8th Circuit Food Fight over LOUIS KEMP Mark

The 8th Circuit recently presided over a food fight over the trademark LOUIS KEMP. In Kemp v. Bumble Bee Seafoods, Inc., No. 02-3797 (Feb. 23, 2005), the recipe for the dispute was as follows:

Ingredients:

• 1 man (Louis Kemp) who has sold the rights to use his name as a trademark on seafood
• 1 company to buy the mark
• 1 contract memorializing the deal
• millions of $$ spent by the company making the man's name famous
• 1 ton of second thoughts by the man upon seeing how famous the company made his name

Let's Cook:

Take the LOUIS KEMP mark, mix in the millions of advertising $$, and allow it to rise. In a separate pan, allow Louis Kemp the man to stew in his own juices with the second thoughts and the contract. Add in a plan to use his name for DIFFERENT food items than the ones specifically listed in the contract wherein he sold his rights. Stir and heat in a federal district court at 400 degrees until the dispute comes to a boil and begins smoking. Garnish the trial court's decision with parsley. Serves 3 appellate judges.

The law the 8th Circuit discussed was pretty straightforward, primarily involving an assessment of the likelihood of confusion factors.

To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select February 2005, and scroll until you come to it.

3d Circuit holds "willfulness" no longer prerequisite for accounting of trademark infringer's profits

The 3d Circuit recently joined the 5th Circuit in holding that the 1999 amendment to section 35(a) of the Lanham Act, 15 USC § 1117(a) -- which added language allowing monetary awards for a "willful violation" of the anti-dilution statute but not adding the word "willful" as to § 43(a) violations -- means that willfulness is now NOT a prerequisite for disgorgement of the infringer's profits. In Banjo Buddies, Inc. v. Renofsky, No. 03-2038 (Feb. 22, 2005), the court held that Congress's failure to add the word willful was, in a word, willful, given that it is charged with knowing that the courts had pretty much, at that time, uniformly been interpreting section 35(a) to require willfulness before ordering disgorgement. The court listed several nonexhaustive factors that a court should consider in deciding whether to award disgorgement of profits, including (1) willfulness, (2) lost sales, (3) adequacy of other remedies, (4) any unreasonable delay in asserting rights, (5) public interest in making the misconduct unprofitable, and (6) whether it's a case of "palming off." In discussing the district court's award of the infringer's profits, the court also noted that "there is no requirement that the defendant's profits approximate the plaintiff's damages" and that an award of the infringer's profits is available if the infringer was unjustly enriched, if the plaintiff sustained damages, OR if the award is necessary for deterrence. (Slip op. at 18.)

9th Circuit says settlement moots Gator.com v. LL Bean dispute

Many folks are aware that Gator.com and LL Bean have been duking it out in California over the legality under the Lanham Act and the Copyright Act of Gator.com's practice of signing up web surfers to receive pop-up ads tied to the web sites they were viewing. The district court kicked the case on Bean's pre-answer rule 12(b)(2) motion, holding that there was no personal jurisdiction over Bean in California. While the personal jurisdictional issue was under en banc consideration at the 9th Circuit, the parties settled the substance of their dispute, with Gator.com phasing out its pop-ups when web surfers are on Bean's website, and Bean releasing Gator.com from liability for claims of infringement, etc.

The settlement had a strange wrinkle, however. If Bean were to win the appeal (no personal jurisdiction over Bean), then Gator.com would pay it an additional 10K. If Gator.com were to win (p.j. over Bean in Cal.), then Bean got nothing.

Although it isn't clear to me why the parties wanted to continue to have the appeal heard with such a paltry stake riding on it (precedent?), they nevertheless pressed forward. But the en banc 9th Circuit pressed back, and held that the parties' settlement mooted the case. The court reasoned that the 10K personal jurisdiction was a "side bet" only: the REAL dispute as to whether Gator.com's business practices were legal was fully resolved by the settlement. The court distinguished prior cases where a settlement payment was contingent on the outcome of an appeal by noting that, in such cases, the contingent payment was in essence a liquidated amount for damages claimed in the original dispute. In this dispute, by contrast, said the court, there is no damage claim (because Bean moved to dismiss and won before it answered and counterclaimed?), and the personal jurisdiction argument has nothing to do with the substance of the controversy between the parties.

