Coca-Cola Facebook Approach Does Not Fit in FranklinCovey Seven Habits Situation

I enjoyed reading blogger Ron Coleman’s  post, The seven habits of highly annoying lawyers. Ron created his own list of seven habits.  The “seven habits” phrase originated from The 7 Habits of Highly Effective People®, written by Stephen R. Covey and published by FranklinCovey.  It is a highly regarded book discussing “proven principles of fairness, integrity, honesty, and human dignity.”

FranklinCovey recently sent a cease and desist letter to Schlock Mercenary for publishing an ongoing, online webcomic called “The Seven Habits of Highly Effective Pirates.”  Ron’s post commented on the post of another legal blogger who thought that FranklinCovey’s cease and desist letter was unwarranted and that FranklinCovey missed the opportunity to put into play “think win-win,” one of The 7 Habits of Highly Effective People.  Under a comparison and competition based approach to life, one side wins and the other side loses and there is only so much pie to go around.

“Win-win sees life as a cooperative arena, not a competitive one….Win-win means agreements or solutions are mutually beneficial and satisfying.  We both get to eat the pie, and it tastes pretty darn good.” 

Unfortunately, trademark law does not operate on a “win-win” approach.  Trademark law arose out of unfair competition law.  Trademark law requires the trademark owner to use and protect the trademark or lose it.  This is particularly true in the 7 Habits situation.  7 Habits is probably a famous trademark, which entitles it to greater protection than ordinary trademarks, but also requires greater vigilance on the part of the trademark owner.

The Coca-Cola Facebook situation is an example of how a trademark owner created a “win-win” out of a trademark infringement and potential media disaster.  Michelle Golden  describes this situation on pages 68-69 of her book, Social Media Strategies for Professionals and Their Firms. Coca-Cola fans created a Coca-Cola Facebook page, included the Coca-Cola logo and posted content the corporation could not control.  Coke did not attempt to shut the page down, but instead, invited the two people who created the Facebook page to corporate headquarters.  There, Coke entertained them and began a collaboration with the fans to work on the page together.  Both the two fans and Coke executives are administrators of the page.  This is a “win-win.”  The fans get to keep their Facebook page and Coke gets to have a voice in the content.

Why won’t the same thing work for FranklinCovey?  Because FranklinCovey does not like the message about its mark.  Schock Mercenary’s message about the FranklinCovey trademark pokes fun at the mark and is undesirable for the corporation, whereas the Facebook message about Coca-Cola was a positive one that the company wished to encourage.  For FranklinCovey, there is no possibility of a “mutually beneficial and satisfying” solution when another is using its mark in such a manner.

Getting back to the famous trademark discussion in the fourth paragraph, as the owner of a famous trademark, FranklinCovey has the responsibility of policing its mark by refusing to let others “tarnish” it.  Tarnishment is “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.”  Policing the mark means taking action to stop parodies or other undesirable uses of the mark.

“[A] ‘parody‘ is defined as a simple form of entertainment conveyed by juxtaposing the irreverent representation of the trademark with the idealized image created by the mark’s owner.”

A parody is not categorically a fair use and can still create a likelihood of confusion.

Fixation in Copyright Does Not Extend to Wild Flower Garden

The Visual Artists Rights Act of 1990  (VARA) protects artists’ rights of attribution and integrity for a limited subcategory of copyrightable “visual art” works.  VARA is the United States’ attempt to comply with the Berne Convention for the Protection of Literary and Artistic Works, a treaty the United States ratified in 1989.  The Berne Convention protects authors’ and artists’ moral rights.  Moral rights include the right to claim authorship (attribution) and the right to prevent alteration of a work that would be prejudicial to the author’s honor or reputation (integrity).  The 7th Circuit recently declined to protect an artist’s moral rights claim under VARA for a flower garden he created.  Seventh Circuit:  No Moral Rights in Flower Gardens Under VARA, by Ray Dowd, briefly describes the court’s ruling and shows a picture of the garden.

