Unlike a patent, registered copyright, or registered trademark, all of which are the result of a formal grant by a government agency such as the United States Patent & Trademark Office, a trade secret has no such formal governmental recognition. Instead, the trade secret owner must take proactive steps to both establish and protect its trade secrets. To prevail in a trademark misappropriation lawsuit, the trade secret claimant must be able to define the trade secret, explain why it’s a trade secret, and demonstrate the steps it has taken to protect the trade secret from dissemination. A common mistake in the world of trade secret IP is that many think that simply designating a document as confidential will automatically confer trade secret status on that document and its underlying content. As discussed in our Nov. 21, 2023 blog entitled “Boosting Enterprise Value Through Trade Secrets,” this understanding is incorrect. Consider a recent 2023 case out of Texas where the jury concluded that a telecom company acted in bad faith by filing a $23 million trade secret misappropriation lawsuit against a competitor; the court found that the underlying technology was not a trade secret. Telegistics, Inc. v. Advanced Personal Computing, Inc. d/b/a/ Liquid Networx, no. 2019-15000 in the 190th District Court of Harris County, Texas. Telegistics alleged that its former employee obtained a copy of Teligistic’s internal Request for Proposal (“RFP”) and used it as the basis for tweaking his new employer’s (Liquid Networx) internal RFP. That is, the former employee altered the RFP so that it could be used by his new employer. As such, Liquid Nerworx did not itself spend time and resources developing its own RFP. Telegistics had made its RFP available to on-line to bidders who were invited to submit responses for Telegistics’ products and services. The document included a confidentiality notice and information that permitted bidders to submit responses for Telegistic’s telecom products and services. Telegistics claimed that the RFP was a trade secret. Defendant Liquid Networx challenged the existence of Teligistic’s alleged trade secrets, claiming the plaintiff had not clearly defined its trade secrets. Liquid Networx argued that while the source code of Telegistic’s platform, for example, could qualify as a trade secret, the actual output generated by the platform, such as the RFP, was not entitled to trade secret protection just because a confidentiality label was affixed to it. Unfortunately for it, Telegistics was also unable to demonstrate any reasonable efforts it had made to keep the information it received from bidders confidential once received. The jury agreed. Interestingly, the jury went a step further and additionally found that Teligistics acted in bad faith by filing its lawsuit. Networx is now seeking its attorneys’ fees as a result. As our earlier blog emphasized, the plaintiff in a trade secret misappropriation lawsuit must at the get-go establish that it does indeed have protectable, definable trade secrets. Telegistics did not meet this threshold. Texas, as with almost all of the other fifty states, including Florida, has adopted the Uniform Trade Secrets Act as its statutory trade secret law. Accordingly, it is highly likely that the same decision would have been reached no matter what jurisdiction the Telegistics case had been brought, namely, that the RFP was not a trade secret. Take-Home Points: The “confidential” labelling of a document, without more, will likely be insufficient for converting the confidential document into a trade secret. Moreover, documents generated automatically by a software program that itself qualifies as a trade secret (e.g., source code and/or object code) may not qualify as a trade secret if other factors are not present. For example, what steps has the trade secret claimant made to limit the dissemination of the collected information within the organization? Here are some tips for consideration: Consider the nature of the document. Is it a general information form or something highly unique to be used in generating a potential economic benefit, e.g., a manufacturing document containing trade secret raw material specifications and which has limited access within the company. What is the purpose of the document? Does it contain information about a trade secret (e.g., generally unknown information about a critical raw material component) where the development of the underlying trade secret involved creativity, considerable time, and considerable resources from human resources to financial resources (e.g., R&D spending)? Is the “confidential” document more of a general information form or a specially developed form? Is there an economic value that comes from maintaining the document’s confidence? What steps are taken to keep it from third parties and to limit access to the document within the company? If it