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The United States V Davidson—Copyright Infringement Of A Replica Statue Of Liberty. Copyright For Creative Copycats? IP Matters by Senator Ihenyen, InfusiThe United States V Davidson—Copyright Infringement Of A Replica Statue Of Liberty. Copyright For Creative Copycats? IP Matters by Senator Ihenyen, Infusi
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The United States v Davidson—Copyright infringement of a Replica Statue of Liberty. Copyright for creative copycats?

On IP Matters this week, it’s all about a copyright-infringement action involving the face of the popular Statue of Liberty (Lady Liberty) in New York and a photograph of its replica. Robert Davidson is the sculptor of the replica statue in front of the New York Hotel & Casino in Las Vegas, Nevada. After the United States Postal Services (USPS) used a photograph of the replica statue in billions of stamps it printed and sold to the public without paying or attributing Mr Davidson, Mr Davidson sued the United States for infringing his copyright in the photograph of the replica statue. The United States Court of Federal Claims awarded $3.5 million damages against the United States Considering that Mr Davidson’s work is a replica of a popular public statue, how did the Court arrive at its decision that the United States is liable for copyright infringement? The reason for the decision may be worth more than $3.5 million to you.

 

Unhappy with USPS’s use of a photograph of the replica statue on its stamp without authorization or attribution, Mr Davidson took the United States to court for copyright infringement.

In 1996, Mr Davidson built the replica of the Lady Liberty statue at the New York Hotel & Casino, Las Vegas. Mr Davidson was paid $385,000 to build the replica statute. Labour and material costs totaled about $152,000.

In 2010, the USPS used a photograph of the replica statute on stamps it released in December 2010. The USPS neither got permission from nor attributed Mr Davidson. When Mr Davidson discovered this in 2013, he obtained a copyright for the replica. Coming later than 5 years after making the work available to the public, Mr Davidson was not entitled to a statutory presumption of copyright eligibility. This means he must bear the burden of proving that his copyright is valid.

 

Ready to prove that his replica statue is eligible for copyright, Mr Davidson sued the United States, seeking compensation for copyright infringement of his work.

 

The United States denies Mr Davidson’s allegation of copyright infringement, relying on the defence of lack of originality of the replica statue and fair use.

 

In 2007, the USPS introduced the first Forever Stamp. It beared the image of the Liberty Bell in Philadelphia. Forever Stamp quickly became popular with the public and was used for first-class mail. In 2008, USPS began to work on updating the image of its Forever Stamp. In June 2010, USPS accidentally ended up using the photograph of Davidson’s sculpture for its Forever Stamp. The photograph USPS used was licensed by Getty Images—a nonexclusive 3-year license for $1,500 which allowed USPS to print over one million copies of the image. What USPS did not realize was that the image was not really the popular Statue of Liberty.

 

Six months later, Lady Liberty and the flag stamp were released for public sale. In a press release, USPS attributed the photograph of the statue to Raimund Linke, the photographer who took the face of the replica statue. Mr Davidson got no attribution.

When in March 2011, USPS became aware that the image on the stamp was Mr Davidson’s work, it still failed to address the issue or contact Mr Davidson. Meanwhile, the stamp was becoming both popular and lucrative. Three billion of the stamps had been printed with $8 million dollars spent for printing.

 

In June 2011,10.5 billion of the stamps were printed. By January 2014 when the USPS stopped selling the Lady Liberty stamp, USPS had sold up to 4.9 billion of it. This amounted to $2.1 billion in sales.

 

Eventually, the United States was sued for copyright infringement.

 

Is Mr Davidson’s work original?

 

Mr Davidson argued that though his work is a replica of a popular public statue, it is original since he achieved his aim of making the replica Lady Liberty unique. He pointed out that he both intended and achieved a more contemporary and feminine face of the Lady Liberty.

 

But the United States disagreed, arguing that Mr Davidson does not have sufficient evidence to establish that he achieved his aim of having a softer and feminine appearance. It also argued that the idea of having a softer and feminine appearance is not subject to copyright protection.

 

The Court stated that for a work to be original, copyright law only requires “some minimal degree of creativity” and that the original elements of the work  is the product of independent creation. The Court was satisfied Mr Davidson has “succeeded in making the statue his own creation, particularly the face” and that ‘[t]he differences are plainly visually observable, can be articulated, and are not merely “ideas”’, thus amounting to originality. The Court therefore held that Mr Davidson’s replica statute is original and protected by copyright.

 

Has USPS copied the original elements of the work?

 

Mr. Davidson’s position is the same—the face of his replica Lady Liberty is unique and therefore original.

 

On its own part, the United States argues that the replica Lady statue was so similar to the original statue that USPS did not notice the difference between the two faces until many months after the alleged act of infringement. Considering this fact, the United States submits that nothing original must have been copied.

 

The Court disagreed with the United States, finding that USPS “copied all of the original elements” of the replica statue. The Court held that since what distinguishes the two statues is the face, USPS’s use of the replica statue face amounts to copyright infringement.

 

Does USPS’s use of the work amount to fair use?

 

To determine fair use, the Court considered each of the 4 elements listed in the United States copyright statute:

 

  • Purpose and character of the use

On purpose and character of the use, the Court reasoned that “if the work is transformed by the new use, the law will generally allow it under the fair use doctrine.” It also reasoned that what the  statute requires courts to consider is whether the end use of the new work is “of a commercial nature or is for nonprofit or educational purposes.”

 

The United States argues that the nature and character of its use favours a finding of fair use “because, as a workhorse stamp, the vast majority of the revenues to the [USPS] represent payment of postage for the universal required service of mail” and “not as payment for the art shown on the stamp”.

 

Mr Davidson disagrees with the United States, countering that USPS’s use of the image on its stamp is commercial. According to Mr Davidson, USPS sold over $4 billion worth of the stamps bearing his work and “made $140 million in pure profit from breakage from the Lady Liberty stamp and the flag stamp combined sales.”

 

The Court agreed with Mr Davidson—the stamp is for commercial purposes. It held that despite the fact that USPS regularly operates at a loss, USPS is “in business and in competition with other private mail services and seeks to operate at a profit” by having its own revenues through from sales.

 

  • Nature of the Copyrighted Work

The United States argues that Davidson’s replica Lady Liberty statue is a derivative work and thereby only enjoys a “thin copyright”. (Ever met or seen a thin copyright before? No? Now you have!)

 

But Mr Davidson has never seen a “thin copyright” before. He countered that the creativity applied to the making of the replica statue cannot support fair use. He added that having publicly displayed the statue since 1996, fair use should not apply.

 

The Court held that this factor favoured neither party. According to the Court, Davidson’s statue is creative and expressive, its “intended use as a replica mitigates in favor of [USPS]”. The Court clarified that contrary to Mr Davidson’s argument, “when a work is published, a subsequent use is more likely to be considered fair use.”

 

  • The Portion Used

 

The Court considered the substantiality and portion of the original work used. It went in Mr Davidson’s favour. This is because the original and expressive portion of Mr Davidson’s replica statue was the face. And it is the face that USPS used for its stamp. Having used a substantial part of the work, there is no defence of fair use on this score.

