Wednesday, October 21, 2015

(Not So?) Charitable IP

It's no secret that certain charitable organizations aggressively assert intellectual property claims. For example, the Susan G. Komen "For the Cure" foundation is a notorious trademark bully, filing trademark oppositions and sending cease and desist letters to any charity that uses the phrase "for the cure," or even variations thereof. And charitable universities and colleges are no exception, often asserting aggressive trademark, copyright, and patent claims. As a theoretical matter, it's difficult to understand how those intellectual property claims benefit the public interest, in a fashion consistent with prevailing theories of charity law. Isn't the whole point of charities to solve market failures in public goods? How is that purpose efficiently advanced by making them more expensive? 

In any case, representatives of my employer, the University of Kentucky, appear to have truly jumped the shark on ridiculous intellectual property claims, by sending a cease and desist letter claiming exclusive rights to use the word "Kentucky." Apparently, Michael S. Hargis of the Lexington, KY law firm King & Schickli sent a cease and desist letter to Kentucky Mist Moonshine of Whitesburg, KY (home of Appalshop, of which I am a proud trustee!), opposing their trademark application and claiming that the University owns a trademark in the word "Kentucky." Hopefully, there is more to the story, because otherwise it seems that Mr. Hargis failed to read the Lanham Act, which explicitly provides, "No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it ... Consists of a mark which ... when used on or in connection with the goods of the applicant is primarily geographically descriptive of them." 15 U.S.C. § 1052(e)(2). In other words, if the "moonshine" was made in Kentucky, you can say so.

UPDATE: Thanks to Mr. Dorisio for pointing out in the comments that geographically descriptive marks can become "incontestable" under the Lanham Act after five years of uncontested use, and that the cease and desist letter only objects to registration of "Kentucky Mist Moonshine" under Class 25 or "clothing." While it is true that geographically descriptive marks can become incontestable, incontestability only goes to the validity of the mark, not its strength. Geographically descriptive marks are typically quite weak, especially when they are used by third parties. Incidentally, as the International Trademark Association has observed:

[I]nfringers often are not aware of the infirmities that may attend even an incontestable registration. As a result, the biggest benefit from claiming incontestability may be in providing the registrant with the ability to say so in a cease and desist or other objection letter. Stating that a registration is active, valid, in full force and effect and “incontestable” may scare the recipient of the letter into giving up on the thought of attacking the registration without ever even exploring any of the many grounds for cancellation that survive incontestability.

Hmm. In any case, a cursory search turned up 446 active trademarks containing the word "Kentucky," including quite a few in Class 25. Irrespective of the incontestability of the University of Kentucky's mark, the Kentucky Mist Moonshine trademark application, is surely a descriptive fair use. Again, as the International Trademark Association has observed:

Using a geographical name relating to the user’s business location, even if that name is the same as or similar to another’s mark, generally is considered fair use. Under the fair use exception, a user generally is permitted to use descriptive indications concerning the kind, quality, quantity, intended purpose, value, geographical origin, time of production of the goods or of rendering of the service, main raw materials, functions, weight, or other characteristics of the goods or services.

It strikes me as highly implausible that anyone could possibly be misled into believing that the University of Kentucky is the source of clothing bearing the mark "Kentucky Mist Moonshine," especially given the fact that the University of Kentucky is still a dry campus. Hopefully not for much longer. In any case, it is disheartening to see the representatives of a charitable organization aggressively asserting intellectual property rights in this fashion, regardless of their likelihood of success on the merits, which I believe to be zero in this chase.

I attach a copy of the cease and desist letter, for those interested. Download Letter 10-12-15

Brian L. Frye

October 21, 2015 | Permalink | Comments (3)

Tuesday, October 6, 2015

Reiser & Dean publish SE(c)(3): A Catalyst for Social Enterprise Crowdfunding

Dana Brakman Reiser (Brooklyn) and Steven A. Dean (Brooklyn) recently published SE(c)(3): A Catalyst for Social Enterprise Crowdfunding, 90 Ind. L.J. 1090 (2015).  Below is the abstract of their article:

The emerging consensus among scholars rejects the notion of tax breaks for social enterprises, concluding that such prizes will attract strategic claimants, ultimately doing more harm than good. The SE(c)(3) regime proposed by this Article offers entrepreneurs and investors committed to combining financial returns and social good with a means of broadcasting that shared resolve. Combining a measured tax benefit for mission-driven activities with a heightened burden on shareholder financial gains, the revenue-neutral SE(c)(3) regime would provide investors and funding platforms with a low-cost means of screening out “greenwashed” ventures.

Terri Lynn Helge

October 6, 2015 in Publications – Articles | Permalink | Comments (0)

Saturday, October 3, 2015

Intellectual Property & Charity Law

Intellectual property and charity law are typically considered distinct and unrelated bodies of law. But as I have observed, they are structurally similar, because both are intended to use indirect subsidies to solve market failures in public goods. The prevailing theory of intellectual property holds that it is justified because it solves market failures in innovation caused by free riding (and transaction costs) by giving inventors and authors certain exclusive rights in their discoveries and works of authorship. And the prevailing theory of charity law holds that the charitable contribution deduction is justified because it solves market failures in charitable goods caused by free riding (and transaction costs) by indirectly subsidizing charitable contributions. I believe this structural similarity suggests that intellectual property and charity law are complementary. Unsurprisingly, promoting innovation is typically considered a charitable purpose.

In any case, Mark Lemley recently published a controversial essay titled Faith-Based Intellectual Property, which argued that consequentialist and deontological theories of intellectual property are fundamentally incompatible. The tension between consequentialist and deontological moral theories will be familiar to nonprofit law scholars. For what it's worth, I recently posted an essay reflecting on Lemley's argument, suggesting that Lemley's article was controversial at least in part because it observed that consequentialist and deontological theories of intellectual property are not merely in tension, but fundamentally incompatible. My essay considers Lemley's argument in light of Isaiah Berlin's essay The Question of Machiavelli, and argues that the incompatibility of consequentialist and deontological theories of intellectual property can be resolved by adopting consequentialist public theories and deontological private theories.

Of course, this insight was largely informed by charity law, which is all about reconciling different values. I think there is a lot of opportunity for productive conversation between intellectual property and charity law scholars, given their common goals.

Brian L. Frye

October 3, 2015 | Permalink | Comments (0)

Thursday, October 1, 2015

CFP: University of Detroit Mercy Law Review Symposium on "The Past, Present, and Future of the City of Detroit"

The University of Detroit Mercy Law Review has posted a call for papers for its 100th Anniversary symposium on the past, present, and future of the City of Detroit. According to the call for papers:

Specific topics could include, but are not limited to:
    1. The Past
        o Civil rights and race relations
        o Labor law
        o Relationship between the City and the suburbs (or the rest of Michigan)
    2. The Present
        o The Impact of the Bankruptcy
        o Efforts to eradicate blight and abandoned buildings
        o Public Education in Detroit
    3. The Future
        o Impact of new developments on the future of Detroit
        o Relations between the City and the suburbs
        o The role of the law in developing new economic opportunities

I imagine that some of the suggested topics might appeals to readers of this blog, who might also have additional thoughts about the role of nonprofit institutions in the past, present, and future of Detroit.

The full call for papers for the University of Detroit Mercy Law Review Symposium is available here.

Brian L. Frye

October 1, 2015 | Permalink | Comments (0)