China Finds Parallel Imports Constitute Trademark Infringement

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Chinese trademark law has no specific prohibitions against sale of gray market products diverted into the Chinese market, also known as parallel importation.  An important breakthrough occurred recently when the Suzhou Intermediate Court enforced trademark holders’ rights against an unauthorized reseller of gray market goods imported into China.

Pernod Ricard China (Trading) Co., Ltd. is the exclusive trademark licensee of Absolut Vodka (Images II-IV) in China.  Pernod Ricard and the trademark owner, Absolut Company Aktiebolag, brought a lawsuit in China against a local retailer of parallel imports of Absolut Vodka products, asserting trademark infringement and unfair competition.  The key facts were that the imported products had manufacturers’ identification codes removed and had added labels bearing Chinese characters for “Absolut” (Image I) and identifying an unauthorized importer and distributor.  The code removal and label addition infringed consumers’ right to know about the product origin, interfered with the trademark owners’ ability to track products to maintain product quality, and undermined the integrity and beauty of the genuine product.   The removal of the manufacturers’ identification code violated Article 52.5 of China’s Trademark Law, which is a catchall term prohibiting impairment of an exclusive right to use a registered trademark, and constituted unfair competition.  The addition of unauthorized labeling violated Article 52.1 & 52.2, prohibiting use of an identical or similar mark on the same or similar goods without the permission of the owner of the registered trademark, and infringed the exclusive right to use the registered trademark.

Absolut Vodka Images

Absolut Vodka Images

Conkle, Kremer & Engel works to protect its clients’ brands in the United States and abroad.

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CK&E Attends ISSE to Help Beauty Industry Clients

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Conkle, Kremer & Engel attorneys recently attended the International Salon and Spa Expo (ISSE).  Held annually in Long Beach, California in January, ISSE is the biggest beauty expo on the West Coast, and attracts hundreds of beauty industry companies from around the world.  ISSE is sponsored by the Professional Beauty Association (PBA).

CK&E attorneys attended ISSE to meet with beauty industry clients, and to stay abreast of the latest trends and developments in the industry.  Attending trade shows helps CK&E maintain its unparalleled legal expertise on such matters as intellectual property protection, manufacturer-distributor relations and government regulatory and compliance issues that affect personal care product companies.

One highlight of this year’s ISSE was the launch of Glycelene, a line of natural, organic and vegan beauty ointments by CK&E client Borio Beauty.  Glycelene was named to PBA’s “Hot List” of products.  As part of CK&E’s  practice of assisting emerging companies for costs reasonably scaled to their needs, resources and business plans, CK&E helped to protect the Glycelene brand from its inception by initiating federal trademark registration and consulting on the packaging.

The breadth and depth of CK&E’s industry experience allows the firm to accomplish client objectives efficiently and effectively.  CK&E continuously builds on its decades of experience representing client interests in every facet of the personal care product industry by continuing to stay up to date on all matters of concern to its industry clients.

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Conkle Kremer & Engel Presents Brand Protection in Brazil

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Daniel Advogados presenting at CK&E's Brand Protection in Brazil

Daniel Advogados presenting at CK&E’s Brand Protection in Brazil

Conkle, Kremer & Engel recently teamed up with its international correspondent lawyers from the Brazilian intellectual property firm Daniel Advogados, Andrew Bellingall and George de Lucena, to give a presentation about what companies can do to protect their brands in Brazil, including helpful information about doing business in Brazil.  Conkle, Kremer & Engel’s Mark D. Kremer emceed the event and moderated the informative Q&A that followed the presentation.

Brazil is the world’s fifth-largest country in the world in terms of land mass and population.  Brazil is also a founding member of BRICS – the acronym for the five major emerging economies of Brazil, Russia, India, China and South Africa.  Its growing middle class, stable currency, and high demand for its commodity exports have all made Brazil a very desirable place for companies to expand. And it does not hurt that Brazil will host both the 2014 World Cup and the 2016 Olympic games.

Kyle Baker shows his 3Expressions 3D Tablet innovation to John Conkle and George Mendonça de Lucena

Kyle Baker shows his 3Expressions 3D Tablet innovation to John Conkle and George Mendonça de Lucena

Because our clients’ intellectual property and brand protection needs extend beyond the U.S. border, Conkle, Kremer & Engel has established working teams with leading international intellectual property law firms around the world.  It is Conkle, Kremer & Engel’s mission to stay on top of developments in all foreign and domestic markets where our clients currently operate or look to expand.

