By: Stephen C. Pritchard *

The advent of digital media, including online music stores, e-books, and the ability to purchase and/or rent movies with one click, has resulted in an increase in individual copies of such media only previously seen with the invention of the printing press, the 8-track, and the VHS. None of those creations can come close to reaching the explosive upturn in media that the Internet has allowed, however. With this start comes the question of where digital media will go next in terms of growth and expansion.

One of the areas most likely to be successful is that of digital media reselling or lending. This raises major intellectual property issues and will also be of great concern to publishers, movies studios, and recording companies. Amazon and Apple, arguably two of the largest digital media providers, both recently began forays into the area by filing patents to essentially create systems or markets for their customers to resell or swap their digital media.

Amazon’s patent is set to be similar to its current online marketplace for used, tangible media in that it would allow users to exchange or sell their digital media, for a reduced cost. Each user would have two lists, one with items available to other users and another similar to a “wish list,” detailing media the user wishes to obtain. Amazon would earn a commission on that sale, much as eBay does on all of its sales. Each original piece of media would be removed from the seller’s “library” or “collection” and transferred completely to the buyer, thereby ensuring that copyright laws are not infringed.

The patent filed by Apple is very similar to Amazon’s in that it also removes the original file from one user to another, ensuring that there is no copying. Apple seems to have been more specific about proceeds going back to the original copyright owners, with a system based upon time and the number of transfers a piece of media has experienced. It also allows for temporary, partial, and delayed transfers, as well as loans of digital media.

Both of these potential systems may face competition from the largest current digital media resale company, ReDigi. That company allows users to sell their iTunes files by ensuring they were legally bought, then deleting them from the seller’s computers and devices. In this manner, the company claims that there is no copyright infringement because the original work is kept intact, with no copying. However, the company is currently defending a copyright infringement suit brought by Capitol Records and could potentially shut down should the judge rule for the recording company. One major defense argument that has the potential to be applicable to all types of digital media is Section 117 of the Copyright Act. That section essentially says that a new copy of a computer program (the question is whether digital media files meet this definition) is not a new infringement of copyright if its creation is an essential step in using the program in conjunction with a machine. ReDigi argues that an mp3 file is a computer program; thus, liability does not attach to reselling such files.

Whatever the outcome of the current ReDigi litigation or the respective patents filed by Amazon and Apple, it seems certain that digital media is headed towards an era in which prices will decrease for “used” copies, much as they have with tangible books, CDs, and movies. This will have enormous impacts on the major entertainment industry players as they will be forced to rethink their revenue models, but they will certainly innovate, as they have at every other turn.

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* Stephen C. Pritchard is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Science in Information Systems and Operations Management, with minors in Economics and Political Science, from the University of North Carolina at Greensboro. Upon graduation, he intends to practice corporate and entertainment law.

By: Alan Guffy *

On January 11, 2013, young internet prodigy Aaron Swartz hanged himself in his Brooklyn apartment. Swartz may not have the instant name recognition of Steve Jobs or Mark Zuckerburg, but at just twenty-six years old, he had amassed an impressive list of achievements. As a teenager, Swartz worked on RSS, developed new standards to support the semantic web, helped create the news aggregation site Reddit, became a digital activist who founded Watchdog.net and Demand Progress, and actively campaigned against the Stop Online Piracy Act. Many believe, including friends and family, that Aaron’s suicide was caused by an ongoing federal criminal action against him under the Computer Fraud and Abuse Act (CFAA) for “hacking” MIT’s network and downloading millions of academic articles from the scholastic database JSTOR. Swartz allegedly planned to distribute these articles on peer-to-peer networks for free. If convicted, Swartz faced over thirty-five years in federal prison. JSTOR itself did not support the prosecution.

Aaron Swartz’s tragic death has brought popular attention to a movement to reform the CFAA. Activists like the Electronic Frontier Foundation’s Trevor Timm argue that a new generation of tech wunderkinds are being dissuaded from the kinds of fringe activities that allowed industry leaders like Steve Jobs, Bill Gates, and Mark Zuckerberg to get their feet wet before founding companies that changed the world. But what sort of impact could a law that targets hackers really have on the development of technology and new intellectual properties?

