Pattishall IP Blog

December 22, 2015

Federal Circuit Holds: “Disparagement” Clause of Lanham Act Violates the First Amendment

Filed under: Constitution, TM Registration, Trademark (General), TTAB — Tags: , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 5:13 pm

Widmaier_Uli_1 F LRBy: Uli Widmaier

I.  The Court’s Holding:

Section 2(a) of the Lanham Act, 15 USC § 1052(a), provides that trademarks that “disparage . . . persons, living or dead, institutions, beliefs, or national symbols” shall not be federally registered (emphasis added).

On December 22, 2015, the Court of Appeals for the Federal Circuit, ruling en banc, held that this clause “is unconstitutional because it violates the First Amendment.” See In re Simon Shiao Tam, No. 2014-1203, slip op. at 62 (Dec. 22, 2015). Based on this holding, the Court vacated the Trademark Trial and Appeal Board’s determination that the mark THE SLANTS for “Entertainment in the nature of live performances by a musical band” is unregistrable as disparaging people of Asian descent.

II.   Practical Consequences:

The Federal Circuit is the statutorily designated Court of Appeals for all USPTO actions, see 15 USC § 1071(a). By holding that Section 2(a)’s disparagement clause is unconstitutional, In re Tam necessarily invalidates not only that clause, but also all USPTO precedents and rules that are based on in. Therefore, In re Tam has several immediate practical consequences:

  • Any disparagement grounds in currently pending Office Actions are no longer valid.
  • Any disparagement claims in currently pending opposition actions or petitions for cancellation must be withdrawn or dismissed.
  • No future trademark applications can be refused registration on disparagement grounds.
  • No future opposition or cancellation actions can validly be based on disparagement claims.

This describes the situation today. But it may not be the end of the matter. The issue may be bound for Supreme Court review, particularly given that a circuit split may emerge in short order. The famous REDSKINS case, in which the Board used the disparagement clause to cancel six trademark registrations of the NFL’s Washington Redskins, Pro-Football, Inc. v. Blackhorse, No. 1-14-CV-01043-GBL, 2015 WL 4096277 (E.D. Va. July 8, 2015), is currently on appeal before the Fourth Circuit. The case turns in substantial part on whether Section 2(a)’s disparagement clause violates the First Amendment. If the Fourth Circuit disagrees with the Federal Circuit’s holding and decides that there is no constitutional violation, then the Supreme Court is likely to step in and resolve the split between the Fourth and Federal Circuits on this important question of constitutional law.

If the Supreme Court were to agree with the Federal Circuit and hold that the disparagement clause is unconstitutional, then the practical implications listed above remain as they are at the moment. But if the Supreme Court were to hold that the disparagement clause is not unconstitutional, then the clause—and the USPTO regulations that depend on it—would be reinstated. What would that mean to any “disparaging” trademark registrations that were issued in the meantime? The answer is that such registrations would potentially be subject to cancellation on disparagement grounds.

III.   Takeaway:

For the time being, the practical takeaway from the Federal Circuit’s In re Tam decision is this. Trademark owners are now free to register disparaging marks, since the USPTO cannot refuse to register them on the ground of disparagement. And third parties cannot oppose applications or seek to cancel registrations on the ground of disparagement.

But any resulting registrations remain at some risk for cancellation, since the Supreme Court may well decide to review this issue. If so, the Supreme Court may overrule the Federal Circuit’s holding, whereupon the disparagement clause and the USPTO rules and precedents based on it would be reinstated.

Furthermore, a disparagement attack (should it be reinstated) cannot be averted via incontestability, since Section 14(3) of the Lanham Act, 15 U.S.C. § 1064(3), expressly permits incontestable registrations to be challenged on Section 2(a) grounds.

*     *     *

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

 

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October 16, 2015

Second Circuit Authors Guild v. Google, Inc. – Google Books Does Not Infringe Authors’ Copyright

Filed under: Copyright — Tags: , , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 4:22 pm

Widmaier_Uli_1 F LRKAB - Low ResBy: Uli Widmaier and Kristine A. Bergman

In the latest development in the 10-year legal battle between the Authors Guild and Google, the Second Circuit affirmed the district court’s grant of summary judgment in Google’s favor and held that Google Book’s search and snippet functions were “transformative” under the test of Campbell v. Acuff-Rose Music, Inc., 510 U.S. 569 (1994) and thus constituted fair use of the published books under copyright that the plaintiffs had authored.

