Pattishall IP Blog

July 18, 2017

“Brandverbing Your Trademark.” Is that a good thing?

Filed under: Litigation, Trademark (General) — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:43 am

By Janet Marvel

Trademark lawyers get nervous when clients use their trademarks as verbs.  Using a trademark as verb, the lawyers say, might kill the trademark by making it the generic name for a type of product instead of a brand of the product.  But increasingly, modern businesses try to create “brandverbs” (e.g. “Bing and  Decide,” to use a rather ill-fated example).  They praise “brandverbs” as some of the best expressions of brand leadership.  In Elliott v. Google, Inc., 20178 WL 2655528 (9th Cir. June 14, 2017), Google got away with it, arguably because GOOGLE is one of the most famous trademarks in the world.  For many “mere mortal” brand owners, using a trademark as a verb is still risky and companies need to weigh the risk before doing or encouraging it.

In Elliott v. Google, a cybersquatter argued that “googling” to describe the act of looking for information via a search engine made GOOGLE generic, thus forfeiting legally protectable trademark status. The plaintiff contended that “verb use constitutes generic use as a matter of law.”  Interestingly, “the district court assumed on summary judgment that the majority of the public uses the verb “google” to refer to the act of “searching on the internet without regard to [the] search engine used.  In other words, it assumed that a majority of the public uses the verb ‘google’ in a generic and indiscriminate sense.”

However, the Ninth Circuit held that “verb use does not automatically constitute generic use.”  It then held that Elliott’s examples of allegedly generic use of “googling” were not persuasive because they referred to use of “google” as a verb for searching and not to the search engine itself.  Moreover, Google presented overwhelming evidence that GOOGLE was a brand name for a particular search engine, and not a generic term for the general class of search engines.  According to a survey, 93 percent of consumers recognized GOOGLE as a brand.

Trademark lawyers still typically recommend against “brandverbing” because it contributes to a slippery slope leading to a potential finding that a mark is generic.  Trademarks are proper adjectives.  They modify the generic name of a product, e.g. Band-Aid bandages, not Band-Aids, or Kleenex tissues, not Kleenex. The use of a term as a modifier encourages consumers to think that not all bandages are “Band-Aids,” for example.  Similarly, using a trademark as a verb leads consumers to think that, for example, any in-line skate can be used for “rollerblading,” and any photocopying machine can be used “to xerox.”  It is a short step to call all in-line skates “Rollerblades” and all photocopiers “Xeroxes.”

The bottom line is that you can “brandverb” if you think the marketplace rewards outweigh the legal risks, but you should think about the long term consequences, and talk to your lawyers about mitigating risks.

These materials have been prepared by Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP for general informational purposes only.
They are not legal advice. They are not intended to create, and their receipt by you does not create, an attorney-client relationship.

June 19, 2017

50 Years After Lanham Act’s Enactment, The Supreme Court’s Slants Decision Unanimously Holds Its Clause Barring Disparaging Marks Unconstitutional Under First Amendment; Far-Reaching Impact Will Cover The Washington Redskins and Likely Far Beyond

Filed under: Constitution, Litigation, TM Registration, Trademark (General) — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:23 pm

By Belinda J. Scrimenti

As its 2016-17 term concluded, the U.S. Supreme Court held unanimously in Matal v. Tam[1] that the disparagement clause of the Lanham Act, Section 2(a), is unconstitutional in violation of the First Amendment’s Free Speech Clause.  The clause at issue—a provision unchanged from the original 1946 enactment of the Lanham Act—prohibits registration of marks which “may disparage . . .  persons, living or dead, institutions, beliefs or national symbols, or bring them into contempt or disrepute.” [2]  The Opinion of the Court, written by Justice Alito – joined in various parts by all of the Justices – reflected the sacred nature of the First Amendment protections at stake when applicants seek to register trademarks deemed offensive.  A concurring opinion by Justice Kennedy, joined by Justices Ginsburg, Sotomayor and Kagan, further highlighted the fundamental simplicity of the First Amendment protection that must be accorded trademark registration to prevent the slippery slope of governmental censorship.

The decision was issued in the case involving an Asian rock band seeking to trademark its name the “Slants,” which band founder Simon Tam asserts he selected in order “‘reclaim’  the term and drain its denigrating force as a derogatory term for Asian persons.”  But the decision’s repercussions will be much broader – most directly to the efforts by the Washington Redskins ownership to defend against longstanding efforts by Native American activists to cancel its trademark registrations under the same provision of the Lanham Act.

