Big Name Brands vs. Department Stores

This time of year department stores begin to heavily discount merchandise in an effort to lure consumers into their stores.  Big name brands, with an eye towards maintaining the strength of their trademarks, are fighting back.  Brands like Levi Strauss, Michael Kors, and Coach are seeking exclusion from this discounting in order to maintain control of their pricing.  While this may mean shrinking sales, it does help maintain the strength of their brands.

While many of these brands started because the department stores bet on their labels, many of these brands now have retail stores of their own.  This dichotomy has created tension between the labels and the department stores.  In some instances there have been "irreconcilable differences" between the two sides such that the brands pull their product from the department stores.  In turn, the department stores will offer weaker brands with less power to set pricing.  Department stores find that their consumers are happiest when they can purchase merchandise at a discount and are willing to switch brands to obtain one.  Indeed, both Macy's and J.C. Penney learned this lesson the hard way when they tried to eliminate coupons and discounts.  The idea was that they were providing low prices every day, yet consumers stopped shopping at those stores until the coupons and discounts returned.

The lesson learned: trademarks and marketing go hand in hand and trademark holders must be diligent in protecting their trademarks.

Craft Beer Names are Getting Crafty and Causing Trademark Pandemonium

One of my favorite stores to visit in San Diego is a store dedicated to hot sauces.  Now, mind you, I don't go there strictly for the hot sauces.  The main attraction for me is reading the witty (often racy or raunchy) names of the sauces.  It always amazes me at how creative the makers are in coming up with their names.

I have also discussed the witty names by Ben & Jerry in another context.  However, there is another type of product which lends itself to creative naming: the craft beer industry.  Unfortunately, it appears as if the term "hops," is becoming scarce for this industry.  The same goes for names involving animals, natural features, and historical references.  Unfortunately, with the fairly recent onslaught of craft breweries--many of whom have several different types of brews--the possible variations of "punny" or creative names for those beers has vastly diminished.  That has lead to an increase in trademark battles over names, images, and the like around the Country.  According to a Wall Street Journal article, the United States Patent and Trademark Office has approximately 25,000 active registrations and applications related to beer.

If that were not enough, those charged with naming their brews must also be aware of wine and spirits trademarks.  For example, Fireball Cinnamon Whiskey maker opposed a brewer's attempt to trademark "Fireball Beer."

Of course, it is not simply the craft brewers who find themselves in a trademark dispute.  Budweiser lost a suit by a small Czech brewery over the use of the Budweiser name in Europe.

This is not surprising given how the importance of trademarks has risen in today's fast-paced economy.  I certainly have been guilty of trying a beer just because its name was clever (although, I am not as inclined to do so for the hot sauces).

Re-Opening of United States Market to Cuba Rum Rekindles Name Dispute

As I wrote a while back,  there was a potential dispute reemerging between Bacardi, Ltd and Pernod Ricard SA over the ownership of the name, Havana Club.  The dispute is not new.  Pernod Ricard is a distiller based in Paris, France who entered into a joint venture with the Cuban government to create Havana Club International.  To hear Pernod Ricard tell it, it entered into a deal with the Cuban government in 1993 which gave it rights to sell the Cuban-made rum around the world, including the United States.  However, the 1962 trade embargo blocked any such sales.

Bacardi counters that it owns the rights to the brand after buying it from the founding family of Havana Club, the Arechabalas.  The Arechabalas and Bacardi fled Cuba in 1960 after Fidel Castro's government nationalized the country's distilleries.  Bacardi has been making its rum in Puerto Rico under the Havana Club brand name.  Initially, the two sides worked together until Bacardi decided to compete with Pernod Ricard by distilling its rum in Puerto Rico in the early 1990's.

Now, both sides are ramping up their production to distribute their rums in the United States.  In the case of Bacardi, to increase its distribution and in the case of Pernod Ricard, to enter the market.

Needless to say, the two sides will have their day in court over who actually owns the trademark.  Stay tuned for updates.

Supreme Court to Decide New Patent Rules

The government recently made it easier for companies and/or individuals to challenge patents without fighting in Federal courts.  It is no secret that patent litigation is one of the most costly and lengthy legal battles possible.  The new process allows the United States Patent and Trademark Office ("USPTO") to make a determination about the patent dispute.  Of note is the fact that the USPTO would use different legal standards to resolve the issues.  This would mean that a Federal court judge and the USPTO could reach different conclusions over the same dispute.