Here is a short recap of Kelley v. Chicago Park District.  Chapman Kelley is an artist who originally was known for painting landscapes and flowers, but switched to planting large outdoor wild flower displays.  In 1984, the Chicago Park District Board of Commissioners granted him a permit to install a wild flower display across 1.5 acres of parkland in Grant Park.  The permit was extended a number of times through 1994.  After that, the display remained in Grant Park without a permit.  Problems caused by insects, rabbits and weeds beset the garden over time.  In 2004, Park District officials met with Kelley to discuss problems with the garden and decreasing the size of the garden.  The Park District then reduced the size of the garden and changed its shape.  Kelley filed suit under VARA.

The 7th Circuit’s decision in Kelley focused on “fixation,” which is separate from VARA, although the court discussed VARA first.  The circuit court disagreed with the district court’s VARA analysis and devoted the first half of its opinion to providing its own VARA analysis.  Since the court decided the case on the copyright “fixation” requirement and not on VARA, the VARA analysis is dicta and not authoritative.  However, the court’s VARA discussion contributes positively to the ongoing VARA discussion.  For example, the court disagrees with the First Circuit’s holding in Phillips v. Pembroke Real Estate, Inc. that “site-specific art is categorically excluded from VARA” and points out some of the inconsistencies in that opinion.  The court also emphasized that VARA protects a subset of works protected by the Copyright Act and that to receive VARA protection, a work must first be copyrightable under the broader Copyright Act.

A work must be fixed to receive copyright protection.

Copyright protection subsists, in accordance with this title, in original works of authorship fixed in any tangible medium of expression, now known or later developed, from which they can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

The Copyright Act defines the word “fixed.”

A work is “fixed” in a tangible medium of expression when its embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.

The court declared “a living garden lacks the kind of authorship and stable fixation normally required to support copyright.”  The court made two important points about fixation:

  • Fixation is an explicit constitutional requirement
  • Certain works of conceptual art stand outside of copyright protection

The Copyright Clause  of the United States Constitution speaks of “authors” and their “writings.”  There must be fixation for there to be a writing.  Since some art cannot be fixed in such a way, it does not qualify for copyright protection. 

A living garden like Wildflower Works is neither “authored” nor “fixed” in the senses required for copyright.

[A] garden is simply too changeable to satisfy the primary purpose of fixation; its appearance is too inherently variable to supply a baseline for determining questions of copyright creation and infringement.

The essence of a garden is its vitality, not its fixedness. It may endure from season to season, but its nature is one of dynamic change.

The court distinguished between a garden as a copyrightable work of art and a plan for a garden designed by a landscape designer.  When the landscape designer uses text, diagrams and drawings to plan a garden, the garden plan is embodied in a fixed and tangible copy that can be protected by copyright.

The court explicitly did not rule that only works that are static or fully permanent can be copyrightable or that copyrighted works cannot incorporate natural or living elements.

Changes in Corporate Structure Can Destroy Key IP Rights

What happens to a company’s IP portfolio when it merges with another company or otherwise reorganizes?  Say that Company A merges into Company B.  Shouldn’t someone, presumably company B, do an IP audit?  An IP audit identifies and evaluates a company’s IP assets, such as patents, copyrights and licenses.  An IP audit should identify the licenses that are important to the day to day operations of Company A.  For each such license, the IP audit should identify whether the license contains terms restricting its transfer or assignment.  Perhaps this is an obvious aspect of due diligence, but it sometimes gets overlooked, leading to a loss of value of or even the inability to enforce rights regarding a particular IP asset.

Owen J. McKeon describes a recent example of the failure to account for a patent during a corporate reorganization in Corporate Reorganization Absent Assignment or License of Patent Rights Results in Preclusion of Patentee’s Lost Profits Damages.  The plaintiff patentee is a company that sued another company for patent infringement.  The plaintiff patentee’s operations were transferred to a parent corporation in a stock acquisition and operations restructuring.  The parent corporation was not a party to the litigation.  The plaintiff patentee did not assign or license the patent to the non-party parent.  The patentee continued to operate as a business, but the non-party parent conducted all operations regarding the subject patent.  The court ruled that the patentee could not collect lost profits damages for any time after the reorganization date, as the non-party parent, not the patentee, incurred the business expenses and losses and enjoyed the profits associated with the patent after that date.  The plaintiff patentee could not enforce the patent after the reorganization date, but neither could the non-party parent, as no patent rights were transferred or licensed to it.  The upshot is that no entity on the plaintiff’s side of the suit could enforce the patent after the reorganization date.

