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).
Showing posts with label 2d Cir. trademark. Show all posts
Showing posts with label 2d Cir. trademark. Show all posts
Thursday, November 10, 2011
Wednesday, August 24, 2011
Patsy's Italian Restaurant: The most complicated trademark litigation in history?
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.
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.
Thursday, October 21, 2010
2d Circuit decision on "false endorsement" and unusual counterfeit-related unfair competition claims
The 2d Circuit today seemed to take a fairly forgiving view of what types of disputes are covered by the Lanham Act. The case is Famous Horse, Inc. v. 5th Ave. Photo Inc., No. 08-4523-cv (2d Cir. Oct. 21, 2010). Famous Horse is a clothing retailer. 5th Avenue Photo is a clothing wholesaler. Famous Horse bought what it thought were genuine “Rocawear” jeans from 5th Avenue Photo, but stopped buying them after determining they were counterfeit. 5th Avenue Photo, however, continued selling the counterfeit jeans to retailers competing with Famous Horse and also advertising that Famous Horse was a “satisfied customer.”
False Endorsement Claims – the 2d Circuit upheld Famous Horse’s “false endorsement” claims under both sections 32 and 43(a) of the Lanham Act (15 U.S.C. §§ 1114(1)(a) & 1125(a)(1)). It held that neither section’s “use in commerce” requirement requires the defendant to have attached the plaintiff’s mark to the goods themselves when the false endorsement related the defendant’s services.
Interesting Unfair Competition Claim – Famous Horse also alleged unfair competition under section 43(a) because 5th Avenue Photo sold counterfeit “Rocawear” jeans to Famous Horse’s competitors. Famous Horse alleged not only that it lost sales, but also that customers would view famous Horse as a price-gouger because the competing stores that 5th Avenue Photo sold to could then sell the counterfeit jeans for less than the genuine jeans sold by Famous Horse. 5th Avenue asserted that Famous Horse lacked standing because the parties weren’t competitors (Famous Horse is a retailer and 5th Avenue a wholesaler). The 2d Circuit rejected this argument, holding that there is no hard and fast rule in the 2d Circuit that, to have standing, the plaintiff be a retail competitor of the defendant, so long as the plaintiff demonstrates that it has a “reasonable interest” to be protected and a “reasonable basis” to think that the defendant is damaging that interest. The court held that Famous Horse’s allegations of injury adequately gave it standing to assert unfair competition under section 43(a).
False Endorsement Claims – the 2d Circuit upheld Famous Horse’s “false endorsement” claims under both sections 32 and 43(a) of the Lanham Act (15 U.S.C. §§ 1114(1)(a) & 1125(a)(1)). It held that neither section’s “use in commerce” requirement requires the defendant to have attached the plaintiff’s mark to the goods themselves when the false endorsement related the defendant’s services.
Interesting Unfair Competition Claim – Famous Horse also alleged unfair competition under section 43(a) because 5th Avenue Photo sold counterfeit “Rocawear” jeans to Famous Horse’s competitors. Famous Horse alleged not only that it lost sales, but also that customers would view famous Horse as a price-gouger because the competing stores that 5th Avenue Photo sold to could then sell the counterfeit jeans for less than the genuine jeans sold by Famous Horse. 5th Avenue asserted that Famous Horse lacked standing because the parties weren’t competitors (Famous Horse is a retailer and 5th Avenue a wholesaler). The 2d Circuit rejected this argument, holding that there is no hard and fast rule in the 2d Circuit that, to have standing, the plaintiff be a retail competitor of the defendant, so long as the plaintiff demonstrates that it has a “reasonable interest” to be protected and a “reasonable basis” to think that the defendant is damaging that interest. The court held that Famous Horse’s allegations of injury adequately gave it standing to assert unfair competition under section 43(a).
Monday, October 18, 2010
Challenging assignments of incontestable registrations (the "Stoly" decision)
I quickly read the "Stoly" case (Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l N.V., No. 06-3532-cv (2d Cir. Oct. 8, 2010)) when it came a little over a week ago but didn't write anything because I figured it was such a unique and complicated set of facts that, who cares?, really. But a colleague spurred me into more closely re-reading it, and I now see two larger legal points here.
First, where an incontestable registration has later been assigned, a challenge to the assignment is not precluded by section 1115(b)'s provision that incontestability is "conclusive evidence of . . . registrant's ownership of the mark" because where there's a dispute as to the validity of an assignment, an assignee is not necessarily the registrant. And where an assignee's rights are at issue, the recordation of the assignment at the PTO is only "prima facie evidence of execution" of the assignment. Thus, to tap into the "conclusive evidence of ownership" provided by incontestability, an assignee whose assignment is challenged must first prove up a valid assignment.
Second, while the "antecedent question" of the validity of the assignment might be a question of state or even foreign law, federal courts have jurisdiction to hear disputes as to the validity of assignment of a federal registration under the Lanham Act if the challenger specifically seeks any of the remedies provided by the Act.
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.
Thursday, April 01, 2010
2d Cir. decision rejecting Tiffany's allegations that eBay liable for sale of counterfeit goods
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.
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.
Thursday, December 03, 2009
2d Circuit Federal Trademark Dilution Act decision in Starbucks v. Charbucks dispute
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:
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."
Sunday, June 28, 2009
2d Circuit: Re-sale of goods whose UPC codes are removed or altered can constitute TM infringement
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.
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.
2d Cir. decision allowing Lanham Act complaint against Google's "Adwords" program
The Google programs allow companies to “buy” keywords that may consist of competitors’ trademarks and, when an Internet user searches Google for that keyword/trademark, have Google’s search result page display an ad and a link for the purchaser’s website.
Rescuecom Corp. v. Google Inc., No. 06-4881 (2d Cir. Apr. 3, 2009) held that the district court erred in concluding that the complaint failed to state a claim because Google didn’t “use” the keyword/mark “in commerce.” Rejecting this reasoning, the Second Circuit held that the complaint alleged that Google indeed uses the mark in commerce by displaying it—and even suggesting it—to potential purchasers of advertisements through the two Google Adwords and Keywords Suggestions Tool. The fact that the Internet searcher doesn’t see the mark in a resulting ad in a later search didn’t seem to matter to the Court once the Court found that the complaint had alleged use by Google at the stage of selling their programs to advertisers.
