The TMCA

In light of ongoing litigation over an applicant’s effort to register the mark FUCT for wearing apparel, the USPTO recently issued an Examination Guide concerning the review of trademark applications under Section 2(a) of the Lanham Act, which bars registration of marks that consist of or comprise immoral or scandalous matter. The constitutionality of this “scandalousness” provision was put into play after the United States Supreme Court ruled in June 2017 in Matal v. Tam that the statutory bar on registering “disparaging” marks constituted an improper discriminatory “viewpoint” restriction under the First Amendment. Tam established the right of a rock band with Asian-American members to obtain a federal trademark registration for the name The Slants, which the band contended should be viewed not as a derogatory name for Asian-Americans, but rather as a term “reclaimed” by them to “drain its denigrating force.” When Tam was decided, many trademark experts predicted that the scandalousness prohibition in Section 2(a) would likely suffer the same fate as the disparagement provision. That indeed occurred on the circuit court level in December 2017, when the Court of Appeals for the Federal Circuit held in In re Brunetti that the scandalousness provision, relied on by the USPTO to refuse registration of the FUCT mark, violates the First Amendment. We blogged about the Brunetti decision late last year, in which the court analyzed whether immoral and scandalous marks are different from disparaging marks because the concept of disparagement necessarily involves a viewpoint analysis, whereas the prohibition on immoral and scandalous marks could be viewed as a viewpoint neutral restriction on commercial speech. The majority opinion in Brunetti held that the scandalousness provision (interpreted to include vulgar terms) “impermissibly discriminates” based on content in violation of the First Amendment. One judge on the appellate panel issued a concurring opinion that would have upheld the scandalouness provision of Section 2(a) for marks that are obscene and therefore not protected under the First Amendment. Rehearing was denied in Brunetti on April 12, 2018, and the period in which to petition for a writ of certiorari expires on July 11, 2018. In this procedural context, the USPTO Examination Guide advises that in accordance with its “broad discretion to manage its own docket,” the USPTO will continue to examine applications for compliance with the scandalousness provision while the constitutionality of the provision remains subject to potential U.S. Supreme Court review. If an examining attorney believes that a mark will violate the scandalousness provision, an advisory refusal will be issued, in addition to any other issues that may be raised by the application. If the asserted scandalousness is the only issue barring registration, the examining attorney will suspend action on the application. The suspension of the application will remain in place “until either: (a) the time for filing a petition for certiorari in Brunetti (including any extensions granted ) expires, with no petition being filed; of (b) if a petition for certiorari is filed, the later of (1) denial of certiorari or (2) termination of U.S. Supreme Court proceedings in the case.” So stay tuned for developments after July 11, 2018!

If you didn’t make it to the 2018 Annual Meeting of the International Trademark Association in Seattle, or if you were there but were out enjoying the spectacular weather or spending time with colleagues and friends, the Dorsey trademark team is here to provide  a brief overview of some interesting seminars we attended and tidbits scooped up during the Meeting: Federal Registrations for Cannabis: In a lively debate, panelists Shabnam Malek (an attorney in the cannabis industry) and Robert A. Mikos (a professor at Vanderbilt Law School) discussed whether the U.S. Patent and Trademark Office should grant federal trademark registrations for cannabis brands.  The PTO’s current position is that federal registrations may not be granted for substances or activities illegal under federal law because they cannot be used lawfully in commerce.  In favor of federal registration, Malek contended that the wording “lawful use in commerce” in the federal trademark law is at least ambiguous and that, under the Administrative Procedures Act, the PTO should exercise its power to interpret the wording to encompass use that is lawful under state law, namely, the sale of cannabis.  She also contends that consumers face serious risks if the same brand is operating in multiple states with different products.  For example, a product with a smaller dosage sold in one state could be sold under the same name in another state with a higher dosage, thereby subjecting consumers to potentially dangerous, or at least different, effects than anticipated.Malek countered that the federal law is not ambiguous and clearly prohibits registration of cannabis while the current state-based system offers enough protection for brands and consumers.  Brands may obtain state trademark registrations where cannabis is legal and labelling requirements in states ensure that consumers understand what is in the product they are purchasing.  Additionally, he worried that granting cannabis registrations would open the door to registrations for other types of federally illegal drugs, such as meth.After a final poll of the room, it was clear that most in the audience favored granting federal registrations for cannabis.  This debate will most certainly continue as more and more states allow the sale of cannabis for medical and recreational purposes and the global market for cannabis, which is expected to hit $57 billion by 2027 according to Forbes, continues to boom.  The TMCA has written on this topic and will continue to follow developments in this industry. Product Placement: While product placement is often thought of as a static one-time and one-brand opportunity (think Reese’s Pieces in E.T.), panelists discussed the ways in which technology has paved the way for new and exciting opportunities.  Using retroactive product placement, it is now possible to seamlessly insert new products into already-existing content.  For example, an older movie poster in the show “How I Met Your Mother” can be digitally altered so that reruns now feature a poster for a 2018 release.  A show or movie can feature different types of cars in otherwise identical scenes in different markets.Social media influencers also remain a top priority for many consumer-facing brands.  Panelists cited statistics estimating that each $1 spent on social media marketing yields approximately $6 in revenue.  And nearly 60% of YouTube subscribers watch an influencer video before making purchases.  The TMCA has posted numerous times on developments in the landscape of influencer advertising. Food For Thought: In a seminar featuring in-house counsel from Amazon, Walmart, General Mills, Restaurant Brands International, and Jelly Belly, some of the largest players in the food industry discussed the challenges of food branding.  One theme for all companies was ensuring consistency of branding across many platforms, especially mobile devices.  Companies need to ensure that branding translates to the smaller screens many consumers are now using to interface with their brands.  In connection with this consistency, the companies discussed the concept of website trade dress and the extent to which the look of a company’s site is entitled to trademark protection.  The short answer: the more distinctive and consistent the better.Another point of concern expressed both by panelists and attendees is their interaction with third-party delivery platforms (e., GrubHub, DoorDash, etc.) and food boxes (i.e., Blue Apron, Plated, etc.) and to what extent these platforms may use a company’s trademark.  Regardless of fair use considerations, most panelists agreed that, at a minimum, contractual control is a crucial component to ensure brand owners have some way to control or limit the way delivery companies use their marks.  This enables companies to retain control over their brands and also ensures that consumers understand the relationship between the parties so that they can appropriately assign expectations (and blame, if necessary). Morality Clauses: In several seminars, panelists reiterated the importance of brand owners including morality clauses in agreements with licensees or promoters. This facilitates a swift exit should a brand wish to sever ties after an embarrassing, illegal, or scandalous action turning public opinion against the licensee or promoter.  With increased scrutiny now facing brands that support individuals or companies falling out of public favor, it is important to have this type of contractual ripcord. The Slants: Rock Stars of the Trademark World and Beyond: Dorsey was proud to present at its reception the talented and U.S. Supreme Court precedent-establishing band The Slants – if you missed their performance, check out their website. We look forward to seeing what happens at next year’s Annual Meeting in Boston (May 18 – 22, 2019) – see you then!

Trademark licensing disputes can present thorny issues at the intersection of contract and trademark law. And when the dispute involves the Trump brand for residential buildings, the adjudication of rights and obligations under a trademark license agreement can become national news. The decision in Residential Committee of the Board of Managers of 200 Riverside Boulevard at Trump Place Condominium v. DJT Holdings LLC was no bed of roses for DJT, as the court held that the 200 Riverside Building was not required to use the Trump name on the façade of the Building. As recounted by the court, the 200 Riverside Building, consisting of 377 residential and four commercial units, was constructed around 1998, at which time the words “Trump Place” were “installed with large brass-finish characters in two locations on the Building’s façade.” In March 2000, Trump and the condominium board of the Building (the “Condo Board”) entered into a royalty-free license agreement, which granted a “nonexclusive, nontransferable right for the Building to use the Identification ‘Trump’ on its façade” in exchange for $1 and “other good and valuable consideration.” In February 2017, the Condo Board conducted a straw poll among residential unit owners, and of the 253 unit owners who responded, 63% favored removal of the Trump signage. A month later, the Condo Board received what the court characterized as a “Threatening Letter” from DJT, stating that removal of the Trump Identifications from the Building “would constitute a flagrant and material breach of the License Agreement.” The Condo Board did not wait around to see if it would be sued, instead commencing an action for declaratory judgment that its License Agreement with DJT did not require the building to use the Trump signage. The Condo Board then moved for summary judgment. The Trump team raised several arguments in response: first, the Condo board lacked standing; second, there was no controversy for the court to decide (at least yet); and third, under the License Agreement, the Condo Board either did not have the right to remove the Trump signage or it did not take the proper steps to do so. The court rejected each of these arguments. DJT contended that standing was lacking because the “full” Condo Board did not vote to authorize the lawsuit. The court easily dispensed with this argument, noting that the two Board seats that did not vote were vacant, and had not voted in Board matters in several years. More importantly, the Condo Board’s rules required a quorum, which it had during the meeting at which the vote occurred. Next, DJT argued that there was no “justiciable controversy,” meaning that there was no dispute for the court to resolve— only a precursor to a dispute. The court rejected this argument, finding that there was in fact a dispute the court could resolve. In particular, DJT argued that there was no dispute yet because the Condo Board had not taken any actual steps to remove the Trump signage on the façade. The court disagreed, as both a factual and legal matter. Factually, the court relied heavily on the “Threatening Letter” asserting that removal of the signage would be a material breach of the License Agreement. The court also noted, ironically, that DJT “complains that [the Condo Board] has not taken the very steps [DJT] threatened it and coerced it not to take.” DJT’s legal argument fared no better, as the court held that the judicial interpretation of the License Agreement would (and ultimately did) resolve the dispute. Specifically, if the court found that the License Agreement prevented the Condo Board from removing the signage, then the Condo Board would not remove it and the dispute would be over. Likewise, if the court found that the License Agreement did not prohibit removal, the Condo Board would do so and the dispute would be resolved. The court then turned to the interpretation of the License Agreement to determine whether removal of the signage was permitted. When the language of a contract is clear, as the court found for the License Agreement, a court must enforce that agreement based on the plain meaning of its terms. When such an agreement is commercial, and negotiated at arm’s length by sophisticated parties—all of which the court found present here—a court is to apply these principles with “even greater force.” Applying these principles, the court’s straightforward analysis turned on the express language of the “very brief, 4-page (including the signature page) License Agreement.” The court agreed with the Condo Board’s argument that there are “no obligations or requirements for the building to carry the name ‘Trump’ on it in perpetuity.” Specifically, Section 1(a) of the license provides that licensor: “… hereby grants to Licensee a nonexclusive, non-assignable, nontransferable right, without the right to grant sublicenses, to use the Identifications, on a royalty-free basis, solely for the purpose of identifying the Building at its above-mentioned location and in advertising, promotional and publicity materials solely with respect to the promotion of the Building and its residential condominium units….” (emphasis added by court). According to the Condo Board, the words “right” and “grant” conferred a permitted right, privilege or favor, not an obligation. DJT argued in opposition that a “whereas” clause in the agreement was intended to memorialize that the Building would be named Trump Place until such time as a proper vote is conducted in favor of changing the name. The court disagreed with this interpretation of the “whereas” clause, which stated: “Since approximately March 25, 1999, Licensee has used the Identifications substantially in accordance with the terms and conditions of this Agreement, and Licensor and Licensee now desire to set forth, in writing, the terms and conditions for Licensee’s continued use of the Identifications to identify the Building.” The court held this clause merely reflected the parties’ intention to continue use of the Trump name as had been the case since 1999, but did not impose a requirement that use of the Trump name continue forever. DJT’s next argument — that the Condo Board had not taken the requisite steps to change the name to comply with applicable condominium bylaws — was found to constitute a “fatal” concession. As the court observed, if DJT believed that there was a proper mechanism to vote on removing the Trump name from the building, there must be a right to do so. The final argument raised by DJT centered on the quality control provision of the License Agreement, which stated: “Licensor shall have the absolute right of prior approval of any and all uses of the identifications of Licensee. Licensee shall submit all such proposed uses to Licensor in writing....” According to DJT, this provision required affirmative consent before any change in use of the Trump name--including a change to non-use — could be made. The court gave this interpretation short shrift, holding that the provision “simply does not say what [DJT] contends it does.” According to the court, “a plain reading of the License Agreement states only that affirmative use of the identifications requires consent.” The court therefore concluded that the License Agreement was clear and unambiguous and that the Condo Board was not required under the terms of the agreement to use the Trump name on the Building. So for those of you driving up the West Side Highway, there may only be limited time left to see the Trump Place signage before it comes down. Sad!

