Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use
November 11, 2014
Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use
January 24, 2014
Published July 29, 2013 in Bicycle Retailer and Industry News
Republished with permission
by Steven W Hansen
After reading two articles in BRAIN’s June 15, 2013 issue (“Speedy e-bikes trouble industry” and “NYC e-bike crackdown exposes legal morass”) as well as a follow up letter to the editor in the July 1, 2013 edition, I was compelled to respond to some apparent misunderstanding by some as to what the “laws and regulations” are with respect to electric bikes and how they do and don’t work together.
First of all there is quite a bit of confusion regarding terminology. I am going to use the phrase “electric bikes” to cover all “bicycles” (not stand on scooters without a seat) which have an “electric motor” to (help) propel them. The industry has evolved into “low speed” electric bikes and “high speed” electric bikes and various configurations which require no pedaling (or may not even have pedals) to the various “pedal assist” varieties, in which the motor wont help you unless you help it. But I digress.
Before 2003 there was really very little in the way of laws or regulations dealing with electric bikes. California passed a few laws in 1998 dealing with what at the time was a new phenomenon and those laws still exist today (more on that later). But the main event that started the ball rolling was when the bicycle industry was able to get Congress to pass a law amending the Consumer Product Safety Commission’s (CPSC) definition of a “bicycle” to include “low speed electric bicycles” which is defined as a “two- or three-wheeled vehicle with fully operable pedals and an electric motor of less than 750 watts (1 h.p.), whose maximum speed on a paved level surface, when powered solely by such a motor while ridden by an operator who weighs 170 pounds, is less than 20 mph.”
This did help clarify the CPSC’s jurisdiction. Before 2003 there was a legitimate question if CPSC had “regulatory” authority over all electric bikes (as “consumer products”, its generally mandated scope of authority) or if it overlapped the Dept. of Transportation (DOT) and its sub agency the National Highway Transportation Safety Administration (NHTSA). NHTSA defined (and regulated) “motor vehicles” (and still does today) as a “vehicle driven or drawn by mechanical power and manufactured primarily for use on the public streets, roads, and highways…”
From the 2003 change in the regulations it was clear that the CPSC only wanted to carve out a small(er) part of the “electric bike” market to similarly regulate as “bicycles” (no new regulations were adopted to deal with the manufacture of electric bikes, just the definition).
Unfortunately this still left NHTSA holding the bag sort of speak on what to do with all the “other” electric “devices” not regulated under CPSC’s new 2003 “carve out”. Before 2005 NHTSA had taken a somewhat ad hoc approach to requests for clarifications from electric or “motorized” bicycle manufacturers (and others) as to whether specific devices were “motor vehicles” or not. But after the CPSC acted in 2003 NHTSA then began a “notice of draft interpretation and request for comments” (aka “rulemaking” without intervention by Congress) in 2005 to help clarify when certain two and three wheeled motorized devices would be deemed “vehicles” and regulated by NHTSA and when they would not be. The problem of course is that one agency can only determine the scope of its own regulatory authority, not that of another agency. NHTSA placed great emphasis on the 20 mph limit that CPSC focused on. They also differentiated a ‘‘Motor-driven cycle’’ previously defined as “motorcycle” “with a motor that produces 5-brake horsepower or less.’’ NHTSA adopted the 20 mph limit as a more decisive factor as opposed to previous rulings as it concluded “that the maximum speed of a vehicle with on-road capabilities is largely determinative of whether the vehicle was manufactured to operate on a public road, in normal moving traffic, and therefore a ‘‘motor vehicle.’’
Unfortunately the method to determine that speed was much more involved than the CPSC’s method and could yield slightly different results. Also the “draft interpretation” remained vague for two and three-wheeled vehicles with a speed capability of 20 mph or greater. Those vehicles would be excluded from the definition of ‘‘motor vehicle’’ if they were manufactured primarily for off-road use. To determine that question NHTSA would again revert to the case by case approach of looking at the physical features of the vehicle to see if was intended for on or off road use. Again NHTSA does not regulate any off road vehicles like off road motorcycles for instance. Those all fall under CPSC jurisdiction (by default, if it’s a “consumer product”), yet there are no CPSC regulations specifically for such electrically powered devices (if they don’t meet the CPSC definition of a “low speed electric bicycle”). Finally, the NHTSA 2005 “draft interpretation” is still in “draft” stage and is no more binding that any opinion letter from NHTSA. It is not a regulation like CPSC’s electric bike definition and from discussing the matter with the NHTSA legal department there is nothing indicating that will change any time soon.
