Distributed Ledger Technology and new Delaware law<\/span><\/p>\n On August 1, 2017, Delaware became the first state to allow share issuing corporations to keep track of stockholders and outstanding stock via blockchain technology. This is one of several steps Delaware has identified as part of its initiative to use blockchain technology as a streamlining tool for the government. The act to \u201cTo Amend Title 8 Of The Delaware Code Relating To The General Corporation Law\u201d was sponsored by 9 Democrats and 3 Republicans. It was passed overwhelmingly in both the Delaware House and Senate and was signed by Governor Jack Markell on July 21, 2017. While shares and shareholder records are primarily maintained on databases, spreadsheets or paper, this amendment includes distributed networks as acceptable means of maintaining shareholder records. Following are excerpts from the amended Delaware code related to distributed databases.<\/p>\n \u201cSection 11. Amend \u00a7 232(c), Title 8 of the Delaware Code, by making insertions as shown by underline and deletions as shown by strike through as follows:<\/p>\n (c) For purposes of this chapter, \u201celectronic transmission\u201d means any form of communication, not directly involving the physical transmission of paper, including the use of, or participation in, one or more electronic networks or databases (including one or more distributed electronic networks or databases)<\/u>, [new language] that creates a record that may be retained, retrieved and reviewed by a recipient thereof, and that may be directly reproduced in paper form by such a recipient through an automated process.\u201d<\/p>\n The amendments also include a definition of \u201cstock ledger\u201d as follows:<\/p>\n “Section 6. Amend \u00a7 219(c), Title 8 of the Delaware Code, by making insertions as shown by underline and deletions as shown by strike through as follows:<\/p>\n (c)<\/u> For purposes of this chapter, \u201cstock ledger\u201d means one or more records administered by or on behalf of the corporation in which the names of all of the corporation\u2019s stockholders of record, the address and number of shares registered in the name of each such stockholder, and all issuances and transfers of stock of the corporation are recorded in accordance with \u00a7 224 of this title<\/u>.[new language] The stock ledger shall be the only evidence as to who are the stockholders entitled by this section to examine the list required by this section or to vote in person or by proxy at any meeting of stockholders.”<\/p>\n In addition, the amendments make significant updates to mergers and related changes in certificates of incorporation.<\/p>\n This is a milestone for state recognition of blockchain technology and its uses for corporate shareholder management. It may be expected that other states will follow Delaware\u2019s lead and enact similar amendments to their state corporate codes.<\/p>\n While this is certainly a step forward with regard to state regulation and accommodation for new technology, the amendments didn\u2019t go far enough. Specifically, this would have been an opportunity to address mergers and consolidations where shares are managed via blockchain technology. From a practical perspective, stock corporations may have to maintain shareholder records in a \u201ctraditional\u201d way until there is some method to convert legacy shares into blockchain native shares. Gayton Law will keep a look-out for updates to DMV corporate codes in response to the Delaware changes.<\/em><\/p>\n It might be of interest to some readers that the Commonwealth of Virginia <\/em>recently allocated<\/em><\/a> technology research funding in the amount of $450,000 including almost $50,000 to a company dedicated to commercializing blockchain technologies. If you have questions about the legal requirements for these programs, please contact Gayton Law. For those interested in cryptocurrency transactions generally, money transmitter licenses are required in <\/em>Virginia<\/em><\/a>, <\/em>Maryland<\/em><\/a> and <\/em>Washington, DC.<\/em><\/a><\/p>\n Design Patent, Trade Dress, Copyright, Unfair Competition and False Designation of Origin. Puma, SE v.Forever 21, Inc.<\/em><\/span><\/p>\n This case, Puma SE v. Forever 21, Inc.<\/em> was filed on March 31, 2017 and offers an opportunity to see how Puma SE, a German company and Puma North America, Inc. attempts to show how Forever 21 infringed on its patent, copyright, trademark, and trade dress rights.<\/p>\n Puma\u2019s Women\u2019s Creative Director for clothing and footwear is Rihanna, a well-known music artist. According to Puma\u2019s Second Amended Complaint, Rihanna served as brand ambassador for its \u201cFenty\u201d luxury product label, including 3 footwear products which are at the heart of this dispute, specifically, 1. the \u201cCreeper\u201d sneaker; 2. the \u201cFur Slide\u201d sandal; and 3. the \u201cBow Slide.