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).
Showing posts with label 9th Cir. trademark. Show all posts
Showing posts with label 9th Cir. trademark. Show all posts
Tuesday, September 13, 2011
Friday, August 19, 2011
9th Circuit withdraws controversial Betty Boop decision, decides to remand case on narrower grounds; trademark licensing programs are safe once again
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.
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.
Wednesday, March 09, 2011
9th Cir.: Purchase of Competitors' Trademark for Google AdWords Listing is "Use in Commerce"; Court Clarifies Confusion Analysis in Internet Setting
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.
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.
Wednesday, February 23, 2011
Very unsettling 9th Circuit "Betty Boop" decision on copyright and trademark in BETTY BOOP character
[WARNING: longer-than-usual discussion because of the scariness of the 9th Circuit’s decision]
The 1930s creator of the cartoon character BETTY BOOP transferred all his copyrights in the character in 1941 to a second company, who later transferred it a third company, etc. The creator’s company folded in the meantime. Eventually, the family of the original creator started a new company to purchase back and exploit the BETTY BOOP character. After purchasing those rights (at least that’s what they thought they got) from several possible sources, the family sued the defendants, who sell handbags and t-shirts featuring the BETTY BOOP character, for copyright and trademark infringement. The district court dismissed both claims, holding that the family failed to prove up at least one of the transfers in each of the alternative chains of title, and that this scotched the copyright claim, and that so many people currently use the character on various goods, the family couldn’t claim ownership of a trademark in it either. In a 2-1 decision, the 9th Circuit affirmed the dismissal. Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Feb. 23, 2011).
The Copyright Claim
On the copyright side, the chain of title argument isn’t so much interesting because of its merits, but because of the appellate procedural issue via which the defendants won. The family’s opening appeal brief challenged only one of the chain of title arguments. In response, the defendants not only raised the argument on which they defeated that chain of title theory at the district court, but also an alternative ground for affirming the district court’s dismissal (one they hadn’t raised at the district court). In their reply, the family argued that even under the defendant’s new ground, the chain of title would have ended up with a company from whom the family had also purchased rights back! Indeed, this was one of the alternative title chains the family argued in the district court. But the panel majority held that by not raising the alternative chain of title argument in their opening brief, the family had waived the argument, even though they addressed it fully in their reply to rebut an argument in the appellee’s brief. Moral of this part of the story? It’s this: You know how appellate judges are always urging appellants not to challenge everything and just focus on the best one or two issues?? Well, forget all that. Raise everything. Or pay the price.
But that’s not even the scariest part of the decision.
The Trademark Claim
This is where the panel majority seems to go completely off the rails, resting their decision on a flawed concept that neither party—neither party!—argued or briefed. Resting its decision on Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), the panel majority held that the BETTY BOOP character on the defendant’s t-shirts and handbags did not serve as a trademark because it was the very thing that made the t-shirts and handbags desirable. The panel explained that this made it “functional.” The panel majority also placed emphasis on the facts that the defendants “never designated the merchandise as ‘official’ [family] merchandise or otherwise affirmatively indicated sponsorship” and, moreover, the family “did not show a single instance in which a customer was misled.” Holy cow. I see several issues here, e.g., how does this square with: (a) the concept that a likelihood of confusion as to whether some form of legal permission was required to use an image is indeed actionable confusion; (b) the concept that actual confusion isn’t required; and (c) prior 9th Circuit (and other circuit) decisions that where the alleged trademark is the very thing consumers desire, appropriating it is infringement and is not insulated by functionality doctrine. See Automotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062 (9th Cir. 2006) (citing the Nike Swoosh, the Playboy bunny ears, the Mercedes tri-point star, and the Ferrari stallion). And where does this leave Mr. Clean, Aunt Jemima, the Jolly Green Giant, Tony the Tiger, the Pillsbury Doughboy, the Geico Gecko, and, well, you get the picture.
