UnIntellectual Property (UnIP): Trade Secret for Process Used to Transfer Images to Flagstone
The Superior Court of Pennsylvania entertained the appeal from the denial of Appellants’ motion for attorney fees under the Pennsylvania Uniform Trade Secrets Act (“the PUTSA”). The Appellants had sought attorneys fees related to Appellee Plaintiff’s having included a misappropriation of trade secrets claim in their lawsuit against Appellants, only to ultimately stipulate to its removal after the Appellants filed a motion for partial summary judgment. The court denied the motion for attorney fees, but this Court reversed (with a dissenting opinion). In doing so, the Court analyzed whether the Plaintiff’s trade secret misappropriation claim was applied what other courts have applied in similar cases, which is the two-prong test for bad faith: (1) objective speciousness of the claim and (2) subjective misconduct by the plaintiff in making the claim. It held:
This case actually involves a Court’s determination that a baking process may, as a compilation, qualify as a trade secret. Although it is not the typical UnIP I blog about, I believe it is instructive to trade secret attorneys.
UnIntellectual Property (UnIP): Trademark for iBooks
The United States District Court for the Southern District of New York granted Apple’s motion for summary judgment stemming from a book publisher’s claim that it had rights to its unregistered trademark for “ibooks” and that Apple’s use if “iBooks” for its e-reader software created a likelihood of reverse confusion. In doing so, it determined that “no reasonable jury could conclude that, as of 2010 when Apple announced its e-reader software, a substantial segment of ordinary consumers in the plaintiffs’ market associated the mark “ibooks” with a single source.”
In analyzing the issue, the Court recognized that Plaintiff had claimed rights to a composite trademark, which consisted of not only the “ibooks” characters but also an image of a light bulb, but it found that Plaintiff failed to establish that the “ibooks” portion of the mark created a separate and distinct impression. While Plaintiff argued that “ibooks” was suggestive rather than descriptive, the Court also recognized that the fact that “i” stood for Internet, it referenced the USPTO Trademark Manuel of Examining Procedure (TMEP) in recognizing that such letter is recognized by consumers to refer to the Internet. Moreover, the Court recognized that the USPTO’s previous refusal to register the Plaintiff’s mark as being deceptively misdescriptive further supports the Court’s opinion that the mark is indeed descriptive.
With that determination made, Plaintiff was tasked with establishing secondary meaning in order to claim acquired distinctiveness, and thus a protectable trademark. Without a survey, Plaintiff argued the trademark secondary meaning factors: advertising expenditures, sales success, unsolicited media coverage, intentional copying, length and exclusivity of use, and other evidence (in the form of alleged “expert testimony”). The Court ultimately held that “the plaintiffs have failed to submit sufficient evidence to raise a genuine issue of material fact with respect to whether a “substantial segment of the relevant group of consumers made the requisite association” between a source and the mark.”
Would a consumer survey had changed the Court’s mind, or at least created an issue of material fact? I say no based upon the Court’s opinion also rejecting any likelihood of consumer confusion.
UnIntellectual Property (UnIP): Trade Secret for Customer List
An Arizona Court of Appeals Court has determined that a cause of action for trade secret misappropriation must fail where the Plaintiff can not establish that the customer list at issue is a protectable trade secret. In doing so, it overturned the trial court. The Court recognized that a customer list may be trade secret under the Arizona’s Uniform Trade Secrets Act where it “represents a selective accumulation of detailed, valuable information about customers such as their particular needs, preferences, or characteristics that — naturally “would not occur to persons in the trade or business.”" However, here, an employee left his employer, where he was a financial advisor, and went to work for a another employer, as a CPA. After sending out a mass email to the client list, the lawsuit commenced.
The Court deemed the customer list to be unprotectable as a trade secret because of a lack of evidence of “specialized, valuable information about its customers, such as information concerning their financial requirements, tax strategies, investment objectives, and risk and investment preferences that could constitute a protectable trade secret.” There was a lack of identification of what unique information could qualify as a trade secret. Moreover, the Court held that the customer list was not held in secrecy because the new employer actually had information from a previous mutual referral arrangement involving employees of the employers.
Once again, the facts determine the outcome in these cases, and opinions can differ. The appellate court applied the question of law, namely whether the customer list is a trade secret, de novo relying upon those same facts as the trial court. That said, this decision does not surprise me. While a customer list may be protectable, a trade secret attorney would likely be able to help before litigation commences as much as after in ensuring such a list can and will qualify.
Calisi v. United Financial Services, Inc., No. CV 2010-000795 (Ariz. App. April 11, 2013).