The Act, written in 1984, punishes accessing a computer “without authorization or exceeding authorized access.” Prosecutors are now using this language, first drafted at a time when personal computing was in its infancy, to charge individuals for violating private terms of use policies. Earlier this month, Columbia Law’s Professor Tim Wu called the CFAA the worst law in technology because of its potential for abuse. Indeed, the Ninth Circuit has expressly held that “exceeding authorized access” cannot be interpreted as applying to use restrictions, and at least one federal judge considers such an interpretation unconstitutional. Nevertheless, this backlash has done little to dissuade aggressive prosecutors.

Last week, twenty-seven-year-old Andrew “weev” Auernheimer was sentenced to 41 months in prison and over $70,000 in restitution damages for finding a security hole in AT&T’s database systems and releasing over one hundred thousand exposed e-mail addresses of iPad owners to Gawker.com. Granted, Auernheimer is a less sympathetic individual than Swartz, but as critics have pointed out, Auernheimer’s actions ultimately amounted to simply accessing public data, even if that data was intended to be private.

Many laypersons would probably consider this a distinction without a difference. After all, Auernheimer exposed private data that he was never meant to access. However, it is this broad interpretation of the CFAA’s “exceeding authorized access” language that proves Timm’s premise: using the CFAA to prosecute individuals simply for breaching a company’s private terms of service is bad for business. Many who got their start in the tech-world’s hacking gray zone were the creators of some of today’s most iconic tech companies, including Apple’s Steve Jobs, Microsoft’s Bill Gates, Facebook’s Mark Zuckerberg, and Twitter’s Jack Dorsey. They would arguably be felons under this aggressive interpretation of the CFAA. Indeed, such a hard-line approach to hacking exposes even relatively harmless acts to prosecution, and exposure is really all that matters.

Whether or not prosecutors will actually use the CFAA to pursue the next Steve Jobs is beside the point. The growing perception among tech enthusiasts is that if they are not careful, they could end up like Aaron Swartz. This seems to be exactly the reaction federal prosecutors wanted. However, testing boundaries leads to innovation. To punish and vilify pushing those boundaries may curb “hacking,” but it could also stifle creativity and perhaps do unforeseeable harm to the development of new and exciting ideas in technology for years to come.

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* Alan Guffy is an associate attorney at Jenny Horne Law Firm, LLC in Summerville, SC. Alan has earned a J.D. from Wake Forest University School of Law and a Bachelor’s in Economics & History from Wofford College. Alan has been admitted to the North Carolina Bar and his South Carolina Bar admission is pending. He is a member of the Intellectual Property Law sections of the North Carolina Bar Association and the American Bar Association. He is currently developing his practice in intellectual property and technology law.

By: Allison McCowan *

It might not come as a shock that you cannot name your computer company “Apple Computers” because, of course, the name is already trademarked by a huge multibillion dollar international company, Apple. However, the same obvious factor doesn’t ring true for all brand and company names. Surprisingly, if you were planning on launching a line of women’s sportswear with the name “Jesus Couture,” you are going to run into some problems because an Italian pants maker beat you to the “Jesus” name years ago.

In 2007, the U.S. Patent and Trademark Office granted ownership of the word “Jesus” to Jesus Jeans, owned by a publicly-traded Italian company, BasicNet, giving the company exclusive rights in America to sell clothing bearing the name “Jesus.” The Jesus Jeans trademark applies to clothing articles including jackets, vests, shirts, pants and belts. With the exception of the U.S. and the European Union, other countries haven’t been so keen to allow “Jesus” to be trademarked. BasicNet’s attempts to trademark “Jesus” have been turned down in Turkey, Uzbekistan, Tajikistan, Kyrgyzstan, China, Switzerland, Australia, Norway, and Cuba. Britain’s patent office rejected Jesus Jean’s application as “morally offensive to the public.” Britain’s patent office feared that the name “Jesus” would be “debased” if it were used to sell articles of clothing or other household products.

Since its successful trademark application, BasicNet has been crusading against other clothing companies that use the name “Jesus.” BasicNet has filed objections to clothing-lines named “Jesus First,” “Sweet Jesus,” and “Jesus Couture,” and has threatened to sue for damages when met with resistance. More recently, Jesus Jeans filed an objection to a start-up apparel company called “Jesus Surfed.” As crazy as it may sound, attorneys for Jesus Jeans argue that they are just trying to protect their brand, similarly as Nike or Apple would do. However, Jesus Jeans has pledged not to go after churches that attempt to use the “Jesus” brand. According to Domenico Sindico, general counsel for intellectual property at BasicNet, “[i]f somebody – small church or even a big church – wants to use ‘Jesus’ for printing a few T-shirts, we don’t care.” Sindico stated that BasicNet only cares when companies seek to commercialize their “Jesus” products.

