IP Advisor - June 2011

September 2011 will see the launch of a new top level domain (“TLD”) specifically designed for web addresses devoted to adult content: .XXX. The introduction of this new adult-oriented TLD presents perhaps as many opportunities for cybersquatters as it does for companies in the adult entertainment industry legitimately looking to identify themselves to prospective customers. Consequently, trademark owners who do not want their brands associated with adult content will have to be pro-active to ensure their key marks are protected.

The Internet Corporation for Assigned Names and Numbers (“ICANN”) announced in April an agreement with ICM Registry enabling the release of the new .XXX TLD intended for use by the adult entertainment industry. Given the controversial nature of this TLD, there were prolonged negotiations between ICANN and ICM Registry, in which ICANN insisted upon stricter compliance and reporting requirements than have been imposed on operators of other TLDs. Developments in these negotiations have been watched closely by the trademark community in light of the special concerns brand owners have about the possibility of their brands being associated with adult entertainment and pornography – concerns that were heightened by the paucity of detailed information on Rights Protection Mechanisms (“RPM”) released by ICM Registry.

Finally, in May 2011, IPRota issued a much-anticipated white paper outlining the procedures that will be made available to trademark owners to protect their marks prior to the launch of the TLD. London-based IPRota is “a specialized provider of rights protection and related services, [and] has been contracted by ICM Registry to assist with the design detail and implementation of the .XXX rights protection mechanisms at launch.” IPRota describes itself as being “passionate about the protection and defence of intellectual property on the Internet.” The company was recently formed for the express purpose of designing and implementing RPM programs for new TLDs. .XXX represents its first such project.

The proposed RPM scheme for .XXX provides brand owners with two avenues for protecting their marks prior to launch: pre-registration and a “Sunrise” program. The options are not mutually exclusive; interested parties can and should take advantage of both.

Pre-Registration

The pre-registration process, which is already open to trademark owners, allows trademark owners to signal their interest in defensive registration of a trademark in the .XXX space. Pre-registration essentially enables brand owners to put a flag in the ground with respect to their key mark(s), and places the brand owners on ICM Registry’s mailing list to receive notifications such as when the Sunrise periods will begin, fee information, and forms, but provides no other substantive advantages during the Sunrise, Landrush and general registration periods to follow. There is no fee associated with the pre-registration process, and the form is currently available here.

Sunrise

The second and more important phase of the process is the “Sunrise B” period, scheduled to begin sometime in September 2011. (“Sunrise A” is a separate program for trademark owners inside the adult entertainment industry – more on this below.) ICM Registry and IPRota have not yet announced the exact date on which Sunrise B will begin – yet another reason to take advantage of the pre-registration process. Once the Sunrise B period does open, it will last for “up to” 30 days.

During Sunrise B, owners of registered trademarks can reserve their mark(s) to ensure that those mark(s) cannot be registered as .XXX domains. To qualify, the mark must be registered at the national level in a country where the applicant conducts bona fide business at a substantial level, and the registration must have been issued before the date of the Sunrise application. The term to be reserved must be identical to the word element(s) of the registered mark. ICM Registry is not accepting Sunrise B applications itself; these will have to be submitted through the various independent domain name registrars.

The Sunrise B application will have a one-time fee associated with it, which will vary from registrar to registrar. Original estimates of $50 to $75 have now risen to $200 to $300 or more. The total includes a payment to the individual registrar (which will vary) as well as ICM Registry’s underlying fee (which has not been disclosed).

If there are no competing applications, a term reserved through Sunrise B will be removed from the pool of available .XXX domains. Internet users who attempt to access a reserved URL will encounter a placeholder web page indicating that the domain name is reserved and unavailable. (IPRota explains that allowing these domain names to resolve to a placeholder page “is designed to prevent ‘synthetic DNS’ or non-DNS resolution systems from hijacking queries to these domain names.”) Who-is information for the domain will reflect the address of the registrar and not the Sunrise B applicant.

If there are more than one Sunrise B applications for the same term (for example, if Delta Airlines and Delta Faucets both want to block delta.xxx), the term will be reserved in exactly the same way as if there were only a single applicant.

