Likely to be Confused -- The Softer Side of IP Law

2d Cir.: Nike's broad covenant-not-to-sue for TM infringement kills jurisdiction over invalidity/cancellation DJ under MedImmune test

2011-11-10T12:28:00.000-06:00

Nike was recently rewarded for pulling a potentially risky litigation move: trying to avoid a troublesome DJ/cancellation counterclaim by unilaterally issuing a broad covenant-not-to-sue. This move is a little like surrendering without knowing for sure if the adversary can shoot you when you raise your hands.

After filing an action alleging Yums infringed Nike’s marks for its “Air Force 1” shoes, Yums filed a counterclaim for a DJ of invalidity and a demand that Nike’s registrations be cancelled. Apparently the counterclaim gave Nike second thoughts, because it then sent Yums a covenant not to sue for footwear “based on the appearance of any [Yum’s] current and/or previous footwear product designs.” Nike then moved to dismiss: (1) its own infringement claims without prejudice under FRCP 41(a)(2) and (2) Yum’s counterclaim without prejudice for lack of a case or controversy under FRCP 12(b)(1).

The 2d Circuit affirmed the dismissal of the counterclaims for lack of a case or controversy. Applying the test under MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), the court ignored whether Yums retained any “reasonable apprehension” of suit, and focused only on whether there remained any “real and substantial” controversy after the broad covenant was issued.

Based primarily on the breadth of the covenant (which covered all past and present Yum’s designs and any future sales of present designs) and on the lack of any evidence that Yum’s intends to infringe or counterfeit through any future design, the Second Circuit held that the basis for a DJ evaporated upon issuance of the covenant, and that the request for cancellation (under 15 U.S.C. § 1119) is merely a remedy, not an independent source of jurisdiction.

The case is Nike, Inc. v. Already, LLC d/b/a Yums, No. 11-314-cv (2d Cir. Nov. 10, 2011).

1st Circuit: Insurance Policy "Antitrust Exclusion" Also Excludes False Advertising/Labeling Claim

2011-10-25T11:18:00.002-05:00

The First Circuit recently held that an insurer was not required to defend and indemnify its insured against claims for misleading product labeling.

Accused of deceptive trade practices, false and misleading advertising, and deceptive labeling (the court did not specify whether these were federal and/or state claims), Welch Foods sought defense and indemnity from its insurer.

The policy at issue in Welch Foods v. National Union Fire Ins. Co., No. 10-2261 (1st Cir. Oct. 24, 2011) (per curiam), which otherwise covered the claims, contained the italicized exclusion below:

Antitrust Exclusion

The Insurer shall not be liable to make any payment for Loss in connection with a Claim made against the Insured . . . alleging, arising out of, based upon or attributable to, or in any way involving, either directly or indirectly, antitrust violations, price fixing, price discriminations, unfair competition, deceptive trade practices and/or monopolies, including any actions, proceedings, claims or investigations related thereto . . . . (emphasis added)

The terms “unfair competition” and “deceptive trade practices” were undefined.

The Court rejected Welch’s argument that, because the heading (“Antitrust Exclusion”) and several of the listed violations focused on anticompetitive antitrust-type behavior, the terms “unfair competition” and “deceptive trade practices” must also refer to antitrust-type behavior—not false advertising or false labeling.

10th Circuit: infringement of patent(!) covering "promotion" or "advertising" may trigger insurance policy covering "advertising injury"

2011-10-18T17:19:00.000-05:00

The 10th Circuit recently reinstated a company’s lawsuit to force its insurers to defend and indemnify it in a patent infringement against the company. The case serves as a reminder to insureds to read through their insurance policies carefully each time they are sued and not to reflexively assume that a patent infringement claim (or any other type of case) may not be covered.

Dish Network Corp. v. Arch Specialty Ins. Co. et al., No. 10-1445 (10th Cir. Oct. 17, 2011), involved patent infringement claims by the well-known patent plaintiff Ronald A. Katz Technology Licensing, L.P. The complaint did not mention advertising. Nor did it specify which patent claims were infringed and how. But some of the claims of the asserted patents mentioned systems and processes for advertising or promoting products.

The policies at issue provided for coverage of claims asserting “misappropriation of advertising ideas or style of doing business.” Under Colorado law, the 10th Circuit held:

(1) “when the underlying complaint alleges any facts or claims that might fall within the ambit of the policy, the insurer must tender a defense”;

(2) to avoid the duty to defend, insurers “must prove [the claim] cannot” fall within the policy;

(3) while such cases may be rare, “patent infringement can qualify as an advertising injury if the patent involves any process or invention which could reasonably be considered an “advertising idea’”;

(4) given the patent complaint’s general allegations, the insurers could not disprove that the claim did not encompass the allegation that Dish Network’s advertising infringed the patent claims that disclosed processes and systems for promoting or advertising products (i.e. “advertising ideas”);

(5) the required “causation” for the advertising injury was satisfied by the patent complaint’s typical “irreparable harm” allegation that the infringer “continues” to infringe and won’t stop “unless enjoined by this Court”; and

(6) the duty to defend an entire suit arises when “the complaint even potentially alleges conduct within the policy”—it’s not restricted to the “core complaint” or “primary grievance,” and advertising need not be the “sole cause of the alleged injury.”

9th Cir.: Apple Not Misuse Copyright by Restricting Use of MAC OS X Operating System Software to Apple computers

2011-09-28T15:39:00.001-05:00

The 9th Circuit today held that Apple may continue to prohibit buyers (i.e., licensees) of its MAC OS X operating system software from using the system on non-Apple computers.

The ruling in Apple Inc. v. Psystar Corp., No. 10-15113 (9th Cir. Sept. 28, 2011), concerned Apple’s claim that Psystar infringed Apple’s software copyright when it (1) bought Apple software, (2) imaged it on to non-Apple computers, and (3) then sold the computers (together with a CD containing an unopened, purchased copy of the Apple software).

The court held that the purported license agreement accompanying each CD containing MAC OS X made the transaction of buying the software a valid license and not a simple sale. (If it had been a simple sale, then first sale doctrine would have ended Apple’s ability to restrict how Psystar used the software.) The agreement stated that it was a license, not a sale, and contained significant use and transfer restrictions. It therefore met the “license not sale” test of Vernor v. Autodesk, Inc., 621 F.3d 1102, 1111 (9th Cir. 2010).

Nor did the restrictions in the license amount to copyright misuse, because they “reasonably restrict[ed] use of the software” but did not “prevent the development of competing products.” The court distinguished decisions in cases where similar restrictions on which products software could be used with effectively made it impossible for users to develop competing software.

The lesson: use restrictions in software copyright licenses may be very strict indeed unless the restrictions effectively prevent users from developing competing products.

9th Cir.: Anti-cybersquatting law not cover "re-registration" (i.e., renewal) of domain name . . .

2011-09-22T15:26:00.000-05:00

. . . as long as the initial registration was lawful. The case is GoPets Ltd. v. Hise, No. 08-56110 (9th Cir. Sept. 22, 2011).

Here’s the timeline. In 1999, defendant Hise registered the domain name gopets.com. Gopets.com is among over 1300 domain names that Hise registered in the last decade. In other words, he’s a “domain name ‘entrepreneur.’” In 2004, plaintiff GoPets started a PC game under the name GoPets, featuring virtual pets that move between the computers of registered users. Later, plaintiff began a series of unsuccessful negotiations with Hise to buy the domain name.

During the negotiations, lots transpired. Hise transferred the domain name to his company. Plaintiff registered its GoPets mark. A month later, Hise’s company “re-registered”—I am not sure why the court refused to use the word “renewed”—the domain name registration. Plaintiff filed and lost a UDRP arbitration because Hise registered before plaintiff began using GoPets. Hise then registered 17 different domain names incorporating “gopets.” Hise’s last demand to plaintiff was $5 million. Finally, plaintiff sued in court.

The 9th Circuit held that Hise’s original registration of gopets.com was lawful, because the ACPA (15 U.S.C. § 1125(d)) requires that a claimant own a “mark that is distinctive at the time of registration”—and plaintiff didn’t begin using its mark until years later. The court further held that “re-registration” (renewal) is not subject to the ACPA if the initial registration was lawful. But the court held that Hise’s subsequent registrations of the 17 “gopets” variant domain names after Hise began negotiations with plaintiff violated the ACPA.

1st Cir.: Compare infringing software with copyrighted code, not modified, non-copyrighted version

2011-09-14T17:23:00.001-05:00

There are two critical lessons for software companies in Airframe Systems, Inc. v. L-3 Communications Corp., No. 10-2001 (1st Cir. Sept. 14, 2011):

(1) It’s not enough to register the copyright in the original source code. When you modify it, register the modified versions too; and

(2) retain copies of all prior versions because you never know which one you might need in an infringement case.

Plaintiff Airframe registered the original software code, then licensed defendant L-3 to use that code. As its clients changed computer systems, Airframe routinely modified its software. When L-3 upgraded its computer system, it got ahold of a newer version of the code and began using it. Airframe found out and sued.

The First Circuit noted that to prove infringement, a plaintiff has to prove both “factual copying” of the copyrighted work and “substantial similarity.” Faced with a summary judgment motion, Airframe put in an affidavit showing how similar L-3’s software was with an updated but unregistered version of the copyrighted software. (The court didn’t explain why Airframe didn’t compare the infringing code to the original, registered code.) The 1st Circuit affirmed summary judgment against Airframe, explaining that Airframe never proved the content of its registered software, so it couldn’t, as a matter of law, establish factual copying.

9th Cir.: ISPs providing servers for Louis Vuitton counterfeiters are contributory infringers

2011-09-13T11:27:00.000-05:00

Money quote: ISPs who “physically host websites on their servers and route internet traffic to and from those websites” perform a service that “is the Internet equivalent of leasing real estate.”

The court in Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., No. 10-15909 (Sept. 9, 2011) dealt with claims of contributory trademark infringement and contributory copyright infringement.

There were lots of holdings on both liability and damages as to contributory infringers. On the trademark liability side, the court noted that Vuitton had to show that the defendant “continued to supply its services to one who it knew or had reason to know was engaging in trademark infringement” and “had direct control and monitoring (sic) of the instrumentality used by a third party to infringe.” The ISPs were found to have “direct control over the ‘master switch’ that kept the websites online and available.”

As to the copyright claim, the court noted that Vuitton had to prove that the defendant “materially contributed” to the copyright infringement, and that “material contribution turns on whether the activity in question ‘substantially assists’ direct infringement.” The court concluded that “providing direct infringers with server space satisfies that standard.”

The court also held that statutory counterfeiting damages are available not just against direct counterfeiters, but also against those who contribute to counterfeiting. As to copyright statutory damages, the court held that “a plaintiff may receive a single statutory award for all infringements of any one copyrighted work from either (1) any one defendant, where the defendant is separately liable, or (2) multiple defendants, where those defendants are jointly and severally liable.” (emphasis added).

TTAB opinion about scope of bona fide intent to use challenges (some or all of goods?)

2011-09-08T12:00:00.001-05:00

The TTABlog recently pointed out a precedential TTAB decision that could be read to throw doubt on the scope of any claim that the applicant/registrant lacked a bona fide intent to use the mark in connection a class of goods in which the applicant lists several specific goods. I thought it was settled that lack of BFI to use on some specific goods didn’t sink the other goods listed, but maybe it’s not settled after all.

The decision is Spirits Int’l, B.V. v. S.S. Tataris Zetin, Opp. No. 91163779 (July 6, 2011). You should read the TTABlog’s take on the decision. My own reading of the opinion – which is certainly less than clear on this point -- is that it does not create a categorical rule that lack of BFI for any good in the class knocks out the whole class. The opinion states that the lack of BFI count was pleaded as to the two classes in their entireties. The opinion also notes that there was also a more specific allegation that there was no BFI as to any alcoholic beverages listed among the non-alcoholic beverage goods in the application. From these statements I infer that the specific allegation that there was no BFI as to alcoholic beverages was not a limitation on the scope of the claim, but simply a factual allegation that the opposer pleaded in support of its broader "whole class" claim.

At trial, the opposer introduced evidence in the form of lack of any documents as to some of the goods (the alcoholic beverages). This was sufficient to shift the burden of production the applicant, who then submitted nothing. Thus, when the applicant failed to put in any evidence whatsoever and failed to file a merits brief, the claim adjudicated was the "whole class" claim. I infer from this that if the applicant had submitted sufficient evidence of BFI as to non-alcoholic goods, then the opposition would have been only partially sustained, and only the alcoholic products would have been struck.

Still, this ruling is unclear enough that it could be argued to support a more categorical rule. An applicant in this position should certainly consider (as noted in the opinion) deleting specific goods as to which BFI is lacking or questionable so as not to endanger registration as to the other goods where BFI is provable, at least until the TTAB clarifies its position on this.

Thanks to TTABlog for highlighting the issue.

Night vision goggles don't prevent 11th Circuit from botching another trademark decision

2011-09-02T16:20:00.002-05:00

I called out the 11th Circuit last year for faulty reasoning in a restaurant trademark dispute, and now, it appears, they’ve botched another trademark case. It was a dispute between a manufacturer of night vision goggles and its sales/distribution partner, and the issue was proof of secondary meaning.

In Knights Armament Co. v. Optical Sys. Tech. Inc., No. 09-14480 (11th Cir. Sept. 2, 2011), OTSI developed and manufactured the product to sell to the US military. It partnered with another company (KAC) that has a lot of experience marketing to the military. OTSI came up with the trademarks UNIVERSAL NIGHT SIGHT and UNS. KAC’s contracts with the government touted the products under these marks. After selling a bunch of OTSI’s goggles to the military, KAC began developing a competing goggles under the marks KNIGHTSCOPE, UNIVERSAL KNIGHTSCOPE and UKS.

Finding that OTSI owned the marks UNIVERSAL NIGHT SIGHT and UNS, but that the marks were descriptive, the court attempted to determine whether the marks had developed secondary meaning. Affirming the district court’s “no” decision, the 11th Circuit said that no secondary meaning could have developed because “there was no indication [in the government contracts] that the UNS/Universal Nightsight mark belonged to OTSI, and not KAC, [so] consumers had no reason to associate OTSI’s mark with its product, and not KAC.”

It seems to me that this reasoning is at odds with the principle that, for secondary meaning to exist, consumers need not associate the mark with a specific company, but only with a single source, even if the source is anonymous. Thus, the 11th Circuit asked and answered the wrong question: whether OTSI made it clear to the military that these were its trademarks. The right question was whether the government associated the marks with a single source—any single source (even if that was the distributor, KAC). It seems like the answer here would have been “yes”—but because the court framed its analysis around the wrong question, the facts referenced in the opinion don’t permit that question to be answered with absolute certainty. But whatever the facts relevant to that question were, they would almost certainly have to viewed through the lens of the principle that, as between a distributor of a product (a licensee) and the manufacturer (the licensor), the manufacturer owns the rights in the mark it selected.

I wonder if the parties properly briefed this issue. Trademark law can get pretty arcane, and if a party's lawyers aren't very familiar with it, issues can be missed, courts can be led astray, and decisions can be framed incorrectly. In patent cases, clients and general litigators generally know to call in specialists. In trademark cases, not so much.

Patsy's Italian Restaurant: The most complicated trademark litigation in history?

2011-08-24T18:30:00.000-05:00

Patsy's Italian Restaurant, Inc. v. Banas, No. 08-4487 (2d Cir. Aug. 24, 2011).

There is no way I can boil this decision down to two paragraphs. Or even five. Nor can I find even one significant legal lesson from it. It's a really factually-complicated, fact-driven decision. Read it at your own risk.

Three thoughts occur to me after trying to read it: (1) how is it that restaurants, more than any other type of business, seems to get into these unbelievably messy fractured ownership disputes?; (2) this is yet another case that leaves me jealously wondering how to get clients this litigious!; and (3) why are these people fighting over New York pizza trademarks, anyway? Far better (indeed, the best) pizza comes from New Haven -- where it is spelled "apizza" and pronounced "ah-beetz." New York pizza isn't even worth a cease-and-desist letter.

9th Cir. overturns another copyright injunction because eBay nixes presumption of irreparable harm

2011-08-22T13:02:00.002-05:00

Putting an exclamation point on a recent panel ruling that eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) overrules prior 9th Circuit precedents that a showing of likely success on the merits of a copyright infringement claim gave rise to a presumption of irreparable harm, the 9th Circuit again so held today, vacating a preliminary injunction in another copyright case. See Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., No. 10-35987 (9th Cir. Aug. 22, 2011).

