10th Circuit decision on whether TTAB proceedings and old C&D letters create DJ jurisdiction

I think this is the first appeals court decision to address whether the nascently infamous footnote 11 in MedImmune, Inc. v. Genentech, Inc., 127 S. Ct. 764 (2007) applies to trademark cases. Yup, it does.

In Surefoot LC v. Sure Foot Corp., No. 06-4294 (10th Cir. July 8, 2008), the DJ defendant had sent the DJ plaintiff several cease & desist letters making accusations of infringement in 1998-99. Then it stopped. In 2002, the DJ plaintiff started filing applications to register the mark at issue. When the first one issued, the DJ defendant petitioned the TTAB to cancel it. After that, any time the DJ plaintiff filed an application, the DJ defendant opposed it. All these TTAB disputes are still pending. But since 1999, there were no further threats of infringement lawsuits.

The 10th Circuit first held that MedImmune applied to Lanham Act cases and that its footnote 11 overruled its former “reasonable apprehension of imminent suit” standard for DJ jurisdiction in trademark cases. It held that under MedImmune the controversy must be “definite and concrete, touching the legal relations of parties having adverse interests” and that the dispute be “real and substantial and admit of specific relief through a conclusive decree, as distinguished from an opinion advising what the law would be upon a hypothetical state of facts.”

Applying this test, the 10th Circuit held that the combination of the several TTAB proceedings, taken together with the 1990s cease and desist letters and threats (which the DJ defendant never withdrew) satisfied the requirements for DJ jurisdiction. It remanded for the district court to determine whether it should nevertheless exercise its discretion (based on a multi-factor test) not to entertain the suit.

The court refused to opine whether the lapse of more time since the last cease and desist letters or fewer TTAB proceedings would satisfy the new, yet old, MedImmune test.

5th Circuit Adopts Presumption of Irreparable Harm by Rejecting Presumption of Irreparable Harm

In Paulsson Geophysical Serv., Inc. v. Sigmar, No. 07-50406 (5th Cir. May 23, 2008), the US plaintiff licensed the named US defendant (Sigmar) and his US company (RSI) to "promote Paulsson's MASSIVE 3D VSP services in Mexico." RSI immediately turned around and, going beyond merely "promoting" Paulsson's services, "licensed" its Mexican sister company, RSM, to "use" Paulsson's mark in Mexico, and RSM did. In Mexico. They just didn't use Paulsson's services with Paulsson's mark.

Paulsson sued in the US and got a preliminary injunction. The 5th Circuit affirmed. First it found it had extraterritorial subject matter jurisdiction even though the infringement was limited to Mexico because US companies were involved, there was no conflict with Mexican law, and the defendants obtained financing for their Mexican business in the US. In so holding, the 5th Circuit made fairly clear that, for a case claiming trademark infringement in a foreign country to have enough "effect" on US commerce to trigger the Lanham Act, a court need not limit its inquiry to the actual challenged transaction, but can look at all sorts of ancillary activity too.

Now to the irreparable harm issue. As you know, courts are beginning to apply eBay's holding ("no broad rules for or against patent injunctions") to the "presumption of irreparable harm" concept in trademark cases. See, e.g., N. Am. Med. Corp. v. Axion Worldwide, Inc., No. 07-11574, 2008 WL 918411, at *12 (11th Cir. Apr. 7, 2008), which I previously blogged on. The Fifth Circuit had been the last holdout on adopting this presumption. While patting itself on the back for holding out, and citing eBay, the Fifth Circuit in this case then turned around, however, and -- in effect -- adopted the presumption. It said it wasn't, but, really, it was. It said that "loss of control of the quality" of services RSM was offering (and mentioning the size of the RSM transaction), was enough to prove irreparable harm.

So the lesson here is this: To get the presumption of irreparable harm in TM cases in the 5th Circuit, simply have your client speculate, er, I mean "testify," about the potentially devastating consequences of the lack of control (i.e., "OMG! What if the defendants' [goods] [services] are sub-par? Their customers will probably think it's us!! And they'll, like, hate us forever!! OMG!"). And voila! Irreparable harm! (Just don't say "presumption.")

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:

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.

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.

6th Circuit decision concerning a spat between wineries over trademark use of a geographically descriptive AVA name

Just because the 6th Circuit doesn't encompass Napa Valley doesn't mean it can't mediate spats between wineries. In Leelanau Wine Cellars, Ltd. v. Black & Red, Inc., No. 06-2391 (6th Cir. Sept. 20, 2007), the 6th Circuit confronted a claim that the winery name "Chateau de Leelanau Vineyard and Winery" infringed plaintiff's registration for LEELANAU CELLARS. Michigan's Leelanau Peninsula is a governmentally-approved American Viticultural Area (AVA).

While the 6th Circuit's review of the grant of summary judgment to the plaintiff was largely fact-intensive, it did not that the common element of the two marks (Leelanau) is geographically descriptive, and therefore weak, and this weakness was highlighted by the donning of AVA status to Leelanau Peninsula. The opinion also contained some useful discussion concerning factors that affect the admissibility and probative value of confusion surveys.

11th Circuit decision concerning when a district court can overturn credibility determinations of magistrate judges on r&r's

In Amlong & Amlong, P.A. v. Denny's, Inc., No. 04-14499 (amended Sept. 17, 2007), the district judge had referred a sanctions motion to the magistrate judge to hold an evidentiary hearing. After hearing extensive testimony, the magistrate judge reported and recommended that the sanctions motion be denied, finding that the attorney in question did not act in bad faith. The district judge, conducting its "de novo determination" as required by 28 U.S.C. § 636(b), disagreed after reviewing the transcript of the hearing before the magistrate judge, and concluded that the testimony showed bad faith.

The 11th Circuit held that the district judge erred in rejecting the magistrate judge's implicit determination that the lawyer's testimony concerning the acts in question and the motives for them was credible. The appeals court held that "[r]ejecting credibility findings made by a magistrate judge without holding a new hearing is permissible only when there is an 'articulable basis for rejecting the magistrate's original resolution of credibility.' " Since there wasn't any such "articulable basis" here, the court reversed.

10th Circuit decision (unpublished) on the phrase "anything of value" in the Computer Fraud and Abuse Act

The Computer Fraud and Abuse Act (18 U.S.C. § 1030) provides a private civil cause of action against one who "knowingly and with intent to defraud, accesses a protected computer without authorization, or exceeds authorized access, and by means of such conduct furthers the intended fraud and obtains anything of value" (there are other required elements as well). In Triad Consultants, Inc. v. Wiggins, No. 07-1007 (10th Cir. Sept. 17, 2007) , it was alleged that fired President and COO (Wiggins), who was required by agreement to return all Triad property, unsuccessfully tried to get a third-party to restore a back-up tape of Triad computer data into a useable format.

The 10th Circuit held that Triad failed to state a claim because the "complaint set forth a sequence of facts showing that [Wiggins] never obtained any information from the tapes." Accordingly, "[b]ecause Triad alleged no facts showing that Wiggins accessed the information on the tape, it cannot establish one of the elements of a claim under § 1030(a)(4), that Wiggins obtained "anything of values." The court rejected the argument that the tapes themselves had intrinsic value, because "value is relative to one's needs and objectives," and if Wiggins couldn't use the information on the tapes, then they had no value to him.

