Pre-registration of a Copyrightable Work

An often overlooked method to protect copyrightable works is pre-registration. This method will likely become a little more prominent because, earlier this year, the United States Supreme Court determined in Fourth Estate Public Benefit Corp. v. Wall-Street.com, 585 U.S. ___ (2019) that a copyright owner must wait to bring suit for copyright infringement until their works have been registered. Previously, in the view of certain lower courts, the copyright owner simply had to apply for registration. This decision increased the burden on copyright owners to bring a suit for infringement, but the Supreme Court noted several reasons for its decision, including pre-registration.

Pre-registration is a tool used to protect unpublished works that are in the final stages before commercial distribution, making them particular susceptible to copyright infringement. Instead of following the full registration process that will take over half a year, the copyright owner would submit the work to the United States Copyright Office and, after a limited review, will receive pre-registration. Under Section 408(f) of the Copyright Act, a work that has been pre-registered provides the copyright owner an opportunity to immediately bring a suit for copyright infringement.

Although this particular method of protection might have limited application, it is an important tool to ensure that owners of particularly vulnerable copyrightable works are able to bring suit immediately against those infringing on their works. Otherwise, the copyright owner will have to wait eight or nine months to receive actual registration from the copyright office before they can bring a suit for copyright infringement, which would likely damage the value of the underlying intellectual property. As always, the attorneys at Vandenack Weaver are available to assist with protecting your intellectual property.

VW Contributor: Alex Rainville
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Technology Vendor Due Diligence; Protecting your Brand

Most companies in the modern economy utilize technology to compete in an increasingly competitive marketplace. In order to utilize third-party technology, a business has to obtain a license from the technology vendor or reseller, otherwise risk intellectual property infringement. Even when using open-source software, the use is subject to licensing restrictions and other limitations. While getting the licensing correct is critical to ensuring your business obtains the most value from the technology, an often over-looked element of procuring technology is the due diligence phase.

Technology due diligence is similar to diligence performed on any vendor, such as ensuring the technology will fit your needs and obtaining favorable pricing, but the due diligence should be far more extensive in the modern technological world. By way of example, in the healthcare industry, over 25 million health records have been breached to date in 2019, many of which as a result of a third party technology provider failing to protect the health information. This means that businesses, especially those in a regulated industry where the technology vendor has access to personal information, need to perform additional diligence on third-party technology providers.

The additional diligence should focus on what the vendor is doing with the data and personal information, ensure that the vendor has protections and controls that meet the various, and often overlapping, state, federal, and international data protection rules, and ensure that their technical protections meet industry standards. Although this will likely require obtaining additional expertise from outside your organization, taking these additional steps during the diligence phase will protect your brand from a potential disruptive data breach at a vendor that results in your business being harmed.

 

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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The CCPA is Here to Stay; Now What?

The California Consumer Privacy Act (“CCPA”), signed into law in 2018, will become effective on January 1, 2020. Many organizations hoped that the California legislature would narrow the scope of the CCPA prior to its effective date, but the legislature adjourned without taking action to narrow its scope. For businesses, this means that preparations should be underway to comply with the CCPA before the California Attorney General has statutory authority to enforce the law on July 1, 2020.

The initial step for a business to develop a CCPA compliance program is to understand what personal information it collects and determine what it does with this personal information. Similarly, the business should review its policies and procedures regarding its collection and processing of this personal information, then conduct a gap analysis between its written procedures, actual procedures, and the CCPA. Understandably, this gap analysis will be challenging, given that the California Attorney General is expected to promulgate regulations under the CCPA this fall and several potential amendments are awaiting the California Governor’s signature. However, the substance of the CCPA should remain the same and actions should be taken to prepare.

For businesses outside of California, much like the GDPR, the CCPA is designed to be extra-territorial. This means that businesses outside of California that conduct business within the state, or with residents of the state, need to take steps to comply with the CCPA, or at least mitigate its risks. The time for a business to prepare for the CCPA is now, even though the law itself will continue to evolve.