In the majority of cases, the “Jesus” clothing competitors will back down and settle with Jesus Jeans. If met with any resistance Jesus Jeans has a history of threatening the opposing company with a lawsuit coupled with a request for damages. Even if a company doesn’t want to back down, it might not be worth the money and headache to fight.

The Jesus Jeans company trademark does not prevent any and every product from bearing the word “Jesus” – it merely ensures that in the area of clothing, all products bearing the word “Jesus” will be sold by only one company, “Jesus Jeans.” It would not stop a new Toyota “Jesus” car or Starbucks “Jesus” coffee from going on sale, but it would bar Toyota or Starbucks from selling T-shirts branded with the product’s name.

This conflict comes at an interesting time. In January 2013, the Benelux Office for Intellectual Property rejected a Dutch artist’s application to trademark the name “Allah.” Teun Castelein submitted his application to register a Gothic-style black-on-white logo for leather goods and clothing. Castelein was shocked to find that his application had been denied, especially considering that “Jesus” and “God” had already been accepted as registered trademarks. A legal consultant for brand protection understood how the Benelux Office for Intellectual Property rejected the bid because “Allah” lacked “a distinctive character,” however “it’s surprising that they chose this reason given that names such as Jesus or God Fix It have been registered as trademarks.”

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* Allison McCowan is a third-year student at Wake Forest University School of Law and is President of the Domestic Violence Advocacy Committee. She holds a Bachelor of Arts in Psychology from Norwich University. Upon graduation in May 2013, Ms. McCowan intends to practice corporate law, commercial law, or alternative entity law in either Delaware or Washington D.C.

By: Lindsey Chessum *

ECONOMIC PROWESS STILL IS A CONCERN OF NATIONAL SECURITY

Recently, there has been a tirade of executive orders and government announcements concerning cyber attacks. All circling back to issues of economic stability and national security.

The concern is that cyber attacks involve theft of trade secrets. Trade secrets include client lists, business models, or product ingredients like the recipe for Coca-Cola. Theft can cost millions or billions of dollars from a single instance leading to layoffs, lost sales, office or factory closures, and even bankruptcy. Essentially businesses lose their competitive edge. The traditional method of espionage was to recruit former or current employees, but cyber attacks are an increasingly real danger.

In regards to national security, Gen. Keith Alexander, the top officer at U.S. Cyber Command, heads 13 teams with the mission of guarding the U.S. in cyberspace. He does not consider trade secret theft or espionage to be acts of war until the intent becomes to “disrupt or destroy the U.S. infrastructure.” This could involve targeting banking institutions, chemical facilities, or water treatment plants. Then a line has been crossed and national security is at stake.

EXECUTIVE ORDER

On February 12, 2013, President Obama signed an executive order titled, Improving Critical Infrastructure Cybersecurity. In brief, the goal is to “increase the volume, timeliness, and quality of cyber threat information.”

There are two major demands on government agencies, amongst a slew of others. One, the Order requires a “Framework” be developed for private companies involving standards and procedures for risk reduction. Catering to businesses, it must be performance based and cost-effective, and the government intends to provide an incentive program. Second, the Order requires a listing of critical infrastructures who could bring about “catastrophic regional or national effects on public health or safety, economic security, or national security” if a cyber attack was successfully executed. Amongst the companies in interest are those operating power grids, telecommunication systems, and banks.

All these efforts are in hopes that private entities will chose to participate in the program, and thereby, receive help and advice on reducing their risk of cyber attack. This will promote greater economic stability and national security.

ADMINISTRATION ANNOUNCEMENT

On February 20, 2013, the White House released a report on proposed strategies for protecting trade secrets of U.S. businesses. It focused on five areas of improvement: diplomatic efforts, industry best practices, domestic law enforcement, domestic legislation, and public awareness. Necessarily, these efforts require the participation of a number of administrative agencies including the departments of Commerce, Defense, Homeland Security, Justice, State, and Treasury.

The Department of Justice has made the investigation and prosecution of trade secret theft a priority, and the Department of Defense will provide education on counterintelligence to certain “cleared industry partners” that work with the U.S. government.