Since it was properly alleged that Google’s programs did in fact “use” the plaintiff’s marks in commerce, and the complaint also alleged that the resulting ads were likely to cause confusion, the Court remanded the case to the district court for further proceedings.
Rescuecom Corp. v. Google Inc., No. 06-4881 (2d Cir. Apr. 3, 2009) held that the district court erred in concluding that the complaint failed to state a claim because Google didn’t “use” the keyword/mark “in commerce.” Rejecting this reasoning, the Second Circuit held that the complaint alleged that Google indeed uses the mark in commerce by displaying it—and even suggesting it—to potential purchasers of advertisements through the two Google Adwords and Keywords Suggestions Tool. The fact that the Internet searcher doesn’t see the mark in a resulting ad in a later search didn’t seem to matter to the Court once the Court found that the complaint had alleged use by Google at the stage of selling their programs to advertisers.
Since it was properly alleged that Google’s programs did in fact “use” the plaintiff’s marks in commerce, and the complaint also alleged that the resulting ads were likely to cause confusion, the Court remanded the case to the district court for further proceedings.
Wednesday, April 09, 2008
Two interesting 11th Circuit decisions (by the same panel!); ALSO, Several Posts that Blogger deleted during a 7-month period from 2007-08
The issues the 11th Circuit addressed in two interesting recent cases included progressive encroachment, fraud on the PTO in obtaining registration, metatags, and the application of the Supreme Court's decision in the recent patent case eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) to trademark claims.
In Angel Flight of Georgia, Inc. v. Angel Flight America, Inc., No. 07-11460 (11th Cir. Apr. 4, 2008), the court affirmed the district court's rejection of laches and acquiescence defenses on the facts in the case because it found progressive encroachment (the defendant had recently greatly expanded its use of plaintiff's mark in plaintiff's territory) and resulting inevitable confusion.
The Angel Flight court also held that if a person falsely states in a section 1(a) affidavit that no other person has the right to use the mark, but knows that others with rights are in fact using it, then the registration is subject to cancellation for fraud.
In the second case, North American Medical Corp. v. Axiom Worldwide, Inc., No. 07-11574 (11th Cir. Apr. 7, 2008) the court found that use of a competitor's trademarks in metatags would constitute infringement. In this case, the use of the plaintiff's marks in metatags, for some reason, were not fully hidden, but actually appeared in the blurb describing the defendant's website in the Google search results listing. (I don't know enough about computer programming or the way Google searches the web to know why that would happen -- I thought that metatags didn't show up at all unless you actively searched the source code for particular webpages.) Anyway, the court held that this went beyond "initial interest confusion" (which it did not accept or reject as a basis for liability in the 11th Circuit) and caused instead a likelihood of "source confusion" -- which it differentiated from initial interest confusion because "source confusion" cannot be dispelled simply by taking a closer look, as initial interest confusion can be.
Despite affirming the liability aspect of this preliminary injunction appeal, the North American Medical court vacated the preliminary injunction based on eBay. Ruling that eBay's rejection of broad rules either pro- or anti-injunction "is applicable to the instant case," the Court held that eBay wasn't limited to patent law, and it wasn't limited to permanent injunctions. The Court remanded to the district court to determine whether the familiar "presumption of irreparable harm" is one of those general rules that eBay prohibits and, if so, to take evidence on whether irreparable harm was likely to occur absent an injunction. I believe that this is the most explicit appellate discussion to date on whether eBay applies to trademark law. (I believe it does, as I wrote in this article.) It also held that eBay, which concerned permanent injunctions, applies equally to preliminary injunction cases (which,, I also predicted in my article).
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10th Circuit decision regarding VAIL and 1-800-SKI-VAIL
The 10th Circuit, in a 2-1 decision, yesterday affirmed a district court ruling, after a bench trial, that the defendants' 1-800-SKI-VAIL toll-free number for Vail, Colorado related marketing services does not infringe the plaintiff's VAIL mark for ski resort services. Vail Assocs., Inc. v. Vend-Tel-Co., No. 05-1058 (10th Cir. Feb. 7, 2008). I don't think this opinion announced any significant legal rules, but rather was more fact-based.
The opinions are kind of analytical messes, in my view. I had to read it through twice to figure out exactly what the analysis was. My conclusion is that the majority was persuaded that 1-800-SKI-VAIL referred to VAIL and skiing descriptively, not as a mark for resort services, although section 1115(b)(4) and the phrase "fair, descriptive use" are never mentioned anywhere in the opinion. The majority then analyzed the evidence on the likelihood of confusion factors, and found no clear errors on any of these factors based on the evidence at trial. Presumably, this can be rationalized as determining whether the use was "fair" even if it was descriptive.
The dissent also focused on the likelihood of confusion factors, but came to the opposite conclusion. The majority, however, repeatedly chided the dissent for blowing off the "clearly erroneous" standard of review.
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2d Circuit decision re whether 3rd party proposing TM to a company "used" proposed mark
This recent 2d Circuit case may be useful to companies who receive unsolicited "suggestions" from third parties about services, products, or marks.
A guy (hereinafter, the "guy") sent several credit card companies a proposal for personalized credit cards with the cardholder's picture on it. The guy proposed using the tagline "My Life, My Card" in connection with them. None of the companies accepted the guy's proposal, but around the same time, American Express's ad agency independently came up with a theme for some ads where celebrities talk about how they use their AmEx cards. The ad agency proposed using the slogan "MY LIFE. MY CARD." with the ad campaign.
When AmEx began airing the ads, a legal tussle broke out.
The Second Circuit, in American Express Co. v. Goetz, No. 06-2184-cv (2d Cir. Feb. 4, 2008), held that the guy had not "used" the slogan as a trademark. It cited McCarthy and a line of cases dealing with ad agencies whose business is to suggest ad campaigns to others. These cases hold that the ad agencies don't actually "use" the suggested marks to identify their services. Instead, they propose that others use it. Rather than a mark, it's simply the ad agencies' creative work (which may, in certain instances, be subject to copyright protection). So here, the guy was out of luck because he didn't "use" the mark to identify his own business.
