Posted on May 31, 2011 by Stacia Lay

First Circuit Declines to Decide Whether Presumption of Irreparable Harm Survives Supreme Court's eBay Decision

This dispute involved the parties' respective uses of the mark MDTV and formatives thereof.  The somewhat lengthy facts are detailed in the First Circuit's opinion but the end result was that the district court granted a preliminary injunction based upon a presumption of irreparable harm as a result of a finding of a likelihood of success on the merits of the trademark infringement claim.

In vacating the district court's grant of a preliminary injunction based upon that presumption of irreparable harm, the First Circuit discussed the Supreme Court's decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) at some length but ultimately declined to decide whether the presumption should be rejected under that decision:

[W]e conclude that a request to preliminarily enjoin alleged trademark infringement is subject to traditional equitable principles, as set forth by the Supreme Court in eBay, and more recently in Winter [v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008)], which also discusses such principles.  We, however, decline to address at this time the full impact of eBay and Winter in this area.  For example, we do not address whether our previous rule, relied upon by the district court, i.e., "that a trademark plaintiff who demonstrates a likelihood of success on the merits creates a presumption of irreparable harm," . . . is consistent with traditional equitable principles.  In other words, we decline to decide whether the aforementioned presumption is analogous to the "general" or "categorical" rules rejected by the Supreme Court in eBay.

(footnotes omitted).

The First Circuit declined to answer that question because the parties' briefs were "inadequate" on the issue but more particularly, it was unnecessary to answer it to decide the case.  Rather, the First Circuit concluded that even assuming, without deciding, that the presumption of irreparable harm was still good law, the district court abused its discretion in applying it in this case because the party seeking the preliminary injunction had delayed excessively in seeking relief.

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

Tags:
Posted on May 10, 2011 by Stacia Lay

Seventh Circuit Affirms Abandonment of Mark As a Result of Naked Licensing

Eva Sweis established "Eva's Bridal" shop in Chicago in 1966 and allowed her children to operate shops under the name.  The business passed to Said and Nancy Ghusein who later sold one of the shops to Nayef Ghusein under an agreement that required payment of $75,000 a year for the use of the "Eva's Bridal" name and marks.

That license agreement expired in 2002 but Nayef Ghusein continued to operate the store under the "Eva's Bridal" name without any payment for use of the name.  Plaintiffs sued under the Lanham Act but the District Court dismissed the suit, concluding that plaintiffs had abandoned the mark by engaging in naked licensing in that the license agreement did not require the licensee to operate the business in any particular way and did not give the licensor any power of supervision over the business.  Plaintiffs had therefore abandoned the mark and defendants could use it without payment.

The Seventh Circuit readily agreed with the District Court's conclusion and also rejected any special rule for "high quality" businesses with respect to trademark licensing:

This argument that licensors may relinquish all control of licensees that operate "high quality" businesses misunderstands what judicial decisions and the Restatement mean when they speak about "quality."  There is no rule that trademark proprietors must ensure "high quality" goods--or that "high quality" permits unsupervised licensing. . . .  The sort of supervision required for a trademark license is the sort that produces consistent quality.

Or, as the court stated somewhat differently, the "trademark's function is to tell shoppers what to expect--and whom to blame if a given outlet falls short."

The Seventh Circuit concluded that it didn't have to answer the question of how much authority over quality must remain with the trademark owner because the case offered "the paradigm of a naked license" where the "plaintiffs did not retain any control--not via the license agreement, not via course of performance."

The case cite is Eva's Bridal Ltd. v. Halanick Enterprises, Inc., No. 10-2863 (7th Cir. May 10, 2011).

Tags:
Posted on May 4, 2011 by Stacia Lay

Ninth Circuit Reverses Copyright Preemption Decision on En Banc Rehearing

This case was back before the Ninth Circuit for a second time, this time for a rehearing en banc. 

You can find a more detailed explanation of the facts of the case in my previous post reporting on the opinion of the three-judge panel.  The gist of the facts are that plaintiffs alleged that they pitched their concept for a new reality TV show to NBC Universal, Inc. and the Sci-Fi Channel and offered to partner "in the production, broadcast and distribution of" their concept.  The representatives turned plaintiffs down but NBC later partnered with others to produce a series on the Sci-Fi channel that plaintiffs allege was based on their material.

