Federal Circuit’s COCKSUCKER Decision Sucks

December 20, 2012

cork soaker

As many long-time readers know, Section 2(a) of the Trademark Act is one of my pet peeves. This is the section of the Trademark Act that gives pretty much unfettered discretion to a trademark examiner to deny a trademark registration on the basis that the mark itself is “immoral” or “scandalous.” The Federal Circuit just decided In Re Fox, in which it reaffirmed some very bad law, and in which it lacked the integrity to address some Constitutional fictions upon which most 2(a) denials are based.

“[n]o trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it[] (a) [c]onsists of or comprises immoral, deceptive, or scandalous matter.” 15 U.S.C. § 1052.

One of the most absurd elements of a 2(a) denial is that the evidentiary standard is so open to abuse. An examiner may prove “immorality” or “scandalousness” by simply establishing that the mark is “vulgar.” In re Boulevard Entm’t, Inc., 334 F.3d 1336, 1340 (Fed. Cir. 2003). Essentially, if the examiner finds a single online dictionary or chat board where someone says “that’s vulgar,” then that is usually enough for the examiner, the TTAB, and the Federal Circuit.

So, another 2(a) denial is just a “ho hum” event. But, this portion of the opinion shows just how little respect the Federal Circuit has for Constitutional issues. I mean, come on guys, at least try and make it look like you didn’t just mail it in.

The prohibition on “immoral . . . or scandalous” trademarks was first codified in the 1905 revision of the trademark laws, see Act of Feb. 20, 1905, Pub. L. No. 58- 84, § 5(a), 33 Stat. 724, 725. This court and its predeces- sor have long assumed that the prohibition “is not an attempt to legislate morality, but, rather, a judgment by the Congress that [scandalous] marks not occupy the time, services, and use of funds of the federal government.” In re Mavety Media Grp. Ltd., 33 F.3d 1367, 1374 (Fed. Cir. 1994) (quotation marks omitted). Because a refusal to register a mark has no bearing on the applicant’s ability to use the mark, we have held that § 1052(a) does not implicate the First Amendment rights of trade- mark applicants. See id. (Op. at 2)

I find it outrageous not just because the court is wrong, but because the court was so glib and dismissive of the First Amendment.

Trademarks propose a commercial transaction; speech that proposes a commercial transaction is “commercial speech” and thus subject to First Amendment protection. Virginia State Bd. Of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 762 (1976). Trademarks convey messages about the type, cost and quality of the product or service associated with the mark. See Friedman v. Rogers, 440 U. S. 1, 11 (1979). The trademark is a tightly targeted bit of expressive activity that seeks to persuade a potential customer to choose one product over another, either due to the identification of goods or to the communicative element of the trademark itself.

Thus far, all USPTO decisions regarding the constitutionality of Section 2(A) rely upon the improperly decided case In re Robert L. McGinley, 660 F.2d 41 (Fed Cir. 1981).

McGinley is where we get the idea that since trademark applicants are still free to use the trademarks, then there is no abridgment of speech if your trademark is denied registration due to its content. However, this reasoning is simply shoddy and contrary to a body of First Amendment jurisprudence. For example, in striking down New York’s “Son of Sam” law, which prohibited criminals from profiting from writing books about their crimes, the Supreme Court held “[a] statute is presumptively inconsistent with the First Amendment if it imposes a financial burden on speakers because of the content of their speech.” Simon & Schuster v. New York State Crime Victims Bd., 502 U.S. 105, 115 (1991). In the Son of Sam case, the authors were still free to write, but were denied the financial benefits of their labors. That was the end of that law. This appears to completely dispense with the McGinley reasoning.

Bad Frog Brewery, Inc. v. New York States Liquor Authority, 134 F.3d 87 (2d Cir. 1998) analyzed a similar issue. In that case, the appellant sought to use a trademark of a frog giving the finger. The Second Circuit held that since trademarks are commercial speech, prohibition on use of so-called “offensive” trademarks did not advance the stated governmental purpose of protecting children from vulgarity or promoting temperance, nor was it narrowly tailored to serve that purpose. Not binding on the Fed. Cir., but I think that the Fed. Cir. is the wrong place to challenge McGinley. There is no indication that the Fed. Cir. will ever admit that it was wrong in McGinley, and every time it gets a chance, it doubles down.