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Puzzling 9th Circuit Decision
Wow -- there's really been a spate of holiday season trademark decisions. Well, they do make great stocking stuffers!
The 9th Circuit today issued an especially puzzling opinion. In Applied Information Sciences Corp. v. eBay, Inc., No. 05-56123 (Dec. 28, 2007), "the district court granted eBay's motion [for summary judgment] on the ground that AIS does not have a valid, protected interest in the mark." The 9th Circuit did not mention whether eBay's motion concerned any other issues.
The 9th Circuit held that AIS did have a valid, protected interest in its mark, but then affirmed the grant of summary judgment in eBay's favor anyway "because in opposing eBay's motion for summary judgment AIS failed to produce any admissible evidence tending to show a likelihood of confusion, or even address any of the Sleekcraft factors."
So here's the confusing part:
(a) did eBay's motion also contend that there was no genuine issue of material fact on likelihood of confusion (the 9th Circuit didn't say); or
-- and this next possibility is more troubling --
(b) did eBay's motion not also contend that there was no likelihood of confusion?
If it's (b), why was AIS supposed to put in evidence that there was a likelihood of confusion if the motion concerned validity and protectibility? Is the implicit, unstated rationale based upon the sometimes-cited-but-more-often-forgotten burden-shifting under rule 56? Specifically, some cases hold that where the moving party does not bear the burden of proof, and it moves for summary judgment on less than all elements of the nonmoving party's claim, the moving party with the burden of proof is required to come forward with evidence on each element of its claim.
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4th Cir.: Foreign Applicants May be Subpoenaed to Travel to the US and Testify in TTAB Proceedings
In a 2-1 decision, the 4th Circuit today held that a foreign trademark applicant with no real presence whatsoever in the US may be compelled by a subpoena under 35 U.S.C. § 24 to provide rule 30(b)(6) testimony in the E.D. Va. (because the PTO is located there). This statute empowers district courts to issue subpoenas in aid of PTO proceedings "for any witness residing or being within such district."
The majority in Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Ltd., No. 06-1588 (Dec. 27, 2007), based its ruling primarily on the ground that nothing in 35 U.S.C. § 24 limits the term "witness" to real people, and so it applies to corporations if they are the "witness." Due to a technicality in the procedural posture of the case, the majority expressly declined to reach the foreign applicant's argument that it didn't qualify as "residing or being within such district." That didn't stop the majority, however, from issuing a one-line footnote -- which it admitted was dictum -- suggesting that the mere act of applying for a registration satisfies the "residing or being within such district" requirement.
The dissent -- which I found pretty persuasive -- really took the majority to task for blowing off the PTO's interpretation (in the TBMP) of the limited reach of subpoena power in inter partes proceedings, as well as the majority's use of procedural technicalities to dodge the issue of whether the applicant, solely by virtue of applying for a registration, thereby rendered itself "residing or being within [the E.D. Va.]" The dissent also lamented that the majority ignored international comity concerns.
By the way, this case would appear fully to apply to inter partes patent proceedings too.
If the applicant has the $$, this decision would seem a likely candidate for en banc rehearing.
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3d Cir. Decision re: Trade Dress and Store Brand Equivalents Products
The Third Circuit recently issued a fairly lengthy decision concerning how close the packaging of store brand equivalent products can come in mimicking brand name products.
The decision in McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, No. 07-2644 (Dec. 24, 2007) came on an appeal of an order denying McNeil Nutritionals' motion for a preliminary injunction against several store brand equivalents of SPLENDA sweetener. Although the Third Circuit's analysis is largely turned on the specific facts in the case, it did reverse-in-part as to certain of the store brands manufactured by Heartland, largely on its assessment of the prominence of the logo and name of the store itself on the package. The Court acknowledged that, "[a]rguably under our holding, store brands can 'get away' with a little more similarity than other defendants' products when they prominently display a well-known label, i.e., a store-specific signature . . . ." (Slip op. at 39.) The Court suggested, however, that this was in part a consequence of the fact that -- at least with respect to stores that use their logos prominently in the store and on other store-brand products -- consumers are familiar enough with the store logo that when they see it prominently displayed on a package that has some similarities with the national brand, they can still tell the difference. (Id.)
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9th Circuit: atty's fees UNavailable in counterfeiting case where statutory damages elected!
If a prevailing plaintiff in a counterfeiting case elects statutory damages under 15 USC § 1117(c), does he qualify for attorney's fees too under § 1117(b)? Not in the 9th Circuit anymore, according to K & N Engineering, Inc. v. Bulat, No. 06-55393 (9th Cir. Dec. 18, 2007).
The court reasoned as follows: actual damages and/or defendant's profits are available under § 1117(a). Section 1117(b) says that counterfeiting plaintiffs get "three times such damages or profits, . . . together with a reasonable attorney's fee." Section 1117(c) allows the prevailing counterfeiting plaintiff to "elect . . . instead of actual damages and profits . . . , an award of statutory damages." Section 1117(c) doesn't mention attorney's fees, so attorney's fees under § 1117(b) aren't available if a plaintiff chooses statutory damages under § 1117(c). (The court didn't say whether the plaintiff could still argue it gets attorney's fees under the "exceptional case" aspect of § 1117(a).)
To me, this makes no sense. Section 1117(b) applies to counterfeiting cases. It provides for treble damages/profits AND attorney's fees. Section 1117(c) says that a plaintiff can pick statutory damages "instead of actual damages and profits under subsection (a)." It does not say "instead of actual damages and profits and attorney's fees." It doesn't explicitly purport to provide an alternative to all of subsection (b), just to "actual damages and profits under subsection (a)." Automatic attorney's fees aren't damages, aren't profits, and aren't in subsection (a). Thus, the more natural reading would seem to be that the prevailing counterfeiting plaintiff can choose between actual damages under subsection (a) or statutory damages under subsection (c), and still get automatic fees under subsection (b).
I don't know if other circuits have dealt with this issue, but the 9th Circuit certainly didn't cite any in support of this surprising result.