We previously posted about an Oregon federal district court’s summary judgment rulings, favorable to Adidas, in the storied battle between heavyweights Adidas and Skechers. (Adidas America, Inc. v. Skechers USA, Inc. (D. Or. 2017)). Earlier in the case, the district court entered a preliminary injunction prohibiting the sale and marketing of Skechers’ Onix and Cross Court shoes, based on claims that the Onix infringes on the trade dress of Adidas’ Stan Smith shoe, and the Cross Court infringes and dilutes Adidas’ Three-Stripe trademark. This month, the Ninth Circuit reversed, in part, the preliminary injunction order, holding that the district court abused its discretion in issuing a preliminary injunction with respect to the Cross Court because Adidas did not show it would be irreparably harmed from the sale of this model shoe. In contrast, the Ninth Circuit affirmed the district court’s ruling with respect to the Stan Smith, holding that the district court did not clearly err in finding a likelihood of irreparable harm based on the record evidence. The Ninth Circuit’s ruling underscores that the presumption of irreparable harm in trademark infringement cases is long gone, even where likelihood of success on the merits is established; instead, a party must submit credible evidence to show that irreparable harm is likely. The district court’s preliminary injunction order entered in February 2016 found that Adidas had produced sufficient evidence of irreparable harm to warrant injunctive relief. It reasoned that: (a) Skechers’ infringement undermines Adidas’ substantial investment in building its brand and reputation of its trademarks and trade dress; and (b) Skechers’ attempt to “piggy back” off of Adidas’ efforts by copying or closely imitating Adidas’ marks means Adidas loses control over its trademarks, reputation, and goodwill—“a quintessential irreparable injury.” The district court order relied on evidence presented by Adidas that: (1) it had spent tens of millions promoting the Stan Smith, and nearly forty million annually on goods bearing the Three-Stripe mark; (2) it spent significant time and money in building and maintaining its perception among consumers as a premium sports brand, whereas consumers perceive Skechers as a “lower end value brand”, based on testimony from its marketing executive; and (3) consumer survey evidence that approximately 20% of surveyed consumers believed that Onix was made by, approved by, or affiliated with Adidas, indicating that Adidas’ carefully constructed brand image is likely to be confused with or associated with Skechers’ value brand. The district court thus concluded that “Adidas had produced evidence that Skechers’ continued sale of its Onix and other contested shoes will harm Adidas’ reputation and goodwill—harm that is not compensable by money damages.” The district court also found that Adidas had produced evidence that Skechers’ infringing footwear will diminish Adidas’ ability to create scarcity and drive demand for the Stan Smith -- a strategy Adidas had employed in 2013 in advance of its “reintroduction campaign.” Finally, the district court noted that Adidas’ Director of Sports Style Brand Marketing testified that the Stan Smith is one of Adidas’ most coveted shoes, and it works to control every aspect of the shoe that it can (materials, price, seller, who is seen wearing it, etc.). The district court reasoned that Skechers’ infringing shoes are likely to irreparably harm Adidas’ ability to control the quality of goods bearing Adidas marks or trade dress. In affirming in part, and reversing in part, the Ninth Circuit’s likelihood of irreparable harm analysis largely hinged on its prior decision in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., 736 F.3d 1239, 1250 (9th Cir. 2013), in which the Court held that “[e]vidence of loss of control over business reputation and damage to goodwill [can] constitute irreparable harm,” so long as there is concrete evidence in the record of those things. With respect to the Stan Smith, the Ninth Circuit was persuaded that there was sufficient evidence from which the district court could conclude that Adidas was likely to suffer irreparable harm to its brand reputation and goodwill if the preliminary injunction did not issue. The Court relied on evidence in the record of significant investment in promoting the Stan Smith through specified and controlled avenues, significant media from various sources that was not initiated by Adidas, and evidence of Adidas’ efforts to carefully control the supply of Stan Smith and the damage that would occur if the market were flooded, in addition to the above-discussed consumer survey. In finding that the district court’s irreparable harm ruling was not clearly erroneous, the Ninth Circuit reasoned that “[t]he extensive and targeted advertising and unsolicited media, along with tight control of the supply of Stan Smiths, demonstrate that [A]didas has built a specific reputation. And, the customer surveys demonstrate that intangible benefits will be harmed if the Onix stays on the market because consumers will be confused about the source of the shoes.” In contrast, the Court found that there was no evidence in the record that could support a finding of irreparable harm with respect to the allegedly-infringing Cross Court. The Court noted that Adidas advanced a narrow argument of irreparable harm as to the Cross Court: that Skechers harmed Adidas’ ability to control its brand image because consumers who see others wearing Cross Court shoes will associate the allegedly lesser-quality Cross Courts with Adidas and its Three-Stripe Mark (i.e. post-sale confusion). The Court first reasoned that Adidas’ theory relies on the notion that Adidas is viewed by consumers as a premium brand, while Skechers is viewed as a lower-quality, discount brand; and that Adidas did not set forth probative evidence of Skechers’ less favorable reputation. According to the Court, the only evidence in the record on this point was from Adidas employees, and Adidas did not provide sufficient specificity regarding consumer perception. The Court thus concluded that that the district court’s ruling that Skechers is viewed as a “value brand” is unsupported and conclusory, not grounded in evidence offered by Adidas. The Court also found that Adidas’ theory of post-sale confusion conflicted with its theory on the merits, and counterintuitive, begging the question: “[h]ow would consumers who confused Cross Courts for Adidas shoes be able to surmise, from afar, that those shoes were of low quality? If the ‘misled’ consumers could not asses the quality of the shoe from afar, why would they think any different about Adidas’ products? In which case, how could Adidas’ premium brand possibly be hurt by any confusion?” Accordingly, the Court found that even if Skechers does make inferior products (or even if consumers tend to think so), there is no evidence that Adidas’ theory of post-sale confusion would cause consumers to associate such lesser-quality products with Adidas. And, even if consumers were likely to be confused as to the maker of the shoe, the Court cannot simply assume that such confusion will cause irreparable harm, where Adidas failed to provide concrete evidence that it will. The Court contrasted the more specific evidence presented by Adidas that its reputation and goodwill were likely to be irreparable harmed by the Onix based on Adidas’ extensive marketing efforts of the Stan Smith and its careful control of the supply. Circuit Judge Clifton wrote a strongly-worded dissent chiding the majority’s Cross Court ruling on irreparable harm. Judge Clifton argued that the theory of post-sale confusion proffered by Adidas was not as narrow as the majority made it out to be, and quite consistent with a common theory of post-sale confusion in the trademark context. He explained that post-sale confusion could divert potential customers who believe they can obtain the prestige of Adidas’ goods without paying its normal prices. He mentioned his time in private practice thirty years ago defending Louis Vuitton against the sale of cheaper imitations. He was persuaded in those cases of the harm that could be caused (as Professor McCarthy described it) “if the prestige of carrying a bag with the Louis Vuitton trademark could be obtained at a fraction of the price, and if viewers could not tell the difference, the value of the trademark would be in jeopardy. And, if someone did confuse the cheap imitation for the real thing, the lesser quality of the imitator could further imperil the perceived value of the Louis Vuitton products and trademark.” He argued that a similar harm would occur to Adidas as a result of Skechers’ shoes imitating the Three Stripes mark. Judge Clifton also vehemently disagreed with the majority’s ruling that there was no evidence in the record to support Adidas’ claim of irreparable injury. He argued that Adidas provided ample evidence of harm, including sworn declarations and live testimony by several Adidas employees supporting Adidas’ contention that it has established a reputation as a premium sports brand, whereas Skechers’ brand perception is a “value brand” or “lower-end brand.” Judge Clifton argued that the majority improperly elected to discount that evidence, by applying its own skepticism toward employee testimony, despite the fact that the district court found the evidence to be credible. He contended that the notion that the appellate court can decide for itself that evidence relied upon by the district court should be ignored because it was provided by an employee of a party is unsupported and badly misguided. Judge Clifton concluded that the district court was well within its discretion to infer that confusion between Skechers’ “lower-end” footwear and Adidas’ footwear was likely to harm Adidas’ reputation and goodwill as a premium shoe brand—which is precisely the type of harm that is “irreparable.” Judge Clifton also reasoned that the district court’s determination did not even depend on establishing Skechers’ reputation as a lower quality brand; instead, the loss by Adidas of its control over its mark was by itself irreparably harmful. He argued that there was substantial evidence in the record regarding the value of Adidas’ mark and its management of the mark through investment and quality control over its product, evidence which the majority ignored. The Ninth Circuit’s decision highlights the significant burden now imposed on parties seeking a preliminary injunction in trademark cases, a substantial departure from the presumption of irreparable harm that was applied once-upon-a-time ago. It also highlights a hurdle for the senior user that wants to obtain injunctive relief for infringement without delay, but now may be required to support its contention of irreparable harm with evidence extending beyond its own ranks, such as by commissioning a consumer survey, an undertaking that can delay the ability to seek immediate injunctive relief. In short, a trademark holder seeking to fully protect its mark from infringement must not only act quickly, it must also make a significant showing of irreparable harm at the preliminary injunction stage.

In 2015, we wrote about the District of New Hampshire Bankruptcy Court’s decision in In re Tempnology, LLC.  That decision was significant because it bucked a recent trend in bankruptcy jurisprudence to permit trademark licensees to retain their trademark rights even after debtor trademark licensors reject their licenses under Section 365(a) of the Bankruptcy Code.  Despite the trend, the court held that because the Bankruptcy Code did not expressly permit trademark rights to continue post-rejection, as it did expressly for other intellectual property rights, the licensee’s trademark rights were extinguished upon rejection. Then, in 2017, we wrote about the Bankruptcy Appellate Panel (“BAP”) for the First Circuit’s reversal of that decision, keeping with the trend in other circuits to allow trademark rights to continue post-rejection.  In January 2018, the First Circuit Court of Appeals reversed the BAP and reinstated the Bankruptcy Court’s decision, creating a circuit split that the Supreme Court may take up—that is, if Congress doesn’t fix the problem first (which it created and can easily fix). Under Section 365(a) of the Bankruptcy Code, a debtor has the right to reject executory contracts, meaning that the parties to any rejected contract are relieved of their obligations to perform.  However, Congress included an exception for “intellectual property” licenses in Section 365(n), which allows licensees to continue using the licensed intellectual property through the end of the term of the license even if the debtor rejected that license under Section 365(a). Under the Bankruptcy Code, “intellectual property” is a defined term, which includes both copyrights and patents, but it does not include trademarks. The circuit split is largely due to a Senate report issued when Section 365(n) was enacted, which stated that trademark rights were intentionally excluded from Section 365(n) because they were different from other intellectual property rights.  As a result, before including trademark rights in Section 365(n), the issue required “more extensive study” and until then, Congress would “allow [for] the development of equitable treatment of this situation by bankruptcy courts.” In the First Circuit’s Tempnology decision, the court relied heavily on the language of 365(n), the definition of intellectual property, and Congress’s “principal aim in providing for rejection” to support its conclusion that trademark rights do not continue when an executory contract is rejected by the debtor.  The court found that Congress’s “principal aim”—i.e., to “release the debtor from burdensome obligations”—could not be accomplished because of a trademark owner’s obligations to exercise quality control over the mark. Saddling a debtor trademark licensor with those obligations would force it to “choose between performing executory obligations arising from the continuance of the license or risking the permanent loss of its trademarks, thereby diminishing their value to Debtor [or a successor].” The First Circuit rejected the BAP’s reasoning—which followed the recent trend in other circuits—to allow trademark licensees to continue using their licensed marks based in large part upon the Senate report’s language regarding equitable treatment by the bankruptcy courts.  In particular, the First Circuit accused other circuits, as well as the dissent in this case, of giving far too much weight to the Senate report, especially because the provision at issue contains no ambiguity.  Moreover, the court found that allowing trademark rights to continue post-rejection does not result in equitable treatment; rather, in addition to the burden upon the debtor, it would result in increased uncertainty, inconsistent rulings and hair-splitting, and higher costs on parties.  Given these considerations, the court found in favor of a “categorical approach” of excluding trademark rights from protection under the Bankruptcy Code. The dissent, to no surprise, disfavored the categorical approach, and instead advocated for equitable treatment, essentially on a case by case basis, consistent with the Senate report.  It argued that the majority’s approach was not only too harsh, but inconsistent with “congressional intent.” Although the Supreme Court recently extended the time for the trademark licensee from the Tempnology case to file a Petition for Writ of Certiorari, this is an issue that Congress can (and should) solve quickly and easily.  Section 365(n) was enacted in 1988; 30 years is enough time for “more extensive study.”  And because bankruptcy courts cannot agree on what constitutes equitable treatment—or even whether equitable treatment is entitled—the “let the courts figure it out” approach has not been particularly successful.  To provide clear guidance and an understanding of rights and remedies to trademark licensors, licensees, as well as purchasers of assets or companies in bankruptcy, Congress should decide whether trademark rights continue post-rejection or not. It seems unfair for the fate of a trademark license to be subject to the jurisdiction in which the licensor files for bankruptcy protection.

