Dear Rich: Nolo’s Patent, Copyright & Trademark Blog

Transferring TMs to New Corporation

Mon, 08 Feb 2010 05:04:11 -0800

Dear Rich: I have two trademarks registered to a corporation and will be transferring the rights to use these trademarks to a new corporation. Do I have to notify the Patent and Trademark Office and how would I do that? Also I notice that someone asked about renewing a patent. Is that also necessary for trademarks? First of all, the Dear Rich Staff wants to acknowledge that the person who asked this question also happens to be the same person who comes by and fixes our mother's computer so we say thanks for all that great service over the years -- and BTW, we messed with the ethernet cords and wifi last time we were in town. Ooops!

As for your question, you need to do two things, (1) assign the marks to your corporation (see below); and (2) file that assignment along with a Trademark Assignment Recordation Coversheet, at the USPTO website.

What about renewal? You must file a renewal and declaration of continued use between the ninth and tenth anniversary of registration and you should file a declaration of continied use and (optional but recommended) a statement of incontestability between the fifth and sixth years of registration. The failure to file the declaration of continued use will result in the loss of the registration.

Trademark Assignment

Value of Nuremberg Trial Transcript

Sun, 07 Feb 2010 04:51:11 -0800

Dear Rich: I saw your question about the Nuremberg trial transcripts. My father was Justice Robert Jackson's driver during the Nuremberg trials. He gave my father a signed copy of the transcript along with several pictures. Is there any value to this original document? You'll need the advice of an appraisor who specializes in autographs, manuscripts and rare books. We're afraid that question is just out of our bailiwick. But if any readers know, drop us a line.

Failed to Pay Maintenance Fees: Is the Patent Lost?

Fri, 05 Feb 2010 07:21:02 -0800

Dear Rich: Help! A friend of a friend failed to pay his patent maintenance fees timely and his patents have expired. Is there any way to pay a late fee and "revive" the patents? Yes there is. If it's been less than two years since the patent expired, you can revive it if you pay the fee and a surcharge of between $700 and $1640 depending on whether the reason for the failure was 'unavoidable' or 'unintentional.' You'll need to file a petition and you can learn more about the requirements, here. If it's been more than two years, you can revive the patent only if you can show the failure was unavoidable. This article explains it better than the Dear Rich Staff (and we recommend the blog to all patent fans).

Find out more about patent maintenance with my book Patent, Copyright & Trademark: An Intellectual Property Desk Reference.

Fiction Writer Asks ... May I?

Thu, 04 Feb 2010 09:31:22 -0800

Dear Rich: In a work of fiction may I write about an adventure in a well known museum and describe specific exhibits that get vandalized? May I write critically about a well known writer who has been dead for over 100 years? May I write about stuffing a family into a Chevy truck? May I write about a fictitious company that clearly resembles a large fortune 500 company? Yes, yes, yes, and yes, although the Dear Rich Staff is a little concerned about the idea of "stuffing a family into a Chevy truck."

Band Wants to Share Profits But Maybe Not Losses

Wed, 03 Feb 2010 13:25:09 -0800

Dear Rich: I formed a band with 3 other guys, and while they contribute in the form of some songwriting, pretty much everything else falls on me, from the bulk of songwriting, to paying for merchandise and CD pressings and most other expenses, down to owning pretty much the full backline of the band. This arrangement is fine with me, as I'm in a better financial situation to be able to do this than they are. The question I have is that I am trying to formulate a band agreement, because I wish to compensate them for their songwriting contributions as well as playing live shows, but at the same time I want to make sure I am able to recoup the money I have put into the project. I feel like a partnership is the type of business arrangement I would like to make, but the issue I see is in the equal sharing of profits and losses, because while sharing profits is fine, the rest of the band members are unable to share the losses. No problem, just structure the partnership agreement as you describe in your letter. Having a partnership doesn't mean that everything is shared equally--that's simply the default presumption unless the partners indicate otherwise. There are many ways you can structure it. For example, you probably want to make sure that expenses are deducted and repaid from all revenue before partners are paid income. The long-form partnership agreement in our Music Law book (insert FTC disclaimer here) provides for a deduction like this. You can get as specific as you'd like -- for example, half of show income goes to paying off band debts and the other half goes to members. Also, the Dear Rich Staff advises that before you sign the partnership agreement, you should document what you are contributing -- the equipment, previous debts, etc. If properly prepared, the partnership agreement should guarantee your ability to walk away from the band with the items you've contributed (or their equivalent value).

