Old Fake Award Scams Never Die...They Just Change Their Names

Congratulations!  After our careful nomination process, many influential people of achievement were reviewed.  In the end, you have been selected as the recipient of a prestigious award recognizing your accomplishments!

All you need to do to claim your prestigious award is send a check or money order for $358, and you will receive a beautiful commemorative crystal trophy for your desk or mantel.  You will also be included in a major press release campaign to announce this momentous event to the whole world.

Of course, no one has ever heard of the organization or the award that you have been selected for, but pay no mind to that silly little detail!  No one cares about the actual award you received anyway, right?

This straightforward business model (or "scam") assumes that some percentage of businesspeople are essentially insecure or gullible enough to put anything on their shelf or mantel that smacks of someone else recognizing their value, and will part with a nominal sum to accept such an award.  And generally, the business model bears enough fruit over time to perpetuate itself.

Consequently, countless "Who's Who" scams have cropped up over the decades, leading Forbes to create the "Hall of Lame" dedicated to publicizing such silly contrivances.

I would like to nominate the United States Institute for Excellence in Commerce ("USIEC") for giving out such a meaningless award, recognizing its worthless contribution to an online world already filled with scams.

The USIEC claims to be a "leading authority on researching, evaluating and recognizing companies across a wide spectrum of industries" that meet its "stringent standards of excellence."

Of course, its website is largely a template and contains little substance when examined.  The USIEC does not list a single human being actually on its "team," and its website includes mostly generic, stock photographs of impressive-looking office buildings and friendly business-people.

The USIEC purports to be a philanthropic enterprise, having offered loans through Kiva.com to fishermen in Nicaragua, farmers in Kenya, grocery stalls in Lebanon and dairy farmers in Uganda.  In reality, Kiva.com allows anyone to donate as little as $25.00 to humanitarian aid.

Further, the USIEC has self-published a couple of research "white papers" that are virtually unreadable gibberish, but called it a "library" for its members.

In exchange, for $358, you can receive a framed certificate and trophy from the USIEC to show the world that you are a proud contributor to its noble cause.

In reality, the USIEC was outed numerous times by other bloggers who noted that it used to call itself the "Small Business Institute for Excellence in Commerce," and others who decry it as a "meaningless award scam."

Others have pointed out that their domain name is virtually brand new, for an "Institute" that claims have been around for awhile.

And if you think that the USIEC couldn't possibly have duped anyone by its approach, it is worth noting that its website receives heavy traffic.  Further, here is a list of just a few press releases announcing those who evidently "accepted" the award, presumably by paying the USIEC for the trophy and to publicize the honor:

ProSys Information Systems

DiverseNet, Inc.

Visionary People LLC

Pacific Controls, Inc.

In reality, being offered an award by the USIEC is not a legitimate recognition of one's diligence and enterprise, as one PR blogger put it, it's "a sign of gullibility."

Perhaps saddest of all, even some Intellectual Property attorneys have been duped by the USIEC scam.

The Drive to Luxury: Commodity Fetishism or Innate Human Need?

Over the last several decades, across the globe, there has been a marked increase in consumers' collective demand for luxury goods.  What are luxury goods and why do consumers seem to express such an insatiable demand for them?  While most researchers cannot agree on a standard definition for luxury goods, they generally agree that it is any consumer product or item that is not a true "necessity."

In other words, access to potable water is a necessity to survive in the world, but owning a diamond-studded watch is not.

Some researchers argue that the luxury marketplace focuses the consumer on a perceived need to belong to an elite group and manifests desire for extremely high quality products, often far in excess of actual need.

Some political commentators on the left have argued that luxury goods are a negative form of "commodity fetishism," a term coined by Karl Marx. Marx decried the capitalistic drive toward exclusionary private property and seemingly irrational desire for classist exclusion that he believed luxury goods represent.

He argued that humans were encouraged to ascribe irrational value to arbitrary materials (such as gold or diamonds), which then are perceived as having a false "intrinsic" value in the marketplace.  He argued that such exclusion was designed to oppress the working classes, and served no other socially beneficial goal.

