5th Cir. decides SHOE SHOW not “substantially similar” to THE SHOE DEPT.

This was a contract case—not a dispute under the Lanham Act. A mall leased space for a shoe retailer called THE SHOE DEPT. The retailer also operated shoe stores elsewhere called SHOE SHOW and BURLINGTON SHOES. The contract said the retailer couldn’t open a store with a “substantially similar trade-name” nearby. When the retailer opened a SHOE SHOW nearby, the mall said nothing, until much later when the retailer tried to get out of the lease. Then the mall complained about the nearby SHOE SHOW.

Ostensibly under Ohio law, but borrowing from a few trademark precedents, the 5th Circuit found that SHOE SHOW is not “substantially similar” to THE SHOW DEPT. The given reason was that “shoe” is generic or descriptive, and so doesn’t count in the comparison, and “show” is not substantially similar” to “dept.” The court made quite clear that it thought the mall was being opportunistic: that it knew darn well that the retailer operated SHOE SHOWs also; that it could have, but didn’t, contract for a prohibition against nearby SHOE SHOWs; and that it was seizing on the fudgy nature of the term “substantially similar” to try to gain advantage in the lease dispute.

(NB – I wonder if, under Ohio law, an acquiescence defense could have been interposed. Seems this would have more directly addressed the court’s concern with opportunism.)

The case is Almeda Mall, L.P. v. Shoe Show, Inc., No. 10-20587 (5th Cir. Aug. 8, 2011)

7th Cir. flip-flops on whether district court challenge of TTAB cancellation waives state sovereign immunity

Several months ago, I reported on a 7th Circuit decision that a state did not waive sovereign immunity by challenging a TTAB cancellation through a de novo action in federal district court rather than a straight appeal to the Federal Circuit. Well, on rehearing, the 7th Circuit has now changed its mind. Citing the procedural advantages of a de novo district court action over a straight Federal Circuit appeal, the 7th Circuit held that it would be unfair to allow a state to choose an advantageous federal forum and later be able to claim sovereign immunity if the adverse party asserted counterclaims against it.

Board of Regents of the Univ. of Wisc. Sys. v. Phoenix Int’l Software, Inc., No. 08-4164 (7th Cir. Aug. 5, 2011).

3d Cir.: HAVANA CLUB brand not falsely imply made in Cuba where label clearly says "Puerto Rican Rum"

In yet another long-running, multi-forum dispute (where do I go to get such litigious clients??), the 3d Circuit held that the brand name HAVANA CLUB appearing on a label for rum did not, as a matter of law, imply to ordinary consumers that the rum was made in Cuba or sourced from Cuban ingredients.

In Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., No. 10-2354 (3d Cir. Aug. 4, 2011), the district court rejected the plaintiff’s false advertising claim under the Lanham Act as a matter of law, holding that plaintiff’s survey, which concluded that 18% of respondents were misled, was immaterial because the label also “clearly and truthfully” stated that the rum was from Puerto Rico. The 3d Cir agreed, holding that in “rare” occasions like this case the words in a challenged ad, read as a whole, are so clear that a court can ignore surveys to the contrary and dismiss a false advertising case as a matter of law.

9th Cir.: After eBay v. MercExchange, Perfect 10 not entitled to presumption of irreparable harm for Google copyright infringement

In the latest installment of the long-running litigation between Perfect 10 and Google over Perfect 10's copyrighted model images, the 9th Circuit affirmed the denial of a preliminary injunction against Google because Perfect 10 failed to demonstrate irreparable harm.

The 9th Circuit first ruled that the Supreme Court's decision in eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) -- a patent case in which the Court held a general or categorical rule favoring or disfavoring injunctions -- was not limited to patent cases. Following the lead of the 2d Circuit in Salinger v. Colting, 607 F.3d 68 (2d Cir. 2010) (which I previously noted here) the 9th Circuit held that eBay also applies to cases under the Copyright Act. In so doing, the 9th Circuit overruled its pre-eBay precedents consistently holding that a showing of likely success on the merits of a copyright infringement claim gave rise to a presumption of irreparable harm.

The 9th Circuit then affirmed the district court's finding that Perfect 10 failed to show that Google's infringement had caused irreparable harm.  The Court held that the post-eBay causation requirement was not satisfied simply by a documented and dramatic decline in Perfect 10's revenues from fees to download photos of its models as the number of free Google thumbnail images increased.

The decision is Perfect 10, Inc. v. Google, Inc., No. 10-56316 (9th Cir. Aug. 3, 2011).

