Pattishall IP Blog

June 5, 2013

Flea Market Operator Hit for Over $5 Million for Permitting Sale of Counterfeit Products

Filed under: Counterfeiting, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 5:41 pm

By Janet Marvel, Partner

The Sixth Circuit, in a case of first impression, held that a flea market operator can be contributorily liable for counterfeiting carried on by vendors renting stalls at his market.  The case illustrates that contributory infringement can be a valuable tool against counterfeiting when the primary infringers are small, numerous, anonymous or (individually) commercially insignificant.

In Coach, Inc. v. Goodfellow, 2013 WL 2364091 (6th Cir. May 31, 2013), the appellate court affirmed a jury award of over $5 million dollars in damages, and a grant of $186,666.61 in attorneys’ fees against Goodfellow, the operator of a flea market at which counterfeit goods were sold.  The district court had granted summary judgment on liability, which Goodfellow failed to contest.  While Goodfellow technically had forfeited his ability to appeal the liability ruling, the court nonetheless used its discretion to render an opinion on liability.

Goodfellow received a letter from Coach in January, 2010, from the district attorney in March, and was served with the complaint in June.  Police raided the market in April, March and June.  In response, Goodfellow distributed pamphlets telling vendors not to counterfeit, and held a voluntary meeting with some vendors, many of whom did not speak English.  He also posted signs saying “counterfeit is prohibit,” but these were meant to address counterfeit currency.  While he claimed to have ejected 16 vendors over a one year period, the court held that “this effort, if believed, is hardly compelling evidence of a reasonable response….”   Goodfellow claimed to believe other counterfeit goods were genuine, but did not check.  He did not train his employees to recognize counterfeits.  Vendors did not sign any agreements that they would not sell counterfeit goods.

The court found that Goodfellow’s remedial measures fell short.  It approved the district court’s conclusion that Goodfellow had engaged in “ostrich-like practices.”  According to the court, Goodfellow “continued to supply flea market resources to vendors with knowledge of and willful blindness toward ongoing infringing activities, thereby facilitating continued infringing activity.”

This supported the court’s finding that Goodfellow was contributorily liable.

Goodfellow equated his anti-counterfeiting efforts with those of eBay, which the court found acceptable in Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010).   There Tiffany sued eBay for contributory liability for sale of counterfeit Tiffany jewelry on the eBay website.  Perhaps the most important distinction between the flea market bricks-and-mortar contributory infringement standard and that imposed on eBay is the speed with which items are listed and the sheer number of them.  The court in Tiffany held that eBay’s general knowledge that counterfeiting was occurring on its site did not create liability.  Specific knowledge (which Goodfellow had, but eBay did not) was required.  It didn’t hurt that eBay spent millions on anti-counterfeiting and had a sophisticated program for dealing with it.

Courts impose contributory liability on those who know about and facilitate counterfeiting, as well as those who would simply “stick their heads in the sand,” refusing to recognize or police it.  Increasingly, liability applies not only to those who sell goods, but also those that offer services.  Manufacturers and licensors suffering from numerous small scale counterfeits would do well to add actions for contributory counterfeiting and trademark infringement to their arsenals.

*     *     *

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 Sixth Edition of the Trademarks and Unfair Competition Deskbook, recently published by LexisNexis.

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September 10, 2012

When Does the First Amendment Trump Trademark Law? 11th Circuit Adopts Rogers v. Grimaldi Test

Filed under: Constitution, First Amendment, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:08 pm

By Janet Marvel, Partner

In 1989, the Second Circuit adopted a balancing test to weigh the value of an artist’s First Amendment rights against the value of trademarks depicted in the artist’s work.  Rogers v. Grimaldi, 875 F.2d 994 (9th Cir. 1989).  In June of this year, the 11th Circuit adopted essentially the same test in University of Alabama Board of Trustees v. New Life Art, Inc., 683 F.3d 1266 (11th Cir. June 11, 2012).

Some Background

In Rogers v. Grimaldi, 875 F.2d 994 (9th Cir. 1989), Ginger Rogers sued over an Italian film titled “Ginger and Fred,” which was about two cabaret performers who imitated Ginger Rogers and Fred Astaire.  Ms. Rogers alleged violations of her rights under the federal trademark statute (the Lanham Act) and of her right of publicity under state law.  The district court dismissed the claim and the Second Circuit affirmed.  The court stated that enjoining the distribution of artistic works does not violate the First Amendment where the public interest in avoiding consumer confusion outweighs the public interest in free expression.  For movie titles, the court stated that unless the title had no artistic relevance to the underlying work or was expressly misleading, no injunction should issue.  Other courts have adopted similar tests, including the Sixth Circuit, in ETW v. Jireh Publishing, Inc., 332 F.3d 915 (6th Cir. 2003), where the court permitted defendant’s use of Tiger Woods’ name on the inside flap of an envelope containing an art print featuring his image, and in the narrative description for the print.  See also ESS Entertainment 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095 (9th Cir. 2008) (scene in a video game featuring trademark of plaintiff’s entertainment club did not infringe plaintiff’s trademark rights).

