Upcoming Event: Business Law Primer in Cambridge, Weds., Jan. 13

On Wednesday, 1/13 at 6:00 PM I will be giving a presentation on business law for startups in Central Square. The location is the first floor of Workbar, 45 Prospect St. (a block from the Red Line stop). Workbar members and nonmembers welcome.

I will cover the most common topics my startup business clients ask about, including pros and cons of different business entity types (LLC, S-Corp, Partnership, etc.), how to work with (or as) an independent contractor and how intellectual property assets are identified, categorized and protected.

Registration is free. Please register at the Eventbrite page here so we can get a head count.

The Alice Corp case: What is it?

It’s hard to read an article about patents these days without a reference to Alice Corp. v. CLS Bank. When the Supreme Court’s opinion in the case came down it was not really surprising to anybody who had been paying attention, but it is important and (even though it’s several months old) not actually that well understood, so here is a short explanation.

What Alice Corp., the patent holder, had done was to patent a system in which an intermediary company, helps parties to a transaction manage their risks by holding up a transaction and not completing it until after confirming that each party has provided the resources that satisfy the obligations, using a computer to log the details of the transaction and compare the requirements to the resources provided by each party.

This is, in essence, escrow. It is a concept is nearly as old as banking itself, making it unpatentable for lack of novelty, and it is also unpatentable because it is a mere concept. The Court’s holding focuses on the second reason why escrow is unpatentable, but the point here is that if a party tried to patent escrow it should fail. What Alice did was to add a computer to the process. That actually worked at first, because it initially did result in a patent issuing, back in the good old days when you could patent toast and playing with cats with a laser pointer – the 1990s. But adding “use a computer” to otherwise unpatentable subject matter does not result in patentable subject matter, so in 2014 the Court ruled that the patents were invalid.

Somehow, this outcome seems to have surprised some observers. It should not have. The Alice case follows on Bilski v. Kappos, a 2010 case that did the same thing to a party that had patented investment hedging, plus a computer.

There are two takeaways here:

  1. You can’t patent an abstract concept. Escrow and hedging are too abstract to be considered “inventions”.
  2. You can’t transform ineligible subject matter into eligible subject matter by adding a computer.

Note: As usual, this is not legal advice, but merely education and commentary. If you have any questions on a matter related to patent eligibility, please consult an intellectual property attorney.

A trademarks overview, through beer goggles

I started writing this post a couple of months ago, as a commentary on trademarks and the craft beer industry, but something was lacking and I didn’t publish. Now I have a focus for the piece that’s more relevant than “beer labels as an excuse to explain trademarks.”

This week I saw a fascinating (by a lawyer’s definition of the word) news item: Lagunitas sued Sierra Nevada for trademark infringement. The case, which only lasted a few days before it was dropped, was based on the manner in which Sierra Nevada’s use of the letters I, P and A. Lagunitas was not claiming trademark rights in those letters – in fact, their trademark filing specifically disclaims ownership of the term “IPA” except in the filed logo design – but in the style in which they were rendered: large type, all caps, in a serif font with an overlap in the kerning.

lagunitas    sierra

The labels in question.

Now, I can’t say whether Lagunitas would have won if the lawsuit had played out to the end. To some people, their complaint might look silly, and whether any consumers would confuse the Sierra Nevada beer for a Lagunitas product is an open question, but cases have been won with less (and lost with more).

Some background

Trademark law deals with words and images that consumers associate with brands and vendors of products. The ultimate goal of trademark law is to prevent confusion. A consumer should be able to look at a product or package and know what company sold it, so that if the consumer wants, for example, Pepsi brand cola, he can buy a bottle labeled Pepsi Cola and be confident that he’s getting the real Pepsi product. If anybody could label an inferior soda “Pepsi Cola” and sell it, the consumer who pays for a preferred product but gets a knockoff would be harmed, while the Pepsi company would also be harmed because on the one hand it’s lost out on business it rightfully earned, and on the other, the consumer’s opinion of Pepsi’s product would be lowered. Similarly, if a company could buy a truckload of expired adjunct lager, stick Weihenstephaner labels on it and pass it off on unsuspecting consumers, they’ve have some very unhappy consumers on their hands as well as a cease and desist letter in strongly worded German.

Trademark protection only extends so far. “Cola” and “Beer” are not protectable words. Neither are generic words for styles, such as “Stout” and “IPA” – which is why Lagunitas objected to the style and size Sierra Nevada’s font rather than the letters IPA themselves. If I had a product called Lynn’s Best Adjunct Lager and another company launched Lynn’s Best Oatmeal Stout, I would be be right to complain. But if I tried to sue a competitor for introducing Cantabrigian Lager I wouldn’t have a Starbucks’ chance in Florence of success.

Branding is about community support now

What I find interesting about the Lagunitas case is that it was not anything Sierra Nevada did or said that caused Lagunitas to drop the complaint, but rather a public reaction against Lagunitas. We craft beer drinkers see ourselves as a community. We don’t just buy the products: we go to festivals, make special trips to wait in line to meet a brewer and try a new beer, and advocate for products we like because we want to see a successful, happy craft beer community that fosters small companies with interesting new products. I do it myself all the time.* Craft brewers get a lot of good will and free publicity this way, much of it deserved, but it also means that when they act like the competing corporations that they often are and employ tactics typical to the arena of corporate competition – such as trademark enforcement – the community-member customers have a negative reaction to the party that is seen as disrupting the peace of the community.