7th Circuit: Raised quilting pattern on toilet paper functional; trademark protection denied

In an entertaining opinion peppered with puns, the 7th Circuit affirmed the dismissal of Georgia-Pacific’s claims that the raised quilting patterns on Kimberly-Clark’s Cottonette brand of toilet paper infringed Georgia-Pacific’s alleged trademark rights in the raised quilting pattern of its Quilted Northern brand. The appeals court agreed with the district court that Georgia-Pacific utility patents and advertising touted the utilitarian benefits of the raised quilting pattern. The court was unpersuaded that the existence of design patents on the quilting pattern undercut what it viewed as clear statements in G-P’s utility patents about the utilitarian benefits of the quilting.


The case is Georgia-Pacific Consumer Prods. LP v. Kimberly-Clark Corp., No. 10-3519 (7th Cir. July 28, 2011).

9th Cir.: Keyword ads misleading; “splash screen” portal with bold disclaimer conditionally approved

TrafficSchool.com, Inc. v. Edriver Inc., No. 08-56518 (9th Cir. July 28, 2011), involved the folks who own DMV.org (and also display several “[state].dmv.org” domains that resolve to DMV.org) – a website that is designed to assist people in renewing licenses, buying car insurance, registering vehicles, drivers’ ed classes, dealing with traffic tickets, and other car-related issues. Competitors complained that DMV.org’s domain names, which were prominently displayed in sponsored ads when Google users searched for certain government/vehicle related terms, fooled users into thinking that DMV.org was a state entity and clicking on the links. The plaintiffs alleged that they lost revenues, such as click-through referral fees, because of the deception and sued under the false advertising provisions of the Lanham Act.

The 9th Circuit affirmed standing primarily because the parties competed for click-through referral revenues with overlapping service providers and because lots of people were tricked into thinking DMV.org was a government entity. The 9th Circuit also affirmed conditionally approved the district court’s injunction requiring a “splash screen” that immediately appeared when users clicked on DMV.org’s sponsored ads, and which clearly warned that DMV.org was not a government website.  The 9th Circuit thought that requiring the splash screen in perpetuity implicated First Amendment commercial speech concerns.  It therefore remanded so that the district court could either (a) explain what conditions the defendant needed to fulfill to have the splash screen requirement lifted or, in the alternative, (b) simply enjoin the defendants from making false or misleading statements on their website.

As to money, the 9th Circuit refused to award profits because the plaintiffs produced no evidence of past monetary injury or causation. But the court remanded for a determination whether the plaintiffs should get attorneys’ fees, primarily because the court viewed the plaintiffs as having paid a lot of money to ameliorate a concrete harm to the public caused by DMV.org’s deceptive practices.

(NB:  subsequent corrections to initial post made by strikethrough and underlining, except in the title, where Blogger doesn't permit strikethrough and underlining.)

7th Circuit: Decisions on Assignability of TM License; Originality of Architectural Plans

In In re XMH Corp., No. 10-2596 (7th Cir. July 26, 2011), an appeal of a bankruptcy court decision, Judge Posner held that the debtor could not assign an allegedly executory trademark license because the agreement was silent on assignability and trademark law’s default rule is that “trademark licenses are not assignable in the absence of a clause expressly authorizing assignment.”


In the architectural copyright case, the panel held that the architect failed to demonstrate that its designs were original (and therefore protectable) where they were based “for the most part” on its hotel-chain client’s prototype, and the few differences were “specifically requested by [the client] through written requests accompanied by graphic designs.” The case was Nova Design Build, Inc. v. Grace Hotels, LLC, No. 10-1738 (7th Cir. July 26, 2011).

Opinion styles and public perception of judicial legitimacy

Here’s a link to an interesting psychological research paper on people’s perceptions of the legitimacy of judicial decisionmaking. It has two basic conclusions. First, and not surprisingly, people tend to view decisions resulting in outcomes they agree with as more legitimate. And they don’t care as much about the reasoning when they agree with the outcome.


But the second finding has significant implications for how judicial decisions are written. The study assessed people’s views of the legitimacy of 4 kinds of written decisions: (1) a simple “party X wins” decision; (2) a decision giving one short reason why party X wins; (3) a decision listing several reasons favoring the victor, party X; and (4) a decision fairly setting forth each side’s arguments, acknowledging the difficulty of the issues presented, and then choosing party X as the victor because its arguments were, on balance, more persuasive.

In my 20 years of practice, I’ve seen several type (1) and type (3) decisions. I’ve seen fewer type (2) decisions, and fewer still examples of the most “legitimate” type (4) decisions. In fact, in the most significant (to me) appellate decision rendered in one of my cases, I very unsatisfactorily lost in a type (3) decision.

