Pattishall IP Blog

February 7, 2014

Utilitarian Shape of Hookah Not Subject to Copyright Protection, Even if Distinctive, Ninth Circuit Holds

Filed under: Copyright, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 3:27 pm

SIA-LRBy: Seth I. Appel, Associate

Inhale Inc.’s efforts to protect the shape of its hookah under copyright law went up in smoke, as the Ninth Circuit affirmed summary judgment in favor of Starbuzz Tobacco, Inc.  Inhale, Inc. v. Starbuzz Tobacco, Inc., 739 F.3d 446 (9th Cir. 2014).[1]

Inhale, a designer and manufacturer of smoking products, sold the hookah[2] shown below:

Hooka

It obtained a U.S. copyright registration for this product.

Inhale sued Starbuzz for copyright infringement in the U.S. District Court for the Central District of California, alleging that Starbuzz sold a similar hookah.  Inhale’s claim was based entirely on the shape of Starbuzz’s hookah.  For purposes of the lawsuit, Inhale disclaimed copyright protection to the skull-and-crossbones graphic.

The district court granted Starbuzz’s motion for summary judgment in 2012, holding that Inhale did not own a valid copyright in the shape of its hookah, notwithstanding its registration.  Last month the Ninth Circuit Court of Appeals affirmed.

The Copyright Act generally protects “original works of authorship,” including sculptural works.  But it does not protect “useful articles.”  Under the Copyright Act, a “useful article” is “an article having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to convey information.”  17 U.S.C. § 101.

Individual design elements of a useful article may be subject to copyright protection, to the extent that they “can be identified separately from, and are capable of existing independently of, the utilitarian aspects of the article.”  17 U.S.C. 101.  Such protectable elements may be either physically separable or conceptually separable.

Inhale argued that the shape of its hookah was conceptually separable from its utilitarian features, but the Ninth Circuit disagreed.  It explained:  “The shape of a container is not independent of the container’s utilitarian function—to hold the contents within its shape—because the shape accomplishes the function.”  739 F.3d at 449.

The court, citing Copyright Office practice, rejected Inhale’s contention that the distinctiveness of the hookah shape affected the separability analysis.  The court observed:

Although Inhale’s water container, like a piece of modern sculpture, has a distinctive shape, “the shape of the alleged ‘artistic features’ and of the useful article are one and the same.”

739 F.3d at 449 (quoting Compendium of Copyright Office Practices II, § 505.03).

The Ninth Circuit also affirmed the district court’s award of attorneys’ fees to Starbuzz under 17 U.S.C. § 505, and further awarded Starbuzz its attorneys’ fees on appeal.

The Ninth Circuit’s decision is a blow to producers of creative works that have utilitarian functions, including other sculptural works such as bottles and vases.  In view of this decision, it may be harder for such entities to address copying by competitors – at least under copyright law.

*     *     *

Seth I. Appel is an associate attorney at 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. Appel’s practice focuses on litigation, transactions, and counseling with respect to trademark, trade dress, copyright and Internet law.


[1] http://scholar.google.com/scholar_case?case=621471655821174883

[2]A hookah is a device for smoking tobacco, in which the smoke passes through a water basin, which filters and cools the smoke before it is inhaled by the user.  See http://en.wikipedia.org/wiki/Hookah.

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March 14, 2012

Sky Diving for Dollars: Ninth Circuit Upholds Jury’s $6 Million Award to Skydive Arizona for Defendants’ Trademark Infringement, False Advertising, and Cybersquatting

Filed under: Advertising, Litigation, Trademark (General) — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 11:12 am

by Phillip Barengolts, Trademark Attorney

Skydive Arizona sued a group of defendants, collectively called “Skyride” by the court, for trademark infringement, false advertising, and cybersquatting.  At trial, the jury awarded Skydive Arizona $1 million in actual damages for false advertising, $2.5 million in actual damages for trademark infringement, $2,500,004 in defendant’s profits from the trademark infringement, and $600,000 for statutory cybersquatting damages.  The district court, upon its own initiative, then doubled the two actual damages awards, for a total of $10.1 million.  Finally, the district court enjoined Skyride from operating in Arizona.  Skyride appealed and, except for the doubling of actual damages, lost.[1]  See Skydive Arizona, Inc. v. Quattrocchi, No. 10-16099 (March 12, 2012), available here: http://www.ca9.uscourts.gov/datastore/opinions/2012/03/12/10-16099.pdf.

