Pattishall IP Blog

June 18, 2014

REDSKINS Trademark Registrations Canceled After 8 More Years of Litigation

Filed under: TM Registration, Trademark (General), TTAB — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 3:38 pm

 

PB LRby Phillip Barengolts, Partner, and Kristine A. Bergman, Summer Associate

In the long-running dispute between representatives of Native Americans and Pro-Football, Inc. AKA the Washington Redskins (“Washington”), the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (“TTAB”) cancelled six of Washington’s registrations for the mark REDSKINS.[1] It was not the first time the TTAB ruled against Washington, finding that the REDSKINS trademark was disparaging and, therefore, not registrable under Section 2(a) of the Federal Trademark Act.[2] Of course, that has been the nickname of the Washington football team since 1932.

Despite mass media misinterpretation of the implications of this opinion, as the TTAB expressly stated, “This decision concerns only the statutory right to registration under Section 2(a). We lack statutory authority to issue rulings concerning the right to use trademarks.” (emphasis original). This decision does not require the Washington team to change its name. It does not prevent the team from continuing to use the REDSKINS nickname in marketing. It does not affect the team’s ability to license merchandise using the REDSKINS name.[3] Furthermore, it does not prevent the team from suing to enforce its rights in the REDSKINS name against others who may try to use it.[4] It merely prevents the team from enjoying the special protections afforded to an owner of a federal registration.[5]

Ultimately, the TTAB found that the registrations for REDSKINS “were disparaging to Native Americans at the respective times they were registered…” This finding is remarkable because the original registration for THE REDSKINS issued in 1967.

In its analysis, the TTAB first determined that the term “redskins,” although associated with the football team, had not been “stripped” of its ethnic meaning. Second, the TTAB found that a “substantial composite” of Native Americans were disparaged by the mark. [6] The primary basis for this conclusion was a resolution issued in 1993 by the National Congress of American Indians (“NCAI”), which represented approximately 30 percent of Native Americans during the relevant time. This resolution also was found to be competent evidence of the past views of Native Americans.

The TTAB also revisited Washington’s laches defense, which was discussed in the Harjo case. The TTAB rejected the defense because it “does not apply to a disparagement claim where the disparagement pertains to a group of which the individual petitioner or petitioners comprise one or more members.” Laches is an equitable defense and, therefore, the TTAB highlighted that “it is difficult to justify a balancing of equities where a registrant’s financial interest is weighed against human dignity.” Moreover, the TTAB noted that laches is inapplicable in cases presenting a broader public policy concern. Finally, the TTAB stated that, even on the merits, the defense could not stand because there was no showing that the petitioners had unreasonably delayed in bringing the petition after each reached the age of majority or that there was economic prejudice to Washington due to the delay.

Unusually for a TTAB decision, there was a dissent. Lest the dissenting judge be deemed insensitive, the primary criticism levelled at the majority was that the evidence presented by the petitioners was insufficient to prove that “redskins” was a disparaging term in 1967 (and when the subsequent trademark registrations issued). For purposes of the eventual appeal, the dissent has some merit because the evidence relied on by the petitioners was the same as that relied on by the Harjo petitioners – and which was deemed insufficient by the D.C. Circuit to support the TTAB’s original decision finding REDSKINS disparaging.

Despite pressure from the Obama administration, Washington team owner Dan Snyder has refused to change the team’s name.[7] So, stay tuned for the eventual appeal.

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Phillip Barengolts is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois. Pattishall McAuliffe represents both petitioners and defendants in trademark, copyright, trade secret and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues. Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, unfair competition, trade secret, Internet, and copyright law. He teaches trademark and copyright litigation at John Marshall Law School, and co-authored Trademark and Copyright Litigation, published by Lexis Publishing.

Kristine A. Bergman is a summer associate with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP.

 

[1] http://ttabvue.uspto.gov/ttabvue/v?pno=92046185&pty=CAN&eno=199.

[2] The original petition to cancel the REDSKINS trademark registrations was brought on September 10, 1992, and the petitioners prevailed before the TTAB. See Harjo v. Pro Football, Inc., 30 U.S.P.Q.3d 1828 (TTAB 1994). The United States District Court for the District of Columbia reversed the TTAB’s original decision, which was upheld by D.C. Circuit Court of Appeals. However, that ruling relied on the defense of laches because the petitioners had waited too long to bring the petition to cancel after reaching the age of majority — the issue of disparagement on the merits was not resolved.

[3] Unless a specific license had a requirement that the mark be registered, which the NFL undoubtedly would not have agreed to, given the long pendency of this objection.

[4] But see http://tushnet.blogspot.com/2014/06/unregistrable-means-unprotectable-by.html. The decision discussed by Prof. Tushnet here addresses very different facts, but it raises an interesting potential defense to any infringement claims Washington may bring over the REDSKINS mark in the future, if the TTAB decisions is upheld on appeal, of course.

