Playing Music Does Not Come Free: A Copyright Condition

Imagine going to a fitness class without music. How motivated would you be? How fun would a local bar be without a band or DJ to dance the night away? When visiting a local bar, restaurant, clothing store, fitness center, grocery, coffee shop, and other venues, we often hear music playing, even if it is subconscious. Imagine what life would be like without music? If we did not realize it before, we would feel like something was missing if there wasn’t background music in places where we just expect it to be playing. However, playing music doesn’t come free.

In many cases, listening to music is as simple as turning on a radio or television. However, every time you hear music, someone is paying to play that music. Whether it is a broadcaster or a venue, it, in most cases, must pay a royalty to the copyright owner if the music is protected by a copyright. This is because when a broadcaster or a venue plays copyrighted music, that particular business is using someone else’s intellectual property. Therefore, it must pay the people who created the music a fee. Typically, broadcasters and venues pay a blanket licensing fee that covers all music activities, such as live bands, karaoke, DJs, and more.

If a broadcaster or venue does not pay the proper licensing fees, then it may be infringing on the copyrights associated with specific songs. Musicians copyright their music to protect their work. Otherwise, anyone could take a song and claim it as his own and make money from it. Essentially, playing music in a public setting without proper licensing is the same as stealing. The penalty for such a crime can range from $750 to as much as $150,000, for each instance music is played without a license!

As you can see, the penalty for playing music without a proper license could cause a venue to go out of business, let alone deal with the troubles associated with a lawsuit. Therefore, it would be worth it for businesses to pay the licensing fee. Three organizations implement these licenses. They are called performing rights organizations (PROs): ASCAP, BMI, and SESAC. They do not hesitate to fine even the smallest venues. In fact, they file hundreds of lawsuits annually. Therefore, it is in the best interest for businesses to properly license music to benefit both themselves and the creators.

Music is a huge draw for a variety of reasons and finds its home in a plethora of settings. For most people, paying for music is likely a small sacrifice compared to the benefits.

Tiger Woods’ Masters Win Increases Brand Value

For years, sports commentators, fans, and others have been convinced that Tiger Woods should retire. His body seems to be falling apart from numerous injuries, with the most serious involving four back surgeries within four years. These injuries have caused him to miss many tournaments over the years and have affected his ability to perform at the professional level. In fact, it has been eleven years since he won a major championship. Along with his injury problems, Woods’ personal life has come under public scrutiny, namely a sex scandal and DUI charges. As a result, Woods’ career has not been a walk in the park.

At the young age of 20, he turned pro and was the youngest professional golfer to win the Masters in 1997. To date, Tiger Woods has won 15 major tournament titles, 81 PGA Tour wins, and 41 European tour wins, with five Masters wins. Woods is arguably the most famous professional golfer in the world with a net worth of $800 million and an annual salary of $50-60 million, topping at $1.5 billion since 1996, making him the most lucrative golfer in history. His accolades are numerous, including PGA Player of the year 11 times, Sports Illustrated’s Sportsman of the year twice, and AP Male Athlete of the year four times.

While Woods became famous for his golfing abilities, like many popular sports professionals, he actually makes the majority of his earnings from endorsements. His earnings for playing golf total $118 million since 1996 at 7.6% of his total career revenue. His earnings from endorsements are roughly 92.4% of his total career revenue at $1.4 billion. His recent win at the Masters makes him a hot target again for companies, especially Nike, which has stuck with him through everything. In fact, just minutes after winning the Masters, Nike broadcasted a new ad.

Woods’ particular career demands a relatively clean slate in the public eye and the ability to perform his job. If he underperforms and disappoints his fans with his personal choices, he risks losing his career as well as sponsors and fans, not to mention the value of his brand. Woods’ personal mistakes have already cost him an estimated $50 million in endorsements. However, in the sports world, perseverance and winning make a player more marketable and gives the public the incentive to become more forgiving.