 

  • Effect of the Use

 

To decide on this factor, the Court considered the “effect of the use upon the potential market for or value of the copyrighted work.” Admittedly, Mr Davidson did not dispute that USPS’s act has not done any harm to his business. This is because before USPS used the replica statue in its stamps, Mr Davidson had no plans to commercially exploit it.

 

The Court therefore decided this factor in favour of the United States.

 

Final scoreline? 2:1 in Mr Davidson’s favour. This scoreline is painfully familiar, from a Nigerian point of view, if you were in Russia, physically or electronically.

 

Conclusively, the Court found that the defence of fair use does not arise in favour of the United States.

 

The Court found the United States liable for copyright infringement. For award of damages, the Court came up with a remedy that best reflects what the fair market value of a nonexclusive license for Mr Davidson’s artwork would have been in 2010. It awarded up to $3.5 million to Mr Davidson. This amounts to 5% of the profits USPS made on the Statue of Liberty stamp based on the replica. It then directed the parties to consult regarding the quantum of interest.

 

Three Questions Neither the Court Nor the Parties Raise or Address

 

First, although USPS printed billions of stamps carrying the photograph of the replica statue’s face on each stamp till 2014, it is strange that USPS didn’t rely on the fact that it got a licence from Getty Images to at least mitigate damages. Subject to Getty Images terms of use, could USPS have possibly asked that Getty Images be joined as a party?

 

Second, USPS had attributed the photograph of the statue to Mr Linke, the photographer who took the face of the replica statue. Since it’s the photograph of the statue USPS has used and not a replica of the sculptured statue itself, who between Mr Linke and Mr Davidson really has copyright to the photograph Mr Davidson is claiming damages for?

 

Third, is copyright in a sculptured work the same as copyright in the photograph of the sculptured work?

 

Three Lessons You Need to Understand about Copyright

 

    1. Originality is fundamental in copyright protection for artistic, literary, or musical works: However way a work is created, whether as a new or derivative work, originality is required for copyright protection. This is why Mr Davidson could get away with enjoying copyright in the replica statue he made of Lady Liberty. Though he ‘copied’ the preexisting statue, he used his creative abilities to make the face of the Lady Liberty softer, more feminine, and contemporary. While the original Lady Liberty is made of iron and copper, the replica is made of styrofoam and glass. 
    2. The idea-expression dichotomy in copyright is forever relevant to determining copyright protection: With copyright, it’s not the ideas that we conceptualize in our minds that matter but the expression of those ideas in any definite medium of expression. When the United States tried to convince the Court that Mr Davidson’s ideas of making its replica Lady Liberty have a softer and feminine appearance was not protectable under copyright, the Court rightly disagreed. This is because beyond having the ideas in his mind, Mr Davidson had succeeded in having the face of the replica statue look softer and more feminine. He in fact had the photograph of his grandmother close to him when he started working on the sculpture.
    3. Copying an existing work may not amount to copyright infringement if the core aspect of the derivative work is transformative or original: The original Lady Liberty statue is made of copper. Dedicated on 28 October 1886, the statue was designed by French sculptor Frédéric Auguste Bartholdi and built by Gustave Eiffel. Mr Davidson’s work is a replica of the work, which necessitates that he copies the work, but the copying may be said to be transformative. By making the face of the replica Lady Liberty softer, more feminine, and more contemporary, Mr Davidson succeeded in transforming the original work. According to the Court, “[a] comparison of the two faces unmistakably shows that they are different… We agree that Mr. Davidson’s statue evokes a softer and more feminine appeal. The eyes are different, the jaw line is less massive and the whole face is more rounded”. But the courts must be careful not to open the floodgates of creative copycats getting away with damages over works derived from things that have become part of the cultural heritage of a people.

 

Three Lessons You Need to Take Away from USPS’s accidental copyright-infringement case.

 

  1. Always ensure you get the right licence from the right source before commercially using a copyrighted work: USPS made a grave error and paid for it. Though it has a department that takes care of acquiring license from copyright owners, it failed to attribute, credit, or pay Mr Davidson, the creator of the replica Lady Liberty statue. Terry McCaffrey, the manager of stamp development at the
    time, was in charge of selecting the new image. He got the image of the replica statue on Getty Images and paid Getty $1,500 for the license. Unknown to him, he was buying over $3 million lawsuit on USPS’s behalf. With licencing, always check and check again.
  2. To be original, a work does not have to be completely unique:  Originality can be subtle and still be recognized. This is because most copyright laws only require some degree of creativity. The United States Supreme Court has once held that the required degree of creativity is “extremely low”. In Nigeria, an artistic, literary, or musical work enjoys copyright protection once sufficient effort is expended on it to give it an original character. This is irrespective of literary quality.
  3. Beware the use of images on photo sites such as Getty Images and other photo sites: When you download images from photo sites for commercial use, be very careful. Ensure that it is either free for commercial use or available for licence. And even when it’s licensed, ensure you are not buying a lawsuit as USPS did. The photograph USPS used was licensed by Getty Images. It is a nonexclusive licence for use of the photograph of Davidson’s replica statue for 3 years. The USPS paid $1,500 and this permitted USPS to print over one million copies of the image, it still ended up getting USPS into a $3.5 million dollar lawsuit. Although neither the Court nor the parties raise issues regarding Getty Image’s licence to USPS and copyright ownership of the photograph of the replica statue between Mr Linke and Mr Davidson, the big lesson is When it comes to determining copyright ownership, always check, check, and check again.

IP Matters, it’s never too early because IP matters to business and development, any day. 

 

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Louboutin v Van Haren: Will Van Haren finally see red for allegedly stepping on Louboutin’s red-sole shoe trademark?.

This week on IP Matters, let’s look at the long-running battle between Louboutin and Van Haren over Louboutine’s red-sole trademark. The European Court of Justice’s (ECJ) ruling on 12 June 2018 was in Louboutin’s favour after the ECJ remanded the case for reconsideration by the Hague court. Louboutine now hopes that it would finally be able to protect its signature red soles as trademark against copycats in the European Union (EU). Will Van Haren finally see red for allegedly stepping on Louboutin’s red-sole shoe trademark?

 

Louboutin high-heel shoes are easily recognizable by their red sole such that it has become a mark of luxury with a pair of stiletto selling for between 500 to 1000 Euros.

 

Louboutin, owned by Frenchman, Christian Louboutin, is a luxury designer brand for people who want to make big fashion statements. In 1992, Christian Louboutin launched the label and by 1993, created the red-sole signature. The world’s most famous women and female celebrities such as  Emma Stone, Jessica Alba, Kendall Jenner, Melania Trump, and Rihanna wear Louboutin red-sole stilettos. This is why Louboutin’s red-sole signature which it trademarked in 2010 is worth so much to Christian Louboutin’s business. It wants no copycats.

 

Van Haren introduced black stiletto shoes that were visually similar to Louboutin stilettos, getting Louboutin’s attention. 

Van Haren is a German shoe designer in the stiletto shoe market. 

Like Louboutin shoes, Van Haren began to use red-sole heels as well and sold for 50 Euros. 