But Her Mark is Hundreds of Miles Away

Tue, 02 Feb 2010 12:01:08 -0800

Dear Rich: I was just contacted via email by a woman in another state. She asked me to cease and desist using my trademark if I wanted to "avoid further legal action." My website's domain name is not the same as her trademark. My company provides very similar services but I only operate in Central Florida, hundreds of miles from her business and I have no plans to go beyond my small world. Any advice. There's an old Russian saying, 'Small potatoes but my potatoes.' Actually we're not sure if it's Russian. We think we first heard it in this movie. In any case, we can relate to your problem. Unfortunately, the short answer is that you're not in a good position and would probably be required to change your name.

The registered user. The registered mark has been in use since June 2002 and has been registered since November, 2009 which would give the registered user a presumption of nationwide priority. If you've been using the name since before 2002, you may have limited rights to continue using it in your geographic area but that argument is muddied quite a bit by the fact that both of you are reaching a nationwide audience with your websites. The marks are identical and as you acknowledge, the services are the same. So, if we were a betting blog, we'd bet pretty heavily that the registered user could stop your use.

What should you do? The Dear Rich Staff thinks that the path of least resistance is to change your service mark and to notify the registered user that you are doing so. You can probably continue using the name for your LLC if you're just using it to sign contracts, write checks or for tax filings.

Questions about trademark law? Check out my book with Stephen Elias, Trademark: Legal Care for Your Business & Product Name.

Want to apply for a trademark? Use Nolo's Online Trademark Application.

Does My Girlfriend Own My Trademark?

Mon, 01 Feb 2010 06:07:52 -0800

Dear Rich: I am starting a fashion design company with my girlfriend. She is the designer and I am handling business/legal issues. She designed the company logo and created the business name. We are going to apply for a trademark for the logo and the name and the question has come up as to whether (i) she should own the trademark alone or (ii) we should be joint owners (we are not seeking to register the trademark in the name of the business to avoid the trademark becoming part of the company's bankruptcy estate upon a bankruptcy). My concern is that, if she owns the mark alone, she can walk away from the table on any given day and take the real value of the brand that we hope to create together. On the other hand, she did design the logo and it seems fair that she should be able to keep the rights to her artwork. Is it common for an entrepreneur to insist on owning a trademark alone or would it be typical to share the trademark among equal business partners even though only one person designed it? Of course, we hope that everything works out perfectly between us and the ownership of the trademark never becomes relevant but, things don't always play out so peachy. Any insight that you could give would be appreciated. We're not sure whether you wanted the insight for keeping things peachy with your girlfriend or about your trademark ownership so we'll address both issues (since they are equally important).

Keeping things peachy with your girlfriend. There are three elements required for a successful long-term relationship with your girlfriend: (1) personal hygiene -- we can't stress how important this is, whether it's individual cleanliness, bathroom orderliness, or sanitary kitchen habits, (2) social deportment -- here we're talking about that sense of respect that comes from good table manners, interpersonal restraint and general cordiality, even in the face of overwhelming despair and doom, and (3) lots of laughs - without lots of yuks (hopefully not derived from the misfortune of others), most relationships are doomed. Okay, so that should establish a long term union for your business. Now about your trademark.