3d Circuit Holds Lanham Act Claim Barred by Laches

The Third Circuit discussed the laches defense to a Lanham Act false advertising claim in Santana Products Inc. v. Bobrick Washroom Equipment, Inc., No. 03-1845 (3d Cir. Feb. 9, 2005). In Santana, the plaintiff filed his false advertising claim 7 years after he first learned of the defendant's alleged false statements. The defendant raised statute of limitations and laches defenses. Since the Lanham Act doesn't have a stated statute of limitations, the district court looked to "borrow" one from state law. But it held that the statute of limitations defense didn't fully bar the claim, just that part of it that was outside the 6-year limitation it borrowed from what it viewed as the most appropriate Pennsylvania law, the Pennsylvania Unfair Trade Practices and Consumer Protection Law (UTPCPL). But because the plaintiff first learned of the false statements outside the UTPCPL's 6-year limit, the district court held that a presumption of laches arose. It also held that the plaintiff's delay was inexcusable. Ultimately, however, it rejected the laches defense because it concluded that the plaintiff had proven that the defendant wasn't prejudiced by the delay. In other words, the district court held that a plaintiff can overcome laches so long as it can defeat a showing of EITHER (a) inexcusable delay OR (b) prejudice to the defendant.

The 3d Circuit held that the district court should have dismissed the Lanham Act claim as barred by laches. It agreed with the district court's choice of the UTPCPL statute of limitations as the proper guidepost for the false advertising claim (take heed -- this may not be the proper source from which to borrow for a Lanham Act trademark infringement claim). It also agreed that a presumption of laches arose because of the plaintiff's seven-year wait. But it disagreed that a plaintiff facing a presumption of laches need overcome only one of the two elements of laches. The plaintiff needs to show BOTH that its delay was excusable AND that the defendant wasn't prejudiced by the delay. (Slip op. at 29.) The 3d Circuit discussed the issue in some detail despite several of its prior opinions expressly so holding, probably because the plaintiff had cited a district court decision written by Senior Third Circuit Judge Becker (when he was a district judge) that adopted the "either/or" rule for overcoming the presumption of laches.

11th Circuit Certifies "Advertising Injury" Insurance Issue in Lanham Act Case to Florida Supreme Court

Most trademark litigators know that, where possible, a plaintiff should plead that the alleged infringer's acts were willful and intentional. It helps in the likelihood of confusion inquiry and any secondary meaning debate, and, in most circuits, it also triggers the plaintiff's ability to seek "big gun" relief, such as treble damages, attorneys' fees, and disgorgement of the infringer's profits.

And if you've defended such cases in situations where there may be insurance coverage for "advertising injury," you might have heard the insurer squawk about how the allegation of intentional or willful infringement triggered a common exclusion in such policies for intentional acts.

The issue of whether an insurance policy covers the particular claims is an issue of state law, and federal courts usually put on their Erie hats and decide them. In Vector Products, Inc. v. Hartford Fire Insurance Co., No. 04-10975 (Jan. 26, 2005), however, the allegation of willful conduct complicated things. One of Vector's competitors claimed that Vector was engaged in false advertising, and brought a Lanham Act claim against it. Probably to try to qualify for additional remedies, the competitor claimed that Vector's acts were intentional. The insurer then refused to defend because of that allegation. Realizing that allegations of willfulness might trigger the exclusion against the insurer's duty to defend, yet wasn't required for Lanham Act liability, the 11th Circuit thought the issue of coverage was sufficiently subtle and unsettled under Florida law to require a punt to the Florida Supreme Court.

Insurers and trademark litigators will be watching the runback on this one.

7th Circuit Says Prevailing Defendants in Copyright Cases Presumptively Entitled to Attorneys' Fees

In Woodhaven Homes & Realty, Inc. v. Hotz, No. 03-4158 (7th Cir. Jan. 28, 2004), the 7th Circuit reiterated its recent holding that prevailing defendants in copyright cases are "presumptively entitled (and strongly so) to recover attorney fees." Otherwise, plaintiffs could coerce settlements with impunity even in frivolous cases, and defendants would be discouraged from asserting their rights in court. (Slip op. at 3.) The court suggested, however, that defendants who incur way more in legal fees than the plaintiff demands may have their fee award reduced as a result. (p.4).

8th Circuit Affirms Perpetual Injunction Against Use of Trade Secrets

If you're a user of Premarin brand hormone replacement product, you probably don't want to read footnote 2 in the 8th Circuit's decision in Wyeth v. Natural Biologics, Inc., No. 03-3651 (8th Cir. Jan. 24, 2005). The case involved allegations by the drug's maker that a competitor stole the trade secrets needed to make the product, whose prime ingredient, natural conjugated estrogens--and here's the yucky part--"is made by extracting conjugated estrogens from pregnant mare urine." (Slip op. at 3 n.2).

