Did Beyoncé Get Special Treatment from the PTO?

Jan Wolfe

Corporate Counsel

04-25-2012

You may already know about singer Beyoncé's well-publicized bid to trademark "Blue Ivy Carter," the name of her and rapper Jay-Z's newborn daughter. You may also recall that Joseph Mbeh, a fashion designer with no relation to the famous infant, tried to trademark her name two weeks before her superstar parents did (he's since apologized). Now here's an aspect of the Blue Ivy saga you probably didn't hear about: The Patent and Trademark Office gave Blue Ivy–related trademark applications the sort of heightened attention that might make trademark lawyers and their clients turn green with envy.

Mbeh, Beyoncé's holding company, and a company called Benton Clothier LLC applied to trademark variations of "Blue Ivy Carter" in the weeks after the infant's birth, according to a search of the PTO trademark database. The PTO took two weeks to reject Mbeh's bid. It also took two weeks to rule on Beyoncé's application. That application, in case you're wondering, was partially rejected on the grounds that someone had already trademarked the term "Blue Ivy" for certain commercial purposes (Beyoncé's lawyers at Reed Smith can contest that initial ruling).

The PTO rarely acts that fast. It usually takes three or four months to hand down initiation determination, known as "office actions," says Geri Haight, a trademark lawyer at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo who first noted the PTO's heightened attention to Blue Ivy–related filing on her firm's blog. "It's somewhat alarming, because I have clients waiting patiently in line for several months," she says.

A source at the PTO (who requested anonymity) explained that trademark applications are usually heard in the order they are received. However, if there's a spike in filings related to a current event, those filing are sometimes heard out of turn to ensure consistency and avoid duplicative work.

That policy doesn't bother many trademark lawyers we spoke to. "I also have clients that have to wait three or four or five months too, but I don't have a problem with it," says David Sunshine of Cozen O'Connor. "I think it's encouraging that the PTO is tapped into what's going into the world."

Michael Allan, a trademark lawyer at Steptoe & Johnson, sees another good reason for the PTO's policy: If the agency swiftly rejects early bids to cash in on the trending phrase, later applicants with the same idea will be deterred from applying.

Haight agrees that the PTO's policy makes sense as a general matter, but says she doesn't see why Mbeh and Beyoncé's applications should have been prioritized over her clients'. She points out that, as of late March, the PTO had yet to rule on the flood of applications in February to trademark "linsanity" (a mental state characterized by an obsession with pro basketball phenom Jeremy Lin). In an e-mail, Haight wrote: "Is Beyoncé more important or famous than Jeremy Lin? I don't think the Trademark Office would want to answer that question!"

American brands are more global in their reach than ever. And the U.S. government is clamping down on foreign bribery like never before. Those two trends are having the combined effect of making American companies pay closer attention to their trademark law practices abroad, experts say.

"As brands are becoming more global, international trademarks are become more valuable," says Jonathan New, a partner at Baker & Hostetler. "That's made the risk of corruption and bribery more clear."

New specializes in helping clients comply with the Foreign Corrupt Practices Act, the once-dormant antibribery statute under which the U.S. Department of Justice and the Securities and Exchange Commission brought a combined 48 enforcement actions in 2011, up from five in 2004, according to a report by Gibson, Dunn & Crutcher.

New calls the process of registering trademarks abroad a "potential minefield" for companies. Despite an international crackdown on bribery, many government agencies in developing countries are still plagued with corruption, and New says trademark agencies are no exception.

The temptation to grease the wheels may be even higher when trying to enlist local law enforcement officials for help rooting out counterfeit goods, says New.

So far there are no reported FCPA cases involving illegal payments to foreign trademark offices, but there have been reports of corrupt patent examiners in China, India, and Vietnam. In 2008 AGA Medical Corp. of Minneapolis admitted to making illegal payment to Chinese patent office employees to expedite issuance of patents. The medical device manufacturer paid a $2 million criminal fine as part of a deferred prosecution agreement. "We've already seen patents get increased attention, and I think it's inevitable that trademarks will as well," says Robert "Red" Horowitz, also a partner at Baker & Hostetler.