But what if your trademark is identical to an adult entertainment trademark or domain name that was the subject of a Sunrise A application? The Sunrise A program will run concurrently with Sunrise B, and will permit companies inside the adult entertainment industry to place an early claim on terms for which they already hold trademark or domain name registrations. In cases where a Sunrise B claim conflicts with a Sunrise A claim, ICM Registry will take no sides. The Sunrise A applicant will be notified of the Sunrise B claim, and will be given the opportunity to withdraw their application. The Sunrise B applicant also will be notified of the competing claim. If the Sunrise A applicant does not withdraw its application, the domain will be registered despite the Sunrise B objection. The Sunrise B applicant’s only recourse will be remedies already available under civil law and/or a dispute resolution procedure (similar to UDRP, but the details of which have yet to be announced). In any dispute, the Sunrise A registrant will not be able to claim lack of notice of the competing rights.

Following the end of the Sunrise terms, there will be a two-week quiet period during which no applications will be accepted, followed by a 14-day “landrush” period for adult-entertainment companies to claim unreserved domains. Thereafter, open registration will commence on a first-come, first-served basis, but registration will only be open to companies in the adult entertainment industry that must commit to use the domain to deliver adult content.

What Next?

In addition to the exact start date and duration of the Sunrise periods, and the exact cost of a Sunrise B application, the trademark community still has many unanswered questions regarding the introduction and implementation of this TLD.

The pre-registration and Sunrise programs are limited, of course, to trademarks already registered. ICM Registry and IPRota have not yet announced what, if any, rights protection mechanisms will be available for marks introduced after the end of the Sunrise period. The white paper’s vague response is that “it is anticipated that a service to deal with this requirement will be introduced in 2012 but it is unlikely to be as cost effective as the options offered during sunrise.” Also mentioned, but without detail, are a proposed rapid takedown service and a version of the ICANN Uniform Dispute Resolution Policy. Presumably there will be some sort of procedure for owners of new trademarks to reserve or block the mark from .XXX registration (if it is not already registered) subject to a fee, which evidently will be more than the currently estimated $300. Trademark owners will have to factor this potential cost into their budgets going forward.

Also unclear is the duration of the Sunrise B “block.” ICM and IPRota have only stated that the term will be blocked for as long as reasonably possible while ICM holds the contract for this TLD from ICANN. The term of that agreement is 10 years, and there is no guarantee that any successor organization would continue to honor the Sunrise B rights.

As with any top level domain, new or existing, brand owners must be vigilant in protecting their trademarks against cybersquatters. The stakes are of course higher here, where the TLD in question is expressly intended for sexually explicit material. There can be no doubt that cybersquatters will try to exploit any opportunity created by this new TLD at the expense of trademark owners. Clients are encouraged to monitor the ICM Registry and IPRota websites for developments, and to keep in touch with their current domain registrar or service provider to keep abreast of developments on the technical front. Goodwin Procter will watch the situation closely so that we can provide our clients with up-to-date strategic and legal advice, and cost-effective plans for protecting brands in the .XXX sphere.

The U.S. power grid has more than 300,000 miles of sprawling transmission lines that weave throughout the country, and the Department of Energy gives it a 99.97% reliability rating. Yet despite the sheer size of the system, a few outages can cost Americans at least $150 billion dollars annually.

Electricity has to be used the moment it's generated. A power plant cannot store a surplus of energy to power air conditioners during the next heat wave. And a growing population continues to plug more and more power-hungry gadgets and appliances into the grid.

To address these shortcomings and prepare for future power needs, a plan is underway to transition to a more efficient power grid called a Smart Grid.

A Smart Grid delivers electricity from suppliers to consumers using two-way digital technology to control appliances at consumers' homes to save energy, reduce cost, and increase reliability and transparency. It is a nickname for an ever-widening array of utility applications that enhance and automate the monitoring and control of electrical distribution.

There are five technologies that drive the Smart Grid: (i) integrated communications; (ii) sensing and measurement technologies; (iii) advanced components (superconductivity, storage, power electronics and diagnostics); (iv) advanced control methods; and (v) improved interfaces and decision support.

