Recent News & Info

Keep up to date with legal news and info from the Parsus Law blog

The Ninth Circuit Examines Domain Name Re-Registration Under the ACPA

by David Kim, Esq.

It is increasingly common for business to be conducted entirely on the Internet, making a domain name a valuable asset that is critical to the success of a business.  The Anticybersquatting Consumer Protection Act (“ACPA”) protects trademark owners from bad faith registrations of domain names.  Designed to prevent the “cybersquatting” of the early days of the Internet, where people would rush to register domain names of well-known service and trademarks in an attempt to sell them to the registered mark owners for an oftentimes astronomical profit, the ACPA prohibits the registration of domain names that are “identical” or “confusingly-similar” to marks that are distinctive “at the time of registration of the domain name.”  The ACPA, which grants statutory damages to damaged mark owners, does not apply, however, to domain name registrations that occur before a mark becomes distinctive.  Recently, the Ninth Circuit considered the question of whether a “re-registration” of a domain name registered prior to the granting of a trademark constituted a violation of the ACPA.  In a decision that split with a Third Circuit ruling on the same issue, the Ninth Circuit determined that the ACPA applied only to the initial registration of the domain name, and that subsequent registrants of the domain would not violate the ACPA.  This ruling could have a significant impact on business owners who are trying to make branding determinations.

In GoPets Ltd. v. Hise, the Ninth Circuit assessed a case brought by GoPets Ltd. against a domain owner who had registered the domain “www.gopets.com” five years prior to the company’s use of the trademark “GoPets.”  The domain owner had made little use of the domain name in the intervening years, but indicated that he might be willing to sell it to the company.  The parties were unable to reach an agreement regarding the price of the domain name, and the company eventually filed a dispute with the World Intellectual Property Organization (“WIPO”).  The WIPO arbitrator decided in favor of the domain name owner, ruling that because the initial registration was not done in bad faith, the WIPO would not compel transfer of the domain name.  Subsequently, the domain name owner transferred ownership of the domain name to a corporation (resulting in the “re-registration” of the domain name to the corporation), and also registered a number of domain names that were similar to “www.gopets.com.”   GoPets Ltd. eventually brought suit against the domain name owner.  A lower court found in favor of GoPets Ltd. and awarded the company damages for the “re-registration” of the domain name, and the subsequent registration of the similar domain names.

In partially reversing the lower court’s decision, the Ninth Circuit examined traditional notions of property law and determined that the ACPA should apply only to the initial registration of a domain name.  Had the domain name owner not transferred ownership to the corporation, he could have held the rights to the domain indefinitely.  Following this reasoning, the Ninth Circuit concluded that a general rule of property is that a property owner may sell all the rights he or she holds in that property, and that the ACPA was not designed to prohibit subsequent “re-registration” of lawfully obtained domain names.  The Ninth Circuit did find, however, that the domain name owner had violated the ACPA in registering similar domain names after the WIPO ruling, and affirmed damages awards based on that violation.

Extending the Ninth Circuit’s holding, it seems that if the initial registration of a domain name is valid, any future transfer of that domain name should also be valid, no matter the circumstances of the transfer.  Use of the domain name would have to comply with trademark law (domain name owners couldn’t attempt to capitalize on the confusion of Internet users, for example), but the Ninth Circuit’s ruling does mean that service and trademark holders should be aware that they may never be able to prevent an existing domain name owner from capitalizing on the holder’s development of that particular service or trademark.  This being the case, business owners may find it worthwhile to consider existing domain names before undergoing substantial branding efforts.  Given the split between the Third and Ninth Circuits, the Supreme Court may make a definitive ruling on this issue, but until that time, domain name “re-registration” is not prohibited under the ACPA in the Ninth Circuit.

When is a Chicken a Chicken? How Attorneys Can Help You Avoid Fowl Situations in Drafting Contracts

by David Kim, Esq.

Why do you need an attorney to draft a contract?  It seems simple enough: you and some potential business partners have been throwing around ideas and want to formalize your arrangements.  You have explored various scenarios, and have a pretty good grasp of what you intend to accomplish and the goals of the parties involved.  If you have survived to adulthood and are able to negotiate a business relationship, chances are good that you have a decent grasp of the English language and are confident in your ability to express yourself on paper.  As a result, many business owners will draft their own contracts in an attempt to save money, or edit an existing contract that they have found online.  Unfortunately, these enterprising people often find that despite their best efforts, they end up drafting imperfect contracts that lead to unexpected results.