Finally, there can be no clearer authority for the death of Section 2(a) than Lawrence v. Texas. (“The fact a State’s governing majority has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice.”)

“Morality” is not a valid reason to confer or deny a governmental benefit – instead the government must articulate a reason why registration of a mark might be harmful, and then apply that reason to the particular circumstances at hand, in a narrow manner. The government has done none of this in this case, nor in any other 2(a) denial.

2(a) Delendum Est!

Sticking up for the big guy: United v. Untied.com

November 29, 2012

I got this story in my inbox — that United Airlines was trying to bully a website that is dedicated to complaining about United Airlines – Untied.com.

United Continental Holdings has sued a Canadian professor who maintains the 15-year-old complaint website Untied.com, which airs complaints from disgruntled United Airlines passengers and employees.

Two suits filed in Canadian courts allege the complaint site violates the airline’s copyright and trademarks. It also alleges the site violates the privacy of senior airline employees by posting contact information for those employees.

Reading that, I got all ready to write a post about what assholes United and its lawyers must be. Imagine my disappointment when I didn’t really get to do that.

The article continues:

United said it is not trying to prevent the site’s owner, Jeremy Cooperstock, from operating a website where people can express their views about United, but instead is trying to protect its intellectual property, such as its logo, and trying to alleviate confusion by United customers who might think they are filing a complaint with the airline on Untied.com.

“We are not requesting the website be shut down,” said United spokeswoman Megan McCarthy.

It was only after an April redesign of Cooperstock’s site, which made it look more like the new United.com, that the airline asked him to modify his site so customers would not be confused, she said, adding that the move was to protect customers and that the airline tried to resolve the matter without going to court.

It looks like United is not concerned about the content on the site, but how it is delivered. The site does look a lot like United’s. There are disclaimers everywhere, but I still don’t see United’s position being all that unreasonable. Yes, almost any idiot should be able to figure out that they are not really at United’s website. On the other hand, the fact that “untied” is a pretty common typo for “united,” coupled with the similarity in look-and-feel, makes United Airlines’ position a lot more reasonable.

If all they are asking is that the gripe site change some site design elements, this does not raise my hackles.

UPDATE: Since the site untied.com seems to have been taken down, here is a side-by-side comparison of the Untied.com and United.com websites.

Some out there, who don’t really understand trademark law, seem to believe that disclaimers on the Untied.com site mean that nobody would be confused by the mock United site. Others say that only a “moron in a hurry” could be confused by the two. I think that such opinions are ill-informed, and the product of the same instincts that I have — a knee-jerk reaction to start off on the side of the little guy against the big corporation; to immediately (without analysis) think that any attack on a critic’s site is an attack on free speech.

I look at these kinds of cases with a rebuttable presumption that the big bad corporation is the bad guy. That presumption, in this case, seems to be rebutted.

The first rebuttal comes from the information that United let the site go for 15 years, and only complained when the gripe site changed its site design. Historical screen captures show that the site didn’t used to look like that.

The second rebuttal comes from this: “Cooperstock offered to work for United as a paid consultant advising the airline on how to improve customer service. United declined.” If that is true, it is not entirely dispositive. Nevertheless, it does skew the optics of the situation a little. I would be interested to see Cooperstock’s response to that.

