Increased Fines for Violations of North Carolina Seed Law

North Carolina Map 3d ShapeIn 2013, the North Carolina legislature increased the maximum fine for violations of the state’s seed law from $500 to $10,000 per violation. See N.C. Session Law 2013-345, Senate Bill 455, An act to increase penalties for violation of the seed law. An article in neighboring South Carolina’s The State examines the primary reason for passage of the tough new law–unauthorized planting and sales of proprietary plant varieties. Martha Quillin, In North Carolina, a 20-fold increase in fines for seed piracy, The State (May 18, 2014).

As explained in an interview with North Carolina State University peanut breeder Dr. Tom Image of peanuts against background of fieldIsleib, even state universities depend heavily upon licensing revenues from crop varieties they develop, because public funds do not cover the high costs of research and development required to develop successful varieties. The federal Plant Variety Protection Act (PVPA) provides intellectual property protection for registered, proprietary plant varieties that are new, distinct, and uniform.  However, until last year, North Carolina’s state seed law did little to deter so-called “brown bagging”–unlawful sales of proprietary seed. The maximum fine available under the seed law was $500 per violation.

In 2012, it was discovered that a  North Carolina peanut seed distributor was selling large quantities of seed saved from his harvests, in unknowing violation of the law. Recognizing that the state law was ineffective to capture the attention of would-be brown bag sellers, the  North Carolina Seedsmen’s Association and state agricultural officials pushed for the harsher penalties. In addition to increasing applicable fines, the newly amended law also provides that in cases involving unlawful sales of seed protected under the PVPA, a court “shall order the payment of restitution to any injured party for any losses incurred as a result of the unlawful sale.”

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Unintended Consequences of Open Access Publishing Policies

Open Access PublishingRick Anderson at The Scholarly Kitchen has a thought-provoking article regarding the pressure on authors to publish their academic articles under the most permissive open access licenses available. See Rick Anderson, CC-BY, Copyright, and Stolen Advocacy, The Scholarly Kitchen (Mar. 31, 2014).  Generally, this means the Creative Commons Attribution (CC-BY) license. The CC-BY license grants the world the right to do essentially anything with the copyrighted work–including sell, translate, edit, or rewrite it–without obtaining further permission from the copyright owner, so long as the original author is given attribution. As Anderson notes, this exceptionally broad advance grant of permission can have unintended consequences, including uses of the author’s creative work in ways diametrically opposed to the intention of the author. For the most fervent advocates of open access, it is worth considering whether the absence of any restrictions on use of copyrighted content is always the ideal outcome and whether insisting on the CC-BY license may cause injustice to the author.

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“Twilight” Trademark Infringement Claims Cleared for Trial

Trademark Infringement, Likelihood of ConfusionThe U.S. District Court for the Southern District of New York ruled that the entertainment company responsible for the “Twilight” film series is entitled to a trial on claims that its trademarks were infringed by a cosmetics company’s use of the marks TWILIGHT WOODS and TWILIGHT CRUSH. Bath & Body Works Brand Management, Inc. v. Summit Entertainment, LLC, No. 11 Civ. 1594 (S.D. N.Y. Mar. 21, 2014).

Bath and Body Works (BBW) is a cosmetics retailer that operates more than 1,500 stores in the United States. In 2011, BBW filed a lawsuit seeking a declaration that its scented products bearing the word “twilight” do not infringe trademarks owned by Summit Entertainment. Summit is a film studio and a subsidiary of Lions Gate Entertainment that produced and distributed the “Twilight” movies based upon the novels of best-selling author Stephanie Meyer. When BBW filed the declaratory judgment action, Summit asserted trademark infringement counterclaims against BBW. After a period of discovery, BBW filed a motion for summary judgment, contending that Summit’s counterclaims lacked merit as a matter of law. In a March 21, 2014 decision, the court denied BBW’s motion, clearing the way for Summit to present its counterclaims to a jury.

As explained by the court, Summit owns 40 U.S. trademark registrations for “Twilight.” Some of the registrations apply to the production and distribution of motion pictures. However, due to the commercial success of the films, Summit has also produced or licensed several lines of merchandise for which it owns trademark registrations, including clothing, candles, and purses and other bags; nail polish; and cosmetics (specifically for products called “Luna Twilight” and “Twilight Venom”).