From time to time, we publish updates on changes to trademark laws that may impact our readers and their IP registration and enforcement strategies.  Once again, Mexico is making changes to its trademark system (recall Mexico added an opposition system in 2016). The proposed amendments are extensive and contain provisions related to new protection for non-traditional trademarks, nullity and opposition procedure, and amendments to provisions on well-known and famous brands, as well as many others.  The following are a few notable amendments that may immediately impact use, filing and maintenance strategy: For all trademark registrations granted from the effective date, trademark owners must file a declaration of use within three months from the third anniversary of the registration. No extensions will be available and failure to file will result in cancellation of the registration. Registrants filing renewal applications will be required to file a declaration of real and effective use of the mark in Mexico in connection with at least one of the products or services covered by the registration. Trademark applicants will be required to identify a date of first use of the trademark in Mexico.  Failure to identify a date of first use will be deemed as a voluntary declaration of no earlier use in Mexico.  This requirement will exist regardless of the fact that use is not required to prosecute the application or achieve a registration in Mexico.  It is possible the failure to identify a date for a mark in use in Mexico (deemed voluntary declaration of no earlier use) could impact defense and enforcement proceedings. The Mexican Senate passed the amendment to the Industrial Property Law in April 2018 and it is likely to become effective sometime in the next several months.

Stop me if you’ve heard this one before: an OB-GYN you probably don’t know named Dr. Drai applies to register his name as a trademark and ends up in a dispute with famous rapper Dr. Dre because the rapper fears there will be confusion between the names. A three-judge administrative panel decides “DR. DRAI” looks and sounds like “DR. DRE,” and agrees that Dr. Dre is really famous and that his brand is strong and distinct, but ultimately rules that there’s no risk of confusion. This might sound like an elaborate setup to a geeky joke, but on May 3, 2018, the Trademark Trial and Appeal Board decided a case with just those facts, holding that Dr. Drai was entitled to register his trademarks. See Andre Young v. Draion M. Burch DO. News of the TTAB decision caused some head-scratching on social media, wondering, what was Dr. Dre thinking? Why did Dre—a famous rapper and headphone mogul—believe that consumers would confuse his brand with that of an OB-GYN? The answer likely lies in the goods and services covered by Dr. Drai’s trademark applications (one for the DR. DRAI word mark and the other for the logo form of his mark). Although Dr. Drai provides obstetrics and gynecological medical services, he’s also a motivational speaker, and uses his brand to promote books, make television and radio appearances, conduct Twitter chats, and participate in speaking engagements and online videos, all relating to women’s health and transgender health topics. In the broadest sense, this makes Dr. Drai—like Dr. Dre—an entertainer. In fact, the challenged Dr. Drai applications covered Classes 9 (Computers, Software, Electronic instruments, & Scientific appliances) and 41 (Education, Amusement, Entertainment, Reproduction)—two classes in which Dr. Dre’s marks are also registered. So, contrary to some of the biting online commentary that followed the TTAB’s decision, Dr. Dre’s action was not, on its face, totally surprising. Dr. Dre opposed the Dr. Drai applications on three grounds: confusion, dilution, and false suggestion of a connection to him as an individual, but the dilution claim was affirmatively waived prior to final hearing. The Board ultimately ruled against Dr. Dre on both the confusion and false connection claims. Likelihood of Confusion Analysis What’s striking about the TTAB’s analysis of the confusion claim is that only one of the 13 du Pont factors of likely confusion favored Dr. Drai. In contrast, Dr. Dre prevailed on six factors, with five found neutral and one ignored by the Board. Indeed, the decision is filled with findings favorable to Dr. Dre: (a) Dr. Drai’s marks look and sound like Dr. Dre’s marks; (b) Dr. Dre’s mark is inherently distinctive; (c) Dr. Dre’s mark has “achieved a degree of renown” and “is strong”; (d) the parties’ trade channels “generally overlap”; (e) some of Dr. Dre’s and Dr. Drai’s less sophisticated consumers may exercise “less care” in their purchases, making “confusion more likely”; and (f) Dr. Dre’s mark is used in connection with “collateral or promotional items,” making it more likely that relevant consumers will be confused. Nonetheless, the TTAB declined to find a likelihood of confusion because the factors favoring Dr. Dre were outweighed by the differences in their respective goods and services. More specifically, the Board found that although both Dr. Dre’s and Dr. Drai’s services fall under the general category of “entertainment services,” Dr. Dre failed to submit evidence showing that Dr. Drai’s “motivational and educational” speaker services were sufficiently similar to Dr. Dre’s “musical composition and production” services. Evidentiary issues played a significant role in Dr. Dre’s lack of success on the confusion claim. The TTAB found that “many of the facts asserted by [Dr. Dre] in his brief have no evidentiary support.” Notably, Dr. Dre provided no evidence of the volume of his sales or advertising expenditures in connection with musical sound recordings or production services. Moreover, the TTAB refused to give weight to much of the evidence submitted by Dr. Dre, finding that it failed to satisfy any exception to the rule against hearsay. Hearsay exceptions can be quite arcane in application, so it might surprise a lay reader to learn that the TTAB can treat “newspaper story submissions dated 1997 or earlier” as admissible, while refusing to admit more recent—and relevant—stories from popular websites such as grammy.com (Dr. Dre awards list), billboard.com (Dr. Dre chart history) and staticbrain.com (Dr. Dre album sales statistics), Genius (genius.com), IMDB (IMDB.com), Biography (biography.com), and All Music (allmusic.com). As a result, Dr. Dre was unable to establish facts relevant to his receipt of Grammy awards, record sales, and rank on the Billboard Hot 100. Under the circumstances, the TTAB concluded that the evidence of record did not support a finding that the mark DR. DRE had achieved a degree of fame such that it fell on the “very strong” end of the spectrum of commercial strength. False Connection Analysis The analysis of the ground of opposition under Section 2(a) of the Lanham Act for false suggestion of a connection also seemed to go well for Dr. Dre, at least initially. The TTAB found that the first three factors in the four factor test favored Dr. Dre: (1) the DR. DRAI marks were found to be a close approximation of Dr. Dre’s name or identity; (2) the evidence showed that Dr. Dre has come to be associated with the name DR. DRE and that name uniquely and unmistakably refers to him; and (3) it is undisputed that Dr. Dre has no connection with the goods and services that Dr. Drai intends to offer under the applied-for marks. Dr. Dre’s Section 2(a) claim foundered, however, on the fourth factor: whether the fame or reputation of Dr. Dre is such that a connection with Dr. Dre would be presumed when the DR. DRAI marks are used in connection with the goods and services covered by the opposed applications. According to the TTAB, the key inquiry for this factor is whether there is something about the motivational and educational speaking services on the topics of obstetrics, gynecology and health, as identified in the opposed applications, that would cause the DR. DRAI marks to be associated with Dr. Dre. In undertaking this analysis, it was not necessary for Dr. Dre to prove that his name was famous in the health or medical field or that he offer goods or services in these areas. But it was not enough to argue that Dr. Dre’s reputation as a musician and producer is of such a nature that consumers would make that association just because celebrities in general license their name for a wide array of merchandise and services. As the TTAB commented, “Here, there is no evidence that it is commonplace for celebrities to sell or license the sale of goods or services of the type provided by [Dr. Drai].” In contrast, other cases where registration was barred under Section 2(a) included an application to register WESTPOINT for shotguns and rifles, which were goods of a type that customers would associate with a military post and an application to register TWIGGY for clothing, which would be associated with the well-known fashion model. Further, although intent to trade on the goodwill generated by a famous person’s name is not a required element of a Section 2(a) claim, such evidence can be considered as relevant. But here, Dr. Drai testified that he is a “gay gynecologist” with “a lot of transgender … [and] lesbian” patients. He further characterized Dr. Dre as being “known for his misogyny and homophobi[a],” adding that “being an OB-GYN, I cannot be associated with anyone that has any kind of misogynistic speech because it’s a bad reflection one me as a doctor.” The TTAB appears to have credited this testimony, finding that Dr. Drai had no intent to trade on Dr. Dre’s name. It is unknown why Dr. Dre decided not to pursue a dilution claim, which might have been more successful. Dr. Dre definitely is a famous name among wide swaths of the general public and there would have been no need to show likelihood of confusion or that the goods and services of the parties were related. However, it might have been difficult to establish, through survey evidence or otherwise, that consumers were likely to associate the DR. DRAI marks and services with Dr. Dre in a manner that would impair the distinctiveness of the DR. DRE mark. Takeaways from the Case The fame and renown of a celebrity name may only go so far in a trademark dispute if the goods and services are widely disparate It is not always true that a less famous trademark user will want to benefit from the particular reputation of the celebrity Being famous and proving that your mark is famous are not always the same things — evidentiary challenges abound

Starting this weekend, roughly 10,000 legal professionals from across the globe will begin converging on the great City of Seattle for the 2018 Annual Meeting of the International Trademark Association.  There are so many fun, interesting, and exciting things to do in the Pacific Northwest.  But let’s face it, unless you have boundless energy and lots of extra time on your hands, you probably won’t be able to take in most of what the Emerald City and its surrounding environs have to offer.   So, we’ve compiled a list of of our Top 10 favorite close by attractions that you might want to check out—all of which are accessible within a short walk from the Convention Center or after a brief journey using your favorite ridesharing service. #10.  Fugetaboutit.  Sure, other metropolitan areas are far better known for Italian fare than Seattle, but Vito’s is an Italian gem in the Emerald City.  It’s been open since the 1950s (yes some of that décor looks like it could be the original).  Excellent musical acts play nightly starting Wednesday through Sunday.   Vito’s is just a few blocks south of the Convention Center.   Email reservations@vitosseattle.com or call 206-397-4053. #9.  Pike Place Market.  This is Seattle’s original farmers market established in 1907.  It’s about a 6 block walk from the Convention Center.  It is ground zero for shops, fresh seafood, and iconic restaurants.  While there, check out a couple of our favorite spots including Beecher’s Hand Made Cheese Café,   and the Original Starbucks, which opened its doors in 1971. #8.  Books & Architecture?  If you are a bibliophile and a connoisseur of interesting architecture, take a short stroll down to Seattle’s downtown Central Library. It was designed by Dutch architect Rem Koolhaas in a joint venture with Seattle-based LMN Architects.  It opens at 10:00 am daily (12:00 p.m. on Sundays). # 7. Skyview Observatory.  If you haven’t experienced Seattle from 902 feet above the ground, head down to Seattle’s tallest building—the Columbia Center—and head up to floor 73 for 360 degree sweeping views of Seattle, Bellevue, Mt. Rainier, the Puget Sound, and much more.  The Skyview Observatory is the highest observatory in the Northwest and well worth the 10 minute walk from the Convention Center.  It’s open daily from 10 am-8 p.m. # 6.  Smith Tower.  If tall modern buildings like the Columbia Center give you vertigo, perhaps you want to check out the Smith Tower just down the street.  It is after all Seattle’s first skyscraper and, at one time, was the tallest building west of the mighty Mississippi River.  Head up to the observatory and take in the sights at the speakeasy-inspired bar on the 35th floor.  Weekday happy hour from 4-6 p.m. and late happy hour from 9-11 p.m. #5. Pioneer Square.  If you make your way to Smith Tower, you will officially be in Pioneer Square, Seattle’s Original Neighborhood founded in 1852.  Dozens of shops, restaurants, and other attractions await you.  Check out this helpful map on things to do and see while you are in the Square.  One of our particular favorite dining spots is the recently “re-opened” 13 Coins.  Great food, live entertainment on weekends, and, hey, its conveniently opened 24 hours a day for all of you INTA early birds and night owls. #4.  The Underground Tour.  Ok, it may sound weird, but go spend 75 minutes on this guided walking tour of entombed storefronts and sidewalks from when Seattle was rebuilt on top of itself after the great fire of 1889.  Call 206-682-4646, visit the ticket counter at 614 First Avenue in Pioneer Place Park, Pioneer Square, or click here for ordering tickets online. #3.  The Seattle Great Wheel.  From Pioneer Square you can walk down to the waterfront and take a spin on Seattle’s Ferris wheel.  Maybe it’s not quite the London Eye, but it is a fun, touristy place to go on Seattle’s waterfront.  It’s open until 10 pm Sunday-Thursday, and until 12 am on Fridays and Saturdays. #2.  Elliot’s Oyster House and the Edgewater Hotel.  If you’ve worked up an appetite after being whirled about on the Great Wheel, you are steps away from two restaurant staples on the waterfront.  Elliot’s Oyster House is a great place for seafood, and the aptly-named Edgewater Hotel (the only hotel on Seattle’s waterfront), offers great lounge and dining options as well. #1.  Seattle Center.  This is your stop for all sorts of entertainment and diversion in Seattle.  From the world famous (and highly recommended) Museum of Pop Culture (MoPOP), to the Space Needle built for the 1962 World’s Fair, there is plenty to see and do @ the Center.  For quick, easy access to the Seattle Center, you can hop on the Seattle Monorail, which is just a few blocks away from the Convention Center. Safe travels and enjoy INTA 2018!    

