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In 1964, the Supreme Court’s opinion in Brulotte v. Thys Co. substantially limited these licensing agreements in holding that a patent-holder could not continue to collect royalties for any licenses after the expiration date of the patent. Once a patent expires (i.e., 20 years), the market is technically free to use the invention, and all licensing agreements expire along with the patent. The Brulotte decision in effect voided many existing licensing agreements and limited a patent-holder’s negotiating power in future contracts.

Kimble v. Marvel Entertainment

The Supreme Court recently revisited this issue in Kimble v. Marvel Entertainment. In 1990, Stephen Kimble invented and obtained a patent for a Spider-man toy that allowed a user to put on a glove and shoot out pressurized foam, simulating the web-casting of the famous superhero. Kimble pitched the “Web Blaster” toy to Marvel Entertainment and, though Marvel passed on licensing Kimble’s product, the company began selling a very similar toy. In the resulting lawsuit, the parties signed a settlement agreement whereby Marvel was granted a license to use the product and Kimble would obtain royalties from toy sales. The settlement provided no end date. Once Marvel discovered the Brulotte decision, it obtained a judgment in court confirming that the company no longer had to pay any royalties to Kimble after his patent expired in 2010. Kimble appealed the decision, requesting that the Supreme Court overturn its prior decision.

The Court ruled 6-3 in favor of upholding its precedent in Brulotte v. Thys Co and upheld the lower court’s decision denying royalties to Kimble. The majority did not believe that Kimble presented enough of a “superspecial justification” to overturn the precedent set in Brulotte. Although the Court noted that Brulotte could serve to hinder innovation and limit economic competition, the Court stated it would respect its past decision, even if it was not necessarily a good one. Thus, for the time being, the ruling in Brulotte stands and limits the rights of patent holders to retain royalties after the 20-year patent term.

Mark advises clients primarily in the areas of Trademark, Trade Secrets, Copyright, and Commercial Disputes. Punzalan Law’s attorneys also handle matters in the areas of Securities Litigation, Whistleblower, and Data Privacy Counseling.

Mark currently serves in leadership capacities for a number of bar associations. He also serves as the Chair of the Legal Advisory Group for the Renaissance Entrepreneurship Center, a 501(c)(3) nonprofit that promotes entrepreneurship among women, people of color, low-income individuals, persons with disabilities, and others who traditionally lack access to entrepreneurship and business resources.

• A musician samples a piece of another song or copies a particular chord progression without authorization;
• A person downloads music, movies, or television shows through piracy programs;
• Someone uses another person’s photograph to design clothing, greeting cards, or other products; or
• A person or company posts videos of another person’s work on YouTube, including sports highlights or television clips.

These are, of course, only a few examples of ways a copyright dispute can arise.

Copyright cases can involve large sums of money. For example, the estate of late singer Marvin Gaye was recently awarded more than $7 million for the unauthorized copying of parts of Gaye’s song “Got to Give it Up” in the 2013 hit “Blurred Lines.” Infringements can also cost your business substantial profits. If you ever suspect that someone else is unlawfully using or profiting from your original work, you should never delay in discussing the matter with an experienced intellectual property attorney. Furthermore, if you have been accused of copyright infringement, a strong defense is important to keep you from facing a large financial penalty.

Basics of Copyright Law

Copyright laws in Title 17 of the United States Code allow individuals or businesses to protect their original work from misappropriation. When artists, authors, musicians, software developers, or others file a copyright, any use of the copyrighted work must be properly authorized by the rightful owner. Further, a person needs authorization to reproduce the work, distribute the work, perform the work in public, display the work, or make derivative works. The following are common works that may be protected:

• Pieces of literature
• Pictures, sculptures, and graphic works
• Sound recordings
• Musical works and lyrics
• Plays and other dramatic works
• Choreography that has been written down or recorded
• Architectural works

Copyrights cannot, however, protect abstract ideas, concepts, or a form of expression that has not been tangibly recorded.

 When Do Copyright Protections Exist?

Too many people believe that in order to have protection of their work under the law, they must file certain paperwork or take other affirmative steps. This is not the case, however, as copyright protections are automatically effective when the work is created. This protection will continue throughout the creator’s entire life plus 70 years following their death.

