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Jun192017

Trademark Law & Genericide: Google's Not Dead Yet

 

Intellectual Property and Franchise Agreement LawyerTrademark Attorney

by Tal Grinblat

(818) 907-3284

 

Domain name registration is usually a good first step to cement trade name and mark ownership. In a previous blog we reminded readers that possession, even in Intellectual Property matters, is nine-tenths of the law (read Why Register a Domain Name? for more info).

Trademark logo designerSo when Chris Gillespie registered over 700 web domain names, we would normally applaud his ambition as well as his efforts.

Except for one problem: Gillespie registered various domain names that included the word “google”. For example, Gillespie registered: “googlenewtvs.com”, “googledisney.com”, and “googlebarackobama.net” without Google’s permission. The REAL Google, who is the registered owner of the mark, filed a complaint with the National Arbitration Forum (NAF), which decides domain name disputes.

Google complained Gillespie: 

  1. Violated the Uniform Domain Name Dispute Resolution Policy (via trademark infringement, also known as cybersquatting); and

  2. Registered names that were confusingly similar to Google’s trademark, in bad faith. 

The agency agreed – NAF transferred the domain names to the web service company in 2012.

Not long after the NAF decision, David Elliott filed a petition in an Arizona Court to cancel the Google trademark registration under the Lanham Act, arguing “google” is now a generic verb for internet searching. Gillespie joined in the action. In September, 2013, the parties filed cross motions for summary judgment. Google prevailed and plaintiffs appealed.

But before we can deconstruct the respective parties' positions and the courts' decisions in Elliott v. Google, Inc., we must first understand the basics of genericide.

What is Trademark Genericide?

Trademark Infringement AttorneyGenericide is a term used when a trademark begins with strong trademark significance, but over time becomes generic and no longer identifies the source of products or services. Some examples of marks that started out as strong trademarks but later lost their significance include Aspirin and Escalator.  

These marks at one point were protectable as arbitrary or fanciful marks because they were primarily understood by the public to refer to specific products—a brand of headache reliever and a specific brand of moving stairs, respectively. But over time, these words became generic and the public now understands these words to describe the actual goods rather than the source of the goods.

Failing the Trademark Genericide Test

On June 14, 2017 the Ninth Circuit Court of Appeals upheld the lower court’s decision and found that appellants’ arguments regarding the genericizing of “google” had two flaws: 

  1. “A claim of genericide must always relate to a particular good or service.”

  2. Appellants “erroneously assumed that verb use automatically constituted generic use.” 

The Appellate Court noted:

If there were no requirement that a claim of genericide relate to a particular type of good, then a mark like IVORY, which is “arbitrary as applied to soap,” could be cancelled outright because it is “generic when used to describe a product made from the tusks of elephants.” Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4, 9 n.6 (2d Cir. 1976).

As to the Appellants’ second argument, the Court decided it contradicted fundamental trademark protection principles, in reference to source identification.

Elliott contended that trademarks perform source-identifying functions only when used as adjectives. The court disagreed and upheld the lower court’s ruling that the relevant inquiry is not whether the public used “google” as a verb indiscriminately, but rather whether the primary significance of the word “google” to the public was a generic name for internet search engines (in which case the word became generic) or as a mark identifying Google’s search engine in particular (in which case was still protectable as a trademark). 

In other words, the court held that a word could be used as a verb, yet retain trademark significance.

Citing the terms “indiscriminate” and “discriminate” coined by the District Court in this case, the 9th Circuit said:

We have already acknowledged that a customer might use the noun “coke” in an indiscriminate sense, with no particular cola beverage in mind {in which case the mark was likely generic}; or in a discriminate sense, with a Coca-Cola beverage in mind. In the same way, we now recognize that an internet user might use the verb “google” in an indiscriminate sense, with no particular search engine in mind; or in a discriminate sense, with the Google search engine in mind.