The electric bike manufacturers and distributors are for the most part satisfied with the way the laws are currently written (or at least interpreted) at the federal level. However some would like to see better and more clear regulation of the over 20 mph category as they apparently are trying to do in the EU with “fast or speed pedelecs.”
The trickier issue of course was raised once again in the article “NYC e-bike crackdown exposes legal morass” which brings to light what many fail to realize about the federal regulations. First none of the electric bikes that fall within the regulations (under 20 mph) have any specific regulations directed at electric bikes other than simply defining what is and to some extent what is not an electric bike (neither NHTSA or CPSC have regulations covering the motors or throttle devices, for example).
Over the years states have basically borrowed NHTSA’s definition of a motor vehicle along with all the regulations governing their manufacture and have incorporated those into their state laws. States have similarly regulated bicycles utilizing the 1973 CPSC bicycle standard as a basis. But with electric bicycles the process seemed to happen in reverse. Electric bicycles popped up and states, caught by surprise, felt they needed to deal with them on their roads and sidewalks, as CPSC and NHTSA failed to timely regulate their manufacture. Some of these laws unfortunately also had to define what the state felt an electric bike was and was not and in some cases this can conflict with federal law.
The other problem is that these federal regulations only affect the manufacture and first sale of these devices, not where, when, how, who and under what other conditions (age limits, licenses, insurance, registration etc.) they can be operated. The federal law has no “preemptive effect” over such state laws. These issues have always traditionally been regulated by state laws and in some cases even county and city laws. This is also true for cars, trucks and traditional non-powered bikes. CPSC mandates how bicycles must be tested and sold and what standards bicycle helmets must meet in their testing and construction but it does not mandate that riders must use the helmets while riding bicycles. That is left up to states or cities to regulate. The same was true for bicycle headlights and tail lights. CPSC does not require them on bikes but most state laws do if riding on road at night. This issue was hotly contested in a serious injury case some years back.
I approached the electric bike industry in 1995-2000 with a two pronged approach; Try to develop some voluntary standards for electric bikes that could be adopted by NHTSA or CPSC (much like they adopted the ASTM bicycle helmet standard) and then try to use model “use” legislation at the state level incorporating the ASTM standards and classifications. The proposal drew interest but was not acted upon by enough influential companies at the time. This legislative approach was somewhat followed by Google with it driverless car legislation passed in California and Nevada recently. Segway also tried a similar approach to pave the way for sales of its totally new type of device.
But the electric bike industry is following the traditional, difficult and time consuming approach. Let consumers buy the products and once a critical mass of the devises is in use there will be legislative “fixes” to accommodate the safe use of mainstream devices. The problem of course is that this is a car centric country, where drivers don’t like bikes of any kind on “their” roads, and many state legislators don’t really like Washington DC’s approach to anything. This was clear in the comments from states to NHTSA’s proposed regulation in 2005. Hopefully this method will work as it may be too late for the “pave the way with legislation first” method. The EU also tried to get a regulatory framework in place before the market was flooded with various devices and in some respects it worked as the EU market is much larger than the US market right now for electric bikes. There are other reasons as well.
Another issue to keep in mind are what some refer to as “fast” electric bicycles, which can travel over 20 mph solely on motor power. The fact that these “fast” electric bikes can travel over 20 mph solely on motor power takes them outside the scope of the CPSC definition of a “low speed electric bicycle”. Some sellers of these “fast” electric bikes claim that these bikes are designed for “off road” use. However, this may be a way to get around the CPSC and NHTSA regulations (and possibly some state laws), since some of these bikes appear to be designed for road use, as opposed to “off road” use (using the NHTSA interpretations). These “fast” e-bikes are causing debates in some states, notably in New York as noted in the article “NYC e-bike crackdown exposes legal morass”.
As pointed out above, the CPSC’s definition of an electric bike centers around a 20 mph limit, with the caveat that this 20 mph must not be exceeded if the electric bike is solely powered by its motor. Accordingly, this definition permits an electric bike which is powered by its rider (with the possible assistance of a motor, making the electric bike what some call a “pedelec”) to travel faster than 20 mph. The distinction is key to a correct interpretation of the CPSC’s definition.
