USPTO will suspend examination – Section 2(a)’s Scandalousness and Disparagement Provisions

Among the many reasons available to the USPTO to reject trademark applications is Section 2(a) of the Lanham Act, 15 U.S.C. § 2(a). This provision bars registration of marks that consist of or comprise immoral or scandalous matter, or matter which may disparage persons, institutions, beliefs, or national symbols, or bring them into contempt or disrepute.  The constitutionality of provisions of Section 2(a) are the subject of active court litigation and the outcome of these actions is relevant to the issue of registrability of marks in the United States.

In re Brunetti, Case No. 15-1109, (Fed. Cir. filed November 6, 2015) a Federal Circuit appeal denying registration of the mark “FUCT” where the Applicant argued that prohibition of the registration of scandalous marks under Section 2(a) of the Lanham Act is unconstitutional.

Pro-Football v. Blackhorse (No. 15 1874, Fourth Circuit). This is an appeal from the (TTAB) petition granting cancellation of six registrations for word and design marks containing the word, REDSKINS for entertainment services. See our June 20, 2014 blog post for a case analysis.

In re Tam, 808 F.3d 1321, 1358, 117 USPQ2d 1001, 1025 (Fed. Cir. 2015) (en banc), as corrected (Feb. 11, 2016) where the Federal Circuit determined that Section 2(a) barring registration of disparaging marks was unconstitutional.  See our December 24, 2015 blog post for a case analysis. On March 9, 2016, the USPTO filed a request to extend the time to file a Petition for a Writ of Certiorari (Supreme Court No.15A925).

Consistent with USPTO procedures, on March 10, 2016, the USPTO issued guidance to the examiners to suspend action on pending applications involving marks subject to refusal under these provisions in Section 2(a), provided that all other issues raised by the examiner have been resolved. Clearly, the USPTO is waiting for a Supreme Court determination of the constitutionality of Section 2(a) of the trademark statute, namely, can the USPTO deny registration of marks that are scandalous, immoral or disparaging.

Changes to European Trademarks

Update to our December 1, 2015 post Changes to the European Trademark System are Imminent, as of March 23, 2016, the Office of Harmonization in the Internal Market (OHIM) will have a new name. It will be known as the European Union Intellectual Property Office (EUIPO). The Community trade mark will be renamed the European Union trade mark.

A summary of noteworthy changes are as follows:

  • An application covers a single class, but additional classes can be added upon payment of additional per class fees. (The pay for one, get two extra classes for free no longer applies.)
  • Non-displayable signs such as smells and sounds may be registered. (Previously only graphically displayable marks were permitted.)
  • Applicant must clearly and accurately describe the goods and services in the classes in question. (Class headings are no longer permitted.)
  • Certification marks can now be registered.
  • Grounds for Refusal have been expanded. Namely adding, designations of origin, geographical indications, protected traditional terms for wine and traditional specialities. (Previously, there were limited substantive grounds that OHIM could assert to deny registration of a mark. )
  • Opposition Grounds have been expanded. Importantly, a revision of the relevant five year period for proof of use of the earlier mark in opposition proceedings to be the date of filing or the date of priority of the EU trade mark application, not the date of publication of the opposed mark.
  • National offices must implement within seven years procedures for revocation and nullification of national trademarks. (Presently, many EU member countries do not provide an administrative way to cancel a national trademark registration requiring all such proceedings to be in the court.)
  • “Goods-in-transit” procedures to prevent the EU from being used as a transit hub for counterfeit goods. These are new provisions that will require each of the EU member countries to implement in their customs regulations.
  • New prohibitions on the use of signs (marks) in comparative advertising where that advertising is misleading. Comparative advertising is permitted, but is more restrictive.

Again, we note that there are many companies out there fraudulently soliciting for payments. The EUIPO has restated its concern about these Fraudulent Solicitations in light of the potential confusion while the OHIM office changes its name to EUIPO and the CTM trade mark registration is renamed the EU trade mark. See our Fraudulent Solicitations link for additional information about the many entities soliciting misleading payments for services.

The full text of the new directive is available. 

New Life for Outdated Trademark Registrations

On September 1, 2015, the USPTO announced a Pilot Program to Allow Amendments to Identifications of Goods and Services in Trademark Registrations Due to Technology Evolution. The intent of the program is to permit “amendments to identifications of goods/services in trademark registrations that would otherwise be beyond the scope of the current identification” with the “goal of preserving trademark registrations in situations where technology in an industry has evolved in such a way that amendment of the goods/services in question would not generate a public-notice problem.” That is to say, where a trademark registration claims a manner or means or medium of distribution that has changed due to changes in technology, it may be possible to amend the identification of goods and services reflecting the current manner or means or medium of distribution. This is what is being termed an “evolved designation.”

Since commencing the program, the USPTO has published examples of permissible evolved designation amendments. Examples are:

Registration ID Proposed ID Change
Prerecorded audio and video tapes featuring religious topics Prerecorded CDs and DVDs featuring religious topics
Pre-recorded audio cassettes Audio recordings featuring religious content
Pre-recorded audio/video cassettes for use in the field of pre-school and primary education Sound and video recordings for use in the field of preschool and primary education
House mark for use with type face fonts recorded on magnetic and optical media House mark for use with type face fonts on electronic storage media and downloaded provided by means of electronic transmission
Retail store services and on-line retail store services featuring musical instruments, bows, strings, instrument cases, sheet music, books pre-recorded video tapes and pre-recorded CDs featuring musical performances or musical instruction Retail store services and on-line retail store services featuring musical instruments, bows, strings, instrument cases, sheet music, books, video recordings and pre-recorded CDs featuring musical performances or musical instruction
DOS-based application software to manage and forecast inventory for the direct marketing industry Application software to manage and forecast inventory for the direct marketing industry
Videotapes, videocassettes, all on the subjects of ancient peoples and cultures around the world Video recordings on the subjects of ancient peoples and cultures around the world

It may even be possible to change the class coverage of the registration when the proper current description of the goods or services are in a different class from what was originally registered (e.g.: printed publication are class 16 while downloadable publications are class 9).

At the end of the process the USPTO will issue a new registration certificate, maintaining the priority of the original registration.


  • Amendments are made via the post-registration petition to the Director provisions and the certificate of registration amendment provisions with a government fee of $200.00.
  • Amendments cannot be made that would expand the scope of the registration. If the registration is limited to a specific subject matter, then the amendment would continue with the same subject matter, merely altering the distribution mechanism.
  • The registrant must have discontinued the prior technology and the designation is removed from the description in the registration. Otherwise, the registrant would be compelled to file a new application.
  • The amendments must conform to the current USPTO practice requirements for proper descriptions of goods and services.
  • A US registration based on an International Registration (Madrid Protocol), must conform with the underlying IR during the first five years of registration. However, US registrations based on national foreign registrations are not similarly limited.
  • There are a number of technical requirements, including:
    •     A request for a waiver of what is known as the “scope rule” which essentially permits only restrictions to identifications that would not require republication;
    •     A declaration that that the registrant will not file (or re-file) an incontestability affidavit for at least five years from the amendment acceptance date for the evolved designation;
    •     Submission of a specimen showing current use of the mark in commerce, along with the dates of first use of the evolved designation along with a declaration in support. (Note: the original first use dates would continue in the registration); and
    •     The request for the amendment must be filed electronically.

Once accepted by the USPTO, the amended registration will be published in the Official Gazette along with other Section 7 amendments.

The USPTO has considered third party harm considerations, and in the amendment examination process will:

  •     Conduct a search for possible conflicting marks;
  •     Require that the incontestability status applicable to any evolved designation will not apply for five years;
  •     Provide a mechanism for interested parties to comment about proposed amendments prior to acceptance, and
  •     Publish the proposed amendments on its website allowing interested parties to comment for thirty days.

What does this mean for trademark owners?

    Depending upon the specific circumstances, it may be more prudent to file a new application claiming not only the new delivery mechanism, as an example, but additional goods and services that may be of interest to the registrant. Often, business changes over time, and trademark owners typically expand their product offerings.

    When filing either a Section 8 (use) or 9 (renewal), it may be more prudent to delete the goods and services that are no longer of interest.

    Ultimately, it really depends on the exact wording in the registration, and on what goods and services the trademark owner is using the mark that will determine the best procedure to deal with changes in technology.

Depending upon how many trademark owners take advantage of the pilot program will determine if the trademark office will continue with this special procedure. So, if you have any trademark registrations that claim outdated technology (or need to claim new technology), and could benefit from this program, feel free to contact us for a consultation.

Federal Circuit Approves Disparaging Marks for Registration

On December 22, 2015, the Lanham Act’s prohibition on the registration of disparaging trademarks was held unconstitutional by the Federal Circuit, paving the way for federal registrations for REDSKINS, HEEB, N.I.G.G.A. and other marks previously denied federal trademark status.

In re Simon Shiao Tam, Case No. 14-1203 (Decision filed on December 22, 2015)

The United States Court of Appeals for the Federal Circuit declared Section 2(a) of the Lanham Act (15 U.S.C. § 1052(a)) unconstitutional. Section 2(a) bars the US Patent and Trademark Office (“USPTO”) from registering scandalous, immoral or disparaging marks.[1]

The case came to the Federal Circuit by way of appeal from a decision by the Trademark Trial and Appeal Board (“TTAB”) in In Re Simon Shiao Tam. The TTAB upheld the USPTO’s refusal to register the name of Mr. Tam’s Asian-American dance-rock band, the SLANTS. Mr. Tam purposely named his band with a pejorative term in order to make a statement about racial and cultural issues. A panel of the Federal Circuit upheld the TTAB decision earlier this year, but shortly thereafter, the Court granted, sua sponte, a rehearing en banc on the issue of constitutionality. Oral argument was held on October 2, 2015.

The Federal Circuit decision was resolute: “Many of the marks rejected as disparaging convey hurtful speech that harms members of oft-stigmatized communities. But the First Amendment protects even hurtful speech.” Thus, the court concluded,

[t]he government cannot refuse to register disparaging marks because it disapproves of the expressive messages conveyed by the marks… The government regulation at issue amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional. Because the government has offered no legitimate interests justifying § 2(a), we conclude that it would also be unconstitutional under the intermediate scrutiny traditionally applied to regulation of the commercial aspects of speech.

Actually, in this case, it isn’t clear that the government disapproved of the expressive message conveyed by the mark. In his application, Mr. Tam stated that the band “feel[s] strongly that Asians should be proud of their cultural heri[ta]ge and not be offended by stereotypical descriptions,” and that their aim was to “reclaim” and “take ownership” of stereotypes.

