Cooks Source, at the center of a copyright infringement controversy, is out of business

In an alternate universe, Righthaven represents the writers up against Cooks Source, attorneys conduct some cost/benefit analysis before suing, and everyone involved in this journalism-publishing-lawsuit stew fact checks and keeps business-as-usual neat and orderly.  Most importantly, the public trusts the system.

But in this universe, newspapers sic attorneys on their own sources, editors of cooking magazines justify plagiarism and, even though they all rely on Copyright law, no one seems to have studied it.  No wonder the public polices the system.

Well, in lieu of calm in our imperfect world, we get interesting: the recent sensations surrounding Righthaven and Cooks Source illustrate some challenges ahead for the publishing industry.

First of all, they illustrate the complexities in Copyright enforcement.  Righthaven has been suing bloggers who reproduce articles that originally appeared in the Las Vegas Review Journal (“LVRJ”).  Their process is to scour the internet for articles, acquire those rights from LVRJ and then file a lawsuit against the blogger.  They have filed 173 cases so far and settled 73, at an average of $3,500 each.

This, Righthaven maintains, in defense of LVRJ’s intellectual property.  Obviously, there are no heroes or villains, mainly just a lot of cold hard cash.  However, our actors raise real questions about what is protected, what is considered copyright infringement and what value any particular work may have.

Stealing is wrong.  But if a newspaper interviewed you for a piece, and you proudly posted the article with credit to the newspaper, would that be theft?  How about if you only posted your quote from that article?  If there were a theft, what is the best punishment?  What is the value of the stolen material? $150,000?  Is reproduction of an article, without malicious intent or the intent to profit, worth a BMW?  Righthaven contends it is but also would settle for a $3,500 and the “infringer’s” website.

If no one knows there's infringement, how could Righthaven even sue?  Given the choice between $150k and $3k, most people choose to settle and Righthaven never needs to prove it.  The defendants sure would appreciate a tighter analysis though, because settling is only “cheaper” by a matter of degree--$3,500, your website and attorneys’ fees for an article you posted with credit to the paper?

Secondly, these cases illustrate the importance of strong leadership.  A newspaper authorizes lawsuits against its sources?  An editor plaigarizes?  Who’s in charge here?

Copyrights are complex and the Internet is frustrating but that is no reason to abdicate authority, especially in publishing, especially in journalism.  The success of news reporting, whether for a particular region or topic, depends on trust.  Trust is an expensive commodity, one that requires strong leadership promising a watchful eye for the benefit of the publication and the protection of the public.

In the Cooks Source (“CS”) matter, blogger Monica Gaudio found her recipe reproduced in full, without credit or permission and asked that CS apologize and donate $130 to the Columbia School of Journalism.  CS Editor Judith Griggs replied:

But honestly Monica, the web is considered "public domain" and you should be happy we just didn't "lift" your whole article and put someone else's name on it! ... If you took offence and are unhappy, I am sorry, but you as a professional should know that the article we used written by you was in very bad need of editing, and is much better now than was originally… For that reason, I have a bit of a difficult time with your requests for monetary gain, albeit for such a fine (and very wealthy!) institution. We put some time into rewrites, you should compensate me! I never charge young writers for advice or rewriting poorly written pieces, and have many who write for me... ALWAYS for free!" (emphasis added)

Cooks Source might have quoted inaccurate law and been forgiven.  What would a cooking serial know about the law?  It was the lack of competent leadership, embodied in a reaction so caustic and pretentious, that rang the death knell.  The strong reaction online is not surprising when a trusted source attacks an “Everywoman” -- it could have been one of us and so, we each want a say.

The leadership at the LVRJ is not so obnoxious but definitely shows cracks.  Their lack of action concedes defeat.  At the very least, they could claim ignorance on the law but emphasize ethics in reporting and in business practices.

If the negative reactions to these cases cannot be mitigated, the publications lose credibility.  Cooks Source has already had to abandon their Facebook page. They may own the words, we know that.  But the subject matter originates from within the community, especially for these local/topical papers.  It’s a symbiotic relationship and to forget about that is a loss of perspective and hubris at fatal levels.

Learning to react decisively is easier than reforming Copyright Law and definitely the practical, cost-effective choice.  In any case, since before the new millennium, publishers and journalists fretted about the Internet running their industry into obsolescence.  The faithful public, for so long accustomed to, and otherwise nostalgic for, print media, was sympathetic.  How ironic would it be that, in its paranoia, media alienated its public and, in the end, created its own demise?