2d Cir. opinion on disgorgement remedy in FTC false advertising actions

2011-08-22T10:19:00.002-05:00

The Second Circuit recently decided that a provision of the Federal Trade Commission (FTC) Act that authorizes district courts to issue injunctions implicitly authorizes the courts to order full disgorgement of all revenues (not merely profits) from the illegal conduct issue as “equitable ancillary relief”—a/k/a “equitable cleanup doctrine.”

I found this interesting for at least three reasons:

(1) The empowering statute (15 U.S.C. § 53(b)) says nothing whatsoever about monetary relief. In pertinent part, it provides: “[I]n proper cases the [FTC] may seek, and after proper proof, the court may issue, a permanent injunction.”

(2) The court said that this statute authorized disgorgement of all ill-gotten revenues, not just profits. Thus, any attempt by a defendant to subtract expenses or costs, or to show its efforts lost money, are immaterial. All the defendant is permitted to do is show that the FTC’s figures for revenue were inaccurate. In contrast, in trademark cases under the Lanham Act, only profits are subject to disgorgement, and a defendant may introduce evidence of costs and expenses incurred in the subject activity.

(3) The Second Circuit is not the first appeals court to hold (1) and (2). The 5th, 7th, 8th, 9th, 10th, and 11th Circuits agree that this section of the FTC Act authorizes disgorgement. And the 1st, 7th, and 10th Circuits agree it’s disgorgement of revenues, not just profits.

Although those of you more familiar with FTC practice may not find these concepts surprising, I had not previously been aware of the existence and sweeping nature of the implicit disgorgement remedy in FTC cases.

The case is FTC v. Bronson Partners, LLC, No. 10-0878 (2d Cir. Aug. 19, 2011).

9th Circuit withdraws controversial Betty Boop decision, decides to remand case on narrower grounds; trademark licensing programs are safe once again

2011-08-19T17:52:00.003-05:00

Back in February, I reported with alarm that the 9th Circuit rejected a trademark infringement claim by the purported owners of the BETTY BOOP cartoon character, issuing an opinion resting on an interpretation of aesthetic functionality doctrine that was so broad that it posed a substantial threat to the ability of pro sports, college, and character licensing companies to stop counterfeiters on the entire West Coast.

On rehearing, and after receiving amicus briefs from INTA, the Motion Picture Association of America, and the companies that license all major pro sports and collegiate trademarks, the Ninth Circuit withdrew the opinion, and substituted a ruling based on narrower grounds that eliminates the commercial and enforcement problems of the original opinion.

The case is now remanded to district court to determine whether the plaintiff can prove secondary meaning in light of the "fractured ownership" of Betty Boop rights among possibly several companies.

UPDATE: Many people I've talked to about the case have asked whether, procedurally, this was an unusual step for the court to take. Yes and no. Frequently losing parties ask for rehearings based on things they think the appeals court overlooked or got wrong. In most cases, the court can address the substance of the rehearing petition by adding a paragraph or a footnote, or making some minor changes to, the opinion. On that basis, they'll deny the rehearing and simply substitute a new opinion containing those minor changes. While the court used this procedure here, the changes it made were major, and that, in my experience, is unusual.

The prior opinion went astray when the appeals court decided the trademark claim on a basis no party raised or briefed. While an appeals court can affirm a case on any basis supported by the record (i.e., not necessarily the basis on which the district court decided the case), appeals courts typically do so only when the appellee actually BRIEFS those other possible bases, and the appellant has an opportunity to reply. It circumvents the adversarial process when the appeals court affirms on a merits-related basis that neither party ever raised. In the superseding opinion, the 9th Circuit panel completely fails to acknowledge both its mistake in deciding the case on a merits-related basis neither party raised or addressed and the fact that it got the law wrong on that unbriefed issue (probably because it was embarrassed). It would have been gutsier to acknowledge its errors.

8th Cir: Registered mark "300-850" for credit rating services invalid for descriptiveness and fraud on PTO

2011-08-17T15:17:00.002-05:00

The 8th Circuit today upheld a jury verdict that the registered mark “300-850,” owned by FICO (a credit assessment service provider), was invalid because it was descriptive. (The court didn't say what listed goods and services were, but the PTO website reveals it's "Credit scoring services and credit risk management and risk management services". ) The court found that consumers perceived the mark to convey a range of credit scores, rather than as an indicator of source.

The court also upheld the jury’s verdict that FICO committed fraud on the PTO in obtaining registration of the mark. Specifically, FICO responded to a initial descriptiveness refusal by providing a literally true but “artful” response tricked the Examining Attorney into thinking that FICO, and FICO alone, used the phrase as a mark, when in fact FICO simply used it as a range of credit scores, as did others.

The case is Fair Isaac Corp. v. Experian Information Solutions, Inc., No. 10-2281 (8th Cir. Aug. 17, 2011).*

* The opinion also upholds the dismissal of FICO's antitrust claim against the three credit bureau defendants.

2d Cir: Copyright “first sale doctrine” applies only to U.S.-manufactured works

2011-08-15T15:55:00.000-05:00

Last year in Omega S.A. v. Costco Wholesale Corp., the Supreme Court was set to decide whether the 9th Circuit correctly held that “first sale doctrine” under 17 U.S.C.§ 109(a)—which applies to copies “lawfully made under this title”—does not apply to items manufactured outside the United States unless they were previously imported and sold in the U.S. with the copyright owner’s permission. But dividing 4-4, it was able only to issue a non-precedential affirmance.

Today, a 2-1 majority of the 2d Circuit in John Wiley & Sons, Inc. v. Kirtsaeng, No. 09-4896 (Aug. 15, 2011), went a bit further than the 9th Circuit, holding that the § 109(a) defense applies, without conditions, only to domestically-manufactured works. The court believed that this reading comports better with a copyright holder’s right under § 602(a)(1) to prohibit the importation into the U.S. of copyrighted works acquired abroad. In other words, applying § 109(a) to works manufactured abroad would render § 602(a)(1) impotent in the majority of cases.

5th Cir. decides SHOE SHOW not “substantially similar” to THE SHOE DEPT.

2011-08-09T12:37:00.002-05:00

This was a contract case—not a dispute under the Lanham Act. A mall leased space for a shoe retailer called THE SHOE DEPT. The retailer also operated shoe stores elsewhere called SHOE SHOW and BURLINGTON SHOES. The contract said the retailer couldn’t open a store with a “substantially similar trade-name” nearby. When the retailer opened a SHOE SHOW nearby, the mall said nothing, until much later when the retailer tried to get out of the lease. Then the mall complained about the nearby SHOE SHOW.

Ostensibly under Ohio law, but borrowing from a few trademark precedents, the 5th Circuit found that SHOE SHOW is not “substantially similar” to THE SHOW DEPT. The given reason was that “shoe” is generic or descriptive, and so doesn’t count in the comparison, and “show” is not substantially similar” to “dept.” The court made quite clear that it thought the mall was being opportunistic: that it knew darn well that the retailer operated SHOE SHOWs also; that it could have, but didn’t, contract for a prohibition against nearby SHOE SHOWs; and that it was seizing on the fudgy nature of the term “substantially similar” to try to gain advantage in the lease dispute.

(NB – I wonder if, under Ohio law, an acquiescence defense could have been interposed. Seems this would have more directly addressed the court’s concern with opportunism.)

The case is Almeda Mall, L.P. v. Shoe Show, Inc., No. 10-20587 (5th Cir. Aug. 8, 2011)

7th Cir. flip-flops on whether district court challenge of TTAB cancellation waives state sovereign immunity

2011-08-08T13:52:00.002-05:00

Several months ago, I reported on a 7th Circuit decision that a state did not waive sovereign immunity by challenging a TTAB cancellation through a de novo action in federal district court rather than a straight appeal to the Federal Circuit. Well, on rehearing, the 7th Circuit has now changed its mind. Citing the procedural advantages of a de novo district court action over a straight Federal Circuit appeal, the 7th Circuit held that it would be unfair to allow a state to choose an advantageous federal forum and later be able to claim sovereign immunity if the adverse party asserted counterclaims against it.

Board of Regents of the Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Aug. 5, 2011).

3d Cir.: HAVANA CLUB brand not falsely imply made in Cuba where label clearly says "Puerto Rican Rum"

2011-08-04T14:32:00.000-05:00

In yet another long-running, multi-forum dispute (where do I go to get such litigious clients??), the 3d Circuit held that the brand name HAVANA CLUB appearing on a label for rum did not, as a matter of law, imply to ordinary consumers that the rum was made in Cuba or sourced from Cuban ingredients.

In Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., No. 10-2354 (3d Cir. Aug. 4, 2011), the district court rejected the plaintiff’s false advertising claim under the Lanham Act as a matter of law, holding that plaintiff’s survey, which concluded that 18% of respondents were misled, was immaterial because the label also “clearly and truthfully” stated that the rum was from Puerto Rico. The 3d Cir agreed, holding that in “rare” occasions like this case the words in a challenged ad, read as a whole, are so clear that a court can ignore surveys to the contrary and dismiss a false advertising case as a matter of law.

9th Cir.: After eBay v. MercExchange, Perfect 10 not entitled to presumption of irreparable harm for Google copyright infringement

2011-08-03T13:22:00.001-05:00

In the latest installment of the long-running litigation between Perfect 10 and Google over Perfect 10's copyrighted model images, the 9th Circuit affirmed the denial of a preliminary injunction against Google because Perfect 10 failed to demonstrate irreparable harm.

The 9th Circuit first ruled that the Supreme Court's decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) -- a patent case in which the Court held a general or categorical rule favoring or disfavoring injunctions -- was not limited to patent cases. Following the lead of the 2d Circuit in Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) (which I previously noted here) the 9th Circuit held that eBay also applies to cases under the Copyright Act. In so doing, the 9th Circuit overruled its pre-eBay precedents consistently holding that a showing of likely success on the merits of a copyright infringement claim gave rise to a presumption of irreparable harm.

The 9th Circuit then affirmed the district court's finding that Perfect 10 failed to show that Google's infringement had caused irreparable harm. The Court held that the post-eBay causation requirement was not satisfied simply by a documented and dramatic decline in Perfect 10's revenues from fees to download photos of its models as the number of free Google thumbnail images increased.

The decision is Perfect 10, Inc. v. Google, Inc., No. 10-56316 (9th Cir. Aug. 3, 2011).

7th Circuit: Raised quilting pattern on toilet paper functional; trademark protection denied

2011-07-28T17:56:00.000-05:00

In an entertaining opinion peppered with puns, the 7th Circuit affirmed the dismissal of Georgia-Pacific’s claims that the raised quilting patterns on Kimberly-Clark’s Cottonette brand of toilet paper infringed Georgia-Pacific’s alleged trademark rights in the raised quilting pattern of its Quilted Northern brand. The appeals court agreed with the district court that Georgia-Pacific utility patents and advertising touted the utilitarian benefits of the raised quilting pattern. The court was unpersuaded that the existence of design patents on the quilting pattern undercut what it viewed as clear statements in G-P’s utility patents about the utilitarian benefits of the quilting.

The case is Georgia-Pacific Consumer Prods. LP v. Kimberly-Clark Corp., No. 10-3519 (7th Cir. July 28, 2011).

9th Cir.: Keyword ads misleading; “splash screen” portal with bold disclaimer conditionally approved

2011-07-28T17:39:00.002-05:00

TrafficSchool.com, Inc. v. Edriver Inc., No. 08-56518 (9th Cir. July 28, 2011), involved the folks who own DMV.org (and also display several “[state].dmv.org” domains that resolve to DMV.org) – a website that is designed to assist people in renewing licenses, buying car insurance, registering vehicles, drivers’ ed classes, dealing with traffic tickets, and other car-related issues. Competitors complained that DMV.org’s domain names, which were prominently displayed in sponsored ads when Google users searched for certain government/vehicle related terms, fooled users into thinking that DMV.org was a state entity and clicking on the links. The plaintiffs alleged that they lost revenues, such as click-through referral fees, because of the deception and sued under the false advertising provisions of the Lanham Act.

The 9th Circuit affirmed standing primarily because the parties competed for click-through referral revenues with overlapping service providers and because lots of people were tricked into thinking DMV.org was a government entity. The 9th Circuit also ~~affirmed~~ conditionally approved the district court’s injunction requiring a “splash screen” that immediately appeared when users clicked on DMV.org’s sponsored ads, and which clearly warned that DMV.org was not a government website. The 9th Circuit thought that requiring the splash screen in perpetuity implicated First Amendment commercial speech concerns. It therefore remanded so that the district court could either (a) explain what conditions the defendant needed to fulfill to have the splash screen requirement lifted or, in the alternative, (b) simply enjoin the defendants from making false or misleading statements on their website.

As to money, the 9th Circuit refused to award profits because the plaintiffs produced no evidence of past monetary injury or causation. But the court remanded for a determination whether the plaintiffs should get attorneys’ fees, primarily because the court viewed the plaintiffs as having paid a lot of money to ameliorate a concrete harm to the public caused by DMV.org’s deceptive practices.

(NB: subsequent corrections to initial post made by strikethrough and underlining, except in the title, where Blogger doesn't permit strikethrough and underlining.)

7th Circuit: Decisions on Assignability of TM License; Originality of Architectural Plans

2011-07-26T14:35:00.000-05:00

In In re XMH Corp., No. 10-2596 (7th Cir. July 26, 2011), an appeal of a bankruptcy court decision, Judge Posner held that the debtor could not assign an allegedly executory trademark license because the agreement was silent on assignability and trademark law’s default rule is that “trademark licenses are not assignable in the absence of a clause expressly authorizing assignment.”

In the architectural copyright case, the panel held that the architect failed to demonstrate that its designs were original (and therefore protectable) where they were based “for the most part” on its hotel-chain client’s prototype, and the few differences were “specifically requested by [the client] through written requests accompanied by graphic designs.” The case was Nova Design Build, Inc. v. Grace Hotels, LLC, No. 10-1738 (7th Cir. July 26, 2011).

Opinion styles and public perception of judicial legitimacy

2011-07-22T11:28:00.001-05:00

Here’s a link to an interesting psychological research paper on people’s perceptions of the legitimacy of judicial decisionmaking. It has two basic conclusions. First, and not surprisingly, people tend to view decisions resulting in outcomes they agree with as more legitimate. And they don’t care as much about the reasoning when they agree with the outcome.

But the second finding has significant implications for how judicial decisions are written. The study assessed people’s views of the legitimacy of 4 kinds of written decisions: (1) a simple “party X wins” decision; (2) a decision giving one short reason why party X wins; (3) a decision listing several reasons favoring the victor, party X; and (4) a decision fairly setting forth each side’s arguments, acknowledging the difficulty of the issues presented, and then choosing party X as the victor because its arguments were, on balance, more persuasive.

In my 20 years of practice, I’ve seen several type (1) and type (3) decisions. I’ve seen fewer type (2) decisions, and fewer still examples of the most “legitimate” type (4) decisions. In fact, in the most significant (to me) appellate decision rendered in one of my cases, I very unsatisfactorily lost in a type (3) decision.

But this study – which concludes that further research is needed – certainly indicates that the judiciary could enhance its governmental legitimacy in the public’s eyes by issuing opinions that acknowledge both sides of an argument (where appropriate).

(HT to How Appealing for noticing the article)

UPDATE (8/5/2011): Recently received a district court order denying a complicated 12(b)(1) motion I wrote concerning whether a DJ action actually raised a justiciable case or controversy. It raised very subtle arguments. The court basically ignored the complexities presented, significantly oversimplified our arguments, and wrote the opinion as if it were an easy decision (kind of like the appellate decision I referenced above -- a variation on the type (3) decision). Nothing is more frustrating. Rule against me? Fine, I have no problem with that. But at least accurately characterize my arguments and explain why you disagree. Really, lawyers can handle an honest loss.

8th Circuit Tom & Jerry, Wizard of Oz copyright decision

2011-07-05T11:30:00.002-05:00

In an interesting decision, the 8th Circuit today largely upheld an injunction against AVELA (yes, the folks from the infamous Betty Boop case I previously blogged and wrote about) prohibiting it from selling certain items bearing reproductions of Tom & Jerry and characters from the Wizard of Oz.