The Court’s opinion began with a primer on trademark law, outlining its history and origins, and purposes. Among the authorities cited were two articles by this Firm’s name partner, Beverly Pattishall, a highly recognized trademark expert of his generation.[3]  The Court also noted the now more than 2 million active marks on the federal register.  The Court next quickly dispensed with the argument put forth by Tam (which may have distinguished the case from that of the Redskins’ case, as cancellation actions brought by individual Native American persons) that the clause did not apply to Tam’s band name because the definition of “persons” included only “natural and juristic” persons, not “non-juristic” entities such as racial and ethnic groups.  Although Tam had not raised the argument in the Federal Circuit or on the writ of certiorari, the Court nevertheless expressed the necessity of rejecting this claim.[4]  The Court concluded that the disparagement clause did prohibit registration of terms that “disparage persons who share a common race or ethnicity.”[5]

The Court then turned to the fundamental issue of whether the clause violates the Free Speech Clause of the First Amendment.  The Court first rejected the Government’s arguments that the registration of trademarks constitutes government speech, not private speech.  The Court pointed out that if “private speech could be passed off as government speech by simply affixing a government seal of approval, government could silence or muffle the expression of disfavored viewpoints.”[6]  The Court concluded that “it is far-fetched to suggest that the content of a registered mark is government speech,” noting that if the federal registration makes a mark government speech, “the Federal Government is babbling prodigiously and incoherently.”[7]  Significantly, the Court noted the “most worrisome implication” of the Government’s argument concerned the copyright registration system, in that such a ruling could eliminate similar protections for books and writings based on the expressive content.[8]

In the next section of the Opinion, Justice Alito (joined by an unusual mix of Justices – Roberts, Thomas and Breyer) rejected the Government’s assertion that the clause should be upheld because it is “subsidized speech.” The Court handily rejected the argument, noting that the situation was readily distinguished from cases involving government cash or equivalent subsidies, because, in contrast, the trademark applicant must pay fees.[9]  The Court concluded that the clause also could not be protected as analogous to cases in which a unit of government creates a limited public forum for private speech where some content and speaker-based provisions may be allowed, noting that even in such situations “viewpoint discrimination” is forbidden.[10]

Having concluded that trademark registration is not government speech, Justice Alito’s Opinion next turned to the question of whether trademarks are commercial speech and therefore subject to relaxed scrutiny. Quickly dismissing the competing claims of the Government and Tam as to whether trademarks are all commercial speech or have an expressive component, he found that the disparagement clause failed even the relaxed test of a commercial speech restriction that must serve “a substantial interest” and be “narrowly drawn.”[11]  Justice Alito rejected as “substantial interests, the Government’s interest in preventing offensive speech as “that idea strikes at the heart of the First Amendment.”  Finally, he rejected the asserted interest in protecting the “orderly flow of commerce” as “far too broad.”

The concluding remarks by Justice Alito are particularly notable in this era of a super-charged political environment:  “The commercial market is well stocked with merchandise that disparages prominent figures and groups, and the line between commercial and non-commercial speech is not always clear, as this case illustrates.  If affixing the commercial label permits the suppression of any speech that may lead to political or social ‘volatility,’ free speech would be endangered.”[12]

The ramifications of the Court’s decision are yet to be seen.  The first, nearly certain result, will be the upholding of the Washington Redskin’s registrations in the face of challenge under Section 2(a).[13]  Less certain is the greater fallout.  Will the ruling open the floodgates for applications seeking registrations of any number of offensive, hateful and otherwise distasteful marks?  While recognizing the source and consumer protection functions of trademarks, Justice Kennedy noted in his concurrence that there remain only “a few categories of speech that the government can regulate or punish—for instance, fraud, defamation, or incitement . . . and a few other narrow exceptions.”[14]  It seems that the next wave of litigation in the trademark arena may now revolve around these narrow First Amendment exceptions, rather than traditional trademark principles.  Will today’s nasty tweet or violent Facebook rant become tomorrow’s trademark?  While the Tam decision decisively answers one question, it may open the door to many more questions of what trademarks are permissible, assuming no traditional trademark grounds for refusal.