But wait, there’s more! The panel majority then decided that, since it had gone this far astray, it might as well throw in a little overbroad dictum to boot. So it went on to opine that the family’s claim was also precluded by the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003)—another decision that neither party had cited or discussed. (So much for the time-worn truism that the whole point of the adversarial process is to sharpen the issues for decision.) The panel stated that Dastar precluded the assertion of any trademark rights in the BETTY BOOP character because the family couldn’t prove ownership of the copyright in the character. What? The panel majority reasoned that Dastar stands for the proposition that “a party may not assert a trademark infringement action against an alleged infringer if that action is essentially a substitute for a copyright infringement action.” Yikes! That is quite an overstatement of Dastar, in my view. In other words, if you think you own a design mark that consists of copyrightable expression, you’d better be able to prove you own the copyright too. Or to say it a different way, if you decide to adopt a public domain graphic as a trademark, you’re out of luck. Of course, Dastar said no such thing, as it concerned a section 43(a) action for failure to provide correct attribution concerning who compiled and edited a video consisting of a compilation of war footage (a/k/a “implied reverse passing off”), not a traditional claim for trademark infringement. The whole point of Dastar was that failure to correctly attribute who contributed to the creation of a product was not a representation of “source” actionable under the Lanham Act. But, of course, in contrast, a classic trademark infringement action is precisely that: an action to stop confusion as to source. And this case was not about which Asian or Central American sweatshop actually produced the t-shirts or handbags (with or without child labor and 18 hour-days), but whether they were sponsored by the owners of the BETTY BOOP mark.
Now, I’m not definitively saying that the trademark aspect of this decision is wrong—I want to think about it some more—but, sheesh, there’s a lot of “stuff” to chew on here.
If this decision isn’t reversed on en banc rehearing, it will surely spawn a whole raft of law review case notes and other articles.
UPDATE: Having thought a little more about it, the "Job's Daughters" part of the trademark holding has potentially grave implications for professional and college logo licensing. People generally buy these sports/college logo clothing not for the "assurance of quality through source identifying" connotation of the team's or college's logo, but because they desire to wear clothing with the logo for associational or other reasons, such as liking the way it looks. Just like wearing a character such as, say, Betty Boop. Indeed, the Job's Daughters case specifically rejected the 5th Circuit's seminal Boston Bruins licensing decision (510 F.2d 1004 (5th Cir. 1975)), which paved the way for this sort of official licensing.
The 1930s creator of the cartoon character BETTY BOOP transferred all his copyrights in the character in 1941 to a second company, who later transferred it a third company, etc. The creator’s company folded in the meantime. Eventually, the family of the original creator started a new company to purchase back and exploit the BETTY BOOP character. After purchasing those rights (at least that’s what they thought they got) from several possible sources, the family sued the defendants, who sell handbags and t-shirts featuring the BETTY BOOP character, for copyright and trademark infringement. The district court dismissed both claims, holding that the family failed to prove up at least one of the transfers in each of the alternative chains of title, and that this scotched the copyright claim, and that so many people currently use the character on various goods, the family couldn’t claim ownership of a trademark in it either. In a 2-1 decision, the 9th Circuit affirmed the dismissal. Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Feb. 23, 2011).
The Copyright Claim
On the copyright side, the chain of title argument isn’t so much interesting because of its merits, but because of the appellate procedural issue via which the defendants won. The family’s opening appeal brief challenged only one of the chain of title arguments. In response, the defendants not only raised the argument on which they defeated that chain of title theory at the district court, but also an alternative ground for affirming the district court’s dismissal (one they hadn’t raised at the district court). In their reply, the family argued that even under the defendant’s new ground, the chain of title would have ended up with a company from whom the family had also purchased rights back! Indeed, this was one of the alternative title chains the family argued in the district court. But the panel majority held that by not raising the alternative chain of title argument in their opening brief, the family had waived the argument, even though they addressed it fully in their reply to rebut an argument in the appellee’s brief. Moral of this part of the story? It’s this: You know how appellate judges are always urging appellants not to challenge everything and just focus on the best one or two issues?? Well, forget all that. Raise everything. Or pay the price.
But that’s not even the scariest part of the decision.
The Trademark Claim
This is where the panel majority seems to go completely off the rails, resting their decision on a flawed concept that neither party—neither party!—argued or briefed. Resting its decision on Int’l Order of Job’s Daughters v. Lindeburg & Co., 633 F.2d 912 (9th Cir. 1980), the panel majority held that the BETTY BOOP character on the defendant’s t-shirts and handbags did not serve as a trademark because it was the very thing that made the t-shirts and handbags desirable. The panel explained that this made it “functional.” The panel majority also placed emphasis on the facts that the defendants “never designated the merchandise as ‘official’ [family] merchandise or otherwise affirmatively indicated sponsorship” and, moreover, the family “did not show a single instance in which a customer was misled.” Holy cow. I see several issues here, e.g., how does this square with: (a) the concept that a likelihood of confusion as to whether some form of legal permission was required to use an image is indeed actionable confusion; (b) the concept that actual confusion isn’t required; and (c) prior 9th Circuit (and other circuit) decisions that where the alleged trademark is the very thing consumers desire, appropriating it is infringement and is not insulated by functionality doctrine. See Automotive Gold, Inc. v. Volkswagen of America, Inc., 457 F.3d 1062 (9th Cir. 2006) (citing the Nike Swoosh, the Playboy bunny ears, the Mercedes tri-point star, and the Ferrari stallion). And where does this leave Mr. Clean, Aunt Jemima, the Jolly Green Giant, Tony the Tiger, the Pillsbury Doughboy, the Geico Gecko, and, well, you get the picture.
But wait, there’s more! The panel majority then decided that, since it had gone this far astray, it might as well throw in a little overbroad dictum to boot. So it went on to opine that the family’s claim was also precluded by the Supreme Court’s decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003)—another decision that neither party had cited or discussed. (So much for the time-worn truism that the whole point of the adversarial process is to sharpen the issues for decision.) The panel stated that Dastar precluded the assertion of any trademark rights in the BETTY BOOP character because the family couldn’t prove ownership of the copyright in the character. What? The panel majority reasoned that Dastar stands for the proposition that “a party may not assert a trademark infringement action against an alleged infringer if that action is essentially a substitute for a copyright infringement action.” Yikes! That is quite an overstatement of Dastar, in my view. In other words, if you think you own a design mark that consists of copyrightable expression, you’d better be able to prove you own the copyright too. Or to say it a different way, if you decide to adopt a public domain graphic as a trademark, you’re out of luck. Of course, Dastar said no such thing, as it concerned a section 43(a) action for failure to provide correct attribution concerning who compiled and edited a video consisting of a compilation of war footage (a/k/a “implied reverse passing off”), not a traditional claim for trademark infringement. The whole point of Dastar was that failure to correctly attribute who contributed to the creation of a product was not a representation of “source” actionable under the Lanham Act. But, of course, in contrast, a classic trademark infringement action is precisely that: an action to stop confusion as to source. And this case was not about which Asian or Central American sweatshop actually produced the t-shirts or handbags (with or without child labor and 18 hour-days), but whether they were sponsored by the owners of the BETTY BOOP mark.
Now, I’m not definitively saying that the trademark aspect of this decision is wrong—I want to think about it some more—but, sheesh, there’s a lot of “stuff” to chew on here.
If this decision isn’t reversed on en banc rehearing, it will surely spawn a whole raft of law review case notes and other articles.
UPDATE: Having thought a little more about it, the "Job's Daughters" part of the trademark holding has potentially grave implications for professional and college logo licensing. People generally buy these sports/college logo clothing not for the "assurance of quality through source identifying" connotation of the team's or college's logo, but because they desire to wear clothing with the logo for associational or other reasons, such as liking the way it looks. Just like wearing a character such as, say, Betty Boop. Indeed, the Job's Daughters case specifically rejected the 5th Circuit's seminal Boston Bruins licensing decision (510 F.2d 1004 (5th Cir. 1975)), which paved the way for this sort of official licensing.
Wednesday, February 16, 2011
9th Circuit: Links to competing services turn cybersquatting into infringement
The 9th Circuit today ruled that an “Internet entrepreneur” (possibly a euphemism for “cybersquatter”) who ran a website at the address not only was guilty of cybersquatting, but also infringed VeriCheck’s VERICHECK mark. What is interesting about the case is that the infringing website was not for a competing service, but was one of those typical “cybersquatter” sites that simply lists lots of seemingly random links to several third party sites. These listings, however, included links to sites of competitors of VeriCheck. Although the Court did not say who was responsible for the appearance of those links (e.g., the cybersquatter or his ISP), the mere existence of links to competing services turned cybersquatting into cybersquatting + infringement (with a dollop of attorneys’ fees).
