Month: October 2017

(Don’t) Say My Name

3581676336_048e8a16fc_b

By Vanessa James

“We’re a company that’s so successful and everywhere you go, you see a scratchy, hairy fastener and you say…

Hey, that’s Velcro.”

So begins the recent Youtube video Velcro released on September 25, 2017. In an effort to protect itself against genericide—an intellectual property term that means the retraction of a trademark because the brand name has become synonymous with the type of product—Velcro released a video pleading with the public to stop saying “Velcro” and start instead saying “hook and loop.”

It may seem innocuous to use brand names to describe products associated with the brand, but this is actually often a red flag that the brand could potentially lose its trademark. For instance, when was the last time you drank from a “vacuum flask,” walked on a “moving staircase,” or went to a “coin laundry shop?”

Velcro, which was first registered as a trademark in 1956, is trying to avoid losing its trademark, as did thermos, escalator, laundromat, yo-yo, aspirin, and pilates. The purpose of a trademark is to uniquely distinguish the goods or services of a company and to help consumers identify the source of a product. When a trademark becomes synonymous with a class of goods, it no longer helps consumers to understand which company made the product. If this happens, the trademark may be cancelled by the U.S. Patent and Trademark Office. Once a trademark is cancelled, the mark can no longer be used to prevent others from using the same mark to describe their products.

One factor courts consider when determining whether a trademark has become generic is whether the owner attempted to educate the public on the proper use of the mark and the generic name for the goods. Enter Velcro’s video. Ad campaigns like Velcro’s have a record of successfully stopping brands from losing their registered trademarks. Campaigns for Xerox (a 2003 advertisement from photocopier firm Xerox read: “When you use ‘Xerox’ the way you use ‘aspirin,’ we get a headache), Jeep, and Band-Aid saved those trademarks from becoming generic.  Johnson & Johnson changed its marketing jingle from “I am stuck on Band-Aids, ’cause Band-Aid’s stuck on me” to “I am stuck on Band-Aids brand ’cause Band-Aid’s stuck on me.”  Chrysler turned to the term “SUV” instead of “Jeep.” The Dow Chemical Company, which makes a well-known “line of extruded polystyrene foam products,” has worked to remind consumers coffee cups are not made of Styrofoam.

Another recent example of a company fighting to save its trademark comes from well-known jewelry chain Tiffany & Co. Tiffany initiated a legal battle with U.S. wholesaler Costco when Tiffany claimed that Costco infringed its trademark by selling “Tiffany” engagement rings. In retaliation, Costco argued that the jewelry firm’s trademark was no longer valid because “Tiffany” had become a generic term for solitaire-style rings. Judge Swain of the United States District Court for the Southern District of New York determined that Costco did in fact infringe on Tiffany’s trademark and awarded Tiffany $11.1 million plus interest in addition to $8.25 million punitive damages. For now, producing a simple, fun Youtube video is far less costly way for Velcro to protect its trademark.

Picture Source

“Errant text messages cost the Buffalo Bills millions”—the Rise of TCPA Litigation

Blog- Phone ImageBy Craig Dammeier

In April of 2014, the Buffalo Bills settled a two-year federal court case in Florida for a cool $3 million dollars. Their mistake? Sending three more text messages over a 14-day period than a fan had agreed to. Mr. Jerry Wojcik visited the Bills’ website in 2012 and opted-in to receiving promotional text messages limited to “…three to five messages per week for a total of 10 to 12 weeks.” Instead, Mr. Wojcik received six text messages the first week and seven the second week. He subsequently filed a class action suit against the sports franchise alleging violations of the Telephone Consumer Protection Act (TCPA). The settlement agreement was as follows: each eligible class member was entitled to a share of $2.5 million worth of debit cards (only redeemable on the Bills’ website, a “win” for the franchise) and $500,000 in attorney’s fees. And it’s not just the Bills (nor the NFL) that faces this menace. The Tampa Bay Buccaneers and the LA-based Chargers, Clippers, and Lakers have all fallen victim to the heartless TCPA. These teams are being mercilessly-abused over a few extra promotional emails or texts—who will help them survive the night?

