Last month, Russia formally adopted multiple online copyright enforcement reforms to its Anti-Piracy Laws (Federal Law No. 364-FZ; “Reforms”). Including in these Reforms were streamlined Internet Service Provider (ISP) injunction procedures, the establishment of a digital fingerprinting system to allow for the online identification of copyright protected works, and the establishment of Russia’s first statutory notice and takedown procedures—allowing qualifying persons or entities who have rights to copyright-protected work(s) (collectively, “Rights Holders”) the ability to extrajudicially petition Russian-based website owners, and eventually their ISPs, to remove infringing hosted content.
On its face, Russia’s new notice and takedown procedures provide qualifying Rights Holders a highly needed extrajudicial enforcement tool to fight online copyright infringement in one of the world’s most infringing online markets. In April 2015, Russia was listed on the Office of the U.S. Trade Representative’s (USTR) Priority Watch List in the USTR’s 2015 Special 301 Report, identifying countries who do not provide adequate protection for intellectual property. The 2015 301 Report cited Russia for having “persistent” online copyright piracy problems, as well as being the home of several piracy websites that “damage both the market for legitimate content in Russia as well as in other countries.”
While Russia’s new notice and takedown procedures in many ways mirror similar procedures in other jurisdictions, there are some important differences Rights Holders should be aware of concerning the new procedures. To understand these differences, it is important to first look at the actual notification procedures.
Procedures: Based on an unofficial translation of the Reforms, a Rights Holder must provide the operator of an infringing Russian-based website notification of an alleged infringement including:
- Name of the legal owner or authorized agent of the copyright protected work(s), including their location, address, passport information, telephone number, fax number, and email address;
- If an authorized agent, provide an attestation as to his or her representation of the owner(s) of the copyright-protected work(s);
- Identification of the copyright protected work(s);
- Identification of the domain name(s), network address(es), and other identifying information of the infringing website in question;
- Consent to use personal information included in the notification; and
- The Rights Holder’s claim that the copyright-protected work(s) and being used on the identified website(s) without the owner’s of the work(s) permission or any valid legal grounds.
Within 24 hours of receipt of a Rights Holder’s notification, the website’s operator will need to either:
- Request additional information from the Rights Holder concerning their notification;
- Remove the allegedly infringing content; or
- Provide proof that the website operator is authorized to use the allegedly infringing content.
If the website operator does not restrict access to the allegedly infringing content within 24 hours after receiving the Rights Holder’s notice, the website’s ISP will have three days to block access to that website. If the ISP restricts access to the website in question, the ISP must notify Russia’s telecommunication agency (Federal Service for Supervision in the Sphere of Telecom, Information Technologies and Mass Communications (Roskomnadzor)) of the incident, and such data will be placed in a infringement registry.
Ok, now that we know the procedures, what are the main takeaway points?
Additional Steps May Be Needed: Unlike most national notice and takedown procedure systems, notices under Reforms are to be sent to website operators prior to sending to the website’s ISP. While a website operators and ISP can often be one and the same, e.g. Facebook or Google, Russia’s notice and takedown procedures may require submitting an additional notice to an ISP if a website operator fails to remove infringing content identified by a Rights Holder in a notice under the procedures.
Qualifying Content: Prior to passage of the Reforms, the Anti-Piracy Laws only covered “movies, including movies, TV films”, thereby excluding many other works normally qualifying for copyright protection in Russia and other countries. The Reforms expands qualifying works to “objects of copyright and (or) related rights (except photographic works and works obtained by processes similar to photography.” While these changes expand protection under the Anti-Piracy Laws beyond solely movies to songs, written works and other normally copyright-protected works, it expressly excludes “photographic works.” Excluding photographic works from protection under the new notice and takedown procedures means Rights Holders of such works would need to seek a judicial order to remove infringe content hosted by a Russian-based website, subjecting such Rights Holders to potentially substantial enforcement delays and costs.
Prosecution Requirements: Like the U.S., Russia does not require prosecution (registration) of copyright-protected works in order to utilize the Anti-Piracy Laws’ new notice and takedown procedures.
Country-Specific Restrictions: Although not identified in the Reforms, notifications sent through the Anti-Piracy Laws’ new notice and takedown procedures will likely need to be sent in Russian. Further, to ensure compliance, foreign Rights Holders will likely need to work with qualified Russian counsel to effectively utilize the new notice and takedown procedures. This can have additional costs and time delays for foreign Rights Holders.
