Category: Intellectual Property

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Federal Trade Secret Law

I just wanted to note that Congress has passed a new federal trade secret remedy, which the President intends to sign into law.  Who says that nothing gets done in Washington.  (Though I doubt that this is a good move.)  The Act does not preempt state trade secret law, so it remains to be seen how much of a role the new federal remedy will have.

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Federal Trade Secret Protection

Yesterday the Senate unanimously passed a statute creating a federal cause of action for the violation of trade secret.  I do not know what the prospects are for this legislation in the House, but I want to express my opposition to the bill.

In general, I take a dim view of federal statutes that seek to take over regulation traditionally handled by the state common law.  There are situations where that is warranted, but this is not one of them.  Trade secret protection is in place in every state, and there is no reason to think that this system is inadequate.

Naturally, companies often prefer one national standard to many state standards, but in my view that does not justify federal action.  An article from Reuters commenting on the bill stated that trade secret cases are currently “relegated to state courts,” which is not the way I would describe federalism but does accurately describe the attitude behind the statute from Republicans and Democrats.

I hope the House decides not to take up this legislation.

 

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Patent Pending

Here’s a question that occurred to me when I was browsing the other day. What is the point of putting “patent pending” on an item for consumers? This gives notice that if a patent is granted then infringement liability may relate back to the use of the item in question, but that is irrelevant to the average consumer.  Is the point of “patent pending” to mislead some consumers into thinking this means “a patent will be granted?”  Does patent pending just sound better than not saying anything about that?  It seems like a fact that only investors would care about.

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Who Owns Soccer?

I’m pleased to announce that Mike Madison, a terrific IP scholar at the University of Pittsburgh Law School, will be giving a talk at my school on Tuesday, March 29th on “Laws of the Game:  Who Owns Soccer?”  The details are here for those who would like to attend.

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The Supreme Court and IP

I would like to dissent from a recent trend that I see in IP. Two recent certiorari petitions (still pending) are asking the Court to get involved in doctrines that they have left alone for decades–the right of publicity and design patents.  These petitions are supported by many scholars that I respect, but I submit that they are making a mistake in asking for this sort of intervention.

While there are significant First Amendment issues raised by the right of publicity, I see no indication that publicity law is working poorly and needs help for the Justices.  Moreover, I see no reason to think that the Justices will actually be helpful in an area of law that they know nothing about.  Design patent, I think, is the same story, though there the argument for Supreme Court action is even weaker given the absence of any constitutional concerns.

I’m not against asking the Supreme Court to decide IP cases.  Far from it.  With respect to utility patents, there was (and still is) a need to rein in the Federal Circuit’s errors and excesses.  In the two areas that I’m highlighted, I think the Court will just mess things up and should stick with “Do No Harm.”

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Better Bar Design Means Better Revenue and Health for Bartenders

With the resurgence of cocktail culture, one may not think about a bartender’s work area, but it turns out that area is not well-designed so much so that bartenders have health problems and they can make fewer drinks. So in the age of let’s design and fix that, a bartender has come up with an “ergonomic, behind-the-bar workstation—which he calls the ‘race track’.” The new design lets the bartender stay in one place, have everything within forearm reach, and gets rid of the well (across which a bartender must lean and thus hurt his or her knees). The creator is seeking a patent, and the expected cost right now is five figures (they are hand built). The Wired piece covers some history of the bar and how ice changed the way we drink and how today the craft cocktail trend means efficiency is at a premium. As Wired notes

A good bar with a smartly built bartender station, on the other hand, is a blue-ribbon-prize-winning cash cow. Your typical cocktail den, Simó says, will rake in between $6,000 and $8,000 in sales in a night. At a nightclub, you more than triple that. A single bartender can ring in $10,000 in sales, by himself. That’s all contingent on how fast he can sling drinks, and Lafranconi says the race track is optimized for that kind of speed. “We can increase the output by about 10 to 15 drinks per hour.”

Throw in the health issues–“Tending bar in 10-hour shifts, night after night, can lead to injuries like tennis elbow, tendonitis, and plantar fasciitis”–and the future bar will let you be closer to the bartender, get your drink faster, and keep him or her in good enough health to be there the next time you visit. Pretty cool.

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Beatles in the Ether or Streaming

By now many may know that The Beatles catalog (or most of it) is available for streaming on the major services. I happen to love The Beatles and easily recommend Cirque du Soleil’s Love in Las Vegas. But the streaming option presents some questions to which I have not seen answers. First, did the services offer anything extra or special to get the rights (I can’t recall the state of streaming license law as far as flat rate or baseline rate to stream if the rights are granted)? Second, will the rights holders (I can’t recall where those have ended up) track the money from streaming versus selling the tracks and albums? If they do what will they find? Work on P2P music sharing and its effect on music and a study on the effect of free options for film may shed light on the future for Beatles revenues. The film study offered:

Together our results suggest that creative artists can use product differentiation and market segmentation strategies to compete with freely available copies of their content. Specifically, the post-broadcast increase in DVD sales suggests that giving away content in one channel can stimulate sales in a paid channel if the free content is sufficiently differentiated from its paid counterpart. Likewise, our finding that the presence of pirated content does not cannibalize sales for the movies in our sample suggests that if free and paid products appeal to separate customer segments, the presence of free products need not harm paid sales.

If music works in a way similar to film, The Beatles rights holders may expand their pie, not reduce it.

Either way I am happy to enjoy the streaming options while they last.