[5] Perhaps of greatest importance in the context of merchandising would be the unavailability of a claim of counterfeiting, for which registration is required.

[6] Of note, the TTAB stated that a “substantial composite” need not be a majority and ultimately found that “thirty percent is without doubt a substantial composite.”

[7] U.S. Patent and Trademark Office Cancels Redskins Trademark, Huff. Post (June 18, 2014 at 10:22 A.M), http://www.huffingtonpost.com/2014/06/18/redskins-trademark-canceled_n_5507169.html.

 

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March 25, 2014

Lexmark Case Decided – U.S. Supreme Court Creates New Standard for False Advertising Claims

Filed under: Advertising, Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 5:45 pm

Widmaier_Uli_1 F LRBy: Uli Widmaier

In Lexmark Int’l, Inc., v. Static Control Components, Inc., No. 12-873 (March 25, 2014), the U.S. Supreme Court held that a party alleging false advertising under Section 43(a) of the Lanham Act, 15 U.S.C. Sec. 1125(a), must show “an injury to a commercial interest in sales or business reputation proximately caused by the defendant’s misrepresentations.”

This holding creates a new standard for false advertising claims and invalidates familiar legal doctrine.

THE FACTS OF THE CASE
Lexmark, the defendant in this lawsuit, manufactures laser printers and sells toner cartridges for these printers. Static Control, the plaintiff, makes components for remanufacturers of Lexmark printer cartridges.
Static Control had alleged “lost sales and damage to its business reputation” as a direct result of Lexmark’s false, misleading, and derogatory statements about Static Control and its clients, the remanufacturers of Lexmark toner cartridges.

THE LAW PRIOR TO LEXMARK
U.S. courts had long used “three competing approaches to determining whether a plaintiff has standing to sue [for false advertising] under the Lanham Act.” A plaintiff who did not have the requisite standing could not bring a false advertising claim.

The Supreme Court rejected each of these tests. They are no longer valid law.

THE NEW LAW
In Lexmark, the Supreme Court held that a plaintiff’s ability to sue for false advertising is no longer a question of “standing.”

Rather, it “presents a straightforward question of statutory interpretation: Does the cause of action in Sec. 1125(a) extend to plaintiffs like Static Control?” Put another way, the question is “whether Static Control falls within the class of plaintiffs whom Congress has authorized to sue under Sec. 1125(a).”‘

The courts must answer this question by considering two factors: (a) the zone of interests protected by the law invoked, and (b) proximate cause.

(a)    Zone of Interests – For the zone of interests inquiry, the Supreme Court held that the plaintiff must allege and prove “an injury to a commercial interest in reputation or sales.”

This requirement is not met by “a consumer who is hoodwinked into purchasing a disappointing product,” or by “a business misled by a supplier into purchasing an inferior product.”

(b)    Proximate Cause – For the proximate cause inquiry, the Supreme Court held that the plaintiff must allege and prove “economic or reputational injury flowing directly from the deception wrought by the defendant’s advertising; and that occurs when deception of consumers causes them to withhold trade from the plaintiff.”

This requirement is not met “when the deception produces injuries to a fellow commercial actor that in turn affect the plaintiff.”

APPLYING THE NEW LAW TO STATIC CONTROL’S FALSE ADVERTISING CLAIM

(a)    Zone of Interests – Static Control alleged that its “position in the marketplace has been damaged by Lexmark’s false advertising.” Therefore, the Supreme Court held, Static Control is “within the zone of interests” protected by Section 43(a) of the Lanham Act.

(b)    Proximate Cause – Static Control also satisfied the proximate cause requirement because it alleged “that Lexmark disparaged its business and products by asserting that Static Control’s business was illegal.” As the Supreme Court explained, “when a party claims reputational injury from disparagement, competition is not required for proximate cause; and that is true even if the defendant’s aim was to harm its immediate competitors, and the plaintiff merely suffered collateral damage.”

In addition, Static Control’s specific business model supported a finding of proximate cause. Static Control’s products “both (1) were necessary for, and (2) had no other use than, refurbishing Lexmark toner cartridges.” Therefore, any false advertising directed at remanufacturers of Lexmark toner cartridges “necessarily injured Static Control as well.”

The Supreme Court noted that its approval of Static Control’s false advertising claim extends only to Static Control’s allegations. Static Control still has to prove both the zones of interest element and the proximate cause element of its Section 43(a) claim with factual evidence.

EDWARD S. ROGERS AND THE MEANING OF “UNFAIR COMPETITION”
The term “unfair competition” does not mean that the plaintiff and the defendants must actually be competitors.