But craft beer, which has traditionally been viewed as small business, is now becoming big business. According to the Colorado-based Brewer’s Association, in 2013 craft beers had a US market share worth $14.3 billion, a 20% year-to-year growth. Sierra Nevada and Lagunitas are both in the top 5 US craft breweries by production, each producing the equivalent of several hundred million bottles of beer per year. Those are big business numbers, so it’s no surprise that trademark enforcement – usually considered a big-business practice – is gaining traction in the craft beer market.

The problem, as I see it

For a company to capture a share of that market and make some money it needs to establish a brand name and be recognized and appreciated by consumers. That means trademarks. Establishing a trademark means taking something that was once free from the public sphere and claiming it as one’s own. If I had a brand called Lynn’s Best Lager and established trademark rights in that name, it would necessarily follow that if I wanted to keep my brand ownership meaningful I would have to act against any other brewery that tried to market a Lynn’s Best Lager – or anything similar enough to cause confusion, such as Lynne’s Most Fabulous Porter.

Suppose my distant cousin Loretta launched Loretta Lynn’s Coal Mine Best Dark Lager. Now we’ve got a gray area on our hands. Is that too close to my brand name? Is it going to cause confusion among consumers or diminish the value of my brand, and if I think it is, what should I do about it? There’s no one right answer to those question – they’re all judgment calls.

Bringing it all together: With the large and increasing number of beer brands and names – I recently read that in a recent year the federal office that approves beer labels had received 29,500 applications in a 12 month period – it is almost inevitable that there will be an increasing number of conflicts. The branding space is getting crowded with word plays, puns on words like hops and rye, caricatures of barley plants and hops cones. While there are some brilliant creative minds at work on these names and labels there are many overlaps in the information the label must convey, only so many label shapes and sizes, and only so many truly unique designs being made each year.

As the number of brands and amount of money at stake continues to grow, we’re going to see more trademark conflicts. Eventually, something’s gotta give. My prediction: there will be a stabilization as on the one hand breweries become more careful about avoiding conflicts, and on the other they come to understand that going after the small stuff, such as the font size of an IPA label, is likely to be counterproductive.

Note

This post is editorial commentary only, not legal advice. Please do not rely on it (or, frankly, anything you read on the Internet) in your legal decision making, but speak with a lawyer instead. Please email andrew@andrewlynnlaw.com or use the contact forms on this site with any questions.

* Off-topic plug: just last month I stumbled on a promising new one called Hermit Thrush when I chanced to look up a hill in Brattleboro, which turned out to be run by a couple of friendly bearded guys making genre-benders with yeast they’d harvested from the air in different places where they’d traveled. That there are people out there doing things like that and finding success is one of the reasons I love being a small business lawyer.

Contract Outline for Interior Design

One of the services that I provide to architect and designer clients is contracts customized for the needs of a firm or project. A well written contract is essential because it sets up the scope and timeline of a project, manages the expectations of the designer and the client and gives you the rights of the parties and the procedures they will follow when something goes wrong.

Contract outline for interiors projects

This article is republished from my architecture law blog at http://www.architecturelaw.net, where I write about legal issues that matter to architects. For more information on my architect and designer representation practice and how your business can benefit from personalized, affordable legal services designed for your industry, see my Architect and Designer Representation page.

Note: This is not a complete contract in any way, just a broad and rough outline. I wrote it for somebody in Massachusetts, and the requirements will vary by state, country and project, so please speak with an attorney in your area if you need a contract for design work.

A fellow lawyer recently asked me for an outline of a contract between a home owner and an interior designer. Here is what I wrote.

  1. General: Describe the project, the participants in the project and the parties to this particular contract. Include normal contract-for-services language, such as choice of law, arbitration, termination, modification, complete integration.
  2. Scope of Services: Describes generally the services that the designer will perform, and what services would be considered additional services. Additional services are work that is triggered by client requests or unforeseen circumstances and that is billed separately.
  3. Project Phases: Lists the project phases: Design phases such as pre-design, design development, contract drawings; construction supervision; project close-out; and there may be others depending on the complexity of the work. Includes the services to be performed during each phase – in more detail than the general Scope of Services section – and expected dates of completion. There should also be a discussion of the completion of each stage: presentation of the deliverables to the client, and how much time the client has to approve the work or request changes.
  4. Owner’s Responsibilities: What does the designer require of the owner? E.g., drawings to be provided, permit applications to be completed, access to the property, timely approval of design options.
  5. Compensation: What will the designer be paid, and at what times? If additional services are requested, what is the compensation?
  6. Delays: Describes the effects of delays. Delays caused by the client, by the designer, by the contractor, and by unforeseen circumstances will each be handled differently.
  7. Estimates: If the designer is providing cost estimates, at what points in the project cycle will they be given, and how reliable will they be? Language should be appropriate to your jurisdiction and give the limits of the designer’s liability for missed estimates if needed.
  8. Intellectual Property License: Make a clear statement of which party will own the intellectual property, including copyright in the drawings. By default, copyright ownership goes to the creator, which is usually the design firm. The non-rights-owning parties (e.g. the building owner) will need a license for use of the drawings to build the project. Include limitations on those licenses, such as limiting their use to this project only. If building information modeling (BIM) technology will be used, include a BIM protocol section that makes it clear whether the BIM model will be available to the client and contractors. If it will be, and this is your first time writing a contract with BIM provisions, be aware that this is potentially a very complex matter and ask somebody with knowledge in the field for help.
  9. Boilerplate”: When talking with other lawyers I tend to refer to this section as something like “the usual terms in a contract for services”, which doesn’t sound interesting, but this is not to be overlooked, because the terms that go in this section define the procedures to follow when something goes wrong. Terms here include choice of law, arbitration, termination, modification, integration, nonpayment and others. This is very dependent on the law of the particular state or jurisdiction, and a good lawyer in your area who drafts contracts will know what to include.

