Dealing with Copyright Trolls

This post was originally published on this site

The ease of sharing pictures online has made it both lucrative for legitimate artists to monetize their works and simpler for opportunists (“copyright trolls”) to victimize unprepared websites with extortion schemes disguised as legitimate copyright enforcement practices. To escape being targeted by the latter, websites that host user-generated content can utilize the “safe harbor” provisions (Section 512) of the Digital Millennium Copyright Act (“DMCA”) to shield them from copyright infringement committed by users. In return, the DMCA “safe harbor” requires the website to adopt “notice and takedown” procedures allowing the copyright holder a streamlined way to report infringement and have the infringing content taken down.

 

Copyright holders who send a copyright notice to a website to remove the copyright-infringing material must include certain information to the website. The copyright notice must (i) identify the infringing material, (ii) provide the location of the original material, (iii) include the submitter’s contact information, (iv) state that the notice is entered in good faith, (iv) confirm that all information in the notice is factual, (v) state that the person sending the notice, under penalty of perjury, has the authority to act on behalf of the copyright holder, and (vi) sign the notice. Before sending the notice, the owner must also consider whether the use of the work is protected by fair use.

 

Copyright trolls abuse the DMCA requirements in search of easy money – big money. Copyright holders with registered U.S. works can seek statutory damages—up to $150,000 per work for willful infringement—for copyright infringement. For U.S. works, the Supreme Court has provided that a copyright owner cannot sue for copyright infringement until they have registered the work with the U.S. Copyright Office. For foreign works, copyright holders may file suit without registration per the Berne Convention (however, foreign works may not be awarded statutory damages or attorneys’ fees unless the foreign work is first registered with the U.S. Copyright Office). While these sometimes substantial damages seem harsh for a website merely hosting content posted by users, full compliance with the “safe harbor” provision of the DMCA can negate liability.

 

Additionally, the DMCA provides a means to fight back against overly aggressive copyright trolls (albeit through a sparingly used provision). Section 512(f) of the DMCA allows the website owner to file a lawsuit seeking costs and attorneys’ fees against any copyright notice sender who knowingly misrepresents information in a DMCA notice. The caveat is that the website must prove their harm as a result of relying upon the misrepresentation. While Section 512(f) lawsuits are scarce, one hopeful lawsuit on Section 512(f) was filed in August 2019 by YouTube against a copyright troll. Unfortunately, YouTube settled the lawsuit out of court with the copyright troll apologizing for his conduct and admitting to sending dozens of false takedowns. Thus, whether Section 512(f) is an effective means to deter DMCA takedown abuses is not yet a settled issue.

 

In any case, because of how easy it is for potentially infringing material to end up on a website, copyright trolling will persist. While the settlement fees copyright trolls request might seem reasonable relative to the costs of a potential copyright infringement lawsuit, websites should seek out help to evaluate the claim and strategize the most efficient way to handle the situation.

 

Written By: Stan Sater and David H. Pierce

Protecting Your Hemp and CBD Brand Through Trademarks

The 2018 Farm Bill was passed on December 20, 2018, and, among other things, removed hemp from the definition of marijuana under the Controlled Substances Act (“CSA”). Prior to the passage of this Farm Bill, the U.S. Patent and Trademark Office (“USPTO”) could refuse any cannabis or cannabis-related trademark application, on its face, because the identified goods and/or services were unlawful under the CSA. In other words, because the good or service for which the trademark was being sought was not in lawful use in interstate commerce, the USPTO would not grant federal trademark protection. With the passage of the Farm Bill, the USPTO is having to change its review practices to handle the confusion that the Bill created as to the trademark rights of cannabis or cannabis-related businesses.