This report came a day after a cyber security firm, Mandiant Corp., publicly accused the Chinese government of heading attacks against at least 141 different organizations since 2006. In a report divulging its research data and discoveries, Mandiant identifies the 2nd Bureau of the People’s Liberation Army as the source of the attacks.

In response to the accusation by Mandiant, a spokesman for the Foreign Ministry of China, Hong Lei, resolutely “denied any involvement,” holding the Chinese 2nd Bureau itself to be a victim of such attacks.

U.S. counterintelligence officials unabashedly declared China to be the world’s largest “perpetrator of economic espionage.” However, when Gen. Alexander was questioned whether U.S. intelligence agencies could determine the exact organizations and companies stealing and profiting from the stolen trade secrets, he simply said there has been increased capabilities in the past years.

IS IT ENOUGH?

In response to the Administrative Announcement, Jason Healey, director of the Atlantic Council’s Statecraft Initiative, applauded efforts to align U.S. trade secret protections with allies, but pointed out that the report did use “the word ‘continue’ more than 20 times,” suggesting ongoing efforts as opposed to new efforts.

For this reason, several persons, including Mr. Healey, have come forward with suggestions for further penalties for cyber piracy.

Mr. Healey recommended that foreign firm officials whose companies benefit from trade secret theft be denied visas and the company be blacklisted from U.S. government contracts.

Peter Toren, a former federal prosecutor, now a computer crimes expert with Weisbrod Matteis & Copley, mentioned a private right of action in federal court against foreign companies committing trade secret theft.

Stewart Baker, a former assistant secretary for the Department of Homeland Security, suggested the government enact punishments similar to those for drug smuggling and trafficking of conflict diamonds. One such punishment effected against companies and individuals involved in cyber piracy would deny them right to operate in the U.S. Another recommendation is to freeze the perpetrators’ funds or seize property in the U.S.

There are plenty of ideas out there, but the question remains whether they would be effective and practical, especially when we are concerned with attacks affecting national security. Most hostile persons attempting to instigate the downfall of the U.S. will not be under U.S. jurisdiction, will not have property in the U.S., and will not expect to be let into the U.S.

There are no easy answers, but collaboration and communication are key to any success. Thus, starting with a tirade of announcements and efforts to share information across the public-private divide seems a good starting point.

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* Lindsey M. Chessum is a second year law student at Wake Forest University School of Law. She has a Bachelor’s in Economics & Business and a Bachelor’s in Philosophy from Westmont College. She spent nearly two years in the stock market industry prior to law school, and upon graduation in 2014, Ms. Chessum plans to return to California to practice business law.

By: Claire Little *

In January, one of the most buzzed about movies at Sundance Film Festival was Escape from Tomorrow, a Disney-themed cinematic thrill ride. The debut film of writer-director Randy Moore, Escape from Tomorrow is a fantasy-horror film that follows a family on vacation at Walt Disney World. But the park is no magical kingdom for the family. Instead, its influence encourages the father’s collapse into insanity. Jim White, the father played by Roy Abramsohn, starts his wild ride after receiving a phone call from his boss announcing that Jim has been laid-off. The call sends him on a downward spiral complete with Jim longing for underage girls, hallucinations involving Disney characters and props, and a feigned suicide attempt at a Disney attraction. The movie culminates with a brainwashing scene underneath Epcot’s Spaceship Earth and Jim’s death at Disney’s Contemporary Resort, a Disney hotel. The movie leaves viewers with the message that perpetual happiness is unattainable, even at Disney World.

To say the least, the picture is critical of Disney’s style of entertainment and an unflattering portrayal of the brand synonymous with family fun. What remains to be seen, over a month since the film’s unveiling, is how, if at all, litigation-loving Disney will react in defense of the “happiest place on earth.”

Though Disney has been quite lenient with admirers who film videos within its parks’ borders, those videos when shared are usually highly favorable portrayals of the park. Unlike such mementos of happy families, a feature-length film of Escape from Tomorrow’s nature is likely to rub the entertainment mogul the wrong way, especially since it was filmed without permission inside Disney’s parks and hotels. But, fear of giving free publicity to the unflattering but not yet widely disseminated film may be holding the mouse back from litigation.

Tim Wu, a professor at Columbia School of Law who specializes in copyright and telecommunication policy, thinks that Disney holds back because it lacks a case. Wu argues that Disney is restrained by fair use since Moore’s film is a social commentary on commercialism and the American family. Wu characterizes Moore’s treatment of Disney World as transformative: “something gruesome and disturbing—a place where, for example, guests are sometimes tasered and have their imaginations purged.”