What’s The Takeaway? Absent prior statutory provisions, the Reforms’ notice and takedown procedures do provide Rights Holders greater means to protect their works online in Russia. However, due to limitations on qualifying works, and additional and country-specific procedures beyond similar notice and takedown procedures in other countries, it remains to be seen whether Russia’s statutory notice and takedown procedures will become an effective extrajudicial enforcement tool against cross-border online copyright infringement.
I am happy to announce that I have the honor of publishing an opinion article in the European Intellectual Property Review (EIPR) to be released this month. Titled “Improvement over the Rest or More of the Same? Australia’s Proposed Extraterritorial Online Copyright Injunctive Reforms,” the article examines Australia’s recently-implemented copyright injunctive reforms that will allow a rights holder to obtain an injunction against a foreign-based website, and evaluates the reforms in relation to its foreign counterparts in the United States and Europe.
In recent weeks, there have been a number of U.S. trademark lawsuits reported in the news that have driven home the true costs of infringing well-known international brands. In one case, German footwear and sportswear behemoth Adidas filed a U.S. federal trademark infringement lawsuit against fashion designer Marc Jacobs (Case No. 3:15-cv-00582) for infringing its internationally renowned three-stripe branding. Particularly, Adidas claimed that Marc Jacobs’ MARC fashion collection line from Autumn/Winter 2014 included a four-stripe design on several pieces of clothing that infringed a number of Adidas’ registered three-stripe designs (U.S. Reg. Nos. 3,029,127, 3,087,329, and 2,278,591 and others).
It was also reported that California winemaker Joseph Phelps Vineyards (JPV) filed a U.S. federal trademark infringement lawsuit against international wine and spirit conglomerate Moët Hennessy (Case No. 2:15-cv-02803) for infringing its established sparkling wine brand DÉLICE, a registered U.S. federal trademark for wines in international class 033 (U.S. Reg. No. 1447846). JPV’s lawsuit followed Moet’s prior attempts to cancel JPV’s DÉLICE registration in a USPTO Trademark Trial and Appeal Board Proceeding (Proceeding No. 92061085), and Moët Hennessy’s launch of a sparkling wine product under the same name.
While neither of these trademark cases raise any unique cross-border IP protection issues, they do show the damaging and often unintended consequences of infringing well-established international brands. Beyond liability and associated costs arising from such lawsuits, the news reporting of these cases have arguably damaged public perceptions towards Marc Jacobs and Moët Hennessy’s goods and services. News reports of Adidas’ lawsuit not only lumped Marc Jacobs together with other “copycat” fashion designs in recent disputes, they also highlighted the fact that Marc Jacobs’ MARC fashion line was being discontinued. Similarly damaging, news reports of JPV’s lawsuit included JPV’s claims that Moët Hennessy’s acts in relation to JPV and its DÉLICE brand were “malicious,” due to Moët Hennessy’s attempts to cancel JPV’s DÉLICE U.S. trademark registration, while subsequently launching a competing wine product under the exact same name.
The damage of Marc Jacobs and Moët Hennessy’s alleged acts go well beyond trademark liability as they directly impact public perceptions towards these companies and their goods and services. News reports on the Adidas lawsuit highlighted Marc Jacobs’s business failings with its MARC line. More damaging is that such reporting also appeared to characterize Marc Jacobs’ alleged acts as copycatting, and thus unoriginal, a label no fashion designer or creative business would want. Similarly, reporting Moët Hennessy’s acts towards JPV as being maliciously aggressive portrays Moët Hennessy as being a senseless multinational business who will stop at nothing to obtain its desired results. This not only portrays Moët Hennessy as a bully, it also paints them as being similarly unoriginal. In both cases, negative reporting of such companies’ alleged acts arguably have done more damage to their business than any single trademark infringement lawsuit could ever do.
What’s The Takeaway? If there is one thing that can be taken away from these cautionary tales is that businesses need to ensure the brands they select and develop, both at home and abroad, are original. Doing so is needed not just to avoid trademark liability, but to more importantly protect their valuable public perception. Taking precautionary measures in selecting and utilizing a brand can help to ensure businesses not only reduce their trademark liability, but effectively protect positive public perceptions towards their goods and services.
For those that will be around Seattle this Friday, March 27th, I will be speaking at the Seattle Angels Meetup Group’s Pitch & Demo Night on IP protection for start-ups and entrepreneurs. It will be from 4:00-7:00 P.M at the Good Bar in Pioneer Square. Regardless of your interest in IP, it should be a good networking event for entrepreneurs or anyone working at a start-up.
Hope to see you there!
