- Posts by Ruth WaltersOf Counsel
Ruth Walters focuses on hospitality operations and general intellectual property and technology transactions. She advises clients on matters such as online hospitality inventory distribution agreements, in-licensing of ...
The digital world is a vast, Amazonian river of intellectual property (IP) – software, brands, photos, video clips, music, guest information, guest reviews – flowing quickly in every direction. Almost any significant issue arising in this space highlights the juxtaposition between an IP owner’s desire – in some cases legal obligation – to control and protect its content (i.e. intellectual property) with the desire to have content exposed to more and different consumers and potential consumers, across ever proliferating channels.
In HOTEL Yearbook Special Edition – Digital Marketing 2017, I will provide valuable legal insights and advice pertaining to the hotel world.
The full article is available for download on HOTEL Yearbook 2017’s website (login or registration is required.)
Service charges, administrative charges, surcharges, house fees—whatever you call those charges assessed for food and beverage service in restaurants and in hotels—the rules about how they need to be disclosed to guests and how they must be allocated are propagating. More and more cities, municipalities and other local legal bodies are taking on service charges in detailed laws, and we expect more to come.
Interest in this issue at all levels of lawmaking seems to be increasing as living wage/minimum wage raise efforts become more and more popular throughout the country. Many such efforts result in laws that also affect how service charges may be collected, distributed and how they must be disclosed to consumers. In other words, the locus for relevant law in this area has shifted significantly from the state to the county or city level.
Ruth Walters, member of our Hospitality, Travel and Tourism practice team, focuses on hospitality operations, general intellectual property and technology transactions. In today’s post, she describes how trademark infringement suits can be tricky at best and the various factors to consider before filing suit. Thank you for today’s post, Ruth! – Greg
Lagunitas Brewing Company filed a federal trademark infringement lawsuit against rival Sierra Nevada Brewing Company. A mere day or so later, Lagunitas dropped it. In addition to providing some writers the opportunity to make awesome (see above), or groan-worthy puns, the situation is an interesting example of how legal justification and the money to sue are not the only ingredients to consider when policing a brand.
In its complaint, Lagunitas alleged that the label for Sierra Nevada’s new Hop Hunter IPA infringed a family of trademarks owned by Lagunitas representing its own IPA labels. In particular, Lagunitas alleged that the large block letter style in the center of the label used by Sierra Nevada plus the prominence of the term IPA was likely to create consumer confusion as to the affiliation of Sierra Nevada with Lagunitas with regard to this particular beer. Pictures of the labels can be found here or here, for example. It’s possible Lagunitas would have won the suit, but as soon as the public got wind of what was brewing, trouble began fermenting and Lagunita’s founder tweeted that he was dropping it.
This subreddit post and comments provide some interesting discussion of past, similar lawsuits and the tone is generally negative or mocking (and also contains some NSFW words). While the craft brew industry has been exploding since the 70s, it seems from the backlash against Lagunitas that at least some of its members and consumers believe the industry should behave like a small artisan’s guild where mutual adoration of the product and commitment to the craft make legal disputes like this as unseemly as bar brawls.
The reality, of course, is that craft breweries are facing increasing competition in the marketplace and must fight ever harder to distinguish themselves from their competitors. This means working harder and harder to choose distinct brands and to protect them. Every trademark attorney, including this one, hammers into the heads of his or her clients that a failure to police trademarks can result in a loss of rights, so it is always important to watch the marketplace (and trademark registries) for potential infringers.
And yet, deciding whether to proceed with a demand letter or lawsuit is always risky and not just because litigation costs money and is uncertain. Non-legal considerations, like customers’ perception of the brand and its market position, public relations issues and other very fuzzy (fizzy?) factors might influence a trademark (or copyright) owner to let matters lie or even help them come up with more creative solutions to the issue. Like Linden Lab did back in 2007 when Darren Barefoot made a parody of their MMORPG Second Life (here’s an archived copy of GetAFirstLife.com, with the link inviting a cease and desist letter at the bottom and some content about bodily functions). A legal parody using other’s trademarks and copyrighted material is difficult to achieve; this all could have gone a very different way.
None of this is to say that Lagunitas’ suit was frivolous and merely intended to intimidate Sierra Nevada or the rest of the industry, or to do else that might be called “brand name bullying,” nor that what is perceived as bullying is, in fact, bullying and not protection of one’s property. It is simply to point out that the benefit of taking legal action in intellectual property matters, even with perfect justification, may pale in comparison to how taking that action may be perceived by the folks on whom the business’ existence relies—its customers.