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Holiday Cheer – Creations for Good

A sister notices that her sister’s monitor for her blood sugar level has a weak alarm and does not work well to wake someone up at night, when the alert is critical. Sister decides maybe she can do something, and she does. Who is this mystery girl? Our own Danielle Citron shared with me (and let me share more) that her daughter, JJ, has been designing a new monitor to help diabetics (which her sister has).

JJ applied to a program to help high schoolers with STEM projects and was paired with folks at Northrup Grumman where she spent a day a month developing her idea. Along the way, JJ had to figure out what alarm noise worked best to wake someone up, program a code to link the monitor and bracelet devices, and then wired them. As her school reports

This year, Citron will continue to test and refine the design, creating the bracelet with the help of a 3D printer. When she’s finished, the bracelet will change color to let the user know immediately if their blood sugar is getting too high or too low. The detailed information from the monitor will also be linked to a smartphone app.

3D printing! Color coding! And JJ seems poised to go into computer science.

Although I am friends with Dani and have met JJ, the real point for me is that a teenager saw a problem and felt she had the room to try and fix it. Then she worked on it. Her success is lovely, but the fact of the chance is downright excellent and puts me in a great holiday mood. Of course, with Danielle as her mom, JJ may have to look forward to law professors wondering about patents, privacy, and data ownership, but those are what a good friend of mine once called “high quality problems.” Well done, JJ.

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Authentic Brands

What is authentic? The question seems to pop up in many areas. If a company or corporation claims authenticity, I am sure several folks I know would have a reflexive reaction that such a claim is absurd. Nonetheless, the Economist notes that “Authenticity” is being peddled as a cure for drooping brands. One part of the article notes that despite the ongoing difficulties in valuing brands, “when brands are sold as part of corporate takeovers, what price do investors put on them? They found that these prices, as a percentage of deals’ total value, have dropped since 2003. So, at least for those firms being taken over, the strength of their brands is becoming a smaller share of their overall worth.” That is interesting insofar as it suggests that 1) Brand value (and goodwill in that sense) can be measured and 2) That is has gone down.

What is driving the change? A key thing I have tried to show is that the issue of information or search costs is not as high as it used to be and that change brings into question many aspects of trademark law and policy. The Economist seems to agree and puts it this way

It is not hard to see why the old marketing magic is fading, in an age in which people can instantly learn truths (and indeed untruths) about the things they are contemplating buying. Online reviews and friends’ comments on social media help consumers see a product’s underlying merits and demerits, not the image that its makers are trying to build around it. The ease of accessing information makes consumers more likely to abandon their habitual brands because they have heard about something new, or learned that retailers’ own-label products are much the same, except cheaper. Depending on your perspective, people are either increasingly fickle or ever more impermeable to marketing bullshit. For brands that lack any truly distinguishing features, that is bad news.

Better information and new sources of it change the legal and brand landscape. Plus an old problem–trying to sell essentially the same goods–has returned. As Spencer Waller and I noted, “From the end of the nineteenth century to the middle of the twentieth century to today, companies have had to find ways to compete over selling essentially the same goods and manage excess production capacity.” So it is not surprising that the sectors most hit by the change The Economist discusses are consumer goods and imported goods that no longer offer difference from other, lower-cost options of the same or close to same quality.

So can a corporation be authentic? If a corporation is slinging its authenticity with Keebler Elves and Santa Claus in Coke Red, that is a harder sell. Those plays will be claiming authenticity based on cultural history and maybe a done deal in that sense (as Spencer and I discussed, the history of firms using events and education to build a sense of community and identity is old). But insofar as craft brewing, locally-made goods, and customized offerings are claiming authenticity, those may fit the authenticity claim; as long as that claim is that the item is not from a firm of a certain size or somehow to be distrusted because of size, for Scalia was correct in Citizens United that many firms of many sizes can be corporations. Assuming small and personal is a sort of authenticity, where I am not sure The Economist is correct is its example of Apple. The newspaper offers

for those firms that get the product right and have a genuine story to tell, the rewards can still be huge. The textbook example of this is Apple, whose devices’ superior design and ease of use make it a powerful brand in a commoditised market. Last year it had only 6% of the revenues in the personal-computer market, but 28% of the profits. That’s real authenticity.

If getting the product “right” is the key, then the competition is about old school “my goods and services are better quality than yours.” If the story is also key, then we have to start asking whether Apple’s claims are accurate or myth-making “bullshit” as the Economist might say. I like Apple products as they fit my needs. I buy them despite the over-claimed genius we are all tech saviors rubbish they sling. It is authentic as long as it authentic here means 100% Silicon Valley hubris. So pure it …

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Santa Coke? Goodwill to All and the Corporate Sources of the Man in the Red Suit

Many may know, but in case you don’t, the image of Santa Claus as a round man in a red suit traces its roots to a riff on St. Nick in brown and green. The linked video story via Fortune has Coca-Cola historians sharing why this creation is so great in their view. There were challenges such as increasing sales of Coke in winter and making an image of Santa that was as iconic as the Quaker Oats man. Vision, ingenuity (dare we say innovation? Dare. Dare.), and world-wide advertising spread the new Coca-Cola-red-wearing Santa far and wide. I wonder whether the idea of promoting this history is to remind folks of Coke in general and create an extra felling of warmth towards the company. And I wonder whether today Coke would try to lock down the image or let it be as ubiquitous as it is. Would the spread of polar bears wearing red and white scarves or hats be smiled upon or would the Cease and Desist letters fill lawyers’ heads and stockings as well? I hope that Coke and other corporate creators see that some of the work is cultural and can be let go without fear of losing value and maybe, just maybe, spreading goodwill to all.