Intellectual Property Directions

I noticed a report the other day that Circuit City’s bankruptcy administrator had hired someone to auction off some intellectual property: the Circuit City and Firedog trademarks. While I understand that any money brought in this way is good for the creditors, I have to wonder who the buyers might be.

We often compare IP to real property. In this situation the Circuit City trademark would seem to have the value of Swampville, Florida - why would anyone see value in opening shop under the sign of a company that had no particular differentiator in the marketplace, has gone bankrupt, has probably left consumers holding the bag on rebates, gift cards, and store warranties, and is now known as a failure?

And Firedog? Well, let’s just say that Firedog is no Xerox, Oreo, or Kleenex when it comes to public name recognition for home technical services.

On the face of it the rules governing trademarks seem straight forward; basically you have to have a distinct “mark” so the public will be able to identify the source of the goods or services being offered. The two no-no’s are trying to use a merely descriptive word (”Delicious” cookies) or a generic term (”Soap” as your brand). For Bayer, the aspirin people, trying to register a new trademark (ASPRINA) turned into a true headache.

The irony in this mini-drama, of course, is that Bayer’s chemists were the first to come up with aspirin as we know it. According to the Bayer web site:

1897 - Chemist, Felix Hoffmann, at Bayer in Germany, chemically synthesizes a stable form of ASA powder that relieves his father’s rheumatism. The compound later becomes the active ingredient in aspirin named - “a” from acetyl, “spir” from the spirea plant (which yields salicin) and “in,” a common suffix for medications.

Yet, 110 years later, when Bayer submitted ASPRINA to the PTO as a mark to be used in conjunction with analgesic goods (presumably aspirin), they were rejected on the grounds that the mark was merely descriptive. Bayer appealed to the TTAB, which concluded that consumers could be confused into thinking ASPRINA was just a variation on the generic aspirin.

Bayer then escalated its appeal to the Federal Circuit; again Bayer was rebuffed. The Court found that visually, and in the commercial context in which it would be used, consumers might be confused into thinking this label was a generic description of what was in the package.

So Bayer, which has made a significant effort to make us think “Bayer” when we think of aspirin (see image of package - “aspirin” is about 1/5 the size of “Bayer”), has found that in the United States it can’t go back and start selling us Aspirina aspirin. It would be like trying sell Macintosh McIntoshes.

Duncan Bucknell recently raised the question in the title of this post - could someone buy up trademarks or copyrights and engage in patent troll-like behavior? And since the answer is clearly “yes”, why hasn’t it happened? Why don’t we have trademark or copyright trolls?

Duncan suggested that the value of a trademark is supported by the goods or services it is associated with, so “you can’t just acquire a trademark and expect it to maintain value without also continuing to supply the goods or services”. No goods or services = no trademark value to claim damages against.

Duncan believes copyrights are more likely to work (for a troll) as they don’t have the problems that trademarks do and that the online environment and software seem to be situations where copyright infringement might be sufficiently widespread to generate the returns.

My take on it is a little different. I think both trademarks and copyrights are significantly less fertile ground for trolls than patents. If you are unintentionally infringing a patent you may be out of business for quite a while trying to do a design-around if you don’t want to pony up the license fee. And the cost of defending yourself in court is prohibitive unless you’re really, really sure you’re not infringing. So the troll has the upper hand.

However, while you certainly might be accidentally infringing a  trademark, defending yourself in court is not as expensive as a patent suit and changing a trademark is unlikely to kill your business (many companies do it on their own; Esso –> Exxon). Additionally, registered trademarks are not hidden the way patents can be and it’s really unlikely that multiple companies will be infringing the same trademark, so the troll doesn’t have many targets to hit or much leverage with the one possible infringer.

There’s really no way for you to unintentionally use a substantial portion of copyrighted material (sure, the 1 million monkeys might eventually type Hamlet, but I’m not counting on it!), so anyone coming after you is not a troll, at least in my book. The enforcement is only a surprise to you because you assumed you’d get away with the infringement and that makes you, not the enforcer, the bad guy.

Most technology companies I know rightfully concentrate on developing their patent portfolio. Patents allow them to block competitors from duplicating their inventions.  But competitors don’t have to infringe to unfairly take market share from you. As Visible Systems Corp. of Lexington realized, trademarks are the weapon of choice to fend off competitors who use similar product names to snag customers who have heard about your great product or service. But trademark infringement can be even tougher to prove than patent infringement!

Visible Systems makes multiple software tools, all branded as “Visible”, including the “Visible Enterprise Workbench”, a design and deployment tool for “rapid development and migration of information systems”. Visible noticed that Unisys was marketing and selling software and services that create a virtual map of an organization’s IT infrastructure under the name “3D Visible Enterprise“; not surprisingly, Visible felt this product infringed on its trademark and was costing it business.

Visible sued Unisys, won in a jury trial, and just last week had the judge uphold the verdict and direct Unisys to pay up and to stop using the product name. Note that Unisys can continue to sell its software and services - no one claimed there was a patent being infringed - but Visible, with less than 25 employees, no longer has to worry about Unisys (more than 31,000 employees) selling to customers who had heard good things about “Visible” software products.

Although Visible won this time, the verdict easily could have the other way. Why? Because a key consideration in trademark suits is the likelihood of confusion in the marketplace. It is legal and appropriate for two non-competing companies to have the same trademark - we all know Apple computer and Apple music co-existed for many years before Apple (computer) started selling music, the product of Apple (music).

In Visible’s case, there are a multitude of other companies with the word “visible” included in their trademarks or in their names. In fact, a simple Google search turns up a company in New Jersey with the identical name [Visible Systems Corp.] which owns the URL “visiblesystems.com”. So the question of confusion in the marketplace was not a slam dunk to decide.

Probably Visible could have forestalled the whole risk of having to sue Unisys had it selected its trademark more wisely. “Visible” is a real English word, for which it is almost impossible to claim exclusive use. Unisys may have felt “visible” was a descriptive enough word that they could get way with using it. There’s a reason we have Kodak, Xerox, and Kleenex out there. Have you looked at your trademarks recently?