6th Circuit decision employing an uber-lenient causation standard for copyright damages

The Sixth Circuit recently issued a decision, that, in my opinion, stretched the well-established causation requirement for copyright damages beyond the breaking point.

In Thoroughbred Software Int'l, Inc. v. Dice Corporation, No. 06-2080 (6th Cir. June 14, 2007), the plaintiff licensed software to the defendant. Under the license, the licensee was permitted to copy and install the software on end-users' computers, but had to pay a license fee each time it did so. Further copying by the defendant was prohibited. At trial, the plaintiffs proved that the defendant made several copies of the software for which it did not pay the plaintiff. Some involved software the defendant installed on end-users' computers. Some copies were never installed on anyone's computer.

The most interesting question on appeal was whether the plaintiff should have been awarded damages for the copies that were NOT installed on any end-user's computer. They were just sitting there in defendant's office, gathering dust.

The defendant argued that, since it never installed the uninstalled copies on anyone's computer, the plaintiff didn't lose any of the licensing fees provided in the license for them, so there was no damage. Sixth Circuit acknowledged that a plaintiff "must prove the existence of a causal connection" between the alleged infringement and the alleged damage. It then pointed to a 2d Circuit case where someone had used a copyrighted object in an ad campaign without obtaining permission. The 2d Circuit case held that the copyright owner should have received a reasonable royalty for the use of the copyrighted object in the ad campaign.

The 6th Circuit then stretched this holding even further (way too far, in my view), and used it as the basis to hold that the plaintiff should receive a reasonable royalty even as to the copies that were made but never used. Its basis for doing this was that it was more equitable to give something to the plaintiff for the unlawful copies than to let the wrongdoer off scot-free as to those wrongly-made copies. This would seem to make a mockery of the causation requirement, as this "principle" would apply in almost every case, causation or not.

So if you want a broad interpretation of the causation requirement, here's your authority.

5th Circuit Shoots Down Creative Attempt to Remove a State Law Trademark Case

The Fifth Circuit recently shot down a creative attempt to remove a state court case claiming trademark infringement under Texas law (not under the Lanham Act) to federal court. In In re Hot-Hed Inc., No. 06-20893 (5th Cir. Jan. 30, 2007), the plaintiff sued in Texas state court, alleging trademark dilution under the Texas Business & Commerce Code, and trademark infringement and unfair competition under Texas common law. In its prayer for relief, the plaintiff demanded “attorneys’ fees as allowed by law.” The defendant removed to federal court, alleging that the claim raised a “federal question.”

The plaintiff moved to remand, saying that its complaint didn’t say a word about federal law. The defendant convinced the district court, however, that the phrase “attorneys’ fees as allowed by law,” which appeared in the prayer, must have meant federal law (i.e., the Lanham Act), since none of the three asserted Texas law claims permit the recovery of attorneys’ fees.

On mandamus, the Fifth Circuit disagreed. It said that Texas case law indicates that the plaintiff might have been able to ask for a declaratory judgment under the Texas Declaratory Judgment Act, even though the complaint didn’t mention the Texas D.J. Act or demand declaratory relief. And under Tex. Civ. Prac. & Rem. Code § 37.009, attorneys’ fees are available for a D.J. under the Texas D.J. Act. Applying the principle that “any doubt about the propriety of removal must be resolved in favor of a remand,” the Fifth Circuit ordered the district court to check out if diversity jurisdiction existed, and, if not, to remand. The Fifth Circuit also seemed swayed by the principle that removal of a trademark case is improper if the plaintiff doesn’t clearly state he’s seeking relief under the Lanham Act.

6th Circuit Decides Interesting Copyright and Trademark Case Involving Repackaging and Reselling of Audio Recordings of Books

First the copyright part of the case. Under copyright law, the legitimate owner of a “copy or a phonorecord” can “sell or otherwise dispose of them” without the consent of the copyright owner. 17 U.S.C. § 109(a). There’s an exception, however, in § 109(b)(1)(A). It says that:

Notwithstanding the provisions of subsection (a), unless authorized by the owners of copyright in the sound recording . . . and in the case of a sound recording in the musical works embodied therein, . . . the owner of a particular phonorecord . . . may [not], for the purposes of direct or indirect commercial advantage, dispose of, or authorize the disposal of, the possession of that phonorecord . . . by rental, lease, or lending . . . .”

This exception came about in the early 1980s because record companies were concerned that they were losing too much business through record and tape rentals (to people would simply copy the rented music). In Brilliance Audio, Inc. v. Haights Cross Communications, Inc., No. 05-1209 (Jan. 26, 2007), the question was whether this exception applied to rentals of audio recordings of books. The Sixth Circuit though that the statutory language could go either way. (I had to read this part of the opinion three times to see how it could be read NOT to include recordings of books, but I digress.) Because it considered the language capable of going either way, the court jumped into the dreaded legislative history and discussed evanescent notions of “policy.” To make a long story short, the court decided that, in 1984, Congress was concerned only with music recordings. Nobody mentioned books on tape at all. And as to policy, the court decided that exceptions to the first sale doctrine should be construed narrowly, since such exceptions would “upset the bargain” in copyright law between copyright owners (who want to protect their creative works) and the rights of owners of stuff (to do what they want with their stuff). So it concluded that first sale doctrine exonerated the defendant on the copyright count.

The trademark claim was that the defendant was repackaging and re-selling the audio books in violation of the Lanham Act. The plaintiff sold two different versions of the audio books: one for consumers and one for libraries. It claimed that the defendant was taking the consumer versions and labeling them as library versions. The court (correctly in my view) upheld the trademark claim in the face of a first sale defense because (a) the plaintiff alleged that the defendant’s labeling didn’t make clear that the product was repackaged, plus (b) the goods weren’t “genuine” because there were differences between the two versions.

October TM Case Roundup

There have been a number of circuit court decisions involving trademark law in the past month, but I haven’t been as current as I should have been in reporting them. So here are the thumbnail sketches on the October roundup:

Federal Circuit Nixes Trademark Damages in Patent Case as “Impermissible Double Recovery” – In Aero Products Int’l, Inc. v. Intex Recreation Corp., No. 05-1283 (Fed. Cir. Oct. 2, 2006), the Federal Circuit used Federal Circuit law, not regional circuit law, in determining that, where “damages flow from the same operative facts,” a recovery for trademark infringement as well as for patent infringement is an impermissible double recovery. In that case, the court held that the operative facts were “sales of the infringing mattresses.” To me, this seems like a really broad-brush holding. What about the value added to the sales of the infringing mattresses by using a confusingly similar mark? What about damage to the company’s goodwill? What about damages for possible remedial advertising? And who knows what other potential types of damage can crop up despite the fact that the “operative facts” of the case revolve around “sales of infringing _______.” Once again, the Federal Circuit issues a shaky decision on trademark law.

