NEWS

Non-Fungible Tokens and Copyrights

What is a non-fungible token? Non-fungible tokens (NFTs) are unique pieces of data stored on a digital ledger- a blockchain. Non-fungible just means they are unique and can’t be exactly substituted by something else. A dollar can be replaced by any other dollar, making it fungible. But an NFT comes with certain unique properties. Blockchains play a pivotal role by using cryptography to link blocks into a chain of data.

Recently, digital assets have included art, memes, music, videos, digital 3D works, and more.

The unique identity and ownership of an NFT is verifiable through the blockchain ledger and is associated with a license to use the digital asset. But that ownership doesn’t necessarily carry over to the field of copyright. Buying a piece of digital art NFT would grant ownership over the specific art, but not grant proprietary rights over the usage of the art. Underlying copyrights can be negotiated and transferred as part of the price, but shouldn’t be assumed as part of the price.

Unfortunately, copyfraud, a false copyright claim with respect to content in the public domain, is common in the NFT space. Bad actors may attempt to mint an NFT for a work to which they don’t even own the copyrights. While copy fraud has been around for generations, block chains use anonymity features that make it difficult to verify the authenticity of particular digital artifacts, and to track the original owner of a particular digital artifact.

Trademark Registration Protection in the US and Canada

The Supreme Court of Canada (SCC) has determined that registration of a trademark is a complete defense against claims for infringement and passing off. Travelway, a Canadian luggage distributor, owns a registered trademark featuring a cross that looked similar to the Swiss flag. Wenger, the Swiss company behind the Swiss Army Knife, had brought Travelway to court the trademark seeking expungement of the trademark. This was originally dismissed but subsequently allowed, remanding the issues to the Federal Court. In 2019, the Federal Court granted expungement, but dismissed Wenger’s claim for damages.
Wenger appealed this, with the sole issue being their entitlement to compensation. The Court of Appeal held Travelway was not liable for damages, because it owned a trademark, and absent fraud, willful misrepresentation or bad faith, a registered trademark is presumed to be valid.

This is different than the US, where a mark becomes incontestable only after 5 years has passed.

New FishFAQ video: Valuing Patents

There is a new FishFAQ video up on our Fish IP Law YouTube channel. This one is on patent valuation and covers questions like what sort of due diligence is involved in valuation, the main valuation models, disparate valuations and whether you should use an outside valuation firm or not, that are found on our Patent FAQ page covering Patent Valuation.

If you find this helpful, please like the video on YouTube and hit the subscribe button to get new videos as they come out.

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Good News – Chinese Trademark Office Starting to Enforce Against Squatters

In the wake of Chinese athletes’ excellent performance at the Tokyo Olympic Games, there has been a surge in trademark squatting, in an attempt to take advantage of the athletes’ names and related terms.

The China National IP Administration (CNIPA) has cracked down on the squatters and announced the rejection of 109 applications, with both the squatters and representing agencies being listed.

The Chinese authorities and courts are cracking down on bad-faith trademark applications. Nevertheless, some bad-faith applications had matured into registration, the owners of the defected trademarks sometimes “enforce” their pirated trademarks against the victims of the bad-faith applications. Such owners are categorized as IPR abusers. Now that the Supreme People’s Court (SPC) permits the victims or defendants to claim compensation for their reasonable expenses, it will be harder for the abusers to profit from trademark squatting. Instead, the squatters shall compensate for the loss caused by the abuse if they maliciously initiate lawsuits. The Interpretation will make trademark squatting or IPR abuse less profitable or riskier, which is certainly helpful to purify the IPR environment in mainland China.

The CNIPA’s current fees were set very low to ensure people were not shut out of the application process. But this had the unintended consequence of dramatically increasing trademark applications and piracy. In an attempt to readjust to an optimum fee rate, the CNIPA has sought public input on fee structures.