Creating a trademark does not create trademark rights. It's true that you will need permission from the artist to use copyrightable artwork in a trademark but you won't need permission to use the name (as that is not copyrightable). Even so, creating the artwork doesn't create trademark rights. Those rights are earned by your use of the mark in commerce. If you're operating as a business--we assume you're a partnership--it would make the most sense to create a partnership agreement and for the partnership to own the marks. Your partnership agreement should address what happens to these assets if the partnership breaks up or if one partner wants to buy out the other. Nolo, our employer (insert FTC disclaimer here) has books that can help you do that.

Your bankruptcy plan. We're not clear about your plan to retain ownership of the trademark to avoid bankruptcy. Your fashion business (or whoever owned the marks) would have to license the marks to the business. So, wouldn't the license become part of the bankruptcy plan? The Dear Rich Staff are not experts on that stuff but we wouldn't count on your approach. (And anyway if the company went into the bankruptcy, doesn't that mean that the brand has failed? So what would be the value of the mark?) Anyway, let's think positive even though we know that's usually not a good idea.

Who Dat Trademark?

Thu, 28 Jan 2010 19:59:18 -0800

Dear Rich: Recently several small shops here in New Orleans, Louisiana have received cease and desist letters from the NFL regarding either the Fleur de Lis symbol or the Who Dat slogan and the Saints. This has been put on merchandise for years by local merchants and never been challenged before. Because we win now all of a sudden people are breaking the law? Do you know anything about this? Is it copyright infringement or trademark issue and which is it the Gold and Black Fleur de Lis or the words Who Dat? Can you explain this to me? I think with all that this city has gone through the NFL should be ashamed. The Dear Rich Staff is not sure whether NFL Enterprises LLC can feel shame. They're a limited liability corporation, not a person. Oh. wait a second, the Supreme Court reported this week that corporations are people, so maybe we're wrong.

Anyway, as for your question ... This is a trademark issue and apparently it has been a hot topic in NOLA for the past few weeks. As everybody seems to acknowledge: (1) the NFL has not registered the 'Who Dat,' mark (although several other companies and individuals are trying for registration or claim to own rights) and (2) the NFL/New Orleans Saints owns two fleur de lis design registrations (No. 3135839 and No. 3210572 -- shown above). Our research indicates that the C&D letters that are going out are for efforts that combine the two elements - the phrase and fleur de lis. The basis for this claim would be that consumers are confused into believing that this merchandise is associated with the NFL. Certainly, the NFL would be hard pressed to pursue vendors selling only "Who Dat" merchandise. So far we haven't found any lawsuits and we assume some PR-savvy NOLA trademark attorneys will jump on the issue (as so many others have) should it head to court. In any case, for now it appears as if it's a Mexican standoff.

Must See Dept. As readers know the staff here doesn't care about football but we'll make an exception for the best football movie since Burt Reynolds scored in The Longest Yard.

Find out more about trademark law and copyright infringement with my book Patent, Copyright & Trademark: An Intellectual Property Desk Reference.

Will My Trademark Graduate to the Principal Register?

Wed, 27 Jan 2010 19:31:42 -0800

Dear Rich: My mark has been registered on the Supplemental Register for five years and continuously used during that time. Does it now qualify automatically for registration on the Principal Register? "Automatically" may not be the correct word but you should be able to "graduate" to the Principal Register without much problem.

Supplemental v. Principal Registers. As you probably know one distinction between the two Registers is that all marks on the Principal Register are considered to be distinctive. Some were born distinctive -- think 'Google' -- while other more descriptive marks-- think 'Lean Cuisine' -- acquired distinctiveness via marketing and continued use (known as "secondary meaning"). When you apply for registration on the Principal Register -- yes, you must apply -- the examiner starts with the presumption that after five years of continued, exclusive use, the mark has acquired secondary meaning and is distinctive. (In legal terms, the five years of use amount to prima facie proof.) However, the Dear Rich Staff notes that despite this presumption, a trademark examiner, if doubtful of your mark's strength, can always require additional proof of distinctiveness. If we were a betting blog, we'd bet that your mark will soon make it on to the Principal Register.