Lastly, on a related topic altogether, some people appear to be confused about where the regulations fit in to the overall scheme of things in terms of liability. If a rider is injured by or on an electric bike, compliance with a regulation or standard (mandatory or otherwise) is not going to be of much help other than possibly being persuasive. (read more on that here). However failure to comply with a regulation (that is applicable) really can create an uphill battle in court. But again the facts of each specific case will be vastly different and drawing conclusions from specific cases will be difficult.
In the meantime it will be interesting to see what develops out of New York and if there is a state or city wide solution. As most in the industry know trying to lobby government officials to your point of view is a tricky business and fraught with pitfalls.
Steven W. Hansen an attorney who defends product manufacturers, distributors and retailers in product liability lawsuits and provides consultation on all matters related to the manufacture and distribution of consumer products. For further questions visit www.swhlaw.com or send an e mail to: email@example.com
The information in this column is subject to change and may not be applicable in your state. It is intended as a thought provoking discussion of general legal principles and does not constitute legal advice. Any opinions expressed herein are solely those of the author.
December 18, 2013
Published in Bicycle Retailer and Industry News December 17, 2013
Reprinted with permission
by Steven W. Hansen
There has been quite a bit of ink used recently discussing trademarks and their enforcement and the folks at BRAIN wanted me to write about the topic generally. I want to make it clear that nothing written in this column is meant to comment upon or pass judgment upon recent issues in the news. We are not privy to all the non-public facts; this is just a general legal overview of the subject.
As most people should know there are three areas of “Intellectual Property” (“IP”) in the U.S.: Patents, Copyrights and Trademarks. Patents cover inventions of things and processes. Copyrights cover things such as written materials (like owners manuals) music, films and photos. Trademarks are most a associated with brand names, words, phrases, designs, logos, images or a combination of all the foregoing. It is possible that one thing could be covered in different ways but all three areas of IP law.
There are a few flavors of trademarks. One is a Service Mark (SM), used to designate a service. There are also “common law” trademarks (discussed below) usually designated with a TM and then Federally Registered trademarks denoted with a ®. There are also state-registered marks, which will not be discussed here.
Unlike patents or copyrights, which have limited lifetimes, trademarks can last forever as long as the “mark” is still being used in commerce.
The rationale behind trademarks is that consumers should not be confused about brands or names of products. Once a company had built up a particular brand or product name there is often a great deal of cost behind that and companies don’t want “impostor” products or brands coming out that act as “free riders” and benefit from all the marketing, branding and consumer goodwill that the trademark holder has put into that trademark. Also the trademark office does not want a consumer to think he is getting the brand name product when he is not. He is getting something that only looks like the genuine article. That causes confusion and does not assist consumers in selecting products or services.
Here is a recent example from the insurance industry. Travelers Ins. is suing Legal & General Group PLC of London over the use of a multicolored umbrella (used since 2011) that Travelers says is too similar to its own iconic red umbrella logo. Even though the umbrella is not red, Travelers feels that the use of any umbrella logo in the insurance industry would “dilute” the famous red umbrella mark. The umbrella is also used to convey “coverage” from harm or the elements (like insurance provides, so it’s a great memorable logo).
So in line with this theme rules have been developed to determine when one trademark is too “similar” to another (registered or non-registered mark) in terms of the way the word itself, the way the word is printed, or a logo, or its coloring or its descriptive characteristics or the goods and services categories that go along with each trademark. For example using the logo example above, if you have a bicycle goods trademark that uses an umbrella there is not much chance of consumers becoming confused as Travelers is not in the bike business. But if Travelers starts selling bikes using the umbrella logo and you are already using that, now there is a problem (unless they reserved the use of the trademark for bike parts as well) Problems crop up when a trademark owner starts to branch out into “goods and services” categories beyond which its trademark was originally registered for.
In addition to the issue of narrowing or expanding the scope when filing for trademark protection there is also the issue of where to file the trademark. You only get the protection the in the country you file in. There is a system in place now to make one filing cover about 100 countries that agree to follow the protocol or system referred to generally as the “Madrid System” (actually there are two international treaties). The U.S. and the EU joined the protocol in 2000. The problem of course is that as you make the trademark apply to a broader class of goods and services (obviously within the scope of your business’s products or services) and to more countries the more likely it is that the trademark will be denied due to some conflict with another. I had heard that “Nike” dropped the use of the word Nike and just went with the “swoosh” symbol as that was well recognized and due to the fact that some rogue distributor had picked up the trademark “Nike” in some non-EU country. But they failed to get the “swoosh.”
