In Cariou v. Prince, 714 F3d 694 [106 USPQ2d 1497] (2d Cir. 2013), the Second Circuit said that a use of a copyrighted work need not comment on the original artist or work, or on popular culture, in order to constitute “transformative” use that qualifies for fair-use defense.  All that is needed to qualify as a fair use, is that the new work alters the original with “new expression, meaning, or message.  Thus the Second Circuit reversed the district court judgment that Cariou’s photograph (left) was infringed by Prince’s “transformative” image (right).

Apparently intent on testing the lower limits of “transformation,” Richard Prince has continued with his appropriation style of artistry, and has been sued by two other photographers:

In Graham v. Prince et al, [1:15-cv-10160-SHS ] filed in the Southern District of New York on December 30, 2015, Graham complained about the reproduction of his photograph with a instragram-style border:

In Morris v. Prince et al., [2:16-cv-03924-RGK-PJW ] filed in the Central District of California on June 3, 2016, photograph Dennis Morris complained about the appropriation of a portrait he published in a book by Richard Prince:

In Salazar v. Prince et al., [2:16-cv-04282-MWF-FFM] filed in the Central District of California on June 15, 2016, model/makeup artist Ashley Salazar complained about the appropriation of a selfie she posted on instagram by Richard Prince:

In McNatt v. Prince et al, [1:16-cv-08896-SHS] filed in the Southern District of New York on November 16, 2016, McNatt complained about the reproduction of his photograph with a instragram-style border:

It hard to imagine that using almost an entire image and “framing” it with a few comments and graphics is “transformative,”  and we will have to wait to see what the courts say.  The Morris and Salazar cases have been dismissed by stipulation, the Graham and McNatt are still pending.

One wonders what upsets these plaintiff’s more, the fact that virtually their entire work is appropriated by someone, or the fact that that someone sells these “transformations” for as much as $100,000!

In Star Athletica, LLC v. Varsity Brands, Inc., (March 22, 2017), the Supreme Court affirmed the Sixth Circuit that the two dimensional designs appearing on the surface of Varsity’s cheerleader uniforms were copyrightable.

The Supreme Court granted certiorari to resolve widespread disagreement over the proper test for implementing 17 USC §101’s separate-identification and independent-existence requirements.  The Court held that a feature incorporated into the design of a useful article like an article of clothing is eligible for copyright protection only if the feature (1) can be perceived as a two- or three-dimensional work of art separate from the useful article and (2) would qualify as a protectable pictorial, graphic, or sculptural work—either on its own or fixed in some other tangible medium of expression—if it were imagined separately from the useful article into which it is incorporated.

The Supreme Court noted that the Copyright Act establishes a special rule for copyrighting a pictorial, graphic, or sculptural work incorporated into a “useful article,” which is defined as “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.”  The design of a useful article is considered a pictorial, graphical, or sculptural work only if, and only to the extent that, such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.”

The Supreme Court said that this so-called separability test applied to the designs at issue because they were incorporated into the design of a useful article.  Applying the separability test the Supreme Court said that the first requirement — that the design can be identified separately from the utilitarian article — is not onerous one need only be able to look at the useful article and spot some two- or three-dimensional element that appears to have pictorial, graphic,or sculptural qualities.

The Court said that second requirement — capable of existing independently of the utilitarian article — is more difficult to satisfy; the decision maker must determine that the separately identified feature has the capacity to exist apart from the utilitarian aspects of the article.  In other words, the feature must be able to exist as its own pictorial, graphic, or sculptural work as defined in §101 once it is imagined apart from the useful article.  This means the feature cannot itself be a useful article or an article that is normally a part of a useful article.

In the view of the Court, the ultimate separability question, then, is whether the feature for which copyright protection is claimed would have been eligible for copyright protection as a pictorial, graphic, or sculptural work had it originally been fixed in some tangible medium other than a useful article before being applied to a useful article.

The Court said that applying the separability test to the surface decorations on Varsity’s cheerleading uniforms is straightforward. First, one can identify the decorations as features having pictorial, graphic, or sculptural qualities. Second, if the arrangement of colors, shapes, stripes, and chevrons on the surface of the cheerleading uniforms were separated from the uniform and applied in another medium—for example, on a painter’s canvas—they would qualify as two-dimensional works of art.

