Intellectual Property Infringement

—David A. Gauntlett, Gauntlett & Associates

Companies looking for extra money in these tough economic times may have an answer from the past. The vast majority of insurer denial letters for intellectual property lawsuits lack merit. Therefore, companies who have litigated intellectual property cases and expended significant monies in defense and settlement may be overlooking ready sources of cash through pursuit of coverage claims.

Five Reasons Why Insurer Denials of Intellectual Property Claims May Not Be Well Taken

First, insurers rarely consider all the potential bases for coverage factually implicated by the underlying lawsuits they address. The distinctions necessary to identify pertinent policy provisions may not be possessed by the personnel charged with conducting that analysis.

Second, insurer’s distinctly narrow fact constructions of allegations leads to consistent under-assessment of potential coverage for fact-based claims under “offense” based coverage for “categories of wrongdoing” which often proceed under a bewildering variety of labeled causes of action.

Third, the insurer’s ability to appreciate a potential for coverage requires an ongoing and “neutral assessment” of developments in coverage case law. Mechanisms to communicate this developing law to the claims handling personnel charged with evaluating coverage for such claims are often ineffective and inconsistent with the insurer’s institutional perspective on how coverage should be evaluated.

Fourth, further, when case law, favorable to policyholders arises, it is not disseminated with appropriate instruction to caution claims to personnel to its significance.

Fifth, claims personnel may be the victim of a collective “willful blindness” to case developments that are antithetical to coverage perspectives developed while protecting insurer interests.

Intellectual Property Lawsuits Are Expensive

It is not uncommon, pursuant to AIPLA surveys for companies to expend $500,000 to $1,000,000 for defense of trademark and copyright infringement lawsuits. More than five times that sum may be expended for patent infringement lawsuits. Where insurer denial letters assert erroneous grounds for denial, a distinct opportunity for pursuit of coverage arises.

Ascertaining Whether Buried Treasure Exists Requires a Five-Part Analysis

These issues include:

1.         Did the company give notice to the insurers on risk as of the date of the first alleged “wrongful act” as well as all subsequent carriers and those at higher levels who may have a duty to pay any settlement reached.

2.         If not, was the insurer on constructive notice of the lawsuit and/or settlement.

3.         Has the statute of limitations run on their complaint.

4.         Are facts beyond the complaint available to clarify potential coverage where the law applicable permits reference to such evidence.

5.         Were the insurer or insurers notified of any settlement prior to its consummation where the insurer agreed to defend under a reservation of rights. 


Continue Reading “Buried Treasure” – Securing Reimbursement for Monies Expended in Past Intellectual Property Lawsuits

   

We’ve spent some time here discussing the world-famous Coca-Cola brand. Most recently, David Mitchell wrote about the incredible consistency of the Coca-Cola brand over the past 125 years. A while back Dave Taylor wrote a nice Ode to the Brand of Brands, the King of Cola: Coke.

And, let’s not forget my humble suggestion that a roadside sign promoting Coca-Cola at a drive-in restaurant that actually sells Pepsi instead of Coke, might be a good example of an appropriate application of the initial interest confusion test.

But, what about Coca-Cola’s frequent reference to "taste infringement" — some cleverly novel and suggestive legalese apparently coined by the Coca-Cola brand a few years back with its launch of Coke Zero?

Putting aside Brent’s fair question of whether the ads are a good idea, some of my favorite ads have been the Coke Zero viral ads, where a variety of lawyers are punk’d on hidden cameras, led to believe they are being interviewed by Coca-Cola representatives to take legal action for "taste infringement" — against the Coca-Cola team down the hall, the rival team of co-workers behind the Coke Zero launch. This one is my favorite, with lines such as these:

"Are you aware that Coke Zero tastes a lot like Coca-Cola?"

"There might be some taste infringement issues."

"I think it’s basic taste infringement, I’d like to stick with that phrase."

"Basically, a patent/copyright, a little too closely."

The ads are silly and I suspect most viewers appreciate the ridiculousness of Coca-Cola suing itself, but I’m not so sure people understand "taste infringement" to be a ridiculous or faux-legal claim — especially in this environment of increased focus and attention on the expansiveness of intellectual property rights. So, perhaps you heard it here first, there is no such legal claim.

In The Great Chocolate War, as reported by Jason Voiovich, the legal claim that Hershey’s — owner of the coveted Reese’s brand — brought against Dove’s competing peanut butter and chocolate candy, was based on trade dress. Notably, there was no asserted claim of "taste infringement". No one owns the combined taste of peanut butter and chocolate, thank goodness.

That’s not to say, however, that there aren’t intellectual property rights impacting the human sense of taste. For example, with respect to trademarks, we’ve written before about the possibility of taste being the subject of a non-traditional trademark, but to the best of my knowledge, none has been acknowledged or even identified to date. If you have information to the contrary, please share your insights here.

Of course, there is a reason for the lack of or scarcity of taste trademarks. Any product intended for human consumption is unlikely a candidate for taste trademark protection given the functionality doctrine. So, Coca-Cola can’t stop another from selling a beverage that has the same taste as Coca-Cola, just because it tastes the same, unless of course, the maker of the competitive beverage hired away key Coke employees who unlawfully revealed the closely guarded secret formula. That is how trade secret litigation happens, not "taste infringement" litigation.


Continue Reading Taste Infringement?

A month ago the hot news was the federal copyright infringement lawsuit filed by Mike Tyson’s facial tattoo artist S. Victor Whitmill against Warner Brothers Entertainment, and Whitmill’s attempt to block the Memorial Day release of the highly anticipated blockbuster sequel movie The Hangover Part II, based on the film maker’s unauthorized reproduction and/or derivative of the tattoo design permanently inked on Tyson’s face, but still owned by the artist and creator of the design.

More recently, within the last week, the hot related news was the federal court’s decision to deny Whitmill’s motion for a preliminary injunction (brought to prevent the release of the film), but in reluctantly permitting the film’s timely release Chief Judge Catherine D. Perry seemed to foreshadow the likelihood of Warner Brothers paying dearly for not inking and negotiating a copyright license in advance.

What I find most interesting about the fact pattern of this lawsuit and the many presently unknown facts is the all-too-common potential for overlapping and competing intellectual property rights to the underlying subject matter in question — in this case, an artistic design that is copyrightable as an original work of authorship, and it also may function as a trademark or service mark, much like a logo or visual element of a brand. And, because the design now forms a permanent part of the visual appearance, persona, and likeness of a famous individual, it may also function as an element or aspect of Mike Tyson’s right of publicity.

When all possible intellectual property rights are bundled together and neatly owned by one party it permits the single owner to fully exploit the subject matter in a variety of ways by relying on multiple and differing legal rights, theories, and remedies. It gets pretty interesting, however, when not all of the intellectual property rights are owned by the same party — and, that’s when talented IP lawyers are needed to sort it all out, hopefully well in advance of the need for any enforcement.


Continue Reading Tattoos & Hangovers: The Headache of Competing IP Rights