Woods is a smart business man who doesn’t give up when the going gets tough. His recent Masters win benefited several companies that Woods endorses. For instance, during the Masters, Nike experienced $22.5 million in exposure, Monster Energy experienced $960,000, and Bridgestone experienced $134.000. And these are only a few of the companies he endorses. In addition to his endorsements, he received recognition from President Donald Trump with the Presidential Medal of Freedom award. Not to mention, Woods is an entrepreneur. His TGR company encompasses his many businesses including a restaurant, an events company that organizes PGA TOUR tournaments, TGR Design, which designs golf courses, and the Tiger Woods Foundation. Therefore, it is likely that Woods will be just fine for a long time to come. His Masters win was just the icing on the cake that will gain him even more attention and opportunities.

Difficulties of Trademarking a Common Term

Trademarks have a specific purpose. They help people identify with a particular product, service, company, or organization. Five types of trademarks exist.

  1. Generic marks: Trademarks to which one attempts to assign secondary meaning, though such attempts will always fail because the marks describe an entire group of products (e.g., aspirin). 
  2. Descriptive marks: Trademarks that take on a secondary meaning (e.g., McDonald’s).
  3. Suggestive marks: Trademarks that suggest a quality or characteristic of the good or service that it represents (e.g., Florida’s Natural branded orange juice).  
  4. Arbitrary marks: Trademarks that tend to describe goods or services that otherwise have no relation (e.g., Apple). These trademarks are generally very strong.
  5. Fanciful marks: Trademarks that tend to describe goods or services and likely have no other precedent in the market (e.g., Allegra). These are typically the strongest trademarks.

As mentioned, typically the strongest trademarks are unique names or words. However, occasionally, a common word can sometimes be trademarked as long as people identify it with a secondary meaning other than its original meaning or the word is used to describe a service or good. For instance, consider Apple. While the original meaning represents the fruit, it has taken on a secondary meaning as representation of the technology company Apple. In fact, when researching the term via Google, the first result that appears is the website for the company Apple.

While Apple has successfully coined a common term with a secondary meaning, this is no easy task. For instance, last year, the Boy Scouts of America (BSA)announced its plans to change its program name from Boy Scouts to Scouts BSA. The change would reflect its modification from an all-boys program to the inclusion of girls into the program. However, the Girl Scouts of the United States of America (GSUSA) objected to the change and sued BSA for trademark infringement. 

Although the two organizations have coexisted for decades without trademark issues, the GSUSA argues that the suggested name change creates confusion. Currently, the terms “girl” and “scouts” used together take on a specific meaning that associates directly with the GSUSA organization. GSUSA contends that BSA cannot have exclusive rights to common terms such as “scouting” and “scouts” in relation to girls. 

When the Boy Scouts was an all-inclusive boys program, there was no question as to whom the organization targeted. However, since the program now includes all genders, it is likely the organization will have to occasionally use the term “girls” and “scouts” to recruit or describe particular aspects of its program. Therefore, it may inadvertently infringe on the GSUSA trademark. In fact, some people have already mistakenly signed up their daughters to the girls’ programs in Boy Scouts, and others believed the two organizations merged.

The BSA argues that it has the rights to use “scouts” when referring to programs associated with boys and girls, and not girls exclusively. It further argues that the GSUSA only has rights to “scouts” when referring to girls.

As you can see, trademarking a common term can be complicated and difficult to implement. It will be interesting to see how this battle is resolved.

2018 Highlights

Each year at our firm turns out to be better than the year before, and 2018 was no exception! We enjoyed a remarkable year filled with new projects, new adventures, new and repeat clients, and a host of other events that kept our team busy.  

Our projects last year covered a number of topics, such as the following: analytics software, protein ice cream, additive manufacturing technologies, LED lighting technologies, thermal warming devices, scuba diving equipment, chemical looping gasification technology, and antimicrobial additives for pet food, among others. We enjoy the variety of projects we receive every year. These projects teach us about emerging technologies within different industries, and each project brings unique challenges.

In addition to our projects, throughout the year we attended a variety of conferences and were invited by several organizations for speaking engagements, such as the LES Annual Conference, IAM Patent Licensing Event, LES board meetings, IP 100 board meeting, ABA-IPL Spring Summit, and the IP Awareness Summit.

