Missouri Federal Court Sends Crayola Trademark Dispute to New Jersey

Back in November 2014, Crayola filed suit against Alex Toys in federal court in Missouri alleging claims for counterfeiting, trademark dilution and infringement, and unfair competition under federal and Missouri state law.  You can read Crayola's complaint here, which has such fun facts as the following:

  • "The CRAYOLA mark has been used since at least as early as June 31, 1905[.]"
  • "The CRAYOLA mark was coined by Alice Binney, the wife of company co-founder Edwin Binney, from 'craie,' the French word for chalk, and 'ola,' from 'oleaginous,' meaning oily."
  • "To this date, Crayola has sold over 200 billion crayons bearing the CRAYOLA mark and Crayola continues to produce nearly 3 billion Crayola crayons each year."
  • "The extraordinary popularity associated with Crayola brand products and the CRAYOLA mark is forever enshrined at the Smithsonian Institution where a permanent display featuring many Crayola brand products has been constructed."

The less fun facts relevant to the district court's decision to be discussed are that the Crayola Plaintiffs are Delaware entities with their principal place of business in Pennsylvania; their parent company (Hallmark Cards, Inc.) is headquartered in Missouri; and Defendant Alex Toys is a New Jersey company with its principal place of business in that state.

Alex Toys filed a motion to dismiss Crayola's complaint for improper venue or, alternatively, to transfer the case to the District of New Jersey.  Notwithstanding the general (often considerable) deference afforded a plaintiff's choice of forum, the district court concluded that overall, the facts favored transferring the case to New Jersey.

The fact that the Crayola Plaintiffs were not Missouri residents decreased the amount of deference afforded their choice of forum.  And the nature of the claims--infringing/diluting use of Crayola's mark--also supported a New Jersey forum, the court concluded, as the allegedly offending packaging was designed and developed in New Jersey, where Alex Toys is headquartered.

The fact that Hallmark, Crayola's parent company, is headquartered in Missouri did not tip the balance back in favor of a Missouri forum.  The court specifically noted that the case turned upon use of the CRAYOLA mark and Crayola, not Hallmark, is the registrant of the mark.

Thus, the court concluded that these and other facts and considerations favored transferring the case to the District of New Jersey.  The court did not address the substance of Alex Toys' alternative motion to dismiss, denying it as moot based on its decision on the motion to transfer.

Apparently, at the time the Missouri court granted Alex Toys' motion to transfer the case, Crayola's motion for a preliminary injunction had been fully briefed and was pending.  That motion will now be decided by the District of New Jersey. 

The case cite is Crayola Properties, Inc. v. Alex Toys LLC, Civil No. 4:14-cv-00992-BCW (W.D. Mo. Jan. 7, 2015).  The case has been assigned case no. 2:15-cv-00278-WHW-CLW by its new home, the United States District Court for the District of New Jersey.

Unanimous Supreme Court Finds That Ninth Circuit Got it Right on Trademark "Tacking"

This case involved the doctrine of "tacking" which allows trademark users to make some modifications to their marks without losing priority over junior users by, as the Supreme Court described it, "cloth[ing] a new mark with the priority position of an older mark."

In determining whether tacking is appropriate, courts have adopted the "legal equivalents" rule, which asks whether the original and modified marks "'create the same, continuing commercial impression' so that consumers 'consider both as the same mark.'"

The circuit split that the Supreme Court addressed was whether the tacking question should be decided by judges or juries.  The Ninth Circuit concluded that it was "a highly fact-sensitive inquiry . . . reserved for the jury," while the Federal and Sixth Circuits resolved it as a question of law.

In a short, unanimous decision, the Supreme Court agreed with the Ninth Circuit, stating that a test like the tacking rule, "that relies upon an ordinary consumer's understanding of the impression that a mark conveys falls comfortably within the ken of a jury."  The Court did not hold that a judge may never decide the tacking question but only that "when a jury trial has been requested and when the facts do not warrant entry of summary judgment or judgment as a matter of law, the question whether tacking is warranted must be decided by a jury."

The case cite is Hana Fin., Inc. v. Hana Bank, Case No. 13-1211 (U.S. Jan. 21, 2015).

UPDATE: No Go for Supreme Court Review in "The Dark Knight Rises" Trademark Dispute

On Monday, the Supreme Court denied review of the dispute between Fortres Grand, the seller of software under the mark "Clean Slate," and Warner Bros. over references to a fictional software program known as "the clean slate" in the 2012 Batman film, The Dark Knight Rises.

Fortres Grand's trademark claims were dismissed in the district court, a decision affirmed by the Seventh Circuit.  You can find a discussion of the district court's decision here and the Seventh Circuit's decision here.

Dispute Over Rights to "Zorro" Dismissed on Jurisdictional Grounds

A dispute over the rights to the nearly 100-year-old fictional character Zorro has been quietly dismissed on jurisdictional grounds by the Western District of Washington.

According to the complaint, the Zorro character first appeared in 1919 in a story titled "The Curse of Capistrano" by Johnston McCulley.  That story was adapted into "The Mask of Zorro" silent movie by Douglas Fairbanks, Sr. in 1920.

There doesn't appear to be any dispute that the copyrights in these two works--the 1919 story and the 1920 film--have expired and therefore those works have entered the public domain.  (In 2002, in another dispute between the parties before the Trademark Trial and Appeal Board, Zorro Productions, Inc. ("ZPI") admitted that the copyright terms for the 1919 story and the 1920 film had expired.)

In 1996, the plaintiff, Robert Cabell, authored the script for a musical-- "Z-The Musical of Zorro"--allegedly incorporating material from the 1919 story and the 1920 film as well as original material.  Cabell later licensed his musical to be produced at a festival in Germany in June 2013 and by a production company also based in Germany.  Plaintiff alleged that ZPI contacted representatives of the festival and the production company, claiming the rights to the Zorro character.

ZPI "claims to be the worldwide proprietor of the trademark 'Zorro' and to own numerous copyrights pertaining to 'Zorro'," according to the court.  The complaint alleges a number of trademark registrations that ZPI obtained for the "Zorro" mark.  It also alleges that ZPI holds a copyright interest in a 2005 book titled "Zorro" and that ZPI produced a musical based on the book that plaintiff alleges incorporates original material from his 1996 script.

Cabell filed suit against ZPI (and others) in March 2013, alleging, in part, copyright infringement with respect to ZPI's "Zorro" musical and the book on which it was based.  He also sought a declaration that his musical does not infringe on any copyright or trademark interest of ZPI and requested cancellation of certain trademark registrations for "Zorro" obtained by ZPI.

Defendants moved to dismiss plaintiff's complaint alleging, among other things, a lack of personal jurisdiction.  The court granted the motion on October 21, 2014, leaving the interesting copyright/trademark issues unresolved.

The case cite is Cabell v. Zorro Prods., Inc., Case No. 2:13-cv-00449 (W.D. Wash. Oct. 21, 2014).

Court Doesn't Like the "Flavor" of Pizzeria's Trademark Claim

New York Pizzeria, Inc. ("NYPI") sued a number of defendants alleging, among other things (check out the court's opinion for a discussion of the other claims), that the defendants had "'infringed and/or diluted NYPI's protected trademark interest in the distinctive trademark flavor of its products.'"  NYPI alleged that its "'specially sourced branded ingredients and innovative preparation and preservation techniques contribute[d] to the distinctive flavor'" of its products.

On defendants' motion to dismiss, the district court did "not doubt that flavor can 'carry meaning,' but that meaning entitles a mark to trademark protection only if it distinguishes the source of a product."  The court however did doubt "that flavors can ever be inherently distinctive [and therefore entitled to trademark protection], because they do not 'automatically' suggest a product's source."

Even setting aside the question whether flavor can be inherently distinctive for trademark purposes, the court found that NYPI's flavor-based trademark claim ran afoul of the functionality doctrine, under which functional product features are not protectable.  "The flavor of food undoubtedly affects its quality," the court stated, "and is therefore a functional element of the product."

The court therefore dismissed NYPI's flavor-based trademark claim although other of its claims survived.

The case cite is New York Pizzeria, Inc. v. Syal, Case No. 3:13-cv-00335 (S.D. Tex. Oct. 20, 2014).

Court: California Not the Proper Venue for John Wayne-Duke University Trademark Dispute

This dispute between John Wayne Enterprises, LLC ("JWE") (a California entity) and Duke University arose from JWE's attempt to register "Duke" as a trademark in connection with alcoholic beverages.  In July 2014, JWE brought this action against Duke in federal court in California seeking a determination that its registration and use of the marks are not likely to cause confusion with, and do not dilute, Duke's valid trademarks.

Duke moved to dismiss the action in August 2014, asserting that the court could not exercise personal jurisdiction over it as a nonresident defendant and that the Central District of California was an improper venue for the case.

Although the court noted that "JWE may have a compelling argument against the scope of Duke's trademarks," (an interesting statement considering the court's ultimate conclusion) it concluded that it was not the appropriate court to address that issue.

Although Duke was aware of JWE's presence in California and therefore knew its opposition to JWE's trademark registration application would be felt in California, the court concluded that JWE had failed to demonstrate that Duke had purposefully directed its activities at California such that it would be appropriate to exercise personal jurisdiction over Duke.  For similar reasons, the court concluded that the Central District of California was the improper venue for the dispute.

The court therefore dismissed JWE's complaint without prejudice, thereby leaving open the possibility of filing suit in another jurisdiction.

The case cite is John Wayne Enters., LLC v. Duke Univ., Case No. 8:14-cv-01020 (C.D. Cal. Sept. 30, 2014).

UPDATE: Seventh Circuit Rejects Trademark Claim Over Name of Fictional Software in "The Dark Knight Rises"

This case pitted Fortres Grand, seller of software under the mark "Clean Slate," against Warner Bros. which, in 2012, released the last Batman film, The Dark Knight Rises.  The film included references to a software program known as "the clean slate," which Catwoman is told is capable of erasing all traces of her criminal past from any database on earth.

Fortres Grand sued Warner Bros. alleging trademark infringement over the use of "clean slate" in reference to the fictional software in the film.  In May 2013, the district court dismissed Fortres Grand's claims, concluding both that it had failed to allege a plausible theory of consumer confusion with respect to the parties' respective uses of "clean slate" and that the First Amendment protected Warner Bros.' use of the words.  You can find a discussion of the district court's decision, along with a copy of the opinion, here.

On Fortres Grand's appeal, the Seventh Circuit agreed with the district court on the consumer confusion issue, ultimately concluding that even "[a]ssuming all Fortres Grand's . . . allegations are true, its reverse confusion allegation--that consumers may mistakenly think Warner Bros. is the source of Fortres Grand's software--is still 'too implausible to support costly litigation.'"  The Seventh Circuit thus affirmed the dismissal of Fortres Grand's claims, declining to reach the question whether Warner Bros.' use of the words "clean slate" was protected by the First Amendment.

The case cite is Fortres Grand Corp. v. Warner Bros. Entm't Inc., Appeal No. 13-2337 (7th Cir. Aug. 14, 2014).

Federal Circuit Affirms Refusal to Register the Mark "Stop The Islamisation of America" on Disparagement Grounds

In February 2010, Pamela Geller and Robert B. Spencer sought to register the mark STOP THE ISLAMISATION (apparently sometimes spelled ISLAMIZATION) OF AMERICA in connection with "[p]roviding information regarding understanding and preventing terrorism."

The PTO examining attorney refused registration on the ground that the mark may be disparaging to American Muslims under Section 2(a) of the Lanham Act (15 U.S.C. Section 1052(a)).  On the applicants' appeal of the refusal, the Trademark Trial and Appeal Board affirmed the refusal finding that the term "Islamisation" had two likely meanings:

(1) the conversion or conformance to Islam (the religious meaning); and (2) a sectarianization of a political society through efforts to make [it] subject to Islamic law (the political meaning).

(All internal quotation marks and record cites omitted in this and all following quotes.)  Under both meanings of the term, the TTAB concluded that the mark may be disparaging to American Muslims.

With respect to the "religious meaning" of the term "Islamisation," the TTAB found the mark to be disparaging because "[t]he admonition in the mark to STOP sets a negative tone and signals that Islamization is undesirable and is something that must be brought to an end in America."  And the proposed use of the mark in connection with "understanding and preventing terrorism" created "a direct association of Islam and its followers with terrorism," the TTAB found.

With respect to the "political meaning" of the term, the TTAB found that the "suggestion that political Islamisation must be stop[ped] to prevent[] terrorism would be disparaging to a substantial composite of American Muslims."

On appeal from the TTAB's decision, applicants largely challenged the evidence relied upon by the TTAB and the appropriate meaning of the term "Islamisation" in the context of their application.  The Federal Circuit rejected those challenges, however, concluding that the evidence relied upon by the TTAB (which included essays and readers' comments posted on applicants' website) was appropriate and that its conclusions were supported by substantial evidence.

The Federal Circuit thus affirmed the TTAB's decision upholding the refusal to register the mark.

The case cite is In re Geller, Appeal No. 2013-1412 (Fed. Cir. May 13, 2014).

Michael Jordan Defeats Supermarket's First Amendment Defense in Dispute Over Congratulatory Ad

In September 2009, Michael Jordan was inducted into the Naismith Memorial Basketball Hall of Fame, at which time Sports Illustrated produced a special commemorative issue of Sports Illustrated Presents devoted exclusively to his legendary career.  Jewel Food Stores--the operator of 175 supermarkets in and around Chicago--was offered and accepted free advertising space in the special issue in exchange for agreeing to stock the magazine.

Jewel's full-page ad appeared on the inside back cover of the issue and included a photo of a pair of basketball shoes bearing Jordan's number 23, with text appearing above congratulating Jordan on his accomplishments and incorporating Jewel's slogan, followed by Jewel's logo in large type (the Seventh Circuit's opinion includes a picture of the ad).

Jordan sued Jewel for, among other claims, violations of the Illinois Right of Publicity Act and the Lanham Act, all based on the allegation that Jewel had misappropriated his identity for its commercial benefit.  He sought $5 million in damages plus punitive and treble damages.

Both parties moved for summary judgment:  Jewel claimed that the ad was noncommercial speech protected by the First Amendment; Jordan claimed the ad was a commercial use of his identity.  The district court concluded that Jewel's ad was fully protected noncommercial speech and therefore entered judgment for Jewel on all of Jordan's claims.

Although it characterized the district court's decision as "thoughtful," the Seventh Circuit nonetheless held that the court had erred in concluding that Jewel's ad constituted fully protected noncommercial speech and therefore reversed on that basis.

Before reaching the substance of the appeal, the Seventh Circuit discussed one issue of law that the parties' agreement allowed the court to avoid resolving.  The parties apparently agreed with the proposition that the First Amendment precluded application of the laws upon which Jordan's claims were based to any noncommercial speech as defined in the constitutional sense, thereby providing a complete constitutional defense.  But the law on that issue is "considerably more complex," the Seventh Circuit commented, and it was "far from clear that Jordan's trademark and right-of-publicity claims fail without further ado" even if Jewel's ad constituted noncommercial speech.  Nonetheless, because the parties had agreed otherwise, that issue was left for another day.

Moving on to the central issue, the Seventh Circuit discussed the varying definitions or descriptions of "commercial speech," including "speech that proposes a commercial transaction."  But "commercial speech" is not limited to speech that falls within that narrow definition; rather, speech can still be characterized as "commercial" if it contains both commercial and noncommercial elements.  In such instances, the court identified three non-exclusive considerations:  whether "(1) the speech is an advertisement; (2) the speech refers to a specific product; and (3) the speaker has an economic motivation for the speech."

Applying these considerations to Jewel's ad, the Seventh Circuit rejected Jewel's argument that the ad wasn't commercial speech because it didn't propose any commercial transaction.  Rather, the text of the ad must be considered in its context as well as the context of modern commercial advertising:

We know from common experience that commercial advertising occupies diverse media, draws on a limitless array of imaginative techniques, and is often supported by sophisticated marketing research.  It is highly creative, sometimes abstract, and frequently relies on subtle cues. . . .  An advertisement is no less "commercial" because it promotes brand awareness or loyalty rather than explicitly proposing a transaction in a specific product or service. . . .  Very often the commercial message is general and implicit rather than specific and explicit.

Such was true with Jewel's ad, the Seventh Circuit concluded, because it sought both to congratulate Jordan and promote Jewel's supermarkets.  The latter purpose was demonstrated by the prominent use of Jewel's logo in the center of the ad in type larger than any other on the page, and the explicit incorporation of Jewel's slogan ("just around the corner") into the text of the congratulatory message:

In short, the ad's commercial nature is readily apparent.  It may be generic and implicit, but it is nonetheless clear.  The ad is a form of image advertising aimed at promoting goodwill for the [Jewel] brand by exploiting public affection for Jordan at an auspicious moment in his career.

Finally, the Seventh Circuit clarified the "inextricably intertwined" doctrine:

Properly understood, . . . the . . . doctrine applies only when it is legally or practically impossible for the speaker to separate out the commercial and noncommercial elements of his speech.  In that situation the package as a whole gets the benefit of the higher standard of scrutiny applicable to noncommercial speech.  But simply combining commercial and noncommercial elements in a single presentation does not transform the whole into noncommercial speech.

So clarified, the doctrine did not apply to Jewel's ad and Jewel's constitutional defense to Jordan's claims was defeated.

The case cite is Jordan v. Jewel Food Stores, Inc., Appeal No. 12-1992 (7th Cir. Feb. 19, 2014).

Ninth Circuit: No Presumption of Irreparable Harm For Preliminary Injunctions in the Trademark Context & No Cause of Action for Contributory Cybersquatting Under the ACPA

As I slowly work through a backlog of cases, there are two trademark related cases from the Ninth Circuit in the not-too-distant past that are worth at least brief mentions.

Herb Reed Enters., LLC v. Florida Entm't Mgmt., Inc., Appeal No. 12-16868 (9th Cir. Dec. 2, 2013):

The first case involved a dispute over the use of "The Platters" name belonging to the well-known musical group of the 1950s.  At issue in the Ninth Circuit appeal was the district court's grant of a preliminary injunction to one of the parties claiming ownership of "The Platters" mark.

The Ninth Circuit addressed a number of issues relating to the grant of the preliminary injunction but only one was an issue of first impression in the circuit, namely, whether a court can presume a likelihood of irreparable harm when a plaintiff establishes a likelihood of success on the merits of its trademark claim.

Under the Ninth Circuit's previous rule, "'irreparable injury [could] be presumed from a showing of likelihood of success on the merits of a trademark infringement claim.'"  But in light of two Supreme Court decisions issued after adoption of that rule--eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008)--the Ninth Circuit held that the rule no longer applies and a plaintiff must instead establish the likelihood of irreparable harm when seeking preliminary injunctive relief in the trademark context.


Petroliam Nasional Berhad v. GoDaddy.com, Inc., Appeal No. 12-15584 (9th Cir. Dec. 4, 2013):

 In the second case, the Ninth Circuit answered the question whether the Anticybersquatting Consumer Protection Act ("ACPA") recognized a claim for contributory cybersquatting.  Looking to the statutory language and the purpose of the ACPA, the Ninth Circuit held that a cause of action for contributory cybersquatting could not be read into the statute.

First, the Ninth Circuit concluded that the plain text of the ACPA did not support the creation of a cause of action for contributory cybersquatting because the text limited civil liability for cybersquatting to those who, with "bad faith intent to profit" from a protected mark, register, traffic in, or use a domain name.  As a result:

[e]xtending liability to registrars or other third parties who are not cybersquatters, but whose actions may have the effect of aiding such cybersquatting, would expand the range of conduct prohibited by the statute from a bad faith intent to cybersquat on a trademark to the mere maintenance of a domain name by a registrar, with or without a bad faith intent to profit.

Second, the Ninth Circuit rejected the argument that Congress incorporated the common law of trademark, including contributory infringement, into the ACPA, and therefore rejected previous cases that had relied on such reasoning to conclude that a cause of action for contributory cybersquatting existed.  One such case specifically cited by the Ninth Circuit is from the Western District of Washington, Microsoft Corp. v. Shah.  You can read the district court's opinion discussing that issue here.  (The case was dismissed with prejudice pursuant to the parties' stipulation in July 2011, apparently without any further substantive motions or decisions on the contributory cybersquatting claim.)

Specifically, the Ninth Circuit stated that the ACPA was not the result of a codification of the common law but rather created a new statutory cause of action to address the new problem of cybersquatting.  Therefore, the court declined to infer a theory of contributory cybersquatting into the ACPA based on the common law of trademarks.

Finally, the Ninth Circuit concluded that recognizing a cause of action for contributory cybersquatting would not further the specific problem Congress sought to fix in the ACPA, namely, the bad faith and abusive registration of marks as domain names.  The ACPA was narrowly tailored to fix this problem by limiting those who can be liable for cybersquatting, including imposing a bad faith requirement and a narrow definition of those who "use" a domain name.  As a result, imposing secondary liability on domain name registrars would undermine these limitations on liability, the court concluded.

The Ninth Circuit also recognized the significant difficulties third-party service providers like GoDaddy would face if there was a cause of action for contributory cybersquatting.  In short, the court concluded that mark owners already had sufficient remedies for cybersquatting under the ACPA without extending liability by "a judicially discovered cause of action for contributory cybersquatting."

Ninth Circuit Concludes That Trademark Registration Cancellation Claim Does Not Provide Independent Basis for Federal Jurisdiction

This isn't a case that's likely to draw you in with its tantalizing facts (at least as recited by the Ninth Circuit), so anyone interested in the facts can read the Ninth Circuit's short and fairly concise opinion.

But the Ninth Circuit did address an interesting question of law on which it admittedly had previously given "contrasting interpretations."  Specifically, the court addressed the question whether a trademark registration cancellation claim, standing alone, provides an independent basis for federal subject-matter jurisdiction.

The relevant language of the Lanham Act gives district courts "the power to order the cancellation of a trademark registration 'in any action involving a registered mark.'"  This language, the Ninth Circuit concluded, specified that cancellation is only available if there is already an action involving a registered mark.  In other words, agreeing with the other circuits that had addressed the question, "this statutory language . . . 'creates a remedy for trademark infringement rather than an independent basis for federal jurisdiction.'"  This conclusion also preserved actions before the PTO's Trademark Trial & Appeal Board "as the primary vehicle for cancellation," the court concluded.

The case cite is Airs Aromatics, LLC v. Victoria's Secret Stores Brand Mgmt., Inc., Appeal No. 12-55276 (9th Cir. Feb. 28, 2014).

Court Concludes That First Amendment Protects Use of Mark in Title of Computer Game, Dismisses Trademark Claims

Plaintiffs (referred to collectively as Rebellion Developments) own a registration for the mark REBELLION in connection with, as relevant here, video and electronic games.  Defendants (referred to collectively as Stardock) recently released a new computer game entitled SINS OF A SOLAR EMPIRE: REBELLION.

Rebellion Developments sued Stardock in summer 2012, alleging claims for trademark infringement and false designation of origin under the Lanham Act and related claims under Michigan state law.  Stardock moved to dismiss the claims, asserting that the use of REBELLION in the name of the computer game -- an expressive work -- was protected by the First Amendment under the so-called Rogers test, adopted from the Second Circuit's opinion in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989).

The district court first addressed Rebellion Developments' arguments that the Rogers test did not apply in this case because Stardock was using REBELLION solely to identify the source of a product and in fact had filed an application to register the mark.

The court rejected those arguments, making four points:  (1) it is "well established" that video games are expressive works; (2) the Sixth Circuit had adopted the Rogers test; (3) the Rogers test does not preclude the title of an expressive work from also acting as a source identifier; and (4) the Rogers test does not require that the defendant use the trademarked term as a reference to the trademark owner.

After concluding that it was appropriate to apply the Rogers test in the early stages of litigation, at least in this case, the district court briefly analyzed the two prongs of that test, which require a showing (1) that the title has no artistic relevance to the expressive work, and (2) that the title of the work is explicitly misleading as to the source or content of the work.

As to the first prong, the required level of artistic relevance the mark must have to the expressive work is minimal, it need only be above zero.  Stardock's use of the term REBELLION in the title of the computer game easily met that requirement "because within the game, players may choose to align with 'loyalist' or 'rebel' factions in the context of a civil war."

As to the second prong, even if there was evidence of consumer confusion--as there allegedly was in this case--that evidence is insufficient to establish that defendant's use of the mark was explicitly misleading as to the source or content of the work.  Rather, under the Rogers test, such confusion is not actionable in the absence of an "overt misrepresentation," which had not been shown here.  The court also rejected Rebellion Developments' allegation that Stardock willfully attempted to capitalize on its reputation and goodwill by using its mark because the Rogers test, rather than the traditional likelihood of confusion factors such as defendant's intent, governed the dispute.