Plaintiffs sued alleging, in part, state law claims for breach of implied contract and breach of confidence but the District Court dismissed those claims, concluding that they were preempted by federal copyright law.

A three-judge panel of the Ninth Circuit affirmed the District Court's decision, concluding that the claims for breach of implied contract and breach of confidence were not qualitatively different from a copyright claim, distinguishing the prior Ninth Circuit case of Grosso v. Miramax Film Corp., 383 F.3d 965 (9th Cir. 2004) in the process.

The Ninth Circuit ordered a rehearing of the case en banc, this time reversing the District Court's preemption decision.

The Ninth Circuit emphasized that it had held in previous cases that an implied contractual claim, like that of the plaintiffs in this case, were not preempted by the Copyright Act because such a claim

requires that there be an expectation on both sides that use of the idea requires compensation, and that such bilateral understanding of payment constitutes an additional element that transforms a claim from one asserting a right exclusively protected by federal copyright law, to a contractual claim that is not preempted by copyright law.

Thus, the Ninth Circuit "again [held] that copyright law does not preempt a contract claim where plaintiff alleges a bilateral expectation that he would be compensated for use of the idea, the essential elements of a Desny claim that separates it from preempted claims for the use of copyrighted material."

The court likewise concluded that plaintiffs' claim for breach of confidence was not preempted because the "claim protects the duty of trust or confidential relationship between the parties, an extra element that makes it qualitatively different from a copyright claim."

The majority saw its approach to the preemption issue as filling a "gap that would otherwise exist between state contract law and copyright law in the entertainment industry":

The Desny innovation serves to give some protection for those who wish to find an outlet for creative concepts and ideas but with the understanding that they are not being given away for free.  Without such legal protection, potentially valuable creative sources would be left with very little protection in a dog-eat-dog business. . . .  Thus we were correct when we observed that "[c]ontract law, whether through express or implied-in-fact contracts, is the most significant remaining state-law protection for literary or artistic ideas."  Benay, 607 F.3d at 629.

The decision was not unanimous, however, as there were two dissenting opinions.

The dissenting opinion authored by Judge O'Scannlain argued that the District Court properly concluded that "an action to enforce a promise not to use or to disclose ideas embodied in copyrighted material without authorization asserts rights equivalent to those protected by the Copyright Act" and were therefore preempted.

The dissenting opinion authored by Judge Gould asserted that the majority decision would "lead to uncertainty by making state law--with its ambiguity, variability, and volatility--available to litigants who bring nebulous state law claims that in substance assert rights in the nature of copyright."

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

Tags:
Posted on May 3, 2011 by Stacia Lay

Creator of Mike Tyson Tattoo Sues Warner Bros. Over Alleged Use of Tattoo in Movie

The facts of this copyright infringement case are perhaps more interesting than the norm.

The creator of the tattoo on the face of former boxer Mike Tyson, S. Victor Whitmill, has sued Warner Bros. Entertainment in connection with Warner Bros.' alleged use of the tattoo on the Ed Helms' character in the upcoming movie The Hangover 2.  According to the complaint, Whitmill owns all rights to the tattoo and has registered the copyright in the tattoo (the Certificate of Registration attached to the complaint has an effective date of April 19, 2011).

Characterizing the tattoo as "one of the most distinctive tattoos in the nation," Whitmill alleges that The Hangover 2 features a "virtually exact reproduction" of the tattoo he created and that the "Pirated Tattoo" plays an important role in the movie and is featured prominently in marketing and promotional materials.  Whitmill alleges that Warner Bros. therefore infringed his copyright in the tattoo and seeks, in part, a preliminary injunction enjoining Warner Bros. from "copying, distributing, publicly displaying, or otherwise making any use of the Pirated Tattoo, both in the Movie and otherwise."

The case cite is Whitmill v. Warner Bros. Entm't Inc., No. 11-00752-CDP (E.D. Missouri).  A copy of the complaint can be found here.

Tags: