The TMCA

As many of our readers know, in 2011, ICANN, the organization that operates the internet domain name system, authorized the launch of the New gTLD Program - the largest expansion of the generic top-level domain name (“gTLD”) system on the Internet in history.  Prior to the launch of this program only 22 gTLDs had been approved and added to the Internet (e.g. .com, .net, .org).  With over 1930 applications for new gTLDs submitted in the program, ICANN has already delegated (introduced into the Internet) 1230 gTLDs as of the writing of this article. The much anticipated .app gTLD extension will soon launch.  Google paid $25 million for the gTLD extension at auction.  The gTLD was delegated in July 2015, and many companies have been waiting for registrations to begin.  Google’s minimal requirements for .app domain names include the following: (1) .app domain name registrations are secure namespaces; (2) all content must be served over HTTPS so that browsers can load .app websites; and (3) any registrant of a letter/letter two-character ASCII label represents that it will take steps to ensure against misrepresenting or falsely implying that the registrant or its business is affiliated with a government or country-code manager if such affiliation, sponsorship or endorsement does not exist. Below are key dates for the launch of the gTLD extension to keep in mind.  If possible, brand owners with interest in the .app extension should take advantage of the Sunrise Period to the extent they have registered relevant brands in the Trademark Clearinghouse and if not, make early submission if possible. Sunrise Period -- Mar 29 – April 30, 2018:  Trademark owners can register .app domains, ahead of the general public, for any marks they have registered in the Trademark Clearinghouse (TMCH) on a first-come, first-served basis; Early Access Period -- May 1 - May 8, 2018:  Anyone can register available .app domains for an extra fee; and General Availability Period -- May 8, 2018 and thereafter:  Anyone can register available .app domains. More information on the ICANN New gTLD Program, including statistics and lists of delegated and to be delegated gTLDS, can be found here.

In a recent unanimous decision, Forman v. Henkin, the New York Court of Appeals, New York’s highest court, removed the heightened requirement set by the lower courts for a party requesting the production of social media posts designated as “private” by the user.  Now, the rule in New York is consistent with federal practice in that general rules of discovery apply. The case involved a personal injury claim resulting from falling from the defendant’s horse, and the plaintiff, in opposing the defendant’s motion to compel, did not claim that the “private” portion of her Facebook page contained privileged information or information that should be shielded based on privacy grounds.  However, the lower court applied a standard in which the defendant must establish a factual predicate by identifying relevant information in the plaintiff’s “public” portion of her Facebook account that contradicts the plaintiff’s alleged “restrictions, disabilities, and losses, and other claims,” in order to access the “private” portion. Although the court noted that sites like Facebook now offer different levels of privacy the user can control to limit sharing information only with those of their choosing, it decided that New York’s discovery rules favoring liberal disclosure militate against a user’s ability to “unilaterally obstruct disclosure merely by manipulating privacy settings or curating the materials.” The court recognized that the proper standard for production should continue to be whether the information is “material and necessary to the prosecution of the defense of an action,” “i.e., relevant,” rather than whether the user has manipulated his or her privacy settings.  The court acknowledged that some materials on a Facebook account may be considered private, but observed there is heavy debate surrounding this characterization.  The court specifically noted that even “private materials may be subject to discovery if they are relevant.” “Private” social media posts are now subject to the same rules as the discovery of a personal diary.  Protective orders and redaction are tools that can be employed in the social media context, just as in any other, to prevent the disclosure of embarrassing information.  The court agreed that a party’s entire Facebook account is not necessarily discoverable upon the commencement of a personal injury action. Information from the following three categories continues to be protected from disclosure: privileged matter (absolutely immune) attorney work product (absolutely immune) trial preparation materials (subject to disclosure only on a showing of substantial need and undue hardship) The court stated that considerations such as the nature of the litigation, the injuries claimed, and any other information specific to the case, should govern whether relevant information is likely to be found on a party’s Facebook (or other social media) account.  The court also noted that the utility of the information sought should be balanced against privacy concerns, and that discovery should be tailored to the “particular controversy” while “avoiding disclosure of non-relevant materials.”  Potentially embarrassing materials of marginal relevance can also be exempted from disclosure.

Hello loyal TMCA readers – This is the first installment of what we hope to be an informative series of posts called Quirky Questions: TMCA Edition. Our labor and employment colleagues have a great blog, Quirky Questions, where they answer unanticipated questions regarding workforce issues. If you have employment questions (and we know many of you may do), we encourage you to check it out.  Over here at The TMCA we will be answering some quirky questions of our own, but in the areas of trademarks, copyrights and advertising. We hope you enjoy the series and feel free to send in your suggestions for future posts. ______________________________________________________________________________________________________________ Under U.S. trademark law, trademarks fall along the spectrum of distinctiveness. Word marks may be inherently distinctive (such as suggestive and coined or fanciful marks) or may acquire distinctiveness through use (descriptive words that have acquired secondary meaning and become protectable as a trademark).  The spectrum informs the scope of protection afforded to a mark – the higher a mark is on the spectrum, the stronger it is in terms of the owner’s ability to enforce its rights against 3rd party users of similar marks.  In short, good, strong trademarks should aim high on the level of distinctiveness. Laudatory Terms Laudatory terms are those that attribute quality or excellence to goods or services or are complimentary or superlative.  Although it may be possible to secure trademark rights in a laudatory term, laudatory trademarks are generally considered weak and entitled to a narrow scope of protection, even after a showing of secondary meaning.  The USPTO considers laudatory terms to be merely descriptive under the Trademark Act.  See Trademark Manual of Examining Procedure (TMEP) § 1209.03(k).  These terms may acquire secondary meaning over time through extensive use and promotion and become protectable as a mark.  The Court of Appeals for the Federal Circuit has stated, however, that “a phrase or slogan can be so highly laudatory and descriptive as to be incapable or acquiring distinctiveness as a trademark.”  See TMEP § 1209.01(c)(ii). The Federal Circuit or the USPTO has found these laudatory phrases to be merely descriptive: SNAP SIMPLY SAFER: cannulae, medical needles and syringes THE ULTIMATE BIKE RACK: bicycle racks and related accessories BEST PROTEIN: dietary and nutritional supplements DRIVE SAFELY: automobiles and parts THINK GREEN: waste disposal and treatment of waste WORLD’S HEALTHIEST GROCERY STORE: grocery store services There are other laudatory marks that do not actually describe a feature of the product, but instead generally suggest the product is of higher or better quality than other similar products.  They require some thought and perception to connect the mark to the goods or services.  For example, these marks have been registered on the Principal Register without disclaimers or claims of acquired distinctiveness: SUPER: vehicle lights PLUS: magazines and online magazines SELECT: automobile ignition parts GOLD MEDAL: pest control services Although these laudatory terms are registered on the Principal Register, they are widely used in many industries to describe products or services.  Thus, they are also weak and ultimately less valuable as trademarks. False Advertising Apart from being weak, another potential issue with laudatory terms is false advertising.  Use of laudatory trademarks can be considered advertising puffery if the attribute claim is general and subjective, such as “Greatest Pizza.”  However, a laudatory phrase that makes a more specific, verifiable claim could be subject to a false advertising challenge, such as “most powerful vacuum” because it could be objectively verified as true or not. At the end of the day, exercise caution in adopting laudatory terms as trademarks as they may not be accorded a worthwhile scope of exclusivity and are therefore less valuable.  Ideally, it is best to select a mark that is inherently distinctive like fanciful or arbitrary marks.  Unique and distinctive brand names have the greatest equity potential.

On February 26, in the wake of significant and far-reaching cybersecurity breaches (e.g., the Equifax Data Breach), the SEC published interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents.  The SEC recognizes that cybersecurity threats present an “ongoing risk” to all public companies which can lead to “substantial costs and other negative consequences” including liability for stolen assets or information and repairs of system damage; increased cybersecurity protection costs, litigation and legal risks; increased insurance premiums; and damage to the company’s reputation, competitiveness, stock price and long-term shareholder value. The SEC’s new guidance reinforces and expands on its October 2011 guidance, emphasizing the importance of adopting sound cybersecurity policies and procedures and safeguards against insider trading in the event of a potentially material cybersecurity breach. Public Disclosure Requirements The SEC provides that “although no existing disclosure requirement explicitly refers to cybersecurity,” periodic reports, current reports and Securities Act and Exchange Act obligations all require public companies to disclose material risks and incidents including those related to cybersecurity. The SEC encourages companies to continue to use current report Form 8-K or Form 6-K to disclose material cybersecurity-related information promptly as this practice reduces the risk of selective disclosure. Beyond requirements explicitly found in SEC regulations, companies are also required to disclose material information and revisit previous disclosure, especially during a cybersecurity investigation, as may be necessary to ensure the company’s filings are not misleading.  Notably, companies “have a duty to correct prior disclosures that the company determines were untrue at the time it was made, or a duty to update a disclosure that becomes materially inaccurate after it is made.” The obligation to update prior disclosure is the subject of some debate, and perhaps will merit further guidance from the SEC.  According to a footnote in the guidance, the SEC bases this duty to update in Backman v. Polaroid Corp., 910 F.2d 10 (1st Cir. 1990), but acknowledges that other circuits have not found a duty to update.  Furthermore, the Private Securities Litigation Reform Act expressly disclaims any duty to update forward-looking statements.  15 U.S.C. §§ 77z-2(d) and 78u-5(d) ("Nothing in this section shall impose upon any person a duty to update a forward-looking statement.").  A duty to update prior disclosure, and the associated work and potential liability, may constrain future disclosure of cybersecurity risk. The SEC provides the following examples of factors companies should consider when evaluating their cybersecurity risk disclosure: 1) the occurrence of prior cybersecurity incidents, including their severity and frequency; 2) the aspects of the company’s business and operations that give rise to material cybersecurity risks and the potential costs and consequences of such risks; 3) the costs associated with maintaining cybersecurity protections, including, if applicable, insurance coverage relating to cybersecurity incidents or payments to service providers; and 4) existing or pending laws and regulations that may affect the requirements to which companies are subject relating to cybersecurity and the associated costs to companies. The SEC cautions that this guidance is not intended to suggest that a company should make detailed disclosures that could compromise its cybersecurity efforts.  There is no general requirement to expose potential system vulnerabilities in such a way that would make the company more susceptible to risk. However, the SEC expects that companies will provide disclosure that is tailored to their particular cybersecurity risks and incidents using company-specific, useful information as opposed to boilerplate language. The SEC guidance suggests companies adopt comprehensive policies and procedures related to cybersecurity and assess their compliance regularly.  Companies should have adequate disclosure controls and procedures in place to ensure that relevant cybersecurity information is processed and reported to the appropriate personnel to enable senior management to make disclosure decisions and certifications. These policies will not only allow the company to adhere to the SEC’s disclosure requirements but will also facilitate policies and procedures designed to prohibit directors, officers, and other corporate insiders from trading on the basis of material nonpublic information about cybersecurity risks and incidents. Insider Trading The SEC guidance provides that companies and their  corporate insiders should be mindful to adhere to the federal antifraud provisions as well as other applicable rules (such as codes of conduct required by exchanges) related to insider trading in connection with information about cybersecurity risks and incidents.  The SEC guidance advises companies in the midst of investigating significant cybersecurity incidents to consider implementing restrictions on insider trading in their securities to prevent corporate insiders from trading on the basis of material nonpublic information before the incident has been publicly disclosed, and to avoid the appearance of improper trading. Conclusion Companies are facing rapidly evolving cybersecurity threats.  It is increasingly important for companies to investigate and refine their own disclosure policies and procedures to ensure a momentary lapse in cybersecurity judgment does not culminate in unnecessary damages to the company or SEC enforcement actions.  The new SEC cybersecurity guidance can be found in its entirety here.

