A Follow up of Sorts to "What is in a name? A lawsuit!"

I mentioned Morton's Pub & Grub in What is in a name? A lawsuit!. Today's Muncie Star Press reports the business is closing.

Another downtown eatery that went public with its struggles to find and keep customers has closed.

Morton’s Pub & Grub will close after July 19, owners Ty and Stacy Morton announced today.

Sometimes the marketplace and not the courtroom is the best defense against another business. In the earlier post, Morton's Steakhouse sent out a letter to protect its trademark. Legal, perhaps even necessary, but one which had (has?) the potential to make Morton's look a bit silly to the general public.

Trademarks and Larry Bird

News from The Indiana Daily Lawyer about a new trademark case out of Indiana. Larry Bird sues over use of name and I am hard put to think of another name in this state and especially in French Lick which lead to this kind of lawsuit.

"Bird filed the suit, Larry Bird v. Legend of French Lick LLC, No. 4:08-CV-0070-DFH-WGH, in the U.S. District Court, Southern District of Indiana, New Albany Division Monday against Georgianna Lincoln and Christopher Cooke, who purchased Bird's childhood home in French Lick from the Larry Joe Bird Revocable Living Trust.

The two marketed the property as a bed and breakfast, promoting the house as, 'Legend of French Lick, the Former Home of Larry Bird Resort.' The two also attempted to purchase memorabilia from Bird and wanted to use his name to identify the house; those requests were denied.

The lawsuit seeks to stop Lincoln and Cooke's unauthorized use of Bird's name in violation of federal trademark laws and state publicity laws. Bird has registered his name as a trademark with the U.S. Patent and Trademark Office, according to the suit. The suit also seeks damages for the improper use of his name and for the impoundment and turnover of certain properties the defendants used improperly."

I wish I had a bit more time to dig into this one. I am a bit surprised that the seller did not impose some limitations on the buyers that might have prevented this suit. Does it seem like such a stretch of the imagination to think the buyer of Larry Bird's childhood home would not try to use the home to make money based on that association? Or that the seller would react in this way? I think not.

Trademarks: Champagne

I suggest reading Produced in Champagne, but What Do You Call It? from The New York Times is not the typical trademarks article. First, it is European although the broader enforcement issues of a trademark remain the same. Second, it involves a treaty rather than a statute, but remember under our federal constitution that treaties are a source of law. Mostly, it does show the power of trademarks.

Startups and Trademarks

Dilution by Blurring's Acquiring a Trademark addresses a subject that needs considering when buying and selling an existing business. The article identifies the following trademark issues as what buyers need to think about before buying a business:

1. "First, business owners should be aware of what marks they are actually buying...."
2. "Second, because trademarks are a bundle of rights similar to real or personal property, the marks may be encumbered by security agreements...."
3. "Third, business owners should be sure to get an assignment of each individual mark from the seller...."

I would make another point even more explicit: when buying a business, hire an attorney who has some knowledge of trademarks.

Trademarks and funeral homes?

See The Trademark Blog's More Skullduggery (yes, there is a pun in there):

"Funeral home dissolves, funeral director may or may not have agreed to not use his name pursuant to a non-compete clause, uses his name with new funeral home, old funeral home uses his name, lawsuit.

Nieberg et al v. Nieberg Midwood Chapel Inc., 08 CV 00392 (SDNY Jan 16 2008)."

I have tried for some time to convince my funeral home client of the need to register their servicemark. Funeral homes rise and fall on the reputation of their names - maybe even more than other businesses. Having registered the servicemark might have just add another layer to the non-competition claim but one that might succeed if the non-compete claim fails.

New Trademark Blog and Declaratory Judgments

What is a declaratory judgment suit? I am glad you asked that question as I found a very good description of declaratory judgment suits in Dilution by Blurring's Declaratory Judgment Actions. Here is the question's answer from the article:

What is a “declaratory judgment”? A declaratory judgment is a judgment from a court that declares the rights of the parties in a dispute.