Attorneys spend a great deal of time learning about the nuances of contract interpretation, which helps them understand the importance of a well-drafted document.  Business relationships often break down and parties may resort to litigation to resolve their differences.  If the obligations of the parties are unclear or not contained in the contract, a court may have to rely on various rules of contract interpretation which were unfamiliar to the person drafting the contract.  Such interpretation may hinge on something that is a non-issue to a layperson.  One famous case taught to many first year law students, Frigaliment Importing Co. v. B.N.S. International Sales, exposes the difference between “legal” and “regular” English.  As difficult as it may seem to believe, the central question in Frigaliment that the court had to resolve was, “what is a chicken?”  Those readers who are familiar with the chicken industry can probably see the pitfalls related to that seemingly innocuous question.  But for those of us not in the know, the answer is not as clear-cut as it may seem.  In the Frigaliment case, the parties contracted for a bulk sale of chickens, to be shipped internationally.  Young chickens are used for broiling and frying, whereas older chickens that have seen better days are used for stewing due to their toughness (and are often referred to in industry parlance as “fowl”).  The contract did not specify the desired age of the chickens, and when B.N.S. sent the older birds, Frigaliment rejected them as being unsuitable for its purposes.  When the parties resorted to litigation to resolve their dispute, the court consulted the dictionary and considered a variety of conflicting expert testimonies before determining that Frigaliment had failed to establish that the word “chicken” in the contract meant a broiler or fryer.  Frigaliment was forced to accept and pay for the shipment of older birds, since B.N.S. had satisfied all of the other requirements of the contract.

In addition to imbuing a craving for chicken in a host of first year law students, the Frigaliment case illustrates that in the often strange world of contract law, a word doesn’t always mean what you think it means.   Modern courts are adept at applying “plain English” interpretations to contracts and figuring out what the parties intended, but commercial relationships are often complex enough that this task can be impossible.  In a world where a chicken isn’t always a chicken, attorneys can’t always guarantee a perfect contract, but they will be able to explain potential danger areas, and help you understand what aspects of the contract will need particular attention.  A well-drafted contract can help protect your business from liability, and can prevent financial harm from unforeseen and unintended consequences.  You have a great idea, a solid business plan, and the drive to make your business succeed.  By consulting an attorney to ensure that your contract is suitable for your purposes, you can eliminate potential challenges to your continuing success.

Read Disclaimer

L.A. First Deputy Mayor Austin Beutner’s Development Reform Assessed

by Katy Young, Esq.

At the invitation of Los Angeles City Building and Safety General Manager Bud Ovrom, select representatives of the city’s real estate development industry gathered at the L.A. Chamber of Commerce headquarters on February 7th to offer input into what was described as a new, second term effort at “comprehensive revision” of the city’s entire approach to processing development projects. Mr. Ovrom noted that the mayor “was not satisfied (to put it mildly) with the pace of development reform during his first term.” He tasked First Deputy Mayor Austin Beutner with creating a development review process that is “efficient, transparent, and consistent.”

The well attended meeting at the Chamber—the first of three such sessions aimed at gathering developer feedback—was facilitated by KH Consulting Group, a private firm retained by the city for approximately $590,000 to spearhead this new reform initiative process and eventually generate a “Strategic Plan with Action Plans that outline what should be done, why it should be done, who should do it, and when it should happen.” KH Consulting also scheduled four community outreach meetings to gather broader input, as well as additional meetings with city staff and elected officials.

Over the course of more than two hours, this facilitated reform discussion at the L.A. Chamber revealed a disconnect between developers in attendance and KH Consulting’s President Gayla Kraetsch Hartsough regarding what was necessary to facilitate a more efficient, transparent, and consistent city development approval process.

The real estate development representatives— many of whom noted their involvement in past Los Angeles City development reform initiatives dating back nearly 30 years—repeatedly cited the need for updated and enforceable community plans, as well as a streamlined application process to eliminate current redundancies across departments. Many attendees identified a key underlying shortcoming of the city planning process to be outdated planning and zoning documents that developers and their representatives now work around rather than with.