Yet, despite persistent economic turbulence and political instability in many emerging markets, the global luxury goods market remains largely robust.  Indeed, the pursuit of luxury has been a sustained growth trend, even in societies that have experienced substantial political perils.

But is this trend just a blip, or a new long-term reality?

I contend that the drive toward luxury is a positive feature of normal human economic and psychological development, and not just a short-term phenomenon or an irrational manifestation of oppressive capitalism gone awry.

As any human society develops, its' collective needs and consumer preferences will gravitate from satisfying the lower-level human needs (such as general stores selling staple household goods) toward increasing demand for brands that represent quality, the respect of others and social achievement.

Maslow's hierarchy of needs is a theory in psychology proposed by Abraham Maslow in his groundbreaking 1943 paper "A Theory of Human Motivation" in Psychological Review:

In essence, Maslow argued that all human behavior can be analyzed within the general framework of this pyramid, representing a dynamic progression toward higher thought processes and a greater degree of social functioning as one's temporal needs are met.

In other words, once a person's immediate physical needs and safety/security are satisfied  he will gravitate toward forming communities and families, and eventually, trend toward morality and achieve self-actualization.  Without one's lower-level needs met, that person -- and eventually his entire society -- will flounder.

From the perspective of predicting and analyzing consumer behavior, Maslow’s hierarchy can be thought of as also predicting macro-level social mobility and consumer preferences.  Such a model allows one to understand trends in demographics, and even develop sound long-term financial and investment strategies.

In other words, in a properly functioning society where social mobility is fluid, eventually, the retail options will become higher-end, and luxury goods retailers will move in.  The “local hardware store” will be replaced by a mass market retailer.  The mass market retailer eventually will be replaced by the shopping mall.  The shopping mall eventually becomes filled with luxury goods retailers.

Therefore, over time, as societies economically, psychologically and demographically evolve, luxury goods should become both desirable and attainable.

Financial data bears this trend out. Standard & Poors Global Consumer Enterprises Index is comprised of thirty of the largest publicly-traded companies in the GICS consumer discretionary sector that meet specific investability requirements.  The index provides exposure to leading publicly-listed companies in developed markets, which meet minimum international revenue exposure requirements.  100% of the companies included relate to consumer discretionary spending.  

Since this custom Index was created by S&P in 2009, it has demonstrated 5-year annualized returns of 25% growth, an astounding rate of return: 

Empirical consumer survey data bear out this trend, as well.  In a recent survey conducted by Empathica Consumer Insights Panel, the largest reported reason that consumers made a luxury purchase was to "reward themselves" (31.9%), although many consumers also indicated they were finally getting around to buying a luxury item that they had previously delayed purchasing (17.5%).  

Others bought a luxury good for a significant other (12.5%), or said they had extra money to spend and just wanted one (11.5%).  Despite the recent recession, three out of four consumers indicated that they perceived that there are the same or even more luxury brands available today than there were two to three years ago, making this luxury goods market more competitive than ever.  Interestingly, 28% of consumers also report that they will tell others about their luxury purchase through social media sites like Twitter, Facebook or blogs.

Therefore, consumers consistently express a deep need to have the ability to "reward themselves" through the purchase of a luxury good that was not a true necessity.  The approval, perceptions and respect of others played a critical role, as well.

Over time, I predict that this drive toward luxury is here to stay, as it represents the innate human drive to progress toward higher levels of achievement and acquire the respect of others, and not simply irrational exuberance or the exploitation of artificial demand.

Isn't it Time for the U.S. Supreme Court to Broadcast Oral Arguments?

It is 2014, and much of the planet is becoming technologically accessible online.

With respect to the U.S. federal government's daily operations, the Library of Congress' card catalog is available online, Congress' floor debates and Committee hearings are broadcast 24/7/365 on C-SPAN and online, the White House has an active website and even Pope Francis has a fully interactive website and Twitter account.

Yet, one branch of the U.S. federal government has crept more slowly into the 21st Century than others.

After 200 years of regular sessions, the routine oral arguments of attorneys before the United States Supreme Court remain a cloistered, closed-door affair, for the most part.

Audio recordings of all oral arguments heard by the Supreme Court are available to the public at the end of each argument week and are posted online.

