[Caution: This blog may contain bad puns; But it’s how Eye Roll.]
In two recent cases, trademark holders learned that it was a huge Missed-Steak to sue when puns were involved.
In the first case, Beyoncé Knowles-Carter and BGK Trademark Holdings, LLC sued Feyonce LLC’s. Beyoncé alleged that Feyonce’s branded merchandise for people who are engaged to be married caused a likelihood of confusion with her trademarked merchandise. Beyoncé’s motion for partial summary judgment got a Chile reception from the court. In denying the motion, the court identified the critical question was whether a rational consumer would believe that Feyonce’s products were sponsored by Beyoncé or affiliated with her company. The court held that the pun on Beyoncé’s name was sufficient to dispel a likelihood of confusion among the consuming public. The court acknowledged that the two trademarks had similar text, font and pronunciation. However, the Feyonce mark has the additional connotation of sounding like the word “fiancé” which is directly related to Feyonce’s merchandise. Since the suit didn’t go how Beyoncé Oregano-ly planned, she dismissed the case.
The second case, involved another Farce to be reckoned with. LTTB LLC is an online apparel company. LTTB credits a large part of its success to public fascination with products featuring the phrase “Lettuce Turnip the Beet”. Redbubble, Inc. is an online marketplace that sells merchandise created by independent artists. When Redbubble artists started using the turnip pun on merchandise, LTTB sued Redbubble for trademark infringement. Redbubble Romained calm and brought a motion for summary judgment. In granting the motion, the court felt that LTTB didn’t have a case against Redbubble. The court granted summary judgment for Redbubble on the basis of the “aesthetic functionality doctrine”. This means that if goods are bought for their aesthetic value, their features are purely functional and not trademark use. The court held that no trier of fact would conclude that consumers bought the merchandise because of LTTB’s reputation.
WHY YOU SHOULD KNOW THIS. These two cases show some of the limits of trademark protection. In the Beyoncé case, the pun had enough to do with the type of merchandise being sold to avoid a likelihood of confusion. In the LTTB case, the pun, and not the brand, was why people bought the merchandise. Note that the “aesthetic functionality doctrine” is the subject of some controversy. It is not evenly applied by the courts. So it may not always Turnip in a victory for the punster.
Premier Comp Solutions LLC develops customized panel listings of healthcare providers for workers’ compensation claims. The technology allows employers to contain workers’ compensation costs by ensuring that a chosen healthcare provider complies with local workers’ compensation laws with respect to qualifications, licensing and quality of care. The beauty of the system is that it can be localized by the state where the employee is located. The system was protected as a trade secret.
Sounds great for an employer with lots of employees in different states who have lots of workers’ compensation claims, right?
Premier Comp alleged that its competitors, UPMC Benefit Management Services, Inc. and MCMC, LLC, thought it was great too. So, Premier Comp says, they conspired to misappropriate Premier Comp’s trade secrets. Premier Comp sued UPMC and MCMC for trade secret misappropriation and for antitrust violations. Antitrust laws protect trade and consumers from companies who work together on anti-competitive practices such as price-fixing, restraints on trade, price discrimination and monopolies. A plaintiff must prove: (1) concerted action by the defendants in furtherance of restraint of trade; (2) that concerted action produced anti-competitive effects within the relevant product and geographic markets; (3) that the concerted action was illegal; and (4) that the plaintiff was injured as a proximate result of the concerted action.
The district court granted the defendants’ motion to dismiss the antitrust claims. The court rejected Premier Comp’s argument that UPMC and MCMC working together created a per se antitrust violation. The misappropriation may have violated trade secrets laws. But circumstantial evidence that the defendants worked together doesn’t automatically create an antitrust violation. The court didn’t reject the idea of using antitrust in a trade secret misappropriation case; just that Premier Comp didn’t have enough facts to prove it. Premier Comp failed to demonstrate that: (1) it is a competitor of the defendants; (2) its injury stems from a competition-reducing aspect or effect of the defendants' behavior; (3) it was shut out of the relevant market; and (4) there was harm to competition in the relevant market.
WHY YOU SHOULD KNOW THIS. Antitrust violations can result in treble damage and an award of attorneys’ fees. So Premier Comp understandably wanted to increase the potential recovery for UPMC and MCMC’s behavior. But, Premier Comp didn’t have facts to support its antitrust claims.
Happy Anniversary to IP News for Business. Today’s blog marks the 5th anniversary of this blog. Thank you to all who have read, enjoyed and maybe learned something from this blog over the years.
That’s not a typo. The subject of today’s blog is THE. THE Ohio State University filed an application to register THE for wearing apparel. According to news sources, Ohio State demands to be called “THE Ohio State University”. Ohio State argues that THE is part of its name. Sports and journalists have often commented on Ohio State’s branding insistence calling it stupid, ridiculous, pompous and arrogant. Ohio State responds to these negative comments saying that it has every right to protect its brand.
