Hollywood, Piracy, and the Future of Media

Mail?  Yeah, we get mail.

Sometimes it’s spam.  Sometimes it’s someone who wants a trademark talking head (with a face for internet radio).

And sometimes, it’s something pretty cool.  Like this infographic from Peter Kim of Paralegal.net.  In particular, I like the statistics toward the end of the graphic about firms who have embraced new technologies.

Guest Post: Megaupload’s Megatakedown – Why SOPA and PIPA Aren’t the Only Copyright Laws Developers Should Know

There’s no question that one of the most popular and highly-debated topics on the internet today is piracy. Since the early days of Napster in the 90’s, piracy has been something that both the government and rights-holders alike have been trying to regulate. To this day, we haven’t reached a common-ground solution for how to handle it, and it’s been a tug of war between the media conglomerates and “the little guy” ever since.

Most recently, the internet has been abuzz about proposed laws like SOPA and PIPA that grant the US Government stronger powers to police online content. These laws, which were intended to give greater protections to intellectual property on the internet, caused a major public opposition due to the potential to cause harm to the open and free Internet structure. Under SOPA and PIPA, websites harboring illegal content could be ripped down without notice, and, in some cases, could cause people to serve jail time. After the anti-SOPA and anti-PIPA blackouts that I mentioned in a recent post, however, the proposed legislation was taken off the table in order to be re-written and renegotiated.

In the wake of the SOPA and PIPA protests, one of the biggest and best known file hosting services, Megaupload, had its domain name seized, and website ripped down by the US government. But wait…how did this happen!?  SOPA and PIPA may be on the shelf, but we can’t forget about The Digital Millennium Copyright Act (or the “DMCA”), which has been a law since 1998, and which greatly affects the way piracy and content is regulated on the Internet. 

Our intern, Megan Costello, wrote an article about the DMCA and was recently published in the Fall edition of the World Jurist Association Journal of Law and Technology. Megan is a third year law student from the University of New Hampshire School of Law who is visiting at the University of Pittsburgh to study law and technology. High-tech law is Megan’s passion. As a technologist with undergraduate expertise in computers, technology and cybersecurity, it is her goal to help other technologists understand the law and to make confusing, legal topics more accessible to those who need help. In law school, she specializes in high tech issues, especially in intellectual property, privacy, and cybersecurity. The following are some excerpts from her piece:  “Look Before You Leap: A Developer’s Guide to Copyright Infringement and Stopping Secondary Liability Before it Starts.” If you’d like to read more from this article, you can request a copy from the World Jurist Association here.  Excerpts and updates from the article appear below.

What is Infringement?

There are two types of copyright infringement: direct and secondary. Direct infringement (also known as primary infringement) cases involve people personally responsible for making copies of copyrighted material, sending copyrighted material to other people, or distributing it in any way when they do not have the right to do so. A web developer should consider some of the things he personally uploads to his website because anyone who knowingly uploads copyrighted material for others to access is apt to be liable for direct copyright infringement.

Rights holders may also sue for secondary (or indirect) infringement if a user posts infringing material to the developer’s website. Collaborative space is a common component of new web-based services, and so secondary infringement is the most common type of copyright lawsuit developers encounter. With that said, this paper hereafter is concerned only with secondary infringement. 

Secondary infringement comes in three varieties: induced, contributory, and vicarious infringement. Though each type of secondary infringement requires a rights holder to show a web developer is indirectly associated with a users’ infringement, one thing holds true throughout each: A person CANNOT be held liable for secondary infringement if NO direct infringement exists in the first place.

Inducement occurs when a web developer creates and advertises a service for the sole purpose of copyright infringement. If a developer makes a website or distributes a program that boasts “THE NEXT NAPSTER! DOWNLOAD MUSIC HERE FOR FREE!” he will likely be involved in an inducement lawsuit. Although he did not do the infringing personally, the act of facilitating the infringement through his services would be enough to hold him responsible for the actions of his users.