The relevant question to ask is how the relevant public primarily understands the word itself. The court therefore denied appellants’ claims, holding that based on the evidence presented, even though some members of the public used “google” in a generic manner, the relevant public still primarily understood the word to refer to the Google search engine in particular.

Generic Lessons Learned

Intellectual Property Litigation

So what can budding business owners establishing trademarks learn from this case?

The evidence to prove a mark is generic must be overwhelming. Elliott provided three consumer surveys to bolster his claim that “googling” simply means performing internet searches, but some were not conducted by qualified companies or individuals, and two were rejected by both courts out of hand.

Additionally, both Google and Elliott provided competing evidence as to the public’s use of the word “google” and “Google” as generic terms and trademarks. Since there were enough examples of trademarked use, Elliot lost this argument as well.

Last, Elliot failed to show “google” was used to describe internet search engines generally, such as Bing and Yahoo. This demonstrated to the Court that the death of Google as a trademark was greatly exaggerated.

Tal Grinblat is an Intellectual Property Attorney, Certified Franchise & Distribution Law Specialist, and a Shareholder at our firm. 

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Jun162017

Old Grounds: A Lack of Prop 65 Warnings Brew Trouble for Coffee Franchisors

 

by Stephen T. Holzer and Barry Kurtz

 

California Prop 65 warnings – many residents barely notice these anymore, as we’ve lived with Safe Drinking Water and Toxic Enforcement Act notices for over 30 years now. They appear at gas pumps; in apartment and office buildings; on packaging for food, toys and other products; and in retail establishments all over the state.

The ubiquitous but largely ignored warnings are clear, generally stating that a consumer may be exposed to certain chemicals that may cause cancer or reproductive harm.

But if the average citizen of California no longer notices the signs, who does? Bounty hunters. More specifically, an opportunistic group of consumers and lawyers who notice the lack of Prop 65 signs and labels. They then file lawsuits on behalf of the public good. Most businesses settle the claims rather than engage in expensive litigation.

This leads to a whole new trend in tort litigation aimed at restaurants, though Starbucks and Dunkin’ Donuts were named (along with approximately 80 other coffee co-defendants) in a suit brought by the Council for Education and Research on Toxics (CERT) back in 2010. CERT's complaint is that these businesses failed to warn customers of potentially harmful, carcinogenic chemicals in coffee, specifically acrylamide.

In the latest news on this particular CERT suit, Dunkin’ lost its argument for summary judgment. The franchisor claimed it needn’t put warning labels on its coffee because technically, the franchisor doesn’t sell coffee in California. Dunkin’ Brands Inc. oversees a corporation – it doesn’t buy, sell, roast, distribute or even possess coffee.

A Los Angeles Superior Court Judge found that argument weak, and so to court will Dunkin’ go, along with its codefendants. 

More Acrylamide and Other Chemically-Based Acrimony

The chemical acrylamide isn't just found in coffee. It forms on starchy foods as they cook, so toast, French fries and a host of other popular menu items carry trace amounts. Really, just about any one operating a restaurant in California can become a target for this type of tort.

But environmental plaintiffs worry about other chemicals and ingredients too.

Prop 65 and Restaurant Businesses

According to the Mercury News, plaintiffs filed lawsuits last year because of Bisphenol A (BPA) found in receipt paper and bottled water.

Sugar is also on the chemical hit list, though not considered a Prop 65 chemical. California lawmakers introduced Senate Bill 300, the Sugar-Sweetened Beverage Health Warning Act, which could require anyone selling closed container beverages to add warnings to their containers, and any business with vending or beverage dispensing machines to add signage to those machines.

The warning as written now, would read:  STATE OF CALIFORNIA SAFETY WARNING: Drinking beverages with added sugar(s) contributes to obesity, type 2 diabetes, and tooth decay.

Some franchisors have already stated an intention to remove food dyes from the ingredients of their menu items, Dunkin' Donuts and Baskin Robins among them. But California has a bill targeting products with these chemicals too.

