Sunday, November 06, 2005
10th Circuit decision on willfulness in a TM case
The 10th Circuit recently wrote an opinion concerning "willfulness" in trademark cases. Specifically, the issue was, what does a plaintiff need to show to survive partial summary judgment on the issue of whether the defendant's alleged infringement was willful? Here's the opinion in Western Diversified Services, Inc. v. Hyundai Motor America, Inc., No. 03-4248 (Nov. 1, 2005). Nothing earth-shattering, but might be useful if this issue ever comes up in one of your cases.
3d Circuit decision concerning nominative fair use
A couple of weeks ago (sorry, I've been pretty busy), the Third Circuit handed down a VERY LONG split opinion concerning the proper way to analyze "nominative fair use" arguments. Nominative fair use concerns situations where Company A uses Company B's trademark to refer to Company B in Company A's name or advertising. Examples loosely taken from past cases include the company name "Stan's Independent VW Repair Shop" or advertising by Terri Welles that stated, among other things, that she was a former "Playboy Playmate of the Year."
Generally, courts have largely followed the 9th Circuit's approach to such cases (since the 9th Circuit has more opinions on the subject than any other court), which holds that a nominative use is fair if: (1) the product or service in question is not readily identifiable without use of the trademark; (2) the defendant uses only so much of the mark as is reasonably necessary to identify the product or service (i.e., no multiple or repeating uses, no use of the other company's distinctive logos, scripts, or trade dress, etc.); and (3) the user must do nothing to suggest sponsorship or endorsement by the trademark holder. Further, the Ninth Circuit and most other circuits view nominative fair use not as an affirmative defense, but as a way to negate likelihood of confusion.
Well, this wasn't good enough for the 3d Circuit. In Century 21 Real Estate Corp. v. Lending Tree, Inc., No. 03-4700 (this .pdf file will take time to load, and you may need to click "refresh" several times before you can upload it), the court held that nominative fair use IS an affirmative defense. It seemed to think this was required by the recent Supreme Court decision in KP Permanent Make-Up. Although by itself this doesn't really matter in my view (given that civil cases are based on a "more likely than not" standard of proof and a defendant is going to put on this evidence no matter who's got the ultimate burden), the problem is that the 3d Circuit went further held that plaintiff's in cases where nominative fair use is an issue can succeed in showing a likelihood of confusion based solely on a showing on a shortened list of confusion factors: price, level of consumer care, actual confusion, and intent.
The dissenting judge (in his own very long opinion) thought that this tinkering with the 9th Circuit's test simply muddied things up. Although I don't have time right now to explain fully why (and you'd all be bored silly if I tried) I think the dissent got it right. KP Permanent Make-Up dealt with a statutory affirmative defense. Nominative fair use isn't in the statute. It's a court-made doctrine, and the courts that made it have always viewed it as a way to negate likelihood of confusion. Making it a defense and simultaneously making it easier for the plaintiff to show likelihood of confusion not only doesn't make sense, but also would tend, I think, to seriously limit a defendant's ability to make the case for nominative fair use.
Anyway, it's a thought-provoking exchange if you've got a couple of hours.
Generally, courts have largely followed the 9th Circuit's approach to such cases (since the 9th Circuit has more opinions on the subject than any other court), which holds that a nominative use is fair if: (1) the product or service in question is not readily identifiable without use of the trademark; (2) the defendant uses only so much of the mark as is reasonably necessary to identify the product or service (i.e., no multiple or repeating uses, no use of the other company's distinctive logos, scripts, or trade dress, etc.); and (3) the user must do nothing to suggest sponsorship or endorsement by the trademark holder. Further, the Ninth Circuit and most other circuits view nominative fair use not as an affirmative defense, but as a way to negate likelihood of confusion.
Well, this wasn't good enough for the 3d Circuit. In Century 21 Real Estate Corp. v. Lending Tree, Inc., No. 03-4700 (this .pdf file will take time to load, and you may need to click "refresh" several times before you can upload it), the court held that nominative fair use IS an affirmative defense. It seemed to think this was required by the recent Supreme Court decision in KP Permanent Make-Up. Although by itself this doesn't really matter in my view (given that civil cases are based on a "more likely than not" standard of proof and a defendant is going to put on this evidence no matter who's got the ultimate burden), the problem is that the 3d Circuit went further held that plaintiff's in cases where nominative fair use is an issue can succeed in showing a likelihood of confusion based solely on a showing on a shortened list of confusion factors: price, level of consumer care, actual confusion, and intent.
The dissenting judge (in his own very long opinion) thought that this tinkering with the 9th Circuit's test simply muddied things up. Although I don't have time right now to explain fully why (and you'd all be bored silly if I tried) I think the dissent got it right. KP Permanent Make-Up dealt with a statutory affirmative defense. Nominative fair use isn't in the statute. It's a court-made doctrine, and the courts that made it have always viewed it as a way to negate likelihood of confusion. Making it a defense and simultaneously making it easier for the plaintiff to show likelihood of confusion not only doesn't make sense, but also would tend, I think, to seriously limit a defendant's ability to make the case for nominative fair use.
Anyway, it's a thought-provoking exchange if you've got a couple of hours.
Sunday, October 02, 2005
6th Circuit decision concerning product configuration trade dress (Les Paul guitars)
This case is a couple of weeks 0ld -- sorry. Been really busy at my real job. Oh yeah, and fleeing from a hurricane.
The 6th Circuit in Gibson Guitar Corp. v. Paul Reed Smith Guitars, L.P., No. 04-5836 (6th Cir. Sept. 12, 2005) pretty much flatly rejected application of "initial interest confusion" in product configuration cases. The plaintiff argued that, at a distance in a music store, customers may initially be attracted to the defendant's guitars because the shape of them is sorta similar to the shape of plaintiff's Les Paul guitars. The court rejected this "at a distance" type of confusion, because it was concerned that so many products look sufficiently at a distance that such a test would almost always be satisfied, making it, really, no test at all. The court was also concerned that the inability of such cases to be tossed on summary judgment, which is similar to Justice Scalia's concern, in Wal-Mart v. Samara Brothers, that applying inherent distinctiveness concepts to product configuration trade dress could lead to anti-competitive strike suits that would unduly hinder competition. While the court said it was limiting its holding to the facts of the case, the reasoning it used is going to be hard to escape in future cases in the 6th Circuit.
The court also rejected "post sale confusion," but on wrong-headed reasoning. Under the heading "Post-Sale Confusion," it addressed, not post-sale confusion, but a "lack of irreparable harm" argument. In essence what the court said was that post-sale confusion isn't applicable here because the defendant's guitars aren't inferior to plaintiff's. Seems to me that's a weak rebuttal to a defendant's argument of, "What's the harm if people are confused? My guitars are good." Of course, the correct response to that argument, when made in opposition to an irreparable harm argument, is that it is the loss of control of one's reputation that is the harm, since the defendant can at any time decide to produce shoddy merchandise. The point is, the plaintiff no longer controls its own goodwill's destiny.
To complicate things, the heading the Court used for the actual post-sale confusion argument was "Gibson's Smoky Bar Theory of Confusion." In this argument, Gibson apparently argued (persuasively I would have thought) that if a consumer saw a performer in a concert or club using defendant's guitar and didn't like the sound of the performance, the consumer might mistakenly attribute the poor sound to plaintiff's guitars. Seems right to me. But the Court rejected it, again on the ill-considered basis that the defendant's guitars were high quality, and that "Gibson is helped, rather than harmed, by any such confusion."
I've always thought that the 6th Circuit was rather hit-or-miss with trademark and trade dress cases, and this one, I think, is a "miss."
The 6th Circuit in Gibson Guitar Corp. v. Paul Reed Smith Guitars, L.P., No. 04-5836 (6th Cir. Sept. 12, 2005) pretty much flatly rejected application of "initial interest confusion" in product configuration cases. The plaintiff argued that, at a distance in a music store, customers may initially be attracted to the defendant's guitars because the shape of them is sorta similar to the shape of plaintiff's Les Paul guitars. The court rejected this "at a distance" type of confusion, because it was concerned that so many products look sufficiently at a distance that such a test would almost always be satisfied, making it, really, no test at all. The court was also concerned that the inability of such cases to be tossed on summary judgment, which is similar to Justice Scalia's concern, in Wal-Mart v. Samara Brothers, that applying inherent distinctiveness concepts to product configuration trade dress could lead to anti-competitive strike suits that would unduly hinder competition. While the court said it was limiting its holding to the facts of the case, the reasoning it used is going to be hard to escape in future cases in the 6th Circuit.
The court also rejected "post sale confusion," but on wrong-headed reasoning. Under the heading "Post-Sale Confusion," it addressed, not post-sale confusion, but a "lack of irreparable harm" argument. In essence what the court said was that post-sale confusion isn't applicable here because the defendant's guitars aren't inferior to plaintiff's. Seems to me that's a weak rebuttal to a defendant's argument of, "What's the harm if people are confused? My guitars are good." Of course, the correct response to that argument, when made in opposition to an irreparable harm argument, is that it is the loss of control of one's reputation that is the harm, since the defendant can at any time decide to produce shoddy merchandise. The point is, the plaintiff no longer controls its own goodwill's destiny.
To complicate things, the heading the Court used for the actual post-sale confusion argument was "Gibson's Smoky Bar Theory of Confusion." In this argument, Gibson apparently argued (persuasively I would have thought) that if a consumer saw a performer in a concert or club using defendant's guitar and didn't like the sound of the performance, the consumer might mistakenly attribute the poor sound to plaintiff's guitars. Seems right to me. But the Court rejected it, again on the ill-considered basis that the defendant's guitars were high quality, and that "Gibson is helped, rather than harmed, by any such confusion."
I've always thought that the 6th Circuit was rather hit-or-miss with trademark and trade dress cases, and this one, I think, is a "miss."
Thursday, September 01, 2005
3d Circuit copyright validity decision re registration of a "group" of things
The 3d Circuit recently decided an interesting copyright dispute involving a sculptures made to resemble large rocks inscribed with various poems. I think the court's discussion of the issue of infringement isn't that noteworthy, but its discussion of the validity of the plaintiff's registration is.
In Kay Berry, Inc. v. Taylor Gifts, Inc., No. 04-3809 (3d Cir. Aug. 30, 2005), the plaintiff created a bunch of different rock/poem sculpture products (these were mass-produced items, not, you know, "museum" art). The plaintiff registered them en masse by sending the Copyright Office a catalog containing photos of its entire line of rock/poems. The Copyright Office issued a single registration for "sculptural works with design and text."