The USPTO refused registration of THE. The Office Action refusing registration had some interesting information. Ohio State wasn’t the first one to try to register THE as a trademark. The clothing and accessory designer/manufacturer, Marc Jacobs, had already filed an application to register THE for accessories and clothing. The USPTO refused Marc Jacobs’ application as well. The Marc Jacobs’ Office Action cited two primary problems. First, the mark drawing and the specimen didn’t match. The mark drawing was just the word THE. But the specimens show THE with other words like “The Backpack Marc Jacobs” and “The Velveteen Jean Jacket by Marc Jacobs.” Second, THE fails to function as a trademark. In other words, THE doesn’t act as a source of Marc Jacobs’ products.
Now back to THE Ohio State’s Office. The Office Action contained a prior advisory of the suspending of the Ohio State application pending the outcome of Marc Jacobs’ application. And then it went deeper into why THE doesn’t function as a trademark for Ohio State. The mark, as it appears on the clothing, is merely ornamental. It just appears on the clothing but does not distinguish Ohio State’s clothing from clothing of others.
Both Marc Jacobs and Ohio State have some time to respond to these Office Actions. So the THE saga may continue.
WHY YOU SHOULD KNOW THIS. Neither Office Action touched on a point that seems obvious. If either applicant gets a registration for THE, how will that affect the ability of others to develop clothing lines that use THE? Both applicants seem to want to corner the market on a word that is one of the most common words in the English language. Aside from that, there is a difference between a slogan or words that appear on clothing versus a mark that is used to identify a product. See the comparison in the graphics. The top graphic shows the mark being used in an ornamental way. If that’s the only way the owner uses it, the USPTO would probably refuse registration. The bottom one shows the mark being used as a source and product identifier. If that’s the way the owner uses it, the USPTO will probably allow registration.
An application to register tells the Copyright Office about you, your work and why you’re entitled to register a copyright. To further this goal, the Copyright Act requires that you include only accurate information in your copyright application. Gold Value International Textile d/b/a Fiesta Fabrics learned the consequences of not following this rule the hard way.
Fiesta registered the copyright for a group of textile designs. Fiesta had distributed samples of some of the fabric designs to get production contracts. Then it sold about 190 yards of one fabric with the design. In its copyright application, Fiesta claimed the designs were unpublished.
Fiesta sued Sanctuary Clothing, Inc. and others for allegedly selling a blouse with an infringing textile design. Sanctuary counterclaimed seeking invalidation of Fiesta’s copyright. Sanctuary argued that Fiesta included previously published designs in its application to register an unpublished collection. Fiesta further argued that this inaccurate information regarding publication required invalidation of the registration. Fiesta argued that it didn’t consider the sample distribution and small sale of the design to be “publication”. But that argument was rejected. The District Court couldn’t get a clear handle on whether Fiesta’s inaccurate information was enough to invalidate the registration. Congress passed a law in 2008 that only invalidates the copyright if: (1) the applicant knew that the information was inaccurate; and (2) the inaccurate information would have caused the Register of Copyrights to refuse registration. So the District Court submitted an inquiry to the Register of Copyrights. The Register of Copyrights responded that she would have refused registration because a copyright registration cannot contain a mix of published and unpublished works. And if the Register had known that the application was trying to register a mix of published and unpublished works, she would have refused registration.
The District Court held that Fiesta knowingly included inaccurate information in its copyright application that required invalidation. Not only did the District Court invalidate the copyright, it found that Sanctuary was a prevailing party and entered a judgment for attorneys’ fees in Sanctuary’s favor.
Fiesta appealed to the Ninth Circuit Court of Appeals who affirmed the District Court’s judgment.
WHY YOU SHOULD KNOW THIS. Copyright registration isn’t a perquisite to copyright ownership. But, your copyright has to be registered before you can sue for infringement. So, of course, you have to be careful when you fill out the application to register a copyright. If you discover an error, you can file an application for supplementary registration to correct the error. And this is better done sooner rather than later.
Matt Furie describes his popular Internet character “Pepe the Frog”, as a “cool, chill frog dude”. Celebrities like Katy Perry and Nicki Minaj have published Pepe the Frog memes.* Online message boards posts fan art featuring Pepe the Frog and calling them “rare Pepes”. Pepe the Frog’s Internet popularity turned into a financial windfall for Matt.
But then unsavory Internet posts started using Pepe the Frog. That’s when the cool, chill frog dude lost his chill. Pepe was co-opted by white nationalists and the alt-right movement to pursue hate filled agendas in blog posts, memes and other promotions. It got so bad that the Anti-Defamation League, an American organization opposed to antisemitism, included Pepe the Frog in its hate symbol database. Matt went after the infringers who used Pepe the Frog as a symbol of hate. Everyone caved – except InfoWars, Inc. InfoWars is the notorious website run by Alex Jones. Mr. Jones is a far-right conspiracy theorist who is currently being sued by some parents of the victims of the Sandy Hook Elementary School shooting because he claims the tragedy was a hoax to support gun control.