The district court thus granted Stardock's motion to dismiss Rebellion Developments' complaint.

The case cite is Rebellion Developments Ltd. v. Stardock Entm't, Inc., Case No. 12-12805 (E.D. Mich. May 9, 2013).

Court Concludes That Use of Mark as Name of Fictional Software in Film Does Not State a Plausible Claim of Trademark Infringement

Fortres Grand sells software called "Clean Slate," which erases evidence of user activity so that subsequent users cannot see previous users' activities.  It obtained a federal trademark registration for CLEAN SLATE in connection with that software in 2001.

In 2012, Warner Bros. released the latest Batman film, The Dark Knight Rises, which included a plot line in which Catwoman attempted to find software that would erase her criminal history from every database in the world. That software was designed by a fictional company called Rykin Data and is referred to four times in the movie as "clean slate."

In connection with the promotion of the film, two websites were created (rykindata.com and rykindata.tumblr.com) that "look like what a (fictional) citizen of Gotham might find if they were looking for information on the (fictional) Rykin Data company."  Thus, the websites also used the term "clean slate" to refer to the software referenced in the movie.

Fortres Grand sued Warner Bros. alleging trademark infringement and unfair competition under the Lanham Act and unfair competition under Indiana state law for the use of "clean slate" in the Batman movie and the related websites.  Warner Bros. moved to dismiss the complaint and the district court readily granted the motion.

The crux of Fortres Grand's claim alleged reverse confusion, in which the junior user (here, Warner Bros.) saturates the market with a similar mark such that consumers assume the products of the senior user (here, Fortres Grand) emanate from or are connected with the junior user.

But the district court concluded that "the fatal flaw in Fortres Grand's case has to do with correctly identifying the exact product that Warner Bros. has introduced to the market -- a film, not a piece of software":

That distinction -- between Warner Bros. real product (a movie) and its fictional product (software) -- makes a world of difference because so much of the consumer confusion analysis depends on a comparison of the products at issue.  In analyzing the potential for consumer confusion in this case, one must compare Fortres Grand's "Clean Slate" software to Warner Bros.' real product -- The Dark Knight Rises.

With that conclusion, the fate of Fortres Grand's trademark claims was sealed as the district court concluded that there was "no plausible claim for consumer confusion" between Fortres Grand's CLEAN SLATE software and Warner Bros.' movie.

As an alternative ground for granting Warner Bros.' motion to dismiss Fortres Grand's complaint, the district court concluded that the use of "clean slate" in the movie was protected by the First Amendment. 

The district court applied the so-called Rogers test (from the Second Circuit's decision in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989)), which states that the Lanham Act does not apply to artistic works as long as the defendant's use of the mark is both "artistically relevant" to the work and not explicitly misleading as to the source of the work.  The court had no difficulty concluding that Warner Bros.' use of the term "clean slate" in the Batman movie met both prongs of that test and therefore was protected by the First Amendment.

In its discussion of the First Amendment issue, the district court also addressed two issues regarding the applicability of the Rogers test generally.

First, the court concluded that the test applied not only to titles of artistic works (the focus of the Rogers case) but also to the works themselves more broadly, citing cases from the Second, Sixth, Ninth, and Eleventh Circuits that had reached the same conclusion.

Second, the district court rejected Fortres Grand's assertion that the Rogers test does not apply in cases of reverse confusion because in such cases, "'the defendant is not trying to use the plaintiff's mark expressively, or availing itself illegitimately of the plaintiff's reputation -- the foundational rationale of Rogers and its progeny.'"  In rejecting that assertion, the district court quoted at length from Warner Bros.' brief, stating that it "entirely agree[d]" with the argument that:

Plaintiff's proposed rule would mean that a small, relatively unknown trademark owner, claiming rights in a mark that few people have ever heard of, would enjoy monopoly power over the use of certain words in expressive works -- power that the First Amendment plainly denies to the owners of famous, household-word trademarks.  If the First Amendment prevents the owners of strong and famous marks . . . from controlling the expressive speech of others, there is no rational basis for holding that the First Amendment freely permits the owners of more obscure marks to dictate the expressive speech of others.

Somewhat surprisingly, despite these conclusions, the district court gave Fortres Grand the opportunity to file an amended complaint to attempt to cure the deficiencies, although the court did express skepticism about its ability to do so.

The case cite is Fortres Grand Corp. v. Warner Bros. Entm't Inc., Case No. 3:12-cv-535-PPS-CAN (N.D. Ind. May 16, 2013).

Court Again Partially Grants Summary Judgment in Warhammer 40K Dispute; Copyright Fair Use Defense Survives

Games Workshop, an England-based company, sells various science-fiction/fantasy products relating to a "dystopian fictional universe" called Warhammer 40,000, which was first created in 1987 with the release of the book Rogue Trader.

Most relevant to this case, Games Workshop created a tabletop miniature game based on Warhammer 40,000 lore in which players compete with miniature figurines.  Games Workshop sells its figurines online and at hobby stores in the United States.  The figurines are sold unpainted and often require assembly.

Chapterhouse Studios, begun by a Warhammer 40,000 fan at his home in Texas, began selling Warhammer 40,000 accessories, or "bit" parts, conforming to the scale used by Games Workshop for its figurines.  The "bit" parts largely included shoulder pads, shields, weapons, and miniature heads to use with Warhammer 40,000 and other figurines.  Chapterhouse sells its products online both at its website and on third-party websites like eBay.

In 2010, Games Workshop sued Chapterhouse for copyright infringement, trademark infringement, and related state and federal claims.

Both parties moved for summary judgment, which the district court granted in part and denied in part in November 2012.  At the time of the court's opinion, Games Workshop claimed that 95 of Chapterhouse's products infringed its copyrighted works and 110 products infringed its trademarks. 

In the November 2012 summary judgment decision, the district court addressed a number of issues including:  (1) Games Workshop's ownership of the copyrights at issue under English law (concluding it had largely established ownership); (2) the protectability of Games Workshop's figurines under U.S. copyright law (concluding that most of the figurines were protectable); (3) substantial similarity of the parties' respective works (concluding that the issue could not be resolved on summary judgment); (4) likelihood of confusion on Games Workshop's trademark claims (concluding that question could not be resolved on summary judgment); (5) Chapterhouse's alleged nominative fair use of Games Workshop's trademarks (again concluding that could not be resolved on summary judgment); and (6) trademark dilution (granting summary judgment to Chapterhouse on Games Workshop's dilution claim).  The November 2012 summary judgment decision can be found here.

After the district court granted Games Workshop leave to amend its complaint to add claims, the parties again moved for summary judgment and Chapterhouse additionally sought reconsideration of part of the court's earlier summary judgment ruling.

The district court denied Chapterhouse's request for reconsideration (which largely related to the protectability of an element of Games Workshop's figurines) although it did award Chapterhouse its costs relating to previously undisclosed correspondence it had obtained between Games Workshop and the Copyright Office.  The court similarly summarily denied Chapterhouse's motion for summary judgment, concluding that the court had already addressed the arguments in its earlier summary judgment decision and in discussing Chapterhouse's motion for reconsideration of that decision.

The district court then turned to Games Workshop's summary judgment motion which raised three issues:  (1) Games Workshop's ownership of the copyrights at issue; (2) Games Workshop's prior use of 87 of its alleged trademarks, which it claimed Chapterhouse had admitted; and (3) Games Workshop's request to strike certain of Chapterhouse's affirmative defenses.

Following fairly brief discussion, the district court resolved the first two issues largely, though not completely, in favor of Games Workshop.

More interesting is the district court's discussion of Games Workshop's request that certain of Chapterhouse's affirmative defenses be stricken, and more specifically, the copyright fair use and implied license defenses.

With respect to the fair use defense, the district court ultimately concluded that genuine issues of material fact precluded summary judgment with respect to virtually every fair use factor.

With respect to the first factor--the purpose and character of Chapterhouse's use--the district court concluded that Chapterhouse had presented evidence from which a reasonable jury could conclude that its products were transformative in that they added something new with a different character.

As to the second factor--the nature of the copyrighted work--although the district court concluded that Games Workshop's products were sufficiently original to warrant copyright protection and that they related to a fictional universe, it was still unclear to what degree this factor favored it:

[T]he characters that [Games Workshop] has created undoubtedly share many of their traits with other fictional characters in science-fiction and fantasy genres, and the Space Marines include traits and armor similar to those worn by real soldiers throughout history.  Thus although Warhammer 40K is undeniably fictional, many components of [Games Workshop's] products bear substantial similar[ity] to items found throughout history.

Factor three--the amount and substantiality of the portion used in relation to the copyrighted work as a whole--was also a jury question, the district court concluded, referring to its earlier discussion and its first summary judgment decision as to the extent that Chapterhouse's products copied Games Workshop's products.

Finally, only the fourth factor--the effect of the use upon the potential market for or value of the copyrighted work--more clearly favored Games Workshop, the district court concluded, because the evidence suggested that Chapterhouse's core business model was to attract Games Workshop's customers and sell them alternative figurine parts at a lower cost.

Thus, in light of these largely disputed issues, the district court concluded that summary judgment was inappropriate as to Chapterhouse's fair use defense.

Chapterhouse was not so fortunate, however, with respect to its implied license defense.  Although the discussion is brief, according to the district court, Chapterhouse contended that a page on Games Workshop's website entitled "What you can and can't do with Games Workshop's intellectual property," impliedly licensed use of its IP (the court's opinion didn't specify any specific language from that page to further explain Chapterhouse's contention).

Citing the policy statement on the website, which forbid "informal licensees" from using its IP "in relation to any commercial activity" and "creat[ing] a production run of conversions for sale" and "cast[ing] any materials that are based on Games Workshop material," the district court concluded that no reasonable jury could find in Chapterhouse's favor on the issue.  It therefore granted Games Workshop's summary judgment motion on Chapterhouse's implied license defense.

The case cite is Games Workshop Ltd. v. Chapterhouse Studios, LLC, Case No. 10 C 8103 (N.D. Ill. Apr. 1, 2013).

Seventh Circuit: "Phifty-50" Rap Duo Had Zero Chance of Success on Trademark Claim Over "50/50" Movie Title

Eastland Music Group, the "proprietor" of the rap duo Phifty-50 (which according to the Seventh Circuit "has to its credit one album (2003) and a T-shirt"), successfully registered the trademark "PHIFTY-50" and also claimed a trademark in "50/50."

Eastland sued Lionsgate and others claiming that they infringed its trademark rights by using "50/50" as the title of a film that opened in 2011.  The district court dismissed Eastland's complaint for failure to state a claim, concluding that the movie title was descriptive because the film apparently concerned "a 50% chance of the main character surviving cancer."

Eastland appealed, raising various substantive and procedural arguments that ultimately the Seventh Circuit concluded it need not reach to affirm the dismissal

because this complaint fails at the threshold:  it does not allege that the use of "50/50" as a title has caused any confusion about the film's source--and any such allegation would be too implausible to support costly litigation.

The Seventh Circuit noted that the film's title, "50/50," differed from Eastland's registered mark "PHIFTY-50," and that Eastland's mark existed in a crowded field as a "very junior user" with correspondingly "weak and narrow" rights.

Finally, citing Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), the Seventh Circuit noted that the "title of a work of intellectual property can infringe another author's mark only if the title falsely implies that the latter author is its origin" but here,

Eastland Music's complaint does not (and could not plausibly) allege that consumers treat it as the producer or source of the film 50/50, or treat Lionsgate as the producer of the 2003 rap album.

The case cite is Eastland Music Group, LLC v. Lionsgate Entm't, Inc., Appeal No. 12-2928 (7th Cir. Feb. 21, 2013).

Federal Circuit Concludes Software Used to Render Online Service Not In Use In Commerce for Trademark Purposes

Lens.com appealed the decision of the Trademark Trial and Appeal Board granting summary judgment to 1-800 Contacts and ordering the cancellation of Lens.com's registration for the mark LENS in connection with "computer software featuring programs used for electronic ordering of contact lenses[.]"

Specifically, the TTAB granted summary judgment on 1-800 Contacts's claim of abandonment, concluding that Lens.com's software was "merely incidental to its retail sale of contact lenses, and is not a 'good in trade,' i.e., 'solicited or purchased in the market place for [its] intrinsic value.'"

Because it was undisputed that Lens.com did not sell software, the issue on appeal was whether its software was a "good" that was "transported in commerce."

Although there was "ample" case law addressing goods in trade with respect to "traditional articles" used in conjunction with services, the Federal Circuit noted that there was little precedent on the question of whether an internet service provider's software is an independent good in commerce or is merely incidental to the internet service.

While the Federal Circuit agreed that "distribution of [s]oftware over the internet can satisfy the jurisdictional predicate for 'use in commerce' . . . whether consumers actually associate a mark with software, as opposed to other services, is a factual determination that must be conducted on a case-by-case basis."  And the court identified several factors to consider in making this determination, including whether the software

(1) is simply the conduit or necessary tool useful only to obtain applicant's services; (2) is so inextricably tied to and associated with the service as to have no viable existence apart therefrom; and (3) is neither sold separately from nor has any independent value apart from the services.

Applying those factors, the Federal Circuit concluded that Lens.com's software was merely the conduit through which it renders its online services, and while the software "may provide greater value to Lens.com's online retail services by enhancing the overall consumer experience, there is no evidence that it has any independent value apart from . . . rendering the service."  The court thus affirmed the TTAB's conclusion that Lens.com's mark was not in use in commerce with respect to its software and the TTAB's grant of summary judgment to 1-800 Contacts, Inc. on the question of abandonment.

The case cite is Lens.com, Inc. v. 1-800 Contacts, Inc., Case No. 2011-1258 (Fed. Cir. Aug. 3, 2012).

SDNY Adopts Concurrent Use Order for "Heart Attack" Themed Food Marks

Heart Attack Grill is apparently a chain of "medically themed" restaurants with only one restaurant currently open in Las Vegas.  The Grill's menu includes four burgers, "the Single Bypass Burger," "the Double Bypass Burger," "the Triple Bypass Burger," and "the Quadruple Bypass Burger."  The Grill has obtained trademark registrations for its restaurant name and its burger names.  The court's description of the largest of the Grill's burgers--the Quadruple Bypass Burger--gives you the flavor of the joint:  it weighs in "at 8,000 calories, consists of four half-pound beef patties, eight slices of American cheese, a whole tomato and half an onion served in a bun coated with lard."  The court also noted that, "[a]s of this writing," one of the Grill's customers had suffered a heart attack while eating at the restaurant.

The Second Avenue Deli is a kosher deli with two locations in Manhattan.  Since 2004, the Deli offered "the Instant Heart Attack Sandwich" and proposed to add "the Triple Bypass Sandwich" to its menu.  The Instant Heart Attack Sandwich consists of two large potato pancakes filled with a choice of corned beef, pastrami, turkey, or salami.  The proposed Triple Bypass Sandwich would also use potato pancakes but would include three, rather than two, layers of the pancakes.  The Deli attempted to obtain trademark registrations for both sandwich names but the PTO preliminarily denied both applications because of a likelihood of confusion with Heart Attack Grill's marks.

 After the Heart Attack Grill sent the Second Avenue Deli a cease-and-desist letter, the Deli filed a declaratory judgment action seeking a declaration that (1) neither of its marks infringed the Grill's marks and that both could therefore be registered; or (2) if the court found a likelihood of confusion, that the Deli may use the Instant Heart Attack Sandwich mark in New York, New Jersey, and Connecticut to the exclusion of the Grill's mark as the Deli's use was senior to the Grill's registration of its Heart Attack Grill mark.

The Heart Attack Grill counterclaimed for dilution (which was later dismissed) and a declaration that (1) the Deli could not register its marks or expand use of its marks; or (2) the parties may use their marks under conditions set by the court.

Following "extensive" discovery, both parties moved for summary judgment.

As to the Deli's Instant Heart Attack Sandwich mark and the Grill's Heart Attack Grill mark, the parties represented that there was no likelihood of confusion with the Deli's current use of the mark on menus at its two Manhattan locations and on the Deli's website menu.

Despite the parties' representation, the court made its own assessment of the likelihood of confusion between the marks and ultimately reached the same conclusion as the parties.  In particular, the court emphasized the lack of competition between the parties in the same geographic market.

But the court declined to grant the Deli's additional request for a declaration that its expanded use of the Instant Heart Attack Sandwich mark, specifically that it was entitled to exclusive use of the mark in New York, New Jersey, and Connecticut, concluding that the record was inadequate to determine the possibility of a likelihood of confusion in geographic areas neither party had yet entered.

Ultimately, the court adopted a concurrent use order that the parties had apparently agreed to at oral argument under which the Deli could (1) serve the Instant Heart Attack Sandwich anywhere in Manhattan; (2) advertise the sandwich on its in-restaurant menus; (3) advertise the sandwich on interior and exterior signs at the Manhattan locations; and (4) reproduce the menu used in the Manhattan locations in its Internet advertising.

As to the Triple Bypass Sandwich, at oral argument the Grill, "in a commendable effort to resolve the present dispute," urged the court to find that there was no likelihood of confusion between the Triple Bypass Sandwich mark proposed to be used by the Deli and the Grill's Triple Bypass Burger mark under specific conditions.  Those conditions were that the sandwich is only shown on a menu and only sold in the current restaurants with no interior or exterior signage.  The Grill also agreed that the Deli could use the Triple Bypass Sandwich on its website but only insofar as it is shown on the online menu.

The court agreed that this was a fair agreement that was unlikely to lead to confusion and therefore adopted it.

Several times in its opinion, the court applauded the parties for narrowing the issues in dispute, making concessions and ultimately reaching an agreement that the court largely adopted.  Nonetheless, in addressing the possibility of future disputes, the court noted that the parties had spent "many months (and presumably a great deal of money in legal fees and costs)" litigating a dispute "only to agree at argument on terms that could readily have been arrived at long ago and which do not seem to impinge either's practical interests in the slightest."  Thus, should future disputes arise, the court "strongly encourage[d] the parties to eschew provocative cease-and-desist letters or precipitous lawsuits, and instead to work together to try to resolve their differences cooperatively."

The case cite is Lebewohl v. Heart Attack Grill LLC, Case No. 11 Civ. 3153 (PAE) (S.D.N.Y. July 5, 2012).

Ninth Circuit: "Non-Consumer" Confusion Relevant to "Likelihood of Confusion" Question

I'm a bit delayed in blogging about this opinion and, to be perfectly frank, I didn't find the facts of particular interest.  Nonetheless, there were a couple of issues addressed by the Ninth Circuit that are worth at least a brief description.

This was a trademark case involving, as the case name suggests, a dispute over various REARDEN-formative marks, which apparently were inspired by the "Hank Rearden" character in Ayn Rand's Atlas Shrugged.

The first issue of interest was the Ninth Circuit's discussion of the "use in commerce" requirement for service marks, not because the opinion broke new ground but because it is an issue I still often hear discussed even among trademark attorneys.

The court emphasized that there are two elements required for a service mark to be used in commerce--the mark must be "used or displayed in the sale or advertising of services" and "the services are rendered in commerce"--both of which must be satisfied.  Evidence of actual sales, or the lack of such evidence, is not necessarily dispositive of the "use in commerce" determination, the court noted.  Rather, non-sales activities, like solicitation of potential customers, are relevant to the "totality of the circumstances" analysis used in the Ninth Circuit to determine whether both prongs of the "use in commerce" requirement have been met.

The second legal issue involved the "evidence of actual confusion" factor of the Sleekcraft "likelihood of confusion" factors used in the Ninth Circuit in trademark cases.  Specifically, the Ninth Circuit concluded that "non-consumer confusion" may be relevant to the "likelihood of confusion" inquiry "in three specific and overlapping circumstances" including:

where there is confusion on the part of:  (1) potential consumers; (2) non-consumers whose confusion could create an inference that consumers are likely to be confused; and (3) non-consumers whose confusion could influence consumers.  In all three instances, the non-consumer confusion bears a relationship to the existence of confusion on the part of consumers themselves.

The court found support for its conclusion that "non-consumer" confusion may be relevant in:  (1) the well-established relevance of confusion on the part of potential consumers; (2) the prior use of "non-consumer" confusion as a proxy for consumer confusion (citing TrafficSchool.com, Inc. v. Edriver Inc., 653 F.3d 820 (9th Cir. 2011)); and (3) prior decisions recognizing that "non-consumer" confusion can contribute to consumer confusion as in the case of "post-purchase confusion" (citing Karl Storz Endoscopy-Am., Inc. v. Surgical Tech., Inc., 285 F.3d 848 (9th Cir. 2002)).

Summing it up, the court stated that:

it appears to be a matter of basic common sense to recognize the very real possibility that confusion on the part of at least certain non-consumers could either:  (1) turn into actual consumer confusion (i.e., potential consumers); (2) serve as an adequate proxy or substitute for evidence of actual consumer confusion (i.e., non-consumers whose confusion could create an inference of consumer confusion); or (3) otherwise contribute to confusion on the part of the consumers themselves (i.e., non-consumers whose confusion could influence consumer perceptions and decision-making).

The case cite is Rearden LLC v. Rearden Commerce, Inc., No. 10-16665 (9th Cir. June 27, 2012).

Fourth Circuit Adopts Predicate-Act Doctrine Allowing Recovery of Damages for Foreign Violations of Copyright Act Linked to a Domestic Violation

Plaintiffs, domestic developers and producers of specialized tires for underground mining vehicles, alleged that defendants, foreign entities, manufactured and sold competing tires based on Plaintiffs' blueprints that had allegedly been stolen.

Five claims were submitted to the jury including claims under the Copyright Act and the Lanham Act.  The jury found in plaintiffs' favor on all counts and awarded them $26 million in damages.  On appeal, the Fourth Circuit made two holdings worthy of at least brief mention.

First, the Fourth Circuit joined the Second, Ninth, Sixth and Federal Circuits in adopting the "predicate-act" doctrine, which is an exception to the general rule that the Copyright Act has no extraterritorial reach.  Under that doctrine, "[o]nce a plaintiff demonstrates a domestic violation of the Copyright Act, then, it may collect damages from foreign violations that are directly linked to the U.S. infringement."

The Fourth Circuit also rejected the defendants' argument that the predicate-act doctrine did not apply where the Copyright Act's three-year statute of limitations barred the recovery of damages from the domestic violation of the Act.

Second, the Fourth Circuit declined to adopt the "diversion-of-sales" theory to extend the Lanham Act's extraterritorial reach.  The Lanham Act applies extraterritorially only when the foreign acts have a "significant effect" on U.S. commerce.  Under the "diversion-of-sales" theory, however, some courts have found such a "significant effect on U.S. commerce where sales to foreign consumers would jeopardize the income of an American company."

Although the Fourth Circuit noted that there were compelling reasons for the use of the doctrine in other cases, it concluded that it was not appropriate to apply it in this case.  Specifically, in those other cases, the courts had emphasized that the defendants were U.S. companies that also had substantial domestic business activity, neither of which was true in this case.

The case cite is Tire Eng'g & Distrib., LLC v. Shandong Linglong Rubber Co., Ltd., No. 10-2271 (4th Cir. June 6, 2012).

Rosetta Stone v. Google Fight Continues

This case involved Rosetta Stone's appeal from the district court's grant of Google's motion to dismiss and motion for summary judgment on Rosetta Stone's trademark-related claims.  (The district court's order on the motion to dismiss is found here; its order on the motion for summary judgment is found here.)

Rosetta Stone in essence alleged that Google's policies allowing advertisers both to purchase keywords, including trademarks, that trigger the advertiser's ad and link when the keyword is searched and to use trademarks in the ad text itself created a likelihood of confusion and actual confusion that misled consumers to purchase counterfeit ROSETTA STONE software.

Rosetta Stone sued Google for direct, contributory, and vicarious trademark infringement, trademark dilution, and unjust enrichment.

As noted, Google's motion to dismiss Rosetta Stone's unjust enrichment claim was granted as was its summary judgment motion on all remaining claims.  The Fourth Circuit reversed the district court's order on the direct infringement, contributory infringement, and dilution claims but affirmed it on the vicarious infringement and unjust enrichment claims.

First, the issues on which the Fourth Circuit reversed the district court.

As to Rosetta Stone's direct trademark infringement claim, the Fourth Circuit concluded that the district court had erred both in finding that there was no genuine issue of material fact as to whether Google's use of the ROSETTA STONE mark created a likelihood of confusion and in concluding that the functionality doctrine shielded Google from liability.

On the likelihood of confusion issue, the Fourth Circuit concluded that the district court had inappropriately viewed the evidence as it would in a bench trial and that there was sufficient evidence of three of the likelihood of confusion factors--intent, actual confusion, and consumer sophistication--to create a genuine issue of fact precluding summary judgment.