May 7 was no day at the beach for Multi-Media Tech. Ventures, Ltd., whose registrations for the mark GIDGET were cancelled in a precedential opinion by the Trademark Trial and Appeal Board. Yazhong Investing, Ltd. v. Multi-Media Tech. Ventures, Ltd. It is unclear whether there is any connection between registrant Multi-Media and the 1959 movie starring Sandra Dee or the follow-on 1960s era TV series made famous by Sally Field, but the specimens of use submitted in connection with one of the registrations at issue in the proceeding showed that Multi-Media was promoting a GIDGET “lifestyle brand” for surfing and other products and activities for girls and young women associated with the 1959 movie. The challenges in establishing such a commercial enterprise are reflected in the difficulties the registrant encountered in proving actual commercial use of its marks for the goods and services registered, particularly because the registrations at issue covered dozens of different goods and services. We think a few takeaways are almost as interesting as the true origins of the word “Cowabunga.” Petitioner, Yazhong sought cancellation of four of Multi-Media’s GIDGET registrations on the grounds of abandonment and fraud after the USPTO refused intent to use applications filed by Yazhong based on a likelihood of confusion with Multi-Media’s marks. The registrations at issue  a broad variety of goods and services including apparel, cosmetics, bicycles, stationery, books, home goods, and entertainment in the nature of theater and musical productions. While the TTAB’s decision does not break new ground on the legal standard for proving abandonment, it articulates the types of evidence that can cause or avoid a wipe out. Yazhong succeeded in satisfying the well-established standard for abandonment, a showing of nonuse for at least three consecutive years, from 2008 to 2012, which shifted the burden to Multi-Media to rebut the presumption of abandonment. Yazhong’s evidence consisted mostly of discovery responses as well as testimony and declarations from officers of a predecessor in interest to Multi-Media. This evidence showed an absence of sales figures; product samples but no commercially manufactured or marketed products during the time period under review; efforts to seek licensing partners; an advance against future revenues and a mistaken understanding about what was legally necessary to file a statement of use in connection with intent to use applications covering multiple products and services. Multi-Media also submitted a declaration by a board member stating that Multi-Media never intended to abandon the mark, but in line with prior precedent, the TTAB rejected this argument, focusing on the need to establish actual use of a mark or an intent to resume use in the reasonably foreseeable future, rather than a lack of intent to abandon. Its decision states: “the owner must do more than simply assert a vague, unsubstantiated intent to make use of the mark at some unspecified time in the future.” While “reasonably foreseeable future” might mean years down the road for some products, like movies, the TTAB felt that production of consumer goods covered by the registrations “may be effected much more easily.” Multi-Media’s lack of evidence regarding annual sales of units bearing the GIDGET mark had a particularly negative effect on its case. The TTAB expected to see such information as operating budgets and licenses demonstrating a “specific and consistent plan” to resume use of the mark, assuming the mark had ever been used commercially at all. The TTAB was unmoved by Multi-Media’s evidence that the mark had been used in connection with marketing activities, including advertising, participation at trade shows, and seeking licensing partners: “Simply put, there is no credible evidence that Respondent or its predecessors made any use of the GIDGET mark apart from a few sporadic promotions of surfing events in the subject registrations….” Having found that Multi-Media failed to overcome the presumption of abandonment, the Board held that it did not need to reach the additional ground of cancellation based on allegations of fraud.

The FTC announced an enforcement action last week that focused on two hot button issues – unsubstantiated health claims and failure to disclose material connections between endorsers and product marketers. In re Mikey & Momo, Inc. et al. The Complaint and Proposed Consent Order involve a business named Aromaflage, which markets sprays and candles advertised as DEET-free mosquito repellants containing essential oils and fragrance. Aromaflage advertised its products, which were sold at $30 for an 8 milliliter spray bottle and $40 for a 7.5 ounce candle, “as effective as 25% DEET over 2.5 hours.” More specifically, Aromaflage claimed that the products were “scientifically tested,”  “rigorously tested at one of the world’s leading Universities and found to be as effective at repelling mosquitos as the leading brand” and would repel mosquitos “that may carry Zika, Dengue, Chikungunya and Yellow Fever.” By expressly mentioning product testing, Aromaflage was required to meet a stringent standard for making what are called “establishment claims” – ad claims that specifically refer to tests having been conducted to support the advertising claims. Turns out that the testing had two significant problems – the test methodology was not scientifically rigorous and reliable and the results did not support the company’s positive claims. Here’s what bugged the FTC about the methodology: the testing did not include candles, even though the advertising claims were made for both sprays and candles; no human subjects were used, even though the products were intended to overcome mosquitoes’ attraction to human odors; and Aromaflage did not use more than one species of mosquito, even though other species can carry many of the diseases specifically mentioned in Aromaflage’s advertising material and could react differently to the same repellant. And the actual test results? Among other things, the data showed that at the 30 minute mark, more mosquitoes were in the Aromaflage-treated half of the testing chamber than in the untreated half and performed worse than water.  Unsurprisingly, the 25% DEET product performed better than the Aromaflage sprays for at least the first ninety minutes. Aromaflage compounded its regulatory problems as a result of glowing testimonials on Amazon that were posted as independent reviews when in fact they were written by one of the company’s officers, her mother and two of her aunts – without disclosing these material connections to Aromaflage. The FTC proposed consent order details an onerous 20-year compliance monitoring program that we are sure that defendants didn’t contemplate when they talked about their own “rigorous testing.” In fact, the order mandates that the defendants have “competent and reliable scientific evidence” to support their claims going forward – meaning: tests, analyses, research, or studies that (1) have been conducted and evaluated in an objective manner by experts in the field of insect repellency; (2) are generally accepted by such experts to yield accurate and reliable results; and (3) are human clinical testing of the covered product, when such experts would generally require such human clinical testing to substantiate that the representation is true. If that wasn’t enough, the order goes on to require that: when such tests or studies are human clinical testing, all underlying or supporting data and documents generally accepted by such experts as relevant to an assessment of such testing as set forth in the Provision entitled Preservation of Records Relating to Competent and Reliable Human Clinical Tests or Studies must be available for inspection and production to the Commission. While the order did not include a monetary judgment, it looks like defendants will be spending a pretty penny if they want to continue advertising their candles and sprays as beneficial. Takeaways: Making health-related advertising claims? – The FTC is watching and focused on protecting consumers from false or misleading claims relating to products advertised to prevent, treat or cure diseases from Alzheimer’s to Zika. If your ad says that your product was scientifically tested, that testing better be reliable and the methods should be well accepted in the relevant scientific community. On the subject of testing, make sure that your ad claims fit your testing – the claim should be designed based on what the testing shows and nothing more. The FTC isn’t saying your mom can’t go on Amazon and review your company’s products, but you’ll need to tell her that she’s going to have to tell everyone that she’s your mom when she writes her glowing review.

  Maybe you’ve applied to register a trademark. Maybe you already own a registered trademark. Maybe you’re using your mark but haven’t yet applied to register it. Maybe you don’t even know what a trademark is and how it differs from a copyright. Either way, you’re wondering: when can I use the ® symbol, and when should I use the ™ symbol instead? Background: The ® symbol vs. the TM Symbol At its simplest, the ® symbol gives notice to others that a mark is registered with the U.S. Patent & Trademark Office (USPTO). You can begin using the ® symbol only after the USPTO issues a registration certificate for your mark. The ™ symbol, on the other hand, is an unofficial way of telling the world that you are using a word or design as a trademark. Remember, trademark rights stem from use, not registration, so using the ™ symbol even when a mark is not registered can be useful for putting others on notice that you are claiming enforceable trademark rights in a mark. Thus, any time a mark is used in a trademark sense to designate source—regardless of whether you’ve applied to register the mark—you can use the ™ symbol (tip: the ™ symbol should be used when designating a mark for products; the equivalent SM, which stands for “service mark,” can be used when designating a mark for services, although the public tends to be less familiar with that designation). While you can legally use the ™ symbol next to a registered trademark, the more exclusive ® symbol demonstrates that rights have been recognized by the USPTO and provides notice of the registration status, which is a prerequisite to obtaining certain legal remedies. Now It Gets a Little More Complicated It’s not always so simple. For instance, what if you have a registration on the supplemental register rather than the principal register (for those that don’t know, the supplemental register is where marks that do not presently meet the distinctiveness requirements of registration but are capable of functioning as trademarks in the future, e.g., descriptive marks, are registered)? In that case, we have good news: your supplemental registration still entitles you to use the ® symbol, exactly the same as if your mark were registered on the principal register. Okay, so maybe that one is not all that complicated. Let’s try a different scenario: what happens if you have registered your mark abroad in countries that allow you to use the ® symbol, but it is not yet registered in the U.S.? The U.S. trademark statute only authorizes use of the ® symbol for marks registered in the USPTO, and improper use of the registration symbol can be considered fraud. While a mistaken or inadvertent use of the ® symbol in the U.S. without deceptive intent based on registration in a country that recognizes use of the ® symbol generally would not rise to the level of fraud, it is still prohibited under U.S. law, and so in the absence of a U.S. registration it’s best to steer clear of using the ® symbol within the U.S. In the reverse situation, where you have a U.S. registration but will be distributing products or services abroad, use of the ® symbol should be assessed on a case-by-case basis. Certain countries will impose sanctions for indicating a mark is registered when, in fact, it is not registered in that country. Some countries recognize registration elsewhere as a defense to such a misrepresentation, but others do not. In some instances, it may be possible to use the “tm” symbol on packaging distributed in more than one country where the registration status differs. For example, it would be acceptable to use the “tm” on packaging distributed in the U.S. and Canada where the mark is registered in the U.S. but not yet registered in Canada. However, this is not always the case and needs to be determined on a country-by-country basis, so, as a general rule, it is safest to tailor your international strategy, e.g., by using different packaging in different countries, to avoid running afoul of a particular country’s trademark laws. One More Caveat It’s also worth noting that obtaining a trademark registration doesn’t give you license to use the ® symbol any time you use your trademark without a second thought. Rather, you can only use the ® symbol when using your registered mark in connection with the goods and services specified in your trademark registration. When the mark is being used to designate other goods/services not covered by your existing registrations, you’ll need to revert back to using the ™ symbol (or no symbol). At the end of the day, use of the ® or the ™ symbols is essentially optional—it is not necessary to protect or enforce your trademarks, though it is helpful for providing notice to others of your trademark rights and preventing the loss of certain other rights (such as the right to profit recovery or damages in a trademark infringement suit). So as a general practice, it is better to use these symbols when you can—as long as you do so properly. So there you have it. Now go forth and use…or don’t! This post is part of a regular series called Quirky Questions: TMCA Edition.  Our labor and employment colleagues have a great blog, Quirky Questions, where they answer unanticipated questions regarding the workforce.  We liked the concept (and their blog) so much that we’ve started a series of quirky question posts here on The TMCA.  We hope you enjoy the series -- feel free to send in your suggestions for quirky questions about trademarks, copyrights and advertising.

