Vultures Still Circling After the Boston Marathon Bombing

Now that the dust has just begun to settle on the horrific Boston Marathon terrorist attack of April 15, 2013, and the perpetrators are either buried or in custody, there is another sad aftermath:  consequences from those cashing in on the victims' suffering by exploiting Intellectual Property through fraud and abuse.

For example, hundreds of fake Boston Marathon-related scams popped up purporting to help the victims, requiring authorities, including the IRS, to issue stern warnings.

Time magazine notes that hundreds of Boston Marathon-themed domain names were quickly registered and put up for auction within hours of the tragedy's unfolding.

Others sought to cash in by trying to federally register trademarks for "Boston Strong," leading to serious questions about their bona fides.

Finally, gruesome and unlicensed photos were stolen from Getty images and the Associated Press, and sold on Amazon.com in unauthorized e-books.  After an outcry, Amazon pulled the e-books.

The predictably sad repeat of these transparently opportunistic activities after recent tragedies has led some to consider whether anti-fraud laws should be enhanced to include stiffer penalties for fraudulent activities after a mass casualty occurs.

Tommy Gun Maker Sues Al Capone For Boozy Trademark Infringement

Saeilo Enterprises, Inc., current manufacturer of the old school Thompson submachine gun (left), often referred to as a “Tommy gun,” recently filed a lawsuit claiming trademark infringement against Chicago-based liquor company, Alphonse Capone Enterprises, Inc.  Capone Enterprises has no clear legal connection to the Chicago gangster of the 1920's, but is clearly attempting to profit from an association with the notorious Public Enemy Number One.

At issue is the fact that Capone Industries has been selling a new brand of vodka under the Tommy Guns name in a bottle that is intentionally shaped like a Tommy gun. 

Saeilo owns a federally registered trademark for TOMMY GUN in connection with actual firearms, and the trademark has been used constantly since 1920 in connection therewith (including use by the Chicago gangster, not the Chicago liquor company).

The gun maker is also the owner of a separate TOMMY GUN trademark that covers clothing. Saelio does not apparently own any federal trademark on the name for alcoholic beverages.


In contrast, Al Capone Enterprises owns a current federally registered trademark for TOMMY GUN for beer, wines and spirits.

The complaint, which was filed in federal court in Chicago in March 2013, alleges that Al Capone Industries does not have authorization to use the Tommy Gun trademarks on alcoholic beverages that carry a reproduction of the Tommy Gun name and distinctive shape. 

Additionally, Saeilo claims that Capone’s conduct not only violates federal trademark laws, but also Illinois state law and common law. Saeilo further brought claims under Illinois’ Trademark Registration and Protection Act, as well as the Illinois Deceptive Trade Practices Act.

As owner of the trade dress rights in the design of the Thompson submachine gun or “Tommy Gun,” Saeilo claimed that Capone’s unlawful use of the Tommy Gun trade dress was likely to cause “confusion or mistake and/or is likely to deceive consumers as to the affiliation, connection of association of [Capone] with Saeilo,” and of course, Saeilo seeks a permanent injunction and damages.

An interesting legal question arises as to whether and when phrases used to describe firearms can be legally trademarked by the gunmaker, or even by others, in connection with alcoholic beverages.

For example, the trademark of Colt Buntline Special .45 is owned by Colt's Patent Firearms Manufacturer. But Colt 45 in connection with clothing is owned by Pabst Brewing Company. It is unclear why Pabst does not own a federally registered trademark for Colt 45 in connection with its malt liquor beverages.

What if the Redskins Lose Their Trademarks, But Keep Using Them?

The Washington Redskins' logo

On Thursday, March 7, 2013 the Trademark Trial and Appeal Board for U.S. Patent and Trademark Office (the "TTAB") heard oral arguments in a case involving a decades-old question: whether the Washington Redskins' federal trademark registrations should be cancelled because they are allegedly offensive to Native Americans.

The case has now been fully briefed and submitted for a decision.  All that remains now is the court's determination: Will the Washington Redskins franchise lose its federal trademark registrations?

Commentators' predictions are mixed. Some argue that, if history is any judge, it would appear that Native Americans are poised to win this most recent battle cancelling the Washington Redskins' famous trademarks. Others aren't so sure, but argue that the poor publicity involved should counsel a branding change.

All commentators agree that what would likely occur if the worst case scenario happens to the Redskins would be years of further appeals to delay the impact of the ruling.  Will the Washington Redskins continue use its brand in the interim?

When confronted with this question, the owner of the team announced that it will "NEVER change its name." (capital letters in original).

But what would happen, long term, if the team loses its federal trademark registrations?  Wouldn't the team still possess at least some rights to prohibit third party uses?

Probably not. Third parties would begin using the name in an unauthorized manner, and take their chances. Without any federal trademark registrations and with a precedential public ruling finding the marks to be offensive and scandalous, the team would face an uphill battle legally protecting and further monetizing its existing brands.

From a practical standpoint, the team would probably face an onslaught of rampant counterfeiting that it could not legally stop. Without any valid or enforceable federal trademark registrations on file, the team would not be able to avail itself of the criminal and other protections that the law authorizes against counterfeiters.  Similarly, there would no longer be any legal bar to importation of unauthorized items bearing the team's name or logos.