The court, in a unanimous decision written by Judge Pierre Leval, provides a lucid summary of the relevant facts:

Through its Library Project and its Google Books project, acting without permission of rights holders, Google has made digital copies of tens of millions of books, including Plaintiffs’, that were submitted to it for that purpose by major libraries. Google has scanned the digital copies and established a publicly available search function. An Internet user can use this function to search without charge to determine whether the book contains a specified word or term and also see “snippets” of text containing the searched-for terms. In addition, Google has allowed the participating libraries to download and retain digital copies of the books they submit, under agreements which commit the libraries not to use their digital copies in violation of the copyright laws. These activities of Google are alleged to constitute infringement of Plaintiffs’ copyrights.

Slip op., pp. 2–3.

The plaintiffs made five distinct arguments, each of which the Court rejected:

(1) Plaintiffs argued that Google’s copying of entire books, together with letting readers search them and view “snippets” of them, is not “transformative” under Campbell. Slip op., p. 3.

The court found that making searchable copies and providing snippets to the public was “a highly transformative purpose” because it “augmented public knowledge” and revealed only as much as was essential to “permit searchers to identify and locate the books in which words or phrases of interest to them appeared.” Id., pp. 4, 21. While the snippet view allows users to read portions of the copyrighted book, it “communicates little of the sense of the original” and provides only “enough context surrounding the searched term to help [the searcher] evaluate whether the book falls within her scope of interest” the use was still “highly transformative [for the] purpose of identifying books of interest to the searcher.” Id., p. 23, 33.

(2) Plaintiffs argued that Google’s overall profit motive and its goal of “use its dominance of book search to fortify its overall dominance of the Internet search market” preclude a finding of fair use, even though Google does not charge for access to the books and provides the functionality in question without advertising. Id., pp. 3, 24.

The court saw “no reason in this case why Google’s overall profit motivation should prevail as a reason for denying fair use over its highly convincing transformative purpose, together with the absence of significant substitutive competition, as reasons for granting fair use.” Id., p. 26. The court also noted that “[m]any of the most universally accepted forms of fair use, such as news reporting and commentary, quotation in historical or analytic books, reviews of books, and performances, as well as parody, are all normally done commercially for profit.” Id.

(3) Plaintiffs argued that Google infringes their derivative rights by cutting into potential licensing revenues. Id., pp. 3–4.

The court found that “the copyright resulting from the Plaintiffs’ authorship of their works does not include an exclusive right to furnish the kind of information about the works that Google’s programs provide to the public. For substantially the same reasons, the copyright that protects Plaintiffs’ works does not include an exclusive derivative right to supply such information through query of a digitized copy.” Id., p. 37.

(4) Plaintiffs argued that Google’s digital copies of plaintiffs’ books are vulnerable to hackers who might distribute the books for free on the Internet. Id., p. 4

The court conceded that “this claim has a reasonable theoretical basis, [since] unreasonably expos[ing] the rights holder to destruction of the value of the copyright resulting from the public’s opportunity to employ the secondary use as a substitute for purchase of the original” may rebut a fair use claim. Id., p. 41. However, the court found that plaintiffs’ claim is “not supported by the evidence” because Google Books’ digital scans are protected by “impressive security measures” that were praised by “plaintiffs’ own security expert.” Id., p. 42.

(5) Finally, Plaintiffs argued that “Google’s distribution of digital copies to participant libraries is not a transformative use.” Id., p. 4.

The court found that “the possibility that libraries may misuse their digital copies is sheer speculation. Nor is there any basis on the present record to hold Google liable as a contributory infringer based on the mere speculative possibility that libraries, in addition to, or instead of, using their digital copies of Plaintiffs” books in a non-infringing, manner, may use them in an infringing manner.” Id., p. 45.

Throughout the decision, the court acknowledged that at risk is an important tool for public knowledge. As the court noted, “giving authors absolute control over all copying from their works would tend in some circumstances to limit, rather than expand, public knowledge. Google Books, however, “augments public knowledge by making available information about Plaintiff’s books.” Id., p. 13. Many of these books, as the court observed, are out of print, so Google Books “provide[s] otherwise unavailable information” about these works. Id., p. 18.