But this study – which concludes that further research is needed – certainly indicates that the judiciary could enhance its governmental legitimacy in the public’s eyes by issuing opinions that acknowledge both sides of an argument (where appropriate).

(HT to How Appealing for noticing the article)

UPDATE (8/5/2011):  Recently received a district court order denying a complicated 12(b)(1) motion I wrote concerning whether a DJ action actually raised a justiciable case or controversy.  It raised very subtle arguments.  The court basically ignored the complexities presented, significantly oversimplified our arguments, and wrote the opinion as if it were an easy decision (kind of like the appellate decision I referenced above -- a variation on the type (3) decision).  Nothing is more frustrating.  Rule against me?  Fine, I have no problem with that.  But at least accurately characterize my arguments and explain why you disagree.  Really, lawyers can handle an honest loss.       

8th Circuit Tom & Jerry, Wizard of Oz copyright decision

In an interesting decision, the 8th Circuit today largely upheld an injunction against AVELA (yes, the folks from the infamous Betty Boop case I previously blogged and wrote about) prohibiting it from selling certain items bearing reproductions of Tom & Jerry and characters from the Wizard of Oz. 

In Warner Bros. Entertainment, Inc. v. X One X Productions, No. 10-1743 (8th Cir. July 5, 2011), the films featuring these characters were copyrighted, but certain pre-film publicity photos and drawings of the characters were not.  The issue was whether, and to what extent, the public domain status of the pre-film publicity photographs and drawings of the characters immunized AVELA from reproducing both exact duplicates and tweaked reproductions.  The court's analysis focused on whether the tweaked aspects of the AVELA reproductions were derived from aspects of the characters developed in the films themselves.

11th Circuit adopts "joint endeavors" test to determine who owns trademark rights where ownership is unclear

What should a court do to determine who owns a trademark where it is unclear who or which of two or more claimants owns it? In a case involving a dispute whether a music group’s members or its manager owns trademark rights in the group’s name, the 11th Circuit yesterday held that in “joint endeavors” such as this, courts should: (1) first identify what “qualities or characteristics” for which the group is known; and (2) figure out who actually controls those qualities or characteristics.

In Crystal Entertainment & Filmworks, Inc. v. Jurado, No. 10-11837 (11th Cir. June 21, 2011), the plaintiff management company’s predecessor came up with the band’s name, hired the original band’s members, songwriter, and producer, and arranged for the original band’s performances. After a few fruitless years, however, new band members in 1986 replaced the original members. Despite the new members’ having signed two license agreements in the 2000s acknowledging the management company’s ownership of the mark, the district court found that the management company could not prove that it had exercised control over the new members or taken any role in scheduling their performances. The 11th Circuit did not find these findings to be clearly erroneous. Under the “joint endeavors” test, the court held that the replacement band members therefore controlled the qualities and characteristics for which the band is known by the public.

2d Cir. broadens copyright preemption as to state law “misappropriation of hot news” claims

Barclays Capital Inc. v. Theflyonthewall.com, Inc., No. 10-1372 (2d Cir. June 20, 2011), involved allegations that the uncovering and dissemination of financial firms’ daily securities trading recommendations constituted copyright infringement and the New York common law tort of misappropriation of “hot news.” Such a misappropriation claim was first accepted in the days of federal common law in Int’l News Serv. v. Associated Press, 248 U.S. 215 (1918) (“INS”), but really hasn’t gotten much traction since.

The defendant conceded copyright infringement. The only question on appeal was whether the misappropriation claim was preempted.

The panel majority’s decision turned on whether a five-part test set forth in a prior “hot news” case, NBA v. Motorola, Inc., 105 F.3d 841 (2d Cir. 1997), was dictum. In NBA, the Second Circuit held that the NBA’s misappropriation claim was preempted, but suggested that an INS-type misappropriation claim could survive preemption if it required an “extra element” beyond those required for copyright infringement. The NBA court posited a five-part test that it believed would characterize a non-preempted claim possessing such an extra element.

The panel majority characterized the NBA court’s five-part test as dictum. Instead, the panel majority compared the misappropriation claim itself to that involved in NBA and determined that they were alike in that (1) the plaintiffs in both cases “created” the news (as opposed to simply reporting it) and (2) defendants in both cases gave proper attribution to the respective plaintiffs for the news. The court contrasted this with the facts in the INS case, where the plaintiff was a news reporting service, not the “creator” of the news itself, and the defendant had taken credit for the report it obtained from the plaintiff. Since the plaintiffs’ claims in NBA and Barclays were alike in these respects (and unlike INS), the panel majority held that, like the claim in NBA, the plaintiffs’ misappropriation claims were similarly preempted.