In Warner Bros. Entertainment, Inc. v. X One X Productions, No. 10-1743 (8th Cir. July 5, 2011), the films featuring these characters were copyrighted, but certain pre-film publicity photos and drawings of the characters were not. The issue was whether, and to what extent, the public domain status of the pre-film publicity photographs and drawings of the characters immunized AVELA from reproducing both exact duplicates and tweaked reproductions. The court's analysis focused on whether the tweaked aspects of the AVELA reproductions were derived from aspects of the characters developed in the films themselves.

11th Circuit adopts "joint endeavors" test to determine who owns trademark rights where ownership is unclear

2011-06-22T12:16:00.001-05:00

What should a court do to determine who owns a trademark where it is unclear who or which of two or more claimants owns it? In a case involving a dispute whether a music group’s members or its manager owns trademark rights in the group’s name, the 11th Circuit yesterday held that in “joint endeavors” such as this, courts should: (1) first identify what “qualities or characteristics” for which the group is known; and (2) figure out who actually controls those qualities or characteristics.

In Crystal Entertainment & Filmworks, Inc. v. Jurado, No. 10-11837 (11th Cir. June 21, 2011), the plaintiff management company’s predecessor came up with the band’s name, hired the original band’s members, songwriter, and producer, and arranged for the original band’s performances. After a few fruitless years, however, new band members in 1986 replaced the original members. Despite the new members’ having signed two license agreements in the 2000s acknowledging the management company’s ownership of the mark, the district court found that the management company could not prove that it had exercised control over the new members or taken any role in scheduling their performances. The 11th Circuit did not find these findings to be clearly erroneous. Under the “joint endeavors” test, the court held that the replacement band members therefore controlled the qualities and characteristics for which the band is known by the public.

2d Cir. broadens copyright preemption as to state law “misappropriation of hot news” claims

2011-06-20T14:31:00.000-05:00

Barclays Capital Inc. v. Theflyonthewall.com, Inc., No. 10-1372 (2d Cir. June 20, 2011), involved allegations that the uncovering and dissemination of financial firms’ daily securities trading recommendations constituted copyright infringement and the New York common law tort of misappropriation of “hot news.” Such a misappropriation claim was first accepted in the days of federal common law in Int’l News Serv. v. Associated Press, 248 U.S. 215 (1918) (“INS”), but really hasn’t gotten much traction since.

The defendant conceded copyright infringement. The only question on appeal was whether the misappropriation claim was preempted.

The panel majority’s decision turned on whether a five-part test set forth in a prior “hot news” case, NBA v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), was dictum. In NBA, the Second Circuit held that the NBA’s misappropriation claim was preempted, but suggested that an INS-type misappropriation claim could survive preemption if it required an “extra element” beyond those required for copyright infringement. The NBA court posited a five-part test that it believed would characterize a non-preempted claim possessing such an extra element.

The panel majority characterized the NBA court’s five-part test as dictum. Instead, the panel majority compared the misappropriation claim itself to that involved in NBA and determined that they were alike in that (1) the plaintiffs in both cases “created” the news (as opposed to simply reporting it) and (2) defendants in both cases gave proper attribution to the respective plaintiffs for the news. The court contrasted this with the facts in the INS case, where the plaintiff was a news reporting service, not the “creator” of the news itself, and the defendant had taken credit for the report it obtained from the plaintiff. Since the plaintiffs’ claims in NBA and Barclays were alike in these respects (and unlike INS), the panel majority held that, like the claim in NBA, the plaintiffs’ misappropriation claims were similarly preempted.

The concurring judge would not have rejected the NBA court’s five-part test as dictum, but instead would have found preemption due to the failure of the plaintiffs to demonstrate one of the five parts of the NBA test (direct competition between the parties).

D.C. Cir.: Licensee estoppel prevents licensee from arguing ownership due to naked licensing

2011-06-17T14:03:00.001-05:00

In a decision involving unique circumstances, the D.C. Circuit held today that a licensee was precluded by licensee estoppel from arguing that the licensor abandoned the licensed mark by engaging in “naked licensing.” The licensee argued, unsuccessfully, that licensee estoppel shouldn’t preclude it from asserting that it owned the mark because it was undisputed that:

The licensor ceased monitoring the licensee in 1991;
The licensor went bankrupt in 1991, and, a few years after the bankruptcy was converted to Chapter 7 in 1993, the licensor’s former owners misappropriated the mark (from the trustee) and re-started the essentially the same business under the mark;
The bankruptcy court then entered an order enjoining the licensor’s former owners from continuing to use the mark; and
Business associates of the licensor’s former owners later purchased the marks from the trustee.

Although it’s hard to draw categorical conclusions from such a unique case, it’s at least safe to say that, if a licensee can’t assert ownership/abandonment in these circumstances, licensee estoppel is pretty robust in the D.C. Circuit.

The case is John C. Flood of Va., Inc. v. John C. Flood, Inc., No. 10-7098 (D.C. Cir. June 17, 2011)

3d Circuit: Removal of NON-DIGITAL author info violates DIGITAL Millennium Copyright Act

2011-06-15T14:41:00.000-05:00

Peter Murphy photographed two of New Jersey’s radio “shock jocks” for a NJ magazine. In the magazine, Murphy was identified, in the margin of the photo, as the photographer. The radio station that employed the jocks scanned the image, deleted Murphy’s name from the margin, and posted the photo on their website for a promotion.

Murphy sued for violation of §§ 1202(b) & (c) of the Digital Millennium Copyright Act. Section 1202(b) prohibits removal of “copyright management information,” and § 1202(c) defines “copyright management information” as “information conveyed in connection with copies . . . of a work . . . , including in digital form . . . the name of the author . . . .”

The 3d Circuit rejected the station’s argument that § 1201 of the Act—which mentions circumvention of “technological measures”—limits § 1202’s coverage to some sort of automated copyright management system. Instead, the 3d Circuit said that §§ 1202(b) & (c) include automated technological measures, but don’t require that the removed or altered copyright management information be digital or automated.

The court also rejected a weak fair use argument.

The case is Murphy v. Millennium Radio Group LLC, No. 10-2163 (3d Cir. June 14, 2011).

Puzzling (to me) 7th Circuit Cypress Hill copyright decision

2011-06-01T17:32:00.000-05:00

In Johnson v. Cypress Hill, No. 08-3810 (7th Cir. June 1, 2011), the 7th Circuit affirmed summary judgment against a plaintiff who claimed that the hip-hop group Cypress Hill infringed his alleged copyright in a 1969 sound recording. Because it’s a 1969 (i.e., pre-1972) sound recording, however, the plaintiff could not have had a copyright in it under 17 USC § 301(c).

After getting poured out on summary judgment, the plaintiff (among other arguments) asked the district court and then the 7th Circuit to rule that the dismissal was not on the merits but rather due to lack of subject matter jurisdiction (because he possessed no copyright). The Seventh Circuit refused, holding that Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010) “foreclosed” that argument.

But I thought Reed Elsevier held only that lack of a copyright registration was not a jurisdictional requirement. In the Cypress Hill case, by contrast, the issue isn’t whether a copyright was registered, but whether any copyright exists at all. How does Reed Elsevier foreclose the argument that where no copyright exists at all there is no subject matter jurisdiction under the Copyright Act?

Any thoughts?

1st Cir. TM injunction case: eBay 4-factor test generally applies, but acquiescence and delay dispositive

2011-05-31T11:28:00.000-05:00

In a fact-specific decision, the First Circuit recently held that eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)—which confirmed that the traditional 4-factor injunction test applies to patent cases—also applies to trademark cases. But the circuit court declined to rule specifically whether eBay eliminates the familiar “presumption of irreparable harm” that automatically flows from a showing of trademark infringement.

The basis the court used to sidestep this precise issue was that the record showed that any such presumption was overcome by the movant’s delay and acquiescence. The court also touched on progressive encroachment without actually calling it that, rejecting the movant’s progressive encroachment argument by holding that the nonmovant’s recent changes were “not sufficiently qualitatively different” from the harm flowing from the prior infringement.

The case is Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., No. 10-1396 (1st Cir. May 27, 2011).

3d Circuit: For waiver of privilege, timing makes a difference

2011-05-25T17:49:00.000-05:00

If a third party is present during an otherwise privileged communication, the privilege is waived, right? Not exactly, said the Third Circuit today. If a third party is present when the privileged communication is made, the privilege doesn’t attach at all. That’s different from a true waiver situation where a communication that is privileged when made is later disclosed to a third party.

This distinction makes a practical difference when the party asserting waiver wants to see documents beyond the initial communication(s) via a “scope of waiver” argument. If the initial communication(s) was not privileged when made, then there could be no waiver and consequently no opportunity to seek other privileged communications on the subject via a “scope of waiver” argument. The party asserting waiver gets only the initial communication(s).

The case is In re Application of Chevron Corp., No. 10-4699 (3d Cir. May 25, 2011), and the initial communications at issue were made in the presence of filmmakers who were—at the behest of the plaintiffs’ lawyers—shooting a movie of a notorious Ecuadorian environmental case against Chevron (while the case was going on).

2d Cir. decision about injunction bonds, attorneys' fees, and the presumption of recovery

2011-05-23T18:21:00.000-05:00

The Second Circuit today decided that a wrongfully enjoined party (1) is entitled to a “rebuttable presumption in favor of recovery . . . for provable damages” against a FRCP 65(c) injunction bond; and (2) such damages may include attorneys’ fees if they were fees that were “incurred in complying with the injunction.” (emphasis added).

As to the “presumption,” the Second Circuit indicated that the presumption attaches only after “the wrongfully enjoined party . . . first demonstrate[s] that the damages sought were proximately caused by the wrongful injunction” and “properly substantiate[s] the damages sought.” (This doesn’t seem to me to be much of a presumption, since it sounds a lot like what any injured party in any case needs to prove to obtain damages.)

The case is Nokia Corp. v. InterDigital, Inc., No. 10-1358 (2d Cir. May 23, 2011).

For those interested, the injunction—which was later vacated and therefore “wrongful”—required InterDigital to stay or terminate its ITC proceeding against Nokia and another company as to Nokia, based on an alleged arbitration agreement between InterDigital and Nokia. So instead of one ITC proceeding, InterDigital for a while had to arbitrate against Nokia while it litigated an ITC proceeding against the other company. InterDigital later claimed that it incurred substantial attorneys’ fees staying the ITC proceeding as to Nokia and having to incur duplicative fees and expenses litigating its claims against Nokia and the other company in two different forums.

3d Cir: Copyright Act permits prejudgment interest in disgorgement of profits cases

2011-05-19T17:05:00.000-05:00

Prejudgment interest is normally associated with making an injured party whole by providing interest on monetary awards for past damages. In William A. Graham Co. v. Haughey, No. 10-2762 (3d Cir. May 16, 2011), the Third Circuit permitted prejudgment interest to be added to an award of the infringer’s profits as well, even where no damages were sought. The Court noted that: (1) nothing in the Copyright Act prohibits prejudgment interest on a disgorgement award; and (2) prejudgment interest and disgorgement serve the same interests (making the claimant whole and preventing unjust enrichment).

7th Circuit/Judge Easterbrook trademark decision on quality control/naked licensing/abandonment

2011-05-10T16:05:00.000-05:00

Eva's Bridal Ltd. v. Halanick Enterprises, Inc., No. 10-2863 (7th Cir. May 10, 2011) contains a short but interesting discussion by Judge Easterbrook about the proper way to look at "quality control." The mark owner trusted the licensee and felt confident he was maintaining high standards, but the agreement between the parties contained no quality control provisions whatsoever and the owner took no steps to monitor the good and services or how the mark was used. Judge Easterbrook said that quality control doesn't mean feeling confident that the licensee is maintaining high quality. Rather, it's about the owner taking steps to insure that the quality is consistent and predictable.

The court affirmed the finding of abandonment through naked licensing.

9th Circuit (en banc): Copyright Act not preempt California implied contract claim based on submission of "idea" for TV show

2011-05-04T14:10:00.000-05:00

The en banc 9th Circuit today held that copyright law doesn’t preempt a writer’s “implied contract” claim under California law that he submitted materials containing an idea for a TV show to a studio or producers with the understanding that he'd be compensated by receiving a share of the profits if the studio or producers use the idea.

The dissent argued that there’s a difference between state law claims that the writer: (a) sold the idea/concept with the implied understanding he’d be compensated (dissent says not preempted because it’s a classic implied contract); and (b) presented the idea with the implied understanding that he was retaining control over the idea unless the studio used it, in which case he’d be compensated (dissent says preempted because the writer is retaining control, which is closer to what copyright law protects). The dissent thought this writer’s claim was closer to (b).

The case is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. May 4, 2011) (en banc).

9th Circuit decision on "exceeds authorized access" in criminal Computer Fraud and Abuse Act case

2011-04-29T13:32:00.004-05:00

Yesterday the 9th Circuit (in a 2-1 decision) held that a criminal defendant "exceeded authorized access," as set forth in the Computer Fraud and Abuse Act, 18 U.S.C. 1030 et seq., when he or she "violates the employer's computer access restrictions--including use restrictions." Does that sound pretty broad to you? Sounds that way to me.

And it sounds that way to others, too. If you ever "Google" anything at work, I commend this blog post in The Volokh Conspiracy (a blog run by a group of (mostly) libertarian law professors) on this recent 9th Circuit decision (United States v. Nosal, No. 10-10038, (Apr. 28, 2011)). It has been my experience almost every civil action for trade secret misappropriation in the last ten years (and lots of other IP and employment cases) potentially implicate the CFAA one way or another, and this is yet another decision -- others are discussed in the opinion -- that shows just how broadly the criminal provisions of the Act can be read.

4th Circuit Applies eBay v. MercExchange Injunction Standard to False Advertising Case

2011-04-21T14:13:00.002-05:00

Yesterday the 4th Circuit affirmed a $13.5 million jury verdict and a permanent injunction against Mead Johnson for false advertising about a competitor’s infant formula. In so doing, the court in PBM Prod., LLC v. Mead Johnson & Co., No. 10-1421 (4th Cir. Apr. 20, 2011), applied the injunction standard set forth in the Supreme Court’s patent law decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006), and held that PBM had introduced sufficient evidence of irreparable harm. The court pointed “primarily” to survey evidence that Mead Johnson’s statements actually misled survey participants. Secondarily, the court noted that damage to “goodwill” and “reputation” also support a finding of irreparable harm. (Of course, this latter basis seems to comes pretty close to the sort of presumption or universal rule rejected by the eBay court.)

The 4th Circuit also held that evidence that a false advertising plaintiff had previously sued the defendant for false advertising is relevant to the defendant’s “intent in making its misleading claims” in the later case, which in turn could relieve the plaintiff of the burden of showing that the defendant’s impliedly misleading claims actually confused people.

5th Circuit: combination of things in public domain COULD be a trade secret if combination is secret

2011-04-05T16:38:00.005-05:00

In Tewari De-Ox Sys., Inc. v. Mountain States/Rosen, L.L.C., No. 10-50137 (5th Cir. Apr. 5, 2011), the Fifth Circuit reversed summary judgment for the defendant in a trade secret case under Texas law. The district court had held that the plaintiff could not prove that its alleged packaging process -- designed to retard meat spoilage -- was a secret, because the various steps or components of the process were either previously disclosed in plaintiff's prior patent application or in the public domain. Reversing, the Fifth Circuit held that disclosure of all the components of a process does not necessarily preclude trade secret status IF the alleged combination of the components is both unique and a secret. The Court discussed other issues, too, but this was the most important bit.

D.C. Circuit holds that 1998 law bars renewal of Cuba-owned trademarks

2011-03-30T14:06:00.000-05:00

Yesterday the D.C. Circuit, in a 2-1 decision, ruled that the Cuban government-owned company Cubaexport could not renew its HAVANA CLUB trademark for rum. In Empresa Cubano Exportadora de Alimentos y Productos Varios v. United States Dep't of Treasury, No. 09-5196 (D.C. Cir. Mar. 29, 2011), the majority held that a provision in a 1998 appropriations act which prohibited transactions or payments to the PTO under 31 CFR § 515.527 (which at the time referred to registrations and renewals as “transactions”), was not impermissibly retroactive as to Cubaexport. Noting that a “vested right” was required to invoke the presumption against retroactivity, the majority held that Cubaexport did not have a “vested right” in renewal because the Cuban trademark regulations at issue also contained an express reservation allowing them to be amended or modified at any time. The dissent argued that the Supreme Court’s retroactivity jurisprudence makes clear that a statute that impairs an existing “substantive right” is impermissibly retroactive, and that the majority was reading “vested right” to mean something more than substantive rights, thus “driv[ing] a large hole in the presumption against retroactivity.” The dissenting judge noted that Cubaexport had a substantive, existing right to renew its registration, notwithstanding the theoretical possibility that hypothetical future regulations could have eliminated that right.