Who knows what lawsuits the future may bring for the indie filmmaker. For now, it seems that the mouse is ignoring the trap.

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* Claire Little is a second year law student at Wake Forest University School of Law. She holds a Bachelor of Arts in English and Philosophy from Virginia Tech. Upon graduation, Ms. Little plans to pursue intellectual property law.

By: Cory Howard *

Vringo, a company known for the video ringtones it makes for mobile phones, has been a somewhat surprising, yet significant player in the patent battle over search engine software. Most of the patent litigation has been undertaken by I/P Engine, a subsidiary of Vringo, that has often been accused of being a patent troll (acquiring patents primarily for litigious, instead of development, purposes). In late 2012, Vringo sold over 9.6 million shares of stock to raise over $31 million to buy 500 patents, including the two at issue from Nokia. Although the patents were only initially worth $20 million, Vringo’s continued patent litigation strategy has increased the potential for their long-term value to increase. After acquiring patent #6,314,420 (Collaborative/Adaptive Search Engine) and patent #6,775,664 (“Information Filter System and Method for Integrated Content-Based and Collaborative/Adaptive Feedback Queries”), Vringo has successfully brought suit against Google, AOL, Gannett, IAC, and Target. The patents at issue permit the search software to match advertisements to queries run by the search engine’s users. These patents are essential to the ranking and placement of ads in search results and thus, they are integral for search engines’ marketing revenue.

Vringo’s previous suits, while successful, resulted in judgments that, although substantial, were only a fraction of the hundreds of millions that it sought in damages. In addition to these one-time compensatory payments, Vringo also received a judgment for a continuing collection of royalties from Google, a decision that Google is still fighting. Due to the success of the substantive claims, Vringo has brought suit against Microsoft using identical patents and theories. I/P Engine seeks royalties from Microsoft not only for use of the patents by its search engine Bing but also for continuing to use of the patented information after having been warned that their use of the technology was in violation of an already held patent. The second part of I/P Engine’s claim forms the basis for its “willful infringement” claim against Microsoft, which will permit I/P Engine to seek punitive damages in an attempt to avoid the disappointing results of its previous patent litigation.

The possibility that I/P Engine could potentially recover more than the $15 million it received from Google or that it could collect continuing royalties from search engines has again raised fears that patent trolls could stall software development. This has prompted billionaire Mark Cuban to buy a controlling stake in the company for the purpose of hedging against the patent exposure that other companies in which he has investments face. Although patent trolls have been blamed for costing the technology development industry millions and constantly pose a threat to technology giants, if investors such as Cuban are willing to acquire controlling interests in publically-held patent trolls, there could be an end in sight for Vringo and other trolls’ litigious ways.

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* Cory Howard is a second year law student at Wake Forest University School of Law. He holds a Bachelor of Arts in International Affairs. Upon graduation, Mr. Howard plans to pursue a career in corporate law.

By: Lena Mualla *

Russian Railways (RZD) has sued Apple, alleging that Apple has committed trademark infringement. It is seeking 2 million rubles, which is about $66,000. The state-owned railway reported: “RZD intends to protect its intellectual property, especially since the trademark is well known in the Russian Federation.” Basically, the company alleges that by allowing a third-party app developer to use its logo, Apple has committed trademark infringement. The app allows users to calculate their cargo tariff when traveling. The app picture features the RZD logo with a picture of train tracks below it.

With these facts, some observers have predictably responded to the railway’s allegations with skepticism and derision. A recent suit in which the Swiss Federal Railway (SBB) successfully settled with Apple for $21 million, also over trademark infringement, may have served as inspiration. In September, SBB sued Apple, alleging that the clock design used in iOS 6 illegally made use of its own clock image, which appears in Swiss train stations. That clock image was originally designed by Swiss engineer Hans Hilfiker in 1944. Ultimately, Apple paid the lump sum, allowing it to continue using the image in its iPhones and iPads.