The TCPA, passed by the Federal Communications Commission in 1991, was originally intended to protect individuals against unsolicited calls and texts sent to wireless devices (and home phones) by “auto-dialers.” Auto-dialers are automatic telephone dialing systems that use prerecorded or artificial voice messages. The 1991 statute arose over complaints regarding the increased use of auto-dialers, specifically because the called parties could incur significant phone bills as a result of the unsolicited calls. In response, the TCPA provides statutory damages of $500 (for an “innocent” violation) and $1,500 for a willful violation of the statute.

In 2012, a subsequent amendment to the TCPA included text messages and other modern technologies into the statute and further precluded companies from making any call without the prior express consent of the consumer. It also required the companies provide an automated, interactive “opt-out” mechanism which would allow the consumer to stop all future messages. It is under this 2012 amendment that TCPA litigation has seen a historic rise in the court system.

While the statute was originally passed to protect consumer privacy and restrict companies from engaging in unwanted telemarketing communication practices, it has quickly become a favorite weapon of plaintiff’s firms as it creates liability for every company from startups to international banks (not just sports franchises). Furthermore, the Act enables mistreated consumers and their lawyers to collect massive class action settlements. Bank of America settled its TCPA class action for $32 million (the culmination of six pending TCPA litigation matters), HSBC was granted judicial approval of a $40 million settlement in 2015, and Western Union agreed to pay $8.5 million the same year. The potential payout has created a frenzy amongst plaintiff’s firms, with several creating sub-groups that specifically handle TCPA class actions. The rise in TCPA litigation has not gone un-noticed by the Judiciary either: “This is the second multi-million-dollar class action settlement this court has reviewed and addressed in the last three weeks in which the plaintiff class has sued credit card companies for violations of the Telephone Consumer Protection Act.”

In short, the sharks are circling and each bite provides larger and larger settlements for Americans whose consumer rights have been violated (along with attorney’s fees, of course).

Antitrust Implications of Amazon’s Purported New Delivery Service

Amazon-Shopping-in-KenyaBy Gardner Reed

Amazon’s recent acquisition of Whole Foods has renewed the debate surrounding the proper role of antitrust regulation. The traditional approach to antitrust law aims to protect consumers by keeping prices down and quality up. The Whole Foods acquisition, along with the growing dominance of large tech firms such as Google, has helped popularize a new approach to antitrust: “hipster antitrust.” Hipster antitrust widens the objectives of traditional antitrust regulation, not only protecting consumers through fostering competition, but also using antitrust enforcement to attack problems such as economic inequality and environmental degradation. While the Federal Trade Commission promptly approved the Whole Foods acquisition, recent reports that Amazon is developing a delivery service to rival FedEX and UPS may raise a new round of competitive questions and continue the debate surrounding the proper role of antitrust regulation.

To begin, it is important to understand why Amazon’s acquisition of Whole Foods was not an antitrust violation. First, Amazon itself only sells a small amount of groceries and Whole Foods only accounts for two percent of the American grocery market. Second, the grocery market contains far larger and more entrenched competitors, such as Walmart with a twenty percent market share and Kroger with a seven percent share. Third, antitrust regulators, applying the traditional approach to antitrust, believe that fostering competition is the best way to promote low prices and high quality. Because this merger accounted for only a small share of the grocery market, consumers were left with plenty of competitive alternatives whether or not it led to lower prices or higher quality services.

