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©2011 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500
For Audio Participation, Please Call 1.866.814.8448, *1543454*
©2011 Foley & Lardner LLP • Attorney Advertising • Prior results do not guarantee a similar outcome • Models used are not clients but may be representative of clients • 321 N. Clark Street, Suite 2800, Chicago, IL 60654 • 312.832.4500
Intellectual Property Issues Affecting the Hospitality Industry
4:00 p.m. – 5:00 Eastern August 30, 2011
Rick Caron Nir MargalitNorm Rich Leslie Smith
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Housekeeping IssuesCall 866.493.2825 for technology assistanceDial *0 (star/zero) for audio assistanceQ & A will be handled at the end of the formal presentation– Pull Down Menu
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Today’s Presenters Rick CaronFoley & Lardner LLP
Nir MargalitFoley & Lardner LLP
Leslie SmithFoley & Lardner LLP
Norm RichFoley & Lardner LLP
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Troll Cases in Hospitalitypresented by
Nir Margalit
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Troll Cases
Troll Cases–Defined– Plaintiffs – Form of Demand– Review of IP licenses/what is covered
Co-defendants–Differentiating– Considerations– Co-counseling
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Troll Cases
Responding to Demand– Initial communications– Review of licenses– Defenses– Indemnifications
Settlements– Settling vs. litigating (case studies)– Per location amount– Look at prior/future sites– Full release/transferable licenses
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Troll Cases
Preventative Actions– Review of Third Party License Agreements– Full Indemnification Provisions– Watch for exculpatory language (modification)– Include exculpatory language in reps of third
party Management Agreements– Have IT Department maintain thorough log of
all licensable/licensed components/software
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Securing and Protecting Valuable Trademarks
Issue-spotting when Acquiring or Selling Hospitality Properties
presented by
Norm Rich
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Trademarks (or Service Marks)
Defined:– Any word, phrase, symbol, artwork, sound,
color, device or non-functional appearance of an article which … identifies the source of goods/services, and distinguishes that source from other sources
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Trademarks & Service Marks
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Trademarks – Legal/Policy Rationale
Consumer Protection Consumer Choice Quality Assurance Protection From Unfair CompetitionCost and Valuation of Good Will
©2011 Foley & Lardner LLP
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ClearanceRegistrationLicensing –merchandising, co-branding, product
placement, etc.
EnforcementLitigation
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Varying Scope of Protection
How much protection can a trademark provide?
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Distinctiveness of Marks
The scope of protection afforded a particular mark varies with its distinctiveness– In general, the more distinctive a mark, the greater
the scope of protection
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Spectrum of Distinctiveness
Strongest Protection
Weakest Protection
Arbitrary/Fanciful
Suggestive
Descriptive
Generic No Protection
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Registration – Bundle of Rights
Principal Register –presumptions
– Exclusive nationwide rights
– evidence of ownership– Right to use the ®– Ability to register with
Customs (CPB)
Non-registration
– Common law rights only (geographic limitations).
– Must prove ownership– Use of TM or SM only– Cannot register with
Customs
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Registration – Bundle of Rights (cont.)
Principal Register –presumptions (cont.)
– Ability to recover profits, damages and costs for infringement
– Ability to recover attorneys fees in infringement actions
– Incontestable status after five years of use
Non-registration (cont.)
– Actual damages must be proven, which can be challenging
– Attorney’s fees awarded only in extreme circumstances
– Incontestable status , which is helpful for marks that were originally descriptive, cannot be obtained.
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Registration – Bundle of Rights (cont.)
Principal Register –presumptions (cont.)– Notice to others conducting
trademark searches, helps to prevent the adoption of confusingly similar marks by third parties
– Right to sue for infringement in federal courts under Federal Question jurisdiction
Non-registration (cont.)
– Innocent use of the mark is possible, which may cause confusion
– No jurisdiction in federal courts
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International Rights
Geographical scope of desired use
Two useful tools – European Community Trademark
Application – one application covers all 27 member countries of the EU
– International Application under the Madrid Protocol – one application designating member countries for expanded protection
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Trademark Issues: Acquiring or selling hospitality properties
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Due Diligence = Evaluate the details of a potential investment or purchase to verify material facts relevant to that transaction
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Core Elements
Prioritize Objectives
Conduct an Investigation
Analyze/Report the Results
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Prioritize Objectives
Purchase brand only …– … to dissolve it as a competitor?– … to expand or re-shape the brand?