Since 2013 the number and type of web domains has exploded and is having a major impact on brands. Ruth Walters has been watching this new era of growth and can share her insights on brand protection. Ruth focuses on hospitality operations and general intellectual property and technology transactions. Thank you for today’s post, Ruth! -Greg
Back in the olden days of last year, there was no particular reason for hospitality industry members to be particularly interested in the administration of the Internet unless you were curious. Now, it benefits every brand owner to understand and pay attention to the basics of how new domain names come into being, who selects them and how they become public. Beginning in late 2013 and early 2014, the number and type of domains has exploded, providing brand owners both the opportunity to expand and strengthen their on-line presence and to expand the number of potential infringing domains there are to worry about. Much of the domain name process operates outside the awareness of many brand holders, and many have been caught unaware.
The Internet is administered by a non-profit corporation called the Internet Corporation for Net Names and Numbers (ICANN). It is this entity that decides, among other things, what letter strings go after the dot. Beginning in 2012, ICANN began its New Generic Top-Level Domains Program to “increase competition and choice in the domain name space.” ICANN accepts applications for new letter strings and then evaluates them and delegates them to the applicant registry (not registrar, which is the entity in this process most familiar to brand owners and the public—like Register.com, GoDaddy, or Network Solutions). Eventually, the registry works with ICANN-approved registrars and the new strings are available to the public for registration.
Some terminology: the letter strings after the dot are called top-level domains (TLDs) and are divided into two main categories—generic top-level domains (gTLDs) and country-code top level domains (ccTLDs). gTLDs are further divided into two sub-categories “unsponsored” gTLDs (uTLDs) which anyone can register (like .com, .net, .biz and .info) and sponsored gTLDs (sTLDs) which can only be registered by members of a “sponsored community” (like .gov, .edu, .aero)
The huge push in adding TLDs in the last year or so has focused on gTLDs and the addition of a third category of domains, the Internationalized Domain Name (IDNs) which allow TLDs in characters that are not US-ASCII, such as Chinese, Arabic or Cyrillic. These may be representations of existing TLDs, like .com, in the applicable characters or new TLDs or both.
Any brand owner can see the potential problems here. The number of TLDs to worry about has gone from a handful to, over the next few years, possibly more than 1300. That makes more than 1300 opportunities for a cybersquatter to register [your brand] in connection with a new domain and possibly several opportunities missed to register useful new TLDs, such as .review, .hotel, .restaurant or, depending on how you feel about things, .wtf. There is also the possibility that the new TLD itself may infringe a trademark, and ICANN has accounted for that possibility in its review and the provision of a post-delegation dispute resolution process.
The more likely scenario is that the second-level domain (the bit right before the dot) will be the infringing piece. ICANN has responded to the significant concerns of brand owners in this regard by introducing a new rights policing mechanism called the Trademark Clearinghouse, participation in which is mandatory for all new gTLD registries. Rather than requiring brand owners to rely on the Uniform Domain Name Dispute Resolution Policy process, requiring brand owners to proceed only after a potential infringing name is registered, the Clearinghouse allows for some pre-registration enforcement. Successful registration of valid trademarks with the Clearinghouse permits those trademark owners—for a fee, of course—to:
- Apply before the general public for the domain names in which the second-level domains; and
- Receive notice of any third-party registrations for domain names containing an exact match to the registered mark(s) for as long as the records are maintained at the Clearinghouse. The potential registrant of an infringing domain name also receives a warning when attempting to register a domain name during the 90 days after the close of the sunrise period, which is called the “Trademark Claim” period.
Registering with the Clearinghouse, if possible, has obvious benefits. In addition, brand owners can track the opening and closing of sunrise periods on both the Clearinghouse and ICANN websites (ICANN’s site includes sunrise periods out into 2015; the Clearinghouse site is more limited).
The Clearinghouse in turn works with a variety of registrars who provide what are called “blocking mechanisms” for the new gTLDs. In very brief, the owner of a trademark registered at the Clearinghouse can purchase blocking services to block third-party registrations of domain names containing that trademark (and, possibly, similar marks) without having to go to the trouble of defensively registering [your brand].[gTLD] 70 or 80 times.
Uniform Rapid Suspension System
If blocking, defensive registration and notification still don’t work (which is entirely possible, given the nature of the Internet) ICANN has also instituted the URS which creates a more streamlined process for shutting down infringing domain names than even the UDRP provides.
As we have written before in many circumstances, the Internet is a tough place for brand owners and, in some ways, it has gotten tougher. Fortunately, there are mechanisms that exist to help brand owners keep control of their good names on the Internet and also to explore new opportunities for expanding their on-line presences.