Three recent cases demonstrate that data privacy enforcement is on the rise in the United Kingdom. These and similar cases signal a new direction in enforcement action suggesting higher penalties, more frequent prosecutions and the casting of a wider net to hold individual and organisations liable for data offences and breaches. In the first ever class action to arise in the UK from a data breach, the High Court held that supermarket chain Morrisons was liable to pay compensation for distress caused to employees whose personal information was published online by a disgruntled worker. Andrew Skelton, a senior internal auditor at the company, was jailed for eight years in 2015 for deliberately leaking payroll information containing the names, addresses and bank account details of almost 100,000 employees. Skelton took that extraordinary step in retaliation for disciplinary action taken against him by Morrisons. The court held that whilst Morrisons was not at fault for the way in which it stored and protected its employees’ personal data, it was still vicariously liable for Skelton’s unlawful actions. The decision was reached notwithstanding the fact that none of the employees’ is thought to have suffered financial loss as a result of the breach, and that Morrisons took immediate action to secure the breach. This case highlights the importance of taking steps to mitigate the risk of breaches by members of staff and other ‘insiders’ (not just external fraudsters and hackers), such as by limiting access to databases strictly to those persons who actually need such access, effective anonymisation of data and regular destruction of data once it is no longer required. Morrisons is appealing the decision against it. Carphone Warehouse, a large UK brick and mortar mobile phone retailer, has been fined £400,000 by the Information Commissioner’s Office (ICO) following a cyber-attack in which hackers were able to gain access to data belonging to more than three million customers and 1,000 employees. A specialist report found a number of technical and security deficiencies, which the ICO found to be unacceptable for an organisation of Carphone Warehouse’s nature and size. It determined that insufficient measures were in place to ensure that software updates and patches were regularly installed, and security was lacking in a number of areas including detection of unauthorised use of login details, conducting vulnerability scans and monitoring and filtering traffic from the company’s web applications. It was found that anti-virus protection was not installed on the compromised servers. The ICO noted that the company’s system contained large amounts of historic transactional data which was not sufficiently encrypted and, in any event, should have long been deleted. The fine imposed on Carphone Warehouse is close to the maximum amount (£500,000) that the ICO can impose under current law. That ceiling will be raised significantly when the General Data Protection Regulation (“GDPR”) comes into force in May 2018, when the maximum penalty will be 4% of the affected organisation’s annual revenue or EUR 20 million (whichever is higher). In another recent case, the Maidstone Crown Court convicted loss adjustment firm Woodgate & Clark together with one of its directors and a senior loss adjustor on two counts of unlawfully disclosing personal data. The director was also convicted of unlawfully obtaining personal data. The firm was fined £50,000 and the director received a fine of £75,000. The defendants were ordered to pay £20,000 in costs. The case concerned an investigation carried out by a private investigator on behalf of Woodgate & Clark in connection with an insurance claim for fire damage brought by an individual policyholder. In the course of the investigation, personal financial information including records of banking transactions of the policyholder were unlawfully obtained. The loss adjustors and their officers were convicted for disclosing the information received from the investigators to their client, the insurer. The director was convicted of unlawfully obtaining the information. The investigators themselves were also convicted and fined. The case illustrates that the ICO – notwithstanding its limited resources - is prepared to pursue serious cases and to bring prosecutions before the criminal courts against organisations and individuals responsible for offences under the privacy laws. The case also highlights that anyone receiving personal data from a third party must exercise caution and judgment and have adequate systems in place to ensure that data obtained unlawfully is not used or disclosed to third parties. For many years, data protection laws were poorly enforced in the UK. This is clearly changing and prosecutions as well as administrative investigations and penalties regularly take place today. Data breaches and spamming offences continue to represent the majority of enforcement action, although the ICO is also engaged in regular auditing of public sector bodies which often results in the issuing of recommendations or directions for taking steps to comply with privacy and data protection laws. It is likely that the introduction of wider investigation and enforcement powers under GDPR would lead to a closer scrutiny of the handling of personal data among private sector organisations, not only in cases of serious breaches.

Pop artist Taylor Swift shook off a copyright infringement lawsuit filed by Sean Hall and Nathan Butler in the U.S. District for the Central District of California, Sean Hall d.b.a. Gimme Some Hot Sauce Music, et al. v. Taylor Swift, et al. Plaintiffs composed the song Playas Gon’ Play, which was recorded by the all-girl group 3LW that gained popularity in the early 2000s, and released in May 2001. The song peaked at number 81 on Billboard’s Hot 100 chart and the album it appeared on sold more than 1 million units. Plaintiffs claimed that Swift’s Shake it Off copied two brief phrases from the lyrics of the chorus of their song: “Playas, they gonna play / And haters, they gonna hate /.” No musical elements were alleged to be copied by Swift and her collaborators. Plaintiffs acknowledged that the concepts of players and their playing were well-established in pop culture when their song was released, but alleged that the “combination of playas/players playing along with hatas/haters hating … was completely original and unique” when the song was released in 2001. Shake it Off, which was written in 2014 by Swift, Karl Martin Sandberg and Karl Johan Schuster and released in August 2014, debuted at number 1 on Billboard’s Hot 100 chart and has sold more than 9 million copies. The chorus of Shake it Off contains these lyrics: “Cause the players gonna play, play, play, play, play / And the haters gonna hate, hate, hate, hate, hate /.” The key issue in the case was whether the lyrics “Playas, they gonna play / And haters, they gonna hate” are sufficiently original and creative to warrant copyright protection. Short phrases and slogans are generally not protected under federal copyright law, although there are exceptions if they are sufficiently creative – such as a catchy one-liner from a film or play. On January 3, 2018, Swift filed a motion to dismiss, arguing that the phrase “Playas, they gonna play/And haters, they gonna hate” is not entitled to copyright protection on this basis. Given that American culture in the early 2000s was heavily steeped with the concepts of players and player haters and “playas, they gonna play” and “haters, they gonna hate” were well-known short phrases, not surprisingly, the Court ruled on February 13, 2018 that the lyrics were not sufficiently creative to warrant copyright protection. The combination of these two unprotecable elements intertwined could not establish copyright protection. If you want to create a protectable copyright work from preexisting elements that will not be shaken off, you will need to convert them from merely well-known banal or trivial elements into an original and creative whole.

With the lifting of the International Skating Union ban on the use of music with lyrics, the Olympics in Pyeongchang is the first in which singles and pairs ice skaters can compete to music with lyrics (Ice Dancers have been able to skate to vocals since the 1990s).  While this adjustment may be the catalyst to inspired and energetic performances, it has also led to an interesting question regarding the types of licenses needed to use such music in live and re-broadcast skating performances. The answer to this question can be as complicated as a triple Axel and requires a bit of background regarding the copyrights present in music.  There are two distinct copyrights in music: (1) the copyright in the sound recording, which results from the fixation of a series of musical, spoken or other sounds (e.g. on CD, digital file, etc.); and (2) the copyright in the composition, encompassing the words and music embodied in the sheet music, sound recording, etc.  Each usually has a different owner and require distinct licenses for their use. Typically, the sound recording (or “master”) copyright is owned by the record label.  The copyright in the composition is typically owned by the songwriter(s) or music publisher. Under the U.S. Copyright Act, the exclusive rights of the owner of copyright in a sound recording are limited to specific rights and do not include any right of performance (unlike the exclusive rights in compositions, which do include the right of performance).  Rather, in the case of sound recordings, there exists the exclusive right to perform the copyrighted work publicly by means of a digital audio transmission.  Thus, for a live skating event there is no license required to use the sound recording.  However, if the performance is reproduced in the future, such as a best of the Olympics feature or compilation of highlighted performances, the situation changes.  In this case, NBC would be required to obtain a master use license for the reproduction of the sound recording. On the other hand, the public performance of the composition requires a license. The type of license and where it is obtained depends on whether the performance is dramatic (also called “grand rights”) or nondramatic.  The answer is further complicated by the fact that the Copyright Act does not define the terms “dramatic” or “nondramatic.”  In the U.S., three organizations negotiate license arrangements for non-dramatic performances and distribute fees back to the writers and publishers whose music and lyrics are being performed – ASCAP, BMI and SESAC.  License rights for dramatic performances, where a work is performed, for example, as part of a musical, opera, ballet, etc., are obtained directly from the copyright owner.  In the case of ice skating, the performance is non-dramatic and likely considered underscore (by ASCAP standards) and background (by BMI standards).  That is, the performance of the work used as a dramatic underscore to a scene where the music is not the focus of audience attention yet nonetheless is used to set the mood of the scene. NBC likely has a blanket license through one or more of the performance rights organizations, ASCAP, BMI or SESAC, which covers the use of the songs in the performances. In the end, NBC certainly trained for this event and had its gold medal team working to ensure the right licenses are in place for the broadcast of the Olympics.  With the proper licenses in hand, the rest of us get to sit back and judge whether a song choice rocks a performance or flops.

The Ninth Circuit breathed new life, for now, into a trademark infringement suit brought by Eat Right Foods Ltd.’s (“ERF”) against Whole Foods Market, Inc.  The district court had granted summary judgment for Whole Foods after concluding ERF’s claims were barred by the doctrines of laches and acquiescence.  But the Ninth Circuit reversed, concluding there were disputed facts material to both defenses, and remanded for further proceedings. From 2004 to 2013, ERF sold gluten-free cookies to Whole Foods that featured ERF’s “EATRIGHT” and “EAT RIGHT” marks.  In late 2009, Whole Foods contracted with a third party to use its food scoring system designed to communicate the nutritional value of foods to consumers.  Whole Foods launched the scoring system in early 2010, and was required to display an “Eat Right America” mark used by the third party.  ERF learned of Whole Foods’ use of the “Eat Right America” mark in connection with the food scoring system sometime between March and November 2010. Over three years later, in December 2013, ERF sued Whole Foods for infringement.  Whole Foods answered that by waiting over three years before filing suit, ERF had slept on its rights, and that, as a result, the claims were barred by the doctrines of laches and acquiescence.  The district court agreed and granted Whole Foods’ request for summary judgment on both grounds. The Ninth Circuit reversed and remanded as to both defenses. First, the Ninth Circuit concluded that because ERF had knowledge of the alleged infringement more than three years prior to when it filed suit in December 2013 – beyond the applicable three year statute of limitations – there was a strong, but rebuttable presumption that laches barred ERF’s claims. ERF argued the delay was reasonable because ERF was trying to settle its claims against Whole Foods without litigation.  Whole Foods countered that ERF was not actually attempting to settle, but instead was trying to “cash in on [its] trademark registrations and sell its brand to a larger company.” The district court agreed with Whole Foods, and concluded the delay was unreasonable.  But the Ninth Circuit disagreed, pointing both to evidence that ERF was trying to settle its claims, and potentially conflicting evidence that ERF was merely trying to sell its brand to Whole Foods.  At summary judgment, such factual disputes must be resolved in favor of the nonmoving party, ERF here, rendering summary judgment in favor of Whole Foods inappropriate. The Ninth Circuit also remanded for further analysis of prejudice.  Delay alone will not support a finding of laches; instead, a party must also show the delay caused prejudice.  Only prejudice suffered during the delay – i.e. expenses incurred after plaintiff knew or should have known about the claim – is relevant to an analysis of expectation-based prejudice.  Because the district court’s analysis did not distinguish between all expenses incurred, and expenses incurred only during the delay, the Ninth Circuit remanded for further analysis of prejudice. Lastly, the Ninth Circuit asked the district court to revisit the acquiescence defense to determine whether Whole Foods actually and reasonably relied on an affirmative act by ERF. The defense requires a showing that (1) plaintiff actively represented it would not assert a claim, (2) an inexcusable delay between the active representation and assertion of the claim, and (3) undue prejudice caused by such delay.  The district court concluded ERF’s acts constituted affirmative conduct and delay, the first and second elements, and that Whole Foods was prejudiced.  But the district court failed to make factual findings regarding the extent and reasonableness of Whole Foods’ reliance on ERF’s acts.  Was ERF’s conduct the actual and reasonable cause of Whole Foods’ prejudice?  The Ninth Circuit remanded with a reminder that prejudice does not equal reliance, and that factual findings for each are required. While the Ninth Circuit saved ERF’s claims for now, it’s not clear for how long.  The Ninth Circuit’s order focuses largely on defects with the district court’s findings, so it’s possible that on remand the district court will make additional findings to shore up the problems with its order, but ultimately come to the same conclusion.