Despite the message that Mr. Tam intended to convey, the TTAB found that the applied for mark was disparaging to a substantial component of people of Asian descent because “dictionary definitions, reference works and all other evidence unanimously categorize the word ‘slant,’ when meaning a person of Asian descent, as disparaging,” and because there was record evidence of individuals and groups in the Asian community objecting to Mr. Tam’s use of the word.”

The USPTO has refused to register numerous marks on the ground of disparagement — most notoriously REDSKINS for the Washington football team. Other rejected marks include STOP THE ISLAMISATION OF AMERICA, THE CHRISTIAN PROSTITUTE, MORMON WHISKEY, KHORAN (for wine), HAVE YOU HEARD THAT SATAN IS A REPUBLICAN?, RIDE HARD RETARD, ABORT THE REPUBLICANS, HEEB, SEX ROD, MARRIAGE IS FOR FAGS, DEMOCRATS SHOULDN’T BREED, REPUBLICANS SHOULDN’T BREED, 2 DYKE MINIMUM, WET BAC, URBAN INJUN, SQUAW, DON’T BE A WET BACK, FAGDOG, and N.I.G.G.A. NATURALLY INTELLIGENT GOD GIFTED AFRICANS. As with SLANTS, applications for some of these intended marks (e.g., HEEB and N.I.G.G.A.) were filed by people from the very communities that the marks were held to disparage. The application for HEEB, for instance, was filed by a progressive Jewish organization. In that case, the TTAB rejected the applicant’s argument that the Examining Attorney “ignored the context and manner in which applicant’s mark is used when determining whether the likely meaning of applicant’s mark is disparaging to the Jewish community” and that “many of this country’s most established Jewish philanthropies and cultural organizations have openly and actively supported Applicant’s magazine and events through their continued funding and sponsorship.” The Board ruled that “[w]hether a proposed mark is disparaging must be determined from the standpoint of a substantial composite of the referenced group (although not necessarily a majority) in the context of contemporary attitudes.” In re Heeb Media, LLC, 89 USPQ2d 1071 (TTAB 2008) [precedential]. In other words, the particular viewpoint of the applicant was irrelevant to whether the mark was “disparaging.” Given prior decisions, the USPTO’s and TTAB’s rejection of Mr. Tam’s application for SLANTS came as no surprise.

A disparaging mark is defined as one which “dishonors by comparison with what is inferior, slights, deprecates, degrades, or affects or injures by unjust comparison.” In order to determine whether a mark is disparaging, the USPTO considers the following:

(1) What is the likely meaning of the matter in question, taking into account not only dictionary definitions, but also the relationship of the matter to the other elements in the mark, the nature of the goods or services, and the manner in which the mark is used in the marketplace in connection with the goods or services; and

(2) If that meaning is found to refer to identifiable persons, institutions, beliefs or national symbols, whether that meaning may be disparaging to a substantial composite of the referenced group.

Trademark Manual of Examining Procedure, § 1203.03(b)(i) (Jan. 2015 ed.)

Viewpoint Discrimination

The Federal Circuit found that since the test for disparagement is determined by whether “a substantial composite of the referenced group would find the mark disparaging,” it is “clear that it is the nature of the message conveyed by the speech which is being regulated. If the mark is found disparaging by the referenced group, it is denied registration.” Under principles of constitutional law, regulations that are not content neutral, i.e, that target speech based on its communicative content, are upheld only if the government proves they are narrowly tailored to serve compelling state interests. Viewpoint discrimination, which targets the substance of the particular viewpoint being expressed, is subject to even greater scrutiny. The Federal Circuit found that Section 2(a) “amounts to viewpoint discrimination, and under the strict scrutiny review appropriate for government regulation of message or viewpoint, we conclude that the disparagement proscription of § 2(a) is unconstitutional.”

The Court’s decision is ultimately hinged on its finding that the effect, if not the very purpose, of Section 2(a) is to disfavor certain viewpoints. According to the government, Section 2(a) is important because the government disagrees with the message that disparaging marks convey, based on how the message is received by an identifiable community or portion thereof. Although the government claimed that the USPTO doesn’t reject marks based on their viewpoints, this appears to be true only with respect to the narrow category of racial, religious and sexual epithets.

The Court cited several examples that it claimed were examples of viewpoint discrimination: the refusal to register 2 DYKE MINIMUM and registration of DYKES ON BIKES; the refusal to register SLANT and the registration of CELEBRASIANS and ASIAN EFFICIENCY, and the refusal to register STOP THE ISLAMISATION OF AMERICA and the registration of THINK ISLAM. However, DYKES ON BIKES was registered (after refusal by the USPTO and reconsideration in the TTAB) because the applicant was able to present evidence that the lesbian community did not consider DYKES to be disparaging, and also because the USPTO’s own evidence merely suggested that it “might” be disparaging. The comparison between SLANT and CELEBRASIONS or ASIAN EFFICIENCY also falls short: this is a comparison between a mark consisting of a pejorative term and two marks that contain no pejorative terms. Viewpoint discrimination, however, was apparently determinative in refusing to register STOP THE ISLAMISATION OF AMERICA. In refusing to register the latter mark, the TTAB “explained that the ‘mark’s admonition to ‘STOP’ Islamisation in America ‘sets a negative tone and signals that Islamization is undesirable and is something that must be brought to an end in America.’” That decision, the Court found, was a moral judgment “based solely and indisputably on the mark’s expressive content.”

Common Law Trademark Rights are Insufficient and Discourage Free Expression

The government attempted to counter this argument on three grounds. First, that Section 2(a) doesn’t prohibit free speech, “but leaves Mr. Tam free to name his band as he wishes and use this name in commerce;” second, that trademark registration constitutes a kind of government speech; and third, that trademark registration is a government subsidy, which (if true) the government may have the right to withhold.

With respect to the first argument, while it is true that Mr. Tam can continue to use his band name, it is not true that he can do so “as he wishes.” As the Court rightly found, Section 2(a) registration “bestows truly significant and financially valuable benefits upon markholders,” citing B&B Hardware, Inc. v. Hargis Industries, Inc., 135 S. Ct. 1293, 1300 (2015); Park ’N Fly, Inc. v. Dollar Park & Fly, Inc., 469 U.S. 189, 199–200 (1985) (valuable new rights were created by the Lanham Act); and McCarthy on Trademarks at § 19:9, :11 (“Registration of a mark on the federal Principal Register confers a number of procedural and substantive legal advantages over reliance on common law rights.”)

As examples of the rights that registration bestows upon the registrant, the Court cited the exclusive nationwide right to use the mark anywhere there is not already a prior user that precedes registration. (15 U.S.C. §§ 1072, 1115). By contrast, marks protected by common law rights are “limited to the territory in which the mark is known and recognized by those in the defined group of potential customers,” citing McCarthy on Trademarks at § 26:2. Without a federal trademark registration, a competitor can swoop in and adopt the same mark for the same goods in a different location. Non-registrants also have no prima facie evidence of their trademark’s validity, ownership and exclusive use. (See 15 U.S.C. § 1057(b)). Federal marks become incontestable after five years; common law trademarks never become incontestable. Finally, a common law trademark owner cannot stop importation of goods bearing its mark, or recover treble damages for willful infringement. (See 15 U.S.C. §§ 1117, 1124.) Nor can the common law trademark owner prevent “cybersquatters” from misappropriating its mark in a domain name. (See 15 U.S.C. § 1125(d).)

Given the limited protection that common law marks receive, if a group fears that a mark might be deemed offensive or disparaging by the USPTO, it will be less likely to adopt the mark, at least in part because the group may not be able to establish exclusive nationwide ownership. There is also a disincentive to choose a mark that might be deemed offensive or disparaging because litigating to obtain registration can be expensive and futile. (The USPTO does not give refunds for applications that are refused.)[2]

Furthermore, the Court pointed out, “the disincentive does not stop there, because the disparagement determination is not a onetime matter. Even if an applicant obtains a registration initially, the mark may be challenged in a cancellation proceeding years later. Thus, after years of investment in promoting a registered mark and coming to be known by it, a mark’s owner may have to (re)litigate its character under § 2(a) and might lose the registration.”

Although the Court didn’t squarely address the subject, common law rights in a band name offers the band no real protection at all. It is fairly commonplace in the music industry for start-up bands inadvertently to adopt the same or a similar name as another band in some other city. Consider two bands with the same name, one popular in and around New York City, the other hailing from Austin, Texas, and popular in the Southwest. Each band is able to co-exist within its respective geographic area. But if one signs with a nationally distributed record company, or even begins releasing records that receive national distribution, it can be hit by a trademark infringement claim from the other. Typically what happens is that the more successful band ends up changing its name. (To give a famous example, one of two bands called Hybrid Theory was forced to change its name in order to avoid a trademark dispute. The band members chose Linkin Park as their new name, probably a fortuitous result.) The problem can also have international implications. The U.S. applicant who is refused registration in the USPTO will face registration difficulties, resulting in many thousands of dollars in legal fees, where it also filed trademark applications internationally, either under the Madrid Protocol or via direct country filings, using the U.S. application as the filing basis, as is ordinarily the case.

In short, a denial of registration is tantamount to punishment, with an added effect of inhibiting people from engaging in potentially disparaging speech in the first place.

Trademark Registration is Not Government Speech

The government’s second argument — that trademark registration is government speech — is specious. As the Court pointed out, trademark registration is, like copyright registration, a regulatory activity that does not involve either approval or endorsement by the U.S. government. One cannot distinguish between trademark from copyright registration on the basis that trademark is “commercial speech” (and thus subject to greater regulation) because advertising and other utterances by businesses are protectable by copyright regardless of their viewpoint. As the Court pointed out,

[T]he logical extension of the government’s argument is that these indicia of registration convert the underlying speech into government speech unprotected by the First Amendment. Thus, the government would be free, under this logic, to prohibit the copyright registration of any work deemed immoral, scandalous, or disparaging to others.

The government cited Walker v. Texas Division, Sons of Confederate Veterans, 135 S. Ct. 2239 (2015) to support its contention that trademark registration is government speech, but the facts of that case are easily distinguishable. There, the Supreme Court found specialty license plates to be government speech, even though state law permitted individuals and organizations to request their own expressions, because “[t]he history of license plates shows that, insofar as license plates have conveyed more than state names and vehicle identification numbers, they long have communicated messages from the States.” (Examples include “Live Free or Die,” “The Show Me State,” and “Land of Opportunity.”) Furthermore, the Supreme Court observed that the State of Texas “places the name ‘TEXAS’ in large letters at the top of every plate,” designs the license plates, and requires vehicle owners to display them. As a consequence, the Supreme Court reasoned, “Texas license plate designs ‘are often closely identified in the public mind with the State.’” In addition, the Supreme Court found that “a person who displays a message on a Texas license plate likely intends to convey to the public that the State has endorsed that message.”