is to be disseminated to third parties, what safeguards are in place to limit the dissemination of the document? When hiring an employee who has worked for a competitor, consider having the employee sign a document stating that, if he had any access to his/her former employer’s trade secrets, that he/she will not use any such trade secrets in the course of his new employment. Such a document may help the new employer, if ever accused of trade secret misappropriation, establish that it took reasonable precautions to prevent the “entrance” of any trade secret information belonging to the trade secret claimant into new employer’s business. This approach could help reduce the amount of any damages award. In conclusion, every business, no matter how small, should be looking into trade secrets as a valuable asset, meaning one which can be monetized and form a part of an IP portfolio. However, claiming something is a trade secret in a trade secret misappropriation lawsuit does not necessarily make it so as the Telegistics case demonstrates. Any attorney who commences a trade secret lawsuit on behalf of a client needs to honestly assess whether the alleged trade secret will actually qualify as a trade secret under state statues and case law. The same also applies where federal trade secret theft claims are involved as under, e.g., the Defend Trade Secrets Act. Contact Susan at Troy & Schwartz (  786-808-1490  ) to request a complimentary copy of her trade secret implementation checklist and work with her to conduct a trade secret audit, create appropriate protection systems, etc. or to represent you in trade secret misappropriation matter. THANK YOU FOR YOUR INTEREST IN THIS BLOG. AS USUAL, THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

The Moral of the Blog: Choreographic works are copyrightable under the 1976 Copyright Act. However, just how far that protection reaches under the jurisprudence of the various circuits may well depend on whether the circuit adopts the U.S. Copyright Compendium’s definition of choreography which is favorable to choreographers. As with any copyright infringement case, the trier of fact is tasked with determining whether the copyrighted work and the alleged infringing work are substantially similar wherein the analysis involves both a quantitative (how much?) and qualitative (how significant?) analysis. District courts are generally the gate keeper in determining if a work qualifies for copyright protection. Although choreographic works are among the least copyrighted works, the decision discussed below is instructive because of its focus on quantitative vs qualitative analyses of infringement. A Word of Caution: It is not clear just how the plaintiff in the case discussed below became aware of potential copyright infringement of his registered work. It must be emphasized that today numerous AI programs exist which can search the Internet to find infringing works. Such software is now being routinely used by photographers. Generative AI also has huge implications in the arena of copyright infringement which the Copyright Office is well aware of and attempting to address. Discussion: When it comes to copyrightable works, we generally think of books, musical compositions, sound recordings, paintings, and software. The Ninth Circuit’s Nov. 1, 2023 decision in Hanagami v. Epic Games, Inc., et al. is a reminder that choreography is a protectable work under U.S. copyright law since the enactment of the 1976 Copyright Act, the first federal copyright statute to provide express protection for “choreographic works” which are “original works of authorship.” 17 U.S.C. § 102(a)(4). In Hanagami, a choreographer commenced a copyright infringement lawsuit against the creator of a videogame having virtual animation known as “emote” which the choreographer claimed depicted portions of his registered choreography. The dance routine had first appeared on YouTube in 2017, and Hanagami obtained a copyright registration in 2021. Epic Games argued that the choreographer had failed to state a claim because the allegedly copied dance steps were not protectable elements of the copyrightable work and thus not substantially similar to Epic’s remote. The district court agreed by focusing on the choreography’s individual poses rather than the “whole” work, concluding that the copied portion of the work was closer to a uncopyrightable “short routine” and comprised a “small component” of the choreographer’s work. As such, there was no substantial similarity between the copyrighted work and the emote and the case was dismissed. The Ninth Circuit disagreed. In doing so, the Court noted that the Act does not specifically define choreographic works and that there is little case law pertinent to infringement of choreographic works. The Hanagami Court adopted the Copyright Office’s definition of choreography stated in the Compendium of U.S. Copyright