Bloomberg News

Patent Trolls, Twitter, DC Comics: Intellectual Property (1)

May 23, 2013

A Texas patent-licensing company that demands royalties from businesses for simply scanning a document was sued by Vermont in what the state said is the first such consumer-protection lawsuit in the U.S.

MPHJ Technology Investments LLC is violating the state’s consumer protection laws by sending letters and demanding the businesses pay as much as $1,200 or be sued for patent-infringement, the state contends. It’s the first time a patent owner has been sued for violating such a law, state Attorney General William Sorrell said yesterday in a statement.

Congress and technology companies are trying to curtail a practice in which certain patent owners use the threat of high legal expenses to extract cash from a large number of businesses rather than going after software developers or electronic-device makers. Through the use of mass mailings, the patent owners can ask for relatively small sums of money and reap a lot of cash. The strategy is pejoratively known as “patent trolling.”

The letters sent to businesses “are false, deceptive and likely to mislead the businesses that received them,” the state said in the complaint filed in Vermont state court. MPHJ “performed little, if any, due diligence to confirm that the targeted businesses were actually infringing its patents prior to sending these letters.”

MPHJ contends its patents cover anyone who scans documents so they can then be sent through e-mail. Among the entities receiving letters demanding cash were two non-profit agencies that provide care to disabled people, according to the complaint.

The state asks that MPHJ be barred from doing any business in Vermont and be ordered to stop threatening Vermont businesses. The state seeks civil penalties of as much as $10,000 for each violation and restitution for any costs to the businesses.

A lawyer who has represented MPHJ said the company stopped its activity in Vermont after it was first contacted by the state attorney general. He defended the company’s practices.

“There are lots of people using the technology,” Bryan Farney, a lawyer with Farney Daniels in Georgetown, Texas, said in a telephone interview. “The company is simply trying to get people to get licenses to use the technology.”

The case is State of Vermont v. MPHJ Technology Investments LLC, 282-5-13, State of Vermont, Superior Court, Washington Unit.

Twitter Gets New Patent, Company Will Use It Only for Defense

Twitter Inc., the San Francisco-based company offering real-time short-messaging service, received a patent and says it will use the patent only defensively.

Patent 8,448,084, which was issued May 21, covers the use of a scrollable refresh trigger to update a display of a scrollable list of contents.

Benjamin Lee, Twitter’s legal director, said in a May 21 blog posting that the patent is the company’s first patent under its Innovator’s Patent Agreement. Under the terms of this agreement, the company agrees with the named inventor that the patent is to be used only for defensive purposes. If it is used otherwise, the inventor’s permission will be required.

Twitter will use this agreement, which it announced last year, on all of its patents, Lee said. The aim of the agreement is the development of “constructive dialogue making patent system work better for companies, inventors, and policy makers alike,” Lee said in the posting.

For more patent news, click here.

Trademark

DC Comics Makes Sure ‘Superman Fitness’ Won’t Fly in Australia

Time Warner Inc. (TWX:US)’s DC Comics unit has prevailed in a trademark dispute with a Melbourne, Australia-based fitness company, the Sydney Morning Herald reported.

Cheqout Pty. Ltd. filed an application to register “Superman workout” as an Australian trademark and was opposed by DC Comics on the grounds it infringed the marks associated with the “Superman” comic-book hero and would cause consumer confusion, according to the newspaper.

Initially the Registrar of Trademarks said that confusion was unlikely because DC Comics had never been in the business of offering fitness classes, according to the Herald.

A judge from Australia’s federal court disagreed, and in a May 22 ruling, barred the registration and found that Cheqout had filed the application in bad faith, the newspaper reported.

No contact information for the company could be found to seek comment on the decision.

North American Breweries Unit Sues Kentucky Brewery Over Marks

A small Kentucky craft brewery has responded to a trademark suit from a unit of North American Breweries Inc. by asking its own customers to petition the larger company to drop the suit.

Rochester, New York-based North American Breweries Inc.’s Independent Brewers United filed suit in federal court in Lexington, Kentucky, on May 16, claiming that West Sixth Brewing Co.’s label, featuring the number 7 and a compass star inside a circle infringed the mark used for its Vermont-based Magic Hat Brewing Co.’s #9 beer. The Magic Hat label is also circular, and containing #6.

Both breweries’ labels are orange, according to court papers, and both use many of the same distributors for their products. North American and Magic Hat claim the public is confused by the similarity between the two labels.

Magic Hat has used its mark since 1995, and registered it with the U.S. Patent and Trademark Office in December 1996.

West Sixth, based in Lexington, is asking each customer to sign a petition as a “passionate craft-beer drinker” who opposes the suit and asks Magic Hat to drop it immediately and “quit being a corporate bully.”

In a posting on the brewery website, West Sixth says its logo was professionally designed by Cricket Press LLC of Lexington and clearly can’t be confused with Magic Hat’s. The Kentucky brewery said it tried to no avail to resolve the dispute with Magic Hat amicably.

It claims that lawyers it has consulted maintain there is no merit to the suit.

Magic Hat has asked the court to declare that the West Sixth label infringes, and for an order barring further infringement. Additionally, it asked for an award of all profits the Kentucky brewer realized through its use of its allegedly infringing label, money damages, attorney fees and litigation costs. The company asked that the damages be tripled.

