Law & Business

Law & Business

By Anthony M. Verna III, Esq.BusinessNewsBusiness News
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Law & Business episodes

  • Law & Business – Episode 38: Rev. Mark Schaefer, the Chaplain of American University.

    Law & Business – Episode 38 – Anthony sits down with the Rev. Mark Schaefer, the Chaplain of American University. Yes, that means that this episode takes a little different path than the usual episode of the “Law & Business” podcast.

    Mark talks about his history from practicing law to being a member of the Methodist clergy. Mark also discusses some of his philosophy and how law and religion relate to each other.

    Mark’s book is The Certainty of Uncertainty: The Way of Inescapable Doubt and Its Virtue, published by Wipf & Stock. The book takes a look at our desire for certainty, explores the unavoidable nature of uncertainty, and reveals how embracing uncertainty and doubt is transformative for our selves and for our world. Of course, the book can be found in bookstores and on Amazon.

    Rev. Mark Schaefer is the tenth University Chaplain in American University’s history, appointed to the position in September 2016 after having served for 14 years as AU’s United Methodist Chaplain. He is a graduate of Wesley Theological Seminary and is an ordained elder in the Baltimore-Washington Conference of The United Methodist Church. Mark has also been teaching as an adjunct professor in the Philosophy and Religion Department since fall 2006. He has also been a summer instructor in Biblical Greek and New Testament at neighboring Wesley Theological Seminary. Prior to his ecclesiastical career, Mark was a practicing attorney in the District of Columbia and is a graduate of the George Washington University Law School. Mark holds a B.A. and an M.A. in Russian Language and Literature from the State University of New York at Albany. A native of New York State, he was born in Buffalo and grew up in Center Brunswick, near Albany.

    Here is the full transcript of the conversation:

    Anthony Verna:
    Thanks for listening everybody. Welcome to the law and business podcast. We are recording in DC this week at chatter, the only podcast studio restaurant hybrid I’ve ever known. I’m here. Marc, you’re recording. Thanks for recording for us. Yes, we are recording. We’re rolling live right now. Our guest today is the American University chaplain, Mark Schaefer. Mark, thanks for, for being with us. Thanks for having me here. One of the, the most interesting facts about you and the reason why, why I have you here with me is because you used to practice law. Technically, I still do. I still, I still pay my bar dues so I still can hang a shingle outside my office I suppose. But yes, I don’t practice nearly as much as I used to. I mean, this seems like a waste of money if that’s correct. Well, it’s, it’s honestly it’s so that because I know people are going to ask me for legal advice from time to time.

    Mark Schaefer:
    It’s to avoid committing malpractice by offering legal advice without the license to practice law. And you know, because if ever my family or friends gets into trouble, I want to be able to help them in some meaningful way. So that’s why I keep the license up to date and that way I’ve got that in my back pocket.

    Anthony Verna:
    So let’s go here. How do you go from practicing law to, to a vocation? I mean, what changed? What, what clicked in your mind? What flipped there? I was going to ask how did I switch sides, which is a little unfair.

    Mark Schaefer:
    I’m still a lawyer. I take that a little personally, but, honestly it was the intersection of questions of justice that did it. I was working in a law firm here in DC, a smaller practice, with an attorney who is very active in the DC voting rights movement. Um, and so we would have conversations about DC voting rights, about, um, possible solutions to the issue. And one of the things that occurred to me in our conversations was that there had not yet been laid a sufficient moral argument for district voting rights. And that is before you get to the legal and political solutions for how you enfranchise the citizens of the district of Columbia, you have to actually get people to understand that the disenfranchisement of more than half a million American citizens, who are, who pay taxes, who are sent off to fight foreign wars, who are subject to all federal laws and regulations and have no vote in the United States Congress is immoral.

    Mark Schaefer:
    So I remember thinking, well, there is a role here for the churches and for the communities of faith to get involved. And I had recently become a member at foundry United Methodist here in DC, just a very active, a church in the community. And I went and proposed to them a mission group to advocate for the voting rights as a moral and ethical issue. I said we would avoid coming up with a political solution, you know, statehood, all that. So we will just simply make the case that this is an immoral state of affairs that the church care about. And so they gave me the permission to create that group. We got a number of young adults involved in that. We drafted positions, we had information sessions, and we actually were ultimately able to get the United Methodist Church as a whole to adopt our resolution as a, as an official statement on the issue.

    Mark Schaefer:
    Um, but when I did that, I started to get noticed in the congregation and people started to invite me to be a part of this effort and that effort. And before long people were saying, have you ever thought about seminary? Have ever thought about the ministry? Um, and to be quite honest, I resisted as long as I could until I came to the realization that, um, the law as much as I cared about it was not fulfilling the vocational part of me. And I guess I had done it because it seemed like a practical thing to do, but I don’t know that it ever really spoken to my heart. And so the ministry became an avenue for that. I think a lot of lawyers have that particular problem as well that there’s a mental aspect of practicing law.

    Anthony Verna:
    There’s sometimes an emotional aspect of practicing law and as somebody who litigate, um, I can certainly attest to the ups ups and downs on that. And even today, for example, I had a conference call with the magistrate judge and opposing counsel and the other side. And one of the defendants is also a pro se in the, in that representing himself in the case. And emotionally you can go up and you can go down to the matter of of minutes. But ultimately then I hang up the phone and I’m like, well, we’re still sitting in the same position we were a half hour ago. Absolutely nothing has changed. And so I can understand where sometimes practicing law isn’t really all that all that fulfilling. How were you feeling not fulfilled in practice of law?

    Mark Schaefer:
    You know, honestly, it’s kind of a paradox to me because I was working with a great boss. I found the work interesting. Um, he was a good person to learn from and to work with. Um, we were doing interesting things on the DC level. We were, uh, we had won, uh, an award to draft some legislation to reform our regulatory structure. And I mean, there are all kinds of interesting things that were going on. It was actually starting to make a little money, you know, things like that. Um, I just think that in, in the long run it wasn’t what I was meant to be doing. And there was a part of it did that where my days felt that they were the same. There was a kind of a sameness to sure that it found hard to kind of overcome. Um, but what’s interesting is that when I went into the seminary, it was my legal training that I found helped me the most in deconstructing complex dense theological arguments and, and making ethical cases, you know, making ethical argument. I remember my, a Christian ethics class, our professor said, I don’t even really care what answers you come up with to these questions.

    Mark Schaefer:
    I just want to understand your processes correct. And all my friends turned and looked at me and said, you’re loving this, aren’t you? I said, this is how I think it’s the process that matters.

    Anthony Verna:
    And as somebody who’s Catholic, I’m used to get bishops, archbishops and cardinals who are lawyers, or at least have a law degree. And then also, right, also went to the seminary.

    Mark Schaefer:
    I mean, for centuries it was the same profession. These are the teachers of the law, right? I mean, these are the folks who understood the rules. And in some ways the lawyers in our society occupy the niche of the priesthood. And in an older, more ancient society, you know, they know all the magic words to say, right? They understand the intricacies of the, you know, the mysteries of the temples and to get things done in ways and they occupy that kind of center place in our commerce and social and political life. That would’ve been a priesthood at an earlier age. So I think on some level it’s the same career. I’m just, you know, working in a different organization.

    Speaker 2:
    So, so what is the, what do you see as a crossover between justice and morality now that you’ve stopped practicing law? Because there are some times when, when practicing law is not necessarily very just, I, I, you know, you and I were having a conversation about copyright law and in the United States, if a one does not have a copyright registered, you can’t even walk into court. Even if somebody is infringing you, worldwide, those statutes are written very differently, right? Like, what’s the justice if, you know, an artist can’t, you know, can’t get recompense for, uh, for somebody else, you know, stealing and swiping ideas.

    Mark Schaefer:
    For example. Well, it’s from a religious point of view, justice is the equal access to the levers of power. That is, it’s the idea that every single person has the ability to participate in the community, to participate, to have access to the resources of the community, to have access to the influence on the community. The decision making of the community regardless of station, regardless of class, race, gender, sexual orientation, you name it. That, that’s, that’s the basic concept of justice. What a court system does is it’s attempting to provide a, just result within some construct, but that may or may not be the same as what divine justice course. Right. And, and I think that’s, you know, where there is a need for humility in any system of justice is to understand that it is imperfect. Um, I know that there is, there’s a difference between the just result and the true result. Right. Um, for example, if a person gets off, uh, because the state was unable to prove guilt, that is the just result, but it may not be the true result. That person may have actually committed that crime. Right. And which case you have set someone free who is in fact guilty, but in fact guilty and just guilty aren’t the same thing.

    Mark Schaefer:
    Right? Because you want to the, because the overarching thing is the state does not have the power to remove your liberty without having proved that. That’s the just principle that is upheld by even when a guilty man goes free from a crime that he committed. So I think part of it is also understanding that there are different levels of justice and sometimes the system itself is just even when the result is not. And that is, that’s something to bear in mind as well. So I think, you know, when I look at the questions of morality and justice, it’s about aspiring for that higher level of justice of, of that sort of, where is the system pointing toward? Is it pointing toward protecting the rights of all people or is it pointing toward enshrining the privileges of a few, in which case the individual just results don’t matter as much as where the overall system is, is pointing.

    Anthony Verna:
    Understood, understood correctly. How does that then apply on your daily life?

    Mark Schaefer:
    As a minister, well, I think what that means is that I have to be prepared to call out the systems that are unjust, not just simply the results that it’s, it’s, and to help people to understand that for from my perspective and I’m United Methodists or Christian denomination, that from my Christian perspective, Christians are required to speak out on behalf of justice. That means that we are about reforming the very systems themselves. This is an idea known as the Social Gospel, the idea that the gospel is not meant simply to convert individuals but to convert entire communities to being more just more righteous, more equitable. This was a movement that, you know, sought to end a child labor that sought to end, you know, tenement housing that sought to end all manner of social injustices, um, and aimed themselves high that way.

    Mark Schaefer:
    So I think where my task is is to help people to understand that it is actually part of a, of a living, thriving spiritual life to work for justice on a systemic social level.

    Anthony Verna:
    And when you talked about starting at at the church and getting that particular ministry off the ground and then you said, well then we got noticed by the entire Methodist church. I would assume that as a lawyer that helped you because there’s has to be a lot of procedure in that. Like no matter what the hierarchy is, you’ve got to deal with rules and you have to deal with the procedure. And that has to like for me, I would say the most frustrating part of litigating is dealing with rules and getting an email like the other day, well these Rule 26(f) initial disclosures don’t follow this. And then, and, and at some point I get, I get frustrated over the rules and then when I joined another organization, I, I tend to go, okay, I already deal with enough rules. So I want to get past the rules here. But, but that has to help you in some aspect.

    Mark Schaefer:
    I mean the, the church is a rule driven organization. Like anything else. I mean, it’s a human institution. And so we’ve, I mean, the United Methodist Church has a book of discipline, uh, which just sounds harsher than it actually actually is. Um, now that I think about it to outsiders, that might sound a little strange. Um, but the book of discipline is our Constitution. It’s our rule book. It’s our, it’s our statutes and it, you know, there are procedures for how things are done. And so what we do is, so for example, the, the resolution I talked about, that was something we had to get passed by my local congregation and we had to ask them to forward it to the annual conference, which is the regional body. But, and they afforded it to the regional body. And the way we had drafted it said, we call on the United Methodist Church to do, to support, you know, voting rights and sorry. And that language actually meant that that resolution then got automatically forwarded to the general conference because it called on the general church. The resolution itself then went automatically to the national body that meets every four years. And then they adopted it as their position statement.

    Mark Schaefer:
    So part of it is, you know, just drafting it correctly, drafting it in a way that moves it up through the, through the chain of, you know, authority in the denomination. Um, other parts are knowing how to draft things so that people will be persuaded by the argument, you know, um, not having 18 million where as-is, you know, and having a numb and making, building a case sort of because we start here, that leads us here. That leads us here. I mean there are times when I’ve seen my legal career really influenced the, some of the things I do in the ministry. And then sometimes it actually works the other way around too, which has also been kind of interesting to see how so? Well, so when I was in law school or in seminary, I still had a case that was left over from when I was practicing and we had an appellate level argument. We had oral argument before the DC court of Appeals. And, um, I had taken a couple of homiletics classes by then and had become much more comfortable with sort of a preaching style that told a story. And so rather than get up and just read through my yellow legal pad worth of notes, I told the judges the story of the case, I walked them through it. I made it sort of a narrative that was understandable and amend, even was able to kind of tie it all up in a nice little bow at the end, um, in the way that I would have with a sermon on some level. Um, and I think that that helped tremendously because it made it clear what the points were that I was going for, what the main thrust of the argument was and helped the judges to center what their response ultimately was around the way I had framed it. But I think that’s something that law school doesn’t do.

    Anthony Verna:
    No, it doesn’t.

    Mark Schaefer:
    Well, even even a boy, you’re giving me flashbacks to my moot court class and, and my, um, you know, and we’re writing classes and we don’t talk about what the story is. We talk about the formalities, we talk about case citations, we talked about the holding of this case, and then it compares to that case. But on the same token, you don’t focus on telling your client’s story and communicating that right to whoever the here is, whether it’s a judge or a jury. Right? And there’s, there’s something that, you know, while any professional has, right, is that it’s what’s called the curse of knowledge. It’s where you know what you’re talking about. And so you assume other people know what you’re talking.

    Mark Schaefer:
    You are completely correct about that. And, and I think at that three lawyers in a room and nobody else can can jump into that conversation. And, and so what they are is bored at the two of us right now. Well, I think what happens is, you see, it’s so you’re making a case to human beings though, right? You are making your case to human beings who may or may not understand the intricacies of what you’ve dealt with, especially when you’re talking with a jury. If you can’t translate that into ordinary experience, then what do you then what are you doing? Even, you know, and I think that’s um, you know, that’s a lesson from the preaching side of things is, you know, I can come at you with all the biblical interpretation.

    I can explain who king Nebuchadnezzar was and why the Babylonian Empire fell and all this stuff. But if it doesn’t have anything to do with how you might be losing your job this week, right, then what does it matter, right? That’s the, the whole point of this kind of proclamation and I think, and also the advocacy piece and the law is to be able to tell the stories of those who need help telling their stories. Right? That’s why people come to lawyers as they need someone to advocate for them, right. To speak on their behalf. And so if we’re not actually good at the vocal thing at the communicating, then we’re not being good lawyers. And so I, you know, I remember the legal research and writing classes and how they weren’t focused on style or clarity, they were focused on checking those boxes. Right.