Trademark and false advertising litigation is different from other commercial litigation in many respects, but what the Ninth Circuit opinion highlights is the difference in precision required to support monetary damages.  Skyride’s appeal focused on the lack of evidentiary support for the jury award.  Specifically, Skyride argued that the district court abused its discretion by:

(1) upholding the jury’s actual damages award, because Skydive Arizona did not present sufficient evidence concerning the amount of damages; (2) upholding the jury’s lost profits award, because the jury failed to deduct SKYRIDE’s expenses and costs based on the “clearly erroneous” testimony of Skydive Arizona’s expert; (3) enhancing the jury’s damages award to punish SKYRIDE; and (4) upholding and enhancing the entire actual damages, lost profits, and statutory damages award, because the judgment was grossly excessive.

Other than (3), the Ninth Circuit found these arguments unpersuasive.

Under the Lanham Act, a court may award the following in its discretion: (1) defendant’s profits; (2) any damages sustained by the plaintiff; and (3) the costs of the action.  15 U.S.C. § 1117(a).  “In assessing profits the plaintiff shall be required to prove defendant’s sales only.”  Id.  A mark holder is held to a lower standard in proving the exact amount of actual damages.  See La Quinta Corp., 603 F.3d 327, 342 (9th Cir. 2010).  Plaintiff’s damages are measured in the same manner as in tort cases: “the reasonably foreseeable harms caused by the wrong.”  A jury award may be supported by “crude” measures “based upon reasonable inferences.”  See Intel Corp. v. Terabyte Int’l, Inc., 6 F.3d 614, 621 (9th Cir. 1993).

The jury had only the following evidence to support the actual damages award: three exhibits showing Skydive Arizona’s advertising expenditure for the years 1997-2007, declarations and witness testimony blaming Skydive Arizona for problems caused by Skyride’s acts, and counsel’s request that the jury consider Skydive Arizona’s need to engage in corrective advertising.

To establish Skyride’s profits, Skydive Arizona presented an expert who calculated Skyride’s revenues by:

calculating the number of Arizona residents identified in SKYRIDE’s records and then increasing that number by 2.131 to account for files missing residence information.  He then multiplied that number by an average transaction amount, and then adjusted for resulting revenue from out-of-state residents who also jumped in Arizona.  Lastly, [he] added an interest factor of 10%, using the prejudgment interest rate applicable under Arizona law.

Skyride argued after trial and on appeal that this expert testimony was clearly erroneous because “he did not properly deduct vendor payments or overhead costs, and he applied an improper interest rate.”  The Ninth Circuit stressed that Skyride did not challenge the admissibility of this expert testimony under Federal Rule of Evidence 702 through a Daubert challenge at any point during the trial and, therefore, upheld the award of profits.  Of course, both courts could also have pointed out that, under the Lanham Act, the burden of deducting vendor payments and overhead was Skyride’s and not Skydive Arizona’s.

Skyride finally won a point on appeal by successfully arguing that the district court doubled the damages awards to punish Skyride.  Lanham Act damages must be compensatory and cannot be punitive. 15 U.S.C. § 1117(a).  The district court’s commentary surrounding the doubling conveyed its distaste for Skyride’s “purposefully deceitful” conduct and need for Skyride to “accept the wrongfulness of [its] conduct.”

Skyride’s last argument was that the overall award of $10 million at trial was grossly excessive and punitive for a company with “only $23 million” in nationwide gross revenues.  The Ninth Circuit easily dismissed this contention that, essentially, Skyride was “too small to justify such a large award.”

