Bloomberg News

Google, KFC, Macy’s, Groupon: Intellectual Property

January 04, 2013

Google Inc. (GOOG:US), avoiding a potentially costly legal battle with U.S. regulators, ended a 20-month antitrust probe by pledging to change some business practices and settling allegations it misused patents to thwart competitors in smartphone technology.

The Federal Trade Commission voted 5-0 to close its investigation into whether Google unfairly skewed its search results, with the company saying it would voluntarily remove restrictions on the use of its online search advertising platform, and offer companies the option to keep their content out of Google’s search results.

Under a consent decree regarding patents, Google will have little chance to seek court orders barring competitors’ products when the company has agreed to license its technology on reasonable terms.

“The changes Google has agreed to make will ensure that consumers continue to reap the benefits of competition in the online marketplace and in the market for innovative wireless devices they enjoy,” FTC Chairman Jon Leibowitz said yesterday at a news conference in Washington. “This was an incredibly thorough and careful investigation by the commission, and the outcome is a strong and enforceable set of agreements.”

The agency’s decision to close its probe of Google’s search practices without any enforcement action is a blow to competitors including Microsoft Corp. (MSFT:US), Yelp Inc. (YELP:US) and Expedia Inc. (EXPE:US) An alliance of such e-commerce and Web-search companies pressed the agency to bring a lawsuit, claiming Google’s dominance of Internet search, combined with favoring its own services in answers to queries, violates antitrust laws.

Google said in a blog posting yesterday that it agreed in a letter to the FTC that websites will be allowed to remove their own content such as reviews from search-results pages including those for local, travel and shopping services. Advertisers will also be able to compare data from other search engines within third-party services that use Google’s AdWords software, Google said in the posting.

Beth Wilkinson, the Washington litigator hired by the FTC to oversee a potential lawsuit, said that the evidence didn’t show Google’s actions were against the law.

The agreement requires Google to give the FTC reports on its compliance with the agreement for five years. The agency has the right to review company documents and interview Google employees if it suspects non-compliance, Peter Levitas, a deputy in the bureau of compliance, told reporters.

The agency voted 4-1 on the patent settlement, a formal consent decree that restricts the situations in which Google can seek court injunctions against competitors’ products that rely on so-called standard-essential patents. Google would still be able to try to block rivals from using those patents if it can’t reach a licensing agreement, the agency said.

For more patent news, click here.

Trademark

Yum’s KFC Seeks ‘Official Sponsor of Couchgating’ Trademark

Yum! Brands Inc. (YUM:US)’s Kentucky Fried Chicken has filed an application to register a trademark related to the consumption of its products while watching television.

According to the database of the U.S. Patent and Trademark Office, KFC filed an application in September to register “Official Sponsor of Couchgating.” The Louisville, Kentucky- based company said it will use the mark for restaurant services, and is presently running ads featuring the “gameday box” and “gameday bucket.”

KFC’s “Couchgating” also has its own page on Facebook Inc. (FB:US)’s social media site.

The chicken company isn’t presently listed as a sponsor for the upcoming broadcast of the National Football League’s Superbowl XLVII, set for Feb. 3 in New Orleans. Among the companies that are known to be planning Superbowl ads are Anheuser-Busch InBev (ABI), Cars.com, Mars Inc., Unilever Plc (ULVR) and Gildan Activewear Inc. (GIL), according to a Dec. 27 story in Advertising Age magazine.

Macy’s Trial Over Martha Stewart Rights Set for Next Month

Macy’s Inc. (M:US)’s bid to prevent Martha Stewart Living Omnimedia Inc. from executing a sales agreement with J.C. Penney Co. (JCP:US) is set to go to trial Feb. 19.

The case won’t be tried before a jury and there will be no need to decide damages, Judge Jeffrey K. Oing said yesterday in New York state court in Manhattan.

Any potential damages in the dispute “are going to pale in comparison to the injunction,” Oing said during a hearing. “That’s the real big bucks there -- if I stop this deal.”

Macy’s, the second-biggest U.S. department-store chain, claims it has an exclusive right to sell Martha Stewart Living (MSO:US) products in certain categories. The Cincinnati-based retailer sued both J.C. Penney and Martha Stewart Living seeking to halt their sales agreement, announced in December 2011.

In one of the suits, Macy’s said Plano, Texas-based J.C. Penney, the No. 4 U.S. department-store chain, caused it to “incur substantial damages and threatens to inflict incalculable further harm” and that the Martha Stewart accord is “transparently designed to eliminate the competitive advantage that Macy’s enjoys in the area of home products.”

Oing in July granted Macy’s request for an initial injunction blocking Martha Stewart Living from taking any steps under the deal on making, marketing, distributing or selling certain Martha Stewart-branded products. In August, he said he wouldn’t impose a similar injunction against J.C. Penney because Macy’s hadn’t proved it was likely to succeed on some claims.