UnIntellectual Property (UnIP): Copyright or Patent Rights in Giant Plunger Idea
The Fifth Circuit Court of Appeals affirmed the dismissal of a pro se complaint that alleged oil giant defendant, BP, stole her intellectual property by misappropriating her copyrighted or patented ideas for stopping the 2010 oil spill in the Gulf of Mexico. The Complaint was based upon Plaintiff having submitted ideas, in response to a request for Alternative Response Technology (ART) proposals, to address the spill. Plaintiff claims that she had filed a provisional patent application with the USPTO (although it was never granted) related to her giant plunger idea. After seeing pictures, provided via the media, of her second idea submission, namely a plunger device, being used by BP, she filed suit.
The Fifth Circuit, in a very short opinion, affirmed the district court’s dismissal. The United States District Court for the Eastern District of Louisiana had held that Plaintiff failed to plead a copyright claim. In doing so, it noted: “The Court cannot reasonably infer that any defendant copied her alleged work of authorship or used her idea based on the fact that she saw “media pictures” of what she alleges was her work/idea.” It concluded: “Whether under a patent infringement, copyright infringement, or general “theft of intellectual property” rubric, the complaint fails to state a claim because it is “an unadorned, the-defendant-unlawfully-harmed-me accusation.”
Was this a case that would have come out differently had the Plaintiff retained counsel? It is hard to tell if there was something more to this “plunger idea” and any facts that could show BP or others misappropriated it in some way. Regardless, I hope the thing worked.
Richards v. BP Exploration, Case No. 12-30508 (5th Cir., Apr. 3, 2013) (per curiam).
What was once declared UnIP, ultimately held to be a protectable trade secret.
The Court of Appeals of Texas has reversed a trial court’s denial of Plaintiff Waste Management’s seeking of declaratory and injunctive relief under the Texas Public Information Act (TPIA) to prevent the disclosure of information contained in waste tickets. A citizen made an open records request to the County for certain waste tickets related to the operation of the County Landfill, which is operated by Waste Management. Waste Management claimed that the the customer names, pricing, and volume of waste contained on a waste ticket was a trade secret, and thus excepted from disclosure under the TPIA.
Texas courts weigh six nonexclusive factors: (1) the extent to which the information is known outside the business; (2) the extent to which it is known by employees and others involved in the business; (3) the extent of measures taken to guard the secrecy of the information; (4) the value of the information to the business and to its competitors; (5) the amount of effort or money expended in developing the information; and (6) the ease or difficulty with which the information could be properly acquired or duplicated by others. Applying these factors, the Court first recognized that providing the information to the Country does not render the first factor in favor of a finding of no trade secret because “Providing trade secret information to a governmental body as required by it does not waive a company’s trade secret protection.” Second, with less than 20% of the company being able to see the pricing and volume related to the customer’s waste, widespread knowledge did not favor a finding against trade secret protection. Third, employees were trained, signed confidentiality agreements, and safeguards were in place to protect the waste ticket information as trade secrets. Fourth, competitors would use the information to undercut Waste Management’s pricing and thus force them to lose customers. Fifth, given that pricing negotiations can last for years, this factor favored a finding for trade secret protection. Sixth, a senior manager of Waste Management’s testimony that “a party could not determine the volume and pricing information by sitting outside the landfill and observing trucks entering and leaving it” was enough to favor trade secret protection.
Ultimately, the Court reversed the trial court and found that the information on the waste tickets was indeed a trade secret.
While the Plaintiff was assuredly not happy with having to win on appeal, and thus pay for an appeal, it is likely happy with the final result. The Attorney General, for the Defendant, on the other hand, may feel that this was literally a waste.
UnIntellectual Property (UnIP): Trademark Rights in the United States
The United States District Court for the Eastern District of Virginia had to determine the following issue: “whether Plaintiff fails to state a claim for direct trademark infringement and contributory trademark infringement when Plaintiff does not assert (1) trademark rights in the United States, and (2) effect on United States commerce.” Does the way this issue was framed by the Court give away the answer? (YES). The Court granted Defendants’ Motions to Dismiss Plaintiff’s Complaint for failure to state a claim because Plaintiff failed to plead facts to establish recognized trademark rights in the United States.
Plaintiff, the owner of a Canadian trademark for LANDCRUISE that rents motor homes in Canada and a pending USPTO application in the United States, operates from its website landcruise.com. Plaintiff alleged that Defendant, a resident of the United Kingdom who uses the “Landcruise” mark in connection with her motor home rental business in the UK and registered landcruise.co.uk, has infringed his trademark. The Court analyzed Plaintiff’s trademark rights. In doing so, it found that the Plaintiff had not alleged sufficient facts to assert that he operates his business or uses his mark in the United States. Moreover, “to the extent that his business operates exclusively in Canada, there can be no confusion among American consumers because Dunabin’s use of Landcruise is limited solely to the United Kingdom.”