However, all other recording devices are strictly forbidden by Court rules.  This issue made headlines recently, when a rare event occurred--a public protest inside the U.S. Supreme Court, recorded by a visitor armed with a hidden camera phone.

The unruly visitor who demonstrated was arrested, but the individual who recorded the session surreptitiously cannot be prosecuted, as the Court's rules do not carry the force of law.

Indeed, if put to a vote before Congress, it is not clear that the Court's preference for such closed door access would be affirmed by both Houses, or signed by the President.

Indeed, fourteen trial courts have been selected for a "pilot study" to evaluate the merits of television cameras in courtrooms, and some of the more technologically-savvy Courts of Appeal (such as the Ninth Circuit Court of Appeals in California) broadcasts their oral arguments online the day after they are held.

The Coalition for Court Transparency is a group of public interest and media organizations demanding open access to the U.S. Supreme Court.

Their compelling argument is that the Supreme Court's decisions affect the lives of Americans everywhere, and that a large majority of the citizenry believe the oral arguments should be televised.  (Their video clip is embedded below).



Perhaps it is time for the U.S. Supreme Court to reconsider its rules and put the matter to a Congressional vote.

China Viewed as America's "Greatest Enemy" in Gallup Polling Data

A recently released Gallup World Affairs poll surveyed Americans, asking them to name the United States' greatest foreign enemy.  More Americans viewed China, not Iran or Russia, as America's greatest threat.

A majority of those polled (52%) apparently view China's growing economic power as a "critical threat" to the "vital interests" of America into next decade.

Eight years ago, 31% of Americans viewed Iran as the USA's "greatest enemy," compared with 16% today.  China's unfavorable ratings have held relatively steady in Americans' minds, despite the announcement of historic reforms late last year that would shift China's economy to a more consumer-driven model.

In 1979, when Gallup first gathered responses to these questions from a representative sample of Americans, China's GDP was not even one tenth that of of the United States. That year, nearly two out of three of Americans polled reported that they saw China favorably.  

Today, China's meteoric rise has led a majority of Americans (52%) to report China as the world's leading economic power. Further, many Americans are beginning to view China's growing military strength and newfound economic power as a threat to U.S. strategic interests.

Gallup notes that in 1959, President John F. Kennedy gave a speech, noting that when written in Chinese, the word "crisis" is composed of two characters, one representing danger, the other representing opportunity.  Americans clearly see the potential for danger in China, but it is worth noting that commercial trade with China continues to grow, creating opportunity as well. Since China joined the World Trade Organization in 2001, America's trade with China has grown dramatically.  

However, many U.S. government officials have openly criticized Chinese currency manipulation policies and tolerance of counterfeiting as well as human rights abuses.

Will BitCoins Survive a Growing Crisis of Confidence?

We previously discussed brand owners' and law enforcement's collective concern that the virtual cryptocurrency known as the BitCoin could spur even more online lawlessness.

It would appear that those fears, at least for now, have been allayed by a number of developments.

First, in October 2013, the FBI shut down SilkRoad, one of the largest online marketplaces where narcotics, guns and counterfeit goods were openly traded using BitCoins.

Then, the People's Republic of China banned financial companies based there from handling any BitCoin-related transactions. Joining suit, Russia banned the currency, making it illegal to trade in any currency other than the official roble.

Both nations' decisions have led to a growing crisis of confidence in the realistic viability of the currency, even as ATM machines trading in BitCoins made their debut in Austin and Seattle.

Finally, Mt. Gox, the Tokyo-based exchange where millions of dollars of investors' BitCoins are ostensibly stored, announced a freeze on any withdrawals of the currency, spawning protests outside the company's headquarters.

As of today, the rights to a BitCoin held by Mt. Gox was only $118, whereas a BitCoin sold on another still-functioning exchange was selling for $570.  Both represent a stark drop from the currency's recent high of over $1,000 in November 2013.

Still, speculators are continuing to invest many millions of dollars in the virtual currency, banking on a rebound. Some are even accusing Mt. Gox insiders of buying up the currency at the deflated price and re-selling them on other exchanges for a premium.