Ninth Circuit Decides Case Involving Priority & “Tacking” Issues; Court Also Holds that the “Innocent Prior User” Defense of 15 U.S.C. § 1115(b)(5) Does NOT Require that the Junior Use be in a Geographically Remote Area – In Quicksilver, Inc. v. Kymsta Corp., No. 04-55529 (9th Cir. Oct. 6, 2006), the priority/tacking issue was very fact-specific and therefore had no earth-shattering legal pronouncements. In holding that the defendant innocently adopted and used its allegedly infringing mark before the plaintiff registered its mark, the Ninth Circuit held that § 1115(b)(5) doesn’t have the same “geographic remoteness” element that the common law has. There’s apparently a split in the circuits on this, the 9th and the 4th Circuits say no remoteness required; the 6th has required geographic remoteness, and Professor McCarthy agrees.

Ninth Circuit Holds that “Progressive Encroachment” Does Not Preclude a Laches Defense Where the Defendant Did Not Change the Mark to be More Similar and Where the Defendant’s Increased or New Sales Simply Represented “Normal Business Growth” – In Tillamook Country Smoker, Inc. v. Tillamook County Creamery Ass’n, No. 04-35843 (9th Cir. Oct. 11, 2006), the Ninth Circuit faced a pretty egregious case of laches and estoppel. The plaintiff tried to wriggle out of it by pointing to “progressive encroachment” doctrine. Under this principle, laches can be excused if the defendant changes its business significantly so as to make the likelihood of confusion much greater. This typically is shown by pointing to changes in a mark to make it more similar, or changes in products or retail outlets that bring the defendant closer to what the plaintiff does. In this case, the 9th Circuit held that where a defendant’s changes are simply natural business growth, progressive encroachment doesn’t apply, and a lazy plaintiff is out of luck.

Federal Circuit Decides that the Name Given to a Seed Varietal in a PVP Certificate Can’t Later be Registered as a Trademark Because, by Definition, It’s Generic – The court suggested that a way around this is to have two names for it: one generic and one the brand name. See In re Pennington Seed, Inc., No. 06-1133 (Fed. Cir. Oct. 19, 2006).

Sixth Circuit Upholds Summary Judgment that Hummer Grille Design and Overall Appearance Is Protectible and Infringed – In General Motors Corp. v. Lanard Toys, Inc., No 05-2085 (6th Cir. Oct. 25, 2006), the GM sued a toy maker over a toy car that looked like a HUMMER, alleging that it infringed its registered grill design trademark and the overall (unregistered) trade dress of its HUMMER vehicle. The Sixth Circuit had not trouble upholding summary judgment that the grill design mark was infringed. The trade dress issue presented more problems, but the Court ultimately upheld summary judgment that the trade dress was non-functional, had secondary meaning, and was infringed. In its analysis, there were two noteworthy points. First, the 6th Circuit held that GM adequately described the trade dress when it described the trade dress it sought to protect as “the exterior appearance and styling of the vehicle design which includes the grille, slanted and raised hood, split windshield, rectangular doors, squared edges, etc.” Second, the 6th Circuit refused to preclude two secondary meaning surveys that were conducted several years after infringement began. While not questioning that secondary meaning is to be judged at the time infringement begins, the 6th Circuit nevertheless refused to issue a blanket rule that post-infringement surveys are irrelevant. It noted that it didn’t want to issue a rule that would have the effect of excluding such a potentially probative tool in the vast majority of cases, and said that district courts could assess whether to reduce the probative value to give a post-infringement secondary meaning survey by considering the amount of time between the infringement start date and the date of the survey.

Seventh Circuit Chastises Parties and District Court for Treating a Trademark Settlement Agreement as Though It Were a Consent Judgment – This decision shows what trouble, confusion, and expense can occur when the parties don’t follow rule 65(d) to the letter. If parties to a trademark suit (or any other kind of suit) want their settlement to be enforceable as a court order (i.e., as a consent judgment rather than as a private settlement agreement) Rule 65(d) requires that the judgment itself be specific and that its directives not refer to or incorporate terms from other documents. In Blue Cross and Blue Shield Ass’n v. American Express Co., No. 05-4004 (7th Cir.Oct. 30, 2006), the district court and the parties thought American Express’s agreement that it wouldn’t use the term BLUE as a trademark was a consent judgment. But it wasn’t. It was a regular settlement agreement. The only order the district court entered was an order dismissing the case and saying that it retained jurisdiction to enforce the agreement. This problem resulted in the appeals court ordering multiple briefs on jurisdiction and, generally, a lot of time and money being needlessly spent. As the court dryly noted about the lawyers’ inattention to this problem: “If these lawyers were physicians, their patients would be dead.” (The specifics of the 7th Circuit’s resolution of whether AmEx complied with the agreement aren’t really significant.)

6th Circuit decision involving interplay of patents with functionality defense

In a sea of not-so-interesting recent decisions, a recent trade dress decision of the 6th Circuit stood out.

The case is Fuji Kogyo Co. v. Pacific Bay International, Inc., No. 05-5854 (6th Cir. Aug. 23, 2006). The plaintiff was trolling for a finding that the defendant had infringed its asserted trade dress rights in the shape of the eyelets that are attached to fishing rods (you know, those things that the line goes through). The plaintiff had previously several utility patents AND several design patents on the various eyelet configurations it asserted. After a bench trial, the district court found them all functional and threw back the plaintiff's case.

The 6th Circuit affirmed. It first noted that the design patents provided presumptive evidence of non-functionality, since you can't get design patents for functional stuff. But the appeals court nevertheless with the district court that there was a whole school of evidence that rebutted that presumption of nonfunctionality.

In its discussion, the 6th Circuit did several interesting things.

First, it used the old CCPA "Morton-Norwich test" to determine if the claimed trade dress was functional. As to the part of the Morton-Norwich test that looks at whether any utility patent tout the utilitarian features claimed as trade dress, the 6th Circuit, citing TrafFix Displays, found that the plaintiff's expired utility patents were literal embodiments of two of the asserted eyelet configurations.

Going further, the 6th Circuit used patent law's doctrine of equivalents in holding that two other of the asserted eyelet configurations, while not literally within the claims of the patents, performed substantially the same function in substantially the same way to obtain the same result. The 6th Circuit rejected the plaintiff's argument that the district court was required to first do a claim construction analysis to determine if the patents could be VALIDLY be construed to cover the asserted trade dress. (In other words, the plaintiff, who wanted a narrow reading of the patent, wanted the court to check out the prior art so that the plaintiff could argue for a narrow range of equivalents.) The 6th Circuit rejected this interesting argument, holding that the district court's job wasn't to construe the patent in such a way as to avoid a finding of invalidity, but simply to determine if what it said (both in claims and in the specification) was probative, relevant evidence on the issue trade dress functionality.

I think the Court's overall analysis makes sense, and I particularly like the way it implicitly holds that the user-friendly Morton-Norwich test is fully consistent with the Supreme Court's confusing TrafFix decision. Anytime an appeals court says, either implicitly or explicitly, that TrafFix didn't turn everything upside down and some of the tried-and-true old precedents still apply, I'm a happy camper, er, fisherman.

Three not-so-interesting circuit decisions -- TV Guide version

Here are links to 3 recent earth-(non)shattering trademark and copyright decisions.

In Schwan's IP, LLC v. Kraft Pizza Co., No. 05-3463 (8th Cir. Aug. 18, 2006), the court held that the mark BRICK OVEN is generic for . . . . . no, not brick ovens, but for . . . . . wait for it . . . . . . PIZZA!! Descriptive, I could see. But generic??? "Um, waiter, I'd like to order the brick oven with extra pepperoni. And can you get the busboy to structurally reinforce our table while we wait?" Sheesh.