A top favorite to win this weekend’s Kentucky Derby is a colt named Justify, whose parents were Stage Magic and Scat Daddy. Other contenders include Free Drop Billy, Firenze Fire, Lone Sailor, and Magnum Moon. The strange names are as much a part of Derby history as the big hats, but what’s the deal? The Jockey Club maintains a registry for US and Canadian Thoroughbred horses, known as the American Stud Book (apparently not about Zac Efron?). In order to register and thus participate in the race, owners and breeders must comply with a long list of naming rules established by the Club. The rules are in fact quite similar to the Lanham Act rules regarding the registrability of trademarks in the United States.  The similarities include the following prohibitions: Names ending with "filly," "colt," "stud," "mare," "stallion," or other horse-related terms. Compare to the Section 2(e) rule against trademarks consisting of merely descriptive terms. Names of living or deceased people (except with written consent). Compare to the Section 2(c) rule against marks featuring the names of particular living individuals (except with written consent). Names that are vulgar, obscene, or offensive. Compare to the Section 2(a) rule against marks containing “immoral, deceptive, or scandalous matter.” Names that are currently active in racing or breeding, including similar spellings and pronunciations. Compare to the Section 2(d) rule against marks likely to cause confusion with other earlier registered or used marks. Names of famous horses or winners of high-profile races in the last 25 years. Compare to Section 43(c), which provides extra protections for the owners of famous marks in order to prevent dilution. As with trademarks, the rules make it difficult to register common names – while unique and distinctive names are much more likely to get through. The full naming rules are available online at The Jockey Club’s website. Given the apparent similarities, should trademark lawyers be expanding their practice to include Derby horse naming issues? This author intends to at least thoroughly examine a mint julep over the weekend.

As we promised in our prior post, we have an update on the “Music Modernization Act” (MMA) that promises to advance copyright law governing digital transmissions of sound recordings into the 21st Century. In a rare act of bipartisanship, the U.S. House of Representatives approved the MMA (H.R. 5447) by a vote of 415-0 on Wednesday, April 25th.  The final legislation combined three separate bills that address three different issues concerning music copyright.  The issues addressed include the following: First, blanket licenses to music streaming services for all public performances would be provided through a newly created clearinghouse organization that would also collect and distribute royalties to copyright owners.  As we previously noted, presently such streaming services must seek permission from individual copyright owners to stream songs, which is a significant burden, especially when information about some copyright owners is not readily available. Second, royalty rights for owners of copyrights in pre-1972 recordings are provided.  To date, the Copyright Act has never provided rights for sound recordings made before February 15, 1972.  This is a significant change and benefit to untold numbers of recording artists, or at least their estates, as it is likely that many have long since passed. Third, the bill would provide royalties to sound engineers, mixers, and music producers, to the extent they were considered part of the creative process of producing the sound recording, for digital transmission performances of recordings on which they worked.  Provision of such royalty payments would be contingent on a written contract or other proof that the engineers/mixers/producers were entitled to such by an agreement with a record label, publisher, or otherwise that they should participate in the revenue generated from the public performance of the sound recording. The Senate Judiciary Committee presently has a hearing scheduled on the legislation later this spring.  Presuming the Senate similarly passes the legislation, long unfilled holes in the Copyright Act regarding compensation for musical performance rights will finally be filled.

If you were a devoted listener of season one of Serial, you probably already know that last month the Maryland Court of Special Appeals decided that Adnan Syed deserves a new trial. What you may not know is that three days before, the Trademark Trial and Appeal Board quietly issued a precedential opinion holding that Sarah Koenig, Dana Chivvis, Ira Glass and team at Serial Podcast, LLC have no trademark rights in the term “serial” because it is a generic term free for all to use for ongoing audio programs. According to TTAB precedent, generic terms are common descriptive names of a class of goods or services and are not registrable because they are incapable of indicating source. In other words, generic terms are the “antithesis of trademarks, and can never attain trademark status.” So how does the Trademark Office determine that a term is generic? They ask if members of the relevant public, the general public in this case, understand the term to refer to the genus of goods or services in question, ongoing audio programs in this case rather than a particular, single source of the goods or services. If the evidence shows the former, the term is generic.  On the other hand, if everyone in your office thinks Serial is Serial the podcast and not a “serial,” the term might not be generic, depending on whether this understanding truly reflects single source significance, not just the popularity of one particular program. But the evidentiary record in this case didn’t include any consumer survey or even an unscientific office poll for that matter. The Examining Attorney, who had already found the term generic prior to the ex parte appeal, relied on current dictionary definitions and a long list of online articles using the term “serial” as both a noun and an adjective to generically denote episodic broadcasts or podcasts.  It should be noted that a number of the articles were references to older radio program dating as far back at the 1930s.  On the other hand, the podcast team relied on over 12,000 recent media stories referring to its podcast as Serial; a daily download audience as high as 1.4 million in the first season and 1.7 million in the second; and high profile parodies on Saturday Night Live and Sesame Street. In their defense, the podcasters also attacked the Examining Attorney’s evidence as “antiquated” and “archaic,” which should not be relied upon to determine the public’s current understanding of a term. From the title of this post, you should already know that the TTAB sided with the Examining Attorney.  The Board found that because current dictionaries contain a definition for “serial,” the understanding of the term is not confined to a bygone era.  Moreover, it found that the podcast’s evidence only amounted to de facto secondary meaning of a generic term, which essentially means nothing more than that the public recognizes Serial as the most well-known ongoing series currently being offered.  In leveling a last blow to the podcast team, the TTAB referenced a Federal Circuit opinion from 2006: While it is always distressing to contemplate a situation in which money has been invested in a promotion in the mistaken belief that trademark rights of value are being created, merchants act at their peril in attempting, by advertising, to convert common descriptive names, which belong to the public, to their own exclusive use. Even though they succeed in the creation of de facto secondary meaning, due to lack of competition or other  happenstance, the law respecting registration will not give it any effect. So what do you think? Does the term “serial” belong to the public or the public radio team of This American Life at WBEZ in Chicago? If the podcasters had submitted a consumer survey, would the case have turned out differently?  Maybe this Serial will follow in the footsteps of Adnan and go up on appeal once more.

We blogged last week about a recent National Advertising Division case involving a Kimberly-Clark ad campaign that illustrated the well-known NAD maxim: “an advertiser is responsible for all reasonable interpretations of its claims, not simply the messages it intended to convey.”  The decision also serves as a useful reminder of another frequent NAD principle of truthful advertising: “at all times there must exist a good fit between the claim made and the evidence offered in support of that claim.”  KC ran afoul of this principle when it advertised its Huggies diapers as “the fastest growing brand in hospitals” with a “super” disclaimer notice that stated “based on volume share growth.” There were number of problems with these ad claims.  As an initial matter, KC relied on data covering only its own products, and the NAD found this to be insufficient because a “fastest growing brand” claim is comparative in nature.  NAD reasoned that to make such a strong comparative claim, data on competitors is necessary.  KC argued that its substantiation was reasonable in this case because the market consists of two main players, Huggies and Pampers, so if the Huggies sales number are increasing, then it could assume that the Pampers numbers were decreasing. While admitting that perfect substantiation is not required, NAD found this type of “conjecture” and “assumptions” (KC’s word, not NAD’s) insufficient. As explained by challenger Procter & Gamble, sales and market share data for hospital products can be obtained through an independent third-party database operated by Global Healthcare Exchange. Over time, both KC and P&G had used the GHX database for the purpose of tracking hospital diaper sales and market share. Here, KC did not rely on GHX data, instead basing its advertising claim on its own internal product shipment data. NAD also faulted KC for not considering the entire market since 100% market data was available and the ad claim was not limited to “among leading brands.”  Notably, NAD allows advertisers to base claims on 85% of the market for comparative product performance claim because obtaining data from the entire market is impractical and expensive. But in this case, GHX data covered the full market and in fact showed that a smaller player had the fastest growth rate.  KC tried to argue that such reasoning was unfair because smaller players could attain a faster (or the fastest) growth rate from a modest increase in sales numbers, but the NAD rejected this reasoning. Based on past NAD precedent, P&G also argued against KC’s data on the basis that untracked, non-publicly available data is unsuitable as claim support because it is not reliable and verifiable based on sales and share data that can be vetted by a competitor. NAD agreed. Another major problem with KC’s ad campaign was the mismatch between the claim of “fastest growing brand” with data that showed only growth in sales volume, not the rate of growth. KC’s internal data demonstrated 18% growth in sales volume on a 52 week rolling basis, but “NAD questioned whether an increase in absolute shipments is an appropriate metric for support of a claim of faster volume share growth (as referenced in the super) than other competitors in the market. A ‘fastest growing brand’ claim requires concrete data demonstrating that Huggies grew sales or share at a faster rate than any other brand in hospitals” – data that KC lacked. NAD emphasized, however, that “given the evidence in the record concerning Huggies impressive growth in sales in the hospital channel, nothing in NAD’s decision precludes K-C from crafting a more narrowly tailored self-referential monadic claim concerning the increasing presence of Huggies in the hospital channel (i.e., growing more than ever before).” Several important takeaways can be gleaned from this NAD decision: Third-party data is the gold standard. If you choose to use internal data, it better be reliable and complete. Comparative sales claims should be supported by reliable data on the market as a whole, not just a substantial portion. If your company has a good story to tell about sales growth, sales ranking or rate of growth, you need to tell the story in the right way – the ad claim must match the supporting data

Winston Churchill famously commented in 1939 that Russia was “a riddle wrapped in a mystery inside an enigma.” The same could be said about Grand Duchess Anastasia Romanov, daughter of Russian Tsar Nicholas II, who was rumored to have survived the massacre of the Tsar’s family in 1918. The riddle wrapped in a mystery deepened in the following years, with various women, with varying degrees of psychological problems, claiming to be long-lost daughter Anastasia, presumably entitled to the Tsar’s fortunes hidden away in foreign banks. The history of these women’s efforts to convince the world and surviving relatives that they were in fact Anastasia Romanov spawned a number of dramatic works, most notably for purposes of this blog post, a fictionalized Play written in the 1940s by French author Marcelle Maurette (later adapted into English in 1952), and a musical version of the Anastasia story written by Terence McNally that opened on Broadway in April 2017. Both the Play and the Musical focused on one particular woman claiming to be Anastasia -- Anna Anderson -- who spent many years trying to convince the public and surviving members of the royal family of her identity. The rights holders in the Play sued McNally and commercial partner Anastasia Musical LLC for copyright infringement, alleging that the Musical had copied creative elements from the Play going beyond the historical record.  Jean-Etienne de Becdelievre et al. v. Anastasia Musical LLC, 16 Civ. 9471 (SDNY) (AKH). District Judge Hellerstein denied the defendants’ motion to dismiss in January 2017, holding that it was not possible to resolve the issues in dispute by making a “complicated comparison” of the two works and the historical record before answers were filed “and without guidance by experts.” The case proceeded into discovery, limited to the issue of how the Musical was created. The court also directed the plaintiffs to make a submission identifying what specific plot elements, characters, dialogue and scenes had been infringed. Defendants then filed a motion for summary judgment, which was denied by Opinion and Order dated April 2, 2018. The court began its analysis by articulating the mission to determine “whether the two works are substantially similar, extracting from the analysis any non-copyrightable historical facts.” Judge Hellerstein also confirmed that when a work contains both copyrightable and non-copyrightable material, as was the case here, the appropriate legal standard for judging substantial similarity is the “more discerning ordinary observer test.” The court further acknowledged that because substantial similarity “is customarily an extremely close question of fact, summary judgment has traditionally been frowned upon” in copyright litigation. Ultimately, after a detailed review of the historical record as well as the content of the Play and the Musical, the court concluded that material issues of disputed fact precluded summary judgment. The decision to deny summary judgment rested on a few “crucial elements” of both the Play and the Musical “that cannot be traced back to the historical record.” The court cited in particular “a much-anticipated meeting” between Anna/Anastasia and her supposed grandmother, the Dowager Empress, resulting in a very emotionally resonant scene in both works in which the Empress finally softens her resistance to believing Anna’s story and agrees to support her as a member of the family. No such meeting ever took place according to any historical evidence. Both works also featured a climactic scene in which  Anna/Anastasia was supposed to be presented to the world at a ceremony, but instead Anna/Anastasia “makes an off-stage decision to reject royalty and wealth, in favor of a simple life.” The court observed, “As with the meeting between Anastasia and the Empress, the presentation scene has no apparent basis in the historical record.” Defendants argued that the ideas embodied in these overlapping plot developments were scenes a faire that were not subject to copyright protection. The court disagreed, saying plaintiffs’ claim was “limited to a particular expression” of the scenes. The court also rejected defendants’ argument that the Play and Musical were different in “total concept and feel”, citing Second Circuit precedent in Castle Rock Entertainment Inc. v. Carol Publishing Group that “the total concept and feel test… is simply not helpful in analyzing works that, because of their different genres and media, must necessarily have a different concept and feel.” So a case involving competing dramatic presentations of the Anna Anderson story, and the riddle wrapped in a mystery inside an enigma about whether Anastasia Romanov survived the assassination of the Tsar’s family, will now – barring a settlement – proceed to trial.