Contributory Infringement occurs when a web developer knows infringement is happening on his website, and he allows this infringement to continue. If users upload content to a site, and the developer learns a user is infringing, he must take measures to remove the infringing content or become a contributory infringer. Knowledge of users’ infringement is a critical requirement of contributory infringement. Past and present trends in litigation show that providing users the ability to post potentially infringing information online is not enough to prove contributory infringement, especially if there are active measures taken to remove infringing content when it is brought to a developer’s attention.

Finally, vicarious infringement occurs when a developer who has direct control over a service or program profits directly from a user’s infringement. A developer could infringe vicariously if he offers a paid service to users who, in turn, use this service to infringe on other people’s copyrights. Whether a developer realizes these users are posting illegal content is not a requirement to make him a vicarious infringer; if he obtains money from the infringing activities of others through his service, a developer is liable for these actions.

What is the DMCA, and How Can it Help Me?

Unlike the Internet, the corresponding copyright law is still clunky and pixilated. When the Internet started to gain popularity in the late 1990’s, Congress passed the Digital Millennium Copyright Act (or the DMCA) that included, among other things, “safe harbors” or protections for service providers from secondary infringement caused by user-posted content. While the DMCA safe harbor laws’ original focus was to protect the “pipes” to and from the Internet, the definition of “service provider” expanded over time to cover the rights of web developers and website owners.

A “service provider” as defined by the DMCA can range in functionality from – as interactive as a search engine. Most web developers will likely fall under the Hosting category of functionality of the DMCA. “Service providers” that host content do not necessarily provide the tubes with which the users connect to the Internet, but they do allow the average user to upload, store, and manipulate content that other users can view. Amazon, EBay, Google, and other large companies have enjoyed safe harbor protections despite being structurally different from traditional ISPs like Comcast or Verizon.

The DMCA takes a lot of pressure off web developers to play the role of editor, and to focus more on being a gatekeeper. Like a traditional service provider, a web developer should not be expected to know each and every case of copyright infringement on his website as they come about. After all, if the website is popular with users, media uploads could skyrocket, and thousands of pieces of copyrighted material could be uploaded in just seconds. Unless this website promotes copyright infringement or is created specifically with the intent to infringe (as discussed earlier), the web developer is entitled to safe harbor protections, so long as he complies with the standards to attain them.

It is important to note that failure to comply with the standards to attain safe harbor protections does not necessarily make a web developer liable for secondary infringement.  If a developer decides not to take the steps to make a website DMCA- compliant, and he is involved in a secondary liability lawsuit, he is still protected by copyright laws that are not specifically reserved for situations on the Internet. Congress created the DMCA as an extra guideline to help the courts easily decide if a service provider should be charged with secondary infringement. Instead of trying to fit standard copyright laws into a virtual context, Congress made a specific set of rules that pertained to the Internet instead.

Why Should I Comply with DMCA Standards if its Not Required?!

Because they are not required to create websites that comply with DMCA standards, it is reasonable for developers to question if the benefits of safe harbor protections are worth the extra effort. Copyright lawsuits consume a large amount of money and time, and if developers are responsible for the actions of users, they could face several of these lawsuits if users are notorious for posting infringing material. If a website falls under the DMCA’s safe harbor laws, a developer will not have to compensate a copyright holder for any direct, vicarious, or contributory infringement if users decide to post copyrighted material to his website. Please note, however, that these rules only apply to copyright infringement—and other issues in trademark, patents, defamation or privacy (to name just a fraction of the other Internet-related problems)— are covered by other laws. Other laws, especially the underpinnings of basic tort doctrine, do mimic the main goal of DMCA protections: a person is only responsible for conduct that he has the capacity to control. It would be a wise choice to comply with the DMCA, however, because the requirements are made specifically for Internet related issues, and they are relatively easy to follow, considering the attached benefits.

What do I need to do to Increase My Chances of DMCA Safe Harbor Protections?

If a developer’s website provides services that could potentially host users’ infringing material, he could be eligible for safe harbor protections under the DMCA as long as he does the following four things:

  1. Designate and Register a Copyright Agent
  2. Implement a Proper Notice and Takedown Regime
  3. Adopt and Enforce a Policy to Thwart Repeat Infringers
  4. Accommodate Technical Measures Set By Copyright Holders for Takedown Procedures

What Is a “Copyright Agent?”

