Pattishall IP Blog

August 29, 2017

Second Circuit Victory Latest Chapter in Donnay Litigation

Filed under: Trademark (General) — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:45 pm

By Robert W. Sacoffrws_high_res

On August 24, 2017, the U.S. Court of Appeals for the Second Circuit closed the latest chapter of the long-running DONNAY litigation, ruling in favor of our clients Donnay Int’l S.A., Int’l Brand Mgt. Ltd, and Brands Holdings Ltd in a suit brought by their 2009 licensee (“Licensee”) of the DONNAY tennis racket brand.

Licensee disputes our clients’ termination of its license, and first sued Donnay Int’l S.A. for two billion dollars ($2,000,000,000.00) in the Supreme Court of New York, Nassau County, in 2014.  We removed the case to the U.S. District Court for the Eastern District of New York, in Central Islip, where it was designated Donnay USA Ltd v. Donnay Int’l S.A., Case No. 2:14-cv-06095-SJF-GRB (E.D.N.Y.).  We then moved to dismiss it for failure to state a claim.  U.S. District Judge Sandra J. Feuerstein granted our motion, with prejudice.  Licensee appealed to the Second Circuit Court of Appeals, Case No. 15-2385, but its appeal was dismissed.

Licensee then filed a second action in the Supreme Court of New York, Nassau County, in 2015, seeking one hundred ninety million dollars ($190,000,000.00).  We again removed the case to the U.S. District Court for the Eastern District of New York, where it was styled Donnay USA Ltd v. Donnay Int’l S.A., et al., Case No. 15-cv-05969-JMA-SIL (E.D.N.Y.).  We then moved to dismiss the case on grounds of res judicata and the forum selection clauses placing exclusive jurisdiction in the courts of England and Wales.  The Honorable Joan M. Azrack granted our motion to dismiss on forum non conveniens grounds, based on the forum selection clause, and found it unnecessary to reach the res judicata ground.

Licensee then appealed, again, to the Second Circuit, Case No. 16-3067.  The case was briefed, and was argued before a three judge panel consisting of Judges Pierre Leval, Reena Raggi, and Raymnd J. Lohier, on Friday, August 18th.  The Court issued its Summary Order six days later, on August 24th, affirming Judge Azrack’s dismissal of the case.  In addition to the author above, our team included Robert Newbury, Seth Appel, and Kristine Bergman

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.

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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 16, 2015

‘Blurred Lines’ Verdict Creates Unpredictable Music Copyright Landscape

Filed under: Copyright — Tags: , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 3:47 pm

Jason Koransky F HRby Jason Koransky, Associate

The recent verdict that Robin Thicke and Pharrell Williams’ hit “Blurred Lines” infringed the copyright to the late Motown legend Marvin Gaye’s composition “Got To Give It Up” has generated significant media attention.[1] And this coverage has certainly been compounded by the eye-popping $7.4 million in damages the California jury awarded Gaye’s heirs.

Controversy and debate have raged about whether the jury was correct, with the primary issue being whether Thicke and Williams actually copied “Got To Give It Up,” or were simply inspired by Gaye’s late-’70s soul/funk composition. Of course, copyright protection does not extend to a musical idea, genre, or overall “feel” of a song. Rather, copyright protects a musical expression fixed in a tangible medium — here, the written composition filed with the U.S. Copyright Office for “Got To Give It Up.” (Gaye’s estate does not own the copyright to the sound recording of “Got To Give It Up,” and thus could not assert that “Blurred Lines” infringed the recording.)

Thicke and Williams made this idea vs. expression dichotomy the primary issue in their complaint for a declaratory judgment of non-infringement: “Being reminiscent of a ‘sound’ is not copyright infringement. The intent in producing ‘Blurred Lines’ was to evoke an era. In reality, the Gaye defendants are claiming ownership of an entire genre, as opposed to a specific work . . . .”