Federal Circuit: "Capital City Bank" marks not confusingly similar to CITIBANK

2011-03-28T13:04:00.001-05:00

The Federal Circuit today handed Citigroup a loss in its opposition proceeding pitting its CITIBANK marks against several marks containing the words “CAPITAL CITY BANK.” Although the decision in Citigroup Inc. v. Capital City Bank Group, Inc., No. 2010-1369 (Fed. Cir. Mar. 28, 2011) was fairly fact-specific, a couple of legal points stood out. First, the Federal Circuit rejected the TTAB’s practice of considering only “reasonable” manners of depicting word (standard character) marks. The court stopped short of re-defining exactly what range of depictions should be considered, however, leaving ambiguity as to exactly what the precise broadening effect of this holding will be. Second, the court noted that “pervasive” use of the phrase “City Bank” in other financial service marks (both registered marks and those found used on various bank websites) “limits the protection afforded to the CITIBANK mark." Interestingly, on appeal, Citigroup waived its arguments as to dilution.

8th Circuit "Church Fight" Trademark Decision

2011-03-21T12:33:00.001-05:00

In Community of Christ Copyright Corp. v. Devon Park Restoration Branch of Jesus Christ’s Church, No. 10-1707 (8th Cir. Mar. 21, 2011), the Eighth Circuit addressed several issues:

● whether the mark REORGANIZED CHURCH OF JESUS CHRIST OF LATTER DAY SAINTS is generic (no, in part because of lack of proof of what the public thought and in part based on precedent that church names generally are considered descriptive, not generic);

● whether the use of a church’s trademark by an unauthorized congregation can constitute trademark infringement (yes, it can, and, in this case, did);

● whether the plaintiff was entitled to a permanent injunction (yes, because it prevailed on the merits and irreparable harm is presumed in trademark cases – no mention of the possible impact of eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)); and

● whether it was an abuse of discretion to whack a small independent congregation with a $348,000 attorneys fees award (no, because there was “willful infringement” in that the defendant ignored the plaintiff’s cease-and-desist letter – which seems like a pretty flimsy reason given the defenses in this unique case resulted in a published opinion).

9th Cir.: Purchase of Competitors' Trademark for Google AdWords Listing is "Use in Commerce"; Court Clarifies Confusion Analysis in Internet Setting

2011-03-09T12:28:00.001-06:00

Yesterday the 9th Circuit decided that a company’s purchase of a Google AdWords listing using a competitor’s trademark is a “use in commerce” potentially subjecting the purchaser to liability for trademark infringement under the Lanham Act. In NetWork Automation, Inc. v. Advanced Sys. Corp., No. 10-55840 (Mar. 8, 2011), the 9th Circuit also tried to clarify how to use its version of the well-known multi-factor likelihood of confusion test in this specific Internet setting. The court then vacated the district court’s preliminary injunction. It isn't clear to me whether the 9th Circuit wanted, or even was permitting, the district court to re-assess whether a preliminary injunction was warranted under the newly-clarified confusion analysis.

At the threshold, the 9th Circuit agreed with the 2d Circuit’s decision in Rescuecom Corp. v. Google Inc., 562 F.3d 123 (2d Cir. 2009) that Google’s sale of a trademark as a trigger for an AdWords listing qualifies as a “use in commerce.”

In probably the most significant aspect of its attempt to clarify how to apply the Sleekcraft confusion factors in this setting, the 9th Circuit indicated that when assessing the “similarity” of the parties’ marks, the courts must pay attention to the “labeling and appearance” of the purchased advertisement, including whether it identifies the alleged infringer’s business. The court also noted that the graphics and text that the Internet service provider (here, Google) uses to distinguish the purchased ads from the search results also plays into the confusion calculus, as does the degree of care exercised by typical searchers.

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

2011-02-23T16:29:00.002-06:00

[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.

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

2011-02-16T14:59:00.000-06:00

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).

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

2011-02-08T13:22:00.000-06:00

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.

9th Cir. addresses procedural effect of presumption of validity under § 410(c) of the Copyright Act

2011-01-26T17:10:00.000-06:00

The 9th Circuit today highlighted the procedural ramifications of the presumption of validity afforded by § 410(c) of the Copyright Act.

In United Fabrics Int’l, Inc. v. C&J Wear, Inc., No. 09-65499 (9th Cir. Jan. 26, 2010), the district court (sua sponte) dismissed plaintiff’s copyright claims, saying that: (1) the plaintiff hadn’t produced sufficient evidence of the “chain of title” in the underlying design (which it got from an Italian firm); and (2) the plaintiff hadn’t produced evidence that the designs, which were registered as a published collection, were actually published as a collection, as required under 37 CFR 202.3(4)(b).

The 9th Circuit reversed, holding that the district court ignored the statutory presumption of validity when it required the copyright owner to prove these things without first identifying evidence to the contrary. The appeals court noted that it was the defendants’ burden to first explode the presumption by coming up with some proof to the contrary on these issues.

3d Cir.: later-created "memorandum of transfer" of copyright not enough; historical evidence of transfer also required

2011-01-18T18:30:00.000-06:00

Section 204(a) of the Copyright Act requires that, to be valid, a transfer of copyright ownership must be in writing, such as a “memorandum of the transfer.” The Third Circuit recently rejected the Ninth Circuit’s requirement that the memorandum of the transfer be “more or less contemporaneous” with the transfer, and held that a memorandum of transfer executed almost 9 years after the alleged transfer was fine (at least where the transferor and the transferee both signed it). But the court further held that there must also be historical evidence – beyond the later-created memorandum -- that the transfer actually occurred. The accused infringer in the case (who was not the transferor) had successfully moved for summary judgment challenging that the transfer ever occurred, and the Third Circuit affirmed that the transferee failed to raise a genuine issue of material fact on that point.

The case is Barefoot Architect, Inc. v. Bunge, No. 09-4495 (3d Cir. Jan. 14, 2011).

8th Cir.: disgorgement of profits under Lanham Act does not, in all cases, require proof of actual confusion

2011-01-06T11:15:00.001-06:00

The Eighth Circuit today clarified that its precedents do not necessarily require proof of actual confusion to qualify for an award of disgorgement of the infringer’s profits in all cases. It held that where a licensee willfully uses the mark for services beyond those authorized in the license, the licensor may seek disgorgement.

While the court did not expressly limit its ruling to this factual setting, it was careful to avoid broad dictum implying that disgorgement is available in all trademark infringement settings, irrespective of proof of actual confusion.

The case is Masters v. UHS of Del., Inc., No. 09-3543 (8th Cir. Jan. 6, 2011).

9th Cir. decision on re-sale of "promotional only" copies of music CDs

2011-01-04T15:43:00.002-06:00

Promotional music CDs that were sent, unsolicited, from a record company to music critics and radio stations, were subject to “first sale doctrine” and could be freely re-sold—notwithstanding a disclaimer stating that the discs were licensed only and could not be re-sold or transferred.

In UMG Recordings, Inc. v. Augusto, No. 08-55998 (9th Cir. Jan. 4, 2011), Mr. Augusto somehow obtained a bunch of these promotional CDs and re-sold them on eBay. UMG sued him for copyright infringement, arguing that the disclaimer stamped on the discs precluded his “first sale defense”:

"This CD is the property of the record company and is licensed to the intended recipient for personal use only. Acceptance of this CD shall constitute an agreement to comply with the terms of the license. Resale or transfer of possession is not allowed and may be punishable under federal and state laws."

The court rejected UMG’s argument that the disclaimer created a license primarily because the UMG sent the CDs out unsolicited. The court also noted that no recipients responded back to UMG, and that UMG did not even try to figure out the status of the copies it sent to the initial recipients.

The court also held that the “Unordered Merchandise Statute,” 39 U.S.C. § 3009—the Unordered Merchandise Statute???; that's some good lawyering!—explicitly permits the recipients of any unsolicited merchandise sent through the mail or similar means to dispose of the merchandise any way they want. The court held that UMG’s unilateral attempt to create a license was inconsistent with this law.

7th Cir. decision on likelihood of confusion and 11th amendment immunity where state appeals TTAB cancellation order to district court

2010-12-29T15:25:00.002-06:00

The Seventh Circuit recently issued an interesting decision in the appeal of a district court decision that reversed a TTAB-ordered cancellation. While long (85 pages, including a dissent), the opinion in Board of Regents of Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Dec. 28, 2010), addressed two core issues:

(1) is actual use (rather than the description of goods and services in the registration) relevant to likelihood of confusion in the context of a district court proceeding challenging a TTAB-ordered cancellation? (yes); and

(2) by going the district court route rather than appealing the TTAB decision cancelling its registration directly to the Federal Circuit, did Wisconsin waive its sovereign immunity for 11th amendment purposes, thereby rendering itself vulnerable to Phoenix’s infringement counterclaims? (no).

The TTAB had granted Phoenix Int’l's petition to cancel Wisconsin’s registration. Rather than appeal to the Federal Circuit, Wisconsin challenged the decision in a district court. Phoenix counterclaimed for trademark infringement and sought damages. The district court gave Wisconsin a win/win: it granted summary judgment reversing the TTAB and reinstating Wisconsin’s registration, and held that the 11th amendment barred Phoenix’s counterclaims. The Seventh Circuit reversed and remanded for a likelihood of confusion trial, but affirmed Wisconsin’s immunity to the infringement counterclaims under the 11th amendment.

On the actual use vs. description-of-goods-and-services-in-the-registration issue, the Seventh Circuit noted first that this sub-issue, in the context of a likelihood of confusion analysis, is not a rote comparison of the parties’ goods, but whether the parties’ products are the kind that consumers would believe to come from the same source. The court further noted that the actual goods the parties’ marks are used on may inform the meaning of the terms used in the registration.

As to the 11th amendment issue, the majority held that the mere fact that Wisconsin chose to challenge the TTAB’s cancellation via a district court proceeding in which it could submit new evidence was not enough to constitute a waiver of 11th amendment immunity. The majority felt that, at bottom, for purposes of 11th amendment immunity, such a challenge is simply a continuation of the TTAB proceeding in which Wisconsin was effectively a defendant. The dissent believed that, for 11th amendment purposes, there was a material difference between a straight appeal to the Federal Circuit and the institution of a de novo proceeding at the district court, primarily because, by choosing to file a proceeding in the district court, the challenger could present new evidence.

Happy New Year!

9th Circuit Digital Millennium Copyright Act decision creates split with Federal Circuit on circumventing access controls

2010-12-14T17:37:00.002-06:00

In a long, comprehensive opinion, the Ninth Circuit (among other rulings) created a circuit split by disagreeing with the Federal Circuit about the elements of violations of the Digital Millennium Copyright Act, 17 U.S.C. §§ 1201(a) & (b).

In MDY Industries, LLC v. Blizzard Entertainment, Inc., No. 09-15932 (9th Cir. Dec. 14, 2010), the Ninth Circuit addressed a dispute between the creator of the popular on-line game “World of Warcraft” and a manufacturer of a software program that automatically plays the game for users to help them progress through the game’s levels. In a nutshell, the Ninth Circuit held that §§ 1201(a)(1) & (2) created a brand new “copyright”—the right to prevent circumvention of measures designed to prevent or control access to a copyrighted work. The court held that § 1201(b), in contrast, prohibited trafficking in devices that circumvent measures that prevent traditional types of copyright infringement, such as copying, displaying, or performing a work.

The Ninth Circuit’s reading of § 1201(a) creates a circuit split with the Federal Circuit. The Federal Circuit had previously required § 1201(a) claimants to prove an additional element: that the circumventing technology infringes or facilitates the infringement of a copyright (i.e., an “infringement nexus requirement”). See Chamberlain Group, Inc. v. Skylink Techs., Inc., 381 F.3d 1178, 1203 (Fed. Cir. 2004). The Ninth Circuit believed that there was no textual support for requiring an “infringement nexus” and that the legislative history confirmed that no such nexus was required.

The circuit split may induce the Supreme Court to grant cert. if the decision is challenged.

Fed. Cir. orders transfer of multi-defendant patent case to N.D. Cal.

2010-12-03T12:01:00.001-06:00

Did you think that having several defendants in multiple other districts insulated an E.D. Tex. patent plaintiff from a § 1404(a) transfer? If so, you may want to qualify that thought a bit.

The Federal Circuit today issued a writ of mandamus ordering the transfer of a multi-defendant patent case to the N.D. Cal. The key facts were these:

The plaintiff was from the N.D. Cal.
11 of the 12 defendants were headquartered in California, with 6 of those actually headquartered in the N.D. Cal.
Only one defendant (Dell) was headquartered in Texas (but not in the E.D. Tex.).

So the lesson seems to be this: the “multi-defendant defeats § 1404(a) transfer” strategy doesn't necessarily work where the majority of the defendants are from one particular area outside the forum (even if they’re all not from the same federal district).

In re Acer Amer. Corp., Misc. No. 942 (Fed. Cir. Dec. 3, 2010)

9th Circuit decides that "naked licensing" led to abandonment of mark

2010-11-28T13:00:00.001-06:00

The 9th Circuit recently decided that "“The Freecycle Network"—a non-profit organization facilitating the free re-use of unwanted items by others—abandoned the mark FREECYCLE because it failed to exert adequate quality control over its loose network of local affiliates.

The court based its conclusion on the facts that: (1) there was no express licensing agreement between the main organization and its affiliates; (2) a directive to affiliates not to use the mark "for commercial purposes" didn’t constitute an implied license; (3) a one sentence ethics standard and voluntary "etiquette guidelines" did not constitute actual control over the affiliates; and (4) the main organization could not have reasonably relied on the affiliate’s own quality control standards (if any) because there was no evidence of a "close working relationship" between the two.

The case is Freecycle Sunnyvale v. The Freecycle Network, No. 08-16382 (9th Cir. Nov. 24, 2010).

7th Circuit (Posner, J.) decision on proper standards for finding case "exceptional" under Lanham Act

2010-11-24T10:08:00.002-06:00

The 7th Circuit today published an interesting decision, written by Judge Posner, on the proper standards for determining whether a case is “exceptional” under the Lanham Act, 15 U.S.C. § 1117(a). The opinion reviews the standards in the other circuits, notes that they seem to differ, and then goes back to “first principles” to try to see if it’s possible both to articulate the proper standard and to reconcile the various circuits’ seemingly different tests.

To cut to the chase, the court held:

We conclude that a case under the Lanham Act is “exceptional,” in the sense of warranting an award of reasonable attorneys’ fees to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no defense yet persisted in the trademark infringement or false advertising for which he was being sued, in order to impose costs on his opponent.

The court believed that this test “captures the concerns that underlie the various tests and offers a pathway through the semantic jungle.” In arriving at its holding, the court was swayed by, among other things, the “practical concern” about the misuse of the Lanham Act “to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor.”

The case is Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, No. 10-2327 (7th Cir. Nov. 23, 2010).

Fed. Cir.'s decision on district court challenges to BPAI decisions to apply to TTAB decisions too?

2010-11-08T15:19:00.002-06:00

In today’s en banc decision in Hyatt v. Kappos, No. 2007-1066 (Fed. Cir. Nov. 8, 2010), the Federal Circuit addressed 35 U.S.C. § 145, which concerns the alternative routes by disappointed patent applicants can contest BPAI rulings rejecting a patent: an “appeal” to the Federal Circuit or a “civil action against the Director in the United States District Court . . . .” Addressing the “civil action” alternative, the court held:

(1) § 145 itself imposes no limit on an applicant’s right to introduce new evidence in the district court, regardless of whether he could have introduced before the BPAI;

(2) such new evidence is subject only to the Federal Rules of Civil Procedure and Evidence;

(3) the district court must make de novo findings on any issues implicated by the new evidence;

(4) in contrast, the district court must apply the deferential APA “substantial evidence” standard of review as to issues for which no new evidence was taken; and

(5) issues (as opposed to evidence) not raised in the Patent Office cannot be raised for the first time in a district court action.