The case before the Supreme Court comes after Congress "updated" the patent laws in 2011.  The issue before the Court is whether the USPTO rules must conform to the legal standards the courts use in adjudicating a patent dispute.

One of the purposes of the 2011 overhaul was to cull bad patents and discourage patent trolls (those who buy patents who do not manufacture the patented item, but merely assert those patents against others).  As you can imagine, because patent litigation is so costly, many patent trolls found success in suing companies for patent infringement.  In many instances, it was a better business decision to pay the patent troll rather than fight the issue in court.

Personally, I like the idea of a less expensive process allowing litigants to get resolution in patent matters.  However, I fear that the parties would go through the USPTO process and then the "loser" would decide to initiate a lawsuit which would put the parties in the unenviable position of having to pay twice for an adjudication of the same issue.

Another Company Changes Its Name to Distance Itself from a Prior Bad Association

Fisker Automotive changed its name to Karma Automotive in order to disassociate itself from its predecesser.  Fisker Automotive stopped producing vehicles in 2012 amid financial difficulty and a recall that led to bankruptcy.  Now, Chinese auto parts company, Wanxiang Group owns Fisker Automotive and decided to distance itself from the prior name in favor of Karma Automotive.  Karma Automotive is working to develop a luxury electric car which it hopes to start selling this summer.  

It makes sense, in today's markets, to try to maintain a strong brand and to distance oneself from tarnished brands.  That is certainly one of the reasons why Fisker decided to re-brand itself.  This is especially true since Fisker received a loan from the Energy Department in 2009 and caused the energy agency to lose $ 139 million on that loan when Fisker filed for bankruptcy protection.  

This is another example of how important a company's trademark or trade name can be and how it is virtually essential to maintain a strong one.  

This Trademark Dispute is Not Funny

Apparently, there are two Comic Cons.  There is the San Diego Comic-Con and the Salt Lake Comic Con (note the hyphenation and lack thereof). As you may have guessed, the San Diego outfit sued the Salt Lake one for trademark infringement.  One of the main questions was whether the removal of the hyphen in the name mattered.  Usually, it would not. Unsurprisingly, the San Diego convention argued that it owned all iterations of "comic con" in all of its possible variants.  The Salt Lake one countered that the term is a general term for the type of convention, and therefore, is not trademarkable.

Nevertheless, it appears that these two conventions are working on a settlement because they asked the judge for more time to iron out some of the details.

Lawsuit Over Copyright of Happy Birthday Song Settles

In a strange lawsuit, a movie producer, Jennifer Nelson, sued music publisher Warner/Chappell over whether she had to pay royalties to use the Happy Birthday song in her documentary.  Her documentary was about the history of the song.  Ms. Nelson claimed that Warner/Chappell did not own the rights to the song, and therefore, could not charge her royalties.  

Patty Smith Hill and her sister Mildred J. Hill wrote the tune in 1893 with the title "Good Morning to All."  From what I understand the Hill sisters were teachers and included the song in a children's music book.  They left the copyright with their publisher.  Somewhere along the convoluted history of the song, the "Happy Birthday" lyrics were added.

In 1988 Warner began collecting royalties for the song.  Warner had purchased the company that obtained the copyright from the Hill sisters' publisher sometime around that time.  To add to the complexity of the case, two other groups claimed a right to the song's copyright:  The Association for Childhood Education International ("ACEI") and the Hill Foundation.  ACEI was a charity designated by the Hill family to receive a portion of the song's licensing profits.  The Hill Foundation and ACEI claimed that they were the actual copyright holders of the song.  

Earlier in the lawsuit, the District Judge ruled that neither Warner nor the prior companies had the right to charge for use of the song--the Judge did not rule on the issue regarding whether the song is in the public domain.  

Ultimately, Warner/Chappell agreed to pay $ 14 million to settle the class action lawsuit.  In addition, they have given up their claims to the song which means that the song falls into the public domain for everyone to use without having to pay a royalty.  Now, the District Judge will need to approve the terms of the settlement for the settlement to be final.  

According to documents filed with the court, the settlement is the result of intense "around the clock" negotiations during the week before the scheduled trial.  The settlement includes ACEI and the Hill Foundation.  No party to the settlement agreement admits wrongdoing and Warner denies that the song is in the public domain.