Applications of the Smart Grid include end-use applications such as automated demand response, use of on-site storage and generation, and smart charging of plug-in hybrid electric vehicles (PHEVs). Smart meters, price-sensitive “smart” appliances, energy storage and distributed generation are the components of these applications. However, some of the highest value applications are likely be on the distribution system side. One of the highest-value early-stage Smart Grid applications is system visualization, which uses networked systems to allow system status monitoring to occur. Currently, for example, outage management is often triggered by a call from a customer who has lost power. With system visualization, outage management does not depend on customer outage reporting, and in some cases can report overhead vegetation contact before a tree actually falls on a line.

Performance optimization is an area of patent activity. Examples include (i) improved grid performance, security and reliability, (ii) better integration of decentralized, distributed and intermittent renewable generation sources into power systems, (iii) facilitation of new demand-side management and energy efficiency programs involving a higher degree of customer participation and (iv) introduction of new services to customers.

Distribution automation allows for more efficient use of the electric distribution system and may lead to highly resilient systems able to route around trouble spots in emergencies.

Finally, on the transmission system side, better visualization of system status allows for improved integration of intermittent resources like wind and solar. So, while the smart meter may have become the “poster child” for the Smart Grid, advanced sensors, synchro-phasors and distribution automation systems are examples of equipment likely to be even more important in harnessing the value of the Smart Grid.

Examples of Smart Grid applications are listed in the following table.

Sample Smart Grid Patents

 

 

Number	Title	Owner
7,233,843	Real-Time Performance Monitoring and Management System	Electric Power Group, LLC
7,274,975	Optimized Energy Management System	Gridpoint, Inc.
7,337,153	Resolving Energy Imbalance Requirements in Real-Time	Siemens Power Transmission & Distribution, Inc.
7,305,281	Management of a Bulk Electric Power Market	ISO New England, Inc.
7,333,880	Aggregation of Distributed Energy Resources	EnerNOC, Inc.
7,376,491	Detection of Islanding in Power Grids	General Electric Company
2008/0177678	Method of Communicating Between a Utility and Its Customer Locations	Southern California Edison

 

Smart Grid technologies have experienced significant patent activity over the last decade in areas such as (i) advanced metering, (ii) IT systems and hardware for distribution automation and (iii) business methods for efficient selection of power sources

Patent owners include industry giants like Siemens, private players like GridPoint/V2 Green, nonprofits like ISO New England, consultants like Electric Power Group, as well as utilities, government laboratories and individuals.

The USPTO's Green Technology Pilot Program and Track 1 Initiative

Applicants in the green technology space can file petitions under the USPTO’s Green Technology Pilot Program, which allows for expedited processing of patent applications related to green technology. The program was originally set to expire on December 8, 2010, but has been successful enough to warrant an extension through the end of 2011. Since the program began in December 2009, a total of 790 petitions have been granted to green technology patent applicants, with 94 patents having already been issued.

The Track 1 initiative provided that by paying a $4,000 per application fee, applicants could receive prioritized examination, which was going to be available as of May 4, 2011.

On April 22, 2011, however, USPTO Director David Kappos announced the impact of the budget reductions embodied in the fiscal year 2011 budget enacted on April 15, 2011. (Fiscal year 2011 runs through September 30, 2011). The budget gives the USPTO the authority to spend only $2.09 billion, which is about $100 million less than its projected fee collections.

Facing the reality of not being able to spend any of the $4,000 per application fee it would have collected, the USPTO has decided not to implement fee-based prioritized examination (Track 1), which would have been available May 4, 2011.

Litigation

An initial round of major NPP patent litigation hit the clean tech industry in the mid-2000s. There were two significant instances of this activity. The first was a series of lawsuits brought by hybrid power train start-up Paice against Toyota, accusing the automaker of infringing some early patents on gas-electric hybrid vehicle technology. After a five-year battle, Toyota ultimately licensed all of Paice’s 23 patents.

