J.T. Colby & Company, Inc. et al v. Apple, Inc.
Filing
137
DECLARATION of Partha P. Chattoraj in Opposition re: 83 MOTION in Limine to Exclude any Testimony, Argument or Evidence Regarding the Expert Reports and Opinions of Robert T. Scherer.. Document filed by Ipicturebooks LLC, J.Boyston & Company, J.T. Colby & Company, Inc., Publishers LLC. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C Part 1, # 4 Exhibit C Part 2, # 5 Exhibit D, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G, # 9 Exhibit H, # 10 Exhibit I, # 11 Exhibit J, # 12 Exhibit K)(Chattoraj, Partha)
to create, publish and share information via the Internet or intranet. The website is created by a
sponsor who then controls the website and decides who shall be permitted access. Content is
placed on the website and edited by the sponsor and other contributors. The IBOOK system can
support a shared identity IBOOK which is visible to all enrollees to the site or a private identity
IBOOK which is visible only to the owner of the IBOOK. The IBOOK system includes several
features to allow the user to perform enhanced tasks, many of which require the purchase of
additional software or hardware. In summary, Family Systems' IBOOK software system is a
very different product with a very different use than Apple's downloadable electronic book orebook product. 3
Because Family Systems never used its IBOOK mark for the distribution of existing
books, it had no trademark rights in the IBOOK mark for that use. Also, since goodwill is based
upon consumers' recognition or mental association of a mark with a single source, there can be
no goodwill in a "mark" which was never used.
I have reviewed the January 31, 2012 deposition transcript of Richard Goldhor, Ph.D.,
who was a technical consultant to Family Systems from 1996 to 2003/2004. During that time, he
was instrumental in the development of the IBOOK software which he described as "an
architecture for allowing a community to create material, including text, but not limited to text,
and to publish it using web technologies, but to also make it possible for multiple members of the
community to edit that material, comment on it, to create their own versions of it, and so forth."
Dr. Goldhor describes Family Systems' IBOOK system as having user-generated content similar
to Wikipedia, which allows the contribution and editing of shared content. On crossexamination, Dr. Goldhor was asked whether Family Systems' IBOOK technology could be used
by commercial publishers to make their books available to others. He stated that the next
technology could be used in this manner, but noted that any such books would have been created
by users of the Family Systems' software. The several questions regarding the publication of a
book via this IBOOK system were all hypothetical in nature. The fact is that Family Systems did
not design the IBOOK product for this use and did not intend for it to be used as a vehicle for the
distribution of published books. Dr. Goldhor even indicated that it would require afuture
generation of technology to make such a use possible .... a generation that never came!
Trademark rights, however, are based on actual use of a mark in commerce in the ordinary
course of trade. (emphasis added)
3
22
7.
FAMILY SYSTEMS' U.S. PATENT NO. 6,411,993:
Apple Failed to Acquire the Underlying Patent for Family Systems' /BOOK Product. .
I read the general description of the invention in Family Systems' U. S. Patent No.
6,411,993 entitled "Interactive web book system with attribution and derivation features", which
reads as follows:
"An interactive Web book ("ibook") system is provided that allows material to be
contributed to the World Wide Web. An ibook is a self-extending, self-sustaining
information-redistributing Web robot, which is resident on a data network such as
the Internet or an intranet. Users may enroll with an ibook as viewers or
contributors. Viewers may view ibook material, such as text or multimedia
content. Contributors may contribute original material to the ibook or may create
derivations of existing ibook material. Attribution information that identifies the
source of material in a derivation is automatically generated. Information
concerning the derivation of each work and its characteristics can be used to help
the user navigate through ibook material. The ibook system keeps track of how
often users access each work within an ibook. Contributors may be automatically
rewarded (e.g., by a monetary distribution) based on the extent to which their
contributed material is viewed by the users." (emphasis added).
This same document explains the background of the invention in the following excerpt:
"This invention relates to the Internet, and more particularly, to techniques for
creating and viewing material on the World Wide Web in the form of an
interactive Web book.