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In order to establish a case of trademark infringement, the mark owner must prove that its trademark is valid and that the defendant’s use of a similar mark presents a likelihood of confusion. According to the court, a “likelihood of confusion” means that “numerous ordinary prudent purchasers are likely to be misled or confused as to the source of the product in question because of the entrance in the marketplace of defendant’s mark.” The court made the following observations in light of factors identified by the U.S. Court of Appeals for the Second Circuit as relevant in determining whether there is a likelihood of confusion:



The strength of the plaintiff’s mark;
The similarity of the defendant’s mark to plaintiffs’s mark;
The proximity of the products sold under defendant’s mark to plaintiff’s products;
Where the products are different, the likelihood that plaintiff will “bridge the gap” by selling products being sold by defendant;
The existence of actual confusion among consumers;
Whether defendant acted in bad faith in adopting the mark;
The quality of the defendant’s products; and
The sophistication of the consumers.






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DC Circuit Upholds USDA Country-of-Origin Rule for Meat Labels

Country-of-Origin RuleIn American Meat Institute, Inc. v. United States Department of Agriculture, No. 13-5281 (D.C. Cir. Mar. 28, 2014), the U.S. Court of Appeals for the District of Columbia Circuit rejected industry challenges to a U.S. Department of Agriculture rule that in most cases requires retailers of “muscle cuts” of meat (meat that is not ground) to list the countries of origin and production steps—born, raised or slaughtered—that occurred in each country. The rule also discontinued a prior USDA practice that permitted the use of identical labels on commingled cuts from animals of different origins that were processed on the same day.

Country-of-Origin RuleAmong other things, the DC Circuit acknowledged that the USDA rule implicated the retailers’ constitutionally protected right to engage in commercial speech. However, the court characterized the U.S. Supreme Court’s decision in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626, 651 (1985), as holding that “commercial speech warrants protection mainly due to its information-producing function,” and thus “a commercial actor has only a ‘minimal’ First Amendment interest in not providing purely factual information with which the actor does not disagree.” For this reason, the Supreme Court held that mandatory disclosures do not violate an advertiser’s First Amendment rights, “as long as disclosure requirements are reasonably related to the State’s interest in preventing deception of consumers.”

Applying the standard set forth in Zauderer, the DC Circuit found that the federal government had a legitimate interest in imposing the country-of-origin rule, and thus the rule did not infringe the industry’s First Amendment rights. The court reasoned that–

What then are the government interests here? AMI argues that the rule merely satisfies consumers’ curiosity. But we can see non-frivolous values advanced by the information. Obviously it enables a consumer to apply patriotic or protectionist criteria in the choice of meat. And it enables one who believes that United States practices and regulation are better at assuring food safety than those of other countries, or indeed the reverse, to act on that premise…. We cannot declare these goals so trivial or misguided as to fall below the threshold needed to justify the “minimal” intrusion on AMI’s First Amendment interests.

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Spanish Trademark Office: “Paella Catalana” too Generic to Register as Mark

Trademark, Genericness, DescriptivenessOn September 10, 2013, Barcelona chef Quim Marqués applied to the Spanish Patent and Trademark Office for registration of the trademark PAELLA CATALANA–the name of a wildly popular dish of rice, chicken, and seafood created by Marqués at the restaurant El Suquet de l’Almirall. See Application No. M3090401 (Oficina Española de Patentes y Marcas). Although many people outside Spain view paella as a national dish of Spain, it originated in Valencia and is strongly associated with that Mediterranean region of the country. Marqués’s recipe for Paella Catalana adapts the traditional Valencian meal to the unique tastes of the autonomous community of Catalonia in the east of Spain by substituting calamari, crayfish, peas, and plums from different locales within the region.

However distinctive the taste of Paella Catalana may be, according to various news reports, the Trademark Office recently determined that its name–translated as “paella from Catalonia”–is too generic or simply too descriptive of the product to be registered as a trademark. See La patente de la ‘paella catalana’ vulnera la Ley de Marcas, (27 Mar. 2014); La Ley de Marcas frustra el registro de la denominación ‘paella catalana’, (26 Mar. 2014).

Article 5(1)(b) of Spain’s Trademark Law 17/2001 explicitly prohibits the registration of marks that lack distinctive character. Subsection (c) of the same provision further declares ineligible for registration marks–

… which consist exclusively of signs or indications that may serve in trade to designate the kind, quality, quantity, intended purpose, value, geographical origin, the time of production of goods or of rendering of the service or other characteristics of the product or service.

It is perhaps not surprising that these provisions forbidding the registration of purely descriptive terms seem to have frustrated Marqués’s attempt to claim exclusive rights in the name of his signature recipe. However, even without the added legal boost of a registered trademark, the mouthwatering qualities of the dish–featured in the short video below–appear more than strong enough to ensure its success in the marketplace.