No one seriously views trademark registration as speech by the government endorsing or approving the mark or the goods and services thereunder. Anyone who did would have to explain why the government was endorsing these registered marks: RADICALLY FOLLOWING CHRIST IN MISSION TOGETHER (4759522); THINK ISLAM (4719002); GANJA UNIVERSITY (4070160); CAPITALISM SUCKS DONKEY BALLS (4744351); TAKE YO PANTIES OFF (4824028); and MURDER 4 HIRE (3605862). (The Federal Circuit named just a few but examples are legion.) Furthermore, as the government stated in its brief, “the USPTO does not endorse any particular product, service, mark, or registrant” when it registers a mark, and “just as the issuance of a trademark registration by this Office does not amount to government endorsement of the quality of the goods to which the mark is applied, the act of registration is not a government imprimatur or pronouncement that the mark is a ‘good’ one in an aesthetic, or any analogous, sense.”

Trademark Registration is not a Government Subsidy

The government contended that “trademark registration is a form of government subsidy that the government may refuse where it disapproves of the message a mark conveys.” However, the benefits of trademark registration are not monetary: trademark registration does not involve government funding or a concession to use or benefit from government property. That the USPTO is partially funded by appropriations does not make it a subsidy. Moreover, since 1991, all of the USPTO’s operating expenses associated with registering marks “have been funded entirely by registration fees, not the taxpayer.” The fact that some federal funds are spent on PTO employee benefits such as pensions, health insurance, and life insurance, is not enough to make it a subsidy. Nor is the benefit of being able to seek enforcement of a trademark by the U.S. Customs and Border Patrol. The analogy, the Court persuasively argued, is again copyright:

Under the logic of the government’s approach, it follows that the government could refuse to register copyrights without the oversight of the First Amendment. Congress could pass a law prohibiting the copyrighting of works containing “racial slurs,” “religious insults,” “ethnic caricatures,” and “misogynistic images.”

As a Regulation Aimed at Commercial Speech, Section 2(a) is Unconstitutional

The government’s main objection to the Court’s trademark-copyright analogy is that § 2(a) is intended to regulate commercial speech. However, the regulation of commercial speech is only permissible where the government has some compelling interest (e.g., to prevent misleading claims about a product or service) and the statute has been “narrowly tailored to achieve that objective.” Lorillard Tobacco Co. v. Reilly, 533 U.S. 525, 555–56 (2001). “Under a commercial speech inquiry, it is the State’s burden to justify its content-based law as consistent with the First Amendment,” said the Federal Circuit, citing Sorrell v. IMS Health Inc., 131 S. Ct. 2653, 2667 (2011).

On its face, the Court found, Section 2(a) “does not address misleading, deceptive, or unlawful marks. There is nothing illegal or misleading about a disparaging trademark like Mr. Tam’s mark.” Indeed, the government’s entire interest in § 2(a) appears to be the denial of registration to trademarks whose messages the government disapproves.


Whether or not the Supreme Court lets the Federal Circuit’s decision stand, the Federal Circuit’s view that Mr. Tam was unjustly refused registration is compelling:

[I]t seems clear that the result as to Mr. Tam this case exemplifies how marks often have an expressive aspect over and above their commercial-speech aspect. Mr. Tam explicitly selected his mark to create a dialogue on controversial political and social issues. With his band name, Mr. Tam makes a statement about racial and ethnic identity. He seeks to shift the meaning of, and thereby reclaim, an emotionally charged word. He advocates for social change and challenges perceptions of people of Asian descent. His band name pushes people. It offends. Despite this—indeed, because of it—Mr. Tam’s band name is expressive speech.

On the other hand, if Mr. Tam can now register SLANTS for a salutary purpose, there is no constitutional justification that would prohibit an organization to register the same word for a racist purpose, for example, “No Slants Allowed.” Nor would there be a constitutional justification for preventing registration of REDSKINS for a football team. (The owner of the REDSKINS trademark certainly claims not to have disparaging intent.) It seems to us that Congress could narrowly prohibit the registration of racial, religious and gender-based epithets that disparage “a substantial composite of the referenced group” on a viewpoint-neutral basis (i.e., regardless of the trademark applicant’s purpose in using the epithet), but Section 2(a) reaches too far when it prohibits disparaging messages whose words, standing alone, are not inherently disparaging. Of course, whether Congress should pass a law prohibiting the registration of epithets is another matter. The marketplace of ideas may be the best way to determine the worth of any mark.

The fight over Section 2(a) is far from over. The case is expected to be appealed to the Supreme Court and, of course, Congress may look for a legislative solution, leading to further litigation. In addition, the Federal Circuit limited its holding to the disparagement provision of Section 2(a), “[r]ecognizing, however, that other portions of § 2 may likewise constitute government regulation of expression based on message, such as the exclusions of immoral or scandalous marks…”


[1] Section 2(a) provides in full as follows:
No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it —
(a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; or a geographical indication which, when used on or in connection with wines or spirits, identifies a place other than the origin of the goods and is first used on or in connection with wines or spirits by the applicant on or after one year after the date on which the WTO Agreement (as defined in section 3501(9) of title 19) enters into force with respect to the United States.
[2] At WebTM, our basic registration fee covers office actions, but not appeals to the TTAB or interventions by third parties. Buyer beware: some registration services charge high fees for office actions, which are issued in a majority of trademark applications. What looks like a cheap deal could turn into disaster.


New infringement claim against appropriation artist Jeff Koons

Appropriation artist Jeff Koons is back in court, this time for a 1986 painting from his “Luxury and Degradation” show for his work, entitled “I could go for something Gordon’s.” The work is a re-painting and reconfiguration of a Gordon’s Gin advertisement from that same year. Koons’ show, and the work in particular, is not about selling gin, but about how advertising seduces the consumer and presents false promises of the fulfillment of desire. The work is on display on the Whitney Museum website, with commentary on the work and Koons’ series in general.
luxury_and_degradation_e.2013.0050_i_could_go_for_something_gordon_s_792On December 14, 2015, photographer Mitchel Gray filed suit in the U.S. District Court, Southern District of New York, against Koons and auction house Phillips Auctioneers, LLC, for copyright infringement related to the creation, display and sale of the work and Artist Proof which sold “approximately $2.1 million” in 2008. According to Gray, he only discovered the infringement in July 2015.

The Copyright Act has a statutory limit on damage claims accruing more than three (3) years prior to the filing of the lawsuit. What that means is that in order to recover against Koons and Phillips, not only must Gray prove that Koons’ work is not “transformative,” but also Gray must show that he was not on “constructive notice” of Koons’ appropriation. Constructive notice means he should have known of the appropriation. Koons’ attorneys will undoubtedly argue that the appropriation was open, public and notorious, and that Gray should have known of it prior to December 2012.

For an explanation of what is “transformative,” see our posts here (on a Second Circuit’s ruling about “transformative” art; and here (on the Second Circuit’s ruling that the Google book-scanning project was non-infringing.)

See also, Psihoyos v. John Wiley & Sons, Inc., 748 F. 3d 120 (2nd Cir. 2014) for a discussion of the three year limitations on damages being based on discovery of the infringement..

Exercise Methods Are Not Protected by Copyright

Whether it’s yoga, karate, Pilates or any other form of movement or exercise, the copyright laws do not protect the modalities themselves. Copyright protection can only be secured for the manner in which they are described, and even then, protection is limited.

In 1979, Bikram Yoga’s founder, Bikram Choudhury, published Bikram’s Beginning Yoga Class, which included descriptions, photographs, and drawings of his “Sequence” of twenty-six poses and two breathing exercises. The copyright was registered in the U.S. Copyright Office in 1979. In 2002, using a supplementary registration form, he registered the “compilation of exercises” contained in the book.

In 2002 and 2005, respectively, Mark Drost and Zefea Samson took Bikram’s 3-month teacher training course. In 2009, they formed Evolation Yoga, LLC, which offers “hot yoga,” among others. As the defendants admitted, Hot Yoga, like Bikram, “includes 26 postures and two breathing exercises and is done for 90 minutes, accompanied by a series of oral instructions, in a room heated to approximately 105 degrees Fahrenheit.”

Choudhury sued in 2011, claiming infringement on his copyrighted works. In 2012, the District Court granted defendants’ motion for partial summary judgment on the copyright claim, ruling that “Sequence is a collection of facts and ideas” that is not entitled to copyright protection. The Ninth Circuit affirmed that decision.[1]

Processes, systems, methods and ideas are not protected by copyright

The Copyright Act expressly excludes protection for “any idea, procedure, process, system, method of operation, concept, principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in such work.”[2]

Choudhury describes his “Sequence” is a “system” or a “method” designed to “systematically work every part of the body, to give all internal organs, all the veins, all the ligaments, and all the muscles everything they need to maintain optimum health and maximum function.” In Bikram’s Beginning Yoga Class, Choudhury explains that he “arrived at the sequence of postures” after “[researching] the diseases and the postures and after many years of research and verification . . . using modern medical measurement techniques.” The book tells readers that “Bikram’s twenty-six exercises systematically move fresh, oxygenated blood to one hundred percent of your body, to each organ and fiber, restoring all systems to healthy working order, just as Nature intended.” An essential element of Choudhury’s system is the order in which the poses and breathing exercises are to be performed.

Because the Sequence “is an idea, process, or system designed to improve health,” the Court found it ineligible for copyright protection. The Court repeated this basic principle throughout its decision like a mantra.

Beauty and Grace do not make exercise sequences copyrightable

Choudhury argued to the court that his arrangement of postures is “particularly beautiful and graceful” and therefore should be protected by copyright.

“The performance of many ideas, systems, or processes may be beautiful: a surgeon’s intricate movements, a book-keeper’s careful notations, or a baker’s kneading might each possess a certain grace for at least some viewers. Indeed, from Vermeer’s milkmaid to Lewis Hine’s power house mechanic, the individual engrossed in a process has long attracted artistic attention. But the beauty of the process does not permit one who describes it to gain, through copyright, the monopolistic power to exclude all others from practicing it. This is true even where, as here, the process was conceived with at least some aesthetic considerations in mind… [J]ust like [a] recipe, the Sequence remains unprotectable as a process, the design of which primarily reflects function, not expression.”

The order and sequence of exercises are not copyrightable.

The court applied the same reasoning to Choudhury’s claim that the actual selection and order of the exercises and positions were protectable as a “compilation:”

“As we have explained, the Sequence is an idea, process, or system; therefore, it is not eligible for copyright protection. That the Sequence may possess many constituent parts does not transform it into a proper subject of copyright protection. Virtually any process or system could be dissected in a similar fashion.”