The opinion did not mention the trademark-side counterpart to 35 U.S.C. § 145 (i.e., 15 U.S.C. § 1071(b)). In my view, however, (so take it for whatever it's worth), these standards on the patent side may very well apply to proceedings challenging TTAB trademark decisions too, for the wording of the two provisions is virtually identical, at least in the respects that the en banc court found significant:

35 U.S.C. § 145

"An applicant dissatisfied with the decision of the [BPAI] may, unless appeal has been taken to the United States Court of Appeals for the Federal Circuit, have remedy by civil action against the Director in the United States District Court . . . . The court may adjudge that such applicant is entitled to receive a patent for his invention . . . as the facts in the case may appear . . . ."

15 U.S.C. § 1071(b)

"Whenever a person . . . is dissatisfied with the decision of the [TTAB], said person may, unless appeal has been taken to said United States Court of Appeals for the Federal Circuit, have remedy by a civil action . . . . The court may adjudge that an applicant is entitled to a registration . . . , that a registration involved should be canceled, or such other matter as the issues in the proceeding require, as the facts in the case may appear."

I also commend Judge Newman’s partial dissent. She didn’t like points (4) & (5), above. As usual, her dissent seems to make sense.

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

2010-10-21T13:52:00.001-05:00

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).

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

2010-10-18T15:17:00.005-05:00

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.

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

2010-10-05T18:21:00.002-05:00

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.

Prolix 9th decision on copyright “first sale” defense

2010-09-17T10:51:00.001-05:00

Whatever happened to the kind of pithy opinions that old-timey jurists like the Hand cousins used to write?

It recently took the Ninth Circuit 26 pages to decide whether a software transaction was a sale or a license for purposes of “first sale” defense to a claim of copyright infringement. The written agreement (1) recited that the copyright owner retained title; (2) stated that the transaction conveyed a nonexclusive, nontransferable license; (3) imposed substantial restrictions against transfer; (4) imposed substantial use restrictions; and (5) provided for license termination if the licensee doesn’t comply with certain provisions. Walks, quacks, and looks like a license to me. Vernor v. Autodesk, Inc., No. 09-35969 (9th Cir. Sept. 10, 2010).

Significant precedential TTAB decision concerning fraudulent intent and "advice of counsel"

2010-09-16T20:26:00.000-05:00

I don’t usually report on TTAB decisions, but this one looks significant. It concerns “advice of counsel” and proof of fraudulent intent in the wake of In re Bose Corp., 580 F.3d 1240 (Fed. Cir. 2009).

In M.C.I. Foods, Inc. v. Bunte, Cancellation No. 92046056 (TTAB Sept. 13, 2010), Bunte cross-petitioned to cancel MCI’s registration for fraud. MCI’s registration listed many types of Mexican foods (including tortilla chips), but MCI never used it for tortilla chips. MCI’s president testified that he made a list of goods he wanted to have on the application (including items he knew MCI hadn't used the mark on, like tortilla chips), but testified that the list “was discussed with counsel.” Bunte’s attorney asked no further questions about the discussions with counsel.

Based on the evidence that MCI provided the list to counsel and discussed it with counsel, the TTAB found that MCI did not intend to deceive the PTO. The TTAB qualified its ruling by noting that it was not holding that merely asserting “advice of counsel” creates a per se defense to fraudulent intent. Rather, it faulted Bunte for not following up and obtaining testimony concerning what counsel’s actual advice, if any, was. So, evidence that counsel’s advice was sought can be exonerating if there is no further evidence that counsel’s advice (or lack thereof) undercut this evidence of good faith. In other words, evidence that the accused party sought the “advice of counsel” creates a presumption of good faith, and the presumption stands unless outweighed by contrary evidence.

NB: The TTAB did not discuss the necessarily-implicated issue of whether an accused party waives the attorney-client privilege merely by invoking or referring to the obtaining of counsel’s advice.

Absent fraud, the TTAB denied cancellation, instead restricting MCI’s registration to the items that it actually used the mark on.

Three recent trademark and copyright decisions of note

2010-09-11T11:53:00.000-05:00

In the past week or so there have been a few appellate trademark and copyright decisions that, while not earth shattering, probably merit a brief note.

In Seller Agency Council, Inc. v. Kennedy Center for Real Estate Educ., Inc., No. 08-56791 (9th Cir. Sept. 3, 2010), the Ninth Circuit officially defined the equitable defense of acquiescence in a trademark case with the three-part test other circuits have used: (1)the senior user actively represented it would not assert a claim; (2) the delay between the representation and the assertion of the claim was not excusable; and (3) the delay prejudiced the defendant.

In the ongoing saga of the copyright-infringing Baltimore Ravens football logo design, the 4th Circuit held that the fair use defense insulated the Ravens—who discontinued the infringing logo several years ago—from liability for displaying the infringing logo in a pictorial collage of the organization’s history in its corporate office, but not for selling highlight films from the years when the players wore the infringing design on their helmets. Bouchat v. Baltimore Ravens L.P., No. 08-2381 (4th Cir. Sept. 2, 2010).

In a patent/trademark case in which the district court made some seemingly bizarre trademark rulings, the Federal Circuit held that a trademark invalidity declaratory judgment cannot be dismissed for lack of an Article III case or controversy where the mark owner has actually sued the party seeking the D.J. for infringement. (One would have thought that this is not a concept that needs to be rectified at the appeals level.) In another part of the opinion, the Federal Circuit also used imprecise nomenclature when it repeatedly referred to a demand for a disgorgement of profits as a “damage” claim—an imprecision that could cause confusion down the line since the principles applying to each remedy are quite different. Green Edge Enters., LLC v. Rubber Mulch Etc., LLC, No 2009-1455 (Fed. Cir. Sept. 7, 2010).

7th Circuit decision re product design trade dress turns on construction of French contract

2010-09-11T11:50:00.001-05:00

In a recent decision, the Seventh Circuit ruled that a trade dress dispute involving nearly identical-looking French press coffee makers turned on the construction, under French law, of a French contract between the parties. In Bodum USA, Inc. v. La Cafetiere, Inc., No. 09-1892 (7th Cir. Sept. 2, 2010), the Court ruled that the plaintiff had signed a contract that permitted the defendant to sell the accused design in all countries but France. Since the issue was use in the U.S., the defendant won.

While the court technically sidestepped the issue of whether the design was protectable under the Lanham Act (all but saying that it wasn't), there were three separate opinions totaling 36 pages (the majority by Judge Easterbrook, with concurrences by Judges Posner and Wood) concerning how foreign law should be proved under Fed. R. Civ. P. 44.1. In short, Judges Easterbrook and Posner think not only that Rule 44.1 does not require expert testimony, but that expert testimony is a lousy way to determine foreign law. They think judges should simply research it, like they do any federal or state law. Judge Wood agreed that rule 44.1 doesn't require expert testimony, but she thinks it's a good idea, mostly because in the translated research materials that judges would typically obtain, nuances can sometimes be missed.

3 Interesting Lanham Act Decisions (2 trade dress and 1 contributory infringement)

2010-08-12T09:52:00.002-05:00

Two 7th Circuit trade dress/functionality decisions

The same panel of the Seventh Circuit, with the same judge writing, decided two separate product configuration trade dress cases on the same day, both involving registered, incontestable dresses, and both on functionality grounds (what are the odds?). In Jay Franco & Sons, Inc. v. Franek, No. 09-2155 (7th Cir. Aug. 11, 2010), the court (Easterbrook, J.) held that registered, incontestable trade dress consisting of a round-shaped beach towel was functional, because it allowed tan-seeking users to pivot to follow the sun without moving the towel. The court cited not only the registrant’s own promotional materials, but also a third-party utility patent claiming the round shape for a beach towel. The court also thought the design was aesthetically functional because the round shape was pleasing, and there aren’t many other pleasing alternative shapes.

And in Specialized Seating, Inc. v. Greenwich Industries, L.P., No. 07-1435 (7th Cir. Aug. 11, 2010), the court (again, Easterbrook, J.) held that the registered, incontestable trade dress consisting of the design of a metal folding chair was functional. The plaintiff itself had obtained four utility patents on different aspects of the chair, and together they covered every element covered in the trade dress. Because that finding alone invalidated the trade dress, the court did not reach the issue of whether the registrant defrauded the PTO by “neglecting” to mention three of its patents to the trademark examining attorney.

4th Circuit “tied product” contributory infringement decision

In Georgia Pacific Consumer Prods., PL v. Von Drehle Corp., No. 09-1942 (4th Cir. Aug. 10, 2010), the plaintiff GP manufactured the touchless “enMotion” paper towel dispenser for commercial customers. It then leased the dispensers to its distributors with the right to sublease them to its commercial customers, but only for use with GP’s expensive “enMotion” paper (which did not sport any trademarks that users could see when using the dispenser). The defendant manufactured cheap replacement rolls and specifically targeted its sales to establishments who were “subleasing” the “enMotion” dispensers. Analogizing this fact pattern to a branded COKE soda fountain in which an establishment uses generic cola, the Fourth Circuit held that the defendant committed contributory infringement, because end users would be likely to think that the paper being dispensed from the “enMotion” dispenser was “enMotion” paper.

TV Guide summaries of recent TM and copyright decisions

2010-08-04T14:09:00.007-05:00

In the past three weeks, there have been a few interesting appeals court decisions on trademark and copyright issues. Here is my take on the salient points:

The 9th Circuit -- following recent Federal Circuit precedent concerning "[THING].COM" marks -- held that the alleged word mark ADVERTISING.COM was generic for "on-line advertising services." Advertise.com, Inc. v. AOL Advertising, Inc., No. 10-55069 (9th Cir. Aug. 3, 2010).

In a fact-intensive "likelihood of confusion" decision notable only for the parties' and the court's seeming confusion over what "initial interest confusion" is, the 8th Circuit held that the defendant's SENSORYFLAVORS mark for "flavor delivery systems" (which I think is basically a line of flavor enhancing food additives) did not infringe its rival's SENSIENT FLAVORS mark, particularly in light of the sophisticated corporate customers each party sold to. Sensient Tech. Corp. v. SensoryEffects Flavor Co., No. 09-2686 (8th Cir. July 21, 2010).

Two copyright decisions turned on the proper filtering out of unprotectable ideas. In Mattel, Inc. v. MGA Entertainment, Inc., No. 09-55673 (9th Cir. July 22, 2010), a Mattel employee (under an employment agreement assigning his work product to Mattel) two-timed his employer by providing a rival toy company with the idea for, and sketches and a crude sculpt of, a doll that MGA eventually transformed into the successful BRATZ line of dolls and characters. In an entertaining opinion by Judge Kozinski, the 9th Circuit held that the district court improperly enjoined the rival and improperly transferred its BRATZ line to Mattel. The main thrust of the opinion was that the finished BRATZ characters were too different from the rough sketches and crude sculpt that Mattel owned (through the employment agreement) once the unprotectable "ideas" were filtered out. On the same day, the 11th Circuit resolved a dispute between rival "binkie" (i.e., baby pacifier) makers on the same basis. In Baby Buddies, Inc. v. Toys "R" Us, Inc., No. 08-17021 (11th Cir. July 22, 2010), the products were binkies embodying a teddy bear and a ribbon bow into the design. Like the 9th Circuit in the Bratz case, the 11th Circuit held that, once the idea of a teddy bear shaped and ribbon bow-bearing binkie was filtered out, the way the defendant (Toys "R" Us) expressed those ideas was not substantially similar to the plaintiff's design.

11th Circuit trademark decision puts cart before horse

2010-08-04T14:06:00.001-05:00

In a dispute involving a Hollywood restaurant's claim that an Atlanta restaurant infringed its mark, the 11th Circuit seemed unnecessarily to go through an entire (and error-filled) likelihood of confusion analysis before ruling that the defendant was a good faith, geographically remote junior user. Instead of viewing the "good faith, geographic remoteness" argument as an affirmative defense, however, it expressly viewed it as an additional likelihood of confusion factor.

In Tana v. Dantanna's, No. 09-15123 (11th Cir. July 15, 2010), the plaintiff (Dan Tana) is the owner of an Italian restaurant in Hollywood called Dan Tana's. Defendant Dantanna's is a surf-and-turf restaurant with a sports theme in Atlanta. Among the controversial statements the court made in the likelihood of confusion analysis was its holding that the "goods and services provided in the parties' restaurants are strikingly dissimilar." I.e, Italian restaurant vs. sporty surf-and-turf joint. This seems far too fine a distinction to make where comparing the parties' services. In my view, sit-down place vs. sit-down place is about as far as this sort of parsing should go. In addition, the court concluded that the parties do not engage in similar advertising because they have different websites, which the court opined would suggest "two completely unrelated restaurants." Again, the court is parsing it too fine and missing the point. That both parties advertise primarily via the Internet should weigh in favor of confusion, not against it.

The court ultimately reached the right result (exonerating the defendant), but the court's unnecessary likelihood of confusion discussion will provide unfounded excuses for infringers in future cases.

Three Interesting Trademark Decisions

2010-07-11T13:16:00.002-05:00

Thursday and Friday last week must have been the circuits’ annual “Get Out Your Trademark Opinions Already Festival™”. There were three decisions of note.

9th Circuit (Kozinski, J.) Nominative Fair Use Decision

The Ninth Circuit upheld the use of the domain names “buy-a-lexus.com” and “buyorleaselexus.com” by personalized auto shoppers (a/k/a auto brokers) who specialize in Lexi. In Toyota Motor Sales, U.S.A., Inc. v. Tabari, No. 0755344 (9th Cir. July 8, 2010), Judge Kozinski’s panel opinion is an interesting read, but the main take-away appears to be:

(1) nominative fair use is not an affirmative defense, but instead replaces the traditional multi-factor likelihood of confusion test in cases where the accused infringer asserts that he is indeed referring to the plaintiff’s mark; and

(2) the trademark owner bears the burden of proving that the asserted nominative use will cause confusion (i.e., is not “fair”) under the familiar three-part test that asks whether: (a) the product or service is readily identifiable without using the mark; (b) the defendant used more of the mark than was needed; and (c) the defendant falsely suggested affiliation or endorsement.

10th Circuit Reverses Award of Attorney’s Fees to Successful Counterfeiting Defendant

Plaintiff sues for counterfeiting, seeking TRO. Plaintiff gets TRO, but it’s vacated because a search by U.S. Marshalls finds no counterfeit goods. Plaintiff then unsuccessfully seeks preliminary injunction. Plaintiff appeals. No dice. Plaintiff petitions for cert. Denied. Plaintiff then voluntarily dismisses the case without prejudice, before the answer is filed. Is the defendant a “prevailing party”?

Nope. Not when the vacatur of the TRO and the denial of the preliminary injunction were based on failure to demonstrate irreparable harm and the dismissal was without prejudice. So holds Lorillard Tobacco Co. v. Engida, No. 08-1037 (10th Cir. July 9, 2010).

3d Circuit Reverses Bench Trial Finding of No Likelihood of Confusion

The Third Circuit came down hard on the district judge in Sabsina Corp. v. Creative Compounds, LLC, No. 08-3255 (3d Cir. July 9, 2010). The district judge’s oral findings and conclusions after a bench trial ignored several of likelihood of confusion factors and contained clearly errors on others, according to the appeals court. The panel noted that this is the second case in which they’ve reviewed trademark bench trial findings and conclusions from this particular judge and that he did the same thing (and was reversed) the first time. The analysis itself isn’t that noteworthy, except where the 3d Circuit points out that “intent is largely irrelevant” to the likelihood of confusion analysis because advertising history “suggests that consumer reactions usually are unrelated to manufacturer intentions.” (Those of you who have heard me rant on the relevance of intent know that this statement is music to my ears.)

9th Circuit (Kozinski) opinion on dilution of non-coined marks

2010-06-29T12:07:00.000-05:00

VISA claimed that "eVisa" for "multilingual education and information" services on the Internet diluted its famous mark by blurring. In Visa Int'l Serv. Ass'n v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010), the 9th Circuit agreed.

Judge Kozinski's opinion focused on issues that can arise when the plaintiff's mark is a real word in the dictionary (e.g., "VISA," as opposed to a coined term like XEROX). Two ways this circumstance can affect a dilution-by-blurring claim are whether the plaintiff's mark is distinctive enough to be protected under the dilution statute and whether the defendant can claim a fair descriptive use.

The court held that even a word appearing in the dictionary can be distinctive enough to qualify for dilution protection (under 15 USC § 1125(c)(1)), so long as the plaintiff isn't using it descriptively. Judge Kozinski mentioned TIDE and CAMEL, among other examples sprinkled throughout the court's opinion.

The court also rejected what appeared to be the defendant's "fair descriptive use" defense (15 USC § 1125(c)(3)(A)), saying using eVisa for multilingual education did not evoke the dictionary definition of "visa."

