Industries Represented – Conkle, Kremer & Engel, PLC

California Attorney General Reports Businesses Paid $17 Million to Settle Private Prop 65 Cases in 2013

And that’s the “good news” – in 2012 it was $20 million.

The California Attorney General’s Office recently released its annual report of Proposition 65 settlements. The report confirms what most businesses are already painfully aware: Proposition 65 continues to be a thriving business for private Proposition 65 plaintiffs and their lawyers, who make millions of dollars in the name of the “public interest.”

While private plaintiffs did not reap as much in 2013 as they did in 2012 ($20 million), they did manage to collect $17 million. That represents the third largest haul for bounty hunters since 2000, when the Attorney General’s Office began collecting the data and publishing annual reports.net

The summary reveals that in 2013 alone, private Proposition 65 plaintiffs acting in the “public interest” and their lawyers entered into a whopping 350 private settlements or consent judgments with businesses alleged to be in violation of Proposition 65, and collected $16,812,396. In contrast, the Attorney General and local District Attorney each filed a single action.

Proposition 65 requires the State of California to publish a list of chemicals known to cause cancer, birth defects or other reproductive harm. Businesses are required to warn consumers before exposing them to any one of more than 800 listed chemicals, by either labeling or posting a notice. If a business does not comply, it can be liable for substantial civil penalties of up to $2,500 per day.

Proposition 65 has become a disturbingly lucrative operation for private enforcers, frequently called “bounty hunters,” who serve dozens if not hundreds of Notices of Violation on unsuspecting businesses. These bounty hunters threaten to sue unless they are paid off in private settlements. If a private settlement cannot be reached, they proceed with a lawsuit and try to force a settlement to avoid the cost of defense.

Proposition 65 allows private enforcers to keep 25 percent of all civil penalties collected, with the remaining 75 percent going to the California Office of Environmental Health Hazard Assessment (OEHHA). In addition, private enforcers pocket 100% of so-called payments in lieu of penalties, or PILPs. Whereas OEHHA would receive 75% of monies designated as civil penalties, OEHHA does not receive any portion of monies designated as PILPs. Finally and most significantly, private enforcers’ lawyers are entitled to reasonable attorneys’ fees and costs under the State’s private attorney general doctrine.

The 2013 report shows that only one-tenth of all monies collected by private enforcers went to the State of California. The rest of the money went to the bounty hunters and their lawyers:

$12,426,052, or 74%, went directly to the private enforcers’ lawyers as attorneys’ fees and costs
$596,977.25, or 3.6%, went directly to private-enforcer plaintiffs
$1,998,435, or 12%, went indirectly to private-enforcer plaintiffs as a payment in lieu of penalty
$1,790,931.75, or 11%, went to OEHHA.

The report also shows continued aggressive activity by a handful of Proposition 65 private enforcers. At the top of the list are:

Center for Environmental Health (represented by Lexington Law Group) with 62 settlements or consent judgments totaling more than $3.3 million
Russell Brimer (represented by Chanler Group) with 60 settlements or consent judgments totaling more than $2.4 million
Peter Englander (represented by Chanler Group) with 46 settlements or consent judgments totaling more than $1.6 million
John Moore (represented by Chanler Group) with 41 settlements or consent judgments totaling more than $2 million
Environmental Research Center (represented by various law firms including Law Office of Karen A. Evans and Michael Freund & Associates) with 34 settlements or consent judgments totaling more than $2.8 million
Consumer Advocacy Group (represented by Yeroushalmi & Associates) with 25 settlements or consent judgments totaling more than $1.3 million

The Prop 65 outlook for businesses in 2014 does not look much better. In particular, the June 2013 listing of cocamide DEA, a common ingredient in beauty and personal care products, such as liquid soaps and shampoos, has spawned dozens of lawsuits and hundreds of businesses have been named as defendants. Numerous settlements have already been approved by the Alameda Superior Court this year, leading to speculation that the total settlements in 2014 will likely exceed the total settlements in 2013.

Conkle, Kremer & Engel routinely represents businesses against Proposition 65 claims and lawsuits brought by private enforcers, as well as counsels businesses on compliance with Proposition 65 in order to avoid becoming a future target of private enforcers.

