Planning for Best Practices in Merchandising, Amazon Averts Trademark Infringement

Posted on March 13, 2013 by Sacha Talpur

Could Coca-Cola sue a diner for offering Pepsi to customers who requested Coke?

Clearly not, according to a California federal court that didn’t find any problem with Amazon’s merchandising practices. Multi Time Machine, Inc., (MTM), a watchmaker filed suit against Amazon for displaying competitor’s watches whenever Amazon customers searched for MTM’s.

In this specific case, Amazon does not sell MTM watches. Searching for MTM watches only yields results from competitors instead. Amazon’s merchandising practices implemented various keywords including trademarks into its internal search engine. So whenever a customer searches for a product, the search results not only include the original product (if Amazon sells it), but also competing products alongside it. This practice led MTM to sue Amazon for trademark infringement.

This case stands for the idea that Amazon’s merchandising practice is acceptable in online retail if using other vendors’ trademarks is not likely to confuse consumers. Amazon’s use of the actual MTM trademark was clearly NOT part of the results, instead shown only as verification that Amazon’s internal search engine understood what you were searching for.

This is where clear labeling and context was critically important. In context, it was clear Amazon was merchandising, showing you products similar to those for which you searched. The only thing Amazon could have done further is show a heading that says explicitly: “NONE OF THESE  WATCHES ARE MADE BY MTM.”

The takeaway here is that Amazon developed an intuitive, user-friendly interface with its trademark concerns in mind. By thinking about their potential liabilities earlier, Amazon was able to keep its merchandising practice and search tool intact. As for similar trademark practices, be careful with context and labeling to make sure that whatever you’re selling is clearly marked. Merchandising is OK so long as you do everything you reasonably can to minimize likelihood of confusion about vendors.

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Responsible User Generated Content Management

Posted on March 5, 2013 by Madhu K. Singh

The balance between managing your company’s interest and maintaining the integrity of your user’s intellectual property CAN and SHOULD be a SYMBIOTIC relationship.

Social Media Campaigns, sweepstakes, and crowd sourcing are great ways to solicit ideas, inspire innovation, produce relevant videos, photographs, and testimonials, build user engagement, and cultivate your brand. However, high profile companies, which i’m sure you can think of a few as you read this, have learned the hard way that curating content without clear intentions can be disastrous for the company’s trust with its users and reputation. Rather than waiting until the damage is done, it is critical to take steps NOW to ensure your intent is clear and you convey a message of respect for your user’s proprietary rights.

THREE MAIN POINTS TO CONSIDER

WHEN CURATING USER GENERATED CONTENT

1.  Describe your Intent: Be specific and transparent about how you intend to use the user content to derive commercial value. Whether it be to sell it, curate it to ultimately deliver an end product, or to use it to drive users to the service or application– regardless of how you might derive value out of the content you need to communicate with the users your intent.

2. Set Expectations: Users have an expectation that they will not be exploited. It is critical to your success to explain to the users that you are requesting a license to use their proprietary information for value.  The license should be limited and should coincide with your intent. Be sure to give users the option not to participate or opt out. In addition, a company should reassure its user that it respects their privacy by having a clear and concise privacy policy.

3. Give something of Value.  There is no such thing as a free lunch; and the saying applies here as well. Users are not going to engage unless they are getting something out of the deal. Most user generated activities offer an award for participation. Rules and Regulations are a great way to provide limitations and describe in detail what a user may or may not “win”, how to “win” the award, and what will happen with their content during and after the activity.

Conveying the above points through a solid set of transparent rules, disclaimers, terms, and regulations will help you manage your users and their content.  Being respectful of user contribution will go a long way in maintaining trust and generating new unique users.

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Does your Intern qualify as an unpaid intern?

Posted on January 22, 2013 by Madhu K. Singh

According to a recent article by the New York Times, unpaid internships are proliferating. Given the continuing uncertainty of the economy, this shouldn’t come as a great surprise – it’s hard to beat the allure of free labor. However, employers need to be wary about how they structure any offered internships; otherwise, they could run afoul of federal and state wage and hour laws.