The third one comes from Canadian trademark law. Cooperstock is Canadian, and the case was filed in Canada. Mattel, Inc. v. 3894207 Canada Inc., 2006 SCC 22, [2006] 1 SCR 772 gives us some instruction. In that case, the Canadian Supreme Court held that a court should measure the “likelihood of a mistaken inference” from the perspective of the “ordinary hurried purchaser.” The court considered the “ordinary hurried purchaser” to lie somewhere between the “moron in a hurry,” and the “careful and diligent purchaser.” The court relied upon Delisle Foods Ltd. v. Anna Beth Holdings Ltd. reflex, (1992), 45 C.P.R. (3d) 535 (T.M.O.B.), whic stated at pp. 538-39:

When assessing the issue of confusion, the trade marks at issue must be considered from the point of view of the average hurried consumer having an imperfect recollection of the opponent’s mark who might encounter the trade mark of the applicant in association with the applicant’s wares in the market-place.

As Cattanach J. explained in Canadian Schenley Distilleries, at p. 5:

That does not mean a rash, careless or unobservant purchaser on the one hand, nor on the other does it mean a person of higher education, one possessed of expert qualifications. It is the probability of the average person endowed with average intelligence acting with ordinary caution being deceived that is the criterion and to measure that probability of confusion the Registrar of Trade Marks or the Judge must assess the normal attitudes and reactions of such persons.

When we consider the issue of “initial interest confusion,” I think that Mr. Cooperstock has some problems. In fact, it seems to be a testament to United’s patience that they did not go after the Untied.com domain name a long time ago.

When looking at this, it is important to understand that there are two types of people who will be dissuaded from doing business with United: The first group are people who read the message on Untied.com, which boils down to “United sucks.” If Cooperstock convinces you of that fact, then that is the marketplace of ideas in action. That is Mr. Cooperstock providing a valuable service, and properly exercising his right to free expression.

On the other hand, there is a second group — a group that comes to the website through mistake, who lingers just a little bit, and by the numbers, a portion of them move on to other websites.

You see, the issue of consumer confusion is not resolved with the simpleton analysis of “nobody would buy a plane ticket from untied.com.” The issue is that more than a few consumers will type “untied” instead of “united” every day — just through the likelihood of that common typographical error occurring. If you are an “ordinary hurried purchaser,” you may get to that site, even with a popup disclaimer, and spend a few minutes there before you realize that you are not, in fact, at United.com.

What do you do then?

Most people would then do what they could to find the right website. But, it wouldn’t take a genius to realize that a certain percentage of people, who might otherwise have bought a ticket, will put it off, or not buy at all, just because the impulse passes. Another percentage may have sought out United.com, just for information, who then lose interest. Remember, a business’ website is not merely a place to purchase tickets. It is a valuable segment in its branding strategy. The pop-up and disclaimers are of little value, given that the average consumer isn’t likely to read the pop up or the disclaimers. When it comes to initial interest confusion on the Internet, even a few seconds’ long detour will cause some harm to the mark owner.

The fact is, a certain number of United’s consumers suffer inconvenience due to the site, and independent of the message on the site, they are driven away from doing business with the airline.

Were I judging this case, I’d say that Cooperstock has every right to say every last thing he says on his website. But, I think his choice of domain, and his attempt to make the site look and feel like United.com, both crossed the line. I think it went even further if United asked him, pre-suit, to simply make some design changes, and he refused. It goes over the cliff if United’s claim that Cooperstock offered to provide his “customer relations services” for a fee.

Sorry guys, I love the little guy as much as anyone else. I never fly United either, mostly because their website is a nightmare to navigate, and I haven’t thought too highly of their customer service either. But, sometimes the little guy is out of bounds.

Wanna own the Righthaven trademark?

May 2, 2012

By J. DeVoy

Hey, you! Give your failed life some meaning by purchasing Righthaven’s registered servicemark!  Available now on eBay!


From the “I’m So Clever” File

April 26, 2012

Federal Judge Slaps Back Dino M. Zaffina in Darts Trademark Battle – Los Angeles News – The Informer


Odd story.  Basically, some dart fan joins the Southern California Darts Association.  They snub him by not using his middle initial, unlike, say, the SAG forcing Michael Fox and Jim Bullock to add middle initials.  So, he finds out that there is no corporation with that name (as the former corporate entity lapsed).  He registers a corporation with that name and tries to stop the association from using that name.  After some surprising initial success, he met with a big ole Fail.

