Erik J. Heels’s Favorite Techdirt Posts Of The Week

from the forest-and-trees dept.

By Erik J. Heels

First published 8/19/2011; Techdirt; publisher: Floor64

Mike Masnick of Techdirt did not ask me why I am a Techdirt fan, but here’s why. Techdirt has (1) good headlines/titles/Tweets (headlines are titles are Tweets, you know), (2) good URLs (no outsourced feeds here), (3) good content, and (4) good cluefulness. This rare combination of goodness makes Techdirt great. Mike has the ability to see both the trees and the forest, providing timely commentary on why stuff is broken and why that brokenness might be part of a larger – often bad – trend. For its insightful commentary on the intersection of law and technology, Techdirt is on my short list of must-read blogs, and you should nominate Techdirt for the ABA’s list of top 100 law-related blogs. And although I link to Techdirt more than I comment on Techdirt, I thank Mike for the opportunity to write about my favorite posts of the week.

So here are my favorite stories (trees) and trends (forest) of the week.

I have noticed that the controversy surrounding a particular flavor of intellectual property (IP) protection is inversely proportional to the duration of the IP rights: (1) Patents generally last 17-20 years and are extremely controversial, (2) copyrights generally last the lifetime of the author plus 90 years and are very controversial, and (3) trademarks last potentially forever and are not very controversial. So I’ll start with trademarks!

Trademarks

1. Where In Trademark Law Does It Say It’s Okay To Trademark A Town Name ‘For The Good Of The Community’? (2011-08-15).

Sturgis Motorcycle Rally Inc. (SMRi) trademarked “Sturgis” (a town in South Dakota) and then tried to stop “unauthorized providers” from selling Sturgis souvenirs. The Sturgis trademark application at issue took over ten years to register (about one year is average), surviving an opposition along the way. The file is 373 pages long! In short, the applicant was able to successfully argue that the geographically descriptive mark “Sturgis” should be accepted as a trademark under the theory of “acquired distinctiveness,” which states that otherwise descriptive marks can be registered if they have been used for five years in connection with the goods and services on the trademark application. If you Google “Sturgis,” you will discover that the word is synonymous with the annual motorcycle rally, not with the town where the rally is held. In other words, the Sturgis motorcycle rally is more important, trademark-wise, then Sturgis, SD. This is a good example of how the law, even when applied accurately, does not always produce a fair result. It seems to me that any retailers in Sturgis should be able to sell Sturgis-related products, but the law says otherwise.

2. Waffle House Says Rap Song Called Waffle House Violates Its Trademark (2011-08-17).

This is a case of Waffle House (the restaurant) cluelessly over-reaching with the trademark rights it does own to try to stop something it doesn’t like. That’s not what trademark law is for. There are registered Waffle House trademarks for restaurant services and mugs and clothing. But not for rap music. See how that works? Waffle House (the restaurant) gets to stop other restaurants from calling themselves “Waffle House.” But it does not “own” the phrase “Waffle House” and get to dictate to the world how or whether to use it.

Which is why Mike Doughty can sing a song called “Busting Up a Starbucks.”

But even that song appears as “Busting Up a Starbuxxx” on iTunes. Hmm.

Censorship, Civil Liberties, And The Cluetrain

As George W. Bush infamously said on 1999-05-22, when trying to justify censoring the parody www.gwbush.com website, “There ought to be limits to freedom.” It seems, unfortunately, that America agrees with you, W.

3. Police Try To Bring Wiretapping Charges Against Woman Who Filmed Them Beating A Man (2011-08-15).

Does this headline sound like it’s coming from North Korea or from the United States? I wonder if government agencies and law enforcement personnel are more stupid today than in pre-Internet times. Or if the Internet just shines a brighter light on their stupidity. Either way, less stupid, please.

4. FCC Investigating Whether BART Cell Service Shut Off Was A Violation Of Federal Law (2011-08-16).

Good that the FCC is investigating the Orwellian decision by BART to shut off cell service over rumored protests about BART. Bad that BART even considered this option in the first place! North Korea or United States?

5. New Research: Internet Censorship To Stop Protests… Actually Increases Protests (2011-08-17).

This is what happens when governments try to censor free speech. The censorship itself becomes news, and the speech spreads. Can you say Streisand Effect?

