensor files for bankruptcy, the licensee of the trademark can legally continue use of the mark or whether the trademark owner/licensor can reject its obligations under the licensing agreement and effectively prohibit the licensee’s continued use of the mark.  A case arising from the First Circuit, Mission Product Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC, involves this precise question and has made its way to the United States Supreme Court.

At the end of last week, following the submission of briefs from the parties and others, the Supreme Court decided to grant certiorari in the case.  According to SCOTUS blog, the issue presented is: “Whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s “rejection” of a license agreement—which “constitutes a breach of such contract,” 11 U.S.C. § 365(g)—terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.”

Not surprisingly, the Supreme Court did not provide any reasoning or insight into its decision to grant cert.  Nor did it directly respond to the parties’ positions regarding a recent order in Tempnology’s underlying bankruptcy case, which Tempnology argued (and Mission Product Holdings disagreed) may have a bearing on the Court’s decision to do so.

 

 

Over the past year, including in my blog post last month, we’ve traced the progression of the Coachella/Filmchella lawsuit, which was scheduled for trial earlier this month.  Approximately a week before trial, the parties settled the case and the Court entered a stipulated order as a result.  The order contains a permanent injunction prohibiting the Filmchella defendants from using the Filmchella marks, the Coachella marks, and any confusingly similar marks and requiring them to transfer certain domain names.  Like many trademark cases, this interesting and contested one did not make it to a jury.

The Food & Drug Administration (“FDA”) has published a Consumer Update with a reminder regarding the implementation of the new Nutrition Facts label.  According to the FDA’s Update, at least 10% of food packaging already carries the new label and therefore consumers are, and will be, seeing two different versions of the Nutrition Facts label on the shelf.  As I previously blogged about, the FDA announced in 2016 that there would be changes to the label required for packaged foods starting in 2018.  However, the FDA has extended the deadline to comply until 2020 for manufacturers with $10 million or more in annual food sales and 2021 for manufactures with less than $10 million in annual food sales.

In a nutshell, the FDA’s Update describes the new Nutrition Facts label as reflecting “updated scientific information, including our greater understanding of the links between diet and chronic disease” (e.g. obesity and heart disease) and as being “more realistic about how people eat today.”  The changes that the FDA has highlighted in its Update are provided verbatim below:

1. The new label makes it easier if you or a member of your family is counting calories by putting the calories, the number of servings, and the serving size in larger, bolder type. We thought it was important to better highlight these numbers because nearly 40 percent of American adults are obese, and obesity is associated with heart disease, stroke, certain cancers, and diabetes.

2. FDA is required to base serving sizes on what people actually eat and drink, so serving size requirements have been adjusted to reflect more recent consumption data.  This way, the nutrition information provided for each serving is more realistic. For certain packages that contain more than one serving, you will see nutrition information per serving as well as per package. That means for a pint of ice cream, calories and nutrients are listed for one serving and the whole container.

3. Added sugars are now listed to help you know how much you are consuming. The 2015-2020 Dietary Guidelines for Americans recommends you consume less than 10 percent of calories per day from added sugars. That is because it is difficult to get the nutrients you need for good health while staying within calorie limits if you consume more than 10 percent of your total daily calories from added sugar.

4. Good nutrition means that you are getting the right amount of nutrients for your body to function correctly and to fight chronic diseases like obesity, heart disease, certain cancers, and type II diabetes. The FDA has updated the list of nutrients required on the label to include Vitamin D and Potassium because Americans today do not always get the recommended amounts of these nutrients. Conversely, Vitamins A and C are no longer required, because deficiencies in these vitamins are rare today, but they can be listed by manufacturers voluntarily.

5. The old label lists calories from fats, but the new label does not. The FDA made this change because research shows the type of fat consumed is more important than total fats. For example, monounsaturated and polyunsaturated fats, such as those found in most vegetable oils and nuts, can reduce the risk of developing heart disease when eaten in place of saturated and trans fat.

6. Daily values for nutrients like sodium, dietary fiber, and Vitamin D have been updated and are used to calculate the % Daily Value (DV) that you see on the label. The % DV helps you understand the nutrition information in the context of a daily diet. The footnote at the bottom of the label has changed to better explain the meaning of the % DV.

See FDA Consumer Update, available at https://www.fda.gov/ForConsumers/ConsumerUpdates/ucm620013.htm?utm_campaign=Nutrition%20Facts%20Label%20Reboot%3A%20A%20Tale%20of%20Two%20Labels&utm_medium=email&utm_source=Eloqua.

What does “natural” mean in the context of product advertising?  Consumers see phrases like “natural,” “all natural,” and “100% natural” over and over again in modern marketing.  The trouble is that “natural” may not mean what consumers expect it to mean, thereby opening companies up to claims of false or misleading advertising.

Two recent lawsuits against Pret A Manger, the sandwich company, provide a cogent illustration.  One complaint was filed by two consumers as a class action.  The other was filed by three non-profit organizations (including the Organic Consumers Association) on behalf of their members and the general public.  Both complaints assert that Pret A Manger has deceptively labeled, marketed, and sold certain bread and other baked goods as “Natural Food” when the products contain trace amounts of a chemical biocide.  According to the non-profit plaintiffs, consumers are willing to pay more for “natural” products and consumers expect such products to be free of pesticides.

This isn’t the first time the Organic Consumers Association, the Federal Trade Commission, or others have gone after companies advertising their products as “natural.”  Companies should be mindful when marketing their products using that term, and should be prepared to defend the claim with substantiation if necessary.