The largest trademark verdict in US history?

....so say lawyers at Kilpatrick Stockton who apparently helped win a $304 million victory for shoe company Adidas AG late last Monday. According to Kilpatrick Stockton's press release (c/o this blogger's friend Allison Mcdade at Dell):

"Adidas sued retailer Payless ShoeSource Inc. in 2001 in federal district court in Portland, Ore., for selling imitation footwear that looked like Adidas' three-stripe shoes. Following a 15-day trial, a nine-person jury took two days to decide that Payless had violated Adidas' trademarks. Payless claimed its shoes did not violate Adidas' trademark since they featured two and four stripes, not three. But lawyers
for Adidas argued the so-called knockoffs could cause confusion or dilution of Adidas's logo trademark. "Our entire position was that the three-stripe mark was a very powerful and strong brand," says Kilpatrick partner Bill Brewster. Also representing Adidas was partner Charles Henn Jr. and local counsel Stephen Feldman at Perkins Coie. Payless was represented by Lathrop & Gage partner William
Rudy and Spillane Shaeffer Aronoff Bandlow partner John Schaeffer. A spokesman for Lathrop & Gage referred comment to Collective Brands Inc., which owns Payless.
The Topeka-based company said in a statement that it is "reviewing the verdict and assessing its impact." "The company believes that the verdict was excessive and unjustified," the statement said. "The company will ask the court to set aside the verdict and, if it is not granted, intends to take all necessary steps to overturn it."

The trial was just the latest foray into Adidas' battle to enforce its international ownership of the three-stripe logo. On April 10 the European Court of Justice ruled against retailers C&A, H&M and others, whose lawyers argued that stripes were such common symbols they should be available for anyone to use. Gregor Vos and Antoon Quaedvlieg of Amsterdam-based IP boutique Klos Morel Vos & Schaap represent Adidas in that litigation. In the U.S., says Brewster, the Germany-based shoe manufacturer has won settlements over similar trademark claims against about a dozen retailers, including Target. Brewster adds that a pending claim against Kmart headed toward settlement. Kilpatrick, which has represented Adidas for about 15 years on trademark matters, now is preparing for another trademark infringement trial, this time against Wal-Mart. A lawyer for Wal-Mart, though, says the Payless win will have no impact on his trial. "It's similar issues but very different acts," says Baker Botts partner Russell Falconer. "Basically, they're different products at issue and different documents. The cases have nothing in common other than that they're both trademark infringement acts." Trial is scheduled for October."

This blogger notes that the latest ECJ judgement in Adidas's three stripe enforcement program hinted at a favourable result for the brand owner in Europe too.

Damages calculation totalling $4.3 million

Karin Segall of Foley & Lardner LLP writing for World Trademark Report on the recent case of Gucci America Inc v MyReplicaHandbag.com (Case 2008 WL 512789, February 26 2008) highlights that $4.3 million has been awarded by a US Court in a counterfeiting matter. According to Segall:

"The underlying case involved claims by Gucci America Inc, Chloé SAS and Alfred Dunhill Ltd against several defendants for offering a variety of counterfeit products bearing the trademarks GUCCI, CHLOE and DUNHILL."

"In order to determine the amount of statutory damages per type of goods, the court surveyed case law and noted that most judges award well below the maximum on the basis of "per mark per type of goods". Ultimately, the court drew from its own experience in a similar case in which damages in the amount of $100,000 per mark infringed was awarded. Using that number, it awarded $3.6 million to Gucci, as there were six marks infringed and six different types of counterfeit goods (ie, $100,000 multiplied by six marks multiplied by six types of goods). Chloe was awarded $400,000 based on counterfeiting of four marks and one type of product, and Dunhill was awarded $300,000 for three marks and one type of product. Altogether, the defendants were thus jointly and severally liable for a total amount of $4.3 million."

Confused by the UNCITRAL Guide? Try this!

