Who Owns the Rights to Santa Claus?

I was recently asked this question and fell in to the common quasi-misperception that the common Americanized image of of the "jolly old elf" was a creation of the Coca Cola company cut from whole cloth. Well, I was partly correct, but, as it turns out, the history of the image of Santa Claus is a little richer than I had originally appreciated.

Fortunately, you don't have to look far to get some pretty good triangulation of the "modern" history of the Americanized image of Santa Claus. Here is what I found.

While the historical roots of the origin of Santa Clause have been traced to the 4th Century Greek Saint Nicholas of Myra (apparently a resident of what is now Turkey (yes, the food irony is not lost on me)) that was not what I was looking for. I was more interested in the origins of the American iconic image.

The commonly found explanation seems to trace the origins of the American image to Washington Irving who (influenced by Dutch and, quite likely, early British images) first described an image of Saint Nicholas in his History of New York (1809) as "equipped with a low, broad brimmed hat, a huge pair of Flemish trunk hose, and a [long] pipe." This image was greatly enhanced in Clement C. Moore's 1823 poem A Visit from St. Nicholas (aka Twas the Night Before Christmas).

However, the first Americanized visual image of our familiar Saint Nick (which appears to incorporate the narrative attributes provided by both Irving and Moore) is attributed to illustrator Thomas Nast who drew an image of Santa for Harpers Weekly magazine in 1863.

This image is in the public domain and is available from Wikipedia and the Library of Congress. Another Santa image (which starts to look more like our familiar Santa Claus) attributed to Nast can be seen below (also from the Library of Congress) titled "Merry old Santa Claus" from 1889.

So far so good. As long as I am using Washington Irving, Clement C. Moore or Nast as my basis for creating my own image of Santa, I'm pretty safe, right? Not so fast.

The modern version (which would appear to draw significantly from the attributes of those images that came before, especially Nast) that most of us (well ... at least me anyway) think of when we think of Santa Claus is largely attributable to the handy work of one Haddon Sundblom who painted Santa images for the Coca Cola company in the 1930s. The Coca Cola company actual has their own accounting of the history of the Santa image on the Coke website. They state that Sundblom's inspiration came largely from the the Clement C. Moore poem. That said, there are clearly similarities between the 1889 Nast image and the Sundblom images.

So, who owns the rights to Santa Claus? Well, while the Sundblom images are owned by the Coca Cola company (I suspect), the Nast images appear to be in the public domain. Does that help? .... I didn't think so.

The better question is who owns the spirit of Saint Nicholas. Hopefully, the answer to that question is all of us.

Thanksgiving is Dead

That's right. You read it correctly. According to the U.S. Patent & Trademark Office, Thanksgiving is listed as dead. Officially, it is listed as having died three days before Christmas in 1988. On December 22, 1998, the THANKSGIVING trademark officially died after Alterman Foods, Inc. had failed to file a Section 8 affidavit continuing the mark. The mark was registered for Cooked Fruits, Cooked Vegetables, Hamburger Patties, Ground Pepper and Tea and, according to its owner, had been in use since September 1912. So the rest of it I can understand, but hamburger patties? Please let me know if you or anyone you know has a tradition of eating hamburger patties at Thanksgiving. I'm not offended, just curious.

On a more upbeat note, however, I am happy to report, that THANKSGIVING has been given new life by Hidden Wineries, Inc. who recently applied for the mark in August of this year for one of my favorite beverages: wine.

You'll also be glad to know that Macy's THANKSGIVING DAY PARADE is alive and well on the USPTO trademark roster, although with a claimed date of first use dataing back to 1924, I was surprised to see that it was only recently registered in 1998.

Finally, of all things, HAPPY THANKSGIVING is currently registered to Mattel. Go figure. Fortunately, it is only registered for toys and not bloging services. So hopefully Mattel will not be offended if I wish you all a HAPPY THANKSGIVING!!!

New FTC Guidelines to Address "Astroturfing"

Ever wonder whether the reviews allegedly posted online by consumers about a product were actually written by independent consumers or by the people on behalf of the company itself? Me too. Apparently, so does the Federal Trade Commission. On October 5, the FTC released its new “Guides Concerning the Use of Endorsements and Testimonials in Advertising.”

The previous guides (which were almost 3 decades old) did not expressly address internet based consumer endorsements sometimes referred to as "astroturfing." The new Guides clearly do, by expressly providing that where bloggers, paid by the advertiser, post product reviews, such reviews will be treated as endorsements. As such, the new Guides apply the previous rule (that the “material connections” between the endorser and the advertiser must be disclosed), at least in part, because these are connections that consumers would not expect.