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[1] Matal, Interim Director, USPTO v. Tam, No. 15-1293 (June 19, 2017) (8-0 decision; Justice  Gorsuch took no part in the decision).  The full opinion can be found at: https://www.supremeCourt.gov/opinions/16pdf/15-1293_1o13.pdf.
[2] 15 U.S.C. § 1052(a).
[3] Slip Op. at 2-5. Citing, treatises and compendiums including 3 J. McCarthy, Trademarks and Unfair Competition §19:8 (4th ed. 2017); Pattishall, The Constitutional Foundations of American Trademark Law, 78 Trademark Rep. 456, 457–458 (1988); Pattishall, Two Hundred Years of American Trademark Law, 68 Trademark Rep. 121, 121–123 (1978), Id. at 2.
[4] All Justices concurred in this portion of the opinion with the exception of Justice Thomas who saw “no reason to address this legal question.”  J. Thomas concurring, Slip. Op. at 1.
[5] Slip. Op., at 11.
[6] Id. at 14.
[7] Id. at 14-15, citing Pro-Football, Inc. (Washington Redskins) Amicus brief and numerous examples of such phrases.
[8] Id. at 18.
[9] Id. at 18-20.
[10] Id. at 22.  But in dicta, the Court noted it left open the question of whether such analysis framework is appropriate for free speech challenges to the provisions of the Lanham Act.
[11] Id. at 23-24, citing Central Hudson Gas & Elec. Corp. v. Public Serv. Comm’n of N.Y., 447 U.S. 557 (1980), but leaving open the question of whether Central Hudson provides the appropriate test for deciding free speech challenges to provisions of the Lanham Act.
[12] Id. at 26.
[13] Pro Football, Inc. v. Blackhorse, Case No. 15-1874 (4th Circ.).
[14] J. Kennedy concurring, Slip. Op. at 2, citing United States v. Stevens, 559 U. S. 460, 468 (2010).

 

These materials have been prepared by Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP for general informational purposes only.
They are not legal advice. They are not intended to create, and their receipt by you does not create, an attorney-client relationship.

June 14, 2017

Drake Copied Jimmy Smith’s Rap. But Court Says it’s not Copyright Infringement, it’s Transformative Fair Use.

Filed under: Copyright, Litigation — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:42 am

By Jason Koransky

Jimmy Smith is considered to have been one of the most influential and accomplished organists in the history of jazz. His soulful and swinging Hammond B-3 playing cemented the organ as a fixture in jazz, and laid the musical groundwork for generations of players to come. And while Smith, who died in 2005, was not known for his rapping, on the last track of his 1982 album Off The Top, he laid down the track “Jimmy Smith Rap,” which is a spoken word narrative about the album’s recording session. The “rap” goes as follows:

Good God Almighty, like back in the old days.

You know, years ago they had the A&R men to tell you what to play, how to play it and you know whether it’s disco rock, but we just told Bruce that we want a straight edge jazz so we got the fellas together Grady Tate, Ron Carter, George Benson, Stanley Turrentine.

Stanley was coming off a cool jazz festival, Ron was coming off a cool jazz festival. And we just went in the studio and we did it.

We had the champagne in the studio, of course, you know, compliments of the company and we just laid back and did it.

Also, Grady Tate’s wife brought us down some home cooked chicken and we just laid back and we was chomping on chicken and having a ball.

Jazz is the only real music that’s gonna last. All that other bullshit is here today and gone tomorrow. But jazz was, is and always will be.

We may not do this sort of recording again, I may not get with the fellas again. George, Ron, Grady Tate, Stanley Turrentine.

So we hope you enjoy listening to this album half as much as we enjoyed playing it for you.

Because we had a ball.

There’s nothing particularly enlightening or interesting about the “rap,” but I included all the words for a reason — it became the subject of a copyright case pitting jazz against rap.

Hip-hop artist Drake is not known for jazz organ, yet he’s become one of the most popular rappers on the planet. He apparently also has an ear for jazz. On his 2013 album Nothing Was The Same, he recorded “Pound Cake/Paris Morton Music 2,” on which Drake samples about 35 seconds of “Jimmy Smith Rap,” including the following lines:

Good God Almighty, like back in the old days.

You know, years ago they had the A&R men to tell you what to play, how to play it and  you know whether it’s disco rock, but we just went in the studio and we did it.

We had champagne in the studio, of course, you know, compliments of the company, and we just laid back and did it.

So we hope you enjoy listening to this album half as much as we enjoyed playing it for you. Because we had a ball.

Only real music is gonna last, all that other bullshit is here today and gone tomorrow.

A comparison between Smith’s text and Drake’s rap shows that Drake sampled a substantial portion of Smith’s work. While Drake and his record label obtained a license for the sound recording of “Jimmy Smith Rap,” they did not obtain a license for the composition. This led to Smith’s estate suing Drake, his record label, and numerous other entities for copyright infringement. Estate of James Oscar Smith v. Cash Money Records, Inc., et al., Case No. 14-cv-2703 (S.D.N.Y.).

On its face, this case does not appear to be appropriate for a summary judgment fair use ruling. Yet on May 30, the court granted the defendants’ motion for summary judgment, ruling that Drake’s use of the composition was a transformative fair use. The court’s analysis of the first fair use factor — the purpose and character of the use — was particularly interesting. The court focused on Drake removing material from Smith’s line, “Jazz is the only real music that’s gonna last. All that other bullshit is here today and gone tomorrow. But jazz was, is and always will be,” so that it read “Only real music is gonna last, all that other bullshit is here today and gone tomorrow.” The court found that the purpose of Drake’s track was “sharply different” from the purpose of Smith’s track. It found that while Smith focused on the primacy of jazz, Drake transformed the song to discuss just “real music” — without any mention of jazz.