This stepped on Louboutin’s red-sole shoes. Louboutin sued.

 

Louboutin sued Van Haren for making and selling lookalike red-sole shoes, allegedly amounting to trademark infringement. 

Louboutin first sued Van Haren in 2012. Louboutin’s case was that Van Haren’s red-sole heels infringed on its registered and well-known trademark. 

The District Court in The Hague ordered Van Haren to stop producing shoes with red soles and prohibited Van Haren from further selling the confusing shoes otherwise it will pay 500 Euros per pair to Louboutin. 

Unhappy with the decision, Van Haren appealed against it, arguing that Louboutin’s red-sole trademark is invalid since it consists of not just colour but also shape of the shoe.

The Court of Appeals in 2014 referred the case to the ECJ to determine Louboutine’s trademark validity. 

 

In February 2018, ECJ Advocate General Maciej Szpunar, recommended to the Court that Louboutin should not be allowed to enjoy trademark protection over its red-sole shoes because it combines colour and shape. 

The question for determination by the court was this: ‘Is the notion of “shape” within the meaning of Article 3(1)(e)(iii) of Directive 2008/95 … limited to the three-dimensional properties of the goods, such as their contours, measurements and volume (expressed three-dimensionally), or does it include other (non-three dimensional) properties of the goods, such as their colour?’ 

Van Haren submitted that the applicable trademark law prevents the misuse of trademarks which may lead to the creation of anticompetitive monopolies. 

But Louboutin disagreed with Van Haren’s position that recognizing Louboutin’s red-sole sign as a trademark would amount to creating an anticompetitive monopoly. Louboutin argued that trademark law protects signs that are distinctively based on their use in connection to goods and services and its red-sole shoes enjoy this attribution in the public. It submitted that what makes Louboutin’s shoes distinctive to the public is its red-sole signature and that over the years the public has associated this distinction to it, thus it would amount to an infringement for Van Haren to use a confusingly similar mark for its stilettos as well. 

After analyzing the facts and the law, the Advocate General of the ECJ agreed with Van Haren. He recommended to the ECJ that Louboutin’s red-sole trademark should be seen as invalid. According to the Advocate General, a sign combining colour and shape is potentially caught by the prohibition contained in Article 3(1)(e)(iii) of Directive 2008/95. He therefore concluded that Louboutin’s red-sole mark “should be equated with a sign consisting of the shape of the goods and seeking protection for a colour in relation to that shape, rather than as a trade mark consisting of a colour per se.”

 

But the ECJ’s ruling on Tuesday 12 June 2018 did not follow the ECJ Advocate General’s recommendation.

The ECJ ruled that Louboutin was not seeking to protect the shape of a shoe, merely the application of a colour to a specific part of it. 

Louboutin is happy about ECJ’s decision and believes that with the case now being referred back to The Hague court, the Hague court will now confirm its red-sole trademark as valid. For over 25 years, Louboutin’s red-sole stilettos has enabled the public to attribute the origin of the shoe to its creator, Christian Louboutin.

 

What the EU Law on Trademark Says 

Under EU law, Article 3 of Directive 2008/95 entitled ‘Grounds for refusal or invalidity’ prohibits certain marks from being registered, and if registered, they shall be declared invalid. 

While paragraph (1)(b) prohibits trade marks which are devoid of any distinctive character, paragraph (e)(III) prohibits signs which consist exclusively of the shape which gives substantial value to the goods. 

Van Haren Schoenen BV, the Defendant, is a company based in the Netherlands. Trademark law in the Netherlands is governed by the Benelux Convention on intellectual property (trade marks and designs). Under Article 2.1 of the Benelux Convention, signs consisting exclusively of the shape which results from the nature of the goods themselves, which gives substantial value to the goods, or which is necessary to obtain a technical result are not regarded as trademarks. 

As the ECJ has rightly ruled, Louboutin’s red-sole trademark is not “a sign consisting exclusively of the shape” but a sign consisting of an application of a colour to a specific part of the shape of a shoe. 

This is distinctive. In 2012, Louboutin had similarly battled Yves Saint Laurent in a New York court over similar trademark issues. After the US Court held that Louboutin’s red-sole trademark was valid, it won the US trademark. It is most likely that Louboutin will finally win the battle when the Hague court follows the direction of the ECJ.

 

Three Lessons You Need to Understand about Trademark Protection 

 

1. Trademark law doesn’t only protect distinctive letters, names, numerals, or words but also protects brands, devices, headings, labels, signatures, tickets or a combination of these: Distinctiveness is the hallmark of a trademark. The more distinctive your trademark is, the more valuable it is to your business, particularly in highly competitive industries. Be imaginative. Notice that Christian Louboutin is not fighting over use of a name confusingly similar to the brand name ‘Louboutin’ but fighting over its signature red-sole mark. Particularly in look-and-feel driven industries such as fashion, sports, or entertainment industries, you need to think of trademarks that don’t only involve words but also incorporate ‘look’ and ‘feel’ such as logo, signature, etc. A good IP lawyer with a brand expert can work you through this IP-brand process. Perception is everything. 

2. Though trademark law protects proprietors of unregistered but well-known marks, always register your trademark: Under trademark laws around the world, unregistered marks enjoy some level of protection if they are well-known marks connected with particular goods or services. In common law jurisdictions such as Nigeria, the proprietor of the unregistered but well-known mark can proceed to bring a passing-off action against the person allegedly infringing on the unregistered mark. But don’t risk it. As a business, it’s best to register your trademark, however well-known it already is. Trademark registration ensures that you will benefit fully from the rights provided to trademark owners under the trademark statute. Also, you will not need to prove that your mark is well known in the affected market, often a daunting task for many trademarks proprietors. Although Christian Louboutin started using his red-sole signature since 1993 and had become well known in most target markets, he still went on to register the trademark to ensure that anyone who stepped on his red-sole shoes didn’t do so without getting a stiletto sting.

3. Trademark protection is not just mere IP registration but investment in your IP asset for business growth: Trademark is bigmuch bigger than most people think. Beyond a trademark certificate, there is a lot more leveraging on trademarks help you achieve, especially if you are working with an IP strategist, not just an IP agent as most businesses do. For instance, have you ever thought about how trademarksor IP generallycan help you grow your business, solidify your unique selling proposition (USP), or turn your brand to a money magnet? If you are in an industry where others compete on price, you can compete on value by leveraging on your IP. With the disruptive technologies out there today, production cost is gradually decreasing across various industries. Think of 3D printing technology in the manufacturing industry. So using lower prices to compete is becoming the norm, especially when your disruptor is from outside your industry. Think Airbnb and hotels, Uber and taxi drivers, or fintech and banks. If you keep lowering price, you may soon find your business below Louboutin’s red-sole stiletto. For instance, Uber lost its place in the ride-hailing industry in Nigeria when it tried to compete with Taxify based on pricing. Avoid competing on price, especially when you know your value. Instead, invest in your IP. It’s the only intangible asset that can tangibly make the big difference.