Not sure why he met with initial success (and no, I’m not making a pun regarding the snub), since this is a pretty straight forward issue.  These folks were using the name.  You can’t bounce them out simply by incorporating with that name.  That would be like discovering that “The Beatles” never formed a corporate entity, so you register “The Beatles, Inc.” and try to keep Sir Paul and Ringo from making appearances together as a “Beatles Reunion”.  Prior use, for the win.

Bieber Bang Bus Presents

March 6, 2012

Navajo Nation Sues Urban Outfitters for Trademark Infringement

March 6, 2012

Last week, the Navajo nation sued Urban Outfitters for trademark infringement, trademark dilution, unfair competition, and a violation of the Indian Arts and Crafts Act for selling products branded as “Navajo” at its stores. The products? “Hipster Panties,” socks, and of all things, a flask. Yes, a flask. Complaint here.

The incredible un-coolness of that just stuns me. Urban Outfitters should know better than to use a Native American tribe’s name on its products without permission. But, to not only misappropriate the Navajo nation’s name, but to put it on a flask? Really? Really?

I’m certainly not the most politically correct guy, and I won’t be winning any sensitivity awards this year. But, you don’t need to be an anthropologist to have a clue about what a toll alcoholism has had on the Native American population. Urban Outfitters are a bunch of dicks. I hope the Navajos kick their ass.

Judge rules court has no personal jurisdiction over Faceporn.com

March 6, 2012

U.S. District Court Judge Nathanael Cousins recently denied Facebook’s motion for default judgment against Faceporn.com, a website operating out of Norway, for trademark infringement. Judge Cousins said the court lacked personal jurisdiction over the defendants and recommended that the case be dismissed.

Facebook originally brought suit against Thomas Pedersen and Retro Invent citing ten causes of action, including trademark dilution, violating the Facebook mark and wall mark, among others. The court concluded that Facebook failed to show that the defendants had purposefully directed their activities at California, pursuant to the three-pronged Calder test. In order to show that a defendant expressly aimed the intentional conduct at a forum state, the Ninth Circuit requires that the plaintiff show “something more.” The court determined that Facebook failed to show “something more” because “they did not establish that “Faceporn’s users in California were an integral component of Faceporn’s business model and profitability.”

Instead, Facebook attempted to argue that jurisdiction was proper because the defendants intended to target Facebook by “offering a pornographic version.” Facebook further claimed that the plaintiff can establish that nonresident defendant aimed its conduct at the forum by showing that the defendant illegally copied elements of a plaintiff’s mark for the purpose of competing with the plaintiff.

The court reasoned that this argument failed because Facebook and Faceporn are not in direct competition with each other, and therefore Facebook could not prove that the defendants’ conduct was directed at California. Additionally, the court said that Facebook failed to show how Faceporn “garnered revenue from their operation of Faceporn at Facebook’s expense or that Faceporn has diverted any of Facebook’s potential customers.”

Had Faceporn more directly targeted Facebook’s audience, Facebook might have been able to establish personal jurisdiction. But Judge Cousins correctly assessed that the audience for pornography is much more narrow than the audience for a general social networking site.

Read the full order below.

Facebook v. Pedersen

Don’t you “Krave” an interesting cybersquatting case?

November 26, 2011

By J. DeVoy

Vegas Inc., which provides excellent coverage of Las Vegas’ legal developments (such as its remarkable dedication to the Righthaven saga), reports on a lawsuit filed by the operator of Piranha Night Club and 8 1/2 Ultra Lounge against Krave over the domain name <piranhalv.com>.  Historical note: from 2004 to 2008, Krave was home to the theatrical adaptation of John Stagliano’s / Evil Angel Video’s Fashionistas.

The Complaint is available here.  It alleges a fairly common cybersquatting claim: The <piranhalv.com> domain name was registered by Krave’s operators and its agents in derogation of Piranha’s trademark rights, as it was supposedly done to mislead and confuse the consuming public.  The Complaint also alleges trademark infringement under 15 U.S.C. § 1125(a) and at common law; it goes on to seek an injunction, and a declaration that the Piranha Night Club’s operator is the proper owner of the domain name.