Finally, the court noted that according to Choudhury’s own descriptions of his method, “the very selection and arrangement of poses and breathing exercises for which he claims copyright protection” were compelled by medical and functional considerations… The Sequence’s composition renders it more effective as a process or system, but not any more suitable for copyright protection as an original work of authorship.”

Thus, it “makes no difference that similar results could be achieved through a different organization of yoga poses and breathing exercises.” Although Choudhury could have chosen from “hundreds of postures” and “countless arrangements of these postures” in developing the Sequence, “the possibility of attaining a particular end through multiple different methods does not render the uncopyrightable a proper subject of copyright.”

Whether it’s Bikram Yoga, meditation exercises, or Pilates, methods of exercise and movement are not protected by copyright

The Bikram decision is not the first decision to teach that methods of exercise or movement cannot be protected by copyright, and it may not be the last, given the number of exercise and movement modalities in the marketplace looking to protect their businesses through intellectual property laws.

What is protected by copyright, then? The particular words and photographs contained in a manual or book are clearly copyrightable, but the ideas they express are not. Thus, particular descriptions of exercises or movements enjoy only a limited scope of protection, given that there are only certain ways that they can be described. Photographs, on the other hand, because they involve composition, angle and lighting, are likely to enjoy a broader scope of protection. In short, the copyright for an exercise, movement, or teacher training publication does not extend to the choice, sequence or method of exercise, the method or sequence of teaching, or the particular ways in which the exercise or movements are performed or taught. The copyright does, however, protect against piracy and unauthorized distribution of publication, including (most typically) via the Internet.

The Bikram decision can be accessed at:


[1] Bikram’s Yoga College of India, L.P. and Bikram Choudhury v. Evolation Yoga, LLC, Mark Drost and Zefea Samson, No. 13-55763, Ninth Circuit Court of Appeals, October 8, 2015. On appeal from the U.S. District Court, Central District of California (No. 2:11-cv-05506-ODW-SS).

[2] 17 U.S.C. 102(b).


European Union Trademarks Goods and Services Examined

International Registrations designating the European Union (CTM/OHIM) previously relied upon the International Bureau (WIPO) for compliance with proper goods and services classification. There are differences between what is acceptable by WIPO, and would be acceptable by OHIM for directly filed applications. For all International Registrations designating the European Union after October 1, 2014, OHIM will now examine all goods and services listed in the international registration for compliance with OHIM requirements. In particular, this addresses the issue of vague and uncertain terms and requiring designations of goods and services that are clear and precise. Should OHIM determine that the goods and services lack clarity or precision, it will issue a notification of provisional refusal with respect to said registration.

We refer our readers to information about goods and services as well as the pitfalls of using class headings in the United States.

There is a clear trend amongst trademark offices to require clear and precise descriptions of goods and services. The USPTO has been more particular in this respect than many other trademark offices. As the world keeps getting “smaller” with more and more opportunities to engage in business throughout the world, it is important to establish a trademark protection program that properly focuses the registrations on precisely what products and services the brand owner is using its mark on.

Aereo and Disruptive Innovation

Under copyright law, among the exclusive rights that are held by copyright holders is the right of public performance. In some cases, the copyright holder is free to negotiate any fee or royalty that it desires for public performance, or even refuse such performance outright, while in other cases, the copyright holder must accept statutorily mandated royalties.[1] Until the innovation of cable, public performance simply entailed providing a copyrighted work directly to the public (as in a movie theater or nightclub) or broadcasting it over the airwaves.

In an effort to bring cable systems within the scope of the Copyright Act, Congress amended the Copyright Act in 1976 by clarifying that to “perform” an audiovisual work meant “to show its images in any sequence or to make the sounds accompanying it audible.” The “Transmit Clause” was also added, specifying that an entity performs a work publicly when it “transmits” a performance to the public, i.e., communicates the performance “by any device or process whereby images or sounds are received beyond the place from which they are sent.” These changes were necessary in the age of technology in order for copyright holders to maintain their statutory monopoly on public performance rights of their works: there are many ways to transmit a performance other than by traditional broadcast. In 1976, of course, Congress was thinking of cable delivery. The Internet was barely even conceived.

In 2012, along came a service called Aereo, launched by Barry Diller’s IAC/Interactive Corp., a $3 billion company. The idea behind Aereo’s service was simple: “an automated system consisting of routers, servers, transcoders, and dime-sized antennae” that allowed consumers to watch television programming whose signals are relayed by Aereo to its customers via the Internet. The reality is a little bit more convoluted:

Respondent Aereo, Inc., sells a service that allows its subscribers to watch television programs over the Internet at about the same time as the programs are broadcast over the air. When a subscriber wants to watch a show that is currently airing, he selects the show from a menu on Aereo’s website. Aereo’s system, which consists of thousands of small antennas and other equipment housed in a centralized warehouse, responds roughly as follows: A server tunes an antenna, which is dedicated to the use of one subscriber alone, to the broadcast carrying the selected show. A transcoder translates the signals received by the antenna into data that can be transmitted over the Internet. A server saves the data in a subscriber-specific folder on Aereo’s hard drive and begins streaming the show to the subscriber’s screen once several seconds of programming have been saved. The streaming continues, a few seconds behind the over-the-air broadcast, until the subscriber has received the entire show.

Convoluted though Aereo may be, the Supreme Court’s decision on June 25, 2014, that Aereo’s service infringed on copyrighted programming was a no-brainer. That’s because Aereo did not simply act as equipment provider, but transmitted each particular program that a subscriber selected to watch. The dissent (written by Scalia, and joined by Thomas and Alito), believed that because transmission was triggered by the subscriber, Aereo’s transmission could not be deemed a transmission at all and viewed Aereo as akin to having a library card. (It’s a bit difficult to square that view with the actual wording and intent of the law.) The majority opinion, written by Breyer and joined by Roberts, Kennedy, Sotomayor, Ginsburg and Kagan, found Aereo’s service to have an “overwhelming likeness to the cable companies targeted by the 1976 amendments,” with the only difference being that cable systems transmit programming continuously, while the Aereo system transmits them only when “a subscriber indicates that she wants to watch a program. Only at that moment, in automatic response to the subscriber’s request, does Aereo’s system activate an antenna and begin to transmit the requested program.” The majority found the distinction to be unimportant, in part because in both systems the method is invisible both to broadcasters and subscribers alike. (As a cable subscriber, you can only watch those channels to which you turn your dial. As an Aereo subscriber, you can only watch those channels you click on.)

There has been some recent fury in the press characterizing the decision as an attack on “disruptive innovation,” a currently vaunted theory that purports to understand how technological innovation really happens. See, e.g., Michael Wolff’s article in USA Today, Concept of disruption under attack, July 7, 2014. Wolff claimed that Aereo was akin to Google and suggested that  opposition to it is an attack on the future. (“Clever ideas are the future. Established ones are the past. Choose your side,” Wolff says.)

However, Aereo was not doing “disruptive innovation” — and neither was Google. Google developed search engine technology that depended on aggregating information from existing websites and publications and provided the means for people to find that information. The argument that Google was infringing copyright by copying information to facilitate searches has nothing to do with the theory of disruptive innovation, which is “the selling of a cheaper, poorer-quality product that initially reaches less profitable customers but eventually takes over and devours an entire industry.”[2] Google wasn’t disrupting or cannibalizing an already existing marketplace.

It might be that Aereo offered a poorer-quality product and reached less profitable customers, but it did nothing more than re-route the information for which cable operators – which do on land what Aereo was doing online – pay license fees. Actually, the fact that the Supreme Court viewed Aereo as substantially similar to cable companies has recently given Aero’s lawyers new hope:

The high court concluded that the streaming service was so similar to cable companies, which are required to negotiate a deal if they want to carry broadcasters’ programming, that it could not simply pluck signals from the airwaves without paying. That’s significant, Aereo says, because the classification also means that it’s “now entitled’ to work out a deal — which broadcasters, in turn, must negotiate in good faith. Indeed, Aereo says, its eligibility for what’s known as a compulsory license ‘must be decided on an immediate basis or [its] survival as a company will be in jeopardy.”[3]

As for the supposedly new “attack” on “disruptive innovation,” this is mere palaver. Aereo was not innovative, but clever — actually too clever by half. For quite a few years now, services that take copyrighted content and re-distribute it without paying royalties or fees to the copyright holders have regularly been found by courts to run afoul of copyright law, regardless of how popular the service is.

It can also be said that Barry Diller’s IAC/InterActiveCorp hardly fits the model for a company engaged in disruptive innovation. IAC/InterActive’s revenues exceed $3 billion per year. Founded in 1995, and traded on NASDAQ, it is very far from being a feisty startup (the standard bearer for disruptive innovation).[4] Diller’s strategy was likely a calculated risk that if he didn’t slip through a loophole, he could get big enough to bring the content providers to the table. With Aereo’s latest argument, as the case goes back to the lower court on remand, he just might succeed.


[1] The reasons for statutorily mandated royalties are beyond the scope of this article, but see our post, Copyright 2014: Understanding the Issues. It should also be noted that while copyright owners of audiovisual works and musical compositions do have the exclusive right to control public performance of their works, sound recording copyright holders currently have that right only for public performance via the Internet (and not via land-based radio stations). That exception may well be eliminated in the near future.

[2] This is a quote from Jill Lepore’s article, The Disruption Machine (The New Yorker, June 23, 2014), criticizing the theory of “disruptive innovation,” but her description is accurate. See


[4] For a thumnail sketch of IAC/InterActive, see

Do we need the Songwriter Equity Act?

The House will hold hearings today, June 10th, and again on June 25th on royalties payable to copyright holders of musical compositions by terrestrial and digital media services. The Songwriter Equity Act is expected to be the focus of the June 10th hearings. The bill, introduced by Rep. Doug Collins (R-GA, the “Most Conservative Georgian in Congress”), is the House version of a bill introduced in the Senate by Orrin Hatch (R-Utah) and Republican Senators from Tennessee, Lamar Alexander and Bob Corker.

Collins says he is hoping for “swift and thorough consideration” of the bill, which would determine how Copyright Royalty Judges set compulsory royalties for the following reproductions of music compositions:

  • Mechanical royalty rates for the reproduction of musical compositions by way of CDs, vinyl records and similar devices,
  • permanent downloads,
  • ringtones,
  • limited downloads
  • interactive streaming

If passed, the law would require that the Copyright Royalty judges

establish rates and terms that most clearly represent the rates and terms that would have been negotiated in the marketplace between a willing buyer and a willing seller. In establishing such rates and terms, the Copyright Royalty Judges shall base their decision on marketplace, economic, and use information presented by the participants. In establishing such rates and terms, the Copyright Royalty Judges may consider the rates and terms for comparable uses and comparable circumstances under voluntary license agreements.

