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Copyright and Trademark Law - A Presentation to CPAs and their Clients

In mid-September 2018, I presented to CPAs, their clients and Certified Valuation Analysts on the issue of copyright and trademark law. The presentation started off being very basis and quickly went to some of the more esoteric issues, namely damages calculation when there is an infringement, as well as what actions their clients should consider taking to protect their rights and gain leverage to settle a case. 

 

In my opinion, if someone has a potentially valuable asset and or brand, it is incumbent upon the company or client to quickly come to terms with what rights if any will be respected when an infringement occurs; a successful brand or trademark will invariably attract imitators and threaten to undermine the value of the brand or copyright.  Proving damages is also a tricky question and the smart party will understand their rights upfront.

 

Getting the necessary protection is neither expensive nor cheap; if it is cheap …. beware.

 

So, here are some of the PowerPoint slides used in this presentation along with a question, a hypothetical based on a picture taken this summer in the North Cascades during the Perseids Meteor shower.

 If someone in North Central Washington reproduces this picture and sells the same (makes some money), what are my remedies? (Hint: come see me at my office to continue this conversation!)

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Definition of Trademark

 

Trademark-A trademark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of the goods of one party from those of others. A service mark is a word, phrase, symbol, and/or design that identifies and distinguishes the source of a service rather than goods. Some examples include: brand names, slogans, and logos. The term "trademark" is often used in a general sense to refer to both trademarks and service marks.  

 

Unlike patents and copyrights, trademarks do not expire after a set term of years.  Trademark rights come from actual “use” (see below). Therefore, a trademark can last forever - so long as you continue to use the mark in commerce to indicate the source of goods and services.  A trademark registration can also last forever - so long as you file specific documents and pay fees at regular intervals.

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What About Registration?

 

Must all trademarks be registered? No, registration is not mandatory. 

 

You can establish “common law” rights in a mark based solely on use of the mark in commerce, without a registration.  However, federal registration of a trademark with the USPTO has several advantages, including a notice to the public of the registrant's claim of ownership of the mark, a legal presumption of ownership nationwide, and the exclusive right to use the mark on or in connection with the goods or services set forth in the registration. For more information about “common law” trademark rights and the advantages of federal registration.

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What the SM, TM and (R) Reveal!

 

Each time you use your mark, it is best to use a designation with it.  If registered with the USPTO, use the ® symbol after your mark.  If not yet registered, you may use TM for goods or SM for services, to indicate that you have adopted this as a “common law” trademark or service mark

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Use of a business name does not necessarily qualify as trademark use, though other use of a business name as the source of goods or services may qualify it as both a business name and a trademark. Many states and local jurisdictions register business names, either as part of obtaining a certificate to do business or as an assumed name filing. For example, in a state where you will be doing business, you might file documents (typically with a state corporation commission or state division of corporations) to form a business entity, such as a corporation or limited liability company. You would select a name for your entity, for example, XYZ, Inc. If no other company has already applied for that exact name in that state and you comply with all other requirements, the state likely would issue you a certificate and authorize you to do business under that name. However, a state’s authorization to form a business with a particular name does not also give you trademark rights and other parties could later try to prevent your use of the business name if they believe a likelihood of confusion exists with their trademarks.

 

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Trademark – the usual legal recourse is to seek a restraining order, although damages are available as evidenced by the Adidas-America v PayLess Shoe case (2008). Read these on your own and see why court reduced the damages and proof issues that arose

 

https://www.courtlistener.com/opinion/1870616/adidas-america-inc-v-payless-shoesource-inc/

 

https://law.justia.com/cases/federal/district-courts/oregon/ordce/3:2001cv01655/5340/1035/

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Definition of  Copyright

 

A copyright protects original works of authorship including literary, dramatic, musical, and artistic works, such as poetry, novels, movies, songs, computer software, and architecture.  The duration of copyright protection depends on several factors.  For works created by an individual, protection lasts for the life of the author, plus 70 years.  For works created anonymously, pseudonymously, and for hire, protection lasts 95 years from the date of publication or 120 years from the date of creation, whichever is shorter.

 

For information on copyrights, visit the U.S. Copyright Office website.