VW Contributor: Alex Rainville
© 2019 Vandenack Weaver LLC
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CBD Sellers Beware: FTC Issues Warnings on CBD Marketing Practices

By Ryan Coufal

On September 10th, 2019 the Federal Trade Commission (“FTC”) sent warning letters to three companies that sell oils, tinctures, capsules, “gummies,” and creams which contain cannabidiol (“CBD”), a chemical compound derived from the cannabis plant.  While the FTC did not identify the companies publicly, the letters warn that it is illegal to advertise a product that can prevent, treat, or cure human disease without reliable scientific evidence to support such claims. 

The companies’ websites claim that CBD products “’work like magic’ to relieve ‘even the most agonizing pain,’” are a “miracle pain remedy,” and are highly effective at treating “the root cause of most major degenerative diseases.”  The websites then promote that CBD treats a whole host of diseases including: cancer, Alzheimer’s disease, multiple sclerosis (MS), fibromyalgia, cigarette addiction, colitis, autism, anorexia, bipolar disorder, post-traumatic stress disorder, schizophrenia, anxiety, depression, Lou Gehrig’s Disease (ALS), stroke, Parkinson’s disease, epilepsy, brain injuries, diabetes, Crohn’s disease, psoriasis, AIDS, arthritis, and heart disease, with one of the websites even stating the treatment is “clinically proven.” 

In its letters the FTC instructs the companies to review all claims made about their products, including consumer testimonials, to ensure such claims are supported by competent and reliable scientific evidence.  Making such unsubstantiated claims can be in direct violation of sections of the FTC Act, 15 U.S.C. §§ 45(a) and 52, which regulate advertising.  Additionally, such claims can violate the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. § 321(g)(1)(B) which is regulate by the U.S. Food and Drug Administration (FDA).  On March 28, 2019 the FTC and FDA jointly sent similar warnings to three different CBD companies about their marketing practices, with the FDA taking the stance that such marketing practices are evidence that CBD products are intended to be used as drugs, which require extensive testing and FDA approval before marketing the products in such a manner.  Making a claim that CBD is a drug that can cure disease when it has not been approved by the FDA could create the potential for violation of the FDCA.

The FTC gave the latest three companies fifteen (15) days to notify the agency of the specific actions they have taken to correct the agency’s concerns.  Companies that sell CBD products should take note of the marketing practices the FTC and FDA are regulating and review all claims made about their CBD products and ensure they are backed by reliable and competent scientific evidence, and ensure they are not marketing CBD products as drugs under the FDCA.

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Nebraska Sales and Use Tax on Short-Term Rentals: New Guidance by the Nebraska Department of Revenue

By Ryan Coufal

Earlier this year Nebraska LB 284 passed into law requiring remote sellers—those without a physical presence—whose retail sales exceeded $100,000 in the previous year or current calendar year or if the seller made 200 or more separate Nebraska retail sales transactions in that same time frame, to obtain a sales tax permit from the Nebraska Department of Revenue (DOR) and begin collecting and remitting Nebraska and local sales tax.  Included with the online retail sales were sales made Multivendor Marketplace Platforms (MMP), or online marketplace facilitators.  Remote sellers selling through MMP’s must file sales tax returns reporting all of their Nebraska sales, but are relieved of the duty to collect and remit the sales tax on sales facilitated by the MMP if the MMP reports and remits the tax to the DOR.

Recently, the Nebraska DOR provided guidance on sales and use tax collection for remote sellers and MMPs which transact sales regarding Short-Term Lodging and Rentals in General Information Letter (GIL) 1-19-1.  The GIL clarifies that beginning on April 1, 2019, MMPs which facilitate short-term rentals must obtain sales and lodging tax licenses and begin collecting and remitting these taxes on the sales they facilitate, much like MMPs facilitating retail sales.  Additionally, the MMP is to complete the MMP Lodging Tax Worksheet-Breakdown by County with the Nebraska and County Lodging Tax Return (Form 64) to report the lodging tax by each county for sales facilitated in Nebraska.  Hotel or tourist home owners who provide short-term lodging and rentals are relieved of the duty to collect and remit the sales and lodging taxes on sales facilitated by an MMP if the MMP reports and remits the taxes themselves to the DOR, however, any sales and lodging not facilitated by an MMP must still be reported by the short-term rental provider themselves.