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South Africa Advertising Body Says GM Crops Ad “Unsubstantiated”

GM Crops in South Africa
South Africa

On March 17, 2014, the Advertising Standards Authority (ASA) of South Africa–a non-governmental, self-regulatory body established by the marketing communication industry–declared that a radio advertisement that touted several benefits of genetically engineered crops violated the ASA’s Code of Advertising Practice. Mariam Mayet on behalf of The African Center for Biosafety v. Monsanto South Africa (Pty) Ltd, No. 22576 (S.A. Advertising Stds. Authority 17 Mar. 2014). The advertisement in question, run by Monsanto South Africa, contained the following statements:

GM crops enable us to produce more food sustainably whilst using fewer resources. GM crops and food are strictly regulated and have been extensively researched and tested for safety. GM crops provide a healthier environment by saving on pesticides and decreasing greenhouse gas emissions whilst increasing crop yields substantially.

The African Centre for Biosafety (ACB)–an advocacy organization that campaigns against transgenic crops and commercial agriculture–complained to the ASA that the claims in Monsanto’s commercial were unsubstantiated. Although Monsanto responded to the ACB’s complaint by citing scientific studies in support of its claims for the benefits of genetically modified crops, the ASA did not take those studies into consideration. The ASA explained that it “is not a technical expert, and would not be able to interpret scientific data and information to appropriately extrapolate findings.” For this reason, the ASA expects advertisers “to present unequivocal confirmation from an independent and credible expert in the relevant field to support the exact claims made in the advertising.” Acccordingly, the ASA deemed the statements in Monsanto’s commercial to be unsubstantiated because Monsanto did not submit evidence from “an independent and credible expert to confirm that the various studies relied on and referred to on its website are applicable to the respondent’s product, or that they support the advertising claims.”

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Brazilian Court Annuls Approval to Commercialize Transgenic Corn

Transgenic Corn in BrazilA federal appellate court in Porto Alegre, Brazil nullified a government commission’s approval for commercial release of the transgenic corn (maize) product known as LibertyLink. See Processo 5000629-66.2012.404.7000 (Tribunal Regional Federal da 4ª Região 13 Mar. 2014).

Transgenic CornAPPROVAL OF RELEASE LEADS TO LITIGATION. In 2007, the South American country’s National Technical Committee on Biosafety (CTNBio) approved the importation and use of LibertyLink, a herbicide-resistant, genetically modified variety developed by Bayer Cropscience. See Technical Opinion No.987/2007 – Commercial Release of Genetically Modified Corn, LibertyLink (Corn T25). However, a group of environmental, consumer, and small farmer organizations filed a judicial action to set aside CTNBio’s decision on the grounds of alleged environmental and health concerns and the purported failure of CTNBio adequately to evaluate the risks associated with transgenic corn.

Transgenic Corn in BrazilTHE APPELLATE COURT’S RULING. After inconclusive litigation in the lower court, on March 13, 2014, the Fourth Regional Federal Court invalidated CTNBio’s approval of LibertyLink due to its failure to conduct studies in the north and northeastern regions of Brazil. The court’s written summary of its decision began by urging policy makers to exercise “caution and humility” when dealing with matters that change the natural order. The court further opined that,

As human beings, we have limits, yet often our science and technology make us believe that we can always overcome them. The truth is that sometimes we make mistakes, and our mistakes can be very costly to the environment, to [other] species living on the planet, and to us in the present and our children in the future.

Transgenic Corn in Brazil, GMOs
General Biome Map of Brazil by Oak Ridge National Laboratory

COMMITTEE MUST CONSIDER ALL RELEVANT BIOMES IN PERFORMING RISK ASSESSMENT. The court observed that Article 14(4) of the national Biosafety Law (Lei nº 11.105, de 24 de Março de 2005), CTNBio’s decisions should take into account the particularities of different regions of the country. According to the court, when CTNBio performed its risk assessment for LibertyLink, it should have considered potential effects in all relevant regions (biomes) of the country. Such a broad consideration was necessary, the court stated, because of the vast territory of Brazil, the fact that pollen from corn plants can travel great distances, and the multiplicity of environments that could be affected. This does not mean that CTNBio should have conducted studies in all of Brazil’s states, but the court declared that the committee should at least have considered all biomes where the transgenic corn could be marketed if commercially released.

CALL FOR GREATER TRANSPARENCY IN DECISION MAKING. The court also quoted Principle 10 of the Rio Declaration on Environment and Development–which encourages public participation and widespread consultation by public bodies making decisions affecting the environment–as a reason for CTNBio to become more transparent in its decisions on applications for release of transgenic crops.

 by Shawn N. Sullivan, March 27, 2014.