Can a stock photography agency bring a copyright infringement lawsuit on behalf of individual photographers?  According to the Ninth Circuit, the answer is “maybe.”  A recent decision provides another example of what the Ninth Circuit referred to as “the now often litigated issue of whether a stock photography agency . . . has standing under the Copyright Act of 1976 to pursue infringement claims involving photographs from its collection.”  DRK Photo v. McGraw Hill Global Education Fund, 870 F.3d 978 (9th Cir. 2017).  Section 501(b) of the Copyright Act allows the “legal or beneficial owner of an exclusive right under a copyright” to sue for infringement.  In a set of three cases decided in the last dozen or so years, the Ninth Circuit has addressed standing when a copyright infringement claim has been assigned: In Silvers v. Sony Pictures Entertainment, 402 F.3d 881 (9th Cir. 2005, the Ninth Circuit rejected the “bare right to sue” rule, holding that assignment of an accrued cause of action – without other rights to the copyright – did not create standing. The plaintiff was no stranger to the copyrighted work; Silvers was the creator of the work pursuant to a work-for-hire contract, but the copyright was held by the employer.  Still, the Ninth Circuit held that Silvers lacked sufficient “legal or beneficial” ownership to support standing. The court came to the opposite conclusion three years ago in Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th Cir. 2015), ruling that a stock photography agency had standing to sue for copyright infringement, because it was the “exclusive licensee” of the copyright holders, even though the copyright holders retained some rights to use or license the works themselves. In the most recent of the three rulings, DRK Photo, the Ninth Circuit held last fall that another stock photography agency did not have standing to sue, because it was a non-exclusive licensee. The court compared the agreements at issue in Minden Pictures and DRK, noting that Minden was the “sole and exclusive agent,” giving it standing, while the DRK agreement did not prevent the photographers from entering an agreement with another stock photography company or agent. On April 13, 2018, the United States Supreme Court denied a petition for review of the DRK case, leaving this trio of cases untouched for now.  Given the “now often litigated issue” of standing for assignment of a copyright claim, we can expect to see the contours of this rule continue to develop in the coming years.

Almost every NAD case begins with the maxim: It is well-established that an advertiser is responsible for all reasonable interpretations of its claims, not simply the messages it intended to convey. It follows that advertisers must choose their words very, very carefully to avoid unsubstantiated claims.  As we’ve blogged about before, comparative advertising can be highly effective in touting the advantages of a company’s products against those of its competitor, but these types of claims often require more careful substantiation than non-comparative ones.  So what happens when an advertiser’s claim is not intended to be comparative on its face, but one of the reasonable interpretations of its claim is comparative in nature? The NAD will likely recommend that the advertiser choose a different word.  In a recent case, the NAD analyzed Kimberly-Clark’s advertising claim “More hospitals than ever are choosing Huggies.”  In connection with data presented to substantiate a related claim ("Huggies® diapers is the fastest growing brand in hospitals ('based on volume share growth')"), which we will blog about soon, the NAD found that Kimberly-Clark had provided reasonable substantiation to support the statement that “more hospitals than ever” were purchasing/using Huggies, but NAD was troubled by the use of the word “choosing.” The NAD found that the word choice: connotes a “selection” of one product over another, and that consumers could reasonably interpret this claim to mean that more hospitals than ever are choosing Huggies over [the main competitor] (or buying more Huggies diapers than [those of the main competitor])—a message that the evidence in the record does not support. So, was there a better word choice?  According to the NAD, Kimberly-Clark could have made the claim self-referential by saying "more hospitals than ever before are using Huggies," or that Huggies is finding its way into more hospitals than ever before."

In a wake-up call to businesses that offer non-compliant consumer warranties, last week the Federal Trade Commission announced that its staff had sent warning letters to six major companies that market and sell automobiles, cellular devices and video gaming systems. According to the FTC, the letters express concerns that the companies’ warranties may be prohibited by the Magnuson-Moss Warranty Act (which governs consumer product warranties) and the FTC Act because they “tie warranty coverage to the use of particular products or services.” The Magnuson-Moss Warranty Act provides in part that: No warrantor of a consumer product may condition his written or implied warranty of such product on the consumer’s using, in connection with such product, any article or service (other than article or service provided without charge under the terms of the warranty) which is identified by brand, trade, or corporate name. 15 U.S.C. § 2302(c). In addition to the exception for articles or services “provided without charge,” a company may apply for a waiver from the FTC if: (1) “the warranted product will function properly only if the article or service so identified is used in connection with the warranted product, and (2) the Commission finds that such a waiver is in the public interest.” 15 U.S.C. § 2302(c). The FTC staff determined that the following examples from the six companies’ warranties were problematic in light of 15 U.S.C. § 2302(c): The use of [the company’s parts] is required to keep your . . . manufacturer’s warranties and any extended warranties intact. This warranty shall not apply if this product . . . is used with products not sold or licensed by [company name]. This warranty does not apply if this product . . . had had the warranty seal on the [product] altered, defaced, or removed. The FTC Staff directed the six companies to review their warranty provisions and revise them if necessary, and informed the companies that the FTC Staff would be reviewing their written warranties and promotional materials after 30 days. Businesses that offer warranties covering consumer products would be well-advised to take a fresh look at their warranties. If those warranties are tied to use of a particular product or service, they may run afoul of the Magnuson-Moss Warranty Act unless the product or service is offered for free or the company has obtained a waiver from the FTC.

An interesting article by The Atlantic highlights the large number of classic works that are set to enter the public domain on January 1, 2019.  Hundreds of thousands of works, including old classics such as Noël Coward’s London Calling! musical and Charlie Chaplin’s film The Pilgrim, which were first published in 1923, are set to have their applicable copyright term expire.  This is a result of patchwork amendments to the Copyright Act, which retroactively extended copyright protection and, in particular, the Sonny Bono Act of 1998, which fixed a copyright term of 95 years (up from the prior extension of 75 years) to any work published between 1923 to 1977.

It’s finally the start of baseball season: you can almost feel the gentle spring breeze, smell the peanuts and popcorn, and hear the crack of the bat. You may also notice something more colorful, dotted, and perhaps camo-patterned wrapped around those bats: nope, it’s not an actual lizard, that’s Lizard Skins® bat grip tape. Lizard Skins registered several of its Lizard Skins® bat grip tape designs for a one-color camo pattern (U.S. Reg. No. 5249013); a two-color camo pattern (U.S. Reg. No. 5239869); and an embossed pattern featuring six staggered rows of ovals (U.S. Reg. No. 5389215). Lizard Skins asserted exclusive rights in these designs and alleged trademark and trade dress infringement against Hot Glove for selling competing camo and oval patterned bat grip tapes under the Mega Wrap brand. The lawsuit was filed in the U.S. District Court for the District of Utah, Central Division on March 1. Lizard Skins claims in the complaint that Hot Glove stole home plate by offering knockoff camo patterns and staggered oval indentations on its bat grip tapes. The following side-by-side comparison photographs are featured in the complaint:   Lizard Skins claims that Hot Glove stole the “look and feel” of its products, though interestingly, it does not allege copyright infringement in the designs. Lizard Skins further alleges that the embossed Mega Wrap name on the tape and the overall product packaging, which features a clear window to show the rolled up tape, also infringes its distinctive trade dress. Lizard Skins makes clear in its complaint that the protected design elements are for “aesthetic and identifying purposes” and not for functionality. This is an important distinction, as functional elements of trade dress cannot be ruled safe under trademark law. Specifically, 15 U.S.C. § 1052(e)(5) bars registration if the mark “comprises any matter that, as a whole, is functional.” The overall goal, at least according to some courts, is to avoid granting one party exclusive rights in an aspect of the product’s design that others need to compete effectively in the marketplace. Lizard Skins claims acquired distinctiveness in its registration for the oval design embossed pattern for bat grip tapes. Its claims to the one and two-color camo patterns are based on inherent distinctiveness of a “random marble camo pattern” as applied to baseball grip tapes. Because Lizard Skins has obtained federal registration protection for its alleged trade dress, the burden will be on Hot Glove to prove that the trade dress is functional if it wants to rely on a functionality defense. Hot Glove is now up at bat to defend itself against Lizard Skins’ claims. We’ll bring you more updates as this case, and our long-awaited baseball season, develops!

When you play the video game Grand Theft Auto 5 (“GTA 5”), the last thing you want to see is a reflection of yourself.  GTA 5 is an action-adventure game that rewards the player for stealing cars and speeding away from cops. Part of the fun is that law abiding citizens can revel in digital mayhem and interact with gang members, drug dealers, and other poor decision makers without real world consequences. But when actress Lindsay Lohan saw certain GTA 5 images, she concluded that some of those poor decision makers looked a little too much like her. Ms. Lohan is a talented and accomplished performer who has been featured in TV, films, and music, as well as such litigations as Lindsay Lohan v. Armando Christian Perez (also known as Pitbull), et al. and a frivolous case filed by a Montana prison inmate serial complainant against Ms. Lohan, the Kardashian sisters, and Lamar Odom. Seeing a character resembling herself, strutting around the virtual, gritty streets of GTA 5 did not inspire Ms. Lohan to embark on a journey of soul searching and redemption, but instead sparked her inner Mean Girl to file a complaint in New York state court. That litigation came to an end on March 29, 2018, when the highest court of New York, the Court of Appeals, affirmed the dismissal of Ms. Lohan’s amended complaint in the case of Lohan v. Take-Two Interactive Software, Inc. The defendant, Take Two Interactive Software, Inc., develops, sells, markets, and distributes video games, including GTA 5. Ms. Lohan maintained that Take Two used her likeness without permission in three instances. In one scene, the player meets a female character named Lacey Jonas, who is trying to escape from paparazzi by hiding in an alley. The character describes herself as “an actress slash singer” and “really famous.” The second and third instances are static images used as transition screens between scenes in the game and also on the packaging, game discs, and promotional materials. One image features a young blonde woman wearing a red bikini at the beach, and the other features a young blonde woman wearing jean shorts, a white t-shirt, sunglasses and a fedora, who appears to be getting arrested by a female police officer. Ms. Lohan claims that Take Two misappropriated both her appearance and her voice to create the Jonas character, and that the two static images contain her “[i]mages, portrait[,] and persona.” To prevail on her right of privacy claim under New York law and survive dismissal of her amended complaint, Ms. Lohan needed to prove that her name, portrait, picture or voice was used for advertising or trade purposes without consent within the State of New York. The Court first concluded that an “avatar” such as a character or image in a video game, may constitute a “portrait.” Next, the Court considered whether Ms. Lohan was capable of being identified from the avatars alone based on the “quantity and quality of the identifiable characteristics” in the avatars. The Court concluded that both the Jonas character and the two images were not recognizable as Ms. Lohan. The Court explained that the Jonas character was simply “a generic artistic depiction of a ‘twenty-something’ woman without any particular identifying physical characteristics,” and the static images were “indistinct, satirical representations of the style, look, and persona of a modern, beach-going young woman.” In light of the Court’s ruling as to the portrait element, it did not address the other elements. This comes as a disappointment to some in the film and gaming industries who hoped that the Court would hold that New York’s right of publicity statute does not prohibit the use of real people in video games, as it does for other fictional works. Given how little the accused images resemble Ms. Lohan, this might not have been the right case to address that issue. We may have to wait until Take Two releases GTA 6 for a resolution.