This decision may prove a landmark case for copyright litigants and scholars alike, as it presents useful guidance on how courts should define what is “transformative use.” The battle may not be over yet, however: the next step may be a petition for certiorari.

*     *     *

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

Kristine A. Bergman is a new associate (pending admission) with Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP, rejoining the firm after working as a summer associate in 2014. Kristine received her J.D., cum laude, from Loyola University Chicago School of Law in 2015.

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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…)

March 25, 2014

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

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

Widmaier_Uli_1 F LRBy: Uli Widmaier

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*     *     *

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

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January 11, 2013

Air Force 1 trade dress dispute held moot – Nike wins at Supreme Court, but at what cost?

Filed under: Litigation, Trade Dress, Uncategorized — Tags: , , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 10:41 am

UW low res

by Uli Widmaier

A sues B for infringing its registered mark.  B counterclaims for cancellation of A’s registration.  A executes a comprehensive covenant not to sue B in the future for using any colorable imitation of A’s mark, and moves to dismiss the lawsuit with prejudice.  B, intent on pursuing its counterclaim, opposes the motion.  The district court holds that the case is moot, and grants A’s motion.  The Court of Appeals affirms, as does the Supreme Court.  Case over.

This is the short version of Already, LLC, v. Nike, Inc., decided unanimously by the Supreme Court on January 13, 2013.  See — U.S. –, No. 11-982 (U.S. January 9, 2013).  To put some meat on the factual bones:  Nike was the plaintiff, Already was the defendant, the mark was the trade dress of Nike’s famous Air Force 1 shoe, for which Nike has a federal registration.  Already sold shoes that Nike felt infringed the Air Force 1 trade dress.  Nike sued, Already counterclaimed.  Nike then reconsidered, successfully mooting the case via a unilateral covenant not to sue.  “The covenant promised that Nike would not raise against Already or any affiliated entity any trademark or unfair competition claim based on any of Already’s existing footwear designs, or any future Already designs that constituted a “colorable imitation” of Already’s current products.”  Already, slip op. at 2.

The Supreme Court’s decision clarifies (to a degree) the burden for showing the existence or absence of an actual controversy where a plaintiff seeks to moot a defendant’s counterclaim via a unilateral covenant not to sue.  But its importance lies just as much, if not more, in the barriers the Court erects against future uses of covenants not to sue, and in the insight it provides into the Justices’ thinking about trademarks and about basic competitive fairness.

The opinion was written by Chief Justice Roberts.  Justice Kennedy wrote a concurrence, which Justices Thomas, Alito, and Sotomayor joined.

I.    The Holding:  Burdens and Burden-Shifting

Both the district court and the Second Circuit held that, once Nike had executed the covenant not to sue, the burden was on Already to show that the case had not become moot.  Slip op., Kennedy concurrence at 1.  This was “wrong.”  Id.  “Under our precedents, it was Nike’s burden to show that it could not reasonably be expected to resume its enforcement efforts against Already.”  Slip op. at 5, quoting Friends of the Earth, Inc., v. Laidlaw Environmental Services (TOC), Inc., 528 U.S. 167, 190 (2000) (quotation marks omitted).  In other words, the “voluntary cessation doctrine” articulated in Friends of the Earth applies to Nike, who in this situation was the party who voluntarily ceased the allegedly wrongful conduct (i.e. a lawsuit based on an allegedly invalid registration) .  Id. at 5-6.  This burden imposed on Nike by the doctrine is a “formidable” one.  Id. at 6. (more…)

April 11, 2012

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

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

by Uli Widmaier, Trademark Attorney

I.   Summary

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

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

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

II.   A Circuit Split in the Making?

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

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

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

January 18, 2012

Peter and the Wolf Leave the Public Domain – Supreme Court Holds Copyright Restoration Law is Constitutional

Filed under: Copyright — Tags: , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 5:59 pm

by Uli Widmaier

On January 18, 2012, the U.S. Supreme Court held in Golan v. Holder, No. 10-545, 565 U.S. — (2012), that a law bestowing U.S. copyright protection on certain foreign works that had previously been in the public domain is constitutional under both the Copyright Clause of the Constitution and the First Amendment.  Justice Ginsburg authored the opinion.  Justice Breyer wrote a dissenting opinion, joined by Justice Alito.  Justice Kagan took no part in consideration or decision of the case.[1]

The Supreme Court’s holding is important because it affirms the accession of the U.S. to a system of international IP protection under the Berne Convention for the Protection of Literary and Artistic Works (Berne Convention), the World Trade Organization (WTO), and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).  It also clarifies the reach of Congress’s authority under the Constitution to legislate in the copyright arena.