To drive home that oft-misunderstood point, the Supreme Court quoted a 1929 (!) article in the Yale Law Journal by the drafter of the Lanham Act and former name partner of the Pattishall law firm, Edward S. Rogers. Rogers – whom the Supreme Court calls a “leading authority in the field” – put the matter memorably: “There need be no competition in unfair competition, just as there is no soda in soda water, no grapes in grape fruit, no bread in bread fruit, and a clothes horse is not a horse but is good enough to hang things on.”

In other words, it is a mistake, explained the Supreme Court, “to infer that because the Lanham Act treats false advertising as a form of unfair competition, it can protect only the false-advertiser’s direct competitors.”

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Uli Widmaier is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois. Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals. The firm advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues. Uli’s practice focuses on domestic and international trademark, copyright, trade dress and Internet law and litigation.

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November 22, 2013

“THANKSGIVUKKAH” Convergence of Thanksgiving and Hanukkah—The Latest Pop Culture Trademark Sensation

Filed under: TM Registration, Trademark (General), Uncategorized — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:54 am

By Belinda Scrimenti, Partner

Many media outlets are asking:  Where is Adam Sandler when you need him?[1]  His well-known Hanukkah Song is due for a new verse that celebrates a hot new holiday “trademark.”

Popular culture events frequently are reflected in trademark filings.  The latest:  “THANKSGIVUKKAH” – This year’s rare convergence of Thanksgiving with the first full day of Hanukkah.   According to reports, the last time the overlap occurred was in 1888, and physicist Jonathan Mizrahi has calculated that the event will not occur for another 79,000 years.[2]

Indeed, this “once-in-eternity” event has brought a “cornucopia of money-making” opportunities as described by USA Today.[3]  And where there’s a money-making opportunity, there must be a trademark.

Reportedly, the “Thanksgivukkah” term was coined by a Boston resident, Dana Gitell,[4] who had the foresight to protect the mark by obtaining trademark registrations for the term, in Class 16 for greeting cards and other party goods, and in Class 25 for t-shirts and baby garments.  The applications, based on a stated first use date of December 3, 2012, were filed one day later, but nearly a year before the 2013 holiday.[5]

In another oft-reported story, a 9-year-old New York boy, Asher Weintraub, “invented” the “Menurkey” – a turkey-shaped menorah – and with his parents’ help, raised more than $48,000 on Kickstarter for the product.[6]   They have already filed for a federal trademark registration.[7]

Anxious to get in on the “Thanksgivukkah” trademark action?  Despite many media references to “Gobble tov,” as of this writing nobody has sought to register a trademark for it.  Also available:  “Hanu-Giving” and “Challahday Greetings,” the latter of which was first registered back in 1985 and has long since expired.

The trademark office is often a reflection of popular culture, but not surprisingly, many of these marks either never make it to registration, or are quickly forgotten and abandoned.  Government and historical events often spawn these filings.   For example, seven applications have been filed that incorporate the term “Obamacare” – mostly related to insurance services.  Three have already been abandoned, and four have pending office actions.  Nevertheless, this volume of filings pales in comparison to the adoption of other government catchphrases.

Remember the Iraq War’s “Shock & Awe”?  Within hours and days following the initial attack on Baghdad, applications for “SHOCK & AWE” in various formulations started flooding in to the USPTO.  Not counting applications for other marks incorporating the terms, 36 “SHOCK & AWE” applications were filed for everything from golf clubs to pesticides, lingerie to fireworks, and even “infant action crib toys.”  Of that, only four were eventually registered and remain on the register today.

During the same period, the ire over France’s lackluster support of the United States in the Iraq War led to another pop culture trademark spat.  French fries became “Freedom Fries.”   Within 60 days of the controversy, six companies sought to obtain a trademark registration for the term, and one tried two years later.  The first user of the mark ultimately prevailed in the registration battle, but years later, allowed the registration to go abandoned for failure to file the Section 8 maintenance declaration.[8]

The king of pop culture filings, however, occurred at the 2000 year millennium.  USPTO records reflect over 320 filings for trademarks incorporating the term “Y2K.”  Of that number, only 27 ultimately registered.  Today, only one registration remains on the register – for business consulting and information services.[9]

In contrast, the USPTO records may well be a good barometer of what is highly unpopular in the United States – as no one sought to register “FISCAL CLIFF,” “DEBT CEILING” or “GOVERNMENT SHUTDOWN”!

With no threats of the fiscal cliff, debt ceiling negotiations or a government shutdown hanging over the month of November, that brings us back to Thanksgiving.  A far more enjoyable government event remains free of trademark interlopers – no one has applied to register “TURKEY PARDON.”

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Belinda Scrimenti is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.   Belinda’s practice focuses on litigation in trademark, copyright, trade dress, and Internet law, as well as trademark prosecution and counseling.  She has worked on numerous matters relating to the registration, protection, and enforcement of trademarks, and litigated in over 40 U.S. federal district courts.