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11th Circuit decision concerning post-sale confusion and misuse of another's TM on hidden parts
Is it infringement when a company uses someone else's trademark on an internal part that is ordinarily hidden from view?
The 11th Circuit recently rejected such a claim. In Custom Mfg. and Eng'g, Inc. v. Midway Servs., Inc., No. 05-12906 (Nov. 21, 2007), the product was a water meter reading system marketed to apartment complex owners. The defendant used the plaintiff's "Custom Manufacturing" mark on an internal circuit board for the meter. The plaintiff's mark was visible only upon removing an opaque plastic housing unit that fully enclosed the circuit board. To borrow from (and distinguish) a very familiar product, while there may in fact have been something analogous to "Intel" on the "Inside," potential buyers and users would not know that there was "Custom Manufacturing" inside without disassembling the unit.
The plaintiff argued that post-sale confusion was likely, because repair technicians or inspecting fire marshals would see the plaintiff's mark. The 11th Circuit rejected this argument, not for legal insufficiency, but for lack of proof. It held that the plaintiff had failed to proffer sufficient evidence "that it was likely that third-party technicians would view and be confused as to the origin of the circuit boards." The Court viewed as an "antecedent question" the issue of whether anyone was "likely to see the circuit boards at all."
The lesson here would appear to be that it is important, when arguing that non-external misuse of a mark is infringing, to present proof that the relevant user or purchaser group would (or did) actually see the misused trademark. Without such proof, the alleged infringement would be, as the 11th Circuit quipped, "like a proverbial tree falling in the forest" with no one around to hear it.
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4th Cir. decision allowing parodies may hurt well-known marks
In a decision that could hurt owners of well-known or iconic marks, the Fourth Circuit recently handed Louis Vuitton a defeat in its attempt to stop a pet products company from selling a dog chew toy in the shape of a handbag and labeled CHEWY VUITON. The Court’s legal rationale concerned how parodies fit within the statutes that govern trademark law. Although Fourth Circuit rulings are binding only in federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina, this decision, if followed by other courts, could have a significant impact on the future ability of the owners of well-known marks to enforce their rights against parodic uses.
In Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, No. 06-2267 (4th Cir. Nov. 13, 2007), Louis Vuitton had sued Haute Diggity Dog—which sells a number of dog toys and beds with names that spoof well-known luxury brands, including Chewnel No. 5, Dog Perignon, Sniffany, and Furcedes—for trademark infringement under the Lanham Act, 15 U.S.C. § 1114, and trademark dilution under the recently-amended Federal Trademark Dilution Act (“FTDA”), 15 U.S.C. § 1125(c).
Haute Diggity Dog asserted that its CHEWY VUITON chew toy was merely a “parody” of the LOUIS VUITTON mark, and therefore did not infringe or dilute the LOUIS VUITTON mark. The district court agreed, granting summary judgment in favor of Haute Diggity Dog, based on the observation that successful parodies must, by definition, both call to mind the object of the parody and simultaneously differentiate the parody from the object of the parody.
The Fourth Circuit largely agreed with this rationale. In its analysis, the Fourth Circuit did not regard “parody” as a per se defense to claims under the Lanham Act or the FTDA. Instead, it stated that, once a challenged use is found to be a “parody,” that finding must influence the way the court assesses the multiple “likelihood of confusion” factors commonly used under the Lanham Act and the multiple dilution factors expressly set forth in the FTDA.
To qualify as a parody under the Fourth Circuit’s test, the parodic use must satisfy three elements. It must: (1) “convey just enough of the original design to allow the consumer to appreciate the point of the parody”; (2) “communicate some articulable element of satire, ridicule, joking, or amusement”; and (3) be different enough so that it also “communicates that it is not [the original] product.”
One of the more significant aspects of the Fourth Circuit’s analysis was its remarks about how the “fame and popularity” of the original mark weighs in the legal analysis. In infringement and dilution cases not involving parodies, the “fame and popularity” of the original mark weighs in favor of a finding of infringement or dilution. But under the Fourth Circuit’s analysis, “the opposite may be true when a legitimate claim of parody is involved.”
Applying this reverse rule, the Fourth Circuit held that the “Chewy Vuiton” parodic use meant that consumers would be unlikely to be confused because they would “readily recognize” it as a parody. As to dilution, the Court similarly held that the stronger the brand owner’s mark, the “more likely that a parody will not impair the distinctiveness of the mark.”
This analysis would appear to punish a brand owner's success in promoting its mark by making the brand owner more susceptible to parodies and other attempts to capitalize on the brand owner's hard-won goodwill through impugning, mocking, or joking. That result itself may appear to represent a “parody” of the Lanham Act and, especially, the FTDA, which are designed to give broader protection to brand owners in direct proportion to their success in promoting their marks.
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5th Cir. decision ordering E.D. Tex. to transfer a case under 1404(a)
Yesterday the Fifth Circuit sent a shot across the bow of the E.D. Tex. concerning its reluctance to transfer cases. Although it was a products liability case, I read it as holding implications for -- and maybe even silently directed at -- patent cases there, as well.
In re Volkswagen of Am., Inc., No. 07-40058 (5th Cir. Oct. 24, 2007) involved a Dallas (i.e., N.D. Tex.) car wreck that spawned a product liability case against VW. In an earlier unpublished panel decision, the 5th Circuit rejected a petition for mandamus to order the transfer to Dallas. On rehearing, the Court flip-flopped, and ordered transfer.
The Court went through the governing 1404(a) transfer factors pretty thoroughly. Some of the parts of the decision I thought were notable were:
• The Court said that the oft-repeated concept of the "weight given to a plaintiff's choice of forum" simply means that the movant has the burden of proof to show "good cause" for transfer, and no more than that.
• Under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
• A court should NOT completely discount that the documents and physical evidence are located outside the district simply because of "advances in copying technology and information storage." (Maybe the advent of "Beam me up, Scottie" technology might require future re-visiting of this notion).
• Where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.