By Eco84 - Own work, CC BY-SA 3.0, https://commons.wikimedia.org/w/index.php?curid=17846929 We previously posted about an advisory jury verdict rendered in the 5Pointz litigation (Cohen et al v. G&M Realty LP et al.), a case involving the whitewashing of the famous exterior aerosol (or “graffiti”) art in the space commonly known as 5Pointz. In November, the advisory jury panel found that the developer’s actions violated the Visual Artists Rights Act of 1990 (“VARA”). On Monday, the presiding judge agreed, ruling that the developer’s whitewashing of the works of art, without giving statutorily-prescribed notice and an opportunity to salvage the works, did indeed violate the artists’ rights under VARA by intentionally destroying their works of “recognized stature” with respect to 45 of the 49 works of graffiti art at issue in the case. In determining damages, the court agreed with the developer’s appraisal expert that because of the unique challenges and costs of selling artworks at 5Pointz—which were the size of a building wall—the works did not have a provable market value. As a result, the court did not award actual damages. The court proceeded, however, to award statutory damages. Pursuant to 17 U.S.C. § 504(c), statutory damages may be no less than $750 and not more than $30,000 for each work, as the court considers just. If the plaintiff proves that the violation was willful, statutory damages may be up to $150,000 for each work. In determining the appropriate measure of statutory damages, the court found that the artists sustained their burden to prove that the violations were willful. The court then undertook a multi-factor analysis to determine the appropriate measure of damages, including consideration of, among other factors, the infringer’s state of mind, the deterrent effect on the infringer and third parties, and the conduct and attitude of the parties. During the trial, the developer left a distinct impression with the court that he was “singularly unrepentant. He was given multiple opportunities to admit the whitewashing was a mistake, show remorse, or suggest he would do things differently if he had another chance. He denied them all.” This undoubtedly played an important role in the court’s ultimate determination to award the $150,000 maximum amount of statutory damages for each of the 45 distinct works, totaling $6.75 Million in total damages awarded to 21 different artists. The court closed its decision on a somber note, stating “[t]he shame of it all is that since 5Pointz was a prominent tourist attraction the public would undoubtedly have thronged to say its goodbyes during those 10 months and gaze at the formidable works of aerosol art for the last time. It would have been a wonderful tribute for the artists that they richly deserved.” The court’s thorough 51 page opinion provides useful guidance on artists’ rights under VARA, and the meaning of “recognized stature” of a work that entitles it to protection under VARA. Due to the dearth of authority on the meaning of “recognized stature,” and the substantial award to the artists, it is likely that the decision will be appealed to the Second Circuit. The TMCA will continue to monitor this case and keep you updated with any interesting developments.

A recent out-of-court settlement following an 8th Circuit decision in Gerlich v. Leath highlights some of the unique legal issues that surround the branding of products in the cannabis space. In 2012, two students at Iowa State University (ISU), Paul Gerlich and Erin Furleigh, secured approval from ISU’s trademark licensing office to use the ISU school mascot, "Cy the Cardinal," and other identifying marks and logos of the school on t-shirts that the students planned to print and sell.  The students were the leaders of the ISU chapter of the National Organization for the Reform of Marijuana Laws (NORML), an advocacy group that promotes the legalization of marijuana for responsible use by adults.  The ISU chapter of NORML was an officially-recognized student group and the t-shirts were designed to raise awareness of NORML.  The t-shirts displayed the school mascot as part of the NORML acronym, along with a marijuana leaf and the slogan “Freedom is NORML at ISU.”   The students started selling their shirts and placed a re-order.  But the school revoked its trademark licensing approval after a front page article in a local newspaper about the school's approval of the t-shirts prompted an angry reaction from state lawmakers and public officials.  The Trademark Office of the school also swiftly rewrote its trademark guidelines to ban the use of school logos on shirts that promote dangerous, illegal, or unhealthy products and illegal drugs. After subsequent versions of their t-shirts did not receive ISU approval, Gerlich and Furleigh sued four ISU administrators, including the then-president and director of trademark licensing, in the federal district court for the Southern District of Iowa on First Amendment and other grounds, claiming that the administrators took specific action at the students and subjected the students to scrutiny that wasn’t placed on other student groups.  The district court ruled that the administrators at ISU ran afoul of the First Amendment because their trademark decisions violated the students’ right to free speech. On appeal, the 8th Circuit agreed and confirmed that denying the students access to the school’s trademarks – such as Cy the Cardinal mascot - as members of NORML discriminated against them based on their pro-cannabis viewpoint.  The 8th Circuit maintained its holding after a rare grant of rehearing. Last month, the State of Iowa agreed to pay $150K to Gerlich and Furleigh and $193K in legal bills to the two firms representing them in order to settle the students’ claims.  The settlement deal covers damages and legal fees at the appellate level, but further payments may still have to be made for the trial phase of the case. Because ISU is a state university, the case involved complex issues of viewpoint discrimination under First Amendment case precedent that might not apply in a private context. However, the case illustrates that, along with the complex and uncertain regulatory scheme currently governing the commercialization of cannabis in the U.S., other considerations such as trademark policies that take into account free speech considerations may come into play in a trademark licensing context when state action is involved.

You’ve heard it before and you’ll hear it again - Stay away from any advertising or promotional ideas that suggest authorization, sponsorship or an official connection to the Olympics. This means not using the Olympic Rings in advertising or even #Olympics on your brand’s social media account, especially in the next two weeks.  And don’t even think about holding any type of “Olympiad” promotions either. Have you ever wondered why the warnings not to use the trademarks owned by the United States Olympic Committee are so strong? The Ted Stevens Olympic and Amateur Sports Act of 1998, 36 U.S.C. §22050 is the answer.  Under its predecessor, the Amateur Sports Act of 1978, Congress granted the USOC the exclusive right to use and license certain Olympic-related trademarks and symbols. The current statute also provides for the USOC’s right to file trademark infringement suits under the Lanham Act.  You might now be asking - so what the big deal here? Any trademark owner can file an infringement suit under the Lanham Act.  Well, as confirmed by federal courts on a few different occasions, the USOC doesn’t need to prove a likelihood of confusion to win an infringement suit.  They simply need to demonstrate unauthorized commercial use by a third party and the USOC is on the medal stand waiting for their court-awarded injunction. The intent behind this super-trademark monopoly is pretty simple – The US Olympic team does not get federal funding, so the USOC has to raise the money and it does so through licensing its trademarks for commercial purposes.  It is important to note that federal law does not prohibit individuals from using Olympic trademarks on social media for non-commercial purposes. The IOC’s social guidelines, in fact encourage athletes and coaches to post on personal social media accounts for non-commercial purposes. As a brand, however, you should also be aware the USOC has more than 200 US trademark registrations and pending applications on file with the United States Trademark Office. As we get excited to cheer on the home team, advertisers should think twice about using the following trademarks on social media or in more traditional advertising: TEAM USA, ROAD TO PYEONGCHANG, DESTINATION PYEONGCHANG, LET THE GAMES BEGIN, PYEONGCHANG 2018 and GO FOR THE GOLD.

In January 2015, Pitney Bowes filed an intent-to-use trademark application for the logo shown here for use with mailing services, including postal delivery, parcel delivery, and delivery of mail to post offices for posting (Serial No. 86502157). Pitney Bowes later filed its specimen of use, consisting of a printout from its website with a photograph of its postal kiosk and information regarding the self-service access available at its kiosks.  The Examining Attorney refused the specimen of use because “the specimen is a webpage describing a self-service kiosk that consumers use to mail and ship items, but not that applicant itself provides these services.” Pitney Bowes responded to the Office Action, advising that “[t]hese kiosks are furnished by Applicant and are placed in different locations for use by consumers.  Consumers use the kiosk to place postage on a letter or package, and then place that [letter or package] in the receptacle that is part of the kiosk system for Applicant to pick up the letter or package and place it in the mail stream for delivery.” (emphasis added). We might expect that Pitney Bowes’ explanation would alleviate any concerns raised by the Examining Attorney as to whether the specimen of use properly constituted a use of the mark in association with the services described in the application. The explanation provided seems to establish a direct association and clear description of how the specimen submitted shows use of the mark for the applied-for services.  Alas, the Examining Attorney issued a final refusal in the application, leading Pitney Bowes to file an ex parte appeal to the Trademark Trial and Appeal Board. In its decision reversing the refusal to accept the specimen of use submitted, the TTAB held that both precedent and examination guidance “make clear that in assessing the specimens, consideration must be given not only to the information provided by the specimen itself, but also to any explanations offered by Applicant clarifying the nature, content, or context of use of the specimen that are consistent with what the specimen itself shows.”  And the Trademark Manual of Examining Procedure § 1301.04 provides “[A] specimen description submitted by the applicant typically helps clarify the manner in which the mark is used in commerce, and the more explanation the application provides initially, the more helpful it is to the examining attorney’s analysis.  Thus, applicants are encouraged to provide a specimen description and explain how the applicant renders or provides the services….” So how might this have been approached differently and more efficiently? Pitney Bowes indicated in briefing its belief that the Examining Attorney did not understand the services being offered under the mark.  Two practice tips come to mind from this decision: Pick up the phone. Engage in conversation with the Examining Attorney to ensure that any aspect of the specimen of use or the services are clear so the Examining Attorney can ask questions or seek further specific explanations. Provide a detailed description of the specimen of use to clarify for the Examining Attorney precisely how the specimen is directly associated with the offered services. If the end result is that understanding is achieved through an Examining Attorney’s careful consideration of a detailed submission and/or information provided in telephone conversations, an unnecessarily prolonged registration process or a costly and time-consuming appeal before the TTAB can be avoided.