30
JUN

Beauty Industry, California Trade Regulations, Manufacturing, Personal Care Products, Proposition 65, Regulatory Compliance, Unfair Competition

PILP, Prop 65, Proposition 65, Proposition 65 Reform

The Conkle Firm Helps MANA Evict Domain Name Cybersquatter

Posted by: Eric S. Engel

What do you do when someone else has taken your trademark and used it in an Internet domain name? Just accept it, even if they’re offering competing products and services? Do you have to go to court and file a trademark infringement lawsuit? Fortunately, these questions all have the same answer: No. You don’t have to accept it, and there are faster and less expensive ways to force the cybersquatter to give up the infringing domain name.

CK&E recently demonstrated this by helping its client, the Manufacturers’ Agents National Association (commonly known as MANA) defeat a cybersquatter and force the squatter to transfer the “manaonline.com” domain name to MANA.

All domains ending in a generic Top Level Domain (gTLD) – such as .com, .org or .net – are automatically subject to ICANN’s Uniform Domain Name Dispute Resolution Policy, an streamlined arbitration process referred to as UDRP. UDRP provides an efficient method for a trademark owner to resolve its rights to a domain name that uses a substantial part of the trademark or is otherwise confusingly similar to the trademark. Instead of going to court to sue for trademark infringement, the business owner can file a complaint online with one of several authorized arbitration providers, such as the National Arbitration Forum (NAF) or the Arbitration and Mediation Center of the World Intellectual Property Organization (WIPO). Through a process that is conducted entirely online, these arbitration providers are empowered to force a domain name registrar to transfer a domain to its rightful owner. This is especially useful if the cybersquatter is in some remote offshore location and cannot be reached by regular legal process, because the domain name registrars are always available and can be directed to transfer the domain name.

To force the transfer of a domain through UDRP, the business owner must show: (1) the domain name is confusingly similar to a trademark owned by the business; (2) the current registrant has no rights or legitimate interests in the domain name; and (3) the domain name has been registered and is being used in bad faith.

In the case in which CK&E helped MANA, another company called “Dvlpmnt Marketing” based out of Saint Kitts and Nevis, in the Caribbean, had registered the “manaonline.com” domain name – which was essentially identical to MANA’s “manaonline.org” Dvlpmnt had used the domain name to park a webpage featuring “pay-per-click” links to other websites offering services competing with those offered by MANA. Dvlpmnt owns tens of thousands of domains, and has been the subject of several NAF and WIPO proceedings in the past.

CK&E attorney Zachary Page initiated a Complaint with NAF on behalf of MANA, charging Dvlpmnt with cybersquatting by registering and maintaining in bad faith, and with no legitimate rights, the manaonline.com domain name that was confusingly similar to MANA, whose genuine website is found at manaonline.org. The different gTLD extensions, .com and .org, are legally insignificant in the UDRP process – effectively, the domain names were regarded as identical. After the UDRP hearing, the NAF Panel held:

“Considering the totality of the circumstances present here—including the similarity between the disputed domain name and Complainant’s domain name, and the content of the website to which the disputed domain name resolves—the Panel infers that Respondent was aware of Complainant when it registered the domain name and that Respondent is using the domain name in a manner intended to exploit confusion with Complainant’s website and service mark. These inferences are indicative of bad faith.”

Manufacturers’ Agents National Association v. Domain Administrator / DVLPMNT MARKETING, INC., National Arbitration Forum Claim Number FA1404001553434

A successful UDRP claimant generally has a choice to have the domain registration cancelled or to have the domain name transferred to the claimant. It is almost always better to have the domain name transferred, so that it cannot be taken by another cybersquatter in the future. CK&E is proud to have helped its client, MANA, successfully force the cybersquatter to transfer the manaonline.com domain name to MANA.

17
JUN

Domain Names, Intellectual Property, Manufacturing, Sales, Sales Commissions, Technology, Trademarks, Unfair Competition

cybsersquatter, domain name squatters, domain names, Dvlpmnt Marketing, gTLDs, internet, MANA, MANAonline

Can Containers be Copyrighted?