Projects, speaking engagements, and conferences take us to many places each year. In 2018, we traveled throughout the country to the following places: Phoenix, AZ; Philadelphia, PA; San Francisco, CA; Washington, DC; New York City, NY; Palo Alto, CA; San Diego, CA; and Boston, MA.

Outside of our projects and speaking engagements, was the publication of Mike’s article “Mike Pellegrino Recommends Sometimes Ignoring Expert Advice” in the Indianapolis Business Journal. Another exciting development was a $112 million jury verdict a client won. The jury awarded the damages based on our damages opinion, virtually to the dollar. To learn more about the case, click here.

While we work hard, we also find the importance in taking time out to regroup, collaborate, and enjoy the companionship of our team. This past year, we enjoyed some friendly competition bowling at a local bowling alley. We also checked out a new concept of golf, which was Topgolf in Fishers, IN. If you haven’t tried it, look for one near you and give it a try. It’s a great time! Our team also enjoyed caving at Indiana Caverns. But our favorite event of the year was attending our coworker Tejas’ beautiful wedding in Playa del Carmen. We were honored to share this special event together as a team.

As you can see, we had a productive and busy year. We look forward to all the activity ahead this year with new projects, conferences, speaking engagements, company outings, and so much more. We appreciate all of our clients and look forward to working with new and repeat clients. We love what we do. 

The Wizard of OZ Turns 80, Still Valuable

“Classic” status in the movie industry is a large feat as few movies make the list. But one movie in particular stands out. Researchers in Italy dubbed The Wizard of Oz as the most influential movie of all time for inspiring the film industry and for the number of times the film industry references the movie. Not only is the movie influential, but many people consider it among the greatest and the most watched movie of all time. The Wizard of Oz was released in 1939 at a budget of more than $2 million, which was excessive at the time. Ironically, the movie was a box office failure and did not make its money back for nearly 20 years. In 1956, the film reached the television audience, making it a huge success.

The actual worth of the film is hard to say today. However, box office numbers indicate the film is worth approximately $34 million, while DVD and Blu-Ray sales reach well over $100 million. Fathom Events rereleased the movie in theaters in January of this year, making more than $1 million in one day. The amount of revenue generated from merchandise is unknown, but is likely a relatively high number. The value of clothes and items from the actual 1939 film are worth millions alone.

This year, the film turns 80 years old. With its colorful characters, fantastical scenery, and symbolic storyline, the movie continues to capture an audience. While the movie likely does not bring the revenue that it did in the 1950s and at its peak, it still has worth. The fact that it is still referenced and still viewed keeps it alive. After all, The Wizard of Oz inspires themed parties and Halloween costumes to this day. It is also not unusual to find a stage production of The Wizard of Oz nearby. In addition, the film has influenced a variety of spinoffs, sequels, and reinterpretations including television shows and other films such as Disney’s Oz the Great and Powerful, along with numerous books. Enthusiasts can readily find a plethora of merchandise including clothes, figurines, posters, and even the film itself. 

Existing more than eight decades and still ranking as one of the most significant movies of all time, The Wizard of Oz will likely have a place in our lives forever. Its whimsical, yet symbolic storyline teaches life lessons in a fun and thrilling way. To many admirers, this alone makes the movie worth more than any revenue it generates.

Louis Vuitton’s Counterfeiting Woes

While imitation can be the sincerest form of flattery in many circumstances, it becomes a nightmare for many companies. The more popular a brand is, the likelihood it will face counterfeiters at some point. Globally, counterfeiting amounted to $1.2 trillion in 2017. According to the Global Brand Counterfeiting Report, global online counterfeiting created losses of $323 billion in 2017, with luxury brands experiencing $30.3 billion of losses in online sales. As these numbers indicate, counterfeited brands create a huge and expensive problem for the actual brands.

Not only do counterfeited products affect the economy, they may also affect consumer health and safety, especially when it comes to counterfeited drugs. In fact, one million people die annually from fake drugs and consumers spend $200 billion annually on these drugs. Other industries where counterfeiting is a serious threat to health and safety include automotive and aviation industries. Fake car parts cause 1.5 million injuries and 36,000 deaths annually.

