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.

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.

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


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.

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.