As to the district court's conclusion that the use of the ROSETTA STONE marks as keywords was protected by the functionality doctrine and therefore non-infringing, the Fourth Circuit held that the district court had improperly focused on whether the marks made Google's product more useful when the appropriate question was whether the marks were functional as Rosetta Stone used them.  Because there was nothing functional about Rosetta Stone's use of its own marks, the Fourth Circuit rejected the functionality doctrine as an affirmative defense available to Google.

On contributory infringement, the Fourth Circuit concluded that there was sufficient evidence "to establish a question of fact as to whether Google continued to supply its services to known infringers," and thus reversed the district court's decision to the contrary.

 As to the dilution claim, the Fourth Circuit concluded that neither basis for the district court's decision supported a grant of summary judgment.

The Fourth Circuit concluded that the district court had erred in requiring Rosetta Stone to establish, as part of its prima facie case, that Google was using the ROSETTA STONE marks as source identifiers for Google's own products and basing that requirement on the fair use defense available under the Federal Trademark Dilution Act ("FTDA").

Not only was it Google's rather than Rosetta Stone's obligation to establish fair use, the Fourth Circuit concluded that the district court had erred in making "nontrademark use coextensive with the 'fair use' defense."  Specifically, the Fourth Circuit held that the FTDA's fair use defense required a showing both "that defendant's use was 'other than as a designation of source'" and that "defendant's use . . . qualif[ied] as a 'fair use.'"

The Fourth Circuit likewise concluded that the district court had improperly focused only on the fact that Rosetta Stone's brand awareness had increased since Google had revised its trademark policy in finding that Rosetta Stone had failed to show that use of the marks was likely to impair the distinctiveness or harm the reputation of its marks.  On remand, the Fourth Circuit stated that the district court should address other factors that may inform its determination of that question.

The Fourth Circuit also directed the district court on remand to reconsider whether Rosetta Stone's mark was famous for purpose of its dilution claim, which required a determination of when Google made its first allegedly diluting use of the mark and whether the mark was famous at that point.

Second, the two issues on which the Fourth Circuit affirmed the district court's decision.

On the vicarious infringement question, the Fourth Circuit concluded that Rosetta Stone's evidence that Google jointly controls the appearance of ads or sponsored links on its search-results page was not evidence "that Google acts jointly with any of the advertisers to control the counterfeit ROSETTA STONE products" and therefore summary judgment in favor of Google was proper.

And as to the unjust enrichment claim, the Fourth Circuit concluded that Rosetta Stone's allegations were insufficient to withstand even a motion to dismiss and thus affirmed the district court's order.  Specifically, the Fourth Circuit held that "Rosetta Stone failed to allege facts showing that it 'conferred a benefit' on Google for which Google 'should reasonably have expected' to repay."

Rosetta Stone alleged that Google's keyword auctions of the ROSETTA STONE marks was an involuntary benefit that it conferred on Google and that Google is therefore "knowingly using the goodwill" established by those marks to derive revenues.  But the Fourth Circuit concluded that Rosetta Stone had not "alleged facts supporting its general assertion that Google 'should reasonably have expected' to pay for the use of marks in its keyword query process."

The case cite is Rosetta Stone Ltd. v. Google, Inc., No. 10-2007 (4th Cir. Apr. 9, 2012).

In Trademark Case, Ninth Circuit Rejects Doubling of Actual Damages Award as Punitive

Skydive Arizona apparently owns and operates one of the largest skydiving centers in the world, including providing planes and personnel for skydiving events in 30 states other than Arizona.  It has operated under the mark "SKYDIVE ARIZONA" since 1986.

The defendants, referred to as SKYRIDE, operated an internet and telephone-based service that made skydiving arrangements and issued certificates that could be redeemed at various drop zones around the country.  SKYRIDE owned and operated numerous related websites and registered a number of domain names specific to Arizona including skydivearizona.net, arizonaskydive.com, and skydivingarizona.com.

Skydive Arizona did not advertise with or accept certificates issued by SKYRIDE.

Skydive Arizona sued SKYRIDE for false advertising, trademark infringement, and cybersquatting under the Lanham Act.  Skydive Arizona alleged that SKYRIDE misled consumers as to SKYRIDE's ownership of skydiving facilities in Arizona when in fact SKYRIDE neither owned nor operated any such facilities.  Skydive Arizona also alleged that SKYRIDE misled consumers into believing that Skydive Arizona would accept SKYRIDE's certificates.

The district court entered summary judgment in Skydive Arizona's favor for false advertising and a jury found in its favor on the remaining claims, awarding $1 million in damages for willful false advertising, $2.5 million in actual damages for willful trademark infringement, more than $2.5 million in lost profits, and statutory damages of $100,000 for each of six violating domain names.

Post-verdict, the district court doubled the jury's actual damages awards for false advertising and trademark infringement, raising those awards to $2 million and $5 million, respectively.

After quickly affirming the district court's grant of summary judgment in favor of Skydive Arizona on the false advertising claim, the Ninth Circuit addressed the "gravamen" of the appeal, namely, the district court's decision on damages.

The Ninth Circuit affirmed the district court's upholding of the jury's award of actual damages and lost profits and rejected SKYRIDE's contention that the entire judgment should be vacated because it was grossly excessive and punitive.

The Ninth Circuit disagreed, however, with the district court's damages enhancement.  Although the Lanham Act allows an award of up to triple the amount of lost profits, actual damages, and costs to compensate the mark holder, it "has been construed to expressly forbid the award of damages to punish an infringer."  But the Ninth Circuit concluded that the district court's damages-enhancement decision had an improper "punitive motivation" requiring reversal of the enhancement of the actual damages award.

As modified by the Ninth Circuit's decision, Skydive Arizona was thus awarded $1 million in actual damages for false advertising, $2.5 million in actual damages for trademark infringement, $2,500,004 in lost profits for the infringement, and $600,000 in statutory damages for cybersquatting.

Judge Noonan wrote an opinion dissenting in part on the question of whether there was proof of harm to Skydive Arizona's goodwill to support the $2.5 million in damages.

The case cite is Skydive Arizona, Inc. v. Quattrocchi, No. 10-16099 (9th Cir. Mar. 12, 2012).

Fifth Circuit Rejects Ford's Dilution Claim Because Commercial Printer Did Not "Use" the Marks to Identify its Goods

This case involved a number of trademark issues but one seemed more interesting. 

National Business Forms & Printing ("NBFP") is a commercial printer that makes signs, stickers, banners, decals and the like.  Ford Motor sued NBFP for, among other claims, trademark infringement and dilution under the Lanham Act for NBFP's use of 14 of Ford's trademarked logos on these materials.

As to the dilution claim, although the district court concluded that the Ford marks at issue were famous, it found that NBFP had not made "use" of the marks in identifying its own goods or services as required by the Trademark Dilution Revision Act ("TDRA") in filling printing orders from used car dealers.

The Fifth Circuit agreed with the district court "that NBFP did not 'use' Ford's marks (as the TDRA contemplates that term) in identifying or distinguishing its own goods or services merely by reproducing them for customers as part of its commercial printing business" and therefore Ford's dilution claim failed.

The case cite is Nat'l Bus. Forms & Printing, Inc. v. Ford Motor Co., No. 10-20023 (5th Cir. Feb. 16, 2012).

Election of Statutory Damages Did Not Preclude Attorneys' Fee Award in Louis Vuitton Counterfeit Trademark Case

Louis Vuitton sued defendants for trademark counterfeiting and infringement under the Lanham Act and the district court awarded it $3 million in statutory damages and more than $500,000 in attorneys' fees.

On appeal, defendants argued, in part, that by electing to receive statutory damages under 15 U.S.C. 1117(c), Louis Vuitton waived its ability to receive an attorneys' fee award because subsection (c), unlike subsections (a) and (b), did not explicitly provide for such an award.

Subsection (a) provides that a plaintiff may be entitled "to recover (1) defendant's profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action."  15 U.S.C. 1117(a).  The last sentence in subsection (a) states that the "court in exceptional cases may award reasonable attorney fees to the prevailing party."

Subsection (c), dealing with the use of counterfeit marks, provides that the plaintiff may elect to recover statutory damages "instead of actual damages and profits under subsection (a)[.]"  No explicit mention is made to an award of attorneys' fees (or costs for that matter).

Acknowledging that district courts had gone both ways on the issue (and in some cases have simply avoided explicitly answering the question) and noting that the Ninth Circuit had explicitly identified but not answered this specific question, the Second Circuit ultimately concluded that an election of statutory damages under subsection (c) did not preclude an award of attorneys' fees in "exceptional cases" under subsection (a).

The case cite is Louis Vuitton Malletier S.A. v. LY USA, Inc., Docket No. 08-4483-cv(L) (2d Cir. March 29, 2012).

Court Finds No Likelihood of Confusion Between "Kinbox" and "Kinect"

Kinbook, LLC developed an application available on Facebook intended to allow the sharing of online messages, photos and videos among friends and family.  The application allows users to create private "sub-social" networks and upload data to offsite storage.

After learning that Facebook had aggressively opposed trademark applications for "_____Book" formative marks for applications connected with Facebook, Kinbook decided to name its Facebook application "Kinbox" and "Munchkinbox" (the latter being for use by children and their family).

Kinbook launched its application on Facebook in December 2009 and its marks were registered with the PTO in September 2010.

In November 2010, Microsoft released the "Kinect" gaming sensor for use in connection with its XBOX 360 console.  The "Kinect" is a hardware sensor that allows a user to operate and interface with the XBOX 360 using gestures and spoken commands.

Also, in April 2010, Microsoft launched a new line of mobile smartphones known as "Kin One" and "Kin Two."  Two months later, Microsoft announced that it would cease production of the "Kin" phones.

 Claiming that Microsoft's "Kinect" mark was confusingly similar to its "Kinbox" mark, Kinbook sued Microsoft for unfair competition and reverse trademark infringement under the Lanham Act.  Microsoft moved for summary judgment and the District Court granted its motion.

The District Court's opinion contains no surprises or new statements of law but is still a worthwhile read for its resolution of the likelihood of confusion question in a concise and straightforward manner that is peppered with a sense of humor.

One example is the court's discussion regarding the "sophistication of the consumers" factor of the likelihood of confusion analysis.  According to Microsoft, its target audience for XBOX 360 users is 5 to 80 years of age, which led Kinbook to argue that the court should look to the least sophisticated consumer, namely, the 5-year-old, who could easily confuse "Kinbox" and "Kinect."  The District Court was not impressed with the argument:

First, it would be completely unreasonable to assign a 5 year-old as "the reasonably prudent purchaser" for the purposes of this analysis.  No matter what else the ever-remarkable current-day precocious 5 year-old can accomplish, this Court cannot fathom a 5 year-old with either the faculties or the financial means to independently purchase a retail item costing hundreds of dollars.  Second, even the hypothetical precocious 5 year-old dispatched by indulgent parents (or grandparents) to make her or his own selections of amusement would likely be able to distinguish between a free software application, and a $150 piece of gaming hardware.

The court also rejected the argument that the fact that the parties both marketed their products on the internet, and specifically Facebook, increased the likelihood of confusion, noting that "advertising on the internet and, more specifically, on Facebook has become vast and indiscriminate, and 'virtually every business today' uses the internet and Facebook for marketing purposes."

The case cite is Kinbook, LLC v. Microsoft Corp., No. 10-4828 (E.D. Pa., Jan. 24, 2012).

UPDATE: TTAB Denies Microsoft's Summary Judgment Motion in Opposition to Registration of Apple's APP STORE Mark

Microsoft's motion for summary judgment in its opposition to Apple's attempt to register its APP STORE mark ended with something of a whimper last week, with the TTAB denying the motion with essentially no substantive discussion.  Details of the opposition proceeding and the parties' briefing on Microsoft's summary judgment motion can be found here.

Despite extensive briefing by the parties, the TTAB concluded that Microsoft had failed to show that there were no genuine disputes of material fact.  In particular, with respect to Microsoft's claim that Apple's APP STORE mark is generic, the TTAB found "that genuine disputes of material fact exist, at a minimum, regarding how the relevant public primarily uses or understands the term APP STORE[.]"

The TTAB's opinion can be found here.

UPDATE: Ninth Circuit Takes Second Stab at Betty Boop Trademark Dispute

The Ninth Circuit first addressed this appeal involving copyright and trademark claims relating to the Betty Boop cartoon character in February, 2011, issuing an opinion affirming the District Court's decision with respect to both claims.  That decision was previously blogged here.

The Ninth Circuit has now withdrawn that opinion and issued a superseding opinion that reached the same conclusion as to the copyright claim but not as to the trademark claim.

 As described in my post describing the Ninth Circuit's February decision, the Ninth Circuit affirmed the dismissal of plaintiff Fleischer's trademark infringement claim

concluding that Defendant A.V.E.L.A. was using Betty Boop as a functional aesthetic component of the products, not as a trademark.  The Ninth Circuit further concluded that allowing Plaintiff Fleischer to assert a trademark infringement claim would run afoul of the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), by preventing the Betty Boop character from ever entering the public domain.

But in its new opinion, the Ninth Circuit took a different stance.

As to the use of the Betty Boop image as a trademark, the court concluded that Fleischer had failed to provide sufficient evidence of secondary meaning to withstand summary judgment.

But as to the Betty Boop word mark, the Ninth Circuit agreed that "the fractured ownership of a trademark may make it legally impossible for a trademark holder to prove secondary meaning."  Nonetheless, the court held that it could not resolve this issue as a matter of law because the only evidence was "the possibility that other copyright owners may be destroying the secondary meaning in the Betty Boop mark," which, standing alone, was insufficient to support summary judgment.

The Ninth Circuit also concluded that it could not "ascertain a legal basis" for the District Court's conclusions that there was no evidence that A.V.E.L.A.'s use represented a use of the Betty Boop word mark in commerce or that any such use was likely to cause consumer confusion.

The Ninth Circuit thus vacated the District Court's decision and remanded the case for further proceedings with respect to the trademark infringement claim relating to the Betty Boop word mark.

The case cite is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Aug. 19, 2011).

"The SHOE DEPT." and "SHOE SHOW" are not substantially similar trade names, the Fifth Circuit concludes in breach of lease case

Technically, this was not a trademark or trade name infringement case, as the court was quick to point out, but that fact only made the case that much more interesting particularly given the court's reasoning.

Defendant Shoe Show and plaintiff Almeda Mall (technically, the mall's predecessor in interest) entered into a lease agreement under which Shoe Show would operate a retail shoe store in the mall under the trade name "The SHOE DEPT."  The lease prohibited Shoe Show from operating another business under that name or any "substantially similar trade-name" within two miles of the store in the mall.  The lease also gave Shoe Show the option to terminate the lease provided that, among other things, Shoe Show was not in default under the lease.

During the term of the lease, Shoe Show opened a retail shoe store under the name SHOE SHOW in a commercial center located about 400 feet from the perimeter of the mall containing The SHOE DEPT.  Almeda did not object or take any action with respect to the SHOE SHOW store.

Instead, some time later, Shoe Show gave notice that it was exercising its option to terminate the lease early.  At that time, Almeda rejected the early termination notice contending that Shoe Show was in default of the lease by virtue of its operation of the SHOE SHOW store.  Almeda then sued Shoe Show for breach of the lease.

On cross motions for summary judgment, the district court held in Almeda's favor, concluding that the two stores had substantially similar trade names (The SHOE DEPT. and SHOE SHOW), awarding damages and attorneys' fees to Almeda.

The Fifth Circuit agreed with the district court that the phrase "substantially similar trade-name" in the lease agreement was not ambiguous:

The district court surmised (and we agree) that the subject phrase, as used in the trade name provision of the Lease, prohibits Shoe Show from opening and operating any business within[] two miles of the Leased Premises under a name that "identifies a business" and has essential elements in common with "The SHOE DEPT."  For purposes of identification, "business" refers to the party conducting the operation, not to the nature of the operation that it conducts.

That about ended the Fifth Circuit's agreement with the district court, however.

At the outset, the Fifth Circuit thought it important to note what the trade name provision of the lease did not specify, specifically, among other things, it did not prohibit Shoe Show from operating a retail shoe store within the specified radius nor did it explicitly prohibit Shoe Show from using either of its two other "widely used trade names, SHOE SHOW or BURLINGTON SHOES."  The court also seemed to find it significant that this was not a trademark infringement case:

We remain mindful that this is not a trademark, patent, or copyright case and does not involve infringement or appropriation of such a right by a stranger against the holder of the right.  Rather, this trade name case implicates precisely the opposite, viz., the express contractual effort to limit the use of a trade name by its rightful holder.

In the end, the Fifth Circuit disagreed with the district court concluding that, "when examined in the context of the entire Lease and the history of the confection, 'The SHOE DEPT.' and 'SHOE SHOW' are not substantially similar trade names within the intendment of the Lease's trade name provision."

The Fifth Circuit concluded that the word "shoe" would not be considered as a factor in determining whether the two trade names "SHOE SHOW" and "The SHOE DEPT." were substantially similar because it was "descriptive only" (presumably the court means generic, in trademark terms).  The word "shoe" also would not be considered in the substantial similarity determination because the lease did not prohibit Shoe Show from operating a "footwear operation" within the proscribed radius and

Almeda . . . has to have known that--absent an express prohibition in the Lease of the use of SHOE SHOW or BURLINGTON SHOES--any facility opened and operated by Shoe Show within (or, for that matter, beyond) two miles of the Leased Premises would almost certainly employ one of those trade names, each of which includes the generic or descriptive term "shoe."

Looking then to the remaining part of the two trade names, "DEPT." and "SHOW," the Fifth Circuit concluded that the words had "very different meanings" and were not synonyms.  It also felt that the words implied two functionally different establishments:

The retail shoe store dubbed "The SHOE DEPT." inside Almeda's shopping mall could well be thought of by the average shopper as that mall's footwear department, division, specialty, or the like.  By contrast, the space occupied by SHOE SHOW in the nearby commercial center is not located inside a mall and has the appearance to the general public of a free-standing commercial space.  More to the point, the word "show" conveys a connotation different from "department."  When, as here, "SHOW" (1) designates an exterior space or premises in a commercial center and (2) is modified by an adjective (shoe) to identify the kind of "show" being conducted in that space, a reasonable inference is that it is a place in which to view and inspect shoes, boots, sandals, and the like, but not necessarily a place in which to purchase footwear.


In any event, the result may have been driven by the Fifth Circuit's explicitly stated opinion that Almeda was trying to gain a benefit by litigation that it was not able to get in the lease:

If Almeda's predecessor expected to be able to block Shoe Show's use of either or both of those trade names [SHOE SHOW and BURLINGTON SHOES], it should have included them expressly in the Lease's list of forbidden trade names, just as it did with The SHOE DEPT.  To sign a lease containing that omission and thereafter come into court with a collateral attack on the use of one of those two known trade names based on nothing more than the amorphous ban on "substantially similar" trade names should not and will not be countenanced -- especially when (1) the generic word, shoe, is universally descriptive of the non-barred act of operating a retail footwear store, and (2) SHOW is not substantially similar to The . . . DEPT.

The court's characterization of the "substantially similar" standard as "amorphous" is notable.  One might call the "confusingly similar" standard similarly amorphous.

Would the result have been different if this had been a case of trademark or trade name infringement?  Who knows honestly but infringement case or not, some of the Fifth Circuit's reasoning seems a bit of a stretch.

One judge did dissent from the Fifth Circuit's opinion, agreeing with the reasoning of the district court, a copy of which can be found here.

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

UPDATED: Coventry First Files ACPA Claim Over Twitter Account

UPDATE:  On July 12, 2011, Coventry First filed a Notice of Voluntary Dismissal without prejudice of its complaint against the unnamed defendants who were never "formally served," according to the dismissal.  Following is the original post about the lawsuit.

There is no shortage of reports about the complaint filed by Coventry First, "a leading company in the life settlement industry," against unnamed defendants for the use of the "domain" <twitter.com/coventryfirst>, so I'll keep this brief.

Coventry First makes the typical claims of, among others, trademark infringement and false designation of origin under the Lanham Act, but also asserts a claim under the Anti-Cybersquatting Consumer Protection Act ("ACPA").  Specifically, Coventry First alleges that defendants registered, operate, traffic in and/or otherwise use "the domain name twitter.com/coventryfirst," which incorporates its COVENTRY FIRST trademark.  The complaint doesn't appear to specifically allege that these purported activities were done with "a bad faith intent to profit" from the mark--an element required by the ACPA--but it does state that the alleged use of the mark in the "domain name" is unauthorized.

The case cite is Coventry First, LLC v. Does 1-10, No. 2:11-cv-03700-JS (E.D. Pa.), filed June 7, 2011.  You can find a copy of the complaint here.

UPDATE: Apple v. Amazon, Apple Denied Preliminary Injunction Over APP STORE Mark

As previously reported, in March 2011, Apple sued Amazon in federal court in California alleging various trademark related claims in connection with Apple's alleged APP STORE mark and Amazon's "Appstore for Android."  Apple's Amended Complaint in the action can be found here.

Apple later moved for a preliminary injunction to stop Amazon's use of Apple's alleged APP STORE mark.  After holding a hearing on the motion on June 22, the District Court yesterday denied the motion, concluding that Apple had not shown that it was likely to succeed on the merits of its trademark infringement and dilution claims.

With respect to the trademark infringement claim, one of Amazon's main arguments was that Apple's alleged APP STORE mark was generic for an online store where consumers can obtain apps and therefore was not eligible for trademark protection.  On the plus side for Apple, even though the Court found that it had not established a likelihood of success on the merits, it did not adopt Amazon's argument that Apple's mark was generic:

The court assumes without deciding that the "App Store" mark is protectable as a descriptive mark that has arguably acquired secondary meaning.  The court does not agree with Amazon that the mark is purely generic, for the reasons argued by Apple, but also does not find that Apple has shown that the mark is suggestive, as there appears to be no need for a leap of imagination to understand what the term means.

Nonetheless, using the multi-factor test applicable in the Ninth Circuit, the Court concluded that, based on the current record, Apple had not established that there was a likelihood of confusion resulting from the parties' respective uses of the APP STORE mark.

Similarly, the Court found that Apple had failed to demonstrate a likelihood of success on its dilution claim.

First, the Court concluded that Apple had not established that its APP STORE mark was famous, despite recognizing that Apple had spent "a great deal of money" on advertising, noting that there was evidence that others used "app store" as a descriptive term for their stores.

Second, the Court found that Apple had failed to demonstrate dilution by "blurring" or "tarnishment."

As to blurring, the Court concluded that

the marks are similar, but "App Store" is more descriptive than it is distinctive.  Apple did have substantially exclusive use of "App Store" when it launched its service a little over three years ago, but the term appears to have been used more widely by other companies as time has passed.  The mark does appear to enjoy widespread recognition, but it is not clear from the evidence whether it is recognition as a trademark or recognition as a descriptive term.  Moreover, there is no evidence that Amazon intended to create an association between its Android apps and Apple's apps, and there is no evidence of actual association.

No luck for Apple on its tarnishment claim either:  "Apple speculates that Amazon's App Store will allow inappropriate content, viruses, or malware to enter the market, but it is not clear how that will harm Apple's reputation, since Amazon does not offer apps for Apple devices."

In the end, although the Court's decision does not doom Apple's claims, it may indicate that Apple has a tough row to hoe.

The case cite is Apple, Inc. v. Amazon.com Inc., Case No. CV 11-01327 PJH (N.D. Cal. July 6, 2011).

Apple Sued Over iBooks Mark

 In more Apple trademark news, Apple is being sued by a "small family of publishing companies" in the Southern District of New York who are alleging, among other things, false designation of origin under the Lanham Act and various New York state law claims.

Plaintiffs allege that they are the owners of the common law trademarks "ibooks" and "ipicturebooks," which have been used for more than 11 years in connection with "a wide range of print and electronic books."  Plaintiffs allege that Apple's use of the iBooks mark in connection with the iPad, iPhone and iTunes store has overwhelmed the alleged reputation and goodwill of plaintiffs' marks such that iBooks is now "forever linked . . . with Apple in the minds of consumers."

The complaint raises a number of potentially interesting issues relating to priority, assignment in gross, estoppel/laches/acquiescence and fraud on the PTO, along with the typical likelihood of confusion question.  The complaint also contains a fairly detailed factual statement about the plaintiffs and their alleged marks as well as about Apple's alleged actions.

The case cite is J.T. Colby & Co. v. Apple, Inc., No. 11-civ-4060 (S.D.N.Y.), filed June 15, 2011.  You can find a copy of the complaint (PDF, 35 pages), minus exhibits, here.