In R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, No. 05-1456 (7th Cir. Aug. 24, 2006), the Seventh Circuit came to the unremarkable conclusion that the sale in the U.S. of "gray market" goods -- i.e., goods that are in fact produced under authority of the trademark owner but exclusively sold outside the U.S. -- can constitute infringement if the gray market goods are "materially different" than their U.S. market counterparts.

And in T-Peg, Inc. v. Vermont Timberworks, Inc., No. 05-2866 (1st Cir. Aug. 18, 2006), the First Circuit reversed a grant of summary judgment to the defendant in a copyright case involving the Architectural Works Copyright Protection Act amendments to the Copyright Act. The court's analysis was fact-intensive, focusing on the substantial similarity issue.

3d Circuit decision on whether a TTAB decision collaterally estops a later infringement case

The Third Circuit recently decided that a district court infringement case was properly dismissed on grounds of collateral estoppel based on a prior TTAB cancellation proceeding between the parties on the same mark. The case was more notable -- at least from a trademark standpoint -- for what it DIDN'T discuss, rather than what it did discuss.

The 3d Circuit's decision in Jean Alexander Cosmetics v. L'Oreal USA, Inc., No. 05-4321 (3d Cir. Aug. 14, 2006), focused primarily on the element of collateral estoppel that requires that the issue on which collateral estoppel is sought have been "necessary to the decision" in the earlier litigation. Because the TTAB decision was based on alternative holdings, either one of which would have supported the ultimate decision, the Third Circuit engaged in an extended discussion of this issue, trying to figure out whether it preferred the position of the First Restatement of Judgments (alternative holdings can result in preclusion) or the Second Restatement (neither of alternative holdings can result in preclusion). It chose the First Restatement's position.

Oddly, the Third Circuit didn't even raise the issue of whether the TTAB decision on likelihood of confusion was identical to the issue of likelihood of confusion to be litigated in the district court infringement action. You might recall that the Second Circuit held nine years ago that there sometimes are substantial differences in the factors and facts that the TTAB considers in its cases (the TTAB does not always assess what is actually going on in the marketplace and frequently limits its analysis to what is stated on a registration or application) and what district courts consider in infringement cases (district courts, at least in the 2d Circuit, are supposed to look at what is going on in the "entire marketplace context"). See, e.g., Levy v. Kosher Overseers Ass'n of Amer., Inc., 104 F.3d 38 (2d Cir. 1997) (sorry, no link). The Levy court refused to apply collateral estoppel where the TTAB's decision didn't assess those marketplace factors.

9th Circuit decision on whether TM abandonment occurs DURING a sell-off of inventory of TM'ed goods

In an interesting and well-reasoned decision, the Ninth Circuit recently addressed whether a trademark is abandoned during a sell-off of inventory of trademarked goods, but before a complete cessation of the liquidation of trademarked inventory. The answer, it said, was NO.

The main dispute at issue in Electro Source LLC v. Brandess-Kalt-Aetna Group, Inc., No. 04-55844, -55909, -56648 (9th Cir. Aug. 14, 2006), was who owned a mark: a party that took an assignment from a trademark owner while the trademark owner's business was in the process of winding down and while he was slowly selling off remaining inventory; or an unrelated party that had been using the mark since before the assignment. The unrelated third party alleged that the assignee got no prior rights from the assignor because assignor abandoned the mark when he decided to wind-down the business and sell off his inventory of trademarked goods.

The 9th Circuit held that there was no abandonment. It explained that abandonment requires two elements: (1) discontinuation of "bona fide use of the mark in the ordinary course of trade"; and (2) intent not to resume such use. Taking the element of intent first, the 9th Circuit held that, so long as there is continued use, a "subjective intent to abandon the mark or business" or a "prospective declaration of intent to cease use in the future" by itself isn't enough to result in abandonment. The court concluded that "unless the trademark use is actually terminated, the intent not to resume prong of abandonment does not come into play."

As to whether there was a discontinuation of use, the 9th Circuit held that "abandonment requires complete cessation of trademark use." Further, "[e]ven a single instance of use is sufficient . . . if such use is made in good faith." It explained that "[g]ood faith nominal or limited sales of trademarked goods are sufficient . . . where the circumstances legitimately explained the paucity of sales." A wind-down or sell-off qualifies as "good faith" use. The court distinguished such "good faith" sales from sales taking place under a "trademark maintenance program," which are insufficient to avoid abandonment.

Two MORE recent TM decisions in the 9th Circuit

The Ninth Circuit has always seemed to have more than its fair share of interesting trademark cases. Here are two more noteworthy recent decisions.

Aesthetic Functionality of Audi and VW logos on car accessories -- A few weeks ago, I noted a decision of the 6th Circuit concerning the use of a car manufacturer's logo on replacement grilles made by an unlicensed company, wondering why the issue of aesthetic functionality never came up. Well, in Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., No. 04-16174 (9th Cir. Aug. 11, 2006), the issue was squarely raised and addressed. The case involved key chains, license plates, and license plate frames bearing exact replicas of the VW circle logo and the Audi four-ring logo. The district court had granted summary judgment to the unauthorized manufacturer of these items, holding that its use of the logos was aesthetically functional as a matter of law because the logos themselves were what drove the sales of the items: people liked the logos.

Natch, Audi and VW appealed. The 9th Circuit reversed. In a well-reasoned opinion, the Court discussed the history of the elusive concept of aesthetic functionality, from the 1938 Restatement of Torts through the Supreme Court's recent TrafFix decision. Ultimately, the 9th Circuit held that where the "entire significance" of the allegedly aesthetically-functional feature is its value as an identifier of source, then use of the mark is "naked appropriation" rather than appropriate. The Court -- correctly, in my view -- pointed out that to hold otherwise "would be the death knell for trademark protection."

Adoption (in dictum) of the "Sublicensing Rule" in TM cases -- In a case involving the tortuous twists and turns in the saga of the GLENN MILLER mark for music and related stuff, the 9th Circuit in Miller v. Glenn Miller Productions, Inc., No. 04-55874 (9th Cir. July 19, 2006), rejected a licensee's argument that it should be able to sub-license without express permission from the licensor in the absence of a prohibition against it. It adopted the rule that licensees can't sublicense without express permission (which was born in patent and copyright cases) because if the rule were otherwise it would make it hard for a licensor to exercise its duty to supervise and control use of its mark, thus undermining markholders' rights. Makes sense to me.

The problem, however, was that the 9th Circuit also rejected the licensors' claims based on laches, thus making the entire discussion about how the licensors were wronged dicta. That darn activist 9th Circuit! Next thing, they'll be ruling that the Pledge of Allegiance can by copyrighted by atheists. God . . . , er, . . . Someone help us.

Two (relatively) recent TM decisions

I'm a little behind because of vacation, etc., but here are two interesting appeals court decisions from the last few weeks.