But the biggest hint to me that the Fifth Circuit may have been thinking of patent cases too was its discussion of the citizenry of Marshall's interest in the case. The E.D. had said they had a interest in a case involving allegedly defective VWs because VWs are available in the district. The 5th Circuit said that this analysis "eviscerates" the public interest factor where the relevant events took place, and the documents and witnesses are located, outside the district. The Court then ended re-emphasizing this point:
Since the Federal Circuit looks to regional circuit precedents in reviewing challenges to 1404(a) decisions, it would appear that this last point will perhaps be a significant factor in future venue disputes in E.D. Tex. patent cases. Arguably, it may even apply more forcefully in patent cases, where the E.D. Tex.'s interest in IP rights is more theoretical than its interest in a case involving an allegedly defective car available there.
In Angel Flight of Georgia, Inc. v. Angel Flight America, Inc., No. 07-11460 (11th Cir. Apr. 4, 2008), the court affirmed the district court's rejection of laches and acquiescence defenses on the facts in the case because it found progressive encroachment (the defendant had recently greatly expanded its use of plaintiff's mark in plaintiff's territory) and resulting inevitable confusion.
The Angel Flight court also held that if a person falsely states in a section 1(a) affidavit that no other person has the right to use the mark, but knows that others with rights are in fact using it, then the registration is subject to cancellation for fraud.
In the second case, North American Medical Corp. v. Axiom Worldwide, Inc., No. 07-11574 (11th Cir. Apr. 7, 2008) the court found that use of a competitor's trademarks in metatags would constitute infringement. In this case, the use of the plaintiff's marks in metatags, for some reason, were not fully hidden, but actually appeared in the blurb describing the defendant's website in the Google search results listing. (I don't know enough about computer programming or the way Google searches the web to know why that would happen -- I thought that metatags didn't show up at all unless you actively searched the source code for particular webpages.) Anyway, the court held that this went beyond "initial interest confusion" (which it did not accept or reject as a basis for liability in the 11th Circuit) and caused instead a likelihood of "source confusion" -- which it differentiated from initial interest confusion because "source confusion" cannot be dispelled simply by taking a closer look, as initial interest confusion can be.
Despite affirming the liability aspect of this preliminary injunction appeal, the North American Medical court vacated the preliminary injunction based on eBay. Ruling that eBay's rejection of broad rules either pro- or anti-injunction "is applicable to the instant case," the Court held that eBay wasn't limited to patent law, and it wasn't limited to permanent injunctions. The Court remanded to the district court to determine whether the familiar "presumption of irreparable harm" is one of those general rules that eBay prohibits and, if so, to take evidence on whether irreparable harm was likely to occur absent an injunction. I believe that this is the most explicit appellate discussion to date on whether eBay applies to trademark law. (I believe it does, as I wrote in this article.) It also held that eBay, which concerned permanent injunctions, applies equally to preliminary injunction cases (which,
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10th Circuit decision regarding VAIL and 1-800-SKI-VAIL
The 10th Circuit, in a 2-1 decision, yesterday affirmed a district court ruling, after a bench trial, that the defendants' 1-800-SKI-VAIL toll-free number for Vail, Colorado related marketing services does not infringe the plaintiff's VAIL mark for ski resort services. Vail Assocs., Inc. v. Vend-Tel-Co., No. 05-1058 (10th Cir. Feb. 7, 2008). I don't think this opinion announced any significant legal rules, but rather was more fact-based.
The opinions are kind of analytical messes, in my view. I had to read it through twice to figure out exactly what the analysis was. My conclusion is that the majority was persuaded that 1-800-SKI-VAIL referred to VAIL and skiing descriptively, not as a mark for resort services, although section 1115(b)(4) and the phrase "fair, descriptive use" are never mentioned anywhere in the opinion. The majority then analyzed the evidence on the likelihood of confusion factors, and found no clear errors on any of these factors based on the evidence at trial. Presumably, this can be rationalized as determining whether the use was "fair" even if it was descriptive.
The dissent also focused on the likelihood of confusion factors, but came to the opposite conclusion. The majority, however, repeatedly chided the dissent for blowing off the "clearly erroneous" standard of review.
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2d Circuit decision re whether 3rd party proposing TM to a company "used" proposed mark
This recent 2d Circuit case may be useful to companies who receive unsolicited "suggestions" from third parties about services, products, or marks.
A guy (hereinafter, the "guy") sent several credit card companies a proposal for personalized credit cards with the cardholder's picture on it. The guy proposed using the tagline "My Life, My Card" in connection with them. None of the companies accepted the guy's proposal, but around the same time, American Express's ad agency independently came up with a theme for some ads where celebrities talk about how they use their AmEx cards. The ad agency proposed using the slogan "MY LIFE. MY CARD." with the ad campaign.
When AmEx began airing the ads, a legal tussle broke out.
The Second Circuit, in American Express Co. v. Goetz, No. 06-2184-cv (2d Cir. Feb. 4, 2008), held that the guy had not "used" the slogan as a trademark. It cited McCarthy and a line of cases dealing with ad agencies whose business is to suggest ad campaigns to others. These cases hold that the ad agencies don't actually "use" the suggested marks to identify their services. Instead, they propose that others use it. Rather than a mark, it's simply the ad agencies' creative work (which may, in certain instances, be subject to copyright protection). So here, the guy was out of luck because he didn't "use" the mark to identify his own business.
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Puzzling 9th Circuit Decision
Wow -- there's really been a spate of holiday season trademark decisions. Well, they do make great stocking stuffers!
The 9th Circuit today issued an especially puzzling opinion. In Applied Information Sciences Corp. v. eBay, Inc., No. 05-56123 (Dec. 28, 2007), "the district court granted eBay's motion [for summary judgment] on the ground that AIS does not have a valid, protected interest in the mark." The 9th Circuit did not mention whether eBay's motion concerned any other issues.
The 9th Circuit held that AIS did have a valid, protected interest in its mark, but then affirmed the grant of summary judgment in eBay's favor anyway "because in opposing eBay's motion for summary judgment AIS failed to produce any admissible evidence tending to show a likelihood of confusion, or even address any of the Sleekcraft factors."
So here's the confusing part:
(a) did eBay's motion also contend that there was no genuine issue of material fact on likelihood of confusion (the 9th Circuit didn't say); or
-- and this next possibility is more troubling --
(b) did eBay's motion not also contend that there was no likelihood of confusion?