A company’s inclination to negotiate a settlement is directly tied to its likelihood of losing in court. So, what are the chances that Apple will settle this one? RZD must show it has a chance of prevailing on its trademark infringement claim. According to Cornell’s Legal Information Institute:

“To prevail on a claim of trademark infringement, a plaintiff must establish that it has a valid mark entitled to protection; and that the defendant used the same or a similar mark in commerce in connection with the sale or advertising of goods or services without the plaintiff’s consent. The plaintiff must also show that defendant’s use of the mark is likely to cause confusion as to the affiliation, connection or association of defendant with plaintiff, or as to the origin, sponsorship, or approval of defendant’s goods, services or commercial activities by plaintiff[…]. Thus, “use,” “in commerce,” and “likelihood of confusion” are three distinct elements necessary to establish a trademark infringment claim.”

There are a few key differences between the SBB case and this one. Most notably, this one concerns a third party vendor rather than Apple itself. That weakens the case RZD has against Apple. Additionally, the Swiss clock design was distinctive, with its block-shaped ticks and the rounded end on one of the three hands. The design had even been honored at museums in New York and London. Apple had used almost the exact same design without modification. The cargo app uses the RZD logo, which is just the letters RZD arranged a certain way, but adds the train track. This reduces the likelihood of confusion among users, which again limits RZD’s chance of succeeding in court.

The Cartier case against Apple more closely resembles this suit. In 2009, the French jeweler and watchmaker sued Apple citing its “Fake Watch” iPhone app, which displayed the time using an image of a Cartier watch. Cartier ended up dropping its suit once Apple removed the apps from its store. Perhaps a similar resolution will be reached in this case. Regardless, it is clear that Cartier, SBB, and RZD will not be the last to file trademark suits against Apple over its apps.

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* Lena Mualla is a third-year law student at Wake Forest University School of Law. She holds a Bachelor of Arts in Government and International Politics from George Mason University. Ms. Mualla was awarded a Fulbright ETA award to teach in Indonesia following undergrad. She is interested in the areas of banking law and IP law.

By: Rebeca Echevarria *

As we envision our future, we like to think that a well-crafted will can ensure that our will is carried out after we die. We rely on the idea that contracts will be upheld after we are gone and plan for the manner in which our estate will be handled after our passing. Like many of us, Ray Charles relied on this idea as well.

Before his passing, Ray Charles entered into a signed agreement with his children that in exchange for half a million dollars each, they would relinquish any future claims on his estate. He then, in his last will and testament, donated the remainder of his estate to the Ray Charles Foundation, including the copyright royalties from approximately sixty of his songs under contract with various labels. Since 1986, the Ray Charles Foundation—then known as the Robinson Foundation for Hearing Disorders—has provided financial support in the area of hearing disorders and supported institutions and organizations for educational purposes. Mr. Charles, who had lost his sight at the age of seven, said that his loss of sight was not a handicap, but that a loss of hearing would certainly have been the worst kind of handicap for him. Mr. Charles wanted to be sure that his foundation would continue helping children with hearing disorders long after he was gone and that his estate would continue to help in that endeavor, but he had not anticipated federal copyright law superseding his will.

Despite the agreements the Charles children all signed, in 2010, seven of Charles’ children served copyright transfer termination notices on various parties with interests in Charles’ works seeking to terminate several copyright transfers that had occurred prior to 1978. By terminating the current third-party rights to a majority of their father’s music, they effectively eliminated the vast royalties the foundation received. The royalties from Ray Charles’ songs served as a large source of the foundation’s income and the terminations will greatly impact the foundation’s efforts in the future.

The foundation sued the Charles children in both federal and state claims that the termination notices were against the Charles estate, and, thus, in violation of the agreements signed with their father, and that the termination notices were both ineffective and untimely. Additionally, the foundation argued that the purpose of the termination provision under the Copyright Act is to ensure that artists who signed bad deals when they were young can have a second chance to profit from their work, but that not only were the royalty terms on the Charles songs fair but also that they had already been increased once during Charles’ lifetime. On January 25, 2013, the U.S. District Court for the Central District of California, Western Division, ruled in favor of the Charles children, validating the termination notices and saying that the rights of an artist of a work or his living family members supersedes other contract law.

The 1976 Copyright Act, which took effect in 1978, allowed for artists to recover rights to their work after 35 years if created in 1978 or later, and to recover rights to works after a maximum of 56 years if created before 1978. After the requisite time period provided in the statute has passed, an artist or his/her living family members need only to officially terminate the agreements that had transferred the works to other parties to regain rights to works. The court held that Federal copyright protection, which derives its power from the Intellectual Property Clause found in the United States Constitution in Article I Section 8, Clause 8, and the congressionally enacted act of 1978 found in section 17 of the United States Code, supersedes other contracted agreements, including a will.