UPDATED: Coventry First Files ACPA Claim Over Twitter Account

UPDATE:  On July 12, 2011, Coventry First filed a Notice of Voluntary Dismissal without prejudice of its complaint against the unnamed defendants who were never "formally served," according to the dismissal.  Following is the original post about the lawsuit.

There is no shortage of reports about the complaint filed by Coventry First, "a leading company in the life settlement industry," against unnamed defendants for the use of the "domain" <twitter.com/coventryfirst>, so I'll keep this brief.

Coventry First makes the typical claims of, among others, trademark infringement and false designation of origin under the Lanham Act, but also asserts a claim under the Anti-Cybersquatting Consumer Protection Act ("ACPA").  Specifically, Coventry First alleges that defendants registered, operate, traffic in and/or otherwise use "the domain name twitter.com/coventryfirst," which incorporates its COVENTRY FIRST trademark.  The complaint doesn't appear to specifically allege that these purported activities were done with "a bad faith intent to profit" from the mark--an element required by the ACPA--but it does state that the alleged use of the mark in the "domain name" is unauthorized.

The case cite is Coventry First, LLC v. Does 1-10, No. 2:11-cv-03700-JS (E.D. Pa.), filed June 7, 2011.  You can find a copy of the complaint here.

Seventh Circuit Finds Online Contacts Too Attenuated to Support Personal Jurisdiction

The plaintiff, be2 LLC, is a Delaware limited liability company headquartered in that state with a parent company organized and headquartered in Germany.  be2 runs an Internet dating website at be2.com.  be2 sued Nikolay Ivanov, a resident of New Jersey, in federal district court in Illinois, alleging that Ivanov had run a matchmaking service at the website be2.net, which was confusingly similar to plaintiff's domain name and design at be2.com.

Ivanov defaulted and judgment was entered against him but he later appeared and moved to vacate the judgment as void for want of personal jurisdiction over him in Illinois.  The district court denied the motion to vacate and Ivanov appealed.

The Seventh Circuit noted that courts should exercise caution in resolving personal jurisdiction questions in the context of online contacts and emphasized that "[b]eyond simply operating an interactive website that is accessible from the forum state, a defendant must in some way target the forum state's market."

Here, the Seventh Circuit did not find sufficient evidence that Ivanov deliberately targeted the Illinois market:

All that be2 Holding submitted regarding Ivanov's activity related to Illinois is the Internet printout showing that just 20 persons who listed Illinois addresses had at some point created free dating profiles on be2.net.  The printout shows only the nickname and age of each user, the city the user then called home, and the type of relationship the user was seeking.  Even if these 20 people are active users who live in Illinois, the constitutional requirement of minimum contacts is not satisfied simply because a few residents have registered accounts on be2.net.  To the contrary, these are attenuated contacts that could not give rise to personal jurisdiction without offending traditional notions of fair play and substantial justice.

In contrast, the Seventh Circuit distinguished this case from its earlier opinion in uBid v. GoDaddy Group (blogged here) where there was "massive and successful exploitation of the Illinois market."

The Seventh Circuit thus vacated the district court's order and remanded the case with instructions to vacate the judgment and dismiss the complaint based on a lack of personal jurisdiction.

The case cite is be2 LLC v. Ivanov, No. 10-2980 (7th Cir. Apr. 27, 2011).

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).

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).

Recent Copyright & Trademark Filings in the Western District of Washington


Northwest Territorial Mint, LLC v. Hangzhou Cool Eagle Hardware Mfg. Co., No. 11-00694-RSL (W.D. Wash.) filed April 25, 2011

 According to the complaint, Northwest Territorial Mint is a custom mint that designs, manufactures and sells coins and other collectables for the U.S. military, federal, state and local governments, and corporations.  NW Territorial Mint displays its coin designs and photographs of its coin artwork on its website, for which it obtained a copyright registration.

NW Territorial Mint alleges that Cool Eagle also sells coins and collectables through its online store as well as third-party resellers such as eBay.  According to the complaint, Cool Eagle's website and coins copied NW Territorial Mint's artwork.  In 2010, NW Territorial Mint complained to eBay that it was hosting auctions for Cool Eagle coins that copied NW Territorial Mint's designs.  In apparent response to that complaint, in March 2011, NW Territorial Mint received an email from Cool Eagle admitting that it had "infringed upon your intellectual property," apologized for doing so and indicating that it had taken action to correct the infringement.  Notwithstanding Cool Eagle's email, however, NW Territorial Mint alleges that Cool Eagle continues to copy its designs.

NW Territorial Mint alleges claims for copyright infringement, a constructive trust upon illegal profits and an accounting.

Complaint, minus attachments, here.

VendNovation, LLC v. Apex Indus. Technologies LLC, No. 11-00700-JLR (W.D. Wash.) filed April 26, 2011

According to the complaint, VendNovation develops software and hardware for use in vending machines, including server-hosted software that controls and remotely monitors vending machines through the web.  VendNovation alleges that Apex Industrial Technologies markets and sells vending machines.

VendNovation alleges that it and Apex entered into agreements (explained in greater detail in the complaint) under which VendNovation agreed to provide its software and control boards for use in vending machines that would be marketed, sold and installed by Apex.  In January 2011, VendNovation alleges that it learned that Apex had begun ordering vending machines without VendNovation's control boards and that Apex had instead developed its own control board and software to compete with VendNovation's works.  According to VendNovation, Apex's competing products used VendNovation's trade secrets and copyrighted works.

VendNovation alleges claims for copyright infringement, a constructive trust upon illegal profits, an accounting, breach of contract, breach of the implied covenant of good faith and fair dealing, misappropriation of trade secrets, unfair business practices, breach of the duty of loyalty and a declaration of exclusive ownership as to the enhancements or derivative works allegedly created by Apex.

Complaint, minus attachments, here.


Goodrich v. Allen, No. 11-00687-RSM (W.D. Wash.) filed April 22, 2011

 According to the complaint, Debbie Goodrich's business "is devoted to providing education and entertainment pertaining to birds, particularly parrots, and other animals, as well as marketing and selling related products and services."  Goodrich alleges that she adopted the name "The Parrot Lady" in connection with presentations in Washington and later California.  In 2001, she obtained a Washington business license under the name The Parrot Lady Educational Entertainment and later obtained the domain name parrotlady.com and a Facebook page advertising her services and products.

Goodrich alleges that Karen Allen, a resident of California, markets and sells products and services related to birds and that she obtained a registration for the mark THE PARROT LADY in 2006 in connection with exotic bird breeding and grooming.  Goodrich further alleges that, among other things, Allen or her representatives contacted Facebook asserting rights in THE PARROT LADY mark, which led to the removal of Goodrich's Facebook page.  Goodrich also claims that Allen or her representatives contacted other of Goodrich's vendors, service providers and potential or actual customers asserting rights in THE PARROT LADY mark.

Goodrich alleges claims for a declaratory judgment of non-infringement, cancellation of Allen's registration, tortious interference with business expectancies and relations and unfair competition and trademark infringement under the Lanham Act.

Complaint, minus attachments, here.

Brian Carter Cellars, LLC v. Casa Bruno, LLC, No. 11-00723 (W.D. Wash.) filed April 28, 2011

 According to the complaint, Brian Carter Cellars owns a registration for the mark ABRACADABRA for red wine, white wine and wine.  Brian Carter Cellars alleges that Casa Bruno is an importer and distributor of wine, including a wine made by the French winery Domain le Chemin des Reves that is marketed under the mark ABRACADABRA.

Brian Carter Cellars alleges that Casa Bruno sells an "Abracadabra 2008 Rouge AOC Pic Saint Loup" red wine in the United States.  Brian Carter Cellars also alleges that in March and April 2011, it asked Casa Bruno to cease importing and selling ABRACADABRA wine from the French winery but that Casa Bruno refused to do so.

Brian Carter Cellars alleges claims for trademark infringement and false designation of origin under the Lanham Act and unfair competition under Washington state law.

Complaint, minus attachments, here.

Fame of Citigroup Marks Fails to Win the Day in Citigroup Opposition

Citigroup filed an opposition to four standard character mark applications filed by Capital City Bank for the following marks:  CAPITAL CITY BANK; CAPITAL CITY BANK INVESTMENTS; CAPITAL CITY BANK GROWING BUSINESS; and CAPITAL CITY BANC INVESTMENTS.  The TTAB dismissed Citigroup's opposition, concluding that there was neither a likelihood of confusion nor dilution from registration of Capital City's marks.

The Federal Circuit affirmed the dismissal, concluding that although a number of the relevant factors supported Citigroup, a proper weighing of the most relevant factors supported a finding of no likelihood of confusion:

Citigroup's approach of mechanically tallying the DuPont factors addressed is improper, as the factors have differing weights.  Although the T.T.A.B. deemed the CITIBANK mark famous, fame is only one of the thirteen DuPont factors.  [Capital City's] marks do not employ the C-I-T-I spelling or compound word structure, characteristics that contribute to the fame of Citigroup's marks.  Because those characteristics are not present in [Capital City's] marks, the fame factor is less persuasive than it is typically.  Pervasive third-party use of the phrase "City Bank" in marks for financial services also limits the protection afforded to the CITIBANK mark.  The dissimilarity of the marks in their entireties as to appearance, sound, connotation, and commercial impression strongly supports a finding of no likelihood of confusion.  Additionally, no instances of actual confusion have been reported despite opportunities for confusion to have occurred.  But because a standard character registration would cover potential variations of the [Capital City] applications that create a different commercial impression from [Capital City's] past uses, the "actual confusion" factor has limited probative value in this case.

Weighing these factors, the Federal Circuit concluded that the TTAB correctly found that Capital City's marks were not likely to cause confusion with Citigroup's marks and affirmed dismissal of Citigroup's opposition.

The Federal Circuit did not address Citigroup's dilution claim, which Citigroup did not discuss on appeal, because Citigroup contended that "'proper consideration of all the reasonable manners of display demonstrates a clear likelihood of confusion' and 'this Court need not consider the issue of dilution to reverse the Board's dismissal below.'"

The case cite is Citigroup Inc. v. Capital City Bank Group, Inc., No. 2010-1369 (Fed. Cir. March 28, 2011) (Opposition No. 91177415).

Domain Name Owner Suffers ACPA Loss After UDRP Win

Newport News Holdings Corporation ("Newport News") is a women's clothing and accessories company that owns five federal registrations for the mark NEWPORT NEWS in connection with the sale of those products through catalogs and over the Internet.  Newport News also owns the domain name newport-news.com.

Virtual City Vision ("Virtual City") owns at least 31 domain names that incorporate the names of geographic locations and Virtual City's intent was to create websites that provided information and advertising related to those locations.

In 1997, Newport News attempted to purchase the domain name newportnews.com but it had already been purchased by Virtual City.  In 2000, Newport News brought a UDRP complaint against Virtual City, alleging that newportnews.com was confusingly similar to Newport News' NEWPORT NEWS marks.

Newport News was unsuccessful, however, as the UDRP panel concluded that, although the mark and the domain name were identical,

"visitors to [Newport News'] branded web site, who seek out the latest women's clothing and home fashions would clearly not be confused when seeing a home page of another web site, bearing an identical mark, that explicitly provides city information . . . with no connection whatsoever to women's and home fashions." . . .  The panel further held that [Virtual City's] website provided "bona fide service offerings," which included "disseminat[ing] city information in an effort to increase tourism and other visitor traffic to the city." . . .  Significantly, with respect to [Newport News'] claim of bad faith, the panel noted that "given the total absence of competition between the businesses of [Newport News and Virtual City] . . . [Virtual City] did not register the contested domain name in an effort to cause any likelihood of confusion.

Following a "deliberate metamorphosis" of its newportnews.com website, however, Virtual City was not so successful in the next litigation confrontation with Newport News.

In 2008, Newport News sued Virtual City alleging claims for, in part, violation of the Anticybersquatting Consumer Protection Act.  The District Court later granted summary judgment in favor of Newport News on its ACPA claim.

On appeal, among a number of other issues, the Fourth Circuit affirmed the grant of summary judgment on the ACPA claim. With respect to the issue of bad faith and Virtual City's use of the domain name newportnews.com, the Fourth Circuit found the District Court had reached the correct conclusion:

Here, even drawing all reasonable inferences in favor of [Virtual City], the record is clear that after November 2007, [Virtual City] was no longer in the business of providing information about the city of Newport News.  The contrast between the newportnews.com website and [Virtual City's] other locality websites, which were dominated by links and advertisements for businesses and activities in those cities, is stark.  Unlike those websites, newportnews.com went from being a website about a city that happened to have some apparel advertisements to a website about women's apparel that happened to include minimal references to the city of Newport News.  The district court correctly held that, once [Virtual City] largely abandoned its city information service, it ceased to have a right to use the name of Newport News to describe such service.

The Fourth Circuit also held that the District Court properly concluded that the prior UDRP decision in Virtual City's favor supported a finding of bad faith.  That decision's finding of no bad faith was supported by, at that time, the total absence of competition between Newport News and Virtual City.  Thus, "[t]he fact that, in the face of this cautionary language, [Virtual City] later purposefully transformed its website into one that competed with [Newport News] by advertising women's apparel is a legitimate factor within the totality of the circumstances supporting the district court's finding of bad faith."

The case cite is Newport News Holdings Corp. v. Virtual City Vision, Inc., No. 09-1947 (4th Cir. Apr. 18, 2011).

Apple Defends its APP STORE Mark Against Microsoft's Claim of Genericness

Not surprisingly given the parties involved, the opposition filed by Microsoft to Apple's application to register its APP STORE mark has garnered significant interest.

First, the basic background.

Apple filed an application to register its APP STORE mark in July 2008 in connection with, in part, the following services:

Retail store services featuring computer software provided via the internet and other computer and electronic communication networks; Retail store services featuring computer software for use on handheld mobile digital electronic devices and other consumer electronics

In its application, Apple cited three prior registrations for APPLE STORE and THE APPLE STORE (Reg. Nos. 2,424,976, 2,462,798, 2,683,410) in connection with retail store services and online retail store services.

The PTO initially refused registration of the APP STORE mark on the ground that it was merely descriptive in that:

the mark APP STORE merely combines descriptive terms ["APP" defined as a computer application and "STORE" defined as a place where merchandise is offered for sale] without creating a new non-descriptive meaning.  The mark would be immediately understood as describing a feature, function, purpose or use of the services, including, retail store services featuring computer applications.

The initial Office Action refusing registration can be found here.

Apple, not surprisingly, disagreed with the PTO's conclusion, arguing that APP STORE was at worst suggestive of the relevant services and even argued that it was "completely arbitrary."  As to the latter point, although Apple grudgingly acknowledged that "APP" "may, arguably, sometimes be used as a slang abbreviation for the word 'application,'" it was also an abbreviation for other "app-formative words, such as apparatus, apparent, appendix, applied, appointed, approved and approximate."  Thus, when "used in connection with the word 'Store' it is not apparent what the goods or services are," Apple argued, making the mark at least suggestive.

Among other points, Apple also argued that APP STORE created "a clearly recognizable double entendre" that cannot be refused registration on a merely descriptive ground as long as one of its meanings is not merely descriptive.  Apple asserted that "in addition to other possible connotations, "APP" and "APP STORE" would be immediately recognized as an abbreviation of the well-known APPLE and APPLE STORE marks, respectively.

Apple's response to the initial Office Action can be found here.

The PTO subsequently made the refusal of registration final, however (final decision found here).  Apple filed a request for reconsideration reiterating its previous arguments but also asserting that as an alternative ground, APP STORE was registerable based upon acquired distinctiveness (request found here).

Although the sequence of events are not particularly clear from the PTO's public records, Apple was ultimately successful and APP STORE was published for opposition.

In July 2010, Microsoft filed an opposition to Apple's registration of APP STORE (opposition found here), claiming that it was generic and that Microsoft would be damaged by registration of the mark because it would "discourage or prevent Microsoft and retail stores that sell Microsoft apps from using APP STORE in connection with such services."  Apple's answer to the opposition can be found here.

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Ninth Circuit Rejects the "Internet Troika" as the Universally Controlling Test for Trademark Infringement on the Internet in Keyword Advertising Case

In a much welcomed if not perfect opinion, the Ninth Circuit rejected the so-called "Internet trinity" or "Internet troika" employed in the court's earlier opinion in Brookfield Communications, Inc. v. West Coast Entm't Corp., 174 F.3d 1036 (9th Cir. 1999) as the controlling test for every case of trademark infringement in the Internet context.

Network Automation and Advance Systems Concepts both sell job scheduling and management software and both advertise on the Internet.  Network sells its software under the AUTOMATE mark; Systems sells its software under the ACTIVEBATCH mark.

Network purchased "Activebatch" as a keyword in connection with Google's AdWords program as well as with a comparable program for Microsoft's Bing search engine.  As a result, according to the court, when users searched the term "Activebatch," an advertisement for Network would appear as a "Sponsored Link" or "Sponsored Site" alongside or above the organic search results.

Systems sent Network a cease and desist letter threatening litigation if Network did not immediately cease use of the term "Activebatch" in its search engine advertising.  Network filed a declaratory judgment action and Systems counterclaimed for trademark infringement, moving for a preliminary injunction.

The District Court granted injunctive relief to Systems concluding that Systems was likely to succeed on its Lanham Act trademark infringement claim, emphasizing three of the Sleekcraft likelihood of confusion factors as the significant factors in "cases involving the Internet."

The Ninth Circuit reversed the grant of injunctive relief starting off its opinion with a quote from Brookfield that seems to often be ignored in cases that rely on the "Internet troika":  "We must be acutely aware of excessive rigidity when applying the law in the Internet context; emerging technologies require a flexible approach."

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Central District of Cal. Rejects Counterclaim Seeking Cancellation of Registration for WOULD YOU RATHER. . .? Mark Based on Fraud on the PTO

This trademark case was back before the District Court after the Ninth Circuit's reversal of the court's grant of summary judgment for the defendant. 

The consolidated cases dealt with the parties' respective uses of the mark "WOULD YOU RATHER" in connection with board games and books involving questions posing humorous, bizarre or undesirable choices.  The District Court had previously granted summary judgment on Spin Master's (formerly Falls Media, LLC) claims for trademark infringement and unfair competition with respect to Spin Master's federally registered WOULD YOU RATHER . . .? mark, concluding that the mark was descriptive and lacked secondary meaning.  For the same reason, the District Court granted summary judgment on Zobmondo's counterclaim for cancellation of the registration.  The District Court entered final judgment which, in part, dismissed as moot Zobmondo's counterclaim for cancellation of Spin Master's registration based on fraud on the PTO in light of the court's ruling canceling the registration based on descriptiveness.

The Ninth Circuit reversed the grant of summary judgment, concluding that the issues of descriptiveness and secondary meaning were disputed issues of fact not amenable to summary judgment.  As a result of the Ninth Circuit's ruling, the District Court's cancellation of Spin Master's registration was reversed and Zobmondo's counterclaim for cancellation based on fraud on the PTO was revived.

The latter issue was before the District Court on Spin Master's motion for summary judgment on Zobmondo's counterclaim for cancellation of Spin Master's registration for the WOULD YOU RATHER . . .? mark based on fraud on the PTO under 15 U.S.C. 1064(3).

Emphasizing that the burden of proving fraud is "heavy" and relying on the Federal Circuit's In re Bose Corp. decision (580 F.3d 1240 (Fed. Cir. 2009)), the District Court concluded that Zobmondo failed to carry that burden and granted summary judgment to Spin Master on Zobmondo's counterclaim.  Specifically, the District Court concluded that Zobmondo had failed to offer clear and convincing evidence from which a jury could infer that Spin Master subjectively intended to deceive the PTO in connection with its intent-to-use ("ITU") application, an "indispens[a]ble" element of a fraud cancellation claim.

The District Court's opinion described in detail the actions Spin Master had taken with respect to use of the WOULD YOU RATHER . . .? mark in connection with board games during the relevant time periods (Zobmondo's fraud claims only applied to the initial ITU application and the first two extensions of time Spin Master requested after the PTO issued a notice of allowance for the application).  Although the District Court noted more than once that development of the game bearing the WOULD YOU RATHER . . .? mark proceeded slowly ("at a snail's pace"), the evidence regarding the development process was sufficient for the court to concluded that no reasonable jury could find a subjective intent to deceive the PTO by clear and convincing evidence.

Of note, the District Court rejected Zobmondo's repeated argument

that there is a negative inference to be drawn from the fact that [Spin Master] sought and obtained all possible extensions of time to file [its] statement of use.  But absent a subjective intent to deceive the PTO during this time, there is nothing wrong with [Spin Master] requesting (and being granted) all of the available statutory extensions.  Congress created the intent-to-use system and the Court will not treat compliance with statutory procedures as evidence of fraud.  Indeed, [Spin Master is] far from the only one[] to have used the full set of procedures created by Congress:  as of 2008, almost 15,000 registrations had been issued after the maximum number of extensions was granted.  Thus, Zobmondo cannot demonstrate fraud by pointing to the authorized use of the full system of statutory extensions.

But interestingly, the District Court earlier cited to the Senate Report on the amendments that created the ITU system which stated that only the "rare applicant" would take advantage of all of the possible extensions (a total of five, six-month extensions) before it filed a statement evidencing use of the mark in commerce.

The case cite is Spin Master, Ltd. v. Zobmondo Entm't, LLC, Case Nos. CV 06-3459, CV 07-0571 (C.D. Cal. Feb. 22, 2011).

Ninth Circuit Affirms Dismissal of Betty Boop Copyright and Trademark Infringement Claims

Max Fleischer, head of Fleischer Studios, Inc. (referred to by the court as "Original Fleischer"), created the well-known cartoon character Betty Boop in 1930.  Some 10 years later, Original Fleischer abandoned Betty Boop and sold the rights to her cartoons and her character and in 1946, Original Fleischer was dissolved.

In the early 1970s, Mr. Fleischer's family attempted to revive his cartoon business, incorporated a new entity (the plaintiff in the case) under the same name as the Original Fleischer and attempted to repurchase the rights to the Betty Boop character.  Based on those purchases, Plaintiff Fleischer believed that it was the exclusive owner of the Betty Boop character copyright and trademark and licensed the character for use on merchandise based on that belief.  (For whatever reason, the Ninth Circuit's factual statement of the case seems rather cursory and somewhat lacking in clarity.  The District Court's summary judgment opinion on the copyright infringement claim, found here, provides a more detailed explanation of the history.)

The defendants in the case also license Betty Boop merchandise based on a copyright on vintage posters featuring the Betty Boop image that defendant A.V.E.L.A. restored.

The parties disputed whether Plaintiff Fleischer owned the exclusive copyright to the Betty Boop character.  On summary judgment, the District Court concluded that plaintiff had failed to satisfy its burden of proof regarding the chain of title to the copyright ultimately leading to the plaintiff and therefore dismissed the plaintiff's copyright infringement claim.  The District Court also dismissed Plaintiff Fleischer's trademark infringement claim concluding that the plaintiff had failed to submit proper evidence of a registered federal trademark for the Betty Boop image, that the fractured ownership and use of the Betty Boop name destroyed plaintiff's trademark rights, and that the plaintiff did not establish common law trademarks of the Betty Boop name or image.

According to the majority opinion, Plaintiff Fleischer asserted several alternative chains of title to the Betty Boop character copyright before the District Court but had abandoned all but one of those chains on appeal.  Specifically, Plaintiff Fleischer asserted the following chain of title on appeal:

Original Fleischer transferred its rights to Paramount Pictures, Inc. (Paramount) in 1941; Paramount transferred those rights to UM&M TV Corp. (UM&M) in 1955; in 1958, UM&M transferred these rights to National Telefilm Associates, Inc. (NTA), which became Republic Pictures in 1986; and finally, Republic Pictures transferred the exclusive copyright to Fleischer in 1997.

In granting summary judgment on Plaintiff Fleischer's copyright infringement claim, the District Court specifically concluded that the plaintiff had failed to meet its burden of proof regarding the transfer of rights from UM&M to NTA and from NTA to Republic Pictures, thereby destroying the chain of title allegedly leading to the plaintiff.

 The Ninth Circuit affirmed the District Court's decision, concluding that Paramount did not transfer the Betty Boop character to UM&M under a 1955 purchase agreement, which transferred rights to certain Betty Boop cartoons.  The court relied on language in the agreement that stated:

Anything to the contrary notwithstanding, no grant or assignment is made hereunder to [UM&M] of the characters and characterizations contained in said Sold Photoplays or said literary material, or of the copyrights in said characters or characterizations, or of any production or other rights in said characters and characterizations, or to use said characters and characterizations or the names of said characters or trade names, trademark and names of the series of Sold Photoplays or of said literary material in any manner except . . . only as part of the particular Sold Photoplay in which they or any of them are contained. . . .