    Is Everything Blue Book cited correctly at you? You know, did you, I tell the size the period and ebbed, you know, all that kind of stuff. You know, I, I’ve never been able to tell the difference between an italic period and a non italic one. Right. But what you see is that there is too much of an emphasis on the form sometimes with out an emphasis on how that form needs to be used to, to serve the message that’s being made.

    Anthony Verna:
    Sure. And you know, reminds me recently, I filed a case against Kylie Cosmetics. That’s a matter of public record because I did an interview for it, but recently, my client just sends me all of these news articles and clippings on the story or even YouTube videos about the case. And there are a lot of people out there. And this is the interesting part for those who don’t understand my particular area of law. And I know that intellectual property is very niche and I understand that a lot of people don’t, don’t truly understand it. And seeing videos that say things like, companies sues Kylie Cosmetics for stealing makeup. And it’s like, “No, no, no, no, no, no.” That’s not, it, that’s not it at all. How can lawyers, you know, now that you’ve, you’ve gotten this training from, from multiple professions, how, how can lawyers communicate better, especially when we’re in these, these niche areas? I mean, the general public doesn’t, there is, there is a need for lawyers and ministers and other professionals to communicate better. There is also a need for journalists who can have the time to learn about these professions. Because what I notice is that, um, science and religion have one thing in common is that the articles about both are often incorrect.

    Mark Schaefer:
    You know, they, they often claim that something has been done that has not actually taken place. You know, oh, the pope changed a policy. No, the pope articulated something that’s been on the books for 700 years or, or scientists have discovered this and now the scientists did nothing of the kind, you know? And so there’s, there’s a lack of basic literacy in the culture about these things. So part of it is that we need more journalists because we need journalists who can actually take the time to focus on in particular fields and become expert in them. But then we also need to, in our professions, recognize that people don’t actually understand what we’re talking about and define and to think carefully about, if I didn’t know anything about this case, how would I explain what happened? You know? And how would I talk about the events that have taken place in ways that make sense to people without any particular knowledge?

    Mark Schaefer:
    That’s a hard thing to do. I mean, I know that I’ve gone back through the things that I’ve written and said, wow, if I, you know, I don’t know how anyone understood this. It was so clear to me at the time, and now that I read it, I realized it’s completely insider language and insider even ways of framing things. Um, and it’s tough. It takes a lot of training to look at your own stuff and to ask yourself, what would this sound like if I didn’t already know what I was talking about now? And, and I agree with you completely that it is a skill that we’re, that’s hard to grow. Yeah. Very difficult. Since we are running out of time, I will let you plug your book because I think there’s a, I think there’s a big, I think there’s a big intersection there anyway, so, so, so tell everybody about your book a little bit.

    Mark Schaefer:
    Sure. The book is called The Certainty of Uncertainty, the way of inescapable doubt, and it’s in virtue, and it is meant to address the problems that people have with uncertainty, both those who are, doing everything they can to stave uncertainty off or those who are feeling like they’re drowning in it and that by doing so, they’re doing something wrong in their lives. Uh, the basic argument of the book is uncertainty as a fact of life. And actually it offers us a lot of opportunity for more meaningful life when we embrace uncertainty in doubt than when we try to clamp down on rigid certainties in our thinking and in our belief systems especially. Um, and where I think it intersects is the willingness to admit that you don’t know something actually opens you up to different kinds of relationships and different kinds of conversations than when you feel that you have to be the expert or the authority or have to have all the answers.

    Mark Schaefer:
    It forecloses the ability, even in this conversation to say, well, what, what might not I understand, what might I misunderstand about this? Or why might I not have considered about the way I’m making this argument? Is it really self-evident or is it possible that there’s a lot of room for interpretation in doubt here? So I think that’s, that’s where they tie together for me.

    Anthony Verna:
    And, and you know where I see that a lot is when a potential client comes to me for a case and they say, you know, we talk about it and then they say, give me a percentage. I want to, I want a percentage to know what’s my chances of winning. Right. I don’t know the answer. I can sit there and I can make the arguments. I mean, I certainly know when, when somebody has, uh, you know, a losing case for sure. You know, you know, something simple. Well, you’ve never registered your trademark, you’ve never registered your copyright. Um, you’re, you’ve been selling your, your product for three years and you’ve never filed a patent. So, I mean, yes, zero. Right? But I, you know, outside of that, the answer truly is, I don’t know. I can make an argument. My job is I can make an argument to, to the court if I can’t do that, I don’t want, I don’t want to handle your case because it’s not ethically proper.

    Mark Schaefer:
    Exactly. And I think allowing people to embrace uncertainty also allows them the opportunity to, well, it’s actually, you know, it’s the difference between a kind of a brittle strength and a, and a resilient strength, right? As the brittle strength requires on having everything figured out and everything known in certain and those things snap where they, they crumble like houses of cards when anything is pulled apart. The resilient strength is the one that admits that it doesn’t have everything worked out but commits to the course of actions, right? I don’t know, we might not win this case, but this case is important. So let’s go forward and um, and if it doesn’t work out, we knew that going into it. And so we can rebound, we can try something else, we can do some other course of action. And I think that that’s something we’re not seeing a lot of. In our day and age, we’re seeing a lot of people who are feeling called to kind of entrench into these certainties. And especially in the political arena where it’s just not even possible anymore to admit the other side might have a point. You know, it’s a, you can’t even say, well you know, that idea, it has some merit. We don’t, we don’t agree with it, but it’s not completely out. It’s not, you know, completely out of the blue. We can’t even get to that point because that sounds like being a traitor to your own side by acknowledging the other side might have some, you know, some small foothold in the truth. And I think if we can get to the point where we become comfortable with not having it all worked out, then that allows for greater community and for greater conversation.

    Anthony Verna:
    And how can, how can people find your book?

    Mark Schaefer:
    They can find The Certainty of Uncertainty if they are in the DC area. IIt’s at a number of our local booksellers. It’s at um, Politics and Prose. It’s at Kramer Books and it’s available on Amazon and thecertaintyofuncertainty.com or links to other online resellers, including the, uh, the publisher itself with in stock where you can buy copies in bulk at a discounted rate.

    Anthony Verna:
    You’ve got that, that answer down pat.

    Mark Schaefer:
    It comes with the territory.

    Anthony Verna:
    Mark, thank you so much for coming on and, and doing this interview with me.

    Mark Schaefer:
    You’re very welcome. Thank you for having me.

    Anthony Verna:
    Thank you.

    27 min
  • Video Blog 3: The Importance of a Copyright Registration

    Why does someone need to register a copyright? It's quite simple. The statute requires that a potential plaintiff must have a copyright registration certificate before walking into court. The Supreme Court affirmed the plain language of the statute in March 2019. It is also better for the types of damages that a plaintiff in a copyright infringement lawsuit can ask the court for.



    Registration Required for a Lawsuit



    Registration of a copyright occurs, and a copyright claimant may commence an infringement suit, when the Copyright Office registers a copyright. Upon registration the copyright, however, a copyright owner can recover for infringement that occurred both before and after registration.



    Under the Copyright Act of 1976, as amended, a copyright author gains “exclusive rights” in her work immediately upon the work’s creation. 17 U.S.C. §106. A copyright owner may institute a civil action for infringement of those rights, §501(b), but generally only after complying with §411(a)’s requirement that “registration . . . has been made.”



    Registration Required for Copyright Damages\



    One of the greatest advantages of registering a copyright pertains to the ability to recover statutory damages and attorney’s fees in a successful action. Given that many infringements costs many thousands of dollars to prove in court yet only generate provable damages of minor amount, the inability to collect significant damages and incurred attorney’s fees for infringement of a non registered copyright may make the difference between a successful action or a Pyrrhic victory.



    Here is a lightly-edited transcript of the video:



    Hi, I'm Anthony Verna, managing partner of Verna Law, P.C.
    We focus on Intellectual Property and Advertising Law.



    This past week I had a phone call with the judge and the
    plaintiff in a case where I'm representing the defendant. The plaintiff sued my
    client for copyright infringement. One little problem though with the
    plaintiff's case: the plaintiff does not have a copyright certificate from the
    Library of Congress. Well, of course that's a bit of an issue.



    Recently as a matter of fact, in March, the Supreme Court
    ruled that you must have a certificate from the Library of Congress before you
    start an infringement lawsuit. Now, this has been written in the statute since
    the Copyright Act has been passed, but a lot of lawyers started to do this
    little trick of filing the application for a copyright, showing that there's a
    number for the application and then filing a lawsuit.



    Some judges have accepted that, but the majority of courts
    have not.



    So we had this split in which some judges said the application
    counts as a registration and some cases in which, of course the application is
    just that: an application. That split was recently resolved by the Supreme
    Court.



    This isn't an ideal situation for a plaintiff if your copyright is being infringed. You need to have that copyright certificate for not just being able to walk into court, but also being able to claim extra damages, which we call statutory damages, which are made by the judge and really are punitive in nature as well as the ability to ask for attorney's fees.



    If infringement happens before a certificate is issued,
    the only damages that plaintiff can ask for is the actual damages of the
    infringement. So in other words, lost profits.



    In order to actually get into court on a copyright infringement
    suit, you need to have that certificate.
    0 min
  • Video Blog 2: Trademark Licenses – Don’t be Afraid

    Being a trademark licensee means that your business is using the trademarks of another business in order to create products that the licensor (the trademark owner) cannot or will not create. This creates a bigger pie for both the licensor and licensee and then the licensee can pay the licensor a royalty to use the trademarks.



    What Is Trademark Licensing?



    Trademark licensing is the process by which a registered trademark owner, called a licensor or proprietor, allows another party, called a licensee, to make and distribute specific products or services under the licensor's trademark agreement. Trademark licensing is a type of merchandise agreement.



    The licensor receives a certain amount of money or royalties, a
    percentage of all sales, in exchange for sharing the trademark. This
    compensation is also called consideration. Fashion and consumer products
    concerned with sports and entertainment are often sold under a
    trademark licensing agreement.



    The licensee usually creates a trademark licensing agreement, but a licensor can also create this document. Both parties usually agree upon the terms before creating a trademark licensing agreement.



    Here is a lightly-edited transcript of the video blog:



    Hi, I'm Anthony Verna, managing partner of Verna Law, P.C.
    where we focus on Intellectual Property and Advertising Law. I've had some
    clients who've asked me about licensing, and sometimes licensing is very good.
    I mean there are some products that don't work unless it's actually licensed
    from somebody else. Well, yeah, go Eagles.



    One of the big issues with licensing is of course you're
    in a contract with a partner, so you as the business owner are now taking
    somebody else's intellectual property and you're using it on your own product.
    So you will have to account for product quality. You're going to have to
    account for obviously sales.



    What a lot of people are concerned when they talk to me
    about licensing are minimums, royalties, those payments that you're going to
    send to, your licensor, and, and really if that license or is going to work
    with you.



    What I, always tell clients or potential clients who are
    looking to be a licensee and work with a licensor and take that intellectual
    property is number one: Your goal is to make sure that there's a bigger pie for
    both sides of the transaction.



    So there's a bigger pie for you. Yes, you'll be paying royalties, but in using somebody else's intellectual property, the goal in that particular case is to make sure that your pie is bigger and their pies. That's number one.



    Number two, does your product fit well? You don't
    necessarily know that and they don't necessarily know that. And the only way
    that you're going to know that is by asking and starting those particular
    contract negotiations.



    Another issue that clients come to me with is the size of,
    of the license or are they going to work with me if I'm a smaller licensee?



    And the answer to that is sometimes and, again, the only way that you're going to know that is by sitting down and having those contract discussions. Certainly a lot of people are afraid that that some licensors, like the NFL, are not going to work with them and a lot of sports leagues have programs for smaller, licensees and having smaller businesses so that hopefully those businesses grow.



    Why? Because, if those businesses grow, then the licensor’s businesses grow as well. And that's one very important aspect of finding out if there's a program for work...
    0 min
  • Video Blog 1: Talking about trademark searches.

    Potential Plaintiffs



    A trademark search shows
    possible plaintiffs.  Does your business’ trademark cause a likelihood
    of confusion with other trademarks that are already registered or in
    use?  It is impossible to judge without a trademark search.



    Potential
    plaintiffs are those whose marks are either registered before your
    mark or in use before your mark.  Many businesses find themselves as
    defendants in either trademark oppositions in the Trademark Trial and
    Appeal Board or in trademark infringement
    lawsuits in federal district court because of the lack of a trademark
    search.  Finding these potential plaintiffs helps to judge the risk of
    being a defendant in a trademark dispute.



    Alternatively, if a
    business has already registered a trademark while your mark is in use,
    then you will need to dispute that registration.  Is it worth that
    dispute or is it more economical to find a new trademark?



    Analysis of the Trademark



    A trademark search reveals how strong your trademark choice is.  For example, if there are 50 other similar trademarks in economically related goods/services, then the trademark you chose is particularly weak, especially if the trademark itself is related to the goods/services the mark is to represent.



    If a trademark search shows that a trademark is in a crowded field, then it may be better to find a new mark.  Fanciful trademarks are stronger and will probably live in a less-crowded field, making them easier to police and enforce.



    There are five levels to trademark strength.



    Fanciful marks



    * A fanciful/inherently distinctive trademark is prima facie registrable, and comprises an entirely invented or “fanciful” word. For example, “Kodak” had no meaning before it was adopted and used as a trademark in relation to goods, whether photographic goods or otherwise. Invented marks are neologisms which will not previously have been found in any dictionary.



    Arbitrary marks



    * An arbitrary trademark is usually a common word which is used in a meaningless context (e.g. “Apple” for computers). Such marks consist of words or images which have some dictionary meaning before being adopted as trademarks, but which are used in connection with products or services unrelated to that dictionary meaning. Arbitrary marks are also immediately eligible for registration. Salty would be an arbitrary mark if it used in connection with e.g. telephones such as in Salty Telephones, as the term “salt” has no particular connection with such products.



    Suggestive marks



    * A suggestive trademark tends to indicate the nature, quality, or a characteristic of the products or services in relation to which it is used, but does not describe this characteristic, and requires imagination on the part of the consumer to identify the characteristic. Suggestive marks invoke the consumer’s perceptive imagination. An example of a suggestive mark is Blu-ray, a new technology of high-capacity data storage.