Senate Bill 504 would amend the state's Health and Safety Code to direct the Office of Environmental Health Hazard Assessment (OEHHA) to review literature regarding the potential risks to children who may be consuming these chemicals.

A report from the OEHHA would be due in 2019. Chances are good the chemicals in food dyes will make their way to the hundreds of chemicals already flagged on California's Prop 65 list of potentially toxic agents.

Prop 65 Compliance

So what should restaurant owners know about Prop 65, and more importantly, what should they do?

1. Size Matters: Understand that the law affects businesses employing 10 or more people. Small café and food truck owners are probably safe if they employ a skeleton staff. In fact, that was another argument Dunkin' Brands Inc. attempted when it tried to get out of the coffee labeling suit.

2. The List is Long: There are about 900 chemicals cited as dangerous on the OEHHA list as of January (there are 1,000 rows on the Excel sheet – some of the data contains delisted chemicals, some are header information rows, etc.). Chances are good every business in California with 10 or more employees should be posting a warning of some sort.

3. Prop 65 Has Evolved: The rules regarding this law changed recently. Warning labels and signs gave general warnings in the past, now businesses must name the specific chemical present on the premises or in the product. That could get rather daunting, e.g. "This establishment sells products for consumption that may contain acrylamide, BPA, benzidene (found in food dyes), ethanol (found in alcoholic beverages), etc. The new rules will be enforced as of August 30, 2018.

4. Violation Penalties: Up to $2,500 per day, per violation.

5. Some Good News: Businesses could argue that the levels of the chemicals present in food or other products are so low, there is little risk of harm. This type of defense requires expert, scientific testimony however, and may be financially out of reach for many businesses.

Franchisors and franchisees should beware and be diligent. 

History tells us that when a contingency fee attorney finds one unit in a franchise system in potential violation of these types of consumer-protection laws, litigation on the claims spreads through the franchise system and company-owned units like wildfire. Since the franchisor generally establishes operating standards, specifications and procedures with which the franchisees must follow, both are at risk if they fail to comply with these measures once they become law.

 

Steve Holzer is the Chair of our Environmental Practice Group. Barry Kurtz is the Chair of our Franchise and Distribution Practice Group.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Wednesday
Jun142017

Franchise Law: Burden of Joint Employer Just Got a Little Lighter

Franchise LawyerChair, Franchise & Distribution Practice Group

 

by Barry Kurtz

818-907-3006

 

 

Direct control, indirect control…these are the employment litigation phrases that had franchisors cowering in duck-and-cover positions over the last few years. But the Department of Labor just issued a statement to breathe new life into the franchise industry.

The dangerous era of joint employer litigation isn’t completely over yet. Franchisors should still take protective measures as they can. Still, there’s a glimmer of hope in the trenches:

Last week the DOL announced a retreat of sorts by withdrawing its interpretation of the Fair Labor Standards Act (FLSA). This January 2016 interpretation was the one that defined an employer as an entity or individual who has “indirect control” over an employee. In the franchise context, it meant courts were looking at whether or not an employee was economically dependent on the franchisor to determine whether that franchisor could be deemed liable for claims as a joint employer. (See our Franchise & Distribution Newsletters for more on Joint Employer Litigation.)

The NLRB was the first agency to take a broad stance on the issue of joint employment, most notably in 2015 in the Browning-Ferris Industries decision. In that case, the NLRB decided entities may be joint employers if:

(1) They are both employers within the meaning of the common law; and

(2) They share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the Board will – among other factors  consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. 

DOL’s rescinding of guidance on this issue doesn’t necessarily change the law, it simply reflects the current government’s friendlier attitudes towards business.

So franchisors, take a deep breath and relax a little. But not too much, as the war on joint employer liability still wages on.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Friday
Jun092017

Los Angeles Ensures Employees Know Their Rights. Employers, Take Notice.

Employment Defense

 

by Amy I. Huberman

818-907-3014

 

 

 

If Los Angeles was a person rather than a city, you could practically hear her telling employers, “It’s ON.