\u201d All three shoes have been sold in brick-and-mortar stores as well as online and have obtained some fashion media attention. Puma alleges that Forever 21 copied or \u201cknocked off\u201d all of these shoes violating a number of intellectual property rights held by Puma. It is also alleged that Forever 21\u2019s business model is based on \u201ctrading-off of the established goodwill of reputable,, name-brand companies\u201d such as Puma.<\/p>\n The \u201cCreeper\u201d shoe is protected by U.S. Patent No. D774,288. Puma alleges that Forever 21 have a \u201csubstantial degree of similarity\u201d to the Creeper. According to Puma, Forever 21 has infringed on its trade dress and copyright interests in all three shoe designs. In addition, Puma alleges that Forever 21 has created market confusion and suggests that the shoes are \u201csponsored, endorsed, approved by, or connected with Puma\u201d and therefore subject to laws related to federal false designation of origin and unfair competition laws as well as California\u2019s unfair competition laws. Puma sought preliminary and permanent injunctions to prevent Forever 21 from selling the allegedly infringing shoes, state and statutory damages as well as treble damages for federal infringement claims, and restitution under California\u2019s unfair business practice laws. Puma is also asking for attorneys fees and pre-judgment and post-judgment interest.<\/p>\n As of June 2017, both the preliminary injunction request and temporary restraining order requests were denied by California Federal Judge Philip S. Gutierrez who was assigned to this case. The denial of injunctive relief in the form of a preliminary injunction and temporary restraining order means that Puma failed to meet the standard required to support these injunctions so Forever 21 can continue to sell the shoes for the time being.<\/p>\n Generally, in order to obtain a preliminary or permanent injunction, the plaintiff has to show four things. Specifically, that: 1. The Plaintiff has suffered irreparable harm; 2. The harm will not be sufficiently cured with money; 3. There is a substantial likelihood of success on the merits of the case and 4. The public will not be harmed if the injunction is awarded. Judge Gutierrez said that Puma failed to prove \u201cirreparable harm\u201d which is required element for injunctive relief. The case is ongoing and there is a scheduling conference<\/a> on November 27, 2017.<\/p>\n Although this case was before a California federal district court, the intellectual property issues (trade dress, patents, copyright) it addresses are nationwide. This case is instructive with regard to articulating and proving that a plaintiff is entitled to injunctive relief. Contact <\/em>Gayton Law<\/em><\/a> to how you can protect your intellectual property from IP infringement. <\/em><\/p>\n Tokens, Branding and Digital Assets by Cynthia M. Gayton, Esq.\u00a0<\/span> \u00a0<\/strong><\/p>\n What is a token? <\/u>For purposes of this discussion, I am not going to address how people are raising money selling tokens as a crowdfunding venture (like an initial coin offering<\/a> or ICO). Rather, I am going to address how artists can use tokens to sell and market existing art and music. In addition, I am going to limit my points to using a token as a \u201ckey\u201d which permits users to access often exclusive digital content and assets. \u00a0 See the rest of the post <\/em>here.<\/em><\/a><\/p>\n Marriage in Ethereum by Cynthia M. Gayton, Esq.<\/strong><\/span><\/p>\n In May 2016,\u00a0a couple who intend to get married in December 2016 created a\u00a0prenuptial\u00a0smart contract agreement\u00a0<\/a>on\u00a0Ethereum<\/a>\u00a0in\u00a0blockchain<\/a>. Ethereum is not a honeymoon resort, but provides a unique way to create, enter into,\u00a0execute,\u00a0pay for, secure, and enforce, contracts.\u00a0 What follows is my take on the legal intersection of autonomous contracting software and human relationships \u2013 specifically, a self-executing prenuptial agreement. See the rest of the post <\/em>here<\/em><\/a>.<\/p>\n Art on the Blockchain (AOTB)<\/strong> <\/span><\/p>\n Cynthia Gayton is a co-host and co-founder with Jeff Clarkin of Art on the Blockchain podcast and MeetUp. This podcast and MeetUp intend to spread some light on the issues facing artists in this new technology and distribution space. Our next MeetUp event is scheduled for September 19 2017 at The Black Cat in Washington, DC. Learn more <\/em>here.<\/em><\/a><\/p>\nIntellectual Property News<\/h2>\n
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