What does this mean in practice?

First, Copyright Royalty Judges are currently prohibited from considering the royalties paid for the use of sound recordings by interactive digital services. (For an explanation of the licensing differences for interactive vs. non-interactive digital transmissions, see our previous post.) This is not necessarily a bad thing, but setting musical composition royalties against sound recording royalties is a zero-sum game, albeit one in which sound recordings owners are currently the clear victors. Some leveling of the playing field may be called for — keeping in mind, however, that songwriters invest very little money, if any, in writing a song, while sound recording owners spend (and risk losing) substantial sums of money before they have a finished sound recording.

Second, the Songwriter Equity Act would strike from the law the section that currently sets the mechanical royalty rate at 9.1 cents (for reproductions of musical compositions and digital downloads). This is probably a bad thing. The current rate of 9.1 cents is comparable or higher than the compulsory mechanical licensing rates of other countries, including the United Kingdom, where music is at least as cherished and important an industry as in the United States.

Moreover, gutting the current method for determining mechanical royalties will, if the rate is raised substantially, cause financial harm to any recording artist who records a cover version of a song. The reason why mechanical royalties were established to begin with is that lawmakers realized that there were no “willing sellers” — i.e., songwriters who were willing to let anyone record their song. But because copyright law is a limited monopoly that must also serve the public interest by advancing the arts, etc., lawmakers decreed that once a musical composition was recorded, anyone can re-record it, provided they remain faithful to the original. The compulsory mechanical royalty sets the terms by which cover versions can exist.

Typically record companies limit the amount of mechanical royalties they are willing to pay their recording artists. (Were recording artists to demand higher mechanical royalty rates, record companies would simply reduce their artist royalties. Again, it’s a zero sum game.) That means that if a recording artist were to release 10 songs, 8 of which were written by the recording artist and 2 of which were cover versions written by others, the artist wouldn’t simply give up a proportional share (i.e., 20% ) of the available mechanical income. Rather, the percentage would depend upon how high the rate was set vs. how much was left over for the songs penned by the recording artist. So much for songwriter equity. Add to this the fact that an uncountable number of recording artists are subject to a statutory rate fixed at the time they made their deals, while the statutory rate for licensed works (for cover versions and samples) are rarely fixed. Those recording artists will see their publishing income slip even further if the Songwriter Equity Act is passed. (Of course, Congress could, for instance, preserve the mechanical royalty for records and downloads, but still raise rates for streaming services.)

Although the goal of higher royalties for songwriters is laudable, at least in the abstract, attempting to set royalties according to what “a willing buyer and a willing seller” would do is a complete fiction, given the monopoly power of the performing rights organizations (which control 100% of performing rights income) and three major record companies (which collectively control 75% of the market for sound recordings). Streaming services pay 60-70% of their income to recording companies not because they are “willing buyers” to the record companies’ “willing sellers,” but because they can’t succeed without offering their subscribers the majors’ sound recordings.

The Songwriter Equity Act is, not surprisingly, opposed by the Digital Media Association (DiMA), which includes Pandora, Google, Apple and Amazon. According to the DiMA’s Executive Director Lee Knife, the Songwriter Equity Act and other currently proposed legislation in this area “create additional anomalies” and “cater to the unique interests of only a limited group of stakeholders.” What he means by the latter — and he is correct — is that any increase in royalties is likely to be felt only by the richest publishers and the most popular artists.

Dispelling the Myths of the “First to Invent” Patent Filing System

Across the Internet can be heard the shrill cry of opponents to the “First to File” patent registration system which will take effect, pursuant to the America Invents Act, in approximately 18 months. The “First to File” system, they say, will disfavor the individual inventor working in his garage and award big corporations with the resources to win the race to the Patent & Trademark Office.

This is a very romantic idea which based on certain populist notions regarding the American Dream, but not rooted in historical or legal reality. It is the purpose of this article to describe the “First to Invent” system as it worked in the real world.

Contrary to popular (and populist) belief, the “First to Invent” system was not a system in which patents were awarded to the first person to conceive of an idea. Hacker News provides these helpful examples to show how it worked. (We have taken the liberty of clarifying their examples):


X comes up with an idea at time 0. X starts working to reduce the idea to practice.
At Time 4, Y comes up with a similar idea, and also starts reducing to practice.
At Time 10, Y gets it all working, writes up and files a patent application.
At Time 15, X gets it all working (poorly), writes up and files a patent application.

Under a “First to File” system, Y will be awarded the patent. Under a “First to Invent” system, Y is presumed to be the one entitled to the patent, but X can initiate an “interference” action. (That’s an administrative procedure in the patent office to determine who “invented” first.) To win the interference action, X must show that he conceived of the invention prior to Time 4 and worked continuously and diligently to reduce it to practice until Time 15. Proving this can be difficult — it requires extensive and objectively verifiable record-keeping. It is also expensive. An interference action may be as little as $50,000 but is typically much more and can exceed three quarters of a million dollars. Fortunately, interference actions are rare: less than one percent of all patent applications become involved in an interference action. This means that in over 99% of patent filings, the patent is effectively awarded to the first (and only) to file.

In those cases where there is a dispute by two or more inventors (or teams of inventors), you only need to ask yourself who has the money to mount an interference action and you’ll know that the answer is “not the small inventor.” An empirical study cited on Bill Heinze’s blog, ip-updates confirms this point. In “Competition, Innovation and Racing for Priority at the U.S. Patent and Trademark Office,” Linda R. Cohen and Jun Ishii from the Department of Economics at UC Irvine analyzed a random sample of 662 patent interference actions and concluded as follows:

“we do not find evidence that the system works to the benefit of small inventors or firms. Small firms rarely avail themselves of the interference process. But if we assume that the winner of an interference is the first-to-invent,* the results suggest that small inventors do not suffer from a filing disability. Alternatively, there is some indication that other groups do have such problems – both the U.S. government and U.S. universities, for example, are far more likely to enter our sample as junior parties, yet they win a reasonable share of cases, which suggests that both institutions systematically take longer to file patent applications than do private firms and individuals. However, we need more data to establish the trend statistically.”

Cohen and Ishii found that in 390 out of 662 cases, or 58.91% of the time, the patent went to the senior filer (i.e., the first to file), while 27.64% went to the junior party, 7.85% went to both parties, and 5.59% went to neither party. (Cohen and Ishii presumed that the party awarded the patent was actually the first to invent, but that probably isn’t true in every case.) In most cases, the winners were large corporations.

Let us continue with the examples comparing the two systems.


X conceives of the idea at Time 0 and begins working on reduction to practice.
Y conceives of the idea at Time 4 and begins working on reduction to practice.
At time 6, X takes time off to work on something else — perhaps he took another job or started working on a different invention — and he only resumes working on the invention at Time 8.
Y files his patent application at Time 10. X files at Time 15.

Here, Y wins under both the “first to file” system and “first to invent” system, because X lost his priority date of Time 0 when he interrupted his work. His new priority date is Time 8. Since Y was working diligently from time 4 to his filing date, Y’s priority date is Time 4.


Same as Example 2, except X files at time 10, Y files at time 15.

X, who was the first to conceive of the invention, wins under the “first to file” system, but loses to Y (after an interference action) under “first to invent” system.

In sum, under the “first to invent” system, the patent wasn’t necessarily awarded to the one who first conceived the idea or first reduced it to practice. The situation was far more complicated.

Walter Hunt and Elias Howe

Moving from the abstract to the concrete, here is a real world example of the “first to invent” system in action in one of the most important patents in the history of American industrialization: the sewing machine.

Walter Hunt built the first American sewing machine in 1834, but decided not to seek a patent because he thought his invention would cause unemployment. His machine sewed only straight seams, but used a lockstitch mechanism characterized by a needle with an eye at the point which passed through the cloth, creating a loop on the other side through which a second thread passed via a shuttle. In 1846, Elias Howe obtained the first American patent for what Hunt was the first to invent: “a process that used thread from two different sources.” Howe’s sewing machine, however, failed commercially.

When Isaac Singer, with the help of Walter Hunt, made design improvements, thereby creating the first commercially viable sewing machine, Howe sued Singer for patent infringement. (In Singer’s machine, the needle moved up and down and the mechanism was powered by a foot treadle.) Belatedly, Hunt tried to file for a patent for his earlier invention, but his claim was rejected by the Patent Office. Had Hunt been successful, Howe would never have prevailed against Singer.

What follows are excerpts from the 1854 decision of Judge Charles Mason, Commissioner of Patents, on Hunt’s application. (Thanks to, where we found this text.)

Hunt claims priority upon the ground that he invented the Sewing Machine previous to the invention of Howe. He proves that in 1834 or 1835 he contrived a machine by which he actually effected his purpose of sewing cloth with considerable success. Upon a careful consideration of the testimony, I am disposed to think that he had then carried his invention to the point of patentability. I understand from the evidence that Hunt actually made a working machine in 1834 or 1835. The papers in this case show that Howe obtained a patent for substantially this same invention in 1846.

Notwithstanding this, the Commissioner was forced to refuse Hunt’s belated application, for the reason that an Act of Congress in 1839 had provided that inventors could not pursue their claims to priority in patents unless application was made within two years from the date when the first sale of the invention was made [one year under current law]. Hunt had sold a machine in 1834, and had neglected to make application for his patent till 1853.

Thus it was that one of the grandest opportunities of the century was missed by the man who should rightfully have enjoyed it; the honors and emoluments of the great sewing machine invention passed to a man who neither had invented a single principle of action, nor applied a practical improvement to principles already recognized

* * *

Elias Howe, Jr., acquired the power, by simply patenting another man’s invention, to obstruct every subsequent inventor, and finally to dictate the terms which gave rise to the great Sewing Machine Combination about which the world has heard—and scolded—so much. Howe’s machine was not, even in 1851, of practical utility. From 1846 to 1851 he had the field to himself, but the invention lay dormant in his hands. He held control of the cardinal principles upon which the coming machines must needs be built, and planted himself squarely across the path of improvement—an obstructionist, not an inventor—
and when, in 1851, Isaac M. Singer perfected the improvements necessary to make Hunt’s principles of real utility to the world Howe continued to obstruct and pursue litigation.”

It was no secret that Howe was not the first inventor of the lockstitch sewing machine — according to Hunt, Howe admitted that to him personally. However, Howe was the first to file.