    Descriptive marks



    * A descriptive mark is a term with a dictionary meaning which is used in connection with products or services directly related to that meaning. An example might be Salty used in connection with saltine crackers or anchovies. Such terms are not registrable unless it can be shown that distinctive character has been established in the term t...
    0 min
  • Law & Business Podcast Episode 36: MillerCoors sues AB InBev (Anheuser-Busch Companies, LLC) over "corn syrup" campaign

    In Episode 36 of the “Law & Business” Podcast, Anthony and producer Marc Sterne talk about the MillerCoors lawsuit against AB InBev over its “corn syrup” campaign, which started during the Super Bowl. This episode (minisode? miniwebisode?) was recorded at Chatter in Washington, D.C. Thank you, Marc for recording and helping with all the episodes at Chatter.

    MillerCoors is suing Anheuser Busch InBev, seeking injunctive and

    other relief for what it calls “a false and misleading advertising
    campaign targeting Miller Lite and Coors Light.”

    It’s the latest step in a brewing marketing feud that began during the Super Bowl. Bud Light, in three spots that aired during the game, attacked MillerCoors’ Coors Light and Miller Lite brands by name, noting that those brews use corn syrup.

    MillerCoors, in its complaint filed in federal court in Wisconsin, said the ads are meant to deceive beer drinkers into thinking its beers contain corn syrup and high-fructose corn syrup in order to boost sales of Bud Light. Plus, it says the ads dilute its trademarks, which would be in violation of the Lanham Act. MillerCoors seeks a halt to the “false and misleading” ad claims and “willful trademark dilution,” saying that the ads have diluted the goodwill associated with its brands and have damaged the reputation of the brands.

    Anthony and Marc discuss the complaint, the false advertising claims, the possible harms to the MillerCoors trademark, and defenses for AB.

    “AB’s purported rationale for this campaign, ‘transparency,’ is a classic example of corporate double-speak,” says AB’s complaint.

    A predicted defense for AB is going be the plain meaning of the words in the advertisement. AB is saying that its Bud Light is not brewed with corn syrup and that MillerCoors’ Coors Light is. Predictably, AB will just stick with the plain meaning of those words and that consumers should only hear the words in their denotations, and not their connotations, which is what MillerCoors’ lawsuit focuses on.

    Smaller businesses need to understand that advertising and the use of a competitor’s trademark do come with risk. Managing the risk is necessary and understanding the limits of what is not a deceptive and not a misleading ad are necessary also.

    Here is a lightly-edited transcript of the podcast episode:

    Anthony Verna:
    Welcome to this mini episode of the Law and Business podcast. We’re still recording from Chatter in DC. How you doing, Marc?

    Marc Sterne:
    I’m doing great. Technically, is this not a mini webisode?

    Anthony Verna:
    Oh, I see. Okay.

    Marc Sterne:
    I’m just trying to stay hip man.

    Anthony Verna:
    I know, I know. Marc, thank you for recording with us. And I know we’ve got a question from the audience.

    Marc Sterne:
    Yes, we do have a question regarding the lawsuit involving Budweiser, Miller Coors and corn syrup.

    Anthony Verna:
    Let’s talk about this particular suit for a second because it’s Miller Coors versus Anheuser Busch filed in federal court in Wisconsin and yes, it’s about the no corn syrup ads. So, went from dilly dilly and do you have an impression of that one?

    Marc Sterne:
    I don’t have it. I do like the ads. I don’t have an impression for the dilly dilly. I hated them to start. And then they grew on me and I was like…

    Anthony Verna:
    No, I could easily see that because it’s a very, it’s a well-crafted campaign that, of course, has now mutated into a second campaign. And Anheuser Busch even did some really fun things with that ad campaign. Like when there was a trademark infringer on a dilly dilly, Anheuser Busch actually sent a guy in a knight’s outfit and he even opened a scroll and he read aloud the cease and desist letter.

    Marc Sterne:
    And that’s how you deal with issues.

    Anthony Verna:
    It was absolutely fantastic. And that turned into a viral video, so you could even find that online, but it’s now mutated from this dilly dilly, but keeping the same characters and it started during the super bowl. And I’m seeing not just the commercials, but also online.

    There are a lot of videos on social media as well as billboards. And so other traditional media where these characters now say that that Bud Light is not brewed with corn syrup. And, Coors Light is brewed with corn syrup.

    Marc Sterne:
    So, in the ads, you’ll see it like the people who come to the castle and say, yes, your majesty, your shipment of corn syrup is here and they’re like, no, that’s not for us. Right. And try Coors. No, they’re filled with theirs. Oh, try Miller. You know, and so yeah, it’s basically saying we don’t use this crap, but these guys do.

    Anthony Verna:
    Yes. So that’s what the lawsuit is. So, effectively this is a lawsuit for partially false advertising, partially  what we call a false designation of origin and effectively hurting the reputation of a competitor’s trademark.

    Marc Sterne:
    And that doesn’t fall in the area of slander or anything like that?

    Anthony Verna:
    Correct. It wouldn’t be a defamation or it wouldn’t be a slander or libel issue because we’re dealing with the harm to the actual trademark. Okay. But a lot of what we’re going to say looks like that as well. So in this particular instance, Miller Coors is alleging that some particular facts, one that nobody is actually drinking corn syrup when they’re drinking a Coors Light, even though it is brewed with corn syrup. Two,  corn syrup is something that is used in other Anheuser Busch beers. And the complaint lists a whole lot of them. Three.

    Marc Sterne:
    In other words, you’re accusing us of this and yet you appear to be doing it yourselves, correct?

    Anthony Verna:
    Correct.

    Marc Sterne:
    Pot calling the kettle black.

    Anthony Verna:
    Correct. So, while there is no corn syrup in Bud Light, I think that Budweiser itself has brews with it.

    Yes. I believe that Stella Artois brews with it as well. So, there are other beers that do brew with corn syrup.

    Marc Sterne:
    I think that’s pronounced teller octos.  Which was another great ad for the Super Bowl. Sorry.

    Anthony Verna:
    That’s okay. So, there are beers that are doing it and two the only way that a beer is brewed is with a carbohydrate of some particular aspect. And in this particular case, yes, Bud Light uses a rice, but again, other beers use corn syrup. And that’s not particularly odd. It’s not particularly weird. And I think you said it, but using the word crap, a lot of people think that corn syrup is high fructose corn syrup or is short for high fructose corn syrup. And in fact, high fructose corn syrup and corn syrup are two completely different animals. Yes. They’re related because high fructose corn syrup means that it’s just a corn syrup with extra sugars in it, and a lot of food is made from that.

    Marc Sterne:
    A lot of food. Yes. So, as we’re finding out a lot of food.

    Anthony Verna:
    And as somebody who has been following the Keto diet since September and…

    Marc Sterne:
    Good for you.

    Anthony Verna:
    Thank you, sir, and has lost weight by the way.

    Marc Sterne:
    You look great, by the way.  You look great.

    Anthony Verna:
    Oh, thank you. I appreciate that. I can tell you what a reduction in carbs has done for my body shape, so, okay. I get all of this. So, these are the factual claims that Miller Coors is making in its complaint and all of these facts lead up to a confusion or deception in this particular advertising campaign. Anheuser Busch has not filed an answer yet. Answers not ready. They probably will be filed by the time that we post this episode.

    But if I’m looking at this from the Anheuser Busch standpoint, they’re going to say no, our words are technically true. Absolutely, your honor. They don’t say that you’re drinking corn syrup. They say that there is no corn syrup in Bud Light. Okay. They don’t say that if you pick up a Coors Light that you are drinking corn syrup. It’s just made with it. Yes. A Bud Light is not going to be talking about the other beers that Anheuser Busch brews in its campaign. So, there’s no mention of that. All of these other implications that Miller Coors is making… Basically, the defense is going to be, we’re not saying any of that. If you look at our words and only our words, they are completely true.

    Marc Sterne:
    Okay. I get all that. Can I get for a second?

    Anthony Verna:
    You’re allowed it.

    Marc Sterne:
    Is the judge allowed to say we get the words technically are true, but the intent and the impression that you’re giving is not what we would call accurate. Are they a little allowable for that kind of discretion or a gray area?

    Anthony Verna:
    I would say. I would say yes. One is probably the best gray area in advertising laws is what we call puffery and puffery is probably not going to apply here. But puffery is like…

    Marc Sterne:
     an over inflation of a product’s like what it does.

    Anthony Verna:
    Correct. So, this is the best beer you’ve ever tasted. How would you ever be able to measure that?

    Marc Sterne:
    Right. You know I’m looking to sue somebody that sold me sea monkeys in the back of a comic book cause they never built a great civilization like they said they were going to.

    Anthony Verna:
    There’s probably the best beer in the world.

    That’s what Carling, I believe.

    Marc Sterne:
    Is that what they’re claiming?

    Anthony Verna:
    That is what their slogan is, yes. So, part of the issues, how do you measure these kinds of things, right? You can’t, so how do you measure the effect of these words on what a consumer looks like? Well, you’ve got to take into effect what the average consumer thinks. And I think where Miller Coors is going to be hammering this particular case is in the angle of what do consumers perceive when they hear these ads and if you’re the plaintiff and any kind of a deceptive advertising lawsuit, this is what you’re going to look at. You’re going to say, well, I get that your words are technically true. But the big issue here is the fact that a lot of people do think that just corn syrup meant high fructose corn syrup.

    Marc Sterne:
    Yes. I’m one of those people. And I know I’ve heard both terms, but I didn’t differentiate as like, Oh, yeah, it must be the same thing.

    Anthony Verna:
    No. So, and it’s not. So, I think a lot of people are going to, I think, I think a judge would have to look at that. But the other issue is, is probably intent as well. Are there going to be any interviews out there with any marketing CMOs or other marketing heads in a company that discussed the advertisement a little more. Like if an interview out there where somebody says, yeah, we did this because we know the average consumer doesn’t know the difference between the two. Well, you’ve just dug yourself a hole that’s going to be very difficult to get out of because of that perception.

    Advertising lawsuits are about what is deceptive and misleading. And in a case such as this one, you’ve got to look at the deceptiveness, what is misleading, what is left out. And a lot of that goes to then back to the creation of the advertisement. And when you work with a company that’s creating an advertisement, is what is said leaving anything out? And, they’re gonna sit there, they’re going to sit back and they’re going to say no, we left nothing out that says no corn syrup, , Bud Light’s not brewed with corn syrup. This one is brewed with corn syrup. That’s what our campaign says. And that’s all that our campaign says.

    Marc Sterne:
    Two things come to mind. Okay. First of all, there were hours and hours of discussion more about hours. I mean hundreds of days of conversation about like with legal teams.

    You know, all this stuff would be like, yes, can we say this? And so, they’ve done the math on this and they’ve been like, this is going to be fine. I mean, they must have done that and said we’re going to be okay with this.

    Anthony Verna:
    I think absolutely correct that even if there were I lawsuit, it’s going to cost us X to defend the lawsuit and we’re still going to make Y money because hungering it out because it’s a great campaign. Yes. Right. Absolutely correct. And all right. And like I said, this is like a mutation of the campaign. And if you look at the complaint, it blatantly states the campaign started at the Super Bowl. Well, it used the same characters from a previous campaign as well. So, it already has this face to it that is that people like.

    And people have grown to like as well. So even if there’s a monetary issue here where Anheuser Busch has to pay Miller Coors something in some kind of restitution for harming their particular value or stating stuff that is deceptive and misleading in an advertisement. They’ve probably calculated that to still…

    Marc Sterne:
    Yeah, they must’ve, the bean counters have to dope that out and be like if we do this, we go this route. This is going to be, the positives is going to be, you know, the negatives and all that kind of stuff. It’s amazing that they can calculate that accurately, but they have to, to go down this kind of campaign.

    Anthony Verna:
    Absolutely. Correct. As a matter of fact, a story from a Dannon, the yogurt company, they came out with Dan Active, which is this probiotic yogurt.

    They had the science, to talk about which probiotics they have in the yogurt and what it does and why it’s not different. Other probiotics. And because those do different things to your digestive system. They had all the science planned out. When the FTC came around to fine them for having advertisements that were deceptive, they basically did a calculation. It would cost X to pay the fine. It will cost Y to defend the lawsuit along with paint Z to change our advertising and labeling. Well the fine plus all the changes in their advertising and labeling were less than the cost of the lawsuit. Even though they probably would have won cause, they had the scientific research there. Right. Well they did the calculation and they paid the fine.

    Marc Sterne:
    That’s amazing.

    Anthony Verna:
    I know even though there was technically really nothing wrong with the advertising.

    Marc Sterne:
    Because it’s just the path of least resistance for them.

    Anthony Verna:
    Exactly. So the bean counters are there…

    Marc Sterne:
    And the world runs on bean counters. We know that. The other thing that comes to my mind and because I’m of certain age and I’m going to bring you up to my age and say that we grew up in around the same time cause we pretty much did but, and I don’t remember when this happened, but at some point there was a court ruling that said you could name your competitor in advertisements because when I was a kid, it was never Budweiser versus Coors  or Miller, it was brand X is terrible, but Budweiser’s the greatest beer ever. It was always brand X or this, that or the other. The company wasn’t named specifically. I want to say it happened in the late seventies, early eighties. Cause I remember when they started happening, I’m like, wow, they just called them out.

    Anthony Verna:
    And I don’t necessarily know that it was one particular court case, but we’ve had this shifting attitude towards trademarks and advertisements and it goes from either comparing products and frankly, if the comparison is truthful, well then you’re not harming the value of somebody else’s trademark. It’s not false advertising. It’s not deceptive advertising. It’s not misleading advertising. So, there is no cause of action there from, from the line of trademarks…

    Marc Sterne:
    Unless you’re the inferior product. You say that’s just not nice, man.

    Anthony Verna:
    Well, it might not be nice, but it’s legal. It’s true. Right. So, we have that attitude and just to keep going with what the shifting attitude looks like. Today we have a lot of advertisements with two brands in them. You might remember the Super Bowl ad from a couple of years ago where it was the Chevy ad with the end of the world and the Twinkies were also a part of it.

    Marc Sterne::
    Oh yeah, yeah, yeah, yeah, yeah.

    Anthony Verna:
    Okay. Right. Like a lot of ad agencies were not expecting that. And when the ad exec saw that ad, everybody was shocked. Yeah. I mean, because it’s two brands in one commercial and now you’re seeing that that a lot more with two brands in one commercial because there are more efficiencies between two companies that have no, you know, Hostess and Chevrolet have no particular relationship to each other and they able to play that into something.

    Marc Sterne:
    Is the area where we see that the most, maybe with movies? Like movies are marketing themselves and they’ll attach themselves to an ad, like a car ad or something like that.