Many attendees argued that real transparency and consistency would flow from updated and enforced planning documents. Specifically, attendees wanted both revised community plans that incorporate zoning reflective of current local land use expectations and comprehensive environmental review—including EIRs and associated impact studies—that analyzes the environmental impacts of the land use changes mandated in the updated community plans. If stringently enforced, these updated community plans would potentially remove most future project applications from the city’s discretionary review process, making them “by-right” (i.e., the city would merely confirm a proposed project’s compliance with a community plan’s applicable land use and zoning provisions and issue appropriate permits). This, in turn, would free city staff to focus on those large projects that will continue to require discretionary approvals. Given recent reductions in planning staff levels, the removal of a significant number of projects from the discretionary approval process is key, many in attendance claimed, to making the development review process not only predictable, but also more efficient and consensual.

As one attendee lamented, at least five community plan updates were all-but-complete and ready for Planning Commission review as of last year. Nevertheless, these updated community plans, paid for with legally dedicated city funding, remain unapproved.

In reaction to this input, Ms. Hartsough countered that KH Consulting was “asked [by the Mayor’s Office] to do the process improvement from the point of: ‘a decision’s been made to build, how do we improve the process so that buildings that meet the plan can get through the process?’ So, we’re not re-engineering how [the] planning [department] does community planning.” It appears from her comments that community plans are not on Ms. Hartsough’s reform to-do list this year.

Rather, Ms. Hartsough asked for “short-term technological solutions before we can come up with the large solution.” According to Ms. Hartsough, the mayor is focused on a full technological solution involving “a city-wide [technology] platform [that] could be $15 million and could take two to three years to implement.” The new technology, she asserted, would provide a single web-based access point for developers to obtain information on the status of their project application. It would not, however, revise any of the underlying planning documents upon which land use decisions in the city of Los Angeles are based. Ms. Hartsough acknowledged that the funding for such a technology platform has not been approved by the City Council, and that approval of funds could prove difficult given the city’s current fiscal woes.

Review of an audio tape of the meeting reveals much frustration in the room, as developers pushed back on the effectiveness of a quick technology fix, noting that the city’s development reform goal of creating an “efficient, transparent, and consistent” planning process requires, at a minimum, up-to-date community plans: “[I]f you knew really what the baseline was, it’d be much easier to figure out what the latitude is in either direction. Right now, there’s no baseline.” Another veteran developer agreed, asserting that community plan updates should be the first priority: “[T]hat’s number one. We need to figure out how we’re going to get there.” A third participant, a former chairman of the Chamber of Commerce, in contrast, expressed fear that a city community plan update process could be used to delay processing of interim development applications.

As the facilitated session neared its conclusion, a number of participants expressed doubt as to the feasibility of implementing any strategic plan halfway through the mayor’s second term, citing power dynamics at City Hall. Unions, general managers, land use expediters, lobbyists, and City Council members, attendees opined, all benefit from the current dysfunction and therefore continue to serve as barriers to long-term, meaningful development reform in Los Angeles. Specifically cited procedural barriers to development reform implementation also include existing term limits for Council and departmental staff turnover and reductions.

City employee unions, who have thus far successfully resisted major departmental streamlining, and department heads wary of ceding turf received some of the blame. Referred to by one developer as the “elephant in the room,” unions were credited with playing at least some role in the abandonment of the mayor’s most-recent development streamlining proposal. Known as “12 to 2,” the streamlining program sought to reduce the number of sign-offs required on a particular project from at least 12 departments to just two. Such a program would likely have resulted in city employee layoffs. Those present at the February 7 meeting agreed that any successful future development reform effort will require union sign-off.

Land use attorneys, expediters, and lobbyists constituted another self-acknowledged elephant in the room. According to one reform meeting attendee, “First of all, let me disclose, I’m a CEQA lawyer, so I’m shooting myself in my own pocket book [by offering reform recommendations].” Nevertheless, he then proceeded to offer several potential reform measures the city could adopt that might accelerate and rationalize the development review process for certain classes of projects.

Many present at the Chamber meeting cynically suggested that the City Council actually benefits from the current discretionary land use development process, dysfunction and all. According to one developer, “I think it’s the Council that’s slowing the [community] plans down because they like chaos, because they come in and take a piece out of somebody’s [project] and put it on the table and…get re-elected. They like the chaos.” Another agreed: “…[L]and use has been the most powerful tool the Council offices have to take…the next election. If, for example, the community plans are streamlined, if they implement the zoning code, you’re taking a lot of power away from the elected officials….”