To learn more about trademark registration, check out my book with Stephen Elias, Trademark: Legal Care for Your Business & Product Name.

To apply for a trademark, use Nolo's Online Trademark Application.

Need Rights to Music for Video

Tue, 26 Jan 2010 12:24:10 -0800

Dear Rich: I am in need of a document but dont know exactly which agreement/form will serve my need. I have a video that needs music put to it and I have found a freelancer to do it. So I need a transfer of rights doc to get him to sign before he works on it so that we can copyright it under our name without ever running into a legal issue. Does a patent, copyright, trademark need to be registered by the original artist before an assignment can be signed? Sorry, we can't answer your question until we finish downloading this album. Amazon is/was offering it for $5.99!!! No video needed for this masterpiece.

Your Question. Right. If someone is commissioned to create a contribution for an audiovisual work (a movie, video, etc.) then that would qualify as a work made for hire under copyright law. And if you want to list your company as the "author," you'll have that option under the work made for hire arrangement. Our employer (insert FTC disclaimer here) sells books that include work made for hire agreements. You can probably fashion one yourself as long as you include the following provision:

Contractor agrees that, for consideration that is acknowledged, any works of authorship commissioned pursuant to this Agreement (the "Works") shall be considered works made for hire as that term is defined under U.S. copyright law. To the extent that any such Work created for Company by Contractor is not a work made for hire belonging to Company, Contractor hereby assigns and transfers to Company all rights Contractor has or may acquire to all such Works. Contractor agrees to sign and deliver to Company, either during or subsequent to the term of this Agreement, such other documents as Company considers desirable to evidence the assignment of copyright.

You'll also need to add some other stuff like an assurance that the material isn't taken from somewhere else, information about payment and other typical contract stuff. The agreement should be signed before the work is completed.

Do you need to register a patent, copyright or trademark before assigning it? Just to be clear, we're only talking about copyrights. No registration is required for the work made for hire agreement or for an assignment of copyright. A registration isn't necessary for assigning a trademark, either. You would need to have acquired a patent before assigning it since patents (unlike copyrights and trademarks) don't exist until the government says, 'Okay!' You can, however, assign a patent application or the underlying technology rights. That's enough blah blah blah for today, the Dear Rich Staff has got to go get melancholy with Frank.

How Do I Copyright My Mobile App?

Mon, 25 Jan 2010 12:05:31 -0800

Dear Rich: How do we copyright an app and do we need a marketing firm to help us once it is developed? Are we locked into Apple once it is published or can we sell it elsewhere as well? Will you send me an answer here or do I have to look on your webpage for your response? We assume you're asking how to file a copyright application since as you should know from following the Dear Rich blog, you get a copyright automatically once you finish your app--even an alpha version.

Form CO. To file an application, you first need to determine which elements of the app are your original authorship. For example, if you only contributed some text and software code, and you licensed the rest, then you would only claim copyright (and seek registration) for what you created. You indicate that information in Form CO -- the all purpose copyright application -- in the section under 'authorship.' Later, in Section 4A of the form you must list the items for which you are not claiming copyright.

Pick Your Category. As with any copyright application you must establish what "category" of work you are registering. Most software programs are registered as 'literary works' - an anachronism dating back to the fact that source code is written in letters and numerals. However, if your app is primarily pictures, choose 'visual arts' work, and if it is a graphics-heavy product like a game, choose 'performing arts' work. Don't worry if your app seems to straddle two categories -- just pick the one that seems best.

Do You Need a Marketing Firm? The Dear Rich Staff doesn't know whether you should use a marketing firm. That's not our bailiwick. In any case it sounds expensive.

Can You Sell it Elsewhere? We don't see anything in the iPhone Developer Agreement that prohibits your porting from one mobile OS to another.