1.     Background

In 1989, the U.S. joined the Berne Convention for the Protection of Literary and Artistic Works.  Article 18 of the Berne Convention provides that “a work must be protected abroad unless its copyright term has expired in either the country where protection is claimed or the country of origin.”  Golan, at 3.  The U.S., however, did not comply with Art. 18.  Prior to 1998, U.S. copyright protection of foreign works was limited.  A foreign work did not enjoy copyright protection in the U.S. for one of three reasons: (1) the U.S. did not protect works from the country of the origin at the time of the work’s publication; (2) the U.S. did not protect sound recordings fixed before 1972; and (3) the work’s author had not complied with certain statutory formalities relating to copyright notice, registration, and renewal, that were formerly required under U.S. copyright law.  See Golan at 1, 4.

When the United States joined both the WTO and TRIPS, continued noncompliance with Art. 18 of the Berne Convention could have given rise to significant sanctions such as “tariffs or cross-sector retaliation.”  Golan at 8.  To bring the U.S. into compliance with Art. 18, Congress in 1998 enacted Section 514 of the Uruguay Round Agreements Act (URAA), codified at 17 U.S.C. §§ 104A & 109(a).  Section 514 “restores” copyright protection to foreign works that were not protected in the U.S. for one of the three reasons set forth above.[2]  Specifically, “restored” copyrights in such works “subsist for the remainder of the term of copyright that the works would have otherwise been granted . . . if the work never entered the public domain.”  17 U.S.C. § 104A(a)(1)(B).

Section 514 grants copyright protection to works that were previously available in the U.S. without such protection.  In other words, it removes these works from the public domain.  This has significant real-world effects.  For example, prior to enactment of Section 514, orchestras could rent the sheet music for famous musical works such as Prokofiev’s Peter and the Wolf, Stravinsky’s A Soldier’s Tale, or the great symphonies of Shostakovich for relatively low fees.  With U.S. copyright in these works newly established, the rental fees became drastically higher, making it economically impossible for many ensembles to afford to perform these works.  See generally Brief of the Conductors Guild as Amicus Curiae supporting Petitioners (filed Nov. 24, 2010).[3]

2.     The Supreme Court’s Analysis

The petitioners appealed from a Tenth Circuit ruling rejecting their argument “that Congress, when it passed the URAA [including Section 514], exceeded its authority under the Copyright Clause and transgressed First Amendment limitations.”  Golan, at 11.  The Supreme Court disagreed, refuting each of the petitioners’ arguments.

(a)     Copyright Clause – “Limited Times”

The Copyright Clause states in relevant part that “Congress shall have Power . . . [t]o promote the Progress of Science and useful Arts, by securing for limited Times to Authors . . . the exclusive Right to their . . . Writings.” Art. I, §8, cl. 8.

Petitioners argued that “removing works from the public domain . . . violates the ‘lim­ited [t]imes’ restriction by turning a fixed and predictable period into one that can be reset or resurrected at any time, even after it expires.”  Golan at 14 (citations and quotation marks omitted).  According to Petitioners, the works in question had enjoyed an initial “limited term” of “zero” duration, and it was unconstitutional to extend that term.

The Supreme Court made short work of the “zero” argument.  “[S]urely a ‘limited time’ of exclusivity must begin before it may end.”  Golan, at 15.  More generally, the Court held, the term “limited times” is “best understood to mean confined within certain bounds, restrained, or circumscribed.”  Golan at 14 (citations and quotation marks omitted).  Section 514 provided a “restrained” and “circumscribed” copyright term for these former public-domain works and thus does not violate the “limited times” clause.  Golan at 14-15.

Moreover, the Court found ample historical precedent of Congress’s removing works from the public domain and giving them copyright protection.  Importantly, the Court noted, “the Copyright Act of 1790 granted protection to many works previously in the public domain.”  Golan at 16.  In short, the Court held, “[g]iven the authority we hold Congress has, we will not second-guess the political choice Congress made be­tween leaving the public domain untouched and embrac­ing [the Berne Convention] unstintingly.”  Golan at 19.

