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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Bad idea.

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

11th Cir. decision on copyrightability of blank forms

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

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

Federal Circuit ruling on website-based trademark specimens

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Numbers as Secondary Trademarks

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

9th Circuit decision giving broad interpretation to copyright venue statute

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

Venue proper?

Yup.

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

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

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

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

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

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

4th Circuit decision on “public use doctrine”

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

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

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

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

Federal Circuit holds HOTELS.COM generic and refuses registration

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

8th Circuit decision on laches and "progressive encroachment"

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Federal Circuit Clarifies Analysis for Preliminary Injunction in Patent Cases

The Federal Circuit recently issued a precedential opinion clarifying, in two respects, the proper analysis for deciding whether to grant a preliminary injunction in patent cases.

In Titan Tire Corp. v. Case New Holland, Inc., No. 2008-1078 (Fed. Cir. June 3, 2009), the court first noted that the basic standard for issuance of a preliminary injunction in any type of case is the four-factor test set forth recently by the Supreme Court in Winter v. Natural Resource Defense Council, 129 S. Ct. 365, 374 (2008): “[a] plaintiff seeking a preliminary injunction must establish [1] that he is likely to succeed on the merits, [2] that he is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in his favor, and [4] that an injunction is in the public interest.” (emphasis added). Prior to Winter, each circuit had its own variation of the test, but the Federal Circuit acknowledged that the Winter test “is now the definitive one,” and that the movant bears the burden of persuasion on these factors.
Second, the court addressed the patent-specific issue of the parties’ respective burdens concerning the invalidity at the preliminary injunction stage. In a nutshell, the Federal Circuit held:

• The trial court must weigh the available evidence for and against validity;
• If there is a “substantial question of invalidity,” then the patentee has by definition not shown that he is likely to succeed on the merits;
• A “substantial question of invalidity” exists where “the alleged infringer has presented an invalidity defense that the patentee has not shown lacks substantial merit”; and
• While the “clear and convincing evidence” standard for proving invalidity does not apply at the preliminary injunction stage, the judge should consider that the infringer must meet that standard at trial in deciding whether, at the preliminary injunction stage, a substantial question of invalidity exists.

5th Circuit: Need "Fixed" Product Design to Invoke DJ Jurisdiction in Trade Dress Dispute

On May 8, the 5th Circuit affirmed the dismissal of a declaratory judgment action concerning the trade dress of a bottom-dump truck trailer design. In Vantage Trailers, Inc. v. Beall Corp., No. 08-21039 (5th Cir. May 8, 2009), the defendant Beall owned a registered trademark for the design of its bottom-dump trailer. It learned that its rival, Vantage, had begun to manufacture and offer to sell a competing bottom-dump trailer, and so wrote Vantage a nasty letter accusing the new trailer design of trade dress infringement. Vantage sued for a declaration of noninfringement.

The 5th Circuit, however, pointed out that during the litigation Vantage had made certain modifications to the external configuration of the trailers. During this period, Vantage also sent one of its customers different depictions of the trailer. Based primarily on these facts, the 5th Circuit concluded that Vantage was thus “not immediately prepared to manufacture and sell trailers at the time it filed suit.” As a consequence, the courts entertaining the dispute would be unable to “compare [the shape of Vantage’s trailers] against that of Beall’s trailers” to determine whether trade dress infringement existed. Citing two patent DJ decisions (one from the Federal Circuit and a much older one from the 7th Circuit), the 5th Circuit held that Vantage “failed to meet its burden to show that its design was substantially fixed as to the potentially infringing elements, i.e., the appearance of the trailers, at the time of suit” (emphasis added), and therefore affirmed dismissal of the declaratory judgment action for lack of an immediate and real controversy.

The War of 1404 Continues

The Federal Circuit recently issued two precedential orders concerning transfers under 28 U.S.C. § 1404(a). Both concerned E.D. Tex. cases.