 

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The first question to ask is: ‘Has the infringed work been registered with the copyright office?’  The answer to this question will have a large impact on damages.  All creative works are automatically protected by copyright law, but registered works are afforded much greater protection.  Copyright registration records are held in a free online database that you can access from the Copyright Office website.

 

There are 2 types of damages for copyright infringement: Statutory Damages and Actual Damages.  For a copyrighted work that has been registered prior to infringement the plaintiff may choose to claim Statutory Damages or Actual Damages (in addition to claiming for attorney’s fees).  A plaintiff who is claiming infringement for an unregistered work may only make a claim for Actual Damages.

 

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The vast majority of plaintiffs in copyright infringement cases will choose to pursue Statutory Damages (if they can) because they are easier to calculate and will often be higher than Actual Damages.  Illegal file sharing cases, for example, will choose Statutory Damages because while their Actual Damages may be around $1 per illegally copied song, they are entitled to much higher damages through the use of Statutory Damages. 

 

Statutory Damages get their name because the amount of damages is set by law, regardless of the actual damages suffered by the plaintiff (17 USC § 504).  They usually range from $750-$30,000 per infringement, though awards can go as low as $200 per infringement for ‘innocent infringers’ and up to $150,000 per infringement when the court determines that the defendant acted ‘willfully’.  The court may not award damages outside of this range.

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While a plaintiff will always ask for the maximum amount of damages, it is at the court’s discretion how much to award within the defined damages range.  Some factors the courts consider are:

  1.      The purpose of the infringing use.  (e.g. – were you selling bootleg CDs on the street, or did you copy a CD for your Mom?)

  2.      The value of the work that was infringed.  (e.g. – was it a $1 song or a $5,000 computer program?)

  3.      The infringer’s state of mind or intent.  (e.g. – did you download a picture off the web unaware that it constituted copyright infringement, or did you know it was illegal and decided to copy it anyway?)

 

Statutory Damages are a powerful tool for the plaintiff in copyright litigation and infringers of registered copyrights should beware.

 

Plaintiffs for copyright infringement of registered copyrights are also allowed to ask the court for attorney’s fees (17 USC § 505).  If awarded, the defendant will owe all or part of the plaintiff’s legal fees, in addition to the fees for the defendant’s own lawyer.  When litigation costs can run upwards of tens or hundreds of thousands of dollars, this is another big stick that the plaintiff can hold over the defendant’s head.  While the awarding of attorney’s fees is at the courts discretion, the plaintiff of an unregistered copyright is never allowed to ask for attorney’s fees (17 USC § 412).

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Actual Damages

 

This is the type of damages pursued by people who have had their work infringed, but didn’t have their work registered prior to the infringement (and in rare cases a registered copyright holder may also select to pursue Actual Damages over Statutory Damages).

 

Actual Damages is the quantifiable monetary loss the plaintiff has suffered, or the profit the infringer has gained, from infringing your copyrights.

 

There are 2 general ways courts determine Actual Damages.  One method involves seeing what the plaintiff’s average income from their copyrighted work was before (and after) the infringement and compare it to the income from when their work was being infringed.  The difference is the Actual Damages.  This method is useful when there are extensive financial records backing up average sales and clear evidence that the dip in sales was due to the infringing activity.

 

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The other method looks at how many instances of infringement took place and awards damages based on what the copyright owner would have received had she sold or licensed the work instead of having it stolen. 

 

This method is easier to use when the plaintiff does not have extensive sales records, because the only numbers that need to be determined are the number of infringements and the value of the work.  This still may be difficult, however, because of the problems associated with pricing a work if it has not been commercially sold (e.g. – a piece of original art from an artist’s private collection).

 

There you go, this is part of that presentation.  Hopefully, this information is of some value to you and your firm and serves to underscore the importance of getting the protection upfront.  Now, getting international protection is complicated.  

 

If you like this Blog, please share it and let me know if this was helpful to you. If you liked the information, then by all means … support this law firm.  This is general information and readers should consult with qualified counsel to discuss their particular matter and determine the law of their jurisdiction, as well as federal law (statutory and case law) …. which change a lot!

 

My e-mail is rcastro@rcastrolaw.com; I am a WA State attorney in North Central WA. 

 

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