Wednesday, February 23, 2011

Very unsettling 9th Circuit "Betty Boop" decision on copyright and trademark in BETTY BOOP character

[WARNING: longer-than-usual discussion because of the scariness of the 9th Circuit’s decision]

The 1930s creator of the cartoon character BETTY BOOP transferred all his copyrights in the character in 1941 to a second company, who later transferred it a third company, etc. The creator’s company folded in the meantime. Eventually, the family of the original creator started a new company to purchase back and exploit the BETTY BOOP character. After purchasing those rights (at least that’s what they thought they got) from several possible sources, the family sued the defendants, who sell handbags and t-shirts featuring the BETTY BOOP character, for copyright and trademark infringement. The district court dismissed both claims, holding that the family failed to prove up at least one of the transfers in each of the alternative chains of title, and that this scotched the copyright claim, and that so many people currently use the character on various goods, the family couldn’t claim ownership of a trademark in it either. In a 2-1 decision, the 9th Circuit affirmed the dismissal. Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Feb. 23, 2011).

The Copyright Claim

On the copyright side, the chain of title argument isn’t so much interesting because of its merits, but because of the appellate procedural issue via which the defendants won. The family’s opening appeal brief challenged only one of the chain of title arguments. In response, the defendants not only raised the argument on which they defeated that chain of title theory at the district court, but also an alternative ground for affirming the district court’s dismissal (one they hadn’t raised at the district court). In their reply, the family argued that even under the defendant’s new ground, the chain of title would have ended up with a company from whom the family had also purchased rights back! Indeed, this was one of the alternative title chains the family argued in the district court. But the panel majority held that by not raising the alternative chain of title argument in their opening brief, the family had waived the argument, even though they addressed it fully in their reply to rebut an argument in the appellee’s brief. Moral of this part of the story? It’s this: You know how appellate judges are always urging appellants not to challenge everything and just focus on the best one or two issues?? Well, forget all that. Raise everything. Or pay the price.

But that’s not even the scariest part of the decision.

The Trademark Claim

This is where the panel majority seems to go completely off the rails, resting their decision on a flawed concept that neither party—neither party!—argued or briefed. Resting its decision on Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), the panel majority held that the BETTY BOOP character on the defendant’s t-shirts and handbags did not serve as a trademark because it was the very thing that made the t-shirts and handbags desirable. The panel explained that this made it “functional.” The panel majority also placed emphasis on the facts that the defendants “never designated the merchandise as ‘official’ [family] merchandise or otherwise affirmatively indicated sponsorship” and, moreover, the family “did not show a single instance in which a customer was misled.” Holy cow. I see several issues here, e.g., how does this square with: (a) the concept that a likelihood of confusion as to whether some form of legal permission was required to use an image is indeed actionable confusion; (b) the concept that actual confusion isn’t required; and (c) prior 9th Circuit (and other circuit) decisions that where the alleged trademark is the very thing consumers desire, appropriating it is infringement and is not insulated by functionality doctrine. See Automotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062 (9th Cir. 2006) (citing the Nike Swoosh, the Playboy bunny ears, the Mercedes tri-point star, and the Ferrari stallion). And where does this leave Mr. Clean, Aunt Jemima, the Jolly Green Giant, Tony the Tiger, the Pillsbury Doughboy, the Geico Gecko, and, well, you get the picture.