The second was Columbia University Professor Gertrude Neumark Rothschild’s enforcement of a pair of patents relating to pioneering LED production techniques against many major targets, including Toshiba, Panasonic, Sony Ericsson, LG Electronics, Motorola, Samsung, Sanyo, Sharp and Philips Electronics. According to her attorney, Rothschild has reached settlements or licensing agreements with more than 40 companies generating more than $27 million. Clean tech is now in the midst of a second wave of NPP litigation. Leading the charge is Sipco LLC, an Atlanta, Georgia-based developer of wireless mesh technology. In August 2009, Sipco sued Florida Power & Light and FPL Group in federal court in Miami, alleging that the wireless network technology in the utility’s Smart Grid system infringes three Sipco patents. In November 2010, Sipco sued such Smart Grid companies as Energate, Ecobee, Rainforest Automation, SmartSynch, AMX Corporation, SimpleHomeNet and CentraLite Systems.

Earlier this year, Sipco expanded the scope of its patent enforcement activity to target players in the electric vehicle charging station space, including Coulomb Technologies and ECOtality, as well as additional energy management, control system and wireless companies such as EnergyHub, Jetlun, SmartLabs, ABB and Ingersoll-Rand.

In solar, Solannex recently began targeting major thin-film photovoltaics players with a patent directed to interconnect structures for PV cells. In the last few months, Solannex has sued Miasolé and Nanosolar for patent infringement. Companies operating in Smart Grid or thin-film, or developing technology to enter the space would be prudent to be aware of the Sipco and Solannex patents.

With just about every major oil company involved in renewables on some level, particularly biofuels, one recent patent infringement suit may mark the start of a trend. In February, Butamax Advanced Biofuels, a Delaware-based biofuel joint venture between BP and DuPont sued Gevo, an Englewood, Colorado, advanced biofuels company, for infringement of a patent directed to Butamax’s biobutanol production technology and recombinant microbial host cells that produce the biofuel.

With the oil majors increasingly involved in biofuels start-ups via research funding, buyouts and JVs like Butamax, more patent infringement suits in this space are expected. Energy companies are no stranger historically to patent litigation in technology, as evidenced in the 1990s by Unocal’s lawsuits over its MTBE patents and the long-running patent fight by Energy Conversion Devices, backed by Texaco, over nickel metal hydride battery technology.

Licensing

The IEEE has created a “Draft Guide for Smart Grid Interoperability of Energy Technology and Information Technology Operation with the Electric Power System (EPS), and End-Use Applications and Loads.” The Guide provides guidelines for Smart Grid interoperability and a knowledge base addressing terminology, characteristics, functional performance and evaluation criteria, as well as the application of engineering principles for Smart Grid interoperability of the electric power system with end-use applications and loads. The guide also discusses alternate approaches to good practices for the Smart Grid.

The governing board of the Smart Grid Interoperability Panel has voted in favor of a new standard and a set of guidelines for making the long-planned “smart” electricity grid a reality. These address the need for wireless communications among grid-connected devices as well as the ability to upgrade household electricity meters as the Smart Grid evolves.

Standards for the Smart Grid

As Federal Energy Regulatory Commission officials acknowledge, the Smart Grid will require new technologies. Without widely adopted standards, entities will attempt to establish proprietary versions.

There are those who want “open” standards for the Smart Grid, but it’s important to distinguish between the necessary characteristic of universal availability and the much less important goal that all included technologies be royalty free. Innovators need an expectation of a reasonable return to justify investments.

Patent owners may agree to royalty-free licensing of rights to secondary products to build acceptance of a main product. For example, a freely available grid connection technology might enlarge the grid and increase the overall market for various proprietary solutions sharing common connectivity to the larger grid. An owner of one of those solutions who also owns the connector patent might well license that patent royalty free. But if the owner of the patent mainly sells grid connectors, he or she is less likely to see a benefit to making a royalty-free license available to other connector vendors. In that case, the patent is protecting a key market.

