IP Law Chat : IP Law Chat -- Hendricks & Lewis, intellectual property, trademark, copyright and technology attorneys

Plaintiff Zino Davidoff SA ("Davidoff"), the creator of high-end luxury goods including  the COOL WATER branded cologne and fragrance, sued CVS Corporation, a retail drugstore chain, for federal trademark infringement, unfair competition, and trademark dilution, among other things.  Originally, Davidoff sought relief only in connection with CVS's alleged marketing of counterfeit Davidoff products.

However, during a court-authorized inspection of undistributed Davidoff products in CVS's inventory, Davidoff discovered 16,600 items on which the UPCs on the packages and labels had been removed.  The UPCs had been removed by, among other things, cutting the portion of the box or label on which the UPC appeared, using chemicals to wipe the UPC away and grinding the bottom of the bottles to remove the UPC.

Davidoff then amended its complaint to claim relief based upon CVS's sale of Davidoff products on which the UPC had been removed and moved for a preliminary injunction forbidding the sale of such products.  The District Court granted Davidoff's motion for a preliminary injunction, concluding that Davidoff was likely to succeed on the merits of its trademark infringement claims on the theory that CVS's sale of Davidoff branded products with the UPCs removed constituted trademark infringement.

The Second Circuit affirmed the District Court's decision, finding that the injunction was justified on the ground that removal of the UPCs from Davidoff's trademarked products unlawfully interfered with Davidoff's trademark rights, specifically, its ability to control the quality of its products.  The Second Circuit relied on an earlier case holding that

a trademark holder is entitled to an injunction against one who would subvert its quality control measures upon a showing that (i) the asserted quality control procedures are established, legitimate, substantial, and nonpretextual, (ii) it abides by these procedures, and (iii) sales of products that fail to conform to these procedures will diminsh the value of the mark.

The Second Circuit agreed with the District Court that Davidoff had satisfied each of these requirements.  Davidoff demonstrated adequately that the affixation of the UPC was a legitimate procedure to detect counterfeits, identify defective products and faciliate effective recalls.  In addition, the Second Circuit concluded that CVS was selling under Davidoff's mark goods that were materially different from Davidoff's genuine trademarked products.  Specifically, the Court concluded that the damage to the packaging caused by the removal of the UPCs--the cutting of the packaging, the application of chemicals to wipe away the UPC, and the grinding of the bottles to remove the UPC--made the goods sold by CVS materially different from Davidoff's genuine trademarked products.

The Second Circuit thus affirmed the District Court's grant of a preliminary injunction to Davidoff.

The Court's opinion in Zino Davidoff SA v. CVS Corp., No. 07-2872, can be found here (PDF, 16 pgs).

• Email This
• Print
• Comments
• Trackbacks

Keeping with the theme of the previous post, here are brief descriptions of some of the recent trademark claims filed in the Western District of Washington:

adidas America, Inc., et al. v. The Topline Corp., No. CV09-00646 RSM, filed May 11, 2009

adidas alleges that The Topline Corporation imported, sold or offered for sale a variety of footwear that infringed adidas' registered trademarks, namely, its "three-stripe mark" and its corporate logo, as well as adidas' trade dress which adidas refers to as the "SUPERSTAR", "MEI" and "PRAJNA" trade dress.  In total, adidas asserts nine claims against The Topline Corporation including federal trademark infringement, unfair competition, and dilution, common law trademark infringement and unfair competition, and state trademark and trade dress dilution and unfair and deceptive trade practices pursuant to the statutes of a number of states.

A copy of the complaint, including photos of the respective products, here (PDF, 32 pgs).

 Soaring Helmet Corp. v. Bill Me, Inc., et al., No. CV09-00789 JLR, filed June 9, 2009

Soaring Helmet Corp., a Washington corporation and owner of the registered trademark "VEGA" for motorcycle helmets, alleges that Defendant Google sold Soaring Helmet's "VEGA" trademark to Defendant Leatherup.com as a keyword such that a sponsored link for Leatherup.com appears alongside the search results for "VEGA helmets".  Specifically, Soaring Helmet alleges that when the query "VEGA helmets" is searched via Google's search engine, an advertisement appears under the sponsored listings stating that Leatherup.com offers "50% off Vega Helmets" when it does not in fact sell any of Soaring Helmet's VEGA products.  Soaring Helmet alleges claims for federal trademark infringement and unfair competition, state unfair competition and tortious interference with prospective economic advantage.