 

Three Lessons You Should Take Away from Louboutin’s long-running battle against Van Haren

1. Believe in your brand: As a business owner, founder, or CEO, you must believe in your brand. If you don’t believe in your brand, no one will—and much less the court. After a long-running legal battle for his red-sole trademark, Christian Louboutin could have given up along the way.

2. Be creative. A little spark may be what you need to be worth billions of dollars in a few years: The first time Christian Louboutin came up with his red-sole high heels, he simply used a nail varnish he had borrowed from an assistant to paint one of the soles of his shoes red. Today, this red-sole mark is a signature of luxury, more than tripling the value of Louboutin shoes. Little wonder Van Haren wants a taste of the scarlet feel.

3. When things go wrong, your IP asset will be both your survival and winning strategy. If Van Haren loses its defence against Louboutin’s trademark-infringement action, what do you think would be the effect on Van Haren’s market? It would seriously affect Van Haren’s stiletto market. This is because Van Haren’s lookalike high heels must have been unduly gaining from Louboutin’s red-sole high heels. Now apart from this lookalike feature, has Van Haren invested in its own IP by not only designing its own high heels uniquely but also distinctively making it stand out from the crowd? It doesn’t seem so, especially from a red-sole point of view. Van Haren may have just bought for itself a copycat status its buyers may not like to be associated with. In business, you must never risk your brand name. Never. Invest in it, always. When Nokia lost out in the mobile-phone market, it leveraged on its IP asset in mobile-communication technology to not only stay relevant but also become invaluable to mobile-phone companies that needed its technology. Nokia became the invisible technology behind visible brands. Today, there is no winning business strategy without a winning IP strategy to power it.

4. Branding is everything. With IP, your brand will be your greatest asset: One of the reasons why African businesses don’t get to become global brands is not because they don’t have great products or services. Not at all. African businesses are not often global brands because they often fail to leverage the power of IP. Most African businesses are in the business of buying and selling. They are traders, even as manufacturers. But global brands have gone beyond trading. Global brands sell IP. They are not mere traders of goods and services. Shoes are not what Louboutin sells. Louboutin sells class and luxury. Phones are not what Apple sells. Apple sells prestige. Coca Cola does not sell beverage. It sells feeling. Without a fine IP strategy, none of these global brands would have become so successful today. What is your business selling?

In IP Matters, it’s never too early because IP matters to business and development, any day.

 

IP Matters, Week 14, 2018
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This is America vs This is Nigeria—Has Falz infringed on Childish Gambino’s copyright?

On IP Matters this week, let’s take a closer look at Falz’s now controversial song, ‘This is Nigeria’. Apparently inspired by ‘This is America’, a song by American rapper Childish Gambino, Falz released ‘This is Nigeria’ a few weeks after ‘This is America’ was released 5 May 2018. Owing to the similarities both songs have, many Nigerians have accused Falz of ‘stealing’ Childish Gambino’s intellectual property. But many other Nigerians have come up to defend Falz’s act, describing ‘This is Nigeria’ as a ‘parody’ or ‘satire’, thus amounting to a defence under copyright law. Does Falz’s ‘This is Nigeria’ infringe on Childish Gambino’s copyright in ‘This is America’?

 

Childish Gambino’s ‘This is America’ is a satire, criticizing the high rate of violence in the American society.

‘This is America’ was released 5 May 2018 in digital-download format. The music video for the song was released on YouTube simultaneously with Childish Gambino’s performance of the song on Saturday Night Live. In 24 hours, the music video received 12.9 million views. It now has over 200 million views. By 15 May, the song was playing on radio in the US. ‘This is America’ debuted at number one on the US Billboard Hot 100. The song is reported to be Childish Gambino’s first number one and top ten single in the US.

Childish Gambino is the stage name of Donald Glover Jr. He is an American actor, comedian, DJ, director, record producer, singer, songwriter, rapper, and writer.

 

Inspired by ‘This is America’, Falz releases ‘This is Nigeria’, a social commentary on the rate of crime, corruption, and violence in Nigeria.

‘This is Nigeria’ was released 25 May 2018. 3:42 minutes long, the music video was produced by Wande Thomas and directed by Iyobosa ‘Geezy’ Rohoboth. After ‘This is Nigeria’ was released in digital format, it went viral on the Internet. By the first week of June 2018, the song became the second hottest Nigerian song in May 2018 after Davido’s song, ‘Assurance’. This is based on online downloads, streaming on iTunes, Spotify, Youtube, radio airplay, etc.

Falz, also called ‘Falz the Bahd Guy’, is the stage name of Folarin Falana, son of Nigeria’s senior advocate, Femi Falana. Falz is a Nigerian actor, rapper, and songwriter. At the 2015 Nigeria Entertainment Awards, he was nominated in the ‘Best Rap Act of The Year’ and ‘Best New Act to Watch’ categories at the same event. He owns Bahd Guys Records.

 

Use of an author’s work without permission amounts to copyright infringement. But if the new work is a parody, pastiche, or caricature, it is a defence against copyright infringement.

According to Britannica,  ‘‘parody’, in literature, [is] an imitation of the style and manner of a particular writer or school of writers. Parody is typically negative in intent: it calls attention to a writer’s perceived weaknesses or a school’s overused conventions and seeks to ridicule them. Parody can, however, serve a constructive purpose, or it can be an expression of admiration. It may also simply be a comic exercise. The word parody is derived from the Greek parōidía, “a song sung alongside another.”’

By imitating an original style, a parody is essentially a mimicry. It mimics a concept, idea, person, or style for comical effects. Parody mocks and ridicules the original work for pure entertainment. It is art for fun’s sake, but can also be used for satirical purposes.

Parody, pastiche, and caricature create a new work of art by imitation. This is why paragraph (b) of the Second Schedule to the Nigerian Copyright Act removes parody, pastiche, and caricature from the control of a copyright owner. Any person who creates a parody, pastiche, or caricature is protected against the copyright owner of the original work or personality/image (in the case of a caricature). This is effectively an exception to copyright infringement.

 

Falz’s ‘This is Nigeria’ is not a parody.

As already explained above, parody focuses on the style of an original work, not a societal issue or social ills. Falz’s song, ‘This is Nigeria’ is not a mockery of Gambino’s style, but a serious commentary on the Nigerian society.

Because a parody necessarily has to imitate the original work, copyright law excuses parody from the requirement of originality. This is reasonable. An imitation of a work of art can hardly avoid copying a substantial part of that work—if not in content, in style—otherwise it won’t qualify as a parody. And since a parody mocks an original work, it is targeted at the author or creator of the original work, not the society.

Falz’s ‘This is Nigeria’ is not an imitation of Childish Gambino’s ‘This is America’ for the purpose of mocking the latter’s appearance, mannerisms, or style, but a serious social commentary on Nigeria.

Therefore, ‘This is Nigeria’ is not a parody.

 

‘This is Nigeria’ does not enjoy the protection parody enjoys because it is not an imitation that creates a parody, but an adaptation that creates a satire. Falz is therefore required to obtain Childish Gambino’s permission to produce or release ‘This is Nigeria’.

According to the Britannica, “[w]herever wit is employed to expose something foolish or vicious to criticism, there satire exists, whether it be in song or sermon, in painting or political debate, on television or in the movies. In this sense satire is everywhere.”