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[1] See, e.g., http://www.miamiherald.com/2013/11/12/3748399/this-year-thanksgiving-hanukkah.html; http://mainstreetmusingsblog.com/2013/11/04/thanksgiving-and-hanukkah-makes-thanksgivukkah/; http://www.kansascity.com/2013/11/11/4614193/this-year-thanksgiving-hanukkah.html
[2]
http://jonathanmizrahi.blogspot.com/2013/01/hanukkah-and-thanksgiving-once-in.html; see http://bigstory.ap.org/article/gobble-tov-american-jews-ready-thanksgivukkah
[3] http://www.usatoday.com/story/news/nation/2013/11/14/thanksgivukkah-products/3516299/
[4] http://en.wikipedia.org/wiki/Thanksgivukkah#cite_note-22
[5] See U.S. Registration Nos. 4,371,793 and 4,379,381.
[6] http://bigstory.ap.org/article/gobble-tov-american-jews-ready-thanksgivukkah; http://www.usatoday.com/story/news/nation/2013/11/14/thanksgivukkah-products/3516299/; http://online.wsj.com/news/articles/SB10001424052702304176904579112022682954300
[7] See U.S. Application Serial No. 85/956314.
[8] See U.S. Registration No. 3,220,999
[9] See U.S. Registration No. 3,677,414

September 30, 2013

The Likely Impact of a Federal Government Shutdown on the United States Patent and Trademark Office, Copyright Office, and Federal Courts

Filed under: Copyright, TM Registration, Trademark (General) — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:10 pm

By Belinda Scrimenti, Partner

Like many areas of commerce to be effected in the United States, the threatened government shutdown – currently scheduled for midnight on Tuesday, October 1, 2013 – will impact trademark owners, copyright applicants, and federal court litigants.  Immediately available information suggests that a brief shutdown would have little impact, but the impact of a longer shutdown is uncertain.  We will keep current status information posted here.

Patent and Trademark Office

The United States Patent and Trademark Office (“USPTO”) has announced that, in the event the October 1, 2013 shutdown comes to pass, it will remain open and will continue to operate as usual for a period of as much as four weeks.  The USPTO is able to keep its doors open because it has enough available reserve fee collections  to remain in operation until that date.  Should a shutdown occur and continue longer than the four-week period, the USPTO has advised that it “would shut down at that time, although a very small staff would continue to work to accept new applications and maintain IT infrastructure, among other functions.”  The USPTO has advised that it will continue to post information on its website as it becomes available.  The agency’s plan for an orderly shutdown are available on page 78 of the United States Department of Commerce’s shutdown plan.  http://www.commerce.gov/sites/default/files/documents/2013/september/2013_doc_lapse_in_appropriations_plan_9_27.pdf

Copyright Office

The United States Copyright Office has not issued any public release about its operations during a shutdown.  Like all agencies, it will be required to follow Office of Management and Budget procedures outlining an orderly shutdown, which will leave only “exempt” (i.e., essential) personnel in place.  It remains unclear what effect this would have on services, such as, for example, the issuance of expedited copyright registrations during a shutdown.

Federal Courts

The federal court system will face a more urgent shutdown date.  The Judiciary has announced that, should Congress not agree on a continuing resolution to fund the government before October 1, “the federal Judiciary will remain open for business for approximately 10 business days. “

On or around October 15, the Judiciary has advised that it “will reassess its situation and provide further guidance.”  The Judiciary also advised that, “[a]ll proceedings and deadlines remain in effect as scheduled, unless otherwise advised.”  The Case Management/Electronic Case Files (CM/ECF) system will remain in operation for the electronic filing of documents with the courts.

The Judiciary has not provided further guidance as to the potential shutdown after October 15.However, the contingency plans likely would be comparable to those announced at the time of the threatened April 2011 shutdown.  At that time, the Judiciary described those functions as “limiting activities to those functions necessary and essential to continue the resolution of cases. All other personnel services not related to judicial functions would be suspended.”  Further guidance during that earlier threatened shutdown suggested that criminal trials would continue as needed, but left uncertain the impact on civil cases.

Following this expectation, late today The Department of Justice published its contingency shutdown plan which can be found at:  http://www.justice.gov/jmd/publications/doj-contingency-plan.pdf.  It “assumes” only a five-day furlough for planning purposes.  With respect to litigation, the Department of Justices’ plan assumes that the Judicial Branch will continue to operate through the furlough, noting that criminal litigation will continue without interruption as an activity essential to the safety of human life and the protection of property.  However, the plan provides that civil litigation “will be curtailed or postponed to the extent that this can be done without compromising to a significant degree the safety of human life or the protection of property,” and requires DOJ civil litigators to seek postponement of such cases.

Check back here for current updates.

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Belinda Scrimenti is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.   Belinda’s practice focuses on litigation in trademark, copyright, trade dress, and Internet law, as well as trademark prosecution and counseling.  She has worked on numerous matters relating to the registration, protection, and enforcement of trademarks, and litigated in over 40 U.S. federal district courts.