Within the U.S. there are also registration issues. In order to obtain a U.S. Federal Registration on a trademark the good or service must be sold or offered for sale in every state. If it's not, that technically is a bar to a federal registration and you have to obtain state law registrations, which is really a whole other system, not unified, like the federal system.
Another issue to think about is who or what entity is going to own the trademark. Normally trademarks and other intellectual property are owned by or “assigned to” a legal entity such as a corporation. In some cases corporations are formed just to own all the IP that a company or group of companies may have. Having individuals own IP is a very risky strategy obviously due to control issues.
The enforcement of trademarks is of course a subject for which books are written. One of the biggest issues for trademark owners is the failure to continue to use the mark in commerce. If the mark falls out of use for a period of longer than five years (in most cases) it can lapse for non-use (abandonment) or of course be challenged by another seeking to use the mark.
Trademarks can also become “generic” through common use and this can result in the loss of registration. For example Xerox does not want people referring to all photocopies generically as a “Xerox” especially if it’s not made on Xerox machine.
“Fair use” is also a very misunderstood concept in trademark. For example you can always use a trademark when saying something negative about the brand or company (that is truthful of course) or comparing it to another brand. This would be considered fair use and of course free speech under the First Amendment to the U.S. Constitution.
Internet domain names are another tricky subject. Typically once you have a registered trademark ensuring that no one else can use that trademark in a domain is relatively easy in straightforward cases but becomes much more convoluted in other trickier issues that don’t just involve a simple domain. For example all the www.yourcompanysucks.com domains have been held to have a right under the First Amendment to exist. Also, what happens with meta tags of your trademark in a competitor's website. Again the specifics facts of the cases control but infringement of the trademark is generally not found where the domain owner does not seek to capitalize on the trademark's goodwill for his own commercial enterprises. For example if the domain owner is legitimately comparing Fords to Chevys in the article, there would not be an infringement if the main purpose of the site was the comparison, not selling those brands. Most internet domain disputes are now dealt with worldwide under the Uniform Domain Name Dispute Resolution Policy with www.icann.org.
In most countries including the U.S. you can license the trademark to third parties. The downside of course is that the trademark owner must closely monitor the quality of the goods produced by the third party licensee to avoid the risk of abandonment of the trademark or worse product liability ramifications to the licensor if someone is injured with the product produced by the third party. These aspects are usually specifically dealt with in licensing agreements.
Some countries, like the U.S. do have certain protections provided to unregistered trademarks often denoted with the TM mark. These rights in the U.S. are geographical in nature, so multiple parties may use the trademark simultaneously. Unregistered marks may be protected under the Federal Lanham Act against commercial misrepresentation of the source or origin of goods.
But typically, in order to gain an advantage and to insure stability and predictability, users will opt to register a mark federally. This also brings greater damages for infringement than from a non-registered mark. Also it’s rare for an unregistered trademark to be successfully licensed to a third party. In addition registered trademark owners can use the trademark to stop the importation of imported products that violate the trademark through U.S. Customs. Also when in court you have a higher burden of proof to prove the mark is yours and unique. A registered owner does not. There are also fewer geographical restrictions to deal with in a registered trademark. Even if your mark is unregistered you should always denote TM next to the mark so that others will know you are asserting that as your trademark and that cannot be used as a defense by the infringer. However, the burden to search the federal trademark database rests with each company that is seeking to find a trademark, as they may be liable for infringement even if they later discovered the owner did not mark its products with the ® mark.
Trademarks should not be an afterthought. They need to be well thought out far in advance of creating any brand name or model name of product. It will help insure many fewer headaches down the road and perhaps save thousands of dollars marketing a name that is owned by another company. Worse, the confusion that is caused with customers may not work to your advantage.
Steven W. Hansen is an attorney who represents product manufacturers, distributors and retailers in product liability and other lawsuits and provides consultation on all matters related to the manufacture and distribution of consumer products. For further questions visit www.swhlaw.com or send an e mail to firstname.lastname@example.org
The information in this column is subject to change and may not be applicable in your state or country. It is intended as a thought provoking discussion of general legal principles and does not constitute legal advice. Any opinions expressed herein are solely those of the author.
Law Offices of Steven W. Hansen | www.swhlaw.com | 562 866 6228 © Copyright 1996-2013 Conditions of Use