6. Police Say They Can Detain Photographers If Their Photographs Have ‘No Apparent Esthetic Value’ (2011-08-16).

Stories like this make me think that maybe the 9/11 terrorists are winning. Only when our liberties return to pre-9/11 status will freedom have the upper hand. I think that the police who enforced this rule have “no apparent law enforcement value.” Unless you consider security theatre valuable.

Patents

7. Google Spends $12.5 Billion To Buy Motorola Mobility… And Its Patents (2011-08-15).

8. What Google Gets With Motorola Mobility (2011-08-16).

9. Motorola Deal Showing Massive Loss To Innovation Caused By Patents (2011-08-17).

The big tech story of the week was Google’s purchase of Motorola. Or was it Motorola Mobility? (Same? Different?) Or Motorola Mobility’s patents? I think the only Motorola device I’ve ever knowingly used is my sucky cable box. So I was having a hard time caring about this deal. When commentators started suggesting that the deal was a patent play, it started to make more sense to me. I teach and practice patent law, and I believe in the ideals of the patent law system. But to say that the current patent law regime is broken is an understatement. Most patents are a waste of money. Modern patent laws were never designed to allow for non-producing non-inventors (i.e. patent trolls) to extract revenues from those actually adding value to society. What worries me most about the Google/Motorola deal is that I don’t believe that Google believes in “don’t be evil.”

Baseball

10. NY Yankees: It’s Insulting To Call Us The Evil Empire… But It’s Also Trademark Infringement (2011-08-18).

I’m also ending with trademarks. Baseball trademarks! It seems that The New York Yankees (aka The Evil Empire, at least in Red Sox Nation) are opposing a trademark for Baseball’s Evil Empire (misspelled as “Baseballs Evil Empire” in the application). You know, because the Yankees are evil! Bwah-ha-ha! (See “Streisand Effect” above.) I love it when the jokes write themselves.

I am a diehard Red Sox fan (sorry, Mike). And if Suck The Red Fox (a not-so-subtle Spoonerism for “F*ck The Red Sox”) can be registered as a trademark, then I have no problem with Baseball’s Evil Empire! Go Red Sox! And Dear Yankees, here’s a lesson for you from your friends at Google: Don’t be evil!


Erik J. Heels is an MIT engineer; trademark, domain name, and patent lawyer; Red Sox fan; and music lover. He blogs about technology, law, baseball, and rock ‘n’ roll at ErikJHeels.com.

Indemnification Clauses Suck

Indemnity clauses suck.

I don’t do as much contract work as I used to, but ping me and I can connect you with good lawyers who do. I wrote this blurb a few years ago and decided to publish it today after reading this question on Quora about indemnity.

1. About Indemnification Clauses

In contracts of all sorts, indemnification clauses are becoming more common. Indemnification clauses are (or, more correctly, should be) tied to warranty clauses. In the following discussion, I refer to the two parties in the contract as the WORKER and the PAYER, as this covers most contract situations and makes the contract examples easier to read. For example:

SITUATION              CREATOR              PAYER
software licensing     software company     customer
book publishing        writer               publisher
patent licensing       inventor             licensee

In the warranty, the CREATOR promises certain things (most commonly, not to violate the rights of third parties), and in the indemnification clause, the CREATOR agrees to hold harmless the PAYER for a violation of this warranty (i.e. to pay to defend PAYER against a third-party lawsuit). I generally don’t like indemnification clauses, especially when the PAYER (which is often a big corporation) is asking the CREATOR (which is often a sole proprietor or small company) to do the indemnifying. The opposite makes more sense.

2. No Indemnification Clause

When negotiating contracts on behalf of the CREATOR, my first suggestion is to propose deleting the indemnification clause entirely. The CREATOR is not providing insurance. The CREATOR is providing a product or service. Both parties should purchase insurance from insurance companies. See also IP Infringement Insurance http://erikjheels.com/?p=184.

If the CREATOR insists on an indemnification clause, and if that indemnification clause is bad, then it is often better for the CREATOR to enter into no contract at all rather than enter into a bad contract.