One thing is certain, if Mt. Gox enters a "death spiral," making it unable to pay back its investors, there is a real concern about the currency itself collapsing under its own weight.

T-Mobile Wins Preliminary Injunction Against Similar Magenta Color

A federal district court judge has granted T-Mobile a preliminary injunction against AT&T subsidiary Aio Wireless on basis that its color scheme infringes on T-Mobile's magenta color trademark. 

In the decision, Federal District Court judge Lee Rosenthal held that "T-Mobile has shown a likelihood that potential customers will be confused into thinking that Aio is affiliated or associated with T-Mobile based on the confused association between Aio’s use of its plum color and T-Mobile’s similar use of its similar magenta color." 

The order prohibits Aio from using a plum color in advertising, marketing, and in store design.

Aio Wireless is a low-cost, no-contract carrier owned and operated by AT&T. 

The prepaid service launched in 2013 and T-Mobile filed a lawsuit against the company's use of the plum color, which we reported on.

In the complaint, T-Mobile argued that Aio's plum color scheme and similar wireless services confused customers into thinking that the low-cost carrier was associated with T-Mobile. 

T-Mobile proved that it had a strong likelihood of success in the merits of its case. 

Part of T-Mobile's argument was that "AT&T set up Aio to compete directly with T-Mobile," and the court agreed, finding that "the record is clear that Aio wanted to capture T-Mobile customers." 

Some documents unearthed during early discovery in the case disclosed that AT&T knew Aio's color scheme was similar to T-Mobile's. 

According to the opinion, a company hired by AT&T for focus group testing sent a report "highlighting that because the plum color was so similar to T-Mobile magenta, focus-group members were initially confused into thinking that the commercials were affiliated with T-Mobile."

T-Mobile has defended its trademark on its magenta color vigorously, and in a statement, the company says that this latest ruling "validates T-Mobile's position that wireless customers identify T-Mobile with magenta and that T-Mobile's use of magenta is protected by trademark law."

Motorcycle Club Trademark Facing Unprecedented Law Enforcement Tactic

Law enforcement efforts to "break" an outlaw motorcycle gang have morphed into a bizarre and groundbreaking trademark dispute, which some legal commentators contend is an unprecedented and possibly unconstitutional overreach by law enforcement.

The dispute's origins began in October 2008, when a federal Grand Jury sitting in Los Angeles indicted 80 members of the Mongols Nation, LLC, a motorcycle club, for a variety of crimes including murder, narcotics distribution and conspiracy.  Agents for the Alcohol, Tobacco and Firearms (ATF) raided locations in six estates and arrested several dozen Mongols members, seizing guns, motorcycles and drugs.

At each location where ATF agents served arrest warrants, they also sought out and seized members' personal jackets, patches and other items bearing the Mongols' trademarked logo.

The Special Agent in charge of the ATF's Los Angeles field office, pointed out the significance of the Mongols trademark to the prosecution.  

"They live by that Mongols patch," he reportedly said.  "We take what's most dear to them....We're gonna break their back.  We'll do whatever we have to do to stop the violence."

Ultimately, everyone named in the indictment pleaded guilty and received sentences ranging from several months to many years in prison.

But an interesting wrinkle arose during the prosecution of the 2008 case. Federal Judge Florence Cooper ruled that the federal government had no right to seize the Mongols trademark.

Judge Cooper later passed away in 2010, and the trademark aspects of the dispute were then assigned to Judge David Carter who agreed that the trademark was inappropriately seized, but suggested a proper way to do it properly to the federal authorities. That approach would require a new indictment because the forfeiture remedy under the RICO Anti-Racketeering statute was not plead in the prior indictment.

As a result, Judge Wright, who heard the 2008 case, is now hearing the trademark dispute in the context of a more recent 2013 indictment that charges racketeering.

Now, the attorneys for the Mongols have sought to disqualify Judge Wright, claiming that he is unfairly "biased" against their clients.  At the core of their motion is an off the cuff comment that Judge Wright made on the record about how he "reluctantly" ruled in the Mongols favor on the trademark issue previously.

The interesting issue is that the federal government is not only claiming that it is entitled to seize the trademark registration originally owned by the Mongols, but that it is entitled to seize physical items and personal effects that utilize the logo such as jackets and patches.