Office Practices. The Compendium is not legally binding on any court, and was drafted by the Copyright Office to provide guidance and interpretation of various aspects of copyright law. Here, the Court relied on the definition as persuasive authority. Slip opinion, FN 10. It concluded that the district court’s approach of reducing the choreography to “poses” was at odds with the Ninth Circuit’s way of analyzing copyright claims for other art forms, like musical compositions. The Compendium defines choreography as “the composition and arrangement of a related series of dance movements and patterns into a coherent whole.” Although related, dance and choreography are not synonymous. Dance is defined by the Compendium as the “static and kinetic succession of bodily movement in certain rhythmic and spatial relationships. The Court was careful to point out that the Compendium does not draw a bright line distinction between copyrightable choreography and uncopyrightable dance. However, to be copyrightable, the choreography must not be simply based on common dance themes such as a basic foxtrot step or a common ballet position. As with book themes (e.g., political satire) or song themes (e.g., a breakup), choreographers should be able to use certain “building” blocks of dance and choreography at will. “The uncopyrightable elements of a dance instead function as the building clocks for a choreographer’s expression in such the same way that words and short phrases provide the basic material for writers.” Slip opinion at 20. The Court held that the district court incorrectly found that the choreographic work was not protectable by focusing on the individual, unprotectable elements. Indeed, “reducing choreography to “poses” would be akin to deducing music to just “notes.” Slip opinion at 22. Instead, the Court agreed with the choreographer that his protectable elements include not only the dancer’s poses but also their body potion, body shape, body actions, transitions [between poses], use of space, pauses, timing, energy, canon, motif, contrast, and repetition. Slip opinion at 21. Accordingly, what defines choreographic works is the relationship between these movements and patterns and the Hanagami alleged that the copied segment is the most recognizable and distinctive portion of his work, similar to the chorus of song which is repeated more than once. Hence, a jury may well find the copied portion to be qualitatively significant Slip opinion at 27. Slip opinion at 22. A good part of the Hanagami decision focuses on the challenges juries face when determining whether an alleged infringing work such as a choreographic work is substantially similar to a copyrighted work. Generally, de minimis copying is not actionable. In Hanagami, the alleged copying included a two-second combination of eight bodily movements, set to four beats of music performed ten times throughout the five-minute registered mark which at first blush may seem de minimis. The district court had additionally dismissed the case by finding that the allegedly copied choreography was “short” and a “small component” of Hanagami’s overall five-minute routine. Interestingly, Epic Games did not argue at the district court level that the alleged copying was de minimis. The Ninth Circuit held that the district court had also erred in its de minimis analysis. As the Court stated, the proper inquiry is not merely based on the mere length of the copied material. “The question in each case is whether similarity relates to matter that constitutes a substantial portion of the plaintiff’s work which is an “evaluation [that]must occur in the context of each case, both qualitatively and quantitatively. Slip opinion at 26 quoting Nimmer on Copyright § 13.03 (2023). Accordingly, what matters is whether the copied portion is deemed significant. The usage of a relatively small portion of an entire work may still be infringing if that portion is qualitatively important. Indeed, Hanagami alleged that the copied segment is the most recognizable and distinctive portion of his choreographed work, similar to the chorus of song which is repeated more than once. By way of a musical composition example, consider the iconic theme song for the movie “Jaws.” The first few stanzas are the most recognizable portion of the score. Those of us who have seen Jaws are reminded of the movie whenever those stanzas are heard. Qualitatively, these few stanzas would be of immense qualitative importance in any copyright infringement lawsuit involving the score. The determination of substantial similarity is generally made by the trier of fact. In the Ninth Circuit, the standard is the “intrinsic test” which focuses on “the similarity of expression from the standpoint of the ordinarily reasonable observer with no expert assistance.” Slip opinion at 17. The commentator emphasizes that jury outcomes are difficult to predict in