The new Guides also require advertisers who rely on research findings to disclose material connections between the advertiser and the research organization. Similarly, with few exceptions, celebrity endorsers are also required to disclose any material connection between them and the advertiser.

Another key change under the new guide is that the FTC has gotten rid of the safe harbor that had previously existed for product endorsements. Under the old guidance, an advertiser could simply include a statement to the effect that “your results may vary” as a guard against a claim of false advertising if an endorser’s statements were not generally representative consumers’ experience with the product. Not any more. Now, advertisers and their endorsers are required to clearly disclose the results that consumers should generally expect.

Finally, the new Guides expressly provide that the endorser (not merely the advertiser) can be held liable for unsubstantiated claims made in the endorsement.

Much of the new Guides focus on the FTC’s opinion as to what a consumer is likely to perceive with respect to the relationship between the advertiser and the endorser. Unfortunately, there are not a lot of bright line tests that can be used by advertisers to know what is in the mind of the average consumer. It will be interesting to see how advertisers (especially those focusing on advertising in online social media) react to this new guidance.

Software Licensing & Bankruptcy

Given the state of the economy, companies are more and more focused on bankruptcy issues. In software licensing transactions where the software is a mission critical application for the licensee, it is not uncommon for the licensee to require that the source code be placed in escrow. Typically, the purpose of the escrow is to provide the licensee with a comfort level that the source code will be available for the licensee’s use if certain events occur. These events are typically referred to as “release events.” One release event that is commonly negotiated in technology escrow agreements is the bankruptcy of the licensor. For more on this issue you can listen to my podcast on this topic.

The licensee’s fear arises (at least in part), from the generally accepted perception that bankruptcy is a bad thing. And, as a licensee, if a bad thing happens to my mission critical application licensor, I want a back up plan. On the other hand, licensor’s carefully guard the confidentiality of their source code. Accordingly, they generally resist release events which would allow the source code to be released while the licensor is still in business. In the abstract, however, the bankruptcy of the licensor does not always spell disaster for the licensee.

In an involuntary bankruptcy of a licensor, the licensor can always get out of bankruptcy by paying off or settling with the creditors that put the licensor into the bankruptcy. Of course if the licensor does not or cannot do so, then the bankruptcy will continue. If the bankruptcy continues as a chapter 7 liquidation, then there is an expectation that the licensor will eventually go out of business. In this case, the licensee would be rightfully concerned about the ability of the licensor to continue to support the software. However, if the involuntary bankruptcy is either filed as a chapter 11 reorganization or the licensor converts it to a chapter 11 reorganization, then the expectation is that the licensor will reorganize its financial position and will not go out of business.

In a voluntary bankruptcy, the key risk for the licensee turns on whether the case will proceed as a chapter 7 liquidation or a chapter 11 reorganization. If the licensor voluntarily files for a chapter 7 liquidation, then, as mentioned above, the licensee has good reason to be concerned. If, however, the licensor files for a chapter 11 reorganization, then, as long as the licensor does not otherwise breach it support and maintenance obligations, there is no need for the licensee to have access to the source code (other than the licensee’s general insecurity). Filing for bankruptcy under chapter 11 does not mean that the licensor will go out of business. It is quite possible that the licensor could file for bankruptcy under chapter 11 and “come out of bankruptcy” with a reorganized and stronger financial position, and, without a "hic up" in the performance of its support and maintenance obligations during the bankruptcy.

From the licensor’s perspective, the risk of compromising the confidentiality of its source code (the company’s key asset) can be terribly problematic. This is especially important where the software and source code will perform a pivotal role in the ability of the licensor to reorganize itself in the context of the bankruptcy. When considering bankruptcy as a release event under a source code escrow, analyzing the pros and cons of the possible scenarios may not be as straight forward as it otherwise seems.

They’re Saying Bad Things About My Company. Can I Sue?

Sooner or later, every company ends up finding negative statements about it published on the Internet in chat rooms, bulletin boards, blogs or otherwise. I periodically get asked, what can I do?