Did you catch that Dodge commercial everyone is talking about with the Rev. Dr. Martin Luther King Jr. voiceover? Many viewers took to Twitter last night to express their belief that the use of the speech to sell trucks was inappropriate and not in line with Dr. King’s message. We at the TMCA were more focused on the online conversation about whether or not the use of the speech and the voiceover were authorized.  While Georgia does not have a right of publicity statute on the books, the Supreme Court of Georgia has recognized a right of publicity at common law.  It has also confirmed that such rights survive death and are inheritable.  Accordingly, the unauthorized use of Dr. King’s name and likeness for financial gain is prohibited by Georgia law.  Federal copyright law is also implicated by use of the recording and the words of the speech. So would Dodge really have proceeded without permission? Shortly after the commercial aired, Dr. King’s youngest daughter and CEO of The King Center, tweeted out a firm “No” to the question of whether the King children allowed Dr. King’s voice to be used to sell Dodge Trucks.  The King Center followed on with a very informative tweet:  So who can provide permission for such uses? The exclusive licensor of the King estate, that’s who. As any good advertiser should, Dodge worked with the company that acts as the exclusive licensor for Dr. King’s name, image, likeness, recording and speeches to make sure this commercial was clear on the right of publicity and copyright fronts.  With such a high profile campaign, they would have been crazy not to do this because the King Estate is known for being litigious in this area. While the debate on whether the use of the voiceover and speech were appropriate will likely continue today on Twitter, rest assured that the usage was legally in bounds.

The Vegas Golden Knights, an expansion team based in Las Vegas that joined the National Hockey League (NHL) earlier this year, have had a surprisingly successful “rookie year,” both on the ice and at the box office.  This month, however, the Golden Knights encountered opposition to their efforts to register the mark “Las Vegas Golden Knights” from an unusual source – the U.S. Army.  On January 10, 2018, the Army fired its opening (slap) shot – a Notice of Opposition to the Golden Knights’ trademark application based upon likelihood of confusion with the U.S. Army Parachute Team Golden Knights’ common law mark.  The key issue for the U.S. Patent and Trademark Office to consider (and one our readers may wish to ponder themselves) is whether anyone is likely to confuse an Army parachute team and a professional hockey team. The U.S. Army’s Golden Knights’ Mark According to its Notice of Opposition, the U.S. Army has been using its Golden Knights’ mark in connection with its U.S. Army Parachute Team (nicknamed the Golden Knights) since 1969.  The U.S. Army claims that it owns common law rights in both the Golden Knights’ mark and in the black+gold/yellow+white color trade dress, which is used by the Army’s West Point Military Academy hockey team (you are likely not alone if you were unaware that West Point had a hockey team).  In support of its Notice of Opposition, the Army contends that the Las Vegas hockey team’s registration of the Golden Knights’ mark would likely cause consumer confusion and suggests a connection between the Army and the Vegas Golden Knights. The Vegas Golden Knights’ Trademark Application In June of 2016, the NHL awarded an expansion franchise for Las Vegas to a consortium led by Bill Foley, with the team due to hit the ice for the first time in the fall of 2017.  In an interesting twist to this story, Foley is a West Point graduate who has been public about his great admiration for the U.S. Army.  Indeed, the U.S. Army’s Notice of Opposition notes that: The Vegas Golden Knights’ General Manager commented on that team’s use of the Army’s colors, stating “Bill Foley is a West Point guy, sort of using those colors. You know his history at West Point.  You know about the classmates he had that he lost serving this country.  So, those colors mean a lot to us. . .” Foley was aware of the U.S. Army parachute team and even tried to get them to appear at a Vegas Golden Knights team event (the attempt was unsuccessful); Foley originally wanted to name his hockey team the “Black Knights” but dropped that idea due in part to opposition from the Army (the fact that Chicago’s NHL team is named the Blackhawks may have also been a concern); and The Vegas GM admitted: “We were going to be the Black Knights, but we already had the Blackhawks in the league, so the league, so the league was trying to get us to come up with another name, so another name used at West Point is the Golden Knights for the parachute team.” Despite (or, it appears, because of) the similarity to the Army’s parachute team nickname, Foley ultimately settled on the name “Golden Knights” for his team.  On August 23, 2017, Foley’s ownership group, Black Knight Sports and Entertainment, LLC (Foley seems to have really wanted to call something “Black Knight”) filed an application to register the mark Las Vegas Golden Knights, in standard characters, for “Entertainment services, namely, professional ice hockey exhibitions.”  Vegas did not claim any colors for use with the mark and disclaimed the words “Las Vegas” in the applied for mark. The Golden Knights’ Defenses Given the admissions of its owner and General Manager, one would think that the Vegas Golden Knights’ trademark application is on thin ice.  However, the fact that its name was admittedly modeled after the U.S. Army’s parachute team’s nickname does not necessarily spell defeat for Vegas.  Indeed, the Golden Knights offered a preview of some of their main arguments in a witty but strongly-worded public relations statement issued in response to the Notice of Opposition, stating: We strongly dispute the Army’s allegations that confusion is likely between the Army Golden Knights parachute team and the Vegas Golden Knights major-league hockey team.  Indeed, the two entities have been co-existing without any issues for over a year (along with several other Golden Knights trademark owners) and we are not aware of a single complaint from anyone attending our games that they were expecting to see a parachute team and not a professional hockey team.  (italics added) In other words, no one is likely to confuse the Vegas Golden Knights with the Army’s parachute team and, in fact, there has been no actual evidence of any such confusion to date (because no one goes to a hockey game to see parachuters).  Vegas’ point about other “Golden Knights trademark owners” is also an interesting one.  A search of the USPTO website reveals multiple registrations for that mark, including one by the College of Saint Rose in Albany, New York, whose athletic teams are called the “Golden Knights.”  Another New York state university, Clarkson University, also uses the name “Golden Knights” for its sports teams.  One wonders why the Army apparently is fine with those universities using the mark but not the Vegas hockey team – is the prospect of achieving an advantageous settlement with the Vegas Golden Knights part of the Army’s strategy?    Settlement in the Offing? Indeed, settlement does seem like a distinct possibility.  On January 25, 2018, Black Knight Sports and Entertainment LLC filed a consent motion for suspension of the Opposition proceeding, stating that the “parties are actively engaged in negotiations for the settlement of this matter.” Such a conclusion makes sense and would likely benefit both parties.  To succeed on its Opposition, the Army faces the difficult challenge of showing a likelihood of confusion.  Even apart from the legal issues, however, it’s not at all clear what the Army hopes to gain from fighting this to the bitter end.  The Vegas Golden Knights have been a great success so far and the Army can surely benefit from the tribute paid to it by the hockey team.  The U.S. military has built successful marketing relationships with numerous sports leagues – why not capitalize on the Vegas Golden Knights’ success and partner with the team?  Perhaps that was the intention all along – and the Notice of Opposition was just a tactic for negotiating a better deal.

Shortly before Christmas 2017, Gibson Brands sued Funko, a maker of pop culture dolls, for trademark infringement relating to several of Funko’s figurines of famous musicians. Among the dolls named in the complaint are Slash (Guns N’ Roses) and Kirk Hammett (Metallica). Gibson’s complaint centers on rights it claims to the shapes of the various guitars that the musicians are holding in the figurines. Gibson cites protection for the following designs (depicted below from federal registration records with links to the USPTO for further reference): Les Paul Body Shape Design(Reg. No. 1782606) Flying V Body Shape Design(Reg. No. 2051790) Flying V Headstock Design(Reg. No. 3976202) Explorer Body Shape Design(Reg. No. 2053805) Kramer Peghead Design(Reg. No. 1567052)   Among Gibson’s causes of action is a claim for infringement of trade dress, which federal courts have defined as the “image and overall appearance of a product [that] embodies that arrangement of identifying characteristics or decorations . . . that makes the source of the product distinguishable from another and promotes its sales.”  Gibson has been fairly active in suing companies it believes have infringed its trade dress rights, including Paul Reed Smith Guitars (trade dress claim dismissed in favor of straight trademark infringement claim), Viacom (involving a SpongeBob SquarePants Flying V Ukulele), and John Hornby Skewes (claiming counterfeiting of body and headstock shapes; case ultimately dismissed). There are generally two types of trade dress: product packaging and product design. Gibson’s claim falls into the category of product design trade dress, which the Supreme Court has held can never be inherently distinctive (that is, it cannot immediately function as an indication of source to the average consumer). Therefore, to succeed against Funko, Gibson will need to demonstrate acquired distinctiveness of its product designs. It will also need to prove its protected designs are similar to those depicted on the Funko Dolls, that its product design trade dress is not functional (in other words, whether the design has some utilitarian feature), and that there is a likelihood of confusion between the parties’ products. The Funko case is a timely reminder to companies who manufacture and sell products. All aspects of a product should be evaluated for potential intellectual property conflicts before bringing the product to market. In the Funko example, there are several potential sources of rights: Right of publicity – depiction of the individual musician. Trademark – The band and musician’s name; brands displayed on clothing worn by the musician, on the guitar, or other items that are part of the figurine; and the design of any objects that are part of the figurine (such as the guitar, sunglasses, or even the shape of Slash’s hat, for example). Copyright – The band’s logo, any stickers or emblems featured on the figurine or items that are part of the figurine, and possibly any tattoos. Once these potential rights are identified, a careful analysis should be undertaken as to which rights should be licensed and which could possibly be defended as fair use under relevant law. On the flipside, companies who produce products with unique, non-functional product designs should consider registering their trade dress with the USPTO. Such applications will potentially be more cost- and time- intensive than, say, a word trademark application, because of the requirement to prove acquired distinctiveness in the product design. Applicants can skip the acquired distinctiveness claim and obtain registration on the Supplemental Register (provided the USPTO does not issue a functionality refusal and the design is in current commercial use), but a registration on the Principal Register is more desirable because it carries a presumption of validity in federal court proceedings. Although an examiner may be willing to accept a claim of acquired distinctiveness based on longstanding use of trade dress, the more likely scenario is the need to prove acquired distinctiveness through evidence, including: length of use; sales revenue and marketing expenditures; submissions of advertising featuring the trade dress; affidavits from customers attesting to the design’s distinctiveness; and examples of third-party media discussing or featuring the design.