This decision will likely be cited frequently by defendants who claim fair use in copyright litigation, as it provides an extremely broad interpretation of  what constitutes a transformative use. Simply put, according to this decision, a small change in lyrics which arguably shifts their meaning can constitute a transformative fair use. This rationale arguably could be applied to other media subject to a copyright claim.

 

 

These materials have been prepared by Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP for general informational purposes only.
They are not legal advice. They are not intended to create, and their receipt by you does not create, an attorney-client relationship.

March 8, 2017

Pattishall Prevails in 5th Circuit

Filed under: Litigation, Trademark (General) — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 12:02 pm

By Phillip Barengolts

Phil Barengolts and Jessica Ekhoff prevailed in the U.S. Court of Appeals for the Fifth Circuit for Insignia Marketing and Christine McAtee in Vetter v. McAtee, No. 15-20575 (5th Cir. March 1, 2017), http://www.ca5.uscourts.gov/opinions/pub/15/15-20575-CV0.pdf. The Court upheld Insignia Marketing’s trial victory and affirmed the denial of Vetter’s request for attorneys’ fees against our clients.  The Court held the Lanham Act’s “fee-shifting provision vests significant discretion in the district courts to grant or deny attorneys’ fees on a case-by-case basis.”  The case was held not “exceptional” under the standards announced in Octane Fitness, LLC v. ICON Health & Fitness, Inc., 134 S. Ct. 1749 (2014).

 

These materials have been prepared by Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP for general informational purposes only.
They are not legal advice. They are not intended to create, and their receipt by you does not create, an attorney-client relationship.

April 12, 2016

Pattishall Prevails for Bayer in Landmark Unfair Competition Case

Filed under: Litigation, Pattishall — Tags: , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 1:47 pm

Phil Barengolts and Bradley Cohn prevailed in the U.S. Court of Appeals for the Fourth Circuit for Bayer Consumer Care AG and Bayer Healthcare LLC in Belmora LLC v. Bayer Consumer Care AG and Bayer Healthcare LLC, No. 15-1335 (4th Cir. March 23, 2016). The Court held that ownership of a U.S. trademark is not a prerequisite for asserting unfair competition and related claims under Section 43(a) of the Lanham Act, or to cancel a trademark registration for misrepresentation under Section 14(3). This is an important clarification of U.S. unfair competition law.

Bayer Consumer Care sells naproxen sodium pain reliever in Mexico under the trademark FLANAX, which is well known in that country. Bayer does not sell FLANAX in the United States, instead selling ALEVE. Bayer sued a U.S. company, Belmora LLC, for using the FLANAX mark in the U.S. to falsely suggest to U.S. consumers–in particular, Mexican-Americans–that Belmora’s FLANAX pain reliever was the same as Bayer’s Mexican FLANAX pain reliever. Bayer sued for unfair competition and false advertising, and petitioned to cancel Belmora’s trademark registration for FLANAX because of Belmora’s misrepresentation.

On March 23, the Fourth Circuit held Bayer was entitled to sue Belmora, reversing the trial court ruling that Bayer could not proceed with its claims because it does not own the FLANAX mark in the U.S. The Fourth Circuit found that “the plain language of § 43(a) does not require that a plaintiff possess or have used a trademark in U.S. commerce as an element of the cause of action.” Based on that finding, and relying on the Supreme Court’s 2014 landmark decision in Lexmark v. Static Control, the Fourth Circuit held Bayer’s claims fell within the Lanham Act’s zone of interest and that Bayer had alleged injuries that were proximately caused by Belmora’s actions.

Many courts previously assumed a party must own a U.S. trademark to bring Section 43(a) claims. However, the Fourth Circuit held that assumption is wrong. A defendant who passes off its products as the plaintiff’s is liable under Section 43(a), regardless of whether the plaintiff actually owns a U.S. trademark. For instance, as the Fourth Circuit explained, a plaintiff can sue a defendant who uses a generic (and hence unprotectable) word to falsely associate its products with the plaintiff’s. Or, as in the present case, a plaintiff can sue a defendant who uses the plaintiff’s non-U.S. trademark to create a false association in the United States.

The Fourth Circuit noted that in a situation where merely “a few isolated consumers . . . confuse a mark with one seen abroad,” the owner of the non-U.S. trademark will “face difficulty” in establishing a Section 43(a) claim. But “the story is different when a defendant, as alleged here, has — as a cornerstone of its business — intentionally passed off its goods in the United States as the same product commercially available in foreign markets in order to influence purchases by American consumers.” In such a situation, the owner of the non-U.S. trademark has viable Section 43(a) claims.