a copyright infringement case because of the subjectivity of the substantial similarity analysis even under the “reasonable observer” test. Not surprisingly, the Court reversed the district court’s dismissal of Hanagami’s copyright infringement claims and remanded the case for further proceedings on two grounds: 1) its failure to focus on the choreographed work as a whole to determine its eligibility for protection rather than on the unprotectable individual elements; and 2) its failure to assess the qualitative significance of the allegedly copied portion of the work. Apparently, the district court would only have “accepted” the work as being protectable if Epic Games had used the copyrighted work in its entirety. The commentator notes that the work had been registered by the U.S. Copyright Office several years after the work had appeared on You Tube or was published. Accordingly, the choreographer will most likely need to prove damages (a challenging endeavor) since statutory damages will not be available. This is why it is important to seek copyright registration within 90 days of publication so that that any copyright infringement can seek statutory damages. Apparently, the district court would only have “accepted” the work as being protectable if Epic Games had used the copyrighted work in its entirety. Take Home Points: The Hanagami decision drives home the point that copyright infringement cases are complex. Even where issues of copyrightability do not arise, substantial similarity determinations are often not predictable and may vary from jury to jury for all but the most obvious cases of blatant copyright infringement. Nevertheless, copyright protection is intended to protect creators from the unauthorized use of their creations. It is highly recommended that copyright registration applications be filed within 90 days of the work’s publication to reap the benefits of statutory damages and shifted attorneys’ fees and costs in a copyright infringement lawsuit if infringement is proven. In Need of Legal Counsel on Copyright Matters? Contact Susan at 305-279-4740 for all matters related to copyright law from registration to copyright infringement lawsuits. THANK YOU FOR YOUR INTEREST IN THIS BLOG. AS USUAL, THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.

The Moral of the Blog: Perhaps one of the most misunderstood requirements for obtaining and maintaining the registration of a service or trademark is that the mark’s recited services/goods must be being offered in commerce to maintain a viable registration. Otherwise, the registered mark is subject to cancellation by the USPTO as this blog discusses. A Little Personal Background: Wolfie Cohen’s Rascal House, once located in Sunny Isles, Florida, was one of my late mother-in-law’s favorite restaurants. Despite her background as a famous dress designer in the 1950s and 1960s who introduced petite-sizing to the fashion world, she never stopped enjoying the food she grew up with in New York City where her stellar career was launched. The commentator still has fond memories of family lunches at this restaurant last century where the tween kids would try and outdo each other with grossness much to the chagrin of their elegant grandmother. Introduction: Rascal House (located in Boca Raton, Florida) and Wolfie Cohen’s Rascal House (both word marks) and Wolfie Cohen’s Rascal House (design mark) are registered service marks owned by Jerry’s Famous Deli, Inc. All three Registrations recite services for “restaurants and carry-our restaurant services.” All three registrations were renewed by the 6th, 10th, and the 20th year of registration. The renewals were based on the Registrant’s submission of specimens ostensibly showing use of the marks in commerce consistent with the Registration’s recited services. A critical tenant of trademark law is that a registered trademark must be used in commerce. Once registration is granted, the submission of renewal documents known as declarations 8 are periodically required to establish continued usage. Registered trademarks will be cancelled by the USPTO for failure of the Registrant to renew the registration by the timely submission of these declarations. Registered trademarks may also be cancelled as the result of cancellation proceedings brought by third parties before the Trademark Trial & Appeal Board (“Board”). One of the grounds for cancellation is non-use/abandonment of the registered mark as discussed in the Sept. 30, 2023 opinion by the Board in Rascal House, Inc. v. Jerry’s Famous Deli, Inc. Here, Rascal House, Inc. (“Petitioner”) filed petitions to cancel all three of the registered “Rascal House” marks alleging abandonment of the marks when the last of the two Rascal House restaurants closed its doors in 2008. The TTAB consolidated the proceedings and bifurcated the case into two stages. This first stage, which this blog discusses, addressed