Lorin Brennan has prepared an excellent memorandum describing quite specifically the interaction between the UNCITRAL Insolvency and Secured Transactions Guide and intellectual property rights. This memo aims to satisfy the twin aims of “keep it short” and “make it accurate”. If you'd like to see a copy, email me here and I'll send it to you.

Astute Ethiopia

Ethiopia has opted for increasing brand recognition and demand through licensing rather than immediate royalty income streams in an effort to generate longer term wealth. Ethiopa's strategy reported on Afro-IP here and on News Blaze here has been hailed as the first time an that an African nation has undertaken such an innovative approach to protecting its economy. Ethiopia selects the global distributors for its coffee and sets the conditions for sale. Ethiopia charges no royalty fees for coffee distribution licenses, but, in return, asks the distributors to market each coffee under its separate brand name.

It is sometimes easy to overlook that brand licensing is motivated by numerous factors, apart from money. For example, Allied Domecq succesfully used brand licensing to reposition its Courvoisier brand to a younger market by introducing a trendy clothing line under the brand. Dunlop Slazenger used sub-licensing as a means of keeping it afloat long enough to attract a suitor in the form of Mike Ashley's Sports Direct, whilst the legal proprietor of the Dunlop brand (at the same time) used licensing simply as means of preserving the trade mark right across sports, tyre and other categories. Al Gosling's Extreme Group (ala Richard Branson) use licensing as means of building brand recognition and developing a complete lifestyle brand. Other companies use licensing to reduce their tax liability through complex transfer pricing schemes and others, to settle disputes or co-brand products.

There are not many other assets that can be used in such a flexible way and it is also easy to forget that not all that long ago, legal systems were reluctant to recognise trade mark licensing at all. Ethiopa's decision is progressive because it entails determining and creating a brand and then marketing that brand through worldwide strategic partnerships (not least with Starbucks) and licensing. The efforts are aimed at increasing longer term demand whilst ignoring a politically tempting income stream.

Patent Quality

Day 2 of the LESI Conference in Chicago and I have spent part of the morning with OceanTomo (about which I shall blog separately). The afternoon's session included a fascinating talk about patent quality.

Christopher Ainsley of the the Patent Board reviewed their work on patent quality which seems to be mostly citation based. The Wall Street Journal has started publishing their patent scoreboard (as does the IAM magagzine). The thesis is that patents with a large number of forward citations are worth more than those with fewer citations when normalised across the industry.

Christopher pointed out patents in new technologies cannot be cited as often as technologies with a long history of patenting. They have developed the concepts of momentum patents which are those younger patents attracting a higher degree of interest.

Jonathan Barney of OceanTomo noted that their research on quality factors refelcted in higher prices in the OceanTomo auctions. In addition to citations, one of the quality factors is the renewal rate of the patents. He pointed out that the wacky patents granted over the past few years are often not renewed on payment of the first renewal fee.

During the ensuing discussion, criticism was made about forward citations being used as a quality factor. Both Christopher and Jonathan clarified that they broke their data out into Examiner citations and Applicant's citations (as Information Disclosure Statement). Both OceanTomo and the Patent Board stated that they also used data from outside of the United States (such as that from the EPO and WIPO). Christopher made the point that we need also to consider India and China in the future.

One of the main points that was made is that all of the tools on offer are using quantitative metrics rather than actually reading the claims and the specification. Christopher made the point that research showed that there is a correlation between the more subjective quality of the claims and the bibliometric approach. However, the point was made that the tools on offer are best used to pre-sort the patents. Ultimately a patent attorney is the best judge of the quality of the patent - her or his assessment may well depend on the current focus of the attorney.

Two announcements

Nominations are invited for up to five new inductees to the IP Hall of Fame. Details can be obtained from the IPKat weblog here.



IP Finance is among the weblogs that will be represented at the "Meet the Bloggers" informal session in Berlin on Monday 19 May 2008. Further details are available from the IPKat weblog here.

Metro Naming Rights in Dubai

This being an Olympic Year, the thoughts of IP attorneys turn to the ever-increasing presence of corporate and product sponsorships that will accompany the various athletic competitions: swimming with "Coke" (or whatever software drink purveyor has purchased sponsorship rights), or following the last leg of the 400 meter sprint relay with "Nokia" (or whatever company name adorns the athletic stadium).