The Wage and Hour Division (WHD) of the Department of Labor (DOL) published a fact sheet in 2010 that outlines the Fair Labor Standards Act’s guidelines for when labor may be exempted from wage and hour laws (Washington’s rules currently mirror the federal rules).  In order for an unpaid internship to comply with federal and state law, it must meet 6 criteria:

  1. Interns have to receive similar training to what they might get in school. This means that they shouldn’t be performing routine or regularly recurring work, and the business shouldn’t be dependent on the intern’s work. Even if the intern is benefitting from the experience, if the intern is performing standard operations of the business, the intern may be entitled to compensation.
  2. The training must be for the benefit of the trainee.
  3. Interns can’t displace regular employees. If, without hiring the intern, the employer would have hired additional employees or required existing staff to work additional hours, the intern would likely be classified as an employee and entitled to compensation. For example, job shadowing, where the intern learns under close supervision, but doesn’t really do any actual work, would be more likely to be considered an educational experience.
  4. The internship doesn’t immediately benefit the employer’s business (and may even impede it).
  5. Interns aren’t necessarily entitled to a job for participating in the internship. The internship should be for a fixed duration, and internships shouldn’t be used as a trial period prior to employment.
  6. Interns must understand that they aren’t entitled to compensation.

The 6-part test, a remnant of a 1947 case regarding exemptions from FLSA for workplace training programs (Walling v. Portland Terminal Co., 330 U.S. 148 (1947)), has yet to be further tested in court. The WHD has provided some guidance via “opinion letters“, but this guidance hasn’t been very definitive.  Just providing school credit doesn’t appear to be sufficient, and the amount of supervision appears to matter. Further, just because the internship is part-time, and therefore doesn’t displace full-time employees, won’t overcome the fact that the intern is performing routine work and thus assuming a role as regular staff.

This lack of clear guidance, however, may be in for a change.  2 private suits have been filed against the film and publishing industries since last September by interns claiming that they should have been paid.  Whether the courts will help to clarify the issue or muddle things further, however, remains to be seen.

 

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Does the Seattle Paid Sick/Safe Time Ordinance Apply to Your Business?

Posted on September 10, 2012 by Sacha Talpur

All employers with employees working in Seattle, even those who only work in Seattle occasionally, need to read-up on Seattle’s Paid Sick/Safe Time ordinance (PSST for short). If PSST applies to your business, it establishes minimum standards for paid sick leave and safe time for most of your Seattle employees.

These minimum standards do not apply to employers uniformly across the board. Instead, degree of compliance with PSST varies based on a 3-tier system corresponding to an employer’s total number of “full-time equivalent” employees.

This full-time equivalent employees concept can be confusing and calculating the total number is the tricky part. Basically, to arrive at the number of your full-time equivalent employees, factor in all hours worked by employees in a preceding year and divide by the hours amounting to work performed by 1 full-time employee.

I thought it would be helpful to visualize what is meant by full-time equivalent along with basic steps for determining PSST compliance. Please feel free to pass around the cheat sheet below, your feedback is welcomed as well.

Before you examine the cheat sheet below and the subsequent PSST links, there are two crucial pieces of information that I need to clarify.

  1. The term “full-time equivalent employee” does not interchangeably mean or equal “full-time employee“.
  2. PSST only applies to employees working in Seattle while working in Seattle, but to determine compliance an employer must factor in all of its employees even those who work outside of Seattle.

Resources and Additional Information

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Social Purpose Corporation, Maximizing Sustainable Business in Washington State

Posted on August 24, 2012 by Sacha Talpur

Social Purpose CorporationIn Washington State, being socially conscious doesn’t mean choosing between doing good and doing good business.

Incorporating or reorganizing as a social purpose corporation (SPC) allows socially conscious businesses greater flexibility to support social and environmental goals.

What makes this emerging corporate entity unique is that maximizing the financial bottom line isn’t a social purpose corporation’s sole and primary objective.

Potentially as an SPC, a business could more easily go green, help give back to communities, require fair trade practices, invest in their employees, or engage in many other sustainable and social goods.

Required General Social Purpose and Optional Specific Social Purpose
The foundational elemental of all SPCs is the same, ultimately the business purpose must promote the general social purpose mandate. Washington State law states:

“[SPC must] promote positive short-term or long-term effects of, or minimize adverse short-term or long-term effects of, the corporation’s activities upon any or all of

(1) the corporation’s employees, suppliers, or customers;
(2) the local, state, national, or world community; or
(3) the environment.”

This is pretty broad and allows an SPC to the freedom to define and implement its social or environmental goals. In addition to the general social purpose, a corporation can choose to promote one or more specific social purposes. Quite simply, an SPC would need to articulate the specific social purpose in a statement as part of its articles of incorporation.

SPCs and Shareholders

“The mission of this social purpose corporation is not necessarily compatible with and may be contrary to maximizing profits and earnings for shareholders, or maximizing shareholder value in any sale, merger, acquisition, or other similar actions of the corporation.”

Traditionally, a corporation’s duty to its shareholders means means increasing the bottom line above all else. In contrast, the director of an SPC will not incur liability for acting in support of the corporation’s social purpose. Instead, actions intending to promote the corporation’s social purpose are in line with its best interets.

While this alternative may not appeal everyone, an SPC can draw in likeminded investors. For one, the SPC must demonstrate its commitment to social good through transparency.