Although it questioned the propriety of looking to subsequent behavior given this contractual language, the Ninth Circuit did note Paramount's subsequent transfer of the Betty Boop character copyright to Harvey Films in support of its conclusion that Paramount did not transfer that copyright earlier to UM&M.

Thus, because the Ninth Circuit concluded that Paramount did not transfer the Betty Boop character copyright to UM&M the chain of title leading to Plaintiff Fleischer was broken and plaintiff's copyright infringement claim was therefore properly dismissed.

The Ninth Circuit also affirmed the District Court's decision dismissing Plaintiff Fleischer's trademark infringement claim (District Court's opinion can be found here) concluding that Defendant A.V.E.L.A. was using Betty Boop as a functional aesthetic component of the products, not as a trademark.  The Ninth Circuit further concluded that allowing Plaintiff Fleischer to assert a trademark infringement claim would run afoul of the Supreme Court's decision in Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003), by preventing the Betty Boop character from ever entering the public domain.

Circuit Judge Susan P. Graber filed a dissenting opinion taking issue with the majority's conclusions as to the chain of title issue on Plaintiff Fleischer's copyright infringement claim.

The case cite is Fleischer Studios, Inc. v. A.V.E.L.A., Inc., No. 09-56317 (9th Cir. Feb. 23, 2011).

Lahoti v. Vericheck, Ninth Circuit Affirms District Court on Second Appeal

Second time was the charm for this case.

Vericheck, Inc. provides electronic financial transaction processing services including check verification and related services.  It obtained a Georgia state registration for its VERICHECK service mark but was unable to obtain federal registration because of a prior registration by an Arizona company.  Vericheck also unsuccessfully attempted to obtain the domain name vericheck.com in 1999.

David Lahoti acquired the vericheck.com domain name in 2003, claiming he contemplated beginning a business of transaction verification and security.  But the vericheck.com website only redirected visitors to a website containing search results, including links to Vericheck's competitors.  Lahoti earned income when users clicked links on the website to which they were redirected.

Vericheck contacted Lahoti in 2004 and offered to purchase the vericheck.com domain name but negotiations ended.  Vericheck filed an arbitration complaint under the Uniform Domain Name Dispute Resolution Policy and the arbitrator ordered the transfer of the vericheck.com domain name to Vericheck. 

Instead of doing so, Lahoti filed a declaratory judgment action seeking a declaration that he did not violate the Lanham Act's cybersquatting or trademark infringement provisions.  Vericheck then counterclaimed alleging violations of, in part, the Lanham Act and the Anti-Cybersquatting Consumer Protection Act ("ACPA").

On cross motions for summary judgment, the District Court concluded that Lahoti had acted in a bad faith attempt to profit from use of the vericheck.com domain name.

In a subsequent bench trial, the District Court found for Vericheck on all claims, concluding in relevant part that the VERICHECK mark was inherently distinctive.  On the first appeal, the Ninth Circuit vacated the District Court's opinion and remanded for further proceedings, concluding that the District Court's reasoning with respect to the question of whether the mark was distinctive was contrary to federal trademark law.  The Ninth Circuit's opinion in the first appeal can be found here.

On remand, the District Court again concluded that the VERICHECK mark was suggestive and again found in favor of Vericheck.

In the second appeal, the Ninth Circuit concluded that the District Court had followed its instructions on remand and properly discussed the principles on the issue of distinctiveness that the Ninth Circuit had articulated.  The Ninth Circuit further held that the District Court's conclusion based on its analysis was not clearly erroneous and therefore affirmed the District Court's finding that the VERICHECK mark is distinctive.

The Ninth Circuit further affirmed the District Court's finding of a likelihood of confusion, its finding of violations of the ACPA and the Washington Consumer Protection Act, and its award of attorneys' fees to Vericheck.

The case cite is Lahoti v. Vericheck, Inc., No. 10-35388 (9th Cir. Feb. 16, 2011).

Ninth Circuit Rejects "Identical or Nearly Identical" Standard for Dilution Claims Under the TDRA

Levi Strauss sued Abercrombie & Fitch in 2007 claiming, in relevant part, that Abercrombie's stitching design used on the back pockets of its jeans diluted Levi's registered stitching design also used on the back pockets of its jeans.

The District Court entered judgment in favor of Abercrombie on Levi's claim for dilution under the Trademark Dilution Revision Act of 2006 ("TDRA"), concluding that Levi had not established that Abercrombie was using a mark "identical or nearly identical" to Levi's stitching design mark (pictures of the two designs are attached to the Ninth Circuit's opinion).  The question on appeal was whether this "identical or nearly identical" standard survived the enactment of the TDRA, which replaced the Federal Trademark Dilution Act ("FTDA").

The Ninth Circuit first traced the origins of the "identical or nearly identical" standard back to New York state dilution law, which pre-dated the adoption of the FTDA in 1996.  The court then examined Ninth Circuit case law applying the standard, which tied it to the language, legislative history and purpose of the FTDA.

The Ninth Circuit then described the passage of the TDRA and ultimately concluded that, for a variety of reasons, the "identical or nearly identical" standard did not survive the enactment of the statute.  In particular, the court noted that "[s]everal aspects of the TDRA are worth noting":

The first . . . is that Congress did not merely make surgical linguistic changes to the FTDA in response to Moseley.  Instead, Congress created a new, more comprehensive federal dilution act.  Furthermore, any reference to the standards commonly employed by the courts of appeals--"identical," "nearly identical," or "substantially similar"--are absent from the statute.  The TDRA defines "dilution by blurring" as the "association arising from the similarity between a mark or a trade name and a famous mark that impairs the distinctiveness of the famous mark." . . .  Moreover, in the non-exhaustive list of dilution factors that Congress set forth, the first is "[t]he degree of similarity between the mark or trade name and the famous mark." . . .  Thus, the text of the TDRA articulates a different standard for dilution from that which we utilized under the FTDA.

In looking further at the statutory language of the TDRA, the Ninth Circuit concluded that it did "not require that a plaintiff establish that the junior mark is identical, nearly identical or substantially similar to the senior mark in order to obtain injunctive relief."  Instead, a plaintiff must show that the junior mark "is likely to impair the distinctiveness of the famous mark" based on the factors set forth in the TDRA, which include the degree of similarity of the marks.

The court also rejected Abercrombie's argument that post-TDRA Ninth Circuit cases demonstrated that the "identical or nearly identical" standard survived passage of the TDRA, concluding that the issue was not "presented or squarely resolved" in any of the three cases (Visa Int'l Serv. Ass'n v. JSL Corp., No. 08-15206, 2010 WL 2559003 (9th Cir. June 28, 2010); Jada Toys, Inc. v. Mattel, Inc., 518 F.3d 628 (9th Cir. 2008); Perfumebay.com Inc. v. eBay, Inc., 506 F.3d 1165 (9th Cir. 2007)).

Finally, the Ninth Circuit held that it could not conclude that the District Court's legal error in employing the "identical or nearly identical" standard was harmless as the use of the standard "permeated the court's analysis and provided the basis upon which the court evaluated the evidence."  The Ninth Circuit thus reversed the District Court's judgment in favor of Abercrombie on Levi's claim under the TDRA.

The case cite is Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., No. 09-16322 (9th Cir. Feb. 8, 2011).

Seventh Circuit Tackles Meaning of "Exceptional" for Purposes of Attorneys' Fees Award in Lanham Act Cases

Defendant Anodyne Therapy, LLC successfully defended against Plaintiff Nightingale Home Healthcare, Inc.'s Lanham Act claim and the district court awarded Anodyne its attorneys' fees in the amount of $72,747 under Section 1117(a) of the Lanham Act, which allows such an award to the prevailing party in "exceptional cases."  Nightingale appealed, claiming that it was not an exceptional case justifying such an award.

The Seventh Circuit, Judge Posner writing, addressed at some length the meaning of the word "exceptional" under this section of the Lanham Act.

First, the Seventh Circuit summarized the varying standards employed by its sister circuits.  The Fourth, Sixth, Tenth and D.C. Circuits applied different tests depending on whether the plaintiff or the defendant prevailed.  The Second, Fifth, and Eleventh Circuits require prevailing defendants and plaintiffs to prove that their opponent litigated in bad faith.  The First, Third, Eighth, and Ninth Circuits do not distinguish between prevailing plaintiffs and defendants and do not require a showing of bad faith (though the Ninth Circuit has used language that could equate to bad faith).

It is surprising to find so many different standards for awarding attorneys' fees in Lanham Act cases.  The failure to converge may be an illustration of "circuit drift": the heavy caseloads and large accumulations of precedent in each circuit induce courts of appeals to rely on their own "circuit law," as if each circuit were a separate jurisdiction rather than all being part of a single national judiciary enforcing a uniform body of federal law.  But whether the difference in standards generates actual differences in result is unclear because the opinions avoid commitment by using vague words and explicit escape clauses, with the Tenth Circuit's catchall ("perhaps for other reasons as well") taking the prize.

Given the variety of standards, the Seventh Circuit started with "first principles," looking to the reasons for the limited exception to the American Rule under which each party bears its own litigation costs.  Of particular interest is the explicit acknowledgment that parties may use litigation for anti-competitive purposes:

A more practical concern is the potential for businesses to use Lanham Act litigation for strategic purposes--not to obtain a judgment or defeat a claim but to obtain a competitive advantage independent of the outcome of the case by piling litigation costs on a competitor.

Ultimately, the Seventh Circuit adopted a standard for "exceptional" cases that it believed "capture[d] the concerns that underlie the various tests and offer[ed] a pathway through the semantic jungle":

We conclude that a case under the Lanham Act is "exceptional," in the sense of warranting an award of reasonable attorneys' fees to the winning party, if the losing party was the plaintiff and was guilty of abuse of process in suing, or if the losing party was the defendant and had no defense yet persisted in the trademark infringement or false advertising for which he was being sued, in order to impose costs on his opponent.

The Seventh Circuit emphasized, however, that the standard was not intended to require an elaborate inquiry into the state of mind of the losing party:

[A] proceeding for an award of attorneys' fees is not a suit; it is a tail dangling from a suit.  We don't want the tail to wag the dog, and this means that an elaborate inquiry into the state of mind of the party from whom reimbursement of attorneys' fees is sought should be avoided.  It should be enough to justify the award if the party seeking it can show that his opponent's claim or defense was objectively unreasonable--was a claim or defense that a rational litigant would pursue only because it would impose disproportionate costs on his opponent--in other words only because it was extortionate in character if not necessarily in provable intention.  That should be enough to make a case "exceptional."

In the case before it, the Seventh Circuit concluded that the facts amply met this standard--Plaintiff's Lanham Act claim had "no possible merit" and the district court found that Plaintiff had made the claim in an attempt to coerce a price reduction from Defendant.  It thus affirmed the district court's award of attorneys' fees and granted Anodyne's motion for its fees and costs on appeal.

The case cite is Nightingale Home Healthcare, Inc. v. Anodyne Therapy, LLC, No. 10-2327 (7th Cir. Nov. 23, 2010).

Recent Copyright and Trademark Cases Filed in the Western District of Washington

Arthemia Int'l SA v. Mohaghegh, No. C10-05812 KLS, filed Nov. 8, 2010

Arthemia International SA, a Swiss corporation, is the exclusive licensee of the Iranian language sitcom "Ghahve Talkh" or "Ghahveye Talkh," which is "about a history professor who travels through time to learn about Persian feudal history."  According to Arthemia, the show is one of the most successful sitcoms in the Iranian language.  Arthemia alleges that Defendant Bardia Mohaghegh, an individual allegedly living in Washington, and possible others, infringed its rights in the series by reproducing, distributing and displaying the series on the website iranproud.com.  Arthemia alleges claims for direct and contributory copyright infringement, violation of Section 1125(a)(2) of the Lanham Act, and conversion.

A copy of the complaint, without exhibits, can be found here (PDF, 11 pages).

Creature, L.L.C. v. Social Creature Media LLC, No. C10-01907 BAT, filed Nov. 22, 2010

 Creature, L.L.C. alleges that it is the owner of the federally registered service mark CREATURE for various advertising and marketing services, including design and web site design services.  Creature alleges that Defendant Social Creature Media LLC infringed Creature's rights in its CREATURE mark by using the mark SOCIAL CREATURE MEDIA in connection with similar services.  Creature alleges claims for trademark infringement under the Lanham Act and unfair competition under federal and/or state law.

A copy of the complaint can be found here (PDF, 8 pages).

Incontestable Trademarks Still Subject to Ownership Challenge

The Second Circuit was presented with a factually complex dispute over ownership of the STOLICHNAYA vodka trademarks.  The Second Circuit's opinion provides a complete recitation of the complex history of transfers of the marks but at a basic level, "the disputed facts involve a series of allegedly unlawful transactions transferring Russia's rights to the marks to privately held Russian companies, who then transferred those rights to non-Russian companies."

On the defendants' motion to dismiss, the District Court dismissed most of the plaintiff's' claims in part on the ground that they did not state a claim because they sought to challenge ownership of marks that had become incontestable under the Lanham Act and plaintiffs had not alleged any of the statutory exceptions to incontestability.

Among other things, the Second Circuit concluded that the District Court had improperly conflated incontestability with the distinct issue of whether a subsequent transfer of the marks was valid and that the plaintiffs remained free to challenge the alleged assignee's ownership of the marks regardless of their incontestability:

The district court's analysis was mistaken in one very important respect: it permitted Allied Domecq to "step into the shoes" of PepsiCo, the previous registrant of the marks, on the ground that under the Lanham Act the term "registrant" includes the "assigns" of a registrant. . . .  Because, the district court reasoned, the marks were incontestable when held by V/O-SPI, they continued to be incontestable when held by Allied Domecq -- an assignee -- and, consequently, FTE's claims failed.  Undoubtedly, the term "registrant" includes its "assigns" under the Act, but we disagree with the district court that this conclusion ends the matter.  The district court was also called upon to inquire whether a valid assignment had ever actually taken place.  This inquiry was required because only after a valid assignment of trademarks does the assignee succeed to the rights of the assignor.

The case cite is Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l N.V., No. 06-3532-cv (2d Cir. Oct. 8, 2010).

Seventh Circuit Affirms Dismissal of Trademark Suit That Was Based on Yahoo! Search Results

Beverly Stayart sued Yahoo! and others for trademark infringement under the Lanham Act and various state law claims in connection with the search results she received when searching her name on Yahoo's search engine.  Specifically, she claimed that the search results improperly gave her endorsement to pornography and online pharmaceuticals in violation of Section 43(a) of the Lanham Act.

The District Court dismissed Stayart's complaint without leave to amend, finding that she lacked standing to sue for trademark infringement under the Lanham Act.  The Seventh Circuit readily agreed, concluding that notwithstanding the activities Stayart alleged she engaged in ("humanitarian efforts on behalf of baby seals, wolves and wild horses; what she describes as 'scholarly posts' on a website; two poems that appear on a Danish website; and genealogy research"), she did not have the necessary commercial interest in her name to establish standing under the Lanham Act.

The case cite is Stayart v. Yahoo! Inc., No. 09-3379 (7th Cir. Sept. 30, 2010).

Seventh Circuit Reverses Personal Jurisdiction Win for GoDaddy

uBID, Inc., a Chicago-based company, sued The GoDaddy Group, Inc. in Illinois alleging that GoDaddy violated the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. Section 1125(d), by registering domain names that are confusingly similar to uBID's trademarks and domain names and profiting from that action by selling advertisements for the websites.

GoDaddy, which is headquartered in Arizona, moved to dismiss uBID's complaint for lack of personal jurisdiction and the District Court granted the motion.  The District Court found that GoDaddy's contacts with Illinois included only two Illinois-registered domain names alleged in uBID's complaint, which contacts the court concluded were "created at the initiative of Illinois residents" and therefore could not be attributed to GoDaddy.  And given that GoDaddy enters into thousands of contracts across the country, the court concluded that GoDaddy should not reasonably expect to be subject to personal jurisdiction in each of its customers' states.

The Seventh Circuit agreed with the District Court that GoDaddy was not subject to general jurisdiction in Illinois but disagreed with the court as to specific jurisdiction.  The Seventh Circuit concluded that "GoDaddy has thoroughly, deliberately, and successfully exploited the Illinois market," citing GoDaddy's extensive national advertising, which reached Illinois customers, and significant national sales including many millions of dollars annually from Illinois customers.  The court also concluded that GoDaddy's Illinois contacts and uBID's claims were sufficiently related to make it reasonable for GoDaddy to be sued in Illinois and found "no unfairness in requiring GoDaddy to defend that lawsuit in the courts of the state where, through the very activity giving rise to the suit, it continues to gain so much."

Circuit Judge Manion filed a concurring opinion agreeing with the ultimate conclusion that personal jurisdiction in Illinois was proper but arguing for "a more limited formula for connecting GoDaddy's contacts in Illinois with uBID's claim."

The case cite is uBID, Inc. v. The GoDaddy Group, Inc., No. 09-3927 (7th Cir. Sept. 29, 2010).

Ninth Circuit Adopts Test for an Acquiescence Defense in Trademark Infringement Cases

In an appeal over a business deal that included the transfer of trademarks gone awry, the Ninth Circuit took the opportunity to adopt a test to apply when assessing the equitable defense of acquiescence in trademark infringement cases.

Agreeing with the Eleventh Circuit that the equitable defenses of acquiescence and laches are very similar, the Ninth Circuit adopted the Eleventh Circuit's definition of a prima facie case for acquiescence.  Specifically, the Ninth Circuit held that the elements of a prima case of acquiescence are:

(1) the senior user actively represented that it would not assert a right or a claim; (2) the delay between the active representation and assertion of the right or claim was not excusable; and (3) the delay caused the defendant undue prejudice.

With respect to the third element, the Ninth Circuit discussed the type of prejudice necessary to the defense:

[P]rejudice in the context of acquiescence inherently must involve reliance on the senior user's affirmative act or deed, and such reliance must be reasonable.  When inquiring into the reasonableness of reliance, a district court must examine both the content of the affirmative act and the context in which that act was performed.  In addition to their relevance with respect to undue prejudice, findings with respect to reliance also may inform whether the delay between the active representation and assertion of the right or claim was excusable.

The case cite is Seller Agency Council, Inc. v. Kennedy Center for Real Estate Educ., Inc., No. 08-56791 (9th Cir. Sept. 3, 2010).

"Delicious" Trademark Dispute Sent Back for Trial

Fortune Dynamic has been designing and selling footwear for young women branded with the DELICIOUS trademark since 1997.  In 1999, Fortune registered the DELICIOUS mark for footwear.

In 2007, Victoria's Secret launched a personal care product line under the trademark BEAUTY RUSH.  As part of a promotion for that product line, Victoria's Secret gave away and sold a pink tank top with the word "Delicious" written across the chest in silver typescript.  "Yum" was written in much smaller lettering on the back of the top and "beauty rush" appeared in the back collar.

Fortune sued Victoria's Secret, claiming that Victoria's Secret's use of "Delicious" on the tank top infringed Fortune's rights in its DELICIOUS trademark.  The District Court denied Fortune's motion for a preliminary injunction and granted Victoria's Secret's motion for summary judgment concluding that the likelihood of confusion factors weighed in favor of Victoria's Secret and that Fortune's claims were barred by the fair use defense.

Setting the theme for its analysis, the Ninth Circuit started its discussion off with the "well-established" principle that summary judgment is generally disfavored in trademark cases.  In light of that principle, the Ninth Circuit reversed the grant of summary judgment, concluding that both questions answered by the District Court should have been answered by a jury:

We are far from certain that consumers were likely to be confused as to the source of Victoria's Secret's pink tank top, but we are confident that the question is close enough that it should be answered as a matter of fact by a jury, not as a matter of law by a court.

. . . .

The same is true of Victoria's Secret's reliance on the Lanham Act's fair use defense.  Although it is possible that Victoria's Secret used the term "Delicious" fairly--that is, in its "primary, descriptive sense"--we think that a jury is better positioned to make that determination.

As to the likelihood of confusion factors, the Ninth Circuit disagreed with the District Court and concluded that a reasonable jury could find that most of the factors weighed in favor of Fortune rather than Victoria's Secret.  The Ninth Circuit also held that the District Court abused its discretion in excluding survey evidence offered by Fortune, noting that its shortcomings went to the weight of the survey not its admissibility.

The Ninth Circuit then addressed Victoria's Secret's fair use defense, acknowledging its merit but ultimately leaving it for the jury to decide:

[I]n light of evidence suggesting that Victoria's Secret used the term "Delicious" as a trademark and suggestively rather than descriptively, together with Victoria's Secret's failure to investigate the possibility that DELICIOUS was already being used as a trademark, there remains a genuine issue of material fact as to whether Victoria's Secret used "Delicious" unfairly.

The Ninth Circuit opinion offers a thoughtful, well-written discussion of the fair use defense, hitting the high points of the defense, including how to determine whether a term is being used as a mark and whether a term is being used only to describe goods or services.

The case cite is Fortune Dynamic, Inc. v. Victoria's Secret Stores Brand Mgmt., Inc., No. 08-56291 (9th Cir. Aug. 19, 2010).

Religion and Trademark Law

The General Conference Corporation of Seventh-day Adventists is a corporation formed in 1863, marking the official organization of the Seventh-day Adventist Church.  The corporation holds title to various registered marks including "Seventh-day Adventist," "Adventist," and "General Conference of Seventh-day Adventists."  It also used "SDA" as an acronym for "Seventh-day Adventist" but has not registered the acronym.

The defendant, Walter McGill, was originally baptized in a Seventh Day Adventist church affiliated with the plaintiffs.  McGill later separated from the church due to a theological dispute and formed his own church called "A Creation Seventh Day & Adventist Church," which name he said came from a divine revelation.  He apparently was aware that plaintiffs had trademarked "Seventh Day Adventist" but used the name anyway, believing he was divinely mandated to do so.

Plaintiffs sued McGill alleging a number of federal and state law claims including trademark infringement, unfair competition and dilution under the Lanham Act.

McGill filed a motion to dismiss arguing that (1) the District Court lacked subject matter jurisdiction because it could not decide the trademark question without resolving an underlying religious doctrine dispute; (2) the Religious Freedom Restoration Act rendered trademark law inapplicable to him; and (3) Seventh-Day Adventism is a religion and therefore generic and not capable of being trademarked.  The District Court concluded that trademark law did apply, that McGill had waived the RFRA defense, and the issue of whether the trademark term was generic was a factual issue that could not be resolved on a motion to dismiss.

The plaintiffs later moved for summary judgment, which the District Court granted with respect to the infringement claim relating to "Seventh-day Adventist" but denied as to "Adventist" and "SDA."

As to McGill's claim that the District Court lacked subject matter jurisdiction because it could not apply neutral principles of trademark law without resolving an underlying doctrinal dispute (i.e., "who are the 'true' Seventh-day Adventists"), the Sixth Circuit disagreed.  It concluded that "[t]rademark law will not turn on whether the plaintiffs' members or McGill and his congregants are the true believers" and therefore affirmed the District Court's (and its own) subject matter jurisdiction over the case.

The Sixth Circuit noted that McGill's RFRA defense had merit as a factual matter but ultimately concluded that he could not claim the benefit of RFRA because it did not apply in suits between private parties.  The court thus sided with the Seventh and Ninth Circuits, which had reached a similar conclusion.

The Sixth Circuit also appeared to acknowledge the merit of McGill's genericness argument, noting that "well-known terms that society understands to refer to a particular faith in general are generic, and no single party can prevent others from using them."  But because whether a name is generic is a question of fact, the Sixth Circuit concluded that "[i]t would be inappropriate to conclude as a matter of law, regardless of the evidence that could be adduced . . . that the public considers 'Seventh-day Adventist' to refer generically to a religion."

Finally, the Sixth Circuit affirmed the grant of summary judgment on the trademark infringement claim relating to the mark "Seventh-day Adventist," specifically addressing only McGill's assertion that the District Court misjudged the relevant factors in light of the relevant public:

McGill argues that the relevant public--those who believe in the imminence of Christ's return and that the Sabbath should be observed on Saturday--are so discerning that there is a genuine issue of material fact about the likelihood that they would confuse McGill's church for the plaintiffs' church.  But while it may indeed be hard to envision a person mistakenly joining the wrong church, it is not at all difficult to imagine a person consuming McGill's published materials and ascribing his teachings to the General Conference, especially in light of the relatedness of the parties' services and similarity of the marks.

The case cite is Gen. Conference Corp. of Seventh-Day Adventists v. McGill, No. 09-5723 (6th Cir. Aug. 10, 2010).

ADVERTISING.COM, Generic or Descriptive?