Will We Send You the Answer? No, we won't send you the answer so if you were hoping for an email response, it's going to get very Godot-ish waiting by your inbox. Sometimes, if we're not overwhelmed with managing our Netflix queue, scrutinizing our credit card statements (What did we order from Czechoslovakia?), and monitoring our TransLink card, we do write back to people.

Other questions about software development? See Stephen Fishman's A Legal Guide to Web & Software Development.

Software Sales, Seller's Permits, and Sales tax

Fri, 22 Jan 2010 06:35:51 -0800

It's AppDev Week!!

Dear Rich: I sell my apps exclusively through the Apple App Store and I'm planning to branch out and sell another program as a downloadable for Mac. Do I have to get a seller's permit and collect sales tax? You won't need a seller's permit for the App Store; you may need it for downloadable software. Read on!

What's a Seller's Permit? A seller's permit, also called a 'resale permit,' authorizes you to make sales and collect sales tax from customers within your state. Since Apple is selling the apps to consumers, they would be responsible for collecting the sales tax if it were due. It's a different story if you are (a) selling downloads directly, (b) selling your apps on media devices such as CDs, or (c) you are selling application services.

State Sales Tax Rules. In most states that collect sales tax, it's for tangible goods--items you can touch, such as jewelry, CDs, clothing, or food. Downloadable software and media has traditionally been off limits for sales tax. However, that may be changing as states have begun to realize the large tax revenues that are being lost. Reportedly, Alabama, Arizona, Colorado, Hawaii, Idaho, Indiana, Kentucky, Louisiana, Maine, New Mexico, South Dakota, Texas, Utah, Washington, and West Virginia now tax media downloads. Some of these states, like Kentucky and Washington, distinguish amongst downloaded materials - for example, taxing downloaded movies, music and eBooks, but not taxing downloadable software. The distinction apparently hinges on whether the download is traditional media or whether it's designed to perform a task--for example to clean up your registry.

California Rules. One example is the California's sales tax rules (Regulation 1502) that state that:

"The sale or lease of a prewritten program is not a taxable transaction if the program is transferred by remote telecommunications from the seller's place of business, to or through the purchaser's computer and the purchaser does not obtain possession of any tangible personal property, such as storage media, in the transaction."

In other words, without a physical object being transferred, no tax is due. On the other hand, if you convert your apps for sale as disk-based software, or you sell a guidebook to accompany your apps, that direct sale would be subject to sales tax because it involves physical goods.

And if that weren't enough ... Also, a few states also tax services, so if you render application services you may have to collect tax on your invoices. (For example, all services are subject to sales tax in Hawaii, New Mexico and South Dakota.) The bottom line is that every state's list of exempt transactions is different, and states have different rules about when and how you must submit the tax. If you're caught doing business without a permit, you could be subject to a number of penalties--such as having to pay the sales tax you should have collected from your customers, along with a fine. You can find information on seller's permit requirements at the website of your state's tax agency. For a list of links to these agencies, go to the IRS website, choose "Business," then "Small Business/Self-Employed," then "State Links." Or, choose your state's link at the list of tax agencies provided at the website of the federal Small Business Administration. By the way, if you do have to pay sales taxes, there are, of course, several helpful iPhone apps for calculating it.

Whew ... was that long enough? The Dear Rich Staff is exhausted!

Oh ... the movie. It's our favorite movie about a tax auditor?

Learn more about software development with Stephen Fishman's A Legal Guide to Web & Software Development.

Can Husband and Wife Developers Be a Sole Proprietorship?

Thu, 21 Jan 2010 06:01:25 -0800

It's AppDev Week!!

Dear Rich: My wife and I create applications together. Do we have to file a partnership tax return or can we file as a sole proprietorship? Whoa! The Dear Rich Staff usually doesn't do tax questions but since this is AppDev week here goes ...