On August 25th they officially responded to proposals from the All-China Federation of Industry & Commerce’s (ACFIC) and have suggested the following changes to Chinese trademark law:

1) To limit the scope of entities qualified to file trademark opposition and invalidation in order to prevent bad-faith oppositions. The CNIPA suggests the possibility of permitting the third party’s opinions and adding the non-use cancellation applicant’s burden of proof;

2) To lift the threshold of opposition. The CNIPA will consult with other authorities about the fee structure for trademark matters and newly design liability of compensation;

3) To improve delivery procedure of opposition documentation;

4) To publicize evidence and have hearings in oppositions; and

5) To strengthen crackdown on bad-faith applications and representation and build fair, honest and creditable market environment.

Australian Design Patent Statute Amendment

The Designs Amendment Bill 2020 passed both houses in Australia on August 30 and is now waiting Royal Assent.

This bill introduces a 12-month grace period for design patents, bringing it in line with other significant jurisdictions such as the US, Europe and Japan, which already provide the year grace period.

Australia’s previous lack of a grace period meant that any disclosure would show up as prior art and therefore prove fatal to patent applicability in Australia. Now an American designer, for example, would be able to disclose the design in the US, and still apply in Australia within one year.

 

Patented: 1000 Design Patents by Thomas Rinaldi- Book Review

Thomas Rinaldi’s new book- Patented: 1,000 Design Patents, covers design patents, one per page and arranged chronologically, from 1900 to the present.

The book documents a shift in design patents over the years. Unlike utility patents, which cover how inventions function, design patents cover only the look of the object. Rinaldi traces the need for design patents back to the beginnings of mass production, when it became easier to produce objects on a large scale, and easier to copy designs.

When design patents were introduced in 1842, there were only 14 designs registered. By the 1930’s, the patent office was issuing 3,000 design patents per year, and 6,500 by 1941. That number wasn’t surpassed until 1989 but has since swelled to around 35,000 per year.

The huge increase in design patents today has come mostly from the tech industry. A landmark case between Apple and Samsung led to Apple being awarded $539 million. This amount was vastly larger than the usual sums awarded for design patent infringement, and in turn led to tech companies engaging in an arms race to patent as many details of their products as possible. These assets are included as part of patent portfolios that can be sold, licensed, or traded, and act as insurance policies against potential infringement litigation.

The book is really a documenting of design: both the stylistic changes through the decades, as well as the continuity of patent drawings, which to this day demand simple black linework on white paper. Pages will show evolution of products through the years, some relatively stable in their designs, others changing more radically. One can see on the pages the design paradigms of the shifting times- from more highly ornamental in the early decades of the 20th century, to the art deco look of the 30’s, to the ‘space age look’, etc.

You can find more information about the book here:
https://www.phaidon.com/store/design/patented-9781838662561/

 

China implements stronger punitive damages

China has recently made some changes to the legal system allowing up to five times the punitive damages for intentional and serious intellectual property infringement. This is part of an ongoing commitment to making a more favorable environment for trade, investment, and innovation.

When can punitive damages be applied? When the defendant has been determined to have intentionally infringed IP rights and the circumstances were deemed serious.

Intentional infringement includes factors such as:
Continuation of infringement after having been notified and warned;
There have been any of a number of legal connections between the plaintiff and defendant;
Piracy of false use of registered trademarks;
Other circumstances that can be regarded as intentional infringement.

The seriousness of the infringement will consider factors such as continual infringement even after having been punished or deemed liable by the court, forgery, destruction or concealment of evidence of infringement, huge profits obtained from the infringement or huge losses suffered by the right-holder, endangering of national security, public interests, or personal health, etc.

Evidence of IP infringement is often difficult to get, and can cleverly hidden in a variety of ways, making it even more difficult for the rights-holder to obtain. Under the revised system, the method for calculating punitive damages is done with a proof obstruction system. Refusals by defendants to cooperate with providing the required records will constitute obstruction and they will bear adverse legal consequences.

The court go through a six-step process for determining punitive damages:
1) Determine if the IP right has been infringed
2) Review of punitive damages were requested
3) Determining if infringement was intentional
4) Determine if serious circumstances were involved
5) Determining the amount of punitive damages
6) Determine the multiple of the punitive damages

China has now provided a clear system to the courts for determining and applying punitive damages. This reduces the burden of proof of rights holders, and ultimately strengthens the protection of IP rights.