A satire is not synonymous with a parody and does not enjoy the legal defence that parody enjoys. Using ‘parody’ and satire’ as synonyms—as a number of writers have done in their opinions on the copyright status of ‘This is Nigeria’—is incorrect. A parody can be satirical. But not all parodies are satires and not all satires are parodies. Both are different.

As defined in Britannica, a ‘satire’ is an “artistic form, chiefly literary and dramatic, in which human or individual vices, follies, abuses, or shortcomings are held up to censure by means of ridicule, derision, burlesque, irony, parody, caricature, or other methods, sometimes with an intent to inspire social reform.”

‘This is Nigeria’ is an adaptation of Childish Gambino’s ‘This is America’ for the purpose of delivering social commentary, engaging in public criticism, or exposing social ills about the Nigerian society. This makes it a serious work of satire.

Satire does not enjoy the defence parody, pastiche, and caricature, with the other exceptions under the Nigerian Copyright Act, enjoy under copyright law. This is because satire does not require the author or creator of a new work to borrow from, copy from, or imitate an existing work of art. Satire, unlike parody, does not copy the appearance, mannerisms, or style of a work to make a point about that work. Satire attacks follies, shortcomings, and vices in real life. Parody attacks the style of a fictional work.

Therefore, it would be wrong to read ‘satire’ into ‘parody’—the word used in Nigerian Copyright Act.

 

Falz appreciates the distinction between a parody and a satire, but the artist does not appear to understand the legal implication of this distinction from a copyright perspective.

When in a recent interview on BBC Africa, BBC Africa’s Usifo Umozokpea asked Falz if Gambino had gotten in touch with him or Falz got permission from Gambino, below was Falz’s response:

“He hasn’t been in touch. No … And I didn’t have to get in touch with him for permission. [This is Nigeria] was just a cover. People do covers all the time. And even before mine, there were a million and one people that had already done covers …mostly parodies … You know people, making fun of the original or trying to do their own or be funny with it. And … maybe that’s why this one caught a bit of attention because everyone must have expected something funny from me as well but I just decided to do something very serious.” [Emphasis mine]

Clearly, Falz appreciates the distinction between a parody and a satire. But what the artist doesn’t seem to realize is that while copyright law accepts parody as a defence to copyright infringement, it does not excuse satire.

Childish Gambino has been silent. He either has no problems with Falz’s adaptation of his work or he also doesn’t fully appreciate the legal implication of the distinction between a parody and satire under copyright law.

But for the purpose of putting this IP matter in the right perspective, the point must be clear that adaptation of a copyrighted work requires the original author’s permission.

 

Apart from the points above, the similar features below show that ‘This is Nigeria’ is not a parody, but an adaptation of ‘This is America’.

In ‘This is America’, Childish Gambino’s lyrics in the song are social commentaries on the high rate of violence in the US. Using chaotic scenes in the music video, the song wittingly brings attention to being black in the US, gun violence, and police brutality in the country. In ‘This is Nigeria’, Falz finely adapts ‘This is America’ to a Nigerian audience by taking on issues of violence, crime, corruption, and exploitation in Nigeria.

In ‘This is America’’s 3:45 minutes video, Childish Gambino is seen dancing through a warehouse. The camera follows Childish Gambino, showing his various encounters in a series of violent scenes. Some of the violent scenes in ‘This is America’ include Childish Gambino pulling the trigger of his handgun to shoot a man from the back of his head and using an AK-47 to spread bullets at a church choir.  In ‘This is Nigeria’, the music video starts with Falz—also shirtless like Gambino in ‘This is America’ video—listening to a radio program. In the background, we see two young men in the street throwing punches at each other. As the camera follows Falz around, we see various scenes, reinforcing Falz’s message. In one of the scenes, a man in Fulani attire playing a local instrument suddenly picks up a machete and attempts to behead a helpless man. Soon after, “Fulani herdsmen” are seen attacking people in the open.

In Childish Gambino’s song, he is with a group of young dancers, performing the South African ‘Gwara Gwara’ and ‘Shoot’ popularized by BlocBoy JB. Similarly, behind Falz in most parts of ‘This is Nigeria’ video are energetic Hijab-wearing female dancers. This reminds viewers about the Chibok or Dapchi girls recently abducted by Boko Haram insurgents in the country. The dancers are seen performing the ‘Shaku Shaku’ dance, a trending street dance in Nigeria.

This is an adaptation.

 

A copyright holder has the exclusive right to adapt his or her own work. Any person who adapts a copyrighted work without authorial permission is liable to copyright infringement.

Under both US and Nigeria copyright laws, Childish Gambino has the exclusive right to make adaptations of his work, ‘This is America’.

In the US where Childish Gambino is based, adaptations are derivative works. Section 101 of Title 17 of the United States Code which governs copyright in that country defines a ‘derivative work’ as “a work based upon one or more preexisting works, such as a translation, musical arrangement, dramatization, fictionalization, motion picture version, sound recording, art reproduction, abridgment, condensation, or any other form in which a work may be recast, transformed, or adapted. A work consisting of editorial revisions, annotations, elaborations, or other modifications, which, as a whole, represent an original work of authorship, is a “derivative work”.” [Emphasis mine]

Under Nigeria’s copyright law, the position is not different. Section 51 of the Nigerian Copyright Act defines ‘adaptation’ to mean “the modification of a pre-existing work from one genre of work to another and consists in altering work within the same genre to make it suitable for different conditions of exploitation, and may also involve altering the composition of the work”. [Emphasis mine]

Section 6(1)(viii) of the Nigerian Copyright Act gives the author of a work exclusive right to “make any adaptation of the work”.

Based on the position of law above, without Childish Gambino’s permission, Falz has infringed on the former’s copyright in ‘This is America’.

 

Four Lessons You Need to Understand about Copyright in Literary, Musical Work, or Artistic Works

1. Copyright in a work confers exclusive rights on the author, including right to make adaptations of the work: A derivative work is an adaptation of that work. It is immaterial that the new work is still within the same genre as the original work. Here, Falz has adapted a satirical song in the US to another satirical song in Nigeria. This is still an adaptation. Copyright law applies.

2. IP protection is territorial, but a national of any country that is signatory to the Berne Convention for the Protection of Literary and Artistic Works enjoy copyright protection in other signatory countries. Also when a non-national produces a work in a signatory country, that non-national’s work also enjoys protection. Nigeria is a signatory to the Berne Convention. So also is the US. So Childish Gambino’s copyright in ‘This is America’, first published in the US, extends to Nigeria. Nigeria is also happy to protect works that are first published in a country by virtue of any international agreement or treaty Nigeria is party to.

3. Apart from parody, pastiche, caricature, there are other exceptions to copyright infringement recognized under the Second Schedule to the Nigerian Copyright Act. One of these exceptions is fair dealing (in Nigeria and in the UK) or fair use (in the US). Fair dealing includes use of a copyrighted work for criticism, current-event reporting, private use, research, and reviews, as long as title of the original work and original author are acknowledged.