The SPC must make available an annual social purpose report that details efforts to promote its social purposes and assesses the effectiveness of those efforts. Shareholders are able to monitor and evaluate whether the SPC truly reflects its social purpose as intended.

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Navigating Pinterest and Its Copyright Challenges

Posted on April 4, 2012 by Sacha Talpur

Pinterest Logo

In the 2 years since Pinterest launched itself as an invite-only social bookmarking service, the size of its user base and web traffic have made Pinterest into a social network heavy weight. Consequently, we need to understand how Pinterest handles third-party intellectual property. In relation to such content, in this post we discuss how is used on the website, Pinterest’s relevant policies towards such content, and what options are available to rights holders.

How It Works

Pinterest has been categorized as a virtual pinboard or image-based social bookmarking system. However, in a lot of ways Pinterest functions more similarly to the microblogging service Tumblr as opposed to a website like del.icio.us. Users can upload or link to media content (i.e. images and videos), and then organize and tag the content based on a category of interest. Other users can follow, like, or re-link the content.

Similar to Facebook or Twitter’s newsfeed, users can follow content streams or lookup certain categories of content based on how its tagged. Clicking through the content may credit or link back to the original source, but that depends on the user to do so.

Terms of Use and User-Submitted Content

Pinterest’s terms of use and related policies are under a lot of heat of late. While Cold Brew Labs, Inc., the company that provides Pinterest, does not claims any ownership rights in user-submitted content, it does retain a broad license to use such content.

“…[Y]ou hereby grant to Cold Brew Labs a worldwide, irrevocable, perpetual, non-exclusive, transferable, royalty-free license, with the right to sublicense, to use, copy, adapt, modify, distribute, license, sell, transfer, publicly display, publicly perform, transmit, stream, broadcast, access, view, and otherwise exploit such Member Content only on, through or by means of the Site, Application or Services.”

Claiming such licensing rights is typical of social networking services. However, problematically, Pinterest seeks to retain a license that is irrevocable and perpetual. The license will not expire once a user removes submitted content or deletes his or her account. Pinterest further explains this in the following provision:

“Following termination or deactivation of your account, or if you remove any User Content from your account or your boards, Pinterest may retain your User Content for a commercially reasonable period of time for backup, archival, or audit purposes. Furthermore, Pinterest and other Users may retain and continue to display, reproduce, re-pin, modify, re-arrange, and distribute any of your User Content that other Users have re-pinned to their own boards or which you have posted to public or semi-public areas of the Service.”

Options Available to Rights Holders

Legally, content owners and rights holders can scour Pinterest regularly and submit DMCA takedown notices to Pinterest directly or its web host, Amazon Web Services (for more information on issuing alleged infringement complaints, please see our past post here). Although time consuming, this is the legal option available to rights holders. Also, follow this link to Pinterest’s page for alleging copyright infringement and submitting DMCA takedown notices.

Another available option is for content owners and right holders to preempt any potential infringement by joining Pinterest and maintain an account. The goal is to establish some control over how the content is displayed. A rights holder can upload the content and ensure that it has proper attribution, tags, watermarks, and website links back to them or their business. That way any re-linking of the material will anchor back to the original content owner and allow other users to see the owner’s information (i.e. website, where to purchase, etc.). The added benefit is gauging trends and the popularity of one’s content through the responses of other users.

This option has its inherent risks along with the broad licensing rights issue. If rights holders go this route, they should keep in mind that Pinterest’s terms of use discourage soliciting and self-promotion. Like most social media, Pinterest is better suited to organic interactions as opposed to solely treating it as marketing vehicle. Also, rights holders should avoid re-pinning content submitted by other users where the source is unknown. It’s better to seek permission or collaborate with other content owners interest. Lastly, rights holders should regularly review Pinterest’s terms of use, which are likely to be updated again as the service continues to grow.

 

Disclaimer
The content of this blog is for informational purposes only and does not constitute legal advice. This author, website, and MK Singh Law Office make no representations as to accuracy, completeness, currentness, suitability, or validity of any information on this site and will not be liable for any errors, omissions, or delays in this information or any losses, injuries, or damages arising from its display or use. All information is provided on an as-is basis.

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Crowdfunding Act: What could it mean for the Entrepreneur or Startup?

Posted on March 23, 2012 by Madhu K. Singh

The Crowdfund Act is an amended version of the JOBS ACT that will permit the SEC to allow for certain types of investments by individuals who don’t normally qualify as qualified investors under the SEC to make investments through SEC Approved websites. The Act has successfully passed both the House and the Senate. There is a long road ahead for actually enacting the bill but its allowances could be huge for Entrepreneurs and Startups.