Of interest in the 8th Circuit's opinion is its discussion of a whole bunch of circumstantial evidence--there was no direct evidence of theft--that supported the district court's finding that the defendant misappropriated the secret process (pp. 5-6.) The court found it particularly significant that no one had, for decades, been able to replicate the Wyeth process, and the court believed that this fact gave rise to an inference that the defendant must have gotten it illegally.

But in the statute of limitations discussion, that fact proved a one way street headed exactly where the plaintiff wanted to go. A process may be so hard to replicate that when someone replicates it, it must be stealing, right? But when the trade secret owner sees that the defendant has replicated it, he isn't charged with notice that the defendant stole it. (pp. 6-9.) Huh?

Anyway, on to remedy. The district court forever barred the defendant from all activity related to the development of natural conjugated estrogens. The defendant thought that the injunction ought to be limited to whatever "head start" the misappropriation gave it. . . but forever? Sheesh!

The 8th Circuit affirmed the permanent timeout, however, primarily because the defendant acted very sneakily during the litigation, destroying evidence, lying, hiding things, whistling some nameless tune while looking around innocently, etc. So sneaky, in fact, that the district court felt that the defendant couldn't be trusted to comply with any order that gave it any wiggle room. The 8th Circuit affirmed on this point. (pp. 9-10.) And I would be missing a marketing opportunity if I were to fail to mention that this holding seems to be in line with my scintillating article, Permanent Injunctions in Trade Secret Actions: Is a Proper Understanding of the Role of the Inadequate Remedy at Law/Irreparable Harm Requirement the Key to Consistent Decisions?, 28 AIPLA Q. J. 124 (Spring 2000). Alas, the court didn't cite to it. Bummer.

To access the decision, go to the 8th Circuit's opinion search page, click on Opinions by Month/Year, select January 2005, and scroll 'til you come to it.

Plaintiff Gets Injunction Despite Sloppy Trademark Practices

On January 13, the Sixth Circuit affirmed a preliminary injunction prohibiting a defendant's further use of the plaintiff's TUMBLEBUS mark for a preschool gym on wheels. The plaintiff really dodged a bullet, however, that was aimed at the sloppy way she let her customers use her trademark.

In Tumblebus, Inc. v. Cranmer, the plaintiff uses the TUMBLEBUS mark both for sales of reoutfitted school buses and for the operation of several buses in the Louisville area. The buses the plaintiff sold to 3rd parties not only looked like the plaintiff's buses, but she also (1) allowed the buyers to use the TUMBLEBUS mark, (2) gave them training lessons in how to pitch the services, and (3) further entered into informal oral agreements about where these buyers could operate. In other words, the plaintiff's business looked a lot like a haphazard and informal form of franchising . . . but without the oversight and quality control.

This informality resulted in a legal dispute when one of the plaintiff's purchasers began operating in the Louisville area, which the plaintiff considered HER territory. The purchaser later sold to someone else, who continued to operate in Louisville.

Suing the purchaser of the used bus, the plaintiff was still able to win a preliminary injunction and get it affirmed by the 6th Circuit. The courts found that the defendant had failed to create a factual record sufficient to find the mark was, or had become, generic. The court also rejected the argument that the mark was descriptive because it found "preschool gym on wheels" more appropriate as a description and thought that TUMBLEBUS required a bit of imagination.

Finally, the courts also rejected an abandonment-through-naked-licensing argument because the one geographic are where that argument really didn't apply was Louisville -- where the plaintiff herself was the exclusive operator.

The lesson here . . . . well, maybe there is no lesson here, since the plaintiff seems to have gotten away with some pretty loosey-goosey business practices. Next time, however, TUMBLEBUS may not be so lucky.

Kid Rock Copyright . . . . Forever

The Sixth Circuit, in Ritchie v. Williams, recently thwarted an attempt by a purported music promoter who claimed to have an ownership interest in the rights to Kid Rock's music. The promoter claimed to have entered into the alleged agreement in 1989 (i.e., before Kid Rock had money like Fort Knox), alleging several claims in state court under state law. But when the fog lifted, the earth had shifted -- Kid Rock removed to federal court. Citing federal preemption, the Kid said the state law claims were still the same as copyright claims 'cause they ain't changed nothin. That is, they were completely preempted by the Copyright Act.

Where it applies, complete preemption doctrine permits the recharacterization of state law claims as federal claims, thus permitting removal of such a case from state to federal court. The reason Kid Rock wanted to recharacterize the promoter's claims as copyright claims was that he'd thought the claims had got rusty, thought they'd got dusty -- the Copyright Act has a 3 year statute of limitations.