A copy of the complaint, including exhibits, here (PDF, 25 pgs).

Kona USA, Inc. v. DBM Nutrition, et al., No. CV09-00822 MJP, filed June 15, 2009

Kona, the owner of the registered "KONA" mark for bicycles, alleges that DBM Nutrition infringed on Kona's rights in the "KONA" mark by marketing and selling goods and services, including cycling clothing products and cycling related goods and services, under the confusingly similar "KONA ENDURANCE" mark.  Kona alleges claims for federal trademark infringement and false designation of origin and state unfair competition.

A copy of the complaint, including exhibits, here (PDF, 49 pgs).

• Email This
• Print
• Comments
• Trackbacks

For a change of pace, here are brief summaries of some of the recent copyright infringement complaints filed in the Western District of Washington:

Corbis Corp. v. Infinity Commercial Capital, LLC, No. CV09-00657 JPD, filed May 12, 2009

Corbis alleges that Infinity Commercial Capital ("ICC"), a business providing hotel and commercial mortgage lending services, downloaded, without authorization, at least 16 images from Corbis' website and uploaded and displayed those images on ICC's website.  Corbis alleges claims for direct and vicarious copyright infringement, as well as breach of contract.  In connection with the latter claim, Corbis alleges that, pursuant to the Corbis Content License Agreement, by using the Corbis images without authorization, ICC agreed to pay Corbis 10 times the licensing rate in addition to other fees, damages and penalties claimed by Corbis.

Complaint here (PDF, 22 pgs).

Global Research & Rescue v. Six Flags, Inc., No. CV09-00749 MJP, filed May 29, 2009

Global Research and Rescue ("GRR"), a non-profit "engaged in the activity of benefiting whales and other marine mammals by promoting public awareness of the existence of these animals," alleges that it is the owner of the copyrights in three films depicting killer whales in their natural habitat.  In 2004, GRR provide complete copies of these films to Six Flags Discovery Kingdom for purposes of demonstrating GRR's capabilities.  GRR alleges that Six Flags then used the films through at least the 2006 and 2007 tourist seasons at the Six Flags Discovery Kingdom Park in Vallejo, California without GRR's permission or authorization.  GRR alleges claims for copyright infringement and unjust enrichment.

Complaint here (PDF, 5 pgs).

Blue Nile, Inc. v. Gem Stone King, Inc., No. C09-0828 RSL, filed June 16, 2009

Blue Nile, the market leader in the online diamond and fine jewelry retail industry, alleges that Gem Stone King willfully and without authorization copied Blue Nile's distinctive diamond photographs and displayed those photographs on Gem Stone King's website.  Blue Nile alleges a single claim of copyright infringement against Gem Stone King.

Complaint here (PDF, 7 pgs).

• Email This
• Print
• Comments
• Trackbacks

Although it is not hot off the presses, the Third Circuit's decision in William A. Graham Co. v. Haughey is worth a brief mention.

Most notably, the Third Circuit was faced with a question of first impression, namely, whether the discovery rule or the injury rule governed the accrual of claims under the Copyright Act.  Under the discovery rule, a claim accrues when the plaintiff discovers, or with due diligence should have discovered, the injury forming the basis of the claim.  Conversely, under the injury rule, a claim accrues at the time of the injury.

Ultimately, the Third Circuit joined the ranks of eight of its sister courts of appeals--the First, Eighth, Sixth, Ninth, Seventh, Fourth, Fifth and Second Circuits--and concluded that the discovery rule governed the accrual of civil claims under the Copyright Act.

The Third Circuit's opinion can be found here.

• Email This
• Print
• Comments
• Trackbacks

Does a federal district judge have the authority to permit gavel-to-gavel webcasting of a hearing in a civil case?  According to the First Circuit Court of Appeals, the answer is no, at least with regard to a federal district judge in the District of Massachusetts.

The issue arose in a set of consolidated cases brought by the record companies against individuals who allegedly used file-sharing software to download and disseminate copyrighted songs.  In December 2008, one of the individual defendants asked the District Court to permit Courtroom View Network to webcast a non-evidentiary motions hearing.  The District Court granted the motion over the objection of the record companies, citing the "keen public interest" in the cases.  The record companies then sought relief from the First Circuit, asking that it prohibit enforcement of the order.