    Anthony Verna:
    But that seems that that’s a little more traditional because sometimes it goes, it works both ways. Like you’ll see the car in the movies, so there’s the product placement in the movie, and then of course then you have the advertisement as well, so that that’s a little more traditional

    Marc Sterne:
    Yeah, the Twinkies …. It was like, wow, I didn’t see that coming. Right. Wow. Well that’s, this is a fascinating case, Martin.

    Anthony Verna:
    Thanks for the question.

    Marc Sterne:
    Yeah. Well, and you’ve, you’ve helped me and I’m hoping all the listeners out there understand it just a little bit better. Thanks man.

    16 min
  • Episode 35 of the “Law & Business” Podcast – Why You Need to Register a Copyright

    In Episode 35 of the “Law & Business” Podcast, Anthony talks (all by himself) about why a person or business must register a copyright in a work that qualifies under copyright law.

    Yes, the Supreme Court recently ruled that a copyright infringement lawsuit can only be instituted after registering a copyright. That blog post was already written.

    However, Anthony is all by himself in Episode 35 of the “Law & Business” Podcast in order to discuss all the reasons why one needs to file a copyright and have that registration.

    1. The requirement to have the registration before any lawsuit is started.
    2. Cataloging.
    3. Statutory damages.
    4. Ease of cataloging, licensing and assigning. This is a thought that not many people have. If a work is registered, then there is a registration number. That number is a simple reference in licensing, use, sale, and transfer agreements.

      Damages. Statutory damages require the registration.
      Only a person or business who has registered a work with the U.S. Copyright Office before the infringement (or within three months of publication) may receive statutory damages.

      Statutory damages are damages that can be awarded by a judge or jury

      to a copyright owner in a copyright infringement suit. They are called
      “statutory damages” because the range of damages is established by the
      statute, specifically section 504
      of the Copyright Act. Statutory damages are usually between $750 and
      $30,000 per work, as determined by the court. However, the damage amount
      can be increased up to $150,000 per work if the infringement is found
      to be willful (intentional). If the infringement is “innocent,” meaning
      the infringer did not know they were violating copyright law, the
      damages can be reduced to a minimum of $200 per work (if the work did
      not contain a proper copyright notice).

      Statutory damages are awarded “per work” infringed (i.e., each individual copyrightable work, like a single song, book, or photograph). This means that if five songs, or five photographs, are infringed, the copyright owner would be able to recover a statutory damage for each one, for a total of five awards. So statutory damages of at least $750 per work, for five works would yield a minimum (non-innocent) total award of $3,750 ($750 x 5 songs = $3,750) or a maximum (non-willful) award of $150,000 ($30,000 x 5 songs = $150,000).

      Awards of Actual Damages in a Copyright Infringement Case.

      Sometimes known as compensatory damages, “actual damages” consists of the dollar amount of any demonstrable loss the copyright owner suffered as a result of the infringing activity. This loss may be from lost sales, lost licensing revenue, or any other provable financial loss directly attributable to the infringement.

      17 U.S.C. § 504(b) provides: “The copyright owner is entitled to recover the actual damages suffered by him or her as a result of the infringement, and any profits of the infringer that are attributable to the infringement and are not taken into account in computing the actual damages. In establishing the infringer’s profits, the copyright owner is required to present proof only of the infringer’s gross revenue, and the infringer is required to prove his or her deductible expenses and the elements of profit attributable to factors other than the copyrighted work.”

      Usually, plaintiffs in infringement actions would

      offer expert testimony to establish their actual financial damages to
      the court.

      Awards of Infringer’s Profits.

      This second form of damages consists of any money made by the infringer as a result of the infringement. These damages are awarded only if they exceed the amount of profits lost by the copyright owner (actual damages) as a result of the infringement.

      Here is a lightly-edited transcript of the podcast episode:

      Welcome to another episode of the Law and Business podcast.

      I’m Anthony Verna. I’m here by myself today because we’re going to be talking a
      little bit about copyright registrations. The last blog post on my blog at Vernalaw.com
      discussed a little bit about the Supreme Court’s March 4th, 2019 decision,
      effectively rendering section 4- 11a of the copyright act to be ironclad and
      stating that yes, one does need a registration to walk into federal court on a
      copyright infringement suit. So, we’re gonna take a look at that a little bit
      more. We’re going to take a look at all of the reasons why somebody needs to
      have a copyright registration, then that is now a certificate from the
      copyright office of the Library of Congress in order to start a copyright
      infringement suit. But there are some other reasons as well.

      So, let’s take a a look at that. To begin with, any work that falls under
      copyright law is traditionally what we would call art. So literary work, photographs,
      paintings, in today’s world what we do is we take computer code and we call
      that software code a literary work. So, this way software falls under the
      copyright scheme and it’s important that if there’s going to be any rate
      asserted in these works that fall under copyright law, that the owner has that
      registration. Number one, I think it’s good business practice to begin with. If
      you are licensing any of your work, if you are selling any of your work, if
      you’re using your work to make money, you are able to refer not just by title,
      not just by as an exhibit in an agreement, but also by the title that you give
      it in the copyright office as well as its registration number. It’s easy
      reference in any kind of agreement. So, whether that agreement is a licensing
      agreement, it’s a sales agreement, maybe just a use agreement without any kind
      of monetary value to it.

      It’s easy reference to have that registration. Now generally I always say it’s

      a one-to-one relationship. One copyright registration is one work and whether
      that work is a literary work. And I had a client that was filing books and
      eventually each of the chapters of the book was separately available online. So
      therefore, one work changed from a book to maybe a chapter. And then this way
      if the chapters had to be updated, they’re updated. But, one registration, one
      work. I’m not a big fan of collections of registrations in order to register
      the work and protect the work. The one real exception that courts have agreed
      to is in photography. And that is because in today’s world you can take a
      camera, push a button and push a button often and have many similar photographs
      and just take a lot of photographs at once. So, take all those photographs, put
      it on a DVD and yes, you can record that DVD and protect all of those
      photographs as one. It really is the only medium that courts have allowed to
      get around that particular one work for one registration number rule.

      So, I like that registration for the ease of referral. But also, now we have

      the Supreme Court ruling and the Supreme Court ruling states that that
      registration certificate must be in your hand before starting a copyright
      infringement lawsuit. So, why is that? Well, section 4-11 a of the Copyright Act
      says no civil action for infringement of the copyright of any United States
      work shall be instituted until preregistration or registration of the copyright
      claim has been made in accordance with the title. And I’m not going to dwell on
      that word, preregistration, because preregistration again applies to very few
      industries where a work is vulnerable to pre-distribution infringement, movies,
      music, those are big examples of where preregistration can exist. But let’s put
      that aside cause most of us listening aren’t going to be worrying about
      preregistration. Registration for that copyright claim has to be made. Well,
      there were two thoughts in appeals courts in the United States until March 4th,
      2019 and one thought was exactly what the Supreme Court ruled, that a court
      will not be able to sit and hear this case until that registration is in hand.

      It makes perfect sense. That’s what it says. But some courts, they had a minority

      view. Certainly the 11th circuit court of appeals did and I believe it was
      maybe the fourth circuit, there were a couple others and they said, well, if
      you walk into the copyright office and you file and you apply for that trademark,
      that copyright, excuse me, and you’ve paid your application fee for that
      copyright, that’s acceptable and we will hear your case. Even though you don’t
      have a registration certificate, you’ve applied for it. Now, I’m not going to
      sit here and say, I haven’t tried that particular move myself because from a
      practical standpoint, I’m going to file my copyright. I’m going to calculate
      the time that it’s going to take to get the copyright. And by the time that the
      other side files a motion to dismiss, the judge rules on it, you get a chance
      to replead your case, by then you’ll have a copyright certificate and maybe the
      parties will have to talk settlement.

      So, I’m not going to sit here and say I haven’t justified moves with that
      particular minority view, but that minority view was eradicated on March 4th, in
      this particular case. And the reason for that is because the statute is very
      clear. Registration of the copyright claim has been made, right. That’s  very clear. And then the next section does
      cover instances in which registration is refused. So, the application process
      is still just a process, even though it’s kind of a lax process, not a lot of
      copyright applications are refused. So, in looking at really a way to get to
      some kind of I don’t want to say a quality, but to get to some kind of just
      result, a lot of judges were overlooking the bureaucratic process and were just
      happy with that application fee. But again, Supreme Court says no, that’s not
      how we read it. Nine to zero unanimous decision doesn’t matter. Their political
      bent doesn’t matter. Their socioeconomic economic bent, all of the justices of
      the Supreme court said registration, that has to be in hand.

      So, now you have to have your registration to not just review and refer to it.

      You have to have your registration to walk into court. And if you don’t, your
      case will be dismissed. Now, yes. What’s the effect if you say have a hundred
      copyrights that are registered and you’ve got twenty five and they haven’t been
      registered yet, is your case really going to be thrown out if all hundred are
      in there? That particular thought and that situation doesn’t appear to truly be
      anticipated. And I think that we’re going to probably have to have some other
      ruling that talks about multiple copyrights and what happens when multiple
      copyrights are infringed and some registrations just have not been procured yet
      even though many have. So, that that’s probably going to be coming down the
      road, although I would suspect if they’re going to be consistent, it’s either
      an all or nothing type of deal.

      The third reason that you want to register your copyright is that damages are
      important and the types of damages that an infringed party is allowed to ask
      for are limited without the registration. So, let’s talk about all of the
      rights if your copyright registration is filed, registered and then
      infringement happens. Well you ask for actual damages and we’ll get to actual
      damages in a second. You can ask for attorney’s fees. You may or may not get
      attorney’s fees. You can ask for statutory damages. And if the order of items
      is that one, the work is created, two, copyright in the work is registered. And
      then three, infringement happens, you are entitled for statutory damages. The
      other aspect that I say is make sure that when the data’s created and published
      or the date of the work is created and published, make sure that you filed that
      copyright within three months to really shore up your statutory damages claim.

      So again, you’re going to receive statutory damages when either your

      registration is within three months for the publication of the work or before
      the infringement starts. Statutory damages can be awarded by a judge or jury to
      a copyright owner and in suit, this is specifically done in section five o four
      of the Copyright Act and statutory damages are between $750 and $30,000 per
      work as determined by the court. The damage amount can be increased up to
      $150,000 per work infringed if that infringement is found to be willful,
      intentional is a good synonym for willful. If that infringement is innocent,
      meaning the infringer did not know that they were violating copyright law, the
      damages can be reduced to an amendment minimum of $200 per work. But that’s
      really only if the work did not contain a proper copyright notice.

      So statutory damages are awarded per work. You heard me say that earlier per
      work. In other words, each work, like a single song, single book, a single
      photograph, you know, every single registration that you have is going to make
      that determination. So, if you have five songs, five photographs, five
      paintings, five pieces of software, the copyright owner could go from $750 per
      work, which is only $3,750, up to a maximum reward of $150,000 per song. Sorry,
      excuse me, up to $30,000. So, if it’s five works $150,000. And statutory
      damages are important because the alternative type of damage award is actual
      damages. And we’ll talk about those in a second. And those have to be proven in
      court. They can be difficult to establish. Actual damages include profit lost,

      include profits the copyright owner lost, any additional profits the infringer
      received. So, this calculation can be very helpful, especially if the infringed
      party has a hundred copyrights, as I was saying. So, it really does behoove
      businesses and people that put out works that fall under copyright law to truly
      consider that registration because statutory damages is an easier calculation
      for when it’s infringed. The other awards that I would look at are your actual
      damages and actual damages do exist even if infringement happens before
      registration of a copyrighted work. But as you’ll see, it’s harder to
      calculate. All right, so we’re going to calculate actual damages as lost
      revenue as a result of the infringer taking the work and reproducing it. So,
      you know, the calculations aren’t perfect. I mean, you could argue that your
      sales went down by a certain percentage

      although there’s not really a clear causation between sales and one particular

      action. So, that’s very difficult. The second form of damages consists of any
      money made by the infringer as a result of the infringement. And these damages
      are awarded only if they exceed the amount of profits lost by the copyright
      owner. So, again, you’re going to go through a lot to see what your damages
      are. You’re going to try to put everything together, but ultimately having that
      registration gets you the easier calculation, especially if you can show that
      it’s willful. And so why do you have to register a copyright? Because in the
      United States, the statute says that you do not have access to court without
      the registration. So, number one, you registered because you have to. In order
      to enforce any rights that you have in it, you need that registration. I always
      point out that you do want to refer to it easily and referring to it easily and
      simply means having that registration, the number, the title, any licensing is
      easy. Any use agreement is easy. And three, if there’s an infringement, you do
      want statutory damages, you do want to be able to try to claim that a the
      copyright is willful. You do want to try to aim for the stars. You can’t do
      that otherwise.

      So, I hope that this clears up some of the potential misconceptions. And
      frankly, I think our system was a little at fault as well, for why copyrights
      are or why that need is there, but, now we have this ruling from the Supreme Court.
      It’s very solid. And I would just say if you’re not registering copyrights, you
      should certainly take a look at your business’ work and make sure that if it
      falls under copyright law, that you’re protecting it properly, else you really
      will be hurting for the types of damages that really would justify a copyright
      infringement suit. Again, I’m Anthony Verna of Verna Law. Thank you for
      listening to the Law and Business podcast. We’ll be back with some other
      episodes soon. Take care.

      18 min
    5. Law & Business Podcast Episode 34: What do Trump's Trademarks in China Teach All Businesses?

      In Episode 34 of the “Law & Business” podcast, Anthony Verna talks to John Eastwood, a partner at Eiger Law in Taipei, Taiwan. They discuss the issuance of the Trump trademarks in China, if there appears to be any issues outside of the normal issuance of trademarks in China, and what any business moving into China should keep in mind about its trademarks.

      Ivanka Trump probably didn’t get special treatment from the Chinese: Based on what John Eastwood has seen, it appears that Ivanka’s trademark applications (which will not have much use for her given that she’s announced that she’s shutting down her brand) were approved in a fairly normal time frame. 

      The Trump Organization probably did get special treatment, but that doesn’t mean that they shouldn’t have gotten the trademarks: The first part of the case involves the Trump Organization’s application for construction-related services that had languished for something like 10 years of struggles against the weight of several Chinese bad-faith filers who had apparently been using the “TRUMP” name to market all sorts of products.