The defendant knocked off one of the rock/poems and, when sued, argued that the registration was invalid as a "group registration" under section 408(c)(1) because they weren't "related" enough. The 3d Circuit agreed that the registration wasn't valid under the group registration rules promulgated by the Copyright Office at 37 CFR §§ 202.3(b)(4) -(9), because those rules are the only authority for registration of a "group" of related products, and they don't explicitly extend to a group of sculptural works.
The court, however, said that the registration was valid as a single work registration under 37 CFR § 202.3(b)(3), which permits a single registration of a "published work" of a single claimant such that "all copyrightable elements that are otherwise recognizable as self-contained works . . . are included in a single unit of publication." The court rejected the argument that, for a single work registration under this rule, the works had to be "related."
In a long footnote, the court directed the district court, on remand, to determine the scope of such a copyright. In particular, the court intimated the possibility that a published work containing both new and pre-existing materials may be limited in some way, perhaps to only the expressive material added by the claimant.
In Kay Berry, Inc. v. Taylor Gifts, Inc., No. 04-3809 (3d Cir. Aug. 30, 2005), the plaintiff created a bunch of different rock/poem sculpture products (these were mass-produced items, not, you know, "museum" art). The plaintiff registered them en masse by sending the Copyright Office a catalog containing photos of its entire line of rock/poems. The Copyright Office issued a single registration for "sculptural works with design and text."
The defendant knocked off one of the rock/poems and, when sued, argued that the registration was invalid as a "group registration" under section 408(c)(1) because they weren't "related" enough. The 3d Circuit agreed that the registration wasn't valid under the group registration rules promulgated by the Copyright Office at 37 CFR §§ 202.3(b)(4) -(9), because those rules are the only authority for registration of a "group" of related products, and they don't explicitly extend to a group of sculptural works.
The court, however, said that the registration was valid as a single work registration under 37 CFR § 202.3(b)(3), which permits a single registration of a "published work" of a single claimant such that "all copyrightable elements that are otherwise recognizable as self-contained works . . . are included in a single unit of publication." The court rejected the argument that, for a single work registration under this rule, the works had to be "related."
In a long footnote, the court directed the district court, on remand, to determine the scope of such a copyright. In particular, the court intimated the possibility that a published work containing both new and pre-existing materials may be limited in some way, perhaps to only the expressive material added by the claimant.
9th Circuit reverse confusion decision
The 9th Circuit recently decided a reverse confusion case. M2 Software, Inc. v. Madacy Entertainment, No. 03-55957 (9th Cir. Aug. 31, 2005) concerned an appeal from a jury verdict of no reverse confusion. I won't bore you with the court's discussion of each of the Sleekcraft factors and a bunch of other uninteresting issues, but what I found notable was the court's rejection of the plaintiff's argument that the reverse confusion jury instruction was too narrow.
The trial court instructed the jury that reverse confusion occurs when the "consumers doing business with the [small] senior user mistakenly believe that they are dealing with the larger junior user" (emphasis mine). The plaintiff argued that "dealing with" is too narrow; that reverse confusion also occurs if the consumers believe there is an affiliation, connection, or association between the parties. But the court said that the instruction was correct.
It seems to me that this is an unjustified narrowing of the scope of a reverse confusion claim. I think most courts agree that forward confusion (i.e, the issue in plain vanilla infringement cases) encompasses more than simply erroneous beliefs that one company is the other; it covers confusion as to association, sponsorship, affiliation, etc. Why treat reverse confusion cases any differently? I can't think of a good reason to make reverse confusion a narrower type of claim. Am I missing something?
In any event, if you're representing a defendant accused of creating reverse confusion, keep this case in mind.
The trial court instructed the jury that reverse confusion occurs when the "consumers doing business with the [small] senior user mistakenly believe that they are dealing with the larger junior user" (emphasis mine). The plaintiff argued that "dealing with" is too narrow; that reverse confusion also occurs if the consumers believe there is an affiliation, connection, or association between the parties. But the court said that the instruction was correct.
It seems to me that this is an unjustified narrowing of the scope of a reverse confusion claim. I think most courts agree that forward confusion (i.e, the issue in plain vanilla infringement cases) encompasses more than simply erroneous beliefs that one company is the other; it covers confusion as to association, sponsorship, affiliation, etc. Why treat reverse confusion cases any differently? I can't think of a good reason to make reverse confusion a narrower type of claim. Am I missing something?
In any event, if you're representing a defendant accused of creating reverse confusion, keep this case in mind.
Wednesday, August 31, 2005
4th Circuit decision in a typosquatting/gripe site case
Last week the 4th Circuit decided against Jerry Falwell in a case concerning an individual who operated http://www.fallwell.com/ as a gripe site to criticize Falwell's views on certain issues.
In Lamparello v. Falwell, No. 04-2011 (4th Cir. Aug. 24, 2005), the court addressed claims under both the Lanham Act for TM infringement and the Anti-Cybersquatting Act. The parties stipulated that Lamparello never sold any goods or services on his website, but that at one point he had a link to Amazon.com's page offering a book that contained views consistent with Lamparello's and contrary to Falwell's on certain issues.
As to the Lanham Act claim, the Court declined to decide whether, as Lamparello argued, the Lanham Act applies only to "commercial speech" as that term is understood under 1st Amendment law, deciding instead that there was no likelihood of confusion based on the appearance of the Lamparello's web site.
The Court then analyzed Falwell's "initial interest confusion" argument separate from the regular likelihood of confusion analysis. The court sort of pooh-poohed the argument initially, calling it a "relatively new and sporadically applied doctrine" -- sporadically applied? I thought at least half the circuits explicitly accepted it -- noting that the 4th Circuit had never applied it. But then the Court sidestepped an "up or down vote" (to use a buzzword used a lot in certain political contexts these days) on the doctrine, holding that, whether it's a valid legal theory under the Lanham Act or not, it would apply only where the defendant competes with the plaintiff for sales. While I'm usually not a big fan of the 4th Circuit's trademark jurisprudence, this distinction seems to make some sense to me.
Finally, in a long but pretty uninteresting discussion, the 4th Circuit decided that Lamparello didn't meet the "bad faith" standard in the Cybersquatting Act.
In Lamparello v. Falwell, No. 04-2011 (4th Cir. Aug. 24, 2005), the court addressed claims under both the Lanham Act for TM infringement and the Anti-Cybersquatting Act. The parties stipulated that Lamparello never sold any goods or services on his website, but that at one point he had a link to Amazon.com's page offering a book that contained views consistent with Lamparello's and contrary to Falwell's on certain issues.
As to the Lanham Act claim, the Court declined to decide whether, as Lamparello argued, the Lanham Act applies only to "commercial speech" as that term is understood under 1st Amendment law, deciding instead that there was no likelihood of confusion based on the appearance of the Lamparello's web site.
The Court then analyzed Falwell's "initial interest confusion" argument separate from the regular likelihood of confusion analysis. The court sort of pooh-poohed the argument initially, calling it a "relatively new and sporadically applied doctrine" -- sporadically applied? I thought at least half the circuits explicitly accepted it -- noting that the 4th Circuit had never applied it. But then the Court sidestepped an "up or down vote" (to use a buzzword used a lot in certain political contexts these days) on the doctrine, holding that, whether it's a valid legal theory under the Lanham Act or not, it would apply only where the defendant competes with the plaintiff for sales. While I'm usually not a big fan of the 4th Circuit's trademark jurisprudence, this distinction seems to make some sense to me.
Finally, in a long but pretty uninteresting discussion, the 4th Circuit decided that Lamparello didn't meet the "bad faith" standard in the Cybersquatting Act.
Wednesday, August 17, 2005
7th Circuit's Recent Trade Dress/Reverse Passing Off Decision (follow-up)
Something has been slowly gnawing at me concerning the issue I didn't discuss in my 8/14 entry concerning the 7th Circuit's decision in Bretford Manufacturing, Inc. v. Smith System Manufacturing Corp., No. 03-3932 (7th Cir. Aug. 8, 2005) (Easterbrook, J.).
It involves the Court's rejection of the plaintiff's reverse passing off claim. The plaintiff alleged that the defendant, which was trying to but hadn't yet been able to produce a knock-off computer table, nevertheless cobbled together a sample table based mostly on its own components, but including the important V-shaped legs feature removed from one of the plaintiff's tables. The plaintiff then used the sample as part of its successful pitch to get the Dallas school system to place a sizeable order for tables.
Judge Easterbrook looked at the Supreme Court's decision in Dastar Corp. v. 20th Century Fox Film Corp., and read it really broadly. Remember, Dastar turned on the meaning of the word "source" in the Lanham Act, and in the specific context of a derivative video work based on an pre-existing work whose copyright had expired -- i.e., a "communicative" product, and one that was presumptively in the public domain. Ignoring these facts, Judge Easterbrook said that Dastar asks only whether the consumer knows who has produced the finished product, regardless of whose components go into it. He rhetorically asked, essentially, whether it's reverse passing off if the table seller doesn't disclose that it got its wood from Oregon Clear Cut Lumberyard, its nuts and bolts from Smith Screw Company, and vinyl molding from Jones Vinyl Corp. Of course the answer is no. Duh.
But this case was different. Oregon Clear Cut and Smith and Jones don't sell tables. They sell components used to make a variety of things, including tables. When a competitor in the table business, however, sees its product being sold under another's mark, that's reverse passing off. And when what is taken is less than the complete product, then most circuits take the position that the question is whether the defendant's product is substantially different from the product the plaintiff sells -- a grey area that will change with each case. In my view it's way too simplistic and wrong, as well as based on an overbroad reading of Dastar, to say that there's no reverse passing off in any case when the customer knows who assembled the product.
Let's take Judge Easterbrook's position to an extreme to see if it holds. Let's say Pepsi decides to change its business model. It decides to buy COKE brand soft drink (good TM usage!) from Sam's Club, pour it into a big vat, add one grain of Domino brand sugar per each 12 ounces, and rebottle under the PEPSI brand. Under Judge Easterbrook's analysis, this is not reverse passing off because Pepsi made the finished product and the consumer is told that. C'mon. No way.
In any event, however, I don't think that Judge Easterbrook needed to address this tricky issue (or to make such a sweeping pronouncement of the death of reverse passing off) -- although he clearly wanted to -- because it seems to me that there was a standing issue "standing" in the way. In a nutshell, there was no mention of any showing that the defendant's use of the plaintiff's component caused it to lose the Dallas sale (so much for the damage claim), and since the Dallas pitch was a one-time, non-repeated thing, there was no standing to ask for an injunction.
Whether I'm right or not on the goofy standing issue, it's clear that the 7th Circuit is now a risky place to bring a reverse passing off claim.