AOL owns trademark registrations for stylized representations of the mark ADVERTISING.COM.  The parties agreed that the genus of the services AOL offered under these marks is online or Internet advertising.  AOL sued Advertise.com claiming that it infringed AOL's trademark rights by using ADVERTISE.COM and a stylized version of that mark that was confusingly similar to AOL's stylized ADVERTISING.COM marks.

AOL moved for a preliminary injunction, which the District Court granted, enjoining Advertise.com from using any design mark that is confusingly similar to AOL's stylized ADVERTISING.COM marks and from using ADVERTISE.COM or any other name confusingly similar to ADVERTISING.COM.  The District Court concluded that AOL was likely to show that the ADVERTISING.COM marks--including the standard text mark--are descriptive and therefore protectable.

Advertise.com appealed to the Ninth Circuit, arguing generally that the standard text mark ADVERTISING.COM is generic and therefore not protectable.  It did not appeal the part of the preliminary injunction enjoining Advertise.com from using any design mark that was confusingly similar to AOL's stylized ADVERTISING.COM marks.

The Ninth Circuit disagreed with the District Court's conclusion that AOL was likely to prevail on the merits and found (after a somewhat lengthy analysis) that the record demonstrated that Advertise.com was likely to rebut the presumption of validity afforded AOL's ADVERTISING.COM mark and prevail on its claim that the mark was generic.  The Ninth Circuit thus reversed and vacated that portion of the preliminary injunction that enjoined Advertise.com from using the name ADVERTISE.COM or any other name confusingly similar to AOL's ADVERTISING.COM marks.

The case cite is Advertise.com, Inc. v. AOL Advertising, Inc., Nos. 10-55069, 10-55071 (9th Cir. Aug. 3, 2010).

"Who owns Bratz?"

Despite years of litigation, that still appears to be an open question.

In an as always entertaining opinion written by Chief Judge Kozinski, the Ninth Circuit handed a big win to MGA Entertainment in its long-running battle with Mattel over the Bratz line of dolls.

The dispute has its origins in the idea of Carter Bryant for the line of Bratz dolls, which he pitched to MGA while still employed by Mattel, designing fashion and hair styles in the "Barbie Collectibles" department.  MGA liked the idea and Bryant signed a consulting agreement with MGA.  Bryant gave Mattel notice but before his employment ended, he provided preliminary sketches and prepared a preliminary sculpt for the Bratz to MGA.  MGA subsequently released the Bratz dolls, which apparently were a huge success.

When Mattel learned of Bryant's involvement with the Bratz, the lawsuits began.  Those consolidated proceedings were ultimately divided into two phases with phase 1 addressing ownership claims relating to the Bratz.  The present appeal dealt with equitable orders entered by the District Court at the conclusion of phase 1.  (Phase 2 was pending and would deal with the remaining claims.)

In phase 1, the jury found that Bryant thought of the "Bratz" and "Jade" names and created the preliminary sketches and sculpt while employed by Mattel.  Along with a finding that MGA committed three state-law violations relating to Bryant's involvement with the Bratz, the jury found MGA liable for copyright infringement and awarded Mattel $10 million in damages (compared to the more than $1 billion Mattel apparently had sought).

Based on these jury findings, the District Court entered equitable orders.  With respect to the state-law violations, the court imposed a constructive trust over all the trademarks, effectively transferring MGA's Bratz trademark portfolio to Mattel.  And with respect to the copyright claim, the court enjoined MGA from producing or marketing essentially all Bratz female dolls and any future dolls substantially similar to the copyrighted Bratz works.  "In effect, Barbie captured the Bratz."

The Ninth Circuit vacated the constructive trust imposed over all Bratz-related trademarks finding that it was overbroad.  The Ninth Circuit questioned whether Bryant assigned his "ideas" for the Bratz to Mattel under his employment agreement.  The agreement assigned "inventions" to Mattel which were defined to include a number of items but not specifically "ideas."  Although the agreement could be interpreted to include ideas, the Ninth Circuit concluded that the District Court erred in finding that it clearly covered ideas.  But the Ninth Circuit left the issue to be addressed by the trial court on remand because it vacated the constructive trust on other grounds.

The Ninth Circuit ultimately vacated the constructive trust on the ground that it was overbroad because it transferred the entire Bratz trademark portfolio to Mattel despite the fact that the value of the brand had been significantly increased by MGA's own efforts:

It is not equitable to transfer this billion dollar brand--the value of which is overwhelmingly the result of MGA's legitimate efforts--because it may have started with two misappropriated names.  The district court's imposition of a constructive trust forcing MGA to hand over its sweat equity was an abuse of discretion and must be vacated.

The Ninth Circuit also vacated the District Court's injunction on the copyright claim, which enjoined MGA from producing the Bratz dolls or any other substantially similar dolls.  The Ninth Circuit concluded that the District Court had erred in holding that Bryant's employment agreement with Mattel clearly assigned works made outside the scope of Bryant's employment.  Rather, because the agreement was ambiguous (stating that he assigned inventions created "at any time during my employment by the Company"), the issue should have been submitted to the jury.  That error was sufficient to require vacating the copyright injunction.

In light of its decision vacating the equitable orders and remanding for essentially a do-over, the Ninth Circuit also addressed MGA's appeal of the District Court's copyright rulings.  Specifically, the Ninth Circuit discussed the trial court's decision with respect to the scope of copyright protection afforded the Bratz sketches and sculpt created by Bryant (assuming for purposes of the discussion that Mattel owned those works).  In particular, the court focused on the distinction between an idea and a particular expression of an idea; the latter is protected by copyright while the former is not.

As to the doll sculpt, the Ninth Circuit concluded that the District Court had erred in affording broad protection to it and instead held that it was entitled to only "thin" protection against virtually identical copying.

As to the sketches, although the Ninth Circuit agreed with the District Court's conclusion that they were entitled to broad copyright protection against substantially similar works, it held that the trial court erred in failing to filter out all of the unprotectable elements of the sketches.  Specifically, the Ninth Circuit held that "Mattel can't claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing--these are all unprotectable ideas."

Chief Judge Kozinski concluded the opinion with another Barbie reference:  "America thrives on competition; Barbie, the all-American girl, will too."

The case cite is Mattel, Inc. v. MGA Entm't, Inc., No. 09-55673 (9th Cir. July 22, 2010).

Third Circuit Finds Ample Evidence of Likelihood of Confusion Between ForsLean and Forsthin Marks

The Third Circuit had little positive to say about a District Court's analysis of the likelihood of confusion question in this trademark battle between the owners of the marks ForsLean and Forsthin.

The plaintiff, Sabinsa Corporation, an ingredient supplier for "nutraceutical" manufacturers, markets a product derived from the plant Coleus forskohlii, which is apparently intended to promote lean body mass.  Sabinsa marketed its ForsLean product to nutraceutical manufacturers and directly to the public.

The defendant, Creative Compounds, also supplies ingredients to the nutraceutical industry.  In 2004, it began selling its forskohlin product under the name Forsthin, which prompted a cease-and-desist letter from Sabinsa.

The matter ultimately ended up in litigation in federal district court in New Jersey and, following a bench trial, the District Court found in favor of Creative Compounds, concluding that there was no likelihood of confusion.

The Third Circuit strongly disagreed with the District Court's assessment of the likelihood of confusion.

Near the beginning of its analysis, the Third Circuit noted that it had reversed the same district court judge's likelihood of confusion analysis in an earlier case for similar errors made here.  The Third Circuit then proceeded to reject almost all of the District Court's conclusions on the likelihood of confusion factors, often making rather pointed remarks about the court's analysis.

On the similarity of the marks factor, the Third Circuit concluded that the District Court's reasoning contained "clear errors" in that the court focused on "minute differences" in the logos while "ignoring evidence" that the marks were often used in plain text without graphics.  It also took issue with the court's finding that the words "lean" and "thin" would convey different mental impressions to consumers notwithstanding its recognition that the terms are interchangeable to consumers.  In the end, the Third Circuit concluded that this factor favored Sabinsa.

The Third Circuit similarly took issue with the District Court's analysis of the strength of the mark factor, finding that the court had failed to analyze the conceptual or commercial strength of the ForsLean mark and had conflated the factors by referring to actual confusion and consumer sophistication in connection with the strength factor.  Again, the Third Circuit concluded that this factor actually favored Sabinsa.

With respect to Creative Compounds' intent in adopting the Forsthin mark, the Third Circuit noted that the District Court "ignored whole swaths of evidence and failed to make any subordinate findings regarding intent" and therefore it was "impossible to determine whether it appropriately comprehended the standard."  But, because this factor involved disputed factual issues, it could not conclude that the factor favored either party.

Ultimately, the Third Circuit concluded that six of the nine factors favored Sabinsa as a matter of law.  Concluding that remand to re-weigh the factors under the "proper legal standards" would serve no useful purpose and would waste judicial resources, the Third Circuit reversed and remanded for entry of judgment in favor of Sabinsa.

The case cite is Sabinsa Corp. v. Creative Compounds, LLC, No. 08-3255 (3d Cir. July 9, 2010).

Ninth Circuit Tackles Nominative Fair Use in Domain Name Case

The defendants, Farzad and Lisa Tabari, are auto brokers, specializing in Lexus vehicles, who contacted authorized dealers, solicited bids and arranged for customers to buy from the dealers.  They offered these services at buy-a-lexus.com and buyorleaselexus.com.

Toyota objected to, among other things, the Tabaris' use of the Lexus mark in their domain names, claiming that such use was likely to cause confusion as to the source of their website.  After a bench trial, the District Court found infringement, ordered the Tabaris (who represented themselves both at trial and on appeal) to stop using their domain names and enjoined them from using the Lexus mark in any other domain name.

The Ninth Circuit vacated the injunction, concluding that it was overbroad based on the nominative fair use doctrine.

The Ninth Circuit, Chief Judge Kozinski writing, first noted that the District Court erroneously applied the Sleekcraft likelihood of confusion test and concluded that the domain names infringed the Lexus trademark.  But that test does not apply when nominative fair use is at issue (e.g., where the defendant uses the mark to refer to the trademarked product itself).  Instead, in nominative fair use cases, the court asks whether "(1) the product was 'readily identifiable' without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder."  If the nominative use satisfies all of these factors, it does not infringe; if it does not, the court may order the defendant to modify use of the mark so that all of the factors are satisfied but "it may not enjoin nominative use of the mark altogether."

The breadth of the injunction, which precluded the use of Lexus in any domain name, troubled the Ninth Circuit:

A trademark injunction, particularly one involving nominative fair use, can raise serious First Amendment concerns because it can interfere with truthful communication between buyers and sellers in the marketplace. . . .  To uphold the broad injunction entered in this case, we would have to be convinced that consumers are likely to believe a site is sponsored or endorsed by a trademark holder whenever the domain name contains the string of letters that make up the trademark.

But the Ninth Circuit was clearly not convinced that consumers were likely to have that belief.  Instead, it concluded that the Tabaris needed to communicate that they specialized in Lexus vehicles and using the Lexus mark in their domain names accomplished that, even if that wasn't the only way to communicate the nature of their business.  "One way or the other, the Tabaris need to let their consumers know that they are brokers of Lexus cars, and that's nearly impossible to do without mentioning Lexus, . . . be it via domain name, metatag, radio jingle, telephone solicitation or blimp."

On a procedural point, the Ninth Circuit also clarified the burden of proof on a nominative fair use defense:

A defendant seeking to assert nominative fair use as a defense need only show that it used the mark to refer to the trademarked good, as the Tabaris undoubtedly have here.  The burden then reverts to the plaintiff to show a likelihood of confusion.

The Ninth Circuit thus vacated and remanded for "[a]t the very least," modification of the junction to allow some use of the Lexus mark in domain names by the Tabaris, noting that "[t]rademarks are part of our common language, and we all have some right to use them to communicate in truthful, non-misleading ways."

Notably, the Ninth Circuit (or at least Chief Judge Kozinski) had quite a bit to say about consumer understanding and expectations with respect to domain names and websites:

When a domain name making nominative use of a mark does not actively suggest sponsorship or endorsement, the worst that can happen is that some consumers may arrive at the site uncertain as to what they will find.  But in the age of FIOS, cable modems, DSL and T1 lines, reasonable, prudent and experienced internet consumers are accustomed to such exploration by trial and error. . . .  They skip from site to site, ready to hit the back button whenever they're not satisfied with a site's contents.  They fully expect to find some sites that aren't what they imagine based on a glance at the domain name or search engine summary.  Outside the special case of trademark.com, or domains that actively claim affiliation with the trademark holder, consumers don't form any firm expectations about the sponsorship of a website until they've seen the landing page--if then.  This is sensible agnosticism, not consumer confusion. . . .  So long as the site as a whole does not suggest sponsorship or endorsement by the trademark holder, such momentary uncertainty does not preclude a finding of nominative fair use.

In his concurring opinion, Judge Fernandez  felt "compelled to disassociate" himself from statements such as these because he could not "concur in essentially factual statements whose provenance is our musings rather than the record and determinations by trier of fact."

As a somewhat interesting side note, the Ninth Circuit concluded its opinion with a comment regarding the Tabaris' pro se status:

Many of the district court's errors seem to be the result of unevenly-matched lawyering, as Toyota appears to have taken advantage of the fact that the Tabaris appeared pro se. . . .  To avoid similar problems on remand, the district court might consider contacting members of the bar to determine if any would be willing to represent the Tabaris at a reduced rate or on a volunteer basis.

The concurring opinion specifically stated that he did not join in that portion of the majority's opinion, stating that "[t]o the extent that the majority sees [the Tabaris'] activities as especially socially worthy and above reproach, I do not agree."  Nonetheless, he concurred that the District Court had erred in its handling of the nominative fair use defense.

The case cite is Toyota Motor Sales, U.S.A., Inc. v. Tabari, No. 07-55344 (9th Cir. July 8, 2010).

Ninth Circuit Affirms Summary Judgment on Dilution Claim in Favor of Visa

Joseph Orr runs eVisa, a multilingual education and information business that operates exclusively on the Internet at www.evisa.com.  The name eVisa came from an English language tutoring service called "Eikaiwa Visa" that Orr ran while living in Japan.

Visa sued JSL Corporation (through which eVisa operated) claiming that eVisa was likely to dilute the Visa trademark.  The District Court granted summary judgment in favor of Visa and JSL appealed.

In a brief opinion, authored by Chief Judge Kozinski, the Ninth Circuit affirmed, readily concluding that summary judgment was appropriate on Visa's claim of dilution by blurring as the marks were "effectively identical" and Visa is a strong trademark.  The Ninth Circuit also rejected JSL's arguments regarding the use of the word "visa" for its common English definition noting that for trademark purposes, the significant factor is the way the word is used in a particular context:

In the context of anti-dilution law, the "particular context" that matters is use of the word in commerce to identify a good or service.  There are, for instance, many camels, but just one Camel; many tides, but just one Tide.  Camel cupcakes and Tide calculators would dilute the value of those marks.  Likewise, despite widespread use of the word visa for its common English meaning, the introduction of the eVisa mark to the marketplace means that there are now two products, and not just one, competing for association with that word.  This is the quintessential harm addressed by anti-dilution law.

The case cite is Visa Int'l Serv. Ass'n v. JSL Corp., No. 08-15206 (9th Cir. June 28, 2010).

NFL's IP Licensing Activities Constitute Concerted Action Under Section 1 of the Sherman Act

In a unanimous opinion, the Supreme Court held that the licensing activities of the NFL and a corporate entity the 32 NFL teams formed to manage their intellectual property constituted "concerted action" that is not "categorically beyond" the coverage of Section 1 of the Sherman Act, which prohibits a "contract, combination . . . or, conspiracy" in restraint of trade.

The case arose after National Football League Properties--the entity the NFL teams formed to develop, license and market their intellectual property--declined to renew the plaintiff's non-exclusive license and granted Reebok an exclusive 10-year license to manufacture and sell trademarked headwear for all 32 NFL teams.

Although the Supreme Court concluded that the NFL's IP licensing activities were not beyond the coverage of Section 1, it remanded for consideration of the legality of the "concerted action" under the Rule of Reason.

The case cite is American Needle, Inc. v . National Football League, No. 08-661 (S.Ct. May 24, 2010).

Sixth Circuit Adopts "A Kind Of" Rebuttable Presumption in Certain Dilution by Tarnishment Cases

In a divided opinion, the Sixth Circuit decided the question of whether:

the plaintiff, an international lingerie company that uses the trade name designation "Victoria's Secret" has a valid suit for injunctive relief against the use of the name "Victor's Little Secret" or "Victor's Secret" by the defendants, a small retail store in a mall in Elizabethtown, Kentucky, that sells assorted merchandise, including "sex toys" and other sexually oriented products.

The District Court issued the injunction, concluding that even though the parties do not compete in the same market, the junior mark, "Victor's Little Secret," because it is "sex related," disparages and tends to reduce the positive associations and selling power of the "Victoria's Secret" mark.

The question on appeal was whether the plaintiff's request for injunctive relief satisfied the standards of the Trademark Dilution Revision Act of 2006 (TDRA), which had been intended to overrule the Supreme Court's interpretation of the earlier version of the Act in the same case (e.g., Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003)).

In that earlier decision, the Supreme Court concluded that the statutory language at the time required a showing of "actual dilution" rather than merely a "likelihood of dilution."  Congress, however, rejected the conclusion and passed the TDRA providing for injunctive relief in connection with a junior mark "that is likely to cause dilution by blurring or dilution by tarnishment[.]"

 Applying this "likelihood of dilution by tarnishment" standard, the Sixth Circuit concluded that there "appears to be a clearly emerging consensus in the case law . . . that the creation of an 'association' between a famous mark and lewd or bawdy sexual activity disparages and defiles the famous mark and reduces the commercial value of its selling power."  This "consensus" apparently was based on eight federal cases that concluded, according to the Sixth Circuit, that "a famous mark is tarnished when its mark is semantically associated with a new mark that is used to sell sex-related products" and the Sixth Circuit found "no exceptions in the case law that allow such a new mark associated with sex to stand."

The Sixth Circuit also relied upon the fact that, according to the House Judiciary Committee Report, the TDRA intended to reduce the burden of evidentiary production on the holder of the famous mark.  Thus, in light of what the Sixth Circuit called the "burden-of-proof problem," the Sixth Circuit concluded that the TDRA created "a kind of rebuttable presumption, or at least a very strong inference, that a new mark used to sell sex-related products is likely to tarnish a famous mark if there is a clear semantic association between the two."  In somewhat broader statements, the Sixth Circuit stated that the

new law seems designed to protect trademarks from any unfavorable sexual associations.  Thus, any new mark with a lewd or offensive-to-some sexual association raises a strong inference of tarnishment.  The inference must be overcome by evidence that rebuts the probability that some consumers will find the new mark both offensive and harmful to the reputation and the favorable symbolism of the famous mark.

As applied to the case before it, the Sixth Circuit concluded that the defendants had failed to offer evidence "that there is no real probability of tarnishment."  Therefore, although the court agreed that the tarnishing effect on the senior mark was "somewhat speculative," there was "no evidence to overcome the strong inference" that the Sixth Circuit concluded applied to the case.

Circuit Judge Moore wrote a dissenting opinion arguing that the plaintiff had failed to meet its burden to show that the junior mark is likely to dilute the senior mark and taking issue with the majority's adoption of the rebuttable presumption (or strong inference):

With its conclusion that there is sufficient evidence of harm to the reputation of the VICTORIA'S SECRET mark based solely on the sexual nature of the junior mark, the majority sanctions an almost non-existent evidentiary standard and, in the process, essentially eliminates the requirement that a plaintiff provide some semblance of proof of likelihood of reputational harm in order to prevail on a tarnishment claim, despite the plain language of [the TDRA].

The dissent pointed to the limited evidence of tarnishment proffered by the plaintiff (consisting of an affidavit from an Army Colonel indicating that an association was made between the two marks and a statement from an officer of plaintiff regarding the "sexy and playful" image that plaintiff strove to maintain while avoiding "sexually explicit or graphic imagery").

Perhaps more notably, the dissent highlighted an issue that went unaddressed in the majority opinion, namely, the character of the senior mark when applying the "sex-related" rule it appeared to adopt.  Specifically, the dissent noted that the plaintiff admitted that "its own mark is already associated with sex, albeit not with sex novelties."  Therefore, the senior mark was "not entirely separate from the sexual context within which the junior mark . . . operates."  This issue flagged a potential problem in applying the "sex-related" rule adopted by the majority:

The potential problem with simply assuming tarnishment when the junior mark places the senior mark in a sexual context becomes apparent if one considers a different case.  What if the holder of a sex-related senior mark levied a claim of dilution by tarnishment against the holder of a junior mark that was similarly associated with sex?  Would the court be willing to assume without further proof that despite their similar sexual origins the junior mark necessarily tarnishes the senior mark?  Under the majority's reasoning, such an assumption would be appropriate.  This cannot be the law.

Thus, the dissent concluded that under the plain language of the TDRA, "evidence that the junior mark is likely to undermine or alter the positive associations of the senior mark--i.e., evidence that the junior mark is likely to harm the reputation of the senior mark--is precisely the showing required[.]"

The case cite is V Secret Catalogue, Inc. v. Moseley, No. 08-5793 (6th Cir. May 19, 2010).

Denial of Leave to Amend Cancellation Petition for Failing to Submit Filing Fee Arbitrary and Capricious

Fred Beverages, Inc. initially filed a petition to cancel Fred's Capital Management Co.'s trademark registration in a single class and submitted the requisite $300 fee with the petition to cancel.  During the cancellation proceeding, Fred Beverages filed a motion for leave to amend its petition to seek cancellation with respect to four additional classes.  The motion was fulling briefed and Fred Beverages did not submit any additional fee in connection with the motion.

The TTAB denied the motion for leave to amend solely on the basis that it was not accompanied by the fee required under Trademark Rules 2.111(c)(1) and 2.112(b) for filing petitions to cancel.

On appeal, the Federal Circuit reversed.  There is no TTAB rule requiring that the statutory fee accompany a motion for leave to amend a pending petition for cancellation nor is there any such established practice.  In addition, prior TTAB cases suggested that the statutorily required filing fee is not a ground for denying a motion for leave to amend.  Consequently, having departed from established precedent "without a reasoned explanation," the TTAB's decision was reversed as arbitrary and capricious.

The case cite is Fred Beverages, Inc. v. Fred's Capital Mgmt. Co., No. 2010-1007 (Fed. Cir. May 12, 2010).

9th Circuit Rejects "First Sale" Defense in Volkswagen Trademark Case

On the case's second appeal, the Ninth Circuit addressed the "first sale" defense of Au-Tomotive Gold in connection with its sale of marquee license plates bearing Volkswagen badges purchased from Volkswagen.

As relevant to the "first sale" defense, Au-Tomotive purchased Volkswagen badges from a Volkswagen dealer, altered them by removing prongs and sometimes gold-plating them, and mounted them on marquee plates, which were packaged with labels explaining that the plates were not produced or sponsored by Volkswagen.

On the first appeal from summary judgment in favor of Au-Tomotive on all claims, the Ninth Circuit concluded that Au-Tomotive's production and sale of auto accessories bearing Volkswagen's trademarks created a sufficient likelihood of confusion to constitute trademark infringement.  But the Ninth Circuit remanded to the trial court to consider Au-Tomotive's "first sale" and other defenses.  On that remand, the District Court granted summary judgment and a permanent injunction to Volkswagen and Au-Tomotive appealed.

With respect to Au-Tomotive's "first sale" defense, the Ninth Circuit considered both cases addressing that doctrine as well as cases not specifically applying that doctrine but which recognized the relevance of "post-purchase" confusion among purchasers and non-purchasers.  In doing so, the Ninth Circuit held that the "first sale" doctrine did not provide a defense to Au-Tomotive because, as the Court had held in the first appeal, the license plates created a likelihood of "post-purchase confusion."  But the Ninth Circuit was careful to characterize the specific type of confusion its holding was based on:

We do not base our holding on a likelihood of confusion among purchasers of the plates.  Rather, we base it on the likelihood of post-purchase confusion among observers who see the plates on purchasers' cars.

The Ninth Circuit thus affirmed the District Court's grant of summary judgment to Volkswagen on its trademark infringement claim.

The cite is Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., No. 08-16005 (9th Cir. May 6, 2010).

Google Successful on Motion to Dismiss in AdWords Case

Plaintiff Daniel Jurin sued Google alleging violations of state and federal law in connection with the inclusion of Jurin's trademark "Styrotrim" as a suggested keyword in Google's AdWords program.  Consistent with other such lawsuits against Google, Jurin claimed that Google's use of Jurin's trademark "Styrotrim" as a suggested keyword that competitors could bid on as part of the AdWords program misappropriated Jurin's trademark and facilitated Jurin's competitors in infringing on his trademark.