The case is Lahoti v. VeriCheck, Inc., No. 10-35388 (9th Cir. Feb. 16, 2011) (previous appeal discussed here).
The case is Lahoti v. VeriCheck, Inc., No. 10-35388 (9th Cir. Feb. 16, 2011) (previous appeal discussed here).
Tuesday, February 08, 2011
9th Circuit: Amended Federal Dilution Law Does Not Require Defendant’s Mark to be “Identical or Nearly Identical” to Plaintiff’s
The 9th Circuit today revived a federal trademark dilution claim because the district court used the “identical or nearly identical” standard in its analysis of the claim. In Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., No. 09-16322 (Feb. 8, 2011), Levi Strauss claimed that the stitching pattern on the back pockets of certain A&F jeans diluted Levi’s famous “arcuate” stitch design. The district court instructed the advisory jury to determine whether the patterns were identical or nearly so. Based in part on their advisory finding that the marks did not meet this standard, the district court found no dilution.
The 9th Circuit reversed and remanded. It found this standard to have its genesis in cases under state dilution laws and under the original version of the federal dilution act. Although more recent 9th Circuit decisions had repeated this standard in cases involving the 2006 amended version of the dilution statute, the Levi panel did not believe these decisions had squarely addressed the issue. Performing its own analysis, the panel held that the 2006 amendments provided no textual support for the “identical or nearly identical” standard. It specifically noted that the amended act targets dilution caused by “the similarity” between marks, and requires assessment of the “degree of similarity.” The panel believed that the lack of any reference to identicality or substantial similarity in the amended statute was a significant omission that precluded any more stringent requirement.
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.
Sunday, November 28, 2010
9th Circuit decides that "naked licensing" led to abandonment of mark
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).
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).
Saturday, September 11, 2010
Three recent trademark and copyright decisions of note
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).
Wednesday, August 04, 2010
TV Guide summaries of recent TM and copyright decisions
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.
Sunday, July 11, 2010
Three Interesting Trademark Decisions
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, 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.)
Tuesday, June 29, 2010
9th Circuit (Kozinski) opinion on dilution of non-coined marks
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."
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."
Monday, May 10, 2010
Ninth Circuit enjoins unauthorized sale of “VW” badges on a marquee license plate
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)
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)
Tuesday, April 27, 2010
Ninth Circuit Decision on the line between descriptiveness and suggestiveness
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.
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.
Tuesday, November 17, 2009
Unduly long 9th Circuit opinion on boundary between descriptive and suggestive marks
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.
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.
Monday, September 21, 2009
Couple of Marginally Interesting TM Decisions (9th Cir. and Fed. Cir.)
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.
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.
Tuesday, August 25, 2009
9th Circuit decision on "tacking" doctrine in context of an evolving trademark design
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??
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??
Sunday, July 26, 2009
9th Circuit TM decision: standards for preliminary injunction ordering product recall
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).
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).
Saturday, March 28, 2009
9th Circuit decision on laches and "public interest" factor in trademark injunction case
In a 2-1 decision in Internet Specialties West, Inc. v. Milon-DiGregorio Enterprises¸ No. 07-55087 (March 17, 2009), the Ninth Circuit affirmed an injunction requiring an Internet service provider to stop using its domain name. One of the effects of the injunction was that the defendant’s 13,000 customers, who innocently used the infringing domain name as part of their individual email addresses (e.g., johndoe@infringingname.com), had to change their e-mail addresses.
The majority and dissent agreed on infringement. The fractures in the panel was mainly over laches and whether the “public interest” favored the injunction.
On laches, the issue was whether the defendant’s 6-year investment in its business—which resulted in growth from 2,000 subscribers to 13,000 subscribers—by itself was enough to show that the defendant was prejudiced by the plaintiff’s delay. The dissent thought that, under 9th Circuit precedent, this was a sufficient showing of prejudice. The majority ruled, however, that “mere expenditures in promoting the infringed name” was not enough under 9th Circuit authority: the defendant must also have developed “brand awareness” or “brand recognition” or “an identity as a business based on its mark”—which the majority thought the defendant failed to do prove.
As to the public interest aspect of the injunction, the majority and dissent disagreed on whether the inconvenience to 13,000 customers of informing all of their e-mail contacts of their new e-mail addresses outweighed the general public’s interest in not being confused.
