Mary Siceloff

Unless you have been living under a rock for the last week, you know who Carli Lloyd is. If, however, you do not, she is the reigning World Cup MVP for Team USA. On Sunday, in perhaps the most astonishing World Cup performance of all time, Lloyd scored a hat trick in just the 16^th minute of the game, and propelled Team USA to its third Women’s World Cup championship. You may be wondering, how is this related to intellectual property, and I promise you, I am getting there.

After Lloyd scored her second goal in the first five minutes of Sunday’s World Cup final, her official website’s server crashed because it was getting so much traffic. Just eleven minutes later, Lloyd scored her third goal and transitioned into a household name. During the game alone, Lloyd gained 50,000 Twitter followers. By now, the connection between this article and intellectual property may be evident: Lloyd’s spike in popularity also caused a spike in the value of her likeness.

Merriam-Webster’s Dictionary defines likeness as (1) a picture of a person; or (2) the quality or state of being alike or similar especially in appearance. California law provides that the appropriation of a person’s name, voice, signature, photograph, or likeness for a commercial use is actionable. Thus, a celebrity is entitled to control the use of their likeness in the commercial context to their financial gain if they so desire. Simply put, Lloyd’s hat trick may have not just cemented her spot in World Cup history, but also greatly increased her wealth.

According to ESPN.com, an autographed card of Lloyd closed out during the game for $177.50, and another card closed out after the game for $218. Prior to the World Cup, Lloyd’s autographed cards sold for $15 to $20. Further, ESPN confirmed that personal appearances by Lloyd would now cost approximately $30,000 for two hours, which was up from $10,000 since the first round of the World Cup, and $15,000 since the U.S. beat Germany in the semifinals.

Prior to this year’s World Cup, Lloyd did not have many endorsement deals aside from Nike and Usana Health Sciences. However, as of last week, she closed a deal to represent Visa through the 2016 Olympics. As you may expect, there will be no shortage of endorsement deals for the superstar now. According to her agent, Josh Weil of William Morris Endeavor, Lloyd is in negotiations with an automobile company and a watch company. Weil said he would like to obtain a deal for Lloyd with a company like AT&T or McDonalds. However, his client has insisted that he put an emphasis on obtaining a deal in the nutrition and training industry. According to Weil, “food, wealth and wellness, is what she is always focused on.” My general inclination is that Lloyd will have no problem obtaining such a deal.

Of course the take away here is simple: score a hat trick in the World Cup Finals, and you too, can get mega endorsement deals. Okay, maybe that isn’t realistic, but what we can all take away from this example is that intellectual property rights can be highly lucrative. As such, corners should not be cut inadequately protecting them through all avenues provided by the law.

By: Intellectual Property Group

Many who enjoy champagne have noticed that their favorite cuvée has quietly changed its label. Many of the world’s bottles of bubbly now indicate that they contain “sparkling wine” when they used to be “champagne.” Those who enjoy Basmati rice or Camembert cheese also have noticed changes to the names of their favorite products. What happened? Why we are now drinking sparkling wine when we used to enjoy champagne, or why we must settle for brie when we previously enjoyed Roquefort?

Although the names have changed, the products probably have not. Rather, many countries have created a system which recognizes and protects the value of the intellectual property associated with the geographic origin of certain products. Functioning like a trademark, a geographical indication can represent valuable intellectual property by identifying a particular region as the source of a certain product. Although not traditionally protected by trademark laws, geographical indications and designations of geographic origin have traditionally been afforded protection by various countries. Long known for its famous varieties of cheese, wine, and, of course, champagne, France introduced one of the first systems designed to protect geographical indications, known as appellation d’origine contrôlée, or the “AOC.” Sacre bleu! The AOC makes it unlawful to manufacture and sell a product under a geographical indication identified by the AOC unless that product complies with a set of strict criteria, including production of AOC-protected products in particular regions.

International agreements recognize designations of geographic origin and geographical indications as valuable intellectual property subject to protection. The World Trade Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights (commonly known as “TRIPS”) provides protection for geographical indications where goods in a region or locality have developed a reputation or other characteristic essentially attributable to its geographic origin. For example, under TRIPS, onions can only be sold as “Maui onions” if they are grown on the Hawaiian island bearing the same name. Likewise, under TRIPS, your favorite sparkling wine can only be called champagne if it originates from that particular region of France.

Acquiring protection of geographical indications is not automatic. Each country that has agreed to the terms of the TRIPS agreement first must permit registration of geographical indications within their borders. Further, all member governments must provide opportunities under their domestic intellectual property laws which permit the owner of a registered geographical indication to prevent the use of trademarks which tend to mislead the public as to the geographical origin of the particular good in question. These governments may refuse to register a trademark, or invalidate an existing trademark, where that mark has a tendency to mislead the public as to the actual origin of the product underlying that mark. Obviously reflecting a strong lobby from the French, Article 23 of the TRIPS agreement provides that all nations covered by the TRIPS agreement must provide the owner of a geographical indication the ability to prevent the use of such indications on wines and spirits which originated outside of the proper geographical region. The grapes of wrath are ripe on the vine – misleading geographical indications relating to wines and spirits must be discontinued, even where there is no evidence of actual confusion among the buyers of these products.