An agent is simply a person or a company tied in with a website’s services that will be responsible for getting and addressing user complaints in the mail. If someone visits a developer’s website and notices that her copyright is being infringed by its users, she will have the ability to contact the website’s agent in order to start the notice and takedown procedures set by the DMCA. 

What Does “Notice and Takedown” mean?

In short, if someone visits a website and notices a user posting her copyrighted material without her permission, she can request that the developer block user access to that material or remove it completely from the website. It isn’t a developer’s duty to determine whether this material is actually infringing, but if he receives a copyright holder’s infringement complaint, it is his responsibility to take down the infringing material and to notify the accused infringer of the takedown. Complaints filed by copyrights holders are known as takedown notices, and they serve as documented knowledge to website owners that copyright infringement is taking place on their website. It is very important to comply with these takedown notices as quickly as possible in order for safe harbor protections to apply. 

What is a Policy to Thwart Repeat Infringers?

Aside from enforcing a notice and takedown regime, developers are also required to draft and enforce a policy that addresses the issue of repeat infringers on their websites. Although the cases that have already taken place have not yet identified a definition for “repeat infringer”, it is important that developers create and notify users about the actions the website will take when users are caught posting infringing material on more than one occasion. In the eyes of the court, a good repeat infringer policy stops infringers from re-registering with a website. No cases have been ruled yet to say developers are responsible for actively tracking whether repeat infringers are actually applying to use the website’s services under a different alias or IP address. It seems that, for now, as long as developers take some action against repeat infringers, they will still be eligible for safe harbor protections. 

Accomodating for Technical Measures?

[I]t is a web developer’s responsibility to accommodate for industry standards for regulating infringing copyright material. If a group of copyright holders agrees to a standard for takedown proceedings, a safe harbor-eligible website must comply with their specific requirements for a proper takedown. So far, no reported industry standards exist, but have the potential to arise in the future. 

Are There any known “Deal breakers” that Could Hurt My DMCA Protections?

Along with the extensive list of requirements for safe harbor protections, two major disqualifiers exist that will destroy safe harbor eligibility. These are:

  1. Actual, “Red Flag” Knowledge of Infringement; and
  2. Control and Direct Financial Benefits Directly Related to the Infringing Material

Developers need to be extremely careful that they do not fit the description of either of these situations in the event that users are infringing on their websites. 

Where did Megaupload Go Wrong?

In light of the information above, consider the circumstances of what happened to Megaupload: where did the website go wrong, and why was it ripped down under the DMCA? The US Justice Department released an official statement on the day that the website was ripped down, and explained that the developers conspired to allow copyright infringement to exist on the website:

Among the violations, Megaupload did the following:

It Failed to Implement a Proper Notice & Takedown Scheme

“[T]he conspirators failed to terminate accounts of users with known copyright infringement, selectively complied with their obligations to remove copyrighted materials from their servers and deliberately misrepresented to copyright holders that they had removed infringing content. For example, when notified by a rights holder that a file contained infringing content, the indictment alleges that the conspirators would disable only a single link to the file, deliberately and deceptively leaving the infringing content in place to make it seamlessly available to millions of users to access through any one of the many duplicate links available for that file.”

It Also Had Actual Knowledge of Infringement AND Benefitted Financially From this Infringement (fulfilling both DMCA “deal breakers”!)

“[T]he conspirators conducted their illegal operation using a business model expressly designed to promote uploading of the most popular copyrighted works for many millions of users to download. The indictment alleges that the site was structured to discourage the vast majority of its users from using Megaupload for long-term or personal storage by automatically deleting content that was not regularly downloaded. The conspirators further allegedly offered a rewards program that would provide users with financial incentives to upload popular content and drive web traffic to the site, often through user-generated websites known as linking sites. The conspirators allegedly paid users whom they specifically knew uploaded infringing content and publicized their links to users throughout the world. “

The worst part about allowing the copyright infringement to exist is the potential punishment:

“The individuals each face a maximum penalty of 20 years in prison on the charge of conspiracy to commit racketeering, five years in prison on the charge of conspiracy to commit copyright infringement, 20 years in prison on the charge of conspiracy to commit money laundering and five years in prison on each of the substantive charges of criminal copyright infringement.”