If it's (b), why was AIS supposed to put in evidence that there was a likelihood of confusion if the motion concerned validity and protectibility? Is the implicit, unstated rationale based upon the sometimes-cited-but-more-often-forgotten burden-shifting under rule 56? Specifically, some cases hold that where the moving party does not bear the burden of proof, and it moves for summary judgment on less than all elements of the nonmoving party's claim, the moving party with the burden of proof is required to come forward with evidence on each element of its claim.
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4th Cir.: Foreign Applicants May be Subpoenaed to Travel to the US and Testify in TTAB Proceedings
In a 2-1 decision, the 4th Circuit today held that a foreign trademark applicant with no real presence whatsoever in the US may be compelled by a subpoena under 35 U.S.C. § 24 to provide rule 30(b)(6) testimony in the E.D. Va. (because the PTO is located there). This statute empowers district courts to issue subpoenas in aid of PTO proceedings "for any witness residing or being within such district."
The majority in Rosenruist-Gestao E Servicos LDA v. Virgin Enterprises Ltd., No. 06-1588 (Dec. 27, 2007), based its ruling primarily on the ground that nothing in 35 U.S.C. § 24 limits the term "witness" to real people, and so it applies to corporations if they are the "witness." Due to a technicality in the procedural posture of the case, the majority expressly declined to reach the foreign applicant's argument that it didn't qualify as "residing or being within such district." That didn't stop the majority, however, from issuing a one-line footnote -- which it admitted was dictum -- suggesting that the mere act of applying for a registration satisfies the "residing or being within such district" requirement.
The dissent -- which I found pretty persuasive -- really took the majority to task for blowing off the PTO's interpretation (in the TBMP) of the limited reach of subpoena power in inter partes proceedings, as well as the majority's use of procedural technicalities to dodge the issue of whether the applicant, solely by virtue of applying for a registration, thereby rendered itself "residing or being within [the E.D. Va.]" The dissent also lamented that the majority ignored international comity concerns.
By the way, this case would appear fully to apply to inter partes patent proceedings too.
If the applicant has the $$, this decision would seem a likely candidate for en banc rehearing.
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3d Cir. Decision re: Trade Dress and Store Brand Equivalents Products
The Third Circuit recently issued a fairly lengthy decision concerning how close the packaging of store brand equivalent products can come in mimicking brand name products.
The decision in McNeil Nutritionals, LLC v. Heartland Sweeteners, LLC, No. 07-2644 (Dec. 24, 2007) came on an appeal of an order denying McNeil Nutritionals' motion for a preliminary injunction against several store brand equivalents of SPLENDA sweetener. Although the Third Circuit's analysis is largely turned on the specific facts in the case, it did reverse-in-part as to certain of the store brands manufactured by Heartland, largely on its assessment of the prominence of the logo and name of the store itself on the package. The Court acknowledged that, "[a]rguably under our holding, store brands can 'get away' with a little more similarity than other defendants' products when they prominently display a well-known label, i.e., a store-specific signature . . . ." (Slip op. at 39.) The Court suggested, however, that this was in part a consequence of the fact that -- at least with respect to stores that use their logos prominently in the store and on other store-brand products -- consumers are familiar enough with the store logo that when they see it prominently displayed on a package that has some similarities with the national brand, they can still tell the difference. (Id.)
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9th Circuit: atty's fees UNavailable in counterfeiting case where statutory damages elected!
If a prevailing plaintiff in a counterfeiting case elects statutory damages under 15 USC § 1117(c), does he qualify for attorney's fees too under § 1117(b)? Not in the 9th Circuit anymore, according to K & N Engineering, Inc. v. Bulat, No. 06-55393 (9th Cir. Dec. 18, 2007).
The court reasoned as follows: actual damages and/or defendant's profits are available under § 1117(a). Section 1117(b) says that counterfeiting plaintiffs get "three times such damages or profits, . . . together with a reasonable attorney's fee." Section 1117(c) allows the prevailing counterfeiting plaintiff to "elect . . . instead of actual damages and profits . . . , an award of statutory damages." Section 1117(c) doesn't mention attorney's fees, so attorney's fees under § 1117(b) aren't available if a plaintiff chooses statutory damages under § 1117(c). (The court didn't say whether the plaintiff could still argue it gets attorney's fees under the "exceptional case" aspect of § 1117(a).)
To me, this makes no sense. Section 1117(b) applies to counterfeiting cases. It provides for treble damages/profits AND attorney's fees. Section 1117(c) says that a plaintiff can pick statutory damages "instead of actual damages and profits under subsection (a)." It does not say "instead of actual damages and profits and attorney's fees." It doesn't explicitly purport to provide an alternative to all of subsection (b), just to "actual damages and profits under subsection (a)." Automatic attorney's fees aren't damages, aren't profits, and aren't in subsection (a). Thus, the more natural reading would seem to be that the prevailing counterfeiting plaintiff can choose between actual damages under subsection (a) or statutory damages under subsection (c), and still get automatic fees under subsection (b).
I don't know if other circuits have dealt with this issue, but the 9th Circuit certainly didn't cite any in support of this surprising result.
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11th Circuit decision concerning post-sale confusion and misuse of another's TM on hidden parts
Is it infringement when a company uses someone else's trademark on an internal part that is ordinarily hidden from view?
The 11th Circuit recently rejected such a claim. In Custom Mfg. and Eng'g, Inc. v. Midway Servs., Inc., No. 05-12906 (Nov. 21, 2007), the product was a water meter reading system marketed to apartment complex owners. The defendant used the plaintiff's "Custom Manufacturing" mark on an internal circuit board for the meter. The plaintiff's mark was visible only upon removing an opaque plastic housing unit that fully enclosed the circuit board. To borrow from (and distinguish) a very familiar product, while there may in fact have been something analogous to "Intel" on the "Inside," potential buyers and users would not know that there was "Custom Manufacturing" inside without disassembling the unit.
The plaintiff argued that post-sale confusion was likely, because repair technicians or inspecting fire marshals would see the plaintiff's mark. The 11th Circuit rejected this argument, not for legal insufficiency, but for lack of proof. It held that the plaintiff had failed to proffer sufficient evidence "that it was likely that third-party technicians would view and be confused as to the origin of the circuit boards." The Court viewed as an "antecedent question" the issue of whether anyone was "likely to see the circuit boards at all."
