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In This Issue
On December 17 a jury in the Circuit Court for Alexandria, Virginia, awarded an employment recruitment business $1,138,500 in its suit against a website developer. The case, Blue Line Media, Inc. v. Redmon Group, No. CL07003974, is one of the few to have turned on the interpretation of Virginia’s Uniform Computer Information Transactions Act ("UCITA"), codified at Va. Code Ann. §§ 59.1-501.1 to -509.2 (2006). A primary goal of UCITA is to standardize the law and establish default rules for licensing software and other forms of digital information. Although in the late 1990s UCITA was expected to be widely adopted throughout the United States, Virginia and Maryland are the only two states that have enacted it to date. Many consumer-protection groups and advocacy organizations for businesses and nonprofits oppose UCITA because they claim it favors software vendors over licensees of the vendors’ software. However, in Blue Line Media the jury found for the business licensee, which claimed that the software vendor had not been able to deliver the contracted-for interactive website. Redmon Group had promised Blue Line Media a site that would permit job seekers to post resumes and contact employers, receiving automatic e-mails to confirm each of their transactions. Blue Line Media claimed the e-mail system never worked properly. The company also claimed that, contrary to the Redmon Group’s assurances, its personnel could not manage the website without technical assistance from the Redmon Group. The Redmon Group had estimated that creating the interactive website would cost approximately $600,000. After paying the developer over $543,000 but being refused permission to inspect the website software, Blue Line Media concluded that the Redmon Group could not deliver the required results and filed suit for breach of contract. Because the parties had not agreed that UCITA would not apply to their contract, the court instructed the jury that under UCITA, the Redmon Group had a statutory duty to design and build the interactive website "in accordance with [software] industry standards and practices." Blue Line Media called an expert witness who testified that the site had over 100 distinct defects and failed to meet the applicable standards. The jury agreed, awarding Blue Line Media close to the $1.4 million limit that Circuit Judge Nolan B. Dawkins had ruled was available under UCITA. The Judge held that, per Virginia Code Section 59.1-508.9, the limit reflected the fair market value of the interactive website that the Redmon Group was contractually obligated to create for Blue Line Media. The Blue Line Media case is significant because the court used UCITA to set the standards for both breach of contract and damage measurement. "The statute makes clear," said a lawyer for Blue Line Media, "that a website developer and builder has a duty to build and deliver in accordance with industry standards." Although UCITA has been in effect in Virginia since 2000, very few cases have cited it, largely because parties can and usually do mutually agree that the statute will not apply to transactions between them. For example, in Pilar Services v. NCI Information Systems Inc., 569 F.Supp. 2d 563 (E.D. Va. 2008), a lawsuit between a contractor and a subcontractor that provided software and services to the National Security Agency, the court held that "the parties’ subcontract governs the software transaction, per the direction of the UCITA, because the UCITA provides that individual parties may decide on the specific terms of the contract." If not overturned, Blue Line Media could prove to be a precedential case, especially on the issues of using UCITA as the standard for determining whether a software contract was breached and, if so, what the appropriate damages should be. However, the head of the Redmon Group said that the company is "considering legal options and . . . aggressively pursuing appropriate appeals," and the court docket indicates that the Redmon Group filed a Notice of Appeal on February 11, 2009. Regardless of what happens on appeal, however, Blue Line Media illustrates the importance to software licensors and licensees of understanding UCITA and how it can affect them. The case also underscores the need to engage licensing counsel who are knowledgeable about and have experience with this unusual statute.
On October 13, 2008, President Bush signed into law the Prioritizing Resources and Organization for Intellectual Property Act of 2008 ("PROIPA" or "Pro-IP Law"), 15 U.S. Code Section 8101. PROIPA aims to improve federal enforcement of intellectual property ("IP") rights by enhancing the resources dedicated to their protection, improving coordination among responsible federal agencies, and increasing penalties for infringement. Title I of PROIPA amends existing IP laws in several ways. The new law makes clear that the requirement to register a copyright before suing for its infringement applies only to civil, not criminal, actions. Also, the law provides a safe harbor for copyright registrations that contain inaccurate information. Previously, the Lanham Act, which governs trademarks, allowed treble damages when a violation consisted of intentionally using a counterfeit mark in connection with the sale of goods or services. Under PROIPA, treble damages may be awarded for "providing goods or services necessary to the commission of a violation . . . with the intent that the recipient of the goods or services would put the goods or services to use in committing the violation." Title I doubles the minimum and maximum statutory damages for the use of counterfeit trademarks. Statutory damages from $1,000 to $200,000 may now be awarded for counterfeiting, and an award of $2 million is available for instances of willful counterfeiting. PROIPA’s Title II enhances criminal IP law by imposing criminal penalties if, in intentionally trafficking in counterfeit goods, an offender knowingly or recklessly causes serious bodily injury or death. In addition, Title II directs the Secretary of Homeland Security to issue regulations by which an artistic performer is entitled (after payment of a fee) to receive notice of imports or exports of infringing goods. The new law also requires convicted infringers to pay restitution fees and facilitates the court’s authority to order the forfeiture and destruction of property used in the commission of an offense. Title III is perhaps the most significant provision of PROIPA. That section directs the President to appoint to the cabinet an "Intellectual Property Enforcement Coordinator" – or an "IP czar," as the position has been dubbed by some commentators. The IP czar will chair an IP advisory committee, also created by PROIPA, consisting of members of various federal agencies, including the Department of Justice, the FBI, and the U.S. Patent and Trademark Office. Title IV broadens the Department of Justice’s ability to hire and train law-enforcement officers to investigate and prosecute IP theft and infringement by making grants available for those purposes. The law designates $55 million for each of the next five years to be used for IP enforcement programs. PROIPA goes into effect immediately, and President Obama will be the first President to appoint an IP czar. PROIPA’s ultimate effect will not be known for some time; however, by enacting it, the federal government has signaled that enforcement of IP rights is one of its priorities.