      Now, anybody who’s doing business in China knows that there’s a big industry. Chinese companies and individuals are extremely fast to file for iconic western marks — or even not-so-iconic marks. (Eiger Law and John Eastwood have a lot of clients that are up-and-coming or niche brands, and even they have problems.)

      To some folks, it looked suspicious that China approved Trump’s trademark in the first month he was in office as president — it looked bad, like “oh, now you’re president of the United States, here’s your trademark.” This caused folks to worry about there being a breach of the Emoluments Clause, the part of the Constitution (Article 1, Sec. 9, Para. 8), which prohibits federal officeholders from getting anything of value from a foreign state.

      Be there also must be an examination at what was happening right before Jan. 2017.

      In December 2016, Michael Jordan got good news in a 15-year struggle to get back the Chinese name commonly used to refer to him — “QIAODAN” — from a Chinese company that used the name to sell sports clothing very successfully. Why? Because when Nike started selling Air Jordan products in China, only the English name “JORDAN” got registered by them — they didn’t bother to go for the Chinese name that everybody in China who cares about basketball chose to call him. The lesson for trademark owners is not to skip registering a Chinese name. 

      In October 2016, C.F. Martin & Co, the nearly 200-year-old company that’s made the iconic acoustic guitars used in blues, country, folk and rock, famous around the world, finally got back its marks after years of pursuing action through official channels. This was a case that had caused profound annoyance and frustration for IP professionals working in China, as it was used for years as an example of the Chinese government allowing a copycat local company to brand-jack a famous American brand. Part of the problem perhaps was that the old measure for “famous mark” protection was whether you were a true household name in China — you couldn’t just be famous within an industry, among musicians or music lovers, you had to be what John Eastwood used to call “Coca-Cola” famous but now could probably say is “Jordan” famous or “Trump” famous. But the trademark law was amended a few years ago to refer more generally to “bad-faith” trademark filings, and that gave some more room for action. 

      OK, so back to Trump — within a relatively quick period, one can see China clearing away a bunch of these cases on their appeals docket that, frankly speaking, were an embarrassment to the country. And you get them releasing their decision in January 2017 when he’d just become president for that mark for construction services, the one that had been part of the decade-long battle.

      So where was the special treatment?

      Well, a couple of months later in March 2017, China approved 38 more trademarks that the Trump Organization had applied for the previous year. Now, it is true that trademark registration times are getting better, but that was pretty quick — and it appears that they didn’t go through the same hassles that many trademark applicants go through with the very persnickety, extremely specific (and ever-changing) terms that the Chinese Trade Mark Office deems acceptable. The marks cover everything from golf clubs, hotels, restaurants, insurance, finance and real-estate companies, as you’d expect, but the applications also included some other areas sometimes harder to categorize, including spas, massage parlors, bodyguards and escort services. 

      But if we go back to the basics of human behavior, what we

      can probably take home is this: 

      • China was already taking some steps to clear away some of its embarrassing trademark cases, like Qiaodan and Martin guitars. 
      • Trump’s fame within China probably also skyrocketed in the past few years — making his trademark application for construction services a potential embarrassment. 
      • Once Trump’s older case was resolved, the CTMO had no really good reason to hold back on the other marks filed in 2016. 
      • They probably let the marks slide through a little easier than they normally would have, but it’s hard to measure that. 
      • Here is a lightly-edited transcript of the episode:

        Anthony

        Verna:
        Oh right. Well welcome to the Law and Business podcast. We’re here again with
        John Eastwood. This time we’re doing some voiceover IP. How are you doing,
        John?

        John Eastwood:

        Doing great, Anthony.

        Anthony Verna:

        Good. John is a partner at Eiger Law in Taipei. And thank you for again coming
        on the podcast. And today we’re going to talk about the Trump organizations,
        their trademarks in the greater China markets. And mainly because whenever a
        trademark gets granted these days with Donald Trump being president of the
        United States, it tends to make some news. And generally the thought is that
        there are some favors being done by the Chinese government. And let’s talk
        about that process for most filers in the greater China market and then how special
        or not special, the Trump organization’s trademarks are.

        John Eastwood:

        Absolutely. Absolutely. Well, I think one of the funny things is that the
        question came up and it’s been out there a lot of times and I think people use
        this in a political standpoint. They look at an official, and I’m not just
        saying Trump, it would any official who’s in the position, you’re getting a
        special favor from the Chinese government or are they seeking to get that and
        so as part of the notion of clean government, just as the United States has its
        Foreign Corrupt Practices Act where we can’t give things of value to[KR1]  foreign government officials. We have in the
        United States, of course, there’s this concept for the emoluments clause, which
        is the idea of somehow taking a benefit from a foreign government or seeking a
        benefit but I think in looking at this, and to be fair, I’m in no sense of a
        fan of Trump, but I look at this and I want to be very analytical.

        I want to be very careful in how I look at this. And I don’t see necessarily

        that special treatment was sought. It just at this I think, maybe bad timing.
        And also, there’s a quirk of famous mark thinking that probably led to the
        perception because there was a large number of marks that got approved almost
        immediately after he became president.

        Anthony Verna:

        Yes. And I think that starts the cynical thinking. How does that sound?

        John Eastwood:

        Yeah, yeah, yeah. Well, and I think about so if we take the clock, go back to
        January 2017 in that time, Trump had been engaged in a 10 year battle with
        mainland Chinese companies that had been selling all sorts of products and
        usually not the ones that he’s necessarily known for, but they were things such
        as Trump toilets, Trump condoms, Trump pacemakers.

        And there was even an a hotel operator who was trying to do a Trump International

        hotel, which is kind of right up in this bailiwick.

        Anthony Verna:

        Right, exactly. But you know, that that doesn’t sound that that particular
        battle, that particular issue doesn’t sound all that different. Like Apple, if
        I recall correctly, had the problem with iPad, if I recall, or was it iPhone in
        China? I forget. Yeah. So that particular problem doesn’t sound all that unique
        to the Trump organization.

        John Eastwood:

        Yeah. And if you think about it, I mean, for example, you know, Trump as a word,
        it has a couple of other meanings aside from being a name. I mean famously his
        immigrant grandfather arrived, he changed his name from Trumpf to Trump to
        anglicize it in a sense. But for ages, we’ve had the concept and in card games
        of, he played the trump card, the British abused it as a…

        Anthony Verna:

        Certainly. By the way, in the United States, you can find trump trademarks in
        poker that do not belong to any aspect of the Trump organization at all.

        John Eastwood:

        Right. And that’s even with him having gotten into the casino business. It’s
        interesting cause you could actually get the idea of trump as being a word that
        indicates having an advantage and you could happen upon it without knowing
        about him. But I think, in most of these cases, the Chinese companies, they did
        have some sense of him being… I mean from a trademark perspective, Donald Trump
        is a fascinating say would one will about a political skill or anything else.
        He’s a master promoter of himself as the idea of being a wealthy person. And
        whether or not he’s actually wealthy doesn’t even really matter, or maybe it
        matters even more than if he’s not wealthy. He’s an even better promoter
        because even when he has said, “Oh, you know, I was in bankruptcy or I had a…” is
        he famously one time said to Ivanka, Ivanka tells the story that one day he’s
        walking with  Ivanka down the street and
        they see a beggar, a homeless guy. And he turns to her and says,  “Believe it or not right now, that guy has
        millions of dollars more than I do.” because of the hole that he’d gotten in at
        that moment because of the volatility of the real estate market and the
        financing and all these other things. So he’s had financially ups and downs,
        but through it all, he is very often tried to extend his name, his fame, his
        efforts to tell people I am a wealthy, successful person. And that has played
        out very well for people being willing to license that name. People have been
        very willing to for a long time, to I guess pay him license fees in order to
        say, can I put your name on my property in this other place?

        And that, that fame hasn’t always extended to steaks or to certain other

        business ventures. But in a sense that doesn’t matter because in a sense he did
        actually believe. And when he does say, when he does say to you he’s been
        quoted as saying before that his net worth goes up and down based on how he’s
        feeling. I actually understand that from a trademark perspective because if
        he’s feeling very bullish about the Trump name or the Trump mark, I’m not
        saying that like the trademark valuation is an impossible science, but it is a
        difficult one. But if you do, if you actually feel that people value your brand
        and you’re feeling good about yourself and your position and the willingness of
        people to do business with you, that probably is a good sign that your mark’s
        on the way up.

        Anthony Verna:

        Well in the United States, the standard by which a famous trademark is measured
        at least by the federal courts is what is the effect or what is the effect that
        the trademark has on the average consumer? Because you can have a trademark,
        for example, that same as in a certain industry. And then you mentioned the
        fact that Trump might not be a famous trademark in steaks or whatever the other
        industries that aren’t associated with the core might be, but that doesn’t
        necessarily mean it’s not a famous mark anyway because wouldn’t the average
        consumer have some kind of reaction to it or some kind of knowledge to that
        trademark?

        John Eastwood:

        It is interesting cause we’ve seen there’s iconic like fashion brands and
        people in Asia will often slap those onto buildings.
        Anthony Verna:
        And I’m sure we just had a movie all about that that came out.

        John Eastwood:

        It is pretty funny cause we have people also love wordplay in Chinese. There’s
        a lot of homophones in the Chinese language. And so, as a result, yeah, many
        times they can find something that in a local dialect or in Mandarin, will be a
        sound alike. And to give a kind of a quirky example, some years back there was a
        motel kind of a hit certain massage places and they liked the name Chanel for
        the luxury brand because the Chinese equivalent, you could make a kind of a
        sound alike for …I guess for massage parlors and kind of a little hourly rent
        motels under the name Shanghai[KR2]  which was sort of like a fragrant breasts.

        And, it’s weird, because it was a sound alike for that. Apparently that was one

        of the things that local companies engaged in Korean[KR3]  activities chose as their marketing and I did
        talk to the Chanel people. They were not happy about that because it’s not the
        image they were shooting for. To think about Trump, there’s two aspects that
        popped to mind is that this 10 years struggle that he had over his mark, the
        Chinese take an attitude towards fame of a mark; that you have to be something
        like Coca Cola famous, you have to be ubiquitously like famous even to the
        common person. Therefore, for example, if you were a provider of automotive
        parts or sewage pumps or some other kind of thing that not your average
        person’s going to know the brand for. You could be very famous in your
        industry. But by Chinese standards under the classical old kind of measure, if
        these things that would not be considered famous. Anthony Verna: Around here, I
        find that fame can be a little, at least famous trademarks can be a little
        inconsistent as well. I kind of wished that we had a really high standard like
        that. So, because we have some rulings, for example, Entrepreneur magazine
        has been ruled a famous trademark, really by the ninth circuit. And I sit here
        and I say, well, I know that they’ve got a lot of sales, but if I go to the
        average person and I say Entrepreneur, is the first thing popping out of
        their mind magazine…

        John Eastwood:

        No.
        Anthony Verna:
        Right. Exactly, exactly correct. It’s not the same as Chanel. It’s not going to
        be the same  as Versace. It’s not going
        to be the same as Michael Jordan. Although I don’t know,

        John Eastwood:

        He was weak there.

        Anthony Verna:

        Yes, exactly. Exactly. So, and Time, I don’t know, I think fame might be
        fleeting there for Time as well, but I think at the very least you can still
        make that argument that Time is still a famous mark. But still, I mean,
        I think we have a little less of a standard here in the United States for that
        famous trademark than there.

        John Eastwood:

        Well, and I think so what you have is the first part of this involves the Trump
        organization, they had an application for construction related services that it
        just languished for some of the 10 years of struggles against the weight of
        several Chinese bad faith filers who apparently been using. And I say bad faith
        because I think they knew, he’s been at least pretty famous for internationally
        for decades. And they were using the Trump name for marketing all sorts of
        products. And I think they knew what they did because anybody who’s doing
        business in China does know that, that this is a classic big industry. Chinese
        companies and individuals are extremely fast to file for these iconic Western
        marks or for these names not so iconic, I guess.

        I mean I’ve got some clients that are quite up and coming are niche brands
        where there should be no level of confusion, but even they’ve got some serious
        problems in China and you see some of these guys, like you look into the filing
        databases in the Chinese trademark office and you’ll see that some guy some
        lone guy out in the middle of nowhere has gone and filed for a zillion famous
        brands that for whatever reason have not bothered to register in China and they
        try to try to address that. I mean the Chinese trademark law got changed to
        have a provision against bad faith filing and establishing bad faith is those
        require a little work and some evidence. Right.

        Anthony Verna:

        I was going to say, what does it take to show bad faith? Because if a company hasn’t
        moved into the jurisdiction yet, they’re not selling the products with those
        trademarks.

        John Eastwood:

        Yes. Yeah, yeah. So sometimes it could be things like if they did certain big
        fashion shows and they did certain things and they were able to show … one
        thing could be also internet sales, but that is difficult. So oftentimes the
        faster way to fight that is to look at a non-use. Because if the mark from the
        other side is say three years old, the guy’s been camping on it for awhile. Sometimes
        what you can do is go for a non-use cancellation against the other side at the
        same time you filed for your mark. And there is often a kind of a funny dance
        where the non-use cancellation will not be fully handled by the time that it is
        that mark is actually cited to knock out temporarily. So, you have to do this
        thing of appeals, but eventually you can win. I mean, we’ve done that quite a
        few times for clients.

        Anthony Verna:

        What takes 10 years? What takes 15 years for a group that is supposedly that
        big to get their trademarks through in China?

        John Eastwood:

        Well, the system is pretty slow and there’s a lot of ways that you can try to
        file and refile but basically, if you’re very persistent, I would say this is a
        testament in the companies that are famous for persistence. Their stories are
        all about 10, 12, 15 years of fighting, fighting, fighting until the law
        actually changed and they got a chance. And maybe sometimes some evidence
        surfaces of an attempt by the other company to… What I’d say is that for me this
        is a fascinating thing in here that this case, China approved Trump’s trademark
        for construction services in the first month that they use in his office as
        president. And you know, it looked bad because you could take this, and I think
        a lot of media outlets did.

        They said, “Oh, well, China treated this like, Oh, you’re now you’re president
        of the United States. Here’s your trademark.” and people thought then the
        moment about like emoluments clause, “Oh, was this a gift from China?” They’re
        somehow treating them specially and giving them something of value, which is a trademark.
        I would actually say that he should have gotten the trademark years ago and in
        this chain of things January 2017 is actually part of a movement by China to
        try to get its act together because just the previous month, Michael Jordan got
        really good news and his 15 years struggles and the perseverance Meeks[KR4]  is it means a lot. He finally managed to get
        back the Chinese name, commonly used to refer to him a child down[KR5] , from a Chinese company that had been using the
        name to sell sports clothing very successfully. And you might wonder why didn’t
        they register that? And it’s because when Nike started selling Air Jordan
        products in China, only the English named Jordan got registered by them. They
        didn’t bother to go for the Chinese name that everybody in China who cares
        about basketball chose to call Michael Jordan. So that’s a lesson for trademark
        owners is don’t skip the Chinese name.

