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Building Asset Value In Trademarks and Copyrights
Presented by
Alec P. Rosenberg
Arent Fox LLP
Washington, DC | New York, NY | Los Angeles
Part I:
Developing Rights
Definitions – Trademarks
• Trademark/Service Mark: word, name, symbol or device used to identify and distinguish the goods or services of a business from those offered by others
• Trade dress: a distinctive, nonfunctional feature of a label, package, advertisement, web site or other object that identifies and distinguishes goods or services
• Certification Mark: a word, name, symbol or device used by a person other than its owner to certify regional or other origin, material, mode of manufacture quality, accuracy, or other characteristics of such person’s goods or services
• Collective Mark: a trademark or service mark used by members of a cooperative, association, or other group or organization including marks indicating membership
Definitions – Copyrights
• Copyright: A bundle of exclusive rights granted by government for a limited time to protect an original, “fixed” expression of an idea.
• Examples of Copyrightable Subject Matter: Literary and Musical Works Movies and other Audio-Visual Works Factual Compilations Software Translations Paintings Photographs Architectural designs
Developing Trademark Rights
• Use in Commerce = Common Law Rights
• Benefits of Federal Registration
Constructive Notice
Rebuttable Presumption of Validity, Ownership and Exclusive Right to Use
Federal Jurisdiction and enhanced relief available
Incontestability After 5 Years
Nationwide and International Priority
• Registration may be based on Actual or Intended Use
• Process
Selection
Search and Clearance
Use / Registration
Proper Use and Licensing
Monitoring and Enforcement
Developing Copyright Rights
• Rights Accrue Upon Creation and Fixation of “Original Works of Authorship” Only Minimal Creativity Required
Selection and Arrangement of Facts, Not Facts Themselves
• Author = Owner Works Made for Hire
Joint Works
• Benefits of Registration Constructive Notice
Federal Jurisdiction
Potential for Evidentiary Benefits and Enhanced Damages
Part II:
Strengthening and Protecting Rights
Maximizing the Value of Trademarks
• Pick Strong, Distinctive Marks
• The Strength of a Mark and Scope of Protection Available is Affected By The Degree of Inherent Distinctiveness
• Spectrum of Inherent Distinctiveness
Coined
Arbitrary
Suggestive
Descriptive
Generic
• Acquired Distinctiveness (aka “Secondary Meaning”)
Examples of Coined Marks
• Kodak
• Exxon
• Verizon
Examples of Arbitrary Marks
• Apple
• Camel
• Saturn
Examples of Suggestive Marks
• Wrangler
• Coppertone
• Sparkle (for glass cleaner)
• Samson (for hair care products)
KEY: Some Imagination Required
Examples of Descriptive Marks
• Steak N Brew
• Raisin Bran
• Bank of America
• Bufferin
• The Dollar Store
KEY: Identify, Describe, Characterize a Quality, Attribute, Ingredient, etc.
Proper Trademark Usage
• Trademark Rights May Be Lost Through Improper Use
Use Trademarks as Proper Adjectives Avoid the Possessive or Plural Form
Display Marks in a Distinctive Manner
Display a TM, SM, or ® Symbol with Marks
Display Marks in a Consistent Format
Never Permit Unauthorized Use of Marks
Strategies for Enhancing Trademark Value
• Monitoring
• Enforcement
• Licensing (Quality Control is Critical)
• Family of Marks Doctrine
• U.S. and Int’l Trademark Registration
Strategies for Enhancing Copyright Value
• Exploit Range of Copyrightable Subject Matter
• Proper Content Clearance
• Register Important Works Made for Hire
• Careful Licensing (Exclusive License = Assignment)
• Consider Registering Websites (and Updating Regularly)
Websites and Domain Names
• Domain Name Selection Consider Seeking Trademark Protection Consider Defensive Registration
• Enforcement Techniques Domain Names: UDRP vs. ACPA Copyrights: Notice and Takedown (DMCA)
• Key Words and Pop-Ups
• Website Content and Programming (i.e., hyperlinks)
• Content Clearance and Copyright Registration
Part III:
Using Trademarks and Copyrights to Obtain Financing
• Relatively Recent Phenomenon
• Exploits Fullest Economic Potential of IP
• Blend of State Law / UCC and Federal Law
• Careful Due Diligence is Critical
Trademarks and Copyrights As Security For Financing
18
Valuation of Trademarks and Copyrights
• Context is Key Mergers / Acquisitions Bankruptcy / Reorganization Inter-company Transfers Litigation / Damages Tax Licensing Loan Securitization
• Important Overlapping Concepts Goodwill (image / reputation, probability of continuing patronage,
intangibles giving going concern advantage over start-up)
Intangible Assets (precisely identifiable, legally owned, traceable, provable, and quantifiable)
Intellectual Property (trademarks, patents, copyrights, trade secrets, software, domain / web assets)
Valuation Methodologies
• Cost Approach Historical or Replacement Cost “Substitution, not “Earnings” Value ” = Generally a Low Value Best Suited to Very Young, Experimental Assets
• Market Approach Compares Actual Market Transactions Requires Accessible, Reliable Data concerning Similar Assets
• Income Approach Considers Reasonable Future Income Stream (DCF Analysis) Challenge is Separating IP Income Stream from Business as a
Whole Requires Multiple Predictions / Estimates
• Relief From Royalty Approach Subset of “Income Approach” – Measures NPV of Royalties
Company Saves Through Ownership of IP Combinations of Real World Info (i.e., Royalty Rate) and
Predictions (i.e., Future Income Streams)
Considerations When Valuing Trademarks
• Only Government-Sponsored Monopoly That Is Endlessly Renewable
• Mark May Be the Brand, So Value of Mark = Value of Brand
• Trademarks Cannot Travel Alone – They Require Associated Goodwill
• What Are You Valuing? (Mark / Brand Only, or also All Related Assets)
• KEYS: Is it really a trademark, and does it work? Would others want to use it to distinguish their goods / services? Would someone pay for a license to do so?
Considerations When Valuing Copyrights
• Long Term of Protection Generally: Life + 70
Works Made For Hire: 95 from Publication or 120 From Creation
• Keys Consider Specific Work In Question
Consider Current Value Based on (a) Licensing and (b) Internal Use / Benefits
Consider Potential New Future Uses
Security Interests in Trademarks / Copyrights
• Careful, Thorough Due Diligence Check Licenses: Can Only Pledge What is Owned Check USPTO and Copyright Office / International?
• Trademarks Rule Against Assignments-In-Gross
Best Practice is to Make Dual Filings (State and USPTO)
Intent-To-Use Applications = Pledge vs. Assignment
• Copyrights Federal Law Preempts, But Dual Filings Recommended
Unregistered Copyrights
• A Note About Domain Names Property vs. Conditional Contractual Right
Alec P. RosenbergPH: [email protected]
Arent Fox PLLC1050 Connecticut Ave., N.W.Washington, DC 20036
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