Fat and ugly, broke, black and blue, the promoter came back to the Sixth for round two. The Sixth Circuit, however, used the opportunity to fall in line with the Second and Fourth Circuit's adoption of complete preemption doctrine. The promoter was told, don't test the boss, 'cause he's got this sewn like Betsy Ross. According to the court:

You take the copyright claim
And you give it the state law name
You know that trick is lame
You're in the federal domain
Forever

Pre-empted
Forever
Time-Barred
Forever


Sorry, I just couldn't resist.

GOP Cybersquatters?

I may live and practice in the great (red) state of Texas, but I was born, bred, schooled and worked exclusively in several true blue states before that. And so, yes, I'm a blue stater politically. As a democrat in Texas, however, I now understand how republicans in my native Massachusetts must feel. But still, as a trademark guy, I can't abide this little gambit.

What is With the 10th Circuit and Tire Trademark Cases?

The 10th Circuit -- not exactly a trademark law hotbed -- issued its second published trademark decision in a month. And on tires, to boot, which is kind of weird for a circuit that doesn't get many trademark cases, yet were the folks who gave us the seminal reverse confusion decision in 1977 in Big O Tires.

But I digress. In Team Tires Plus, Ltd. v. Tires Plus, Inc. (January 6, 2005), the 10th Circuit burned a little rubber on the district court. The plaintiff used TIRES PLUS for franchising services to tire stores. The defendant TIRES PLUS was an unrelated tire store. The district court ruled that since franchising and tire-selling are not the same thing, the plaintiff's infringement case had no traction.

The 10th Circuit held that the district court's simplistic analysis hydroplaned right over the key issue of likelihood of confusion. The court noted that while in the days of solid rubber tires such a binary view may have held sway, it has long gone the way of the Model T.

Having jacked up and replaced the district court's threadbare reasoning, the 10th Circuit rolled the case back to the trial court for proper inflation of the multi-factor likelihood of confusion test.

The Meaning of the Word "Pimp"

A 9th Circuit panel today couldn't agree on whether calling Evel Knievel a "pimp" was, in the current vernacular, an insult, a compliment, or neither. ESPN published a photo of Knievel and his wife standing together arm-in-arm with an unnamed young woman at the 2001 Action Sports and Music Awards Ceremony with the caption "Evel Knievel proves that you're never too old to be a pimp."

After summarizing Knievel's career of daring exploits in a manner worthy of the best publicists, the court held that Knievel's lawsuit had hit a slippery patch of 12(b)(6) grade motor oil and crashed. Blame it on kids today. Given the other "satirical, risque, and sophomoric slang" used by ESPN and others in describing the "youthful" event, two judges held that the word pimp wasn't really an accusation that Knievel was, in fact, unlawfully engaged as a business manager of prostitutes. Holding that Knievel should get over it (the majority actually wasn't quite that blunt), the court affirmed the dismissal of Knievel's complaint.

A dissenting judge wasn't so sure. He quoted Shakespeare (presumably, in the context of this case, to exemplify just how far pop culture has fallen) and lamented that the jury ought to have decided whether Knievel was defamed or not. Here's the link.

5th Circuit copyright decision involving the registration requirement and "probative similarity"

The 5th Circuit recently handed down a lengthy decision that addresses several basic copyright issues. Positive Black Talk Inc. v. Cash Money Records Inc., No. 03-30625, concerned a dispute between two New Orleans based rappers, each of whom recorded a piece called "Back that A** Up" (which the court dryly described as a "poetic phrase"). Here are some highlights:

First, there was a jurisdictional issue. The plaintiff filed suit the same day it mailed the application to register the copyright to the Copyright Office. Four days later, the Copyright Office received it. The case then went all the way through a jury trial. Although the 5th Circuit has previously held that a valid copyright registration is a jurisdictional prerequisite to a copyright suit, it has also interpreted this to require only that the Copyright Office receive the application, deposit, and fee before the plaintiff files suit. Here, it was even more lenient, holding that, although there was no subject matter jurisdiction when the suit was filed, the jurisdictional defect was cured when the Copyright Office received the application materials. The court relied on Supreme Court cases under other jurisdictional rules that permit courts to overlook "procedural-jurisdictional" defects that were cured before final judgment based on "considerations of finality, efficiency, and economy." (p.12).

On to the merits. The court's holding require some background. Copyright infringement requires (1) ownership of a valid copyright and (2) copying of protected elements of the plaintiff's work. The "copying" element is proven by (a) factual copying and (b) substantial similarity. Because copying's hard to prove, it can be inferred from (i) proof of access and (ii) "probative similarity."