When would someone file an action for a declaratory judgment? Typically, a person files a declaratory judgment action when another person threatens them with litigation. In the trademark context, if Apple, for example, threatened to sue BlueAir for trademark infringement and BlueAir does not think that they are infringing Apple’s mark, then BlueAir can file a “dec action” in federal court to have the court determine who’s right as they did in this case.

I never get to use declaratory judgments very often but they do have their limits - as noted in the article.

From what I have seen, I like Dilution by Blurring. The blog takes on trademark law in a way that business owners as well as lawyers can understand.

Indiana Trademarks

Yes, trademarks belong to the Federal government but the states also have a trademark system. Federal law limits the state trademark's validity only to the state issuing the trademark. So why file with a state? Because it is there, a sort of completeness along the lines of wearing a belt with suspenders.

Indiana's Secretary of State runs Indiana's trademark registry. The SOS also provides a web page of trademark information:

• Trademark Legislation effective July 1, 2006 NEW!
• Trademark Search
• Download Bulk Trademark Data
• Information about Trademarks

• Trademark Application

• Trademark Renewal Application

• Assignment of Trademark/Service Mark

• Contact: Trademark Deputy - (317) 232-6540

Trademarks and trade secrets - Important for your Business?

From the San Jose Mercury News Dynamic nature of patent law actually has more to do with all kinds of intellectual property for business.

"Paul Goldstein, a Stanford law professor, has written a new book on the subject. Despite its title, 'Intellectual Property' (Portfolio, Penguin Group) is an easy read and a good guide for anyone starting or operating a company involved with patent, trademark and copyright issues. And is there any other kind?"

The article goes onto a Q & A with the author:

Q Your book, "Intellectual Property" is subtitled "The Tough New Realities That Could Make or Break Your Business." What are they?

A The realities center around the volatility of intellectual property law - not just patents, but copyrights, trademarks and trade secrets. An abrupt change in any of these areas of law can make or break your business.

Q By "abrupt change," you mean. . . ?

A An example: In the early 1970s, Kodak looked at the instant photography business that Polaroid monopolized, thanks to its patents. Kodak had expert counsel, relying on existing patent law which imposed a high standard, telling it that these patents were invalid, under existing standards.

So Kodak invested $600 million, relying on these expert opinions. Well, by the time the product came out, the Court of Appeals for the Federal Circuit had lowered the patent standard, and suddenly patents that looked invalid when Kodak made its investment were now valid. Once you count the damages levied against Kodak, their loss was over a billion dollars, just because the legal standard changed.

Q Can a company protect itself against something like that?

A There are cycles of high and low protection for each form of intellectual property. In the book, I identify the dynamics that indicate where on these cycles we are today with each area of law and what companies can expect to happen.

For example, patents were on a huge upswing starting in 1980s through the end of the century. Now the pendulum is swinging in the opposite direction.

Q Where else are we in this cycle?

A Trademark is in a long-term upswing. It has, over a 100-year period, expanded from a narrow remedy aimed at protecting consumers from confusion to a robust property right. Look at the polo player on the Ralph Lauren shirt, or the name Calvin Klein - these names and brands have taken on a value of their own, almost like a product or a song.

That's been a huge expansion of trademark, and there's no sign it's going to slow down.

Copyright, on the other hand, is in a more modest way encountering the same cutbacks as patents, most notably in the courts.

One thesis of the book is that these changes occur because of public sentiment. In 1998 Congress extended the term of copyright by 20 years. It was a move of no great prospective economic consequence. But it served as a lightning rod in this country for people who said this was a greedy move to monopolize the public domain. As a result, you'll find courts today carving out exceptions to copyright to a degree that we've never seen before.

Cookie Leads to Trademark Dispute

A little trademark humor from madisonian.net:

"Pittsburgh-based restaurant icon Eat ‘n Park is in the news with a claim that a New York-based cookie company is infringing Eat ‘n Park’s trademark rights in the smiley cookie. Local broadcaster WTAE posted its story on the dispute on YouTube."