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Functionality of Product Design Bars Registration as Trademark

Trademark Functionality
The Applicant’s Product Design

In Adams Manufacturing Corp. v. Rea, No. 12-1430 (W.D. Pa. March 12, 2014), a federal court in Pennsylvania upheld the determination of the U.S. Trademark Trial and Appeal Board (TTAB) that the shape and design of a suction cup with a concentric two-ring design were not eligible to be registered as a trademark because the product features in question were influenced by functional considerations.

The court cited the U.S. Supreme Court’s decision in Qualitex Co. v. Jacobson Products Co., 514 U.S. 159 (1995), which held that product characteristics that contribute to the function of the product cannot be protected by trademark law. In Qualitex, Justice Breyer wrote for the Court that,

The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, after which competitors are free to use the innovation. If a product’s functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity). That is to say, the Lanham Act does not exist to reward manufacturers for their innovation in creating a particular device; that is the purpose of the patent law and its period of exclusivity. The Lanham Act, furthermore, does not protect trade dress in a functional design simply because an investment has been made to the public to associate a particular functional feature with a single manufacturer or seller.

In the Adams Manufacturing case, the district court observed that the applicant had held a utility patent on the suction cup design, and that the applicant did not apply for a trademark registration until it was “nearing the expiration of its utility patent.” According to the court, both the patent and the advertising materials for the product emphasized that the two-ring design had the specific functional purpose of diffusing light, and thereby prevented damage to the product from the convergence of light rays on a single focal point.

The court opined that “[t]he fact that other suction cup designs will also diffuse light does not take away from the basic functionality of the Adams two-ring design.” The court quoted the Seventh Circuit’s decision in Georgia-Pacific Consumer Products LP v. Kimberly-Clark Corp., 647 F. 3d. 723, 727 (7th Cir. 2011), for the proposition that “the design in question does not have to be the only possible design to be functional; rather, it is functional if it represents one of many solutions to a problem.” (Internal quotation marks omitted.)

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Fair Use Bars Copyright Infringement in Politician Photo Case

fair use
Stock photo. Copyright: Depositphotos / zurijeta

The U.S. District Court for the Northern District of California held that the fair use doctrine barred copyright claims by a politician and lawyer against the operators of a website that reproduced her photo without her permission. Dhillon v. Does 1-10, No. C 13-01465 (N.D. Cal. Feb. 25, 2014).

PLAINTIFF’S PHOTOGRAPH. In 2008, Harmeet Dhillon, an attorney who currently serves as Chairman of the Republican Party chapter of San Francisco, California, was a candidate for a seat in the California state legislative assembly. In the course of her campaign, she commissioned photographs of herself, including a headshot set against a gray background. She used the headshot in the campaign and in subsequent publicity activities.

UNAUTHORIZED USE OF PLAINTIFF’S PHOTOGRAPH. On February 12, 2013, the website published an anonymous article about the Ms. Dhillon entitled “Meet Harmeet.” Alongside the article appeared an unauthorized copy of Ms. Dhillon’s headshot photo. Ms. Dhillon registered the copyright in the photograph and filed a copyright infringement lawsuit against the operator(s) of The defendants moved for summary judgment, contending that the copyright claim was barred by the doctrine of fair use. In a decision dated February 25, 2014, the court granted the defendants’ motion and dismissed the claim.

THE FAIR USE DEFENSE. Fair use is an exception to the exclusive protection of copyright under U.S. law. It permits certain limited uses of copyrighted works without the permission of the author or owner of the copyright. Section 107 of the U.S. Copyright Act  contains a list of the various purposes for which the reproduction of a particular work may be considered fair. Those purposes include criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also identifies the following four non-exclusive factors to be considered by courts in determining whether a particular use is fair:

  • The purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes;
  • The nature of the copyrighted work;
  • The amount and substantiality of the portion used in relation to the copyrighted work as a whole; and
  • The effect of the use upon the potential market for, or value of, the copyrighted work.

THE COURT’S REASONING. In concluding that the defendants’ unauthorized use was shielded by the fair use defense, the court took into consideration the following evidence:

  • The website on which the photo was reproduced was a non-commercial website, and there was no evidence that the defendants obtained any financial benefit as a result of using the photo.
  • The defendants’ use of the photo was “transformative,” because, although the plaintiff had commissioned the creation of the photo to promote her political candidacy, the defendants had used the photo in connection with an article that was critical of the plaintiff’s political positions.
  • It would not have been feasible for the defendants to have used less than the entire photo.
  • There was no evidence or allegation “that any market ever existed for the sale or licensing of the headshot photo, or that such a market might have developed at any future time.” Therefore, there was no evidence of “any impact upon the economic market for the headshot photo,” as required under the fourth fair use factor.