Essentially, the government is attempting to hijack the seizure aspect of anti-counterfeiting remedies and utilize it for punitive measures.  That approach raises very interesting-- and disturbing--constitutional issues, say legal commentators.

Martinson Coffee's Advertising Campaign Risks Elvis Presley Estate Lawsuit

I recently came across a billboard on the side of a telephone booth (yes, those still exist) in New York City, and stopped dead in my tracks to snap a photograph of it.

The primary reason that the advertisement caught my attention was that about three years ago, I had considered approving a similar advertising campaign.  We considered utilizing a stock photograph of a cheesy Elvis Presley impersonator along with the tagline: "Not All Imitation Is Flattery."

Now, there is an ongoing debate in legal circles about whether such commercial use of a famous persona should be protected as free speech and constitute a form of parody or fair use, or whether such use could conceivably be an infringement of the late Elvis Presley's right of publicity and trade dress and trademark rights.

Absent such a finding of free speech or fair use, the unauthorized commercial use of a famous person's likeness can constitute an infringement of their right to publicity.  This right can be protected under state law, even long after their death, unless that right has lapsed, or the person's identity is in the public domain.

Last year, we reported on the legal developments involving Albert Einstein's likeness and how use of it embroiled General Motors in protracted litigation.

There has been much written in the academic literature about the fuzzy boundaries between unlawful imitation and flattery. For example, Touro Law Review published an article in 2012 about this subject.

Aware of how aggressive Elvis Presley Enterprises (EPE) has been in the past in protecting Presley's image and likeness, we had contacted EPE to discuss whether we could obtain a license. This standard "clearance" procedure is a prudent measure, regardless of whether a fair use/parody defense exists.

I was informed by EPE's representative that the Estate would not offer a license for Elvis' likeness to be used in this manner. (It is possible that the unflattering impersonator we were considering using may have played a role).

Regardless of the legal merits of EPE's position, out of respect for "the King's" intellectual property rights and to avoid the risk of litigation, we never approved or ran the advertisement.

Now, it would appear that Martinson Coffee had a similar idea, and decided to run the advertisement.

According to a press release issued by Martinson in October 2013, it is using a media blitz campaign, including with roving trucks emblazoned with the billboards. "The Martinson® Coffee trucks will appear in over two dozen locations during the campaign. The social media launch will run in conjunction with a city-wide advertising campaign. The ads, featured on New York commuter rail stations, subway stations and the like, will focus on proving why Martinson is the Real Joe."

I contacted Martinson Coffee's public relations department by e-mail, to ask if they had sought or received a license from EPE. This is what they said:

"We currently buy our images from a stock image company.  They provide all the licenses for all the images they own.

We don’t do anything on our end.  They vet those issues out prior."

In other words, the advertising agency utilized "stock photography" and assumed that the stock photography company had acquired and provided all relevant licenses.

But this assumption is usually factually and legally incorrect.

For example, iStockPhoto, Getty Images, ShutterStock and other "stock image" galleries offer a variety of "Elvis Impersonator" photographs.

However, the licenses offered for such stock photographs is typically "for editorial use only."  Their Terms of Use specifically state that "Files for Editorial Use Only cannot be used for any commercial purposes. These files may contain identifiable brands, locations or people without the proper legal releases needed for commercial use.  They may be used in blogs, magazine and newspaper editorial applications, or other non-commercial uses." Shutterstock explains the distinction on its website.

Therefore, assuming for argument's sake that Martinson acquired its Elvis impersonator image from such a third party stock image company, its commercial use would clearly fall outside the scope of the editorial use only license.

Consequently, Martinson could not avail itself of the license defense, and could not drag the third party stock image company into the case to indemnify (defend) it.

Further, whatever "releases" the stock image company acquired for use of the image would only involve the model depicted in the photograph -- not the Elvis Presley Estate, who has the legal right and obligation to protect the King's likeness.

Commentators have noted that EPE is strategic about its litigation targets. It is yet to be seen if Martinson Coffee incurs its wrath, as there is no word yet on whether a lawsuit has been filed. 

Stay tuned.