The case is Magic Hat IP LLC v. West Sixth Brewing Co, 8:13-cv-00136-DCR, U.S. District Court, Eastern District of Kentucky (Lexington).

‘Vampire’ Wine Maker Sues Brewer of ‘Vampire Slayer’ Beer

A Los Angeles winery sued a Massachusetts brewery for infringing vampire-related trademarks.

TI Beverage Group Ltd., which does business as Vampire Brands, produces a range of products with vampire-themed names, including Chateau du Vampire, Vampyre, Dracula, and Dracula’s Blood. The products, which also include beer and vodka, are marketed through websites with “vampire” as part of the domain name.

Mercury Brewing and Distribution Co. of Ipswich, Massachusetts’ Vampire Slayer beer infringes the California company’s “vampire” trademarks, according to the complaint filed May 17 in federal court in Los Angeles.

TI claims that the Vampire Slayer brand and design so closely resembles its Vampire Pale Ale that the public would “naturally assume it is a spinoff” of the TI vampire brands. Mercury is using the name deliberately in order to trade off the goodwill TI has built with its Vampire products, according to the complaint.

Mercury Brewing didn’t respond immediately to an e-mailed request for comment on the lawsuit.

TI is seeking a court order barring the Massachusetts brewery’s use of “vampire” in connection with its products. Additionally, the company seeks all of Mercury’s sales proceeds related to the alleged infringement, money damages, litigation costs and attorney fees.

The case is Vampire Brands LLC v. Mercury Brewing and Distribution Co., 2:13-cv-03568-SVW-SH, U.S. District Court, Central District of California (Los Angeles).

For more trademark news, click here.

Copyright

Frontier Custom Builders Must Pay $1.3 Million in Suit

Frontier Custom Builders Inc., a Houston-area homebuilder, was ordered to pay a $1.3 million judgment in a copyright infringement case.

Hewlett Custom Home Design of Houston sued Frontier in a Texas federal court in December 2010, claiming that Frontier was building homes to designs that belonged to Custom Home.

Frontier was displaying the infringing designs on its website, and was promoting them through a wide range of promotional media, according to the lawsuit. Hewlett said it registered the copyrights on the disputed designs, and asked the court to bar their unauthorized use.

The design company sought money damages, including Frontier’s profits from the sale of homes based on the designs.

On May 8, a jury in Houston found that 19 houses Frontier built infringed Hewlett copyrights. The jury said that no percentage of the profits Frontier derived from the homes could be attributed to anything but infringement.

In the final judgment entered May 20, U.S. District Judge Ewing Werlein Jr. ordered Frontier and Ronald W. Bopp, its principal, to pay Hewlett $1.3 million in damages. He also ordered the destruction of any plans that are derived from Hewlett’s work, and of plans and marketing materials for the 19 homes the jury said had infringed the copyrights.

The case is Hewlett Custom Home design Inc., v. Frontier Custom Builders Inc., 4:10-cv-04837, U.s. District Court, Southern District of Texas (Houston).

For more copyright news, click here.

Trade Secrets/Industrial Espionage

Sanctions Proposed by U.S. Commission to Deter China Trade Theft

The U.S. should consider new laws to let American companies better defend themselves against cyber-attacks from Chinese-based hackers, said a commission led by two former advisers to President Barack Obama.

The Treasury Department should be empowered to deny access to the U.S. banking system to companies from China and other countries that benefit from stolen data, and sanctions could be imposed on those found to benefit from theft, the commission said in a report released yesterday.

“New laws might be considered for corporations and individuals to protect themselves in an environment where law enforcement is very limited,” the Commission on the Theft of American Intellectual Property said. The commission is headed by Jon Huntsman, Obama’s former ambassador to China who sought the Republican nomination for president, and Dennis Blair, Obama’s first director of national intelligence.

The commission didn’t conclude that U.S. companies should be able to conduct retaliatory cyber-attacks, known as hacking back, which has been the subject of a policy debate among U.S. policy makers and computer security experts.

The Pentagon this month for the first time directly accused the Chinese military of intruding into U.S. computers to steal sensitive data. The Alexandria, Virginia-based computer security company Mandiant Corp. released a report in February concluding that the People’s Liberation Army in China may be behind the hacking of at least 141 companies worldwide since 2006.

Obama will meet Chinese President Xi Jinping June 7 and 8 at the 200-acre Walter and Leonore Annenberg estate in Rancho Mirage, California, in their first face-to-face talks since China’s power transition ended in March. Obama’s national security adviser, Tom Donilon, is scheduled to be in Beijing next week.

Hong Lei, a Chinese Foreign Ministry spokesman, told reporters May 21 the U.S. has no hard evidence China is behind cyber-attacks. He said cybersecurity is an issue faced by both countries.

The group in China identified in Mandiant’s February report continues its intrusions after being identified publicly, Richard Bejtlich, the company’s chief security officer, said in an interview.

Shawn Henry, president of CrowdStrike Services based in Palo Alto, California, told a conference in Washington in April that U.S. laws should be clarified regarding what companies can do to protect their networks from attacks and raise the cost for hackers.

To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at vslindflor@bloomberg.net.

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


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