In the lawsuit brought by Matt, Mr. Jones took a shot gun (pun intended) approach to defending his unauthorized use of Pepe the Frog. The defenses included claiming Matt’s work was not original to Matt and claiming Matt lied to the Copyright Office in his application to register Pepe’s copyright. But one of the defenses was unique. Mr. Jones argued Pepe’s ubiquitous appearance in Internet memes nullifies Matt’s copyright in the character. In denying Mr. Jones’ motion for summary judgment, the District Court for the Central District of California noted that "Defendants have not pointed to any authority for the proposition that 'meme-ification' of an image or character destroys or diminishes the original author's copyright interest." The parties ended up settling for $15,000 and a permanent injunction.
WHY YOU SHOULD KNOW THIS. As the Court pointed out, Mr. Jones’ meme-ification argument was unsupportable. Copyright Law does not nullify a copyright because of prevalent uses of a copyrighted work, whether authorized or not. While it would have been great for Pepe the Frog to have his day in court at a trial, the District Court’s summary judgment opinion gives us cited authority that “meme-ification” is not a defense to copyright infringement.
- Memes are images, videos, pieces of text, etc., that are copied (often with slight variations) and spread rapidly by Internet users.
Acacia Communications got tired of paying a license fee to Viasat, Inc. for trade secret protected technology. So Acacia supposedly created replacement technology. The problem? Acacia used Viasat’s trade secrets.
Viasat sued Acacia for trade secret misappropriation. During the litigation, Acacia’s defenses shifted. Acacia started out denying any copying. But, through discovery, Viasat found a slew of emails between Acacia’s co-founders, Christian Rasmussen and Mehrdad Givehchi, sent via their personal email addresses. They discussed how to give a new Acacia engineer a white paper on the technology. They ultimately decided to give him a USB drive containing Viasat’s trade secrets. In one email, Rasmussen wrote, "... I don't want to mail it from the company account, just in case silly things should happen down the road." Well, $49.3 million of silly things happened. The jury found that Acacia acted willfully and maliciously and awarded the huge judgment to Viasat.
In a twist of irony, on a counterclaim by Acacia, the jury found that Viasat misappropriated Acacia's trade secrets, but that it was not done willfully. The jury awarded Acacia just $1.
WHY YOU SHOULD KNOW THIS. Acacia’s solution to getting out of paying license fees was not ideal. In fact, it was exactly the wrong thing to do. To make matters worse, the co-founders heavily ‘papered’ their scheme. Hiding behind personal email accounts only supported the jury’s determination that Acacia’s co-founders acted willfully and maliciously. The end result was a ‘break your company’ judgment (less $1).
If you needed a crown or root canal lately, your dentist may have used a fancy wand to scan and send a picture of your mouth to the dental lab. Chances are that the scanner was the Itero Element scanner, a computer scanning system that is manufactured by Align Technologies. The Itero scanner requires a disposable sleeve for the wand. One of Align’s competitors, Strauss Diamond Technologies, began selling a competing sleeve, called “MagicSleeve”. In its advertisements, Strauss used Align’s trademarks in hashtags, product descriptions and product images.
Align brought suit against Strauss and sought a preliminary injunction to stop Strauss from using its trademarks. Strauss argued that its use of the Align trademarks was “nominative fair use”. The nominative fair use defense has 3 parts: (1) the trademark is the only word available to accurately describe the product; (2) the mark is used only as is “reasonably necessary” to identify the product; and (3) the user does nothing that would suggest endorsement by the trademark owner. Putting aside the fact that the first and second elements are contradictory, the court determined that Strauss’ defense was full of cavities. Strauss’ various uses of Align’s trademarks failed at least two out of three of the nominative fair use test. Align’s motion for preliminary injunction was granted.
WHY YOU SHOULD KNOW THIS. Nominative fair use can be a useful tool in a competitive industry. Sometimes you have to refer to your competitor’s products in order to differentiate yourself in the market. Deciding what crosses the line can be tricky. One thing we know is that Strauss crossed that line.
In 1981 the well-known photographer, Lynn Goldsmith, took a series of photographs of the pop star, Prince. Goldsmith interpreted the photographs as describing a vulnerable and uncomfortable person. In 1987, Vanity Fair magazine commissioned Andy Warhol to create illustrations from the Goldsmith photos for their article titled “Purple Fame”. Warhol created “The Prince Series” consisting of 19 paintings of Prince, some of which used an orange wash of color.
After Prince died, Vanity Fair again published copies of the Warhol works. Goldsmith says that that’s when she learned about the "Prince Series" for the first time. Goldsmith sued the Warhol Foundation, the owner of the works, for copyright infringement. A New York District court entered summary judgment for the Foundation on the basis of fair use. The court described the Warhol paintings as having removed the protectable elements of the photographs to turn Prince into an iconic, larger than life figure.
WHY YOU SHOULD KNOW THIS. The court used the transformative nature of Warhol’s orange take on the Purple One to find fair use. Although, in this case it might take an art critic’s eye to see the court’s argument.