J.C. Penney announced in December 2011 that it was entering into a “strategic alliance” in which it was investing $38.5 million for a 16.6 percent stake in Martha Stewart Living. As a component of the deal, the companies planned to open distinct Martha Stewart home and lifestyle merchandise stores inside many J.C. Penney locations starting in February and sell specialty merchandise online, according to the announcement from J.C. Penney.

The case is Macy’s Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan). The old case is Macy’s Inc. v. Martha Stewart Living Omnimedia Inc., 650197/2012, New York state Supreme Court (Manhattan).

Groupon, Groupion Agree to Settle Trademark-Infringement Suit

A trademark dispute between a California coupon-management company and Chicago’s Groupon Inc. (GRPN:US) was dismissed, according to a Dec. 21 court filing.

Groupion LLC, based in Palo Alto, sued Groupon in federal court in San Francisco in February 2011, claiming the shopping- website company infringed marks it had used since 2007 and that the public was confused by the name similarity.

The companies reached a confidential agreement and will each pay their own litigation costs and legal fees, according to the court filing. Other terms of the accord weren’t disclosed.

Google Inc. was dismissed as a defendant in the case in September.

The case is Groupion LLC v. Groupon Inc., 11-cv-870, U.S. District Court, Northern District of California (San Francisco).

For more trademark news, click here.

Copyright

Life Is Good’s Non-Infringement Ruling Affirmed by Appeals Court

Life is Good Inc., a New Hampshire-based clothing company, defeated a copyright-infringement claim brought by a Colorado artist.

Gary D. Blehm sued the company in federal court in Denver in December 2009, claiming some Life is Good t-shirt designs infringed his copyrights for Penmen, a series of stylized hand- drawn stick figures. The artist said he first created his Penmen when he was 12 years old in 1977, and that by 1995 he was earning his living from a variety of Penmen-related products and publications.

He objected to the “Jake” stick-figure characters appearing on Life is Good’s t-shirts. Blehm claimed that several Life is Good products contained images of characters he said were directly derived from his work.

In September 2011, U.S. District Judge Richard P. Matsch granted Life is Good’s request that the case be dismissed. Blehm then filed an appeal with a federal circuit court.

The U.S. Court of Appeals in Denver affirmed the dismissal on Dec. 27, saying that the lower court correctly determined that the elements of his work that Blehm claimed were infringed weren’t protectable under U.S. copyright law.

The “everyday activities, common anatomical features and natural poses” used in both the shirts and Blehm’s art “are ideas that belong in the public domain,” the appeals court said. “Mr. Blehm does not own these elements.”

The court also found that “no reasonable juror could determine that the Jake figure is substantially similar to the protected expressive choices” that Blehm used for his Penmen figures.

The appellate court case is Blehm v. Jacobs, 11-1479, U.S. Court of Appeals for the Tenth Circuit. The lower court case is Blehm v. Jacobs 09-cv-2865, U.S. District Court, District of Colorado (Denver).

Leader of IMAGiNE Piracy Group Gets Five-Year Prison Sentence

Jeramiah Perkins, leader of the Internet piracy group “IMAGiNE,” received a five-year prison sentence yesterday, according to a filing in federal court in Norfolk, Virginia.

The 49-year-old resident of Portsmouth, Virginia, pleaded guilty in August to a charge of conspiracy to commit copyright infringement. He and three others were indicted in April in connection with IMAGiNE’s release on the Internet of movies that were only being shown in theaters.

Perkins said in court papers that he used electronic devices in theaters to record the movies and create files that were shared over the Internet. He agreed to provide restitution to trade groups of content owners, including the Motion Picture Association of America, the Business Software Alliance, the Recording Industry Association of America, the Software and Information Industry Association and the Entertainment Software Association.

In addition to the prison term, Perkins faces three years of supervised release and was ordered to pay $15,000 in restitution. He also surrendered the electronic equipment he used to record and transmit the movies.

Three of Perkins’s co-defendants previously pleaded guilty and received prison sentences.

The case is U.S. v. Perkins, 12-cr-59, U.S. District Court, Eastern District of Virginia (Norfolk).

For more copyright news, click here.

IP Moves

Duane Morris Hires Khachatourian for Silicon Valley Office

Duane Morris LLP hired Karineh Khachatourian for its intellectual-property practice, the Philadelphia-based firm said in a statement yesterday.

Khachatourian, a litigator, joins from Pittsburgh’s K&L Gates LLP and will head a new Duane Morris office in Palo Alto, California.

She does both patent litigation and acquisition, and has also done copyright, trade-secret and trademark work. Her clients’ technologies have included computer hardware and software, consumer electronics and computer peripherals, encryption, video gaming, social media, semiconductors and enterprise cloud computing.

Khachatourian has an undergraduate degree from New York University and a law degree from George Washington University.

To contact the reporter on this story: Victoria Slind-Flor in San Francisco at vslindflor@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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