The Court cautioned that the only feature of the cheerleading uniform eligible for a copyright in this case is the two-dimensional work of art fixed in the tangible medium of the uniform fabric. The Court said that even if Varsity ultimately succeed in establishing a valid copyright in the surface decorations at issue here, it had no right to prohibit any person from manufacturing a cheerleading uniform of identical shape, cut, and dimensions to the ones on which the decorations in this case appear. They may prohibit only the reproduction of the surface designs in any tangible medium of expression—a uniform or otherwise.

A pair of recent illustrate two important interrelated points about trade secret law: First, all trade secrets must be secret. Second, and less obvious, not all secrets are trade secrets.

In Hawg Tools, LLC v. Newsco International Energy Services, Inc., [2016COA176M] (Colo. App. December 1, 2016), the Colorado Court of Appeals reversed the trial court award of $1.3 million for misappropriation of trade secrets relating to sealed bearing packs for mud motors used in drilling, because “the evidence
did not prove that the design of the sealed bearing pack in question was a secret.”

As the Colorado Court of Appeals noted, the subject of a trade secret must be secret, and must not be of public knowledge or of a general knowledge in the trade or business.  While the jury found, at least implicitly, that the sealed bearing pack design was secret, the Court of Appeals review of the record revealed that no reasonable person would conclude that any evidence, or any reasonable inference arising therefrom, was presented on which the jury’s verdict against defendants could be sustained.

The Court found ample evidence to establish that the two desings were essentially the same, but it did not find sufficient evidence to distinguish plaintiff’s design its from other designs that were publicly available at the same time. In other words, the evidence in the record showed that the design of plaintiff’s sealed bearing pack was “of public knowledge or of a general knowledge” in the mud motor manufacturing business.

The $1.3 million verdict could not be sustained because the trade secret was not in fact a secret.

Part II of the less comes from the jury verdict in in Zenimax Media Inc. v. Oculus VR LLC, in the Northern District of Texas.  There, the jury rejected plaintiff’s trade secret misappropriation claims:

However, on the breach of the non-disclosure agreement, the jury found for plaintiff:

The jury found that Oculus as a successor to the agreement, and responsible for damages for its breach, and awarded $200,000,000.00 in damages:

One cannot and should rely exclusively on trade secret protection under state, and now federal law — not all secrets are trade secrets, i.e., not all secrets meet the definition of trade secret under state and federal law.  However, these “non-trade secret” secrets can have substantial value.  A good non-disclosure agreement remains an essential business tool.

United States Statutes purport to restrict the use made of the American flag.

4 USC § 8 – Respect for Flag

No disrespect should be shown to the flag of the United States of America; the flag should not be dipped to any person or thing. Regimental colors, State flags, and organization or institutional flags are to be dipped as a mark of honor.

(a)   The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.

(b)   The flag should never touch anything beneath it, such as the ground, the floor, water, or merchandise.

(c)   The flag should never be carried flat or horizontally, but always aloft and free.

(d)   The flag should never be used as wearing apparel, bedding, or drapery. It should never be festooned, drawn back, nor up, in folds, but always allowed to fall free. Bunting of blue, white, and red, always arranged with the blue above, the white in the middle, and the red below, should be used for covering a speaker’s desk, draping the front of the platform, and for decoration in general.

(e)   The flag should never be fastened, displayed, used, or stored in such a manner as to permit it to be easily torn, soiled, or damaged in any way.

(f)   The flag should never be used as a covering for a ceiling.

(g)   The flag should never have placed upon it, nor on any part of it, nor attached to it any mark, insignia, letter, word, figure, design, picture, or drawing of any nature.

(h)   The flag should never be used as a receptacle for receiving, holding, carrying, or delivering anything.

(i)   The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard. Advertising signs should not be fastened to a staff or halyard from which the flag is flown.

(j)   No part of the flag should ever be used as a costume or athletic uniform. However, a flag patch may be affixed to the uniform of military personnel, firemen, policemen, and members of patriotic organizations. The flag represents a living country and is itself considered a living thing. Therefore, the lapel flag pin being a replica, should be worn on the left lapel near the heart.

(k)   The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning.

