Wood Trade Marks and Design Limited

If a newspaper circulates a covermount (those LOVELY CD’s they put with the Sunday papers) without clearance, how do you work out the damages if you are the owner of the infringed rights?

This was the question in the latest decision regarding The Sunday Times and Experience Hendrix.  Experience own the rights to some of Hendrix’s recordins, including some particularly valuable recordings made at the Royal Albert Hall of Hendrix.  Experience said that they were getting ready to launch this wonderful new content on the market, and were going to have theatrical release, CD’s, DVDs and downloads.  The Sunday Times distributed what Experience arguedwere bad quality bootlegs of the tracks.  Experience alleged that this covermount killed off the market in the UK for their official content for a while and pushed the launch back until the market was ready again.  As they had planned a global launch, the global launch was delayed, and they claimed for damages for the global losses.

The Sunday Times said that the correct damages should be by way of a notional licence, and said that they usually paid between £50k and £100k for the rights to produce the covermounts.  Experience said that the damages should be for the loss of profit – to put them in the position they would have been had the Sunday Times not produced the covermount.

The court sided with Experience – including agreeing that the damages should be global as the delay in the UK meant it was reasonable to wait elsewhere and have a single launch (as they were advised to do).  There the fun started – there seemed to be no agreement as to how successful the film would be, and as such no agreement as to the likely profits.  They sought to argue that the film could be compared to “This Is It”, the film of the preparations to Michael Jackson’s last concert, but this was rejected.  The projections for the success of the theatrical release were too vague, and all the other income was dependent upon the success of the theatrical release.  The judge clung onto the minimums which Experience could show they had been offered (US$5.8M), and gave a calculation for working out the “time cost” of not having that money – discounted income.

For The Sunday Times, it shows the importance of clearing the rights (although it seems their legal counsel had dealt in good faith with a party they believed had the rights).  For claimants, it shows the importance of good, solid facts regarding damage – if they had demonstrated a particular contract they alleged they had then it would have been approximately 5 times the sum in damages.

Software interoperability and competition amongst software is a key issue.  A recent case regarding the SAS Institute helps to underline the law that applies when someone looks at how software works and creates a copy without using the source code – so-called “non-literal copying”.

The SAS Institute produces a very expensive (but obviously highly-worthwhile!) piece of software called Base SAS and also produces lots of modules to add functionality.  They had extensive manuals that detailed the underlying ways in which the product manipulated the data users provided.  A company caled World Programming Limited (WPL) took an educational copy of the SAS software (one meant to help users understand how to use the software) and a copy of the manuals and created their own set of programmes in C++.  They purposefully made the programme work in exactly the same way as SAS, since it was essential that users got the same outcome from their programmes when they used their data as they would get using the SAS modules.

SAS sued for copyright infringement.  Rejecting the case, the judge highlighted the difference between ideas and expressions.  This is the fundemental split in copyright – the law protects expressions, not ideas.  A mathematical formula will often be no more than an idea, so copying that will not be an infringement.  It is only the skill, judgment and labour in EXPLAINING the concept, or in producing code which uses the formula, which will be protected.  In this case, WPL were largely successful in defending themselves, although the judge did say that some elements of the case would need to be referred for clarification by the European Court of Justice and he did acknowldge that WPL’s manuals copied from SAS’.

Ideas and expression.  Not an easy split – it is one of the difficult parts of copyright law, particularly where the output is not directly copied.  How much does one have to copy the plot of a book or a play before it is too close for comfort?  Where does the limit lie in a graphic?  This is a subject which often requires substantial experience to assess.

In the case of software, it should be noted that there is a difference between copyright protection for the functionality (which will be very difficult to protect) and the copyright in the graphical user interfaces (the screens) which may well attract copyright.

A few months ago I mentioned the Vodkat case.  Diageo (owner of KETEL vodka) had brought a case for passing off against the owners of VODKAT, alleging that there was goodwill in “vodka”, that it had specific traits and that the use of the term where the product did not share those qualities would be misleading.  They were successful.

The owners of VODKAT appealed, arguing that where you wish to allege passing-off rights in a generic term, it must be niche or luxury compared to the market (such as was the case in the CHAMPAGNE cases a good number of years ago).  The UK Court of Appeal disagreed with these arguments and rejected the appeal unanimously.  In doing so, however, one judge (Rix LJ) expressed regrets that this was the case in the face of a product which was clearly not vodka, which only idiots would think was vodka, when there were labelling laws to protect mislabelling.

I can see Rix LJ’s point.  I suspect that Diageo have “pulled a fast one” and that whilst the alcohol industry may approve of the outcome, the judgment actually sets a precedent which they will use to beat their competitors.  If they do, then well done to them for a clever move - cheers!

Trade marks are a difficult beast – some try to use them to stop their competitors commenting on their behaviour.  We see this in many forms:

1. Trade mark owners trying to seize back domain names which have the trade mark in the name when they are being used for criticism sites;

2. Trade mark owners trying to suggest that competitors cannot use their trade marks when they criticise them; and

3. Trade Mark owners trying to use trade marks to stop people using the marks in Adwords.

All three situations are difficult, as there is inherently nothing wrong in commenting and using trade marks where the use is to identify the competitor.  The test is whether the use is in accordance with honest business practices, however, and if you go to far then you stray outside the realms of acceptable practice.  Whether it is acceptable practice or not may be difficult to assess – some will be put off by receiving threatening letters even when they have a “gut” feeling that they should be able to keep using the mark.

Further problems arise where someone has a logo – are you going too far if you use the logo?  If you could quite easily identify them just by the word part (think ESSO) then it may well be that using the logo may go too far.

In the case of AdWords, there may be a difficult “squeeze” involved.  If you want to say that JOHN SMITH vodka is made by underpaid child labour, you may want to use the trade mark JOHN SMITH as an AdWord and also say in the text “Read here how JOHN SMITH is made by child labour”.  The problem comes that Google will routinely reject the advert (and take it down if complained about) on the basis that the trade mark is in the advert text.  This is in their terms of service, so it’s a matter of Google’s terms with advertisers rather than a legal requirement.  If you don’t make the advert clear, however, then the trade mark owner may suggest that you are conducting a “bait and switch” site, attracting people by suggesting that the site is real/official/authorised.  If they successfully argue that then you may find yourself on the wrong side of a trade mark case.

The centre ground would appear to be to use wording which makes it clear that it is not official – something like “Read the truth about child labour that they don’t want you to read!”.  It seems unlikely that anyone would be confused, and you have made it clear what they will find.  Nevertheless, you should probably expect to have to explain your actions at some point.

By the way, in case anyone is in ANY doubt, nothing on this blog constitutes legal advice – don’t simply rip off my comments and think I’ve given you “proper” watertight legal advice!

It pays to stay on top of your domain names.  It seems like The Coca Cola Company did not with their 5 Alive drink.

They recently come out on the wrong side of a couple of domain name decisions relating to the domain names www.5alive.co.uk and www.fivealive.co.uk. In both cases the Expert found that Coca Cola had not proven that the registrant had registered the domain names in bad faith.  In the 5alive.co.uk case, the Expert went a little further..

The registrant had found that the domain name 5alive.com was not registered to Coca Cola.  The Expert picked up on this, and also the fact that Coca Cola were apparently just about to launch a new marketing campaign in the UK.  The timing of the complaint seemed to be with that in mind – to succeed and get a domain name transferred to them to use for marketing campaigns.

As always, it seems that painting the right picture is important – Coca Cola seem to have attracted the Expert’s ire by the timing of their action, having had some 6 years with few domain names and then a sudden “push” to get them.