In In re Volkswagen of America, Inc., No. Misc. 897 (Fed. Cir. May 22, 2009), the court denied a writ of mandamus that sought to overturn the E.D.Tex. court's refusal to transfer two patent infringement cases (based on the same patents) brought by a Texas company against many, many auto manufacturers located around the world. In a short order, the court agreed with the district court that it made sense to try such a case in one district. Apparently the Federal Circuit viewed the E.D. Tex. as good as any other district for that purpose.

In In re Genentech Inc. and Biogen, Inc., No. Misc. 901 (Fed. Cir. May 22, 2009), however, the court granted the writ of mandamus and ordered the E.D. Tex. to transfer a patent suit brought by a German company against a San Diego company and a San Francisco company to San Francisco. In a lengthier discussion, the Federal Circuit explained that the district court made several legal errors in its convenience analysis.

A 4th Circuit Copyright Decision that Stretches Fair Use Too Far?

A.V. v. iParadigms, LLC, No. 08-1424 (4th Cir. Apr. 16, 2009) involved a company that offers an on-line anti-plagiarism service to high schools and colleges who want to make sure their students aren’t cheating.

iParadigms signs up schools for a fee. The schools then require their students to submit all their term papers through iParadigms’ “Turnitin” program. The program stores the papers and compares them to content on the Internet and with all previously-submitted papers and other materials in the database it keeps. The service then creates an “Originality Report” for the school, suggesting how much of the work, if any, is not original.

Some students challenged whether this service violated their copyrights in their papers. The decision addressed many issues, but one of the key disputes was whether iParadigms’ service fell within the fair use provisions of 17 U.S.C. § 107.

Perhaps the most controversial part of the ruling was on the first fair use factor: “the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes.” Keep in mind that iParadigms is a for-profit company that enjoys millions of dollars of revenues from “Turnitin” and that it does not alter the papers in its database in any way. So one would think that with a for-profit motive and no physical transformative use, this factor disfavors fair use, right? Wrong. The 4th Circuit held that the purpose of unauthorized copying was transformative (iParadigms’ purpose was plagiarism detection, not the creative purpose of the students) notwithstanding that it didn’t alter the documents. And this transformative “purpose” trumped the fact that iParadigms raked in beaucoup $$ from its program.

The rest of the opinion is worth reading too. See if you don’t get the impression, like I did, that this was a result-driven decision (teaching students that plagiarism is wrong is a good thing, right?).

2d Cir. decision allowing Lanham Act complaint against Google's "Adwords" program

The Google programs allow companies to “buy” keywords that may consist of competitors’ trademarks and, when an Internet user searches Google for that keyword/trademark, have Google’s search result page display an ad and a link for the purchaser’s website.

Rescuecom Corp. v. Google Inc., No. 06-4881 (2d Cir. Apr. 3, 2009) held that the district court erred in concluding that the complaint failed to state a claim because Google didn’t “use” the keyword/mark “in commerce.” Rejecting this reasoning, the Second Circuit held that the complaint alleged that Google indeed uses the mark in commerce by displaying it—and even suggesting it—to potential purchasers of advertisements through the two Google Adwords and Keywords Suggestions Tool. The fact that the Internet searcher doesn’t see the mark in a resulting ad in a later search didn’t seem to matter to the Court once the Court found that the complaint had alleged use by Google at the stage of selling their programs to advertisers.
Since it was properly alleged that Google’s programs did in fact “use” the plaintiff’s marks in commerce, and the complaint also alleged that the resulting ads were likely to cause confusion, the Court remanded the case to the district court for further proceedings.

Fed. Cir. decision involving use of prosecution history in a trademark case

Be careful what you say to the PTO in trying to register your mark. The Federal Circuit’s recent decision in Aycock Engineering, Inc. v. Airflite, Inc., No. 2008-1154 (March 30, 2009), shows how prosecution history can sometimes be as dispositive in trademark disputes as it is in patent cases.

Airflite filed a petition to cancel Aycock’s registration for AIRFLITE for the service of “arranging for individual reservations for flights on airplanes.” The key issue was whether Aycock ever “used” the mark. If not, bye-bye registration. This required construction of the meaning of the service Aycock identified in the registration.