Domestically?Internationally?– Expand the brand outside the U.S.?– Bring the brand into the U.S.?
Purchase location only?Purchase brand and location?
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Prioritize Objectives (cont.)
What are the market share goals?– How does the brand fit into this?– Is the purchase for the purpose of acquiring a
platform that allows creation of sub-brands?Same or different branding for: – Fractional ownership?– Time share?
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Conduct an Investigation
PRIORITIZE ANALYSIS☐ Analyze State of Industry☐ Determine Scope Of Protection☐ Verify Exploitability☐ Review Warranties and Indemnifications☐ Review Other/Special Considerations☐ Establish Value
Does transaction make sense from a TM standpoint?
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Transaction Goals
Buyer’s Goals
Pay a littleGet a lotAvoid Risk
Seller’s Goals
Maximize sale priceAvoid liabilityReserve certain IP rights
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Transaction Goals
Reasonable Time,Place, SubjectMatter Restrictions
No WarrantyAll Related Product Lines
Non-Compete
i) Seller not aware of anyii) Seller disclosedknowledge of allpotentialinfringementsiii) Seller will cooperate indefending suitsrelating to seller’sproduct line
No WarrantyNo Indemnity
Non-infringementof all IP of othersIndemnification
Infringement
CommonCompromises
Seller’s GoalBuyer’s Goal
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Transaction Goals (Cont’d)
i) Seller will cooperate in litigationii) Seller will execute documents necessary to perfect titleiii) Seller hasdisclosed all relevantcircumstances
No WarrantyWarranty to
extent inrecordedassignment documents
All right, title,interest in IPw/rt product lineNo liens
encumbrancesTMs and
applicationsCopyrights
Ownership
CommonCompromises
Seller’s GoalBuyer’s Goal
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Other Factors
Rights to File Additional Applications– no rights reserved by seller
Foreign Rights/Portfolio– careful selection of foreign counsel
CopyrightsTrade SecretsLicenses in/out
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Analyze Results of Investigation
Present findings to decision makers and articulate the benefits and risks of going forward with the transaction.
Create succession plan to continue to meet objectives of the transaction.– Who will oversee the portfolio?– Who will monitor the marks?– How will assignments and licensing be
handled?
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IP Litigation in Connection with Hotel Franchises and
Timeshare Resellers
presented by
Leslie Smith
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IP Litigation
Traditional– Post-Termination Infringement by Franchisees
Lanham Act ViolationsState Unfair Competition Law
– Evidentiary ProofVideo/PhotosCustomer Complaints
– Coordinate Legal Action with Business DepartmentsStop Reservation System AccessStop Franchise Support Post-Termination Inspections to Ensure Compliance
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IP Litigation
Foreclosures– Absence of Notice of Default to Franchisor– If notified pre-suit or early in suit, work with lender to
obtain receiver with hotel management expertise and obtain receiver’s license agreement
– If notified during suit, terminate license agreement immediately to gain leverage with receiver or lender
– If notified post-judgment, terminate license agreement immediately to gain leverage with new owner
If lender-owned facility, demand removal of trademarksIf lender not operating hotel and protests that trademarks not being “used in commerce”, identify sales literature that may reference your marks
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IP Litigation
Timeshare Industry– Reseller Scams
Monitor Secretary of State filings and websitesFollow-up on Customer ComplaintsGuard Customer Lists
– Taking ActionUse an InvestigatorLanham Act Violations, infringement, counterfeiting, false designation, dilution, and Anti-Cybersquatting Consumer Protection ActLittle FTC Act Violations and State Unfair Competition LawsEnlist your state’s Attorney General
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Questions and Answers
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Presenter Contact Information
Rick Caron407.244.3223
Norm Rich202.945.6100 [email protected]
Nir Margalit415.984.9802 [email protected]
Leslie [email protected]
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Thank You
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