The concurring judge would not have rejected the NBA court’s five-part test as dictum, but instead would have found preemption due to the failure of the plaintiffs to demonstrate one of the five parts of the NBA test (direct competition between the parties).

D.C. Cir.: Licensee estoppel prevents licensee from arguing ownership due to naked licensing

In a decision involving unique circumstances, the D.C. Circuit held today that a licensee was precluded by licensee estoppel from arguing that the licensor abandoned the licensed mark by engaging in “naked licensing.” The licensee argued, unsuccessfully, that licensee estoppel shouldn’t preclude it from asserting that it owned the mark because it was undisputed that:

• The licensor ceased monitoring the licensee in 1991;
• The licensor went bankrupt in 1991, and, a few years after the bankruptcy was converted to Chapter 7 in 1993, the licensor’s former owners misappropriated the mark (from the trustee) and re-started the essentially the same business under the mark;
• The bankruptcy court then entered an order enjoining the licensor’s former owners from continuing to use the mark; and
• Business associates of the licensor’s former owners later purchased the marks from the trustee.

Although it’s hard to draw categorical conclusions from such a unique case, it’s at least safe to say that, if a licensee can’t assert ownership/abandonment in these circumstances, licensee estoppel is pretty robust in the D.C. Circuit.

The case is John C. Flood of Va., Inc. v. John C. Flood, Inc., No. 10-7098 (D.C. Cir. June 17, 2011)

3d Circuit: Removal of NON-DIGITAL author info violates DIGITAL Millennium Copyright Act

Peter Murphy photographed two of New Jersey’s radio “shock jocks” for a NJ magazine. In the magazine, Murphy was identified, in the margin of the photo, as the photographer. The radio station that employed the jocks scanned the image, deleted Murphy’s name from the margin, and posted the photo on their website for a promotion.

Murphy sued for violation of §§ 1202(b) & (c) of the Digital Millennium Copyright Act. Section 1202(b) prohibits removal of “copyright management information,” and § 1202(c) defines “copyright management information” as “information conveyed in connection with copies . . . of a work . . . , including in digital form . . . the name of the author . . . .”

The 3d Circuit rejected the station’s argument that § 1201 of the Act—which mentions circumvention of “technological measures”—limits § 1202’s coverage to some sort of automated copyright management system. Instead, the 3d Circuit said that §§ 1202(b) & (c) include automated technological measures, but don’t require that the removed or altered copyright management information be digital or automated.

The court also rejected a weak fair use argument.

The case is Murphy v. Millennium Radio Group LLC, No. 10-2163 (3d Cir. June 14, 2011).

Puzzling (to me) 7th Circuit Cypress Hill copyright decision

In Johnson v. Cypress Hill, No. 08-3810 (7th Cir. June 1, 2011), the 7th Circuit affirmed summary judgment against a plaintiff who claimed that the hip-hop group Cypress Hill infringed his alleged copyright in a 1969 sound recording. Because it’s a 1969 (i.e., pre-1972) sound recording, however, the plaintiff could not have had a copyright in it under 17 USC § 301(c).

After getting poured out on summary judgment, the plaintiff (among other arguments) asked the district court and then the 7th Circuit to rule that the dismissal was not on the merits but rather due to lack of subject matter jurisdiction (because he possessed no copyright). The Seventh Circuit refused, holding that Reed Elsevier, Inc. v. Muchnick, 130 S. Ct. 1237 (2010) “foreclosed” that argument.

But I thought Reed Elsevier held only that lack of a copyright registration was not a jurisdictional requirement. In the Cypress Hill case, by contrast, the issue isn’t whether a copyright was registered, but whether any copyright exists at all. How does Reed Elsevier foreclose the argument that where no copyright exists at all there is no subject matter jurisdiction under the Copyright Act?

Any thoughts?

1st Cir. TM injunction case: eBay 4-factor test generally applies, but acquiescence and delay dispositive

In a fact-specific decision, the First Circuit recently held that eBay, Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006)—which confirmed that the traditional 4-factor injunction test applies to patent cases—also applies to trademark cases. But the circuit court declined to rule specifically whether eBay eliminates the familiar “presumption of irreparable harm” that automatically flows from a showing of trademark infringement.

The basis the court used to sidestep this precise issue was that the record showed that any such presumption was overcome by the movant’s delay and acquiescence. The court also touched on progressive encroachment without actually calling it that, rejecting the movant’s progressive encroachment argument by holding that the nonmovant’s recent changes were “not sufficiently qualitatively different” from the harm flowing from the prior infringement.

The case is Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., No. 10-1396 (1st Cir. May 27, 2011).