Last week the FTC published a Complaint and proposed Consent Order in In re Bollman Hat Company et al. addressing two hot topics: Made in USA ad claims, which have been an agency focus for decades, and “selfie” and self-certification marks, a more recent regulatory interest.  Avid readers of this blog will know that we've also covered both Made in the USA claims and selfie-certification marks before. The Made in USA  issue was relatively straightforward. Pennsylvania-based Bollman advertised its hats with the claims “Made in USA since 1868, “Made in the USA for 100 Years or More” and #madeintheusa. But more than 70% of its hat styles were wholly imported as finished products. Other styles contained significant imported content. Under longstanding FTC guidelines and enforcement precedents, a company may not make a Made in USA ad claim -- referred to as an “unqualified” U.S. origin claim -- unless all or virtually all ingredients or components of the product are made and sourced in the United States and all significant processing takes place in this country. Qualified U.S. origin claims, which contain caveats, qualifying or limiting language, must clearly and conspicuously disclose the extent to which the product contains foreign components. Further, qualified claims must not use phrases such as “built”, “produced” or “created” in the USA that misleadingly convey the impression that the product was entirely manufactured in the United States. The FTC also raised two issues concerning Bollman’s use of a certification seal on its products featuring the phrase “American Made Matters – Choose American.” The seal originated with a wholly-owned subsidiary of Bollman named SaveAnAmericanJob, LLC, which jointly conducted business with Bollman as “American Made Matters” to market the use of the seal to other companies.  Permission to use the seal was granted for a $99 annual licensing fee to any company claiming that it had a United States-based manufacturing facility or one product with a U.S.-origin label and could self-certify that at least 50% of the cost of at least one product was incurred in the U.S. Based on this self-certification, Bollman and SaveAnAmericanJob promoted member companies on a website and in social media, but did not do anything to independently evaluate members’ compliance with the membership standards. The first problem with the American Made Matters – Choose American seal was the selfie-certification  aspect. When Bollman used a seal that its own subsidiary created to certify its own hat products, it conveyed the misleading impression that an independent organization had evaluated and endorsed their products as American-made. The FTC isn’t banning “selfie-certification” marks, but it is requiring that companies clearly and conspicuously disclose on product labeling and advertising their material connection to the certifying organization. Second, if member companies “self” certify their own products without any independent evaluation or compliance monitoring, that fact must be disclosed and Bollman must not know or have reason to know that the self-certification is misleading. Alternatively, Bollman must undertake an “independent and objective evaluation, audit, or verification check” to confirm that the products or services it is certifying meet the certification standard. The proposed Consent Order does not impose a monetary fine, but does require Bollman and its affiliates to submit compliance reports, maintain certain records for 20 years and submit to compliance monitoring by the FTC.

The women’s hosiery powerhouse, Spanx, is being sued for allegedly copying designs of a small shapewear company (R and A Synergy, LLC, v. Spanx, Inc., (C.D. Cal. 2017)).  In the Complaint filed on December 21, 2017 in the Western District of California, R and A Synergy claimed that Spanx copied the design of and advertising for R and A’s “Sleevey Wonders” product.  The twist here: R and A has evidence showing that Spanx ordered and received two pairs of Sleevey Wonders and had them sent directly to the office of Spanx’s CEO four years before Spanx launched its new products.  R and A Synergy is a small business that first sold its “Sleevey Wonders” in 2011.  R and A alleged that it spent several years on research and development to invent the “Sleevey Wonders,” a “unique [ ] sleeved garment specifically designed as a layering piece to wear under sleeveless and strapless tops and dresses.”  In 2009, R and A filed a trademark application for the mark SLEEVEY WONDERS and began filing a series of utility and design patents covering the undergarments.  Shortly after, R and A launched its Sleevey Wonders website, where it advertised and sold its products.  R and A alleges that “prior to the launch of the Sleevey Wonders under sleeves, no category of garment existed for slip-on sleeves made to wear under sleeveless and strapless tops and dresses that give the appearance of being part of the outer garment with which they are worn.” Fast forward to May 15, 2013.  R and A, which had been selling Sleevey Wonders in boutiques across the U.S., received an order from the assistant to Sara Blakely, CEO of Spanx, for two Sleevey Wonders products.  The order was shipped to Spanx’s headquarters in Georgia to Ms. Blakely’s assistant. R and A followed up, inquiring about whether Spanx had any interest in discussing a potential business partnership.  Spanx, however, had another idea.  To R and A’s dismay, Spanx debuted is new “Sheer Fashion” and “Arm Tights” products “as layering pieces to be worn under sleeveless garments” in September 2017.  According to the Complaint, Spanx’s Blakely claimed that Arm Tights filled a “white space” in the fashion industry that had never existed before, though it had two pairs of Sleevey Wonders sitting right in its offices. R and A further claims that Spanx had even gone as far as to copy several key advertising and branding elements from the Sleevey Wonders products, such as the use of illustrations of paper dolls wearing a sleeved under garment with various interchangeable outfits, a bullet-pointed list on the packaging, and the use of a mathematical equation to show that the products combine with other items to create new items.  R and A also points out interesting similarities in the branding slogans for each product: R and A asserts that like its use of the slogan “Made in the USA, with love” to advertise its product, Spanx also uses the phrase “#Madewithlove” to advertise its products.  R and A also asserts that “similar to the slogan of R and A, ‘Magically transforming your outfit into something NEW!,’ Spanx advertises [its] Arm Tights on its website and its product packaging using the slogan, ‘Transform your wardrobe!,’ and advertises its product as being magic.” According to the Complaint, after receiving a cease and desist letter from R and A, Spanx’s attorneys attempted to distinguish the products claiming that Spanx’s packaging and promotional materials are readily distinguishable from R and A’s and that Spanx’s products are “all in a pull-on style, whereas Sleevey Wonders [ ] products snap under the bust.”  R and A contends, however, that the packaging and promotion are nearly identical to one another and the original Sleevey Wonders are pull-on style, similar to Spanx’s products. R and A was not convinced and now pursues claims for copyright infringement based on Spanx’s alleged copying, reproduction and distribution of R and A’s marketing materials, such as the use of the paper doll illustrations, equations to show wardrobe expansion, and buzz words and slogans; trade dress infringement for the identical look and feel of the fabric design of the two products; false advertising; and federal and state unfair competition.  However, R and A makes no claim for patent infringement based on its utility and design patent applications. The outcome of this case will be interesting, as those in the fashion industry have long expressed their concern over the lack of intellectual property protection for unique fashion designs.  Technology has made it increasingly difficult for designers to stay ahead of copyists, who can immediately begin producing knockoffs and counterfeits, or, in this case, a direct competitor. The TMCA will keep you posted about further developments in the case!

In January 2016 and January 2017, we blogged about a trademark and copyright dispute between Louis Vuitton Malletier, S.A. and My Other Bag, Inc. (“MOB”) over a line of canvas tote bags that parodied Louis Vuitton’s iconic designer handbags. In this January 2018 blog edition, we report on a recent district court decision denying a motion by MOB for attorneys‘ fees and costs under the Lanham and Copyright Acts. For those who have not been closely following the case, MOB’s tote bag said “My Other Bag ….” on one side while the other side depicted an imitation of the famous LV monogrammed handbag: Judge Jesse Furman of the federal court for the Southern District of New York granted summary judgment to MOB in January 2016 on Louis Vuitton’s claims for trademark dilution, trademark and copyright infringement, based on MOB’s successful parody defense. In the opinion, the court observed that LV “cannot take a joke” and suggested that in some cases it is better “to accept the implied compliment in a parody” and smile or laugh rather than filing a lawsuit.  The Second Circuit affirmed the trial court’s decision in a December 2016 summary order, and the Supreme Court denied Louis Vuitton’s petition for certiorari in October 2017.   Notwithstanding the comments about Louis Vuitton’s sense of humor in the summary judgment ruling, the court wrote a cogent decision as to why MOB was not entitled to an award of attorneys’ fees and costs as a prevailing defendant. The court reiterated that Louis Vuitton “certainly needs to learn how to take a joke,” but “[i]ts lack of a refined sense of humor” is “not a reason to pile on further by awarding MOB – however sympathetic its cause may be – attorneys’ fees and costs.” As a threshold matter, Judge Furman discussed whether the Supreme Court’s ruling in Octane Fitness, LLC v. ICON Health & Fitness, Inc. on what constitutes an “exceptional case” for an award of fees under the Patent Act should apply to Louis Vuitton’s trademark and copyright claims.  Prior to the Octane Fitness ruling, the Second Circuit had held that a prevailing defendant in a trademark infringement case must show “fraud or bad faith” to receive attorneys’ fees. The Supreme Court in Octane Fitness rejected a similar standard for patent disputes and held, instead, that an “exceptional case,” given the “totality of circumstances” is “simply one that stands out from others with respect to the substantive strength of a party’s litigating position (considering both the governing law and the facts of the case) or the unreasonable manner in which the case was litigated.” Non-exclusive factors that may inform the analysis include “frivolousness, motivation, objective unreasonableness (both in the factual and legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence.” The Second Circuit has not yet ruled on whether the Octane Fitness standard applies to trademark claims under the Lanham Act, although some district courts within the Second Circuit have already decided that it should.  Judge Furman determined that it was unnecessary to decide the question because “even if the more lenient Octane Fitness standard applies,” MOB was not entitled to an award of attorneys’ fees and costs. Judge Furman cited a number of factors in support of his decision, including: While neither the district court nor the Second Circuit thought the case to be “a particularly close call”, Louis Vuitton’s arguments were not objectively unreasonable as a legal or factual matter Louis Vuitton’s trademark dilution and infringement claims required the application of a fact-intensive multifactor analysis, making it difficult for Louis Vuitton to predict the likelihood of success Even though the district court ultimately found MOB’s totes to be a parody, a finding of parody did not necessarily resolve trademark infringement or dilution claims Louis Vuitton’s arguments could not be viewed as “frivolous or a mere shakedown” or “objectively unreasonable” There was no evidence that Louis Vuitton knew or willfully ignored evidence of the meritlessness of its claims Louis Vuitton did not litigate the case in an “exceptionally vexatious and coercive manner” - most of the litigation conduct challenged by MOB was “well within the metes and bounds of acceptable, if aggressive, litigation tactics” and one asserted example, filing an oversize or improperly spaced brief without permission, is “not particularly uncommon, even if it is regrettable” The court further addressed MOB’s characterization of Louis Vuitton as a “trademark bully” and its argument that fees and costs should be awarded to “deter litigation abuse.” While the court agreed that Louis Vuitton’s enforcement efforts had been aggressive over the years, the court offered three reasons why that did not warrant an award of fees and costs: (1) “the Court is sensitive to the fact that the law compels trademark owners to police their marks or risk losing their rights”; (2) given the size and nature of Louis Vuitton’s business, “it is no surprise that the company is involved in a lot of trademark litigation” and thus the court would need a better record “before adding its judicial imprimatur to the ‘trademark bully’ label”; and (3) putting aside “conclusory aspersions,” MOB did not present any “concrete evidence” that Louis Vuitton was solely or even primarily motivated in this case by an improper desire to chill parody or stamp out a smaller competitor”. Accordingly, “considering the totality of circumstances” the court concluded that this was not an “exceptional case” under the Lanham Act. Judge Furman then turned to the Copyright Act and the court’s discretion to award fees to a prevailing defendant, giving “substantial weight to the objective reasonableness of the losing party’s position in determining whether attorneys’ fees are appropriate” in light of all other circumstances. The court held that its analysis and conclusions with respect to awarding fees under the Lanham Act “all but compel denial” of MOB’s application under the Copyright Act.