One of the most counterfeited luxury brands is Louis Vuitton. As a result, it makes headlines frequently in its quest to assert its rights. The company spends more than $17 million annually to combat counterfeiters. Unfortunately, it is likely the company will always fight counterfeiters as counterfeiters continue to market and make products so closely designed like the original it is hard to distinguish between the real product and the fake product. Further, the Internet makes it easier to hide counterfeited products. In fact, on Instagram Louis Vuitton is one of the top targeted brands at 8.51%. This is only one online avenue. Recently, Louis Vuitton sued hundreds of websites over counterfeiting issues.

As indicated, the time and money Louis Vuitton has to expend in order to combat counterfeiters is tremendous. However, the alternative could prove detrimental. If Louis Vuitton were not pursuing counterfeiters, it would lose significant profits and could taint its reputation as knockoffs typically do not have the same quality. Therefore, the company must continue to assert its rights in order to protect its reputation, its revenue, and its future.

Patent Pools May Create Potential Antitrust Issues

Patent pools are on the rise. They are groups of two or more patent holders that publicly agree to share (or cross-license) patent rights. Patent pools are ideal for technology that contains a lot of overlap among various innovations in order to function properly. For instance, smartphones have a lot of overlap among innovations created by telecommunications technology giants. Companies such as Samsung, Microsoft, Apple, LG, and others sometimes form patent pools to share innovations and reduce the risk of lawsuits. This is fairly common in the telecommunications industry. In fact, a study conducted by Toulouse School of Economics indicates that cross-licensing accounts for half of all licensing agreements in the industry.

Sharing patents provides many benefits among companies within the same industry. Some of these benefits include reducing licensing fees, combining innovations to provide state-of-the-art products, providing faster development, and saving on costs, to name a few. However, while patent pools provide many benefits, they also create challenges. For instance, concern exists that patent pools may create collusive opportunities that hinder new companies from entering a particular market. These pools are also subject to regulatory scrutiny to ensure they do not create unfair competition or thwart innovation.

The challenges presented by patent pools can introduce complicated scenarios that may cause issues greater than what the pools were formed to avoid. Therefore, antitrust laws exist to promote honesty and fair circumstances for competition. However, every licensing agreement is different. Therefore, addressing specific provisions can make it difficult to provide antitrust rules that apply to all situations. Intellectual property by its very nature is unique, making it difficult to instill laws that are general and broad enough to encompass a tremendous amount of scenarios.

As the number of patent pools continues to rise, the need for antitrust laws promoting fair competition also rises. However, this area of law is not fully developed, enabling potential unfair situations presented by patent pools in the meantime. It will be interesting to see how patent pools can be regulated so that fair competition ensues. Unfortunately, given the complicated nature of intellectual property and individual licensing agreements, it may take some time to come up with solutions.

Ways Celebrities Capitalize on Brands

Celebrities typically become well-known for their skills. For instance, many actors such as Julia Roberts, Al Pacino, Leonardo DiCaprio, and Meryl Streep are famous for their abilities to play diversified roles. Singers such as Beyoncé, Taylor Swift, and Justin Timberlake sell out concerts because they give great performances and many people like their songs. Tom Brady, LeBron James, Serena Williams, and Tiger Woods garner attention because they are among the best in their sports. As long as their skills remain strong and in demand, they continue to capitalize on their brands.

While honing a skill and performing at high levels protects celebrities and their brands, making them more valuable, publicity helps to maintain that value and keep celebrities in demand. The more celebrities are exposed, the more they are remembered and the more the public associates with them. While newer talent and age may play a factor in how long or how well celebrities can maintain their brand value, celebrities often use other methods than the skills that made them famous in the first place to keep their brand valuable.

For instance, many celebrities launch clothing lines that help to keep their brand thriving. Such lines include Fabletics by Kate Hudson, Ivy Park by Beyonce, SJP by Sarah Jessica Parker, Goop Label by Gwyneth Paltrow, Paper Crown by Lauren Conrad, and many others. Some celebrities launch their own perfumes. Justin Bieber, Jennifer Lopez, Britney Spears, Jennifer Aniston, Sean Combs, Derek Jeter, and David Beckham are just a few who market their own scents. The number of type of products celebrities launch is large. Other items may include purses, handbags, makeup lines, and so much more. In addition to their own lines, celebrities endorse a plethora of products including athletic gear, credit cards, medication, technology, and endless other products.