Minimum Wage Notice Los AngelesThe warning comes by way of a massive ad campaign to remind members of the working public they have certain rights regarding minimum wage and paid sick time – just in case employers fail to comply with these legal mandates. Witness the latest bus stop ads for example, in big, bold lettering, which sends a not-so-subtle reminder to Los Angeles workers. This one is right outside our offices on Ventura Boulevard in Encino:

In case you can’t read the graphics on the bus stop wall, here’s what it comes down to: As of July 1, 2017 which is less than a month away, ALL employers with workers in Los Angeles will need to increase wages. 

For employers with 25 or fewer employees, that means raising minimum hourly pay to $10.50 per hour. For companies with 26 or more employees, minimum hourly rates will increase to $12.00 per hour.

The chart below illustrates the scheduled increases through 2021 – after 2021, minimum hourly wage rates will be based on Consumer Price Index for Urban Wage Earners, according to the Los Angeles Ordinance. 

Los Angeles Minimum Wage & Sick Pay

48 Hours Paid Sick  Leave in Los Angeles

Employees who perform at least two hours of work in a particular week in the City of Los Angeles are entitled to a greater amount of paid sick leave than California law mandates, pursuant to the City of Los Angeles Paid Sick Leave ordinance. These employees must be provided with one hour of paid sick leave for every 30 hours worked, or 48 hours each year. Larger companies (26+ employees) should have begun compliance last July. This July 1st, the rules apply to employers with 25 or fewer employees as well.

Ban the Box Penalties

The Fair Chance Initiative for Hiring Ordinance (FCIHO, a/k/a Los Angeles’ “Ban the Box” initiative) has been in effect since January 22nd of this year. This means that employers may not inquire about a job candidate’s criminal history until AFTER an initial offer of employment has been made.

There are strict rules regarding the “Fair Chance Process” and withdrawing job offers, should a criminal history be discovered.  Employers should proceed with caution. Go to Hiring and Firing in Los Angeles: Fair Chance Initiative Update, for more information.

Starting July 1st of this year, fines will  be imposed on employers who violate the rules According to the city’s Administrative Fine Schedule, they amount to $500 for the first violation, $1,000 for the second, and $2,000 for the third and subsequent violations.

These are the current rules specific to employers in Los Angeles, or employers headquartered elsewhere but have employees performing work within Los Angeles. Other cities (San Francisco comes to mind) may have stricter regulations.

Employers should follow a general rule of thumb: local laws tend to be stricter than county ordinances, which tend to be stricter than California regulations, and state regs tend to trump federal law. That isn’t always the case of course. But employers should always follow the higher standard.

Amy I. Huberman is an Employment Defense Attorney.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

Thursday
Jun082017

There's an App for That: Franchisors Fight Slumping Sales, Millenials

Franchise LawyerChair, Franchise & Distribution Practice Group

by Barry Kurtz

818-907-3006

 

How has the gourmet burger gone awry? According to Fox, the better burger business dropped five percent in foot traffic at quick-serve restaurants last year, primarily because consumers are opting to “DIY” their food at home.

But why would customers go through the hassle of firing up the grill when it’s so much easier to belly-up to a counter and place an order? For many, double-digit burgers just cost too much.

Franchisors are taking notice, and making adjustments.

Some are offering premium toppings to compete with the fancier restaurant chains. Others like McDonald’s plan to try using non-frozen beef or offer more “Signature Crafted” items alongside the menu mainstays. Franchises like Wendy’s are sticking to lower price point items, knowing the average consumer just can’t spend $6.00 per day on lunch, according to the article.

Chains in fast food (Burger King), quick-serve (Habit) and full service, sit-down style restaurants (Red Robin) are offering rewards programs to encourage brand loyalty through discounts and freebies. These strategies may help bring back those customers wanting to save money.

But there’s another reason diners are cutting back on eating out: Physically going to restaurants just costs too much in time and stress. Some even characterize it as a “dying tradition” that eats up too much of the work day. Just consider the coordination of schedules, the drive to the restaurant, a hunt for parking, the wait for a table, the wait for service…all of that time adds up. It’s daunting.