It involves the Court's rejection of the plaintiff's reverse passing off claim. The plaintiff alleged that the defendant, which was trying to but hadn't yet been able to produce a knock-off computer table, nevertheless cobbled together a sample table based mostly on its own components, but including the important V-shaped legs feature removed from one of the plaintiff's tables. The plaintiff then used the sample as part of its successful pitch to get the Dallas school system to place a sizeable order for tables.
Judge Easterbrook looked at the Supreme Court's decision in Dastar Corp. v. 20th Century Fox Film Corp., and read it really broadly. Remember, Dastar turned on the meaning of the word "source" in the Lanham Act, and in the specific context of a derivative video work based on an pre-existing work whose copyright had expired -- i.e., a "communicative" product, and one that was presumptively in the public domain. Ignoring these facts, Judge Easterbrook said that Dastar asks only whether the consumer knows who has produced the finished product, regardless of whose components go into it. He rhetorically asked, essentially, whether it's reverse passing off if the table seller doesn't disclose that it got its wood from Oregon Clear Cut Lumberyard, its nuts and bolts from Smith Screw Company, and vinyl molding from Jones Vinyl Corp. Of course the answer is no. Duh.
But this case was different. Oregon Clear Cut and Smith and Jones don't sell tables. They sell components used to make a variety of things, including tables. When a competitor in the table business, however, sees its product being sold under another's mark, that's reverse passing off. And when what is taken is less than the complete product, then most circuits take the position that the question is whether the defendant's product is substantially different from the product the plaintiff sells -- a grey area that will change with each case. In my view it's way too simplistic and wrong, as well as based on an overbroad reading of Dastar, to say that there's no reverse passing off in any case when the customer knows who assembled the product.
Let's take Judge Easterbrook's position to an extreme to see if it holds. Let's say Pepsi decides to change its business model. It decides to buy COKE brand soft drink (good TM usage!) from Sam's Club, pour it into a big vat, add one grain of Domino brand sugar per each 12 ounces, and rebottle under the PEPSI brand. Under Judge Easterbrook's analysis, this is not reverse passing off because Pepsi made the finished product and the consumer is told that. C'mon. No way.
In any event, however, I don't think that Judge Easterbrook needed to address this tricky issue (or to make such a sweeping pronouncement of the death of reverse passing off) -- although he clearly wanted to -- because it seems to me that there was a standing issue "standing" in the way. In a nutshell, there was no mention of any showing that the defendant's use of the plaintiff's component caused it to lose the Dallas sale (so much for the damage claim), and since the Dallas pitch was a one-time, non-repeated thing, there was no standing to ask for an injunction.
Whether I'm right or not on the goofy standing issue, it's clear that the 7th Circuit is now a risky place to bring a reverse passing off claim.
Sunday, August 14, 2005
7th Circuit decision re proof of secondary meaning in product configuration cases
The 7th Circuit recently issued what seems to be a significant decision about what is necessary to prove secondary meaning in product configuration trade dress case. And it seems to make a survey just about indispensable.
In Bretford Manufacturing, Inc. v. Smith System Manufacturing Corp., No. 03-3932 (7th Cir. Aug. 8, 2005) (Easterbrook, J.), the plaintiff asserted trade dress protection for the V-shaped table legs of its computer table. Following Wal-Mart v. Samara Brothers, the district court required the plaintiff to prove secondary meaning in the asserted product configuration trade dress, as opposed to claiming it was inherently distinctive.
So the plaintiff pointed to the fact that for 7 years, it was the only manufacturer of computer table with V-shaped legs, and during that time it spent over $4 million to promote the tables, and was successful in selling 200,000 tables. Not bad, eh?
Not good enough, said Judge Easterbrook. He reasoned that:
"In the end, all Bretford has to go on is the fact that it was the only maker of such tables for eight years and spent more than $4 million to promote sales. If that were enough to permit judgment in its favor, new entry would be curtailed unduly by the risk and expense of trademark litigation, for every introducer of a new design could make the same sort of claim." (Slip op. at 5.)
The rest of the panel, in awe of this Jedi master of law and economics, nodded in unanimous agreement.
I think this answers the wrong question. The question shouldn't be whether the plaintiff's assertion of trade dress rights in product configuration curtails new entry in that exact market. Of course it does. And the risk increases the longer the plaintiff is out there alone. But the Supreme Court didn't categorically reject product configuration cases because of this risk. It simply said that in such cases a plaintiff needs to prove secondary meaning. An accepted (if risky) way to prove up secondary meaning is to show a long period of exclusivity in the market, with substantial sales success, along with substantial promotional activity. In this case, those numbers were pretty impressive, and the Court didn't mention any countervailing evidence.
But if these numbers didn't cut it, then, at least in the 7th Circuit, it's going to be virtually impossible for anyone to prove secondary meaning in a product's design with sales & advertising figures alone. And I doubt that the Court that slapped down this evidence is going to be swayed by affidavits of selected consumers ("merely anecdotal," no doubt), no matter how many you can drum up. Plaintiffs are going to have to strongly consider ponying up for a real survey.
(Judge Easterbrook also addressed, in his inimitable style, a weak reverse passing off claim in the case.)
As always, it's fun to read a Judge Easterbrook opinion, but I think this one is wrong.
In Bretford Manufacturing, Inc. v. Smith System Manufacturing Corp., No. 03-3932 (7th Cir. Aug. 8, 2005) (Easterbrook, J.), the plaintiff asserted trade dress protection for the V-shaped table legs of its computer table. Following Wal-Mart v. Samara Brothers, the district court required the plaintiff to prove secondary meaning in the asserted product configuration trade dress, as opposed to claiming it was inherently distinctive.
So the plaintiff pointed to the fact that for 7 years, it was the only manufacturer of computer table with V-shaped legs, and during that time it spent over $4 million to promote the tables, and was successful in selling 200,000 tables. Not bad, eh?
Not good enough, said Judge Easterbrook. He reasoned that:
"In the end, all Bretford has to go on is the fact that it was the only maker of such tables for eight years and spent more than $4 million to promote sales. If that were enough to permit judgment in its favor, new entry would be curtailed unduly by the risk and expense of trademark litigation, for every introducer of a new design could make the same sort of claim." (Slip op. at 5.)
The rest of the panel, in awe of this Jedi master of law and economics, nodded in unanimous agreement.
I think this answers the wrong question. The question shouldn't be whether the plaintiff's assertion of trade dress rights in product configuration curtails new entry in that exact market. Of course it does. And the risk increases the longer the plaintiff is out there alone. But the Supreme Court didn't categorically reject product configuration cases because of this risk. It simply said that in such cases a plaintiff needs to prove secondary meaning. An accepted (if risky) way to prove up secondary meaning is to show a long period of exclusivity in the market, with substantial sales success, along with substantial promotional activity. In this case, those numbers were pretty impressive, and the Court didn't mention any countervailing evidence.
But if these numbers didn't cut it, then, at least in the 7th Circuit, it's going to be virtually impossible for anyone to prove secondary meaning in a product's design with sales & advertising figures alone. And I doubt that the Court that slapped down this evidence is going to be swayed by affidavits of selected consumers ("merely anecdotal," no doubt), no matter how many you can drum up. Plaintiffs are going to have to strongly consider ponying up for a real survey.
(Judge Easterbrook also addressed, in his inimitable style, a weak reverse passing off claim in the case.)
As always, it's fun to read a Judge Easterbrook opinion, but I think this one is wrong.
Tuesday, August 09, 2005
9th Circuit Decision on Genericism
The Ninth Circuit recently issued an opinion in Yellow Cab Co. of Sacramento v. Yellow Cab of Elk Grove, Inc., No. 03-16218 (9th Cir. Aug. 9, 2005), in which it re-affirmed that the owner of an unregistered mark confronted with a challenge to the validity of the mark (such as the genericism defense raised in the case) has the burden to prove that the mark is valid and protectable.
The court performed its genericism analysis by literally asking itself and answering itself the questions "who are you; what are you?" I'm not sure I've ever seen genericism analyzed in a way that sounds like a game kids play at preschool, but, hey, whatever works.
The court performed its genericism analysis by literally asking itself and answering itself the questions "who are you; what are you?" I'm not sure I've ever seen genericism analyzed in a way that sounds like a game kids play at preschool, but, hey, whatever works.
Monday, August 08, 2005
5th Circuit decision on the requirement that copyright transfers be in writing
In its recent decision in Lyrick Studios, Inc. v. Big Idea Productions, Inc., No. 03-10837 (Aug. 5, 2005), the 5th Circuit addressed the requirement in section 204(a) of the Copyright Act that copyright transfers be in writing. The general fact pattern is probably pretty common: the copyrighted matter was commercially successful, and the parties acted for a while like there was an agreement, but then the relationship soured and the original creator decided to do business with someone else. So the jilted business partner tries to cobble together a bunch of things that aren't agreements on their own, but, the argument goes, together -- voila! -- they constitute a "writing."
Well, no dice, said the 5th Circuit. The Court not only examined the documents in detail, but it also examined several other other cases involving disputes about whether a sufficient writing existed. So this case is one to keep in mind if you're facing this sort of question.
There's some other interesting stuff in the opinion about what happens to preliminary injunction bonds when the winner of the case keeps changing. (The copyright owner won a preliminary injunction, posted a bond, lost at trial, lost the bond, then won on appeal and wanted the money back.)
Well, no dice, said the 5th Circuit. The Court not only examined the documents in detail, but it also examined several other other cases involving disputes about whether a sufficient writing existed. So this case is one to keep in mind if you're facing this sort of question.
There's some other interesting stuff in the opinion about what happens to preliminary injunction bonds when the winner of the case keeps changing. (The copyright owner won a preliminary injunction, posted a bond, lost at trial, lost the bond, then won on appeal and wanted the money back.)
Saturday, August 06, 2005
1st Circuit decision re extraterritorial application of Lanham Act
Adding yet another take on when it's OK to apply the Lanham Act to foreign defendants and/or foreign activities, the 1st Circuit recently decided not to follow the kinda seminal decision of the Second Circuit in Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633 (2d Cir. 1956). Back during the days of McCarthyism and "duck-and-cover," Vanity Fair held that courts should assess (without really saying HOW to assess) (1) whether the defendant is a US citizen; (2) whether the defendant's actions have a substantial effect on US commerce; and (3) whether relief would create a conflict with foreign law.