Conkle, Kremer & Engel wishes to thank all those who attended the presentation, as well as our friends and colleagues from Daniel Advogados, Andrew Bellingall and George de Lucena.   We are pleased to be able to confirm that the presentation was approved by the State Bar of California for 1.0 hour of participatory MCLE credit for all lawyers and paralegals in attendance.  For all questions regarding MCLE credit, please contact Martinique E. Busino at 310-998-9100.

Slideshows from Brand Protection in Brazil:

Daniel Advogados – Doing Business in Brazil

Daniel Advogados – Combating Counterfeiting and Piracy in Brazil

Topics covered in the presentation and the Q&A session included:

Strategies for entering the Brazilian market

  • Exporting goods bearing the owner’s trademark
  • Doing business through a subsidiary
  • Licensing use of trademarks to an unrelated third-party
  • Joint ventures with Brazilian companies
  • Franchise agreements with Brazilian companies

 Protection of trademarks in Brazil

  • Best practices for brand protection
  • An overview of trademark prosecution and enforcement in Brazil
  • Procedures and delays at the Brazilian Patent and Trademark Office
  • Legal remedies available to intellectual property owners
  • Court procedures in Brazil for actions involving intellectual property
  • Registration of domain names in Brazil

The latest developments at the Brazilian Patent and Trademark Office regarding trademarks

  • Issues related to Brazil’s possible adoption of the Madrid Protocol
  • Adoption of multi-class and multiple owner applications

Combating counterfeiting and piracy in Brazil

  • Ramifications of intellectual property infringements, which are crimes in Brazil
  • Using criminal remedies and border control measures as intellectual property protection solutions

 

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Turning an Agreement for Use of Public Information into a Trade Secret Misappropriation Case

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A recent New Jersey case is an example of how claims of misappropriation of trade secrets can arise in unexpected ways, and of the importance of the terms used in agreements for use of information.  The case shows that trade secret misappropriation can occur even when the information is “public” and the recipient was authorized to have the information.

In Events Media Network, Inc. v. The Weather Channel, Events Media had collected and compiled information about public events into a database.  Events Media then licensed the compilation to The Weather Channel to list events on The Weather Channel’s website.  Events Media claimed that The Weather Channel used the database for purposes other than listing events on its website.  Events Media sued The Weather Channel, but not just for a breach of the licensing agreement – Events Media also sued for trade secret misappropriation.

Although trade secrets are generally thought of as valuable information that no one else knows (of course, that is why it is secret), compilations of information that is available to the public, such as the Events Media database, can receive trade secret protection.

Events Media serves as a demonstration of how important the license agreement terms can be to whether a misappropriation of trade secrets claim can be pursued.  In finding that the Events Media database could be a protectable trade secret, the New Jersey court relied in part on the licensing agreement itself.  The court concluded that Events Media’s database was valuable – why else would The Weather Channel agree to pay for it?  The court also found the compilation was “secret,” because it was provided under a license agreement that affirmed its confidentiality and limited its use and disclosure, and because the data compilation was not known to others even though individual items of data were public.

Events Media further shows that trade secret misappropriation can occur even where a party has rightfully acquired the information under an agreement.  All that is required is unauthorized “use or disclosure” of the secret information, which can be shown by demonstrating that the use or disclosure was not permitted under the terms of a limited licensing agreement.

Finally, the case demonstrates that trade secrets need not be revealed to a third person in order to have misappropriation.  Trade secrets cases frequently involve a person who has impermissibly disclosed trade secrets to another, such as an employee who takes trade secrets from a former employer to a new employer.  But Events Media claimed only that The Weather Channel misappropriated trade secrets just by using the information for purposes not authorized by its licensing agreement.

In short, the ability to assert trade secret misappropriation can be based in large part on the terms of agreement between the parties.  As this case demonstrates, trade secrets laws protect a broad array of information, from customer lists to product formulas, and misappropriation can occur in circumstances that few would imagine.  CK&E’s lawyers have decades of experience in drafting agreements to protect and use trade secrets, as well as litigating trade secrets cases for both plaintiffs and defendants.  We always stand ready to provide clients with forward-thinking legal representation on these matters.