For those interested in U.S. and Canadian IP protection issues, I will be giving a presentation at the April 2, 2015 King County Bar Association (KCBA) – Intellectual Property Section meeting in Seattle, Washington on U.S. and Canadian cross-border IP protection issues. Particularly, the presentation will cover IP protection issues that U.S. businesses should consider as they expand into Canada, and conversely, IP issues Canadian businesses should consider as they enter the U.S. market.
The April 2nd KCBA IP Section meeting will be held at KCBA’s headquarters at 1200 Fifth Avenue, Suite 700, Seattle, Washington 98101. A webcast of the meeting will be made available to KCBA IP Section members. Further details on the webcast are available here.
Hope you can make it!
For those who did not have a chance to attend my January 20, 2015 presentation Online Copyright and Trademark Enforcement in the U.S. and Abroad, the Washington State Bar Association International Practice Section’s Blog, The Global Gavel, has provided a summary of my presentation. It overviews the main issues discussed and key takeaway points. Those with further questions should feel free to contact me.
A link to the presentation summary can found here.
The United Kingdom Intellectual Property Office (UK IPO) released a report today providing a comprehensive and insightful breakdown of online copyright enforcement regimes in multiple countries. Titled International Comparison of Approaches to Online Copyright Infringement, the report evaluates online enforcement regimes in many of the world’s major markets including Brazil, Canada, France, Italy, The Netherlands, South Korea, Spain, the U.K., and the U.S. Beyond providing in-depth details and statistics on each country’s online enforcement procedures that international IP policy nerds like myself find interesting, the report highlights how each country’s enforcement regimes have dealt with the proliferation of broadband Internet and various online media services. It is also a good primer for practitioners to understand online copyright enforcement procedures across borders. Give it a read!
The New York Times and other news outlets reported last week that The Hershey Company, the global confectionary behemoth, settled its U.S. federal trademark lawsuit against leading U.S. importer of British confectionery products, LBB Imports, LLC (Case 1:14-cv-01655-JEJ), who had allegedly infringed Hershey’s own trademark-protected brands, as well as those it has exclusively licensed, through LBB’s unauthorized importation of popular UK brands and UK versions of existing U.S. brands including CADBURY DAIRY MILK, CARAMELLO, TOFFEE CRISP, YORKIE, MALTESERS, ROLO and KIT KAT.
Although these news reports have largely focused on U.S. consumer dissatisfaction over inaccessibility of these UK chocolate varieties as a result of the settlement, this case also underscores the important role trademark licensees have in the cross-border enforcement of their licensed trademarks. Hershey attested in their complaint that it has produced and promoted Cadbury’s brands in the U.S. for over 25 years, and that it is Cadbury’s exclusive U.S. licensee of several of its U.S. registered trademarks including Cadbury’s logo (U.S. Reg. No. 1,107,458) and its DAIRY MILK brand (U.S. Reg. Nos. 1,403,327, 4,224,494 and 1,460,259) (collectively, the Cadbury Marks).
While it is unclear what contractual obligations Hershey had with Cadbury concerning enforcement of the Cadbury Marks in the U.S., in regards to infringing imports or otherwise, Hershey likely had substantial legal and business incentives to enforce the Cadbury Marks against LBB. Often, foreign distributors, manufacturers, and promoters have licensed rights, and in many cases, contractual obligations, to enforce rights in their licensed trademarks including preventing the importation of infringing goods and parallel importation shipments (aka grey goods). Beyond legal obligations, licensees like Hershey have financial incentives to enforce their licensed trademarks rights as it is often necessary to protect business opportunities, as well as relationships, that accompany cross-border licensing arrangements.
As these licensed rights and obligations have substantial legal and business implications, it is important for licensing businesses to know and understand such rights and obligations, and develop enforcement strategies based on the same. So how do licensees do this? Well, here are a few things licensees should consider:
Evaluate and Understand Contractual Rights and Obligations. The first and most important thing a licensee should do when entering a cross-border licensing arrangement and considering enforcement measures based on that arrangement is to evaluate and understand their rights and obligations of enforcement. This requires that a licensee read and evaluate whatever agreement(s) acknowledge their licensing arrangement to identify such rights and obligations. Such rights and obligations may be detailed in a stand-alone trademark licensing agreement, they may be included in a more comprehensive distribution or service agreement, or they may be covered multiple agreements.
Regardless of what type of agreement(s) such rights and obligations are acknowledged, licensees need to identify three things:
(1) their rights to enforce rights in licensed mark(s);
(2) their obligations to enforce rights in licensed mark(s); and
(3) the extent and territoriality of such rights and obligations.