The First Circuit granted the relief sought by the record companies and prohibited enforcement of the District Court's order permitting webcasting of the motions hearing.  The First Circuit concluded that it was "perfectly clear" that a local rule of the District Court, the policy of the Judicial Conference of the United States, and a resolution of the First Circuit Judicial Council "undermine[d] the district judge's assertion of authority to allow webcasting."  Thus, in a case the First Circuit characterized as being about "the governance of the federal courts," the court concluded it was bound to enforce the controlling local rule.

In a concurring opinion, Circuit Judge Lipez acknowledged the "inescapable legal conclusion" reached by the First Circuit but called for the prompt reexamination of the local rule, the Judicial Conference policy and the Judicial Council's resolution, noting that "there are no sound policy reasons to prohibit the webcasting authorized by the district court."  Judge Lipez went on to say:

The Local Rule at the center of this controversy was adopted in 1990.  Since its adoption, dramatic advances in communications technology have had a profound effect on our society.  These new technological capabilities provide an unprecedented opportunity to increase public access to the judicial system in appropriate circumstances.  They have also created expectations that judges will respond sensibly to these opportunities.

In re Sony BMG Music Entertainment, No. 09-1090 (1st Cir. Apr. 16, 2009) (PDF, 25 pages)

• Email This
• Print
• Comments
• Trackbacks

In the late 1940s, William Aycock conceived of and began developing a service that would allow solo passengers to arrange flights on chartered aircraft because at the time, the common practice was for air taxi companies to lease entire airplanes rather than individual seats.  Aycock's service would act as the communication link between customers and the air taxi service operators he contracted with to provide flights on an individual seat basis.  Aycock planned to advertise his service under the mark AIRFLITE and have those interested in the service call a toll-free number to schedule reservations.

Aycock believed that in order for the AIRFLITE service to become operational, he would need at least 300 air taxi operators in the United States to participate in his air taxi operator network.  In March 1970, Aycock distributed fliers containing in-depth information about his AIRFLITE service to virtually all air taxi operators certified by the FAA and invited them to join his service.  Some of these air taxi operators agreed to participate in the AIRFLITE service and entered into contracts with Aycock, paying "modest initiation fees" to him.

In August 1970, Aycock filed an application to register the AIRFLITE service mark.  Although there apparently was significant back-and-forth between Aycock and the examining attorney, the final description of services approved by the PTO for the AIRFLITE mark was "[a]rranging for individual reservations for flights on airplanes."  The AIRFLITE mark was registered on April 30, 1974, on the Supplemental Register and his application to renew the mark was granted by the PTO in April 1994.

In 2001, Airflite, Inc. filed a petition for cancellation of Aycock's AIRFLITE service mark registration alleging in part that Aycock did not use the mark prior to registration in connection with the services identified in the registration.  The TTAB agreed with the petitioner and issued an opinion in October 2007 canceling the AIRFLITE registration.

The Federal Circuit, with one judge dissenting, affirmed the TTAB's decision, concluding that Aycock's AIRFLITE service mark application (and therefore the resulting registration) was "void ab initio" because it did not meet the use requirement when he filed it more than 30 years ago in 1970.  Specifically, the Court concluded that, given the description of services in the registration (characterized by the Court as "the arranging of flights between an air taxi operator and a passenger"), Aycock's use of the mark in contracting with the air taxi operators was not sufficient "use in commerce" to support the registration.  Rather, the Court concluded that such actions were merely "preparations to use" the mark in commerce.  In order to establish the necessary "use in commerce," the Court stated that he "had to develop his company to the point where he made an open and notorious public offering of his AIRFLITE service to intended customers" but the evidence did not support such a finding.

In a sympathetic dissent, Federal Circuit Judge Newman characterized the cancellation of the registration after 35 years as "seriously flawed" and "seriously unjust."  The dissent argued in part that--given the prosecution history, which involved extensive exchanges between Aycock and the examiner regarding the description of services--it would be "unfair to penalize the applicant for flaws for which there was at least a shared responsibility."  Rather, the dissent argued that the appropriate remedy should be clarification and correction of any perceived flaw in the registration not cancellation after 35 years.

The Federal Circuit's opinion, including dissent, in Aycock Engineering, Inc. v. Airflite, Inc., can be found here (PDF, 29 pages).  You can also find the TTAB's opinion in the case here (PDF, 18 pages).