The lesson here would appear to be that it is important, when arguing that non-external misuse of a mark is infringing, to present proof that the relevant user or purchaser group would (or did) actually see the misused trademark. Without such proof, the alleged infringement would be, as the 11th Circuit quipped, "like a proverbial tree falling in the forest" with no one around to hear it.
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4th Cir. decision allowing parodies may hurt well-known marks
In a decision that could hurt owners of well-known or iconic marks, the Fourth Circuit recently handed Louis Vuitton a defeat in its attempt to stop a pet products company from selling a dog chew toy in the shape of a handbag and labeled CHEWY VUITON. The Court’s legal rationale concerned how parodies fit within the statutes that govern trademark law. Although Fourth Circuit rulings are binding only in federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina, this decision, if followed by other courts, could have a significant impact on the future ability of the owners of well-known marks to enforce their rights against parodic uses.
In Louis Vuitton Malletier, S.A. v. Haute Diggity Dog, LLC, No. 06-2267 (4th Cir. Nov. 13, 2007), Louis Vuitton had sued Haute Diggity Dog—which sells a number of dog toys and beds with names that spoof well-known luxury brands, including Chewnel No. 5, Dog Perignon, Sniffany, and Furcedes—for trademark infringement under the Lanham Act, 15 U.S.C. § 1114, and trademark dilution under the recently-amended Federal Trademark Dilution Act (“FTDA”), 15 U.S.C. § 1125(c).
Haute Diggity Dog asserted that its CHEWY VUITON chew toy was merely a “parody” of the LOUIS VUITTON mark, and therefore did not infringe or dilute the LOUIS VUITTON mark. The district court agreed, granting summary judgment in favor of Haute Diggity Dog, based on the observation that successful parodies must, by definition, both call to mind the object of the parody and simultaneously differentiate the parody from the object of the parody.
The Fourth Circuit largely agreed with this rationale. In its analysis, the Fourth Circuit did not regard “parody” as a per se defense to claims under the Lanham Act or the FTDA. Instead, it stated that, once a challenged use is found to be a “parody,” that finding must influence the way the court assesses the multiple “likelihood of confusion” factors commonly used under the Lanham Act and the multiple dilution factors expressly set forth in the FTDA.
To qualify as a parody under the Fourth Circuit’s test, the parodic use must satisfy three elements. It must: (1) “convey just enough of the original design to allow the consumer to appreciate the point of the parody”; (2) “communicate some articulable element of satire, ridicule, joking, or amusement”; and (3) be different enough so that it also “communicates that it is not [the original] product.”
One of the more significant aspects of the Fourth Circuit’s analysis was its remarks about how the “fame and popularity” of the original mark weighs in the legal analysis. In infringement and dilution cases not involving parodies, the “fame and popularity” of the original mark weighs in favor of a finding of infringement or dilution. But under the Fourth Circuit’s analysis, “the opposite may be true when a legitimate claim of parody is involved.”
Applying this reverse rule, the Fourth Circuit held that the “Chewy Vuiton” parodic use meant that consumers would be unlikely to be confused because they would “readily recognize” it as a parody. As to dilution, the Court similarly held that the stronger the brand owner’s mark, the “more likely that a parody will not impair the distinctiveness of the mark.”
This analysis would appear to punish a brand owner's success in promoting its mark by making the brand owner more susceptible to parodies and other attempts to capitalize on the brand owner's hard-won goodwill through impugning, mocking, or joking. That result itself may appear to represent a “parody” of the Lanham Act and, especially, the FTDA, which are designed to give broader protection to brand owners in direct proportion to their success in promoting their marks.
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5th Cir. decision ordering E.D. Tex. to transfer a case under 1404(a)
Yesterday the Fifth Circuit sent a shot across the bow of the E.D. Tex. concerning its reluctance to transfer cases. Although it was a products liability case, I read it as holding implications for -- and maybe even silently directed at -- patent cases there, as well.
In re Volkswagen of Am., Inc., No. 07-40058 (5th Cir. Oct. 24, 2007) involved a Dallas (i.e., N.D. Tex.) car wreck that spawned a product liability case against VW. In an earlier unpublished panel decision, the 5th Circuit rejected a petition for mandamus to order the transfer to Dallas. On rehearing, the Court flip-flopped, and ordered transfer.
The Court went through the governing 1404(a) transfer factors pretty thoroughly. Some of the parts of the decision I thought were notable were:
• The Court said that the oft-repeated concept of the "weight given to a plaintiff's choice of forum" simply means that the movant has the burden of proof to show "good cause" for transfer, and no more than that.
• Under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
• A court should NOT completely discount that the documents and physical evidence are located outside the district simply because of "advances in copying technology and information storage." (Maybe the advent of "Beam me up, Scottie" technology might require future re-visiting of this notion).
• Where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.
But the biggest hint to me that the Fifth Circuit may have been thinking of patent cases too was its discussion of the citizenry of Marshall's interest in the case. The E.D. had said they had a interest in a case involving allegedly defective VWs because VWs are available in the district. The 5th Circuit said that this analysis "eviscerates" the public interest factor where the relevant events took place, and the documents and witnesses are located, outside the district. The Court then ended re-emphasizing this point:
The record indicates that the [car] was purchased from a location in the Dallas Division, and that Marshall, Texas, has no Volkswagen dealership. But again, the larger point is the one we emphasize: that a product is available within a given jurisdiction is insufficient to neutralize the legitimate local interest in adjudicating local disputes.
Since the Federal Circuit looks to regional circuit precedents in reviewing challenges to 1404(a) decisions, it would appear that this last point will perhaps be a significant factor in future venue disputes in E.D. Tex. patent cases. Arguably, it may even apply more forcefully in patent cases, where the E.D. Tex.'s interest in IP rights is more theoretical than its interest in a case involving an allegedly defective car available there.