In the Complaint’s other causes of action, though, it invokes some claims one doesn’t always (or even often) see in trademark matters: Unfair, Deceptive and Fraudulent Business Practices under NRS 598A; Intentional Interference with Prospective Economic Advantage; Tortious Interference with Contractual Relations, and; Piercing the Corporate Veil under NRS 74.787 (since the domain name registrant is a party other than Krave’s owners/operators).

The case is Manhattan West LLC v. Century Partners Ltd. et al., 2:11-cv-01898 in the District of Nevada, and may be worth a PACER notification for those interested in trademark and domain name disputes.

Christian Louboutin Shoes and “Aesthetic Functionality”

October 22, 2011

Christian Louboutin tried to distinguish its shoes from others by giving them a shiny red lacquered sole. The company takes the position that the red sole functions as a trademark — that it helps consumers know the source or origin of the shoes.

In general, colors can be trademarks. See Qualitex v. Jacobson Products, 514 U.S. 159 (1995). Think of the Owens Corning fiberglass insulation’s iconic pink color, or the blue Tiffany boxes. Those colors are protected as trademarks, and no competitors may use them without running afoul of the Lanham Act.

However, trademarks are about promoting competition – not stifling it. Therefore, if something is “functional,” then it can not be the subject of trademark protection.

“The functionality doctrine prevents trademark law, which seeks to promote competition by protecting a firm’s reputation, from instead inhibiting legitimate competition by allowing a producer to control a useful product feature. It is the province of patent law, not trademark law, to encourage invention by granting inventors a monopoly over new product designs or functions for a limited time, 35 U.S.C. §§ 154 173, after which competitors are free to use the innovation. If a product’s functional features could be used as trademarks, however, a monopoly over such features could be obtained without regard to whether they qualify as patents and could be extended forever (because trademarks may be renewed in perpetuity).”

Under the doctrine of “aesthetic functionality,” something can be solely aesthetic, but it would be anti-competitive to permit one company to monopolize the feature. For example, in Brunswick Corp v. British Seagull, Ltd., 35 F.3d 1527 (Fed. Cir. 1994), the Federal Circuit considered the case of Mercury outboard engines. Mercury sought trademark protection for its black engines, but the Federal Circuit upheld the TTAB’s decision that black was “dejure functional because of competitive need.” The Court compared the black engines to Owens-Corning’s pink fiberglass. While the pink in the fiberglass serves no real purpose except to tell you who made the stuff, a black engine will appear smaller than other colored engines (black is slimming, after all) and black goes with a greater variety of hull colors. Therefore, trademark protection for pink fiberglass is ok, but every engine manufacturer has a right to make black engines.

So how does this apply to the Christian Louboutin Shoes?

Manhattan federal judge Victor Marrero found that the red was aesthetically functional. Christian Louboutin S.A. v. Yves St. Laurent Am., Inc., 778 F. Supp. 2d 445 (S.D.N.Y. 2011).

Christian Louboutin himself has acknowledged significant, nontrademark functions for choosing red for his outsoles… he stated that he chose the color to give his shoe styles “energy” and because it is “engaging.” He has also said that red is “sexy” and “attracts men to the women who wear my shoes.” … The outsole of a shoe is, almost literally, a pedestrian thing. Yet, coated in a bright and unexpected color, the outsole becomes decorative, an object of beauty. To attract, to reference, to stand out, to blend in, to beautify, to endow with sex appeal — all comprise nontrademark functions of color in fashion.

The red outsole also affects the cost of the shoe, although perhaps not in the way Qualitex envisioned. Arguably, adding the red lacquered finish to a plain raw leather sole is more expensive, not less, than producing shoes otherwise identical but without that extra ornamental finish. Yet, for high fashion designers such as Louboutin and YSL, the higher cost of production is desirable because it makes the final creation that much more exclusive, and costly.

