Move over Prenda, there’s a new IP troll in town and it’s New York State.

Or at least the third-party agency assigned to protect New York’s trademark, and it’s harassing everyone it can find over an iconic image that few would recognize as a trademark.

But what elevates this trolling to a new level is that enforcing this trademark actually frustrates the mission of the holder. And isn’t promoting the business of the holder kind of the whole point of intellectual property protection?

And what really elevates this case is that the IP troll is literally sticking it to the Everyman…

Everyman Espresso that is, but the name is fitting in these times where IP law has morphed into a license to bully anyone who might not want to lawyer up for a protracted litigation.

The East Village coffee shop had a clever idea to market itself — one of the owners, Sam Penix, tattooed his knuckles to read, “I, [Coffee Cup], N, Y.”

Then came the logo — a cartoon of Mr. Penix’s tattooed fist grasping a coffee-filled portafilter, punching through the name of the East Village coffee shop Mr. Penix co-owned, Everyman Espresso. It said everything Mr. Penix meant for the shop to stand for: an in-your-face passion for New York City and for fine coffee.

Sounds good so far.

Then, last month, came the letter from agents for the state’s Department of Economic Development.

It said, “Everyman Espresso’s unauthorized and confusingly similar use of the I ♥ NY® logo” violated federal trademark law and implied “a misleading designation of source, origin, endorsement, sponsorship or approval by the New York State Department of Economic Development of your merchandise.”

Stop the French presses.

One, “stop the french presses” is a cringeworthy level of corny and I love it. Or, at the risk of getting a similar letter, I heart it.

Two, there’s no denying that the marketing campaign for Everyman Espresso sought to create an intellectual connection between the iconic “Heart” campaign and its own products. But would anyone seriously consider Everyman’s tattoo image an endorsement by New York State? Because likelihood of confusion is kind of a standard for a trademark claim and I don’t think anyone believes New York went into the coffee business. Indeed, almost all of the Polaroid factors seem to tilt in favor of Everyman except for the strength of the senior mark — more on that in a second.

Double Hoosier Clare Neumann, counsel at CMG Worldwide, the trolling agency employed by Albany to protect its mark, couched her request as a confusion claim:

Ms. Neumann’s response is, essentially, that the law — specifically, section 43(a) of the Lanham Act, 15 USC 1125(a) — is the law. Nor does the fact that the red coffee cup does not much resemble the red heart of the I ♥ NY logo make much difference. Federal regulations, she said, “prohibit companies from using any part of a trademark.”

Except it’s actually “prohibit companies from using any part of a trademark likely to create confusion.” CMG’s argument might be more viable as a dilution claim of a well-known senior mark (and maybe that was part of the letter as well and the Times piece just missed it), claiming that the bastardization of the mark to represent anything robs it of its power to promote the state. Except if that’s the claim, that ship sailed a long time ago because I doubt most folks even realized that mark belonged to New York.

In any event, Everyman Espresso had no interest in litigating the issue and actually “ceased and desisted” its use of the mark. All’s well that ends well as they say.

Except:

“We expect that any entity that infringes on the rights of our client compensate it for unauthorized use,” the lawyer, Clare Neumann, wrote on May 20, requesting “an accounting of all gross revenues generated during the period when the I ♥ NY® Trademark was used” to help her set the appropriate penalty.

OMG, CMG! Are you serious? You have a borderline claim and Everyman conceded. Now you’ve decided to look that gift horse square in the mouth and ask for damages? Bold.

CMG also offered Everyman an expensive license to continue using its coffee mug campaign, but Everyman declined because it does not negotiate with terrorists.

In the end, the most troubling aspect of this affair is that the claim is antithetical to the business mission of the holder, the Department of Economic Development, and its parent, Empire State Development.

“Basically, it’s extortion,” [Penix] said. “It’s also ironic because we are being threatened by the entity that has vowed to grow our New York business.”

The mission of Empire State Development, the department’s parent agency, is indeed “to promote a vigorous and growing economy, encourage the creation of new job and economic opportunities, increase revenues to the State and its municipalities, and achieve stable and diversified local economies.” Empire State Development is also home to the state tourism department, which started an effort last year to revive and reinvent its “I ♥ NY” campaign.

So, ironically, with this incident New York has managed to sully its PR campaign with its own PR slogan.

Intellectual property law is, at its root, a constitutional bargain. Free speech is circumscribed by a societal interest in protecting the rights of another. In the case of trademark, the law helps the holder conduct their business free of those who might undermine its work by stealing its business or ruining its reputation.

The “Heart” campaign is iconic and connecting with it invokes consumer goodwill. Allowing derivative marks by tasteful businesses would seem to fulfill the business mission of New York State rather than run counter. Requiring very nominal licensing fees could protect the mark while bringing in a little extra benefit for the government.

And that’s what makes this story so paradigmatic of the sad state of intellectual property today. While the “Heart” campaign is undeniably real IP, unlike the claims in Prenda, the decision by New York and other IP rights holders is to farm out enforcement to agencies who extort the figurative everyman (or everyperson as the case may be) to the legal limit for all perceived technical slights, rather than developing a comprehensive enforcement strategy that takes into account business goals, truly winnable claims, and maintaining all-around goodwill.

Alright, screw it, I’m going to get coffee.

A Cup Is at the Heart of a Trademark Dispute [NY Times]


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