Posted by: Eric S. Engel

There are some containers that have achieved trademark status. Among the most famous are the Coca-Cola bottle and the OPI nail lacquer bottle. Ownership of a trademark in container design requires a solid showing of secondary meaning, which generally takes considerable time, sales volume, and promotional efforts. Ownership of a copyright in a new creative work, on the other hand, is automatic. Copyright registration is usually quick and inexpensive.

So why not protect a container design through copyright? Because a container design that is functional is not copyrightable.

According to the Ninth Circuit Court of Appeals in its recent decision of Inhale, Inc. v. Starbuzz Tobacco, Inc., a case about a copyright claim on a hookah water pipe, copyright protection is not available for functional features of a useful article like a bottle or a chair. As a “useful article,” the shape of a container (including a hookah pipe) is copyrightable “only if, and only to the extent that, [it] incorporates . . . sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the container.” 17 U.S.C. § 101.

Courts have said that the non-functional, sculptural features must be “conceptually” or “physically” separable from the container in order to be protected by copyright. “Physically separable” is an easy concept – a printed label or a fancy emblem that is applied to the container can usually be protected by copyright, because it can exist separately from the container. “Conceptually separate” is more esoteric. The Ninth Circuit held that “the shape of a container is not independent of the container’s utilitarian function – to hold the contents within its shape – because the shape accomplishes the function.” In other words, as long as the shape of the container merely holds the container’s contents, the shape is not subject to copyright.

The Ninth Circuit left unanswered whether a “ring shape” that is molded into the bottle but does not conform to the interior container might be copyrightable as “conceptually separate” from the functional container. In any event, the Court’s lesson seems to be that, for copyright protection for a container, the copyrighted feature should serve no purpose in holding the contents. Conkle, Kremer & Engel attorneys regularly work with clients to most effectively secure and protect their valuable intellectual property, regardless of whether it’s a traditional trademark, artwork, a fragrance or a container.

10
JUN

Advertising and Labeling, Beauty Industry, Brand Protection, Copyrights, Fashion, Food, Craft Beer and Nutrition, Intellectual Property, Manufacturing, Personal Care Products, Trademarks, Unfair Competition

Containers, Copyright Act, Copyrights, Hookah, Starbuzz

BIR Article Features the Conkle Firm at Cosmoprof Bologna’s California Pavilion

Posted by: Conklelaw

Tireless reporter Mike Nave attended Cosmoprof Bologna in April 2014, and this month published the Beauty Industry Report (BIR) article detailing his observations. BIR featured Conkle, Kremer & Engel’s participation in the California Pavilion. As previously posted in this blog, Cosmoprof Bologna is a preeminent global conference for the personal care products industry, with over 207,000 visitors and 2,450 exhibitors from 69 countries, and participation by manufacturers, distributors and industry organizations. CK&E was proud to be able to assist The California Pavilion, orchestrated by the California Trade Alliance. CK&E joined Beauty Industry Market Access (BIMA) directors Patty Schmucker and Cesar Arellanes, and several graduates of the BIMA program, and was pleased to offer immediate assistance in international distribution and brand protection issues.

4
JUN

Beauty Industry, Brand Protection, Intellectual Property, International Trade, Manufacturing, Personal Care Products, Trademarks

Beauty Industry Market Access, Beauty Industry Report, BIMA, BIR, Cosmoprof, Cosmoprof Bologna

New York Assembly Passes First Ban on Microbeads; California and Other States Expected to Follow

Posted by: H. Kim Sim

Legislators in several states, including California, New York, Illinois, Minnesota, and Ohio, have recently introduced legislation to ban the use of “microplastics” in personal care products. Such “microplastics” are tiny plastic microbeads, defined in the legislation as 5 millimeters or less in all dimensions. They are typically found in personal care products such as hand and body soap, exfoliates, shampoos, toothpastes and face and body scrubs. They are included in products to improve performance, but have been the subject of intense scrutiny because of concern about their environmental impact, including contribution to water pollution. The microbeads are small enough to wash down the drain, but are not being caught by sewage treatment facilities.

On May 5, 2014, the New York State Assembly unanimously passed New York Assembly Bill A08744, the “Microbead-Free Waters Act,” which would prohibit the sale of personal cosmetic products that contain the tiny plastic particles. The bill is now before the New York State Senate; if passed into law, it would take effect January 1, 2016.