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July 8, 2015

REDSKINS Trademark Registrations Still Canceled After Appeal to Federal Court

Filed under: Constitution, Litigation, TM Registration — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 12:45 pm

PB LRby Phillip Barengolts, Partner

Today, the District Court for the Eastern District of Virginia has upheld an administrative ruling that canceled federal trademark registrations for the REDSKINS nickname of the Washington football team despite the team’s constitutional and other challenges. Pro-Football, Inc. v. Blackhorse, Case No. 14-cv-01043 (E.D. Va. July 8, 2015). [1]

Last year, on June 18, 2014, the Trademark Trial and Appeal Board of the United States Patent and Trademark Office (“TTAB”) canceled six of Washington’s federal registrations for the trademark REDSKINS because the name disparages Native Americans.[2] The team appealed the ruling to federal court. It argued, essentially, that Section 2(a) of the Federal Trademark Act (the “Lanham Act”), which prohibits the federal registration of potentially disparaging trademarks, is unconstitutional and that the Native American petitioners did not prove that the REDSKINS trademark is, in fact, disparaging. On cross-motions for summary judgment, the Eastern District of Virginia sided with the Native American petitioners on all counts.

The decision highlights an important aspect of trademark practice. As the Court admonished the parties, this case concerns the right of the Washington football team to register the REDSKINS trademark– not the team’s right to use the mark. The TTAB also highlighted this point in its decision, but mass media, and even many attorneys, confused this point.

The rights conferred by registration are important and valuable , but the TTAB only has the right to decide whether a trademark may be registered, it has no authority to stop the use of a trademark. Section 2(a) of the Lanham Act, at issue in this dispute, only applies to registration of trademarks. As the Court stated, “Thus, regardless of this Court’s ruling, [the team] can still use the Redskins Marks in commerce.”

As a practical matter, however, a trademark owner who is not permitted to register its preferred mark often chooses not to use that mark, but, ultimately, it is the trademark owner’s choice. This point is crucial for the Court’s decision and crucial for an understanding of when and why to bring an action before the TTAB.[3]

As a result of this limited application of Section 2(a) of the Lanham Act, the statute survived the constitutional challenge brought by the team. In particular, the Court found that Section 2(a) does not even implicate the First Amendment precisely because it does not prohibit the use of a trademark, and therefore, does not prohibit or impinge on any speech.

The Court also found that the federal trademark registration program is government speech under the Supreme Court’s recent decision in Walker v. Tex. Div., Sons of Confederate Veterans, Inc., 135 S. Ct. 2239 (2015).[4] Basically, this means that “the federal government may determine the contents and limits of programs that it creates and manages.” The Court also ruled that the term “may disparage” in Section 2(a) of the Lanham Act is not impermissibly vague – generally or as applied to the team. Finally, the TTAB’s ruling was not an impermissible taking because a trademark registration is not a property interest, as opposed to the underlying trademark itself, which is.

As to the team’s challenges to the ruling that the term REDSKINS may disparage Native Americans, the Court found that evidence found in dictionaries, scholarly and media references, and statements from Native Americans were sufficient to uphold the TTAB’s ruling.

In the previous iteration of this battle, the D.C. Circuit Court of Appeals upheld a ruling that laches barred the Native Americans’ suit. Pro-Football, Inc. v. Harjo, 415 F.3d 44 (D.C. Cir. 2005).[5] Here, for reasons not worth getting into, the District Court found that laches did not apply.

Undoubtedly, the team will appeal this decision to the Fourth Circuit. So, the saga of the REDSKINS trademark registration continues.

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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, false advertising, 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 advertising issues. Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, advertising, 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.

Footnotes:

[1] The full 70-page opinion can be found here: http://www.pattishall.com/pdf/PFI%20v%20Blackhorse%20Decision.pdf

[2] Further background and earlier coverage on the TTAB decision can be found here: https://blog.pattishall.com/2014/06/18/redskins-trademark-registrations-canceled-after-8-more-years-of-litigation/.

[3] The recent decision in B&B Hardware, Inc. v. Hargis Indus., Inc., 135 S. Ct. 1293, 575 U.S. __ (2015), may have changed this calculus. See https://blog.pattishall.com/2015/03/25/supreme-court-holds-that-issues-decided-by-the-ttab-may-be-preclusive-in-federal-court/. The decision can be found here: http://scholar.google.com/scholar_case?case=15316530830472719965.

[4] http://scholar.google.com/scholar_case?case=2629371590163032730.

[5] http://scholar.google.com/scholar_case?case=2204191829610278162.