• Email This
• Print
• Comments
• Trackbacks

This copyright infringement case involved two competitors that provide consulting services "aimed at improving employee communication and negotiation skills within the workplace."

The plaintiff, Situation Management Systems, Inc. ("SMS") had developed training materials focused on teaching these skills and specifically three training workbooks ("Positive Power & Influence", "Positive Negotiation Program", and "Promoting and Implementing Innovation").  After SMS was acquired in bankruptcy proceedings in 2001, a number of employees left the company, several of whom started defendant ASP. Consulting LLC ("ASP").  ASP then developed training workbooks including three that SMS claimed infringed its copyrights in its workbooks.

The district court found that ASP had in fact copied SMS's works but entered a judgment of noninfringement because it concluded that ASP's works were not substantially similar to the very limited protectable aspects of SMS's works.

The First Circuit disagreed with the district court, however, primarily with the district court's conclusions with regard to the "originality" necessary for copyright protection.  Ultimately, the First Circuit concluded that the "district court's originality analysis was obviously tainted by its own subjective assessment of the works' creative worth" which the First Circuit noted "displayed nothing but pejorative disdain for the value of SMS's works."  The quotations from the district court cited by the First Circuit appeared to support the characterization of the district court's opinion of SMS's works.

In concluding that SMS's works were "dominated by unprotectable material," the district court opined that

[t]hese works exemplify the sorts of training programs that serve as fodder for sardonic workplace humor that has given rise to the popular television show The Office and the movie Office Space.  They are aggressively vapid--hundreds of pages filled with generalizations, platitudes, and observations of the obvious.

Similar comments and characterizations are sprinkled throughout the district court's opinion along with seemingly tangential asides including a brief description of the Civil War's Battle of the Crater and a recitation of Shakespeare's Sonnet 18.  Also, in the footnote describing the Battle of the Crater, the district court stated that

[i]t is appropriate to note that law clerk Alex Ewing, Esq., the creative analyst behind this opinion, is the great-great-grandson of George Washington Condrey, a sergeant in Lane's North Carolina Brigade, who believed until his dying day that he had accidentally shot Stonewall Jackson.

And in another footnote in the district court's 34-page opinion, apparently in connection with its substantive discussion of originality, the court noted that "[a]propos of naming concepts, it is interesting to note that The Origin of the Species does not actually include the word evolution" and then quotes the passage of the book from which that word evolved.

Returning to the legal issues, the First Circuit readily concluded that SMS had satisfied the originality requirement for all of the three works at issue and remanded the case back to the district court to consider the question of substantial similarity in light of the standards articulated by the First Circuit.

The First Circuit's opinion in Situation Management Systems, Inc. v. ASP. Consulting, LLC, can be found here (PDF, 20 pages) and the District Court's (somewhat unusual) opinion can be found here (PDF, 34 pages).

• Email This
• Print
• Comments
• Trackbacks

Internet Specialties West and Milon-Digiorgio Enterprises, Inc. are both internet service providers offering substantially similar services.  Internet Specialties uses the domain name "ISWest.com" and it registered that domain name in May 1996.  MDE uses the domain name "ISPWest.com", which it registered in July 1998.  Internet Specialties learned of ISPWest's existence in late 1998 but took no action against it because the company was not concerned about competition from ISPWest at that time.

After 1998, ISPWest continued to expand, including offering nation-wide service in 2002 and DSL in mid-2004.  In 2005, Internet Specialties took action, sending ISPWest a cease-and-desist letter and filing a lawsuit alleging that the use of the "ISPWest.com" domain name constituted trademark infringement under the Lanham Act.  In a bifurcated trial, the jury found that ISPWest had infringed on Internet Specialties' trademark but found no damages.  The district court in turn denied ISPWest's laches defense and issued an injunction against its use of the name "ISPWest".

The Ninth Circuit panel split on the primary issue on review--the analysis of ISPWest's laches defense to Internet Specialties' trademark infringement claim.

Both the majority and the dissent agreed on certain aspects of ISPWest's laches defense.  For example, both agreed that the laches period began in 1998, when Internet Specialties first learned of ISPWest's existence.  Because Internet Specialties did not file suit within the applicable four-year statute of limitations period starting from 1998, there was a presumption that laches applied.