The World Wide Web has made the Internet accessible to a broad range of
people. One can search the Web and view a large amount of material using a
Web browser. However, there is no satisfactory framework within the Web to
encourage contributions of new material while rewarding contributors for their
efforts. As a result, many people who might make meaningful contributions of
entertaining or educational material to the World Wide Web do not make such
contributions.
It is therefore an object of the present invention to provide a way in which to
facilitate the contribution of material using a data network such as the World
Wide Web and to compensate the contributors of such material."
This patent appears to cover the totality of Family Systems' IBOOK product and to be integral to
the continuation of the Family Systems business. The fact that it was not acquired by Apple
along with the IBOOK trademark raises questions regarding the transfer of goodwill and the
23
validity of the trademark assignment (See Section 8). According to the PTO Patent Assignment
records, this patent is currently owned by FASM Network Services, LLC, which, based upon the
acronym, appears to be related to Family Systems Limited.
8.
THE ASSIGNMENT OF REGISTRATON NO. 2,446,634, TRADEMARK /BOOK,
AND THE ROLE OF GOODWILL:
~x~t·eA:s~lgn1tteil( oj(he;,1Ql1Q:Ifl'fliir~1t~ii;tlill{~~~}j~'ii/illff~~mtifii;t~~l#.~~~~j·Jllfl~i!;.
On January 29, 2010, Family Systems Limited signed a document transferring and
assigning to Apple Inc. "all right, title and interest in and to [Reg. No. 2,446,634], any other
rights or registrations that Family Systems may have in the mark and trade name IBOOK,
including without limitation any common law rights, and the goodwill of the business pertaining
thereto." Apple had known about this Family Systems' mark for almost eleven years and had
even discussed the similarity of the marks and negotiated a Letter of Consent with Family
Systems in 1999 (See Para .13). Yet Apple did not purchase the Family Systems' mark until the
very day that plaintiff, John Colby, sent an e-mail to Mr. Dowling at Apple informing him of
plaintiffs' prior use of the iBooks mark. Mr. Colby's e-mail to Apple and the assignment of the
IBOOK mark are both dated January 29, 2010. This "coincidence" in timing can best be
explained by the fact that Family Systems' IBOOK registration had a priority date of October 8,
1996, the date on which it was filed in the PTO as an ITU application.
I have reviewed an internal Apple invoice stating that Apple paid Family Systems
for the IBOOK trademark. See Exhibit G. After acquiring the mark, Apple made no
effort to continue the business which had reportedly been using the mark since October, 2000.
This leads to the question of why did Apple pay so much money for a trademark used in
connection with a business which they abandoned? Once Apple received actual notice of
plaintiffs' earlier claim to the iBooks mark, there was an urgent need for them to acquire the
24
earlier priority date of Family Systems' registration. -~~~~~j!~~~il~~iliil
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f understand that Apple employees and others will be providing testimony and may be
;'
,
producing additional doc'uments regarding the subject matter of this report. Therefore, I reserve
the right to amend or supplement this report following their testimony or the production of
'
additional documents.
45
J.T. COLBY & COMPANY, INC. d/b/a
BRICK TOWER PRESS, J. BOYLESTON &
COMPANY, PUBLISHERS LLC and
IPICTUREBOOKS LLC.,
Case No. 11-cv-4060 (DLC)
Plaintiffs,
-againstAPPLE, INC.,
Defendants.
EXPERT REBUTTAL REPORT OF ROBERT T. SCHERER
8
I am the same Robert T. Scherer who previously submitted a report in this matter ("my
report"); the only additional document I considered in connection with this Rebuttal Report is the
Expert Report ofSiegrun D. Kane, dated September 17, 2012 (the "Kane Report" or "Report").
This Rebuttal Report responds to the Kane Report:
1.
THE ASSIGNMENT OF REGISTRATION NO. 2,446,634, TRADEMARK
IBOOK:
2.