(b)     Copyright Clause – “Promote the Progress of Science and useful Arts”

Petitioners argued that the Copyright Clause mandates that any copyright laws passed by Congress must “promote the Progress of Science and useful Arts.”  Golan at 20.  But a law providing new copyright protection to an existing work in the public domain cannot possibly incentivize the creation of new works.  Therefore, according to Petitioners, such a law is unconstitutional.  Id.  The Supreme Court disagreed.  “A well-functioning international copyright system would likely encourage the dissemination of exist­ing and future works. . . . The provision of incentives for the creation of new works is surely an essential means to advance the spread of knowledge and learning. We hold, however, that it is not the sole means Congress may use “[t]o promote the Pro­gress of Science.” . . . Congress determined that exem­plary adherence to Berne would serve the objectives of the Copyright Clause. We have no warrant to reject the ra­tional judgment Congress made.”  Id. at 22-23.

3.     First Amendment

Petitioners argued that they “enjoyed ‘vested rights’ in works that had already entered the public domain,” and depriving them of these rights by withdrawing the works from the public domain violates petitioners’ First Amendment rights.  Golan, at 26.  The fact that copyright law protects First Amendment interests via doctrines such as the idea/expression dichotomy or the fair use doctrines cannot, in Petitioners’ view, compensate for Congress’s “unprecedented foray into the public domain.”  Id. (quotation marks omitted).

The Supreme Court noted that this argument depends on a premise the Curt had already rejected, “namely, that the Constitution renders the public domain largely untouchable by Congress.”  Id.  Moreover, the Court noted, granting copyright protection to Prokofiev’s Peter and the Wolf or to Shostakovich’s symphonies merely puts these works on equal footing in the marketplace with “music of Prokofiev’s U.S. contemporaries: works of Copland and Bernstein, for example, that enjoy copyright protection, but nevertheless appear regularly in the programs of U.S. concertgoers.”  Golan, at 29.  The Court stated that there is no “free speech principle [that would disarm Congress] from protecting works prematurely cast into the public domain for reasons antithetical to the Berne Convention.”  Id. at 28.

In short, “[b]y fully implementing [the Berne Convention], Congress ensured that most works, whether foreign or domestic, would be governed by the same legal regime.”  Id. at 30.  Neither the Copyright Clause nor the First Amendment prevents Congress from determining “that U.S. interests were best served by our full participation in the dominant system of international copyright protection.”  Golan, at 32.

4.     The Dissent

In dissent, Justice Breyer argued that the Copyright Clause embodies a strong “utilitarian view of copyrights and patents” and places “great value on the power of copyright to elicit new production.”  Golan, Breyer Dissent, at 5, 7.  Therefore, since a law bestowing copyright on existing works that were – often for decades – in the public domain does not in any meaningful way elicit the production of new works, the law – Section 514 – is unconstitutional.  See id.  Justice Breyer also notes the “speech-related harms” arising from Section 514, such as “restricting use of previously available material; reversing payment expectations; [and] rewarding rent-seekers at the public’s expense.”  Id. at 16.

The Court should therefore have scrutinized “with some care the reasons claimed to justify [Section 514] in order to determine whether they constitute reasonable copyright-related justifications for the serious harms, including speech-related harms, which [Section 514] seems likely to impose.”  Id. at 16-17.  Applying such scrutiny, Justice Breyer concludes that “the Copyright Clause, interpreted in light of the First Amendment, does not authorize Congress to enact this statute.”  Id. at 24.

5.     Conclusion

In Golan v. Holder, the Supreme Court strongly affirmed Congress’s authority to legislate freely in the copyright area.  “The judgment §514 expresses lies well within the ken of the political branches.”  Golan, at 32.  Neither the Copyright Clause nor the First Amendment imposes strict or inflexible limitations on Congress’s power.

From a political perspective, the Supreme Court’s decision has the important effect of affirming the place of the United States within the legal structure of international intellectual property law.  In deciding the case, the Supreme Court had Congress’s intent to protect the United States’ international interests firmly in mind.  “Those interests in­clude ensuring exemplary compliance with our interna­tional obligations, securing greater protection for U. S. authors abroad, and remedying unequal treatment of foreign authors.”  Id.

*  *  *

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


[footnotes]

[1] A copy of the opinion and the dissent is available at: http://www.pattishall.com/pdf/golanscotusruling.pdf.