So, here is what you need to support a $6 million damages award in a trademark and false advertising case: an unsympathetic defendant, proof of your advertising expenditures, proof of defendant’s revenues, and evidence suggesting the need for corrective advertising.  Your results may vary.

*       *      *

 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.


[1] Skydive Arizona appealed the geographic scope of the injunction as being too narrow and lost, but we won’t address that here.  For further background on this case and the facts at issue, see http://blog.ericgoldman.org/archives/2010/05/geographic_trad.htm.

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February 9, 2012

Defendant Hoist Manufacturer Awarded Attorney’s Fees in Trade Dress Case Secalt v. Wuxi Shenxi Construction Machinery

Filed under: Litigation, Trade Dress — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 12:30 pm

By Janet Marvel, Trademark Attorney

In Secalt S.A. v. Wuxi Shenxi Construction Machinery Co., Ltd., Nos. 10-17007 & 11-15066, 2012 WL 373102 (9th Cir. Feb. 7, 2012), plaintiff, a manufacturer of traction hoists (typically used for commercial building and window washing), alleged that it owned trade dress rights in the following design:

The Ninth Circuit ruled for the defendant, the maker of an apparently identical product.  The court’s opinion rested on its conclusion that, to paraphrase, no one cares what a traction hoist looks like, as long as it works.  Id. at *4.  Since plaintiff’s design was not the subject of a federal trademark registration, plaintiff was required to prove that it was non-functional and that it had secondary meaning.  Plaintiff could not prove non-functionality.  A design is functional if it “is essential to the use or purpose of the article, or affects the cost or quality of the article.”  Inwood Laboratories v. Ives Laboratories, 456 U.S. 844 n.10 (1982).

The Ninth Circuit, after citing the confusing de jure and de facto definitions of functionality (which have been rejected as unhelpful by the TTAB), considered the much more understandable factors set forth in Disc Golf Ass’n v. Champion Discs, Inc., 158 F.3d 1002 (9th Cir. 1988).  Those factors are:  “(1) whether the design yields a utilitarian advantage, (2) whether alternative designs are available, (3) whether advertising touts the utilitarian advantages of the design, and (4) whether the particular design results from a comparatively simple or inexpensive method of manufacture.”  Secalt, 2012 WL 373102, at *4 (citing Disc Golf, 158 F.3d at 1006).

No factor supported the plaintiff.  Plaintiff’s own engineers testified that the hoist’s features were utilitarian.  There were alternative designs, but they were functional too.  Plaintiff’s own advertising stated that its hoists were rectangular (“cubist” in plaintiff’s trade dress parlance) so they would not roll off of tables.  All hoists cost pretty much the same, so the last factor was neutral.  The court found that plaintiff’s evidence was so lacking that defendant was entitled to its attorney’s fees.

The Secalt case provides the opportunity to revisit a best practice in trade dress protection.

Although a utilitarian design can only be protected for a limited time, and a purely ornamental design does not necessarily function as a source indicator, when designing a product, the  developer has the opportunity to consider adding a unique feature and repeating it throughout a product line.  If this is possible, then the product manufacturer has the opportunity to use the feature to develop and support brand recognition, even after its utility patent for the product expires, at which time copyists otherwise legally would be allowed to create competing identical products.

 *     *     *

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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December 8, 2010

Ninth Circuit Finds that Trademark Owner Did Not Exercise Adequate Quality Control Under an Implied License

Filed under: Licensing — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:46 pm

Categories:  Trademark (General)
Tags:  Licensing, 9th Circuit, Ashly A. Iacullo

by Ashly Iacullo, Trademark Attorney

We previously highlighted the importance of quality control in trademark licensing.[1] In most cases, an express, written trademark license governs the trademark owner’s duty to exercise quality control and also provides the method and manner in which the goods sold under the licensed trademark will be inspected.  But what happens when no such express license exists?