Are Buildings Copyrighted?

This article is republished from my architecture law blog at http://www.architecturelaw.net, where I write about legal issues that matter to architects. For more information on my architect and designer representation practice and how your business can benefit from personalized, affordable legal services designed for your industry, see my Architect and Designer Representation page.  

Are Buildings Copyrighted?

Most architects know that their drawings are protected by copyright. That’s sometimes the basis of contract sticking points (“Who owns the drawings?”) and the more tech-savvy know that limited copyright licenses can be used to limit the uses of BIM files by owners and contractors both as a method of retaining control over the process and as a limitation on the architect’s liability. What gets less press – and this is true even in law school copyright classes, where the topic is only mentioned but not explored – is that buildings themselves enjoy a form of copyright protection. Please note: This article applies in the US only. Other countries have different copyright laws. This is not legal advice, just a broad overview. If you need help with a legal question, contact a lawyer in your area.

History

Before the United States joined the Berne Convention (the international agreement on copyright protection, enacted in 1886 and joined by the US in 1988) there was no building copyright in the US except for purely ornamental works – structures that were sculpture only. The federal law that formally added copyright protection for other buildings was not enacted until 1990, and any buildings substantially completed or published before December 1, 1990, are not protected.

What Buildings Are Protected

Copyright protection now applies to buildings newer than December 1, 1990, that are capable of human occupation (e.g., houses, office buildings, even gazebos, but not monuments that lack roofs). Mobile structures – mobile homes, RVs, boats – are not protected by architectural works copyright, though they may have other forms of intellectual property protection. Modular structures assembled on-site can be protected.

What Features Are Protected

Copyright protection on buildings applies to those aspects of the design that are form, not function. In any design context, separating the two is difficult; if I ever write an extended article on the subject it will have to quote from Huxtable and Banham, feature interviews with theory professors and be unreadable by anybody without at least an M.Arch. The Congressional committee report references Michael Graves’ dichotomy between “internal” and “poetic” architectural languages. The internal is “determined by pragmatic, constructional, and technical requirements,” while the poetic is “responsive to issues external to the building, and incorporates the three-dimensional expression of the myths and rituals of society.” The report states that the intent of the law is protect the poetic language only. In real-world terms, therefore, design decisions made for practical reasons are less likely to result in copyright protection than those made for aesthetic, cultural or dare I say whimsical reasons. (Yes, I admit, I have made design decisions for purely whimsical reasons.) While “standard” features – e.g. a window from a catalog, a common wall assembly or a rectangular panel of fiber-cement board – are not copyrightable, creative combinations, configurations and combinations of otherwise standard items are.

What Is Infringement

A building can be accused of infringing another building’s copyright in the same ways that any other work can infringe, though most obvious and common would be actual copying or “substantial similarity” copying. The line between inspiration and copying can be fine and difficult to place. In one famous case – which never made it to court and so never produced a legal precedent – recent architecture school graduate Thomas Shine accused architect David Childs of making the New York Freedom Tower a “substantially similar” copy of Shine’s student project. Had the case gone to court, Shine would have had to prove that Childs’ design was so similar that copying should be inferred, and that Childs had access to Shine’s design. The latter part could be proven by showing that Childs was a member of the jury that evaluated Shine’s project and that Childs had commented on the project. Childs responded that the similar elements were really industry standard and that the design was informed by the site and other unique factors. The line between inspiration and copying is a distinction that would make many architects rightfully uncomfortable, because the practice of drawing on “precedent” studies is time-honored tradition in architecture, and perhaps this – together with the relative newness of architecture copyright – contributes to the relative scarcity of architectural copyright disputes, compared with more litigious fields such as software and music.

What Else Should I Know?

Too much to write here! It took me three law school classes and two co-op placements in the field to get a handle on copyright law. I’ll write more along these lines in upcoming posts continuing my discussion of BIM and the law and maybe one relating the recent Oracle v. Google case to architecture copyrights, but if you have any questions please email me at Andrew@AndrewLynnLaw.com.