        Anthony Verna:

        But that’s also a cultural lesson as well. You can say don’t skip the Chinese
        name, but you got to know what it is too.

        John Eastwood:

        Right. Or if you don’t choose your name, the market will find one for you. And
        you can maybe choose a better name. Coco Cola is the Chinese name for Coca Cola
        and I think it was actually …

        Anthony Verna:

        …getting a bite. The Max Tadpole reference here.

        John Eastwood:

        I think that’s their second time around. I think they actually had a… I think
        if I remember right, Coca-Cola had a different Chinese name when it first went
        on the market and then they subtly changed it. So they could have actually
        gone, in terms of the the phonetic sounding words. They could have gone
        something but it wouldn’t have meant so much. But Coco Cola actually has a
        good, very good meaning in terms of making your mouth happy and stuff like the
        flavor and everything.

        So it’s actually is a very smart bit of branding and companies that choose …that
        work a little bit to come up with a cute way to say something. They can either
        go with a transliteration, which is the way to sound like their own name. If
        they can’t do that because of certain vowels… Sorry, certain consonants are not
        really being used too often in Chinese because certain sounds that may not be
        used then at least you can come up with a Chinese name that captures the
        meaning or the feel of your brand. And if you choose it, then it’s much better
        than someone else choosing it. Because if someone else chooses it, by the time
        the market has a name for it. And if you have any reputation…someone… go back
        to that thing about the Chinese industry based around of the sheer number of
        people who will go and register marks. So, people will move, companies will
        move, individuals will move really fast to go and register a trademark that
        will use exactly the same characters that the market’s calling you.

        Anthony Verna:

        I mean, I think that’s a good lesson that kind of transects everything we’re
        talking about here, which is if you’re going to file in China, you need to
        understand, or if you just register the English word you need to understand how
        that could be transliterated.

        John Eastwood:

        Right, right. And you’re looking at chow done, with Michael Jordan’s Chinese
        name. There was a lot of registrations for Trump type names using the Chinese
        characters that are used for his name. Hillary Clinton is known as she all the.
        Obama has two different Chinese names Obama and Obama and people, especially
        for someone who’s famous out in the world, they show up in the newspaper. The newspapers
        not going to just write the name out in English. They’ll come up with a name
        for them. And I think that’s Trump in January 2017, Michael Jordan, just the
        month before in December 2016, and the two months before that, there’s this
        case involving the CF Martin and Co. It’s a company that’s been in Nazareth,
        Pennsylvania since 1833.

        Anthony Verna:

        Yes. While I don’t have a Martin guitar, I definitely have bought many Martin
        guitar strings in my time.

        John Eastwood:

        And have to admit I aspire some day to getting a Martin guitar there. They’re
        beautiful instruments and some years back I did actually meet at one of the
        industry shows, Christopher Martin, the fourth, you know, same family. They’d
        been running the business forever. And I know that back at that time they were
        extremely frustrated to hopefully, now they’re very happy because in October
        2016, two months before Michael Jordan, three months before Donald Trump, they
        won on their trademark battle in China. Their epic decade long fights and they
        went through a lot of official channels and things like that. But this had
        caused a huge annoyance and frustration for IP professionals working in China
        because it had been used for years. As an example, the Chinese government just
        totally allowing a copycat local guitar company to brand hijack a famous
        American brand.

        Anthony Verna:

        And when you say that, I mean Martin is a famous brand in China or is it not? I
        mean how …it certainly isn’t going to be Chanel or Versace.

        John Eastwood:

        Well, the key point I think is that the trademark law was amended a few years
        ago to refer more generally to bad faith trademark filings. And I think it
        didn’t have to necessarily be like Coca Cola or you could even say instead of
        that, you could probably say Jordan or Trump famous. I mean, that gets into the
        second aspect, which is that when you become president of the United States
        there’s another aspect to, he might’ve been famous for the TV show Apprentice.
        And I think it doesn’t even matter whether or not that show was shown in China.
        He’d already been a figure in pop culture for a while before that, which is how
        he got the Apprentice show.

        But he didn’t have to, it wasn’t just like he went with the election being
        becoming the president of the United States. I mean, that’s a hell of a lot of
        fame right there. Yeah, that’s pretty crazy. They are in the history books. So,
        I think it was just simply too embarrassing for China. I know that you could
        say like, wow, legally speaking that 10 year battle is something  that shouldn’t have happened for him and it
        shouldn’t have happened to Michael Jordan. It shouldn’t have happened at the CF
        Martin and Co, guitar makers, like this kind of stuff is all things that nobody
        deserved to have happened to them. And then you add in the extraordinary fame
        that a person who becomes elected to the United States presidency gets. And you
        add on a third element, which it doesn’t have to officially be a reason, but if
        I was China looking at this situation, it would just be horrendously
        embarrassing and a stupid bit  for a
        country that already is frequently at odds with the United States on
        intellectual property protections.

        Sitting out there and having local companies camping out on the Trump name. I

        mean when you have meetings between, now with recent news and it seems that the
        meetings between the Xi Jinping and Trump are already awkward enough whether or
        not there’s more terrorists or fewer terrorists or what’s going to be the
        future. And militarily we have the South China seas, but imagine going in and if
        there was a guy in the United States who was going around, doing something
        completely outrageous with the Xi Jiping branded toilet brush or some kind of
        horrible kind of thing that the Chinese would take as an insult to them
        personally. And that’s just no way to try to build goodwill between nations.
        And so, I could see why the Chinese would try to remove this sort of an
        obstacle from relations between world leaders.

        Anthony Verna:

        I think one of the perceptions that a lot of Americans have is that trying to
        fight this in China is useless, that the Chinese IP system feels arbitrary when
        you’re sitting from this side of the Pacific Ocean. And it’s really hard for
        maybe a smaller American company to truly understand and appreciate what the
        system is, especially when it really does feel like it happened at a time that the
        simple faraway narrative could have been its favor. But when you look and you
        dig deep, it’s not, but I think a lot of Americans feel is if they’re doing
        business in China and even if they’re just manufacturing products in China,
        that the IP system feels maybe a little arbitrary when it’s not.

        John Eastwood:

        One of the most difficult things that I think companies dealing with China
        trademark, there is a little bit of an arbitrariness in terms of office
        actions. Because even skilled professionals find it hard to get the
        specifications just right. And we frequently, depending on the whims of the
        examiners, we have to amend things and try to find a way to classify goods and
        services in a way that will be acceptable. And I think if there was a favor
        that he got, because once he got that first mark through  the CTMO, the Chinese Trademark Office had no
        really good reason to hold back on the other marks that had been filed in 2016
        and so then you get a flood of cases coming a few months later and I can see
        how that happened.

        John Eastwood:

        I mean, if we’re going back to the basics of human behavior, what we probably
        can take home is this –  China was
        already taking some steps to clear away some of its most embarrassing trademark
        cases like chow done, like Jordan and Martin guitars and Trump’s fame within
        China skyrocketed in recent years, making the trademark application for construction
        services a potential embarrassment for them to be holding back on that. And
        once Trump’s older case got resolved, the CTMO had no really good reason to
        hold back on the other marks that he filed in 2016. And probably, if there would
        be one observation to make is that they probably let the mark slide through a
        little easier than they normally would have. It’s hard to measure that, but
        given how persnickety the individual trademark examiners can be it is kind of
        hard because they do request like little changes here and there and there and
        there.

        And I’ve even had clients that if they make the changes requested by the
        examiner, and then once they’ve made the changes requested by the examiner, the
        trouble they landed in is that then the examiner rejects it because it’s too
        similar to another mark’s subclasses. And if they had actually stuck to their
        guns earlier on, they would’ve had less of a problem if they had said, well,
        no, actually we don’t do power transformers but the Chinese government
        requested power transformer that such and such term be slightly changed. So it’s
        really hard sometimes you have to know when to stick to your guns and try to
        look at the classifications, the specifications very, very carefully.

        Anthony Verna:

        Yeah, I was about ready to sit there and disagree with you and say, “Well, gee,
        that doesn’t sound all that different from my filings.” and, until you hit
        like, yes, well then, then when we change it, then it’s rejected for something.
        All right. All right. You’re right. You’re right. That does, you’re right. It
        does sound a little arbitrary. I was about ready to fight you there, John. then,

        John Eastwood:

        But the question here is should you try to register? Well, first off, my
        philosophy is that you should always register in the countries where you’re
        doing business. If you’re making goods, if you’re selling goods, or if your
        competitors who are going to be pirating your goods or something like that are
        located there and we’ve had a lot of trademarks go through quite smoothly. So,
        I mean, in one sense you shouldn’t skip it because many times it does work and
        every so often you do get an epic battle or you get into like kind of a little
        thing. And it’s important to pay attention to the details of their sub-classifications
        because they’re so persnickety about that. But otherwise, don’t ever let the
        examiner pull you too far away from your core.

        It’s sometimes simpler is better sometimes we have clients that want to throw
        in the kitchen sink for all sorts of stuff. And you have to really be very
        realistic about the client really is known for for making say pens and ink
        cartridges. But if they’re not planning to do anything with writing paper or
        some other kinds of stationary products, better to leave some of those out if
        you know that they’re not a paper maker, if you know that they don’t have
        really any plans because you don’t know… You have to be very careful not to
        step on something else. And it’s very easy to do that in charter.

        Anthony Verna:

        Right. So, John, other than the takeaway of it seems as if the Trump
        organization had a typical fight for their trademarks in China. We’re hitting
        the 30 minute mark, so, we’ll not the extend this because we’d like to keep our
        episodes at 30 minutes. But what other takeaways do you think other American
        firms should have for moving the IP into the greater China market?

        John Eastwood:

        Well, for the greater China thing, I think that you should work with your
        marketing people, work with some native speakers, as your local council. We’ve
        helped a lot of clients over the years come up with a variety of possible
        names. And we’re not in a marketing gurus, but if you are working with like an
        ad agency or something like that on the launch in China, big corporations have
        the money for that, the small companies usually don’t. But it’s usually good to
        ask and say, “Hey, is there a neat turn of phrase? Is there something I can use
        that would express what my company does? It sounds somewhat like my brand name.”
        Cause if you don’t choose your name, you know the market, will choose one for
        you.

        So that would be one of the most important things. I would emphasize,
        definitely register the Chinese trademark; the Chinese character trademark.
        It’s crazy when people don’t and maintain consistency across the greater China
        market. So for example, if you have one Chinese trademark that you use on mainland
        China, plan it out so that you could still use that in Hong Kong, Macau,
        Taiwan, because I’ve seen large brands many years ago, say like about 18, 17
        years ago or so. I remember that I think Intel used to be using two different
        names. It was a [inaudible]
        [KR6] in one market and in diary[KR7]  in another one. And it was all because of, of
        the way that things were filed and what marks had been there before. And you
        know, just for consistency of branding, it’s important. It’s good to be able to
        have materials that will work in one environment, websites that will work in
        one environment and will work in another.

        Anthony Verna:

        Right. Right. John, thank you so much and look forward to having you on another
        episode for a fun cross Pacific chat.

        John Eastwood:

        That sounds great. Thank you so much for having me,

        Anthony Verna:

        John. Thanks. Talk to you soon.

        John Eastwood:

        All the best.

        33 min
      • Law & Business Podcast Episode 33: Intellectual Property and Taxes

        Diane Kennedy, CPA, joins Anthony Verna for episode 33 of the Law & Business podcast.

        Diane has written a dozen or so books and had the fortune of hitting the New York Times, Wall Street Journal and Business West best seller lists with some of them. That’s even more remarkable because her books are about tax, accounting and investing. They aren’t your typical beach books.

        Diane and Anthony talk about the need for corporate structuring and the possibility for licensing within holding and parent-child companies for intellectual property use.

        Diane does recommend having holding companies that own IP and fully discusses the asset protection that is in place for the business.  Ownership and licensing matter greatly to the tax ramification.

        Here is a lightly-edited transcript of the podcast episode:

        Anthony Verna:

        Hey everyone, welcome to the Law and Business podcast. We’re conferencing with Diane Kennedy, CPA as everybody knows her, right?

        Diane Kennedy:

        Well, I don’t know about that, but your listeners will soon meet me.

        Anthony Verna:

        Yeah, but nobody just calls you Diane. It’s always Diane Kennedy, CPA.

        Diane Kennedy:

        Yeah, typically. Yeah, I make my kids call me that too. So, just so you know. I’m kidding.

        Anthony Verna:

        As you should, that power trip, wherever your kids is always important. Yes. Says the guy who doesn’t have any. So, Diane, why don’t you tell everyone a little bit about your practice. I know you can be found over at ustaxaid.com but a little more than a plug. Why don’t you tell everybody about yourself?

        Diane Kennedy:

        So I’ve been a CPA for a lot of years and I have a practice that focuses exclusively with small business owners and their businesses, obviously, and or real estate investors. So, with that focus, then we’re able to really just hone in on how do we help you with strategies that build up the value of your business, create cashflow, and most importantly, how do you legally save on taxes? And I also write a lot of books. My latest is Tax Again 2018: How to Brace for the Trump Tax Plan. And the, the whole viewpoint of books I write is it’s not an argument about whether tax law is right or fair or overthrow this or whatever. It’s just simply how do you make use of the things that are in law right now? The rich have lots of advisors and they pay a lot of money for those.

        The average guy who’s got a business and is working hard or trying to build up some real estate investments, they can’t afford the team of experts that the rich have. And yet those same exact legal tax loopholes exist for everyone as a business owner or a real estate investor. So, it’s just simply taking that arcane language and changing it so it’s more accessible to everybody. That’s the idea. By the way, I just turned down a client who had $1.1 billion in assets. So that’s it. And I should say net worth of 1.1 billion simply because he didn’t fit the model. And it’s like, you know, you can hire a lot of really expensive people. You don’t need me, but I want to work with the guys who can’t get the experts or can’t afford them normally. So, these are ways that we can provide you those services most efficiently.