And some blame the millennials, who, believe it or not, prefer to cook at home more than their parents did. They also rely more on fast, cheaper meals provided by grocery stores, grocery delivery services, and a new wave of hi-tech, time-saving web based applications for curbside pickup or delivery.

Speed seems to be key here. Denny’s just launched Denny’s on Demand, allowing customers to place orders for pickup or delivery, and pay for those orders. Forget 30 minute pizza delivery. In the land "Down Under", Dominos is working on making and delivering pizzas in 10 minutes or less.

Jack in the Box recently teamed up with DoorDash to deliver curly fries and tacos to home addresses. McDonald’s hopes to drive up profits through UberEats, now available in 100 test markets across the country. Eat24 and Yelp will help web visitors find fast food delivery services within their zip codes.

All in all, apps seem to be the way of the future for restaurants craving more business. Some eateries in the Los Angeles area are claiming anywhere from a 2 to 35 percent increases in sales due to expanded digital assets. But what should franchisors know about the legal ramifications of going hi-tech?

A Franchisor’s Mobilization Plan

Some recent litigation in the dawn of digital gastronomy points the way. Franchisors should ensure they hire the right developers to reduce the risk of litigation. Important aspects to consider include:

Accessibility: This is a big issue, as ADA (Americans with Disabilities Act) suits are on the rise. Sweetgreen, Inc., a Washington D.C. based salad chain faced a class action lawsuit filed on behalf of visually-impaired plaintiffs. The app Sweetgreen had developed to allow customers to order online for faster pickup worked great for those who could see. But those customers who were impaired or blind weren’t able to customize their orders as easily, and spent extra time refining their choices at the restaurant. For this group, the app wasn’t time-saving at all.

Intellectual Property Rights: It’s common for developers to borrow code already written, rather than reinvent the wheel every time they build a new site or app. The same applies to graphics and text. However, developers are being targeted more and more often for trademark, copyright or patent infringement. Franchisors should ensure the developers own all elements used in the project, have the licensed rights to use all elements, or that the developers assume all responsibility should IP litigation be initiated.

Privacy: This one’s always an issue, as anything that connects to the internet can be hacked. Just ask Starbucks, which attributes a third of its sales to purchases made through its app. The franchise also claims that less than one percent of its app users have actually been hacked, and that the fault lies with users employing simplistic passwords. Whether those claims are true or not, the hacking is turning out to be a bit of a social media challenge for the coffee franchise.

Third Party Partnerships: Customers are generally unaware when they place an order online through their favorite restaurant’s website that the food will actually be delivered through a third party delivery service. Zoomer is one example, and plaintiffs allege the company violated the federal Telephone Consumer Protection Act and other laws when the delivery service sent customers unauthorized texts after placing food orders with partner restaurants. Granted, it’s the delivery service that is facing the lawsuit – but franchisors should be wary of using any third party service that will annoy customers. Or break the law.

As for the non-digital logistics, remember the practicalities: People who order online generally don’t want to communicate with the restaurant – they want to get in and out quickly, or just have food delivered without fuss. Consider more short-term parking or curb service for pickups; counter space, windows or staff dedicated just to online orders; and whether or not it’s better to employ your own delivery staff or contract out.

Most importantly, make sure the app works, and that it works well – there’s no point in developing an app that doesn’t allow customers to order, customize selections, and pay. Useless apps without these features tend to get slammed in reviews. And the critics are harsh, as seen in the example to the right.

Barry Kurtz is a State Bar of California Certified Specialist in Franchise & Distribution Law.

Disclaimer:
This Blog/Web Site is made available by the lawyer or law firm publisher for educational purposes only, to provide general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand there is no attorney client relationship between you and the Blog/Web Site publisher. The Blog/Web Site should not be used as a substitute for obtaining legal advice from a licensed professional attorney in your state.

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