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July 7, 2015

Amazon.com Sued for Bait and Switch

Filed under: Internet, Litigation, Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:52 pm

baa_hiresBy: Brett A. August

In an important case for all companies whose products are sold on Amazon.com, the Ninth Circuit Court of Appeals overturned a district ruling yesterday that Amazon could not be sued for trademark infringement when it presented the goods of one watch maker in response to a search for another brand of watches.  In Multi Time Machine Inc. v. Amazon.com Inc., Case No. 13-55575, the Ninth Circuit (in a 2-1 decision) ruled that Amazon’s practices could confuse consumers into believing the watches displayed in the search results are put out by a company related to the manufacturer of the searched-for watches.

This is an important result for all vendors of branded goods who believe they are losing business to competitors due to Amazon’s failure to tell users of its website that the goods for which the customer is searching are not available on Amazon.com. The court noted that Amazon’s competitors – such as Buy.com and Overstock.com –  inform customers when the goods in their search terms are not sold on those websites.

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Brett August 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.  Brett’s practice focuses on domestic and international trademark, copyright, unfair competition, and Internet counseling and litigation.

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March 25, 2015

Supreme Court holds that issues decided by the TTAB may be preclusive in Federal Court

Filed under: Litigation, TTAB — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:53 am

Widmaier_Uli_1 F LRBy: Uli Widmaier

A.  The Supreme Court’s Holding

On March 24, 2015, the Supreme Court held for the first time that “a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.” B&B Hardware, Inc. v. Hargis Industries, Inc., No. 13-352, slip op. at 2.

In other words, “[s]o long as the other ordinary elements of issue preclusion are met, when the usages adjudicated by the TTAB are materially the same as those before the district court, issue preclusion should apply.” Id., slip op. at 22. The Supreme Court remanded the case for a determination whether the conditions for preclusion are met. Id.

B.  The Reach of the Supreme Court’s Opinion

In B&B, the issue to which preclusion may apply was likelihood of confusion. But the principle announced by the Supreme Court is not limited to likelihood of confusion. Given the wording and rationale of the Supreme Court’s opinion, practitioners and trademark owners should expect any TTAB decision to have a preclusive effect if it meets the conditions for preclusion articulated by the Supreme Court. These conditions are discussed below.

That would include TTAB decisions on issues such as secondary meaning, inherent distinctiveness, genericness, abandonment, functionality, dilution, and others. Any TTAB decision on these and other issues will be preclusive if it meets the Supreme Court’s conditions. Therefore, the potential reach of the Supreme Court’s holding is broad and may have substantial implications for trademark owners.

C.  Facts

B&B owns the mark SEALTIGHT for metal fasteners in the aerospace industry; Hargis owns the mark SEALTITE for metal fasteners in the construction trade. Slip op. at 6. B&B opposed Hargis’s application to register SEALTITE and prevailed in the TTAB, which found a likelihood of confusion between the two marks. Id. at 6-7.

B&B also sued Hargis in federal district court for trademark infringement. After the TTAB had found in B&B’s favor, B&B argued before the district court that the TTAB’s decision precluded Hargis from further contesting the issue of likelihood of confusion. The court rejected B&B’s argument, and the jury found in favor of Hargis on likelihood of confusion. B&B appealed to the Eighth Circuit, lost, and then prevailed before the Supreme Court.

D.  Issue Preclusion

The Supreme Court explained issue preclusion as follows: “[w]hen an issue of fact or law is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, the determination is conclusive in a subsequent action between the parties, whether on the same or a different claim.” Slip op. at 9, quoting Restatement (Second) of Judgments, §27, p. 250 (1980). Importantly, “issue preclusion is not limited to those situations in which the same issue is before two courts.” Slip op. at 9 (emphasis in original). Therefore, a decision by an administrative agency may also have issue preclusive effect. Id. (more…)

October 2, 2014

Not Quite “Happy Together” – Recording Industry Scores Significant Victory in First Major Pre-1972 Sound Recordings Performance Rights Decision

Filed under: Copyright, Internet, Litigation — Tags: , , , , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:40 am

by Jason Koransky, Associate

When Sirius XM broadcasts “Happy Together,” “It Ain’t Me Babe,” and other hit recordings from The Turtles through its satellite and Internet radio services, it infringes the copyrights to these recordings, according to a court in the Central District of California.