A Senate Report from 2008 provides an excellent summary of federal statutes and regulations.  However, there is no penalty for violation of the statute.  There are corresponding restrictions on the use of the American flag in the statutes of several of the states, some of which includes penalties. While these statutes are still on the books, they are of questionable enforceability, and one does not have to look very far to find the flag used on clothing (compare 4 USC § 8(d)), on costumes and uniforms (compare 4 USC § 8(j));  and in advertising (compare 4 USC § 8(i)).  The collection of U.S. Patents has several of these examples:

D771,519 American Flag Ball

D696,493 American Flag Novelty Headwear

D651,538 American Flag with Three Dimensional Stars

D585,775 Scoreboard in the Form of an American Flag

D549,032 American Flag Style Cover for Barbecue or the Like

D516,730 American Flag Bandage

D515,628 American Flag Duct Tape

D507,843 American Flag Lantern

D487,180 American Flag Pole Cover

D482,144 American Flag Colored Light Bulb

D463,998 Lighted American Flag

D459,860 American Flag Hat

After threading the tortuous path through the Patent and Trademark Office, and withstanding assaults of infringers, who would have thought that one of the biggest problems for patent and trademark owners is scammers.  These scammers send official looking documents with data downloaded from the Patent and Trademark Office requesting payment for various unnecessary services, such as inclusion in a directory, or sometime for no service at all.

The USPTO has created a webpage, but it is largely forgotten by the time the solicitation is received.  The Director’s Blog recently reported that the Department of Justice obtained guilty pleas from two California men in a mass-mailing scam that targeted owners of U.S. trademark applications, stealing approximately $1.66 million from registrants and applicants of U.S. trademarks through companies called Trademark Compliance Center (TCC) and Trademark Compliance Office (TCO).

While these efforts are encouraging, it is still up to ip owners to protect themselves.  Critically evaluate any invoice you receive; as a general rule if its not from your IP counsel it is a solicitation that should be ignored.  In particular be on the look out for correspondence from:

• Patent & Trademark Resource Center (Seattle & Woodinville, WA)
• Patent and Trademark Organization (New York, NY)
• Trademark Office Ltd. (New York, NY)
• U.S. Trademark Compliance Office (Wilmington, DE)
• Patent & Trademark Bureau (Philadelphia, PA)
• Patent & Trademark Office (555 Madison Ave., New York, NY)
• Patent & Trademark Office (299 Park Ave., New York, NY)
• Patent & Trademark Agency (New York, NY)
• Trademark and Patent Office (Los Angeles, CA)
• P.T.M.A. Patent and Trademark Association (New York, NY) NEW

Apparently, New Jersey is about to join the list of states with statutes that protect the rights of inventors.  Generally, inventions made by employees belong to the employee, unless (1) that employee was specifically hired to invent, or is later assigned that task; or (2) there is an agreement between the employer and the employee.  However, in most states there is no restriction on the scope of these agreements.  Most times, an employer is content with owning inventions made using the time, material, or information of the employer, or which otherwise relate to the employers’ business.  However, some employers contract for all inventions made by the employer regarding of when or where it is made, or to what it relates.  It is this last category of employer that is targeted by the bill passed by the New Jersey legislature.

If the bill becomes law, New Jersey will join the small, but growing list of states that have statutes that affect employer’s claims to employee’s inventions:

• California (California Labor Code § 2870)
• Delaware (Delaware Code Annotated, Title 19, § 805)
• Illinois (Illinois Revised Statutes, Chapter 140, §§ 301-303)
• Kansas (Kansas Statutes Annotated §§ 44-130)
• Minnesota (Minnesota Statutes Annotated § 181.78)
• North Carolina (North Carolina General Statutes §§ 66-57.1, 66-57.2)
• Utah (Utah Code Annotated §§ 34-39-2, 34-39-3), and
• Washington (Washington Revised Code Annotated §§ 49.44.140, 49.44.150).

Employers with employees living or working in one of these states should be aware of these statutes and their requirements, or the employer may find that it does not have the rights it thought it did in its employees’ inventions.

The graphics on a web page can be protected by copyright.  If they are distinctive enough, they can also be protected as a trademark, and even registered.  However, a third alternative, design patent, which can protect such things as website backgrounds and other website features.  See, for example,  U.S. Patent No. D570,362 on the background image for a portion of a display screen:

Google obtained U.S. Patent No. D599,372 on its landing page:

In Trieme Medical, LLC v. Angioscore, Inc., [2015-1504] (February 5, 2015) the Federal Circuit reversed the dismissal of Trieme’s complaint to have its assignor, Dr. Lotan, named as an inventor of Angioscore’s patents.