But wait, there’s more! The panel majority then decided that, since it had gone this far astray, it might as well throw in a little overbroad dictum to boot. So it went on to opine that the family’s claim was also precluded by the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003)—another decision that neither party had cited or discussed. (So much for the time-worn truism that the whole point of the adversarial process is to sharpen the issues for decision.) The panel stated that Dastar precluded the assertion of any trademark rights in the BETTY BOOP character because the family couldn’t prove ownership of the copyright in the character. What? The panel majority reasoned that Dastar stands for the proposition that “a party may not assert a trademark infringement action against an alleged infringer if that action is essentially a substitute for a copyright infringement action.” Yikes! That is quite an overstatement of Dastar, in my view. In other words, if you think you own a design mark that consists of copyrightable expression, you’d better be able to prove you own the copyright too. Or to say it a different way, if you decide to adopt a public domain graphic as a trademark, you’re out of luck. Of course, Dastar said no such thing, as it concerned a section 43(a) action for failure to provide correct attribution concerning who compiled and edited a video consisting of a compilation of war footage (a/k/a “implied reverse passing off”), not a traditional claim for trademark infringement. The whole point of Dastar was that failure to correctly attribute who contributed to the creation of a product was not a representation of “source” actionable under the Lanham Act. But, of course, in contrast, a classic trademark infringement action is precisely that: an action to stop confusion as to source. And this case was not about which Asian or Central American sweatshop actually produced the t-shirts or handbags (with or without child labor and 18 hour-days), but whether they were sponsored by the owners of the BETTY BOOP mark.

Now, I’m not definitively saying that the trademark aspect of this decision is wrong—I want to think about it some more—but, sheesh, there’s a lot of “stuff” to chew on here.

If this decision isn’t reversed on en banc rehearing, it will surely spawn a whole raft of law review case notes and other articles.

UPDATE: Having thought a little more about it, the "Job's Daughters" part of the trademark holding has potentially grave implications for professional and college logo licensing. People generally buy these sports/college logo clothing not for the "assurance of quality through source identifying" connotation of the team's or college's logo, but because they desire to wear clothing with the logo for associational or other reasons, such as liking the way it looks. Just like wearing a character such as, say, Betty Boop. Indeed, the Job's Daughters case specifically rejected the 5th Circuit's seminal Boston Bruins licensing decision (510 F.2d 1004 (5th Cir. 1975)), which paved the way for this sort of official licensing.

Wednesday, February 16, 2011

9th Circuit: Links to competing services turn cybersquatting into infringement

The 9th Circuit today ruled that an “Internet entrepreneur” (possibly a euphemism for “cybersquatter”) who ran a website at the address not only was guilty of cybersquatting, but also infringed VeriCheck’s VERICHECK mark. What is interesting about the case is that the infringing website was not for a competing service, but was one of those typical “cybersquatter” sites that simply lists lots of seemingly random links to several third party sites. These listings, however, included links to sites of competitors of VeriCheck. Although the Court did not say who was responsible for the appearance of those links (e.g., the cybersquatter or his ISP), the mere existence of links to competing services turned cybersquatting into cybersquatting + infringement (with a dollop of attorneys’ fees).

The case is Lahoti v. VeriCheck, Inc., No. 10-35388 (9th Cir. Feb. 16, 2011) (previous appeal discussed here).

Tuesday, February 08, 2011

9th Circuit: Amended Federal Dilution Law Does Not Require Defendant’s Mark to be “Identical or Nearly Identical” to Plaintiff’s

The 9th Circuit today revived a federal trademark dilution claim because the district court used the “identical or nearly identical” standard in its analysis of the claim. In Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., No. 09-16322 (Feb. 8, 2011), Levi Strauss claimed that the stitching pattern on the back pockets of certain A&F jeans diluted Levi’s famous “arcuate” stitch design. The district court instructed the advisory jury to determine whether the patterns were identical or nearly so. Based in part on their advisory finding that the marks did not meet this standard, the district court found no dilution.

The 9th Circuit reversed and remanded. It found this standard to have its genesis in cases under state dilution laws and under the original version of the federal dilution act. Although more recent 9th Circuit decisions had repeated this standard in cases involving the 2006 amended version of the dilution statute, the Levi panel did not believe these decisions had squarely addressed the issue. Performing its own analysis, the panel held that the 2006 amendments provided no textual support for the “identical or nearly identical” standard. It specifically noted that the amended act targets dilution caused by “the similarity” between marks, and requires assessment of the “degree of similarity.” The panel believed that the lack of any reference to identicality or substantial similarity in the amended statute was a significant omission that precluded any more stringent requirement.