Per the Nebraska Revenue Act, a retailer or seller of lodging is defined as any person who, directly or indirectly, rents or leases property for a profit or gain when the transaction is subject to the sales tax, including sales facilitated by an MMP.[1]  The GIL indicates that travel agents who do not publish room availability and rates on behalf of hotels or tourist homes are generally not considered MMPs. This helps clarify a travel agent from a more well-known MMPs, such as Airbnb.

[1] Neb. Rev. Stat. §§77-2701.07, 77-2701.13, 77-2701.16, 77-2701.32 and 77-2701.36; see also Neb. Rev. Stat. §§77-2701.25, 77-2701.31, and Nebraska Sales and Use Tax Regulations 1-004.02C.

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Foreign-Domiciled Applicants; Why the Change at the Trademark Office?

By Alex Rainville

In a long anticipated decision, starting on August 3, 2019, foreign domiciled trademark applicants, registrants, and parties must be represented by a US licensed attorney in front of the United States Patent and Trademark Office (“USPTO”). This means that any foreign-domiciled person or business wishing to seek trademark registration with the USPTO must appoint a US licensed attorney to file and prosecute the trademark registration application. This may appear like an unnecessary burden, but it is part of fixing overarching administrative problems.

The USPTO is actively trying to modernize and streamline the trademark registration application process, to ensure timely review of applications and increase efficiency to final outcomes. One of the challenges to this process has been a large number of foreign-domiciled applicants submitting inaccurate, and often times fraudulent, materials. By way of example, a common problem with these applications is the specimens are either failing to meet the required standards or are outright fraudulent. This increases the time required for the USPTO to examine and process applications, resulting in an inefficient registration process for all applicants. By using a US licensed attorney, the USPTO expects that the applications will be more accurate and eliminate much of fraud, ultimately increasing efficiency.

For businesses wishing to protect its intellectual property, even those based in the US, it is a good idea to hire a trademark attorney. For example, the attorney will be able to guide you on what can be protected under the Lanham Act and the common law, and the best avenue to obtain registration or, more generally, protection for your intellectual property. They will also ensure you and your business are not defrauded by the multitude of USPTO imposters, and will know how to file complaints regarding these imposters with the Federal Trade Commission, for the Department of Justice to prosecute. Although this change of policy at the USPTO may seem unfair to foreign-domiciled applicants, the change may ultimately benefit all the businesses relying on the USPTO to protect its brand and intellectual property.

© 2019 Vandenack Weaver LLC
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Will the United States Enact a Federal Law on Privacy?

By Alex Rainville

With corporate giants like Amazon, IBM, Citigroup, and 48 others pushing for federal legislation on privacy, will the United States Congress act? In a letter to Congress, dated September 10, 2019, these corporate giants are pushing for a “comprehensive consumer data privacy law” that will stabilize the myriad of state rules.

In the absence of federal legislation, individual states have taken the responsibility for legislating consumer privacy and data security standards. In fact, Alabama was the last to enact such a law, and that law has been in effect since June 1, 2018. However, most individuals are unaware of their rights and, importantly, most businesses are unsure of how, or are simply unable, to comply with many of the state laws. Even the much-publicized California Consumer Privacy Act (“CCPA”) remains a challenge for businesses to comply with, and many businesses remain unaware that they are subject to this rules even though they reside outside of California.

This push for federal privacy legislation comes on the heels of the European Union enacting and implementing the General Data Protection Regulation, which ushered in an unprecedented level of privacy measures for European Union Data Subjects and regulatory burdens for data controllers and processors. Will the US Congress follow suit and implement a federal data privacy law? Only time will tell, but businesses should be prepared to comply with each state rule, as enforcement and fines for failure to comply have started to hit US companies of all size.

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