The trademark registration programs Horowitz implements for his clients often involve 20–50 foreign agents, he says. An illegal payment by one of those agents will be imputed to the company, even if the agents acted without the direct authorization of the company's leaders. The means that compliance departments need to train foreign agents about antibribery laws, he says. Internal regulators must also investigate any results that seem too good to be true, like a trademark being registered unusually quickly.

"You really have to be on the look-out," says Horowitz. "To be forewarned is to be forearmed."

Journalists tasked with follow­ing patent news could easily have missed an interesting development on February 15. That day, eight leading tech companies quietly disclosed that they've formed a new lobbying group dedicated to keeping so-called patent trolls—entities that use patents to litigate, rather than innovate—out of the International Trade Commission (ITC), which has become a red-hot forum for patent disputes because it can ban infringing products from entering the United States.

Thankfully, Bernard Cassidy, the general counsel of Tessera, Inc. (a Silicon Valley company that develops semiconductor technology), was around to spread the news in a blog post. His piece set off a war of words with a top lawyer at Hewlett-Packard Company and led to a wider online debate about patent rights at the ITC.

According to a recent congressional filing pursuant to the Lobbying Disclosure Act, eight companies—HP; Apple Inc.; Google Inc.; Intel Corporation; Oracle Corporation; Cisco Systems, Inc.; Broadcom Corporation; and Avaya, Inc.—recently formed an organization called the ITC Working Group.

The ITCWG didn't state its goals in the filing, but an anonymous source told Politico that it seeks to "address the growing problem of nonpracticing entities (NPEs) litigating patent cases at the [ITC]." HP associate general counsel Paul Roeder has penned a series of articles that, while not written on behalf of the Working Group, seems to confirm that its members intend to ramp up the fight against certain types of NPEs.

NPEs brought 22 percent of new ITC complaints in 2011, up from 7 percent in 2010. NPE cases named 235 respondents (ITC–speak for defendants), up from 23 in 2010, according to data compiled by RPX Corporation, a patent risk management company.

The Working Group didn't initially generate much discussion, until Tessera GC Cassidy wrote a guest column on the blog IPWatchdog criticizing the coalition of tech-sector heavyweights. Cassidy calls it another example of big tech companies lobbying lawmakers "to further tilt the legal playing field in favor of large, already-dominating business," and against "the entire class of inventors who have neither the capital nor the business model to commercialize their own inventions."

"NPEs . . . have always been central to U.S. economic growth," Cassidy wrote. "Were Thomas Edison alive today, would it be in the national interest to bar him from seeking justice at the ITC?"

Tessera is itself an NPE, in the sense that it generates revenue mostly from patent licensing, not making gadgets. Its engineers invented cutting-edge microchip packaging technology in the 1990s; ever since, it has been licensing patents to manufacturers like Intel.

Roeder wrote a subsequent response on IPWatchdog accusing Cassidy of making "straw man" arguments. He said that the ITCWG has no problem with small-time inventors, universities, and licensing companies like Tessera. The problem is what he calls "patent assertion entities." PAEs hold up innovation, he argues, by buying patents and asserting them against entire industries. They've invaded the ITC, he argues, because federal courts are cracking down on their favorite tactics.

The debate raged on. Cassidy fired off a rebuttal to Roeder's response. Roeder, meanwhile, penned a related article for Law360, "How to Fix Our Broken Tech Patent System."

Corporate Counsel got in touch with Cassidy after the dust had settled. He told us that Roeder's clarifications don't ease his concerns. "Attacking patents based on who owns them is contrary to fundamental elements of our patent system," he says.

Cassidy acknowledges that some NPEs bring dubious cases in hopes of striking an easy settlement. But nuisance lawsuits are endemic to all aspects of the American legal system, he says, and there are already effective tools in place to help judges root them out: "HP is not going to go under because of these lawsuits. They know how to deal with them. And they don't need the rules changed to make things easier for them."

Roeder declined to be interviewed, but in a brief e-mail exchange he predicted: "The ITC is just beginning to grapple with the influx of patent assertion entity cases, and will come to the correct conclusions."

See also: "Jay-Z and Beyonce's New IP Asset: Their Daughter, Blue Ivy," CorpCounsel, February 2012.