Terroir and the curious path to geographic indication. 

This week I was honored and pleased to participate in the “Sub-regional workshop on geographical indications/ origin-linked products in Kingston, Jamaica. The event was coordinated by various governmental and international trade organizations including: WIPO, CEDA, EU-Caricom, IDB and JIPO.

A geographic indicator (GI) is a specific product name that has trademark-like protection and exclusivity as long as the product characteristics, or reputation is due to its place of origin. This idea of place has great importance and is referred to as “terroir” in Europe. A clear and scientific connection between product and place of origin and its connection to culture, tradition, heritage and processes are all linked to this interesting concept in international trade and IP law.

This legal issue has great commercial relevance since the market for GIs is estimated at more than $50 billion. Some of the most popular GIs include Champagne, Port (the oldest GI), Roquefort, Tequila, and Darjeeling.

The aim of the workshop was to build capacities in the Caribbean for the registration of GIs in the area, connect stakeholders and raise awareness.

Registering a GI is a three step process:

1. Form a producer group/ association, e.g. Co-op farmers from Belize were present to discuss efforts to develop a GI for cocoa from the Toledo region (terroir) in that country.

2. Develop a scientific product specification with verified protocols and standards. Elements may include: production methods, livestock regimes, plant varieties, traditional practices. The terroir must be described in detail. Boundaries and unique territorial aspects should be included, e.g some coffee must be grown at certain elevations and with certain soil conditions. The link between product and terroir must be scientifically established to establish uniqueness and source origin.

3.  Control production to guarantee customers of origin and authenticity.

Once these are all established a producer group may reap the benefits of a GI system and enjoy market exclusivity and higher margins for their unique products. Consumers can enjoy consuming the product knowing that the product is sustainably sourced from a legitimate producer group with strong historical and cultural connections to the terroir.

Apple’s Victory is One for Pioneering Designers

As reported by The Wall Street Journal, Apple won its long-anticipated jury trial against Samsung on Thursday and was awarded $1.05 billion in damages by a jury. I think it is highly unlikely that the decision will be overturned on appeal, so the case is likely to establish an important precedent, as I anticipated in an earlier post I wrote in 2011. My prediction then, however, was that Apple would win through a private settlement instead of a jury verdict.

I predicted a private settlement because of the high stakes involved and the risks open to both companies if the issue ultimately was taken to a jury. Apple’s risk was that the jury would invalidate some or all of the patents it had asserted, a defensive maneuver that Samsung adopted during litigation. Samsung’s risk was that it would be found to have infringed Apple’s patents by copying user interfaces and other design aspects of Apple’s products. In the end, and to the surprise of many, both companies rolled the die and Apple came out on top.

The $1.05 billion verdict is a big coup, not just for Apple, but for product designers in general. For a long time, product design was perceived in industry and in legal policy-making circles as an intellectual property and strategic backwater. That has changed, however, due to consumers’ increasing aesthetic sophistication and a crowded global marketplace.

Design is starting to play an essential role in product differentiation and branding. An empirical study I conducted with two marketing scholars in 2009, published in The Journal of Marketing, found a positive association between trademark ownership and financial performance. This link between the two suggests that companies which pay attention to the legal aspects of branding through trademark registration reap greater rewards.

Elsewhere, I have written about the rare capability within firms that generates product shape trademarks. Product shape and packaging trademarks, often referred to as “trade dress,” were among the arrows in Apple’s legal quiver in the Samsung trial. I believe the Apple-Samsung case signals that product design and trademarks will be increasingly applied during new product development and asserted during litigation among companies across industries.

I make a career of teaching legal studies to business students. In my lectures, I invariably cover the subject of intellectual property management and strategy. Had Samsung won at trial against Apple, I would have cynically advocated what I perceived as Samsung’s business and intellectual property strategy. That is, I would have advocated in favor of free-riding from an industry leader to quickly gain a foothold and increase market share. Had Samsung won, this strategy would be effective, since the risks of infringement and damages would have been minimal. Once the fast follower and design imitator establishes their foothold, they can then compete against the innovator based on a cost advantage. From a business perspective, this clearly would have been an effective tactic.

Given Apple’s victory, however, Samsung’s strategy is no longer risk free or optimal. Instead, a better strategy is to be aware of competitor’s intellectual property rights and embrace innovation. This will require investing in design capabilities to distinguish products, which is how Apple secured its leadership position.

A copycat strategy may still be adopted by firms that want to quickly enter a technology market, such as mobile devices. After the Apple-Samsung case, however, that strategy became significantly riskier, much to to the benefit of pioneering innovators everywhere.