Fed. Cir. Overturns Yet Another E.D. Tex. “No Transfer” Order

2010-06-25T12:24:00.001-05:00

The Federal Circuit yesterday rejected a plaintiff’s attorney’s attempt to “game the system” by arranging to have its client open up what appeared to be a sham office in the E.D. Tex. before filing a patent suit there against an Indiana company.

In In re Zimmer Holdings, Inc., No. 2010-M938 (Fed. Cir. June 24, 2010), the evidence showed that the plaintiff's Longview, Texas, office was shared with another of plaintiff’s counsel’s clients. The plaintiff was not registered to do business in Texas, had no employees in Texas, and actually has deeper ties to Michigan, where it conducts its R&D, where its two officers reside, and where its patent prosecution is done. But the district court denied a section 1404(a) transfer.

The Federal Circuit granted the defendant's petition for mandamus. It chastised the district court for admittedly refusing to “scrutinize litigants’ business decisions to determine whether opening an office in a particular location has a legitimate business purpose or is merely a tactic to manipulate venue.” Citing Hertz Corp. v. Friend, 130 S. Ct. 1181, 1195 (2010), the Federal Circuit urged district courts to do just that. Calling the Longview office "a legal fiction" (slip op. at 8), the court held that manipulation is precisely what transpired in this case: “This is a classic case where the plaintiff is attempting to game the system by artificially seeking to establish venue by sharing office space with another of the trial counsel’s clients.” (Id. at 6.)

5th Circuit lays out analytical framework for assessing distinctiveness of registered design mark

2010-06-03T12:20:00.002-05:00

The Fifth Circuit yesterday issued an opinion discussing how to analyze the distinctiveness of a registered design mark. In Amazing Spaces, Inc. v. Metro Mini Storage, No. 09-20702 (5th Cir. June 2, 2010), the court first held that the presumption of validity flowing from registration was not itself enough to stave off summary judgment of nondistinctiveness (at least in this case).

Moving on to an assessment of inherent distinctiveness, the court held that this registered design mark:

could not be analyzed under the seminal distinctiveness (generic, descriptive, suggestive, arbitrary/fanciful) test set forth in Abercrombie & Fitch Co. v. Hunting World, Inc., 537 F.2d 4 (2d Cir. 1976) (Friendly, J.) (generic, descriptive, suggestive, arbitrary/fanciful) because it was a "futile endeavor" to try to apply any of those labels to the mark. (The court resisted saying that Abercrombie could never be applied to a non-word mark, however.)

Instead, the court applied the distinctiveness test from Seabrook Foods, Inc. v. Bar-Well Foods Ltd., 568 F.2d 1342 (CCPA 1978), which is geared more toward design marks. The Seabrook test looks at whether the design is a common shape or form of ornamentation (as opposed to being unusual in its field), or is capable of being perceived as an indicator of source apart from any words it is used with. Applying Seabrook, the court held that so many others use designs similar to this one that it was not inherently distinctive.

The mark owner tried to establish secondary meaning by offering evidence of long usage, substantial sales revenue, and substantial advertising expenditures. But the 5th Circuit affirmed summary judgment of no secondary meaning because the evidence showed that the mark owner primarily used the mark as a form of ornamentation, along with word marks that were more clearly the main product identifiers. In other words, these other facts severed the inferential link the mark owner tried to make between this circumstantial evidence and the conclusion that the star design itself thereby acquired secondary meaning.

Tom

9th Circuit: Receipt of application, not issuance of registration certificate, prerequisite to copyright suit

2010-05-27T18:57:00.001-05:00

17 U.S.C. § 411(a) provides that "no civil action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made in accordance with this title." In Cosmetic Ideas, Inc. v. IAC/InteractiveCorp., No. 08-56079 (9th Cir. May 25, 2010), the 9th Circuit held that § 411(a) is satisfied when the Copyright Office receives a completed application, not when it actually issues a certificate of registration. This issue has split the circuits, with the 9th Circuit joining the 5th and 7th against the 10th and 11th.

6th Circuit Gives Victoria's Secret a Dilution Win Against Victor's Little Secret in Round 2

2010-05-20T10:25:00.001-05:00

In a fractured decision, the Sixth Circuit yesterday revisited the trademark dilution dispute between Victoria’s Secret and the Kentucky “adult” store, Victor’s Little Secret. V Secret Catalogue, Inc. v. Victor’s Secret Stores, Inc.¸, No. 08-5793 (6th Cir. May 19, 2010). The case had previously risen all the way up to the Supreme Court, which in 2003 held that Victoria’s Secret had failed to prove actual dilution under the old dilution law and remanded the case. In response, Congress quickly expanded the dilution law to cover “likelihood of dilution.”

In essence, the Sixth Circuit interpreted the revised law to create a rule that puts a finger on the scales of justice in favor of a mark owner when the junior user uses a mark that (1) creates an association with the senior user’s mark and (2) is used in connection with sex-related products. One judge in the majority called it a “rebuttable presumption” or a “res ipsa loquitur-like effect.” (Opinion of Merritt, J.) The other judge in the majority called it an “inference.” (Opinion of Gibbons, J.) The dissenting judge (Moore, J.) called it “wrong.”

The dissent noted that the only evidence in the record was that one army officer at a nearby base was offended by the junior user’s mark. The dissent explained that evidence that one person is offended by the junior user’s mark or commercial sex-related activities is not the same thing as evidence that the senior user’s reputation has been tainted. The dissenter noted that this paucity of likely reputational harm is especially significant where the evidence showed that the senior user (Victoria’s Secret) uses its mark in ways that relate to sex as well.

I am inclined to agree with the dissent—based on the facts sets forth in the opinion—on the failure of the plaintiff’s evidentiary showing here. I agree Congress intended to liberalize the dilution law by expanding it to be triggered by likely dilution. But I don’t think Congress intended that expansion to mean that there should be a presumption or inference in the absence of any evidence of likely harm.

Ninth Circuit enjoins unauthorized sale of “VW” badges on a marquee license plate

2010-05-10T18:54:00.001-05:00

This is a decision I think is best categorized as right decision, wrong reasoning. The declaratory judgment plaintiff in Au-Tomotive Gold Inc. v. Volkswagen of America, Inc., No. 08-16005 (9th Cir. May 6, 2010) sold several auto accessories displaying the VW design, including a “marquee” license plate with a VW design badge mounted on it. It purchased the badge from authorized VW dealers, altered them so they could be stuck on a marquee license plate, then stuck them on the plate and sold them. At the point of sale, Au-Tomotive Gold used a disclaimer stating that the plates were not VW plates.

In a previous decision, the 9th Circuit held that these products would likely create post-sale confusion among non-purchasers who see the license plate—which did not themselves in any way identify Au-Tomotive Gold as the manufacturer. But the 9th Circuit remanded for consideration of the “first sale” defense.

This time around, a different panel of the 9th Circuit affirmed the district court’s rejection of the defense. It held that the first sale defense did not apply because post-sale, nonpurchasers viewing the license plate were likely to think it was a VW product. The Court seemed to distinguish—but did not explain why—cases where the re-seller simply repackaged the trademark owners goods and placed a label on the repackaged goods disclosing that they had been repackaged. The Court also cited, but stated it was not relying on, cases where a purchaser bought a trademarked good, altered it, and re-sold it without disclosing the alteration.

The Court also seemed quite concerned with Au-Tomotive Gold “free-riding” on the demand for VW emblems on marquee license plates.

To me, this is a puzzling and unsatisfying decision. If the first appeal turned on likelihood of confusion, and the remanded issue (first sale) also turned on the same finding, then why the remand? I think the court would have done better to rely on the cases it said it wasn’t relying on: those that hold that folks who materially alter trademarked goods can’t re-sell them under the original trademark. I guess the second panel was in a pickle because the first panel remanded on the wrong issue.

(Hat tip to Locke Lord associate Kathryn Barrett for alerting me to this decision)

Second Circuit gets rid of presumption of irreparable harm in copyright injunction cases

2010-04-30T16:32:00.001-05:00

The Second Circuit yesterday overruled prior precedent that provided for a presumption of irreparable harm in the preliminary injunction context in copyright cases. In Salinger v. Colting, No. 09-2878 (2d Cir. Apr. 29, 2010), the Second Circuit held that the Supreme Court’s decision in eBay, Inc. v. MercExchange, LLC, 547 U.S. 388 (2006)--in which the Supreme Court, in a patent case, rejected general or categorical rules favoring or disfavoring injunctions--was not limited to patent cases.

The new test for a preliminary injunction (in copyright cases in the Second Circuit) is now:

1. (a) likelihood of success on the merits; or

(b) sufficiently serious merits questions and the balance of hardships tipping decidedly in the movant’s favor;

2. a demonstration of likely irreparable harm;

3. consideration of the balance of hardships; and

4. confirmation that the public interest would not be disserved.

As to factor (2), the Court softened the blow to copyright holders, however, by hinting that courts could consider “historical tendencies” in past copyright cases in assessing the showing of irreparable harm. It will be interesting to see whether such “historical tendencies” will actually put litigants pretty close to where they were under the “presumption of irreparable” standard.

While the Court was careful to limit its holding to copyright cases, nothing I could find in the opinion suggested that the Second Circuit would not also extend eBay to trademark cases once the issue is squarely presented to it. However, in what might have been an instance of purposeful judicial foreshadowing, the Court noted that historically courts have tended to find “possible marketplace confusion” as an example of irreparable harm. Hmmm.

Ninth Circuit Decision on the line between descriptiveness and suggestiveness

2010-04-27T18:38:00.001-05:00

In Zobmondo Entertainment, LLC v. Falls Media, LLC, No. 08-56831 (9th Cir. Apr. 26, 2010), the 9th Circuit reversed the district court’s ruling, on summary judgment, that the registered mark “WOULD YOU RATHER . . . ?” for books and games was merely descriptive and that its registration should be canceled.

While largely fact-specific, the 9th Circuit opinion is notable in a least a couple of respects. First, it discusses three different tests that could be employed to determine whether a challenged mark is suggestive or descriptive: the “imagination” test, which focuses on how much thought consumers need, when confronted with the mark, to make conclusions about the nature of the product; the “competitors’ needs” test, which focuses on the extent to which, if any, competitors need to use the mark to describe their competing products; and the “extent of use” test, which looks at the frequency with which competitors actually use the mark on similar merchandise. (To me, there looks to be little difference between the “competitors’ needs” test and the “extent of use” test.)

Second, the court gave substantial weight to the fact that the PTO registered the mark without requiring proof of secondary meaning.

Finally, the court highlighted the challenger’s citation of statements by people associated with the registrant that seemed to indicate that they thought “WOULD YOU RATHER . . . ?” was a good mark for the precise reason that it described the subject of the book and the game. Good evidence to look for in discovery.

Three recent decisions re: architectural copyrights; a stolen domain name; and copyright/trade secret ownership in the employment context

2010-04-08T18:18:00.001-05:00

While interesting, the following three recent decision don’t seem to warrant extended analysis, so here are the TV Guide summaries:

2d Circuit Throws Out Architectural Copyright Claim on 12(b)(6) Motion Based on Designs Appended to Complaint

Don’t plead yourself out of court. That may be the lesson of Peter F. Gaito Architecture, LLC v. Simone Dev. Corp., No. 09-2613-cv (Apr. 7, 2010). The plaintiff copyright owner alleged that a developer infringed his copyrighted plans, and attached depictions of the designs to its complaint. Assuming for purposes of argument that copying occurred, the Second Circuit compared the two designs for substantial similarity. Concluding that the depictions demonstrated that only general ideas and concepts—not protectable expression—was misappropriated, the court affirmed dismissal of the case. Of course, not attaching the depictions of the designs to the complaint would likely have only postponed the dismissal to the summary judgment stage, but it may have increased leverage for some kind of monetary settlement in the meantime.

9th Circuit Grapples with Conflict of Laws Issue in Domain Name Conversion Case

In an intensely-fact specific case involving a claim that the defendants converted the plaintiff’s domain name registration (replete with a bad guy in the PRC, an innocent purchaser for value defense, and a cameo appearance by Ralph Lauren), the 9th Circuit in CRS Recovery, Inc. v. Laxton, No. 08-17306 (Apr. 6, 2010), engaged in a lengthy discussion of the policies underlying the respective laws of Virginia and California to determine a tricky and potentially outcome-determinative choice-of-law issue.

9th Circuit Analyzes Employee/Independent Contractor Issue to Decide Who Owns Copyrights and Trade Secrets in Computer Software Source Code

In JustMed, Inc. v. Byce, No. 07-35861 (Apr. 5, 2010), the Ninth Circuit went through a lengthy, fact-intensive analysis of the often-litigated issue of whether the author of copyrightable material or creator of a trade secret was an employee or independent contractor of a company claiming that it owned the individual’s work. The case is interesting in that it seems to somewhat alter the traditional weighing of the factors relevant to that determination to fit the context of small, non-traditional, techie start up companies.

2d Cir. decision rejecting Tiffany's allegations that eBay liable for sale of counterfeit goods

2010-04-01T13:27:00.002-05:00

The Second Circuit today affirmed judgment in favor of eBay and against Tiffany in Tiffany’s much-publicized case against eBay for permitting the sale of counterfeit Tiffany products in its on-line auctions. The case involved significant rulings in the area of (1) buying “sponsor links” on Internet search engines using others’ trademarks, and also (2) as to the liability of an on-line auction site for hosting sales of counterfeit goods.

In Tiffany (NJ) Inc. v. eBay Inc., No. 08-3947 (2d Cir. Apr. 1, 2010), the Second Circuit first rejected Tiffany’s claim of direct trademark infringement. Although eBay bought Yahoo! sponsor ads/links using Tiffany’s trademark, the court found that this was a nominative fair use of the Tiffany mark, because Tiffany goods were in fact available on eBay.

The Second Circuit next rejected Tiffany’s claim that eBay contributorily infringed the Tiffany marks by facilitating the sale of counterfeit goods at auction. Citing the Supreme Court’s familiar standard from Inwood v. Ives, 456 U.S. 844 (1982), and decisions from other circuits concerning flea markets, the Second Circuit first ruled that eBay exerted substantial enough control over the auctions on its site to potentially be subject to contributory liability. But because eBay effectively stopped known instances of counterfeiting pursuant to its various programs designed to stop sale of counterfeit and infringing goods, the Second Circuit ruled that eBay did not run afoul of the Inwood v. Ives prohibition against continuing to permit sales of known counterfeit items or permit known counterfeiters to continue to list on eBay.

Tiffany pointed to evidence that nearly three-quarters of its goods sold on eBay are counterfeit. The Second Circuit, however, rejected the notion that generalized knowledge that many counterfeit items are being sold can trigger contributory liability under Inwood v. Ives, particularly in view of the substantial anti-counterfeiting steps that eBay has implemented. In so doing, the Second Circuit admitted that it was adopting a somewhat narrow reading of the Inwood v. Ives standard of continued support in the face of a “reason to know” of infringing activity. The court also noted that such generalized knowledge does not rise to the culpable level of “willful blindness.”

The court also quickly dispatched Tiffany’s trademark dilution claim (because eBay did not itself use the Tiffany marks).

Finally, the court remanded Tiffany’s claim of false advertising for the district court to determine whether any of eBay’s ads were implicitly misleading as to the nature of the Tiffany goods that were listed on eBay.

9th Cir. decision re enforcement of judgment by levying on and auctioning off domain names

2010-02-26T17:14:00.003-06:00

In Office Depot, Inc. v. Zuccarini, No. 07-16788 (9th Cir. Feb. 26, 2010), the Ninth Circuit held Office Depot’s money judgment against notorious cybersquatter could be enforced by levying upon and selling off his domain names.

VeriSign, the registry for all “.com” and .net” domain names, is located in the N.D. Cal. The 9th Circuit permitted an enforcement procedure comprising: (1) registering the judgment in the N.D. Cal.; and (2) moving for the appointment of a receiver, who would then (3) obtain the domain names from the VeriSign registry and sell them off at auction. In approving this procedure, the court held that domain names are “property” that can be levied upon under California law. The court further held that, for purposes of the quasi in rem jurisdiction that applied to such attachment proceedings, domain names are located wherever the registry or registrar is located.

