Good Practices Concerning Intellectual Property Ownership: Articles by Novagraaf

In a helpful series of articles, the law firm Novagraaf addresses the issue of good practices concerning intellectual property ownership (particularly internationally) that make the future transfer of intellectual property easier.  The first article titled, “IP Ownership Transfers: Getting Your IP Rights in Order,” concerns, in part, potential problems with the ownership of proposed acquired intellectual property that can be addressed in due diligence.  The article discusses the importance of ensuring the present owner of the acquired rights has a contractual obligation, for example, to assist in recording changes in ownership as well as providing assistance to utilize future rights.  A recent article, titled, “IP Transfers: Potential Pitfalls and Problems to Solve,” by Tom Farrand, discusses the quality of intellectual property records maintenance.  The article provides a helpful nonexclusive list of common pitfalls:

·         Difficulty tracking and identifying which IP assets have been updated and which have not;

·         Erroneous record of title may jeopardise the validity of IP in some jurisdictions;

·         Recently filed applications can be held up by IP registered in the old name;

·         Original evidentiary documents could be irretrievably lost;

·         Prior owners may go out of business, cease to exist, move or change names;

·         Prior owners may be unwilling to cooperate after the passage of too much time, especially if personnel have changed since the original transaction;

·         Default in applications and registered IP may occur if official documents are delivered to the old owners and answer deadlines are missed, potentially causing the rights to be lost;

·         Inability to file suit against infringers if the IP is in the wrong name;

·         Inability to get a temporary restraining order in infringement matters;

·         For trademarks, third parties may be more likely to adopt conflicting marks if they think the owner is defunct; and

·         May make divestiture of assets more difficult or may get lower offer if ownership appears split or the chain of title is not up to date.

There are several others helpful articles available, including “IP Recordals: An Administrative Burden for In House Teams,” “IP Transactions: How to Manage Pending Applications,” and “IP Transactions: Managing Unregistered or Associated IP Rights.”    

The LOTR and the One Armed Bandits: Part I

I love J.R.R. Tolkien’s Lord of the Rings and the Hobbit.  I’ve loved the books since I was a child and I love the movies as an adult.  I am sure there are other fans who love LOTR and the Hobbit more than me, but I am at least in the class of persons who owns multiple copies of the books, purchases tickets to the movies, buys the DVDs when they are released, purchases the DVDs that include the extended versions of the movies, and buys the video games based on the movie.  I am not in the class of fans that follows litigation concerning the LOTR and am thankful for LK Shield’s Deirdre Kilroy’s lead to this litigation.

On November 19, 2012, Fourth Age Limited, trustee for the Tolkien Trust, J.R.R. Tolkien Estate Limited, Harper Collins Publishers and others filed a complaint for: (1) Copyright Infringement; (2) Breach of Contract (3) Declaratory Relief -- Gambling Games and Downloadable Games; and (4) Declaratory Relief --Trademarks Service Marks and Services Licensing in Federal court, in the Central District of California (Los Angeles is located in the Central District), against Warner Brothers Digital Distribution, New Line Productions, Saul Zaentz Company d/b/a Middle-earth Enterprises, and others.   (Zaentz recently filed a counterclaim, which I’ll hopefully discuss soon).

The suit essentially revolves around the interpretation of a clause concerning merchandising rights in a 1969 license covering the film rights.  The complaint states that:

Specifically, defendants' predecessors-in-interest obtained the limited right to use the characters, places, objects and events referred to in The Lord of the Rings and The Hobbit "solely and only upon and in connection with the manufacture, sale and distribution of ... any and all articles of tangible personal property, other than novels, paperbacks and other printed published matter..." . . .  The original contracting parties thus contemplated a limited grant of the right to sell consumer products of the type regularly merchandised at the time (such as figurines, tableware, stationery items, clothing, and the like). They did not include any grant of exploitations such as electronic or digital rights, rights in media yet to be devised or other intangibles such as rights in services. To emphasize the limited nature of the grant, plaintiffs' predecessors-in-interest specifically reserved "the right to utilize and/or dispose of all rights and/or interests not herein specifically granted."

The Defendants apparently gave permission to a company that produces gaming equipment and more specifically slot machines to produce slot machines and an online game.  And, according to the complaint, many fans are not happy about this development—very unhappy.   Many also know that the LOTR and the Hobbit are viewed as incorporating Christian and Catholic meaning, but what does that mean (particularly with respect to IP claims)?  As a fan, I must say that I am not outraged, but which fans matter?  Other works of art have been apparently licensed to produce gambling devices such as the Wizard of Oz’s The Great and Powerful Oz slot machine.  (or is that fundamentally different because someone would create a Wizard of Oz slot machine?)  I can understand, of course, how the Plaintiffs want to protect the image associated with its brand and how other fans are upset; however, I am not sure that an argument that is essentially “we never would have agreed to allow this type of merchandising because it would upset our fans and is inconsistent generally with the merchandising of great works of art” is always true? Although once the court sorts out the trademark rights in the license in favor of the Plaintiffs, then Defendants and their licensees will cease selling slot machines and other gambling devices under the trademarks.  The fourth claim for declaratory relief states:

a. For a declaration that defendants do not have the right to license or exploit any services in any categories, nor the ability to register, use or exploit service marks in any categories in connection with The Lord of the Rings and/or The Hobbit; and

b. for a declaration of the parties' respective rights and obligations under the Merchandising License as they relate to the registration and/or use of Lord of the Rings and/or Hobbit-related trademarks and/or service marks and/or the ability to license or exploit services.

Is the value of the brand hurt by licensing the production of gambling devices?  I suppose it depends on the nature of the work, but from who’s perspective?  The LOTR is relatively violent.  What do you think?