The Ninth Circuit recently addressed this issue in FreecycleSunnyvale v. The FreeCycle Network, No. 4:06-cv-00324 (9th Cir. Nov. 24, 2010).[2] Even where an express license does not exist, a trademark owner still has an obligation to control the use of its marks.  Although the absence of a written agreement itself is not fatal, a trademark owner must establish firm standards for use of its trademarks and ensure that those standards are maintained.

In the spring of 2003, TFN popularized the concept of “freecycling,” or donating unwanted items to others rather than disposing of them.  This practice is primarily conducted through online groups including Yahoo!, Google and other similar forums.  TFN had been using the trademarks FREECYCLE, THE FREECYCLE NETWORK and a logo (“FREECYCLE Marks”)[3] and licensed them to others. (more…)

December 1, 2010

Ninth Circuit Articulates Its Version of the Acquiescence Defense to Trademark Infringement

Filed under: Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:13 pm

Categories: Trademark (General)
Tags: Phillip Barengolts, Trademark Infringement, Acquiescence, 9th Circuit

by Phillip Barengolts, Trademark Attorney

Acquiescence has long been accepted as a defense to a claim of trademark infringement in most jurisdictions.  The Ninth Circuit recently articulated its definition of the defense in Seller Agency Council, Inc. v. Kennedy Center for Real Estate Education, Inc., No. 08-56791 (9th Cir. 2010).[1]

Specifically, the Ninth Circuit found that acquiescence “limits a party’s right to bring suit following an affirmative act by word or deed by the party that conveys implied consent to another.”  Accordingly, it held that the elements of an acquiescence defense are: (1) the trademark owner 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.  Prejudice must involve reliance on the trademark owner’s affirmative act or deed, and the reliance must be reasonable.  The reasonableness of the reliance depends on the content of the affirmative act and the context in which that act was performed.  By contrast, to establish a laches defense in the Ninth Circuit a defendant must, first, establish that the plaintiff’s delay in bringing suit was unreasonable and, second, that the defendant was prejudiced by the delay. (more…)

November 5, 2010

Use of a Domain Name, Originally Registered with a Trademark Owner’s Permission, to Extract Payment from the Trademark Owner Violates the Anticybersquatting Consumer Protection Act

Filed under: Cybersquatting, Internet — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:46 pm

by Phillip Barengolts, Trademark Attorney

Domain names have become increasingly important to business.  Consumers expect to find a brand at the eponymous domain name.  When that expectation is thwarted, a consumer may shop somewhere else – much to the harm of the business.

Fortunately for brand owners, Congress passed the Anticybersquatting Consumer Protection Act (ACPA), which establishes liability where: 1) a defendant “has a bad faith intent to profit” from the use of a protected trademark; and 2) the defendant registers, traffics in, or uses a domain name that is identical or confusingly similar to the protected mark.[1] The Ninth Circuit found in DSPT Int’l, Inc. v. Nahum, No. 08-55062 (9th Cir. Oct. 27, 2010),[2] that a bad faith intent to profit from a domain name may arise at any time a defendant owns the registration for a domain name – not only at the time of registration. (more…)

September 21, 2009

Ninth Circuit Rules That Paris Hilton May Proceed with Her Right of Publicity Claim Despite Hallmark’s Free Speech Challenge

Filed under: First Amendment, Right of Publicity — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 8:35 pm

by Phillip Barengolts, Trademark Attorney

Companies must be careful when considering the use of a person’s image, likeness or other identifying material for commercial purposes without that person’s permission because many states protect a person’s “right of publicity” through statute or the common law.  Thus, unauthorized use can result in liability for damages.

California in particular has a long history of protecting celebrities’ commercial publicity rights.  It also has codified its citizen’s right to be free from meritless lawsuits filed merely to chill their First Amendment rights so that they may comment upon matters of public interest.  These two rights came into conflict when Hallmark decided to use Paris Hilton’s face and her catch-phrase “That’s hot” on one of its birthday cards – shown below.  The inside of the card reads, “Have a smokin’ hot birthday.”

(more…)

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