In light of these facts, the court determined that the fair use factors weighed in favor of the defendants, and that the plaintiff’s claim should be dismissed. The court did not, however, grant the defendants’ motion for sanctions because the court determined that the plaintiff’s position “was not completely unreasonable.”

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SCOTUS Allows False Advertising Claims vs Printer Cartridge Manufacturer

Cleaning printer toner cartridgeOn March 25, 2014, the Supreme Court of the United States unanimously ruled that Static Control Components, Inc., a seller of components for remanufacturing of used laser printer toner cartridges, may pursue false advertising claims against Lexmark International, Inc., a laser toner cartridge manufacturer. Lexmark International, Inc. v. Static Control Components, Inc., No. 12–873 (U.S. Sup. Ct. Mar. 25, 2014).

LEXMARK’S PLAN TO FOIL CARTRIDGE REMANUFACTURING. Lexmark had sold its cartridges under a “Prebate” program, in which customers could obtain a discount if they agreed to return their used cartridges to Lexmark instead of selling them to purveyors of “remanufactured” cartridges. Each Prebate cartridge contained a miocrochip that disabled the empty cartridge unless Lexmark replaced the chip. Static Control reverse-engineered microchips to mimic Lexmark’s chips, so that competitors of Lexmark could remanufacturer used Lexmark cartridges and sell them in the aftermarket.

STATIC CONTROL’S FALSE ADVERTISING COUNTERCLAIMS. In 2002, Lexmark sued Static Control, claiming, among other things, that its reverse-engineered chips circumvented a technological measure that controlled access to copyrighted software inside Lexmark printers, in violation of the Digital Millennium Copyright Act (DMCA). In addition, Lexmark sent letters to cartridge remanufacturers, claiming that using Static Control microchips would violate Lexmark licenses and constitute copyright infringement. Static Control counterclaimed against Lexmark for alleged antitrust violations and false advertising. Specifically, Static Control alleged that Lexmark “falsely informed customers that SCC’s products infringe Lexmark’s purported intellectual property,” and “misled . . . customers of SCC’s products that license agreements prohibit remanufacturing Lexmark toner cartridges, when no license agreements actually exist,” causing Static Control’s customers to believe that Static Control is engaging in illegal conduct and thereby damaging Static Control’s business and reputation.

PROCEEDINGS IN THE LOWER COURTS. In the course of ten years of litigation, including a jury trial, Lexmark’s claims against Static Control were all dismissed. See Static Control Components, Inc. v. Lexmark International, Inc., Nos. 09-6287/6288/6449 (6th Cir. Aug. 29, 2012). In the first instance, Static Control’s false advertising counterclaim was also dismissed, with the district court ruling that Static Components lacked “prudential standing” to bring the Lanham Act claim. On appeal, however, the U.S. Court of Appeals for the Sixth Circuit reversed, finding that it was sufficient for standing purposes that Static Components “alleged a cognizable interest in its business reputation and sales to manufacturers and sufficiently alleged that th[o]se interests were harmed by Lexmark’s statements to the remanufacturers that Static Control was engaging in illegal conduct.” Lexmark petitioned the Supreme Court for a writ of certiorari, which the Court granted.

SUPREME COURT REJECTS “PRUDENTIAL” STANDING DISMISSAL. In affirming the Sixth Circuit’s ruling, the Supreme Court rejected the notion that “prudential” standing principles could be invoked to bar Static Control’s claim. “Just as a court cannot apply its independent policy judgment to recognize a cause of action that Congress has denied,” Justice Antonin  Scalia wrote for the Court, “it cannot limit a cause of action that Congress has created merely because ‘prudence’ dictates.”

STANDING FOR FALSE ADVERTISING CLAIMS. In its March 25, 2014 ruling, the Supreme Court ruled that to “invoke the Lanham Act’s cause of action for false advertising, a plaintiff must plead (and ultimately prove) an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.” The element of proximate cause means that ”a plaintiff suing under §1125(a) ordinarily must show economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising; and that that occurs when deception of consumers causes them to withhold trade from the plaintiff.” However, according to Justice Scalia, proximate cause does not require that there be direct competition between the claimant and the defendant, and the claimant need not establish a direct link between consumer confusion and its injuries.

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