11th Circuit "Fair Use" Decision -- In International Stamp Art, Inc. v. United States Postal Service, No. 05-13492 (11th Cir. July 18, 2006), the plaintiff owned a registration for a perforated border (like on a stamp) in connection with a line of "stamp art" cards and postcards. The USPS had previously licensed certain of its stamp designs to the plaintiff for use on these cards, but then went into business for itself selling them (with the obligatory "perforated border"). The plaintiff sued and the USPS raised the "fair use" defense, arguing that it didn't use the perforated border as a mark, but that the border simply descriptively depicted a portion of the stamp that was reproduced on the card.

The only issue on appeal was whether the USPS acted in "good faith." The 11th Circuit held that good faith means only that the defendant did NOT "intend to trade on the goodwill of the trademark owner by creating confusion as to the source of the goods or services." The 11th Circuit found that the USPS satisfied this standard, in part because there was no evidence of bad faith and in part because the USPS "provided affirmative evidence of good faith in showing that it prominently places its own familiar Eagle trademark on the backs of its stamp art products thereby identifying them as Postal Service products rather than the products of anyone else in the marketplace."

An explicit holding that use of a house mark supports a showing of good faith is a useful precedent to remember.

9th Circuit Decision Warning About Promiscuous Use of Ex Parte TROs -- In Reno Air Racing Association v. McCord, No. 04-16001 (9th Cir. July 7, 2008), the 9th Circuit went on a rant about how important it is for district court to remember that Rule 65(b) has stringent requirement that must be met before a court can issue a TRO without notice. Essentially, the 9th Circuit said that ex parte TROs are appropriate only where (a) it is impossible for the plaintiff to find the defendant; or (b) the defendant can be found, but the plaintiff can make a SPECIFIC showing that the defendant would disregard a direct court order AND would hide or dispose of the goods before the hearing could take place. The specific showing must either be of the defendant's past activities or of activities of similarly situated persons.

The court also talked a bit about what language to use to properly describe the enjoined trademark in an injunctive order.

Having been bushwhacked (twice) by too-casually-issued ex parte TROs, I'm going to tuck this one away for future use.

6th Circuit decision in TM case involving GM emblems on replacement grilles for cars

You know how cars' grilles have the manufacturers' trademark designs on them? Well, in General Motors Corp. v. Keystone Automotive Industries, Inc., No. 05-1712 (June 30, 2006), GM sued a manufacturer of replacement grilles over that issue. The replacement maker didn't actually put the emblem itself on it. It put a piece of plastic in the outline of the emblem, onto which the official emblem (which could be separately purchased from GM) could be affixed. The court called this plastic outline a "placeholder."

The district court granted summary judgment for the replacement maker on likelihood of confusion. The 6th Circuit agreed as to point-of-sale purchaser. They knew they were getting a non-GM replacement grille. But the 6th Circuit said that folks downstream in the river of commerce might be confused, and any shoddiness could be incorrectly attributed to GM. (There was also an issue of fact as to whether the placeholder was visible to downstream commerce waders.)

This is all pretty straightforward. But the silent "elephant in the room," in my mind, was aesthetic functionality. The Court noted in passing that, after GM filed suit, the defendant removed the placeholders in the shapes of the GM trademarks, and the defendant's sales of replacement grilles immediately went down. Turns out that buyers of replacement grilles actually DESIRE to have grilles with the emblems on them.

So why didn't the 6th Circuit "grille" the parties on this issue? It seems like a textbook example of aesthetic functionality. Recall that the Supreme Court in Qualitex Co. v. Jacobson Products Corp., 514 U.S. 559 (1995) , said that "if a design's aesthetic value lies in its ability to confe[r] a significant benefit that cannot practically be duplicated by the use of alternative designs, then the design is functional. The ultimate test of aesthetic functionality . . . is whether the recognition of trademark rights would significantly hinder competition."

Who knows -- maybe the defense wasn't raised. In any event, enjoy.

Eighth Circuit copyright decision on expert testimony and "substantial similarity" test

Can "substantial similarity" of expression be the subject of expert testimony? No, says the Eighth Circuit in The Rottlund Co. v. Pinnacle Corp., No. 05-1296 (8th Cir. June 20, 2006).

The case involved allegations that the defendant infringed plaintiff's copyrights in townhouse design plans. In a copyright case, plaintiffs must show ownership of a valid copyright (this was not at issue) and copying of protected expression. Copying of protected expression can be shown by direct evidence of copying OR indirectly by showing (a) access to the copyrighted materials (this was not at issue) and (b) substantial similarity of both (i) ideas (this was not at issue) and (ii) expression. (The three elements that were not at issue were decided in plaintiff's favor at summary judgment.)

So the real issues left for the jury were: was there direct copying; and were the defendants' works substantially similar to the expression in plaintiff's works?

The Eighth Circuit explained that to determine whether there's a substantial similarity of expression, expert opinion and "analytical dissection" (i.e., element-by-element comparison) are impermissible. Instead, substantial similarity of expression is an "intrinsic" issue: it is measured by the response of an ordinary, reasonable person.

The trial court, however, had allowed the defendants to put on an expert who testified regarding what he believed to be key differences between several individual elements of parties' townhouse layouts. He also testified several times that, in his opinion, these differences led him to the conclusion that there was "no copying." The jury apparently believed the expert, and found against the plaintiff.

The Eighth Circuit reversed and remanded for a new trial because the district court not only shouldn't have let the expert analytically dissect the individual elements of expression, but it shouldn't have entertained ANY expert testimony at all on the intrinsic issue of similarity of expression. Because that element depends on the perception of an ordinary, reasonable person, that's something the jury should decide for itself. Further, the Eighth Circuit rejected the defendant's explanation that the expert's testimony was merely rebuttal of some small amount of evidence of direct copying, saying that the expert's testimony was "unhelpful" on the "ultimate issue" of copying.

9th Circuit decision regarding rejecting state attempt to claim ownership of private party's trademarks

The Ninth Circuit recently decided a trademark case that, while interesting, involves a fact pattern unlikely to pop up again anytime soon. Department of Parks and Recreation v. Bazaar del Mundo Inc., No. 05-02244-JTM (May 24, 2006), concerned a dispute over the marks CASA DE BANDINI and CASA DE PICO. These two marks were being used by the party that for decades had the concession for restaurants it ran under the same name in San Diego's Old Town State Historic park. Before giving the concession to the defendant, the California Department of Parks and Recreation ("Parks Dept") hadn't used these marks for restaurants or as trademarks for anything else. The Parks Dept argued that it had previously used the names in brochures for the park, but the 9th Circuit held that these were only historic references, not uses as trademarks. The 9th Circuit also held that the Parks Dept's concession agreement with the defendants was merely a standard leasing arrangement, not a trademark license, thus rejecting the Parks Dept's argument that it MUST have owned trademark rights -- or else why would it have purported to license them?

The Parks Dept was apparently upset with the defendant because, after the concession expired and the Parks Dept re-bid it and wanted to award it to someone else, it found out that the defendant (the prior concessionaire) had registered the marks years before, and had taken the position that not only could the new concessionaire not use them, but also that the old concessionaire could continue to use them in another location.

Second Circuit decision on copyright "fair use"

The Second Circuit recently issued a opinion discussing whether use of a few shrunk-down images of copyrighted concert posters in a historical coffee table book about the Grateful Dead violated copyright law.