Thursday, July 07, 2005
2d Circuit Absolves WhenU's Pop-up Ad Program
In a noteworthy (but in my view conceptually muddled) decision, the 2d Circuit recently held that WhenU--an Internet marketing company--didn't violate the Lanham Act through its pop-up ad & coupon program.
WhenU sells pop-up advertising. The pop-ups appear on computer screens of Internet users who have installed the WhenU program on their computers. The ads vary in size, shape, and placement, but they all are framed by a border displaying the words "A WhenU Offer--click?" The advertisers are usually competitors of, or in a business related to, the company whose website the computer user is on or the search result screen on which the company appears. Advertisers can't sign up to always have their ads appear when a user is on a competitor's site, but they sign up to be included in group of several advertisers whose pop-ups are randomly chosen for display when the triggering event happens.
The pop-ups are triggered by a database of web addresses, search terms, and key word algorithms kept by WhenU in an unseen directory maintained by When U.
One of the triggering web addresses in the WhenU directory was www.1800contacts.com, the web address of a company that used 1-800CONTACTS as a service mark for selling contact lenses.
The 2d Circuit reversed the district court's entry of a preliminary injunction against WhenU's "use" of the www.1800contacts.com web address as a trigger for competitors' pop-up ads. The 2d Circuit believed that WhenU did not "use" the plaintiff's mark by either maintaining the web address in WhenU's hidden directory or by causing the corresponding pop-up ad to appear.
As to the secret directory, the court said that (a) the inclusion of the plaintiff's web address was not the same thing as inclusion of the plaintiff's mark (even though they're similar), and (b) in any event, the fact that it was secret was not a "use" in connection with the sale of goods, in that the use was hidden from the purchasing public. I think the first reason is pretty flimsy, but the second reason goes to the heart of the matter, and I think gets it right.
As to the pop-ups themselves, the court again found no "use" as required by the Lanham Act. It again rested its decision in part on the flimsy distinction between the triggering address and mark itself. In another unconvincing section, the 2d Circuit pointed out that there was no "use" because other search terms (like "eye care") triggered 1-800CONTACTS' competitor's pop-up ads. More solidly, I think, however, the court also pointed out that the pop-up ads themselves don't actually use the plaintiff's mark or anything like it. And, of course, as a result, the pop-ups themselves are clearly marked as something other than the web page on which they are superimposed, and they're not themselves confusing. My own view is that the Court therefore should have rested its analysis of the pop-up ads themselves on the ground that they were unlikely to cause confusion, rather than lack of "use."
The 2d Circuit also pointed out that WhenU's program isn't different from vendors who pay retail stores to place their competing, but not confusingly similar, brands, right next to a well-known competing brand. Of course, this begs the question whether THAT practice is legal, but even so, it's a decent analogy.
Overall, I think this is probably the right result, but the analysis leaves something to be desired.
WhenU sells pop-up advertising. The pop-ups appear on computer screens of Internet users who have installed the WhenU program on their computers. The ads vary in size, shape, and placement, but they all are framed by a border displaying the words "A WhenU Offer--click?" The advertisers are usually competitors of, or in a business related to, the company whose website the computer user is on or the search result screen on which the company appears. Advertisers can't sign up to always have their ads appear when a user is on a competitor's site, but they sign up to be included in group of several advertisers whose pop-ups are randomly chosen for display when the triggering event happens.
The pop-ups are triggered by a database of web addresses, search terms, and key word algorithms kept by WhenU in an unseen directory maintained by When U.
One of the triggering web addresses in the WhenU directory was www.1800contacts.com, the web address of a company that used 1-800CONTACTS as a service mark for selling contact lenses.
The 2d Circuit reversed the district court's entry of a preliminary injunction against WhenU's "use" of the www.1800contacts.com web address as a trigger for competitors' pop-up ads. The 2d Circuit believed that WhenU did not "use" the plaintiff's mark by either maintaining the web address in WhenU's hidden directory or by causing the corresponding pop-up ad to appear.
As to the secret directory, the court said that (a) the inclusion of the plaintiff's web address was not the same thing as inclusion of the plaintiff's mark (even though they're similar), and (b) in any event, the fact that it was secret was not a "use" in connection with the sale of goods, in that the use was hidden from the purchasing public. I think the first reason is pretty flimsy, but the second reason goes to the heart of the matter, and I think gets it right.
As to the pop-ups themselves, the court again found no "use" as required by the Lanham Act. It again rested its decision in part on the flimsy distinction between the triggering address and mark itself. In another unconvincing section, the 2d Circuit pointed out that there was no "use" because other search terms (like "eye care") triggered 1-800CONTACTS' competitor's pop-up ads. More solidly, I think, however, the court also pointed out that the pop-up ads themselves don't actually use the plaintiff's mark or anything like it. And, of course, as a result, the pop-ups themselves are clearly marked as something other than the web page on which they are superimposed, and they're not themselves confusing. My own view is that the Court therefore should have rested its analysis of the pop-up ads themselves on the ground that they were unlikely to cause confusion, rather than lack of "use."
The 2d Circuit also pointed out that WhenU's program isn't different from vendors who pay retail stores to place their competing, but not confusingly similar, brands, right next to a well-known competing brand. Of course, this begs the question whether THAT practice is legal, but even so, it's a decent analogy.
Overall, I think this is probably the right result, but the analysis leaves something to be desired.
Wednesday, March 02, 2005
2d Circuit Declares Open Season on Cuban Marks
Well, that's not what they actually said in Empresa Cubana del Tabaco v. Culbro Corp., No. 04-2527 (Feb. 24, 2005), but that's the effect. The plaintiff was a Cuban cigar company famous for its COHIBA cigars. But alas, the Cuban trade embargo prohibits their sale in the US. So the defendant, an unrelated US company, decided to market its own COHIBA cigars in the US, admittedly based on the international fame of the unavailable original. AND THE SECOND CIRCUIT LET THEM GET AWAY WITH IT! Why? Because the very same embargo prohibits the Cuban company from acquiring any enforceable trademark rights in the mark in the US. With no rights, the Cuban company's Lanham Act case went up in smoke. Interestingly, the Second Circuit took an even stricter view of the effect of the Cuban embargo than the US Departments of Justice and the Treasury took in their amicus submission. Is there a cert petition in the humidor?
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