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November 27, 2012

When it Comes to Parody Twitter Accounts, Laughing Them Off May Be Your Best Move

Filed under: Internet, Social Media, Trademark (General) — Tags: , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 12:39 pm

by Andrew R. W. Hughes

The @NYTOnIt Twitter feed managed to draw more than 20,000 followers and accolades from Time magazine with its wry send-ups of New York Times trend pieces.  Whenever the New York Times published a story that Benjamin Kabak found obvious, pompous, or otherwise groan-inducing, he took to his @NYTOnIt Twitter handle to mock the venerable publication.  When the New York Times ran a piece on teenagers’ bedrooms being messy, @NYTOnIt was there with, “GUYS, teenagers have messy bedrooms, and The Times is ON IT. http://nyti.ms/X62BZs.”  An article about seniors and the Internet drew, “GUYS, some old people aren’t too up on the Internet, and The Times is ON IT. http://nyti.ms/SaJglV.”

While many people found the account hilarious, the New York Times did not.  This week, the paper complained to Twitter, which suspended the account.[1]  The basis of the complaint was apparently not the content, but Kabak’s use of a modified version of the Times’ “T” logo as the handle’s avatar:

As the paper’s spokeswoman Eileen Murphy explained, “We’re not seeking to disable the account however it is important to The Times that our [trademark] is protected and that it is clear to all users of Twitter that parody accounts or other unofficial Times accounts are not affiliated nor endorsed by The Times.”[2]

Kabak claimed that his use of the modified Times logo was fair use.  Bolstering his claim was the fact that the description of the account explicitly stated that it was “a parody account clearly not associated with any newspaper.”[3]  Nonetheless, in accordance with its rules regarding trademark protection, Twitter initially suspended the account, before restoring it without the potentially infringing logo. (more…)

October 10, 2012

Pattishall Client Prevails On Counterfeiting and Infringement Claims Over Marks for Vehicle Braking Systems; Court Awards Over $13 Million in Damages, Attorneys’ Fees, Costs and Sanctions

Pattishall client Robert Bosch LLC (“Bosch”) was awarded judgment of over $13 Million by default on its claims of counterfeiting, infringement, unfair competition, and false advertising after nearly three years of litigation and “extensive and cumbersome discovery” in Robert Bosch LLC v. A.B.S. Power Brake, Inc., Case No. 09-14468 (E.D. Mich. August 2, 2012).  Pattishall attorneys Belinda Scrimenti, Bradley Cohn, Thad Chaloemtiarana, and Jeffrey Wakolbinger represented Bosch in this litigation in the United States District Court for the Eastern District of Michigan before the Honorable Patrick J. Duggan.

Specifically, Judge Duggan:

  • awarded Bosch $12,875,997.96; consisting of $3,931,220 in defendant’s profits (which the court trebled to $11,793,660), $993,309.00 in reasonable attorneys’ fees, and $89,028.96 in costs;
  • awarded Bosch $142,082.52 as a judgment for previously entered sanctions;
  • enjoined defendants from future use of Bosch’s HYDRO-BOOST and HYDRO-MAX marks in connection with hydraulic vehicle braking systems or remanufactured, reconditioned or rebuilt Bosch products; and
  • ordered the defendants to destroy all infringing products and promotional materials.

The Court’s opinion highlighted the difficulty of assessing actual damages given the actions of the defendants in discovery and found the Pattishall team’s method for estimating damages to be reasonable.  Relying on survey evidence of law firms nationwide, Judge Duggan also found Pattishall’s Chicago-based attorneys’ fees request reasonable and consistent with rates of comparably-situated firms in Detroit with large intellectual property practices under the traditional lodestar analysis.

The defendants’ alleged violations covered a range of activities, including manufacturing of counterfeit products sold under Bosch’s trademarks, use of identical and similar infringing marks on generic products, sale of refurbished Bosch products that failed to meet genuine Bosch specifications, and false advertising of refurbished hydraulic brake products as new, genuine Bosch products.

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July 12, 2012

Seventh Circuit Issues Important Decision Regarding Trademarks in Bankruptcy

Filed under: Licensing, Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:46 am

By Janet Marvel, Trademark Attorney

When a trademark licensor declares bankruptcy, the trustee may reject the trademark license.   The trademark licensee then can lose its rights to use the licensed trademark, which obviously can be a disaster for the licensee.  The Bankruptcy Code protects patent and copyright licensees from this fate, but not trademark licensees.  See 11 U.S.C. § 365(n).

On Monday, the Seventh Circuit created a circuit split and issued a very encouraging decision for trademark licensees.  In Sunbeam Products, Inc. v. Chicago American Manufacturing, LLC., 2012 WL 2687939 (7th Cir. July 9, 2012), the Seventh Circuit held that a trademark licensee retained its rights to use a licensed trademark even after the bankruptcy trustee for the licensor rejected the license agreement.