In Bill Graham Archives v. Doris Kindersley Ltd., No. 05-2514-cv (2d Cir. May 9, 2006), the plaintiff noticed the use of its images in the book, which it found HARD TO HANDLE. It sued the defendant, and said THE RACE IS ON. Its complaint tried to take the book's publishers to SHAKEDOWN STREET using the copyright laws, but the defendant claimed fair use, and that was THE RUB. And once the district court analyzed the fair use factors, it said it LOOKS LIKE RAIN for the plaintiff, who was told on summary judgment to BEAT IT ON DOWN THE LINE, and ended up the LOSER in the district court.

At the Second Circuit, the EYES OF THE [copyright] WORLD were upon the court. Of the four "fair use factors" in 17 U.S.C. § 107, the Second Circuit focused primarily on "the purpose and character" of the defendants' use. The court held that the defendants' use of the work was "transformative," in that it used only a few images, in much-reduced size, and integrated them into a historical timeline and provided historical information about the concerts depicted in the posters. The court also noted that the plaintiff's works constituted only a very small portion of the challenged book, and that the defendants hadn't used the works in the advertising for the book. This was the most important factor, in the Second Circuit's view, and it had a RIPPLE effect on the THE OTHER ONEs (fair use factors, that is).

AROUND & AROUND the arguments went on the other three fair use factors. While the plaintiff got some GOOD LOVIN' on the creative nature of its work (the second fair use factor), the court held that its significance amounted to JACK STRAW in light of the importance of the first factor. The court also found that the "amount and substantiality" of the work copied was small, and that plaintiff's use of thumbnails didn't eat into the market for or value of the originals, which were not ever licensed in such a way.

Concluding that only a SHIP OF FOOLS would side with the plaintiff on this one, the Second Circuit said, IT'S ALL OVER NOW, leaving the plaintiff in the COLD RAIN AND SNOW. Its copyright claim looking like a BROKEDOWN PALACE, the plaintiff had to say, YOU WIN AGAIN, and ultimately ended up GOIN' DOWN THE ROAD FEELIN' BAD.

Since the court thought its legal analysis should NOT FADE AWAY, this opinion will be published.

"Advice of Counsel" Defense and Scope of Waiver of Privileges

When a defendant in a patent case (or a trademark case, for that matter) introduces evidence of communications or documents otherwise falling within some privilege in defense of a charge of willful infringement, then quite obviously that privilege is waived. The question is, how far does the waiver extend? The Federal Circuit recently issued a very clear explanation of its view concerning the scope of the waiver that necessarily flows from a defendant's disclosure that he relied on advice given by counsel.

In In re Echostar Communications Corp., Misc. Nos. 803, 805 (Fed. Cir. May 1, 2006), defendant Echostar asserted, in response to a charge of willful infringement, that it had relied on the advice given by its in-house counsel. Echostar later got additional advice from an outside law firm, but elected not to rely on it. The plaintiff, however, moved to compel and got a district court order that, because Echostar was relying on its in-house counsel's advice as a defense, it waived attorney-client privilege and attorney work-product immunity as to all communications from any counsel on that subject, whether or not it was communicated to Echostar. That last italicized bit is important, because, remember, the "advice of counsel" defense goes to the defendant's state of mind. So the district court's ruling, in essence, said that even information not communicated to the client is relevant to the client's state of mind. Yikes!

The Federal Circuit had problems with it too. They focused on work-product doctrine, since they viewed the scope of a work-product waiver as being narrower than a waiver of the attorney-client privilege. Specifically, waivers of privilege are for all privileged materials on the same subject, but a work product waiver extends only to "factual" or "non-opinion" work product on the same subject matter.

The court then broke down the scope of the work product waiver into three categories: (1) documents that themselves are a communication, like a letter or e-mail; (2) documents that discuss or memorialize a communication between the lawyer and the client, but aren't themselves communicated to the client; and (3) documents that analyze the law, the facts, trial strategy, or anything else that reflect the attorney's mental processes, but aren't sent to the client. The court explained that categories (1) & (2), since they either embody or discuss a communication to the client, do inform the client's state of mind, and are discoverable. But category (3) documents, since they aren't communication to the client, don't and aren't.

Seems about right to me. And I see no reason why this reasoning ought not to apply to trademark cases as well. Overall, a good, sensible opinion from a circuit that (at least on trademark matters), I frequently disagree with.

Two interesting decisions on injunctive relief and on discriminatory state food labeling laws

The following two decisions raise what I think are interesting, if not common, issues.

In Lakeview Technologies, Inc. v. Robinson, No. 05-4433 (7th Cir. May 1, 2006), the defendant, an individual, stole plaintiff's trade secrets, and the plaintiff sought a preliminary injunction against defendant's use of the secrets. The district court denied the injunction for various reasons, one of which was that, since a damage award could be calculated, the plaintiff had an adequate remedy at law. The Seventh Circuit said that the ability to calculate damages could potentially make the legal remedy adequate, but not if the defendant couldn't pay it. In such a case, a defendant could only avoid the preliminary injunction if he put up an adequate bond or other good security in lieu of the injunction (Judge Easterbrook's opinion called it a "non-injunction bond").

Piazza's Seafood World, LLC v. Odom, No. 05-30098 (5th Cir. May 4, 2006) involved a suit by a seller of Chinese farm-raised catfish under the CAJUN BOY and CAJUN DELIGHT marks to enjoin enforcement of two Louisiana statutes: The "catfish statute" prohibited sales of any non-American catfish as "catfish," even if it was biologically the same species; the "Cajun statute" prohibited labeling food from outside Louisiana as "Cajun" or "Creole" unless the food was "substantially transformed by processing in Louisiana." The Fifth Circuit held that the "catfish statute" violated the dormant foreign commerce clause of the Constitution because it facially discriminated against foreign commerce, and the state gave no good reason for it. The Court enjoined the "Cajun statute" because it failed the 4-part test for permissible regulation of commercial speech set forth in Central Hudson Gas v. Public Service Commission, 447 U.S. 557 (1980). Important to the court's decision was that use of the CAJUN BOY and CAJUN DELIGHT marks was not actually or inherently misleading as to Chinese-raised fish, as required by Central Hudson, but only "potentially" misleading, in light of the fact that the plaintiff clearly labeled its packages "Product of China."

Second Circuit copyright decision on statutory damages

The Second Circuit recently decided a case that raised the issue of how to count the number of statutory damage awards are available under section 504(c)(1) of the Copyright Act. In WB Music Corp. v. RTV Communications Group, Inc., No. 04-3890, 04-3892 & 04-3901 (2d Cir. Apr. 19, 2006), the defendant had sold seven CDs that infringed plaintiffs' copyrights in 13 songs. Section 504(c)(1) provides for one statutory damage award for each work that is infringed. The last sentence of section 504(c)(1) further provides that, for purposes of calculating statutory damages, all parts of a derivative work or compilation constitute one work.

The trial court thought that since the defendants' infringing CDs were compilations, that meant there were seven infringing works. The Second Circuit disagreed, holding that the last sentence refers to the copyrighted works, not the infringing works. Therefore, since the defendants infringed 13 different songs, they were on the hook for 13 statutory damage awards.

Coupla Trademark Decisions (1st and 5th Circuits)

The First and Fifth Circuit recently handed down trademark decisions.