A New Jersey court recently addressed a claim of trade libel. Bovial Corporation vs. SAC Capital, Docket ESX-L-1583-06 (N.J. Law Div., August 20, 2009). Trade libel is similar to defamation. However, where defamation is a claim based on general injury to reputation, trade libel is a claim based on specific injury to the good will associated with particular goods or services. In New Jersey, for example, the claim is sometimes referred to as a claim for "product disparagement." The use of a brand for a specific good or service, however, can actually help to insulate a company from defamation since negative statements about a brand tend more to diminish the brand than the company as a whole.

Both defamation and trade libel involve claims of a false statement being made to others and resulting damages. One key difference, however, is that for defamation, a drop in stock value, for example, can be valid evidence of damage cause by defamation. For trade libel, the claimant must prove lost sales caused by the libelous statements (referred to as “special damages”).

The tough thing about bringing either of these claims is proving damages. In the Bovial case, the plaintiff’s claim was dismissed on the basis that Bovial had allegedly failed to plead special damages with specificity. Why didn’t Bovial claim defamation? Because the statute of limitations had run on any claim for defamation whereas claims for trade libel are subject to a longer statute of limitations. In New Jersey, claims for defamation must be brought within one year, whereas claims for trade libel may be brought within six years.

Inside Google's US Trademark Policy

It has been a while since Google's new trademark policy allowing the use of trademarks in the text of ads went into effect. This was a big deal when it was announced (ironically during the Annual Meeting of the International Trademark Association). Even the New York Times covered the story. I thought it might be helpful to take a closer look at the limitations on when Google will allow or disallow an advertiser to use a trademark in the text of an ad.

Google's policy places 5 limitations on when an advertiser can use a trademark in the text of its ad (and I'm paraphrasing here):

1. If the ad uses the trademark in a descriptive or generic way not referring to the trademark owner or the corresponding goods or services.

2. If the ad uses the trademark to refer to the trademark owner.

3. If the ad is used in connection with the re-sale of the trademarked goods or services.

4. If the ad uses the trademark in connection with the sale of replacement parts or compatible components corresponding to the trademark.

5. If the ad uses the trademark for informational purposes where the advertiser does not sell competiting goods.

What are your thoughts? Is this adequate to guard against trademark infringement? Take the poll in the right hand margin on whether you think keyword advertising is trademark infringement.

Copyright in Aerial Photos

In November, the New Jersey district court threw out the $20,000,000 copyright infringement claim of an aerial photographer due to the running of the statute of limitations on the claim. Bruss v. Berger, 2008 WL 5111284. This case is a good reminder that copyright claims must generally be filed within 3 years after the claim accrues and that the damages for copyright infringement in real estate cases have the potential to be significant.

In this case, in 1986 the photographer took aerial photos of the Paramus and Monmouth malls for a real estate developer. The developer allegedly borrowed the negatives with the understanding that he would order prints from the photographer. The developer allegedly used the photos to sell the properties and never compensated the photographer.

The photographer alleged copyright infringement and claimed $20,000,000 in damages.

The case is unclear as to why the photographer waited so long to bring his claim. What is interesting is that the court did not suggest that the photographer's claim was meritless. The court also did not address whether the copyright in the photograph had been registered prior to bringing the case (copyright registration is a prerequisite to filing an infringement law suit). Nonetheless, the court did not hesitate to dismiss the photographer's claim and rightly so. The clear lesson learned here is to be aware of the limited time allowed to bring copyright claims.

It's fun (if you're a lawyer) to speculate as to what the result would have been if the case had been brought before the expiration of the statute of limitations. Assuming that the developer made copies/prints, there may have been infringement. But how much would that infringement have been worth? In a case recently blogged about on the Photo Attorney blog, a photographer obtained a $12 million verdict for the unauthorized use of her photographs to sell high-end homes.

Under the copyright act, the photographer's damages are measured, at first, by the profits obtained by the infringer. In the Bruss case, the damages would, initially, have been the $20,000,000 alleged. It would then have been the burden of the infringer to prove what portion of the profits were attributable to factors other than infringement of the copyrighted work. In a real estate case, its easy to imagine how other factors could be demonstrated to be the driving force in determining the selling price (square footage, condition of the building, location, quality of existing tenants, etc.). However, if the photographer had timely registered his copyright, he would have been entitled to statutory damages of up to $150,000 per infringed photograph without having to prove damages!

Another Poor Name Choice (Only The Lawyers Won)

The moral of this story is simple. Choosing a trademark is a business decision. It's about managing risk and making money. When choosing a new trademark, there is no good business reason to choose a mark that is in use by others. Not only is it likely to provoke unnecessary and costly legal battles, but also it fails to effectively distinguish your goods/services from others and may result in committing to a name that is not protectable. This case is the classic example.