The jury disagreed with this argument. Weighing evidence such as competing expert testimony, recordings of the compositions (interestingly, the judge only allowed the jury to hear a new recording of Gaye’s composition that was made for the litigation and which was based on the music filed with the Copyright Office), and testimony from Thicke and Williams regarding the creation of “Blurred Lines,” the jury found that Thicke and Williams incorporated too many elements of “Got To Give It Up” into “Blurred Lines,” such that it crossed the line from “inspired by” to “copying.”

Does this verdict represent a slippery slope in copyright law, in which songwriters now have grounds to plead infringement when another composition has a similar “feel” but does not actually copy a song? Further, could this decision extend to other media, such as film, literary works, or photography, in which new works are often inspired by those which precede them? (more…)

January 22, 2015

Supreme Court Finds Tacking to Be an Issue of Fact

Filed under: Trademark (General) — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:17 am

Jason Koransky F HRby Jason Koransky, Associate

The doctrine of “tacking” deals with priority in trademark law. A trademark owner “tacks on” its period of using an earlier version of its mark to the time it has been using the current version of the mark. For tacking to be accepted by the court or the T.T.A.B., however, the respective versions of the marks must be “legal equivalents,” creating “the same, continuing commercial impression.” In a rare opportunity to decide a substantive issue of trademark law, on January 21 the Supreme Court in a unanimous opinion held that tacking is an issue to be decided by a jury. See Hana Financial, Inc. v. Hana Bank, 574 U.S. __ (2015). In affirming the Ninth Circuit’s decision that tacking is an issue of fact, the Court settled a circuit split, with the Federal Circuit and Sixth Circuit having held tacking to be an issue of law.

In this case, the petitioner Hana Financial began using its HANA FINANCIAL mark in commerce in 1995, and in 1996 obtained a federal registration of a logo that included the HANA FINANCIAL mark for financial services. Meanwhile, in 1994, the respondent Hana Bank started to advertise financial services under the name Hana Overseas Korean Club in the United States, targeting Korean expatriates. These advertisements included the name “Hana Bank” in Korean. In 2000, Hana Bank changed its name to Hana World Center, and in 2002 it started operating a bank in the U.S. called Hana Bank.

In 2007, Hana Financial sued Hana Bank for infringing its HANA FINANCIAL mark, and in response Hana Bank claimed priority based on tacking. The case went to trial, at which the jury was given a tacking instruction. The jury found that Hana Bank did not infringe the HANA FINANCIAL mark, and the district court denied Hana Financial’s motion for judgment as a matter of law.

In its brief and straightforward opinion, the Court wrote that tacking was properly in the jury’s hands as an issue of fact because “the tacking inquiry operates from the perspective of an ordinary purchaser or consumer.” It emphasized that it has “long recognized . . . that, when the relevant question is how an ordinary person or community would make an assessment, the jury is generally the decisionmaker that ought to provide the fact-intensive answer.”

The Court acknowledged that courts could decide a tacking issue in a bench trial or on summary judgment or judgment as a matter of law when the facts warrant such a determination. But when the parties request a jury trial, and summary judgment or JMOL is not warranted, tacking must be decided by the jury.

The Court rejected the four arguments Hana Financial made for why tacking is an issue of law. First, even though the “legal equivalents” test in tacking involves the application of a legal standard, the court found no reason why the jury could not properly apply that standard, essentially stating in dicta that the jury could consider this mixed question of law and fact. Next, it rejected Hana Financial’s argument that tacking questions must be decided by comparing the marks at issue to the marks in other tacking cases. Third, it found that juries deciding tacking would not make the trademark system “unpredictable.” Finally, it found that courts have not historically decided the issue of tacking as a matter of law, and that Hana Financial’s cited cases in which the court ruled on tacking included bench trials and summary judgments.

On its facts, Hana holds only that tacking an issue of fact for the jury. But the analysis seems to apply to other issues in trademark law as well, such as likelihood of confusion – even though the opinion does not address these other issues. If Hana is extended to such other issues, it could make it more difficult to obtain summary judgment in trademark litigation.