Though it is not necessary to register a copyright protection with the United States Copyright Office, individuals and businesses who choose to register enjoy certain benefits. Registration provides publicly available record of your copyright protections and serves as evidence of your ownership in any subsequent legal disputes. Additionally, you are not able to file a legal claim for infringement until you have registered your copyright and timely registration can save you in legal costs. The registration process involves completing an application, a copy of the work to be protected, and a filing fee.

 Copyright infringement cases can be extremely complicated and significant sums of money can be at stake. Anyone who believes they may have a copyright dispute or who simply wants more information regarding the legal implications of a copyright should contact our office for help today.

Background of the Dispute

B&B Hardware holds a registered trademark for the name of its product SEALTIGHT, while Hargis Industries applied to register a trademark for its product SEALTITE. B&B raised an opposition to the trademark for Hargis, arguing that a high likelihood of confusion existed with its own type of metal fastener. In order to determine whether a trademark would create a likelihood of confusion, deception, or mistake in the face of opposition, the TTAB considers only how the mark is used in regard to the goods involved the application or registration. The TTAB generally does not extend its analysis to how the trademark will be used in commerce. The TTAB ultimately denied the trademark application filed by Hargis Industries finding that confusion was likely to occur.

Before the TTAB issued its decision, B&B also filed a trademark infringement claim in civil court and requested an injunction because use of the SEALTITE brand name was likely to cause confusion, deception, or mistake. Once the trademark denial was issued, B&B argued that the decision would preclude Hargis Industries from arguing that there would be no likelihood of confusion and thus moved for summary judgment in its favor. The court denied this motion, stating that the decision by the TTAB—a federal agency—would not preclude a decision in court. The decision was largely based on the fact that the TTAB does not do as thorough of an analysis as is required in an infringement claim, especially regarding the use of the mark in the marketplace. Both the district court and the Court of Appeals for the Eighth Circuit found that no preclusion existed based on the TTAB decision.

Supreme Court decision and Impact

In a 7-2 decision, SCOTUS disagreed with the lower courts and held that issue preclusion could exist based on the determination of the TTAB so long as the other requirements of issue preclusion are met. Generally, these elements are that an issue of fact or law was actually litigated, that the issue was decided in a valid and final judgment, and that the determination was essential to the judgment. The fact that the TTAB may use different factors in deciding a likelihood of confusion does not automatically prevent preclusion.

This decision may have an effect on trademark litigation in the future. For example, because more weight will be given to the TTAB decision, pursuing an opposition to a trademark based on likelihood of confusion could become more complicated and costly. Businesses may fight harder to oppose a trademark in the TTAB because they may not have the chance to present evidence on the matter in a subsequent court case. Litigation strategies regarding likelihood of confusion issues will have to evolve to ensure that trademarks are best protected

What is a Cease and Desist Letter?

Cease and desist letters are commonly sent to businesses or individuals to demand the discontinuation of a certain action (“cease”) and to refrain from further engaging in the action (“desist”). The cease and desist letter is a standard first step in protecting your rights. Sometimes the cease and desist letter is all you need to get the other party to stop the infringing actions. Other times it is the start of a negotiation process or the foundational groundwork for a civil law suit.

Cease and desist letters typically identify the infringed material, provide proof of ownership of the copyrighted or trademarked material, and outline the instances where the intellectual property has been infringed upon. In the world of intellectual property, a cease and desist letter is an assertion of rights and notice of the intent to assert those rights. If the offending party ignores the letter or continues the infringing actions, then the owner of the rights may decide to take legal action and the cease and desist letter may serve as notice and evidence in future litigation.

In the event of infringement, you will want to gather any documentation or evidence to support your case. If you have an attorney write the cease and desist letter, the attorney will often cite laws and regulations to support your position, such as the laws on copyright, trademark and patent rights.

What is Copyright or Trademark Infringement?

Copyright infringement is the use of works protected by copyright law without permission, violating certain exclusive rights  granted to the copyright holder, such as the right to reproduce, distribute, display or perform the protected work, or to make derivative works. Such infringement can be intentional or unintentional (“innocent” infringement) but even innocent infringement may be actionable. (See Bright Tunes Music Corp. v. Harrisongs Music, Ltd., 420 F. Supp. 177 (S.D.N.Y. 1976). Copyright law protects any original creation such as literary works, paintings, photographs, drawings, films, music (and its lyrics), choreography, sculptures and many other creative works.

Copyright owners may obtain the following penalties for infringement:

• Infringer pays the actual dollar amount of damages and profits;
• Statutory damages of $200 to $150,000 for each work infringed;
• Infringer pays for all attorneys fees and court costs;
• The court can issue an injunction to stop the infringing acts;

• The court can impound the illegal works; or
• Infringer could serve jail time.