You may recall the scene in the Ghostbusters movie where, Rick Moranis’ character begs diners in a swanky Central Park restaurant to save him from a Terror Dog. That restaurant is the famous “Tavern on the Green” that has been owned by New York City since 1934. The Tavern’s trademark has a bit of a complicated history. NYC leased the restaurant to Tavern on the Green LP (TOTG). NYC decided not to renew TOTG’s lease in 2009. That’s when NYC discovered that TOTG registered the trademark in 1978. NYC sued TOTG to cancel the registration because NYC was the owner of the trademark and not TOTG. TOTG and NYC entered into a settlement agreement that allowed TOTG to use the name outside of NYC as long as TOTG didn’t use the words “Central Park”. TOTG went ahead and used the Tavern trademark along with the words “Central Park” thereby breaching the agreement. NYC sued again. And won.
WHY YOU SHOULD KNOW THIS. When an applicant fills out a trademark application, the applicant has to state under oath that it is the bona fide owner of the trademark. If that isn’t true, the applicant has committed a fraud in the application process. The USPTO will cancel a registration obtained by fraud. TOTG didn’t have the right to register the trademark. And even after getting the right to use the name “Tavern on the Green”, TOTG used the words “Central Park” in breach of the settlement agreement. TOTG couldn’t escape the trademark Terror Dog of its own creation.
CMI Roadbuilding, Inc. is in the business of manufacturing road construction equipment and replacement parts. Through a series of acquisitions and mergers, CMI acquired trade secrets included in engineering documents. CMI sent its engineering documents to vendors without confidentiality notices. Iowa Parts, Inc. is in the business of manufacturing the same kind of replacement parts that CMI manufactured. Over the years, Iowa Parts hired various employees who had worked for companies acquired by CMI. Iowa Parts also reached out to vendors who had CMI’s engineering drawings. In 2002, Iowa Parts began manufacturing competing replacements parts.
CMI knew (or should have known) that Iowa Parts was manufacturing competing replacement parts. Iowa Parts made no secret of it (pun intended). Then in 2016, Iowa Parts lowered its prices and cut deep into CMI’s revenues. That’s when CMI sued for misappropriation of trade secrets under the Defend Trade Secrets Act (“DTSA”). The Eighth Circuit Court of Appeals affirmed summary judgment in favor of Iowa Parts. The DTSA has a 3 year statute of limitations. CMI waited too long to defend its trade secrets.
WHY YOU SHOULD KNOW THIS. Trade secrets have two primary attributes. They are (1) something that’s not generally known or readily ascertainable; and (2) subject to reasonable measures of secrecy. Allowing someone to use your trade secrets for over 14 years is not a reasonable measure of secrecy. If a trade secret is being misappropriated, the owner has to be aggressive and take action immediately. Otherwise, the trade secret is lost forever.
After the Chicago Cubs won the World Series in 2016 (breaking a 108 year losing streak), Ronald Mark Huber filed an intent to use trademark application for the word “Cubnoxious”. The Chicago Cubs Baseball Club LLC opposed the application. The Cubs were able to establish that Ronald had no real intent to use the trademark in commerce. All he had was one sheet of paper showing potential imprints on t-shirts. He submitted a conclusory statement that he intended to use it in no specific geographic area and not specifically to target Cubs fans. He had no business plan, no marketing plan, no established business experience and no experience in the sports industry. It could have ended there but the Cubs also opposed the application on the basis of a likelihood of confusion. That’s where the Trademark Trial and Appeal Board’s decision in favor of the Cubs got fun.
The Board examined the numerous ways that the Cubs use their Cubs trademarks in conjunction with other words. Then the Board found that Cubs fans could perceive “Cubnoxious” as coming from the Cubs and not some other source. The Board conceded that calling fans “obnoxious” isn’t very flattering. But the Cubs submitted compelling evidence that “sports teams or their fans may seek to provoke opposing teams and their fans, thereby embracing an offensive, or obnoxious reputation”. The Cubs argued that Cubs fans are notorious for their undying allegiance to the team and might see being called “obnoxious” as a badge of honor.
WHY YOU SHOULD KNOW THIS. Putting aside the fun of the likelihood of confusion arguments, Ronald’s loss teaches a valuable lesson about what an ‘intent to use’ trademark application really is. A bona fide intent to use has to be something more than “at some point I’d like to use this trademark” which is all that Ronald proved. Ronald’s evidence (or lack thereof) worked against his alleged bona fide intent to use the trademark. Keep in mind that many intent to use applications are not tested as heavily as Ronald’s was. However, before filing an intent to use application, it’s a good idea to have at least sketched a plan of how the trademark is going to be used.
TKC Aerospace, Inc. was justifiably upset when its vice president, Charles Muhs, left and began working closely with Phoenix Heliparts, Inc., a competitor. Then TKC found even more reason to be upset. TKC lost a Department of State contract to Heliparts who used TKC’s trade secrets. TKC sued Heliparts in Arizona. After a 40 day trial, TKC got a $30 million judgment against Heliparts. TKC sued Charles in a concurrent case in Alaska. Based on the Arizona judgment, the district court granted TKC’s motion for summary judgment against Charles in the amount of $20 million. Then Charles filed a Chapter 7 bankruptcy case.