The prosecution file showed a lot of back-and-forth between the PTO and Aycock, in the course of which Aycock made several representations about the nature of the service. These representations made clear that Aycock’s service involved putting a traveler in touch with an air charter company with empty seats to fill.

Aycock took several steps towards getting his service off the ground, including signing up several air charter companies, and argued that this showed that he “used” the mark in commerce. The TTAB and Federal Circuit disagreed. Using Aycock’s own prosecution history statements against him to construe the meaning of the identified services, the TTAB and Federal Circuit held that “use” required, in this context, that Aycock have at least tried to have signed up a traveler or two. Signing up air charter companies was merely a step towards offering the service, but didn’t constitute the service itself, which required a traveler as well as a plane. Because there was no evidence that Aycock ever actually offered the service to the traveling public, the registration was canceled.

9th Circuit decision on laches and "public interest" factor in trademark injunction case

In a 2-1 decision in Internet Specialties West, Inc. v. Milon-DiGregorio Enterprises¸ No. 07-55087 (March 17, 2009), the Ninth Circuit affirmed an injunction requiring an Internet service provider to stop using its domain name. One of the effects of the injunction was that the defendant’s 13,000 customers, who innocently used the infringing domain name as part of their individual email addresses (e.g., johndoe@infringingname.com), had to change their e-mail addresses.

The majority and dissent agreed on infringement. The fractures in the panel was mainly over laches and whether the “public interest” favored the injunction.

On laches, the issue was whether the defendant’s 6-year investment in its business—which resulted in growth from 2,000 subscribers to 13,000 subscribers—by itself was enough to show that the defendant was prejudiced by the plaintiff’s delay. The dissent thought that, under 9th Circuit precedent, this was a sufficient showing of prejudice. The majority ruled, however, that “mere expenditures in promoting the infringed name” was not enough under 9th Circuit authority: the defendant must also have developed “brand awareness” or “brand recognition” or “an identity as a business based on its mark”—which the majority thought the defendant failed to do prove.

As to the public interest aspect of the injunction, the majority and dissent disagreed on whether the inconvenience to 13,000 customers of informing all of their e-mail contacts of their new e-mail addresses outweighed the general public’s interest in not being confused.

2d Circuit decision re presumption of irreparable harm in trade secret cases

The Second Circuit appears to have made it a bit more difficult to rely upon a presumption of irreparable harm flowing from a finding of misappropriation of trade secrets.

In Faiveley Transport Malmo AB v. Wabtec Corp., No. 08-5126 (2d Cir. Mar. 9, 2009), the Court held that it is “not correct” that a “presumption of irreparable harm automatically arises upon the determination that a trade secret has been misappropriated.” Slip op. at 10-11 (emphasis added). The court stated that “[a] rebuttable presumption of irreparable harm might be warranted in cases where there is a danger that, unless enjoined, a misappropriator of trade secrets will disseminate those secrets to a wider audience or otherwise irreparably impair the value of those secrets.” Id. at 11 (emphasis added). In contrast, the court noted that damages would tend to be a complete remedy when the “misappropriator seeks only to use those secrets . . . .” Id. (emphasis added). Because there was no evidence that the defendant intended further dissemination, only use, of the trade secrets, the court vacated the preliminary injunction in the case.

4th Circuit decision invalidating OBX as trademark for bumperstickers

In an interesting decision, OBX-Stock, Inc. v. Bicast, Inc., No. 06-1769 (Feb. 27, 2009), the 4th Circuit held that the term OBX was geographically descriptive of the Outer Banks seashore in North Carolina. The court thus ruled that the plaintiff – who was the acknowledged "inventor" of the term and the first to use it on the now ubiquitous oval bumperstickers (and on other products) – could not stop others from using the term on bumperstickers.

The court based its decision primarily on the fact that, while the term was not necessarily geographically descriptive when it was coined, the plaintiff’s advertising and promotion was designed to, and did, make the term synonymous in the eyes of the public with the Outer Banks itself, and not with a particular source or brand of goods. The court also noted that copycats had gotten out of hand, and the plaintiff's policing efforts had largely failed.