A New York federal district court has certified for appeal its recent decision in a pending case involving the unauthorized use of a photographer’s photo by a number of media outlets, maintaining the spotlight on the issue of whether the online practice of embedding violates copyright law. Goldman v. Breitbart News et al. (SDNY Feb. 15, 2018, ruling certified Mar. 19, 2018). In 2016, plaintiff Justin Goldman snapped a photo of New England Patriots quarterback Tom Brady, while walking down the street in East Hampton with the Boston Celtics’ general manager (the “Brady Photo”). Goldman then uploaded it to his Snapchat account. The Brady Photo was newsworthy because Brady was in East Hampton to help the Celtics recruit basketball player Kevin Durant, who was staying nearby. The Brady Photo was scraped from Goldman’s Snapchat account, and posted to Reddit and then Twitter by a number of users, and the tweets were later embedded in a number of online posts reporting on the story, all without Goldman’s authorization. Goldman sued a number of the news outlets that had posted the Brady Photo, alleging that the embedding of his photo as part of their news stories violated his copyright rights in the photo. The news outlets filed a motion for partial summary judgment on the issue of whether their embedding of the Tweet displaying Goldman’s photo on their websites violated Goldman’s copyright in his photo and, specifically, the right to display it. The court in Goldman explained the technical process of embedding and, more specifically, the fact that the HTML source code of a webpage can either retrieve the photo to be displayed from the webpage’s own server or from a third-party server, with the latter referring to embedding. Here, the news outlets and blog did not host the Brady Photo, but rather embedded the photo as hosted on Twitter. This method is widely used and, to date, had been legally acceptable based on what is referred to as the “Server Test.” Under the Server Test, which has been upheld by the Ninth Circuit, websites that display copyrighted images without authorization are not liable if that image is retrieved from a third-party server and not hosted by the website’s own server. In Goldman, Judge Forrest rejected the application of that test, finding that it has not been widely adopted by all courts. Further, the court found that each defendant “took active steps” to embed the Brady Photo on their website, rendering it irrelevant where it was hosted, since the actions had the effect of transmitting an image to the public, regardless of the technological process (invisible to the viewer) for achieving that display. The court did not accept the defendants’ arguments that finding liability for any website that embedded content from another website would “cause a tremendous chilling effect on the core functionality of the web.” The court left open whether Goldman had in fact authorized the public use of his photo by posting it on Snapchat account (for example, under Snapchat’s terms of use), and whether defenses to copyright infringement such as a “very serious and strong fair use defense” and/or whether limitations on damages may exist. The defendant media outlets immediately moved to certify the ruling against them. Judge Forrest, noting that her opinion “has created tremendous uncertainty for online publishers” and the “frequency with which embedded images are ‘retweeted’”, agreed to this request on March 19th. The case will now go to the U.S. Court of Appeals for the Second Circuit. We will post further updates on this case as material developments occur. Jeremy Elman recently launched his own blog called Law of Technology.  The blog focuses on the intersection of technology and law, and explores how dramatic advances in technology change the legal system, and how the legal system both advances and inhibits that change. We encourage you to check it out!

We previously posted about a four year legal battle that arose from a refusal by Iowa State University to let its school logos be used on t-shirts by an on-campus pro-cannabis group, and the free speech implications of this refusal. In that case, ISU was found at both the district court and appellate levels to run afoul of the First Amendment because its refusal violated free speech rights of the students involved. By way of update, the State of Iowa has now been ordered by a federal district judge in the Southern District of Iowa to pay nearly $1 million in damages based on ISU's actions regarding its school logos. The state had already agreed to pay $150,000 to the individual plaintiffs in that case, as well as $193,000 for the plaintiffs' legal fees on appeal. The recent order addresses the award of the plaintiffs' legal fees at the district court level, setting these at $598,00. The high financial penalty faced by the State of Iowa reflects the special considerations surrounding cannabis branding as well as state agency trademarks. The decision on appeal can be found here.

The United States Patent and Trademark Office rejects trademark applications when it determines that the use of the mark is unlawful under the Controlled Substances Act. See In re Brown, 119 USPQ.2d 1350 (TTAB 2016) In the Weeds Between Federal and State Law: Brand Name for Legal Marijuana Sales Denied Federal Registration. No statutory support for these rejections can be found in the Lanham Act, nor does any court appear to have sanctioned them. In this author’s view, these rejections are unlawful, regardless of the “unlawfulness” of the conduct. The Lanham Act defines commerce as “all commerce which may lawfully be regulated by Congress.” 15 U.S.C. § 1127. The definition doesn’t say that the underlying commerce must be lawful – it just specifies that Congress’ regulation must be lawful. The definition makes sense in that the Commerce Clause is the constitutional basis of the Lanham Act, and the plain meaning of the definition is that the jurisdiction of the Lanham Act is as broad as Congress’ power to regulate commerce, regardless of whether Congress has chosen to criminalize the commerce. In Gonzales v. Raich, 545 U.S. 1 (2005), the Supreme Court upheld Congress’ power to regulate marijuana under the Commerce Clause, even as to its local cultivation and use. That Congress can lawfully regulate marijuana cultivation, use, and sale is therefore beyond dispute. The Board in In re Brown observed that it has “consistently held that, to qualify for a federal service mark registration, the use of a mark in commerce must be ‘lawful.’” While that may be its consistent position, the Board did not explain in Brown how such a requirement comports with the plain meaning of the Lanham Act, which imposes no such requirement. Nor did it explain how its apparent transformation of the Lanham Act’s definition of commerce complies with the Board’s limited jurisdiction (of which it often reminds those who appear before it). The Trademark Manual of Examining Procedure section embodying In re Brown, TMEP 907, adds little substantive analysis. In addition to a plethora of TTAB decisions along the lines of In re Brown, it cites a single federal court case that purportedly supports the PTO’s position that that it should determine if an applicant’s use of a mark is lawful before issuing a registration. In Gray v. Daffy Dan's Bargaintown, 823 F.2d 522 (Fed. Cir. 1987), the court considered the 15 U.S.C. § 1052(d) requirement of “concurrent lawful use in commerce,” and the timing of such lawful use. The Court opined in dicta that a mark must be in “lawful use in commerce” to obtain a valid registration, but the Court based that determination by relying on the portion of Lanham Act Section 2(d) that only applies to the unusual situation of concurrent use registrations, and not to the general and more common circumstance of non-concurrent use registrations. As a matter of statutory construction, the Lanham Act’s reference to “lawful use in commerce” in connection with concurrent use registration (and in a few other specific situations) should be read to mean that Congress knew how to specify “lawful use in commerce” as a requirement for registration when it wanted, and Congress chose not to include that as a general requirement. It should be noted that 37 CFR § 2.69 authorizes the PTO to inquire as to the lawfulness of commerce recited in an application. That regulation is vague in that it doesn’t explicitly provide any basis for the PTO to reject an application based on the response to the inquiry, although a rejection could be appropriate in connection with a concurrent use registration and perhaps in other unusual circumstances. And perhaps most directly, a regulation cannot supplant a law enacted by Congress, and here the law provides no general basis to reject applications merely because the PTO considers the use to be unlawful. In the present era when the executive branch may choose not to enforce or to selectively enforce various areas of federal law, it makes little sense for the PTO to apply a “lawfulness” requirement that isn’t in the Lanham Act, to the detriment not only of trademark applicants, but also to the public that relies upon trademarks to avoid confusion.

It is hard to imagine that any one person could initiate separate lawsuits resulting in decisions of substantial importance to the entire U.S. entertainment industry.  And when that person is iconic actress Olivia de Havilland – best known for her roles in “Gone With the Wind,” “The Heiress” and dozens of other films from Hollywood’s golden age – and the time between those two decisions spans more than seventy years, the scenario seems even more farfetched.  But Ms. de Havilland is indeed the plaintiff whose 1944 lawsuit against Warner Brothers resulted in the decision that effectively broke the control movie studios then exercised over their talent, and she is also the plaintiff whose 2017 lawsuit against the FX Networks cable channel has now resulted in a decision that confirms the wide-ranging ability of filmmakers to depict real people like de Havilland in entertainment properties like the miniseries “Feud.” Television producer Ryan Murphy created “Feud:  Bette and Joan” as the first installment in a series of television docudramas dedicated to chronicling famous real-life feuds.  Airing in 2017, this first installment, starring Susan Sarandon and Jessica Lange, portrayed the bitter rivalry between film stars Bette Davis and Joan Crawford, and how that rivalry was the product of the way Hollywood studios, dominated by men, treated women – especially older actresses. De Havilland was a longtime friend of Davis and a fellow actress with her at Warner Brothers in the 1930s and 1940s.  In “Feud,” de Havilland, portrayed by the actress Catherine Zeta Jones, appears in a fictitious interview conducted at the 1978 Academy Awards ceremony, in which she comments on the rivalry between Davis and Crawford, and the problems women in Hollywood encountered during their era.  (Kathy Bates, portraying the late actress Joan Blondell, also appears in a similar, fictitious interview.)  In addition, “Feud” shows Davis and de Havilland together in the past, including at the 1964 Academy Awards ceremony and during the making of the film “Hush … Hush, Sweet Charlotte,” in which de Havilland replaced Crawford as Davis’ co-star.  Over eight episodes of “Feud,” the de Havilland character appears in only seventeen minutes of screen time – 4.2% of the series as a whole. Notwithstanding the brevity of her portrayal, de Havilland, now age 101 and a longtime resident of Paris, France, sued FX and related defendants for violations of her rights of publicity and privacy, as well as false light, arguing that no one has the right to portray her in a film or otherwise without her permission, such that the mere inclusion of her in a fictionalized docudrama like “Feud” violated her rights.  She also argued that she was presented in “Feud” as a person who spread malicious gossip, and who used the word “bitch” to describe her sister, the equally iconic actress Joan Fontaine.  (While the relationship between de Havilland and Fontaine could itself be the subject of a whole other installment of “Feud,” Murphy has announced that the next airing will be entitled “Feud:  Charles and Diana”). FX and the other defendants immediately moved to strike de Havilland’s complaint under California’s anti-SLAPP statute, relying heavily on the First Amendment and the argument that filmmakers and the authors of creative works have the right to depict actual persons in docudramas like “Feud,” but their motion was denied.  The trial court held that the realistic portrayal of de Havilland was insufficiently transformative, such that no First Amendment defense to de Havilland’s right of publicity claim was available under California law.  The trial court also held that a reasonable jury could conclude that de Havilland’s portrayal in “Feud” cast her in a false light with respect to her use of vulgar terms like “bitch” to describe Fontaine, and the repeating of gossip (specifically, about the drinking habits of Frank Sinatra). Working under an expedited appeal schedule due to de Havilland’s advanced age, three California court of appeal judges rejected the trial court’s findings, holding that the First Amendment protects FX’s portrayal of de Havilland in a docudrama without her permission.  The court held that the right of publicity cannot be used to control a celebrity’s image by censoring disagreeable portrayals consistent with First Amendment and free speech considerations.  The court also held that de Havilland’s portrayal in “Feud” was transformative, particularly her appearance in the interview “framing device” that articulates the series’ broader concerns about the treatment of aging women, especially in Hollywood.  Finally, the court rejected de Havilland’s false light claim, finding that, with one possible exception, she was portrayed more favorably than any other person appearing in “Feud.” The court also held that de Havilland’s claims of damage resulting from her alleged portrayal as a gossip who used inappropriate language were not cognizable, in light of prior interviews de Havilland had given over many decades recounting lighthearted stories about the peccadillos of others, including her co-stars, and her documented use of the words “dragon lady” to describe her sister. So what’s next?  Under California’s anti-SLAPP law, the defendants can recover attorneys’ fees and costs from de Havilland, but she has vowed to appeal further.  In addition, her lawyers have characterized the appellate court’s ruling as an “industry decision” written by a judge who used to work for NBC and the firm representing FX.  So it seems that there will be yet another episode of “Feud: de Havilland v. FX” coming soon to this blog.  Stay tuned!

