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Legal Age
February 28,
2013 by in UnCategorized 
By Home Furnishings Business in on March 1, 2013
The increasing role of Internet sales and social media in their business has created new legal considerations for home furnishings retailers.
While knockoffs remain an issue in furniture land, and retailers must watch that they dont get caught up in vendors legal disputes, the open range of the social media world can make it easy to run afoul of other areas related to copyright infringement.
Speaking of knockoffs, retailers should be aware of the implications of the America Invents Act, said Jack Hicks, an attorney specializing in patent and intellectual property law at Womble Carlyle Sandridge & Rices Greensboro, N.C., office.
Its the most significant change to patent law Ive seen in my career, Hicks said. The changes primarily are to address patent situations and to harmonize U.S. law with the rest of the world.
The act is particularly significant for those doing international business and online retailingto expedite quality patents and the time it takes to litigate those patents.
One particular change relates to patent-marking requirements.
If retailers suspect theyre buying a design knockoff, I suggest they see whether the organization has sought patent protection (for the item in question). Hicks said. Now, patent owners can identify a piece on their Web site when they have patent protection.
This is one way retailers can try to gauge their exposure, but its not a safe harbor for several reasons: First, patent protection is only one of several forms of protection that apply to furniture. The others are copyright and trademark. Second, new patent laws pertain only to patents.
The acts biggest change is a switch from first to invent to first to file, which comes into play when more than one person comes up with a new design.
Overall, I dont see major impact on retailers or the prevalence of knockoffs in the industry, Hicks said. As the economy picks up again, well see an uptick in successful new products, and an uptick in people emulating that success.
One might think that a difficult economy would lead to more companys trying to emulate anothers success with a particular product, but that hasnt been the case said Jake Wharton, Hicks colleague in Womble Carlyles Winston-Salem, N.C., office, who also specializes in patent and intellectual property law.
In the time Ive been observing this, counter-intuitively the recession did not result in an uptick of knockoffs, Wharton said. My take is that of the number of companies inclined to knock off, some of those have gone away.
And if you watch whats going on, not as many rights owners are putting forth the resources to go after the closer calls. Is it worth it for them to pursue in a down market. Unless its a major seller it might not be.
TROLL WATCH
Retailers should be aware that there are folks out there looking to take advantage of copyright law, and not just for furniture design.
Seventy percent of the infringement cases Im seeing deal with trolls, Wharton said. Thats a disparaging term we use for non-practicing entities.
Trolls are people or organizations who basically try to make money on patents, but had no hand in the development of the products in question.
These are people trying to monetize patents. Since patents can be bought and sold, you have investment groups pooling their resources to buy patents, Hicks said.
They arent practicing the technology, theyre exploiting it.
The America Invents Act tries to curtail trolls, but their activity is legal. Theyre collecting royalties, and theyre filing suits left and right. Every Fortune 500 company gets a letter from one every two or three months. The top five furniture companies have gotten these, based on their Web site activity.
Example: Lets say a software developer is helping ACME Furniture Store develop its Web site, which needs search functionality.
Wharton cited Kerlora Systems, whose targets to date include Target Stores, Office Maxx, Office Depot and Nebraska Furniture Mart, claiming a patent on searching with parameters.
Kerloras not going to sue the software developer whos making the Web sitethats killing the golden goose, Wharton said. They go after the retailer for an e-commerce functionality license.
Several companies, including Nebraska Furniture Mart, have filed counter-suits against trolls. (Check this link.)
One of the frustrated targets of a recent troll counter-claimed for violation of racketeering regulations, Wharton noted, adding that litigation can cost retailers a lot of money. Its cheaper to pay $10,000, $50,000 than to pay for patent litigation.
The retailers mentioned above are large companies, but smaller ones can draw trolls attention.
If Mom and Pop go to their nephew to design their Web site thats who the troll will go after, Wharton said. Thats one advantage to going with an established company (for Web site design)theyll fight it.
SOCIAL WHIRL
Social media and social media-related issues are hot topics for all brands, not just retailers, said David Ervin, a partner in Kelley Drye & Warrens Washington, D.C., office who focuses his practice on the interplay between intellectual property and advertising law.
And the social media arena brings on its own set of legal issues for retailers looking to make connections with existing and potential customers there.
Pinterest presents the biggest intellectual property challenges (in social media) for retailers, Ervin said. The primary issue is copyright risk. Pinterest is set up to share the things people love.
He offered several rules of thumb for retailers using Pinterest. First, be aware anything you pin to your board can be pinned to anyone elses board. If it gets re-pinned, you cant take it back, it goes viral.
Only pin images you own or have a license to use, Ervin said. If you are a retailer, and have a relationship with a manufacturer, that is an appropriate image to pin.
If you dont have a relationship you might not have a right to use it. The manufacturer might have a relationship with a competitor retailer that it wants to protect.
He noted that retailers can run into trouble pinning something from another Web site. Just because you can pin an item doesnt mean you can use it on your board.
If theres a pinning function (the little P pin-it app) on a Web site related to the image, the site is free game to pin but you could still run into trouble, Ervin said. The question is Do I own it, or do I have the right to use it? Do I have a supply and distribution agreement with that manufacturer?
The purpose of your use of the image matters. Its hard to argue that any purpose youre using it for is not financially driven. Is the use communicative in nature? Is it something the owner of the copyrighted work might be likely to charge you money to use?
Wharton at Womble Carlyle noted that the use of imagery on retailers Web sites and in their social media presence has copyright implications.
Weve seen how sites like Pinterest will be used as a sword and a shield, he said.
Say you post a high-end collection beside your lower-end, comparable offering.
Youve opened yourself to exposure to run afoul of (design) rights they might hold, Wharton said. If you put up a collage of images (you dont have rights to) in the best case youll receive a letter demanding to take it down.
Whenever youre posting YouTube videos, Facebook photos, be cognizant of the rights associated with those images. HFB