Web Developers: it is more crucial than ever to be wary of the websites you create and the information your users post. While SOPA and PIPA won’t affect you, the DMCA is still in full-force, and can cause your website to be ripped down. 

While it isn’t required, there are many benefits to complying with the rules set by the DMCA because copyright infringement is a costly and serious crime. Don’t be the next Megaupload. If you are confused as to whether your website complies with the DMCA, or if you would like help complying with the safe harbor requirements, please contact me for help. After all, as the old saying goes: “It’s better to be safe than sorry!”

Author’s Note: The content quoted within this blog post was taken from: Megan Costello, A Developer’s Guide to Copyright Infringement and Stopping Secondary Liability Before it Starts, originally published in Law/Technology, Volume 44/Number 3, 18 (2011). It was reprinted with the permission of The World Jurist Association Law/Technology Journal which holds the Copyright. If you’d like to purchase a copy of this article, please contact WJA via email on wja@worldjurist.org or call them at 202-466-5428.

They Call Alabama the Crimson Tide…

I’ll spare you the Steely Dan joke (can’t find a fitting one right now) and jump right into the facts:

The U.S. 11th Circuit Court of Appeals in Atlanta heard arguments today in the trademark infringement case between sports artist Daniel Moore and the University of Alabama.  Alabama sued Moore in 2005 alleging that Moore’s paintings, which depict scenes from Alabama Crimson Tide football games, infringe on Alabama’s trademark rights.

In 2009, the lower court found that Moore’s paintings and prints did not infringe and were protected free speech but that other items — such as coffee mugs — were infringing.  Apparently, the parties were unhappy with the court’s “split the baby” approach, as they both appealed.

I blog a lot about public relations concerns as they relate to trademark law, and although the mere fact of filing suit is often seen as bad PR, I did like the soundbite from university spokeswoman Deborah Lane.  From Businessweek:

Lane said the University of Alabama has licensing agreements with some 600 business owners and that supporters want to buy products “that benefit the university they love rather than an unlicensed competitor.

“The university asks that businesses — like (Moore’s) New Life Art — that profit from the university’s name and reputation pay a few cents in licensing fees out of each dollar they receive from the sale of merchandise bearing university trademarks,” she said. “These licensing fees fund academic scholarships for UA students.”

It will be interesting to see how this plays out.  There’s a lot at stake here not only for the parties, but also in terms of the precedent this will set for universities and artists.

SOPA Blackout

Wow.  So you take some time off for the holidays (and then catching up from the holidays) and aren’t IP blogging for a little while and then– all of a sudden– the whole web is talking (or not talking, out of protest) about copyright law.

You didn’t have to venture too far beyond a simple Google search (which we, as a planet, only do a billion or so times a day) to notice something strange was going on today.  Visitors to a laundry list of sites including Google, Wikipedia, and Twitter were greeted by blacked-out logos and missing content in protest of SOPA and PIPA, two IP reform bills currently in Congress.

And, according to the Los Angeles Times, this protest might have already had an impact as three co-sponsors of the SOPA and PIPA antipiracy bills have publicly withdrawn their support for the legislation.  From the Times:

Sen. Marco Rubio (R-Fla.) withdrew as a co-sponsor of the Protect IP Act in the Senate, while Reps. Lee Terry (R-Neb.) and Ben Quayle (R-Ariz.) said they were pulling their names from the companion House bill, the Stop Online Piracy Act. Opponents of the legislation, led by large Internet companies, say its broad definitions could lead to censorship of online content and force some websites to shut down.

In a posting on his Facebook page, Rubio noted that after the Senate Judiciary Committee unanimously passed its bill last year, he has “heard legitimate concerns about the impact the bill could have on access to the Internet and about a potentially unreasonable expansion of the federal government’s power to impact the Internet.”

 

Blogging About Clients: What’s a Lawyer to Do?

Jack Greiner shares some nice observations over at Jack Out of the Box about a recent matter involving a Virginia criminal defense attorney who is facing disciplinary actions from the state bar for allegedly posting confidential information about a client.

