Intellectual property protection--From Groucho Marx to the Internet

Protecting identity of a firm's products is crucial in today's fast-moving business climate

By Phil Zinkewicz

“Your ability to defend yourself in patent, trademark or copyright infringement lawsuits may be the key to your company’s survival.”

—Bob Fletcher
Louisville, Kentucky

“We have raised brand awareness to new levels., for example, has been able to achieve ‘mindshare’ on a global scale in a fraction of the time it took Coca-Cola to build its brand.”

—Ken Taylor
Glendale, California

While preparing to film a movie titled A Night In Casablanca, the Marx Brothers received a letter from Warner Bros. threatening legal action if they did not change the film’s title. The studio claimed that the film’s title was too similar to their own film, Casablanca, released almost five years earlier, with Humphrey Bogart and Ingrid Bergman. Groucho, surmising that this letter was probably written by some low-level wannabe in the studio’s legal department, decided to answer it with his inimitable wit. A portion of that letter follows.

Dear Warner Brothers,
Apparently, there is more than one way of conquering a city and holding it as your own. For example, up to the time that we contemplated making this picture, I had no idea that the city of Casablanca belonged exclusively to Warner Brothers. However, it was only a few days after our announcement appeared that we received your long, ominous legal document warning us not to use the name Casablanca.

It seems that in 1471, Ferdinand Balboa Warner, your great-great grandfather, while looking for a shortcut to the city of Burbank, had stumbled onto the shores of Africa and, raising his alpenstock (which he later turned in for a hundred shares of common), named it Casablanca.

I don’t understand your attitude. Even if you plan on re-releasing your picture, I am sure that the average movie fan could learn in time to distinguish between Ingrid Bergman and Harpo. I don’t know whether I could, but I certainly would like to try.

You claim that you own Casablanca and that no one else can use that name without permission. What about “Warner Brothers”? Do you own that too? You probably have the right to use the name Warner, but what about the name Brothers? Professionally, we were brothers long before you were. We were touring the sticks as the Marx Brothers when Vitaphone was still a gleam in the inventor’s eye, and even before there had been other brothers—the Smith Brothers, the Brothers Karamazov, Dan Brothers (an outfielder with Detroit), and “Brother, Can You Spare a Dime?” (This was originally “Brothers, Can You Spare a Dime?” but this was spreading a dime pretty thin, so they threw out one brother, gave all the money to the other one and whittled it down to “Brother, Can You Spare a Dime?”)

There’s much more to the letter, but basically this was Groucho’s way of saying, “Take a Walk.” Warner Bros. responded with another letter, asking that Groucho at least outline the premise of the film. Groucho wrote back with an utterly ridiculous storyline and, sure enough, received another stern letter requesting clarification. He obliged and went on to describe a plot even more preposterous than the first, claiming that he, Groucho, would be playing “Bordello, the sweetheart of Humphrey Bogart.” No doubt exasperated, Warner Bros. dropped the whole thing. A Night in Casablanca was released in 1946.

That exchange of missives between Groucho and Warner Bros. may seem whimsical for its time, but today the subject of ownership of intellectual property is a very serious one. With the Internet and the millions of Web sites that it contains and the thousands more being designed, intellectual property has become a valuable asset; and some insurance companies, seeing this as a burgeoning business, are offering coverages to protect that asset.

There have been court cases involving intellectual property—trademark infringement, patents or copyrights, etc.—where a defendant’s general liability insurer was forced to assume the insured’s legal costs, but only if the words “advertising injury” were specifically used in the description of coverage. In most cases, however, general liability policies are worded in such a way as to exclude intellectual property coverages and, in those cases, specific insurance products related to intellectual property perhaps should be obtained.

Intellectual Property Insurance Services Corp. (IPISC), based in Louisville, Kentucky, describes itself as a “complete intellectual property service firm” and has more than 10 years’ experience underwriting intellectual property insurance. Bob Fletcher of IPISC, says that there are several firms offering some form of intellectual property insurance, including AIG and Chubb. “One company may offer coverage only for litigation over Web sites,” he says. “Another may cover all trademark, patent and copyright exposures. We concentrate on trademark, patent and copyright, but not Web site risks.”