Cellophane. Escalator. Zipper. Once they were trademarks; now they’re not. What happened? Each mark became so popular that people began using it as the generic name for the product it branded – cellulose sheets, powered stairs and sliding fasteners, respectively – and eventually the mark became the name for that product. In other words, the mark died and was buried in the "trademark graveyard." That graveyard actually exists – it’s called a dictionary, which is where a former mark may officially appear as a generic name. In fact, Merriam-Webster’s Collegiate Dictionary (10th ed.) gives the derivation of the word zipper as "Zipper, a trademark." That dictionary also shows that "thermos," long generic in the United States for vacuum-insulated containers, was originally a trademark. However, because trademark rights vary country by country, THERMOS still receives protection as a trademark in some jurisdictions – the United Kingdom, for example. Likewise, Canada still regards YO-YO as a trademark for a brand of the popular spinner-on-a-string, even though over 40 years ago a U.S. court declared the term generic for such toys. Trademark owners sometimes put their marks on a "health maintenance program" by running advertisements to remind the public that their marks are not generic names and should not be used that way. Xerox Corporation’s "anti-genericide" ads are perhaps the best known. One states, "When you use ‘Xerox’ the way you use ‘aspirin’, we get a headache." That ad humorously makes the point that the company doesn’t want XEROX to become generic for photocopiers the way ASPIRIN became generic for a pain reliever (at least in the United States; ASPIRIN is still a mark in many places). Anti-genericide ads appear most frequently in publications aimed at writers and editors – Writer’s Digest and Editor & Publisher, for instance. That way trademark owners have the best chance of keeping generic uses of their marks out of print, thereby avoiding the quickest route to the trademark graveyard. Another way to keep marks from entering the graveyard is to ensure that there is a generic name for the branded goods or services in question, even if the name has to be invented by the trademark owner (which could well be the case with a unique new product). Examples include "correction fluid" for liquid WITE-OUT products and "inline skates" for ROLLERBLADE products. In fact, the Wikipedia entry for ROLLERBLADE carefully notes that "Rollerblade is a type of inline skate" and that the term is a "registered trademark." Yet another technique for avoiding the graveyard is consistently using the word "brand" between the mark and the generic name – for example, KLEENEX brand tissues and BAND-AID brand bandages. Several of Johnson & Johnson’s U.S. registrations for its various BAND-AID trademarks include the word "brand" as part of the mark. But even a careful owner may not be able to avoid its mark being killed by genericide in certain places. Although Xerox Corporation has kept XEROX from becoming synonymous with "photocopy" in most of the world, the mark has reportedly become generic in the Bulgarian, Portuguese, Romanian and Russian languages. Google Inc. seems determined not to let GOOGLE enter the graveyard even though the mark is often used, at least informally, as the generic term for conducting an Internet search. In 2006, Merriam-Webster began defining "Google" as a verb meaning "to use the Google search engine to obtain information about (as a person) on the World Wide Web," and the Oxford English Dictionary also includes the verb, although capitalized. Perhaps recognizing that limited use of a mark as a generic name helps to show the mark’s popularity, Google has indicated that it does not necessarily object to "Google" being used to name searches run with Google’s proprietary engine. If use of GOOGLE is restricted in that way, the mark likely will remain a mark, and a strong one at that. For example, in the 1970s and 1980s, the owner of the LEGO mark conducted a campaign to persuade customers to call its products "LEGO blocks" or "LEGO toys." Although they continued to call LEGO brand products "legos," customers did not call competing products by that name, so the LEGO mark has remained alive and well – and out of the trademark graveyard. Ironically, the most popular marks face the greatest threat of entering the trademark graveyard. So, as is the case when goods with a desirable brand are counterfeited, having a genericide problem is, in one sense, a sign of success. Who knew the prospect of burying a mark would have a bright side? Sources: http://en.wikipedia.org/wiki/Genericized_trademark; http://blogs.techrepublic.com.com/geekend/?p=1293&page=2; http://news.cnet.com/Google-joins-Xerox-as-a-verb/2100-1025_3-6091289.html; www.yo-yos.net/Yo-yo%20history.htm * As appeared in INTA Bulletin
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