The Crimson and White

In University of Alabama Board of Trustees v. New Life Art, Inc., 683 F.3d 1266 (11th Cir. June 11, 2012), the University sued an artist who, for over thirty years, had painted and sold images of plays in University of Alabama football games.  The parties had entered into various licensing agreements, apparently licensing some University of Alabama logos, among other things.  In 2002, the University demanded that the artist take a license for all of his works because they depicted University uniforms in the colors crimson and white, which the University stated were its trademarks.  The artist declined, arguing that he did not need a license to depict University trademarks within his images.

The court separately considered the parties’ respective rights in calendars, and large-size paintings and prints, and “mundane products,” comprising such things as “‘mini-prints,” mugs, cups, flags, and towels. (more…)

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.


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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January 5, 2012

Using An Employee’s Personal Social Media Accounts Without Her Authorization To Market Employer May Create Liability Under Trademark And Electronic Privacy Laws

Filed under: Advertising, Litigation, Right of Publicity, Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:55 am

by Phillip Barengolts, Trademark Attorney

We’ve all been taught that our work e-mail and social media accounts are owned by our employers, so watch what you say and realize that you have no expectation of privacy in those accounts.  But what happens when an employee uses a personal account to promote her employer?  According to one court, the employer’s use of these accounts without the employee’s authorization can lead to liability under the Lanham Act and the Stored Communications Act. Maremont v. Susan Fredman Design Group, Ltd., Case No. 10 C 7811 (N.D. Ill. Dec. 7, 2011).[1]

The plaintiff, Jill Maremont, was the Director of Marketing, Public Relations, and E-commerce for the defendant Susan Fredman Design Group, Ltd. (SFDG), a prominent interior design firm based in Chicago.  As part of a social media marketing campaign for SFDG, Maremont created a blog on SFDG’s website.  She also promoted SFDG through her personal Twitter and Facebook accounts., including by linking to the SFDG website and blog.  She entered and stored all account access information, including passwords for her personal Twitter and Facebook accounts, on the SFDG server.  She never gave authority to anyone to access her personal Twitter and Facebook accounts. Maremont’s compensation was, in part, based on the overall sales of SFDG, so she had every incentive to promote SFDG.

After suffering a serious accident, Maremont could not work for some time and SFDG decided to continue posting to Maremont’s personal accounts to promote SFDG.  Once she found out, Maremont asked SFDG to stop – but SFDG did not.  After some back and forth about Maremont returning to work for SFDG, she went to another company and sued SFDG over the use of her social media accounts.  (more…)

December 13, 2011

Judge In New Mexico Issues Temporary Restraining Order Against Research In Motion To Prevent Use Of BBX Mark At Conference In Singapore

Filed under: International, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 11:01 am

by Phillip Barengolts, Trademark Attorney

Research In Motion (RIM) planned to introduce its newest mobile platform at the BLACKBERRY developers’ conference (DevCon) in Singapore.  It was going to call it BBX – until Basis International obtained a temporary restraining order against RIM’s use of the name the day before the conference opened.  See Basis Int’l Ltd. v. Research In Motion, Ltd., No. 11‑cv-953, slip op. (D.N.M. Dec. 6, 2011).[1]  Now, RIM is going to call the platform BLACKBERRY 10.  Meanwhile, the suit continues with a hearing on Basis’s motion for preliminary injunction, scheduled for December 19.

The Lanham Act can have extraterritorial application to stop foreign use of an infringing mark under appropriate circumstances.  As stated in the order:

This Court may issue an injunction having extraterritorial effect in order to prevent trademark violations under the Lanham Act where: the extraterritorial conduct would, if not enjoined, have a significant effect on United States commerce, and then only after consideration of the extent to which the citizenship of the defendant and the possibility of conflict with trademark rights under the relevant foreign law might make issuance of the injunction inappropriate in light of international comity concerns.

Id. at 3.

The court decided the facts satisfied these conditions, so issuing a temporary restraining order was appropriate.  From this author’s view, three facts convinced the court: (1) RIM was going to use a mark identical to Basis’s mark; (2) the parties targeted identical consumers, i.e., business software developers; and (3) actual confusion had already arisen – upon RIM’s original announcement of the BBX platform in October, Basis had been contacted about the connection between RIM and Basis.