Federal common law causes this licensing problem.  The U.S. Supreme Court declared in Erie R.R. v. Tompkins, “[t]here is no federal general common law.”  Undeterred by this pronouncement, the 6th Circuit proclaimed, “[f]ederal common law governs questions with respect to the assignability of a patent [or copyright] license.”  The 6th Circuit stated that despite the declaration in Erie that there is no federal general common law, “there are limited situations where there is a significant conflict between some federal policy or interest and the use of state law that require judicial creation of a special federal rule of common law.”  The court indicated that such a special rule is clearly justified in the area of intellectual property, because the reward of the exclusive right acts as an incentive to invent and create.

In Cincom Systems, Inc. v. Novelis, Corp, the case discussed immediately above, Cincom developed, licensed and serviced software for corporations.  It licensed some software to Alcan Ohio for use in a particular facility.  The license was non-exclusive and non-transferable.  Alcon Ohio underwent a series of reorganizations and name changes, eventually becoming Novelis.  Apparently the name changes did not affect operations and Cincom’s software continued to be used in the facility for which it was licensed.  Cincom learned of the corporate changes and sued Novelis, alleging violation of the software licensing agreement.  The district court entered summary judgment in favor of Cincom and the 6th Circuit affirmed.  The name changes violated the license and caused Novelis to infringe Cincom’s copyright.

In PPG Industries v. Guardian Industries Corp. the plaintiff PPG and Permaglass, Inc. developed similar processes for fabricating glass.  The two companies licensed their respective patents to each other.  PPG licensed two patents to Permaglass on a non-exclusive, non-transferable basis.  Permaglass granted an exclusive license in nine patents to PPG, reserving to itself a non-exclusive, non-transferable, royalty-free license.  PPG could assign to any successor of its entire flat glass business, but otherwise could not assign without the previous written consent of Permaglass.  The license granted to Permaglass was personal to Permaglass and was non-assignable except with the previous written consent of PPG.  A termination clause provided that if a majority of the voting stock of Permaglass became owned or controlled by an automobile manufacturer or a glass manufacturer or glass fabricator other than the present owners, the license granted to Permaglass would terminate. Permaglass subsequently merged into Guardian, the defendant.  Guardian’s primary business was fabricating and distributing automobile and truck windshields.  When PPG discovered the merger, it filed suit against Guardian for patent infringement.  PPG claimed that Guardian infringed all eleven patents, the two PPG patents and the nine Permaglass patents.  The district court ruled that there was not a transfer or assignment under Ohio and Delaware merger statutes.  The 6th Circuit reversed, stating that “[q]uestions with respect to the assignability of a patent license are controlled by federal law.  It has long been held by federal courts that agreements granting patent licenses are personal and not assignable unless expressly made so.”

The result in PPG highlights the need to include a thorough IP audit in the due diligence process.  It is not enough for the potential target to provide an attachment with copies of the patents, as Permaglass did for Guardian.   The acquiring company must examine the licensing documents itself.

Patient Privacy Not Protected in Facebook Placenta Photo Case

A Kansas federal district court judge recently enjoined a community college nursing program from expelling a student for posting a photo of herself examining a placenta on Facebook.  Three other nursing students likewise posted photos of themselves examining the placenta on Facebook.  All were expelled from the nursing program.  The woman from whom the placenta came was not shown in the photos.  An instructor allowed the photos to be taken, but denied that she was informed that the photos would be posted on Facebook.  One of the nursing students challenged her explusion in federal court.  The judge found that there were no patient privacy rights involved.  Debra Cassens Weiss describes the facts in greater detail in In Facebook Age, Do Photos Carry Expectation of Privacy?  Placenta Opinion Raises the Issue.  Nursing Student wins Facebook placenta photo case by Matt Campbell is another detailed article and includes a picture of the Facebook photo posted by the challenging student.