According to the USPTO, trademark infringement is the “unauthorized use of a trademark or service mark on or in connection with goods and/or services in a manner that is likely to cause confusion, deception, or mistake about the source of the goods and/or services.” In determining whether consumers are likely to be confused, the courts will typically examine a number of factors, known as the “Polaroid Factors” which include: (1) the strength of the mark; (2) the proximity of the goods; (3) the similarity of the marks; (4) evidence of actual confusion; (5) the similarity of marketing channels used; (6) the degree of caution exercised by the typical purchaser; and (7) the infringer’s intent. Polaroid Corp. v. Polarad Elect. Corp., 287 F.2d 492 (2d Cir.), cert. denied, 368 U.S. 820 (1961).

If the infringer continues using the mark despite the cease and desist letter, the owner may want to consider filing a lawsuit. If the owner is able to prove infringement, available remedies for trademark infringement may include the following:

• A court order (injunction) that the infringer stop using the mark;
• An order requiring the destruction or forfeiture of infringing articles;
• Monetary relief, including the infringer’s profits, any damages sustained by the trademark owner, and the costs of the action; and
• Infringer pays for all attorneys’ fees.

What to Do If You Receive a Cease & Desist Letter

If you receive a demand letter notifying you to stop allegedly infringing behavior, you are not legally required to respond to the letter. In and of itself, a cease and desist letter is NOT legally binding. Additionally, there are times when cease and desist letters have been used to intimidate the recipient or mislead the recipient into paying for a license to use the mark. However, as outlined above, ignoring it may have legal ramifications.

If you get a letter, take the following steps:

1. Review the letter and determine what type of intellectual property rights are being asserted. Is the letter about copyright, trademark or patent infringement?
2. Assess whether the claims have merit.
3. Gather evidence or information about the issue that counter the claims or support your position.
4. Meet with an attorney to determine your rights, the validity of the legal claim and the appropriate response.

If the claims have merit, there may be defenses against infringement and Punzalan Law can help you identify the defenses and provide you with an assessment of the strengths, weaknesses and risks of the case. Additionally, Punzalan Law can help you register, protect and enforce your copyrights or trademarks.

Trade secret law provides an alternative way for people who have a unique idea from which they may be able to profit to protect their intellectual property, without having to disclose it to the rest of the world. In addition, unlike trademarks, patents, or copyrights, trade secret protections do not expire, allowing the protection to be extended indefinitely, which may be of significant importance to certain ventures. For example, the Cola-Cola Company has successfully protected the formula for its eponymous product as a trade secret for decades after its patent protections would have expired, resulting in untold billions in profits.

What is a Trade Secret?

California, along with a majority of other states, has adopted a version of the Uniform Trade Secrets Act (UTSA) in California Civil Code §§ 3426-3426.11, which defines a trade secret as “information, including a formula, pattern, compilation, program, device, method, technique, or process.” In addition, in order to one of the preceding ideas to be considered a trade secret, it must:

• Derive independent actual or potential economic value by not being known to the public or to other parties that may be able to profit from its disclosure or use, and
• Be the subject of reasonable efforts to maintain secrecy regarding its existence or content.

The types of intellectual property that may be considered trade secrets include recipes, customer or client lists, processes for the manufacture of certain products, computer programs or applications, techniques of products, research data, pricing information, marketing plans, and information regarding company personnel.

Misappropriation of Trade Secrets

The USTA refers to the theft or other misuse of trade secrets as “misappropriation.” The law defines misappropriation as the acquisition of a trade secret of another by a person who knows or has reason to know that the trade secret was acquired by improper means. In addition, misappropriation can occur when an unauthorized person discloses or uses a trade secret. Misappropriation can occur both through intentional and unintentional disclosure and could be the result of actions taken by both employees and third parties.

Remedies

There are a variety of remedies available to parties who have fallen victim to trade secret misappropriation under the UTSA. Among those authorized by the statute include:

• An injunction enjoining the actual or threatened misappropriation
• Payment of royalties
• Actual damages
• Unjust enrichment
• Double the actual damages, in cases of willful and malicious misappropriation
• Attorney’s fees

Various criminal penalties may also be available under California law, including under California Penal Code 499c, which specifically criminalizes the theft of trade secrets.