Yes, you read the title of this post correctly – Judge Rogers of the Northern District of California granted summary judgement in favor of Starbucks in a proposed class action lawsuit alleging that the coffee company deceived consumers by underfilling lattes and mochas. The plaintiffs’ filed suit alleging common law breach of express warranty and fraud; violation of California’s Consumers Legal Remedies Act; unfair competition and false advertising under California law; unfair trade practices under New York law; and unfair trade practices under Florida law.  Plaintiffs’ supported their own motion for summary judgement with an expert declaration about cup volumes, measurements taken by plaintiffs of the alleged underfilling, two online surveys about consumer expectations and a detailed, expert analysis of Starbucks' steaming pitchers and recipe cards. In the end, common sense prevailed and the court found that “no reasonable consumer would be deceived into believing that Lattes which are made up of espresso, steamed milk, and milk foam contain the Promised Beverage Volume excluding milk foam.” (emphasis in original).  Thus, all of plaintiffs’ arguments, which ignored the volume of foam in a Starbucks latte, were rejected by the court.

Did you celebrate with a sip of Champagne on New Year’s Eve? Champagne is not just a sparkly beverage consumed around the world, it also refers to the region in northeastern France where the drink originated. For centuries, this region has grown, produced, and labeled its sparkling wine under the “Champagne” name. However, California vintners have produced and labeled their own sparkling wine as “champagne” since the 1860s, a clear contradiction of the drink’s geographic origin. A quirk of US intellectual property law—and extensive negotiation with the European Union—will allow this unusual labeling to continue. Wine producers, from the United States and France alike, rely on geographic terms like “Champagne” or “Napa Valley” to inform consumers about the quality and characteristics of their wines, even if that consumer has never heard of their brand. In 1919, France was the first country to legally recognize a specific form of intellectual property protection, “geographic indicators.” These geographic indicators are used to label products that directly specify a product’s particular geographic origin, like “champagne” from France or “parmigiana reggiano” from Italy. Numerous other countries—but not the US—have followed suit since then by adopting geographic indicators as a form of intellectual property protection, and also extending local courts’ jurisdictions to hear disputes under such laws. The geographic indicator “Champagne” has been protected throughout Europe since 1992 under European Community (“EC”) regulations, meaning no other wine producer in the EC can make, bottle, and sell a sparkling wine under the “champagne” label. For EC member countries, geographic indicators are similar to trademarks, but are an entirely separate category of intellectual property, given special legal status separate from trademark law protection. Once a geographic indicator is registered, it confers certain exclusive rights on the owner, which, in turn, allows the owner to use the geographic indicator to create market recognition of its product, add a premium price mark-up to the product, and protect the association of certain food or beverage characteristics with that region. Conversely, in the United States, geographic indicators are a sub-set of trademark law; as a matter of historic practice and precedent, Congress has refused to grant geographic indicators full intellectual property rights, isolating the United States from others countries, particularly the European Union, on the issue. According to the U.S. Patent and Trademark Office, geographical indicators serve the same function as trademarks and thus, are potentially registrable as certification or collective marks if they meet the necessary requirements. While these two types of registered marks (as opposed to geographically descriptive marks, which can be registered upon proof of secondary meaning) usually run parallel with geographic indicators of the European Union, an essential feature of trademark law causes them to diverge. Words that are “generic” cannot be protected as trademarks. In the United States, champagne became so synonymous with sparkling white wines in general—describing a class of goods, not the source of the goods—it no longer describes the region of origin of the wine. Therefore, under U.S. trademark law, the term champagne appears to be generic, and thus incapable of trademark protection. The United States and the European Union have negotiated and disputed this issue through trade agreements, the World Trade Organization, and litigation. The negotiations finally concluded in 2006 when United States agreed to ease trade restrictions it had previously placed on European Union wine products in exchange for removing certain names from its domestic wine labels, including champagne. However, this agreement was not retroactive and any names used prior to March 10, 2006 could continue being used indefinitely. While no future wine labels may bear the name “California Champagne,” the ones already in existence have the right to continue their labeling practices, to the frustrations of many French winemakers and organizations. In an effort to regain the prominence the term “champagne” once held, French winemakers have initiated a public policy campaign to educate wine lovers of all kinds—if your sparkling wine was produced in Champagne, France, feel free to call it champagne! However, if it was bottled in California, it should be referred to as “sparkling wine.” The same goes for prosecco from Italy and cava from Spain!

Domain name registrars and registries might soon be changing their mantra from, “I think ICANN,” to, “Maybe ICANN’T,” when it comes to providing publicly available WHOIS information for domain name registrants.  New potential models for WHOIS will be posted January 15, 2018, and attempts to salvage at least most of the existing WHOIS system are underway. ICANN, the Internet Corporation for Assigned Names and Numbers, is an international nonprofit organization responsible for creating and maintaining rules related to domain names.  Among other things, ICANN contractually requires accredited domain name registrars (companies selling domain names to the public) and certain domain name registries (companies that manage domain name extensions) to maintain a free, publicly available WHOIS database from which anyone may obtain basic contact and technical information about domain name registrants.  This data includes information like the domain name registrants’ names, addresses, email addresses, and phone numbers.  Registrars that fail to comply with these requirements are in breach of their agreement and risk losing ICANN accreditation. But registrars and registries now find themselves between a rock and hard place when it comes to providing required WHOIS data in light of changes to EU privacy law under the General Data Protection Regulation (“GDPR”), which become effective on May 25, 2018.  We have written previously about the GDPR in other contexts here and here. In a nutshell, the GDPR imposes duties on companies based in the EU or offering goods and services to EU residents requiring these companies to protect all data that relates to a living individual, even where that data is publicly available or voluntarily submitted by the individual.  EU residents also have various rights, including the right to object (opt-out) and the right to be forgotten (erasure/data cleansing).  Consent to use data cannot be folded into online terms and conditions (like those agreed to during the registration of most domain names) and it may be withdrawn.  Companies that fail to comply with the GDPR may face enormous fines of up to €20 million or 4% of global annual revenue, whichever is greater.  Because much of the information available in WHOIS databases is governed by the GDPR (when it relates to EU registrants), these organizations are concerned about their ability to comply both with ICANN’s contractual requirements for public disclosure of personal WHOIS data and the GDPR’s data protection requirements.  Given the massive fines at stake under the GDPR, it is not surprising that many are opting to shirk ICANN’s WHOIS requirements as they prepare for the GDPR’s implementation. For its part, ICANN has acknowledged the conflict and has created a Protection/Privacy Issues webpage with updates on its consideration of the issue.  ICANN received a letter from the EU’s Article 29 Working Party in December saying that the current WHOIS system does not comply with the GDPR and the goals of WHOIS may be met by developing a system of layered access in which different users receive access to different sets of data. For the time being, ICANN is investigating options and has stated and that it will defer taking action for noncompliance with its WHOIS requirements if registries and registrars share their models for complying with the GDPR, their analysis of how each model complies with the GDPR and ICANN obligations, and a description of how the disclosed model does not simply abandon all WHOIS obligations.  It has asked for models to be submitted by January 10, 2018, and plans to post the models on January 15, 2018.  These submitted models are being evaluated by an outside law firm, which will present a number of options to ICANN, presumably so that it may either adjust its WHOIS policies or provide guidance to registrars and registries on how to comply with both the GDPR and WHOIS obligations. In its latest memo to ICANN (December 21, 2017), the outside law firm describes how layered access to WHOIS would significantly increase the cost and burden on registrars who are not in a good position to assess legally who should receive which type of access to WHOIS.  It recommends that layered access be considered as a temporary solution only.  It suggests that ICANN negotiate with EU regulators to allow the current WHOIS system to continue to exist long-term, with the same information publicly available (except for email addresses, which it deems unnecessary for enforcement activities).  It notes that similar information is currently publicly available in trademark registers. In the meantime, this conflict is likely to have a negative impact on the ability of brand owners to enforce their rights against domain name squatters and infringers.  If registries and registrars are unwilling to provide WHOIS data, it will be more difficult to ascertain the identities and contact information for infringers, either for purposes of sending demand letters or establishing patterns of abuse.  It could also make it difficult to file complaints under the Uniform Dispute Resolution Policy (“UDRP”), which requires that a complainant list the contact information for a domain registrant as it appears in the WHOIS database.  If the WHOIS information is not available, it is unclear what information, if any, a complainant would be required to include in the complaint to ensure it is complete and whether an arbitrator or registrar reviewing the complaint could refuse to act based on a lack of information.  Even if WHOIS information is available under a new, layered access system, the increased effort required to obtain ownership information will likely increase enforcement costs for brand owners. For now, it appears that ICANN is serious about trying to resolve the issue.  We will keep our readers updated on changes to this developing situation.

On December 15, 2017, a Federal Circuit panel held the Lanham Act prohibition against registration of “immoral” or “scandalous” marks (interpreted to include vulgar terms) unconstitutionally restricts free speech, and therefore the Patent and Trademark Office’s refusal to register the mark FUCT for clothing was improper.  In re Brunetti, 2017 U.S. App. LEXIS 25336.  The case can be seen as an obvious extension of the Supreme Court’s recent and unanimous holding that the Lanham Act’s prohibition against the registration of disparaging marks is likewise unconstitutional.  See Matal v. Tam, 582 U.S. ___ (2017). Perhaps because the various opinions in Matal v. Tam cautioned that it shouldn’t be read to necessarily strike down aspects of the Lanham Act other than the disparagement prohibition, the Federal Circuit again waded deep into the thickets of First Amendment jurisprudence.  The government attempted to distinguish immoral and scandalous marks from disparaging marks on the basis that prohibiting disparaging marks constitutes viewpoint discrimination and was therefore subject to strict scrutiny, whereas prohibiting immoral and scandalous marks is a viewpoint neutral restriction of commercial speech and therefore subject to intermediate scrutiny.  In this author’s view, the Federal Circuit could have held that the immoral and scandalous prohibition also constitutes viewpoint discrimination when, for example, the immoral and scandalous prohibition have been used to reject marks seen as blasphemous.  But the panel went on to hold that the prohibition of scandalous and immoral marks is unconstitutional even under intermediate scrutiny. One judge on the panel would have upheld the scandalous and immoral prohibition for marks that are obscene and therefore not protected by the First Amendment, but the other judges declined to make any such carve out; time will tell if this judge’s view or anything else will embolden the government to seek an en banc rehearing or otherwise seek to undo the panel decision in whole or in part. Assuming the panel decision stands, one may wonder if other Lanham Act prohibitions of the registration of certain marks based on their content are subject to a similar First Amendment challenge. None of the opinions cast doubt on by far the most common bases of rejection—that marks are confusingly similar to other marks or are merely descriptive.  But a number of miscellaneous prohibitions against the registration of marks based on content, for example, the prohibition against the registration of marks comprising governmental flags, may now be questioned.  While the seemingly important issue of whether these prohibitions should be evaluated under strict or intermediate scrutiny remains undetermined, so far the courts have found the restrictions to be unconstitutional regardless.

