We had an expert from an accounting firm give us a presentation yesterday about royalty audits. All sorts of bad things can occur with regard to collecting royalties from the licensee – the licensee may under count, may go bankrupt, etc. (hence the need to attend a presentation about royalty audits, so that we’ll draft better royalty audit clauses in our licenses.
Royalty audits (and disputes) are expensive. The thought occurs: can an intermediary (say, the retailer, or a payment processor) collect patent and trademark royalties on behalf of the licensor? Wal-Mart is told, for example, that if if it sells SKU 1234, then it will remit the designated royalty amount to an agent of the licensor. The licensor would not mind doing without the headache that the licensee may, for example, disappear without paying the royalties. The licensor might even be prepared to grant the licensee a lower royalty rate (or grant other favorable terms) in exchange for the licensee agreeing to this scheme. The intermediary might have two motivations for participating in this: (1) it will make itself a slightly more attractive distribution channel by offering this service; and (2) it would likely be compensated by the licensor for this.
What are the arguments for and against? I’m not really envisioning a copyright collective licensing model. More of a ‘withholding lien’ model.
I was reading about the Pizzagate affair, where a 28 year-old, with an arrest record and substance-abuse problems, walked into a DC pizza place named Comet Ping Pong, and fired an AR-16 rifle several times. It was reported that he had driven up from North Carolina to ‘investigate’ rumors on the Internet that the restaurant was connected in some way to a pedophilia ring that was itself, somehow connected to Hillary Clinton and John Podesta.
As I read how vicious allegations were fabricated, amplified across the Internet, and then given such credence that a young man felt compelled to ‘investigate’ (not with a notepad but with a rifle), I was reminded of “Anatomy of a Rumor,” a post I had written about an incident 11 years ago. This was the beginning of the blogging era, and the rise of ‘amateurs’ giving their opinions on all topics. I was happily part of this movement. In addition to writing The Trademark Blog, I wrote for a group blog named “Between Lawyers”
This is what I remember about the post. In July 2005, John Roberts had been nominated to SCOTUS. The New York Times ran a background profile. There was something about the Times’ choice of photos, and some facts that it identified, that could put into the reader’s mind the ‘notion’ that the Times was hinting that Roberts was gay. Addicted to social media even then, I regularly read blogs by Wonkette, Ann Althouse (a law professor) and Powerline (one of whose writers was a conservative lawyer named Hinderacker), and I noticed a peculiar game of ‘telephone’ that started with the Times article. I suppose now you would call it ‘transmission of a meme.’ Professor Althouse made a note about the Times’ seeming implication and Wonkette made a joke about it as well. Some conservative blogs repeated but mischaracterized these two passing observations, and by the time Hinderacker got to it, he was claiming that ‘some Democrats’, who were ‘beneath contempt,’ had begun a smear campaign against Roberts. If you only read the Powerline story, then your take-away was that the Democrats who were ‘beneath contempt’ had begun a smear campaign against Roberts.
Unfortunately, the “Between Lawyers” blog and its archive have apparently gone to File Not Found land, but fortunately Professor Althouse still exists and you can read her account (she disagreed with the way I characterized her impression of the Times article but she agrees with the general point, which is that Hinderacker’s allegations simply wasn’t supported by reality)
Professor Althouse ends her post by asking about whether this was Powerline’s modus operandi.
As much as I hate linking to Powerline, I ask that you do the following. Read the Washington Post story. Read Powerline’s story on Pizzagate here. My thought is: a man, with an arrest record and a substance abuse problem, walked into a restaurant, with an AR-16, because he had read that Hillary Clinton and John Podesta were part of a satanic pedophile ring. He fired the rifle. Yes, there are other horrible things in the world but children frequent this restaurant. This isn’t ok. What are we going to do?
Infographic explaining top level domain name system, courtesy of HostingFacts.com
Plaintiffs owned CostaRica.com. Defendants allegedly hacked the admin info and substituted themselves as registrant (statement of facts begins at paragraph 13). They didn’t re-direct the site at first so Plaintiff’s website continued to resolve, and thus it didn’t learn of the hack at first. Now, plaintiff brings an in rem action, alleging rights in the trademarks COSTA RICA and CostaRica.com.
Rolex files complaint against TheReplicaWatchShop.com for sales of ‘replica’ watches and ‘replica’ watch boxes.
Plaintiff organizes chess tournaments and webcasts them live. Defendant provides a live feed of the games displayed on a virtual chess board. Plaintiff alleged that Defendant’s actions constituted ‘hot news misappropriation’ under New York common law. See complaint below.
Preliminary injunction denied (decision immediately below). The information that defendant publishes, including the players’ moves, consists of factual data in the public domain. Defendant was not free-riding on plaintiff’s webcast, as it secured the factual information from secondary sources. Like the defendant in NBA v Motorola, defendant expends its own resources to collect purely factual information.
Example of copyright complaint in the Southern District of New York concerning rug designs.
Fed Cir: Adizero v Add a Zero. 2 Sales In-state To Out of State Resident Constitutes Use in Commerce
Illinois Church sold, Illinois, two hats bearing mark to Wisconsin resident.
Held: The two sales satisfies use in commerce. There is no de minimus standard, and of no moment that the out-of-state resident was in state when the purchase took place.
Cross Commerce Media v. Collective Inc., 15-782 (2d Cir Nov 7, 2016)
Is the mark COLLECTIVE descriptive of ‘data-driven analytics software that helps business select effective marketing opportunities on multiple electronic platforms’
Discussion begins on page 11.
Meat of discussion on page 14.
How PTO practice affects the analysis on page 17.
How third party use affects the analysis on page 18.