In short, the bill will allow entrepreneurs to raise up to one million ($1,000,000) dollars per year through a special SEC registration for crowdfunding. This means that a regular person who normally doesn’t qualify as an Angel Investor will have the opportunity to invest in private entities. Investors who have an annual income of less than $100,000 will be able to invest up to $2,000 or 5% of their income. Investors who have income of more than $100,000 will be able to invest up to $100,000 or 10% of their income.

Stay tuned for more updates.

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SOPA and PIPA: Breaking Down the Bills and Possible Affects on Internet Piracy

Posted on January 20, 2012 by Sacha Talpur

With the recent Internet-based blackout by big names in protest of the two bills, it’s worth going over the proposed law and its potential impact on online piracy.

Targeting Piracy With Digital Millennium Copyright Act (DMCA)

The current mechanism for addressing internet piracy utilizes takedown notices through the Digital Millennium Copyright Act (DMCA). This allows rights holders to ask for the removal of specific infringing content. Generally, this approach narrows itself to specified content and it recognizes that online service providers may not be culpable for the actions of their users.

Most notably, under § 512 of the DMCA service providers hosting the infringing content may be exempt from liability upon meeting certain requirements. This safe harbor applies if the content host:

  • Lacks actual knowledge of infringing use; or
  • Lacks awareness of facts or circumstances that make infringing use apparent; or
  • Removes or disables access to infringing material upon knowledge or awareness; and
  • Informs users of its copyright infringement policy; and
  • Complies in good faith with the takedown notice; and
  • Does not receive a direct financial benefit from infringing use if it has the right and ability  to control such activity.

Targeting Piracy Through Stop Online Piracy Act (SOPA) and Protect IP Act (PIPA)

SOPA is the House bill and PIPA is the Senate version. Both seek to address Internet piracy differently from the DMCA approach. Instead of content removal and focusing on users, the bills propose targeting websites. This will widen the net beyond safe harbor such that content hosts must be more vigilant and self-police.

In relevant portion, under SOPA the Attorney General may take action against a website if at least a portion of it is directed to the U.S. and is used by users within the United States; offering goods or services in a manner that engages in, enables, or facilitates copyright infringement; or takes steps to avoid confirming a high probability of infringing use. In addition, SOPA also targets foreign websites or portion of such sites availing themselves to the U.S. that commit or facilitate infringing use or trafficking of counterfeit goods or services.

Upon a website allegedly falling under the aforementioned criteria, notified payment network providers (like credit card companies and PayPal) and internet advertising services would have 5 days within delivery of notification to suspend any services providing financial support to the website. Furthermore under SOPA, notified internet search engines have 5 days within delivery of notification to remove direct links to an allegedly infringing foreign website or a portion of such a site.

As of January 18, due to mounting pressure, legislators scrapped SOPA’s requirements for ISPs to block the domains for websites allegedly found in violation. Similarly, legislators are reconsidering this issue in regards to PIPA, which is quite similar to SOPA in it’s aim and enforcement measures. It specifically acts as a tool for rights holders to target foreign “rogue” websites. Like SOPA, measures include sending notices to suspend Internet financial services and transactions, and removal of direct links.

The Division Amongst Companies

Some of the biggest support for the bills comes from U.S. entertainment content providers who would be able seek enforcement against piracy by foreign websites, which generally remain outside U.S. jurisdiction.  The proposed bills would offer rights holders more options in terms of enforcement measures. Also, extending beyond removal of specific content, the measures would ostensibly throttle foreign “rogue” websites dedicated overall to piracy.

Part of the the opposition is comprised of U.S. tech and social media companies because Internet-based businesses will have to increase policing of suspected infringing use, and also comply with enforcement measures against alleged violating websites. Additionally, investors of Internet startups (such as these 55 venture capitalists in this letter) have expressed concern that enacting such measures will stymy innovation and growth, and be cost-prohibitive for legitimate ventures.

See below for links to the text
  • H.R. 3261: Stop Online Piracy Act
  • S. 968: Preventing Real Online Threat to Economic Creativity and Theft of Intellectual Property Act of 2011


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    Effective Date 2012: Local and Federal Legislation Changes and Extensions

    Posted on January 11, 2012 by Sacha Talpur

    With the New Year in full swing, it’s a good time to consider new laws that will take effect in 2012 (and to be reminded of some that remain in effect).

    • Effect of Washington State’s new liquor law on local restaurants, bars, and craft distilleries.
    • The annual adjustment of Washington’s minimum wage.
    • New employment-related changes in Seattle.
    • Requirement to post employee rights poster.
    • Extension of tax rate for long-term capital gains and qualified dividends, along with a brief explanation of those terms.

     
    Continue reading →

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