4. Until ‘This is Nigeria’ is seen for what it isan adaptation of ‘This is America’trying to apply the principle of substantial copying in order to determine copyright infringement will be foggy. Whether we choose to look at this IP matter from the idea/expression dichotomy angleas many Nigerians have been doingor from a quanlity vs quantity angle, all I see is fog. Understanding that Falz’s ‘This is Nigeria’ is an adaptation immediately removes the fog. An adaptation greatly relies on the idea of an original work just as it relies on the expression of that idea, especially style.

 

Three Lessons You Should Take Away from ‘This is America’ vs ‘This is Nigeria’ controversy

1. As an artist, author, or creator, never make assumptions when it comes to IP. You are in a copyright-intensive industry. Before you produce or release any work, always double-check. In fact, it’s best to have done your homework even before starting any project. This doesn’t only save you energy, money, and time, but also ensures you are not putting your brand or reputation at risk. Keep a good IP lawyer close.

2. Imbibe the practice of including credits in your work, particularly when you have not gotten in touch with the original author: When playing fair as Falz intended with ‘This is Nigeria’, make effort to acknowledge the original author right in the work. For example, below the title of the work. This demonstrates good faith. If you wait till you are interviewed by the press about authorial attribution or credit, the affected author may be dissatisfied with that.

3. As an artist, always avoid the pressure or temptation to justify the artistic contents of your work, even if MURIC (Muslim Rights Concern) is breathing down your neck. An artist creates art. The audience appreciates it however way they interpret it. An artist should not waste creative time explaining his or her art. If you must, let your choreographers, directors, lyricists, and other professionals you worked with work closely with PR to communicate this to the public. If PR also needs help, then you may ring your lawyers! Never be pushed to testifying on the Internet. Just turn the heat on with another hit. Sing.

IP Matters, it’s never too early because IP matters to business and development, any day. 

 

IP Matters, Week Thirteen, 2018
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Apple v Samsung—Samsung to pay over half a billion dollars for patent infringements.

This week on IP Matters, the never-ending Apple and Samsung battle is back with a $539 million bang! That’s the amount of damages the jury at the United States District Court for the Northern District of California said Samsung owes Apple for infringing 5 of Apple’s patents. Will this be the end of this long legal battle between Apple and Samsung? Not likely.

 


Apple’s case against Samsung is simple—You sold millions of smartphones containing Apple patents. Pay total profits to us.

Apple wants the whole Samsung profit paid to it as money damages.

Apple’s position is that Samsung’s act of selling the affected phones amount to patent infringement, and consequently renders Samsung liable to payment of the total profit of sale as damages. This is in accordance with section 289 of the US patent law (Code Title 35).

Section 289 provides that during the term of a patent for a design, whoever without owner’s license, does any of the two acts below “shall be liable to the owner to the extent of his total profit”:

(1) applies the patented design, or any colorable imitation from the design, to any article of manufacture for the purpose of sale, or

(2) sells or exposes for sale any article of manufacture to which such design or colorable imitation has been applied.

 


But Samsung—having been found liable for patent infringements long before now—disputes the amount of damages awarded to Apple.

Samsung contends that Apple is entitled to the profits from the specific components found to have infringed on Apple’s patent, and not the entire profit from the whole article or device.

This contention formed the basis of Samsung’s earlier appeal against a trial verdict in 2012 which awarded almost $1 billion in damages against Samsung. Though later reduced to about $548 million, Samsung challenged $399 million of the award at the US Supreme Court.

According to Samsung’s calculations, what it should pay Apple should not be more than $28 million.

 

Apple’s battle against Samsung is a long-drawn battle, going as far back as 2011.


The first case between Apple and Samsung was in 2011. Apple claimed that Samsung sold smartphones that infringed Apple’s designs and utility patents in the iPhone. This covered Apple’s  design patents D618,677; D593,087, and D604,305, and utility patents 7,469,381 and 7,864,163.

The D677 patent covers Apple’s iPhone’s rectangular font face with corners. The D087 patent protects a rim surrounding the bottom of the iPhone. And the D305 patent protects the shape of the grid displaying app icons on-screen. For the utility patents, US patent 7,469,381 protects a computer-implemented method for list scrolling and document translation, scaling, and rotation on a touch-screen display. US patent 7,864,163 protects a computer-generated method for portable electronic device and graphical user interface for displaying structured electronic documents.


Samsung sold 8.6 million smartphones found to have infringed on Apple’s patents above. From this sale, Samsung made $3.3 billion. But this sum represents the total profit made from selling the whole device, not specific components of the device found to have infringed on Apple’s patent.



So the question is: Does award of damages for patent infringement entitle a patent owner to total profits from sale of the infringing device or profits from the components of the device that really infringed on the patent?

In the US, award for infringement had always been determined by calculating profits from sales of the whole device. This is the position of the US patent law (Code Title 35). (More on this below.)

But a US Supreme Court decision in December 2016, the Supreme Court agreed with Samsung that payments should cover components of a device, and not the entire product.

 

The US Supreme Court ordered that the case be taken back to the California District Court to determine the award after considering both Apple’s and Samsung’s competing submissions.


The Jury sides with Apple; says Samsung owes Apple $539 million for selling smartphones products containing Apple’s patents.

To determine the award against Samsung, the case fell on primarily deciding what amounts to an article of manufacture as used unders section 289 of the US patent law (Code Title 35).

Apple argued that the patents affected adequately cover the entirety of Samsung’s infringing smartphones, thus rendering Samsung liable to pay total profit to Apple.

But Samsung countered Apple, maintaining that article of manufacture—in relation to Apple’s three design patents—are iPhone’s black glass, bezel or surrounding rim, display screen, and round corner. It submitted that only profits from these components are payable as money damages.



To properly determine the article of manufacture, the Jurors applied 4 rules:

1. The scope of the design claimed in Apple’s patent, including the drawing and written description;

2. The relative prominence of the design within the product as a whole;

3. Whether the design is conceptually distinct from the product as a whole; and

4. The physical relationship between the patented design and the rest of the product, including whether the design pertains to a component that a user or seller can physically separate from the product as a whole, and whether the design is embodied in a component that is manufactured separately from the rest of the product, or if the component can be sold separately.

At the end of proceeding, the jury’s verdict went against Samsung. It found that Samsung owes Apple $539 million for infringing Apple’s patents in the iPhone.


Apple is happy. Samsung is sad. But the lesson is clear: ‘Don’t infringe on IP. Get License.’

Apple will be obviously happy with the jury. It says the seven-year old case (still counting) is more than just the money.

But it’s all about the the money for Samsung, since it had been hoping to pay only $28 million for the patent infringements. So the jury’s verdict must have made Samsung the most unhappy technology company in the world. After a long legal battle that must be costing it millions of dollars, it still gets to pay over half a billion dollars in damages!

Samsung says the decision “flies in the face of a unanimous Supreme Court ruling” and “will consider all options to obtain an outcome that does not hinder creativity and fair competition for all companies and consumers.”