In a long and scholarly opinion in McBee v. Delicia Co., No. 04-2733 (1st Cir. Aug. 2, 2005) (click on link, click "opinions", type in the case number "04-2733", and click "submit search"), the 1st Circuit decided that the Vanity Fair factors needed to be "disaggregated." It thought that the first Vanity Fair factor (whether the defendant is a US citizen), should be the preliminary inquiry. The 1st Circuit suggested that the answer to that question would have an impact upon how much of an effect the defendant's foreign activities would be required to have on US commerce (US citizen, less; foreigner, more). (The court also briefly noted that US activities of foreign defendants are automatically within the subject matter jurisdiction of US courts over Lanham Act claims).
Because the defendant in the case was foreign company, and the activities at issue (with a minor exception I won't tell you about) were purely foreign activities, the 1st Circuit then went on to put a finer point on how much of an effect on US commerce is required for subject matter jurisdiction over such foreign activities of foreign defendants. Looking for guidance more from recent Supreme Court antitrust decisions than from the Supreme Court's much older Bulova Watch Lanham Act decision, the 1st Circuit decided that there has to be "a substantial effect on United States commerce" -- which, of course is the second Vanity Fair factor. The court said this test needs to be applied with an eye toward the dual goals of the Lanham Act: protecting US consumers from being confused, and protecting the goodwill of trademark owners in their marks.
The 1st Circuit then "disaggregated" the third Vanity Fair factor (comity with foreign law), saying that issue wasn't a question of subject matter jurisdiction, but rather was a question of whether that jurisdiction, if it exists, ought to be exercised.
Applying the new test, the 1st Circuit said there wasn't subject matter jurisdiction over the plaintiff's claim concerning the defendant's Japanese language website because few Americans can read Japanese and there wasn't any evidence of Americans going to the website and being confused. Nor was there jurisdiction over the plaintiff's claim concerning the Japanese company's sales in Japan because there was virtually no evidence that Americans either were exposed to and confused by the defendant's mark in Japan or that the defendant's goods sold in Japan were making their way back into the US in substantial amounts.
In a long and scholarly opinion in McBee v. Delicia Co., No. 04-2733 (1st Cir. Aug. 2, 2005) (click on link, click "opinions", type in the case number "04-2733", and click "submit search"), the 1st Circuit decided that the Vanity Fair factors needed to be "disaggregated." It thought that the first Vanity Fair factor (whether the defendant is a US citizen), should be the preliminary inquiry. The 1st Circuit suggested that the answer to that question would have an impact upon how much of an effect the defendant's foreign activities would be required to have on US commerce (US citizen, less; foreigner, more). (The court also briefly noted that US activities of foreign defendants are automatically within the subject matter jurisdiction of US courts over Lanham Act claims).
Because the defendant in the case was foreign company, and the activities at issue (with a minor exception I won't tell you about) were purely foreign activities, the 1st Circuit then went on to put a finer point on how much of an effect on US commerce is required for subject matter jurisdiction over such foreign activities of foreign defendants. Looking for guidance more from recent Supreme Court antitrust decisions than from the Supreme Court's much older Bulova Watch Lanham Act decision, the 1st Circuit decided that there has to be "a substantial effect on United States commerce" -- which, of course is the second Vanity Fair factor. The court said this test needs to be applied with an eye toward the dual goals of the Lanham Act: protecting US consumers from being confused, and protecting the goodwill of trademark owners in their marks.
The 1st Circuit then "disaggregated" the third Vanity Fair factor (comity with foreign law), saying that issue wasn't a question of subject matter jurisdiction, but rather was a question of whether that jurisdiction, if it exists, ought to be exercised.
Applying the new test, the 1st Circuit said there wasn't subject matter jurisdiction over the plaintiff's claim concerning the defendant's Japanese language website because few Americans can read Japanese and there wasn't any evidence of Americans going to the website and being confused. Nor was there jurisdiction over the plaintiff's claim concerning the Japanese company's sales in Japan because there was virtually no evidence that Americans either were exposed to and confused by the defendant's mark in Japan or that the defendant's goods sold in Japan were making their way back into the US in substantial amounts.
Saturday, July 30, 2005
Whole Buncha Stuff
What, with vacation and an office move, I've been a little behind on new developments. To catch up, here's the TV Guide version of some recent decisions this month.
Counterfeiting. In a case I initially missed because it was a criminal case -- not a civil suit -- the 10th Circuit held in United States v. Foote, No. 03-3263 (July 6, 2005), that the criminal counterfeiting definition, 18 USC § 2320(e)(1), which, like its civil counterpart, 15 USC § 1114(1)(b), requires a likelihood of confusion, covers post-sale confusion. The case concerned a defendant who sold "replicas" of prestigious branded items to customers who, it was assumed, knew full well that the items were fakes.
8th Circuit Gives Cold Shoulder to Weak Ice Cream Mark. "Frosty Treats" is a company that operates a fleet of vans that cruise residential neighborhoods and sell frozen goodies. Problem is, the FROSTY TREATS brand doesn't appear prominently on the trucks. It appears on a sign no larger than the myriad of other stickers festooning the truck displaying the "frosty treats" within. Oh, that reminds me, the mark is also highly descriptive. So when the mark appeared on an evil ice cream truck in a Sony video game, Frosty Treats was ill-prepared to defend its rights. The 8th Circuit held, in Frosty Treats, Inc. v. Sony Computer Entertainment America, Inc., No. 04-2502 (July 25, 2005), that the FROSTY TREATS mark was descriptive and that the plaintiff failed to prove up secondary meaning. Oh yeah, and there was no likelihood of confusion, either. In so doing, the 8th Circuit also trashed the plaintiff's shoddy survey. NOTE: To access the decision after linking, click on Opinions by Month/Year, select July 2005, and scroll until you come to it.
10th Circuit Requires Copyright Office to Issue Registration Before Suit Can Be Filed. In La Resolana Architects, PA v. Clay Realtors Angel Fire, No. 04-2127, (July 26, 2005), the Tenth Circuit, in a detailed opinion, held that "[t]he Copyright Office must approve or reject the application before registration occurs or a copyright infringement action can be brought." In taking this approach, the 10th Circuit broke with the 5th Circuit's rule, which is that it is enough to have filed the application, together submitting the proper specimen and fee. Although the 10th thought it was the second circuit to have taken the "registration required" approach, I believe that it's actually the third circuit to have done so explicitly, since the 10th Circuit overlooked at least the 9th Circuit cases requiring registration. See, e.g., S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989); Kodadek v. MTV Networks, Inc., 152 F.3d 1209 (9th Cir. 1998). (There may be other circuits too, but I've researched the 9th Circuit's approach before and know of those 2 cases.)
11th Circuit Sinks Vessel Hull Infringement Complaint. In a straightforward (but rare) suit under the Vessel Hull Design Protection Act, 17 USC § 1301 et seq., the 11th Circuit held in Maverick Boat Company, Inc. v. American Marine Holdings. Inc., No. 04-11259 (July 27, 2005), that the Act means what it says when it provides that only a "substantial" change to an existing design can qualify for protection under the Act.
Counterfeiting. In a case I initially missed because it was a criminal case -- not a civil suit -- the 10th Circuit held in United States v. Foote, No. 03-3263 (July 6, 2005), that the criminal counterfeiting definition, 18 USC § 2320(e)(1), which, like its civil counterpart, 15 USC § 1114(1)(b), requires a likelihood of confusion, covers post-sale confusion. The case concerned a defendant who sold "replicas" of prestigious branded items to customers who, it was assumed, knew full well that the items were fakes.
8th Circuit Gives Cold Shoulder to Weak Ice Cream Mark. "Frosty Treats" is a company that operates a fleet of vans that cruise residential neighborhoods and sell frozen goodies. Problem is, the FROSTY TREATS brand doesn't appear prominently on the trucks. It appears on a sign no larger than the myriad of other stickers festooning the truck displaying the "frosty treats" within. Oh, that reminds me, the mark is also highly descriptive. So when the mark appeared on an evil ice cream truck in a Sony video game, Frosty Treats was ill-prepared to defend its rights. The 8th Circuit held, in Frosty Treats, Inc. v. Sony Computer Entertainment America, Inc., No. 04-2502 (July 25, 2005), that the FROSTY TREATS mark was descriptive and that the plaintiff failed to prove up secondary meaning. Oh yeah, and there was no likelihood of confusion, either. In so doing, the 8th Circuit also trashed the plaintiff's shoddy survey. NOTE: To access the decision after linking, click on Opinions by Month/Year, select July 2005, and scroll until you come to it.
10th Circuit Requires Copyright Office to Issue Registration Before Suit Can Be Filed. In La Resolana Architects, PA v. Clay Realtors Angel Fire, No. 04-2127, (July 26, 2005), the Tenth Circuit, in a detailed opinion, held that "[t]he Copyright Office must approve or reject the application before registration occurs or a copyright infringement action can be brought." In taking this approach, the 10th Circuit broke with the 5th Circuit's rule, which is that it is enough to have filed the application, together submitting the proper specimen and fee. Although the 10th thought it was the second circuit to have taken the "registration required" approach, I believe that it's actually the third circuit to have done so explicitly, since the 10th Circuit overlooked at least the 9th Circuit cases requiring registration. See, e.g., S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081 (9th Cir. 1989); Kodadek v. MTV Networks, Inc., 152 F.3d 1209 (9th Cir. 1998). (There may be other circuits too, but I've researched the 9th Circuit's approach before and know of those 2 cases.)
11th Circuit Sinks Vessel Hull Infringement Complaint. In a straightforward (but rare) suit under the Vessel Hull Design Protection Act, 17 USC § 1301 et seq., the 11th Circuit held in Maverick Boat Company, Inc. v. American Marine Holdings. Inc., No. 04-11259 (July 27, 2005), that the Act means what it says when it provides that only a "substantial" change to an existing design can qualify for protection under the Act.
Thursday, July 21, 2005
Federal Circuit Addresses Genericism, Descriptiveness, and Acquired Distinctiveness
In the recent Federal Circuit decision in In re Steelbuilding.com, No. 04-1447 (July 11, 2005), the Federal Circuit held that the TTAB erred in holding the mark STEELBUILDING.COM generic. In a decision that provides a helpful roadmap for future cases (particular for "________.com" marks), the Court held that the Board described the genus wrong, made its decision on too little evidence, and gave too short shrift to the effect of the ".com" TLD portion of the asserted mark.
Unfortunately for the applicant, the Federal Circuit did uphold the Board's decision that the mark was merely descriptive and, over a dissent, that it lacked secondary meaning. Curiously, the majority didn't even mention much of the evidence in the record that Judge Linn's dissent thought required a vacatur of the Board's finding of no secondary meaning. It's frustrating when a dissent mentions evidence in a record that it thinks requires a contrary result, yet the majority doesn't even deign to say why that evidence didn't require a different result from the one it reached. That situation makes it hard to figure out how to use the decision as precedent in future disputes.