In an interesting aside, the court highlighted the fact that the PTO rejected the plaintiff’s application to register the mark five (5) times before finally allowing it, and then only after intense lobbying from the North Carolina congressional delegation. The court stated that the more quickly and easily a mark is allowed, the more likely it is to be valid (i.e.¸ distinctive). Conversely, the more difficult it is to convince the PTO to allow registration, the more likely it is invalid.

Supreme Court Decision Clarifying Preliminary Injunction Standards

In a few circuits, preliminary injunctions are decided using a sliding scale test: the higher the likelihood of success, the less irreparable harm need be proved, so when success looks like a sure thing, sometimes only the "possibility" of irreparable harm will suffice.

Not any more. In Winter v. NRDC, No. 07-1239 (U.S. Nov. 12, 2008), the Supreme Court rejected the notion that preliminary injunctions may be entered based on a showing of only the "possibility" of irreparable harm. (Slip op. at 12.) Instead, the movant must make a "clear showing" on each of the four relevant factors.

Historically, the circuits' varying preliminary injunction tests often play a role in deciding where a trademark plaintiff should file suit. This decision, however, should -- if the circuits actually cite and follow it -- go a long way to eliminating this as a forum-shopping concern.

5th Circuit's en banc decision on section 1404(a) transfers in In re VW

In this much anticipated decision, the en banc court has directed the E.D. Tex. to transfer this car crash case, which had the barest connection, if any, to that district, to the N.D. Tex., Dallas Division.

For those who don't want to wade through 37 pages of majority and dissenting opinions, it looks to me that this decision will be as relevant to patent cases as the now-vacated prior panel opinion would have been. How the E.D. Tex. judges will APPLY the case, however, will certainly be an interesting question. As with the prior panel's opinion, the en banc decision:

• 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.
• held that under 1404(a), "good cause" for transfer means "when the transferee forum is clearly more convenient, a transfer should be ordered."
• said that 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."
• re-affirmed the 5th Circuit rule of thumb that where witnesses reside more than 100 miles from the court, the inconvenience to them increases as the distance beyond 100 miles increases.

Perhaps most importantly, the court discounted that the denizens of Marshall may have an interest in the case simply because the product is available there. The en banc court reasoned that such a concept could apply "virtually to any judicial district or division in the United States."

10th Circuit decision on bad faith use of one's own name as a mark

In The John Allan Company v. The Craig Allen Company, No. 07-3193 (10th Cir. Aug. 28, 2008), the Tenth Circuit reversed and remanded a district court decision where the plaintiff technically won but really didn’t obtain any relief.

JOHN ALLAN apparently is a well-known New York City-based men’s grooming salon. After visiting the Big Apple and the JOHN ALLAN salon, defendant Craig Allen Tatro returned to Wichita, Kansas, and started a CRAIG ALLEN salon offering the same services, providing his graphic designer with the logo from JOHN ALLAN salon. The resulting logo -- surprise! -- looked nearly identical to the plaintiff's.

When John Allen objected, Craig Allen changed the logo completely (shelling out 20K for a new logo design), but kept the name.

After trial, the district court found bad intent, but entered no injunction concerning the logo because Craig Allen had stopped using it. The district court did not enjoin the word mark CRAIG ALLEN because it felt “reluctant” to stop the defendant from using his own name. The plaintiff didn't appeal the order refusing to enjoin the logo, but did appeal the refusal to enjoin the name.

The 10th Circuit reversed and remanded, primarily because of the finding of bad intent. The 10th Circuit indicated that any judicial reluctance to stop a person from using his or her own name as a mark doesn’t apply to intentional infringers. In addition, the 10th Circuit criticized the district court for failing to consider whether the two instances of actual confusion it ignored were relevant to “sponsorship” or “affiliation” confusion.

Finally, the appeals court remanded with instructions to determine if continued use of the word mark CRAIG ALLEN, even with a different logo, required an injunction to alleviate residual likelihood of confusion.

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.