With all the anticipated razzmatazz over Olympic sponsors, a full-page ad in the April 26 issue of The Economist caught my eye. Entitled "Dubai Metro Naming Rights", it is an ad on behalf of the Dubai RTA (I assume that means "Rapid Transit Authority") for companies to place their brand on a Dubai metro station, or on one of the two lines of the Dubai Metro network.

None other than IMG is the marketing agent for the name rights program. In case you're wondering, IMG is a world giant in sports and entertainment sponsoring and marketing. For grey-hairs like me, IMG will ever be identified with its promotion of Arnold Palmer, which turned golf into a marketing bonanza and set the table for the phenomenon that we call Tiger Woods.

It is not clear to me how this program will work. Will it mean that instead of calling the station the Dubai equivalent to "Oxford Circus", it will be referred to as the "XYZ" brand station? On the one hand, that seems like a great way to get reinforcing exposure to your brand. On the other hand, calling the station only by the corporate name may confuse the passenger, who will no longer be able to link the name of the station with some kind of geographic or other connection to the site. Or maybe there will be dual names for the station.

In any event, this metro name rights program is an interesting idea. While your brand will not enjoy the intense exposure of hundreds of millions of Olympic-viewing spectators, the games are over in two weeks and, with them, the immediate connection between your brand and the athletic competition. You, on the other hand, will have your name and brand associated on a permanent basis with a site that presumably caters to a large number of passengers and passers-by on a 24/7 basis.

An analogy is the use of sign rights on buildings. It reminds me of that one-time icon of New York City, the Pan Am Building. However, the name recognition that derived from the sign rights apparently did little to save the airline from ultimate business failure, and the building has been called the MetLife Building since the 1980s. In our own day, we need look no further than Chicago, where we find the Sears Tower (the verdict is still out on the ultimate future of Sears) or the John Hancock Building (but I wonder how many non-Americans know that this is the name of an insurance company).

I will be intrigued to see what companies ultimately choose to participate in this program. Will the names that ultimately appear on the Dubai metro reflect local/regional brands (à la John Hancock) or international brands (à la Pan AM), or some combination of the two? For those of you who are interested, you can check out the RTA website , or inquire directly here.

Licensing Executives Society - International Chicago

Rob's been a little bit quiet lately - he's been helping two clients on diligence reviews!
If any readers are going to be in Chicago next week at the annual LESI conference, then feel free to look him up. You can also use the power networking tool to schedule a meeting!

IP finance ... where money issues meet intellectual property rights: German Standards Institute DIN - General Principles of Proper Patent Valuation

IP finance ... where money issues meet intellectual property rights: German Standards Institute DIN - General Principles of Proper Patent Valuation

Voting ends tomorrow (2nd May) at ISO on whether to create a new project committee for Patent Valuation. In the initial round of comments to the ISO Technical Management Board 25 replies were received. 16 member bodies voted in favour of the starting work on the proposal whilst 8 rejected the idea. One abstained.

Countries rejecting the standard included Japan, Canada, Finland, Netherlands, Spain, South Africa, the UK and the US.

The Netherlands provided the most detailed arguments on their position, essentially maintaining that the idea of a standard was not feasible and that it is difficult to understand how the complexities of the subject matter can be mastered sufficiently to develop any useful standard.

The UK commented that the work on the standard on brand valuation should be completed before starting work on patent valuation.

ANSI in the US considered that a standards development committee was not an appropriate forum for doing the kind of the work needed to develop and evaluate new patent valuation methodologies.

Clearly ISO and its member organisations are divided on the subject. It is difficult to tell whether ISO will take on this project or not. However, one of the most interesting points to emerge from the comments made from the national standards organsiations was the concern of overlap in work with the International Accounting Standards Board. Clearly ISO will need to liaise with this other organisations active in the IP and finance fields if the standard is to be accepted.