As TheTMCA.com wraps up a successful 2017 (we were named one of the ABA's top 50 blogs! and Law.com profiled one of our editors) we want to thank our clients, friends and readers who support our blog. In case you missed them, here are our top 10 most viewed posts of 2017, from the Federal Trade Commission’s guidance on social media posts, to new TTAB and USPTO rules, and Seussisms to guide you through fair use. TOP 10 MOST VIEWED POSTS OF 2017 Phish Snared in Trademark Office’s Net Due to Phan Products Change is Coming: New Rules for TTAB Opposition and Cancellation Proceedings Fair Use on The Loose For The Great Dr. Seuss! Who Owns That Trademark – The Manufacturer or the Exclusive Distributor? New Federal Law Protects Consumers’ Right to Post Negative Online Reviews Dear Influencers: It’s the FTC, Again – FTC Issues 21 Follow-up Warning Letters Sued for Retweeting – Yes, That Just Happened Dear Influencers: #FullDisclosure we use Instagram too. Love, The FTC – Warning letters provide guidance to influencers, celebrities and brand owners Launched July 8, 2017: New USPTO Rules to Clear “Deadwood” in the Federal Trademark Registry Another IP Lesson from Bikini Bottom: What “The Krusty Krab” Teaches Us About Trademark Protection for Fictional Places We wish you a happy and prosperous 2018!

Fan boys and fan girls may soon see changes to the names of their favorite pop culture events given a federal jury’s recent ruling that the term “Comic-Con” is not generic, but instead a valid, federally-registered trademark owned by San Diego Comic Convention. Following a ten-day trial, a jury in the Federal District Court in San Diego recently ruled that San Diego Comic Convention’s family of “Comic-Con” trademarks were valid, and that its competitor Salt Lake Comic Con infringed San Diego Comic Conventions’ valuable trademark rights in promoting its convention under the “Salt Lake Comic Con” name. The successful result was achieved in a suit filed in 2013 by San Diego Comic Convention against Dan Farr Productions, Bryan Brandenburg, and Daniel Farr alleging that Salt Lake Comic Con had exploited San Diego Comic-Con’s “creativity, ingenuity and hard work” through the unauthorized use of its trademarks to advertise and promote its event.  According to its initial filing, San Diego Comic-Con’s marks have become valuable assets and a symbol of San Diego Comic-Con’s positive industry reputation. The three-day San Diego Comic-Con convention is a comic book and popular arts convention held annually in San Diego since 1970.  Over the past four decades the event has grown to be the premier event in geekdom, showcasing comics and comic books, as well as popular video games, film, and television.  In 2017, the event drew over 130,000 attendees and highlighted exclusive footage from major Hollywood productions, including blockbuster films such as Thor: Ragnarok and Justice League, as well as television’s Game of Thrones. In response to San Diego Comic Convention’s lawsuit, the Defendants alleged that the “Comic Con” mark had become weak based on the frequent use of the term both before and after San Diego Comic Con began use, and that prior to San Diego’s use or registration of the mark, the term “Comic-Con” had been used to describe comic book conventions.  The Defendants further claimed that the general public understands the words “comic con” or “comic-con” to refer generally to comic conventions.  Additionally, Defendants argued that even if the registration had been valid in 1998 when the COMIC CON INTERNATIONAL mark was first registered with the United States Patent & Trademark Office, it had become generic over time.  According to Dan Farr Productions, San Diego Comic Convention’s failure to police its mark has led competitors and consumers to use the term as a generic name for comic conventions, resulting in over 100 events nationwide incorporating the term “Comic-Con.”  The jury rejected the defense that San Diego Comic Convention’s “Comic-Con” mark was invalid based on genericness. While San Diego Comic Convention requested $12 million in damages, the jury only awarded $20,000 for corrective advertising, deciding that the infringement was not willful.  Additionally, the jury found that Dan Farr Productions was not liable for making any false designations of source or origin by its use of the term “Comic Con.” The Defendants say that they plan to appeal, but it is not yet clear what the full impact of the decision will be.  Following the jury’s decision, San Diego Comic Convention has stated it will seek a permanent injunction to prevent Salt Lake City Comic Con’s future use of the “Comic-Con” mark.  This could have large ramifications in the world of comic and media conventions, given the widespread use of the term “Comic-Con.”  Variations of the term “Comic Con” are currently used by over 140 competitors nationwide for numerous comic book and entertainment conventions.  These include Seattle’s Emerald City Comic Con, Baltimore Comic Con, Motor City Comic Con in Detroit, and New York Comic Con, to name a few.  San Diego Comic Convention initially went after Salt Lake Comic Con following Salt Lake Comic Con’s attempted promotional activities during San Diego Comic Con in 2014, including a Salt Lake Comic Con-branded vehicle driven throughout downtown San Diego.  Now that San Diego Comic Convention has achieved this verdict, they will likely demand these other events change their names, and cease use of the “Comic-Con” mark. The TMCA will continue to update you with the latest developments in the case and the ongoing effort to protect the “Comic-Con” mark.

On December 7, a federal jury in Los Angeles awarded $846,720 in damages to Unicolors, Inc. in its suit against H&M Hennes & Mauritz, LP for copyright infringement of a textile design. Unicolors, Inc. v. H&M Hennes & Mauritz L.P., Case No. 2:16-cv-02322 (C.D. Cal). Here is a comparison of the designs at issue that led to a finding of willful infringement: THE WINNING ARGUMENTS: Unicolors argued that it only needed to prove the “possibility of access” and substantial similarity in order to demonstrate infringement and that the possibility of access could be established by its widespread dissemination of its work (selling  over 40,000 yards of its pattern to numerous customers) before H&M sold its products.  Further, Unicolors contended that the two designs were “strikingly similar” – i.e., that similarities between the designs could only be explained by copying, rather than by “coincidence, independent creation, or prior common source.” Unicolors urged that small differences in the designs should be “disregarded,” because on the human form, small differences fade within a few feet of distance from the wearer, and that small differences in the designs could actually be evidence of willful infringement.  It also argued that H&M was reckless, if not willful, in continuing to sell the allegedly infringing goods after it was on notice of Unicolors’ claim. THE LOSING ARGUMENTS: In defense, H&M relied on the following theories: It did not “design, manufacture, distribute,” or have “anything to do with the creation or selection” of the allegedly infringing product; The design H&M used was protected by a Chinese copyright obtained in 2014 in China (and a U.S. copyright obtained in 2017); Unicolors failed to present “some evidence” of copying, pursuant to the Ninth Circuit’s decision in United Fabrics, International v. C&J Wear, 630 F.3d 1255, 1257 (9th Cir. 2011); To date, no court has permitted a plaintiff to rely on the “strikingly similar” doctrine where the accused design is protected by a copyright registration; The producer of H&M’s design provided “credible evidence” of its independent creative process, including a “written paper trail”; Unicolors did not have any evidence of prior access by either H&Ms or the designer (a Chinese entity) prior access to Unicolors’ design; and It had six-figure losses on the goods LESSONS FOR THE FUTURE: Although jury verdicts are often unpredictable, a few themes emerge from a review of Unicolors’ success: If you are on notice of a potential infringement, continuing to sell the products in dispute can lead to enhanced damages and a finding of willfulness; Cases involving textile designs can be hard to predict; although there may be only a narrow scope of protection, minor differences may not be enough to convince a jury that the designs are not substantially similar; and Evidence of independent creation must be credible and convincing.

  You know of this lawsuit, we’ve blogged on it twice, It’s time for a check-in, to see who’s naughty and nice. The Plaintiff as you know is the heir of Dr. Seuss, And fussing and fuming about an alleged unfair use. The work that’s at issue is one that you know, It’s a book of acclaim called “Oh, The Places You’ll Go!” The Defendant was sued a year ago this November, A federal court skirmish we will forever remember. The Seuss complaint built on legal mortar and bricks, It took aim at the Defendant called ComicMix. The accused work was a copy, purloined as you know, And given the title “Oh, The Places You’ll Boldly Go!” Why choose this title?  Did Defendant not check? It’s actually a mashup of Dr. Seuss and Star Trek. But Defendant didn’t whimper or slink off into the night, Instead it said, “Hey Dr. Seuss, We’re ready to fight!” So fight did Defendant with great passion and devotion, And responded to the complaint with a 12(b)(6) motion. The court almost seemed ready to find Boldly was fair, But last summer ruled that the evidence was a tad bit too bare. Fair use was denied at that stage of the proceeding, And the case carried on with an amended pleading. The new complaint was loaded and packed quite a wallop, Copyright claims and a trademark dollop. The Defendant unfazed by Plaintiff’s new legal potion, Dashed off to court with a second 12(b) motion. Would it prevail?  Would it score a fair use goal? Sadly for Defendant, it scored a big lump of coal. The court rejected the motion, to Plaintiff’s great glee, No present for Defendant under the Christmas Tree. So this skirmish continues there is no end in sight, Lanham Act claims mixed with copyright. We will keep updates coming, TheTMCA will be here, Happy Holidays to all and a Happy New Year!

Social media has created a minefield of concerns for both employees and employers. The news is full of stories of employees documenting their questionable off-duty conduct on social media, or posting comments containing racist or derogatory remarks. Often, the employer—or sometimes, the rest of the online community—will demand that the employee be fired. In such a scenario many employers may be wondering: What could prevent an employer from lawfully terminating an employee based on social media activity, and what steps can employers take to best handle these situations? Recent examples abound: Last year an employee of a large corporate bank was terminated following a racist rant on Facebook. Throngs of customers contacted the bank, threatening to close their accounts if the employee was not fired. The employee was promptly terminated for her “reprehensible” comments. Many readers may remember the notable case of a public relations director in 2013, who, before boarding a flight to South Africa, tweeted: “Going to Africa. Hope I don’t get AIDS. Just kidding. I’m white!” Despite her 170 followers, her tweet immediately went viral worldwide. By the time she landed in South Africa eleven hours later, her manager had informed her that she’d been fired. Most recently, on October 31, 2017, a marketing director for a government contracting firm was terminated after a photograph of her flipping off President Trump’s motorcade went viral on social media. In the wake of the September “white nationalist” marches, numerous Twitter accounts were created to identify and draw attention to the participants. Many employers have been inundated with demands that these individuals be terminated, and have been quick to distance themselves from the employees. In this situation, there are several things employers should consider. First, be aware of state and federal laws which may affect the way you might react to employee social media use. For example: Off-Duty Conduct Laws. Some states have laws prohibiting employers from disciplining or firing employees for activities pursued in their personal time—including the use of lawful substances such as medical marijuana and tobacco. Protection of Political Views. A few states (and some cities and counties) protect employees from discrimination based on their political views or affiliation. In such a state, terminating or disciplining an employee for purely political social media activity or for political conduct outside the workplace could be illegal. NLRB Protections. The National Labor Relations Act and similar state laws protect employees’ rights to communicate with one other about their employment. More specifically, employees have the right to engage in “protected activity” regarding their workplace—sharing grievances and organizing online in protected activity. Under these laws, an employee who is fired for posting online complaints about their wages, benefits, tip sharing, management, or hours, etc. could have a strong legal claim. As we noted in a recent post, this protection can be quite robust, leading to the reinstatement of a union employee fired after posting: “F*** his mother and his entire f***ing family!!!! What a LOSER!!!! Vote YES for the UNION!!!!!!!” (He was saved by the last sentence, which linked the rant to his union activities.) Prohibitions on Retaliation. Beyond NLRB protections, many employment laws protect employees from retaliation for claiming that their rights have been violated. If an employee complains online about workplace discrimination, harassment, or other legal violations, that employee may be protected. However, at the end of the day most states are “at-will” employment states, meaning both employers and employees are free to terminate the employment relationship at any time with or without reason. Therefore—if an employer determines that an employee’s speech outside the workplace runs counter to the employer’s values or public image, the employer could have solid grounds for termination. While this is not the case in all states (for example, Montana), in the vast majority of states employment is considered at-will. So long as the aforementioned laws are taken into account, chances are good that an employer can safely terminate an employee for objectionable conduct online. While consulting with legal counsel prior to any such termination is recommended, employers can take the following affirmative steps to provide proper procedure in the event of an employee’s worrisome or unacceptable online behavior. Social Media Use Policy. Adopt a policy, included in your handbook, informing employees that their personal social media accounts, online networking account, blogs, and general online posts could get them in trouble at work. Explain what types of content could create problems, including harassing and bullying behavior or discriminatory or offensive language. This can include online conduct that may be associated with the company or which could cause serious interpersonal problems in the workplace. Be Consistent. As with all employment policies, be consistent when enforcing your social media policies. If a female employee is terminated for posting objectionable material on the internet but a male employee is not for the same or similar conduct, the female employee may have a cause of action for sex discrimination. Always enforce your policies consistently to protect your company. Rebecca Bernhard, Jillian Kornblatt and Lily Dobson are members of Dorsey’s Labor & Employment practice group and are regular contributors to Dorsey’s Quirky Questions blog, where this post originally appeared.  The Quirky Questions blog addresses unanticipated, real life employment questions.