Unfortunately for the applicant, the Federal Circuit did uphold the Board's decision that the mark was merely descriptive and, over a dissent, that it lacked secondary meaning. Curiously, the majority didn't even mention much of the evidence in the record that Judge Linn's dissent thought required a vacatur of the Board's finding of no secondary meaning. It's frustrating when a dissent mentions evidence in a record that it thinks requires a contrary result, yet the majority doesn't even deign to say why that evidence didn't require a different result from the one it reached. That situation makes it hard to figure out how to use the decision as precedent in future disputes.
Wednesday, July 20, 2005
6th Circuit decision re reasonable royalty damages in a trade secret action
The 6th Circuit today issued an opinion -- available at this link -- in which it affirmed an award of damages based on a reasonable royalty measure in a trade secrets case under Ohio law. Since Ohio trade secrets law is based on the Uniform Trade Secrets Act, which has been adopted by 44 states (I think) in some form, this decision may have wider applicability than just to Buckeye fans.
Wednesday, July 13, 2005
5th Circuit decision on copyrightability of garment designs
In Galiano v. Harrah's Operating Co., Inc., No. 04-30521, -30806 (5th Cir. July 8, 2005), the 5th Circuit addressed the copyrightability of clothing designs.
The case involved uniforms for casino employees. The plaintiff, an independent clothing designer, designed them for Harrah's, and Harrah's began ordering the plaintiff-designed uniforms from third-party clothing suppliers, since the plaintiff didn't have the capacity to manufacture the uniforms. After the contract between the plaintiff and Harrah's ended, Harrah's kept ordering plaintiff-designed uniforms from the suppliers. The designer somehow felt aggrieved by this--the opinion doesn't explain exactly why--and so she sued, "weaving" her law "suit" out of the "fabric" of copyright law.
All agreed that the uniform designs were very creative, but the district court nevertheless found the copyright claim "torn": it held that the designs were not entitled to copyright protection because the uniforms' artistic elements weren't conceptually separable from their utilitarian aspects. "Dressing up" the issue in this fashion, the district court held that the definition of "pictorial, graphic, or sculptural works" (17 USC § 101) didn't "fit". Under this definition, copyright protection "vests" in useful articles only if the design of them "incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article."
There are many variants of the "conceptual separability test" out there, including the 7th Circuit's recent and lengthy decision in Pivot Point International, Inc. v. Charlene Products, Inc., 372 F.3d 913 (7th Cir. 2004), but the 5th Circuit said none of these "one-size-fits-all" tests really "suited" the case, and so "skirted" around the question of whether to adopt a general test. Instead, it decided to "fashion" a rule specifically for, and explicitly limited to, garment design cases only: the likelihood-of-marketability test.
Under the new likelihood of marketability test, a garment design is entitled to copyright protection upon a showing that it has "actual or potential market value as a stand-alone piece of artwork," (Slip Op. at 10), i.e., "the capacity of the item to moonlight as a piece of marketable artwork." (Id.) Because the plaintiff had made no showing under this newly-adopted test--but who knows what was in her "briefs"--the case against her was all but "sewn up": the 5th Circuit affirmed summary judgment in Harrah's favor.
The case involved uniforms for casino employees. The plaintiff, an independent clothing designer, designed them for Harrah's, and Harrah's began ordering the plaintiff-designed uniforms from third-party clothing suppliers, since the plaintiff didn't have the capacity to manufacture the uniforms. After the contract between the plaintiff and Harrah's ended, Harrah's kept ordering plaintiff-designed uniforms from the suppliers. The designer somehow felt aggrieved by this--the opinion doesn't explain exactly why--and so she sued, "weaving" her law "suit" out of the "fabric" of copyright law.
All agreed that the uniform designs were very creative, but the district court nevertheless found the copyright claim "torn": it held that the designs were not entitled to copyright protection because the uniforms' artistic elements weren't conceptually separable from their utilitarian aspects. "Dressing up" the issue in this fashion, the district court held that the definition of "pictorial, graphic, or sculptural works" (17 USC § 101) didn't "fit". Under this definition, copyright protection "vests" in useful articles only if the design of them "incorporates pictorial, graphic, or sculptural features that can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article."
There are many variants of the "conceptual separability test" out there, including the 7th Circuit's recent and lengthy decision in Pivot Point International, Inc. v. Charlene Products, Inc., 372 F.3d 913 (7th Cir. 2004), but the 5th Circuit said none of these "one-size-fits-all" tests really "suited" the case, and so "skirted" around the question of whether to adopt a general test. Instead, it decided to "fashion" a rule specifically for, and explicitly limited to, garment design cases only: the likelihood-of-marketability test.
Under the new likelihood of marketability test, a garment design is entitled to copyright protection upon a showing that it has "actual or potential market value as a stand-alone piece of artwork," (Slip Op. at 10), i.e., "the capacity of the item to moonlight as a piece of marketable artwork." (Id.) Because the plaintiff had made no showing under this newly-adopted test--but who knows what was in her "briefs"--the case against her was all but "sewn up": the 5th Circuit affirmed summary judgment in Harrah's favor.
Thursday, July 07, 2005
2d Circuit Absolves WhenU's Pop-up Ad Program
In a noteworthy (but in my view conceptually muddled) decision, the 2d Circuit recently held that WhenU--an Internet marketing company--didn't violate the Lanham Act through its pop-up ad & coupon program.
WhenU sells pop-up advertising. The pop-ups appear on computer screens of Internet users who have installed the WhenU program on their computers. The ads vary in size, shape, and placement, but they all are framed by a border displaying the words "A WhenU Offer--click?" The advertisers are usually competitors of, or in a business related to, the company whose website the computer user is on or the search result screen on which the company appears. Advertisers can't sign up to always have their ads appear when a user is on a competitor's site, but they sign up to be included in group of several advertisers whose pop-ups are randomly chosen for display when the triggering event happens.
The pop-ups are triggered by a database of web addresses, search terms, and key word algorithms kept by WhenU in an unseen directory maintained by When U.
One of the triggering web addresses in the WhenU directory was www.1800contacts.com, the web address of a company that used 1-800CONTACTS as a service mark for selling contact lenses.
The 2d Circuit reversed the district court's entry of a preliminary injunction against WhenU's "use" of the www.1800contacts.com web address as a trigger for competitors' pop-up ads. The 2d Circuit believed that WhenU did not "use" the plaintiff's mark by either maintaining the web address in WhenU's hidden directory or by causing the corresponding pop-up ad to appear.
As to the secret directory, the court said that (a) the inclusion of the plaintiff's web address was not the same thing as inclusion of the plaintiff's mark (even though they're similar), and (b) in any event, the fact that it was secret was not a "use" in connection with the sale of goods, in that the use was hidden from the purchasing public. I think the first reason is pretty flimsy, but the second reason goes to the heart of the matter, and I think gets it right.
As to the pop-ups themselves, the court again found no "use" as required by the Lanham Act. It again rested its decision in part on the flimsy distinction between the triggering address and mark itself. In another unconvincing section, the 2d Circuit pointed out that there was no "use" because other search terms (like "eye care") triggered 1-800CONTACTS' competitor's pop-up ads. More solidly, I think, however, the court also pointed out that the pop-up ads themselves don't actually use the plaintiff's mark or anything like it. And, of course, as a result, the pop-ups themselves are clearly marked as something other than the web page on which they are superimposed, and they're not themselves confusing. My own view is that the Court therefore should have rested its analysis of the pop-up ads themselves on the ground that they were unlikely to cause confusion, rather than lack of "use."
The 2d Circuit also pointed out that WhenU's program isn't different from vendors who pay retail stores to place their competing, but not confusingly similar, brands, right next to a well-known competing brand. Of course, this begs the question whether THAT practice is legal, but even so, it's a decent analogy.
Overall, I think this is probably the right result, but the analysis leaves something to be desired.
WhenU sells pop-up advertising. The pop-ups appear on computer screens of Internet users who have installed the WhenU program on their computers. The ads vary in size, shape, and placement, but they all are framed by a border displaying the words "A WhenU Offer--click?" The advertisers are usually competitors of, or in a business related to, the company whose website the computer user is on or the search result screen on which the company appears. Advertisers can't sign up to always have their ads appear when a user is on a competitor's site, but they sign up to be included in group of several advertisers whose pop-ups are randomly chosen for display when the triggering event happens.
The pop-ups are triggered by a database of web addresses, search terms, and key word algorithms kept by WhenU in an unseen directory maintained by When U.
One of the triggering web addresses in the WhenU directory was www.1800contacts.com, the web address of a company that used 1-800CONTACTS as a service mark for selling contact lenses.
The 2d Circuit reversed the district court's entry of a preliminary injunction against WhenU's "use" of the www.1800contacts.com web address as a trigger for competitors' pop-up ads. The 2d Circuit believed that WhenU did not "use" the plaintiff's mark by either maintaining the web address in WhenU's hidden directory or by causing the corresponding pop-up ad to appear.
As to the secret directory, the court said that (a) the inclusion of the plaintiff's web address was not the same thing as inclusion of the plaintiff's mark (even though they're similar), and (b) in any event, the fact that it was secret was not a "use" in connection with the sale of goods, in that the use was hidden from the purchasing public. I think the first reason is pretty flimsy, but the second reason goes to the heart of the matter, and I think gets it right.
As to the pop-ups themselves, the court again found no "use" as required by the Lanham Act. It again rested its decision in part on the flimsy distinction between the triggering address and mark itself. In another unconvincing section, the 2d Circuit pointed out that there was no "use" because other search terms (like "eye care") triggered 1-800CONTACTS' competitor's pop-up ads. More solidly, I think, however, the court also pointed out that the pop-up ads themselves don't actually use the plaintiff's mark or anything like it. And, of course, as a result, the pop-ups themselves are clearly marked as something other than the web page on which they are superimposed, and they're not themselves confusing. My own view is that the Court therefore should have rested its analysis of the pop-up ads themselves on the ground that they were unlikely to cause confusion, rather than lack of "use."
The 2d Circuit also pointed out that WhenU's program isn't different from vendors who pay retail stores to place their competing, but not confusingly similar, brands, right next to a well-known competing brand. Of course, this begs the question whether THAT practice is legal, but even so, it's a decent analogy.
Overall, I think this is probably the right result, but the analysis leaves something to be desired.