Attendees then expressed frustration with a lack of initial buy-in for the reform initiative now before them. They were concerned that the mayor’s latest effort did not have up-front City Council support. According to one development process veteran, “This [development reform] plan is driven by the Mayor’s Office, as it always has been…. And I think we need to learn a little bit from the last three [development reform] plans… where they were driven by the mayor, really none of them have gone anywhere. I don’t think you can minimize or ignore the fact that we have fifteen very powerful council members and they’re equally as powerful as the mayor in their own area…. I don’t think [the council members] should be sold the plan once you guys put the plan together. They need to be involved from day one.”

Other impediments to lasting development reform, according to attendees, are city term limits and staff turnover. A sustained, comprehensive reform of the city’s development process would, it was asserted, require a significant, prolonged period of financial and political support from City Hall. One attendee commented, “[Y]ou’ve got to realize the inmates run the asylum. Two more years for the mayor; half the council will be gone a little bit after that. No matter what you implement, no matter how great these ideas, we’re going to have to figure out a way to make sure that they’re sustainable.” Moreover, several suggested that if rumors of a possible mayoral run by development reform proponent and First Deputy Mayor Austin Beutner prove accurate, this latest reform attempt may be dead before arrival to the City Council.

Given the candid development reform discussion on February 7th, it remains unclear whether Mayor Villaraigosa’s latest attempt at adopting comprehensive development process reform will result in any meaningful change in City Hall. As far as most attendees at the February 7 meeting are concerned, it seems unlikely, what with all the elephants crowding the room.

Read Disclaimer

Key Issues in Production Legal

by James Kidston, Esq.

Ever written a script for television or film?  Or come up with a great concept for a reality show?  If you have, congratulations!  You fit in nicely here in Los Angeles.  If you’re serious about actually putting your idea on film, then you’ll soon be confronted with a wide array of challenges and frustrations familiar to many an aspiring producer.  Chances are you’re focused on the artistic ones, but neglecting the legal side of things can sabotage your fledgling production.

Location Agreements

If you own or control all the sites where you’ll be filming, then great – you’re all set.  We should all be so lucky!  In the likely event that you don’t, however, you’ll need to lay some groundwork before you go in.  If you’re filming in public, you may need a permit or some other form of official authorization – consult the local government or film office where you plan to shoot (permits are required in most of Los Angeles).  To film on private property, you’ll need an agreement with the owner or person in charge of the property.  Usually that person will be the owner of the property or the owner’s representative, but not always – if your shoot will take place entirely on property occupied by a tenant of the owner, the tenant’s agreement may be all you need.

Location agreements don’t need to be complicated; at minimum, they need to give you sufficient access to the property to get the necessary shots, along with the rights to actually use the recordings you’ve made in your production.  It may seem that the former implies the latter, but that is not the case – make sure your agreement clearly grants you both of the above rights, and the more broadly the better.  A good rule of thumb is to seek the right to use your recordings in all media now known or hereafter devised, throughout the world, in perpetuity.  If the location features any trademarks, logos or other intellectual property of the owner (or other parties), the agreement should address your rights to include recordings of them in your production.

Image and Likeness Rights

Generally, it’s good policy to secure an agreement from any recognizable people appearing on screen in your production, granting you the right to use their image and likeness.  There are situations where such agreements aren’t required, such as where the First Amendment is implicated (i.e., for newsworthy material, etc.).  Even in such cases, it’s beneficial to get an agreement anyway if you can, so as to head off any possible problems at the pass.  If you fail to obtain the rights to the likenesses you include in your film, those people can sue to prevent you from using their image, which can in turn prevent you from distributing your finished work, essentially holding you ransom.  A scary thought, no?

The appearance agreement you need may take the form of a detailed talent agreement for a main character, with compensation provisions, back-end participation and any number of other bells and whistles, or it may be as simple as a one-page consent form for unpaid extras or passers-by in the background.  It all depends on your particular situation.  However you do it, the agreement must at minimum give you permission to use the person’s image in your film, and should make clear that you may edit, broadcast, and exploit the film however you want, wherever you want, forever.  Consider including a waiver of a participant’s right to sue you for an injunction – this will make it difficult for them to prevent you from distributing your production in the event they don’t like their portrayal.  Be aware that often, talent with leverage may seek to limit your rights to use their likeness (for example, to just the right to depict them in your film, but not in associated promotions).