 On May 2, 2019, the USPTO issued new guidance addressed to its trademark examiners on how to handle trademark applications for cannabis-related products. The guidance reiterates that a product ‘must first be in lawful use’ to receive a federal trademark. As it relates to cannabis or cannabis-related trademarks filed on or after December 20, 2018, a lawful use determination “requires consultation of several different federal laws” including the CSA and the Federal Food Drug and Cosmetic Act (“FDCA”). The FDCA, which is overseen by the Food and Drug Administration (“FDA”), makes it unlawful to introduce hemp-derived foods, beverages, dietary supplements, or pet treats unless approved by the FDA. Additionally, under the FDCA, “any product intended to have a therapeutic or medical use intended to affect the structure or function of the body” is a drug. Drugs cannot be distributed or sold in interstate commerce unless approved by the FDA. At present, other than Epidiolex, a plant-derived CBD product used to treat two pediatric epilepsy disorders, no cannabis-derived drug products have been approved by the FDA. The FDA recently restated its viewpoint on the market for CBD products in a revised consumer update and is carefully monitoring the space, having issued 15 warning letters to cannabis-related companies selling products in violation of the FDCA.

  For trademark applications filed before December 20, 2018, the examiners may allow applicants to amend their applications to claim a December 20, 2018 filing date to overcome a refusal based on the CSA. As the trademark can still be denied for the other reasons as discussed above, examiners may also allow applicants to amend the original filing basis to an “intent-to-use” basis. With the date change and the “intent to use” change, the examiner will conduct a new search of conflicting trademarks in the USPTO’s records. If applicants choose not to amend their application, they can abandon the application and re-file or respond to the examiner’s office action with evidence to oppose the examiner’s determination. As it relates to hemp cultivation or production services, the examiners will investigate the applicant’s legal ability to cultivate and produce hemp. Per the 2018 Farm Bill, hemp must be produced “under license or authorization by a state, territory, or tribal government in accordance with a plan approved by the U.S. Department of Agriculture (USDA) for the commercial production of hemp.” However, the USDA has not approved any state, territory, or tribal government hemp production plan. Therefore, hemp cultivation or production services trademark applications could still be denied despite the 2018 Farm Bill.

While there is still uncertainty about the future for granting federal cannabis or cannabis-related trademarks, applicants can seek state trademark registration or protect their rights against copiers at common law. Each trademark strategy must be tailored to the applicant’s business and products.

Written by: Stan Sater and David H. Pierce

Seven Must Know Facts About Patents

Here’s 7 Things to know about Patent Rights – #4 is what most people DON’T know, #1 is the most important to know, and #7 reflects a recent change to our patent laws.

1. First Come, First Served:  The US patent system will only award a Patent on an idea or invention to the first inventor who files a patent application.  If you aren’t the first to file, you risk losing your patent rights.

2. The Clock is Ticking: If you don’t file a U.S. Patent Application within 12 months of public disclosure (such as sharing your idea with others) or within 12 months of offering your invention for sale, you lose your patent rights.  Even still, the longer you wait, the greater the risk of someone else filing a patent application for the idea you came up with first.

Important Note: Although the US gives you a 12 month period to file a patent application after your first public disclosure/offering for sale, most other countries in the world do not.  This means, in those countries, you will have lost your patent rights if you’ve made a public disclosure before first filing a patent in at least one country.

3. Filing a Provisional Patent Is a Great Place To Start: It’s affordable and it’s an essential take away from these 7 facts.  A provisional application secures your priority date (your spot in line) to the patent rights while you develop your idea, market it, and raise funding.  This helps to ensure that no one will beat you the patent office.

4. Put the Public on Notice:  Simply put, once you have a patent or patent pending status, tell everyone about it.  The traditional way to do this was to write your patent number on your product.  However, now this can be done virtually (See Fact 5).  Notice is crucial, because if you don’t provide notice of your patent (or pending) rights, then you aren’t entitled to monetary compensation from competitors who have been infringing your patent rights under your radar.

5. Virtual Patent Marking Makes Things Easy:  Recent updates to our patent laws allow for a “Virtual Patent Marking”.  This simply means that you can now put the public ‘on notice’ of your patent rights over the internet.  If done correctly, you satisfy your notice requirement, and you no longer have the burden of constantly monitoring and notifying your competitors one-by-one.