One Approach. According to this IRS directive, spouses that co-own and run a business in a community property state (Arizona, California, Idaho, Nevada, New Mexico, Texas, Washington, and Wisconsin) can operate as a sole proprietorship (or "disregarded entity") and report their business income as part of their joint tax return (which has several obvious benefits) or they can operate as a partnership and file a K-1 partnership return. Couples in non-community property states, see below.

And here's another IRS bulletin. According to this IRS directive, if spouses co-own and run a business in a non-community property state, they must operate as a partnership and file a K-1 partnership return (unless they choose to be treated as a "qualified joint venture.") In all states, if one spouse owns the business and the other works for it, the business is a sole proprietorship, and the owner will have to declare the spouse as an employee or independent contractor. If the spouse occasionally volunteers to help the business without pay, you won't have to declare the spouse as an employee or independent contractor.

Spousal Inspiration. By the way, did you know one of the biggest software companies was founded by husband and wife nerds. Some other couples we love who created stuff together -- Roy Rogers & Dale Evans, John Cassavetes & Gena Rowlands, Louis Prima & Keely Smith, Ashford & Simpson, Charles & Ray Eames, and Masters & Johnson.

What's My Liability for Errors in My App?

Wed, 20 Jan 2010 06:38:36 -0800

[It's App Dev Week -- Question #2!!]

Dear Rich: I've created an app that uses mass transit timetables. Since people rely on these to get to work and things like that I'm a little concerned about whether I will run into problems if there are errors in my app? What's the story on that? If an app provides incorrect information the developer is not likely to be liable to the consumer --- at least not under typical product liability theories. Although there haven't been any cases involving apps, we can analogize to the publishing industry, For example in one case, a book identified poisonous mushrooms as being safe to eat; in another case a map provided incorrect directions; in another case, a person was injured as a result of incorrect published information about enema procedures; and in another case, a woman became pregnant despite following published contraception procedures. In all of these cases, the producers of the information were not liable to the consumer. That's because published information is not considered a "product" for liability purposes. In addition, Apple's Terms of Service make it difficult for a disgruntled commuter to seek redress ("YOU EXPRESSLY AGREE THAT YOUR USE OF, OR INABILITY TO USE, THE SERVICE IS AT YOUR SOLE RISK.") That is not to say you can't be sued over these issues. It just means that you're unlikely to be liable for damages. Of course having incorrect information will torpedo your App Store ratings and your company's credibility.

Apps We Love Dept. The Dear Rich Staff hasn't located any incorrect information in our favorite mass transit app -- iBart -- which lets us know whether we should sprint from the Ferry Building to Embarcadero station. Well ... it used to let us know. One of our New Year's Resolutions is to never again (no,no) run for a bus (or Bay Area Rapid Transit).

Can I Break My Noncompete?

Tue, 19 Jan 2010 06:37:04 -0800

Dear Rich: I'm quitting my job as an SQL developer to strike out on my own doing mobile apps for the Android. The software I did for my employer doesn't have anything to do with the apps I'm working on. A lot of my apps are variations on old arcade games. Do I need to be concerned if I signed a noncompete agreement with my employer? We couldn't say without reading your agreement and knowing which state's law applies. (These states restrict or prohibit noncompetes -- Alabama, California, Colorado, Florida, Louisiana, Montana, Nevada, North Dakota, Oklahoma, Oregon, South Dakota and Texas). Under a standard noncompete you agree not to compete with your former employer for a period of time. If your mobile app business is competitive -- more information needed -- you may be in violation of the noncompete. Here's how some people fight it.

Why Skee Ball? The Dear Rich Staff hasn't bought this app yet, but we look at it longingly. What's holding us back is the disconnect between the memory of skee ball on the Long Beach boardwalk and the idea that we're experiencing something similar flicking our finger. We'll figure it out.

To find out more about noncompete agreements, check out Stephen Fishman's book A Legal Guide to Web and Software Development.