        Anthony Verna:

        Wonderful. So today, let’s talk a little bit in my wheelhouse. Let’s talk a little intellectual property. And one of the discussions I like to have with my clients is I say you need to sit down with your business’ CPAs and you need to talk about what is right for your intellectual property. Meaning, is it right for your company to spin off a parent or spin off a child, some kind of sibling company? And what does that mean for your taxes? And the usual setup is that intellectual property sits in a holding company and in the regular company there’s a licensing agreement so that a payment is made from the original company to the holding company for a license. And then this way there’s a payment made and there are tax ramifications. None of which I ever handled in my practice. So, Diane, why don’t you take it away from my bumbling words as to what I’m trying to say?

        Diane Kennedy:

        Right. Well, you know, actually, a lot of things changed effective January 1st, 2018 with the new tax plan that is the Tax Cuts and Jobs Act, also known as the Trump tax plan and quite likely a lot of business owners.

        Anthony Verna:

        Which you also call Taxmageddon.

        Diane Kennedy:

        Well, you know, and that all by the way, it came with the idea that there were so many thinking, this is the end, it’s not going to work. It’s like, no, it’s just a change. And that’s what the entire book is about. It’s not really taxmageddon. Again, it’s just a change. But if you think it’s not a big deal, you’re going to have a huge awakening this next year when you find out that you thought you were getting a refund and you’re suddenly paying a lot of money or you thought you were breaking even and you’re paying a lot of money because you just did that survey, two out of ten Americans are going to have to pay this next year and they aren’t expecting it.

        So anyway, but that all said you might have different entities you choose now, but in general that same concept is very accurate. I like to have the IP separate from the operating company. There’s a number of reasons for that. One is for asset protection. In essence with IP, you’ve created something of value out of nothing. I mean it, it has very little basis. It’s just your ideas and your systems and I don’t mean to say that’s nothing, but, normally if I want to have a commercial office building, I have to put some money into it. This is an asset that is from your ideas and your hard work. Protect those, keep them separate from your business. Additionally, I run into clients that after they find a system that works really well for them and they’ve got this IP sitting there, then they start thinking, well, it’s not just licensing it to myself, but I might want to license it to others so it becomes other income streams there.

        I mean, maybe someday you franchise or maybe it’s just you let people use your ideas, take your idea and spin it into other businesses, other bricks and mortar or take it online and maybe you have a different partner or whatever, there are different businesses and business structures. But the idea is that IP is still held in there and they’re still licensing agreements and there’s an income flow and that’s yours. As far as what kind of entity that’s generally the question that most people are asking me is, what do I hold my IP in? I prefer to hold it in something that’s like an LLC, a limited liability company. The reason for that is that it allows for flow through taxation. So. income or expenses that are made their flow through to your to your personal tax return, which may or may not be a benefit.

        But the biggest thing is  that if this IP could get big at some point, somebody may want to buy it from you. And if that happens, you created an appreciated asset. And anytime we have an appreciating assets, we don’t want to hold those inside a corporation. All kinds of bad things happen. You’ve got more tax you pay, and then you’ve got this issue of how do I get the money out of the corporation? So, then you have to take dividends. And that’s where we get the whole idea of double taxation and C corporations. So, I prefer just to have the IP sitting in another LLC and having it separate and then make sure you’ve got good agreements back and forth. You know, I’m speaking to a lawyer and talking about asset protection, but the fact is if anybody ever challenges you, you need to make sure you’ve got good paper trails and you treated that like a separate entity.

        Anthony Verna:

        I think another thought here that comes to mind is not just the licensing agreement but also the value. How do you look at the value of intellectual property, say at conception, so that if you’re going to set this up, your license and your agreement and the royalty amount being paid from one entity to the holding company is, you know, the operating company to the holding company is not illegitimate, for lack of a better word?

        Diane Kennedy:

        Right. And it’s, boy, that’s such a tough one because accountants, we’re always looking, what’s the basis, what do we have into this? So again, using that example of a commercial office building, okay. It’s like, you know, it’s a million-dollar building. I put $200,000 into it. I mean, I know what it is. I’m looking at what my ROI should be. You know, you have all those kinds of facts.

        Anthony Verna:

        And something like that. You get like you look at what’s been built into it. When houses are renovated, and every single nail is deductible, and you don’t necessarily have that. You may have attorney’s fees for getting your trademark and that’s about it.

        Diane Kennedy:

        Yeah, exactly. So, what is the value? Well, on the books it’s close to nothing. I mean seriously what you’ve got is your attorney’s fees most likely and maybe you know some work around that, just getting the that stuff trademarked or patent or whatever it is that that IP is and that’s all. Now what is the value of it? In that case we’ve got to look at what the cash flows are going to be and so it almost becomes kind of a circular argument like, well we’ve got to determine what the value is and just determine how much the royalty payments should be. And it’s like, no, I think it’s more important that we look at the royalty payments that are for the industry. For example, I might look at something like Subway, if you’re starting a submarine sandwich shop or a sandwich shop, and what is the licensing agreement?

        If you get a Subway franchise, what do you have to pay for the use of their systems and there is an amount you’re going to pay for that on a monthly basis. You know there’s probably a marketing amount. That then becomes, okay, if that’s the number we’re going to start using, then what is the value of that future cashflow and from that, that’s where you start to kind of do evaluation. I think that’s a really important question though, not just for how do we make sure our documents now are right, but let’s say for your estate 10 years down the line and you’re looking at, okay, I need to leave this to my heirs. What is the value of this thing going to be? If you don’t establish the way you want it valued, the IRS is going to do it for you when you die and trust me, they’re going to value it as high as they possibly can because they’re trying to going to try to collect some estate tax if you’re close to that number.

        So, I don’t have a great answer other than to tell you it’s really important. I think what I would do is look at what is a reasonable royalty payment. And like you said, it’s based on net profits or gross profits or there’s something in the industry for something similar. And then based on that, that’s going to tell us what our income stream’s going to be and then just do a calculation of present value of the future cashflow. And now we’re just talking math. I’m not going to spew that off the top of my head. But there’s formulas that give you that information. And then based on that, you’d have maybe valuation that you reassess every year.

        Anthony Verna:

        And I think this valuation is an important point. Diane, got an episode coming up where Will Jacques, my patent agent, and I talked about damages in an infringement lawsuit.

        And the first question there is, how much is your IP worth? What I find important here is that if your valuation is way off here at the beginning it’s probably going to be way off down the road.

        Diane Kennedy:

        Right. And I think at the very beginning it’s hard to value it because we don’t know what the market’s going to be. And that’s where I like, and again,  speaking as a CPA solely as a CPA, I like the idea that part of your annual minutes, even though you’re not required to have annual meetings in an LLC, I would do that at least annually and record that information. And as part of that, the LLC manager or members, however it’s set up, signs off on the fact that this is the valuation formula we’re using. And based on that, this is what we say the value of it is now. You get sued in the first two months
        it’s difficult, but a couple of years down the line, you now have a track record of this is how we do our valuation.

        Anthony Verna:

        But that happens too. Either being sued in the first two months or the need to file a lawsuit in the first two months. I mean, even this week I’ve spoken to somebody who the business is new, and they already see trademark infringers out there.

        Diane Kennedy:

        Wow. You know? Wow. I guess maybe what it is, it’s like, this is where we do this kind of pulled from the air PFA and I just like to be determined later. But meanwhile we’re going to say this is what the value is.

        Anthony Verna:

        But when you said PFA, I thought you meant something else.

        Diane Kennedy:

        I know you did. I feel like we were taping up. The general thought though is, I mean, in accounting, sometimes people start LLCs or corporations or anything and they don’t put any value for their stock or their units on the books. They just start off with, well, you know, we just gonna start it and we’ll just get going. And then they get into trouble because if you then got a problem with, is this really a legitimate entity because almost every entity needs something to get it going. Put a thousand bucks in there, do something so that there’s an amount shown to start with the  beginning capital amount and that then shows for the books and records and the tax return you file that there is value in that from the very beginning.

        Anthony Verna:

        I think it’s a very important point that you add something per valuation and that’s something that I speak until I’m blue in the face about, and I know that a lot of small businesses out there are just happy to get their copyright trademark or patent  certificate and I don’t want to say be done with it, but then their business moves on without much of a thought on what the value is behind the certificate.

        Diane Kennedy:

        Yeah, totally understand. I run into that. I see the guys who just started a business and they’re so busy working and fulfilling and figuring out systems and employees and inventory or you know, whatever it is they’re doing, that they don’t have time for the little nuances. And then sadly, 10 years later, if there’s a problem, that’s the thing that could have taken them a couple of hours, ends up costing them hundreds of thousands of dollars. So, part of it is to say it, you know, you’re going to have to, it’s going to be one more thing on your to do list.

        Anthony Verna:

        All right, so some of the thoughts here on transferring IP to a holding company. You said make it in an LLC. And you specifically said don’t make it a C Corp, right?

        Diane Kennedy:

        Yeah. I don’t like to put appreciating property or property that has a chance of going up in value to appreciate them. Not as opposed to depreciate, but appreciating in value for tax consequences. It’s hard In a C Corp. Now, there are a lot of other reasons to have a C Corp you’re going to go public or something. So maybe that’s not a choice. Maybe you have to have a C corporation, in which case that’s what it is.

        Anthony Verna:

        Sure. And then start creating the value and valuation right away by putting money into this whole incorporation,

        figuring out what the future value is worth and starting those royalty payments from the operating company to the holding company.

        Diane Kennedy:

        Absolutely. Yeah. And it’s not even just the valuation, it’s the valuation formula, because the valuation is going to be dynamic. It’s going to be changing.

        Anthony Verna:

        Understood. Completely. All right then, Diane. I know this is a bit of a mini-sode, but thank you for coming on and we’re going to have you on again very soon, aren’t we?

        Diane Kennedy:

        Thank you. I enjoyed it.

        Outro:

        This has been the Law and Business podcast. Visit Vernalaw.com for more episodes. To contact Verna Law PC, send an email to [email protected] or call (914) 358-6401.

        16 min
      • I Want a Provisional Patent

        It’s Episode 32 of the Law & Business Podcast.

        Anthony Verna and Wil Jacques talk about the possibilities of a provisional patent application (PPA).  Many potential clients call asking for a provisional without really understanding that the provisional patent application only gives a one-year extension to the deadline of filing a full patent application.

        Law & Business Podcast with Wil Jacques

        Pros of a provisional:

        • a way to initiate the patent process is because they are cheaper to prepare (because there are no formal requirements) and the filing fee due to the United States Patent Office at the time of filing is only $130 for small entities (i.e., individuals, universities and companies with 500 or fewer employees), which saves you several hundreds of dollars compared to the filing fees for a non-provisional patent application. Indeed, the filing fee is even less — just $65 — if you qualify as a micro entity
        • cost less to prepare from an attorney fee perspective because there are no formal requirements, which means we can focus on disclosing the invention in its full detail while still preparing an exceptionally detailed application that costs a fraction of the cost of a nonprovisional patent application
        • it is a filing that counts in a first-to-file scheme – used to secure an early filing date
        • A PPA is also held in confidence with the USPTO, even if it is not converted to a regular application. More specifically, a PPA will not be published by the USPTO unless a later filed published application or issued patent claims the benefit of the PPA’s earlier filing date.
        • no requirement that a PPA include any claims to an invention.
          • 35 U.S.C. 112 (a). Those requirements can be divided into an “enablement requirement” and a “best mode requirement.” Section 112 (a) specifically states:
            • The enablement requirement
              • “the specification shall contain a written description of the invention, and of the manner and process of making and using it, in such full, clear, concise, and exact terms as to enable any person skilled in the art to which it pertains, or with which it is most nearly connected, to make and use the same, and”
              • The best mode requirement
                • “shall set forth the best mode contemplated by the inventor or joint inventor of carrying out the invention.”
                • In other words, a PPA must disclose enough information that a person having ordinary skill in the same technology would recognize that the invention claimed in a later-filed non-provisional application is described in the PPA upon which it relies. If the PPA description is inadequate and does not meet these requirements, than a later filed regular application cannot claim the benefits of the PPA’s earlier filing date.
                • Cons:

                  • pre-filing disclosures permitted by the USPTO may in fact disallow patenting in some foreign countries. Furthermore, even in the U.S., if the pre-filing disclosures are made more than one year before the filing date of the provisional patent application, patenting in the U.S. is likewise precluded.
                  • Although the initial cost is low, the required follow-up non-provisional filing fee means that the applicant is actually paying two fees to achieve what an initial non-provisional filing might have accomplished.
                  • The provisional patent application preserves the date and renders temporary protection but does not fully protect the invention unless and until the subsequent non-provisional filing or conversion filing meets all of the formal requirements for patent protection. Accordingly, some applicants may gain a false sense of patent protection when they in fact may wind up with no protection at all if the latter application or conversion does not meet with the examiner’s approval  (No formal examination and no issuance)
                  • Here is a lightly-edited transcript of the podcast episode:

                    Anthony:

                    Okay everyone. Welcome to the Law & Business Podcast. Anthony Verna here with our patent agent. Wil Jacques, how are you doing?

                    Wil:

                    Well, very good. Anthony, how are you this evening?

                    Anthony:

                    I’m doing well, thank you and hello to all the as well. Thank you for joining us and don’t forget to subscribe and rate if you’re listening on iTunes to the podcast today, we’re talking about a more traditional topic. It’s the provisional patent versus the full-blown patent application. And we’ve certainly had people call us and say, “I want a provisional patent.”

                    And generally I say to somebody, “Why do you want a provisional?” And usually the answer is, “I don’t know, doesn’t everybody get a provisional?” And the short answer is no. And you need to sort through some, some pros and some cons of the provisional patent application process versus just getting a full blown patent application.

                    Why don’t we start off with positive check mark or two for the provisional patent application.

                    Wil:

                    Well, just as you alluded to, a lot of our clients will come to us and suggest that they want a provisional patent when in fact what they’re asking for is a provisional application for patent, which is kind of different. You know, you know, the nuances are kind of thin for most of our clients. But just so that you know, there’s no such thing as a provisional patent. What there is, is a provisional application for the patent. But that provisional is important because if one is not absolutely sure about all of the, let’s call it modes of operation of a, of my invention or every little detail of my invention, what I may want to do is to get as broad coverage and as much disclosure about what my invention is that I have in my possession right now. And get that on paper and get that file you want to, you know, under first to file, you want to get that into the office and establish your date. So you timestamp.