RECORDAL OF THE ASSIGNMENT WITH THE PTO:
Acceptance of the Recordal is Not a Determination of Validity.
Ms. Kane refers several times in her Report to the recordal of the trademark assignment
with the United States Patent and Trademark Office ("PTO"). (Paragraphs 39-40 and 64.) It
should be noted that the recordal with the PTO's Assignment Services Branch ofthe assignment
of the ffiOOK mark and Reg. No. 2,446,634 from Family Systems to Apple does not mean that
the assignment was valid or effective. The Trademark Manual of Examining Procedure (the
"TMEP") specifically emphasizes that:
"The recording of a document pursuant to Section 3.11 (of the
Trademark RulesofPractice, 37 C.P.R. Section 3.11) is not a
1
determination by the Office of the validity of the document or to
the effect that the document has on the title to an application, a
patent or a registration .... " Section 503.01.
" The Assignment Services Branch does not examine the substance
of documents submitted for recording. The act of recording a
document is a ministerial act, and not a determination of the
document's validity or of its effect on title to an application or
registration ...." Section 503.01(c).
Any determination of the validity or effectiveness of a purported assignment will be decided by
the Court. The fact that the assignment was accepted for recorda} in the PTO has no relevance to
the issue of whether or not the assignment was valid.
3.
APPLE'S RENEWAL OF REGISTRATION NO. 2,446,634, IBOOKS (AS
AMENDED):
·········~her Report,
Ms. Kane maintains that Apple filed (i) a specimen
consisting of a "Screenshot ofRegistrant's online store offering !BOOKS software for sale" and
(ii) a supporting declaration and thereby complied with all of the statutory requirements for
renewing the !BOOKS registration (Paragraphs 87 and 88). This conclusion presumes, of
course, that all of the statements made in the supporting declaration are true. 1 However, the
1
In reviewing the renewal documents, the Trademark Examiner must rely on the
Combined Declaration and the accompanying specimen evidencing current use of the mark. And,
because the Combined Declaration includes an acknowledgment under penalty of perjury that
"all statements made of his/her own knowledge are true", the Trademark Examiner routinely
accepts the trademark owners statements at face value. Also, the Trademark Examiner has
neither the means, the time nor the authority to investigate beyond the four comers of the
Combined Declaration. As a result, registrations are sometimes renewed in error even though the
subject mark is not being used on the goods listed in the registration. As the need arises, any
2
reality is that Apple's current use does not support the statements made in the Combined
Declaration.
Why is Apple's statement that ''the mark is in use in commerce on or in connection with all
goods or services listed in the existing registration" false? In Paragraph 6 of my report, I devoted
considerable time comparing Family Systems' use ofthe ffiOOK mark in connection with
"computer software used to support and create interactive, user-modifiable electronic books"
with Apple's current use of the ffiOOKS mark in connection with downloadable books and the
electronic transmission of downloadable books. Family Systems' IDOOK software is a web content publishing tool that allows users to create their own content, modify that content and share
that content among a community of users via the Internet or intranet. The "electronic books"
referenced in the registration do not consist of an existing published work. They are created by
the user of the software.
As noted in Paragraph 7 of my report, Family Systems' U.S. Patent No. 6,411,993, see
Exhibit L hereto, describes its own IDOOK product as "a self-extending, self-sustaining
information-redistributing Web robot". Does this sound like an e-book reader? Apple's
ffiOOKS mark is used in connection with an e-book reader which allows for the electronic
transmission and downloading of 1,500,000+ existing published works. The nature and use of
the respective products is distinctly different in that Family Systems' software allows the user to
create and modify content whereas Apple's app is used to distribute existing books
electronically. Family Systems' use is the equivalent of providing the user with a blank diary or
investigations would be left to others. This is one of those instances. In this case, it was left to the
plaintiffs to compare the use of the mark as recited in Registration No. 2,446,634 with Apple's
current use of the same mark (as amended), and it was found that Apple's present use does not
align with the statements made in the Combined Declaration.