Some background is necessary.  In 1985, the Fourth Circuit decided Lubrizol Enterprises, Inc. v. Richmond Metal Finishers, Inc., 756 F.2d 1043 (4th Cir. 1985).  There, the court held that an intellectual property licensee loses its rights to use licensed property if the license is rejected in bankruptcy.  Three years later, Congress amended the Bankruptcy Code to permit “intellectual property” licensees to continue to use licensed property after rejection, subject to certain conditions. 11 U.S.C. § 365(n).  The Bankruptcy Code’s definition of “intellectual property” includes patents, copyrights, and trade secrets, but not trademarks.

Many courts interpreted the omission of trademarks from the definition of “intellectual property” to mean that the Lubrizol holding continued to apply to trademark licensees, and they would not retain any license rights upon rejection.  This interpretation has been assailed, but never as aggressively as by the Sunbeam Products decision.  See In re Exide Technologies, 607 F.3d 957 (3d Cir. 2010), cert. denied, 131 S.Ct. 1470 (2011) (Ambro J., concurring).

Chief Judge Easterbrook, writing for the court in Sunbeam Products, found that Lubrizol “was mistaken”.  In the Sunbeam Products case, the debtor-licensor made box fans, among other things.  It contracted with Chicago American Manufacturing (“CAM”) to manufacture the fans, and granted a patent and trademark license to CAM.  The agreement permitted CAM to itself sell box fans it made for the debtor if the debtor could not afford to buy the fans for resale.  When the debtor went bankrupt, Sunbeam bought its trademarks.  Sunbeam wanted to make fans under the licensed mark without competition from CAM.  The trustee rejected CAM’s license agreement, and Sunbeam sued CAM for infringement.

The district court held for CAM, permitting CAM “on equitable grounds” to continue to use the licensed mark.  The Seventh Circuit rejected “equitable grounds” as the rationale for the decision, but affirmed it anyway.  The court held that the omission of trademarks from section 365(n) was not a codification of Lubrizol.  Instead, the court stated that “an omission is just an omission.”  The court then noted that a rejection under the Bankruptcy Code was a breach of contract, in this case by the licensor, “but nothing about this process implies that any rights of the other contracting party have been vaporized.”  Id. at *3.  The rejection ”merely frees the estate from the obligation to perform and has absolutely no effect upon the contract’s continued existence.” Id. at *4 (citations and internal quotations omitted). As such, rejection, even if effected, did not terminate the licensee’s rights.

After Sunbeam Products, trademark licensees in the Seventh Circuit now share “the same rights” under the Bankruptcy Code as other intellectual property licensees.  Whether Sunbeam will appeal to the Supreme Court, and then, whether the Court will grant certiorari, remains to be seen.

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Janet Marvel is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.  Ms. Marvel’s practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, Internet, and copyright law.  She co-authored the Fifth Edition of the Trademarks and Unfair Competition Deskbook, recently published by LexisNexis.

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April 11, 2012

Fourth Circuit Reverses Grant Of Summary Judgment In Rosetta Stone v. Google: Google’s AdWords Program To Be Put On Trial

Filed under: Internet, Litigation, Trademark (General) — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 6:07 pm

by Uli Widmaier, Trademark Attorney

I.   Summary

Rosetta Stone, a leading language-learning software producer, sued Google for trademark infringement and dilution based on Google’s sale of Rosetta Stone’s marks as keywords.  In 2010, the District Court for the Eastern District of Virginia entered summary judgment against Rosetta Stone’s trademark claims (direct, contributory, and vicarious trademark infringement; dilution), and dismissed Rosetta Stone’s unjust enrichment claim.  See Rosetta Stone Ltd. v. Google, Inc., 730 F. Supp. 2d 531 and 732 F. Supp. 2d 628 (E.D. Va. 2010).

Rosetta Stone appealed.  On April 9, 2012, the Fourth Circuit issued its long-awaited decision.  See Rosetta Stone Ltd. v. Google, Inc., — F.3d –, No. 10-2007, 2012 WL 1155143 (4th Cir. April 9, 2012).  The Court reversed the district court’s summary judgment rulings in Google’s favor on Rosetta Stone’s three most important claims – for direct infringement, contributory infringement, and dilution.  The decision is notable for the Court’s frank criticism directed at the district court’s orders, finding substantial flaws in the district court’s analysis of both the factual record and the applicable legal doctrine.  The Fourth Circuit’s analysis contains a number of important assessments of actual confusion evidence, a defendant’s level of knowledge necessary to prove contributory infringement, the possibility of a plaintiff’s proving dilution when recognition of the plaintiff’s mark actually increased during the relevant time period, and several other matters. In light of these determinations, the Fourth Circuit’s affirmance of summary judgment on Rosetta Stone’s claims for vicarious infringement and dismissal of Rosetta Stone’s unjust enrichment claim provides scant comfort for Google.