California Assembly Bill 1699, introduced February 13, 2014, would similarly prohibit the sale or offer for promotional purposes of any personal care products containing microplastics on or after January 1, 2018. The so-called “Microplastic Nuisance Prevention Law” would impose civil penalties on violators of up to $2,500 per day for each violation in actions brought by the Attorney General or local officials, as well as permit injunctions to be imposed on violators. The bill provides an exemption for products that contain less than 1 part per million (ppm) by weight of microplastic. Like Proposition 65, businesses employing fewer than 10 employees are exempt from compliance.

Conkle, Kremer & Engel monitors the latest developments on legal and regulatory issues affecting the personal care products industry to provide expert guidance to its industry clients.

13
MAY

Beauty Industry, Personal Care Products, Regulatory Compliance

microbeads, microplastics

The Conkle Firm is Featured in April 2014 Beauty Industry Report

Posted by: Conklelaw

Conkle, Kremer & Engel is proud to again be the subject of a feature interview in the industry-leading publication, Beauty Industry Report (BIR). BIR is a monthly 24-page executive newsletter for professionals that focuses on the emerging trends affecting the beauty industry. CK&E’s feature interview assessed the latest legal trends, based on CK&E’s decades of experience in the industry. Topics covered included trademark and brand protection, both international and domestic, regulatory compliance issues such as California’s Proposition 65 and the Safe Cosmetics Act, issues in manufacturer-distributor relationships, and more.

The attached article includes links to topical blog posts and websites referenced in the interview. CK&E wishes to thank BIR’s Mike Nave for taking the initiative to disseminate information about these important industry issues. BIR proved again that working in the beauty industry without reading BIR is like working in finance without reading The Wall Street Journal.

BIR Feature Interview of CK&E

26
APR

Advertising and Labeling, Beauty Industry, Brand Protection, Domain Names, Green Chemistry Initiative, Intellectual Property, International Trade, Personal Care Products, Proposition 65, Regulatory Compliance, Safe Cosmetics Act, Safer Consumer Products Regulations, Trademarks

Beauty Industry Report, BIR, Mike Nave

Smells Like Trademark Registration

Posted by: Conklelaw

Brand owners are increasingly tapping into the powerful realm of olfactory memory by using scent as a brand identifier. Conkle, Kremer & Engel, a pioneer in brand protection strategies, registered one of the only three fragrance trademarks ever on the U.S. Patent and Trademark Office Principal Register. In fact, CK&E registered the first ever U.S. fragrance trademark for personal care products.

Scent can evoke strong emotional reactions and create long-lasting memories, so a signature scent can be a critical element of an overall brand identity. As recently reported in The Los Angeles Times, retail clothing stores and hotels are beginning to use scent diffusers to greet consumers with their custom-made fragrances. Signature scents can also be introduced with products, such as Brazilian designer Melissa’s bubblegum scented plastic shoes or GM’s use of semisweet scented leather in Cadillac automobiles.

While brand owners often focus on traditional trademarks like brand names (word marks and stylized word marks) and logos (design marks), nontraditional trademarks like scent, sound and color may also be eligible for protection. In the United States, a scent mark can be registered as a trademark if it is used as a brand identifier, but only if it is neither functional nor naturally occurring in the goods or services. For example, the scent of elderflower cannot be protected as a trademark for use with perfume, as it would be functional, or for use with elderflower cordial, as it is naturally occurring. However, the scent of elderflower could be used as a trademark with stationery.

The next hurdle to registration on the Principal Register is secondary meaning. A brand owner must show that consumers associate the scent with the source of goods or services through evidence such as extensive use of the scent in commerce, advertising expenditure, affidavits from consumers, or surveys. In order to establish a signature scent as a registrable trademark, it is especially useful to provide evidence of advertising that specifically identifies the scent in connection with the goods or services (e.g., “stationery distinguished by its unique elderflower scent” or “always with our signature fragrance”).

As noted in Gilson on Trademarks, CK&E presented the USPTO with strong evidence that its client’s fragrance mark was not functional when used with hair care products, and CK&E submitted substantial, well-focused evidence of secondary meaning. As signature scents continue to develop as key elements of brand identities, more brand owners will seek trademark protection for their chosen fragrances. Brand owners should consider methods of protecting and enforcing their rights in nontraditional trademarks such as fragrance, color and sound.

