Thursday, October 21, 2010

2d Circuit decision on "false endorsement" and unusual counterfeit-related unfair competition claims

The 2d Circuit today seemed to take a fairly forgiving view of what types of disputes are covered by the Lanham Act. The case is Famous Horse, Inc. v. 5th Ave. Photo Inc., No. 08-4523-cv (2d Cir. Oct. 21, 2010). Famous Horse is a clothing retailer. 5th Avenue Photo is a clothing wholesaler. Famous Horse bought what it thought were genuine “Rocawear” jeans from 5th Avenue Photo, but stopped buying them after determining they were counterfeit. 5th Avenue Photo, however, continued selling the counterfeit jeans to retailers competing with Famous Horse and also advertising that Famous Horse was a “satisfied customer.”

False Endorsement Claims – the 2d Circuit upheld Famous Horse’s “false endorsement” claims under both sections 32 and 43(a) of the Lanham Act (15 U.S.C. §§ 1114(1)(a) & 1125(a)(1)). It held that neither section’s “use in commerce” requirement requires the defendant to have attached the plaintiff’s mark to the goods themselves when the false endorsement related the defendant’s services.

Interesting Unfair Competition Claim – Famous Horse also alleged unfair competition under section 43(a) because 5th Avenue Photo sold counterfeit “Rocawear” jeans to Famous Horse’s competitors. Famous Horse alleged not only that it lost sales, but also that customers would view famous Horse as a price-gouger because the competing stores that 5th Avenue Photo sold to could then sell the counterfeit jeans for less than the genuine jeans sold by Famous Horse. 5th Avenue asserted that Famous Horse lacked standing because the parties weren’t competitors (Famous Horse is a retailer and 5th Avenue a wholesaler). The 2d Circuit rejected this argument, holding that there is no hard and fast rule in the 2d Circuit that, to have standing, the plaintiff be a retail competitor of the defendant, so long as the plaintiff demonstrates that it has a “reasonable interest” to be protected and a “reasonable basis” to think that the defendant is damaging that interest. The court held that Famous Horse’s allegations of injury adequately gave it standing to assert unfair competition under section 43(a).

Monday, October 18, 2010

Challenging assignments of incontestable registrations (the "Stoly" decision)

I quickly read the "Stoly" case (Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l N.V., No. 06-3532-cv (2d Cir. Oct. 8, 2010)) when it came a little over a week ago but didn't write anything because I figured it was such a unique and complicated set of facts that, who cares?, really. But a colleague spurred me into more closely re-reading it, and I now see two larger legal points here.

First, where an incontestable registration has later been assigned, a challenge to the assignment is not precluded by section 1115(b)'s provision that incontestability is "conclusive evidence of . . . registrant's ownership of the mark" because where there's a dispute as to the validity of an assignment, an assignee is not necessarily the registrant. And where an assignee's rights are at issue, the recordation of the assignment at the PTO is only "prima facie evidence of execution" of the assignment. Thus, to tap into the "conclusive evidence of ownership" provided by incontestability, an assignee whose assignment is challenged must first prove up a valid assignment.

Second, while the "antecedent question" of the validity of the assignment might be a question of state or even foreign law, federal courts have jurisdiction to hear disputes as to the validity of assignment of a federal registration under the Lanham Act if the challenger specifically seeks any of the remedies provided by the Act.

Tuesday, October 05, 2010

4th Circuit decision on furniture design knockoffs as both copyright infringement and reverse passing off under the Lanham Act

In an interesting case that I missed (because it issued the day after I had shoulder surgery), the 4th Circuit discussed copyright and Lanham Act claims directed at knock-off furniture designs. In Universal Furniture Int’l, Inc. v. Collezione Europa USA, Inc., No. 07-2180 (4th Cir. Aug. 20, 2010), the plaintiff designed two furniture line busily adorned by many types of decorative designs derived from historical public sources.

The Fourth Circuit first held that in selecting, adapting, and arranging historical design elements from the public domain, the creator of the furniture displayed enough expressive originality to obtain copyrights on the designs.

The Court then dealt with the “more vexing” question of whether the decorative designs carved into the furniture were “conceptually separable” from the utilitarian aspects of the furniture design, because without this separability, otherwise copyrightable material incorporated into a useful article are not eligible for copyright protection. After discussing cases holding that mannequins of human torsos are not copyrightable but highly ornamental designs on belt buckles are, the Fourth Circuit decided that the decorative elements of the furniture at issue were more like the belt buckle and thus were copyrightable.

The Court then went on to (mis)construe the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), holding that the defendant’s knock offs amounted to “reverse passing off” under the Lanham Act. In a really small nutshell, Dastar held that the word “origin” in the Lanham Act required the limiting of reverse passing off claims to instances where the accused product actually originated with the plaintiff (like taking Coke and putting it in Pepsi bottles). The 4th Circuit construed some language in Dastar about how licensors can also be a source of “origin” too broadly, however, and held that a knockoff product not made by the plaintiff, but by the defendant, “originated” with the plaintiff. To me, this pretty much re-expands the tummy tuck the Supreme Court gave reverse passing off claims in Dastar, but that’s just my opinion. Your mileage may vary.