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.

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.

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.

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.

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.