3
journal on which to write and share one's information, thoughts and comments via the Internet or
intranet, while Apple's use is an electronic library or bookstore.
Given these significant differences in the nature and purpose of Family Systems' !BOOK
product and the nature and purpose of Apple's !BOOKS product, it is a material
misrepresentation to claim that Apple is using the mark "in commerce on or in connection with
all goods and services listed in the existing registration." Further, for the sake of clarity, I would
note that (i) there are·no "services" listed in the subject registration and (ii) in Paragraph 25 of
her Report, Ms. Kane states that the PTO is required to consider whether the mark was being
used for at least some of the goods identified in the '634 Registration ... " [emphasis added]. In
this case, since Apple stated that it is using the mark in connection with all goods ... listed in the
registration, the PTO is required to look at the entire list of goods as well as the nature and use of
those goods.
Why is this a misrepresentation of a material fact? The primary purpose of the Section 8
Declaration of Use (whether filed between the 5th and 6th year after registration or as part of a
Combined Declaration in connection with a ten year renewal) is to clear those registered marks
which are no longer being used (a/k/a "deadwood") from the Federal Trademark Register and to
allow those registered marks which are still in use to continue to enjoy the benefits of registration
on the Principal Register. Given this mission, a false statement of continued use ofthe mark,
which resulted in the renewal of a federal registration which should not have been renewed, is a
material misrepresentation that defeats both the letter and the spirit of the Section 8 Declaration
of Use.
In gathering and reviewing the information for the Combined Declaration, it should have
been immediately apparent that Apple was not using the !BOOKS mark on or in connection with
4
the "computer software used to support and create interactive, user-modifiable electronic books"
listed in the registration. And, the specimen filed in support of the renewal, which Apple
described as a "Screenshot of Registrant's online store offering IDOOKS software for sale" and
which shows a bookshelf with several published books :from well-known authors as well as a
description of the IDOOKS product itself, further highlighted the distinct differences between the
goods listed in the registration and the goods on which Apple was currently using the mark.
Despite these obvious differences, Apple's representative declared that the IDOOKS mark was in
use in connection with all of the goods listed in Registration No. 2,446,634. • • • • • • •
What purpose would be served by making a material false statement in an official
document filed with the PTO? For the answer, we must look to the reason why Apple purchased
Family Systems' IDOOK registration in the first instance. Since the 1999 Consent Agreement
between Apple and Family Systems (see Paragraph 13 of my report and the file wrapper for Reg.
No. 2,470,147, Exhibit M hereto) precluded Family Systems from suing Apple for trademark
infringement, Apple had no need to acquire Family Systems' IDOOK mark to ward off a
potential lawsuit. Rather, Apple purchased the IDOOK mark in an attempt to claim the benefit
of the October 8, 1996 priority date (the date on which Family Systems filed the ITU application
which eventually matured into Registration No. 2,446,634; see the file wrapper for Reg. No.
2,446,634, Exhibit N hereto).
If the purchase of Family Systems' U.S. registration proved successful, this priority
would allow Apple to claim use of the IDOOKS mark dating back to 1996, three years prior to
plaintiffs' use of its iBooks mark and then perhaps, as Apple hoped, defeat plaintiffs'
infringement claim. Because of the importance of this priority to its defense, Apple paid
5
for Family Systems' registered trademark (see Exhibit G to my report). Apple could
not risk the cancellation/expiration of this registration, which would, of course, eliminate its
strongest defense to plaintiffs' infringement claim and have been a significant waste of money.
Therefore, it was imperative that Apple keep Registration No. 2,446,634 in full force and effect.
The PTO relied on the statements made in Apple's Combined Declaration because, as
noted above, the Trademark Examiner took Apple's statements at face value and had no
independent way of checking the accuracy of those statements. As a result, the PTO renewed
Registration No. 2,446,634 and gave Apple the opportunity to improperly claim the benefits of a
federal registration, to plaintiffs' detriment.
6
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7
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