Google moved to dismiss Jurin's claims for violations of the Lanham Act and for Negligent Interference with Contractual Relations and Prospective Economic Advantage, Intentional Interference with Contractual Relations and Prospective Economic Advantage, Fraud and Unjust Enrichment.  The District Court agreed with Google as to each of the claims and dismissed them with leave to amend.

With respect to Jurin's Lanham Act claims, the District Court rejected the false designation of origin claim finding that Google "in no way directly represented that it is the producer of the Styrotrim product," a necessary showing for such a claim under Dastar.  The District Court also went on to comment on any claim that Google facilitated confusion by use of Jurin's trademark as a suggested keyword:

To the extent Plaintiff may contend that Defendant has helped "facilitate" confusion of the product with others, such is a highly attenuated argument.  Even if one accept[s] as true the allegation that a "Sponsored link" might confuse a consumer, it is hardly likely that with several different sponsored links appearing on a page that a consumer might believe each one is the true "producer" or "origin" of the Styrotrim product.  As such, Plaintiff fails to properly plead a false designation of origin claim.

And the District Court readily disposed of Jurin's Lanham Act false advertising claim because Jurin could not show that he and Google were direct competitors in the building materials market.

As to the other claims raised in Google's motion to dismiss, the District Court found that Google was a protected interactive computer service and was therefore immunized from liability under the Communications Decency Act, 47 U.S.C. 230:

Defendant does not provide the content of the "Sponsored Link" advertisements.  It provides a space and a service and thereafter charges for its service.  By suggesting keywords to competing advertisers Defendant merely helps third parties to refine their content.  This is tantamount to the editorial process protected by the CDA.  Defendant's keyword suggestion tool hardly amounts to the participation necessary to disqualify it of CDA immunity.  Rather it is a "neutral tool," that does nothing more than provide options that advertisers could adopt or reject at their discretion, thus entitling the operator to immunity.

Google also successfully moved for an order requiring Jurin to pay $6,030.52 in costs in connection with a previously-filed "almost identical" complaint that was filed in June 2009 and voluntarily dismissed in July 2009.

The District Court's Memorandum and Order in Jurin v. Google Inc., No. 2:09-cv-03065-MCE-KJM (E.D. Cal. March 1, 2010) can be found here (PDF, 13 pgs).

Recent Trademark Filings in the Western District of Washington

Checking back in with the happenings in the Western District of Washington, following are brief descriptions of a few of the recent trademark-related claims filed in the Court:

Deloitte Touche Tohmatsu v. Anselmi, No. CV10-00220 RSL, filed Feb. 5, 2010

Deloitte Touche Tohmatsu, a Swiss Verein, alleges that Roberto Anselmi's registration of the domain name rsudeloitte.org and posting of a website at that address violated Deloitte's rights in its "DELOITTE" and "DELOITTE & TOUCHE" marks.  Anselmi, an individual alleged to have a mailing address in Italy, was alleged to have registered the domain name with eNom, Inc., a Washington corporation with a principal place of business in Bellevue, Washington.  Deloitte alleges a single cause of action for violation of the Anticybersquatting Consumer Protection Act, Section 43(d) of the Lanham Act.

A copy of the complaint, including exhibits, here (PDF, 22 pgs).


S.H. Inc. v. The Law Society, No. CV10-00248 MJP, filed Feb. 9, 2010

S.H. Inc., a Belize corporation, alleges a claim for "reverse hi-jacking" under the Anticybersquatting Consumer Protection Act of the Lanham Act against The Law Society, an entity located in London, in connection with the domain name lawsociety.org.  S.H. Inc. seeks, in part, an order enjoining transfer of the domain name (which appears to have been ordered following a UDRP claim filed by The Law Society) and a declaration that S.H. Inc. is the lawful registrant of the domain name.

A copy of the complaint here (PDF, 6 pgs).


Ball & Chain LLC v. Random House, Inc., No. CV10-00235 MJP, filed Feb. 10, 2010

Ball & Chain LLC, a Washington limited liability company, alleges that Random House, Inc. has infringed its trademarks "BEDROOM BUCKS" and "IOU" by using identical marks in connection with competing coupon books.  Ball & Chain alleges claims for federal trademark infringement, false designation of origin, and state law unfair competition.

A copy of the complaint here (PDF, 9 pgs).


Choice Advisory Servs., Inc. v. Choice Connections, Inc., No. CV10-00311 TSZ, filed Feb. 22, 2010

Choice Advisory Services, Inc., a Washington corporation that provides retirement-related services, alleges that Choice Connections, Inc., a Michigan corporation and related defendants that provide a senior housing advisory service, infringed its rights in the "CHOICE" mark by using that mark in connection with identical and closely related products and services and by incorporating the mark in domain names.  Choice Advisory alleges claims for federal trademark infringement and for infringement and unfair competition under state law.

A copy of the complaint here (PDF, 9 pgs).

The Trademark Battle of the "SC" Universities

In a collegiate battle over trademarks, the University of South Carolina suffered defeat at the hands of both the TTAB and the Federal Circuit while the University of Southern California walked away the victor.

The University of South Carolina sought registration of its Carolina Baseball Logo mark (pictured in the opinion linked below) composed of the interlocked letters "S" and "C" for "clothing, namely, hats, baseball uniforms, T-shirts and shorts."  The University of Southern California opposed the registration, claiming in part that it would create a likelihood of confusion with its registrations for the letters "SC" in standard character form and for a design mark composed of the interlocked letters "S" and "C" (also pictured in the opinion).

Showing that fighting spirit, South Carolina counterclaimed for cancellation of SoCal's registration of the letters "SC" in standard character form, claiming that the letters falsely suggested an association with the State of South Carolina.

The TTAB disagreed, concluding first that South Carolina lacked standing to bring the cancellation counterclaim and that even if it did have standing, summary judgment would still be granted in favor of SoCal because South Carolina failed to establish a genuine issue of fact as to whether the letters "SC" are "uniquely and unmistakably associated with the State of South Carolina.  In another defeat, the TTAB refused registration of South Carolina's mark, finding that it would create a likelihood of confusion with SoCal's registrations.

On appeal, South Carolina challenged the TTAB's likelihood of confusion conclusion only with respect to three factors:  the similarity of trade channels; the care exercised by consumers in purchasing the goods; and the absence of evidence of actual confusion.

Although the Federal Circuit did not agree with the TTAB's decision on all three of these factors (specifically with respect to the degree of care differing classes of consumers would exercise in making purchases), it ultimately concluded any error was harmless because the conclusion that the marks were legally identical and would appear on the same classes of goods in the same trade channels was sufficient to support a likelihood of confusion finding.

On the issue of standing, the Federal Circuit agreed with South Carolina that the TTAB had taken an unnecessarily limited view of standing because South Carolina only needed to show that it had a reasonable belief that it would be damaged by SoCal's registration and that it had a direct and personal stake in cancellation.  The Federal Circuit had no problem concluding that South Carolina could make that showing.

Victory was short-lived, however, because the Federal Circuit concluded that, although South Carolina had standing to assert its cancellation claim, the claim still failed because South Carolina had failed to show that there was a genuine issue for trial as to whether the letters "SC" uniquely pointed to the State of South Carolina.  Although South Carolina pointed to evidence demonstrating that the public associates the letters with the State, SoCal countered with evidence showing that "SC" refers to many other entities.  And South Carolina itself had, in the context of another issue, submitted evidence showing that at least 16 other universities and colleges represent themselves as "SC."

The cite is The University of South Carolina v. University of Southern California, No. 2009-1064 (Fed. Cir. Jan. 19, 2010) (non-precedential).

Western District of Washington Finds No Likelihood of Confusion Between SPIDER and SPYDERCRANE

SafeWorks, LLC, based in Tukwila, Washington, is the owner of several registered SPIDER marks for hoisting and suspended staging and scaffolding equipment.  Spydercrane.com, LLC, based in Arizona, is a crane distribution business that sells truck-mounted cranes.  SafeWorks has manufactured, sold and rented equipment under the SPIDER marks since 1947; Spydercrane began selling cranes under the Spydercrane name in 1999.

SafeWorks learned of Spydercrane after Spydercrane applied to register SPYDERCRANE with the PTO in 2008.  Thereafter, SafeWorks sued Spydercrane for trademark infringement and unfair competition under the Lanham Act and for a related claim under Washington state law.  Following an apparently unsuccessful summary judgment motion by SafeWorks, the matter was tried to the Court.

In its Memorandum Opinion finding for Spydercrane on all of SafeWorks' claims, the District Court concluded that the "most important [Sleekcraft] factors" for judging the likelihood of confusion between the parties' marks favored Spydercrane.

In SafeWorks' favor, the Court found that the SPIDER marks were suggestive and were very strong with respect to lifting, hoisting, safety and suspended access equipment.  Nevertheless, the Court found that the "strength of the mark" factor favored Spydercrane.  The Court found that the parties' goods were sold in separate and distinct markets to divergent classes of customers despite the fact that their goods could be broadly described as "products that are used to lift things."  In addition, the Court noted the prevalence of the use of the terms "spider" and "spyder" in "the commercial world," although it is not clear that the Court took into consideration the specific goods or services with which these marks were used.

Also in SafeWorks' favor, the Court concluded, with some hesitation, that the similarity of marks favored a likelihood of confusion finding given "some parallels" between the parties' products and the use of Spider/Spyder in the names.

The Court found that the remaining factors favored Spydercrane or were neutral.  The Court found that the parties' products, when considered more particularly than merely items used to lift things, were functionally different and were sold to different classes of purchasers (again when examined more precisely than merely those customers affiliated with the construction industry).  Thus, the proximity of the goods factor favored a finding of no likelihood of confusion.  For somewhat similar reasons, the Court also found that the parties' marketing channels were not convergent and therefore did not support a finding of a likelihood of confusion.  Lastly, the Court found that both the degree of care that customers would take with respect to purchase (or rental) of the parties' products and the lack of evidence supporting the existence of an intent to deceive weighed against a finding of a likelihood of confusion.

Thus, taken together, the weight of the factors supported a finding that there was no likelihood of confusion in the marketplace between SafeWorks' SPIDER marks and Spydercrane's SPYDERCRANE mark and the Court found in favor of Defendant Spydercrane.

The cite is SafeWorks, LLC v. Spydercrane.com, LLC, No. 08-00922 (W.D. Wash. Dec. 7, 2009).

Federal Circuit Rejects Bright-Line Rule for Internet Specimens of Use

Michael Sones filed an intent-to-use application for the mark "ONE NATION UNDER GOD" for charity bracelets.  After the PTO issued a notice of allowance, Sones submitted his Statement of Use along with a specimen of use consisting of two pages from a website bearing the title "Beaches Chapel School Store."  Under this title, there appeared a listing for "ONE NATION UNDER GOD CHARITY BRACELET" followed by further text stating "ONE NATION UNDER GOD CHARITY BRACELET CHOICE OF BLUE OR RED $2.00 EACH."  Next to the description appeared a shaded box that stated "Photo not availble [sic]."  The specimen further showed a "shopping cart" functionality for online ordering.

The PTO rejected Sones' Statement of Use stating that the specimen did "not show a picture of the goods in close proximity to the mark."  Sones submitted argument in rebuttal but did not submit a picture of the charity bracelets or any new textual description.  The PTO then issued a final office action affirming the rejection.  The TTAB affirmed the decision stating that "it is readily apparent that [the webpages] do not include a picture of the goods."

On the same day that the TTAB's decision affirming the rejection was mailed, Sones filed a use-based application to register the same mark for charity bracelets.  He submitted a website specimen showing a picture of the bracelet but the alleged use in commerce date was later than that of Sones' original intent-to-use application.

On appeal, the Federal Circuit first disposed of any claim by the PTO that it was not proposing a bright-line rule requiring a picture for every website specimen of use, concluding that "the PTO's position has been consistent from prosecution up to oral argument in this appeal: a website specimen of use must have a picture of the goods."

The Federal Circuit then examined the origin of the PTO's "rule" from the case of Lands' End, Inc. v. Manbeck, 797 F. Supp. 511 (E.D. Va. 1992).  That case involved a specimen of use from a mail order catalog for the mark "KETCH" for purses.  The submitted specimen consisted of a catalog page showing a picture of a purse, a description and the term "KETCH."  The court in Lands' End concluded that the use of the term with the picture of the purse and the corresponding description was a sufficient display associated with the goods.

The PTO interpreted Lands' End to require that a catalog specimen include a picture of the relevant goods (among other requirements) and created a new section addressing that requirement in the trademark examining manual for "catalogs as specimens."  In addition, the Federal Circuit examined the cases demonstrating that the PTO had applied this interpretation of Lands' End to website specimens, including "a rigid requirement for a picture."

The Federal Circuit read Lands' End differently, however, concluding that the case did not state that a picture is mandatory or that such a requirement applied to website specimens.  Nor could the Federal Circuit find any basis for a picture requirement in trademark law or policy.  Thus, the Court concluded that

a picture is not a mandatory requirement for a website-based specimen of use, and that the test for an acceptable website-based specimen, just as any other specimen, is simply that it must in some way evince that the mark is "associated" with the goods and services as an indicator of source.

The Federal Circuit therefore remanded the case for the PTO to consider Sones' specimen of use in light of the appropriate standard.

Circuit Judge Newman dissented from the decision contending that Sones had rendered the issue moot by filing the second, use-based application for the same mark for the same goods and submitting a specimen that included a picture.

The cite is In re Michael Sones, No. 2009-1140 (Fed. Cir. Dec. 23, 2009) and includes a photo of the website specimen submitted by Sones.

Federal Circuit Reverses Cancellation of THE COLD WAR MUSEUM

A recent trademark decision from the Federal Circuit emphasizes the sometimes critical role procedural issues can play in the outcome of a case.

In 2004, Francis Gary Powers, Jr. obtained registration of the mark THE COLD WAR MUSEUM for museum services based on acquired distinctiveness of the mark under Section 2(f) of the Lanham Act (15 U.S.C. 1052(f)).  Mr. Powers later assigned the rights to the mark to The Cold War Museum, Inc.  During the initial prosecution of the mark after the examining attorney had refused registration, Mr. Powers submitted more than 200 pages of material supporting his contention that the mark had acquired distinctiveness.

In 2007, Cold War Air Museum Inc. filed a petition to cancel the registration arguing that the mark was merely descriptive for museum services related to the Cold War.  In support of this claim, it submitted search engine results evidencing the public's understanding of the term "cold war" and excerpts from the mark owner's website and brochure to demonstrate that the museum's contents all related to the Cold War.

The mark owner responded by arguing that even if the mark was descriptive it had become distinctive and was therefore eligible for registration under Section 2(f), that the PTO had accepted evidence submitted during prosecution as sufficient proof of distinctiveness and thus the mark was now presumed valid.  It also argued that the challenger had not presented any evidence showing that the mark should not have been registered under Section 2(f).  The mark owner did not resubmit the evidence of acquired distinctiveness that had been submitted during prosecution.

The TTAB granted the cancellation petition finding that the challenger had proven that the mark was "highly descriptive" and had not acquired distinctiveness.  The TTAB then shifted the burden to the mark owner to show to the contrary.  Although the TTAB acknowledged that evidence of acquired distinctiveness had been submitted during prosecution, it concluded that it could not consider the evidence because the evidence had not been resubmitted in the cancellation proceeding.

The Federal Circuit held that this conclusion was in error and fatal to the TTAB's decision granting the petition for cancellation.  Emphasizing that registration of the mark under Section 2(f) afforded it both a presumption of validity as well as a presumption that the mark had acquired distinctiveness, the Federal Circuit stated that the challenger to the registration must therefore produce sufficient evidence to rebut these presumptions.

First, the Federal Circuit concluded that the TTAB had erred in concluding that it could not consider the evidence of acquired distinctiveness submitted during prosecution as the applicable regulation, 37 C.F.R. 2.122(b), unambiguously states that the entire registration file is automatically part of the record in a cancellation proceeding.  As a result, the challenger must rebut evidence of acquired distinctiveness in the registration file in order to satisfy its burden of proof.

Second, the Federal Circuit held that the challenger had failed to satisfy this burden.  To the contrary, the challenger's arguments in the cancellation proceeding related exclusively to the descriptive nature of the mark, which is irrelevant to the validity of a Section 2(f) registration.  The challenger presented no evidence relating to the acquired distinctiveness of the mark and therefore failed to rebut the presumption of validity.  And, given that failure, the Federal Circuit also concluded that the TTAB had erred in shifting the burden to the mark owner.

The Federal Circuit therefore reversed the TTAB's decision granting the petition for cancellation.

The cite is The Cold War Museum, Inc. v. Cold War Air Museum, Inc., No. 2009-1172 (Fed. Cir. Nov. 5, 2009).

Federal Circuit Affirms Conclusion that MATTRESS.COM is Generic

1800Mattress.com IP, LLC appealed from the TTAB's decision finding that the mark MATTRESS.COM was generic for the services identified in its application for registration, namely, "online retail store services in the field of mattresses, beds, and bedding."  1800Mattress.com challenged the decision arguing that (1) the only generic term for such services is "online mattress stores," (2) businesses outside the genus of online retail store services use "mattress.com" as part of their domain names, (3) the TTAB improperly looked to the components of the mark rather than the mark as a whole, and (4) the TTAB improperly disregarded the nature of the mark as a mnemonic and "as being capable of evoking the quality of comfort in mattresses."  None of these arguments swayed the Federal Circuit.

The Federal Circuit readily agreed with the TTAB's finding that the relevant public understands MATTRESS.COM to be no more than the sum of its constituent parts (the parties did not dispute the genericness of the components), specifically, "an online provider of mattresses."  Nor was it relevant whether the public referred to online mattress retailers as "mattress.com" as the inquiry is what the relevant public would understand upon hearing the term.  And on a related argument, the Federal Circuit rejected 1800Mattress.com's assertion that there could be only one generic term, "online mattress stores."

 Finally, the Federal Circuit agreed with the TTAB's finding that the ".com" "tail" of the mark did not "evoke the quality of comfort in mattresses" and that the mark is not a mnemonic, noting that 1800Mattress.com had failed to prevent any evidence to support such an argument.

The cite is In re 1800Mattress.com IP, LLC, No. 2009-1188 (Fed. Cir. Nov. 6, 2009).

Federal Circuit Rejects "Should Have Known" Standard in Proving Fraud on the PTO in Trademark Cases

The Federal Circuit succinctly and decisively rejected a lower standard of proof for proving fraud on the PTO in obtaining or renewing a trademark registration in In re Bose Corp., Opposition No. 91/157,315 (Fed. Cir. Aug. 31, 2009).

In the opposition proceeding before the TTAB, the trademark applicant--Hexawave--counterclaimed for cancellation of Bose's WAVE mark on the ground that Bose had committed fraud in connection with its combined Section 8 affidavit of continued use and Section 9 renewal application, which was signed by Bose's general counsel.  In this filing, Bose stated that the WAVE mark was still in use in commerce on, among other things, audio tape recorders and players but the TTAB found that Bose had stopped manufacturing and selling those particular goods between 1996 and 1997 and that Bose's general counsel knew that when he signed the filing.

Bose's general counsel testified that, at the time he signed the filing, Bose continued to repair previously sold audio tape recorders and players and he believed that the WAVE mark was still in use in commerce because "in the process of repairs, the product was being transported back to customers."  The TTAB concluded that such repair and shipment back did not constitute sufficient continued use of the mark and found that the belief of Bose's general counsel to the contrary was not reasonable.  Apparently following the standard that a trademark owner commits fraud on the PTO in procuring or renewing a registration when it makes material representations of fact which it knows "or should know" to be false or misleading, the TTAB found that Bose had committed fraud and ordered cancellation of its registration for the mark.

 The Federal Circuit reiterated the heavy burden of proof the party claiming fraud on the PTO bears, requiring that such fraud be proven "to the hilt" by clear and convincing evidence.  The Federal Circuit then painted a brief history of the cases recognizing a "material legal distinction" between a "false" representation and a "fraudulent" one, in that the latter requires an intent to deceive.  The Court thus rejected the TTAB's decision in Medinol Ltd. v. Neuro Vasx Inc., 67 U.S.P.Q.2d 1205 (TTAB 2003), to the extent it adopted a negligence standard for fraud by approving of a "knew or should have known" test.  In rejecting the "should have known" standard, the Federal Circuit held that "a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with the intent to deceive the PTO."

As applied to the facts of the case, the Federal Circuit found that Bose had made a material misrepresentation to the PTO but that the challenger had not pointed to clear and convincing evidence to support an inference of deceptive intent in light of the testimony of Bose's general counsel that he believed the statement in the filing was true at the time he signed it.  Notably, the Federal Circuit rejected the relevance of the TTAB's conclusion that Bose's counsel's belief as to the sufficiency of use of the mark in commerce was not reasonable, stating that reasonableness was "not part of the analysis" because there "is no fraud if a false misrepresentation is occasioned by an honest misunderstanding or inadvertence without a willful intent to deceive."

The Federal Circuit thus concluded that Bose had not committed fraud in renewing its registration for the WAVE mark and that the TTAB had erred in canceling the registration in its entirety (although the Court did acknowledge that the registration needed to be restricted to "reflect commercial reality").

District Court Extends Summary Judgment Too Far in Eyelash Extensions Trademark Case

Xtreme Lashes, LLC and Xtended Beauty, Inc. both market kits used by professional cosmetologists to lengthen and accent clients' eyelashes.

Xtreme, the plaintiff, has used the marks XTREME LASHES and EXTEND YOUR BEAUTY since September 2005 and obtained registration of the marks in April 2008 and October 2007, respectively.  The XTREME LASHES mark features a large X, part of which is formed by a stylized eyelash.  The mark EXTEND YOUR BEAUTY is typewritten and always appears in conjunction with the XTREME LASHES mark.  Each of Xtreme's kits come in a silver carrying case bearing the XTREME LASHES mark.

Xtended, the defendant, has used the mark XTENDED BEAUTY since July 2006.  Xtended's mark features a large, type-written X and its kits come in a silver carrying case featuring the XTENDED BEAUTY mark.

Xtreme alleged that Xtended had infringed and diluted its marks.  Xtended, in turn, counterclaimed, seeking cancellation of Xtreme's EXTEND YOUR BEAUTY mark.

Xtended moved for summary judgment on all of the claims before the parties conducted discovery.  The District Court concluded that no reasonable person would likely confuse the parties' marks because they were so dissimilar and therefore entered judgment in favor of Xtended on Xtreme's trademark infringement and dilution claims.  The District Court then later found that EXTEND YOUR BEAUTY was descriptive as a matter of law and therefore ordered Xtreme's mark cancelled.

On appeal, the Fifth Circuit reversed each of the District Court's conclusions.  Although the Fifth Circuit could not say with certainty whether Xtreme's XTREME LASHES mark was strong or weak, it found that the mark at least had the indicia of a suggestive mark and, for purposes of summary judgment, was entitled to protection.  Examining the other "digits of confusion" relating to the parties' XTREME LASHES and XTENDED BEAUTY marks, the Fifth Circuit found that each of the factors either favored Xtreme or were neutral; no factors favored Xtended.

Similarly, the Fifth Circuit found that the District Court had erred in finding no likelihood of confusion between the parties' EXTEND YOUR BEAUTY and XTENDED BEAUTY marks.  As an initial matter, the Fifth Circuit rejected the District Court's finding that Xtreme's EXTEND YOUR BEAUTY mark was descriptive as a matter of law, concluding that "consumers must use 'imagination, thought and perception' to conclude that an exhortation to 'extend your beauty' markets eyelash extensions, as opposed to another cosmetically enhanced feature."  The Fifth Circuit thus reversed the District Court's order cancelling Xtreme's registration of its EXTEND YOUR BEAUTY mark.

The Fifth Circuit then went on to conclude that there were issues of fact demonstrating a likelihood of confusion between the EXTEND YOUR BEAUTY and EXTENDED BEAUTY marks that precluded summary judgment and therefore reversed the District Court's order and remanded the case for further proceedings.

The Fifth Circuit's decision in Xtreme Lashes, LLC v. Xtended Beauty, Inc., No. 08-20578 (5th Cir. July 15, 2009), can be found here (PDF, 18 pgs).

Ninth Circuit Requires Finding of Substantial Risk of Danger to the Public to Support a Preliminary Injunction Requiring a Product Recall in a Trademark Infringement Case

In an opinion issued today, the Ninth Circuit adopted the Third Circuit's standard for determining the propriety of a preliminary injunction directing recall of a product in a trademark infringement case.  Specifically, in addition to the traditional standard for a prohibitory preliminary injunction, the district court must consider three other factors in cases involving a requested product recall:

(1) the willful or intentional infringement by the defendant; (2) whether the risk of confusion to the public and injury to the trademark owner is greater than the burden of the recall to the defendant; and (3) substantial risk of danger to the public due to the defendant's infringing activity.