However, recent reports indicate that Amazon is planning to launch a new delivery service similar to FedEX and UPS. According to Bloomberg, project “Seller Flex” began a trial run on the West Coast in 2017 with an expansion planned for 2018. The purpose of the system is to decrease the crowding in Amazon’s warehouses and increase the number of products available through two-day delivery. Under this new system, Amazon will directly oversee the pickup and delivery of packages from the warehouses of third-party merchants who market their items on Amazon.com. Traditionally, when delivering to end consumers, merchants had the choice to ship their products directly through Amazon or to use third-party carriers such as FedEX and UPS. Amazon may still elect to use FedEX and UPS to make deliveries, but merchants will no longer be able to make the decision on their own. Amazon expects that its increased control of the shipping process will allow it to save money through volume discounts, avoiding congestion, and increasing its flexibility.

By drawing comparisons with Amazon’s acquisition of Whole Foods it is possible to identify potential competitive concerns implicated by the new delivery system. The key difference is the amount of competitive power Amazon wields in each market. In the grocery market, Amazon is not an antitrust risk because it is a small player with only a two percent market share, which gives it essentially no ability to affect its competitors’ businesses or the market as a whole. In the e-commerce market, however, Amazon provides an essential platform and acts as a gateway for businesses to reach consumers across the United States. In the past, merchants could participate on Amazon’s platform, but retained the option to select their preference of delivery service. By requiring the use of its own delivery service, however, Amazon will be depriving its merchants of choice. Given Amazon’s power in the e-commerce market, merchants have limited alternatives to Amazon’s platform and thus may have no other realistic option outside of using Amazon’s in-house delivery service. This lack of competition in delivery methods could potentially raise end prices for consumers.

Ultimately, it is too early to predict the competitive effects of Amazon’s delivery service, but different schools of antitrust may reach different conclusions. Consistent with its track record, it is likely that Amazon will do everything in its power to lower prices and offer a better service by integrating delivery into its e-commerce platform. Under these circumstances, a traditional antitrust review would not likely find a problem. A review under “hipster antitrust”, however, may find a problem regardless of the cost or quality outcome. As part of a larger policy matter, such as protecting small businesses, Amazon’s acquisition of more power and the reduction of choice for its merchants may simply be unacceptable. Regardless of the outcome, Amazon’s continued expansion of its operations has all but guaranteed that it will remain a focus of antitrust discussions for the foreseeable future.

Sharing Is Not Always Easy – An Analysis of Sharing Data Between the Public and Private Sectors

Picture1By Isaac Prevost

Traffic data plays an important role for public agencies concerned with traffic management and infrastructure. We’re seeing private companies collect more and more of this data, occasionally resulting in partnerships between governments and those private companies. However, whether these partnerships will stave off an increased interest in regulatory requirements of private data disclosure remains to be seen.

Federal, state, and local governments collect significant traffic data about traffic patterns and use of roadway system. The collection methods used by governmental entities range from interconnected sensors along the road to government employees manually tallying vehicle occupancies. This information is then used to analyze infrastructure needs, improve public transportation routes, and provide real-time traffic information to the public. In recent years however, there has also been a substantial uptick in the amount of traffic data collected by private companies. This is occurring with the prevalence of ride-sharing companies, increasingly-automated cars, and mapping applications such as Google Maps.

So, just how are public transportation agencies utilizing these new sources of data? Waze, a GPS navigation software owned by Google, launched the Connected Citizens Program in 2014 that shares traffic and road information with public entities for free. Agencies that partner with them participate in a two-way exchange of traffic data, giving Waze information on road closures and incidents. This private data supplements the government’s data, providing better information on functions such as the timing of traffic signals or the dispatch of emergency vehicles.

An alternative example of these partnerships can be found between Strava Metro and public agencies, where the agency pays for access to the data. Strava, a popular application for runners and cyclists, gives the public entities access to the their users’ running and cycling routes.  The Oregon Department of Transportation pays $20,000 per year for access to the data. Information from Strava Metro was a factor in the decision to restrict cars from Portland’s Tilikum Crossing bridge. These types of collaborations are just a small sample of how private data is increasingly being used in public planning.

