Copyrights in Works For Hire

What can the Hulk, Spiderman and the X-Men teach us about copyrights? Well, artists and authors alike must understand the terms under which they are creating their works, or potentially lose any copyrights they, and their heirs, might otherwise enjoy. IP Law360 recently reported on Marvel Worldwide v. Kirby from the Southern District of New York, which underscores the importance of such understanding.

In short, a “work for hire” exists when an artist or author creates a work on behalf of, or commissioned by, another. Typically, this arises in an employer-employee situation when an artist or author creates a work in the regular course of employment. Copyrights under such circumstances generally belong to the employer.

The Marvel case concerned legendary comic book artist Jack Kirby, who in 1972 assigned to Marvel all rights he “may have or control” in any of the works he created for Marvel. Importantly, Kirby acknowledged that he had created the subject works “as an employee for hire” of Marvel in the 1960’s (when the Copyright Act of 1909 was in force). In 2009, Kirby’s heirs attempted to terminate these assignments based on the Copyright Act of 1976, which gives authors or heirs the right to terminate a prior copyright assignment 56 years after the date of the original copyright. Of note, the 1976 Act was enacted, inter alia, to address apparent flaws in the 1909 Act. While the heirs gave timely notice to Marvel, the Court ruled that the 1976 Act specifically excluded copyrights in a work for hire, which is what the Court determined Jack Kirby’s creations were pursuant to the 1909 Act.

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Proper Patent Valuation is Critical in Today's Market

$12.5 billion for 17,000 patents! $4.5 billion for 6,500 patents! These purchases by Google and a group spearheaded by Microsoft and Apple represent a shift in the value of respective patents. However, valuing patents is not a simple task, but requires proper attorney diligence to ensure the purchase of patents is done in an efficient manner as not all companies have the resources of Google and the Microsoft group.

In the first deal, Google allegedly paid a premium for 17,000 patents of Motorola Mobility. Some speculate that this was done to ward off lawsuits from Apple, Microsoft, Oracle, and the like targeting the Android, including application developers and manufacturers for the phone. Or maybe it was because Google's chief legal officer believes that a smart phone is possibly subject to approximately 250,000 potential patent claims. (In a related patent deal, Google obtained 1,000 patents from IBM after the Nortel deal, which is discussed below, fell through.)

In the second deal, the Microsoft group purchased 6,500 patents from a Nortel bankruptcy auction at 4.5 times the seller's valuation. This purchase was possibly done with future patent litigation and/or licensing in mind.

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A Challenge to Color Trademarks in the Field of Fashion: Christian Louboutin v. Yves Saint Laurent America

The U.S. District Court for the Southern District of New York’s August 10, 2011 decision in Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., questions whether a single color may serve as a trademark for fashion. That case arises from an action for trademark infringement brought by luxury shoe designer, Christian Louboutin, against Yves Saint Laurent America (“YSL”). Louboutin is well-known for his collection of high end women’s shoes, which have bright red glossy soles. He also owns U.S. Trademark Registration No. 3,361,597 for the following mark, which is described in the registration certificate as “a lacquered red sole on footwear:”

 

The action alleged, among other things, that YSL’s sale of four shoe designs that are entirely red, with a red sole, including YSL’s Trib Too shoe, were likely to confuse consumers as to the source of the YSL shoes, in violation of Louboutin’s trademark rights. In the August 10, 2011 decision, Judge Victor Marrero denied Louboutin’s motion for preliminary injunction, finding that Louboutin was unlikely to be able to establish that he had a protectable mark, since color cannot serve as a trademark if it is functional.

In its decision, the court recognized the cachet of Louboutin’s red soles, noting that “[w]hen Hollywood starlets cross red carpets and high fashion models strut down runways, and heads turn and eyes drop to the celebrities’ feet, lacquered red outsoles on high-heeled, black shoes flaunt a glamorous statement that pops out at once. For those in the know, cognitive bulbs instantly flash to associate: ‘Louboutin.’” Neither party disputed that Louboutin’s red soles were distinctive, or that they were associated with Louboutin’s high-end footwear brand. The court’s decision turned on its finding that a single color is unlikely to be protectable as applied to fashion.

