Cruz Law, PLLC

Dedicated representation, personal service and quality results

New LLC rules regarding allocations of profits and losses

The recently amended Washington state rules for limited liability companies addresses the allocation of profits and losses to its members. Under the old rules, the default rule for distributions and profits and losses were to be allocated to the members in proportion to the agreed value of contributions made or required to be made by each member.

The new rule, RCW 25.15.206, provides a default rule for distributions based on the agreed value of contributions. However, there is no default rule for allocating profits and losses.

In order to avoid the default rules, the members of an LLC could draft their own agreement related to its distributions as well as allocating profits and losses. If you are interested in knowing more, I can be of assistance.

Advertising functionality could hurt trademark

In a recent ruling by the Trademark Trial and Appeal Board, affirmed an Examining Attorney’s decision that an application for a proposed rifle barrel configuration mark in connection with rifles and rifle barrels could not be trademarked.

There are several elements (sometimes referred to as the Morton-Norwich factors) for analysis when determining whether a product design or feature can be owned as a trademark or whether it is functional and part of the public domain.

  1. The existence of utility patent that discloses the utilitarian advantages of the design sought to be registered;
  2. Advertising by the applicant that touts the utilitarian advantages of the design;
  3. Facts pertaining to the availability of alternative designs; and
  4. Facts pertaining to whether the design results from a comparatively simple or inexpensive method of manufacture.

TMEP 1202.02(a)(v); In re Becton, Dickinson & Co., 102 USPQ2d 1372, 1377 (Fed. Cir. 2012); In re Morton-Norwich Prods., Inc., 1340-1341, 213 USPQ 9, 15-16 (C.C.P.A. 1982).

While the decision hinged on multiple factors, one of the practical matters cited by TTAB in denying its trademark application was the advertising description on the company’s web site which touted the company’s “patented helical fluting” for its “Fluted Gun Barrel.”  TTAB determined that the applicant’s claims were “more than mere puffery.”  Although the trademark applicant advertised on its web site that it’s product had a “unique appearance,” it also stated on its web site its utilitarian advantages.

A functional matter cannot receive trademark protection.  A product feature is functional, and cannot serve as a trademark, if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.

For a company that looks to trademark one of its products, it must be careful with its ad copy on its web site or other promotional materials.  TTAB will review this information in making a determination as to whether the application for a trademark can be approved.

It should be noted that the Examining Attorney originally denied the application for lack of response by the applicant.  TTAB subsequently ruled on the basis of the information described above.

Case: In re E.R. Shaw, Inc. (mailed September 29, 2015)

Bikram yoga loses copyright fight

A recent 9th circuit Court of Appeals ruling determined that Bikram Yoga’s regimented exercise routine is not protected by copyright.

The determined that it was not copyrightable as a compilation or a choreographed work.  The court held that the yoga poses encompassing Bikram is “an idea, process or system to which copyright protection may “[i]n no case” extend.”  Essentially, the 9th circuit determined that the sequence of yoga poses fall within Section 102(b)’s exclusions from copyright protection.

The court makes the distinction between expression of ideas and the ideas themselves.  The latter is not copyrightable while the former might be.  The analogy utilized by the court here is that of a book describing a book-keeping system.  While the book might be subject to copyright laws, the actual system for book-keeping would not.

The opinion negated arguments by Bikram that its sequence of poses, which were first published in a book, were transformative into copyrightable material.  While the actual book is subject to copyright laws, the court determined that the actual poses and sequence are not.

The case is Bikram’s Yoga College of India L.P. and Bikram Choudhury v. Evolation Yoga LLC, et al.

Fantasy Sports in Washington still a big question

This year, legislators in Washington introduced a bill which would allow fantasy sports fans in the state access to web sites like Draft Kings and Fan Duel.  Currently, Washington is one of just a handful of states that prohibits fantasy sports in their state.  The proposed law would classify fantasy sports as a game of skill and exempt it from gambling.

With the start of a new NFL season, we will see a lot of commercials for Draft Kings and Fan Duel which will offer monetary prizes for those that enter.  Well, you are probably best served to turn the channel when you see these ads because residents of the state of Washington will continue to be blocked from access as the bill has not moved much since its introduction.

One of the reasons is due to the state differing on the definition betweendaily fantasy sports and season-long fantasy sports.  The critical distinction that seems to be made here is that daily fantasy sports would include less skill than that of a season long fantasy sports league.  Regardless the distinction seems to be the reason there is a hold up.

Since a committee hearing earlier this year on the proposed legislation, the bill has stalled although it was reintroduced on June 28th and maintains a present status.