[2] The Supreme Court noted that “[r]estoration is a misnomer insofar as it implies that all works protected under Section 104A previously enjoyed protection. Each work in the public domain because of lack of national eligibility or subject ­matter protection, and many that failed to comply with formalities, never enjoyed U. S. copyright protection.”  Golan, at 10 n. 15.

September 23, 2010

You Are Now Free to Use Crinkly Paper Towels: Eighth Circuit Affirms Finding that Sale of Generic Paper Towels Designed to Fit Branded Dispensers is Not Contributory Trademark Infringement

Filed under: Litigation — Tags: , , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 1:52 pm

by Uli Widmaier, Trademark Attorney

Do generic unbranded paper towels, dispensed from a branded dispenser, confuse consumers?  No, says the Eighth Circuit, despite a survey commissioned by defendant that showed 11% consumer confusion, a level that often suffices for a finding of liability.  What was the basis for the court’s holding?  The plaintiff’s own business practices, which refuted the gravamen of the plaintiff’s claim that the defendant’s sales created the likelihood of confusion.

In Georgia-Pacific Consumer Products LP v. Myers Supply, Inc., No. 09-2980, slip op. (8th Cir. Sept. 15, 2010), the Eighth Circuit affirmed the district court’s judgment after a bench trial for defendant Myers.  In 2002, plaintiff Georgia-Pacific (“GP”) had introduced a touchless paper towel dispenser known as “enMotion.”  The enMotion dispenser, which is prominently branded with the enMotion and GP trademarks, accepts 10-inch-wide paper towel rolls.  Until 2007, towel rolls of that width were unique in the paper towel dispenser business, and GP was their sole supplier.  In 2007, however, Myers began selling 10-inch rolls made by a third party, Drehle.  Since only the enMotion dispenser accepted that width, Myers knew “with 99% certainty,” as the court put it, that the paper towels would be installed in enMotion dispensers.  Id. at 1. (more…)

May 25, 2010

Supreme Court Makes the Call: NFL Not Exempt from Antitrust Law when Licensing Team Trademarks for Merchandise

Filed under: Antitrust, Licensing — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 7:27 pm

By Uli Widmaier, Esq.

Reversing the Seventh Circuit, the Supreme Court unanimously held that the National Football League’s trademark licensing activities are “not categorically beyond the coverage” of federal antitrust laws.  American Needle, Inc., v. NFL, No. 08-661, slip op. at 1 (S. Ct. May 24, 2010).  The Court concluded that the league’s actions constitute “concerted activity” under Section 1 of the Sherman Act, meaning that, on remand, the district court will evaluate American Needle’s claims under the Rule of Reason standard.  Id. at 18.  This does not mean that the NFL necessarily will be found liable under the Sherman Act, or that such an outcome is even likely.  Writing for the Court, Justice Stevens emphasized that the NFL may very well prevail under the Rule of Reason test, since NFL teams may have “a perfectly sensible justification for making a host of collective decisions.”  Id.  Nevertheless, American Needle’s antitrust claim will proceed for the time being. (more…)

April 27, 2010

Supreme Court to Examine Application of Copyright Law’s First Sale Doctrine to Importation of Gray Market Goods

Filed under: Copyright, Gray Market — Tags: , , — Pattishall, McAuliffe, Newbury, Hilliard & Geraldson LLP @ 9:18 pm

by Uli Widmaier, Trademark Attorney

Does copyright law’s first sale doctrine apply to imported goods manufactured abroad that are not intended for the United States market?  That is the question on which the Supreme Court recently granted certiorari in Costco Wholesale Corp. v. Omega, S.A., No. 08-1423 (Apr. 19, 2010).  Costco purchased genuine Omega “Seamaster” from an entity that acquired the watches outside the U.S. and imported them into the U.S. without Omega’s authorization.  Costco ultimately sold the watches to consumers at 35% below the price Omega normally charged in the U.S.  To stop this practice, Omega engraved a small design on the back of these watches, registered it with the U.S. Copyright Office, and then sued Costco for copyright infringement in the Central District of California, alleging violations of Sections 106(3) and 602(a) of the Copyright Act, 17 U.S.C. §§ 106(3), 602(a).  The district court entered summary judgment in Costco’s favor, but the Ninth Circuit Court of Appeals reversed.  Omega S.A. v. Costco Wholesale Corp., 541 F.3d 982 (9th Cir. 2008). (more…)

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