This issue is not a new one. Record companies have long worried that artists would reclaim the rights to their music as soon as they are able, and this recent court decision is just the blow record companies have feared. Both Bob Dylan and Tom Petty recently filed to reclaim rights to several of their songs and that is likely only the beginning. It is unclear if other courts will follow suit or if this case will be appealed, but this decision will undoubtedly open the doors for other courts to address this issue as well.

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* Rebeca Echevarria is a second year law student at Wake Forest University School of Law. She has a Bachelor of Arts in Politics, International Relations, and Biomedical Ethics from Mount Holyoke College. Upon graduation in May 2014, Miss Echevarria intends to practice Intellectual Property and Biotechnology law.

By: Stephen DeGrow *

Cracker Barrel Old Country Store recently launched a new strategy that analysts, quoted by USA Today, say is “a low-risk way to broaden brand awareness, appeal and revenues.” The strategy involves a licensing agreement with Smithfield Foods’ subsidiary John Morrell and entails selling ham, bacon, glazes, and other meats in grocery stores under the Cracker Barrel name.

The agreement follows older attempts by Cracker Barrel to expand beyond its restaurant chain. The company once started an unsuccessful fast food branch and a stand alone retail store. This time around, however, analysts are saying good things about the new strategy.

For starters, because there is a licensing agreement, the strategy places more risk on the producer, Smithfield Foods. The plan also puts Cracker Barrel products in grocery stores far from restaurants, which comes with the added benefit of giving Cracker Barrel access to upper income households that often buy restaurant branded products in supermarkets. Finally, because Cracker Barrel’s grocery products are different from its dinner offerings, the strategy should not hurt restaurant sales.

Despite the possibilities for Cracker Barrel, the company has a super(market) legal hurdle. Kraft Foods, the maker of Cracker Barrel cheese, has sued the company with the hope of stopping the restaurant chain’s expansion. According to filings quoted by Food World News, Kraft wants to protect a “mark [that] has come to represent an enormous amount of good will for Kraft.” (It also happens to be a mark that generates quite a bit of cash. The Cracker Barrel brand brings in around $100 million in annual revenue.)

The lawsuit comes on the heels of Kraft’s new advertising campaign for Cracker Barrel cheese, launched last October. In the ad, judges examine cheese with the delicacy you’d expect from diamond dealers. Not surprisingly, Kraft comes out on top at the end when viewers are reminded that Cracker Barrel won an award at the 2012 World Championship of Cheese.

Kraft’s success with cheese connoisseurs could coincide with a courtroom victory. Legal experts quoted by USA Today say that it “will be a serious fight” and that Kraft “could prevail in this case.” Ultimately, Kraft would like to stop Cracker Barrel Old Country Store from “selling any branded food items beyond its own restaurants, store or website.” But “experts believe the dispute likely will be settled.”

The outcome of the case, if it goes to trial, should be interesting because the brands have the same names but involve separate goods. Despite the product difference, Kraft, according to USA Today, believes that the expansion “threaten[s] to destroy the substantial goodwill that Kraft has created in its Cracker Barrel trademark, and [is likely] to create significant confusion.” Adding further drama to the case is the fact that Cracker Barrel’s partner, Smithfield Foods, competes with Kraft in the billion dollar food industry. (As of February 22, 2013, Smithfield Foods’ market capitalization topped $3 billion, while Kraft Foods Group came in at over $28 billion.)

Moving forward, hopefully the two parties can resolve this dispute quickly without making a big cow out of it.

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*Stephen DeGrow is a second-year student at Wake Forest University School of Law and holds a Bachelor of Arts in Economics from Cornell University.

By: Lindsey Chessum *

CREATE A NEW ACCOUNT

Cisco Systems, Inc. (“Cisco”), one of the largest producers of computer networking equipment, embarked on a campaign in December spending $100 million in hopes of creating a new image. It launched its campaign with a meeting of analysts in New York, quickly followed by a deluge of print materials, webcasts, and commercials. The tagline, “Tomorrow Starts Here.”

This was meant to be a turning point for Cisco. In summer 2012, Cisco’s stock hit a low of $15.12 (compare with low of $15.17 in November 2008), and negative press revolved about the layoff of 1,300 workers. This was Cisco’s coming out after a period of underperformance. This was to be a milestone turning point.