But the majority and the dissent parted ways on the question of prejudice to ISPWest resulting from Internet Specialties' unreasonable delay in bringing suit for approximately six years.  The majority concluded that ISPWest could not show prejudice simply by demonstrating that it had spent money expanding its business but rather must show that during the delay, it developed "brand recognition of its mark."  Thus, although the majority expressed sympathy for ISPWest's position--during Internet Specialties' delay in bringing suit, ISPWest expanded from 2,000 to 13,000 customers and grew from $518,848 in sales to $2,422,463 in sales--it concluded that ISPWest had failed to show "that its identity had much at all to do with the mark ISPWest, inasmuch as [it] did not rely on its mark to attract customers."

Judge Kleinfeld, writing in dissent, disagreed with the majority's view of the type of prejudice that must be proven and asserted that the practical effect of what he characterized as a new rule in the Ninth Circuit "is to eviscerate the defense of laches in trademark law."  Relying on an earlier Ninth Circuit case, Grupo Gigante S.A. de C.V. v. Dallo & Co., 391 F.3d 1088 (authored by Judge Kleinfeld), the dissent argued that the rule had long been that for purposes of laches, prejudice is established if the party asserting the defense proves "it has continued to build a valuable business around its trademark during the time that the plaintiff delayed the exercise of its legal rights."  Based on ISPWest's "five or sixfold" expansion of its business during Internet Specialties' delay, the dissent concluded that ISPWest had met its burden of proving such prejudice.

The dissent also rejected the majority's attempt to distinguish Grupo Gigante.  The majority argued that there "is a significant difference between the public association of a grocery store [at issue in Grupo Gigante] and its name, versus the public association of MDE and ISPWest" and that "[a] grocery store's very identity rests in its name."  Indeed, the discussion of prejudice in Grupo Gigante does not appear to support whatever distinction the majority was attempting to articulate between a grocery store name and a domain name.  To the contrary, the Ninth Circuit in Grupo Gigante merely stated that by opening a second grocery store after the senior user learned of the alleged infringement and "by operating both stores for an additional four years after that use was discovered," the junior user was prejudiced by the delay.

You can find a copy of the Ninth Circuit's decision in Internet Specialties West, Inc. v. Milon-DiGiorgio Enterprises, Inc., including the dissent, here (PDF, 25 pages).

• Email This
• Print
• Comments
• Trackbacks

It is still in its infancy but the lawsuit between Shepard Fairey and The Associated Press over Fairey's use of a photograph taken by an AP photographer to create his well-known "Obama Hope" poster (and other related works) has already generated some interesting reading.  Specifically, the AP filed its answer to Fairey's complaint for declaratory and injunctive relief and asserted several counterclaims against Fairey and related entities for copyright infringement, a declaratory judgment and violation of the DMCA.

The core issue is whether Fairey's use of the AP photo constituted fair use.  Fairey contends that his use of the photo "as a visual reference" was fair use and emphasizes the transformative nature of his creation:

"Fairey transformed the literal depiction contained in the [AP] Photograph into a stunning, abstracted and idealized visual image that creates powerful new meaning and conveys a radically different message that has no analogue in the original photograph."

Fairey also alleges that he "did not create any of the Obama Works for the sake of commercial gain", that the AP photo was a "factual" work, that he used only a reasonable portion of the photo, and that his use did not impose any "significant or cognizable harm" to the value of the AP photo.

The AP's answer disputes Fairey's characterization of his use of the AP photo, claiming that Fairey's work copies "all the distinctive and unequivocally recognizable elements of the Obama Photo in their entire detail, retaining the heart and essence of The AP's photo[.]"

But the AP's counterclaims go on to say much more about both the AP and Fairey, apparently in order to paint a picture of the "equities of this lawsuit" as the AP sees them.  For example, AP's counterclaim alleges that Fairey has shown "willful disregard for the property rights of others" but has acted "hypocritically and aggressively when it comes to the protection of Fairey's works and enforcement against those who make use of them."  The AP also describes the parties' pre-filing discussions and alleges Fairey's counsel "reneged" on a "standstill agreement" by filing the lawsuit.

A copy of Fairey's complaint can be found here (PDF, 15 pages) and the AP's answer and counterclaims can be found here (PDF, 61 pages--with pictures--but worth the read).

• Email This
• Print
• Comments
• Trackbacks