Conclusion

The foundations of the Smart Grid are innovation, standardization and accessibility. Without technologies recently developed and still to be developed, these goals will not be attained. Without the protection of patents, the new technologies of the Smart Grid will not be funded. Patent protection is an important element relative to continued development of the Smart Grid. Standards will need to be set in order for the Smart Grid to work everywhere. Otherwise, there will be mini-Smart Grids. As in all areas of innovation technologies, litigation will play a role. This is not different from other areas of technology. Open source type of licensing remains an issue. However, as in all software, this should not be a major obstacle for innovators.

Under the 1976 Copyright Act, creators (and their heirs) of works assigned or licensed by the author to another on or after January 1, 1978 may terminate their assignments and recapture their copyrights within a five-year window, beginning 35 years after the date of the grant. 17 U.S.C. § 203(a). As a result, the right to commercially exploit many popular creative works assigned or licensed after 1978 may begin to revert back to the original authors (or their heirs). This statutory right of termination and recapture under 17 U.S.C. § 203 has precedent in earlier-enacted copyright provisions such as 17 U.S.C. § 304(c) and (d) (pertaining to pre-1978 grants), but is rather unique to intellectual property law, and reflects Congress’ view that many copyright creators may have assigned their works at a time when they had little bargaining power and the potential value of their works was unknown.

By its express terms, Section 203 does not apply to works made for hire. 17 U.S.C. § 203(a). In addition, this provision does not apply to works transferred pursuant to an author’s will. In other words, it applies to transfers that an author made during his or her lifetime. Id. (applying to transfers or licenses “otherwise than by will”). The termination and recapture of an assignment is not automatic, and the right is effectively a “use it or lose it” opportunity that must be exercised within the statutory time period. Authors or their heirs must therefore familiarize themselves with Section 203 and the relevant provisions of the Code of Federal Regulations, 37 C.F.R. § 201.10, which set forth with specificity the time and manner in which a termination and recapture must be made. Likewise, assignees who stand to lose their right to exploit creative works should understand these provisions in order to ensure that, if they receive notice of a termination, the termination complies with the statute and regulations.

When the Right to Terminate May Be Exercised

The Section 203 termination provisions apply to copyright grants made on or after January 1, 1978. 17 U.S.C. § 203(a). The author or the author’s heirs may terminate the grant 35 years after the grant was made, so the first terminations that may take effect under Section 203 are on the immediate horizon in 2013. The right to terminate may be exercised only during the five-year window that begins 35 years after the grant. If the grant covered the right of publication of the work, the period begins at the end of 35 years from the date of publication of the work under the grant, or at the end of 40 years from the date of execution of the grant, whichever term ends earlier. 17 U.S.C. § 203(a)(3).

The Copyright Office has recently amended its regulations to provide, in the case where an author agreed prior to 1978 to a grant of rights in a work not created until after 1977, that it will accept for recordation a termination notice reciting as the date of execution the date the work was created. Whether such notices actually fall within Section 203 will ultimately have to be resolved by the courts.

Importantly, before the termination occurs, the author or the author’s heirs must give written notice to the assignee not less than two years, nor more than 10 years, before the termination date. 17 U.S.C. § 203(a)(4)(A). As set forth below, the statute and regulations provide specific requirements that must be followed for the content, service and recordation of the notice of termination.

The Persons Entitled to Exercise the Right to Terminate

One issue to which the author or author’s heirs must pay special attention is the identification of the persons who must exercise the right to terminate and sign the mandatory notice. Section 203(a)(1) and (2) provide specific direction as to who has the right to terminate in the case where the author is deceased or where there are joint authors. Authors or their heirs considering termination should carefully consult these provisions to ensure that the persons executing the termination notice are sufficient to exercise the right.

In general, the statute provides that termination may be effected by the author or, if the author is now deceased, by survivors owning a total of more than one-half of the author’s termination interest. 17 U.S.C. § 203(a)(1). Thus, because more than one person may be required to execute the right, the author’s heirs may need time to enlist the requisite number of current owners necessary to terminate the grant. Subsection (a)(2) lists the persons who may own a deceased author’s termination interest in order of priority, such as the widow or widower, surviving children or grandchildren, executors, administrators and so on.