21
APR

Advertising and Labeling, Beauty Industry, Brand Protection, Fashion, Intellectual Property, Manufacturing, Personal Care Products, Sales, Technology, Trademarks

Fragrance Trademarks, Nontraditional Trademarks, Olfactory Memory, Scent Trademarks

The Conkle Firm Participates in California Pavilion at Cosmoprof Bologna

Posted by: Conklelaw

CK&E attended Cosmoprof Worldwide in Bologna, Italy, the international professional beauty industry trade show, in April 2014. Cosmoprof Bologna is a preeminent global conference for the personal care products industry, with over 207,000 visitors and 2,450 exhibitors from 69 countries, and participation by manufacturers, distributors and industry organizations. Highlights included the dynamic USA Pavilion and California Pavilion, orchestrated by the California Trade Alliance. CK&E joined Beauty Industry Market Access (BIMA) directors Patty Schmucker and Cesar Arellanes, and several graduates of the BIMA program, as they put into practice the concepts taught at the intense educational program designed for entrepreneurs entering international markets. To learn more about the BIMA program in which CK&E attorneys participated, click here.

As developed in discussions at Cosmoprof, a critical issue for many U.S. exhibitors entering the EU market is the July 2013 Cosmetics Regulation (EU Reg. 1223/2009) that overhauled the European Union’s regulatory landscape for personal care products. The Regulations introduced a number of new requirements, including labeling for nanomaterials such as titanium dioxide, claim verification standards and an EU-wide ban on animal testing. As a brief introduction to the new requirements, the EU distilled the July 2013 Cosmetics Regulation into the simplified infographic shown here.

Under the new Regulation, each manufacturer selling cosmetic products into the EU must designate a person or business entity physically located in the EU that will serve as the manufacturer’s designated “responsible person” for compliance with the Regulation. CK&E has strong working relationships and regularly works with such “responsible persons” who can be engaged to assist businesses seeking to expand into the EU. CK&E is pleased to participate in industry events such as Cosmoprof Bologna and programs such as BIMA, to help U.S. entrepreneurs expand into the EU and to assist foreign manufacturers develop and secure markets for their products in California and throughout the United States.

15
APR

Advertising and Labeling, Beauty Industry, Brand Protection, Intellectual Property, International Trade, Manufacturing, Personal Care Products, Regulatory Compliance, Sales, Trademarks

Beauty Industry Market Access, BIMA, Cosmetics, Cosmoprof, Cosmoprof Bologna, Italy, Nanomaterials, Titanium Dioxide

The Conkle Firm Teaches International Entrepreneurs in BIMA Program

Posted by: Conklelaw

Conkle, Kremer & Engel attorney Mark Kremer has been honored to participate in and contribute to the revolutionary Beauty Industry Market Access (BIMA) program through the Center for International Trade Development (CITD). The BIMA program was developed and is led by beauty industry guru Patty Schmucker and international trade expert Cesar Arellanes, the Director of CITD in Long Beach. BIMA is a five week intensive international trade and business education program taught by leading health and beauty industry experts. BIMA participants focus on key program principles distinct to conducting business overseas, receive bi-monthly objectives for assessing their business, and ultimately produce an export growth plan exclusive to their business. Participants also have access to upcoming trade missions to the world’s largest emerging market beauty trade shows – effective venues for executing learned principles and business plans.

Mark contributes to the BIMA educational program by teaching modules on domestic and foreign intellectual property protection, domestic regulatory compliance, and international distribution agreements. Participants are particularly interested in cost-effective methods of protecting their intellectual property internationally, such as international trademark registrations through the Madrid System. The Madrid System offers a centralized application process for trademark registration in over 90 countries based on a brand owner’s domestic application or registration. Participants are also interested in CK&E’s practical approach to domestic regulatory compliance, including California’s evolving green chemistry initiative, Safe Cosmetics Act and Proposition 65. Participants have also benefited from CK&E’s tips for forging fruitful business relationships with distributors, based on decades of experience representing clients in the personal care products industry.