While consuming the contents of the champagne bottles might have been sufficient to avoid the onset of international conflict regarding the fizzy libation, it is the change to the bottles’ labels which has permitted makers of the bubbly to avert international conflict. So, next time you reach for a bottle of Ballatore or Chandon, you can be confident that it’s still the product you’ve become accustomed to, even though it’s not Champagne.

On Monday, the United States Supreme Court upheld the longstanding case law that prohibits a patent owner from receiving royalties after a patent has expired. In Kimble v. Marvel Entertainment, LLC (June 22, 2015) 2015 U.S. LEXIS 4067, the Court ruled in favor of Marvel, the licensee of a patent for a Spiderman web-shooting toy.

The plaintiff, Stephen Kimble, had patented the web-shooting toy. Kimble had talked to Marvel about licensing his patent, but Marvel declined to take a license. Shortly thereafter, Marvel began selling a suspiciously similar web-shooting toy.

Kimble sued Marvel for patent infringement. The parties settled. Pursuant to the settlement, Marvel bought the patent from Kimble for a lump sum and a three-percent royalty on future sells of the toys.

Marvel later filed a declaratory judgement action in the district court, seeking a judgment that Marvel could stop paying Kimble royalties when the patent expired in 2010. Marvel relied on Brulotte v. Thys Co., 379 U.S. 29 (1964), in which the Supreme Court had held that a patent owner could not receive royalty payments after the patent had expired, and that agreements that provided for post-term patent royalties were per se unlawful.

The district court ruled in favor of Marvel, agreeing with Marvel that Brulotte prohibited post-term patent royalties. The Ninth Circuit Court of Appeals affirmed the district court. On appeal to the Supreme Court, Kimble argued that the Court should overrule Brulotte. The Court refused to do so.

First, the Court explained that courts have carefully protected the rights of the public to make and sell inventions that were covered by patents that have expired. Just like unpatentable inventions, inventions whose patents have expired are in the public domain, and the public is free to use them. As set forth in 35 U.S.C. §154, a patent expires twenty years from its filing date. At that time, the patent owner’s rights to exclude others from practicing the invention end. The Court reiterated the Brulotte Court’s conclusion that this rule is consistent with the policy of the patent laws to limit a patent owner’s monopoly to the term of the patent.

Next, the Court acknowledged that Brulotte’s per se rule hinders certain kinds of deals in which parties want to extend royalty payments over a longer period of time to cover the life of the product. As the Court explained, however, there are alternative arrangements that achieve the same result. For example, parties may agree that the licensee will pay a ten percent royalty over the twenty-year life of the patent, but that the payments will be amortized over forty years. Parties may also agree to license other, non-patent rights, such as trade secrets, that do not expire. Parties may enter into joint ventures or other business transactions to share the risks and profits of commercializing a patented product.

Kimble argued that the Court should replace the Brulotte per se rule with a flexible, case-by-case antitrust-type of “rule of reason.” According to Kimble, the analysis should focus on the relevant product market and whether the patent owner has the power to limit competition.

The Court emphasized that the doctrine of stare decisis requires “sticking to some wrong decisions” because it is “more important that the applicable rule of law be settled than that it be settled right,” (quoting a 1932 Supreme Court case). Id. at *15. According to the Court, stare decisis is only relevant when it is used to maintain incorrect decisions, as a correct decision will be affirmed on its merits. Thus, in order to overcome stare decisis, there must be some “special justification” in addition to a previous wrongful decision. Id. The Court noted that stare decisis is even more important when the prior case interprets a statute (as was true with Brulotte, which interpreted the patent term statute, 35 U.S.C. §154), and pointed out that Congress has had many chances to change the law and overrule Brulotte. In fact, Congress has considered legislation that would change the Brulotte rule into a flexible rule similar to the rule of reason that Kimble proposed.

The Court agreed with Marvel that parties may have been relying on Brulotte in entering into licenses. “Overturning Brulotte would thus upset expectations, most so when long-dormant licenses for long-expired patents spring back to life.” Id. at *18. Brulotte’s rule is clean, easy to apply, and provides certainty to parties in licensing. Kimble’s suggested rule of reason would be difficult to apply, be subjective, provide no certainty, and significantly increase the amount and cost of litigation.

Kimble raised two additional arguments in an attempt to convince the Court that there was special justification to overrule Brulotte. First, he argued that Brulotte was based on the incorrect view that post-term patent royalties are anticompetitive. Second, he argued that Brulotte inhibits innovation.

The Court dispensed with both arguments quickly. The Court found that Brulotte was not based on a concern about the anticompetitive effects of post-term patent royalties. The Brulotte Court did not focus on anticompetitive aspects because the goal of the patent law is not to foster competition. As to Kimble’s innovation argument, the Court found that Kimble had not produced any evidence that post-term patent royalties stifled innovation. Brulotte does not preclude inventors from commercializing their inventions; there are several alternatives to post-term royalties that are sufficient incentives to innovate.

The Court’s message was loud and clear: if the law needs to be changed, Congress can do it.

The take-away message? Be careful in drafting patent licenses so that royalties are not being paid after the patent’s expiration unless those payments are specifically tied to something other than the patented invention. The old rule still applies.