In an order issued September 22, 2014, in Flo & Eddie Inc. v. Sirius XM Inc., 2:13-cv-05693 (C.D. California: Public performances of pre-1972 sound recordings protected by California copyright law)[1], the record industry scored a significant victory in the first major court ruling on the issue of state copyright protection for public performances of pre-1972 sound recordings. The court granted Flo & Eddie summary judgment on its claim that Sirius’ unlicensed public performances of its sound recordings violated California Civil Code § 980(a)(2), the section in California’s copyright statute that applies to pre-1972 sound recordings. Flo & Eddie is the corporation owned and operated by Howard Kaylan and Mark Volman, founding members and the lead singer and guitarist, respectively, of the 1960s pop group The Turtles. Because the case involves only California state law, however, the court’s ruling is limited in scope to public performances of these recordings in the state of California.

This case is one of a series of lawsuits that seek royalties for public performances by new media music services such as Sirius XM and Pandora of sound recordings created before February 15, 1972, based on the argument that state law protects these recordings from such unlicensed uses. While music compositions have long enjoyed copyright protection under U.S. copyright law, only in 1972 did Congress extend copyright protection to sound recordings. Individual states, however, had enacted their own copyright statutes, which co-existed with the federal Copyright Act until the enactment of the 1976 Copyright Revision Act, which preempted these state laws. The 1976 federal law, however, expressly carved out a preemption exemption to sound recordings created before February 15, 1972. See 17 U.S.C. § 301(c) (“With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067.”)

In 1995, Congress expanded the rights attached to a sound recording when it passed the Digital Performance Right in Sound Recordings Act, which added digital audio transmissions of sound recordings to the exclusive bundle of rights a copyright grants. See 17 U.S.C. § 106(6). SoundExchange has emerged as the performance rights organization that collects the compulsory license fees that non-interactive digital music services—including Sirius XM—pay to perform these recordings.

But Sirius did not pay, and SoundExchange did not attempt to collect, royalties for pre-1972 recordings, as these do not have federal copyright protection. The digital public performance rights that owners of these sound recordings possess have existed in a sort of legal limbo based on the interpretations of state copyright statutes. Flo & Eddie owns the rights to The Turtles’ recordings, and tested these legal waters by suing Sirius for violating California copyright law—and bringing claims for unfair competition, conversion, and misappropriation—for broadcasting its sound recordings.

The case boiled down to statutory construction. The applicable statute, California Civil Code § 980(a)(2), reads (with emphasis added):

The author of an original work of authorship consisting of a sound recording initially fixed prior to February 15, 1972, has an exclusive ownership therein until February 15, 2047, as against all persons except one who independently makes or duplicates another sound recording that does not directly or indirectly recapture the actual sounds fixed in such prior recording, but consists entirely of an independent fixation of other sounds, even though such sounds imitate or simulate the sounds contained in the prior sound recording.

Flo & Eddie argued that “exclusive ownership” of sound recordings encompasses the right to control public performances of these recordings. Sirius argued that because the statute did not expressly specify the public performance right, it was not included in the “exclusive ownership” of a recording. Based on the plain language of the statute, its legislative history, and two court decisions which implied that the California statute granted the owner of a sound recording the exclusive right to control public performances of its recordings, the court agreed with Flo & Eddie’s interpretation. As such, because no dispute existed that Sirius had broadcast The Turtles’ recordings without a license, the court granted Flo & Eddie’s summary judgment motion that these public performances infringed their sound recording copyrights. The court also granted Flo & Eddie summary judgment on its unfair competition, conversion, and misappropriation claims.

This case has the potential to create significant revenue streams for major record labels and other owners of pre-1972 sound recordings. Conversely, it presents new licensing and business challenges to Internet, satellite, and other new media non-interactive music service providers. Of course, a treasure trove of artistically and commercially successful music was recorded before 1972—think Elvis, The Beatles, Jimi Hendrix, Miles Davis, Duke Ellington … the list could go on and on. A huge void would exist if Sirius simply stopped broadcasting these recordings. As such, the full implications of the decision in the Flo & Eddie case may take years to emerge, especially considering that the decision applies only in California. For example, a court interpreting another state’s law could issue an opposite decision. But in practicality, Sirius could most likely not block its broadcasts from California. So if this decision is affirmed on appeal, new licensing requirements will likely emerge for digital public performances of pre-1972 sound recordings.

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Jason Koransky is an associate 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, 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. Jason’s practice focuses on trademark, trade dress, copyright and false advertising litigation, as well as domestic and international trademark prosecution and counseling. He is co-author of the book Band Law for Bands, published by the Chicago-based Lawyers for the Creative Arts.