However, even though the voluntary sharing of private data with public entities has become more common, it has not happened without its hurdles. While governments may be eager to use the data that companies like Waze or Strava are willing to share or sell, tensions have arisen when a company like Uber is reluctant to turn over data or withholds certain customer information. A partnership between Uber and the City of Boston in 2015 resulted in underwhelming results because Uber only disclosed the zip codes for the start and end location of an Uber user’s ride. A city official explained that the location information was not specific enough to be useful for urban planning.

Instead of pursuing partnerships, some cities have required data information from ridesharing companies in exchange for their license to operate in the area. In January 2017, the New York City Taxi and Limousine Commission requested all passenger pick-up and drop-off information from ride-sharing companies such as Uber and Lyft. Uber publicly objected to the proposal, citing the privacy of their drivers, but the Commission kept the requirement. The City expressed interest in the value of Uber’s data for traffic planning and analysis, as well as a tool for preventing drivers from working beyond their permitted total of work.

Possibly in an effort to appease regulators, Uber launched Uber Movement this year, which aggregates and anonymizes Uber’s ride data to show the traffic flows of various cities. In their FAQs section, Uber Movement states that the launch of the site was partially due to feedback from government agencies that “aggregated data will inform decisions about how to adapt existing infrastructure and invest in future solutions to make our cities more efficient.” One of their pilot reports tracked how a metro shutdown in Washington D.C. affected travel times in the city. The New York Times labeled this website “an olive branch to local governments.”

Uber Movement formally launched in August. As it gains more and more data on various cities, it could provide an interesting case study: what amount and type of private traffic data are governmental entities hoping to access? Will the availability of this data stave off further local and state regulations? Partnerships between governments and private companies are becoming more and more common, but the success or failure of Uber Movement may provide some insight into what lies ahead for these types of partnerships.

 

Picture Source

Online Education and Federal Funding: When Is a Class Actually a Correspondence Course?

Picture1By Brittany Taylor

On September 21st, 2017, the Inspector General for the Department of Education released an audit of Western Governors University (WGU), a non-profit, primarily online university that has been using technology to further higher education for twenty years. The Inspector General’s findings indicated that WGU does not provide the “regular and substantive contact” between students and teachers required by The Higher Education Act, making its classes what are called “correspondence courses,” which are ineligible for federal funding. Moreover, the inspector general has recommended that WGU repay all funding received over the last several years, which would total over $712 million. Western Governors University contests these findings vehemently, and supporters of the school have come out of the woodwork to praise the WGU’s unique educational model as well as the above average outcomes its students enjoy.

Online education has been a rapidly changing and growing field, both in high schools and on college campuses. The Higher Education Act, enacted in 1965, has not been updated to account for technological changes in education technology. It also applies outdated rules to modern programs, despite making other updates during reauthorization periods. In the case of WGU, students who (1) watch lectures digitally (sometimes in real time), (2) complete the same assignments as students in a brick-and-mortar classroom, and (3) communicate with professors by phone, email, and assignment feedback, have been found ineligible for federal funding under the same rules that made mail-in correspondence courses of the 1960’s ineligible. Specifically, these types of contacts were not considered “regular and substantive” enough to meet Title IV requirements to receive federal funding for the school. However, the Department of Education has not issued guidelines to assist schools in meeting the “regular and substantive contact” with teachers requirement, according to Jamie Merisotis, director of the Lumina Foundation, leaving institutions like WGU to use their best judgement in attempting to meet it.

One response to these findings is a movement to update the language in the Higher Education Act to better adapt and account for current technology and research regarding what types of education are effective. A house bill has been proposed to help update the statutory and regulatory framework behind online learning. The Advancing Competency-Based Education Act of 2017, HR 2589, is currently receiving bipartisan support and will, if passed, update the Higher Education Act of 1965 language to be more accommodating of modern technology and educational models like WGU’s.

Meanwhile, WGU is awaiting the Department of Education determination regarding these findings. It is entirely possible for the Department of Education to decline to act upon the results of the audit, effectively punting the question to some later date. Even if the audit is not acted upon, though, the findings send a chill through innovative education models that rely upon government funding.

Picture Source