Though the US Supreme Court decision in December 2016 flies in the face of the wording of section 289 of the US patent law (Code Title 35), I agree with the decision. It’s a welcome interpretation of the statute. A literal interpretation of the statutory provision would not have only succeeded in punishing Samsung for the infringement, but also failed to reasonably compensate Apple for the damages suffered since the award would have amounted to a Father Christmas gift weeks before Christmas day in 2016. (Yes, reasonable compensation for damages should be a two-way consideration—just as too little would be unreasonable, so is too much!)


Three Points You Should Take Away from Apple’s Case.

1. A grant of patent gives the patentee exclusive ownership of a patented object. With a patent, you are the boss. By having a patent, you exclusively control sale, use, importation, and manufacturing of the patented object. Here, Apple has patents covering certain aspects which include rim of iPhone’s front face, mobile design e.g rounded corners, and iOS home screen’s  app-grid layout. Any company that wished to use any of these patented innovations must get a license, otherwise that company risks a lawsuit.

2. In the US, there is a distinction between design patents and utility patents. The US Patent and Trademark Office (sometimes called “the PTO”) grants design patents and utility patents. While a design patent protects the way an article, device, or object looks or protects its ornamental design, a utility patent protects both the way an article, device, or object is used and the way it works and protects a method or process of making or doing something. In Nigeria, protection of ornamental designs fall under industrial designs.

3. Unauthorized sale, use, importation, or manufacturing of a patented product amounts to infringement and this makes the patentee entitled to profits earned from the infringement. As can be seen in Apple’s claim against Samsung, an infringer is liable to pay profits made from an infringement to the patentee. The only issue in Apple’s case is how much Apple is entitled to—profits made from the components of Samsung’s smartphones that infringed on Apple’s patents or total profits from the sale of the whole phone. So when you are selling unlicensed patent, you may be doing business for the true owner, not for your shareholders! Someday, the true owner will demand you pay all profits to it. Steer clear of unlicensed intellectual property!


Three Lessons Businesses Need to Take Away from the Apple-Samsung Battle

1. Prevention is better than cure. A business should get a license for components needed for its products. Of course you can make fast, fine-smelling mint from infringing on a big competitor’s IP, but don’t bank on it. At a time the Apple iPhone was becoming the hottest and most expensive smartphone in the mobile-phone market, Samsung smelled the cheese. Rather than paying Apple for license—which I doubt Apple would have made easily available to Samsung—Samsung decided to invest in R&D to build the same technology. Under patent law, you are not allowed to make, import, use, or sell a technology that is already patented. And it’s immaterial that you built it independently. Samsung made over 3 billion dollars from it but not without getting its fingers burnt in the process. (Indeed, one of the issues in Apple’ s case was if Samsung could deduct R&D investments from the final damages.)

2. In today’s highly competitive and disruptive economy, technology companies must be agile, flexible, and innovative. You can’t be an island in the today’s technology market, otherwise you will end up an islander in the consumer market. I will show why. Today’s electronic and mobile devices are mostly made up of small components numbering up to hundreds, typically owned by different manufacturers. You can’t do it alone. So focus on your Unique Selling Proposition (USP), understand the technologies you will need to build your product on, map out your market, know your competitors, invest in your brand, and continually innovate. If you get your penetration and growth strategies wrong, you will most likely infringe IP.

3. Be smart with the use of third-party technology. As a long-term solution, invest in your IP strategy. Know exactly the worth of every component of your product. Know exactly what each component brings to the table. And know the numbers—costs and profit margins. Also, keep a good accounting system. Keep a good contract system. And keep all records intact and safe. If or when issues arise, you will not be overwhelmed or allow lawyers on the other side determine what their client’s technology is worth to you. In this case, Apple had calculated what its technology was worth to Samsung, but Samsung did its best to prove it was much less, relying on its own accounting system and records. Run your business; don’t let your business run you. When your business runs you, sooner or later it will run you over. Having an IP strategy will make your business an IP business in your core market, not an IP infringer, fighting for less damages after the damage has been done.

In IP Matters, it’s never too early because IP matters to business and development, any day.

 

IP Matters, Week 12, 2018
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Alibaba v. Alibabacoin—When Marketing Crypto Buys You a Lawsuit in Trademark Infringement

This week’s IP Matters takes on Alibaba’s dispute with Alibabacoin, a cryptocurrency company, over use of Alibaba’s registered trademark, ‘Alibaba’ and other marks. Can Alibaba stop Alibabacoin from continuing to market ‘Alibabacoin’ on the Internet?

Alibaba is into online retail business, while Alibabacoin is into cryptocurrency business.

Alibaba Group Holding Limited (Alibaba), the plaintiff, is the parent company of arguably the largest online and mobile commerce group of businesses in the world, Alibaba. Alibaba is the largest retail platform in the world. When Alibaba made an initial public offering, the offer set a world record for the most valuable initial public offering in history. Alibaba’s principal place of business is China. With such a valuable business, Alibaba is registered owner of not just the mark “ALIBABA”, but also other related marks containing the word. These marks are used in relation to Alibaba’s goods, computer, and internet services.

The Defendant, Alibabacoin, is the creator of a cryptocurrency. According to Alibabacoin Foundation, it is “a technology optimized for distribution, finance, shipping, security, and use of blockchain technology”. After two initial coin offerings, Alibabcoin is currently running a third one and expects to raise over $35,000,000. Alibabacoin maintains two websites–‘the Alibabacoin website’ (https://www.abbcfoundation.com) and ‘the Wallet website’ (https://alibabacoinwallet.com). Alibabacoin also has phone applications ‘Alibaba Coin Foundation Wallet’ (on Apple app store) and ‘AlibabaCoin Wallet’ (on Google app store) available for mobile downloads. Through these channels, Alibabacoin enables Internet users understand its vision, access its whitepaper, and see how its cryptocurrency system works.


Alibaba fights Alibabacoin in New York for alleged unlawful use of ‘Alibaba’ mark to market cryptocurrency.

When Alibaba discovered that a cryptocurrency company was marketing cryptocurrency on the Internet with the name ‘Alibabacoin’, Alibaba sued on 2 April 2018. In the suit, Alibaba brought claims of trademark infringement, unfair competition, false advertising, false designation of origin, and trademark dilution against Alibabacoin. This was at the New York Southern District Court. The next day, Alibaba succeeded in getting an order to temporarily stop Alibabacoin, from using, or making false or misleading statements concerning Alibaba’s marks.

Alibaba’s Causes of Action against Alibabacoin

Alibaba’s causes of action, are summarized below:

1. Alibabacoin violated Alibaba’s registered US trademarks by using ALIBABA Marks and marks confusingly similar to Alibaba’s trademark in connection with the advertising, promotion, and sale of their products and services without Alibaba’s authorization.

2. Alibabacoin engaged in unfair competition and false designation of origin of its coin by allegedly deceiving consumers into believing that Alibaba is the source of Alibabacoin’s products and services, “or that such products and services are endorsed by, sponsored by, or otherwise associated or affiliated with Alibaba.”

3. Alibaba engaged in false advertising by distributing materials that misrepresent that Alibabacoins’ uses of the ALIBABA Marks are authorized, licensed, or sponsored by Alibaba–when in fact they are not–thus deceiving the public.