On the day after the airing of “Fortune Be Not Crost,” the sixth episode of season four of Fox’s popular show “Empire,” Fox had some good fortune of its own when the Ninth Circuit Court of Appeals affirmed a declaratory judgment of non-infringement involving “Empire.”  In Twentieth Century Fox TV v. Empire Distrib., Inc., the Court held that Fox’s use of the mark “Empire” in the show’s name and its marketing and promotional activities was protected by the First Amendment, and thus neither infringed nor diluted the trademarks of Empire Distribution, Inc., a record label, music distributor and publishing company focused on hip hop, rap, and R&B.  In doing so, the Court broadened the scope of permissible uses of otherwise protectable trademarks to include those uses auxiliary to protected expressive works. As we wrote in February 2016 after the district court decision, the case involves First Amendment constraints on Lanham Act enforcement, which may be triggered when an expressive work contains an allegedly infringing use (like when a TV show uses the title “Empire” that is allegedly subject to trademark protection).  There are two bases for treating expressive works differently: (1) they implicate First Amendment free speech rights that must be weighed against the public interest in avoiding consumer confusion; and (2) “consumers are less likely to mistake the use of some else’s mark in an expressive work for a sign of association, authorship, or endorsement.”  When an expressive work contains an allegedly infringing use, the Ninth Circuit applies the two-part test first announced by the Second Circuit in Rogers v. Grimaldi, 875 F.2d 994 (2d Cir. 1989) to determine if there is liability under the Lanham Act.  Under that test, if the allegedly infringing use has some artistic relevance to the expressive work, and does not explicitly mislead as to the source of the expressive work, then there can be no Lanham Act violation. In this case, the Ninth Circuit agreed with the district court that Fox’s uses of the “Empire” mark passed the Rogers test.  Of more interest, however, was the Court’s threshold determination that the test should be applied to all of Fox’s uses of the mark.  That decision appears to have expanded the scope of First Amendment protection to new categories of uses not previously protected. When the Rogers test was first announced (and when it was first adopted by the Ninth Circuit), it applied only to allegedly infringing uses in titles of expressive works.  In 2008, the Ninth Circuit extended the applicability of the test to allegedly infringing uses in the body of expressive works.  E.S.S. Entm’t 2000, Inc. v. Rock Star Videos, Inc., 547 F.3d 1095, 1099 (9th Cir. 2008).  Here, the Ninth Circuit had to analyze these apparent limitations in the context of Fox’s multiple uses of the “Empire” mark, which extend beyond the title and the content of the TV show.  Fox also uses the mark in connection with music released after each episode and on soundtrack albums at the end of each season.  In addition, Fox promotes the show and associated music “through live musical performances, radio play, and consumer goods such as shirts and champagne glasses bearing the show’s ‘Empire’ brand.” The Court began its analysis by concluding that the TV show, songs and albums were clearly expressive works subject to the Rogers test.  It then characterized Fox’s other uses, including the sale of consumer goods bearing the mark, as “promotional efforts” that are “auxiliary to the television show and music releases, which lie at the heart of [Fox’s] ‘Empire’ brand.”  The Court acknowledged that these promotional efforts fall outside the title and body of an expressive work, but nonetheless held that “it requires only a minor logical extension of the reasoning of Rogers to hold that works protected under its test may be advertised and marketed by name . . . .”  The Court reasoned that the First Amendment interests underlying the Rogers test could be “destabilized” if the titles of protected expressive works could not also be used to promote those same works. The idea that marks may be used to promote protected expressive works pre-dates this decision.  In fact, the Court noted that Rogers itself involved both a movie and its promotion. But the Ninth Circuit appears to have expanded the scope of uses protected by the First Amendment by broadly characterizing all of Fox’s uses as “promotional,” even those that earn revenues like the licensing and sale of consumer goods.  After this decision, one could contend that if an expressive work like a television show, movie, or song is protected under the Rogers test, then any arguably promotional activities for that expressive work are also protected, so long as they are “auxiliary” to that work. Empire Distribution has since petitioned for a panel rehearing and rehearing en banc; the petition is pending.  Relevant here, Empire Distribution distinguishes between uses that promote the title of the expressive work, such as articles and commercials, and the sale of goods and services under the “Empire” mark and the sale of musical recordings under the “Empire” brand, which Empire Distribution contends cannot be protected by the First Amendment.  If the petition is denied or the Ninth Circuit affirms its earlier decision on rehearing, those promotional vehicles for protected expressive works appear to have greater leeway to use marks in connection with those activities.

We’ve blogged about recent enforcement actions taken by the FTC against companies using deceptive “selfie” certification marks. These are seals of approval created by or otherwise affiliated with the companies whose products or services are being marketed, without disclosure of the material connection between the certifier and the company. Last week, the FTC struck again to put a stop to this practice in a Complaint and proposed Final Order filed against NextGen Nutritionals, LLC and related parties. The gravamen of the enforcement action against NextGen was deceptive and unsubstantiated weight loss and therapeutic health claims used to promote the company’s diet products. NextGen accompanied its false and unsubstantiated ad claims with “Certified Ethical Site” seals of approval. These seals included a “click to verify” link to content assuring consumers that the website had been “verified to be ethical and trustworthy” by Ethical Site, an organization dedicated to being “the most reliable evaluator of trust in the online business marketplace.” Ethical and Trustworthy? Not so much. Turns out that the Ethical Site seals displayed by NextGen were issued by a company owned by the same individuals who owned NextGen.  And not surprisingly, there was no disclosure of this material connection. The FTC Complaint alleged that the seals communicated the deceptive representation that Ethical Site was an independent third-party certification program for verification  of the ethics and trustworthiness of NextGen’s website content. The stipulated Final Order, as in the previous FTC enforcement actions against “selfie” certification seals, enjoins any further misrepresentation that “an entity providing an endorsement, seal, or certification is independent of the product or service advertiser.” The Order also imposes a $1.3 million judgment for NextGen’s various legal violations, most of which will be suspended in light of the defendant’s financial condition. Given the FTC’s ongoing regulatory focus on misleading certification seals of approval, any company continuing to display “selfie” certification logos would be wise to remove them!

For more than seven decades, the Arts sections of the New York Times featured cartoons by the famous artist Al Hirschfeld, whose works were celebrated for their clean crisp lines, as well as the artist's penchant for embedding the name of his daughter, Nina, in his images.  After a long, rich life, Hirschfeld died in 2003 at the age of 99.  Unfortunately, as is often the case with many artists, Hirschfeld left behind him a series of agreements concerning the licensing, sale and disposition of his works that have given rise to litigation, as reflected in a recent decision from the U.S. District Court for the Southern District of New York in Al Hirschfeld Foundation v. The Margo Feiden Galleries, Ltd., Case No. 16 Civ. 4135. Margo Feiden and her Galleries began selling Hirschfeld's works on consignment in 1969, and their relationship was formalized in an agreement that was in effect until 2000.  In that year, after a dispute between Hirschfeld and the Feiden Galleries arose, the parties entered into a new agreement.  After Hirschfeld's death, the plaintiff Al Hirschfeld Foundation succeeded to Hirschfeld's rights under that agreement, which remained in effect until 2016.  In that year, the Foundation took steps to terminate the parties' agreement, claiming that Feiden and her Galleries had materially breached their contractual obligations in multiple ways.  The Foundation also sought and obtained a temporary restraining order, and then a preliminary injunction, granting it certain relief attendant to the filing of its lawsuit seeking, among other things, a declaration that the Foundation's termination of the parties' agreement was proper.  For their part, the Feiden Galleries asserted various counterclaims against the Foundation. On November 7, 2017, the Court issued a decision and order granting partial summary judgment to the Foundation and against Feiden and her Galleries on several of the key contested claims and counterclaims in the case, namely whether the defendants had materially breached the parties' agreement such that the Foundation's termination was proper.  Rather than addressing all of the contractual breaches alleged by the Foundation, the court focused on two: (i) whether the Galleries had sold unauthorized reproductions of several Hirschfeld works in a manner not permitted under the license conferred by the agreement; and (ii) whether the Galleries were unable to account for twenty Hirschfeld works transferred to their custody on consignment.  On the second issue, the Court found that there were no genuine disputes of material fact that the twenty works had been transferred to the Galleries, but had gone missing.  The Court had little difficulty concluding that the loss of these works was a material breach of the Galleries' contractual obligations sufficient to warrant termination. Of greater interest to practitioners is the manner in which the first alleged material breach was addressed and resolved in favor of the Foundation.  For many years, Feiden and her Galleries had sold giclee reproductions of certain Hirschfeld works, in some cases in unlimited quantities.  A giclee is a high quality photostatic reproduction of a work of art made via an inkjet printer, and the Galleries took the position that they were permitted to sell giclee prints under various provisions of the parties' agreement, particularly one that allowed the Galleries to reproduce works "in connection with [the Galleries'] promotion, advertising and marketing in furtherance of [the Galleries'] rights under this Settlement Agreement."  The Court concluded as a matter of law that this provision allowed the Galleries to reproduce Hirschfeld's works for purposes of advertising and promotion, but not to create a new category of sales they could exploit.  The Court also concluded that the Galleries' interpretation conflicted with the overall structure of the agreement with respect to the categories of works the Galleries could sell and the financial terms on which such sales were permitted.  Indeed, even though giclees were a form of reproduction in existence in 2000 when the agreement was signed, it made no mention of them in specifying what the Galleries could sell and exploit, and how.  The Court went on to reject the Galleries' claim that the Foundation had waived this breach over time, finding that the presence of a "no waiver" provision in the agreement precluded that argument as a matter of law. The Court's decision highlights the importance of clarity in this and any other licensing relationship as to the scope of the rights being licensed by the licensor to the licensee.  Indeed, even though the parties' relationship had endured for decades, and even though the Galleries' sale of giclees was longstanding and publicly ascertainable, the Court found that the Galleries had exceeded the scope of the rights granted to them, and that this was a material breach.  As of this writing, the case remains pending as to other issues.