Fed. Cir. holds government liable for copyright infringing stamp depicting Korean War Veterans Memorial

2010-02-26T10:17:00.001-06:00

In a fascinating and factually unique case that I won’t try to fully summarize, a 2-1 panel majority of the Federal Circuit held that the U.S. government is liable to the sculptor of the soldier figures in the government’s Korean War Veterans Memorial for copyright infringement based on a commemorative U.S. postage stamp bearing a photograph of the soldier figures. Gaylord v. United States, No. 2009-5044 (Fed. Cir. Feb. 25, 2010).

The sculptor was a subcontractor. The prime contractor for the Memorial had a contract with the government providing that government would own the copyrights in the end product and that the project was a work made for hire. The government paid the subcontractor/sculptor $775,000 to create the figures. The sculptor later registered copyrights in the figures.

The majority ignored the government contract because the parties (curiously) didn’t brief it, and ruled that: (1) the sculptor owned valid copyrights; (2) the stamp was not a fair use; and (3) the government was not a joint author because the only contributions made by the government’s designees were suggestions (i.e., uncopyrightable ideas). The majority remanded for a determination of damages—which will probably be substantial in light of the fact that the government sold $17 million worth of stamps.

In dissent, Judge Newman lambasted the majority for ignoring the contract and for ignoring a statute that provides that there is no right of action against the government for infringement of copyrights inuring in works created in service to the government (28 U.S.C. § 1498).

5th Circuit decision on "innocent infringer" damages reduction defense in copyright case

2010-02-25T13:51:00.000-06:00

The 5th Circuit recently whacked a defendant found liable for copyright infringement by downloading, and possibly sharing, 37 of the plaintiff’s copyrighted songs through a peer-to-peer file-sharing network. Maverick Recording Co. v. Harper, No. 08-51194 (5th Cir. Feb. 25, 2010).

The district court had entered summary judgment of infringement. The plaintiff requested minimum statutory damages of $750 per song under 17 USC § 504(c)(1), but the defendant argued that she was an innocent infringer and therefore should be liable only for the 17 USC § 504(c)(2) reduced amount of $200 per song. The district court found that the defendant’s testimony—that she was too young to understand that such free downloading and sharing constituted copyright infringement—created a trial issue.

The copyright owner accepted the $200 per song judgment, but reserved the right to appeal the innocent infringer issue if the infringer appealed. The infringer appealed.

Bad idea.

The Fifth Circuit affirmed the infringement finding and threw out the infringer’s weak due process argument (to paraphrase the defense: “$200 per song is unconstitutional given that I was young and naive”). The Fifth Circuit then found that the infringer’s "young and ignorant of the law" argument immaterial to the “innocent infringement” defense as well because the copyright owner put copyright notices on its “phonorecords” (e.g., CDs). Even though there was no evidence that the file-downloading infringer ever saw a CD, 17 USC § 402(d) prohibits the “innocent infringement” reduction where the infringer had “access” to the “phonorecord,” a point that the infringer failed to contest. Having stripped away the innocent infringer reduction, the Fifth Circuit remanded for entry of judgment for the amount the copyright owner originally requested: $750 per song.

11th Cir. decision on copyrightability of blank forms

2010-02-21T14:03:00.000-06:00

In Utopia Provider Sys., Inc. v. Plummer, No. 09-11160 (Feb. 19, 2010), the 11th Circuit addressed the test for determining the copyrightability of blank forms. At issue was a series of print and electronic forms developed for hospital emergency room treatment. The forms contained a detailed series of headings with blank spaces for a treating physician to input a patient's medical history, present symptoms, physical exam results, diagnosis and treatment decisions, and instructions. The more specific aspects of the forms were different for different problems.

The court first noted that blank forms are not copyrightable unless they convey information or original pictorial expression. Examples of non-copyrightable forms include baseball scorecards and check stubs. In contrast, diaries for "baby's first year" might be an example of a form that could be copyrightable. Because, in the court's view, the headings of the medical forms at issue did not convey any information, but simply called for the recordation of the information that any responsible physician would ask or note in such emergency room visits, the court held that the forms were not copyrightable.

Federal Circuit ruling on website-based trademark specimens

2009-12-30T17:08:00.001-06:00

In a mundane but useful decision, the Federal Circuit recently overturned the PTO’s “bright-line rule that a trademark specimen of use taken from a website must contain a picture.”

In In re Sones, No. 2009-1140 (Fed. Cir. Dec. 23, 2009), the specimen consisted of two webpage print-outs. One was a page from a website advertising a “charity bracelet” under the asserted mark "ONE NATION UNDER GOD™." There was no picture of the bracelet on the webpage, only a placeholder icon stating “Photo not available.” This webpage appeared to allow the user to click on an “Add to Cart” icon, indicating that the item could be ordered right off the website. The applicant also provided a sample webpage order form with the bracelet in the "cart."

The test that the Federal Circuit articulated in lieu of the website-picture requirement is that the website specimen “must in some way evince that the mark is ‘associated’ with the goods and serves as an indicator of source.” The court noted that while a picture is “an important consideration,” all relevant factors should be assessed, including whether the webpage specimen has a “point of sale nature,” whether the actual or inherent features of the product are recognizable from the textual description, and the use of the “™” symbol.

While the Court rejected the PTO’s “website-picture” requirement, the Court did not approve the specimen at issue, but instead remanded for a determination whether the specimen met the newly-articulated test.

2d Circuit Federal Trademark Dilution Act decision in Starbucks v. Charbucks dispute

2009-12-03T17:16:00.002-06:00

The Second Circuit today revived Starbucks' Federal Trademark Dilution Act (FTDA) claim against the mark CHARBUCKS, but affirmed a judgment, entered after a bench trial, dismissing Starbucks' federal infringement and New York state dilution claims.

In Starbucks Corp. v. Wolfe's Borough Coffee, Inc., No. 08-3331-cv (Dec. 3, 2009), the Second Circuit found that the district court erred in ruling against Starbucks on the FTDA claim when it held that the "similarity" factor in the FTDA claim requires that the accused mark be "substantially similar." Rather, the latest version of the FTDA (which was amended in 2005 to address the Supreme Court's interpretation of the FTDA in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003)), contains no such requirement, providing only that the courts assess only "the degree of similarity."

The Second Circuit's opinion contained a few more interesting statements, including:

"intent to capitalize on [the senior user's] reputation" is irrelevant to a federal infringement claim; only "intent to deceive" or "mislead" the public is relevant;
intent to create an association is the relevant type of intent for FTDA claims;
even if a product name sounds pejorative, that isn't necessarily a "tarnishing" use if the mark isn't marketed as a pejorative and the product is of high quality;
Unlike the current FTDA, New York dilution law does require "substantial similarity"; and
"Charbucks" was not a protected parody but an (unprotected) "subtle satire."

Unduly long 9th Circuit opinion on boundary between descriptive and suggestive marks

2009-11-17T15:10:00.003-06:00

In what struck me as an unusually long opinion, the 9th Circuit took on the difference between descriptive and suggestive marks. Lahoti v. VeriCheck, Inc., No. 08-35001 (9th Cir. Nov. 16, 2009) concerned a DJ brought by a previously-adjudicated cybersquatter concerning his registration of the domain name "vericheck.com." The district court found for the defendant, ruling on summary judgment that the mark VERICHECK was inherently distinctive and that the plaintiff acted in bad faith.

The 9th Circuit affirmed the finding of bad faith, but vacated the finding of inherent distinctiveness because the district court, in its view, relied in part on erroneous legal reasoning. In its long discussion, the 9th Circuit noted that it is proper for a court to weigh in favor of a finding of inherent distinctiveness that the PTO has allowed others to register the mark at issue for similar products without requiring a showing of secondary meaning.

7th Circuit decision on who gets to "copyright" derivative works

2009-11-09T19:02:00.000-06:00

Here's a good lesson in how to bite the hand that previously fed you.

In Schrock v. Learning Curve Int'l, Inc., No. 08-1296 (7th Cir. Nov. 5, 2009), the owner of copyrights in toy characters licensed a company to make the toys. The toy maker then licensed a photographer to take photos of the toys for marketing purposes. When the toymaker stopped using the photographer, the photographer registered the photos and sued the character owner and the toymaker for copyright infringement for continuing to use the photos. The district court dismissed the photographer's case, saying that the photographer needed permission to "copyright" the photos.

The 7th Circuit reinstated the photographer's claim. Assuming that the photos were derivative works, the 7th Circuit held a couple of things. First, it held that derivative works are subject to the same minimal originality requirements as any other type of work and the photos of the toys were original enough for copyright protection as derivative works.

Second, it noted that, to sue for infringement, the person creating the derivative work must have both (a) the permission of the owner of the copyright in the underlying work to create the derivative work (not a problem in this case) and (b) the right to "copyright" the derivative work. As to (b), however, the 7th Circuit disagreed with the district court, noting that copyright law normally vests the copyright in the derivative work in the creator of the derivative work unless the owner of the underlying copyright contractually alters this ownership arrangement.

Since the record was inconclusive on whether the arrangement was contractually altered, the court remanded the case.

2d Circuit decision allowing consumer class action alleging Walker Process antitrust claim to go forward

2009-10-16T14:42:00.002-05:00

Today the Second Circuit reversed the dismissal of a Walker Process antitrust claim brought against prescription drug sellers whose patent on the drug was previously held unenforceable.

It's a long (but interesting) decision, so I'll take my shot at a TV Guide®-type summary. First, the Court held that the consumer class has antitrust standing. In part the Court based this on the fact that type of damage the consumers sustained -- overcharging -- would go unremedied if only competitors could bring this type of action. Second, the Court held that the class's complaint satisfies both rule 9(b) and Iqbal. Both discussions are informative.

The case is In re: DDAVP Direct Purchaser Antitrust Litigation, No. 06-5525 (2d Cir. Oct. 16, 2009).

5th Circuit (in Unpublished Opinion) Says Strength of Junior User’s Mark May be Relevant in Reverse Confusion Analysis

2009-09-30T17:01:00.001-05:00

Seemingly approving of other circuits’ holdings that, in a reverse confusion case, the strength of the junior user’s mark is relevant, the 5th Circuit vacated summary judgment in the reverse confusion case of The Great Amer. Rest. Co. v. Domino’s Pizza LLC, No. 08-40654 (5th Cir. Sept. 30, 2009). The court designated its short, four-page opinion as “unpublished,” however. While unpublished opinions can be cited pursuant to Fed. R. App. P. 32.1, the 5th Circuit’s local rule 47.5.4 states that its unpublished opinions “are not precedent.” So it’s questionable how much weight any court might give it.

I believe this is the first time that the 5th Circuit has mentioned the “reverse strength” concept applying in a reverse confusion case. Off the top of my head I know that the 3d and 9th Circuits also take this view (the 5th Circuit cited only the 3d Circuit’s decision in A&H Sportswear, Inc. v. Victoria’s Secret Stores, Inc., 237 F.3d 198 (3d Cir. 2000)). The court did not address, however, whether the strength of the senior user’s mark remains relevant (or how) in the likelihood of reverse confusion calculus.

6th Circuit decision on IP license transfers through intra-corporate mergers

2009-09-25T19:12:00.002-05:00

The Sixth Circuit today held that a copyright (or patent) license that expressly provides that it is non-assignable or non-transferrable is breached when (1) the licensee merges with its corporate sibling entity, (2) the licensee is not the surviving entity, and (3) state law provides that the surviving entity owns all the assets of the constituent entities.

The court noted that even if the license hadn’t expressly addressed assignability or transferability, federal common law would have led to the same result because its default rule prohibits transfer of a patent or copyright license without authorization.

The case is Cincom Systems, Inc. v. Novelis Corp., No. 07-4142 (6th Cir. Sept. 25, 2009).

Couple of Marginally Interesting TM Decisions (9th Cir. and Fed. Cir.)

2009-09-21T15:28:00.001-05:00

Hey, They Copied My Product Idea and Owe Me Mega-$$

First, a Ninth Circuit decision dealing with the familiar and usually unsuccessful case of someone claiming that a defendant copied their idea for what ultimately became a tremendously successful product. At issue in Art Attacks Ink, LLC v. MGA Entertainment Inc., No. 07-56110 (9th Cir. Sept. 16, 2009) were the popular line of BRATZ dolls. The court shot down the plaintiff’s copyright claim because the plaintiff had insufficient evidence of copying or access by the defendants. The plaintiff’s trade dress claim foundered on the shoals of inadequate proof of secondary meaning.

Numbers as Secondary Trademarks

Hidden in the middle of the patent decision in Vita-Mix Corp. v. Basic Holding, Inc., No. 2008-1479 (Fed. Cir. Sept. 16, 2009), was the Federal Circuit’s discussion of whether the asserted trademark—here, the numerical designation 5000—functioned as a trademark or merely as a “grade designation.” The plaintiff used the number in the mark “Vita-Mix® 5000,” to distinguish it from the plaintiff’s previous products, the “Vita-Mix® 3600” and “Vita-Mix® 4500.” Given that the plaintiff didn't use the number apart from the mark “Vita-Mix® 5000,” and in light of plaintiff’s concession that the number served only to differentiate from the two previous “Vita-Mix®” products, the Federal Circuit held that "5000" reflected only the “style or grade” of product and possessed neither inherent nor acquired distinctiveness.

Commentary: The Vita-Mix case touches upon, but doesn’t really discuss, an issue that has always intrigued me: the tension between the numbers=style/grade “presumption” (if you can call it that) and the principle that a product can bear more than one trademark. Think, for example, whether the numbers in the following designations are trademarks or mere style/grade designations: BMW 530, BOEING 767, MITCHELL 300. There are probably circumstances at which a number used in this manner becomes a separately protectable trademark, but I’ve never had the opportunity to research exactly where that line is drawn.

6th Circuit decision affirming dismissal of TM infringement complaint under rule 12(b)(6)

2009-09-03T18:35:00.003-05:00

In a decision with potentially important procedural ramifications, the 6th Circuit today affirmed the rule 12(b)(6) dismissal of a trademark infringement complaint for failure to state a claim.

In Hensley Mfg., Inc. v. ProPride, Inc., No. 08-1834 (6th Cir. Sept. 3, 2009), the plaintiff alleged it was the owner of the HENSLEY mark, which it purchased from Jim Hensley when it purchased Hensley’s trailer hitch business. Jim Hensley then started working with a competing company (ProPride). At ProPride, Hensley designed a competing trailer hitch, and to promote it, ProPride created some print advertisements and webpages that talked about “the Jim Hensley Hitch Story,” described Jim Hensley’s history of designing trailer hitches at Hensley Mfg., and touted how he has now designed an even better hitch at ProPride. The ads and webpages all contained a disclaimer that Jim Hensley is no longer affiliated with Hensley Mfg. The complaint attached the ads and print-outs of the webpages.

The district court dismissed the complaint under rule 12(b)(6) finding that the allegations and attachments showed that the fair use defense applied as a matter of law.

The 6th Circuit affirmed. The court held that it need not get into the likelihood of confusion factors because the complaint and its attachments showed, as a matter of law, that the word “Hensley” was not being used as a trademark (i.e., an indicator of source). Examining the attachments closely, the court held that they conclusively demonstrated instead that the name “Hensley” was being used lawfully solely to refer to the individual accomplishments and reputation of Jim Hensley, and the attached ads and webpages did not create a likelihood of confusion as to source.

The 6th Circuit also expressly approved of the district court’s having based the dismissal on the “fair use” defense, even though, by first moving to dismiss the complaint, the defendants hadn’t even pleaded it yet. The 6th Circuit reasoned that there’s nothing wrong with dismissing a complaint where the allegations conclusively establish an affirmative defense as a matter of law.

IMPLICATIONS: One of the lessons here might be to be careful not to plead yourself out of court. Specifically, it might be useful to consider whether the complaint in this case could have been dismissed under rule 12(b)(6) if the plaintiff hadn’t attached copies of the offending ads and webpages. On the other hand, the 6th Circuit referenced at the outset the (arguably heightened) “plausibility” pleading standard in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), although it did not ultimately appear to rest the dismissal in any significant way on the “implausibility” of the factual allegations in the complaint itself. So it may conversely be useful to consider if there is such a thing as a trademark complaint that is too bare-boned. At minimum, however, in any trademark case where a plaintiff is considering unusually detailed factual allegations and/or attaching copies of the allegedly infringing uses to the complaint, the pleader would do well to consider whether the pleading would survive the sort of analysis the 6th Circuit used here.