“First to File” under the America Invents Act Doesn’t Mean First to Steal

For those who have been confused into thinking that “first to file” means that someone can simply steal an invention and run to the patent office to file it, the America Invents Act makes it perfectly clear that it is only inventors (or the owners to whom they assign their patents in writing) can file at all. Moreover, where the first party to file “derived” its invention from another, the prior inventor may bring a derivation proceeding. In many respects this will resemble the interference action, but such actions should arise on far fewer occasions.

“America Invents Act” Brings Substantial Changes to Patent Practice

The rules for filing and challenging patents are about to change with the passage of the Leahy-Smith-sponsored “America Invents Act.” A lot of claims have been made about the law, for example, that it will end American dominance of inventions, favor big corporations or even favor foreign inventors. Such claims seem unlikely, but the real world effects of the new law may not be known for at least several years. In the meantime, inventors, both corporate and individual, and their attorneys will have to understand how to use the law to their advantage.

Provisions of the new law include the following:

I. A Switch to a “First to File” System (with Exceptions)

The PTO will grant patents based on who was “first to file” rather than who was “first to invent.” Thus, where two (or more) inventors file for the same patent, the person who files for it first will be the one who gets it, even if that person’s invention came after that of a competitor. However — and this is a big however — if, prior to filing, the first inventor (or, more likely, the company for which s/he works) makes public disclosures about the invention, that first inventor may defeat the patent application of the first filer provided that such disclosure was made within one year of the first filer’s application to the PTO. In other words, while “first to file” is the general rule, “first to disclose” within the one year grace period may preempt it. Missing here is what exactly will be deemed to constitute “disclosure.” The criteria have yet to be promulgated by the PTO.

Pre-filing disclosures may therefore become crucial under the new law. If an inventor or company keeps its invention secret while deciding whether to file for patent protection and a competitor publicly discloses or files for the patent first, the inventor or company which was actually the first to invent will lose out. Consequently, inventors and companies will have to decide not only when (because they must file for the patent within one year of disclosure) but what to disclose. As the Brookings Institution has noted,

[s]ome companies may find themselves targeted by competitors’ disclosures engineered specifically to foreclose patent opportunities.[1]

For this reason, companies may need to make “preemptive ‘defensive’ disclosures,” taking into consideration their own filing deadlines.

II. Changes in Who May File a Patent Application

Patent applications may now be filed by an inventor’s employer and the employer may also execute any required documents on the inventor’s behalf should the inventor fail or refuse to do so.

III. The Right to Make Supplement Filings

The new law will permit patent owners to request that the PTO initiate a supplemental examination to allow the owner to correct or reconsider information relevant to the patent. This change is intended to limit the extent to which patent infringers can defend against an infringement suit by bringing up what was considered “inequitable conduct” of the patent applicant (e.g., failure to submit to the PTO material *prior art* known by the applicant; failure to explain and translate references in a foreign language; material misstatements of fact in the application or supporting affidavits; or a misdescription of inventorship). The patent owner who invokes the Supplemental Filing provision, may effectively innoculate itself against such “inequitable conduct” claims by third parties.

This provision does not come into effect, however, until one year following enactment of the law.

(*Prior art* means any and all publicly available information that might be relevant to a claim of originality of a patent. Generally speaking, if an invention has been described in prior art, a patent on that invention is not valid. Applicants are required to disclose material prior art in their applications and PTO examiners are bound to consider it.)

IV. Submissions of Prior Art by Third Parties

Third parties seeking to prevent the issuance of a patent for whatever reason will be able to submit to the PTO prior art not disclosed by the applicant, together with “a concise description of the asserted relevance of such submitted document.” However, this is a double-edged sword: while the PTO may find that such prior art prevents issuance of the patent, the PTO may also grant the patent, thereby strengthening it. (The patent is strengthened because, in granting it, the PTO examiner will have considered the disclosed prior art, thereby reducing opportunities for post-grant attacks.

This provision also does not come into effect until one year following enactment of the law.

V. Post-Grant Review Proceedings

Under prior law, there were two patent re-examination procedures which could be brought to challenge the validity of a patent: ex parte and inter partes. In the ex parte proceeding, a third party requests a re-examination of the patent but participates in the proceeding only to the extent that the patent owner responds. In such event, the third party is limited to responding to the patent owner’s statement and has no right of appeal. In an inter partes proceeding, the third party may not only files a submission with the PTO every time the patent owner responds to a PTO office action, but it may also appeal the PTO’s decision. The essential difference between these two proceedings from the standpoint of third parties is that the inter partes proceedings potentially limits the third party’s remedies in federal court should the third party be sued by the patent owner for infringement. For example, the third party cannot assert an invalidity defense based on any prior art which was or could have been raised in the inter partes proceeding.

Under the new law, the ex parte re-examination is left intact, but the inter partes reexamination will be, one year following enactment of the law, replaced by an “inter partes review” to be conducted by the (newly named) Patent Trial and Appeal Board. The burden of proof will also change. Under the old law, the would-be opposer in an inter partes reexamination was required to provide the PTO with information about prior art sufficient to raise a “substantial new question of patentability.” Under the new law, and this provision takes place immediately, the would-be opposer will have to demonstrate “reasonable likelihood that the petitioner woud prevail with respect to at least one of the claims challenged in the petition.” The inter partes review may be brought only nine months (but sometimes longer) following the issuance of a patent.

For challenges within nine months of issuance, there will a “post grant review” procedure. This will be an entirely new way to challenge a patent short of going into federal court. With this procedure, the PTO may grant review if the opposer presents information which, “if not rebutted, would demonstrate that it is more likely than not that at least one of the claims challenged in the petition is unpatentable.” This standard includes not just the assertion of well-established legal arguments of invalidity, but also “a novel or unsettled legal question that is important to other patents or patent applications.”

VI. Elimination of “Best Mode” Disclosure As A Ground for Invalidity

Under both the prior and new law, patent applicants must disclose to the PTO “the best mode contemplated by the inventor of carrying out” the invention. This requirement is based on the traditional view (rooted in Article I, §8, clause. 8 of the U.S. Constitution) that the grant of a patent is conditioned upon the inventor providing enough information to the public to know how the invention is best carried out, or, in patent jargon, “practiced.” Failure to disclose the “best mode” of practice could prevent anyone from later practicing the patent (e.g., when the patent expired after twenty years) or making new inventions based on the information disclosed, and for this reason such failure has been considered by courts as grounds for invalidation.

Under the new law, failure to disclose “best mode” will not be a ground for asserting invalidity. As various commentators have noted, this new provision of the law will likely promote greater secrecy. With no danger of losing a patent for failure to disclose, inventors and companies will disclose only so much of the “best mode” as is necessary to satisfy the particular PTO examiner, keeping the most crucial information for itself.

For an example how the “Best Mode” principle used to be applied, see Wellman, Inc. v. Eastman Chemical Company at Google Scholar.

VII. Expansion of Prior Commercial Use Defense to Infringement

Alleged infringers have, since 1999, been able to avail themselves of the defense of prior commercial use under certain conditions. Under the new law, the defense will be extended to include any subject matter “consisting of a process, or consisting of a machine, manufacture, or composition of matter used in a manufacturing or other commercial process.” The prior commercial use defense may be asserted where the commercial use occurred at least one year prior to the filing of the patent application. This provision will apply only to new patents.

VIII. Fund Diversion

The PTO is one of the few government institutions which takes in more money than it expends. Over the past two decades, Congress has “diverted” about $900 million dollars of the PTO’s revenues to cover non-IP-related expenditures. This practice will continue to some as-yet-unknown degree. On the one hand, the new law provides for the establishment of a Patent and Trademark Fee Reserve Fund which will accumulate all fees in excess of the sums officially appropriated to the PTO for each year. Use of the Fund by the PTO will be a matter of Congressional discretion. On the other hand, the PTO is authorized immediately to add a 15% surcharge to all patent-related fees and the funds collected will be available to the PTO for patent-related purposes. Hopefully, it will be enough to allow the PTO to clear a backlog of cases.

IX. Reduced Filing Fees for the Small and Micro Inventor

The PTO will have the continuing authority to offer a 50% fee reduction to small entities and establish a 75% reduction for a new category of “micro” entities, although when the latter will happen is unclear.


The America Invents Act encourages early filing with the added incentive that filings may be supplemented to correct errors, omissions and new information. There is no reason why this should disfavor the small inventor. The Act leaves intact provisional patents which give inventors twelve months within which to explore the viability of their invention in the marketplace before embarking on a formal patent filing. (The provisional patent is inexpensive and allows filing without a formal patent claim, oath or declaration, or any disclosure of prior art.) And the one year grace period ensures that disclosure within a year of filing a patent will not result in a loss of patent rights. Moreover, by strengthening administrative remedies and raising a patent opposer’s burden of proof, the law may well make post-grant challenges more friendly and accessible to the small inventor. Finally, establishing a lower fee for a new category of “micro inventors” is specifically aimed to help the small inventor. Senator Leahy should be commended for a job well done.

Much of the opposition to the new law was based on the theory that America out-invents the rest of the world because it had a first-to-invent rather than a first-to-file system. The first-to-invent system, some commentators have claimed, favored small inventors. There is little or no evidence to support this. As the New York Times pointed out in an editorial in March of this year, the first-to-invent system already favored

whoever files first for a patent. Of the last three million applications filed, only 113 were granted to entities who filed second but proved they had invented first. In 88 of these cases, the winners were large corporations.[2]

Furthermore, proving who invented first was no easy task. Again, the Times editorial:

According to the patent office, it costs $400,000 to $500,000 to challenge a patent on the grounds of a prior invention.

So much for the small inventor.

The new law will require vigilance on the part of inventors, as well as new strategies for patent filing and litigation for companies large and small. These strategies will need to be developed gradually by closely watching activity in the PTO, the courts and the marketplace. Inventors and companies whose assets include patentable intellectual property must take heed.



[1] Brookings Policy Brief Series, # 184: “The Comprehensive Patent Reform of 2011: Navigating the Leahy-Smith America Invents Act,” September 2011,

[2] “Patents, Reform and the Little Guy,” New York Times, March 7, 2011,

FTC Compliance in Advertising

Blogger and Consumer Endorsements of Commercial Goods: Is Your Company in Compliance with FTC Guidelines?

Whether on your company’s website, Facebook, Twitter or third party blogs, endorsements of your products are subject to FTC guidelines issued in 2009.

General Considerations, 16 CFR § 255.1

FTC rule and guidelines require that before a company publishes an advertisement of a product — and this applies to all advertising, online or off — it must have a “reasonable basis” for each claim being made about the product. Both advertisements which make claims about the efficacy of a product (e.g., “you will achieve noticeable results in a few weeks”), and statements by bloggers and consumers attesting to that efficacy (e.g., “I used the product and felt results within a few days!”) are subject to the rule.