The majority and dissent agreed on infringement. The fractures in the panel was mainly over laches and whether the “public interest” favored the injunction.
On laches, the issue was whether the defendant’s 6-year investment in its business—which resulted in growth from 2,000 subscribers to 13,000 subscribers—by itself was enough to show that the defendant was prejudiced by the plaintiff’s delay. The dissent thought that, under 9th Circuit precedent, this was a sufficient showing of prejudice. The majority ruled, however, that “mere expenditures in promoting the infringed name” was not enough under 9th Circuit authority: the defendant must also have developed “brand awareness” or “brand recognition” or “an identity as a business based on its mark”—which the majority thought the defendant failed to do prove.
As to the public interest aspect of the injunction, the majority and dissent disagreed on whether the inconvenience to 13,000 customers of informing all of their e-mail contacts of their new e-mail addresses outweighed the general public’s interest in not being confused.
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.
Wednesday, September 26, 2007
9th Circuit decision vacating injunction against making disparaging comments about a trademark
The Ninth Circuit today vacated a preliminary injunction prohibiting a defendant from making disparaging comments about a trademark.
The dispute in The Freecycle Network, Inc. v. Oey, No. 06-16219 (9th Cir. Sept. 26, 2007) garnered significant interest from First Amendment law professor types. The plaintiff is a company that encourages people to coordinate recycling efforts to minimize landfill issues. The defendant was previously affiliated with Freecycle, and had initially encouraged Freecycle to protect its FREECYCLE trademark. Later, he changed his mind and decided the public should be free to use “Freecycle” as a generic term to describe the sort of coordinated recycling services that the plaintiff performed. So he began communicating via the Internet encouraging people to use the term generically and to express his opinion that FREECYCLE didn’t qualify as a proper trademark.
The district court enjoined the defendant from making any further statements disparaging Freecycle’s trademark.
On appeal, a bunch of amici screamed and yelled about the First Amendment problems with such an injunction, but the Ninth Circuit avoided the constitutional issue by ruling that: (1) the defendant hadn’t used the mark “in commerce”; (2) even if there had been a “use in commerce,” there was no likelihood of confusion; (3) there is no cause of action under the Lanham Act for “trademark disparagement”; (4) even if there were, the plaintiff hadn’t proved that the alleged elements of its alleged cause of action were satisfied; (5) there was no false statement of fact (only a lay opinion about the legal validity of the mark) and therefore no Lanham Act false advertising; and (6) the Lanham Act contains no provision preventing the generic use of a trademark.
The Ninth Circuit noted, however, that it was expressing no opinion about whether the defendant’s activities were unlawful under any state law claims.
The dispute in The Freecycle Network, Inc. v. Oey, No. 06-16219 (9th Cir. Sept. 26, 2007) garnered significant interest from First Amendment law professor types. The plaintiff is a company that encourages people to coordinate recycling efforts to minimize landfill issues. The defendant was previously affiliated with Freecycle, and had initially encouraged Freecycle to protect its FREECYCLE trademark. Later, he changed his mind and decided the public should be free to use “Freecycle” as a generic term to describe the sort of coordinated recycling services that the plaintiff performed. So he began communicating via the Internet encouraging people to use the term generically and to express his opinion that FREECYCLE didn’t qualify as a proper trademark.
The district court enjoined the defendant from making any further statements disparaging Freecycle’s trademark.
On appeal, a bunch of amici screamed and yelled about the First Amendment problems with such an injunction, but the Ninth Circuit avoided the constitutional issue by ruling that: (1) the defendant hadn’t used the mark “in commerce”; (2) even if there had been a “use in commerce,” there was no likelihood of confusion; (3) there is no cause of action under the Lanham Act for “trademark disparagement”; (4) even if there were, the plaintiff hadn’t proved that the alleged elements of its alleged cause of action were satisfied; (5) there was no false statement of fact (only a lay opinion about the legal validity of the mark) and therefore no Lanham Act false advertising; and (6) the Lanham Act contains no provision preventing the generic use of a trademark.
The Ninth Circuit noted, however, that it was expressing no opinion about whether the defendant’s activities were unlawful under any state law claims.
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