Apple Asserts iPhone and iPad Shape Trademarks

Apple recently sued Samsung, claiming that the Korean manufacturer’s mobile phones and tablets infringe the trademark rights related to the iPhone and iPad line of products. I have written extensively about Apple’s unique and sophisticated approach to securing its design-related innovations with overlapping intellectual property rights. As I’ve mentioned in those writings, very few manufacturers have the legal knowledge and execution expertise to obtain shape trademarks for their products. Now it seems that Apple will assert the rights to their products’ look-and-feel in federal court against an aggressive competitor that has partnered up with another Apple arch rival, Google. Samsung’s devices use Google’s Android operating system.

In its complaint, Apple alleges that three federal configuration (shape) trademarks are infringed by Samsung’s devices. The two mobile phone devices are depicted side by side below:

Samsung's Galaxy next to Apple's iPhone

The trademarked elements relate to the rounded edges, the black finish and screen, the silver band running alongside the edge, and the configuration of software icons on the touchscreen.  Apple’s ability to obtain product shape and ornamental trademarks on all of these innovative product attributes indicate the high level of sophistication of their intellectual property strategy. Even today, many company executives are surprised to learn that it is possible to get federal trademark rights on anything other than a company name or logo. For Apple, it may be that their appreciation and investment in these product attribute trademarks may offer them a key weapon in the firecely competitive battle for mobile device supremacy.

Samsung’s allegedly infringing devices have sold well into the millions since their introduction in 2010. As part of the bundle of trademark rights, Apple may ask for reimbursement for any lost profits due to trademark infringement. Samsung’s operating margin is reportedly lower than Apple’s, yet that may still amount to hundreds of millions of dollars. Apple claims that the infringement was willful, since the copying is a case of “slavish” imitation. If this case ever reaches trial (which is unlikely) a judge and jury may award trebled damages due to Samsung’s willful behavior. Finally, and most importantly, Apple will seek a preliminary injunction early on in this litigation to prevent Samsung from selling any additional devices until the litigation is resolved. Given the strength of Apple’s trademarks, and the similarity between Apple’s and Samsung’s products, the judge may very well grant this extraordinary relief to Apple.

As part of any settlement (the more likely outcome), Apple may also require Samsung to redesign its mobile devices and tablets so that they do not create the likelihood of consumer confusion between the two competing companies’ products. That will, in the end, protect the Apple brand and differentiation that this company has worked so hard to develop and protect through the intellectual property system.

My guess is we’ll hear about a settlement to this case with terms favorable to Apple within a few months’ time.

Ann Arbor

 

 

 

 

 

A few days ago, I had the honor of lecturing MBA students at the Ross School of Business (U. of Michigan) about trademarks. In addition to meeting with the wonderful business law faculty at that august institution, the following recollections of that short trip vividly stand out:

Knit-work graffiti.

Cold, bright Midwestern mornings.

Driving along the Huron River.

Walking through the crowded quadrangle.

Smartly dressed students.

Young people embracing timelessness.

To watch the trademark lecture I presented, click here.

Several ways to protect a website

How does one protect a website with great functionality and excellent design? The default is to obtain copyright on the expressive elements of the website. However, these other means are also used:

Utility patents can secure innovative functionality as a method/algorithm. For example, Netflix obtained this patent to secure the way its website guides users to create lists and queues for renting items.

Design patents can secure any ornamental or aesthetic design features on a website. For example, Google obtained this design patent on its clean search interface design.

Trademarks can secure any distinctive names, symbols or icons that are displayed on a website. Twitter does this, for example, by trademarking its stylized blue bird, the words “tweet” and “retweet” and its iconic “t” shaped logo. All of these are then used on the website.

Independent Designers: Here’s a Powerful Tool to Combat Knock-Offs

I’m always troubled when I hear stories about independent designers who are ripped off by knock-off artists, large retail chains and unscrupulous exporters who take advantage of low-cost manufacturing costs to catch a free ride from a designer’s work.

Reporter Christina Binkley wrote an interesting article on this very topic in The Wall Street Journal on April 29. The article discusses how the small, independent makers of the popular Shashi bracelet saw their unique fashion accessory imitated and sold for a fraction of the cost by a large corporate retailer shortly after the product gained mass appeal.

Innovators often fall victim to this type of intellectual property theft as free riders imitate a design and exploit a cost-based advantage that erodes the original design’s exclusivity, leading to brand erosion and foregone sales. From numerous articles I have read, it seems that this happens all too often to designers, and that all they can do is throw their arms up and accept this sorry state of affairs. As The Wall Street Journal article reports, most designers believe that the only response is to keep designing and hope their new creations will keep them above water.