Most tellingly, the Court went on to state:
Plaintiff erroneously relies on his use of the Landcruise mark in Canada and his registration of Landcruise.com domain name to confer trademark rights in the United States. Plaintiff alleges such conduct gives him worldwide rights to the Landcruise mark, as well as exclusive rights over all second-level domain names and subdomain names, including Dunabin’s Landcruise.uk.com. However, operating a website available on the Internet is not equivalent to use in United States commerce. See Specht v. Google Inc., 758 F.Supp.2d 570, 593 (N.D.Ill.2010)(finding a website that merely advertises products and fails to offer consumers any information regarding pricing and sales does not constitute a bona fide use in commerce under the Lanham Act.). “Courts have noted that anyone may register any unused domain name upon payment of a fee,” but this registration in no way trumps federal trademark law. Newborn v. Yahoo!, Inc., 391 F.Supp.2d 181, 190 (D.D.C.2005)(internal citations omitted). Therefore, the mere registration of Plaintiffs Landcruise.com domain name is insufficient to confer trademark protection under the Lanham Act.
Based upon the above, the Court granted dismissal finding that Plaintiff had not established trademark rights in the United States. The decision raises several questions for me, and likely for trademark attorneys and domain name lawyers alike:
1. Once again, how much would a USPTO trademark registration have helped, especially given the Court’s strict interpretation of the geographic scope of trademark rights?
2. While the mere registration of a domain name is not enough to establish trademark rights, if Plaintiff had established actual trademark use on its website or in some other marketing material and could point to a US customer, would that have changed the ruling?
3. Was there not a cybersquatting claim under the ACPA?
4. Could all of this change if Plaintiff can successfully register its mark with the USPTO?
UnIntellectual Property (UnIP): Trade Secret for Client List
The United States District Court for the Central District of California granted Defendant’s motion to dismiss numerous claims, including one for trade secret misappropriation brought by the Plaintiff stemming from Defendant’s alleged attempts to unionize its employees. The Court’s findings as it relates to the trade secret misappropriation claim, pursuant to California law, are worth quoting below:
You have to love a case that starts out by saying “This is a case about trademarks and apple turnovers.” I love both. The United States District Court of the Eastern District of Pennsylvania had to deal with both following Defendant’s Motion to Dismiss. Plaintiff, Sweet Street Deserts, Inc., alleged that Defendant, Chudleigh’s Ltd, tortuously interfered with its business by wrongfully asserting a trademark right to an apple turnover product with a generic design. Plaintiff had been asked by the restaurant chain, Applebee’s, to create an apple turnover dessert that would be sold in the restaurants. Plaintiff, a bakery, sought to outsource the production, and it entered discussions with Defendant, another bakery. Plaintiff ultimately chose not to use Defendant and decided to produce the product in-house. Defendant learned of the same, and its attorneys sent a cease and desist letter to Applebee’s demanding that it stop selling the product offered by Plaintiff because it infringed upon Defendant’s incontestable trademark design for “a distinctive configuration for baked goods.” Applebee’s chose to no longer sell Plaintiff’s product.
Plaintiff sought, among other things, declaratory judgment that its apple turnover does not infringe Defendant’s and that Defendant’s trademark is invalid. The Court focused mostly upon whether the trademark cease and desist letter may amount to tortious interference, rather than be privileged. The Court analyzed the “sham exception” to First Amendment protected right to petitioning activity. In determining whether the letter was “objectively baseless” and “subjectively motivated” by anticompetitive intent, however, the Court also analyzed the underlying trademark issues. In doing so, it did not yet determine whether the Defendant possessed protectable trademark rights. However, it questioned whether a likelihood of confusion could exist given the differences in the products. Nonetheless, it ultimately denied Defendant’s motion to dismiss as it relates to the declaratory judgment claims and tortious interference claims alleged by Plaintiff.
Plaintiff may not ultimately be successful in providing that Defendant’s incontestable trademark is generic, although I must say I have seen such a design many times before in my family’s kitchens and elsewhere. Regardless, Plaintiff does not have to if it can establish no likelihood of confusion, which is strengthened when a mark is weak. More importantly for this case, Plaintiff hopes to establish that the cease and desist letter had no legal merit and thus justify a finding of tortious interference. While the result remains to be seen, this is a good case for trademark attorneys, and others, who regularly send cease and desist letters, or receive them. Would this case be drastically different if the letter also, or only, went to Plaintiff? I think so.