The Fourth Circuit’s decision may well influence the approach to keyword advertising cases under U.S. trademark law.  With this decision, the law would seem to have become more favorable to trademark owners whose marks are being sold and used as keywords.  Search engines may reconsider some of their keyword advertising practices.  Parties who use others’ trademarks as keywords for their own sponsored links may wish to assess whether any of their practices may be affected by the Fourth Circuit’s analysis.  This is particularly true for situations in which the trademarks used as keywords also appear in the text of a sponsored link.  In the meantime (and barring a settlement), the fate of Google’s current keyword advertising model stands to be determined by a jury.

II.   A Circuit Split in the Making?

The Fourth Circuit’s evaluation of the evidence of actual and likely consumer confusion stands in contrast to two recent decisions from the Ninth Circuit, Toyota Motor Sales, USA, Inc., v. Tabari, 610 F.3d. 1171 (9th Cir. 2010) and Network Automation, Inc., v. Advanced System Concepts, Inc., 638 F.3d 1137 (9th Cir. 2011). The Ninth Circuit premised these decisions on its finding that consumers have become sophisticated in exploring search engine results, including sponsored links.  According to the Ninth Circuit, consumers understand what sponsored links are, recognize them by their labels and graphic set-offs on search results pages, and are “ready to hit the back button whenever they’re not satisfied with a site’s contents.”  Tabari, 610 F.3d at 1179; see also Network Automation, 638 F.3d at 1152.  Moreover, “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.”  Tabari, 610 F.3d at 1179.

Contrast this with the Fourth Circuit’s observation in Rosetta Stone that “even well-educated, seasoned Internet consumers are confused by the nature of Google’s sponsored links and are sometimes even unaware that sponsored links are, in actuality, advertisements.  At the summary judgment stage, we cannot say on this record that the consumer sophistication factor favors Google as a matter of law.”  In fact, the Court noted, such uncertainty constitutes “quintessential actual confusion evidence.”  Rosetta Stone at *10.

“Sensible agnosticism” versus “quintessential actual confusion evidence” – these are rather different, and potentially outcome-determinative, evaluations of rather similar states of mind.  It remains to be seen how these two different approaches will play out in the evolution of trademark law as it relates to keywords and sponsored links. (more…)

March 28, 2012

Court Deals Blow to Hasbro in Dispute Involving Transformers Trademark

Filed under: Litigation, Trademark (General) — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:34 am

by Jeffrey A. Wakolbinger, Trademark Attorney

The storyline developed to market the “Transformers” line of toy robots that transform into vehicles and other objects is probably familiar to any child of the ’80s and certainly to anyone who contributed to the box-office success of the 2007 Transformers movie and its sequels.  It’s a battle between Optimus Prime’s virtuous Autobots and Megatron’s evil Decepticons, an epic robot battle between good and evil.

A somewhat less epic battle is being waged in the Central District of California, where Hasbro, the owner of the Transformers brand, has sued Asus Computer International, a manufacturer of high-end electronics, for trademark infringement and dilution.  See Hasbro, Inc. v. Asus Computer Int’l, Inc., No. 11-cv-10437 (C.D. Cal. Mar. 23, 2012).[1]

Hasbro owns a registration for TRANSFORMERS in class 28 for “toy action figures, toy vehicles, and toy robots convertible into other visual forms.”  Taking advantage of renewed interest in the Transformers brand (owing to the success of the recent film franchise), Hasbro launched the Emmy-nominated “Transformers Prime” animated television series in November 2010 and applied to register its TRANSFORMERS PRIME mark in classes 28 and 41.

On January 4, 2011, Asus announced the launch of its Eee Pad Transformer tablet computer, which uses Google’s Android operating system and is capable of “transforming” from a tablet computer into a laptop when connected to a mobile docking station.  The name did not go unnoticed by Hasbro, which sent Asus a cease-and-desist letter two weeks after the announcement.  Asus’s counsel responded, asserting that Hasbro’s mark did not apply to netbook computers and that Asus’s use of the term was merely descriptive.  No further communications between the parties were exchanged, and Asus began selling the Eee Pad Transformer tablet in April 2011.  On October 19, 2011, Asus announced the second generation of its tablet: the Eee Pad Transformer Prime.  According to Asus, the word “prime” was added to signify the premium nature of the product and “to emphasize the tablet was first in time, rank, authority, and significance.”  It’s also the last name of the Autobots’ protagonist.  Hasbro filed suit on December 16, 2011, and moved for a preliminary injunction shortly thereafter.

