iVLG News Roundup Week 4 2014: Seattle Startups Acquired; Candy Crush and Pinterest’s Trademark Battles Continue; Supreme Court, Congress, and Patents
Seattle Startups Sparq and Scout Acquired; Scout’s Board Sued
The Seattle Times announced Wednesday that “San Franciscans came to Seattle for a football game and left with a couple of startups.”
First, the online marketing startup Sparq was acquired by Yahoo and Sparq said it will discontinue its services. The terms of the deal were not disclosed, but given that Sparq had raised only $1.7 million so far in several small financing rounds, the deal was relatively inexpensive for Yahoo.
Then, the same day, it was announced that San Francisco based revenue management company ServiceSource acquired Seattle area cloud-based analytics company Scout for $32 million in cash. Scout’s celebration of the deal is likely subdued as last week a group of Series A shareholders sued the company for waste, gross negligence, and self-dealing. The suit against Scout also alleges the Board breached the shareholder agreement by not getting consent from the shareholders. Scout responded by filing a motion to seal the complaint because the complaint revealed that ServiceSource was the acquirer. The Scout insiders who apparently profited from the deal at the expense of the Series A shareholders have yet to substantively comment on the claims and probably won’t.
Trademarks: Candy Crush and Pinterest Protect Their Right to Generic Words
King.com, the owner of the extremely popular game app Candy Crush Saga, recently secured a trademark on the word “candy” as it relates to video games, clothes, and educational services. It promptly began sending cease and desist letters to the owners of all apps that use the word “candy” in their name. Benny Hsu, a well known competing app developer, responded to King.com saying that “just searching the word ‘candy’ in the App Store is like visiting Willy Wonka’s Chocolate factory. Candy here, candy there, candy everywhere.” The same article details how Hsu also surmised that Candy Crush Saga is “so popular that the word ‘candy’ could cause some confusion in real life too. I’m sure when little kids say ‘I want candy’, parents are confused if they are talking about playing Candy Crush or eating actual pieces of candy.”
This follows the revelation that late last year social site Pinterest sued travel planning startup Pintrips over use of the word “Pin”. Earlier this month, Pintrips responded with a motion to dismiss that will be heard in February. In the motion, Pintrips attorneys’ point out that “no amount of advertising – even advertising directed at a specific term, can convert the generic term into a trademark.” And that “a showing of ‘secondary meaning,’ no matter how strong, can never earn trademark status for a generic word or phrase.” Unlike Candy Crush and the word “candy”, Pinterest’s federal trademark on the word “pin” has only been published for opposition.
The Federal Circuit and Patent Reform
The Supreme Court unanimously ruled that the Appeals Court for the Federal Circuit was wrong in a decision between Medtronic and its patent licensor. The case centered on a procedural issue, but the Supreme Court ruling gives companies being sued an expanded arsenal of weapons to use to defend patent trolls. The Federal Circuit has been overturned frequently by the Supreme Court in recent years, and better guidance for the Court may be part of the reason Congress has been trying to and successfully passing patent legislation in recent months.
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