The Ninth Circuit's opinion in Marlyn Nutraceuticals, Inc. v. Mucos Pharma GMBH & Co., No. 08-15101, can be found here (PDF, 14 pgs).

Second Circuit Upholds Conclusion that Removal of UPCs from Trademarked Products Constitutes Trademark Infringement

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).

Recent Trademark Claims Filed in the Western District of Washington

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).




Service Mark Registration Deemed Void Ab Initio More than 30 Years After Registration

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).

Ninth Circuit Panel Splits on Laches Issue in Trademark Suit

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).

Fourth Circuit Finds "OBX" Geographically Descriptive Abbreviation for the Outer Banks

In a fairly straight forward yet interesting trademark case involving rights to the mark "OBX", the Fourth Circuit affirmed the grant of summary judgment to the defendant, finding that OBX is a geographically descriptive abbreviation referring to the Outer Banks of North Carolina that had not acquired secondary meaning and therefore was not a valid trademark.  Nonetheless, the Fourth Circuit also affirmed the District Court's exercise of its discretion not to order the cancellation of the registrations the plaintiff had obtained for the OBX mark.

In 1994, James Douglas, the founder of the plaintiff OBX-Stock, Inc., "cleverly invented 'OBX' as an abbreviation for the 'Outer Banks' of North Carolina."  The plaintiff then enjoyed considerable success selling a variety of products with the OBX letters affixed to them.  Unfortunately for the plaintiff, however, the abbreviation caught on and, as the Court noted, entered the "linguistic commons" such that businesses and residents of the Outer Banks used the abbreviation "on a daily basis to refer to the Outer Banks."

Moreover, in the course of the case, Douglas testified that the company's product "was actually the OBX in general since it had not been used before."  Nonetheless, after PTO examiners rejected the plaintiff's application to register the OBX mark five times, OBX-Stock was ultimately successful in obtaining registration but only after "intervention" by North Carolina's congressional delegation (the opinion does not describe the nature of this "intervention" but the Fourth Circuit stated that it undermined any support the registrations may have offered).

After obtaining registrations for the OBX mark, OBX-Stock began efforts to police the mark, including suing the defendant, Bicast, Inc., in connection with its sale of oval stickers bearing "OB Xtreme".  OBX lost on summary judgment, however,as the District Court found that the OBX mark had become generic or was geographically descriptive without secondary meaning.  Based on what appears to be substantial evidence--particularly the testimony of Douglas that OBX stood for the Outer Banks--and the lack of evidence establishing any secondary meaning, the Fourth Circuit readily agreed with the District Court.

The Fourth Circuit's opinion in OBX-Stock, Inc. v. Bicast, Inc., Nos. 06-1769, 06-1887 (4th Cir., Feb. 27, 2009), can be found here (PDF, 13 pages).

First Circuit Avoids Lanham Act Accounting Jury Trial Right Question

The First Circuit's opinion in Visible Systems Corp. v. Unisys Corp. is almost more interesting for the question it didn't answer than for the questions it did, at least for me.

In this trademark case, Visible Systems obtained a jury verdict of $250,000 against Unisys Corporation on a reverse confusion theory in connection with Unisys' use of the marks 3D VISIBLE ENTERPRISE, 3D-VE, and VISIBLE in the "enterprise modeling" or "enterprise architecture" fields (described as "the diagraming of an entity's business to demonstrate relationships between information flow and business processes and to allow decisionmakers to identify errors or redundancies").  Visible Systems also received injunctive relief but the trial court denied its request for attorneys' fees.  On Visible Systems' request for a jury instruction on the remedy of an accounting of Unisys' profits, the trial court concluded that it was an issue for the court, not the jury, and that in any event, the evidence was insufficient to support the remedy.

Both parties appealed on various grounds, all of which the First Circuit rejected, upholding the jury verdict and affirming the trial court's challenged rulings.

On the issue of the requested accounting of Unisys' profits, Visible Systems argued that it was entitled to a jury trial on the issue under both the Lanham Act and the Seventh Amendment.  The First Circuit noted that the "question of what role a jury plays as to the remedy of an accounting in a Lanham Act case is complicated" and that no "federal court of appeals decision which extensively discusses the [Seventh Amendment] issue has been called to our attention by the parties."  Nevertheless, the First Circuit avoided answering the question (following the general rule of avoiding constitutional questions when possible) by agreeing with the trial court that the evidence was insufficient to justify an accounting, thereby rendering the question of whether there is a Seventh Amendment jury trial right to an accounting "academic."

Ninth Circuit Upholds First Amendment Defense to Strip Club's Trademark Claims

In E.S.S. Entertainment 2000, Inc. v. Rock Star Videos, Inc., the Ninth Circuit addressed the question of whether the producer of the video game "Grand Theft Auto: San Andreas" had a defense under the First Amendment to the claim of trademark infringement brought by the operator of a strip club in downtown Los Angeles called the Play Pen Gentlemen's Club.

In "Grand Theft Auto:  San Andreas," the game depicts, in the words of the Ninth Circuit, "one or more dystopic, cartoonish cities" modeled after American urban areas including, as relevant to this case, Los Angeles.  The game's version of Los Angeles, called "Los Santos," depicts various businesses such as liquor stores, ammunition dealers, bars and strip clubs, which were inspired, at least in part, from photographs of actual businesses in Los Angeles, including the Play Pen.  The strip club in the game, however, was named the "Pig Pen" and lacked some of the characteristics of the Play Pen building.

Nonetheless, the operator of the Play Pen sued the producer of the game for trade dress infringement, unfair competition and trademark infringement under the Lanham Act and unfair competition under California state law claiming that the game "used Play Pen's distinctive logo and trade dress without its authorization and has created a likelihood of confusion among consumers as to whether [the plaintiff] has endorsed, or is associated with, the video depiction."

The producer of the game moved for summary judgment arguing the affirmative defenses of nominative fair use and the First Amendment.  The District Court (Judge Margaret M. Morrow, who wrote a very thorough 55-page opinion containing a wealth of authority) rejected the nominative fair use defense but granted summary judgment to the game producer based on the First Amendment defense.

The Ninth Circuit agreed with the District Court, concluding that because the game's "Pig Pen" strip club did not use the actual trademarked Play Pen logo, the nominative fair use defense did not apply.

Applying the Second Circuit's test from Rogers v. Grimaldi, the Ninth Circuit also upheld the defendants' First Amendment defense to the strip club's trademark claims.  Although traditionally, the test had been applied to uses of a trademark in the title of an artistic work (such as the song "Barbie Girl" in the Mattel, Inc. v. MCA Records, Inc. case), the Ninth Circuit concluded that it should also apply to the use of a mark in the body of the work, such as the "Pig Pen" strip club in the video game.  Other than this clarification, the Ninth Circuit's application of the Rogers test was straightforward:  the use of the mark had some artistic relevance to the work ("some" meaning the level of relevance must merely be more than zero); and the use of the mark did not explicitly mislead as to the source or content of the work.  As to the latter point, the Ninth Circuit described its conclusion in creative fashion:

Both San Andreas and the Play Pen offer a form of low-brow entertainment; besides this general similarity, they have nothing in common.  The San Andreas Game is not complementary to the Play Pen; video games and strip clubs do not go together like a horse and carriage or, perish the thought, love and marriage.

You can read the Ninth Circuit's opinion here (PDF, 11 pages).

False Endorsement and "the Voice of God"

John Facenda won national acclaim for his work on various NFL Films becoming known to some football fans as "the Voice of God" because of the special qualities of his voice.  For decades, Mr. Facenda did worked on these films under an oral agreement, receiving a per-program fee.  But not long before he died of cancer in 1984, Mr. Facenda signed a standard release contract that stated that NFL Films enjoys "the unequivocal rights to use the audio and visual film sequences recorded of me, or any part of them . . . in perpetuity and by whatever media or manner NFL Films . . . sees fit, provided, however, such use does not constitute an endorsement of any product or service."

In 2005, NFL Films produced "The Making of Madden NFL 06," a 22-minute long production that was shown on the NFL Network eight times in a three-day span leading up to the release of the video game.  The program included three sentences read by Mr. Facenda that were taken from earlier NFL Films' productions (although they were apparently digitally altered to make them sound more like the synthesized speech from a computer) that totaled 13 seconds of the program.

Mr. Facenda's estate sued the NFL for false endorsement under Section 43(a) of the Lanham Act and for unauthorized use of name or likeness under Pennsylvania state law.  Specifically, as to the former claim, the Estate alleged that the use of the sound recordings of Mr. Facenda's voice falsely implied that the Estate had agreed to endorse the video game.  The case was split into liability and damages phases and, upon cross-motions for summary judgment on liability, the District Court granted summary judgment to the Estate on both claims.

 In a 60-page opinion, the Third Circuit reversed the grant of summary judgment on the Lanham Act false endorsement claim and remanded for trial but affirmed the grant of summary judgment to the Estate on the state law right of publicity claim.

As to the Lanham Act claim, the Third Circuit first rejected the NFL's First Amendment defense, concluding that the production was commercial speech and therefore declining to reach the issue of whether the Court would adopt the Rogers balancing test that weighs the public interest in avoiding consumer confusion against the public interest in free expression (in other words, it addresses the collision of the Lanham Act with the First Amendment).

Turning to the substance of the Lanham Act claim, the only prong at issue was the "likely to cause confusion" prong as the NFL did not contest that Mr. Facenda's voice could be protected as an unregistered mark and that the Estate owned the "mark." 

The Third Circuit, however, was exploring new territory as it had yet to announce the legal standard applying to false endorsement claims under Section 43(a).  The District Court had used the traditional 10-factor test from Section 43(a)(1)(A) cases as modified for false endorsement cases used by the Ninth Circuit.  With some modifications, the Third Circuit agreed with the District Court's use of these modified factors in false endorsement cases.  The Third Circuit also rejected the NFL's contention that claims under Section 43(a)(1)(A) required proof of actual confusion distinguishing between claims brought under that section versus those brought under Section 43(a)(1)(B) for false advertising.  Ultimately, the Third Circuit concluded that there were issues of fact (such as whether the NFL intended to profit unjustly from the use of Mr. Facenda's voice in the program) that precluded summary judgment.

As to the state law right of publicity claim, the Third Circuit readily agreed with the District Court's grant of summary judgment to the Estate.  The Court then turned to what appears to have been the NFL's primary argument, namely, that copyright law preempts the Estate's right of publicity claim.

The Third Circuit found no express preemption under Section 301(a) of the Copyright Act, in part because Pennsylvania's right of publicity statute required an additional element beyond what is required for a copyright infringement claim, specifically, that Mr. Facenda's voice have "commercial value."

The Court then went on to discuss--at some length--whether the right of publicity claim was impliedly preempted by copyright law because it clashed with the NFL's right to exploit its copyright.  As with the NFL's First Amendment argument, the commercial nature of the program was its downfall.  Relying on the premise that rights of publicity claims involving use of the work "for the purposes of trade" such as in an advertisement should not be preempted (as compared to claims involving expressive works), the Third Circuit concluded that the nature of the NFL program (which it characterized as a promotional piece) suggested that implied preemption was inappropriate.

The Third Circuit next turned to the release Mr. Facenda signed concluding that it did not support a finding of preemption.  The question in cases involving a contract and advertising was whether the plaintiff collaborated in the creation of a copyrighted advertising product.  If the plaintiff did, allowing the plaintiff to assert a right of publicity claim for use of its likeness in advertising would conflict with the copyright holder's rights.  But such was not the case here, the Third Circuit concluded.  To the contrary, Mr. Facenda participated in creating films documenting NFL games (presumably expressive works), not an advertisement for a football video game and the release he signed specifically preserved his right of publicity with respect to endorsements.  Thus, no implied preemption and summary judgment on this claim was affirmed.


First Circuit finds "duck tours" generic for, well, duck tours

In a remarkably lengthy decision, the First Circuit reversed the grant of a preliminary injunction in a trademark case concluding that the phrase "duck tour" was generic for the parties' services and that the District Court's conclusion to the contrary was clear error.

The case pitted the plaintiff--Boston Duck Tours--against its competitor Super Duck Tours.  On Boston Duck Tours' motion for a preliminary injunction, the District Court concluded that the phrase "duck tours" was non-generic based entirely on a dictionary definition of "duck" that did not include any reference to DUKWs (amphibious army vehicles used in World War II) or amphibious vehicles.  The District Court thus enjoined Super Duck Tours from using the phrase "duck tours" or a cartoon duck (both parties used a cartoon duck in water as part of their design marks) as a trademark in connection with its tour service in the greater Boston area.

The First Circuit reversed the grant of a preliminary injunction based largely on its conclusion that the District Court erred in finding the phrase "duck tours" to be non-generic.  In reaching this conclusion, the First Circuit looked to evidence overlooked by the District Court, including third-party sources that used the phrase "duck tours" generically to refer to amphibious sightseeing tours and Boston Duck Tours' own generic use of the phrase "duck tour."  The First Circuit also considered the widespread use of "duck" and "duck tours" by companies around the country that provide the same amphibious sight-seeing services (32 of the 36 tours described in the record used the term "duck" and more than 10 used both "duck" and "tour(s)").

You can find the First Circuit's opinion, including concurring opinion, here (PDF, 74 pages).

Worlds collide -- The Doors and insurance

When is an opinion about insurance coverage interesting?  Answer:  When it involves The Doors.

A Story About Coincidence

Many times, I find cases more interesting for the stories they tell than the thorny legal issues they may (or may not) present.  American Express Co. v. Goetz out of the Second Circuit is one of those cases and it tells a story of remarkable coincidence.

In the summer of 2004, the defendant, Stephen Goetz developed the idea of allowing credit card customers to personalize their cards by choosing a photo to be printed on the card.  As part of his pitch for this idea, Goetz used the slogan "My Life, My Card" because he thought the phrase "would perfectly embody what card consumers sought."  On July 30, 2004, Goetz mailed a proposal to American Express that included the slogan.  He also created an Internet-based demonstration of his concept which prominently displayed the slogan.  And on September 7, 2004, he registered the domain name www.mylife-mycard.com and filed a trademark registration application for the slogan with the PTO the next day.

As it happens, also in the summer of 2004, American Express hired an advertising agency to develop a new global campaign for its products.  On July 22, 2004, the agency proposed a campaign to American Express featuring the MY LIFE.  MY CARD. slogan.  After American Express expressed interest in the campaign, the agency's outside counsel conducted a preliminary trademark search for the availability of the slogan as a service mark on July 29, followed by a full trademark search on July 31, which was two days before the scheduled delivery date of Goetz's proposal to American Express.  American Express decided to proceed with the MY LIFE.  MY CARD. campaign and therefore registered the domain name www.mylifemycard.com on September 1, 2004, and filed an ITU application with the PTO on September 15.

As I said, remarkable coincidence.

As for the legal issue--this is after all a legal blog--American Express won on summary judgment and Goetz's counterclaims were dismissed because both the District Court and the Second Circuit concluded that he did not use the slogan as a trademark.

Award of statutory damages for trademark counterfeiting precludes attorneys' fee award

In a pure statutory interpretation opinion, the Ninth Circuit concluded that a plaintiff's election of statutory damages in lieu of actual damages for trademark counterfeiting under 15 U.S.C. 1117(c) precludes that party from also recovering an award of attorneys' fees under 15 U.S.C. 1117(b).  Not a positive result for the plaintiff, K and N Engineering, Inc., which had been awarded $100,000 in attorneys' fees by the trial court.  The Ninth Circuit's opinion in K and N Engineering, Inc. v. Bulat, No. 06-55393, can be found here.

The Power of Pictures Sways the Seventh Circuit

Apparently, for the Seventh Circuit, a picture is indeed worth a thousand words--at least in the absence of any evidence contradicting that picture.

Top Tobacco--the plaintiff in this trademark case--started off with a difficult position, claiming that it had exclusive rights to the common word "top" in the cigarette tobacco market.  Top Tobacco, which uses the mark TOP above a drawing of a spinning top, sought to stop North Atlantic from using the phrase "Fresh-Top Canister" on its cigarette tobacco cans.

The district court granted summary judgment for North Atlantic and the Seventh Circuit affirmed concluding that "[o]ne glance" at the pictures of the canisters "side by side" was "enough to decide the appeal."  Based on these pictures, the Seventh Circuit concluded that it was "next to impossible" to believe that even the most careless consumer would confuse the products.  And although the Court acknowledged that "next to impossible" was not "absolutely impossible," the pictures were all the Court had because Top Tobacco did not conduct a survey or produce any affidavits from consumers or merchants demonstrating confusion.

To see the pictures that decided the appeal and read the Seventh Circuit's opinion in Top Tobacco, L.P. v. North Atlantic Operating Co., No. 07-1244, see here.

"Chewy Vuiton" Parody Wins the Day

The Fourth Circuit readily disposed of the trademark infringement, dilution/tarnishment, trade dress and copyright claims of high-fashion icon Louis Vuitton against Haute Diggity Dog, a Nevada company that manufactures and sells a line of pet chew toys and beds whose names parody elegant high-end brands including "Chewy Vuiton," a dog chew toy.

In the end, the fact that the "Chewy Vuiton" dog chew toy was obviously a parody of the LOUIS VUITTON handbag--with both obvious similarities and dissimilarities--led to the District Court's and the Fourth Circuit's rejection of Louis Vuitton's claims on summary judgment:  "The dog toy irreverently presents haute couture as an object for casual canine destruction.  The satire is unmistakable.  The dog toy is a comment on the rich and famous, on the LOUIS VUITTON name and related marks, and on conspicuous consumption in general."

And in something of an ironic twist, the strength and distinctiveness of the LOUIS VUITTON mark worked against Louis Vuitton in the context of its dilution by blurring claim, making it more likely that a parody (at least an obvious one) will not impair the distinctiveness of the famous mark.

The Fourth Circuit's opinion in Louis Vuitton Malletier S.A. v. Haute Diggity Dog, LLC, can be found here.

No Preliminary Injunction for GM and the Hummer

Can one talk about the Hummer without mentioning Arnold Schwarzenegger?  Apparently not.  In General Motors Corp. v. Urban Gorilla, LLC, No. 06-4128, the Tenth Circuit affirmed the denial of a preliminary injunction to GM in its trade dress and dilution claims against a company that sells steel "body kits."  These body kits, which GM claims are a knock-off of the Hummer, allow customers to install a new body on top of an existing truck chassis for about $10,000.

However, back in 1998 (Urban Gorilla's predecessor had been selling the steel body kits since 1997), GM's predecessor in interest sent a cease and desist letter to Urban Gorilla's predecessor claiming that the body kits infringed its Hummer trademarks.  In response, Urban Gorilla's predecessor made changes to the body kit design and GM's predecessor did not pursue the matter further.  But in February 2006, GM filed a complaint against Urban Gorilla claiming, among other things, trade dress infringement and dilution and sought preliminary injunctive relief.  But the District Court denied GM's request for a preliminary injunction, concluding that GM had not marshaled sufficient evidence to justify the relief.

The Tenth Circuit agreed, affirming the District Court's decision and also suggesting that GM may need the Hummer to navigate the possibly rough terrain ahead of it in pursuing its claims.  Interestingly, both the District Court and the Tenth Circuit appeared to have doubts about the strength of GM's trade dress claim.  Indeed, the Tenth Circuit noted that the District Court appeared to be "skeptical as to whether the allegedly unique features of the Hummer were not actually shared by all military-style vehicles."  In addition, although not addressed on appeal, Urban Gorilla raised several seemingly meritorious defenses including laches, acquiescence and estoppel.

And for the record, the mention of Arnold Schwarzenegger came in the Tenth Circuit's recitation of the Hummer's history, noting that the civilian version of the Humvee (the Hummer) came about "[a]t the urging of then-actor and now Governor Arnold Schwarzenegger."

Utah Trademark Protection Act on Hold?

The news on the Trademark Protection Act passed by the Utah Legislature earlier this year is that it likely will not be enforced when it goes into effect today.  This news came after Utah lawmakers met, one might argue rather belatedly, with high-tech execs who aired their concerns about the law.  Eric Goldman at the Technology & Marketing Law Blog weighs in on the news here.  Hat tip to Techdirt.

The Power of Google

John Welch at The TTABlog discusses another victory by Google, Inc. at the TTAB, this time against the mark BLOGLE.  As he points out, the numbers that Google offered up in support of the "fame" factor are "staggering."  I don't know which is more amazing, the 300 million visitors per day or the explosive growth in revenue over just four years.

Eric Goldman's March 2007 Quick Links

I highly recommend checking out Eric Goldman's March 2007 Quick Links, Google Edition and March 2007 Quick Links Part 2 at the Technology & Marketing Law Blog.  As usual, well worth the read.

Second and Ninth Circuits Part Ways on the Famous Marks Doctrine

With the Second Circuit's recent decision in ITC Ltd. v. Punchgini, Inc., No. 05-0933-cv, the Ninth Circuit (some might argue unsurprisingly) stands alone among the federal appeals courts in recognizing the so-called "famous marks doctrine" under federal trademark law.  The famous mark doctrine provides an exception to the territoriality principle that a trademark has a separate legal existence under each country's laws and that ownership of a mark (even a famous one) in one country does not automatically confer the exclusive right to use that mark in another country.  But the famous marks doctrine recognizes an exception to this principle "for those foreign marks that, even if not used in the United States by their owners, have achieved a certain measure of fame within this country."

ITC held a federal registration for the mark "BUKHARA" for restaurant services that it used in connection with two restaurants in New York and Chicago.  But ITC closed the New York BUKHARA restaurant in 1991, followed by the cancellation of the franchise BUKHARA restaurant in Chicago in 1997.  Since that time, ITC admittedly has not owned, operated or licensed any restaurant in the United States using the BUKHARA mark.

Meanwhile, in 1999, the defendants decide to open an Indian restaurant in New York City and apparently thought "Bukhara Grill" seemed like a fine name.  Notably, each of the individual defendants had previously worked at ITC's New York Bukhara restaurant or the Bukhara restaurant in New Delhi.  ITC, however, wasn't particularly pleased about the defendants' name choice or the decor of their restaurant and sued them for, among other things, federal trademark infringement, unfair competition and false advertisement as well as parallel claims under New York common law.

As to the claims asserted under federal law, the Second Circuit had no good news for ITC.  It first affirmed the District Court's conclusion that ITC had abandoned its registered BUKHARA mark for restaurant services as well as its corresponding order that the registration be canceled.  Then, in a detailed discussion, the Second Circuit declined to join with the Ninth Circuit in recognizing the famous mark doctrine noting that although a "persuasive policy argument" could be advanced for recognizing the doctrine, that alone "is not a sufficient ground for its judicial recognition, particularly in an area regulated by statute."  And finally, the Second Circuit affirmed the District Court's conclusion that ITC lacked standing to assert a false advertising claim under the Lanham Act.

Happily for ITC though this isn't baseball and despite three strikes, all may not be lost for ITC.  The Second Circuit concluded that it could not determine the propriety of the District Court's dismissal of ITC's parallel state unfair competition claim because that determination depended on whether New York recognized the famous mark doctrine as a matter of state law.  Therefore, the Second Circuit chose to certify the following question to the New York Court of Appeals:  "Does New York common law permit the owner of a famous mark or trade dress to assert property rights therein by virtue of the owner's prior use of the mark or dress in a foreign country?"  If New York does recognize the famous mark doctrine, the Second Circuit also asked the New York Court of Appeals to indicate the scope of that doctrine.

Rebecca Tushnet also has a good synopsis of the case at the ever thorough 43(B)log.

Utah Trademark Protection Act

Much has already been said (mostly bad but some good) about the Trademark Protection Act recently adopted by the Utah Legislature, which, according to the Act's general description, "establishes a new type of mark, called an electronic registration mark, that may not be used to trigger advertising for a competitor and creates a database for use in administering marks."

Whatever the merits of the legislation, the debate over the pros and cons of the Act has demonstrated the power and reach of blogs (if that still needed to be demonstrated) with even the Act's sponsor, Utah Senator Dan Eastman, taking to the blogosphere to defend the Act from its critics (or "the fringes" as he rather uncharitably characterizes them).  See here for an interesting critique of the Senator's defense from Eric Goldman of the Technology & Marketing Law Blog.

Check back for more on the Utah Trademark Protection Act as events unfold but for now, see here for the letter from the Electronic Frontier Foundation, Professor Eric Goldman and others to the Utah Attorney General asking him to stay implementation of the Act pending further investigation (hat tip to Martin Schwimmer at The Trademark Blog).