On December 9, 2008, the New Jersey District Court ruled in favor of plaintiff Heritage Community Bank in a trademark infringement action against defendant Heritage Bank, N.A. Heritage Community Bank v. Heritage Bank, N.A., 2008 WL 5170190. This is a case that never should have happened.

Plaintiff owned a federal trademark registration for "Heritage" for banking services. Defendant ran a trademark search and found several other users of "Heritage." According to the court, there were five other users of the word "Heritage" in the banking industry nationwide and none of them were in the New Jersey area. Nonetheless, the defendant apparently concluded that the banking industry was a crowded field as to the use of word "Heritage."

The crowded field theory is not easily quantifiable. Generally, though, the theory is that if there are several similar marks already in use (i.e., a "crowded field"), then courts will tend to construe the scope of rights very narrowly. That is, for marks in a crowded field to be found confusingly similar, they generally have to be exactly (or almost exactly) the same and for very similar goods.

It is often difficult to effectively evaluate the impact of the crowded field on the rights of the parties to use the mark. For this reason, this theory is typically used as a shield not a sword. That is, it is typically a defense used by a business which has already committed to a name and finds itself in the middle of a dispute.

In the Heritage case, it is hard to understand why the defendant would have relied on this legal theory in committing to a new mark. Even if it were successful, the theory would necessarily have resulted in the defendant's inability to perfect trademark rights (i.e., the right to stop others from using the name). If the defendant won, the court would likely have decided that the word "Heritage" was so weak that the plaintiff's had no ability to stop the defendant from using the "Heritage" name other than in the exact same manner. The corollary to this is, of course, that the defendant would then have no right to stop others from using the "Heritage" mark.

Once the search was run and the plaintiff's registered trademark was discovered, it is hard to understand why the defendant would have chosen to commit to the Heritage name. At this stage, the defendant would have had nothing invested in the Heritage name and could have easily chosen another name.

Second, defendant received a cease and desist letter from plaintiff before starting business. Again, knowing that the plaintiff (holder of the federal trademark registration) objected to the use of the Heritage name, why did the defendant provoke this fight by continuing to use the name? Clearly, the less costly alternative would have been to choose a different name.

Finally, once the case was filed, it must have seemed very unlikely that the defendant would have succeeded in this case. This should have settled.

Obama Trademarks

Here is some interesting trivia. The "O" design used by the Obama campaign is actually a registered trademark. The New York Times did an interesting interview with the designer that you can read here. The application was filed in May of 2007, but, not surprisingly, did not register until December 2008. Well, he didn't have the registration for the election, but the USPTO did come through in time for the inauguration. :->

As was to be expected, there continues to be an onslaught of people trying to register Obama formative and Obama comprised trademarks. By my count, since the first of such applications was filed in November 2006, there have been 84 applications filed for Obama marks of which 13 have already died and I suspect that most of the others will likely have a similar fate. Most of these applications will be rejected without the President's consent. Under §2(c) of the Trademark Act, in order to register a trademark that contains the name, portrait or signature of a living person, you must obtain their consent. For the record, there are one or two I suspect may obtain such consent (e.g., one filed by the Presidential Inaugural Committee).

Here are some of the more amusing attempts so far:

OBAMA BALM

OBAMA BAHAMA PAJAMAS

OBAMA VODKA

BUSH ROBBED MY MAMA SO I VOTED FOR OBAMA

OBAMA JAVA VICTORY BLEND

BROCCOLI OBAMA

WHO'S YO'BAMA NOW? (for t-shirts, etc.)

and my personal favorite

OB-LA-DI OB-LA-DA O-BA-MA

Another Trap for Consultants in a Down Economy; Unregistered Consultants Barred From Court

In 2002 and again in 2003, I wrote about the importance of consulting firms making sure to register in New Jersey as temporary help service firms. A new case decided in January makes this point yet again. If you are providing staff augmentation or consulting work, you probably need to be registered. Camo Technologies Inc. v. Pathan, 2009 WL 17890 (N.J.Super January 2, 2009). Here is an excerpt from a piece I wrote in 2002 explaining the dilemma which is even more poignant today.

"In a down economy, companies try to cut costs by limiting their outside consulting. Rather than engage an outside consultant for a full project, they try to save money by fixing the problem [using] mostly in-house [personnel]. However, many companies also seek help from short-term, skilled people engaged on a limited basis. Hungry consulting companies respond by gladly offering up their skilled employees on a temporary basis for whatever projects their customers need. Consulting companies who do so risk becoming subject to the [Private] Employment Agency Act and, therefore, may be unable to enforce customer contracts unless they are licensed or registered under the [Act]."

The first big case on this point was decided in 2001. At that time the New Jersey courts refused to enforce a subcontracor contract entered into by a temporary help service provider who was unregistered under the Private Employment Agency Act. Data Informatics v. AmeriSource Partners, 338 N.J. Super. 61 (App.Div. 2001). Then in 2003, the New Jersey courts refused to enforce a business-to-business non-solicitation provision between consulting companies. Software Int'l v. Real Soft, Inc., Docket No. A-1454-01T3 (Unpublished App.Div. 2003).

The 2009 Camo case confirms some important aspects of the statute and takes this a step further. In Camo, the New Jersey court held that:

1. Registration after the fact doesn't cure the problem for contracts entered into before registration;

2. Employment agreements of unregistered temporary help service providers are unenforceable; and

3. Not only will contracts not be enforced, but also the courts will not enforce other claims arising out of the same circumstances (e.g., torts).

The first holding would seem to fall squarely within the statute.

The second holdings represents a broad reading of the statute, but is consistent with prior case law.

The third holding is an even broader interpretation of the statute than prior cases. The statute only expressly prohibits unregistered companies from using the courts "for the collection of a fee, charge or commission." N.J.S.A. §34:8-45. Arguable, compensatory damages arising out of breach of an employment agreement or a tort are not a "fee, charge or commission." However, since all of the claims arose out of the same set of circumstances which were all related to the temporary help service business, the court concluded that they were all unenforceable.

After Camo, it is harder to imagine a set of circumstances in which an unregistered temporary help service firm would be able to bring any action in any court in the state.

This case (together with its predecessors) send a clear message. Unregistered temporary help service providers will not be provided access to the courts for almost anything related to the conduct of their business.

Mandatory CLE for NJ Attorneys

I recently distributed an article about the report of the New Jersey Supreme Court's Ad Hoc Committee on Continuing Legal Education as it relates to in-house counsel and inactive attorneys. Below are links to some of the materials reference in the notice.

NJ Court Rule 1:27-2 - Provides that in-house counsel licensed in another state but employed in New Jersey may obtain a limited license (subject to certain restrictions) to practice law in New Jersey solely for his/her employer.

NJ Court Rule 1:28-2(b) - Uses the term "inactive" for the purpuse of excusing inactive attorneys from New Jersey Client Protection Fund payments. Does not define "inactive."

Official Notice of the Ad Hoc Committee's Report dated November 10, 2008, but not published until December 1, 2008.

Full text of the Ad Hoc Committee Report.

Please email me if you would like a copy of the full text of my article.

Keyword Advertising - Trademark Infringement or Not?

I've been getting inquiries about keyword advertising. This is where a company buys a keyword from a search engine and when someone searches that word, the company's ad is displayed. These ads are also links to the advertiser's website. Google uses their trademark "Adwords" for this service. All in all, this can be an effective way of driving web traffic to your site.

The problem arises when a company buys a keyword which is also a competitor's trademark. Is that trademark infringement or is it good old fair competition? At the 2007 International Trademark Association Annual Meeting presentation on this issue in Chicago, the audience seemed to have as many different opinions as the courts do.

At a high level, courts in the 9th circuit (which includes California) have tended to hold that it is (or at least can be) trademark infringement. On the opposite side of the country (and the spectrum), New York courts have held that keyword advertising using a competitor's trademark doesn't even constitute "use" of the trademark (let alone infringement). To make matters even more confusing, we in the 3d circuit (NJ, PA & DE) have a split among the district court decisions on this issue. In Pennsylvania, this kind of keyword advertising is not trademark infringement, but in New Jersey it is. Go figure.

What do you think? Take the poll below the archive on this site.

Obama to Use the Lincoln Bible

As many people know, for his inauguration today, Obama will be using the same bible used by Abraham Lincoln. According to the Library of Congress, it is not uncommon for members of Congress to request bibles from the library for various occasions. However, it appears that this is the first time that a president has ever requested the Lincoln bible for his inauguration. The Library of Congress has recently posted some high resolution photos of the Lincoln bible. If you're interested, you can see them and read more at this link. http://www.loc.gov/blog/?p=410