In the bankruptcy case, TKC used the Alaska judgment to have the $20 million debt held non-dischargeable on summary judgment. Charles appealed to the district court and lost. But the Fourth Circuit Court of Appeals reversed and remanded the case for further hearing. The Fourth Circuit held that a trade secret misappropriation judgment can be held non-dischargeable under the Bankruptcy Code only if the misappropriation is both willful and malicious. The Arizona judgment didn’t make those findings against Charles. The Alaska judgment didn’t make those findings either. So neither the Arizona judgment nor the Alaska judgment could be used to determine if the trade secret misappropriation debt was non-dischargeable.
WHY YOU SHOULD KNOW THIS. TKC thought it had a slam dunk. It had two judgments for trade secret misappropriation. But, bankruptcy is a whole new world. Bankruptcy is designed to give a debtor a fresh start. So non-dischargeability of a debt is strictly construed. TKC’s result can be avoided. A plaintiff can lay the groundwork for non-dischargeability if the defendant happens to file bankruptcy.
Erik Brunetti wanted to register the word “FUCT” as a trademark for clothing. The United States Patent and Trademark Office (“USPTO”) refused registration saying it was too “scandalous” because it was “extreme nihilism”, evidence of “anti-social behavior” and “extreme misogyny”. Erik appealed to the Trademark Trial and Appeal Board (“TTAB”), who affirmed the refusal. Erik didn’t give up and appealed to the Federal Circuit Court of Appeals who reversed the refusal (See IP Blawg Post Dated 1/16/18). The director of the USPTO, Andre Iancu, appealed to the U.S. Supreme Court who affirmed the Federal Circuit thus allowing the trademark to proceed to registration.
Justice Elena Kagan, writing for the majority, adopted the reasoning in Matal v. Tam which held that a disparaging trademark like “The Slants” for an Asian American band is protected free speech (See IP Blawg Post Dated 9/9/17). Like the now-prohibited ban on disparaging trademarks, the USPTO’s ban on scandalous marks was based on the view-point of the observer. Justice Kagan stated that the USPTO allows registration for trademarks that are consistent with society’s sense of rectitude and morality. But the USPTO discriminates against trademarks that, in its viewpoint, don’t fit into a standard of morality. The USPTO’s view-point analysis is not neutral. Therefore, the prohibition against the registration of scandalous trademarks is an unconstitutional violation of First Amendment Free Speech.
WHY YOU SHOULD KNOW THIS. Erik’s trademark projects a certain sensibility; one that Erik obviously believes his customers share. Trademarks that don’t fit into society norms may be fun, interesting and good marketing tools. But, a trademark reflects the values of the owner of the products or services. So when choosing a trademark, know your customer base and be careful about the impression your trademark makes.
Return Mail, Inc. obtained a patent for a computerized system of bar coding so that companies can track returned and undelivered mail. The U.S. Postal Service was interested in licensing the technology. Before they could ink a licensing agreement, the Postal Service walked away and developed its own system. And that’s when the litigation began.
The Postal Service tried to invalidate Return Mail’s patent before the Patent Trial and Appeal Board. The Board held that the patent was valid. Return Mail sued the Postal Service under the Federal Claims Act for using a patented process without a license. Using a proceeding that was created by the America Invents Act (“AIA”), the Postal Service got a ruling that invalidated the patent. Return Mail appealed. The case landed before the U.S. Supreme Court. Justice Sonya Sotomayor, writing for the 6 to 3 majority stated that the AIA proceeding is only available to a “person”. Governmental units such as the Postal Service were not included in the definition of a “person” under AIA. So the Postal Service can’t use the AIA to invalidate the patent.
WHY YOU SHOULD KNOW THIS. When faced with any dispute, don’t assume anything. In this case, Return Mail, Inc. questioned whether the Postal Service had standing to challenge its patent. Following the 11th Commandment, “Thou shall not assume”, Return Mail, Inc. won the day.
Violent Hues Productions published a tourism guide that used a stock photograph depicting the Adams Morgan neighborhood of Washington D.C. The problem is Violent Hues used it without the permission of the photographer, Russell Brammer.
Russell sued Violent Hues. The District Court originally sided with Violent Hues saying that Violent Hues didn’t infringe because the photograph was used for “informational” purposes. The Fourth Circuit Court of Appeals reversed the decision to the relief of photographers everywhere. The Fourth Circuit rejected all of the defenses brought up by Violent Hues including, some flimsy excuses like, it was an innocent mistake and its use didn’t stop the photographer from licensing it to others. Violent Hues’ fair use defenses didn’t get anywhere. Violent Hues tried to make the case for “transformative use” because it cropped and only used half of the photograph. That doesn’t fit into the definition of transformative use. The Fourth Circuit Court’s opinion was scathing in its rebuke of Violent Hues’ defenses by holding that “fair use is not designed to protect lazy appropriators”.