In Borinquen Biscuit Corp. v. M.V. Trading Corp., No. 05-2591 (1st Cir. Apr. 4, 2006), the First Circuit upheld a preliminary injunction against an accused infringer. In so doing, the court spent considerable time discussing the parties' respective burdens on the issue of the distinctiveness as to an unregistered, registered but not yet incontestable mark, and a registered and incontestable mark. In an interesting side issue, the defendant tried to show that the plaintiff's mark was weak because the PTO had issued several registrations including the mark. The First Circuit turned this against the defendant on the issue of whether the mark was inherently distinctive, observing that the PTO wouldn't have issued so many registrations for the mark without requiring 2(f) showings of secondary meaning if the mark wasn't inherently distinctive. I wouldn't have seen that boomerang effect coming, but now we're all forewarned (at least in the First Circuit).

In Icee Distributors Inc. v. J & J Snack Foods Corp., No. 04-30060 (5th Cir. Apr. 11, 2006), the Fifth Circuit rejected trademark infringement claims by one licensee against another licensee. Essentially, the court decided that the plaintiff licensee had no claim under the Lanham Act because the licensor (also a defendant) had validly licensed the defendant licensee. Since the licensor couldn't have sued the defendant licensee for infringement, neither could the other licensee, whose rights were only as great as the licensor's. There were also some other side issues in play, but that's the core trademark holding.

Seventh Circuit decision concerning Computer Fraud and Abuse Act

I know this isn't strictly trademark, copyright, or trade secret law, but the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. § 1030 et seq., does seem to pop up in many trade secret-related disputes I've worked on.

The Seventh Circuit issued a decision under the CFAA about a month ago that got me thinking about a potentially new way to use the CFAA. Before I get into the new way, the decision in International Airport Centers, L.L.C. v. Citrin, No. 05-1522 (7th Cir. March 8, 2006), primarily concerned whether the defendant in this civil case under the CFAA, who had intentionally erased important data from his company-issued laptop just before he got canned, had caused the "transmission" of a command or program that caused damage and whether he was "authorized" to have erased the data. (The data was important to the employer and it didn't have any copies of the data, and the ex-amployee, after deleting the critical information, then started up his own competing business.)

The district court had dismissed the case, but Judge Posner, writing for the panel, held that such conduct would violate the CFAA.

But this got me thinking about spoliation of evidence during the course of litigation. Normally, when that happens, lawyers tend to think of it in terms of discovery sanctions and "adverse inference" jury instructions. But if, during the course of litigation, someone is found to have intentionally deleted or erased relevant computer data, might that not fall under the CFAA? Section 1030(a)(5)(A)(i) prohibits the intentional transmission of a program or command that causes damage to the computer so long as he wasn't "authorized" to do so. Section 1030(a)(5)(A)(ii) & (iii) prohibit intentional access to a protected computer that recklessly causes damage, or just causes damage, all without "authorization."

So if under the Federal Rules governing discovery, a party has a duty not to destroy potentially relevant information, does that mean the party isn't "authorized" under the CFAA? That would look to be the key question. Further, if the adverse party needed to spend more than $5000 to retrieve (or try to retrieve) the data (whether lawyer time or computer forensics experts or whatever), the adverse party might even be able to amend his claims or counterclaims to assert a CFAA claim in that case, thus maximizing the chances that the jury or the judge gets to hear, in excruciating detail, about the evidence that was destroyed.

Is this a possibility? Anyone spot any bone-headed flaw in my thinking?

Third Circuit decision in family seed business trademark/trade secret dispute

The Third Circuit recently issued a long decision dealing primarily with a complicated dispute over trademark ownership rights in the context of a dispute between several entities that grew out of a successful family business. There was also an interesting question involving the intersection of trade secret rights and the Federal Seed Act.

I won’t even try to summarize the salient facts concerning the ownership and use of the Doebler family name in Doeblers’ Pennsylvania Hybrids, inc. v. Doebler, No. 04-3848 (March 23, 2006), but there were a couple of legal points discussed by the Third Circuit that bear mentioning. First, on the trademark side, one of the Doebler parties was on the manufacturing side, the other was on the marketing/sales side. Looking to Professor McCarthy’s treatise, the Third Circuit noted that in disputes where manufacturers and distributors are quarrelling over who owns the mark, McCarthy suggests that the courts first look to whether a contract takes care of the question. If not, McCarthy suggests that courts look to a multi-factor test to determine what a typical consumer of the goods would perceive about who owns the mark. The Third Circuit, while not rejecting this “consumer expectation” test (there was no contract dealing with the issue) in all circumstances, limited when it could be applied. It held that where, as in the Doebler case, it was clear that one of the parties started out owning the mark and the issue was whether subsequent events resulted in transfer or abandonment of rights, the “consumer expectation” test had no application. Because the party challenging the first owner was essentially saying that, through subsequent events, the original owner “forfeited” its rights in the mark, courts should strictly apply the traditional tests to determine whether there had been an assignment or abandonment, rather than use a “balancing test” to decide whether such a forfeiture of rights had occurred. (Ed. I find this to be pretty solid reasoning.)

On the trade secret side, the issue was whether the plaintiff’s brand names for different hybrid vegetable seed varietals could be “trade secrets.” I know, I know, how can a brand name be a trade secret?, you ask. Well, hybrids are the first generation of pure bred “inbred” varietals. Apparently, the hybrids’ brand names in this case uniquely corresponded to the two inbred varieties used to make them. It was the defendants’ knowledge of what inbreds made up each of the plaintiff’s hybrids that the plaintiff wanted the defendants to stop using. Under the trade secret claim, the plaintiffs had gotten an injunction at the district court prohibiting the defendants from selling any of the hybrids sold by the plaintiff or disclosing any of the pedigrees of those hybrids.

The Third Circuit reversed this aspect of the district court’s decision, primarily on the ground that the third-party “foundation” seed companies that sold inbred seeds to the parties (so they could make their hybrids) pretty much told all their customers for inbred seeds which inbred seed varieties to cross-breed in a given agricultural zone, and most customers followed this advice. So the combinations weren’t “secret” at all.

The Third Circuit was also concerned that considering the parentage of the plaintiff’s hybrids to be a trademark could potentially conflict with the Federal Seed Act (FSA). The FSA requires that seeds be sold under their varietal name. Regulations under the FSA require that hybrid designations are treated as varietal names, and that the first company to name a new varietal sets the varietal name that other companies must thereafter follow. So the defendants needed to be able to use their knowledge of the make-up of the plaintiffs’ varietals and the plaintiff’s varietal names to comply with the FSA and associated federal regulations.

Federal Circuit decision on copyright and design patent issues concerning furniture design

The Federal Circuit recently reversed a district court summary judgment ruling of no copyright infringement and no design patent infringement in a case involving competing furniture. Amini Innovation Corp. v. Anthony California, Inc., No. 05-1159 (Fed. Cir. March 3, 2006) concerned copyright registrations for "carved ornamental woodwork" on furniture items and a design patent on a bed frame.