                    Anthony:

                    A couple of things that you said there. One, because we’re in a first-to-file scheme now that started in 2013 for everybody out there who didn’t know that here in the United States first to file, you get to the patent office before anybody else. So number one, a provisional patent counts in a first to file scheme. So that’s one of our positives of that provisional patent application is we get our filing date. And another thing that I want to unpack a little bit is that you said that there’s a focus on disclosing the invention in its full detail. In the provisional patent application. You can prepare an exceptionally detailed application in a provisional patent application without going through the formality of a regular patent.

                    Wil:

                    There are quite a few formalities associated with the regular or what we call non-provisional patent application that are not in a provisional patent application. So one of those things would be the level of detail that one may go into. In terms of your full disclosure. It is not necessarily a requirement that you have drawings now. It is recommended that one has drawings in order to fully explain what the invention is. Sometimes you don’t capture it without the drawings, but these are certain formalities that may not be required in the filing of a provisional but still afford you the ability to get a timestamp and to get that date. And I’m sure we’ll talk about the caveats of why we, you know, some of the cons associated with this as well. Get to that. We’ll get to that, but certainly that’s, that’s one of the things you want, you want to be aware of. The one that matters the most is that in a provisional one does not even need to make a claim and that is what is it that I claim to be the invention buck. Don’t confuse it with saying it is not what I have disclosed in that application. It should be there and then you know as patent practitioners we can come back later and formalize the claims.

                    Anthony:

                    I don’t want to necessarily call this a a pro or a con, but when you still need to make sure as a, as a drafter of the patent application that that description of the invention is neither too narrow nor too broad as well. I mean there still is an art to drafting the provisional patent application because, and tell me if I’m wrong,

                    Wil:

                    If it’s too narrow, converting it to a full patent application is going to be different and difficult. Excuse me. And if it’s too broad, then maybe the examining attorney might not give you the filing date of the provisional application. It’s a fine line. And to some degree as to what is actually been disclosed, it’s typically not to the letter. It May, I think to use the term inference because we have to disclose fully and concise. Yes, clearly understood what our inventions are. But having said that, a molecule that has one spitting at them, it may be representative of a molecule that has multiple spinning atoms in, in a region, you know, and still you’ve disclosed the invention. However, there may be other claims to be made to capture all of the different elements of your invention as you write those claims. But you have this done your job of disclosing that what you may not have done is disclose the best mode of your invention, which is a requirement for your non-provisional and not a requirement for your provisional patent application. And understood. So I call that a positive, but I just wanted to say there still is an art to the provisional patent application. Uh, yes. Okay. So with the fact that that there are less formal requirement to the provisional patent application, I’m assuming the cost of a provisional patent application is going to be less than the cost in fees of a full, a non-provisional patent application. And then is that true for the patent and trademark office filing fees? Oh yes. Okay. I just wanted to make the distinction between the fees.

                    Anthony:

                    It depends on the approach of your practitioner.

                    Wil:

                    At Verna Law, we try to be as detailed as possible up front and so the cost of your, of your provisional application, depending on the budget of our client, could get too close to what it would be in a regular file application. But that provisional has been prepared to the extent, and I’ll use your term that it could be converted now it’s not recommended to convert. It’s, it’s recommended to Reno to really redraft, you’re not provisional and clean benefit, but you could save 50% or so. You know, let’s just throw out around number on your drafting fees because of the, the less requirements, less attention to too much detail. As far as the US PTO is concerned, your bees are much less as well. And most of that has to do with the fact that it is not examined. Generally speaking, Europe, your provisional application for patent is not examined by the u s PTO.

                    Anthony:

                    Now you’d said just said generally speaking, the patent and trademark office will not examine a provisional patent application. Can you name an exception?

                    Wil:

                    Well, yeah, yeah. And let’s say in your, in your regular uh, pattern, uh, app application, what we called a non-provisional patent application, you have made a, uh, a claim for the benefit, a written statement in your non provisional application claiming benefit of the priority date or the filing date of that provisional patent application. Then it, again, it is still not examined per se, but the provisional patent application does become available to for the public proceed. And so whether it’s examined or not and the invention is there, we’ve timestamped it, something’s going to get examined. But I think what our real concern is whether or not it’s still a quote unquote held in confidence between the inventor in the patent office.

                    Anthony:

                    Does that confidence go away? Is that provisional patent application ever published?

                    Wil:

                    No, it is not published, but there is access made to it. So typically after you file a regular patent application, 18 months after your priority date, that application is published. So it is made of public. Uh, they don’t necessarily publish your provisional application, but one has access to it through the files based on the fact that you were regular patent application has been published and you can see the number, therefore you have access to that provisional.

                    Anthony:

                    I think that’s an important distinction to make because I think a lot of people go into this process saying, well, I can file the provisional patent application and nobody’s ever going to find it.

                    Wil:

                    Well, the other thing, and that’s a true statement, let me say that first, but one thing that we tend not to think about a lot of our inventors more independent, some of the smaller vendors they come in, but they do see a need to want to file internationally. And so provisional applications for patents is strictly a u s function. It does not work the same way around the world. But because of our bars, let’s call it two to patent ability, one is given a certain amount of time in order to file your application in light of certain other, and we’ve talked about those on other shows, but in terms of having your foreign patenting rights preserved, you have to file within 12 months of your national filing in another country.

                    Anthony:

                    So if you file in the United States within 12 months, you have to file that invention in the most foreign countries.

                    Wil:

                    Right. And you need to check with your patent practitioner, your patent attorney in other jurisdictions to see how it’s calculated. Because frankly, it’s despite the treaties, it is different in every country. So how Canada treats your us provisional patent application is different than how France and to treat it and it’s different than how Japan is going to treat it and it’s different than how Korea is going to treat it. You just need to check with your practitioner in that jurisdiction. You know what we’ve done with our provisional patent applications is we provided an additional year of, quote-unquote patent protection to those filing.

                    Anthony:

                    Hey that’s, that’s another, that’s that is another pro. That is another positive check mark.

                    Wil:

                    At registration, you’ve got 20 years of, let’s call it quote unquote patent protection. However, because of that benefit, you do not get that in our foreign jurisdictions. And so the clock starts running at the point you filed that provisional patent application.

                    So I’d say one of the negative check marks for the provisional patent application is that if you’re going internationally, you need to make sure you understand your timing with counsel in each jurisdiction that you plan to file in because they’re going to calculate that provisional filing date differently. Right. And so, so you need to make sure that you understand this, so I’m going to guess that that’s a negative check mark. That is a, I hate to say pros and cons cause boy would have phrase, but anyway, that works. I know. I know. If we’re filing a provisional patent application, I understand that the, that the initial cost feels low, but in reality isn’t a going to be higher because it’s almost as if the inventor needs to pay twice because you’re going to be paying a second USPTO filing fee. You’re going to be paying your attorney or a practitioner multiple times because now you’re going to, you’re going to turn that provisional application into a non provisional application for the extra year of work or extra year of protection. It doesn’t seem like there’s a whole lot of benefit there with the number of extra fees but, it truly depends. Let’s take a look at the current environment. Maybe we even stepped back 20-25 years ago when everything was a sensor, so all manner of memes and sensors were being filed. You know, it may be, to use Steven Johnson’s term, the primordial soup, right? We’re talking about the minds getting together and inventions just kind of flying off the wall. And it’s funny that Oculus was quote unquote invented at the same time by two different people, but they hung together. And so the language was there. Having said that, this what happened during the censors and memes period is happening today, let’s say in AI or in crypto currencies and that’s another matter as to whether or not they’re patentable.

                    Right about now the environment is, these are the types of patents that are being filed all around the world and particularly at the USPTO. And so when the, I-have-an-idea person comes or the adventure comes to us, it may be that they’re in an environment that’s moving very quickly and they need to get something filed on the books. Now in order to at least attempt to preserve their patent ability position within this environment of my buddy at the University of Pennsylvania is working in the same area and I know they’re going to be filing.

                    And that brings up the next point, which is if I’m filing this this time sure, sure. But that brings up my next slide. If an inventor is filing a provisional patent application, that provisional patent application, as we said, uh, several times it has some kind of description of the invention. Um, and even if it’s a quick and dirty description of the invention, the, the way you were just talking about it goes hurry up, get it filed. Cause we have to get something on, you know, on the books. It’s, it’s not truly protection for the invention until this entire process is formalized anyway into a non-provisional patent, which sets forth the claims.

                    And so imagine that a lot of work on the side of the inventor may have been performed. And again, we, we, we recommend you sit and go what your, your patent, uh, practitioner to make a clear determination of this. But in adventure columns and they’ve done a white paper and they have experimental results and they can show tables and they can show other aspects of how the invention is working. They may even have photographs of, of the invention, maybe, you know, something that could at least not be a formalized drawing, but it could be a picture that kind of shows the shows the adventure, those things without going into a lot of formality could be the basis of your provisional, which is why they’re so inexpensive because of time is the issue. Then these things can kind of be put together and vile. In other cases, you may not want to do that, but it depends.

                    Anthony:

                    So if somebody is picking up the phone, calling their practitioner and saying, I want to provisional and I’m going to be stubborn about wanting provisional right now, what’s your advice for the right case for filing that provisional application?

                    Wil:

                    I need to get it done yesterday.

                    Anthony:

                    Okay.

                    Wil:

                    And that’s it is it in my mind is the only reason to file the provisional because one understands that it takes a little time to formally and get a patent application drafted properly. There’s a fair amount of back and forth that I actually recommend and should happen between the patent practitioner and the inventor. For instance, I’ve seen pattern, uh, pass list of c and applications that had been from inventors and it’s been, I’ll use the term elegant in that environment.

                    Where the invention could’ve gone. In other words, they want it to be too perfect about what it is they had discovered it. They ignore the broader impact theory is in such a way that they could have captured more. These are the things that come from sitting down and questioning and taking consideration of the invention.

                    You don’t have that time – we’re in the AI environment and you think that there are people who are getting close to what you’re doing.

                    Then let’s get the clock stay out in this. Just get something filed.

                    Anthony:

                    Why am I not just, why are we not just doing that for everybody? Because this way you get that you get that filing date

                    Wil:

                    Because one is still has the requirement of having maybe a distinct invention.

                    A disclosure of the invention and in order to properly construct claims, the specification or what we will just refer to the entire application as the disclosure, which could or may or may not include drawings, but it has to have fully describe what it is that your invention does, what it’s made of, how it works. It needs to be there.

                    Anthony:

                    There are some websites that say the provisional patent application is a really good idea. If you need to tell investors that you’ve something filed and this way the provisionals filed or you can say patent pending and this is a good way to talk to investors. I know you’ve got practical business experience and this will not, not, not just drafting patents experience. What’s your experience with that set of facts?

                    Wil:

                    Well, it used to be a lot easier. Yeah.

                    Anthony:

                    Well yes.  I know years ago you and I both know that that angel money and VC money isn’t what it used to be. Now we both know that, but at least an inventor can say, well the patent is pending.

                    Wil:

                    Yeah, well we can certainly talk about that, but that’s another show in itself as well.

                    Well let’s say this, there is a colleague of mine always use the term smart money and dumb money and there was a little bit more dumb money, at least with respect to reviewing the statement of I have past or I’ve filed for patents these days. It is well okay, but to some degree investors will want to know what is it that you filed. And so what becomes important is, let’s see, you come, you want to get the provisional file so you can have something inexpensive so that you could run to the nearest bank of crowd funding or other folks and say, yeah, I have a patent filed. Or you know, maybe you wind up on that tech show.

                    Anthony:

                    Okay,

                    Wil

                    I got a patent filed. Well, is a patent provisional? The first thing I look at is, well, what have you filed? Have you made a sufficient disclosure of the invention and something that’s going to protect what it is we’re trying to sell and prevent others from doing it. Right, because you can’t go back in, add new matter after defined.

                    Anthony:

                    Oh sure. And, and I was at a, at a startup convention a couple of years ago. I don’t, I’m sure we’ve talked about this story privately, but person owner of the company comes up to me and says, well yeah, I have a pen. I picked up the phone, I called the patent and trademark office and got an appointment with the attorney at the USPTO and I explained the intervention. And then somebody started infringing. Then I went to a lawyer and the, and the patent lawyer said, sorry this, the claims are so narrowly drafted that this other company is making a version of your invention that is not described in your patent and therefore there’s no infringement. So I get, and I know that you get that the embodiment is truly important and especially when you’re dealing with a full non-provisional patent.

                    Wil:

                    That is what we call enablement. And so though this is what the embodiments do, those are what the best mode is intended to do, is to say that I really have command, I really know what my invention is. And to be able to describe that in a way that someone who is as we use the term skilled in the art one who understands this technol technological space would be able to say, yeah, I get that. And that really, really does work. Now again, as we’ve said in previous shows, it doesn’t really matter in some respects that you have a patent in that piece of the patent world doesn’t provide you or provide your, your, your market with something substantial in terms of, of value. And the best way to think of it when, when we have our inventors come in is to say it patent doesn’t give you a right to sell anything.

                    Anthony:

                    That’s true. It gives you a right to restrict others. And so the mere fact that you may be able to get a patent on something and so you add a new laser clicker to your pen that is not part of other pens. But if there’s a pen that is patented that you need to go through in order to sell your product, then you are less, we say restricted. You don’t have a freedom to operate in that regard. And so you know, maybe your, your, your patent isn’t worth as much as what you thought it was. All right. So to to wrap up here, well the provisional, in your opinion, the provisional patent application really is for somebody who needs that filing date right away.

                    Wil:

                    And I hate to use this term, but I would also add that there may be other specifics around how one would describe other specifics around the invention that one may want to include in a regular application that you may not have at this point in time. A lot of people in fact used the provisionals is a very inexpensive way to be able to go out and see whether or not the invention does have value. So you can file, you can know that you have some protection in place that you can later on come and spend the real money, you know, or a larger sum of money in order to capture that. But you could test it in the market now to see whether or not what you have invented and what you hope to get a patent for that will restrict others. That’s a lot, isn’t it? Will in fact have value. But you’ve done that at, um, you reduce the risk of the amount of money you have to pay upfront.

                    Wil:

                    And other than that, sit down with your practitioner, go through the and, and, and get your claims. Absolutely. Okay. Well, thank you so much for spending another half hour. Thanks for the conversation.

                    Anthony:

                    All right, and once again, thanks for listening to the lawn business podcast and coming up. We have an episode on cryptocurrency in taxes as well as taxes and placing your IP and parent child, brother, sister subsidiaries, like a mind warmer. [inaudible] thankfully I don’t do taxes. All right, everyone, please don’t forget to rate and subscribe to the Law & Business Podcast. Thanks very much for being with us.

                    28 min

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