**WHY YOU SHOULD KNOW THIS. ** Finding a photograph on the Internet is easy. But using it can have harsh results. When using content from the Internet, the default should always be that the work belongs to someone and you need their permission to use it. If you need stock photographs, there are numerous stock photo websites that will license the use. The license fee is substantially less then expensive and time consuming copyright infringement litigation.
Versata Software Inc. licensed its automotive configuration software to Ford Motor Co. The license agreement contained an affirmative acknowledgment that Versata owned the Intellectual Property related to the software, including trade secrets. The license agreement had fairly standard language that prohibited Ford from reverse engineering the software. Ten years later, after updates to the underlying technology for the software, Ford bid Versata adieu and decided not to renew the license. No surprise, Ford developed similar software on its own. No further surprise, Versata sued Ford for violating the anti-reverse engineering clause in the license. In ruling on cross-motions for summary judgment, the court held that the language of the reverse engineering clause was ambiguous when it comes to the current version of the software. So the parties are going to have to go to trial on the interpretation of the clause.
WHY YOU SHOULD KNOW THIS. The Versata anti-reverse engineering language may have been fine at the beginning of the license agreement. But over time, the underlying technology changed and the language did not. To avoid Versata’s dilemma, license agreements should permit updates to defining the scope of Intellectual Property in software license agreements to reflect updates in the technology.
Siny Corp tried to register its trademark “Casalana” for a knit textile used in the manufacture of outerwear, gloves and the like. As its specimen of use in commerce, Siny submitted pages from its website. But the United States Patent and Trademark Office refused the specimen because it was mere advertising and not evidence of use in commerce. Siny appealed the decision all the way up to the Federal Court of Appeals and lost. Where did Siny go wrong?
In order to claim rights in a trademark, the owner has to use the trademark in commerce. Siny argued that the website showed use in commerce because it had the text “For sales information” followed by a phone number. That wasn’t enough. The website has to provide a means for ordering the goods, such as through a “shop online” or “add to cart” button or link, or through information contained on the page. “For sales information” isn’t the same as “order now” or “to order, call this number”. According to the Federal Court of Appeals, “if virtually all important aspects of the transaction must be determined from information extraneous to the web page, then the web page is not a point of sale.” If it’s not a point of sale, it’s not use in commerce. So Siny has to go back to the website drawing board and make some changes.
WHY YOU SHOULD KNOW THIS. At first glance, the Siny decision seems like splitting hairs. But it points out an important distinction between mere advertising and use in commerce. A website that shows pictures of a product doesn’t mean that the product is actually being sold. Even having contact information for the seller, doesn’t mean it’s being sold. The consumer visiting the website has to have enough information about how to actually purchase or get the product.
Stella McCartney, the fashion designer daughter of former Beatle, Paul McCartney and his late wife, Linda, tried to register the trademark “Fur Free Fur”. The United States Patent and Trademark Office (USPTO) rejected it as being merely descriptive of Stella’s use of fake fur in her fashion designs. The Trademark Trial and Appeal Board (TTAB) disagreed and overturned the decision.
The TTAB held that the USPTO failed to recognize the multiple meanings of the use of the word “fur” in the trademark. Judge Thomas Shaw, writing for the TTAB described the “Fur Free Fur” trademark as really being two things at once like Schrödinger’s Cat (see below for more information) being dead and alive at the same time. “In the first instance, ‘Fur Free,’ the term ‘fur’ refers exclusively to animal fur. In the second instance, ‘fur’ alone, the term ‘fur’ refers to imitation fur.” The “internal inconsistency” in “Fur Free Fur” would give consumers pause making the trademark distinctive. In other words, the juxtaposition of the words required some imagination on the part of the consumer to recognize the trademark as being connected to the goods and service.
WHY YOU SHOULD KNOW THIS. The “Fur Free Fur” trademark is a good example of how a trademark can be created from seemingly generic or descriptive words by adjusting word placement. The word placement of “Fur Free Fur” created a play on the words. The key is to make sure the words require some imagination on the part of the consumer when they see the trademark. Note, that this case had a rare dissenting opinion where the judge disagreed that consumers needed any imagination or perception to recognize the words as a trademark. So care must be taken when developing a Schrödinger’s Cat trademark.
More information about Schrödinger’s Cat: In 1935, Erwin Schrödinger illustrated a problem in quantum physics by presenting a hypothetical scenario where a cat may be alive and dead at the same time. For any further explanation, please consult your friendly neighborhood physicist.
Ahlam Ramzy, a former employee of Perfect Brow Art, Inc., left and started her own Tennessee eyebrow threading salon. Perfect Brow brought suit against Ahlam in Chicago for trademark infringement, trade dress infringement, false designation of origin, trade secret misappropriation and unfair competition.