The Content of the Termination Notice

Both the statute and applicable regulations set forth the required contents of a termination notice. It is important to note that there is no Copyright Office form for a termination, and therefore, again, authors or their heirs should pay special heed to these requirements. In general, the notice must contain: (i) a statement that the termination is being made under Section 203; (ii) the name and service address of each assignee (or successor in title) whose rights are being terminated; (iii) the date of execution of the original grant (and the date of publication if the grant covered the right of publication); (iv) the title of each work to which the notice applies; (v) the names of the author(s) or successor(s) in interest to the author’s rights; (vi) the original registration number, if available; (vii) a brief statement reasonably identifying the grant being terminated; and (viii) the effective date of termination. See 17 U.S.C. § 203(a)(4); 37 C.F.R. § 201.10(b)(2). The notice must be signed by the owners of at least the requisite proportion of termination interests as set forth above. Again, particularly where the termination notice is being served by persons other than an original sole author, the terminating parties should carefully review the requirements of Section 201.10(b)(vii) to ensure that they are providing all the required information.

All of the required information must be provided in a “complete and unambiguous statement of facts in the notice itself.” 37 C.F.R. § 201.10(b)(3). Incorporation by reference of information from other documents or records is not sufficient. Id.

Service Requirements

The primary source of the service requirements for the notice is 37 C.F.R. § 201.10(d). In general, the termination notice must be served by personal service or first-class mail to the last known addresses of all parties whose interests are being terminated. The terminating parties must make a reasonable investigation to determine those who have ownership rights subject to termination. Id.

Recordation of the Termination Notice

The terminating parties must record the notice in the Copyright Office before the effective date of termination, “as a condition to its taking effect.” 17 U.S.C. § 203(a)(4)(A). The fact that the Copyright Office has recorded the notice does not mean that the notice is otherwise sufficient under the law, and recordation by the Office is without prejudice to any party claiming that the legal and formal requirements for termination have not been met. 37 C.F.R. § 201.10(f)(5). The Copyright Office may refuse to record the notice where, on its face, the notice appears to have been filed after the closure of the five-year window. 37 C.F.R. § 201.10(f)(4).

Impact on Derivative Works

By the express terms of the statute, the right to terminate a copyright grant under Section 203 does not apply to an authorized derivative work created after the original grant but before its termination. 17 U.S.C. § 203(b)(1). In other words, the Section 203 termination does not “de-authorize” a previously authorized derivative work created prior to termination. However, the assignee may be precluded from making new derivative works once the grant is terminated. Id. (“this privilege does not extend to the preparation after the termination of other derivative works based upon the copyrighted work covered by the terminated grant”).

The Effect of Termination

Except as noted above with respect to prior derivative works, a termination that complies with the statutory and regulatory requirements restores to the original author or author’s heirs all the exclusive rights of a copyright owner. 17 U.S.C. § 203(b). This means that even those persons who could have joined in, but did not join in, the termination notice retain their proportionate share of the interests in the work. Id. Importantly, contractual agreements to the contrary do not negate the grantor’s ability to terminate under the statute. 17 U.S.C. § 203(a)(5) (“Termination of the grant may be effected notwithstanding any agreement to the contrary, including an agreement to make a will or to make any future grant”). However, nothing prevents the author or author’s heirs from renegotiating a new assignment to the same assignee.

Conclusion

The opening of a five-year window for termination of copyright grants made after January 1, 1978 provides new opportunities for authors or their heirs to recapture their copyrights and explore new ways to commercially exploit their works. However, because the right to terminate is of limited duration and entails numerous procedural requirements, authors and their heirs need to move quickly to ensure that all necessary persons join in the termination, and to timely serve and record a sufficient termination notice.

At the same time, copyright assignees that have enjoyed the commercial success of these works over the past three decades face the prospect of losing valuable works from their catalogs. These assignees should proactively consider how they might present to the authors or authors’ heirs the reasons why termination may not be the most advantageous course of action, or what new terms they may be willing to offer to retain the right to exploit works during the remainder of the copyright period. Assignees should also carefully monitor any termination notices they receive to ensure that they fully comply with statutory and regulatory requirements.