9th Circuit decision on "tacking" doctrine in context of an evolving trademark design

2009-08-25T09:59:00.003-05:00

The Ninth Circuit yesterday decided an interesting case involving the concept of “tacking” the use of one form of a trademark onto another. In One Industries, LLC v. Jim O’Neal Distributing, Inc., No. 08-55316 (9th Cir. Aug. 24, 2009), the trademark owner claimed that the defendant’s stylized letter “O” infringed its stylized “O”. Since the trademark owner’s most recent stylized “O” was closest to the defendant’s stylized “O” but was also adopted after the defendant adopted its stylized “O,” the trademark owner tried to “tack” its junior stylized “O” onto its more senior stylized “O”s.

The 9th Circuit held that tacking doctrine is extremely strict—so strict that it wouldn’t allow the trademark owner to tack the 2003 “O” onto the older “O”s because they did not create the same, continuing commercial impression. (Sorry, I can't figure out how to upload images of the O's so you can see them, but they're in the opinion).

Having rejected tacking, the court then compared the trademark owner’s 1997 “O” to the defendant’s 1999 “O”.*

The 9th Circuit held that, in the absence of actual confusion, and because the “O” field was crowded with other stylized “O”s, these two “O”s were too different to give rise to a likelihood of confusion.

* Interestingly, the court did not explain why it was allowing the trademark owner to assert infringement based on a mark it abandoned in 2003. I mean, shouldn't the Defendant, if anyone, have been the one asserting that the Plaintiff moved closer to it and was, as a result, the infringer??

9th Circuit decision giving broad interpretation to copyright venue statute

2009-08-16T13:28:00.003-05:00

Small law firm with purely local practice in S.D. Cal. copies the “elder law” section of a Northern California firm’s website. Northern California firm sues for copyright infringement in N.D. Cal.

Venue proper?

Yup.

And if you’re not asleep yet and are interested in why, I try below to summarize the decision.

In a 2-1 decision, the 9th Circuit recently took a broad view of the copyright venue statute, 28 U.S.C. § 1400(a). Section 1400(a) provides that venue is proper where the defendant “resides or may be found.” So how is it that a small San Diego firm “resides or may be found” in Northern California?

Under 9th Circuit precedent, the copyright venue inquiry is the same inquiry as for personal jurisdiction. The 9th Circuit test for specific personal jurisdiction focuses on whether the defendant “purposefully directed” his activities at the forum or a resident. That, in turn, requires use of the three-part “Calder effects” test. See Calder v. Jones, 465 U.S. 783 (1984) ((1) intentional act (2) expressly aimed at forum (3) causing known, likely harm in the forum). While not crystal clear, prior precedent in the 9th Circuit seemed to indicate that “express aiming” requires something more than an intentional act causing harm to a known resident of the forum.

The majority thought there was “something more” in this case because the S.D. Cal. law firm “individually targeted” the N.D. Cal. law firm for the purpose of competing in the same area of law, and possibly confusing potential clients about who authored the text at issue. The dissent thought that the majority’s analysis conflated the “express aiming” part of the Calder effects test with the “known likely harm” part.

The dissent pointed to prior 9th Circuit precedent that held that if the defendant isn’t targeting potential clients in the forum, then there’s no “express aiming.” And here, the defendant was targeting only San Diego clients.

The case is Brayton Purcell LLP v. Recordon & Recordon, No. 07-15383 (9th Cir. Aug. 5, 2009).

4th Circuit decision on “public use doctrine”

2009-07-29T22:36:00.002-05:00

Public use doctrine concerns whether a company can acquire trademark rights in a mark it doesn’t use, but instead is a nickname by which the public refers to it or its goods and services. That’s how the term “Coke” came to be a trademark of Coca-Cola. But the plaintiff in George & Co. v. Imagination Entertainment Ltd., No. 08-1921 (4th Cir. July 27, 2009) didn’t fare as well as Coca-Cola did in days gone by.

George had used the term LEFT CENTER RIGHT for a dice game in the 1980s, but then abandoned that mark in favor of its abbreviation LCR. When the defendant later began using LEFT CENTER RIGHT, George sued. Sensing defeat if it asserted only LCR, George tried to claim that, even though it stopped using LEFT CENTER RIGHT, the public still used that term to refer to George’s dice game.

The 4th Circuit rejected the argument. It held that public use doctrine should be narrowly construed to apply only where: (1) the formal mark that is the object the public nickname is well-known (e.g., COCA-COLA or BUDWEISER); and (2) the nickname “adds distinctiveness” to the formal mark (e.g., COKE or BUD). Applying these principles to the facts in the case, the 4th Circuit held that LCR wasn’t well-known and that simply elongating it to LEFT CENTER RIGHT didn’t add to its distinctiveness.

(There’s also a lengthy and unremarkable discussion of the likelihood of confusion analysis.)

Federal Circuit holds HOTELS.COM generic and refuses registration

2009-07-29T22:31:00.003-05:00

The Federal Circuit continued what some may consider a stubborn refusal to acknowledge how modern-day business is done over the Internet by holding the mark HOTELS.COM generic and refusing to allow it to be registered as a trademark.

In In re Hotels.com, L.P., No 2008-1429 (Fed. Cir. July 23, 2009), the applicant argued, to no avail, that it was not a hotel, but instead provided travel related information and travel agency services. The Federal Circuit thought that since a large part of those services involved hotels, the services were close enough to the name to be generic. The Federal Circuit also stuck by the PTO’s consistent policy that adding “.com” to a generic name doesn’t make the generic name into a trademark. For evidentiary reasons, the Federal Circuit also discounted several consumer affidavits and a survey for evidentiary showing that 76% of respondents thought HOTELS.COM was a brand.

Some (maybe a lot) may argue that this decision ignores that Internet-savvy consumers may increasingly view designations in the form “product category.com” as brand names for services facilitating commerce in that product category. But the question may not be ripe for reconsideration by the en banc court until presented in a case avoiding the evidentiary shortcomings identified in this one.

11th Circuit decision on corporate domain name renewal policies and "bad faith" element of cybersquatting case

2009-07-29T22:29:00.002-05:00

In an interesting decision, the 11th Circuit ruled that 3M did not exhibit bad faith in continuing to renew a domain name that they did not use and which consisted of a trademark they previously abandoned. In Southern Grouts and Mortars, Inc. v. 3M Co., No. 08-15850 (11th Cir. July 23, 2009), the plaintiff really wanted 3M’s “diamondbrite.com” domain name. Even though it wasn’t using it, 3M refused to sell it to Southern Grouts, so Southern Grouts sued for cybersquatting under the ACPA (15 U.S.C. § 1125(d)).

3M previously acquired the DIAMOND BRITE mark and the domain name from another company, but quickly stopped using the mark, and a short time later stopped displaying content on the “www.diamondbrite.com” website. The PTO in due course cancelled 3M's DIAMOND BRITE registrations for failure to show continuing use. 3M kept renewing the domain name, however, for two reasons: (1) it was concerned that someone would pick it up and use it in a manner that could be confused with 3M’s unrelated DIAMOND GRADE mark; and (2) it had a corporate policy of continuing to renew its registered domain names indefinitely unless there was an explicit corporate decision not to.

The 11th Circuit held that on these facts, 3M could not be held to have acted in bad faith, a necessary element of an action under the ACPA.

11th Circuit decision on ACPA (i.e., cybersquatting) damages

2009-07-26T12:49:00.002-05:00

The Eleventh Circuit recently held that statutory damages under 15 U.S.C. § 1117(d) for violations of the Anticybersquatting Consumer Protection Act (ACPA), 15 U.S.C. § 1125(d)):

are designed to punish cybersquatters and deter future violations; and, as such
may be ordered in the absence of any actual damages; and
are not duplicative of any actual damages awarded under 15 U.S.C. § 1117(a) for infringement or unfair competition.

The case is St. Luke’s Cataract and Laser Institute. P.A. v. Sanderson, No. 08-11848 (11th Cir. July 9, 2009).

9th Circuit TM decision: standards for preliminary injunction ordering product recall

2009-07-26T12:44:00.003-05:00

The 9th Circuit recently decided that a preliminary injunction ordering a recall of infringing product should not be ordered based simply on a showing that the four traditional preliminary injunction factors favor an injunction. Rather, the court must in addition consider the following additional factors: (a) whether the infringement was willful or intentional; (b) whether the risk of confusion and injury to the trademark owner outweighs the burden of a recall; and (c) whether there is a substantial danger to the public due to the infringing activity.

Marlyn Nutraceuticals , Inc. v. Mucos Pharma GMBH, No 08-15101 (9th Cir. July 2, 2009), concerned competing sales of an enzyme-based dietary supplement. The district court ordered a recall based only on an assessment of the four traditional preliminary injunction factors: (1) likelihood of success; (2) irreparable harm; (3) balance of harms favoring the movant; and (4) the public interest. But the 9th Circuit held that a preliminary injunction ordering a recall goes beyond preservation of the status quo. Instead, a recall constitutes a “mandatory” injunction, which requires an additional showing. In the context of a trademark infringement case, the 9th Circuit, agreeing with a prior 3d Circuit decision, held that district courts must consider the three additional factors set forth above. In particular, the 9th Circuit noted that if “the district court makes a finding that the infringing product causes a substantial risk of danger to the public, it should order a recall.”

Interestingly, the 9th Circuit also noted that irreparable harm may be presumed from a showing of likelihood of success, a position that other courts have suggested is at odds with the Supreme Court patent injunction decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006).

8th Circuit: Intervening receipt of "incontestability" status defeats collateral estoppel in renewed trademark suit

2009-06-28T16:16:00.005-05:00

The 8th Circuit recently handed down a decision holding that collateral estoppel did not bar a second trademark suit between the parties when, in between the two suits, the plaintiff received § 15 incontestability. The case concerned a unique fact situation that probably won’t pop up in any dispute we’ll ever see, but in case you’re still interested, I summarize it below.

Here’s the chronology in B & B Hardware v. Hargis Industries, Inc., No. 07-3866 (8th Cir. June 22, 2009): Plaintiff registered its mark. Defendant then petitioned the TTAB to cancel it. A short while later—and before Plaintiff’s registration qualified for incontestability status—Plaintiff sued Defendant for infringement in SUIT 1. The TTAB subsequently stayed Defendant's cancellation proceeding. A jury then found against Plaintiff in SUIT 1, expressly finding that its mark was merely descriptive and lacked secondary meaning. When the TTAB matter resumed, however, the TTAB wouldn’t let Defendant assert mere descriptiveness/lack of secondary meaning. It said it was too late to add that claim (which apparently was not one of the initial grounds for cancellation), and dismissed Defendant’s cancellation petition. Later, Plaintiff’s registration achieved incontestable status under § 15. Plaintiff then sued Defendant for infringement again in SUIT 2.

Defendant argued that collateral estoppel barred SUIT 2 because the jury in SUIT 1 previously held that the mark was merely descriptive and lacked secondary meaning. The 8th Circuit, however, disagreed. It held that the receipt of incontestability status constituted a “significant intervening factual change”—and reflected something more than just “the mere passage of time”—thus allowing PLAINTIFF to escape the clutches of collateral estoppel.

8th Circuit decision on laches and "progressive encroachment"

2009-06-28T16:16:00.004-05:00

Did the 8th Circuit recently make “progressive encroachment” more of a formalistic, procedural headache than it had been? That’s how its decision in Champagne Louis Roederer v. J. Garcia Carrion, S.A., No. 08-2907 (8th Cir. June 24, 2009), seemed to me.

Roederer makes the famous CRISTAL high-end champagne; Carrion and its predecessor (“Carrion”) make a much cheaper Spanish sparkling wine under the marks CRISTALINO and CRISTALINO JAUME SERRA. There were plenty of times when Roederer had been aware of CRISTALINO. Roederer opposed Carrion’s attempts to register one or more of these marks in Spain in 1989, in Colombia in 1991, and in the U.S. in the mid-1990s. Roederer also saw an affidavit in another case in 1995 from which it learned that a Cost Plus store in California was stocking CRISTALINO. In 2002, Carrion filed another application for CRISTALINO in the U.S., and Roederer filed a TTAB opposition.

But Roederer didn’t file a district court action until 2006. The district court dismissed the lawsuit based on laches because it found that Roederer learned in 1995 that Carrion was selling CRISTALINO in the U.S., and by that time Carrion was selling as many bottles of CRISTALINO as Roederer was selling of CRISTAL.

The 8th Circuit reversed. It held that progressive encroachment can alter the date that a laches defense begins to run (which other courts have noted). But where the 8th Circuit seemed (at least to me) to go further was in holding that, where progressive encroachment is asserted, the date runs from the time that the trademark holder first possesses an “actionable and provable” claim. It then said that this analysis requires an assessment of all of the likelihood of confusion factors at the time that the plaintiff first received notice of the defendant’s infringing use (in this case, the court assumed that was 1995, when Roederer found out about the California Cost Plus sales). The 8th Circuit reversed and remanded because the district court hadn’t made that full assessment.

My two cents: This test just seems too formalistic. Also, it would almost necessarily seem to have the effect of unduly lengthening and complicating trials. The parties will have to prove infringement at two times: the present time, and whatever the laches date is alleged to be. I have always conceptualized progressive encroachment as focusing on a less rigid analysis. Courts would look at objective and subjective facts concerning what the infringer had been doing and how confusing and damaging that was, and then see whether there was any substantial and relatively sudden change to the nature of the use or the extent of damage, as opposed to the simple results of natural growth in the marketplace. If it was just natural growth, laches began running at the earlier date; if there was a big, sudden change, laches began running at the later date. My view, of course, could be wrong, but in any event be forewarned about how the 8th Circuit apparently now analyzes progressive encroachment allegations.

2d Circuit: Re-sale of goods whose UPC codes are removed or altered can constitute TM infringement

2009-06-28T16:15:00.004-05:00

Similar to the 10th Circuit case I posted recently, the 2d Circuit recently issued a decision concerning whether re-sale of materially altered goods under the original trademark can constitute trademark infringement.

In Zino Davidoff SA v. CVS Corp., No. 07-2872 (June 19, 2009), the plaintiff manufactures high-end fragrances. It sells primarily through authorized dealers. Its quality control and anti-counterfeiting programs rely in large part on UPC codes in the bottom of each product. The various information embedded in the codes permits Davidoff to control quality by being able to trace back any defective product so it can implement effective recalls, etc. The unique numbering in the codes also permits Davidoff to detect counterfeit products, since counterfeiters either don’t use such codes or their replicas of the codes don’t conform to the format of the Davidoff codes.

The plaintiff caught CVS selling the products with the UPC codes removed, and sued for trademark infringement, obtaining a preliminary injunction.

The Second Circuit affirmed the injunction, holding that -- regardless of whether the goods were genuine or counterfeit, and regardless of whether the goods are of lesser quality than Davidoff’s product -- the re-sale of these goods with the Davidoff UPC code removed interfered with Davidoff’s legitimate quality control and anti-counterfeiting programs. The court also noted that the removal of the UPC codes was detectable by consumers of such luxury goods, but its decision did not appreciably rely on this ground for sustaining the injunction.

10th Circuit: Re-sale of materially-altered original goods not immunized by first sale doctrine from Lanham Act liability

2009-06-28T16:14:00.001-05:00

The 10th Circuit recently handed down an important trademark decision concerning “first sale doctrine” and non-genuine goods. In Beltronics USA, Inc. v. Midwest Inventory Distribution, LLC, No. 07-3340 (10th Cir. April 9, 2009), the court held that:

(1) first sale doctrine does not immunize a re-seller of goods that are materially different from genuine goods from Lanham Act liability (no biggie here); and

(2) differences in warranty or service terms can constitute such a material difference (this was the important part).

Beltronics makes radar detectors. It had only two authorized distributors, but these two companies sometimes sold to other (unauthorized) companies for re-sale. The authorized distributors stripped Beltronics’ serial number from the product (or placed a phony serial number label on the product) before shipping to the unauthorized re-sellers. The unauthorized products were then sold on eBay. Beltronics’ warranty policy precludes coverage for detectors not bearing the original serial number. A few customers returned detectors bought on eBay for warranty service but Beltronics told them the goods weren’t covered. The customers were angry and blamed Beltronics for deceiving them.

In addition to the holdings mentioned above, the court noted that it was theoretically possible for such re-sellers of materially-different goods to avoid liability if they disclosed the differences in a manner sufficient to prevent confusion. But the 10th Circuit upheld the district court’s factual finding that the instances of actual confusion here (and resulting loss of goodwill) indicated that the defendants’ disclosures in this case were inadequate.