3. Narrow Indemnification (IP Only & What CREATOR Knows)

Assuming that the PAYER does not agree to deleting the indemnification clause, the next approach would be to propose that the indemnification clause be narrowed to more realistic and fair terms.

First, all indemnification clauses should be tied directly to corresponding warranty clauses.

Second, there should only be one warranty clause, namely, the warranty that relates to intellectual property rights. These clauses are the most common and the least unreasonable of all of the varieties of indemnification clauses.

Third, I recommend adding “knowingly” to the warranty clauses so that the CREATOR is only warranting that it 1) KNOWS of no third-party IP rights that might be violated 2) AT THE TIME the contract is signed. Then you have a defense for random lawsuits for violations of rights that you didn’t know you may have been violating.

4. Mutuality

No matter what form the indemnification clause ends up taking, it should be mutual. If the PAYER wants you to hold it harmless for your breach of a contractual warranty, then it should also hold you harmless for its breach of a contractual warranty.

Other clauses (such as confidentiality and nondisclosure clauses) should also be mutual. Insisting on mutuality generally helps, since the PAYER is more likely to be reasonable with clauses that are mutual than with ones that are not.

5. Limited Liability

You can also protect yourself by adding limited liability clauses to the contract. These clauses could limit your total liability (whether for contract breach or for indemnification) to a specified amount, such as the total amount (or even better, half of the total amount) that PAYER has paid under the contract.

6. Suggested Language

Here is some suggested language:

1) Warranties by [CREATOR]

[CREATOR] warrants that it has no knowledge that the [PRODUCTS] infringe, or are manufactured in connection with a misappropriation of, the intellectual property rights owned or controlled by a third party, including without limitation patents, copyrights, or trade secrets.

THE FOREGOING LIMITED AND NON-TRANSFERABLE WARRANTY IS IN LIEU OF ALL OTHER WARRANTIES OR CONDITIONS, EXPRESS OR IMPLIED, AND [CREATOR] DISCLAIMS ANY AND ALL IMPLIED WARRANTIES OR CONDITIONS, BY STATUTE OR OTHERWISE, INCLUDING ANY IMPLIED WARRANTY OF TITLE, OF NONINFRINGEMENT, OF MERCHANTABILITY, OR OF FITNESS FOR A PARTICULAR PURPOSE.

2) Indemnification by [CREATOR]

[CREATOR] shall indemnify [PAYOR] and hold [PAYOR] harmless from any damages and liabilities (including reasonable attorneys’ fees and costs), arising from any breach of [PAYOR’s] warranties as defined in “Warranties by [CREATOR]” above, provided:

(a) such claim, if sustained, would prevent [PAYOR] from marketing the Products;

(b) such claim arises solely out of the Property as disclosed to the [PAYOR], and not out of any change in the Property made by [PAYOR] or a vendor, or by reason of an off-the-shelf component or by reason of any claim for trademark infringement;

(c) [PAYOR] gives [CREATOR] prompt written notice of any such claim;

(d) such indemnity shall only be applicable in the event of a final decision by a court of competent jurisdiction from which no right to appeal exists; and

(e) that the maximum amount due from [CREATOR] to [PAYOR] under this paragraph shall not exceed 50% of the amounts due to [CREATOR] under the Payment Section from the date that [PAYOR] notifies [CREATOR] of the existence of such a claim.

3) LIMITATIONS ON LIABILITY

NEITHER PARTY SHALL BE LIABLE FOR ANY CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST PROFITS), INDIRECT, SPECIAL OR PUNITIVE DAMAGES REGARDLESS OF WHETHER SUCH LIABILITY SOUNDS IN CONTRACT, NEGLIGENCE, TORT OR ANY OTHER THEORY OF LEGAL LIABILITY, AND EVEN IF THE OTHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. IN NO EVENT SHALL [CREATOR]’S MAXIMUM LIABILITY UNDER THIS AGREEMENT EXCEED 50% OF THE AMOUNTS PAID BY [PAYOR] UNDER THIS AGREEMENT.

END

Erik J. Heels writes about technology, law, baseball, and rock ‘n’ roll. He is @ErikJHeels on Twitter.