Ahlam brought a motion to dismiss the Chicago case for lack of personal jurisdiction. Personal jurisdiction is dictated by the reach of where the court sits. Ahlam had never been to Chicago and hadn’t done any business there. Ahlam argued that the Chicago court only would have personal jurisdiction over her if she was located in Illinois or she had sufficient minimum contacts with Illinois to justify jurisdiction over her. Perfect Brow sought to get around the fact that Ahlam had no contacts with Illinois by pointing to a clause in Ahlam’s employment agreement where the parties agreed that the employment contract would be interpreted under Illinois law. The District Court dismissed the case for lack of personal jurisdiction without prejudice. The court held that the choice of law term in the contract was not sufficient to confer personal jurisdiction over Ahlam. Note that the case was dismissed without prejudice. That means Perfect Brow can still bring suit against Ahlam in Tennessee.
WHY YOU SHOULD KNOW THIS. Companies often use employment agreements to make sure that an employee won’t take the company’s Intellectual Property with them after the employee leaves. Companies can also use employment agreements to keep any lawsuits in the company’s home state. It’s convenient and tames the costs of litigation. As Perfect Brow learned, getting the benefits of a contractual term is all in how the term is drafted. If the term had specifically stated that any litigation between the parties would take place in Illinois, then the Illinois case would probably not have been dismissed.
Express Oil Change used the service mark “Tire Engineers” for its tire sales, repair and maintenance services. The Mississippi Board of Licensure for Professional Engineers & Surveyors had a problem with that. According to the Board, no one can use the word “engineer” unless they are actually engineers and have registered for a license to practice engineering in Mississippi.
Express Oil Change brought a declaratory judgment action against the Board. On appeal from summary judgment in the Board’s favor, the Fifth Circuit Court of Appeals reversed. In its opinion, the Court held that commercial speech is protected by the First Amendment. Anyone challenging commercial speech has to justify any restrictions. And the challenger has a heavy burden. The Board didn’t meet that burden. The Board tried to argue that Express Oil Change’s use of the word “engineer” was misleading. The Court rejected the argument for two reasons. First, the word engineer is generally defined as someone having technical skills and does not exclusively refer to a person who designs, builds, or maintains engines, machines, buildings or public works. Second, the essential character of how Express Oil Change used the word is not deceptive or misleading.
WHY YOU SHOULD KNOW THIS. What the Board failed to understand is that there’s a difference between holding yourself out as an engineer for engineering services and using the word “engineer” for marketing other types of services. Many professions are regulated for public policy reasons. For example, someone can’t call themselves a medical doctor without proper degrees and registrations. But someone can call their clock and watch repair business “The Clock Doctor” without having to register with a medical professional board. The essential character of using “doctor” for fixing clocks isn’t deceiving the public.
VidAngel Inc. removed nudity and violence from films and then sold the ‘redacted’ versions. Disney Enterprises, Inc. its subsidiary Lucasfilm Ltd. LLC, Twentieth Century Fox Film Corp. and Warner Bros. Entertainment Inc. sued VidAngel for copyright infringement.
This case has boomeranged between the District Court in California and the Ninth Circuit Court of Appeals. The courts have consistently rejected VidAngel’s defenses and affirmed injunctions against them. Among VidAngel’s defenses were First Amendment free speech and fair use. The District Court called these arguments “poorly developed” and “convoluted”. VidAngel also argued that an obscure 2005 statute called the “Family Home Movie Act” allowed it to edit dirty material from films and then sell the edited versions. The courts rejected this argument. The act permits the development of technology for consumers to skip content once they’ve purchased a film. The District Court has now entered summary judgment in favor of the Hollywood studios against VidAngel on the issue of liability. The case will proceed to the damages phase.
WHY YOU SHOULD KNOW THIS. VidAngel’s sanitized versions of popular films were derivative works. Derivative rights belong solely to the owner of the copyright. Without a license to create, copy and distribute those derivative works, VidAngel’s business model had a shaky foundation. Perceiving and acting on a need is a good business model. Infringing on someone else’s copyright is a bad business model.
Using someone’s trademarks when criticizing their products or services can be tricky. But if you do it the right way, it could be considered nominative fair use.
Applied Underwriters, Inc. owns the trademark “Equity Comp” for financial services. Providence Publications LLC, which describes itself as a provider of informative journalism, offered a webcast seminar titled: “Applied Underwriters’ Equity Comp Program: Like it, Leave it, or Let it be?” The seminar wasn’t very complimentary. Applied Underwriters sued for trademark infringement and unfair competition. Providence Publications moved to dismiss the complaint arguing that the use of the trademark was permitted as nominative fair use. The motion was granted and affirmed on appeal. Relying on the leading case of New Kids on the Block v. News Am. Publ’g, Inc., the Ninth Circuit Court of Appeals showed that the three factors of nominative fair use existed in this case. Those factors were (1) Applied Underwriter’s products and services could not have been readily identifiable without use of the trademark; (2) Providence Publications only used so much of the trademark as was reasonably necessary to identify Applied Underwriter’s products and services; and (3) Providence Publications did nothing that would suggest Applied Underwriters sponsored or endorsed the seminar.