NOTE: On November 16, 2010, Cooks Source ceased operations.

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Does Teachbook infringe the Facebook trademark?

Facebook recently filed a complaint against Teachbook.com, a social networking site for teachers, for alleged trademark infringement in the Northern District of California.  Specifically, Facebook argues that Teachbook misappropriates the term "book" from its regsistered trademark.  The complaint further alleges that Teachbook dilutes the company's famous mark and causes confusion as to the source of Teachbook.

This excerpt from the complaint summarizes the argument:

The 'book' component of the Facebook mark has no descriptive meaning and is arbitrary and highly distinctive in the context of online communities and networking Web sites," the complaint explains. "If others could freely use 'generic plus BOOK' marks for online networking services targeted to that particular generic category of individuals, the suffix 'book' could become a generic term for 'online community/networking services' or 'social networking services.' That would dilute the distinctiveness of the Facebook marks, impairing their ability to function as unique and distinctive identifiers of Facebook's goods and services.

Analysis

All of the causes of action are predicated on the argument that the "book" portion of the trademark has attained secondary meaning and is therefore distinctive.

That is not so clear.  Perhaps within the context of online communities, "book" does uniquely identify the company's products and services when it is combined with "face".  But "book" might signify origin only when it is combined with "face."

Paragraph 26 of the complaint (First cause of action: Federal trademark infringement) asserts that the instantaneous nature of internet navigation increases the risk of confusion.  Maybe, maybe not.  That is a factual question.  Regardless, this argument seems quite important to the company's position.  The dilution causes of action raise factual questions as to consumer confusion.

Blog co-author and trademark attorney Soyeun Choi posits that Facebook did not have to separate "Face" from "book" in its argument.  Soyeun points out that commercial impression counts, and that Teachbook is attempting to achieve the same commercial impression.  That supports the contention that Teachbook causes confusion as to its source.

I agree with Soyeun's reasoning.  Apparently, though, Facebook has a broader legal strategy in mind for asserting its intellectual property.  Around the same time that the company filed the complaint against Teachbook, TechCrunch reported that Facebook is attempting to register "face" as a trademark.  Although the company has not yet filed for the mark "book," it is effectively trying to claim both "face" and "book" as marks.  If this is accurate, will Facebook and Apple clash over Apple's FaceTime mark?  Further, this raises the flip side of the question above: Does "face" have secondary meaning unless it is combined with "book"?

At the least, the complaint will likely survive a motion to dismiss because there are questions of fact.  It will be difficult for Teachbook to get rid of this complaint that quickly.  Teachbook promises to fight the suit.

What do you think about Facebook's lawsuit and legal strategy?

Douglas Y. Park

Twitter: @DougYPark

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As I wrote in an earlier post, because of an apparent oversight in coordinating its marketing strategy and trademark strategy, Apple faced the prospect of not being able to use the "i-phone" mark in China. That would have greatly impacted its efforts to market the iPhone in China.

I suggested that Apple could purchase or license the i-phone trademark from Hanwang.  The company decided to buy the rights to the i-phone trademark. This move made the most strategic sense, as it was the fastest and cleanest way to secure the trademark.

But the purchase is not without its problems.  Apple's acquisition of the mark from Hanwang is unpopular with the Chinese public, with 80% of those polled being against the deal.  Because of public relations concerns, the companies are not releasing the details of the deal.

How Legally Informed Strategy Could Have Benefited Apple

This example demonstrates the business and marketing strategy benefits of Legally Informed Strategy.  Legally Informed Strategy focuses on integrating legal moves with business strategy. It considers how legal moves will impact the business. Had Apple's product development, marketing, and legal teams worked together, the company could have better optimized its business and legal risks. In this situation, there appears to have been a disconnect between these parts of the company. As I pointed out in another post, business and legal all often operate in separate silos.  The result is unbalanced risk where business and legal risks are not optimized.  Thus, Legally Informed Strategy can strengthen risk management efforts.

Douglas Y. Park
Twitter: @DougYPark

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Soyeun advises her clients on business and intellectual property matters. Her practice includes business transactions from formation to exit, intellectual property transactions, and general business law. I am unfortunate to be able to work on projects with her. Prior to establishing her own practice, Soyeun was an associate for Dan Offner & Associates.

In addition to her practice, Soyeun actively serves the bar. She is President of the Palo Alto Area Bar Association (PAABA) and Co-Chair of the Newsletter Committee of the Asian American Bar Association. This is Soyeun’s second term as President of PAABA, and she has served PAABA in numerous capacities including Editor in Chief of the Bulletin and Co-Chair of the Community Law Night Committee.