Tomorrow, Floyd “Money” Mayweather and Saúl “Canelo” Álvarez (“El Canelo”) will fight a much-anticipated title bout at the MGM Grand in Las Vegas, bringing in what Showtime certainly hopes will be record-breaking pay-per-view revenues.
Today, after a week of difficult negotiations with huge telecommunications companies on behalf of my hotel clients, a week of wondering what to write for this blog, and a challenging sparring session on Wednesday, it occurred to me to write a bit about boxing. A lot of people hate lawyers and a lot of people think boxing is a violent, brutish sport that should be shunned in a civilized society. I’m a lawyer and I box. Full disclosure: I'm taking boxing lessons at Cappy’s Boxing Gym in Seattle, and the gym is a client of the firm. The thoughts in this post are my own and not our client’s. Finally, and for the record, I have never punched anyone or anything at work. I promise.
The analogy between lawyering and boxing is obvious: fight with words, fight with fists, both within a structure of rules, standards and strategies governing how and when to attack, how and when to defend and how and when to take a hit or two in order to set up a stronger or more important punch. In amateur boxing, the point is not to leave your opponent bleeding and broken on the canvas for a 10 count; it’s about being skilled—agile, flexible, strong, focused. My experience getting in the ring occurs when I spar with a partner, rather than compete with an opponent. At my gym and my level of ability, sparring is learning to apply fundamentals (punches, stance, body position, cover, blocks and parries) in a version of the “real world”—fluid and often unpredictable and, most importantly, a real world that contains a partner, a coach, noise, lights, and a lot of other stimuli. At the gym where I box, sparring is also about helping my partner improve her own skills, which requires me to listen, observe and focus even more carefully.
The same can be said for negotiating an agreement on behalf of a client. It’s less sweaty (although sometimes no less exhausting) but the goal is still the same—a mutually beneficial solution, where each party feels as though it’s taken a few punches, defended well against a few, and landed a few. At the end, we touch gloves and leave the ring with respect and dignity and an arrangement that probably looks different than either party imagined at the outset. After all, contracts are only negotiated when both parties want something good to happen between them. My role is to advance my client’s interests as vigorously as possible, while always keeping my cover up and defending them from exposure to significant risk. The negotiations themselves are always fluid and shifting; I’ve learned over the years and in the ring how to better “think on my feet,” to listen and adjust my angle of attack or defense, or just step back and wait the other side out.
And just as I’ve left the ring with my nose throbbing and my sides aching after sparring with a more skilled partner, I’ve left my office feeling brutalized after a negotiation with a potential provider who is brawnier, bigger and far more powerful than I am or my client is (see, e.g. gigantic telecommunications companies). It’s less satisfying than sparring with a more evenly matched partner, but I always manage to get a few good licks in.
As anyone who reads this blog can see, the Hospitality, Travel & Tourism group keeps up on legal developments, attends conferences, and writes for journals—we do legal theory and legal knowledge. We also have years and years of cumulative practical experience, bringing that theory out into the world of our clients. Being a good lawyer is a constant dance (pun intended) between the “right” and the “practical,” taking on the desires of my client as my own, advising that same client of the risks they’re undertaking, and, of course, getting in the ring with the other side and working each other out.
None of this is to say that negotiating contracts for my clients is a game with no real consequences, nor is it to say that when I negotiate deals for my clients that I am thinking only of myself. Quite the opposite—my clients’ interests are paramount in any negotiation. They are, to force the analogy a bit, the most fundamental of fundamentals. The sparring comes in presenting and defending those interests, staying focused on the ultimate goal and removing my ego and my pride from the equation. In other words, sometimes those pretty flicking jabs are totally useless and, well, you just can’t take those right hooks that feel like they came all the way from Oklahoma personally. It’s all part of the movement and flow of negotiation—just don’t let them get you on the ropes, right?
Deal or No Deal?
Daily deal (or “flash sale” sites) like Groupon, LivingSocial, and Rue La La, are quite popular with both hoteliers and their potential guests, providing, as they often do, slashed rates and an easy method for getting heads in beds during times the hoteliers want them there the most. Unfortunately, these channels may not provide the benefits they seem to, and they pose a number of legal and practical risks that may make them even less attractive.
• Illegal Voucher Expiration Dates. Most of these providers issue vouchers to purchasers for redemption at hotels, which vouchers are considered “gift certificates” under most state and federal laws. Despite language in the standard contracts proposed by the providers, and despite hoteliers’ agreement (or desire) to limit redemption periods, the law may require vouchers be honored well beyond the time the hotel intended it to be. Some states have laws prohibiting the expiration of gift certificates period, some have mandated long validity periods, and federal law requires most gift certificates to be valid for 5 years.