Friday, May 20, 2005
Permanent Litigation (KP, that is)
Amazing. Some lawyers have all the luck -- clients who actually want to litigate their trademark disputes up and down and all around the federal court system. I'm talking about the KP Permanent Make-Up case, which is back at the 9th Circuit after a remand from the Supreme Court.
In this round, the 9th Circuit re-analyzed the district court's summary judgment in favor of accused infringer KP. While the 9th Circuit had no trouble identifying lots of fact issues that required trial, the most important aspect of the 9th Circuit's decision is how it assessed the scope of enforceable rights that the plaintiff owned through its incontestable MICRO COLORS & design registration (which it called a "logo mark"). The 9th Circuit stated several times that the mark owner's rights from such a registration cover not only the whole design (including the words), but also the words "MICRO COLORS" alone, which the court said was appropriate because the words were, in its view, "most salient feature of the logo mark." Accordingly, the 9th Circuit wouldn't let the accused infringer challenge the words MICRO COLORS alone as merely descriptive and lacking secondary meaning.
This broad view that the incontestability of a design mark extends to the words alone if they are the most salient feature of the design mark is, in my view, more controversial than the 9th Circuit lets on. But this is certainly a weapon to remember in future cases.
In this round, the 9th Circuit re-analyzed the district court's summary judgment in favor of accused infringer KP. While the 9th Circuit had no trouble identifying lots of fact issues that required trial, the most important aspect of the 9th Circuit's decision is how it assessed the scope of enforceable rights that the plaintiff owned through its incontestable MICRO COLORS & design registration (which it called a "logo mark"). The 9th Circuit stated several times that the mark owner's rights from such a registration cover not only the whole design (including the words), but also the words "MICRO COLORS" alone, which the court said was appropriate because the words were, in its view, "most salient feature of the logo mark." Accordingly, the 9th Circuit wouldn't let the accused infringer challenge the words MICRO COLORS alone as merely descriptive and lacking secondary meaning.
This broad view that the incontestability of a design mark extends to the words alone if they are the most salient feature of the design mark is, in my view, more controversial than the 9th Circuit lets on. But this is certainly a weapon to remember in future cases.
Saturday, May 07, 2005
Pre-emption: Copyright Act v. Right of Publicity
The 7th Circuit recently held that the Copyright Act does not pre-empt state law claims that use of a person's photograph violates the person's right of publicity. According to the court in Toney v. L'Oreal USA, Inc., No. 03-2184 (7th Cir. May 6, 2005), the Copyright Act protects works of authorship in a fixed medium, whereas the state right of publicity protects a person's "persona," which is not so fixed. The court believed the two rights were different enough to escape preemption.
Mi jury demand es tu jury demand
The Ninth Circuit recently held that a plaintiff who didn't demand a jury trial on his trademark and trade dress infringement claims was nevertheless entitled to a jury trial on those claims under the defendant's demand for a jury trial on its counterclaims for business disparagement and false advertising, where the counterclaims were based on the alleged falsity of plaintiff's statements to customers that the defendant was infringing plaintiff's TM and trade dress rights. Whew! Long sentence! The court thought the claims and counterclaims were related enough that the plaintiff could have reasonably relied on the defendant's demand. California Scents v. Surco Prods., Inc., No. 03-56116 (May 6, 2005).
9th Circuit Botches "Relatedness of Goods" Inquiry?
The Ninth Circuit recently decided a reverse confusion case against the plaintiff. The decision in Surfvivor Media, Inc. v. Survivor Productions, No. 02-17064 (May 4, 2005) is not particularly interesting, however, except in its assessment of the "relatedness of the goods" factor in the likelihood of confusion analysis. In that paragraph, the court didn't assess whether the goods of the parties overlap, are complementary, or are otherwise related. Characterizing its task as to determine whether customers "could reasonably conclude that the products came from the same source," the court said there was no evidence to suggest that customers would "conclude that the products came from the same source," pointing as well to the near total absence of actual confusion evidence. See id. at 4851. This seems wrong to me in that it both (a) suggests that survey or other actual confusion evidence is required as to what is supposed, in my view, to be a different factor, and (b) collapses the ultimate likelihood of confusion inquiry into the relatedness of the goods factor.
Nevertheless, this precedent may come in handy when representing accused infringers.
Nevertheless, this precedent may come in handy when representing accused infringers.
Thursday, May 05, 2005
4th Circuit on proving up copyright infringer's profits
Maybe because it was the day before taxes were due, but I missed the 4th Circuit's April 14 decision in Bonner v. Dawson, No. 04-1440. In Bonner, the court held that the plaintiff must do more than simply point to the infringer's TOTAL profit stream, and then sit back. Instead, the plaintiff has the initial burden to point to a particular profit stream and prove "some causal link between the infringement and the particular profit stream" he is seeking to recoup. Slip op. at 5-6. In Bonner, the plaintiff architect satisfied the initial burden by pointing to the income the building owner derived from leases in the infringing building.
Despite satisfying his initial burden, however, the plaintiff couldn't recover because the defendant had presented adequate evidence that the rent money was the result of factors other than the copyrighted design elements. Id. at 7.
Despite satisfying his initial burden, however, the plaintiff couldn't recover because the defendant had presented adequate evidence that the rent money was the result of factors other than the copyrighted design elements. Id. at 7.
Wednesday, April 13, 2005
Blogger ate my homework
Haven't posted in a while, but tried to last week. Unfortunately, as I clicked "Publish Post," Blogger croaked. All was lost. This "Retrieve Post" stuff? Didn't work. So herewith, below, are overly simplistic and only marginally humorous synopses of some recent decisions for the attention-span impaired. As you will see, it wasn't a good month for owners of what they thought were trademark rights or copyrights:
- What parts of the graphic and user interface of a video golf game are protectible under trade dress and copyright law? None, that's what, sez the 7th Circuit in Incredible Technologies, Inc. v. Virtual Technologies, Inc., No. 03-3785 (March 15, 2005).
- How about part numbers and part drawings in a transmission parts catalog? Protectible under copyright law? Nope, quoth the 6th Circuit in ATC Distribution Group, Inc. v. Whatever It Takes Transmissions & Parts, Inc., No. 03-6505 (March 30, 2005).
- OK, what about a last name registered as a trademark under German law? Out of luck in Murica, says the Federal Circuit in In re Rath, No. 04-1419, -1420 (March 24, 2005).
- I don't own the copyright, but I have an assignment of all causes of action from the copyright owner, so I can sue, right? Wrong, according to the en banc 9th Circuit in Silvers v. Sony Pictures Entertainment, Inc., No. 01-56069 (March 25, 2005).
- I've got a jury finding of intentional trademark infringement. Pretty exceptional, huh? I get fees, don't I? Well, don't I?? Nope. Intentional doesn't mean the same thing as willful, says a panel of the 9th Circuit, apparently deciding the case without their Roget's Thesaurus. Watec Co. v. Liu, No. 03-55823, -56079 (March 30, 2005).
- Hey! There's a guy using my trademark for the domain name of a web site where he says rotten things about me. Doesn't trademark law prohibit that? Not if he's just griping. That's not "use in connection with the sale of goods," as required under the Lanham Act, but you might have a beef under the Anticybersquatting Act. Bosley Medical Inst., Inc. v. Kremer, No. 04-55962 (9th Cir. April 4, 2005).
- Finally, the 8th Circuit held that (a) a bankruptcy court order approving the sale of assets, including "all intellectual property," was a valid transfer of ownership in copyrights, (b) an appellate court should review a district court's finding of "substantial similarity" under the clearly erroneous standard, not de novo (a bad sign for the appellant in the case), and (c) no jury trial for plaintiffs who drop their damage claims prior to trial. Taylor Corp. v. Four Seasons Greetings, LLC, No. 04-1088 (April 11, 2005). (Hard to do anything flip with that decision -- sorry.)
Wednesday, March 02, 2005
2d Circuit Declares Open Season on Cuban Marks
Well, that's not what they actually said in Empresa Cubana del Tabaco v. Culbro Corp., No. 04-2527 (Feb. 24, 2005), but that's the effect. The plaintiff was a Cuban cigar company famous for its COHIBA cigars. But alas, the Cuban trade embargo prohibits their sale in the US. So the defendant, an unrelated US company, decided to market its own COHIBA cigars in the US, admittedly based on the international fame of the unavailable original. AND THE SECOND CIRCUIT LET THEM GET AWAY WITH IT! Why? Because the very same embargo prohibits the Cuban company from acquiring any enforceable trademark rights in the mark in the US. With no rights, the Cuban company's Lanham Act case went up in smoke. Interestingly, the Second Circuit took an even stricter view of the effect of the Cuban embargo than the US Departments of Justice and the Treasury took in their amicus submission. Is there a cert petition in the humidor?
Friday, February 25, 2005
8th Circuit Food Fight over LOUIS KEMP Mark
The 8th Circuit recently presided over a food fight over the trademark LOUIS KEMP. In Kemp v. Bumble Bee Seafoods, Inc., No. 02-3797 (Feb. 23, 2005), the recipe for the dispute was as follows:
Ingredients:
Ingredients:
- 1 man (Louis Kemp) who has sold the rights to use his name as a trademark on seafood
- 1 company to buy the mark
- 1 contract memorializing the deal
- millions of $$ spent by the company making the man's name famous
- 1 ton of second thoughts by the man upon seeing how famous the company made his name
Let's Cook:
Take the LOUIS KEMP mark, mix in the millions of advertising $$, and allow it to rise. In a separate pan, allow Louis Kemp the man to stew in his own juices with the second thoughts and the contract. Add in a plan to use his name for DIFFERENT food items than the ones specifically listed in the contract wherein he sold his rights. Stir and heat in a federal district court at 400 degrees until the dispute comes to a boil and begins smoking. Garnish the trial court's decision with parsley. Serves 3 appellate judges.
The law the 8th Circuit discussed was pretty straightforward, primarily involving an assessment of the likelihood of confusion factors.
To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select February 2005, and scroll until you come to it.
3d Circuit holds "willfulness" no longer prerequisite for accounting of trademark infringer's profits
The 3d Circuit recently joined the 5th Circuit in holding that the 1999 amendment to section 35(a) of the Lanham Act, 15 USC § 1117(a) -- which added language allowing monetary awards for a "willful violation" of the anti-dilution statute but not adding the word "willful" as to § 43(a) violations -- means that willfulness is now NOT a prerequisite for disgorgement of the infringer's profits. In Banjo Buddies, Inc. v. Renofsky, No. 03-2038 (Feb. 22, 2005), the court held that Congress's failure to add the word willful was, in a word, willful, given that it is charged with knowing that the courts had pretty much, at that time, uniformly been interpreting section 35(a) to require willfulness before ordering disgorgement. The court listed several nonexhaustive factors that a court should consider in deciding whether to award disgorgement of profits, including (1) willfulness, (2) lost sales, (3) adequacy of other remedies, (4) any unreasonable delay in asserting rights, (5) public interest in making the misconduct unprofitable, and (6) whether it's a case of "palming off." In discussing the district court's award of the infringer's profits, the court also noted that "there is no requirement that the defendant's profits approximate the plaintiff's damages" and that an award of the infringer's profits is available if the infringer was unjustly enriched, if the plaintiff sustained damages, OR if the award is necessary for deterrence. (Slip op. at 18.)