Licensed rights include a licensee’s optional ability to enforce rights in licensed mark(s), while obligations are a licensee’s contractual duty to enforce rights such mark(s). The extent and territoriality of such rights and obligations is particular important in cross-border IP protection as it is needed for a licensee to establish both the subject and geographic scope of their rights and obligations. In Hershey’s case, being Cadbury’s exclusive U.S. licensee of the Cadbury Marks likely gave Hershey rights and obligations of enforcement for such Marks in the U.S. However, Hershey was likely not given rights of enforcement for all Cadbury brands, nor rights of enforcement for the Cadbury Marks outside the U.S. as Hershey is identified as having only licensed certain Cadbury brand lines, and only in the U.S.
In any instance, a licensee needs to know their licensed rights and obligations, as well as its scope and territoriality.
Develop Tailored Strategies to Fulfill Licensing Obligations. Once particular licensed enforcement rights and obligations are identified, a licensee must evaluate what such obligations mean for their business. If a licensee is obligated to enforce rights in licensed mark(s) under their particular licensing arrangement, they may be required to monitor use of the marks in commerce, register (aka prosecute) the marks with national trademark authorities, record trademark registration(s) with national customs agencies to monitor and detain infringing imports, and/or conduct litigation enforcement.
In Hershey’s case, Cadbury had already registered the Cadbury Marks with the U.S. Patent and Trademark Office, and it remains unclear what Hershey’s obligations were under their licensing agreement(s) with Cadbury to record such registrations, monitor commercial use of the Marks, or even litigate their rights against potential infringers such as LBB. However, if Hershey’s did have monitoring and enforcement obligations in their licensing agreement(s) with Cadbury, their lawsuit against LBB would likely have been fulfilling these obligations as Hershey went after an allegedly unauthorized importer of Cadbury’s brands in the U.S., which it would have not otherwise known without attaining monitoring services and potentially other enforcement measures.
In short, licensees, like Hershey, have to find ways to fulfill their licensing obligations that are tailored to their particular obligations and business. As such, licensees should establish a budget to conduct such enforcement services, and consider retaining qualified counsel to ensure effective execution of obligated enforcement activities.
Consider Business Implications of Optional Licensed Rights. A licensee’s fulfilling of their licensed legal obligations is relatively straightforward, yet determining when and how to enforce licensed optional rights of enforcement is more complex, and often has more business than legal implications. Although a licensee may have optional rights of enforcement, the nature of the licensing arrangement and business relationships may obligate a licensee to adopt trademark enforcement measures. This is because the success of a licensing arrangement often depends on a licensee’s exclusive use of their licensed mark(s) in a particular country, requiring enforcement measures if such exclusivity is jeopardized. Further, licensors often urge their foreign licensees to enforce their licensed trademark rights regardless of contractual obligations, making such acts the basis for continuing their licensing arrangements. As such, a licensee may wish to adopt enforcement measures for their licensed marks despite having no obligations to do so to ensure profitability and continuation of their licensing arrangement, and to protect their existing business relationship with their licensor.
In Hershey’s case, they have been Cadbury’s exclusive U.S. licensee of the Cadbury Marks for over 25 years. Even if their rights of enforcement were optional, Hershey likely had substantial incentive to enforce rights in the Cadbury Marks as LBB’s imports jeopardized their exclusive use of such brands, and Hershey’s failure to enforce such rights may have harmed their long existing relationship with Cadbury.
Like Hershey, any licensee with optional rights of enforcement needs to consider the impact of non-enforcement on the business opportunities available in their licensing arrangement, as well as its impact on their relationship with their licensor.
What’s The Takeaway? As more and more businesses seek local foreign businesses to assist them with promoting their brands abroad, licensee businesses will be increasingly required to understand what rights and obligations they have in their trademark arrangements, and what measures they should take to fulfill those obligations, especially in deterring infringing imports. As these enforcement rights and obligations have substantial legal and business implications, licensees should work with their licensors and qualified counsel to determine how to best fulfill their enforcement obligations.
Wanted to let you all know that I will be speaking on cross-border online copyright and trademark enforcement at a Washington State Bar Association – International Practice Section seminar on January 20, 2015 at Noon at Davis Wright Tremaine LLP in Seattle, Washington.
Titled Online Copyright and Trademark Enforcement in the U.S. and Abroad, the seminar will cover issues in obtaining cross-border protection for copyrighted works and trademarks, understanding copyright and trademark enforcement systems in the U.S. and other jurisdictions, and using copyright and trademark enforcement measures on major online social media and retail sites such as Google, Facebook, Amazon, Baidu and others.