WHY YOU SHOULD KNOW THIS. Providence Publications used Applied Underwriter’s trademarks in a non-competitive, public commentary/free speech kind of way. But what happens if a competitor uses another’s trademark? In other words, how far does commentary and free speech go between competitors? The New Kids on the Block factors should help figure out the answers to those questions.
The famous movie producer, Sam Goldwyn, is credited with saying that “An oral contract isn’t worth the paper it’s written on”. The son of Bob Ross, the Joy of Painting icon, found out that there’s an exception to this rule.
Bob Ross created a company, Bob Ross Inc., along with his wife and Walt and Annette Kowalski, two of their friends. There were no written assignments or other written agreements between Bob and the company. During Bob’s lifetime, the company registered his trademarks and managed his business. The company licensed Bob’s trademarks, his likeness and his name for the manufacture and sale of merchandise and collected the revenues. Bob also executed a trust that was administered by Bob’s brother. The trust had some language about the ownership of intellectual property. After Bob died, his son, Robert Stephen Ross, took over administering the trust and brought suit against the company alleging that the trust and not the company owned all of Bob’s intellectual property. The court entered summary judgment for the company. In granting summary judgment, the court held that it was clear that Bob wanted the right to his name and image to go to the company. He may not have formally assigned the rights on paper, but he did make a verbal grant and otherwise made his intentions clear.
WHY YOU SHOULD KNOW THIS. Bob and the company didn’t have anything in writing. Instead, the company proved years of custom and usage that the judge used as a substitute for a written agreement. But, these results are not typical. The lack of a written agreement can suffer from the passage of time which can cause divergent memories regarding the parties’ intentions. Don’t leave something as important as management of intellectual property to chance. Always choose a written agreement over an oral one.
Swarmfly Inc. and CloudFlare Inc. courted each for a potential acquisition and licensing relationship related to video streaming service technologies. Each party signed non-disclosure agreements. Sadly, the courtship didn’t lead to a marriage proposal and each party went their separate ways. Until, Swarmfly sued CloudFlare for trade secret misappropriation.
Swarmfly’s wings were clipped when the court denied Swarmfly’s motion for preliminary injunction. The court stated that Swarmfly’s trade secret claims were “moving targets” which didn’t bode well for its ability to ultimately prevail on the merits. Four months later, Swarmfly dismissed its case with prejudice. CloudFlare then brought a motion pursuant to the Defend Trade Secrets Act, the California Uniform Trade Secret Act and the court’s inherent powers seeking an award of the attorneys’ fees it incurred between the denial of the preliminary injunction and the dismissal. The motion was granted. It seems that during mediation, new facts came to light that "unquestionably rendered Swarmfly's misappropriation claim objectively specious." The court stated that Swarmfly was "ethically obligated to drop its misappropriation claim” at that time. Since Swarmfly didn’t, Swarmfly has to pay CloudFlare’s attorney’s fees.
WHY YOU SHOULD KNOW THIS. The best way to avoid Swarmfly’s cataclysmic outcome is to: (1) properly identify your trade secrets; (2) make sure you maintain reasonable measures to keep the trade secrets from public disclosure; (3) if you’re going to sue for trade secret misappropriation, make sure you did (1) and (2); and (4) if you find out that no misappropriation took place, back off immediately.
Marco Guldenaar Holding BV filed a patent application for a casino dice game. The claims in the patent covered unique markings on the dice and the rules of the game. Guldenaar Holding threw snake eyes when the United States Patent and Trademark Office rejected the application and the rejection was affirmed on appeal to the Federal Circuit of Appeals.
According to the Court, the US Supreme Court’s decision in Alice Corp. v. CLS Bank International prohibits patents for abstract ideas like Guldenaar Holding’s casino game. The game rules and markings on the dice lacked an “inventive concept” sufficient to transform the claimed subject matter into a patent-eligible application of that idea. Guldenaar Holdings argued that the dice markings aren’t conventional and the game isn’t just an abstract idea because it involves physical game-playing steps versus just mental game-playing steps. The Court disagreed, ruling that a game can still be abstract even if there are physical steps to playing the game. But, the Court was careful to say that not all games are ineligible for patent protection. In a concurring opinion, Circuit Judge Haldane Robert Mayer wrote, “While games may enhance our leisure hours, they contribute nothing to the existing body of technological and scientific knowledge. They should therefore be deemed categorically ineligible for patent”.
WHY YOU SHOULD KNOW THIS. All types of Intellectual Property Law have limitations on what they protect. Guldenaar Holdings butted up against the patent limitation for abstract ideas. Guldenaar Holdings is not alone. Owners of business process and software have watched their patent applications be denied and the issued patents be cancelled in light of the Alice decision. So if patent protection isn’t available, what then? Assuming the elements exist, other types of Intellectual Property such as copyrights and trade secrets could be available.