TIP: The Patent Seal™ is a Virtual Patent Marking certificate issued by licensed patent attorneys that you can use to meet the Legal Notice Requirements under 35 U.S.C. § 287.  Just place the Patent Seal™ Virtual Patent Mark on your website. When your website visitors click on your Patent Seal™, they will be directed to a certificate detailing your intellectual property rights.

6. The more you wait, the more you lose:  It could take months, if not years, to discover and locate people who infringed on your patent.  By the time you find these infringers and put them on notice of your patent rights, they may have made substantial profits from your idea.  Moreover, you won’t be entitled to any of those profits unless you can prove that the infringers had notice of your patent rights.  The Virtual Patent Mark is a legally recognized form of ‘public notice’ that will entitle you to a portion of the infringers’ revenue, even if you didn’t provide them with notice directly.

If you are interested in more detail related to your situation it is best to speak with a patent attorney.

Are You Missing Out on the Defensive Value of a Patent?

As the adage goes, “the best defense is a good offense.”  While this principle may very well hold true in warfare and sports, an all-out patent offensive is not necessary to see value from patent protection.  Patents are commonly viewed as a “sword” with which you can use to go after or attack the opposition.  Alternatively, patents can also be used as a “shield” to defend your company against the opposition. What are some benefits that can be afforded by “defensive” patent protection?

1.  Litigation avoidance through patenting of key technologies

Although litigation avoidance is a goal of most companies, startups and emerging companies are especially vulnerable to the detrimental effects of a potential infringement patent suit.  The cost associated with resolving a potential patent infringement suit can quickly deplete a young company’s limited resources or compel a company into taking a license with unfavorable terms.  However, it is possible for a company to avoid these situations by establishing patent rights around key technologies and innovations before others have the opportunity to patent it.  By securing patent rights to key technologies or innovations early, you can cover your products while creating potential infringement issues for your opposition.  More importantly, pursuing patent protection for promising technologies ensures that the innovation is available for you to use in future products.  Conversely, if a competitor patents an improvement on your technology, it could potentially limit your freedom to operate.

2.  Patents as deterrent to competitor lawsuits

Patents can effectively operate as shields against patent-holding competitors.  To this end, competitors may refrain from suing another patent holder for infringement for fear of a possible countersuit for patent infringement.  Because relevant patents can be used as a potential source of prior art, companies often are more reluctant to litigate its patents against other patent holders due to concerns that the asserted patent may be found invalid.  After a patent has been invalidated, the patent can no longer be enforced against anyone, including key competition.

3.  Patents as tool to negotiate cross-licensing agreements

Even if faced with the prospect of a possible patent infringement suit, having patents around relevant technologies can provide a company with leverage to negotiate a cross-licensing agreements with the competition.  For example, owning patents related to an improvement to a competitor’s technology can be a valuable bargaining chip.  A cross-license to a competitor’s patent often can be preferential to a burdensome licensing agreement or potential litigation.

4.  Patents and indemnification of customers

Owning patent rights to technologies utilized in your products are useful in sending a message to your customers (and opposition) that the underlying technology was developed and patented by your company.  Notwithstanding the foregoing, many customers, particularly larger entities, will still demand certain assurances from your company before selling or using your product.  Specifically, customers may require indemnification against infringement suits in connection with the use or sale of your product.  Having patents related to your products can provide some assurances to the customer, and at the same make it easier for your company to agree to broader indemnification provisions.

5.  An effective patent portfolio can help protect future development and growth

All companies that are developing new products should analyze its activities to ensure it is employing effective patent protection strategies around its technologies.  Effective patent portfolio management should incorporate protecting features and innovations that extend beyond specific products, identifying advancement opportunities around your key technologies, and monitoring your opposition to identify opportunities and threats.  For most startups, their patents are often its most valuable asset, and the minimal cost of securing additional patents in related areas around key technologies is relatively low compared to the potential returns from investors and purchasers.  Good communication between your company and your legal team is essential for protecting innovations, building an effective patent portfolio, and providing value to stakeholders.