A thorough, individually signed release is always preferable, but not always possible; if you know a shot will contain large numbers of recognizable people – for example, if you’re filming in a public square – you may elect to post area releases around the scene, notifying people that if they enter they are consenting to being filmed for your production.  If minors appear in your production, note they lack the legal capacity to consent to an area release, and you’ll need to have a parent or legal guardian sign off on their appearance agreement.

Music Licensing

It’s likely that your film will feature a variety of clips or other musical recordings.  If you personally created all the music in your production, then not only are you one very talented individual, you also don’t have to worry about licensing the music.  If you use any music created by others, then yes, you guessed it – you need permission for each and every clip.  Usually you’ll get a synchronization and master license – often called  “synch” license – which gives you the right to synchronize a particular master recording to the images on screen.  The rights to well-known songs are often very expensive; assuming you’re able to afford your chosen track, you’ll need to secure a license from the rights holders.  Usually you’ll be dealing with a music publishing company, but sometimes the artist itself will administer the song.

As always, you should seek the broadest possible rights in the music you’re licensing.  For example, you’ll want the right to use it in your film in any manner in any media throughout the world in perpetuity, as well as to use as much of the song as you want, and to edit it in any way you see fit.  The breadth of the license you get will be open to negotiation, so do the best you can with the leverage you possess.  If, on the other hand, you’re commissioning music for your production, make sure you have an agreement with the composer stating that the resulting piece is a work-for-hire; that way, you will be the sole owner of the copyright in the completed work, and you won’t need a license to use it in your film.  Regardless of where you find that perfect song, the associated legal issues are often complicated, and it’s essential to do your homework and secure the necessary rights.

An ounce of prevention…

The above are just a few of the most common production legal issues, and the preceding discussions are by no means exhaustive.  Complications will invariably arise, and if you’re not on top of the situation from the start, delays and other problems can result.  You would be well served to consult with a lawyer before you begin, lest you allow legal issues to come between you and the realization of your creative vision.

Read Disclaimer

Improperly Drafted Trademark Licenses May Result In Abandonment

by David Kim, Esq.

A strong, recognizable trademark is a valuable asset to a business owner.  A focus on quality products and services will quickly establish your brand and create a favorable impression on consumers.  Eventually, your trademark may become so valuable that other businesses may want to license it.  Licensing your mark can be lucrative for your company, but if the licensing agreement is not drafted carefully, you could be forced to abandon the trademark.  Trademark owners have a duty to control the quality of their trademarks, even when used by licensees.  When a trademark owner fails to exercise adequate quality control over a third party’s use of its trademark, it is deemed to have engaged in “naked licensing.”  Courts find this practice deceptive to consumers and will force the trademark owner to forfeit the right to exclusive use of the trademark.

A recent decision from the 9th Circuit, FreecycleSunnyvale v. Freecycle Network , provides some guidance on how trademark owners may avoid “naked licensing” situations.  In this case, the parties had agreed to a trademark licensing arrangement, but a dispute eventually arose over the continued use of the trademark in question.  The trademark licensee refused to surrender use of the trademark, arguing that the owner had engaged in “naked licensing.”  In reaching its decision, the 9th Circuit relied on a three part test: 1) whether the license allowed the trademark owner to inspect and supervise the licensee’s operations; 2) whether the trademark owner actually supervised or inspected the quality of the goods or services associated with its mark; and 3) whether the parties involved had such a close relationship that the trademark owner could justifiably rely on the quality control measures of the licensees.  The 9th Circuit ultimately concluded that the licensing agreement failed to provide the trademark owner with the needed control and quality assurances that would prevent “naked licensing.”  Consequently, the trademark owner lost the right to exclusive use of the trademark.

Losing your trademark can be the harsh reality of an improperly drafted licensing agreement.  Proper licensing agreements should establish the owner’s right to supervise and otherwise control use of the trademark, and also provide some system for terminating the license in the event that the licensee’s goods or services fall below the owner’s standards.  Additionally, owners should be diligent in actually taking the time to inspect goods or services that are being offered to consumers under the trademark.  In the event that you have a close business relationship with a licensee whose quality control measures you know and trust, you don’t necessarily have to expend a lot of resources on monitoring their goods and services.  Even in a relationship like that, however, trademark owners should continue to ensure that the goods and services live up to the standards of the brand.  Drawing from the lesson learned inFreecycleSunnyvale, trademark owners should review their trademark licensing agreements to make sure they haven’t engaged in “naked licensing.

Read Disclaimer