The full article is A Tasty Trademark Dispute.

Small Businesses and Intellectual Property Reading Materials: trademarks and trade secrets

Anyone reading this blog for any time ought to know that I like trademarks and trade secrets. If you have not been here before, click the links next to word label at the end of this article to check out what else I have written on these topics.

Trademarks and trade secrets have as much importance for small businesses as for large. The difference lies in the small business owner may not know of their importance.

The following consists of articles I ran across which do a good job of explaining their importance. Contact me if after reading them, you have an Indiana business, and have more questions.

For a start, Do I Adequately Protect My Intellectual Property? covers the generalities. There are links to related articles at the bottom of the page.

I know I have mentioned the United States Patent and Trademark Office Page for small business. Well, I am mentioning it, again. Just click here.

The USPTO has created this Web site to help small businesses consider the benefits of strong IP protection - both in the United States and overseas - and decide whether it is right for them.

Hamish McRae: Why intellectual property is a vital trade for the English-speaking world:

But the narrow legal issue seems to me much less interesting than the broader one: how in practical terms should creators of intellectual property maximise the return on their investment? You could almost say: how do you make money in a world where all your ideas are liable to be stolen?

Some of the questions asked by Mr. McRae might find answers in Is Trademark the New Copyright? (which may be a bit over the top with its concentration on high tech).

What we’ve seen over the past few years is the rise of trademark as a business model. You create, or have your users create, large amounts of copyrightable content, give the content away for free, often giving up many rights to the work and then leverage your brand name to make money.

Following up on Hershey v. X-IT Activewear, Inc

I reported on this case here. Today, I finally got a look at the Complaint. Hershey caught everyone's attention by its using Indiana's Crime Victim's Statute as a basis for its Complaint. The following is the part of the Complaint utilizing the Crime Victim's Statute:

Count VII: Civil Action under the Indiana Crime Victims Act

69. Hershey incorporates by reference the allegations contained in all previous

paragraphs of this Complaint.

70. Pursuant to the Indiana Crime Victims Act, IC. 34-24-3-I, a person that suffers pecuniary loss as a result of a violation of IC. 35-43 et seq. may bring a civil action against the person who caused the loss for treble damages, costs of the action and reasonable attorneys' fees.

71. Defendants have violated IC. 35-43 by committing the following offenses:

a. "Criminal Mischief' as defined in IC. 35-43-1-2;

b. "Conversion" as defined in IC. 35-43-4-3 and/or

c. "Deception" as defined in IC. 35-43-5-3(a)(6) and (9)

72. Hershey is the victim of Defendants' criminal violations and, as a result of these violations, has suffered actual pecuniary damages.

73. Accordingly, Hershey is entitled to an award of those actual damages as well as statutory treble damages, corrective advertising damages, costs and reasonable attorneys' fees.

For those not knowing these criminal statutes, please let me introduce you to them:

IC 35-43-1-2 Criminal mischief; penalties
(a) A person who:

(1) recklessly, knowingly, or intentionally damages or defaces property of another person without the other person's consent; or
(2) knowingly or intentionally causes another to suffer pecuniary loss by deception or by an expression of intention to injure another person or to damage the property or to impair the rights of another person;
commits criminal mischief....

IC 35-43-4-3 Conversion
(a) A person who knowingly or intentionally exerts unauthorized control over property of another person commits criminal conversion....

IC 35-43-5-3 Deception
(a) A person who:

***

(6) with intent to defraud, misrepresents the identity of the person or another person or the identity or quality of property;

(9) disseminates to the public an advertisement that the person knows is false, misleading, or deceptive, with intent to promote the purchase or sale of property or the acceptance of employment....