The district court denied Hasbro’s motion on March 23, 2012.  The court found that Hasbro failed to establish a likelihood of success on the merits of its claims, explaining, among other things, that Hasbro’s computer-related products, including Transformers-themed USB storage devices, speakers, laptop skins, and a toy “educational laptop,” were “gimmicky,” while Asus’s “sleek” products were anything but.  The court held that this and other equitable considerations weighed against granting the “extraordinary and drastic remedy of preliminary relief.”

The court accepted Asus’s uncontroverted evidence that it would suffer considerable hardship from the recall of goods already in circulation—particularly in light of the very short window of opportunity for computer manufacturers to capitalize on the latest technology—and rejected Hasbro’s claims of hardship in light of the fact that Hasbro waited eleven months after sending a cease-and-desist letter and eight months after Asus launched its original Eee Pad Transformer tablet before filing suit.  Although it may have been the announcement of Asus’s Eee Pad Transformer Prime tablet that ultimately pushed Hasbro into filing, Hasbro still waited two months before filing its complaint on the eve of Asus’s second-generation tablet’s launch.

One could argue that the court’s focus should have been on the time between the announcement of Asus’s second-generation Eee Pad Transformer Prime tablet and Hasbro’s filing, but this is hardly the first case in which a court has resisted a party’s claimed need of immediate injunctive relief in light of a perceived delay in bringing the matter before the court.  Although the denial of a motion for preliminary injunction is not a total defeat, it is often more than meets the eye.  A party making such a motion risks prematurely committing to legal theories and factual positions, losing goodwill with the court, and losing bargaining power with the defendant.  Hasbro’s ultimate likelihood of success remains to be seen, but the outcome of this dispute may easily be influenced by this early decision.  Trademark owners and their counsel must carefully evaluate the strength of their claims and consider appropriate equitable concerns before seeking the “extraordinary and drastic remedy of preliminary relief.”

*          *          *

Jeffrey A. Wakolbinger is an attorney with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.   Jeff’s practice focuses on trademark and copyright litigation, as well as domestic and international trademark, Internet, e‑commerce, and copyright law.


March 27, 2012

Fourth Circuit Overturns Laches Defense Victory for Clear Channel

Filed under: Litigation, Trademark (General) — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:17 am

by Phillip Barengolts, Trademark Attorney

Trademark owners have a duty to police their rights or risk erosion or even loss of those rights.  This duty does not extend to every known infringement, but alleged infringers often assert unaddressed third-party use of other infringing marks as a means of defeating a trademark infringement claim against them.  Thus, a trademark owner should engage in a consistent level of policing to protect its investment in its brand.

As with most types of tort claims, waiting to file suit against a particular infringer carries the risk that the equitable doctrine of laches will bar the suit.  In most jurisdictions laches, may bar monetary relief for trademark infringement, but rarely precludes injunctive relief.  The Fourth Circuit’s recent decision in Ray Commn’s, Inc. v. Clear Channel Commn’s, Inc., No. 11-1050 (4th Cir. Mar. 8, 2012),[1] highlights the difficulty of prevailing on a laches defense and provides guidance for plaintiffs overcoming a laches problem in a suit.

The dispute concerned the trademark AGRINET, used for competing agricultural news radio programs.  Both parties used the mark for many years, but it was undisputed that Ray Communications (“RCI”) was the prior user in all geographic areas.  The relevant issue for laches was whether RCI delayed so long as to bar its trademark infringement claim as a matter of law.  The district court said yes, granting Clear Channel summary judgment on RCI’s trademark infringement claim.  The Fourth Circuit reversed, finding the district court abused its discretion.

The main points raised by the Fourth Circuit in vacating the district court’s decision were:

1.      Although RCI knew of Clear Channel’s uses of AGRINET in certain regions of the country for over 25 years, because it did not use the AGRINET mark in those regions, its trademark infringement claim had not yet accrued;

2.      There was a genuine dispute as to RCI’s grant of licenses to some of Clear Channel’s predecessors-in-interest (even though RCI had trouble producing those licenses in discovery); and

3.      Evidence that Clear Channel had stopped using AGRINET in some jurisdictions to facilitate settlement suggested that Clear Channel would not suffer any economic injury from changing its mark.

The key teachings of this decision are that laches does not start to run until the trademark owner is aware of the infringement, as distinct from mere knowledge of the use.  Keeping a record of all trademark licenses, and other grants of permission, helps protect trademark owners in future suits.  Finally, at least in the Fourth Circuit, to bar injunctive relief, a defendant must meet a higher standard than the traditional factors of 1) knowledge, 2) unreasonable delay, and 3) undue prejudice to the defendant.

 * * *

Phillip Barengolts is a partner with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, a leading intellectual property law firm based in Chicago, Illinois.  Pattishall McAuliffe represents both plaintiffs and defendants in trademark, copyright, and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues.  Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, Internet, and copyright law.  He teaches trademark and copyright litigation at John Marshall Law School, and co-authored Trademark and Copyright Litigation, published by Oxford University Press.


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