Although endorsing and launching products is another big avenue that can keep a brand alive, some celebrities also tap into new territory to keep their image public. For instance, many famous singers and athletes have dabbled with acting. They include Lady Gaga, Tim McGraw, Brett Favre, Christina Aguilera, Shaun White, and numerous others. Partnering with charities is also another way celebrities can benefit.

As you can see, developing, maintaining, and enhancing a celebrity brand can take a tremendous amount of time, work, experience, practice, and even stepping out of a comfort zone. However, the more a celebrity remains in the spotlight, the more important that brand becomes.

The Licensing Executives Society: A Voice for the IP Community

Founded in 1965, the Licensing Executives Society (LES) is an organization that supports, represents, and connects nearly 3,000 IP, business, and technology licensing professionals. LES provides members with best practices, education, mentoring, networking, and participation. Membership benefits are many and include chapter events, access to the LES directory, industry connections, social media channels, industry publications, certified licensing professional (CLP) certification, CLP preparation courses, free education, career center advantages, and registration discounts.

At Pellegrino & Associates, we are a big proponent of this organization and all that it offers the IP industry. This is why we are so actively involved. Our company president Mike Pellegrino is currently treasurer of LES. He is also the chair of the patent valuation standards committee established by LES, whose charter is to pursue American National Standards Institute (ANSI)-accepted standards for the valuation of patents in a variety of contexts including financial reporting, capital formation, economic damages calculations, and others. Mike is also a member of LES’s public policy committee, seeking to help set standards for intellectual property-focused regulatory matters with the SEC and others. He is also a member of LES’s standards committee for IP use in the boardroom.

While our expertise within the organization is on IP valuation, LES strives to find standards for many IP areas. These areas include the following: ISO/TC 279 innovation management, IP protection in the supply chain, FRAND licensing, IP licensing, IP management for startups, intangible assets in the boardroom, IP valuation, and IP brokerage.

Working together with IP professionals around the world, LES represents one voice for the IP management community. It supports a variety of organizations including corporations, law firms, consultant/service providers, universities/government, entrepreneurs, and students in various industries such as life sciences, high technology, consumer products, and others. We are proud to be a part of and to support this prestigious organization. To learn more, visit the LES website at https://www.lesusacanada.org/. Also, be sure to check out the Events section to learn about the annual LES meeting.

Successful Athletes Are Ripe for Trademark Approval

In January, professional wrestler Rhonda Rousey filed a trademark for the “Rowdy” term. In March, the University of Maryland Baltimore County filed several trademarks after its historic win in college basketball when the No. 16 seed defeated the No. 1 seed in the NCAA men’s basketball tournament. In April, Boston Marathon winner Desiree Linden filed a trademark for “Keep Showing Up” to use on athletic gear. By filing for trademarks, these athletes and/or associations can capitalize on the accomplishments they have made.

People remember winners. Winning takes an abundance of skill and sometimes luck. When a remarkable win occurs, fans revere the athletes and their hard work. Therefore, it makes sense for athletes to capitalize on their wins by trademarking terms that the public associates with them. Obtaining a trademark is one way athletes can take control over who uses their likeness (or personal brand). It also gives them a way to continue earning money based on their skills, accomplishments, and dedication.

If athletes do not file for trademarks that people associate with their likeness, then other people and companies may try to make money on the hard work accomplished by these athletes. Furthermore, others may misrepresent or even abuse the likeness of a person, which could damage their reputation and downplay their capabilities. By filing for trademarks, these athletes are better armed to protect their image.

Not only are winners often an elite group of people, they are unique. For instance, there is only one Rhonda Rousey and one Desiree Linden. While other athletes exist in the same sport, their stories, skills, and accomplishments are always different. There is never the same story in any given win. Therefore, the logos, phrases, names, and terms for which these athletes apply are unique to those athletes. Furthermore, the more these athletes win or the more remarkable a win is, the more likely a trademark is warranted.

As athletes continue to achieve remarkable feats and set new records, the distinctive trademarks associated with them will continue to prove valuable to them.