Protecting Trade Secrets

Importantly, businesses must make “reasonable efforts” to ensure that the ideas that they wish to protect as trade secrets are classified as such by the law. Such efforts could include informing employees about the confidential nature of certain information, marking confidential files as such, establishing internal network security measures, and the use of non-compete and non-disclosure agreements with employees and potential business partners.

Federal Law

There are a number of federal laws that can be used to criminally prosecute individuals and businesses that misappropriate trade secrets. Among the most commonly used is the Economic Espionage Act of 1996, which criminalizes the misappropriation of trade secrets, including knowingly buying, possessing, or receiving trade secrets. The penalties associated with violating the law include a fine of up to $5,000,000 and 15 years in prison for individuals and for organizations “the greater of $10,000,000 or 3 times the value of the stolen trade secret to the organization, including expenses for research and design and other costs of reproducing the trade secret that the organization has thereby avoided.”

For further information, contact Punzalan Law, P.C.

Anyone with questions regarding trade secret protections or who is currently involved in a trade secret dispute should consult with an attorney with experience in this area of law immediately. The attorneys at Punzalan Law, P.C. advise and counsel a wide variety of companies on legal matters related to intellectual property and trade secret protection.

Heidi has also exhibited a commitment to pro bono work and has worked with a variety of non-profit organizations in obtaining temporary restraining orders for domestic violence victims, assisting with asylum applications, and serving as a mentor to a foster child.  In her spare time, Heidi plays violin as a member of San Jose’s professional orchestra, Symphony Silicon Valley, and serves on the Board of Directors for the California Music Center in San Francisco.

Heidi received her Bachelor of Arts from Stanford University in 1999 and her Master of Music degree from the San Francisco Conservatory of Music and Yale University.  Heidi received her Juris Doctor from Santa Clara University School of Law in 2006.

a record $30 million to a whistleblower who provided original information that led to a successful

SEC enforcement action. SEC Press Release. As Sean McKessy, the Chief of the SEC’s Office of the Whistleblower,

stated, “Whistleblowers from all over the world should feel similarly incentivized to come forward with credible

information about potential violations of the U.S. securities laws.” What is a whistleblower, and why are they

important? Corporations or other organizations that attempt to defraud the government can cost American

taxpayers billions of dollars. Employees or members of an organization who are brave enough to come

forward and report fraud, corruption, or other violations to governmental authorities are known as

“whistleblowers.” In many instances, individuals who are aware of unlawful activity taking place may fear

retaliatory action if they report the misconduct. For this reason, federal and state laws protect whistleblowers

from such retaliation and also provide financial rewards under certain circumstances. Anyone who is

considering blowing the whistle on an employer or other entity’s governmental fraud should seek the advice of

legal counsel.

Common Types of Whistleblower Actions

Different federal laws protect whistleblowers who expose different types of unlawful actions. The

following are some examples of laws that protect whistleblowers in the United States:

• False Claims Act (31 U.S.C. § 3729–3733)—This law includes a “qui tam” provision, which

gives certain rights to whistleblowers who report violations of the False Claims Act, which prohibits

fraud against federal government programs. The Act allows individuals to file a legal claim on

behalf of the government against an organization committing such fraud, thereby exposing the fraud.

The qui tam provision further allows the individual to receive part of the damages recovered by

the government—generally from 15% to 20% — depending on the extent of the whistleblower’s

assistance. Common qui tam actions arise from fraud involving military contracts, health care, or

other spending programs.

• IRS Whistleblower Law (26 USC § 7623)—Many companies and individuals try to pay as little

in taxes as possible, and some even go so far as to commit tax fraud in order to limit liability. If an

individual provides information about a party’s tax fraud and underpayments that exceed $2 million

and the IRS takes judicial action, the whistleblower may stand to receive 15% to 30% of the amount

the IRS collects.

• Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111–203)—This Act

created the SEC Whistleblower program, which rewards individuals who expose insider trading and

other securities fraud schemes. If a individual provides information and a successful legal action

worth more than $1 million results, the SEC Office of the Whistleblower is authorized to reward the

whistleblower 10% to 30% of the penalties recovered.

The above are only a few instances of whistleblower scenarios and laws that protect and reward

whistleblowers for their willingness to expose unlawful actions. At Punzalan Law, we understand

that whistleblowers have certain rights and deserve protection, and we provide the highest quality of

representation for each individual client. If you believe you have a case related to whistleblowing, please

do not hesitate to contact our office today.