I’d like to offer designers another solution based on strategic knowledge of intellectual property. Designers can register and protect their designs as numerous forms of intellectual property (IP), including trademarks, design patents, copyrights and trade dress. The Wall Street Journal article mentions this fact and discusses how these IP assets rarely prevent the flood of copycats.

The Wall Street Journal article, however, does not discuss a little-known procedure that IP owners can initiate that could offer them a powerful shield in their arsenal. The procedure is IP recordation with the U.S. Customs and Border Enforcement Authorities.

The process is actually quite simple. After you have registered your IP as a trademark, design patent, copyright or trade dress, all you need to do is file a short form with Customs and pay a $190 fee. The form is extremely simple and asks the IP owner to provide a registration number, describe the intellectual property, list parties authorized to use the mark, and provide an image of the intellectual property.

To access a screen shot of the actual form, click here.

Once your IP is recorded with Customs, you may then notify the office of any suspected parties that may be importing goods that infringe your IP. Customs may then decide to seize and impound the knock-off goods at any U.S. port while it conducts an infringement assessment. Impoundment creates a difficult scenario for the alleged infringers, including the foreign manufacturer and the domestic importers, which may include distributors and retailers. The procedure creates a cost for all these parties, buys the designer precious time to retain exclusivity for their designs (especially important when the design in question ties into a current fashion trend), and sends a clear signal that the designer means business.

The Wall Street Journal article mentions that designers may send cease-and-desist letters, and this is an important weapon in the independent designer’s arsenal. However, large companies tend not to respect these letters as much as when a big corporation with deep pockets is behind the letter. For an up-and-coming designer, having knock-off goods impounded is a much stronger weapon, especially when many companies that sell imposters have those items manufactured in China or other locations overseas.

Customs provides statistics on what types of goods have been seized under this impoundment procedure. In 2009, it conducted 14,841 separate IP-related seizures with confiscations worth $260.7 million. To view the statistics, click here.

To learn more about the impoundment procedure and how you can take advantage of it to protect your intellectual property, visit the Customs website here.

Designers, please consider using this legal tactic to protect your hard work and creativity under a system of fair trade for everyone.

Trademarks & Gray Market Pharmaceutical Law in the E.U.

I was invited to post a response on the Opinio Juris international law blog to an article written by Robert C. Bird (U. Connecticut) and Peggy Chaudhry (Villanova). Their article, ” Pharmaceuticals and the European Union: Managing Gray Markets in an Uncertain Legal Environment” was published by the Virginia Journal of International Law.

The article is very good, and they are offered an opportunity to respond to my questions and comments. To view the discussion, please click here.

Do Androids Dream of Cell Phones?

The Wall Street Journal reports that an heir to the estate of sci-fi author Phillip K. Dick has alleged that Google’s “Nexus One” phone infringes the author’s intellectual property estate. Mr. Dick is the author of “Do Androids Dream of Electric Sheep?”, which was the basis of the sci-fi cult classic “Blade Runner“. In that futuristic film-noir classic, Harrison Ford plays a bounty hunter who tracks down androids referred to as Nexus-6 models.

The Google phone is not the only phone that borrows from sci-fi cinema to boost its branding appeal. Motorola’s much celebrated Droid cell phone references the many robotic characters that play a key role in the “Star Wars” films. There are, however, important differences between the two cases. Lucasfilm, owner of the “Star Wars” franchise, registered the trademark Droid in 1985 for use with action figures. They maintain that registration and several others related to Droid. No other parties have registered Droid as a trademark. All that meant Motorola required a trademark license from Lucasfilm.

The estate for Philip Dick would have a much stronger claim against Google had they registered Nexus-6 as a trademark. Instead, other companies have registered the word Nexus for various types of goods and services. The critical question is whether the use of Nexus One for the cell phone market creates a likelihood of confusion with regards to sponsorship or source in relation to the Dick estate.

Another interesting twist arises if Google’s future versions of the phone increase sequentially. At some point, the phone may be branded as Nexus Six. By claiming an intellectual property dispute early on, the Dick’s estate may be pre-empting the controversy.

More Shape Trademarks

Special thanks to my friend in Athens, Ga., Marc Lazar, for pointing out additional shape trademark possibilities. I have expanded the archive of these fascinating products.

Note: The product image is followed by the issued trademark.

Iconic Shape Trademarks
Iconic Shape Trademarks