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Kirtsaeng Holds Copyright First Sale Doctrine Trumps Importation Rights

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The Copyright Act gives a copyright owner the exclusive right to sell copies of the copyrighted work. But once a genuine copy is sold, a lawful owner of that particular copy can resell or transfer what he bought without infringing the copyright – the copyright owner can no longer use the copyright to control the resale of that particular copy.  This copyright limitation has become known as the “First Sale Doctrine.”

A quirk in copyright law arose because the Copyright Act has a provision that prevents importation of a copyrighted work into the U.S. without the copyright owner’s permission.  (17 U.S.C. 602(a)(1)).  This ability of the copyright owner to prohibit importation seemed to conflict with the First Sale Doctrine when a copy is first sold outside of the United States.

In the 1998 decision Quality King Distributors, Inc. v. L’Anza Research, Int’l, Inc., the Supreme Court held that a copyrighted product manufactured in the U.S., but first sold in a foreign country, was subject to the First Sale Doctrine.  The result was that the copyright owner could not prohibit importation of the copyrighted product into the U.S.  But the question remained whether the First Sale Doctrine also applied to copyrighted works that were both manufactured and first sold outside the U.S.

In March 2013 the Supreme Court answered the question by applying the First Sale Doctrine regardless of where the copyrighted work is manufactured or first sold.  In Kirtsaeng dba Bluechristine99 v. John Wiley & Sons, Inc., the products involved were textbooks manufactured and first sold in Thailand by the copyright owner, then later imported into the U.S. for resale without the copyright owner’s permission.   In a split decision, the Supreme Court held that the Copyright Act requires that the First Sale Doctrine applies to authentic, unaltered products that were lawfully manufactured and first sold by the copyright owner in a foreign country as well as in the U.S.

The Kirtsaeng decision provides no protection for sale of modified, adulterated, pirated or counterfeit copies, regardless of where they were made or sold.  Nor does it insulate parties from participation in fraud, breach of contract, unfair competition or other wrongful acts that are independent of copyright protections.  Conkle, Kremer & Engel has long recommended that its clients take a multi-faceted approach to preventing and remedying product diversion and counterfeiting, so they are able to effectively address the problem no matter where and how the misconduct occurs.

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Deal done? Maybe Not, if it’s a Copyright Sale

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Copyright ownership sales are generally controlled by ordinary state contract laws, but there are some limits when dealing with an agent of the copyright owner. In the recent case of MVP Entertainment v. Frost, a film producer offered to purchase the movie rights to author Mark Frost’s book, “The Match: The Day the Game of Golf Changed Forever.” The purchaser dealt with the attorney for the owner. In response to an email by the purchaser offering purchase terms, the attorney replied by email, “done . . . thanks!” Under many state laws that might have been enough to transfer ownership, but not so under copyright law.

The Copyright Act (17 U.S.C. § 204(a)) says that “transfer of copyright ownership . . . is not valid unless . . . a note or memorandum of the transfer, is in writing and signed by the owner of the rights conveyed or such owner’s duly authorized agent.” An attorney is an agent, so the attorney’s email saying the deal is “done” should be enough, shouldn’t it? Not quite, said the California Court of Appeal in MVP, because the owner disputed that his attorney had the owner’s actual authority to sell the copyright. In other words, the attorney was not the “owner’s duly authorized agent” for that purpose.

But the purchaser claimed it was led to believe that the attorney had authority, which is a theory known as “ostensible agency.” Under California law, a property owner can be bound by the acts of another person (the “ostensible agent”) whom the owner “intentionally or by want of ordinary care, causes or allows” another (the purchaser) to believe had the owner’s authority. Contracts can be created by “ostensible agents” in many circumstances. But the MVP decision held that copyright transfers cannot be done by “ostensible agents.” Copyright law requires that the purchaser deal directly with the owner, or with an agent expressly and “duly authorized” to act on behalf of the owner, with the goal that copyright interests are not inadvertently given and there is no uncertainty about what rights were transferred.

The takeaway from MVP is, when buying copyrights it’s wise to get the owner’s signature.  CK&E lawyers routinely guide clients through transfers and licensing of intellectual property including copyrights, trademarks and patent rights. As well, when a client’s rights in intellectual property are threatened, CK&E lawyers respond with effective enforcement.

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