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Gibbons Director Catherine Clayton to Host Roundtable on Internet Privacy and Emerging Issues Relating to Online and New Media Enforcement

Gibbons is pleased to announce that Catherine M. Clayton, a Director in the firm's Intellectual Property Department, will host a roundtable on Internet privacy and emerging issues relating to on-line and new media enforcement on September 22, 2011 at 12:00 pm. This program is part of the International Trademark Association’s (INTA) roundtable series, and will take place at the firm’s Newark office.

The roundtable will examine a host of emerging issues, including the impact of Internet privacy issues on brand owners; taking action against Internet scams; protesting infringement on social media sites; and the upcoming roll-out of new generic top level domains (gTLDs) for brand names, generic terms and locations. To register, please visit INTA’s website.

Beware of Invention Promoter and Private IP Registration Service Scams

While invention promoters and IP registration firms claim to assist present and future IP holders, some have been found to offer little or nothing of value in exchange for the thousands of dollars paid to them. Here are ways to investigate these firms and learn about your rights to avoid being treated unfairly.

Invention Promoters
There are several resources available to help investigate and weed out unscrupulous invention promoters. The Federal Trade Commission offers a Consumer Alert listing the “sweet-sounding promises” of promoters that may do little or nothing in return for the fees they collect. Complaints regarding invention promoters can be filed with the FTC.

The U.S. Patent and Trademark Office maintains a Scam Prevention webpage as a public forum for the publication of complaints concerning invention promoters. The USPTO does not investigate or participate in any legal proceedings, but will forward any complaints to the invention promoter and will publish any response on the USPTO public web forum.

Under the American Inventors Protection Act of 1999, invention promoters are required by law to describe their business practices and disclose all invention promotion companies they have been affiliated with over the last 10 years before entering into a promotion contract with a customer.

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The Intellectual Property Exchange International: A Market for IP Assets?

With the importance of Intellectual Property to a company’s bottom line, maximizing that value continues to command a prominent role. “Monetizing” an IP asset, such as a patent, is typically done by licensing, where the patent owner, or licensor, and the party wishing to use the patented technology, the prospective licensee, negotiate conditions and terms of use of the patented technology.

The Chicago-based Intellectual Property Exchange International (“IPXI”), debuting in 2012, bills itself as “[T]he world’s first financial exchange focused on IP rights.” The IPXI will strive to eliminate current licensing inefficiencies like cost, lack of transparency and time consumption, by creating an open market for IP assets, where the intangible IP asset will become a commodity via a Unit License Right (“ULR”) contract. A ULR contract is the IPXI mechanism by which IP asset owners will be able to license technology in a non-discriminatory manner using a standard form license and on publicly disclosed terms. Each ULR contract will give the buyer the right to use a pre-established unit of IP, such as the right to make or sell up to a certain quantity of product covered by the asset.

The process for listing an IP asset on the IPXI will be analogous to that of an initial public offering on other financial exchanges: an IP owner (or “Sponsor”) will submit the proposed asset for consideration and consultation, due diligence by a “Selection Committee” at the IPXI will take place, including publication on the IPXI website of the proposed ULR contract and a comment period by IPXI Members. Following any revisions to the draft proposal, the Selection Committee will render a final decision about the ULR contract. If in agreement, the Sponsor then will assign or exclusively license the asset to a special purpose vehicle (“SPV”) formed by an IPXI affiliate, which will serve as master licensor for offering the ULR contracts. (Think of the SPV as a specialist on a financial exchange that is trying to link up buyers and sellers of a certain commodity.) Parties to the ULR contract agree to arbitrate any disputes, with the SPV ensuring compliance with the ULR contract terms and overseeing any necessary arbitration.

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