RIM, a Canadian company, argued that the Lanham Act should not be applied to stop the use of BBX by RIM’s Singapore subsidiary (which was running the conference), but the court found that line of reasoning unpersuasive.  “It is naive to believe that further confusion of the BBX mark in the United States will be confined to only those attending the conference from this country.”  Id. at 4 (emphasis in original).  The court did not explore this conclusion, but did say that “it is not a stretch to state that RIM is attempting global publicity, much of which is aimed at BASIS’s core customer base—U.S. software developers.”

Companies with products in international markets must be cognizant that use of a mark that has a substantial or significant effect on U.S. commerce may result in a violation of the Lanham Act.  This was true even before the age of the Internet, but the Internet has helped blur national boundaries – with no small help from RIM and its BLACKBERRY.

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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 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.


June 10, 2011

First Circuit: Supreme Court Decision Calls into Question Presumption of Irreparable Harm in Trademark Infringement Preliminary Injunction Cases

Filed under: Litigation, Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:37 pm

Categories: Trademark (General), Litigation
Tags: Litigation, Preliminary Injunction, 1st Circuit, Janet A. Marvel

by Janet Marvel, Trademark Attorney

In eBay v. MercExchange L.L.C., 547 U.S. 388 (2006), the Supreme Court reaffirmed that courts must apply “traditional rules of equity” in deciding whether to grant permanent injunctions in patent cases.  It found that the Federal Circuit’s “general rule” in patent cases “that a permanent injunction will issue once infringement and validity have been adjudged” except in “exceptional circumstances” was improper.  Essentially, then, the Court found that courts cannot presume irreparable harm in the patent injunction context.

In many jurisdictions, irreparable harm has been presumed in trademark infringement preliminary injunction proceedings.  After eBay v. MercExchange, courts have considered, and sometimes avoided, the question of whether that presumption remains valid.  See Osmose, Inc. v. Viance LLC, 612 F.3d 1298 (11th Cir. 2010) (“Because the district court did not rely on a presumption of irreparable injury, we need not decide whether such a presumption still applies in the wake of eBay); N. Am. Med. Corp. v. Axiom Worldwide, Inc., 522 F.3d 1211 (11th Cir. 2008) (vacating and remanding preliminary injunction for consideration of whether a presumption of irreparable harm should be applied after the eBay decision); Lorillard Tobacco Co. v. Engida, 213 Fed. Appx. 654 (10th Cir. 2007), cert. denied, 127 S.Ct. 3016 (2007) (“We need not consider how eBay may apply in this context . . . because in any event Lorillard has not shown that any harm Lorillard would suffer in the absence of an injunction outweighed the potential harm to I and G”).  Compare Lorillard Tobacco Co. v. Amouri’s Grand Foods, Inc., 453 F.3d 377 (6th Cir. 2006) (court presumed irreparable harm on a showing of likelihood of success on the merits); Harris Research, Inc. v. Lydon, 505 F. Supp. 2d 1161 (D. Utah 2007) (“The Supreme Court has recently disapproved the use of categorical rules in connection with injunctive relief in intellectual property actions, and Plaintiff must show irreparable injury to support a preliminary injunction.”) (internal quotations and citations omitted).  (more…)

May 27, 2011

Federal Court Determines that Filing of Opposition Along with Settlement Discussions Regarding Use of a Mark is Not Grounds for Declaratory Judgment

Filed under: Litigation, Trademark (General) — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:41 pm

Categories: Litigation, Trademark (General)
Tags: Litigation, Declaratory Judgment, Janet A. Marvel

by Janet Marvel, Trademark Attorney

The Supreme Court in Medimmune, Inc. v. Genentech, Inc., 549 U.S. 118 (2007), set out a new standard for determining whether a case or controversy creates jurisdiction under the Declaratory Judgment Act.  The Medimmune standard states:

[T]he question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interest, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

Id. at 127.  The court in Vina Casa Tamaya S.A. v. Oakville Hills Cellar, Inc., No. 10 Civ. 3025, 2011 WL 1642524 (S.D.N.Y. Apr. 26, 2011),[1] applied that new test in the context of trademark oppositions.  There, Vina Casa Tamaya sought a declaratory judgment that its TAMAYA mark did not infringe Oakville Cellars’ MAYA mark.  Oakville sent Vina Casa a cease and desist letter objecting to its application for federal trademark registration of TAMAYA, but not to its use.  When Vina Casa did not respond, Oakville filed an opposition to registration.  The parties then tried to settle; apparently they discussed use of the TAMAYA mark, but Oakville would not settle on terms permitting continued use.  Vina Casa had used the TAMAYA mark in the U.S. for seven years prior to the suit. (more…)

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