This is an interesting question, and it’s likely that bars in other states will be watching to see what happens with attorney Horace Hunter’s appeal.  Hunter contends that the names of his clients are not “confidential information” within the meaning of Virginia Rule of Professional Conduct 1.6, and he said that the blog posts with clients’ names are based entirely on open court proceedings and other matters of public record, which he said include clients’ names.

So what’s the takeaway for attorneys?  Regardless of how this plays out, it can never hurt to err on the side of caution and ask permission first.  A lot of clients (especially in IP, nonprofit, and business counseling settings) would be flattered to have you blog about them.  And the ones who wouldn’t be so flattered, I’m sure, would let you know.

Turkey Trots and Trademark Law

It’s Thanksgiving week, and like many of you, I’m scrambling to wrap up work in time to spend the holiday with family and friends, enjoying a healthy dose of tryptophan.  Fearful of skimping on the holiday-related blogging, I’ll give you a second helping (and stop with the wordplay while I’m ahead) of a post I wrote last year on Turkey Trots and trademark law:

(Originally posted November 24, 2010)

For some people, tomorrow’s Thanksgiving holiday means not only time spent with loved ones over a turkey dinner– it means waking up at the crack of dawn and running.

Pittsburgh Trademark Lawyer is not one of those people.  Admittedly, I am a runner, and a somewhat avid one, at that.   In fact, I just ran my first marathon in my second-favorite city in Pennsylvania this past weekend.  But, on Thanksgiving, I eat.

In any case, people all across the country will lace up their running shoes tomorrow and participate in what, in many instances is called a “Turkey Trot.”   These races often raise money for charity, and participants no doubt enjoy the benefit of burning some extra calories on Turkey Day.  But it probably goes without saying that I’m more interested in the trademark law issues surrounding the phrase “Turkey Trot.”

Evidently, the tradition of hosting public footraces on Thanksgiving Day dates back farther than I would have guessed, with the first Turkey Trot taking place in Buffalo, New York in 1896.

The Usual Suspects

And while some Thanksgiving Day races bear monikers such as “Stuffing Strut” there are “Turkey Trots” taking place all across the country, which begs the question: does someone collect a licensing fee for all these uses of “Turkey Trot,” or is the phrase more or less descriptive of a Thanksgiving Day race?

The USPTO weighted in on this in an Application for (you guessed it) the proposed mark “TURKEY TROT.”

The applicant applied to register the mark TURKEY TROT in connection with organizing running races, charitable fundraising and community cultural activities on or around Thanksgiving Day.  This mark is merely descriptive of the services because it immediately tells consumers that the services involve a “turkey trot.

TURKEY TROT is the common, generic name given to running races and surrounding cultural and sporting activities performed on Thanksgiving Day across the country. The examining attorney has attached ten sample websites found using the GOOGLE search engine that show widespread use of this term by others to name their similar races and fundraising activities.  The evidence shows that others have been using TURKEY TROT to name such activities far longer than the applicant’s claimed dates of first use.  In  the interest of brevity, the examining attorney has attached only ten such sample uses of TURKEY TROT.  Given this widespread use, consumers who encounter the applicant’s proposed mark would perceive the wording TURKEY TROT as the name of the activity, and not as a source identifier for the applicant.

Therefore, the examining attorney refuses registration on the Principal Register on the basis that the mark is merely descriptive of and appears to be generic for the services.

There are a few other applications and registrations that include the phrase “Turkey Trot” and the Office appears to generally suggest a disclaimer of the phrase “Turkey Trot” when it is part of an applied-for mark.

All this talk of running is working up an appetite, however.  Could someone please pass the cheddar and jalapeno stuffing?

Happy Thanksgiving!

OCCUPY WALL ST.™

In this line of work, sometimes nothing surprises you:

From the New York Daily News, a Long Island, N.Y. couple has recently applied for a trademark registration for (you guessed it) “OCCUPY WALL ST.”  The application was filed on October 18 as an intent-to-use (ITU) application, listing a variety of products including clothing, bags, and bumper stickers.

