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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

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

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

Happy New Year!

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

To cut to the chase, the court held:

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

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

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

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

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

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

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

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

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

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

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

35 U.S.C. § 145

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

15 U.S.C. § 1071(b)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Prolix 9th decision on copyright “first sale” defense

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

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

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

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

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

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

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

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

Three recent trademark and copyright decisions of note

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

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

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

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

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

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

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

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

Two 7th Circuit trade dress/functionality decisions

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

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

4th Circuit “tied product” contributory infringement decision

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

TV Guide summaries of recent TM and copyright decisions

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

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

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

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

11th Circuit trademark decision puts cart before horse

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

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

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

Three Interesting Trademark Decisions

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.)