Protecting bright ideas: How to safeguard your company’s intellectual property
One glance at the Las Vegas Strip makes it clear that Southern Nevada is a center of creativity.
New ideas, catchy phrases and eye-catching displays battle to attract attention.
But the city also is a danger zone for thieves who hope to profit from that creativity by appropriating protected trademarks or concepts for their own use.
“This is a city built on ideas,” said Mark Tratos, one of the top intellectual property lawyers in the country. “When you have ideas, some ideas are so good that everybody’s going to emulate them.”
Most major casino companies and gaming equipment manufacturers employ their own intellectual property experts. Their responsibilities are twofold: They protect their companies’ assets from patent trolls and cybersquatters while making sure their own companies don’t trample on someone else’s intellectual property.
“It’s something that all the major manufacturers in our industry take very seriously and spend a lot of resources toward,” said Lars Perry, vice president of intellectual property for Bally Technologies, a Las Vegas-based slot machine and gaming systems manufacturer.
What exactly is intellectual property?
The U.S. Patent and Trademark Office defines it as a brand name: “A trademark or service mark includes any word, name, symbol, device or any combination, used or intended to be used to identify and distinguish the goods and services of one seller or provider from those of others and to indicate the source of the goods and services.”
Tratos, a shareholder with Greenberg Traurig, breaks it down even further.
He said there are five major categories of intellectual property: copyrights, patents, trademarks and service marks, trade dresses and related rights of privacy, and publicity.
A copyright gives the creator of an original work — such as a book, score, painting or blueprint — exclusive rights to use it. A patent does the same for an invention or process. Both can be registered by the Patent and Trademark Office.
Patent challenges often arise when trying to determine whether an invention actually is new, said Mary LaFrance, an intellectual property law professor at the William S. Boyd School of Law at UNLV.
“It can be difficult to distinguish whether something is sufficiently new and different to be eligible for a patent,” LaFrance said. “Standards are statutory, but they are a little vague, and every analysis is very fact intensive. So it often winds up in court.”
A number of Las Vegas intellectual property cases involve patent law because of the hundreds of slot machines and table games developed here. Companies argue — and sue — over whether new processes warrant patents and whether new products encroach on existing ones.
“There’s a lot of room for interpretation to determine whether it’s different from what they call ‘the prior art,’” LaFrance said.
Acquiring a patent can be an expensive and lengthy process, especially if it involves technology. LaFrance said most patent filings take between 18 months and five years and can cost tens of thousands of dollars, mostly in legal fees. Lawyers constantly have to revise applications and research other patents.
Sometimes, inventors who hope to save money don’t patent their products and wait to see if they’re approached by rival patent owners. Failing to enforce a patent saves money, but most owners recognize that their patents lose value if they aren’t vigorously enforced.
Perry said game manufacturers became more aggressive in protecting patents in the 1990s when the industry was in the midst of a nationwide expansion. Some companies focused aggressively on protection while others developed contracts to work with third-party licensers as a new revenue source.
The challenge is to stay in front of rapid change, Perry said.
“You do your best to stay fully informed and aware of what’s out there, but there’s so much,” he said. “There could be something out there that you’re just not aware of, so you try your best to keep up with what’s out there as well as capture what is being developed internally.”
New social media games add to the challenge.
“Traditionally, our rate of change has been rather slow in comparison to other industries,” Perry said. “However, with this convergence of social gaming and premium games and Internet-based gaming that is starting to get approved in various slots in certain jurisdictions, it appears as though regulators are starting to accept technology changes at a much quicker rate.”
The growth in patented products has given rise to “patent trolls” — people and companies who acquire patents from bankrupt companies or purposely fail to protect their own patents, then aggressively enforce them with lawsuits. Among the most notable local examples: Righthaven.
“Righthaven’s lawsuits became nationally infamous,” LaFrance said.
Righthaven was a copyright-holding company that contracted with newspapers, including the Las Vegas Review-Journal and Denver Post, to enforce their copyrights. The company went after people it believed illegally republished newspaper material. But Righthaven overlooked one important detail: It didn’t own most of the copyrights.
“Once the courts got a look at the documents purporting to have assigned the copyrights to Righthaven, it turned out that those were not valid assignments,” LaFrance said. “So the whole premise of the litigation just collapsed. Then there were some court rulings that said the defendant’s activities were fair use of the copyrighted material.”
Cybersquatting is another intellectual property concern that has come about in the Internet age. It occurs when someone registers a domain name that’s similar to an existing trademarked brand. Cybersquatters typically have no intention of building a website but grab a site in the hopes of selling it to the affected company or a third party.
Cybersquatting can cause confusion among consumers, but it’s up to judges and juries to determine whether that confusion warrants damages.
A common remedy is issuing a restraining order demanding that the company stop using the name, LaFrance said. If monetary damages are issued, they usually are limited to the profits generated by the cybersquatter.