This voice in my head keeps repeating that there is a thing line between brilliance and chutzpah. After all, what we would we think of Custer if he had lived through the Little Bighorn? Remember that the basis for the lawsuit is:

12. Hershey is the owner and1or licensee of multiple federally registered trademarks, state registered Irademarks and trademarks protected by common law including, but not limited to, the following (hereinafter, the "ALMOND JOY® Trademarks"): the collection of ALMOND JOY® related trademarks, including the famous "Sometimes you feel like a nut Sometimes you dont" slogan, which together have been used in commerce by Hershey or its affiliate companies and predecessors in interest for decades in connection with ALMOND JOY® brand candy and related products.

***
14. Hershey and its affiliate companies have extensively used and promoted the
LMOND JOY® Trademarks at considerable expense, and Hershey has acquired significant Goodwill and public recognition of such.

15. Authorized products bearing the ALMOND JOY® Trademarks are referred to collectively herein as "Hershey Products."

16. The ALMOND JOY® Trademarks have been used in commerce for many years. are immediate]y recognizable by consumers and are famous marks.

***
20. The ALMOND JOY® Trademarks are distinctive and/or have developed secondary meaning and significance in the minds of the purchasing public. Furthermore, Hershey's Products are recognized by the purchasing public nationwide and are immediately identified by the purchasing public with Hershey, its affiliate companies, and their high quality goods and services.

21. As a result of the goodwill and immediate recognition and as a result of extensive sales and advertising, the ALMOND JOY® Trademarks have become highly valuable.

22. Upon information and belief, Defendants have engaged in the business of
advertising, selling, and distributing certain infringing products including, without limitation, the product included in Exhibit I. attached hereto (the "Infringing Merchandise" and/or "Infringing Products"). Defendants' unauthorized use of the ALMOND JOY® Trademarks is a deliberate effort to trade on their value. Such unauthorized products infringe on Hershey's trademark and other intellectual property rights.

And a T-shirt that says "Sometimes you feel like a slut..sometimes you don't."

I do not see it. I do think that Hershey has stated a pretty good case for a parody but that is not quite what they wanted to do here.

But why did I say this might be brilliance? Because I have never heard of these statutes being applied to intellectual property. Personal property, yes. Applying these statutes to intellectual property is not something I would think of doing but then I do not think application will survive contact with defense counsel.

The Washington Post on Companies Protecting Their Domain Names

Two types need to read Firms Fight Back in Site Name Game, those starting businesses and those businesses who have taken no steps to protect their online image.

"Shielding a company's brand from early or negative exposure has become a business unto itself. On the advice of digital brand-management services and lawyers, many companies register thousands of names to protect themselves. Every time they launch products or services, executives have to worry about shielding their moves online from competitors and protecting themselves from users who might sully their brand."

Domain names are a bit more and a bit less than trademarks. You also need to think about cyber-squatting.

Introducing Indiana's Crime Victim's Statute

Indiana law provides a special remedy for victims of some crimes. This remedy is the Offenses Against Property statute. One can find the statute at IC 34-24-3. This article is a bit of a follow up to my post Trademarks: Hershey Sues in Indiana Over Parody.


As I wrote in that article, I find it difficult to explain what attraction the Crime Victim's Statute has for that case.

As for my list, I complied this for an article I never quite finished on this statute. Which means the chart might have a bit more interest to lawyers than to laypeople. The first column lists the crimes which can be used for a civil suit. The remaining columns show the kind of mental state is required to prove a case. Yes, one must show the defendant acted with criminal intent required under the criminal statute.

As anyone can see, the crimes listed are not ones to truly attract a lot of civil llitigation. Some do not even have a very wide application in Indiana (like unlawful acts relating to caves) and others probably lack the prime requirement for a civil suit: a defendant with money.

My experience with the statute begins and ends with check deception, conversion and criminal mischief. The criminal mischief case involved a defendant splattering a very red paint throughout a very white kitchen. While another statute exists for check deception, this statute has fewer procedural requirements.

With conversion cases, this statute allows for attorney fees where common law conversion does not. The attorney fee provision also lead to the use of the statute with the criminal mischief case. Note that the statute requires payment of reasonable attorney fees. However, the judge or jury decides what is reasonable. In my case, the judge cut off about a thousand dollars of fees without any explanation. I put it down to the vagaries of the judicial mind.