CK&E will join Patty Schmucker and several graduates of the BIMA educational program to Cosmoprof Worldwide in Bologna in April 2014. Mark looks forward to the next BIMA session, which begins on June 26, 2014. Click for further information about joining the BIMA program: BIMA_Summer-Fall_2014

22
MAR

Beauty Industry, Brand Protection, California Organic Products Act, California Trade Regulations, Copyrights, Intellectual Property, International Trade, Personal Care Products, Proposition 65, Regulatory Compliance, Safe Cosmetics Act, Safer Consumer Products Regulations, Trademarks, Unfair Competition

Beauty Industry Market Access, BIMA, Center for International Trade Development, CITD, Cosmoprof Bologna, Madrid System

gTLDs are Already Causing Confusion – Just Ask Wayne Knight and TMZ

Posted by: Eric S. Engel

UPDATED July 15, 2015

Actor Wayne Knight (best known as Newman on Seinfeld) was forced to tweet his “proof of life” on Twitter, after a website that uses the domain name TMZ.today reported that he was killed in a traffic accident and the story went viral. It has been reported that many users credited the story of the death of Wayne Knight because it was circulated with attribution to the website TMZ.today. TMZ is well known as a major source of real entertainment news and celebrity gossip. TMZ uses the domain name TMZ.com, but the domain name TMZ.today links to an entirely different website called ebuzzd.com that is actually an unrelated, deliberately fake news website – a website dedicated to hoaxes.

Wayne Knight’s concerns aside, this story presents important lessons for trademark holders and domain name registrants: New generic Top Level Domains (gTLDs) are here and must be reckoned with. TMZ.com is not TMZ.today, but it’s a good bet that a substantial portion of the consuming public does not know that. Will the consuming public realize that your company website “XYZ.com” is not affiliated with XYZ.Today, XYZ.News, XYZ.Info, XYZ.Web, XYZ.Blog, XYZ.Corp, XYZ.Inc, XYZ.London, XYZ.Charity or XYZ.Porn, or any of the 600+ other non-branded gTLDs that are available now and coming online within the next two years?

For a trademark holder, it can be a daunting prospect to try to police that many possible confusing domain names, but there are cost-effective brand protection strategies and solutions. They begin with recognizing the issue, and making sure that you have taken all appropriate steps to protect your trademarks and domain names. The most basic step is to obtain U.S. trademark registrations for your important trademarks – especially for your primary brand. That is the key to many of the solutions that are offered at http://trademark-clearinghouse.com/, the administrative service established by ICANN to help control issuance of gTLDs. Then, set a strategy that includes monitoring the “Sunrise Periods,” during which registered trademark holders can take the most efficient steps to protect against spurious registrations of confusingly similar domain names with the new gTLDs.

The best and most cost-effective methods of protection against gTLD infringers and domain name cybersquatters will be discussed in future blog posts. Available methods include preemptive registration, blocking and various forms of policing. Conkle, Kremer & Engel routinely guides its clients to protect their valuable intellectual property and domain names, including taking proactive steps to address the new threats to trademarks posed by gTLDs. Contact us if you have questions and need assistance.

UPDATE July 15, 2015: Another example of misuse of gTLD domain extensions happened again and demonstrates that real money can change hands when gTLD domain name extensions are abused. Twitter stock jumped on July 14, 2015 after what appeared to be the Bloomberg Business website posted a news article reporting that Twitter had received a $31 billion buyout offer. The story was fake, but it passed for real news by being posted on a website designed as a counterfeit of the Bloomberg Business website and using a new gTLD: www.bloomberg.market. The real Bloomberg website is actually found at www.bloomberg.com. To help make a convincing appearance, the www.bloomberg.market website included links back to the real www.bloomberg.com website. Enough readers were fooled that Twitter stock price spiked after news of the purported buyout offer was picked up in legitimate media. gTLD confusion may continue to be a problem for trademark holders until they take affirmative steps to limit the possibilities of confusion and abuse.

18
MAR

Banking and Finance, Beauty Industry, Brand Protection, Contracts, Business and Finance, Domain Names, Fashion, Food, Craft Beer and Nutrition, Industries Represented, Intellectual Property, Manufacturing, Real Estate & Construction, Sales, Technology, Trademarks, Unfair Competition

Bloomberg, Global Top Level Domains, gTLDs, ICANN, Top Level Domains, Trademark Clearinghouse, Twitter hoax

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