Creative Label Trademark Case

Matt Sieverson had wanted to manufacture personalized label wine for years. He had made wine in his basement and put on special labels as gifts for his friends on special occasions such as weddings and special parties. His friends remarked that the wine was very good and the label was a great idea.

Matt decided to go ahead with his dream venture and produce wine commercially with personalized labels. He made all preparations for the venture including having others manufacture the product to his specifications, obtaining the necessary licenses and getting approval of the basic label that had the constant information required by the government for an alcoholic beverage.

He now wanted to get his venture known and needed a tradename to promote his company. He decided upon the name "Creative Label" and discussed with his attorney the process for obtaining a trademark. He learned that each filing with the federal government for a trademark would cost about $1000.00 ($325.00 for the filing fee and the rest in attorney fees). Also, if he wanted to learn if others are using this tradename, he could engage Thomson & Thomson of Washington D. C. (1-800-356-8630) to do a trademark search for about $370.00.

Matt considered that this is a start-up venture and the $1000.00 plus that he would spend now for a tradename really is hard earned money. What would happen if he used the name and someone else had it registered? If he had to stop using the name it would set him back somewhat in his company recognition. But at start-up time, how should you spend your money? What would you do?

Computer Software Copyright Case

Keith Straitmann owned a small computer store named The Computer Shop in Cedarburg, Wisconsin, one of many such businesses in small-town rural America. He custom built inexpensive personal computers for small businesses and individuals in Cedarburg, and had a clientele that was interested primarily in low cost personal computer systems.

Most of the personal computers sold by The Computer Shop retailed for only $500-600, complete with a monitor, a keyboard, and a mouse (the more expensive systems have an LCD monitor, while the cheaper systems have a CRT monitor). The personal computers were sold with only Microsoft Windows XP and Microsoft Office XP installed on them, and did not come with operator's manuals or other software.

The Computer Shop sells only six to fifteen personal computers a month, and cannot afford to advertise either in the local newspaper, the Yellow Pages, or a local radio station, and has only a basic Internet site.

The cost of a legitimate copy of Microsoft Windows XP can add anywhere from $80-160 to the wholesale cost of a personal computer, and the cost of a legitimate copy of Microsoft Office XP can add at least $125 to the wholesale cost of a personal computer.

Since the local market will not bear a higher cost (thanks to low end personal computers being available from Dell by mail order), The Computer Shop provides the personal computers they sell with Windows XP and Office XP preinstalled, but without any documentation or discs.

Even with these cost-cutting measures, The Computer Shop was not making a profit, and Mr. Straitmann sold the business to you six months ago for the cost of the computers in inventory.

You previously operated a computer store in Illinois, and buy in larger quantities from a hardware vender in China who sells you the personal computers with Windows XP and Office XP preinstalled and with (you assume) Microsoft licensed CD's of the software for each personal computer.

You have pointed out to several of Mr. Straitmann's customers who returned to The Computer Store with software problems that they don't have a Microsoft Product ID Code that would allow you to reinstall the software on their personal computers. On at least one such personal computer that has been so returned, it is unclear whether it was sold before or after you bought The Computer Store.

This morning, you were served with a complaint naming The Computer Store and Mr. Straitmann as defendants in U.S. District Court in Milwaukee in a lawsuit filed on behalf of Microsoft for software piracy.

What are the potential issues for you in connection with the lawsuit? What would your first steps be? How would you attempt to resolve the issue, keeping in mind that you cannot afford to hire an expensive law firm to defend the litigation against Microsoft.

Appliance Master, LLC - Patent Defense Case

Appliance Master, LLC (AM) created a household appliance that was especially effective in attracting and killing flying insects. The basic appliance had been invented in Asia over 10 years earlier and the Asian inventors were unsuccessful in obtaining a patent on the basic appliance.

AM had brought the appliance to the USA and had made an improvement for which AM applied for and obtained a patent. The improvement was the addition of an air actuated damper that kept live insects from escaping before they dehydrated and died. AM had grown in its 5-year life to a company with current sales of $15 million annually.

Pest-Be-Gone, Inc. (PBG) was a competitor of AM with a bad reputation for stealing inventions of their competitors. In one case PBG infringed the patent of Big Gun, Inc. (BG), a $70 million company in the pest control industry. BG took PBG to court for patent infringement and won a $500,000 award after spending $2 million in court and attorney costs to defend its patent. (or a net loss on the transaction of $1.5 million.)

PBG copied AM's air actuated damper in products that it is currently selling. AM asked its patent attorney to send a cease and desist letter to PBG.

Three weeks after the cease and desist letter was sent, PBG sent a letter to AM enclosing documents advising that a suit in federal court had been filed against AM to invalidate AM's patent on the grounds that AM did not file its patent application within the one year time limit after public disclosure of the invention. PBG cited AM's dated web site that showed AM's appliance over one year earlier than the patent application date.

AM claims that its filing was timely and that the product in the web site was the model that existed before the air damper was included. However, AM believed that it would be difficult to prove that the air damper was included in public disclosures only within the 1 year time limit.

As the entrepreneur owner of AM, what would you do?