I think that we might see use of this statute as part of a qui tam action (welfare and Medicaid fraud), computer trespass and home improvement fraud. Remember, I already mentioned the need for a defendant with money and I presume any use of this statute requires a fund for a damages award. (For those wondering why I emphasize a defendant with money , a suit for damages means a suit for money). I think anyone will see that the statute's protections are far more limited than one might suppose from its title.

I am sure that I have not provided anyone with a clue about why Hershey chose Indiana and this statute.

Trademarks: Hershey Sues in Indiana Over Parody

Thanks to a bit of bad health, I was not able to write on this until today. Probably my delay turned out well as this case is getting some attention.

First, the following from the Indianapolis Star caught my eye:

Parody leads to Hershey suit in Indy

"Hershey, the largest candy maker in the U.S., has filed suit in Indianapolis, charging a Pennsylvania apparel-maker with infringing on its trademark."

Bloomberg News reports today that the suit against X-it! Activewear Inc. accuses the company of selling counterfeit products and, under Indiana's Crime Victims Act, Hershey is seeking triple damages.

Hershey claimed X-it! made a derogatory parody of Hershey's famous slogan for its Almond Joy candy bar: "Sometimes you feel like a nut! Sometimes you don't!" Hershey was issued a registered trademark for those words in 1990.

Trademark infringement? Okay, I was a bit leery about that but using Indiana's Crime Victim's Statute, too? That definitely raised my eyebrows. Some others have already commented on the trademark issue.

Trademark “crime”? from Likelihood of Confusion nails my initial reaction:

Crime Victims Act — trademark infringement?

I don’t find the concept entirely offensive. Some kinds of counterfeiting, such as raw knockoffs and counterfeits, really are crimes, and should be treated as crimes. Using victim statutes this way could be a fair balance to the tendency of law enforcement to ignore this stuff.

Except that I just do not see how the Crime Victom's Statute (commonly called here the Treble Damages Statute) applies to this kind of case. Take a look at IC 34-24-3-1 and then track down the criminal statutes that serve as the predicate for that statute. I hope that answers the question asked by Your Name Is My Business in the article Pennsylvania Companies Drop Gloves In Indiana (by the way, why is it so hard to post comments on a WordPress blog?). Without something special about Indiana law (which I cannot see), the following comment from Your Name Is My Business makes an even stronger impact:

Hershey is located in, well… Hershey, PA. X’It Activewear is located in Allentown, PA (about an hour and a half apart, if that). The venue seems rather vindictive, doesn’t it?

I will try to track down Hershey's Complaint on Monday. Maybe that will solve these mysteries.

Patents and trademarks

I am not a patent attorney. Before becoming a patent attorney, the person must be an engineer. However, patents and trademarks can overlap the subject of their protection. I suggest reading Erik J. Heels' Patents vs. Trade Secrets for anyone interested in reading up on this overlap. It isa few years old but I notice nothing out of date when I re-read the article last night.

What do I when a client has a patent issue? Anderson has a patent attorney that I will work with.

What is in a name? A lawsuit!

Yes, names make a difference. So learned a Muncie business. Muncie pub gets threat of legal action from steakhouse chain.

A new downtown Muncie eatery has been threatened with legal action by a well-known restaurant chain with a similar name. Attorneys for the Morton's of Chicago steakhouse chain this week sent a letter to Ty Morton, the owner of Morton's Pub and Grub, demanding he change the name of his restaurant, which opened Tuesday.

This is trademark law, pure and simple. Big companies keep an eye out for those businesses with similar names. Generally speaking, the law asks if there is a likelihood of confusion to the public created by the different businesses. One case coming to mind right now is the one between Lexus (yeas, the car) and Lexis (a publisher). No likelihood of confusion there.

Businesses must do this or lose the value of the trademark.

All that said, two things surprise me in this article. First, why did the business owner not consult an attorney before opening the business. One does not need a patent attorney to know something about trademarks. I think I would have advised him that this kind of action was possible even though I think the likelihood of confusion is small.