Deceptive “Made in USA” advertising and labeling claims have received a lot of attention from the FTC in recent years, reflecting the agency’s recognition that USA-origin claims are a persuasive selling point and should not be false and misleading. Many of the FTC’s enforcement actions have emphasized that “Made in USA” should not be used unless “all or virtually all” of the ingredients or components of the product are made and sourced in the United States. The same standard applies to words that are considered equivalent to “made” such as manufactured, built or produced. But what about “Assembled in the USA”? A mattress company using the ad claim “Designed and Assembled in the USA” ran afoul of FTC substantiation requirements when it turned out that the mattresses were imported from China already completed, with no assembly operations performed in the United States at all. See Complaint in In the Matter of Nectar Brand LLC. It is not surprising, then, that this ad claim was found to be deceptive. However, the Decision and proposed Consent Order provides helpful guidance about when it is appropriate to represent that a product is “Assembled in the USA.” According to the Consent Order, such a claim is substantiated if “the product is last substantially transformed in the United States, the product’s principal assembly takes place in the United States, and United States assembly operations are substantial.” (emphasis added). This is very clear guidance for companies using “Assembled in the USA” or closely analogous ad claims. As the FTC commented in its own blog post announcing the Complaint and Order, “Claims like Made in USA or Assembled in USA are more than just marketing talk to slap on a webpage or label…..Given how important USA claims are to many consumers, companies have an obligation to comply with the law. That starts with one simple principle: Tell the truth.” Definitely words to live by.

Last month in our Olympics edition, we provided a glimpse into the arcane world of licensing of musical works under the U.S. Copyright system.  It’s actually crazier still.  Who knew that the legislative reaction to the introduction of player pianos at the turn of the last century would continue to govern the royalty scheme for satellite radio and digital streaming services?  In large part it’s true!  However, U.S. Representatives Doug Collins (R-Ga.) and Hakeem Jeffries (D-N.Y.) have introduced legislation in the form of the “Music Modernization Act” (MMA) avowedly to bring the royalty determination formula for digital music services into the 21st Century.  In truth, the MMA is a modest step, but a step nonetheless. As a refresher, recall that there are two separate, primary expressions of music subject to copyright: 1) the song composition (i.e., the words and music, for example, embodied in sheet music); and 2) the sound recording, i.e., the performance of a song by an artist you hear on the radio or (for some of us Luddites) on the CD that you buy. Strangely, the ability to collect a royalty for the use of these two forms of the same song is different under the Copyright Act and it further differs when the sound recording is in a digital form. A license to reproduce the composition (for example, on a record or CD, or in a digital file) is called a “mechanical right.”  In the early 1900’s, songwriters railed against the introduction of the player piano, fearing a loss of revenue in the sale of sheet music.  A court sided against the songwriters, stating that the royalty provisions in the Copyright Act at the time did not address anything other than copies of sheet music.  Significant lobbying prompted Congress to amend the Copyright Act to include a “mechanical license” and related royalties.  The lore is that “mechanical” referred to the machinery of the player piano using paper rolls to substitute for a human being reading sheet music to play a tune. As recording mediums evolved beyond a paper roll into phonographs, cassette tapes, compact discs, and now digital files, the mechanical royalty has been applied to each new medium such that the songwriter receives a royalty for copies made.  If copies of the song are sold even once, then anyone else can record and sell their sound recording of the song, without any negotiation over terms, as long as they pay the mechanical license royalty.  Mechanical license royalties are paid to and distributed by a collective society of the songwriters and music publishers called the Harry Fox Agency (HFA) authorized by the Act.  Compensation for the rights in particular sound recordings come in the form of a percentage of the actual record sales paid to the recording artist per contract with the record distributor. Any public performance of a musical composition (which includes broadcast radio) is subject to a compulsory license fee to the songwriter.  Typically a license is taken from one or more of the big three performance rights organizations (ASCAP, BMI, SESAC).  The fees per performance are standardized and set by a panel of administrative judges.  These clearinghouses keep databases of songs and songwriters, manage the performance royalties, and send appropriate payments to the songwriters according to the statutory fees. Strangely, however, the performing artists that make the sound recordings you hear on the radio do not receive any compensation for the performance.  Up until the Copyright Act of 1976, there were no rights in sound recordings.  In the lead-up to the 1976 Act, terrestrial broadcasters (radio stations) argued that the performing artists did not need compensation for airplay because they received free publicity through airplay of the songs and received adequate compensation through record sales.  This argument won and an exemption still resides in the Copyright Act today for terrestrial radio, music clubs, restaurants and live performances. But not with respect to digital performances.  Think streaming internet radio (Pandora) and interactive streaming services (Spotify).  In 1995, the exemption for royalties for sound recordings was removed with respect to the digital delivery of music performances by the Digital Performance in Sound Recording Act (DPRA).  A new agency called SoundExchange was created by the DPRA to collect and distribute sound recording royalties implemented by the act.  Mechanical royalties were left to administration under the historical structure with the HFA.  However, because they are not broadcast services, interactive streaming services fall under a different mechanical royalty scheme and do not receive the benefit of a blanket license with the HFA.  (The explanation why is worthy of another article.)  Thus, the streaming services sometimes must seek out individual songwriters and publishers, who often may be difficult to find, or at least provide public notice at the Copyright Office.  Failure to provide such notice can lead to hefty statutory penalties. With all of this stratification, one might think that proposed MMA legislation would offer a comprehensive solution.  In actuality, the MMA, at over 100 pages long, really only accomplishes three narrow objectives related to mechanical licenses for digital music delivery.  First, the MMA sets up yet another rights clearinghouse called the “Mechanical Licensing Collective” (MLC) with a mandate to grant blanket mechanical licenses for streaming and interactive digital music delivery services and to remove the penalty for failure of notice to songwriters.  The MLC database would be public and any songwriter could claim rights in a song on the platform if not previously identified.  Second, the MMA would remove restrictions on consideration of market conditions in the setting of statutory royalty rates by the Royalty Board Judges.  (Curiously, this is not presently the case.)  Third, the MMA removes a limitation on single courts and judges having jurisdiction over rate challenges and instead provides for the random assignment of judges from the judicial district in which the case is properly brought, just as in all other civil cases. The MMA does not address the third rail of payments to performing artists for public performance of sound recordings (i.e., radio airplay).  Nor does it propose to consolidate the various collectives and agencies that manage mechanical and performance royalties.  In fact, it adds yet another agency into the mix.  The MMA thus appears to be merely another patch on top of the original player piano rules. There is no guarantee that the MMA will be enacted—this is the U.S. Congress we are talking about here.  However, there is strong industry support from all sides—music publishers, performance rights organizations, broadcasters, and digital media companies—so it may just have a chance.  We will be monitoring progress of the MMA over the coming year and will update you if any significant actions occur.

As we entered the first full day of the equinox yesterday, a split panel of the Ninth Circuit Court of Appeals handed the heirs of Marvin Gaye a decisive victory that will no doubt leave them with a spring in their steps.  The Court affirmed the jury verdict and multi-million dollar damage award in the Gayes’ copyright infringement suit against Pharrell Williams and Robin Thicke.   If you were hoping the Ninth Circuit would take this opportunity to wade deeply into the swirling waters of music copyright protection and infringement, the majority decision will leave you thirsting for more.  If you're looking for a fiery dissent that sings to a different tune, you will not be disappointed.  If you’re looking for a takeaway or two from this 80+ page decision, look no further than the rest of this blog post. Here are the key facts:  Marvin Gaye’s family owns the copyright in the song “Got to Give It Up.”  In 2012, Pharrell Williams and Robin Thicke (along with a cast of others) wrote and published the song “Blurred Lines,” which ended up being the best-selling single on the planet in 2013.  Gaye’s family claimed infringement, Thicke & Co. denied it, and litigation ensued.  The infringement issue was ultimately decided by the jury, and it sided with the Gayes.  The end result was a multi-million dollar damage award in their favor.  A mash-up/comparison of the two songs can be found here. On appeal, Williams and Thicke asked the Ninth Circuit to overturn the jury verdict arguing that as a matter of law, the similarities between the two songs do not constitute infringement.  Instead, they argued, the similarities simply related to the “style” or “genre” of the two songs, as opposed to any “protectable” expression owned by the Gayes.  Had the majority entertained the argument advanced by Thicke, it would have required the Court to grapple with the finer nuances of music copyright, which the majority refused to do.  Instead, it affirmed the jury’s verdict by concluding that the Gayes were entitled to “broad” protection for the work and that “there is no one magical combination of factors that will automatically substantiate a musical infringement suit.”   The majority essentially deferred to the jury’s findings and upheld the infringement verdict against Williams and Thicke. The dissenting opinion, authored by Judge Jacqueline Nguyen, is not just some waning coda at the end of the majority opinion—it’s a magnum opus copyright tour de force.  Her opening motif starts as follows: The majority allows the Gayes to accomplish what no one has before: copyright a musical style. “Blurred Lines” and “Got to Give It Up” are not objectively similar. They differ in melody, harmony, and rhythm. Yet by refusing to compare the two works, the majority establishes a dangerous precedent that strikes a devastating blow to future musicians and composers everywhere. Thereafter, this same theme is played in variations.  Judge Nguyen gives a masterclass on the law of music copyright.  She dives into the thicket of past precedent and a variety of musical concepts such as the signature phrase, pitch and rhythm, and discusses melismas, word painting, and parlandos.   After her exhaustive analysis, she ultimately concludes that the songs simply share a similar “groove,” which is not protected by copyright. It’s not clear what Williams and Thicke intend to do at this point.  With Judge Nguyen’s harmonious dissent playing so forcefully in the background, though, they do not "Got To Give It Up" just yet.  

Several musical artists, producers, publishers and songwriters, including the estate of the Notorious B.I.G and Rita Ora, are celebrating after a U.S. District judge for the Southern District of New York dismissed a copyright infringement lawsuit against them. In 1968, poet Abiodun Oyewole published the song “When the Revolution Comes.” The song warns of a coming revolution involving the black nationalist movement and ends with the lyrics: “But until then you know and I know n*****s will party and bulls*** and party and bulls*** and party and bulls*** and party and bulls*** and party…” In 2016, Oyewole filed a copyright infringement suit against several parties who performed, produced, published or wrote several songs that included the phrase “party and bulls***.” These songs included “Party and Bulls***” by The Notorious B.I.G. and “How We Do (Party)” by Rita Ora. Oyewole stated that he brought the suit because the songs contravened the meaning of the phrase “party and bulls***.” In response, most of the named defendants filed motions to dismiss alleging, among other things, that the alleged infringement constitutes fair use (two of the defendants filed a motion to dismiss for insufficient service of process). The court held that the defendants’ use of the phrase “party and bulls***” constituted fair use, focusing its analysis on “the purpose and character of the use” of Oyewole’s poem and the defendants’ songs. The court determined that Oyewole’s poem warned its listeners “to prepare for the revolution, appreciate its gravity, and commit themselves to it; [the poem] explain[s] that only things of substance will survive the revolution.” As such, the court found that Oyewole’s use of the phrase “party and bulls***” condemned the partying lifestyle since such a lifestyle does not prepare one for the revolution. Meanwhile, the defendants’ songs use the phrase “party and bulls***” to embrace the partying culture. The court accordingly found that the defendants’ use of the phrase “party and bulls***” transformed the phrase “from something shunned to something glorified.” The court also found that Oyewole’s complaint supported the court’s determination that the defendants’ use of the phrase “party and bulls***” constituted fair use. For example, the court stated that “Oyewole acknowledges that the B.I.G. and Rita Ora Defendants use the phrase ‘party and bulls***’ in contravention’ of Oyewole’s original purpose, which was to encourage people to NOT waste time with party and bulls***. Thus, even Oyewole recognized that Defendants’ songs change the meaning and purpose of the phrase party and bulls***.” (Internal quotations omitted). The court also quickly analyzed the other three factors of fair use (the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work). However, the court appeared to give significantly less weight to these three factors than the purpose and character of the use factor. This decision demonstrates that the purpose and character of the copyrighted work and the allegedly infringing material is a very important consideration in the fair use analysis. It also serves as a cautionary note to parties to be careful in drafting pleadings to avoid providing statements that support the opposing party’s position.