PASSWORD TAKEN

Unfortunately, Cisco ran into some difficulties. East Carolina University (“ECU”) is suing Cisco in federal court for the unauthorized use of “Tomorrow Starts Here.”

ECU’s chancellor stated the university has been using the tagline for ten years. A spokeswoman for Cisco replied with a brief statement voicing surprise, but at this point little more has been said or done by either ECU or Cisco.

The only other source of information is the U.S. Patent and Trademark Office where both ECU and Cisco have trademark filings. According to a USPTO trademark search, ECU’s filing was registered in April 2011. A filing must be approved before the trademark is registered. Then upon registration a trademark becomes enforceable. So, on the other hand, Cisco’s filings have not yet been registered. It was filed on December 10, 2012, according to a search of the USPTO database, when Cisco launched the marketing campaign and is waiting for approval.

USE SYMBOLS AND CAPS

Trademark law follows common sense in many ways. When two entities are claiming the same mark, for example, “Tomorrow Starts Here,” people can become confused. People that know both entities might think there is some connection between the two, that there is a sponsorship or endorsement. Think of the Wake Forest men’s basketball jersey; it has a Nike sign. Nike is the team’s sponsor. What if you see a t-shirt from a 5K race with “Just Do It” on the back? You think Nike is a sponsor, and maybe you decide to participate in that race because you like Nike. The problem arises when you show up for the race, and you figure out it is not Nike, just a small time running club.

Trademark law protects against this by giving the registrant of a trademark exclusive use. Only the person or company who registers a trademark can use it. The other advantage it that registration gives nationwide protection. Thus, ECU, a university in NC, can protect its slogan in NC and the rest of the United States.

There is one applicable limitation on this right to enforce exclusive use. This limitation to exclusive use is the phrase “likely to cause confusion.” As discussed before, the goal of trademark law is to stop consumer confusion. Thus, to enforce an exclusive right to a trademark, the party, ECU in this case, must show that the other party’s use, Cisco, is likely to cause confusion among consumers. When you see “Tomorrow Starts Here” on ECU’s webpage, is it likely you think Cisco is a sponsor of the university? Or conversely, when you see the Cisco tagline is it likely that you will think it is sponsored or endorsed by ECU?

PASSWORD STRENGTH

The best place to start is with what the two parties think, ECU and Cisco. Whenever an entity files a trademark, it must select a category to file the trademark under. According to the filings, ECU registered under university-level “educational services,” while Cisco filed with a laundry list of computer hardware and software products and telecommunication services. Are educational services likely to be confused with computer hardware?

Off the bat, these filings appear unrelated, but ECU plans to argue both Cisco and it operate in the same computer technology industry. Specifically, it has an “overlapping field of goods and services.” The best connection for ECU is its College of Technology and Computer Science that has commercialized products and intellectual property. Still outside commentators on the suit are skeptical ECU will be successful.

While ECU acts confidently, Cisco has clearly expressed its surprise about any chance of confusion. The spokeswoman went so far as to say, Cisco is “confident that [its] new campaign does not create any confusion in the marketplace.”

WEAK TO MEDIUM

There are already bets on the suit settling. It is usually a cheaper way to resolve any issue, and it guarantees the complaining party, ECU, walks away with something.

One speculator suggests that universities are always strapped for cash, so ECU is going after Cisco, a deep pocket. He then goes on to mention another theory for the suit. In trademark law the owner of the trademark, ECU, has to take action. Otherwise, it is essentially authorizing the use of its mark. Still the trademark owner must be discerning in the fights it picks. Litigation is expensive, especially when you lose.

A last theory that sounded plausible is that ECU sued Cisco as a defensive tactic. It is possible had ECU not sued, Cisco might have. Being on the defensive end of a fight against a large company like Cisco can be daunting. Cisco has money to spend, and any lawsuit would be focused on destroying or limiting any ownership rights ECU has.

Thankfully for ECU, it is fairly well insulated. It has a registered trademark, proving ownership of the slogan, at least for university level education services.

It cannot be stressed enough, the importance of registering trademarks, and now, filing can be done online.

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* Lindsey M. Chessum is a second year law student at Wake Forest University School of Law. She has a Bachelor’s in Economics & Business and a Bachelor’s in Philosophy from Westmont College. She spent nearly two years in the stock market industry prior to law school, and upon graduation in 2014, Ms. Chessum plans to return to California to practice business law.