“Reasonable basis” means that the company must have objective evidence to support each claim. For medicine, remedies, vitamins, food supplements, reparative cosmetics and diets, “objective evidence” means “competent and reliable scientific evidence,” i.e., studies conducted by qualified persons, using methods that are generally accepted as scientifically valid. Furthermore, any claim regarding the results of using a product must be based on what consumers may generally expect. The matter obviously gets quite tricky when, for example, a study reveals a wide range of outcomes, particularly with regard to varying body types, skin types, ages, etc. But the FTC guidelines provide no further guidance on what will pass the test. The onus, if the FTC comes knocking, will be on the company.

If a claim is not supported by “objective evidence,” the company must conspicuously (i.e., not in fine print) state what the “generally expected results” of the product are, but even these generally expected results must, according to the FTC, be supported by objective evidence. Testimonials from satisfied customers are not considered objective or adequate evidence to support a claim about a product. Moreover, the FTC does not distinguish between claims made (1) directly by your company; (2) via consumer testimonials which appear on your company’s websites, blogs, Facebook pages, etc., or any other website at your company’s behest; and (3) by bloggers if the blogger has been provided with the product by the company, or reviews the product at the company’s request, or receives any kind of compensation, monetary or otherwise. In all three cases, the claims must be supported by objective evidence.  Claims which are not supported by objective evidence may be considered “deceptive” by the FTC.

Rules Applicable to Consumer Endorsements, § 255.2

As noted above, the FTC makes no distinction between consumer and blogger endorsements. They carry the same burdens and are treated as statements by the company whose product is being endorsed. Where a blogger makes a claim about the efficacy or curative properties of a product, the Company may be held responsible by the FTC even if the claim appears only on the blogger’s blog. Companies must therefore be aware of what bloggers (with whom they have been in contact) write and must take steps to correct claims which are not what consumers will generally achieve and are not supported by objective evidence. The FTC, by the way, disfavors the use of disclaimers such as “the results attested to by [the endorser] are not typical” or “may not be achieved by you.” FTC cites research on these disclaimers demonstrating that they have no effect on consumer expectations. However, the FTC doesn’t rule out the possibility that such a disclaimer might be sufficient in some circumstances. It just doesn’t say what those circumstances are.

There is a further rule which companies must heed for advertisements which contain consumer endorsements. Whenever an endorser represents that s/he uses a product, the company may run the advertisement only during the time the endorser actually uses, and continues to use, that product and to have the same opinion about it. (Companies have the obligation to contact the endorser from time to time to find out.) Dated testimonials in a section devoted to consumer comments is likely the best way to sidestep this potential problem –that is, where endorsement are conspicuously dated, there is no implication that product use is either current or ongoing. Videoclips with endorsements should also be conspicuously dated. Companies should ensure that the bloggers they contact also conspicuously date their product reviews.

§§ 255.1 and 255.2 contain several examples which are useful in understanding how the rules are applied:

  • A brochure for a baldness treatment consists entirely of testimonials from satisfied customers who say that after using the product, they had amazing hair growth and their hair is as thick and strong as it was when they were teenagers. The advertiser must have competent and reliable scientific evidence that its product is effective in producing new hair growth. The ad will also likely communicate that the endorsers’ experiences are representative of what new users of the product can generally expect. Therefore, even if the advertiser includes a disclaimer such as, “Notice: These testimonials do not prove our product works. You should not expect to have similar results,” the ad is likely to be deceptive unless the advertiser has adequate substantiation that new users typically will experience results similar to those experienced by the testimonialists.
  • An advertisement for a cholesterol-lowering product features an individual who claims that his serum cholesterol went down by 120 points and does not mention having made any lifestyle changes. A well-conducted clinical study shows that the product reduces the cholesterol levels of individuals with elevated cholesterol by an average of 15% and the advertisement clearly and conspicuously discloses this fact. Despite the presence of this disclosure, the advertisement would be deceptive if the advertiser does not have adequate substantiation that the product can produce the specific results claimed by the endorser ( i.e. , a 120-point drop in serum cholesterol without any lifestyle changes).
  • An advertisement for a weight-loss product features a formerly obese woman. She says in the ad, “Every day, I drank 2 WeightAway shakes, ate only raw vegetables, and exercised vigorously for six hours at the gym. By the end of six months, I had gone from 250 pounds to 140 pounds.”The advertisement accurately describes the woman’s experience, and such a result is within the range that would be generally experienced by an extremely overweight individual who consumed WeightAway shakes, only ate raw vegetables, and exercised as the endorser did. Because the endorser clearly describes the limited and truly exceptional circumstances under which she achieved her results, the ad is not likely to convey that consumers who weigh substantially less or use WeightAway under less extreme circumstances will lose 110 pounds in six months. (If the advertisement simply says that the endorser lost 110 pounds in six months using WeightAway together with diet and exercise, however, this description would not adequately alert consumers to the truly remarkable circumstances leading to her weight loss.)The advertiser must have substantiation, however, for any performance claims conveyed by the endorsement (e.g., that WeightAway is an effective weight loss product).

If, in the alternative, the advertisement simply features “before” and “after” pictures of a woman who says “I lost 50 pounds in 6 months with WeightAway,” the ad is likely to convey that her experience is representative of what consumers will generally achieve. Therefore, if consumers cannot generally expect to achieve such results, the ad should clearly and conspicuously disclose what they can expect to lose in the depicted circumstances ( e.g., “most women who use WeightAway for six months lose at least 15 pounds”).

If the ad features the same pictures but the testimonialist simply says, “I lost 50 pounds with WeightAway,” and WeightAway users generally do not lose 50 pounds, the ad should disclose what results they do generally achieve ( e.g., “most women who use WeightAway lose 15 pounds”).

  • A skin care products advertiser participates in a blog advertising service. The service matches up advertisers with bloggers who will promote the advertiser’s products on their personal blogs. The advertiser requests that a blogger try a new body lotion and write a review of the product on her blog. Although the advertiser does not make any specific claims about the lotion’s ability to cure skin conditions and the blogger does not ask the advertiser whether there is substantiation for the claim, in her review the blogger writes that the lotion cures eczema and recommends the product to her blog readers who suffer from this condition. The advertiser is subject to liability for misleading or unsubstantiated  representations made through the blogger’s endorsement. The blogger also is subject to liability for misleading or unsubstantiated representations made in the course of her endorsement.

Material Connections, § 255.5

This section of the regulations requires that companies disclose any material fact that might influence a blogger’s opinion about the product. This applies both to compensation, the promise of compensation, employment by the company (as when an employee posts on a board anonymously, touting his company’s products) and claims that an opinion is candid when it isn’t. “Compensation,” in this context, does not need to be monetary for the disclosure requirement to be triggered. The promise of publicity or some non-monetary reward for a favorable review is also “compensation.”

Again, the FTC provides some nuanced examples:

  • An actual patron of a restaurant, who is neither known to the public nor presented as an expert, is shown seated at the counter. He is asked for his “spontaneous” opinion of a new food product served in the restaurant. Assume, first, that the advertiser had posted a sign on the door of the restaurant informing all who entered that day that patrons would be interviewed by the advertiser as part of its TV promotion of its new soy protein “steak.” This notification would materially affect the weight or credibility of the patron’s endorsement, and, therefore, viewers of the advertisement should be clearly and conspicuously informed of the circumstances under which the endorsement was obtained.
  • Assume, in the alternative, that the advertiser had not posted a sign on the door of the restaurant, but had informed all interviewed customers of the “hidden camera” only after interviews were completed and the customers had no reason to know or believe that their response was being recorded for use in an advertisement. Even if patrons were also told that they would be paid for allowing the use of their opinions in advertising, these facts need not be disclosed.
  • An infomercial producer wants to include consumer endorsements for an automotive additive product featured in her commercial, but because the product has not yet been sold, there are no consumer users. The producer’s staff reviews the profiles of individuals interested in working as “extras” in commercials and identifies several who are interested in automobiles. The extras are asked to use the product for several weeks and then report back to the producer. They are told that if they are selected to endorse the product in the producer’s infomercial, they will receive a small payment. Viewers would not expect that these “consumer endorsers” are actors who were asked to use the product so that they could appear in the commercial or that they were compensated. Because the advertisement fails to disclose these facts, it is deceptive.
  • A college student who has earned a reputation as a video game expert maintains a personal weblog or “blog” where he posts entries about his gaming experiences. Readers of his blog frequently seek his opinions about video game hardware and software. As it has done in the past, the manufacturer of a newly released video game system sends the student a free copy of the system and asks him to write about it on his blog. He tests the new gaming system and writes a favorable review. Because his review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, readers are unlikely to know that he has received the video game system free of charge in exchange for his review of the product, and given the value of the video game system, this fact likely would materially affect the credibility they attach to his endorsement. Accordingly, the blogger should clearly and conspicuously disclose that he received the gaming system free of charge. The manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.
  • An online message board designated for discussions of new music download technology is frequented by MP3 player enthusiasts. They exchange information about new products, utilities, and the functionality of numerous playback devices. Unbeknownst to the message board community, an employee of a leading playback device manufacturer has been posting messages on the discussion board promoting the manufacturer’s product. Knowledge of this poster’s employment likely would affect the weight or credibility of her endorsement. Therefore, the poster should clearly and conspicuously disclose her relationship to the manufacturer to members and readers of the message board.

FTC Enforcement

The FTC can subpoena companies and hold them accountable for violating FTC guidelines. It can issue cease and desist orders, require corrective advertising and impose civil penalties. By all accounts, FTC enforcement is focused on products which are ingested (particularly supplements) and products which claim to cure conditions or diseases (especially cancer). The use of consumer and blogger endorsements which make claims not substantiated by objective evidence is common practice in the health supplements and cosmetics industries, but “everybody does it” is not a defense to an FTC action.

The FTC is not particularly proactive, but responds primarily to consumer complaints. Still, any proceeding — administrative or civil — can be an expensive process and is best avoided by following the guidelines carefully and in good faith.

Reversion of Rights Under the Copyright Statute

Reversion of Rights Under the Copyright Statute: When and How Authors, Composers and Recording Artists Can Get Their Intellectual Property Back from Publishers and Record Companies

Section 203 of the U.S. Copyright Act permits “authors” — a term which includes writers, composers and recording artists — who signed away rights to their works on or after January 1, 1978, to terminate their contracts and, to some extent, recapture those rights. This comes as good news to many authors but mostly bad news to book and music publishers and record companies who will either lose valuable back catalog or have to pay higher royalties in order to retain it.