Perhaps worse yet, the various lucrative licenses for team-branded products and third party endorsements could be prospectively ignored on the grounds that the team lacks any appreciable intellectual property rights to further license.

It is also worth noting that, even if the team wins this round in the TTAB, some Congressional Democrats have attempted to legislate the issue against the team.

Perhaps the moral of the story is "never say never" when it comes to branding and intellectual property.

Mozilla Targets Spyware with Trademark Infringement Claims

Mozilla, the maker of the Firefox browser, is reportedly taking on a controversial surveillance company that has been accused of selling spyware to authoritarian regimes, by asserting trademark infringement claims.

Gamma Group, a British company, offers governments and law enforcement agencies spy Trojan programs that are designed to covertly infiltrate computers and gather data from hard drives, eavesdrop on Skype chats and other communications, and conduct "live surveillance through webcam and microphone," according to the company's marketing materials. 

The technology is supposed to be used solely to target criminals such as terrorists. However, a mounting body of evidence has linked it to attacks on activists or political opposition figures from countries including Bahrain and Ethiopia.

Last year, researchers had noticed that the spy tool had apparently been masking itself as Mozilla Firefox—tricking targeted users into thinking it was a legitimate application.

Mozilla has confirmed that it is planning to imminently issue a cease-and-desist notice to Gamma over what it alleges is a “misrepresentation of our copyright and trademarks.”

The development will come as another blow to Gamma, which was recently branded a “corporate enemy of the Internet” by Reporters Without Borders and is also currently the focus of ongoing legal action in the United Kingdom related to its spy tech sales. 

The company’s spokesman, Martin Muench, has previously stated that Gamma cooperates with export control agencies in Germany, the United Kingdom, and the United States, and “does not discuss its client base, its exports, or any of the operations which its clients may or may not be undertaking” on the grounds that doing so can “prejudice criminal or counter terror investigations and compromise the security of the members of the police or security services involved.”

The Seven Dollar Toaster - How Brands Decline in a Disposable Economy

In 2012, I purchased a Toro brand lawmower at Home Depot for $400.  This lawnmower was supposedly "guaranteed to start."  After only 3 uses in 1 month, the mower simply and inexplicably refused to start again.  

After sending a personal letter to the CEO of Home Depot (that he actually responded to, to his credit), the retailer decided to replace the unit with a new one.  I used the replacement lawnmower only 2 times so far in 2013.  Now, the second unit refuses to start.

A quick visit to Amazon.com reveals that this Toro brand lawnmower received 38 ratings, 24 of which were only 1 star, the lowest rating possible on that site. Customer comments such as "piece of junk," "buy anything else," "broke after 3 weeks," disgusted" and "definition of a lemon," can only lead to the conclusion that Toro may end up facing yet another class action lawsuit.

But, in all honesty, what mass market brands haven't demonstrated a notable decline in quality in recent years?  This dramatic drop-off in quality that almost all household brands are exhibiting is called the "Wal-Mart effect," essentially blaming the power of the massive discount retailer for the decline of all brands.

For example, Wal-Mart sells a toaster that retails for $7.84 — a price that an article on Grist points out effectively renders its longevity virtually irrelevant.  If it breaks, just buy another.  

If you are another toaster manufacturer, how can you compete by offering a high quality toaster for $50? No, instead, you lower your own quality dramatically and try to sell competing toasters for $20 or $30.

Consequently, since 1995, the number of toasters and other small electro-thermal appliances sold in the U.S. each year increased from 188 million to 279 million. The average household now buys a new TV every 2.5 years, up from every 3.4 years in the early 1990s. These changes exceed the pace of population growth.

We buy more than 2 billion bath towels a year, up from 1.4 billion in 1994. In general, prices on household goods have fallen by about one-third since the mid-1990s.  Since 1994, the consumer price of apparel as well, in real terms, has fallen by 39 percent.  Quality, like price, is a fraction of what it used to be. 

And as Grist points out, while there are certainly factors beyond Wal-Mart that have contributed to this ever-expanding avalanche of consumption, Wal-Mart has clearly been a major driver of the trend.  Its astounding growth and profitability rest on fueling an ever-faster churn of products, from factory to shelf to house to landfill.

In a paper that was released in 2010, three business professors illustrated how inducing manufacturers to cut product quality enhances Wal-Mart’s competitive position: “Because lower quality products are usually cheaper to produce, it is often argued that discount retailers induce lower quality in order to drive down prices.  Our model suggests, however, that the competitive and bargaining position effects provide incentives to induce lower quality regardless of changes in production costs,” the authors write.

In other words, because of the fierce competition with Wal-Mart, all brands have an incentive to lower their quality and production costs each successive generation, in a perpetual bid to increase profits.  
Brand equity suffers eventually, but only relatively, since other brands' quality will decline, as well.  Many brands seem to have succumbed to this desire to increase profits over the short-term, without any real vision for how to survive the onslaught of customer complaints. Only time will tell which brands will survive this march to mediocrity in a disposable economy.