3d Circuit: For waiver of privilege, timing makes a difference

If a third party is present during an otherwise privileged communication, the privilege is waived, right? Not exactly, said the Third Circuit today. If a third party is present when the privileged communication is made, the privilege doesn’t attach at all. That’s different from a true waiver situation where a communication that is privileged when made is later disclosed to a third party.

This distinction makes a practical difference when the party asserting waiver wants to see documents beyond the initial communication(s) via a “scope of waiver” argument. If the initial communication(s) was not privileged when made, then there could be no waiver and consequently no opportunity to seek other privileged communications on the subject via a “scope of waiver” argument. The party asserting waiver gets only the initial communication(s).

The case is In re Application of Chevron Corp., No. 10-4699 (3d Cir. May 25, 2011), and the initial communications at issue were made in the presence of filmmakers who were—at the behest of the plaintiffs’ lawyers—shooting a movie of a notorious Ecuadorian environmental case against Chevron (while the case was going on).

2d Cir. decision about injunction bonds, attorneys' fees, and the presumption of recovery

The Second Circuit today decided that a wrongfully enjoined party (1) is entitled to a “rebuttable presumption in favor of recovery . . . for provable damages” against a FRCP 65(c) injunction bond; and (2) such damages may include attorneys’ fees if they were fees that were “incurred in complying with the injunction.” (emphasis added).

As to the “presumption,” the Second Circuit indicated that the presumption attaches only after “the wrongfully enjoined party . . . first demonstrate[s] that the damages sought were proximately caused by the wrongful injunction” and “properly substantiate[s] the damages sought.” (This doesn’t seem to me to be much of a presumption, since it sounds a lot like what any injured party in any case needs to prove to obtain damages.)

The case is Nokia Corp. v. InterDigital, Inc., No. 10-1358 (2d Cir. May 23, 2011).

For those interested, the injunction—which was later vacated and therefore “wrongful”—required InterDigital to stay or terminate its ITC proceeding against Nokia and another company as to Nokia, based on an alleged arbitration agreement between InterDigital and Nokia. So instead of one ITC proceeding, InterDigital for a while had to arbitrate against Nokia while it litigated an ITC proceeding against the other company. InterDigital later claimed that it incurred substantial attorneys’ fees staying the ITC proceeding as to Nokia and having to incur duplicative fees and expenses litigating its claims against Nokia and the other company in two different forums.

3d Cir: Copyright Act permits prejudgment interest in disgorgement of profits cases

Prejudgment interest is normally associated with making an injured party whole by providing interest on monetary awards for past damages. In William A. Graham Co. v. Haughey, No. 10-2762 (3d Cir. May 16, 2011), the Third Circuit permitted prejudgment interest to be added to an award of the infringer’s profits as well, even where no damages were sought. The Court noted that: (1) nothing in the Copyright Act prohibits prejudgment interest on a disgorgement award; and (2) prejudgment interest and disgorgement serve the same interests (making the claimant whole and preventing unjust enrichment).

7th Circuit/Judge Easterbrook trademark decision on quality control/naked licensing/abandonment

Eva's Bridal Ltd. v. Halanick Enterprises, Inc., No. 10-2863 (7th Cir. May 10, 2011) contains a short but interesting discussion by Judge Easterbrook about the proper way to look at "quality control." The mark owner trusted the licensee and felt confident he was maintaining high standards, but the agreement between the parties contained no quality control provisions whatsoever and the owner took no steps to monitor the good and services or how the mark was used. Judge Easterbrook said that quality control doesn't mean feeling confident that the licensee is maintaining high quality. Rather, it's about the owner taking steps to insure that the quality is consistent and predictable.

The court affirmed the finding of abandonment through naked licensing.

9th Circuit (en banc): Copyright Act not preempt California implied contract claim based on submission of "idea" for TV show

The en banc 9th Circuit today held that copyright law doesn’t preempt a writer’s “implied contract” claim under California law that he submitted materials containing an idea for a TV show to a studio or producers with the understanding that he'd be compensated by receiving a share of the profits if the studio or producers use the idea.

The dissent argued that there’s a difference between state law claims that the writer: (a) sold the idea/concept with the implied understanding he’d be compensated (dissent says not preempted because it’s a classic implied contract); and (b) presented the idea with the implied understanding that he was retaining control over the idea unless the studio used it, in which case he’d be compensated (dissent says preempted because the writer is retaining control, which is closer to what copyright law protects). The dissent thought this writer’s claim was closer to (b).

The case is Montz v. Pilgrim Films & Television, Inc., No. 08-56954 (9th Cir. May 4, 2011) (en banc).