Tuesday, February 15, 2005
9th Circuit says settlement moots Gator.com v. LL Bean dispute
Many folks are aware that Gator.com and LL Bean have been duking it out in California over the legality under the Lanham Act and the Copyright Act of Gator.com's practice of signing up web surfers to receive pop-up ads tied to the web sites they were viewing. The district court kicked the case on Bean's pre-answer rule 12(b)(2) motion, holding that there was no personal jurisdiction over Bean in California. While the personal jurisdictional issue was under en banc consideration at the 9th Circuit, the parties settled the substance of their dispute, with Gator.com phasing out its pop-ups when web surfers are on Bean's website, and Bean releasing Gator.com from liability for claims of infringement, etc.
The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.
Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.
The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.
Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.
Friday, February 11, 2005
3d Circuit Holds Lanham Act Claim Barred by Laches
The Third Circuit discussed the laches defense to a Lanham Act false advertising claim in Santana Products Inc. v. Bobrick Washroom Equipment, Inc., No. 03-1845 (3d Cir. Feb. 9, 2005). In Santana, the plaintiff filed his false advertising claim 7 years after he first learned of the defendant's alleged false statements. The defendant raised statute of limitations and laches defenses. Since the Lanham Act doesn't have a stated statute of limitations, the district court looked to "borrow" one from state law. But it held that the statute of limitations defense didn't fully bar the claim, just that part of it that was outside the 6-year limitation it borrowed from what it viewed as the most appropriate Pennsylvania law, the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL). But because the plaintiff first learned of the false statements outside the UTPCPL's 6-year limit, the district court held that a presumption of laches arose. It also held that the plaintiff's delay was inexcusable. Ultimately, however, it rejected the laches defense because it concluded that the plaintiff had proven that the defendant wasn't prejudiced by the delay. In other words, the district court held that a plaintiff can overcome laches so long as it can defeat a showing of EITHER (a) inexcusable delay OR (b) prejudice to the defendant.
The 3d Circuit held that the district court should have dismissed the Lanham Act claim as barred by laches. It agreed with the district court's choice of the UTPCPL statute of limitations as the proper guidepost for the false advertising claim (take heed -- this may not be the proper source from which to borrow for a Lanham Act trademark infringement claim). It also agreed that a presumption of laches arose because of the plaintiff's seven-year wait. But it disagreed that a plaintiff facing a presumption of laches need overcome only one of the two elements of laches. The plaintiff needs to show BOTH that its delay was excusable AND that the defendant wasn't prejudiced by the delay. (Slip op. at 29.) The 3d Circuit discussed the issue in some detail despite several of its prior opinions expressly so holding, probably because the plaintiff had cited a district court decision written by Senior Third Circuit Judge Becker (when he was a district judge) that adopted the "either/or" rule for overcoming the presumption of laches.
The 3d Circuit held that the district court should have dismissed the Lanham Act claim as barred by laches. It agreed with the district court's choice of the UTPCPL statute of limitations as the proper guidepost for the false advertising claim (take heed -- this may not be the proper source from which to borrow for a Lanham Act trademark infringement claim). It also agreed that a presumption of laches arose because of the plaintiff's seven-year wait. But it disagreed that a plaintiff facing a presumption of laches need overcome only one of the two elements of laches. The plaintiff needs to show BOTH that its delay was excusable AND that the defendant wasn't prejudiced by the delay. (Slip op. at 29.) The 3d Circuit discussed the issue in some detail despite several of its prior opinions expressly so holding, probably because the plaintiff had cited a district court decision written by Senior Third Circuit Judge Becker (when he was a district judge) that adopted the "either/or" rule for overcoming the presumption of laches.
Friday, February 04, 2005
11th Circuit Certifies "Advertising Injury" Insurance Issue in Lanham Act Case to Florida Supreme Court
Most trademark litigators know that, where possible, a plaintiff should plead that the alleged infringer's acts were willful and intentional. It helps in the likelihood of confusion inquiry and any secondary meaning debate, and, in most circuits, it also triggers the plaintiff's ability to seek "big gun" relief, such as treble damages, attorneys' fees, and disgorgement of the infringer's profits.
And if you've defended such cases in situations where there may be insurance coverage for "advertising injury," you might have heard the insurer squawk about how the allegation of intentional or willful infringement triggered a common exclusion in such policies for intentional acts.
The issue of whether an insurance policy covers the particular claims is an issue of state law, and federal courts usually put on their Erie hats and decide them. In Vector Products, Inc. v. Hartford Fire Insurance Co., No. 04-10975 (Jan. 26, 2005), however, the allegation of willful conduct complicated things. One of Vector's competitors claimed that Vector was engaged in false advertising, and brought a Lanham Act claim against it. Probably to try to qualify for additional remedies, the competitor claimed that Vector's acts were intentional. The insurer then refused to defend because of that allegation. Realizing that allegations of willfulness might trigger the exclusion against the insurer's duty to defend, yet wasn't required for Lanham Act liability, the 11th Circuit thought the issue of coverage was sufficiently subtle and unsettled under Florida law to require a punt to the Florida Supreme Court.
Insurers and trademark litigators will be watching the runback on this one.
And if you've defended such cases in situations where there may be insurance coverage for "advertising injury," you might have heard the insurer squawk about how the allegation of intentional or willful infringement triggered a common exclusion in such policies for intentional acts.
The issue of whether an insurance policy covers the particular claims is an issue of state law, and federal courts usually put on their Erie hats and decide them. In Vector Products, Inc. v. Hartford Fire Insurance Co., No. 04-10975 (Jan. 26, 2005), however, the allegation of willful conduct complicated things. One of Vector's competitors claimed that Vector was engaged in false advertising, and brought a Lanham Act claim against it. Probably to try to qualify for additional remedies, the competitor claimed that Vector's acts were intentional. The insurer then refused to defend because of that allegation. Realizing that allegations of willfulness might trigger the exclusion against the insurer's duty to defend, yet wasn't required for Lanham Act liability, the 11th Circuit thought the issue of coverage was sufficiently subtle and unsettled under Florida law to require a punt to the Florida Supreme Court.
Insurers and trademark litigators will be watching the runback on this one.
Friday, January 28, 2005
7th Circuit Says Prevailing Defendants in Copyright Cases Presumptively Entitled to Attorneys' Fees
In Woodhaven Homes & Realty, Inc. v. Hotz, No. 03-4158 (7th Cir. Jan. 28, 2004), the 7th Circuit reiterated its recent holding that prevailing defendants in copyright cases are "presumptively entitled (and strongly so) to recover attorney fees." Otherwise, plaintiffs could coerce settlements with impunity even in frivolous cases, and defendants would be discouraged from asserting their rights in court. (Slip op. at 3.) The court suggested, however, that defendants who incur way more in legal fees than the plaintiff demands may have their fee award reduced as a result. (p.4).
8th Circuit Affirms Perpetual Injunction Against Use of Trade Secrets
If you're a user of Premarin brand hormone replacement product, you probably don't want to read footnote 2 in the 8th Circuit's decision in Wyeth v. Natural Biologics, Inc., No. 03-3651 (8th Cir. Jan. 24, 2005). The case involved allegations by the drug's maker that a competitor stole the trade secrets needed to make the product, whose prime ingredient, natural conjugated estrogens--and here's the yucky part--"is made by extracting conjugated estrogens from pregnant mare urine." (Slip op. at 3 n.2).
Of interest in the 8th Circuit's opinion is its discussion of a whole bunch of circumstantial evidence--there was no direct evidence of theft--that supported the district court's finding that the defendant misappropriated the secret process (pp. 5-6.) The court found it particularly significant that no one had, for decades, been able to replicate the Wyeth process, and the court believed that this fact gave rise to an inference that the defendant must have gotten it illegally.
But in the statute of limitations discussion, that fact proved a one way street headed exactly where the plaintiff wanted to go. A process may be so hard to replicate that when someone replicates it, it must be stealing, right? But when the trade secret owner sees that the defendant has replicated it, he isn't charged with notice that the defendant stole it. (pp. 6-9.) Huh?
Anyway, on to remedy. The district court forever barred the defendant from all activity related to the development of natural conjugated estrogens. The defendant thought that the injunction ought to be limited to whatever "head start" the misappropriation gave it. . . but forever? Sheesh!
The 8th Circuit affirmed the permanent timeout, however, primarily because the defendant acted very sneakily during the litigation, destroying evidence, lying, hiding things, whistling some nameless tune while looking around innocently, etc. So sneaky, in fact, that the district court felt that the defendant couldn't be trusted to comply with any order that gave it any wiggle room. The 8th Circuit affirmed on this point. (pp. 9-10.) And I would be missing a marketing opportunity if I were to fail to mention that this holding seems to be in line with my scintillating article, Permanent Injunctions in Trade Secret Actions: Is a Proper Understanding of the Role of the Inadequate Remedy at Law/Irreparable Harm Requirement the Key to Consistent Decisions?, 28 AIPLA Q. J. 124 (Spring 2000). Alas, the court didn't cite to it. Bummer.
To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select January 2005, and scroll 'til you come to it.
Of interest in the 8th Circuit's opinion is its discussion of a whole bunch of circumstantial evidence--there was no direct evidence of theft--that supported the district court's finding that the defendant misappropriated the secret process (pp. 5-6.) The court found it particularly significant that no one had, for decades, been able to replicate the Wyeth process, and the court believed that this fact gave rise to an inference that the defendant must have gotten it illegally.
But in the statute of limitations discussion, that fact proved a one way street headed exactly where the plaintiff wanted to go. A process may be so hard to replicate that when someone replicates it, it must be stealing, right? But when the trade secret owner sees that the defendant has replicated it, he isn't charged with notice that the defendant stole it. (pp. 6-9.) Huh?
Anyway, on to remedy. The district court forever barred the defendant from all activity related to the development of natural conjugated estrogens. The defendant thought that the injunction ought to be limited to whatever "head start" the misappropriation gave it. . . but forever? Sheesh!