Depending on your outlook on things, it’s temping to be cynical (perhaps even from both “sides” of the aisle) at first, and I’ll admit that was my first reaction.  Moving beyond that reaction, though, I think that both the protesters and their critics can (at lease hopefully) agree that small business and entrepreneurship are vital to our economy.  And Robert Maresca (who appears to have filed under his wife’s name) is certainly an entrepreneur.

But I think there’s even more going on here.  Take a look at what Mr.Maresca, himself an injured ironworker and union member, told the Daily News of his idea to register the mark:

“People are calling this a crass attempt to profiteer off a social movement, but that’s not it [.] I do believe there’s a possibility it could become a global brand. I could maintain control to keep it from someone trying to undercut the 99% [.] [The trademark] “isn’t about me getting rich. If it turns into a big moneymaker, I would like some of it to go back to the group.”

Sometimes, it’s not about the money (as UK pop-singer Jessie J so catchily reminded us 156 million times or so, according to YouTube).  Sometimes it’s about principle.

Much of my non-trademark work centers on working with nonprofits.  And when nonprofit clients ask me trademark questions, I try to distinguish the sort of interests nonprofits and for-profits would have in trademark protection.  For nonprofits, there’s not such a clear “good branding equals more revenue” correlation.  For them, it’s about their message and making sure that that message is protected and not tarnished, maligned, or confused by those with conflicting values.

A Geeky Brand of Humor

It’s probably fair to say that most people–irrespective of profession– look for humor in their daily routines.  As a trademark attorney, I spend a good bit of time poring over USPTO records, which (as readers of this blog probably already know) can contain quite a bit of humor (whether intentional or unintentional).

The marks themselves are generally the most obvious source of humor, but I sometime get a kick out of design codes (e.g., The iconic MR. PEANUT logo gets the following designation: “Monsters (not robots); Other grotesque including men formed by plants or objects”).

Self-proclaimed BRAND GEEK® Lara Pearson shares some trademark-related humor at her blog by the same name.

 

The Terrible Towel and Naked Licensing

It’s football season once again in Pittsburgh, and on the heels of a much-too-close victory in Indianapolis, I will kick off Steelers blogging season at PTL.  My off-season wasn’t nearly as colorful as the Steelers’ (I didn’t even get an invite to be on Dancing With the Stars, let alone win it– though, in hindsight, it may have had something to do with my lack of star-status and/or dancing skills).

I recently had a great conversation about the trademark rights in the Terrible Towel at breakfast with my former professor, Michael Madison.  He has some excellent analysis over at Madisonian about the possible naked licensing issues involving the Towel.

I’ve blogged on the the Towel in the past, but here’s the quick background for those unfamiliar with the Towel’s origins.

Myron Cope, a Pittsburgh sports announcer known as the “voice of the Pittsburgh Steelers” for many years, is credited with inventing the Terrible Towel.   Cope assigned the Terrible Towel trademark to the Allegheny Valley School (AVS), a Pittsburgh-area institution specializing in intellectual developmental disabilities that has cared for Cope’s son, Danny, who has severe autism.  Proceeds of the Terrible Towel’s sales benefit the School.

I suspect that a lot of non-Pittsburghers reading this post might  not have known that back story, but that virtually everyone reading this post associates that Towel with the Steelers.

And that is precisely the problem here, from a trademark doctrine standpoint.

When consumers associate the mark with the licensee (the Steelers) and not the licensor/owner (AVS), it creates a risk of “naked licensing” and a possible forfeiture of the owner’s rights in the mark.  For a nice general overview of naked licensing in the context of a recent Ninth Circuit decision, check out Jim Singer’s post from last winter.

It’s tempting to simply say “OK, so consumers think the Towel comes from the Steelers and not the AVS– so what?”.  From a practical standpoint, it’s probably not a big deal.  People buy the towels (we’ve got one at my house), they wave them at games, and the school gets money.  Everyone wins.

But this scenario does raise an interesting question about the internal architecture of trademark law– why the statutory language says what it says and what the purpose(s) of trademark law is/are (e.g., protecting investments in marketing, preventing consumer confusion, etc.)

I agree with Professor Madison that one of the fundamental purposes of trademark law is consumer protection.   A quick look at some of the language in two historic trademark decisions provides some support for this position.