The “Window” of Termination.

Termination of contracts which cover the right of “publication” (including release of records) must be made within a five-year window beginning either thirty-five years from the date of publication, or forty years from the date of execution of the contract (grant of rights), whichever term ends earlier. Thus, for someone who signed a deal in 1978 for a book published or a record released in the same year, that window opens on January 1, 2013. On the other hand, for someone who signed a deal in 1978 for a work released in 1980, the window opens on January 1, 2015.

Limitations on Termination.

The right of termination does not apply to “work made for hire.” (For an explanation of “work made for hire” doctrine under the Copyright Act, and in particular as it relates to sound recordings, see, “Statement of Marybeth Peters, The Register of Copyrights, before the Subcommittee on Courts and Intellectual Property Committee on the Judiciary, United States House of Representatives, 106th Congress, 2nd Session, May 25, 2000, available here. Nor does the right of termination apply to derivative works authorized and created prior to termination. So while an author of a book of fiction may terminate his/her contract with a publisher, s/he cannot also terminate an already executed contract between the publisher and a film production company for a motion picture based on the book. (Terminations in the case of sound recordings which contain so-called “samples” will be addressed in a different posting.)

Time for Sending Notice and Filing Notices of Termination.

Before termination can occur, the author of the work (or his or her heirs) must (1) provide written notice to the company or person whose rights are being terminated, and (2) file the termination notice in the Copyright Office prior to the date of intended termination. The notice of termination must be sent to the party who is being terminated not less than two nor more than 10 years prior to the intended date of termination. (See, 17 U.S.C. § 203(a)(4)(A).) If the window of termination opens on January 1, 2013, but notice of termination is sent only on January 1, 2012, then termination cannot take effect until January 1, 2014. Authors should take care to file their notices in the Copyright Office promptly, as notices submitted for filing after the closure of the five-year window will be rejected. (See, 37 C.F.R. § 201.10(f)(4).) Instructions for filing a notice of termination with the Copyright Office are provided in Circular 12, “Recordation of Transfers and Other Documents, available from the Copyright Office website.)

Although termination is required, the filing does not necessarily make the termination valid. Whether termination is valid depends on whether all the requirements (the contents of the notice, the methods of service and the procedure for “recordation” of filing) are satisfied. Needless to say, the termination procedures are full of pitfalls for the lay person and lawyers alike. And the right to terminate is a “use it or lose it” one. A failure to do it just right may invalidate the termination and prevent the recapture of rights.

Termination by Majority

Section 203 also provides that termination is effective only if it is made by the holders of more than 50% of the copyright in the work. This means that where there is more than one author or where one or more of the authors is deceased and the rights have passed to the author’s heirs, there may be a lot of parties who need to sign the termination notice in order to make it effective.

Moreover, when an author dies, it is the Copyright Act, not the author’s last will and testament, which determines who gets the copyright in the creator’s work. In other words, the author’s will could grant the copyrights in his work to a third party, but the authors widow and children can still exercise their termination rights, thereby wresting control of the work away from the third party. Under the Copyright Act, the author’s interest passes to a widow or widower, unless there are children or grandchildren, in which case the widow/er gets half. The other half is then divided equally among the author’s children. If any is deceased, the deceased child’s living children (i.e., the grandchildren of the author) take their parent’s interest divided in equal shares.

Works created by multiple parties may also present difficulties. The author of a sound recording, for purposes of the Copyright Act, is the performers who play on the recording and the record producer who processes the sounds and fixes them in the final recording. In the case of a musical group, if five members signed a single contract (as is usually the case) at least three out of those five would have to agree in order for the termination to be effective. The producer, however, is likely to have signed a different contract — the Producer Agreement — so s/he will have an independent right to terminate his/her grant of rights. If the producer terminates but a majority of the group does not, the group’s record company will have only a non-exclusive right to exploit the works going forward and the producer will be free to grant non-exclusive rights to another record company or even to release it him/herself, so long as the members of the group all receive their respective proportions of the earnings. Theoretically, multiple releases of a single sound recording could end up competing with each other in the marketplace.

A note for the music industry: Most record company contracts contain “work made for hire” language which purport to give the record company copyright ownership of the sound recordings produced under the agreement. However, unless they are made actual employees of the record company, sound recordings do not qualify as work made for hire. Many knowledgeable music industry lawyers believe that this language can be safely ignored as applied to recording artists. “Work made for hire” provisions may, however, be effective for sidepersons who are paid a lump sum for their contributions to a sound recording. In any case, as non-royalty participants, sidepersons are unlikely to be found to be “authors” of the sound recording for purposes of copyright ownership.

Contents of the Notice of Termination.

The notice of termination must contain the following:

  • (i) a clear statement that termination is being made pursuant to Section 203 of the Copyright Act;
  • (ii) the name(s) and addresses of each assignee (or successor in interest) whose rights are being terminated. (The termination notice must be served by personal service or first-class mail to the last known address of each party whose interests are being terminated. The terminating party must also use reasonable efforts to determine who has ownership rights subject to termination);
  • (iii) the date of execution of the original grant;
  • (iv) if the grant included the right of publication, the date of publication;
  • (iv) the title of each work to which the notice applies;
  • (v) the names of the author(s) or their heirs to whom the author’s rights have passed;
  • (vi) the original copyright registration number, if available;
  • (vii) a brief statement explaining what grant is being terminated;
  • (viii) date on which termination is to take effect; and
  • (ix) the signatures of the parties holding a majority interest in the copyright.

(See, 17 U.S.C. § 203(a)(4); 37 C.F.R. § 201.10(b)(2) and (3); and 37 C.F.R. § 201.10(d).)

A Gap in the Termination Provisions

On June 6, 2011, the Copyright Office announced an amendment to its termination regulations which are intended to address a perhaps unintended gap left by Congress for works which were the subject of a grant prior to January 1, 1978, but which didn’t come into existence until after January 1, 1978. This covers a substantial number of works delivered under multi-record or multi-book deals and long-term publishing contracts, many of which can extend for longer than a decade. The new regulation provides:

In any case where an author agreed, prior to January 1, 1978, to a grant of a transfer or license of rights in a work that was not created until on or after January 1, 1978, a notice of termination of a grant under section 203 of title 17 may be recorded if it recites, as the date of execution, the date on which the work was created.

(See, 37 C.F.R. § 201.10(f)(5).) See, “Gap in Termination Provisions.”)

The theory behind this amendment makes plenty of sense. First, the termination provisions under Section 304 of the Copyright Act (which will be the subject of a separate posting) apply only to works created prior to January 1, 1978. The way it stands now, neither Section 304 nor section 203 (the one we’re talking about here) allow for termination of works created after January 1, 1978 under a contract made before that date. Second, a contract which grants rights in a work to be created sometime in the future cannot be consummated until something copyrightable comes into existence.

But note that the new regulation covers filing, not sending notice. Unfortunately, this is because the Copyright Office doesn’t actually have the power to declare that authors whose works fall into the gap can actually terminate under Section 203. Rather, the new regulation merely provides a means by which authors of such works (i.e., a contract executed prior to January 1, 1978, but works created after) may go through the motions of termination in the hope that their right will eventually be recognized by Congress or vindicated in the courts. No one knows when or whether this will happen.


Lawyers as well as lay persons are advised to read carefully the termination provisions of Section 203 of the Copyright Act and the applicable regulations. While authors are not required to terminate their agreements, they may find that termination opens new commercial opportunities for their works or makes possible a favorable renegotiation of the commercial terms of their prior agreements. For now, those authors who works fall into the gap should go through the process of notification and filing just in case their rights are subsequently recognized.

[Thanks to Alistair Paton for pointing out a previous error in the window for termination.]

Copyright & Fashion Design: Chuck Schumer’s Modest Proposal

On August 6th, Sen. Charles Schumer (D-NY), introduced the “Innovative Design Protection and Piracy Prevention Act (“the Innovative Design Act”) (S. 3728). If passed (and it has a long way to go before that happens), it will become the first U.S. law extending copyright protection to design elements of “men’s, women’s or children’s clothing, including undergarments, outerwear, gloves, footwear, and headgear; handbags, purses, wallets, duffel bags; suitcases, tote bags, belts and eyeglass frames” which are “unique, distinguishable, non-trivial and non-utilitarian variation[s] over prior designs.”

Under current copyright law, “useful articles” including clothing and accessories are not copyrightable. This is because they have “an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.” 17 U.S.C. § 101. (See Whimsicality, Inc. v. Rubie’s Costume Co., Inc., 891 F. 2d 452 (2d Cir., 1989), finding that children’s costumes were not copyrightable.) However, fabric design elements are copyrightable. (See Knitwaves, Inc. v. Lollytogs Ltd., 71 F. 3d 996 (2d Cir., 1995). In that case, the defendant was found guilty of copyright infringement for copying plaintiff’s stylized oak and maple leaf appliques on children’s sweaters.)

The Innovative Design Act, however, would not grant the same scope of protection to clothing designs that it does to fabric designs. Here the period of protection would be a mere three (3) years, but that is more than enough to eliminate the problem or benefit (depending on which side of the fence you sit) of knock-offs. To be sure, the Innovative Design Act would apply only to new designs, old ones being dedicated by law to the public domain. Moreover, in order to win an infringement suit, a designer will not only have to describe in detail exactly what s/he is laying claim to, but will have to prove in court that:

  • the copyrighted elements are wholly original and a “unique, distinguishable, non-trivial and non-utilitarian variation over prior designs;”
  • the accused design is “substantially identical,” i.e., so similar that it is likely to be mistaken for the original;
  • the allegedly infringing design “contains only those differences in construction or design which are merely trivial” — i.e., the design is truly “substantially identical” and not simply identical in certain features; and
  • the defendant had the opportunity to see the original design before creating the alleged infringement.

To uncomplicate the court’s job slightly, the law provides that a knock-off of a truly original work would be infringing regardless of its color or the design of the fabric with which it is made. Finally, the proposed law limits damages to a maximum penalty of $50,000 or $1.00 per copy, whichever is greater, although the law also makes clear that “the damages awarded shall constitute compensation and not a penalty.”

Whether the Innovative Design Act survives the legislative process is anyone’s guess, but it is worth observing here that it is not so much a law that protects the exclusive rights of the designer as one that mandates a compulsory fee for copying. In other words, the creation of knock-offs will continue to be economic decisions, but with the consideration that there might be an added cost should a designer decide to invest a substantial amount of money in lawyers’ fees to start a legal action. Thus one would presume that the law, if passed, will lead to knock-offs of only the most commercially successful products. $50,000 may be a worthwhile price to pay.