The 8th Circuit affirmed the permanent timeout, however, primarily because the defendant acted very sneakily during the litigation, destroying evidence, lying, hiding things, whistling some nameless tune while looking around innocently, etc. So sneaky, in fact, that the district court felt that the defendant couldn't be trusted to comply with any order that gave it any wiggle room. The 8th Circuit affirmed on this point. (pp. 9-10.) And I would be missing a marketing opportunity if I were to fail to mention that this holding seems to be in line with my scintillating article, Permanent Injunctions in Trade Secret Actions: Is a Proper Understanding of the Role of the Inadequate Remedy at Law/Irreparable Harm Requirement the Key to Consistent Decisions?, 28 AIPLA Q. J. 124 (Spring 2000). Alas, the court didn't cite to it. Bummer.
To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select January 2005, and scroll 'til you come to it.
Thursday, January 13, 2005
Plaintiff Gets Injunction Despite Sloppy Trademark Practices
On January 13, the Sixth Circuit affirmed a preliminary injunction prohibiting a defendant's further use of the plaintiff's TUMBLEBUS mark for a preschool gym on wheels. The plaintiff really dodged a bullet, however, that was aimed at the sloppy way she let her customers use her trademark.
In Tumblebus, Inc. v. Cranmer, the plaintiff uses the TUMBLEBUS mark both for sales of reoutfitted school buses and for the operation of several buses in the Louisville area. The buses the plaintiff sold to 3rd parties not only looked like the plaintiff's buses, but she also (1) allowed the buyers to use the TUMBLEBUS mark, (2) gave them training lessons in how to pitch the services, and (3) further entered into informal oral agreements about where these buyers could operate. In other words, the plaintiff's business looked a lot like a haphazard and informal form of franchising . . . but without the oversight and quality control.
This informality resulted in a legal dispute when one of the plaintiff's purchasers began operating in the Louisville area, which the plaintiff considered HER territory. The purchaser later sold to someone else, who continued to operate in Louisville.
Suing the purchaser of the used bus, the plaintiff was still able to win a preliminary injunction and get it affirmed by the 6th Circuit. The courts found that the defendant had failed to create a factual record sufficient to find the mark was, or had become, generic. The court also rejected the argument that the mark was descriptive because it found "preschool gym on wheels" more appropriate as a description and thought that TUMBLEBUS required a bit of imagination.
Finally, the courts also rejected an abandonment-through-naked-licensing argument because the one geographic are where that argument really didn't apply was Louisville -- where the plaintiff herself was the exclusive operator.
The lesson here . . . . well, maybe there is no lesson here, since the plaintiff seems to have gotten away with some pretty loosey-goosey business practices. Next time, however, TUMBLEBUS may not be so lucky.
In Tumblebus, Inc. v. Cranmer, the plaintiff uses the TUMBLEBUS mark both for sales of reoutfitted school buses and for the operation of several buses in the Louisville area. The buses the plaintiff sold to 3rd parties not only looked like the plaintiff's buses, but she also (1) allowed the buyers to use the TUMBLEBUS mark, (2) gave them training lessons in how to pitch the services, and (3) further entered into informal oral agreements about where these buyers could operate. In other words, the plaintiff's business looked a lot like a haphazard and informal form of franchising . . . but without the oversight and quality control.
This informality resulted in a legal dispute when one of the plaintiff's purchasers began operating in the Louisville area, which the plaintiff considered HER territory. The purchaser later sold to someone else, who continued to operate in Louisville.
Suing the purchaser of the used bus, the plaintiff was still able to win a preliminary injunction and get it affirmed by the 6th Circuit. The courts found that the defendant had failed to create a factual record sufficient to find the mark was, or had become, generic. The court also rejected the argument that the mark was descriptive because it found "preschool gym on wheels" more appropriate as a description and thought that TUMBLEBUS required a bit of imagination.
Finally, the courts also rejected an abandonment-through-naked-licensing argument because the one geographic are where that argument really didn't apply was Louisville -- where the plaintiff herself was the exclusive operator.
The lesson here . . . . well, maybe there is no lesson here, since the plaintiff seems to have gotten away with some pretty loosey-goosey business practices. Next time, however, TUMBLEBUS may not be so lucky.
Tuesday, January 11, 2005
Kid Rock Copyright . . . . Forever
The Sixth Circuit, in Ritchie v. Williams, recently thwarted an attempt by a purported music promoter who claimed to have an ownership interest in the rights to Kid Rock's music. The promoter claimed to have entered into the alleged agreement in 1989 (i.e., before Kid Rock had money like Fort Knox), alleging several claims in state court under state law. But when the fog lifted, the earth had shifted -- Kid Rock removed to federal court. Citing federal preemption, the Kid said the state law claims were still the same as copyright claims 'cause they ain't changed nothin. That is, they were completely preempted by the Copyright Act.
Where it applies, complete preemption doctrine permits the recharacterization of state law claims as federal claims, thus permitting removal of such a case from state to federal court. The reason Kid Rock wanted to recharacterize the promoter's claims as copyright claims was that he'd thought the claims had got rusty, thought they'd got dusty -- the Copyright Act has a 3 year statute of limitations.
Fat and ugly, broke, black and blue, the promoter came back to the Sixth for round two. The Sixth Circuit, however, used the opportunity to fall in line with the Second and Fourth Circuit's adoption of complete preemption doctrine. The promoter was told, don't test the boss, 'cause he's got this sewn like Betsy Ross. According to the court:
You take the copyright claim
And you give it the state law name
You know that trick is lame
You're in the federal domain
Forever
Pre-empted
Forever
Time-Barred
Forever
Sorry, I just couldn't resist.
Where it applies, complete preemption doctrine permits the recharacterization of state law claims as federal claims, thus permitting removal of such a case from state to federal court. The reason Kid Rock wanted to recharacterize the promoter's claims as copyright claims was that he'd thought the claims had got rusty, thought they'd got dusty -- the Copyright Act has a 3 year statute of limitations.
Fat and ugly, broke, black and blue, the promoter came back to the Sixth for round two. The Sixth Circuit, however, used the opportunity to fall in line with the Second and Fourth Circuit's adoption of complete preemption doctrine. The promoter was told, don't test the boss, 'cause he's got this sewn like Betsy Ross. According to the court:
You take the copyright claim
And you give it the state law name
You know that trick is lame
You're in the federal domain
Forever
Pre-empted
Forever
Time-Barred
Forever
Sorry, I just couldn't resist.
Monday, January 10, 2005
GOP Cybersquatters?
I may live and practice in the great (red) state of Texas, but I was born, bred, schooled and worked exclusively in several true blue states before that. And so, yes, I'm a blue stater politically. As a democrat in Texas, however, I now understand how republicans in my native Massachusetts must feel. But still, as a trademark guy, I can't abide this little gambit.
Friday, January 07, 2005
What is With the 10th Circuit and Tire Trademark Cases?
The 10th Circuit -- not exactly a trademark law hotbed -- issued its second published trademark decision in a month. And on tires, to boot, which is kind of weird for a circuit that doesn't get many trademark cases, yet were the folks who gave us the seminal reverse confusion decision in 1977 in Big O Tires.
But I digress. In Team Tires Plus, Ltd. v. Tires Plus, Inc. (January 6, 2005), the 10th Circuit burned a little rubber on the district court. The plaintiff used TIRES PLUS for franchising services to tire stores. The defendant TIRES PLUS was an unrelated tire store. The district court ruled that since franchising and tire-selling are not the same thing, the plaintiff's infringement case had no traction.
The 10th Circuit held that the district court's simplistic analysis hydroplaned right over the key issue of likelihood of confusion. The court noted that while in the days of solid rubber tires such a binary view may have held sway, it has long gone the way of the Model T.
Having jacked up and replaced the district court's threadbare reasoning, the 10th Circuit rolled the case back to the trial court for proper inflation of the multi-factor likelihood of confusion test.
But I digress. In Team Tires Plus, Ltd. v. Tires Plus, Inc. (January 6, 2005), the 10th Circuit burned a little rubber on the district court. The plaintiff used TIRES PLUS for franchising services to tire stores. The defendant TIRES PLUS was an unrelated tire store. The district court ruled that since franchising and tire-selling are not the same thing, the plaintiff's infringement case had no traction.
The 10th Circuit held that the district court's simplistic analysis hydroplaned right over the key issue of likelihood of confusion. The court noted that while in the days of solid rubber tires such a binary view may have held sway, it has long gone the way of the Model T.
Having jacked up and replaced the district court's threadbare reasoning, the 10th Circuit rolled the case back to the trial court for proper inflation of the multi-factor likelihood of confusion test.
Tuesday, January 04, 2005
The Meaning of the Word "Pimp"
A 9th Circuit panel today couldn't agree on whether calling Evel Knievel a "pimp" was, in the current vernacular, an insult, a compliment, or neither. ESPN published a photo of Knievel and his wife standing together arm-in-arm with an unnamed young woman at the 2001 Action Sports and Music Awards Ceremony with the caption "Evel Knievel proves that you're never too old to be a pimp."
After summarizing Knievel's career of daring exploits in a manner worthy of the best publicists, the court held that Knievel's lawsuit had hit a slippery patch of 12(b)(6) grade motor oil and crashed. Blame it on kids today. Given the other "satirical, risque, and sophomoric slang" used by ESPN and others in describing the "youthful" event, two judges held that the word pimp wasn't really an accusation that Knievel was, in fact, unlawfully engaged as a business manager of prostitutes. Holding that Knievel should get over it (the majority actually wasn't quite that blunt), the court affirmed the dismissal of Knievel's complaint.
A dissenting judge wasn't so sure. He quoted Shakespeare (presumably, in the context of this case, to exemplify just how far pop culture has fallen) and lamented that the jury ought to have decided whether Knievel was defamed or not. Here's the link.
After summarizing Knievel's career of daring exploits in a manner worthy of the best publicists, the court held that Knievel's lawsuit had hit a slippery patch of 12(b)(6) grade motor oil and crashed. Blame it on kids today. Given the other "satirical, risque, and sophomoric slang" used by ESPN and others in describing the "youthful" event, two judges held that the word pimp wasn't really an accusation that Knievel was, in fact, unlawfully engaged as a business manager of prostitutes. Holding that Knievel should get over it (the majority actually wasn't quite that blunt), the court affirmed the dismissal of Knievel's complaint.
A dissenting judge wasn't so sure. He quoted Shakespeare (presumably, in the context of this case, to exemplify just how far pop culture has fallen) and lamented that the jury ought to have decided whether Knievel was defamed or not. Here's the link.
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