From Dawn Donut Company, Inc. v. Hart’s Food Stores, Inc. (1959):

“If the licensor is not compelled to take some reasonable steps to prevent misuses of his trademark in the hands of others the public will be deprived of its most effective protection against misleading uses of a trademark. The public is hardly in a position to uncover deceptive uses of a trademark before they occur and will be at best slow to detect them after they happen. Thus, unless the licensor exercises supervision and control over the operations of its licensees the risk that the public will be unwittingly deceived will be increased and this is precisely what the Act is in part designed to prevent. See Sen. Report No. 1333, 79th Cong., 2d Sess. (1946). Clearly the only effective way to protect the public where a trademark is used by licensees is to place on the licensor the affirmative duty of policing in a reasonable manner the activities of his licensees.”  (Emphasis mine.)

And from Taco Cabana International, Inc. v. Two Pesos, Inc. (1991): 

The purpose of the quality-control requirement is to prevent the public deception that would ensue from variant quality standards under the same mark or dress. Where the particular circumstances of the licensing arrangement persuade us that the public will not be deceived, we need not elevate form over substance and require the same policing rigor appropriate to more formal licensing and franchising transactions.”  (Emphasis mine.)

It’s hard to imagine a public outcry when Towel wavers “find out” that the Steelers are not the the “real” source of the Towels.  But it is important for trademark owners to exercise care to avoid “naked licensing” when entering into a licensing deal.

Trademark law recognizes the value of providing flexibility for licensees/licensors and relieving them of statutory formalities (where possible), but it must do so while remaining grounded on one of its key commitments — to prevent consumer confusion in the marketplace.

Updated October 5, 2011: 

Considering Bernard Schneider’s comment below and having done a bit more digging into the “naked licensing” doctrine, I think I should try to flesh out my thoughts a bit more here.

The license between AVS and the Steelers for the Terrible Towel is not a “naked license.”

There are a couple of reasons for this.  First, AVS “does controls the nature and quality of goods sold by the Pittsburgh Steelers under its trademarks. [AVS] periodically examines those goods and has the right under its license agreement to demand quality enhancements if necessary (See first comment below).

Second, there’s the “inurement” doctrine.  As Prof. Madison explains in an update to his post:

The Lanham Act provides, in connection with registration, that use of a mark by a “related” company “inures to the benefit” of the mark owner (registrant).  […]  The public policy behind the “inurement” rule closely parallels the public policy behind the “naked licensing” rule:  so long as consumers get a consistent product/service experience associated with the mark, then consumers are not deceived.  The mark is valid; actual ownership of the mark is, for this purpose, not relevant.

[…]

If the AVS and the Steelers have a licensing relationship that in fact grants the AVS the power to monitor and control the quality of goods produced under the TT mark, then the consumer goodwill associated with the TT inures to the benefit of the AVS.

I think these two doctrines (quality control and inurement) square with a consumer-protective theory of trademark law.  If consumers are confused as to the “real” source (i.e., the record owner of a particular trademark), a close relationship between licensor and licensee and the presence of quality-control mechanisms should obviate any theoretical harm to consumers.

Put differently, these doctrines make sure that consumers get what they think they’re getting.

It’s interesting to try to unpack the statutory language of the Lanham Act and try to puzzle out trademark law’s key functions in society.  And I think there’s good evidence to suggest that consumer protection is a big part of it.

But it’s also important for brand owners to have a clear set of rules that allow them to enter into licensing relationships freely in order to capitalize their brands (and, in the case of the Terrible Towel– for an incredibly good purpose).

And as the Steelers wrestle with injury problems as they prepare for this week’s home game against Tennessee, one thing’s for sure.  Come Sunday afternoon, Heinz Field will look a little something like this:

How to Select a Trademark

One of my favorite conversations with clients is the conversation about how they should go about choosing a trademark (which, as most of you reading this blog know, could be many “things” including names, logos, symbols, devices, heck– even blue turf– at least for certain collegiate football teams in Idaho).

It requires creativity– from both a legal perspective and a marketing perspective.  It involves a delicate balance between recognizing your client’s business goals on the one hand and informing them of legal risks on the other.

And Mike Atkins sums it up nicely here.

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