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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, domestic and international trademark prosecution and counseling, and privacy issues. He is co-author of the book Band Law for Bands, published by the Chicago-based Lawyers for the Creative Arts.

 

 

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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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June 12, 2014

Supreme Court Permits Competitor False Advertising Suits to Proceed Under Lanham Act Despite FDA Regulation

Filed under: False Advertising, Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 2:51 pm

PB LRby Phillip Barengolts, Partner

Today, the Supreme Court provided competitors with a powerful new tool to combat potentially false and misleading statements on food and beverage labels, or any other FDA regulated materials – a cause of action for false advertising under the Lanham Act. The unanimous opinion[1] in POM Wonderful LLC v Coca-Cola Co., Slip Op. No. 12-761, 573 U.S. _ (2014)[2], specifically permits POM to proceed with its false advertising claim that Coca-Cola’s MINUTE MAID juice, which contains 99.4% apple and grape juice, .3% pomegranate juice, .2% blueberry juice, and .1% raspberry juice, but displays the words “pomegranate blueberry” in all capital letters (as shown below), misleads consumers, overruling the Ninth Circuit’s ruling to the contrary.

POM v Coca Cola Picture

The key issue before the Court was whether The Federal Food, Drug, and Cosmetic Act (FDCA), which regulates labeling of food and beverages, among other things, precludes[3] a false advertising claim over an FDCA-compliant label. The FDCA prohibits false or misleading labeling. 21 U.S.C. § 343(a). The FDCA does not allow private parties to enforce its provisions through a lawsuit. 21 U.S.C. § 337. Here, Coca-Cola complied with the Food and Drug Administration (FDA) requirements for juice labeling. 21 CFR § 102.33(d).

Both the district court and the Ninth Circuit had ruled in Coca-Cola’s favor, essentially finding that since the FDA did not impose label requirements as stringent as those sought by POM through its lawsuit, then POM should not have a private right of action to impose such requirements under the Lanham Act. The Court, however, found that the “FDCA, by its terms, does not preclude Lanham Act suits.” Slip Op. at 9. Furthermore, the Court noted that when Congress enacted the preemption provisions of the FDCA, “if anything [Congress] indicated it did not intend the FDCA to preclude requirements arising from other sources” and that “pre-emption of some state requirements does not suggest an intent to preclude federal claims.” Slip Op. at 11, citing Setser v. U.S., 566 U.S. __, __ (2012) (slip op., at 6-7).

Ultimately, the Court chose to read the Lanham Act and FDCA as complements – one protecting against unfair competition, the other protecting public health and safety. Slip Op. at 11. Indeed, the Court noted that “[a]llowing Lanham Act suits takes advantage of synergies among multiple methods of regulation.” Id. at 12. This decision will have consequences for companies in regulated industries – especially those in the food and beverage fields – because, before placing products into the marketplace, they will now need to review labels and statements both to assure compliance with FDA regulations and in light of Lanham Act principles to avoid competitor suits.

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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, trade secret and unfair competition trials and appeals, and advises its clients on a broad range of domestic and international intellectual property matters, including brand protection, Internet, and e-commerce issues. Mr. Barengolts’ practice focuses on litigation, transactions, and counseling in domestic and international trademark, trade dress, unfair competition, trade secret, Internet, and copyright law. He teaches trademark and copyright litigation at John Marshall Law School, and co-authored Trademark and Copyright Litigation, published by Lexis Publishing.

 

[1] Justice Breyer did not participate in considering this case.

[2] Read the entire opinion here: http://www.supremecourt.gov/opinions/13pdf/12-761_6k47.pdf.

[3] This is not a preemption case – preemption addresses the situation when state and federal laws conflict. The Court made sure to point this out in its opinion. The FDCA does preempt certain state laws on misbranding. 21 U.S.C. §343-1(a).

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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.

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