Soyeun received her J.D. from University of California Los Angeles Law School and her B.A. from University of California at Santa Cruz in Psychology. At UCLA Law School, Soyeun was Editor in Chief of the Asian Pacific American Law Journal, Recent Developments Editor and Chief Essays Editor of the Women's Law Journal and Social Chair of the Asian Pacific Islander Law Student Association. She also externed for Justice Bamattre-Manoukian in the California Court of Appeal, Sixth Appellate District, and was a Teaching Assistant for Professor Cheryl Harris.

Soyeun also received the Miley W. Manuel Award for Pro Bono Legal Services and was a Fellow of the State Bar's Access & Fairness Leadership Academy.

Soyeun is admitted to the State Bar of California.

Please welcome Soyeun to the blog.

You can find Soyeun on Twitter at @SoyeunDChoi

Patent Drawing of Eli Whitney's Cotton Gin

The New York Times recently reported on the emerging patent market. The idea is that a market where patents can be bought and sold would reduce the costs of litigation and promote innovation. What are the prospects for success of a patent marketplace?

Patents As Commodities?

For a patent marketplace to operate efficiently, it would certainly help if patents can be traded as commodities. However, patents can be difficult to price and value because they exist in technological spaces that are differ greatly in competitiveness and market size. A patent may have multiple product applications that are difficult to foresee, and thus the value can be difficult to reliably estimate.

Further, the value depends on who owns it. A small inventor with limited resources may not be able to commercialize a patent as easily as a large corporation.

For these reasons, among others, Harvard Business School professor Josh Lerner explains:

Yes, you can move in the direction of trading markets for patents, but these are complicated assets that are individualized and hard to value. [Patents] are more like works of art than stocks.

Like auctions for art, the market for patents will be fragmented, with buyers possessing specialized information about markets. The number of potential buyers and sellers will be limited compared to the number of buyers and sellers of stocks. This may limit the efficiency of these markets.

Ocean Tomo's Patent Auction Problems

Patent auctions have attempted to create patent markets. The demise earlier this year of Ocean Tomo's patent auction unit demonstrates the challenges facing suchauctions. After several successful years, Ocean Tomo ran into problems when key personnel left and the recession left buyers reluctant to spend cash.

Ocean Tomo had unique problems. Because of its live auction format, buyers had little opportunity to conduct due diligence on the patents. In addition, Ocean Tomo focused on lower value patents, for which the market is less robust than for higher value ones.

Future auction formats might model art auctions, where buyers have information far in advance of the auction. Similarly, auctions of higher value patents should contribute to a more stable and predictable market making process.

The New Market Makers

A new set of players is hoping to become patent brokers. The New York Times reports:

Other players in the emerging patent marketplace are specialized investment banks, brokers and licensing companies including Acacia Technologies, Altitude Capital Partners, Intertrust, IPotential, Ocean Tomo, Rembrandt IP Management and Thinkfire. Venture capitalists are also interested in this field — Kleiner Perkins Caufield & Byers, for example, is backing Rational Patent Exchange, a company that buys reservoirs of patents in crucial fields and charges fees to corporate “members,” who participate as a defensive tactic to limit potential patent litigation costs.

(emphasis added).

Implications For Patent Trolls, Patent Litigation, and Innovation

If attempts to create patent markets succeed, patent trolls may find it more profitable to become market participants rather than litigants. If this happens, patents could more often end up in the hands of companies who want to commercialize and use technology in products.

The dead weight loss atttributable to patent litigation would be reduced. Innovation should increase because it will become less expensive and risky for all the parties.

Patent litigation is costly and risky. But as I wrote in a previous post, patent trolls are rational in deciding when to bring suit.

While theoretically a patent marketplace should reduce patent litigation, one investor is starting to encourage such litigation. Intellectual Ventures, the largest patent investor, has long raised concerns that it will become a "super" patent troll, though it has not filed suits itself. The company has begun selling patents to investors and companies who want to monetize the patents. With Intellectual Ventures taking a stake in the litigation outcome, buyers have already initiated patent litigation as they try to monetize the patents.

If the market grows and patents are more freely bought and sold, Intellectual Ventures may become an active participant in the market. And the need for owners to engage litigation in order to monetize patents may slowly disappear.

Douglas Y. Park
Twitter: @DougYPark