“Everybody seems to want to bask in the glow of a famous casino name,” LaFrance said. “They’re trying to draw the eyeballs of Internet users and drive them to these websites and try to get their money in various ways. The casinos in Las Vegas are very aggressive in pursuing these cybersquatters and are very successful at it.”
A year ago, American Casino and Entertainment Properties, which owns the Stratosphere, sued Seattle’s Marchex Sales over its aceplay.com website, a play off the Stratosphere’s Ace Play loyalty club. A Clark County judge ordered Marchex to shut down the website.
In 2011, owners of the Golden Nugget downtown sued Kanter Associates SA of Panama over a website called thegoldennuggett.com. Kanter added an extra T to the casino’s name. Earlier that year, the property sued the developers of golddennugget.com, which added an extra D.
And in 2010, Station Casinos sued Ryan Murphy of Great Britain and S.L. Enterprises for developing vegasstationcasino.com.
Sometimes it isn’t just a name but a look that results in legal action. That’s called trade dress.
The owners of New York-New York found themselves at the defensive end of a trade dress action in 1997, shortly after the resort opened.
The New York Stock Exchange demanded that the resort’s owners, MGM-Mirage and Primadonna Resorts, change the name of the casino’s “New York Slot Exchange” slot machine area. The Stock Exchange didn’t like the inference that trading securities was a form of gambling.
“You would think that everybody would know it was a joke, but the New York Stock Exchange wasn’t laughing,” LaFrance said.
New York-New York no longer uses that name.
According to trademark law, even if a phrase doesn’t actually confuse customers, if it tarnishes or weakens a trademark, it can be actionable.
Trade dress also is at issue in the legal dustup between Steve Wynn and his former business partner, Kazuo Okada. The bronze curved shape of the Wynn and Encore was emulated in an overseas Okada project without Wynn’s permission, Tratos said.
Another one-of-a-kind protected device is the Wynn’s front marquee, which seemingly squeezes and stretches video images with a sliding bar.
“That sign attracts attention,” Tratos said. “That’s an idea that is essentially protected by intellectual property in a way that does what this town is supposed to do — attract people, hold them here pleasurably, let them enjoy the experience and keep coming up with something new to innovate.”
Patent and trademark law also can protect entrepreneurs in Las Vegas. Nevada law, for example, allows celebrity impersonators to perform live. Many, however, still hold licensing agreements with the performers or their families.
Casino ownership also is changing intellectual property law in Las Vegas.
With more corporate ownership and managers who have to answer to shareholders, there’s less dispute resolution by phone. Tratos said he is amazed there haven’t been more big fights, especially given that Strip competitors commonly latch onto similar popular ideas.
“What’s fascinating to me is not the number of challenges but the number of matters that never turn into fights,” Tratos said. “For many years in this community, one of the things I really admired was the hotel owners when it was less corporate. If somebody had a problem with somebody else, they’d pick up the phone and they’d call. They’d talk to each other. They’d have a discussion. Frequently, I’d have a call from one of them and a call from the other of them, and I’d say, ‘Guys, I can’t represent both of you, but I can tell you what a court is going to do with it.’ And then they’d resolve it.
“There were a dozen matters every year where somebody was thinking that their promotion or giveaway was similar to somebody else’s and they were really offended. But when they learned what the law was, they’d always have the ability to work it out.”
One of the most commonly duplicated promotions was “A car a day in May,” a vehicle giveaway promotion that was copied by several casinos.
Another logo that’s prime for copying is the "Welcome to Fabulous Las Vegas" sign. But that’s fair use. It was never copyrighted and is now part of the public domain.
Even Rachel Maddow uses it for her “Best New Thing in the World Today” feature on MSNBC.
Las Vegas also was the home of one of the biggest failures in intellectual property protection. When R&R Partners created the “What happens here, stays here” slogan for the Las Vegas Convention and Visitors Authority, the group never protected it.
“They made some serious mistakes because they didn’t federally register the trademark,” LaFrance said. “That was a no-brainer.”
The LVCVA assigned the trademark back to R&R, resolving the issue, but Las Vegas easily could have lost its most famous and successful tagline.
The lesson to be learned, LaFrance said: Always be proactive in protecting your intellectual property.
Evolving technology will make protection even more important. As more Strip marquees get replaced with dynamic video screens, casino operators will have to be more wary of what they place on the signs.
“You can’t just throw stuff on the screen,” Tratos said. “You’ve got to make sure you haven’t exposed yourself to unwanted litigation simply because you posted it on your video wall.”
Intellectual property cases are likely to become more prevalent, as well, because of the way the original 1976 Copyright Act was written. It took effect in 1978 and allows artists, creators and authors to reclaim their rights after 35 years.
“So you’re going to see a lot of, ‘Give me my song back, Mr. Music Publisher; give me my book back, Mr. Book Publisher; give me my film back, Mr. Film Distributor,’” Tratos said. “It seemed like a long time in the future 35 years ago, but it’s on us now.”
Early protection is the best way to protect a worthwhile investment.
“Protection up front first is critical,” he said. “If you fail to protect it up front, it’s lost. Early protection is the key.”