the issue as to whether the Respondent (Jerry’s Famous Deli, Inc.) had abandoned the marks. Registrations are presumed valid under the law, and a party seeking cancellation bears the burden of providing abandonment. The cancellation standard is preponderance of the evidence. For cancellation on the basis of abandonment, Section 45 of the Lanham Act requires that “usage of the mark has been discontinued with intent not to resume such use. Non-use for 3 consecutive years shall be prima facia evidence of abandonment.” The Act defines “use” of the mark as bona fide use of the mark in the ordinary course of trade, and not merely to reserve a right in the mark. For service marks, a mark is used in commerce on services when (1) when it is used or displayed in the sale or advertising of services; and (2) the services are rendered in commerce. Accordingly, mere display of the mark is insufficient to establish use unless the associated services, in this case, restaurant services, are actually being rendered. In Rascal House, the Respondent relied on its on-going usage of specimens showing the marks after the two Rascal House restaurants closed in 2008. The problem with this argument is that the Respondent merely displayed the specimens at its other establishments including Miami’s Epicure Market and at a California restaurant bearing the name Jerry’s. According to the Respondent’s own corporate representative, the usage of the marks was intended to cause customers to associate the Respondent’s non-Rascal House businesses with the Rascal House restaurants. That is, to take advantage of Rascal House’s iconic brand to “associate what they are getting [at the Respondent’s businesses] with the Rascal House.” As the Board pointed out, such a display would have constituted legitimate advertising of the Rascal House restaurants had the restaurants still been open. The restaurants could have been located anywhere. However, the Respondent’s display of the registered marks did not constitute rendering of the services recited in the Registrations. At most the usage “constituted an attempt to take advantage of residual good will in a past [local] iconic brand with services rendered under other brands such as JERRY’S or EPICURE. Residual goodwill will does not negate a finding of abandonment based on non-use.” Not surprisingly, the Board found that the RASCAL HOUSE marks were abandoned and emphasized what the Federal Circuit had stated in Imperial Tobacco Ltd. v. Phillip Morris: “The Lanham Act was not intended to provide a warehouse for used marks.” The Board will next determine if the Respondent had an intent to actually use the marks. Based on the testimony of the corporate representative in stage 1 of the proceedings and the facts of the case, the commentator believes that the marks will be cancelled. This is because the restaurants have been closed since 2008 or far beyond the three (3) years which the law implies may be a reasonable period of non-use to prevent cancellation, e.g., where the business had supply chain issues or was confronted with events that affected its business operations such as a fire. Discussion: The commentator is a stickler for ensuring that a registration’s recited services/goods are indeed being offered in interstate commerce at the time of registration and when renewal declarations are filed. The USPTO cannot verify that every piece of information provided to it is true and accurate. It depends on the forthrightness of the filing attorney and registrant to be truthful. Moreover, when working with clients who are considering purchasing a registered mark as part of an asset acquisition, the commentator always reviews the prosecution and renewal history of the registered mark(s) to ensure there are no red flags concerning the registration status of the mark which could make it susceptible to cancellation. With the “Rascal House” marks’ renewal documentation, the documentation filer was representing that the marks were still being used in commerce (i.e., the restaurant services were being provided) when in fact they were not after 2008. Although the marks were renewed by the USPTO, the situation caught up with the Registrant when a cancellation proceeding was filed in 2020. It should be noted that defendants in a trademark infringement lawsuit involving a registered mark may also seek cancellation of the registered trademark by the court. Take Home Point: A registered mark is only as “good” as its usage status in commerce. Use it or lose it so to speak. In Need of Legal Counsel on Trademark Matters? Trademark law is a complex area of the law. Contact Susan at 305-279-4740 for all matters related to trademark law from registration to proceedings before the Trademark Trial & Appeal Board and courts of law. THANK YOU FOR YOUR INTEREST IN THIS BLOG. AS USUAL, THE CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT LEGAL ADVICE.