4. Alibabacoin committed trademark dilution against Alibaba by using the famous ALIBABA Marks, and substantially similar marks, in commerce in connection with the advertising, promotion, and sale of their products and services, without Alibaba’s authorization.

5. Alibabacoin has unduly profited and  unjustly enriched itself through its unlawful conduct and has consequently made Alibaba suffer damages.

For the alleged unlawful acts enumerated  above, Alibaba wants the Court to hold Alibabacoin liable, permanently stop Alibabacoin from continuing to dilute the Alibaba mark with cryptocurrency business,  and make Alibabacoin pay, even if in cryptocurrency. (Alibaba’s relief includes an account of profit.)

Alibabacoin counters Alibaba’s argument; says the New York District Court has no jurisdiction over the matter.

In its defence, Alibabacoin largely relies on a technicality–jurisdiction. Alibabacoin contended that Alibaba is not entitled to a preliminary injunction for 3 reasons. According to Alibabacoin, Alibaba has failed to establish:

1. subject matter jurisdiction under the Lanham Act;

2. personal jurisdiction; and

3. likelihood of success on the merits.

Alibabacoin explains that Alibaba has not established that Alibabacoin ever made “use in commerce” of Alibaba’s trademark, therefore the Court lacks subject-matter jurisdiction under the Lanham Act. In other words, no Alibabacoins have been sold and consequently there is no use of Alibaba mark in commerce. And since the mark was not used in commerce, the Court should not give Alibaba judgment.

The Court gives Alibabacoin judgment; says Alibaba didn’t prove its case.

First, on subject-matter jurisdiction, the Court disagreed with Alibabacoin, holding that “use in commerce” in relation to a mark does not require actual sale but use of the mark in the  ordinary course of trade through displaying or advertisement.

Second, on personal jurisdiction, the Court held that though Alibabacoin’s websites are highly interactive and have significant commercial elements, Alibaba cannot base jurisdiction on this because Alibaba has failed to show that there is “reasonable probability that these websites have been actually used to effect commercial transactions with customers in New York”. Therefore, the Court reasoned that the alleged infringement of Alibaba’s trademarks is in the form of reputational harm and loss of business and goodwill. And most likely, this may have injured Alibaba’s brand in China–its place of business–not New York, the forum it sued. To have personal  jurisdiction, it must be New York market.

Lastly, the Court held that  Alibaba has failed to demonstrate or even allege that “its actual or potential New York customers were confused or deceived merely by viewing images of its trademarks on Alibabacoin’s website[s].” Alibaba did not identify any specific economic injury in New York.

The Court denied Alibaba’s motion on preliminary injunction. (This judgment does not finally close Alibaba’s window of opportunity to adequately show why the Court should have personal jurisdiction over Alibabacoin.)

Four Points You Should Take Away from Alibaba’s Case.

1. Trademark does not concern itself with anything other than commerce: Trademarks serve the purpose of distinguishing goods or services from one another. Goods and services inherently involves commerce. For the purpose of commerce, goods and services must be capable of being distinguished from the other so that the enterprise, industriousness, or innovation of one business is not confused with the other. Trademarks also safeguard against deception in commerce. And as seen in the case above, “use of commerce” does not require that goods or services have been sold. Display or advertisement of the goods or services for commercial purposes is adequate to constitute commerce–as also held in Alibaba’s case.

2. Infringing another brand’s trademark makes you liable for damages, but you must prove the damage or injury you have suffered if you want compensation: It is not enough to catch an infringer. If you ask for damages, you need to be able to convince the court that the alleged trademark infringement has injured your market or has the real potential of injuring your market. If you fail to–as Alibaba has failed to do–you may go home oweing your lawyers.

3. Registered trademark and unregistered trademark are both recognized in trademark law, but …: To enjoy trademark protection, you must have either registered the mark(s) as your trademark(s) or have been using the mark in commerce and acquired goodwill and reputation. This is by virtue of legislation. It is statutory. A registered trademark entitles the trademark owner to sue and recover damages. Another way of enjoying trademark protection is by use of the mark to a level the brand name becomes distinctly associated with the goods or services in question and the user enjoys goodwill and reputation from customers. But the owner of an unregistered trademark can only sue an infringer for passing off goods or services as the user’s goods or services. Passing off, a common law action, is not easy to prove. In Alibaba’s case, Alibaba relied on its registered US trademarks and its common law rights to the trademarks as well, having used them extensively and continuously, thus taking on secondary meaning among consumers as marks unique to and associated with Alibaba Group Holding and the Alibaba Websites.

4. Trademark registration is in relation to a particular class or classes of goods or services and protects your business in those classes alone: Under Nice Trademark Classification, there are 45 classes of goods and services. ‘Alibaba’ mark and device were registered as trademarks in a number of classes, not all classes. In Alibaba’s submission to the Court, it had mentioned that Alibaba does not plan to go into cryptocurrency business. Since Alibabacoin was in cryptocurrency business and not retail business, the Court–for the purpose of determining injury to Alibaba–did observe that confusion of both brands seemed unlikely.

Four Lessons You Need to Take Away from this Trademark Dispute

1. In IP, prevention is often better than cure: It’s best you prevent a trademark fight with elephants like Alibaba, Alphabet, Apple, and the likes because they will not let you be until your brand becomes associated with negative news. Alibabacoin may have smartly taken advantage of the popularity of the ‘Alibaba’ mark to boost its own cryptocurrency business, but if Alibabacoin had seen this trademark fight coming, would it have considered using another name for its coin?

2. Be careful with using popular names or historic names as brand names: Though Alibaba Group Holding’s registration and use of the name ‘Alibaba’ has made it Alibaba’s trademark for commercial purposes, Alibabacoin did argue that its own brand name ‘Alibabacoin’ was coined from the legend of Alibaba, a thing not exclusive to Alibaba Group Holding alone. It argued that by adding ‘coin’ to the name ‘Alibaba’, it had become  its own brand. Because ‘Alibaba’ has acquired secondary meaning due to Alibaba Group Holding’s use of the name ‘Alibaba’, Alibabacoin’s argument in this regard is not a strong one. But the hint is that when your business chooses to use a legendary, mythic, or historical name as its brand name, such name is more likely to be used by other persons, and consequently the more likelihood of what I call trademark instability.

3. Register your trademarks early, not when you get “bigger”: Delay can be dangerous.In trademarks, delay can be even more dangerous. Today, new businesses are coming up fast. Disruption is the order of the day. Ideas are flying everywhere. Naming these new businesses and branding these ideas involve trademark. That unique name you are using or keeping for your business may just be what another person has in mind as well. By trademarking early, you get to avoid problems going into the future.

4. In trademark matters, the hurt your brand suffers may be trademark dilution, and not economic loss. Prove it: Though Alibaba included trademark dilution in its allegations against Alibabacoin, Alibaba failed to prove this. Instead, it kept saying Alibabacoin’s unlawful act was wilfully deceptive and this had caused economic injury to Alibaba. But without showing how Alibaba’s New York customers had been allegedly deceived by Alibabacoin’s actions, it is a weak argument.

IP Matters, it’s never too early because IP matters to business and development, any day.

 

IP Matters, Week Eleven, 2018
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