Further information on attending the seminar can be found here.
Hope you can make it. It should be fun!
Co-author Peter Dang, recent graduate of the University of Washington School of Law and admitted member of the Washington State bar.
Imitation may be the sincerest form of flattery, but try telling that to Converse. Last month, Converse filed multiple lawsuits in the U.S. District Court for the Eastern District of New York against 31 alleged infringers including Sketchers, H&M and others, for importing and selling knockoffs of Converse’s iconic shoes, the Chuck Taylor. Converse claimed that such alleged infringers infringed the Chuck Taylor’s distinctive shoe designs (aka trade dress) (15 U.S.C. § 1114), diluted such trade dress’ distinctiveness (15 U.S.C. § 1125(c)), and used such trade dress in a manner that constituted unfair competition (15 U.S.C. § 1125(a)). The trade dress at issue in both cases consists of Chuck Taylor’s federally registered “midsole design” and “outsole design” (collectively, the “Designs”). The midsole design (Reg. No. 4,398,753 – see image above) refers specifically to the Chuck Taylor’s “toe bumper” and “toe cap,” while the outsole design (Reg. No. 1,588,960) refers to the distinct diamond pattern on the sole of the shoe.
Simultaneously to filing its federal lawsuits, Converse filed a parallel complaint at the International Trade Commission (ITC) against the same alleged infringers for unfair trade practices (19 U.S.C. §1337 et seq.) related to importing shoes that infringed the Designs.
So why are these cases important? Beyond the large amount of potential financial recovery at stake, the outcome of these proceedings will have strong implications for cross-border trademark protection. Converse’s victory in its federal lawsuits may provide greater means for U.S. and foreign retail product producers to protect their products’ designs from unauthorized use in the U.S. by potentially expanding U.S. legal protections afforded to clothing and footwear trade dress. Further, an ITC ruling in Converse’s favor provides Converse the means to not only prevent the infringement of their trade dress, it also helps to stem the cross-border flow of shoes infringing their Designs.
Commentators have reported that Converse faces challenges in its actions because the Designs’ elements may be considered functional, and thus not protectable. Under U.S. trademark law, only distinctive non-functional elements of trade dress are protectable. See Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763, 775 (1992). Since the Designs’ rubber toe bumper and cap, and outside design are arguably used to prevent wear and provide foot protection, they may be considered functional elements of the Chuck Taylor, and thus unprotectable.
In contrast, others believe that footwear trade dress precedent may give Converse the legal basis it needs to succeed in such actions through the Designs’ potential secondary meaning. In Christian Louboutin, S.A. v. Yves Saint Laurent Am. Holding, Inc., 2012 WL 3832285 (2nd Cir. 2012), the Court found that Louboutin’s iconic red sole of its luxury women’s shoe to be distinctive despite being a element of the shoe’s sole due to secondary meaning (aka acquired distinctiveness) that the sole had acquired amongst the general public, thereby granting Louboutin trade dress protection to its shoe’s red sole. As the Chuck Taylor shoes have been widely available in U.S. commerce for decades, Converse may be able to establish that the Designs acquired secondary meaning amongst the U.S. public, and are thus protectable despite their apparent functionality.
Impact of the ITC Action
Although Converse’s victories in its federal court actions would likely result in substantial financial recovery for Converse, a favorable ITC decision would arguably provide Converse greater cross-border benefits. The ITC provides rights holders of U.S. patent, trademark and copyright rights the means to petition the U.S. government under Section 337 of the 1930 Tariff Act to conduct an investigation of unfair trade practices, including the importation of goods infringing such U.S. IP rights. If such infringing importation is found, the ITC may issue a ban on such infringing imports. In Converse’s case, an ITC issued ban would prevent the alleged infringers’ importation of footwear utilizing the Designs into the U.S., and potentially deter transshipments of such footwear to other markets from the U.S. As such a ITC decision impacts the importation and exportation of shoes infringing the Designs, it arguably has more cross-border benefits as it could effectively provide Converse trademark protection across multiple markets through one legal action.
What’s The Takeaway?
If successful in both its federal and ITC actions, Converse may obtain substantial financial recovery and injunctive relief to prevent imitators from selling their shoe designs in the U.S. and potentially other markets. More broadly, a favorable ITC ruling for Converse would provide Converse the tools to protect its Designs and control the flow of goods infringing such Designs across markets, a strategy that commentators have reported is overlooked, but has the potential to provide enhanced cross-border trademark protections.