[1] http://www.soundexchange.com/wp-content/uploads/2014/09/Flo-Eddie-v.-Sirius-XM-Order-on-MSJ.pdf

 

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June 26, 2014

Aereo’s Internet-Based Television Streaming Services May Be Wizardry, But the Supreme Court is in No Mood for Magic

Filed under: Copyright, Internet, Litigation — Tags: , , , , , , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 12:17 pm

Ekhoff_Jessica_2 F LRby Jessica Ekhoff, Associate

Describing its Internet-based television streaming services, tech start-up Aereo proclaims, “It’s not magic. It’s wizardry.”[1] In yesterday’s 6-3 decision the Supreme Court disagreed, or at the very least, adopted a staunchly anti-wizardry stance.[2]

Justice Breyer, writing for the majority in American Broadcasting Cos. v. Aereo, Inc., characterized the issue before the Court as whether “Aereo, Inc., infringes this exclusive right [of public performance under §106(4) of the Copyright Act] by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over air.”[3] Despite Aereo’s self-description as a mere equipment supplier doing no “performing” of its own, the Court held in the affirmative.

The Court analyzed the issue in two parts: whether Aereo “performed” under the Copyright Act, and if so, whether the performance was “public.”

In concluding that Aereo did, in fact, perform under the Copyright Act, the majority of the Court turned to the 1976 amendments to the Act, which were adopted, in large part, to bring community antenna television, or CATV—the precursor to cable television—within the scope of the Act. CATV functioned by placing antennas on hills above cities, then using coaxial cables to carry the television signals received by the antennas into subscribers’ homes. CATV did not select which programs to carry, but rather served as a conduit for the transmission and amplification of television signals. Before the 1976 amendments, Supreme Court precedent considered CATV to be a passive equipment supplier that did not “perform” under the Act.[4] After the amendments, to “perform” an audiovisual work such as a television program meant “to show its images in any sequence or to make the sounds accompanying it audible.”[5] CATV thus “performed” the shows it transmitted because it both showed the television programs’ images to its subscribers, and made the accompanying sounds audible. Over a strong dissent authored by Justice Scalia[6], the majority found that, because its services were so similar to those once offered by CATV, Aereo also “performed” under the post-1976 definition of the term.[7]

Having determined that Aereo’s services constitute a performance under the Copyright Act, the Court next turned to the issue of whether those performances are public. Aereo argued its services do not constitute public performance because whenever a subscriber selects a program to watch, Aereo places a unique copy of the show in that subscriber’s folder on Aereo’s hard drive, which no one other than that subscriber can view. If another subscriber wants to watch the same show, she will receive her own copy of the program in her own folder from Aereo. The Court dismissed this argument, finding the “technological difference” inconsequential in light of Congress’s clear intent to bring anything analogous to CATV within the scope of the Copyright Act’s requirements. Under the post-1976 Act, an entity performs a copyrighted work publicly any time it “transmits” a performance. A performance is “transmitted” when it is communicated by any device or process beyond the place from which it is sent, whether the recipients receive the transmission at the same time and place, or at different times and places.[8] Aereo therefore publicly performs a copyrighted television program each time its system sends a copy of that program to a subscriber’s personal Aereo folder.

The majority characterized its holding as a “limited” one, and was careful to emphasize that its decision does not apply to other new technologies, such as cloud-based storage and remote storage DVRs. But with a slew of amici curiae predicting the decision could have a catastrophic impact on the tech industry, there are surely some who will take no comfort from the Court’s assurances. Aereo, unfortunately, may not have a spell to resurrect itself.

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Jessica Ekhoff is an associate 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, 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. Jessica’s practice focuses on trademark, trade dress, copyright and false advertising litigation, as well as film clearance, media and entertainment, and brand management.

[1] https://www.aereo.com/about

[2] http://www.supremecourt.gov/opinions/13pdf/13-461_l537.pdf

[3] American Broadcasting Cos. v. Aereo, Inc., No. 13-461, slip op. at 1, 573 U.S. __ (2014).

[4] Fortnightly Corp. v. United Artists Television, Inc., 392 U.S. 390 (1968); Teleprompter Corp. v. Columbia Broadcasting System, Inc., 415 U.S. 394 (1974).

[5] 17 U.S.C. § 101.

[6] Justice Scalia argues that Aereo does not “perform” because it is the subscriber, rather than Aereo, who selects the program she wishes to watch, which in turn activates the individual antennae Aereo has assigned to her for the purpose of viewing that program. This means it is the subscriber who is doing the performing, since she is the one rousing Aereo’s antennae from dormancy and calling up a specific program to watch. Justice Scalia went on to note that although he disagrees with the majority’s interpretation of “perform,” he agrees that Aereo’s activities ought not to be allowed, either because Aereo is secondarily liable for its subscribers’ infringement of the Networks’ performance rights, or because it is directly liable for violating the Networks’ reproduction rights. If future courts fail to find Aereo liable under either of those theories, Justice Scalia advocates relying on Congress to close the loophole. Slip Op. at 12.

[7] Slip Op. at 8.

[8] 17 U.S.C. § 101.

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