Protect Your Good Name: Keyword Advertising and Trademark License
Published in Hospitality Upgrade, March 2013.
The Internet can be a hard, hard place for brand owners. Yet failing to engage potential guests online across a variety of platforms is no longer a viable option for the majority of hospitality industry participants. It is crucial that brand owners exercise control over their marks whenever possible. This article focuses on the legal use of keyword advertising, and provides some tips about how to negotiate trademark licenses in online distribution and marketing agreements...To read the full article click here.
Several clients have lately been asking about notices they've received that look like this. If they come from the Eastern District court in New York, they’re legitimate, and if you are a merchant who accepted Visa or MasterCard or both between January 1, 2004 and November 28, 2012, you are a probably a member of the class and should have received one too. If you didn't, the lawsuit and proposed settlement are discussed in detail here. Take a look; the settlement could affect your legal rights. You have until May 28, 2013 to exclude yourself from the settlement (opt-out) or object to its terms; the final hearing on the proposed settlement will be September 12, 2013. Assuming the court approves the settlement, with or without changes that may occur as the result of objections, claim forms will be issued after that date to class members and a claim deadline will be set.
Travel industry and technology experts gathered at the Four Seasons Seattle this past Wednesday to participate in the region’s first conference devoted exclusively to the intersection of hospitality, travel and tourism with technology. The TNT Travel & Technology Conference was hosted by the Hospitality, Travel & Tourism Practice Group at Garvey Schubert Barer and local angel investment/opportunity facilitator and industry connector Zino Society. I conducted an informal interview of participants and attendees, which I selected randomly via a complex, proprietary algorithm (red wine vs. white wine; preference for mushroom quiches over Vietnamese spring rolls, cocktail napkin or no cocktail napkin) and 100% of respondents indicated the event was an unqualified success.
Garvey owner and chair of the firm’s E-Commerce and Technology Practice, Scott Warner, and Hospitality, Travel & Tourism Practice chair, Greg Duff, each hosted a panel of experts—Scott, a group of expert technologists and Greg, a group of expert users. The former consisted of representatives from Expedia, Microsoft, Intelity, Sabre Hospitality, Google, Concur Technologies, Urbanspoon, Tnooz and Ascension Software and the latter of panelists from Evergreen Finance Consulting, Virtuoso, Alaska Airlines, Benchmark Hospitality, American Casino & Entertainment Properties, Mandarin Oriental and Holland America Line. See the linked Conference Program for a more detailed description of the panels and each of the panelists.
The United Kingdom's Office of Fair Trading (OFT) issued a Statement of Objections this Tuesday alleging that industry giants Booking.com B.V., Expedia, Inc. and InterContinental Hotels Group violated the UK’s Competition Act of 1998. The Statement of Objections will not be made public, but from OFT’s comments, it’s rate parity and best rate guarantees that are causing the trouble.
Requiring on-line travel agents (OTAs) to honor a hotel supplier’s best rate guarantee (at retail) and requiring hoteliers to provide inventory to distributors at the same price across all distribution channels are as close to universal practice in this industry as I have seen. And now, OFT appears to consider them by a less salubrious name: price-fixing. However, the Statement of Objections is not “the final word." It is a sort of pre-trial opinion in which OFT provides official notice of a “proposed infringement [of the Competition Act 1998] decision” and the parties to the dispute may make written and oral arguments to be considered before final decision is rendered.
OFT’s statement was issued at the end of an investigation begun in 2010 after a complaint was made by Skoosh, a small British OTA. Skoosh contacted OFT after Skoosh’s own hotel suppliers demanded that Skoosh raise its retail rates to a certain figure (among other allegations). The hoteliers, of course, were apparently acting to meet pressure applied by Booking and Expedia not to violate what was almost certainly a contractually required rate parity obligation of some sort. In effect, Skoosh raised concerns with OFT that rate parity and best rate guarantees operate together to artificially fix prices in the marketplace and therefore act as a barrier to competition, particularly for new or smaller players, like Skoosh, who might be willing to undersell the larger OTAs to grow its business.
If OFT formally issues a finding of an infringement, despite its jurisdiction being limited to the UK, the finding will cause--at a minimum--a shift in the way a significant majority of the hospitality industry conducts its distribution business, as well as the amount of competition in the marketplace. The Internet, after all, is international. So please stay tuned!
Greg Duff, Editor
Greg Duff founded and chairs GSB’s national Hospitality, Travel & Tourism group. His practice largely focuses on operations-oriented matters faced by hospitality industry members, including sales and marketing, distribution and e-commerce, procurement and technology. Greg also serves as counsel and legal advisor to many of the hospitality industry’s associations and trade groups, including AH&LA, HFTP and HSMAI.