Second, why did go all the way to Texas for a patent attorney when there is one in Anderson and one in Muncie (or used to be)? I am trying to expand my trademark practice and I am sure there are others locally or within Indiana who are knowledgeable about trademarks.

Update 7/3/08. Morton's Pub & Grub to close:

MUNCIE — Another downtown eatery that went public with its struggles to find and keep customers has closed.

Morton’s Pub & Grub will close after July 19, owners Ty and Stacy Morton announced today.

Ty Morton had told The Star Press a few weeks ago that the restaurant, located in a building at High and Main streets that has been the scene of many failed restaurants, was struggling.

Friday humor: business branding

From Name Wire: The Product Naming Blog comes Company Naming That Is As Funny as It Wants to Be:

There are many company names that are funny without really meaning to be, for example STD Contractors, the WTF Group, or Phag.

Some restaurants also just seem to create unintentionally memorable names, such as the House of Hung or Yuki Sushi. Boring Business Systems is another name that is kind of, you know, boring.

***

On the other hand, Raymond Lawrence has an excellent post up about funny business names that work. Nerds ToGo, Pet Butler, Boneheads and College Hunks Hauling Junk are all on the crazy side but they get the service message across. Brick Kicker gives pizzazz to a home inspection business, and FunBus is a better service offering than "livery service."

I will suggest that some of the poorer business brands may be due to an interaction between the trademark office and the imagination of the business owners.

Restaurants - serious money

I call $1.9 billion serious money. Considering that what it may be used for is even more surprising. Wiggin and Dana's Franchise Law Blog posts a report that this is the asking price for Applebee's. I generally like Applebee's, but it is not a chain I would think would be worth that much money. The Blog's links to the article are dead but here are some more:

• IHOP Buys Applebee?s for $2.1 Billion

• Baby-back ribs, pancakes and a side of real estate

What makes Applebee's valuable is not the pizzaz of its menu but its menu and its real estate. This quote is from the second article:

“The value is in the restaurants and the real estate. You’ve seen this play in Sears-Kmart, Toys R Us and elsewhere. The companies may have problems, but the land they are sitting on still has value and the brand names still have value that can be leveraged,” said one consumer investment banker who declined to be named.

For legal issues, the purchase shows the value of trademarks.

Both the second article and the Blog post remark that IHOP intends to franchise the Applebee's chain. That I find very interesting - if I am understanding IHOP's intentions. Franchising would seem to be a good method to work off some of the debt incurred in the purchase and one that might be a useful tool for similar sales.

More on trademarks

Since I have been commenting on trademarks, I want to give a shout out to The Trademark Blog.

Thinking more about restaurants and intellectual property #1

Does a restaurant need trademarks? Do most businesses need trademarks?

The New York Times' coverage of the Pearl Oyster Bar litigation got me thinking about how its points would apply here. I made some comments within the original post and others have occurred to me since then.

First, I want to be clear that I am not addressing all restaurants. Franchise restaurants have franchisors eager to protect their trademarks and trade secrets. Nor am I addressing those restaurateurs who do want to expend the money to protect their intellectual property. I specifically exclude them on the assumption that they have made the decision that any infringement has not or will not cost them any money. A civil suit requires damages and that will be measured in dollars. No damages means no lawsuit.

I remain convinced that trademarks are the most cost effective intellectual property for any small business. The name must be unique and used in connection with the business. This could include the business' name or items on the menu or both. Trademarking the business' name provides protection against the competitor with the same or a similar name moving into the same area. While bringing menu items under a trademark provides protection from a competitor using your business' success with a menu item for their own purposes. You can see the government's fees for trademarking here.

You have the ultimate decision as to trademark or not. Remember enforcement costs do exist. I suggest thinking of trademarks as a form of insurance. Like all insurance, you need to think about what will be your costs if you do not have the insurance.

4/26/08 update: Follow Up on "Restaurants and intellectual property" about settlement of this case.