Continues Fletcher: “Your ability to defend yourself in patent, trademark or copyright infringement lawsuits may be the key to your company’s survival. Every lawsuit charging infringement must be taken very seriously and defended to the utmost, no matter how frivolous the suit may be.”

IPISC offers two IP insurance products, covering everything from single properties to an insured’s entire intangible asset portfolio. One is Infringement Defense Cost Reimbursement Insurance, intended to offset the high costs of defending against an infringement claim. Defense cost reimbursement reimburses an insured’s legal costs when the insured asserts patent/trademark/copyright invalidity as a defense to a charge of infringement. The policy will reimburse the cost of reexamination proceedings initiated by the insured as a defense strategy arising out of a lawsuit for patent/trademark/copyright infringement.

The second policy is called Infringement Enforcement (Abatement) Insurance, and it is intended to offset litigation expense when an insured elects to enforce his or her patents, trademarks or copyrights against an alleged wrongdoer. This policy pays an insured’s legal costs when his or her intellectual property is challenged by a countersuit for invalidity in an infringement suit. The policy can be written to cover U.S. and foreign patents, copyrights and trademarks as well as patent or trademark applications including provisional patent applications. Similar products are offered through the California-based insurance brokerage firm of Cooper & McCloskey, Inc., as well as other insurance brokers.

But insurance against IP infringement allegations is only one way to go. Many firms choose to protect themselves against trademark, patent and copyright exposures by hiring their own investigators, either in planning to establish a trademark, patent or copyright or to do an investigation when a dispute occurs. One investigative firm is the Glendale, California-based Marksmen, self-described as a “leader in intellectual property investigations, acquisitions and Internet monitoring.”

“We specialize in IP investigations and recovery and help companies clear or protect their brands by identifying conflicts, infringement, priority, channels of trade and/or abandonment,” says Ken Taylor, co-founder, president and CEO of Marksmen. The company was founded in a one-bedroom apartment in Pasadena, by Taylor, Mark Doerr and Jason Tirado. It quickly attracted a team of IP experts and became a sort of “Rockford Files” detective agency for the Fortune 500 companies or the outside counsel of firms involved in infringement disputes.

“Protection of one’s intellectual property is essential in today’s environment, where communication has become so rapid,” says Taylor. “We have raised brand awareness to new levels., for example, has been able to achieve ‘mindshare’ on a global scale in a fraction of the time and expense that it took Coca-Cola to build its brand.”

Taylor says that branding issues, especially on the Internet, must be dealt with quickly. “Mega-tags, hidden text, banner ads, deep-linking, framing, hidden browser doors, whacking Web sites are all viable daily concerns. Identity spoofing, when someone else assumes everything that represents you or your company on the Internet, is already happening.”

Taylor points to one of Marksmen’s cases in which a reputable baby diaper manufacturer’s brand was being used by someone who was actually selling diapers to adults who had a diaper fetish.

“Prescription drug brands have become a problem,” says Taylor. “The Internet has ads every day offering people prescription drugs with recognizable brand names from Canada cheaper than they can be bought in the U.S. How many of these offers are reputable? How many are not?”

Taylor says that when a company decides to hire an investigator for problems related to trademarks, patents and/or copyrights, it should choose a firm that is well versed on the latest developments regarding the Internet. “They should be aware of Internet tracking, technology such as geographical trace route, reverse DNS look-up and have access to log analysis tools for Web servers and firewalls,” he says. “They should be up on ICANN decisions, have a working relationship with the many domain name registrars and stay on top of the new gTLD policies that will or will not protect trademark owners. These are just some of the things that a trained IP investigator should be aware of.”

In addition to investigations, Marksmen also negotiates the purchase or sale of trademarks and domain names on behalf of companies. “We’re also versed in the latest requirements of each registrar, allowing us to expedite registrations or transfers, thus keeping costs down,” says Taylor.

But whether a company decides to use insurance or private investigators or a combination of both to protect intellectual property, it is certain that this is a concern that is becoming increasingly important in today’s hi-tech environment. *