On the copyright claim, the Federal Circuit (applying 9th Circuit precedent) noted that a plaintiff has to show ownership of a copyright and copying of protected expression. Since there was no evidence of literal copying, the court looked to the "access + substantial similarity" indirect way of showing copying. And in the 9th Circuit, the more access, the less a plaintiff needs to show on substantial similarity. Since there wasn't much evidence of access, the court required "striking" similarity. But only similarity in expression counts, and since purely utilitarian articles don't receive copyright protection, the court focused solely on the carvings themselves.

Under the 9th Circuit's two-part "extrinsic/intrinsic" test for substantial similarity, courts must first perform the "extrinsic" test: an "objective comparison of specific expressive elements," in which the court analytically dissects the work (and maybe takes expert testimony). If under this test the two works "share a similarity of ideas and expression as measured by external, objective criteria," courts are then to apply the "intrinsic" test, which asks whether an ordinary reasonable audience would find substantial similarity in the "total concept and feel of the works."

The Federal Circuit was OK with the district judge's performance of the extrinsic test, but held that the district judge went wrong when he performed the intrinsic test himself, deciding "the fact intensive question of the total concept and feel of the carvings in the furniture." The Federal Circuit believed that a reasonable jury could have determined that there was a substantial similarity in the total concept and feel of the works.

As to the design patent, the Federal Circuit held that the district court's claim construction focused too much on the details of the ornamentation rather than the overall design of the bed post. Further, the Federal Circuit found again that the district court had usurped the jury function in performing an element-by-element analysis in determining that no reasonable jury could have found that the accused product was substantially similar. Instead, the district court was supposed to have analyzed "the design as a whole from the perspective of an ordinary observer."

I don't know about you, but to me these types of cases are analytical minefields.

2d Circuit decision on "loss" requirement in Computer Fraud and Abuse Act action

I usually don't bother commenting on unpublished circuit court decisions, particularly in circuits like the Second Circuit where you can't even mention them as precedent, but this one is worth noting.

In Nexans Wires S.A. v. Sark-USA, Inc., No. 05-3820-cv (2d Cir. Feb. 13, 2006), the Second Circuit issued an unpublished opinion (they call them "summary orders") affirming summary judgment against a plaintiff on its claim under the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. 1030 et seq. The CFAA is a neat little criminal statute, with an express but limited civil right of action, aimed generally at unauthorized access to protected computers with the intent to defraud or cause damage.

The key issue was whether the damage claimed by the plaintiff caused a qualifying "loss," as that term is specifically defined in the CFAA, of over $5,000 in any 1 year period. The plaintiffs claimed that the defendants misappropriated confidential data from their computers that caused the plaintiffs to lose over $10 million in profits. Well over the statutory threshold, right? Not so fast, said the court.

The CFAA defines loss as "any reasonable cost to any victim . . . and any revenue lost . . . because of interruption of service" from the unauthorized computer access. It was this last limitation on causation that did in the plaintiff. The court held that there was no evidence that the lost alleged $10 million in lost revenue was due to any "interruption of service." The plaintiffs' "Plan B" argument was that they spent $8000 to fly their German execs over to the US to investigate the defendants' misappropriation, but the court said there was no evidence that the German execs actually performed any computer investigation or repair, or any other type of preventative security measures, for that matter. Rather, the evidence was that they were in the US solely to assess the business loss associated with the misappropriation.

The moral is, remember this important limitation on the $5,000 loss threshold when assessing potential CFAA claims.

10th Circuit decision on unauthorized sales of genuine goods

The 10th Circuit recently issued an opinion in an interesting case involving issues of (1) unauthorized sales of genuine products and (2) use of the trademark holder's mark on the Internet in various ways.

In Australian Gold, Inc. v. Hatfield, No. 03-6218 (10th Cir. Feb. 7, 2006), the appeals court affirmed a jury verdict in which the plaintiffs were awarded a total of $550,000 in damages on their trademark infringement claims (and much more money for compensatory and punitive damages on their state law non-trademark claims).

The plaintiffs sold tanning products through authorized distributors to tanning salons who then sold to consumers. Distributors signed agreements that required them to undergo training sessions about the proper use of the products (which might not work properly or could even injure people if misused) so that the distributors could train their salon customers, and the distribution agreements also prohibited selling to anyone but real salons. The defendants, who were not salons, bought from rogue distributors who did not adhere to the re-sale restrictions, and the defendants in turn re-sold the products to anyone over the Internet. In connection with defendants' Internet sales, defendants used the trademarks on their websites, in their metatags, and in connection with a key word program run by search engine Overture.com through which the defendants paid for enhanced search listings when users typed in plaintiffs' marks.

The defendants raised a number of defenses, but chief among them, at least as to the product sales themselves, was "first sale doctrine" -- the principle that it's OK for someone who buys the trademark holders' goods to simply re-sell them. The 10th Circuit rejected the first sale doctrine defense, however, because in its view the defendants went further than simply re-selling: they used the trademark on their website in a way that made it seem like they were authorized dealers when they actually weren't.

As to the use of the marks on defendants' websites, the 10th Circuit held that this created a likelihood of "initial interest confusion" because these trademark uses were an attempt to divert traffic seeking plaintiffs' products to defendants' websites. According to the court, this hurt the plaintiffs in several ways: First, since defendants also sold other companies' tanning products, the plaintiffs may have lost sales to competitors. Second, the plaintiffs lost opportunities for additional or upgraded sales that frequently occur when authorized tanning salon professionals handle the sales. Third, there was the potential for damage to plaintiffs' goodwill (or even lawsuits) if the products were misused due to lack of instruction from authorized tanning salon re-sellers.

As to the $$ amount of the damages, the court noted that it's really hard to quantify trademark damages, but held that the jury was within its rights to link the quantum of damages to the amount of money that the defendants had received in revenue for their unauthorized sales.

There are many other interesting issues in the court's discussion, but those are the highlights that jump out at me concerning the trademark issues.

1st Circuit decision on reverse confusion

In a pretty plain vanilla decision, the First Circuit recently affirmed a jury verdict of infringement in a reverse confusion case. In Attrezzi, LLC v. Maytag Corp., No. 05-2098, -2181 (Jan. 27, 2006), the court affirmed the jury's determination that Maytag's use of ATTREZZI (which is Italian for "tools") on its Jenn-Air line of small kitchen appliances infringed the plaintiff's prior use of ATTREZZI for a single location store for upscale kitchen products and services, including small kitchen appliances. The pivotal facts, based on the court's discussion, seemed to be: (1) that there were several instances of actual confusion (although the court characterized them as "limited"); and (2) Maytag's in-house counsel initially opined that the plaintiff's mark, which showed up in a pre-adoption search, was "a problem," but later changed his mind when company execs told him to "take another look" at the issue (nudge nudge, wink wink).

There was nothing earth-shattering in the decision, although other noteworthy aspects of the court's opinion include:

• noting that a defendant's use of its well-known house mark in conjunction with the accused mark in a reverse confusion case actually exacerbates, not diminishes, the likelihood of confusion; and
• holding that attorney's fees expended by the plaintiff in initially fighting the defendant's ITU before the plaintiff sued was a compensable item of actual damage.

Because of the way the First Circuit's website is set up, I can't link directly to the opinion, but here's the link to the home page of the First Circuit website. Use the docket number to search for the opinion.

UPDATE: A nice anonymous comment provided me the static link to the opinion: It's this.