Lotan worked as a consultant for Angioscore, and had signed a consulting agreement with a Section 9(a) that gave Angioscore a license to any preexisting inventions made by Dr. Lotan:

(a) Inventions Retained and Licensed. Consultant has attached hereto, as part of Exhibit C, a list describing all inventions, original works of authorship, developments, improvements, and trade secrets which were made by Consultant prior to the date of this Agreement (collectively referred to as “Prior Inventions”), that belong solely to Consultant or belong to Consultant jointly with another and that relate to any of the Company’s current or proposed businesses, products or research and development; or if no such list is attached, Consultant represents that there are no such Prior Inventions. If, in the course of providing the Services, Consultant incorporates into a Company product, process or machine or into any Invention (as defined below), a Prior Invention owned by Consultant or in which Consultant has an interest, the Company is hereby granted and shall have a non-exclusive license (with the right to sublicense) to make, have made, copy, modify, make derivative works of, use, sell and otherwise distribute such Prior Inventions as part of or in connection with such product, process, machine or Invention.

and a Section 9(b) that gave Angioscore ownership of any inventions made during the term of the agreement:

(b) Assignment of Inventions. Consultant agrees to promptly disclose to the Company and hereby assigns to the Company, or its designee, all right, title and interest in and to all inventions, original works of authorship, developments, concepts, know-how, improvements or trade secrets, whether or not patentable, that Consultant may solely or jointly conceive or develop or reduce to practice during the term of this Agreement that relate to the Services (collectively referred to as “Inventions”).

Angioscore’s problem was that while the agreement was executed on May 1, 2003, Dr. Lotan actually began working before May 1, 2003, and the results of such pre-agreement work was not assigned to Angioscore.

The Federal Circuit could not determine on the sparse record of the motion to dismiss, whether or not the agreement transferred all of Dr. Lotan’s rights to Angioscore, or whether he retained some ownership based upon his pre-agreement work that he could validly transfer to Angioscore.  Angioscore may still prevail, but this case highlights the importance of knowing when a consultant or other inventor began working on the invention, and making sure that all rights, including those created before the execution of the agreement, are properly addressed.

Design patents protect the aesthetic appearance of a product (or a part of a product). They are relatively easy and inexpensive to get, but are they worthwhile?

A design patent is a patent, meaning while the application is pending (typically about 20 months) the applicant can mark the product “patent pending,” and after the patent issues “patented.”  The design patent allows its owner to sue competitors for making, using, selling, or importing a product that is substantially the same as the patented design.  Substantially the same does not mean identical, and if the patent owner can show  the resemblance is such as to deceive such an observer and sufficient to induce him to purchase one supposing it to be the other, he or she has proven infringement.

A patent owner is usually entitled to an award of its lost profits, but no less than a reasonable royalty, however there is an alternative remedy for design patent infringement: the infringer’s profits. Moreover, this is the profit on the entire product.  Thus Apple was awarded Samsung’s entire profits on the phones found to infringe Applies design patents on the iPhone shell, not just the profits attributable to the shells (which were not sold separately).

Finally, a fifteen year design patent can be a stepping stone to perpetual trade dress protection, providing a period of exclusive use of the design needed to establish that the design has acquired “secondary meaning” and has become a protectable trade dress.

If a design patent makes sense in the United States, what about foreign protection.  Interestingly, while design patents are reasonably popular in the US, with more than 35,000 applications filed last year, design patents are even more popular in Asia,.  More than half a million design patent applications were filed in China last year (sixteen times as many as filed in the US), more than 65,000 were filed in South Korea, (nearly twice as many as filed n the US),and nearly 30,000 were filed in Japan (almost tying US filings):

1. China (564555)
2. S. Korea (64574)
3. United States (35378)
4. Japan (19738)
5. EC (25745)
6. Turkey (10251)
7. India (9309)
8. Iran (8864)
9. Germany (7392)
10. Australia (6597)
11. Brazil (6590)
12. Canada (5767)
13. Russia (5184)
14. UK (5084)
15. France (4782)

Perhaps of more interest to US businesses is which countries are most popular with non-residents:

1. China
2. US
3. EC
4. Canada
5. Japan
6. Australia
7. S. Korea
8. India
9. Russia
10. Brazil

and in particular which countries are most popular with other U.S. filers:

1. China
2. Canada
3. EC
4. Australia
5. Japan
6. Brazil
7. Mexico
8. S. Korea
9. India
10. Russia

Design patents help round out an IP portfolio, but domestically, and abroad.