I will depart from much of the other discussion about the case and make these two arguments:

  • The woman the placenta came from is personally identifiable to a point where her privacy should be protected.
  • The supervisor had no authority to consent to the students taking the photos.

First off, what is a placenta?  I have been involved in whelping a few litters of puppies over the past 20 years.  When I first read about this case, I had a hard time believing that anyone would want a photo of the human equivalent of the little sack you tear off of the puppy when it is born, but that’s what they took a photo of.  “The placenta is an organ that connects the developing fetus to the uterine wall to allow nutrient uptake, waste elimination, and gas exchange via the mother’s blood supply.”  Unlike dogs, where the puppy is usually born while still in the placenta, in humans the placenta is usually expelled 15 to 30 minutes after the baby is born.

The court specifically found that “no patient privacy rights were implicated in this photo,” due to the fact that the supervisor “ensured that all patient identifying marks which might be captured by a photograph be removed before the photo was taken.”  The court indicated that whether it was a “fresh” placenta is irrelevant, as the freshness could not be determined from the photo.  Perhaps you can’t tell from the photo whether it is fresh, but the students and supervisor probably knew how fresh it was and that certainly is another identifier that can be used to narrow the identity of the woman it came from.  The court also stated that one of the defendants “testified to some attenuated theory involving the number of births that day at Olathe Medical Center (allegedly only one), which would enable the patient to be identified.  The theory is too remote and speculative.”

In Northwest Memorial Hospital v. Ashcroft, the hospital sought to quash a federal government subpoena of medical records of 45 women on whom a particular doctor performed late term abortions using a controversial method.  The 7th Circuit Court of Appeals upheld the district court’s order quashing the subpoena.  It found that the government failed to adequately account for the privacy interests of the women whose records it sought.  The court of appeals indicated that even if the medical records were redacted to remove personal identifying information, if the women’s medical records were made part of the trial record, some of the women would be fearful that others would have enough information to be able to determine their identity and “expose them to threats, humiliation and obloquy.”  The court of appeals thought that the medical histories and accumulation of information “can make the possibility of recognition very high.”  The court of appeals also stated that:

Even if there were no possibility that a patient’s identity might be learned from a redacted medical record, there would be an invasion of privacy.

That is because the woman who is the subject of the records knows those are her records, even if others do not, and would still feel that her privacy was invaded.

The court’s ruling in the placenta case is just the opposite.  I think the 7th Circuit has the better argument, as it would be a small matter for someone searching publicly available records to narrow down where the placenta came from to a few women.  More importantly, the women who gave birth at that facility on or shortly before the day the photos were taken know who they are and know that some part of a very private moment was made public without patient consent.

My second argument, that the supervisor did not have the authority to consent to the students taking the photos, is an argument about confidentiality.  The court in the placenta case used the word “confidentiality” only once:  “While this Court recognizes and understands the significance of not only patient confidentiality, …”  Despite this comment, patient confidentiality was not recognized by the court at all. 

Under Kansas law, a patient of a treatment facility has a privilege to prevent treatment personnel from disclosing that the patient has received treatment or from disclosing confidential communications made for treatment purposes.  Moreover, “the treatment personnel shall claim the privilege on behalf of the patient unless the patient has made a written waiver of the privilege.”  It seems to me that the supervisor should have refused the students’ request to photograph the placenta and claimed the privilege on behalf of the patient.  In any event, this decision failed to adequately consider the important rights of a person not named in the lawsuit, the patient.

Aside from the above arguments, are we willing to tolerate this type of insensitivity from our health care providers?  When I begin to feel like I am being treated in an impersonal manner or sense a lack of respect, I find another health care provider.  How many women across the country are going to refuse to allow nursing students to attend their deliveries as a result of this case?