The court first held that the "probative similarity" element doesn't require the "whole of the defendant's work [to] replicate[] the whole of the allegedly copied work." Instead, "the jury must consider the whole of the first work (including both copyrightable and non-copyrightable parts) and the whole of the second work and then compare the two works, looking for any similarities between their constituent parts." (p.17)

The court went on to say that, "In order to avoid confusion, a district court should explain that the purpose of the probative similarity inquiry is to determine whether factual copying may be inferred and that this inquiry is not the same as the question of substantial similarity, which dictates whether the factual copying, once established, is legally actionable." (p.18.) A "jury may find that two works are probatively similar if it finds any similarities between the two works (whether substantial or not) that, in the normal course of events, would not be expected to arise independently in the two works and that therefore might suggest that the defendant copied part of the plaintiff's work." (p.19)

Once copying is found, the court noted that the "substantial similarity" element must take into account "must take into account the qualitative importance of the copied material to the plaintiff's work" -- NOT whether it constitutes a substantial portion of defendant's work. (p.26 n.12). Further, the substantial similarity must focus on a comparison of the two parts of the works that are similar, not the works as a whole. (pp. 25-28.)

The court also held that newspaper articles that contained statements that the district court did not err in excluding newspaper articles that stated that the two songs were quite similar. The court said that "the question of substantial similarity is typically left to the fact finders' own impressions. Thus, a court could reasonably conclude that the views of persons not on the jury and not qualified to give an expert opinion on substantial similarity should not be admitted." (p.37.)

These look to be the major points, though court discussed a host of other topics too.

9th Circuit Officially Blesses "Famous Mark" Doctrine for Foreign Markholders

The 9th Circuit recently held that foreign mark owners can avail themselves of "famous" or "well-known" mark doctrine to assert rights in the United States even where they don't "use" the mark here.

In Grupo Gigante S.A. de C.V. v. Dallo & Co., No. 00-57118, the plaintiff GIGANTE was a Mexican grocery store chain of over 100 stores throughout Mexico, including 2 in Tijuana. The defendant was a San Diego company that began operating GIGANTE Market after the plaintiff's mark became known in the San Diego area.

The district court applied "famous mark doctrine" and held that the plaintiff's mark qualified for protection in San Diego because it had established secondary meaning there before the defendant opened up its first store. The 9th Circuit surveyed the sparse case law concerning the famous mark doctrine (including the eponymous MAXIM'S case, Vaudable v. Monmartre, Inc.) (sorry, can't find a link), and concluded that the famous mark doctrine was a sound corollary of the Supreme Court's venerable Tea Rose-Rectanus territoriality cases.

The 9th Circuit went on to hold that the famous or well-known mark doctrine applies when (1) the plaintiff can show secondary meaning in the contested geographic area and (2) that a substantial percentage of consumers in that market are familiar with its mark. The court suggested that intentional copying and actual confusion are relevant factors in determining whether the second element of this test is met.

The 9th Circuit seemed to think that there was no circuit court authority on famous or well-known mark doctrine, apparently ignoring two Depression-era cases involving the mark HUDSON BAY, in which both the 9th Circuit itself and the 5th Circuit approved and applied the doctrine.

The Court also went on to discuss the issue of laches in some detail.

10th Circuit Pours Out Beerman

The 10th Circuit recently gave a Christmas present to Coors Brewing, which was exonerated of ripping off the "Bob the Beerman" character created by a locally-renown Coors Field beer vendor.

The plaintiff created a persona he called "Bob the Beerman," who used certain crazy antics and quips to sell beer at Rockies baseball games. The character got to be so well-known that Bob (a/k/a Robert Donchez) was able to snag several paying gigs to do his "Bob the Beerman" routine outside of cozy confines of Coors Field.

He tried to sell Coors on the idea, but you know the story. Coors wasn't interested, yada yada yada, but lo and behold, a few months later, Coors comes out with a bunch of ads featuring beer vendors with crazy antics and quips.

Bob the Beerman became Bob the Lawsuitman, asserting a six-pack of claims against Coors. The district court drained the Beerman out of court on summary judgment. Thirsty for another round of litigation, Bob went to see what legal principles the 10th Circuit had on tap.

In its opinion, the 10th Circuit quickly and understandably cold-filtered out his trademark and service mark claims for the term "beerman." But it seemed curious that the 10th Circuit didn't find the nose of the right of publicity claim more interesting. It held that the right of publicity doesn't extend to a character created by the plaintiff, but only to the plaintiff's own identity. Although this would seem to conflict with the Restatement's view (section 46, comment d), and also some of the case law out there, the result is that Bob got a mug full of foam.

Cheers!