Because the use of red outsoles serves nontrademark functions other than as a source identifier, and affects the cost and quality of the shoe, the Court must examine whether granting trademark rights for Louboutin’s use of the color red as a brand would “significantly hinder competition,” that is, “permit one competitor (or a group) to interfere with legitimate (nontrademark-related) competition through actual or potential exclusive use of an important product ingredient.”

The court found that it would hinder competition.

Fashion is dependent on colors. It is subject to temporal change. It is susceptible to taste, to idiosyncrasies and whims and moods, both of designers and consumers. Thus, at any moment when the market and the deities of design, by whatever fancy they decide those things, proclaim that “passion” is in for a given season and must be expressed in reds in the year’s various collections, Louboutin’s claim would cast a red cloud over the whole industry, cramping what other designers could do, while allowing Louboutin to paint with a full palette. [*455] Louboutin would thus be able to market a total outfit in his red, while other designers would not. And this impediment would apply not just with respect to Louboutin’s registered “the color red,” but, on its theory as pressed in this litigation, to a broader band of various other shades of red which would be available to Louboutin but which it could bar others from using.

Louboutin has now filed an appeal with the Second Circuit. See Christian Louboutin wants his red soles back. If I’m the bookie for this case, I’d give 20:1 odds that he loses. First of all, he’s appealing the denial of a preliminary injunction. That requires him to show that the lower court abused its discretion when issuing the denial. Second, the record seems quite clear that giving a fashion designer a monopoly over one color in a design would be as anticompetitive as letting one boat manufacturer have a monopoly on black engines.

Hey Lacoste: I hear Hollister is inexpensive

September 12, 2011

By J. DeVoy

I previously wrote about protecting your brand and crapping all over a competitor’s by giving a rival’s products to infamous celebrities and public figures, thus lowering its social cachet.

Ignoring this sage advice, Lacoste has asked police in Norway to keep mass murderer Anders Brievik from wearing its clothes.  Lacoste’s desire to end this potential association is understandable.  But since Hollister’s clothes advertise themselves by spelling out the logo in large, chunky letters (a classic low-class tell from Paul Fussell’s Class) it would be remarkably easy for Lacoste to spend a few hundred dollars on clothes from that provider and its ilk in order to irreparably damage them, rather than draw attention to its fierce protection of the iconic crocodile.

With .xxx imminent, people finally notice it

September 8, 2011

By J. DeVoy

At Likelihood of Confusion, guest blogger Matthew David Brozik provides an overview of the .xxx roll-out, which is happening in phases beginning now.  For those unfamiliar with the domain name, there are two types of initial availability: Sunrise A, where existing adult companies can get .xxx domains to correspond with their .com domains, and Sunrise B, where non-adult companies can permanently de-reigster their hypothetical .xxx domain names (e.g., ToysRUs.xxx), and ensure they will never exist.  After that, there will be a “landrush” period for adult companies to get new .xxx domains to develop new brands and services, and then a perpetual period of general availability so that adult companies can get new domain names on a first-come, first-serve basis; trademarks outside of adult can also be de-registered during this time.  To understand the importance of this open registration period, bear in mind that 10 years ago the acronym CFNM was meaningless, whereas now it’s a popular porn genre, and “twitter” was similarly a nearly meaningless (and antiquated) intransitive verb. Or noun. Anyway…

Some groups, such as the Free Speech Coalition, are against the .xxx sTLD.  Others are agnostic, or open-minded regarding the extension.  Informal research reveals that many companies are indeed buying the domains, optimistic that they will generate more traffic and search engine recognition, and at a minimum protect the brands they have created.  Still, others eschew it.

Some non-adult entities are embracing .xxx to make a splash for themselves.  PETA, for example, is getting a .xxx domain name.  But, this likely is more of a publicity stunt than a lasting foray into adult.  After all, this is the same PETA that had some sycophant legally change his name to KentuckyFriedCruelty.com.

Brozik’s post is informative, but I do have one bone to pick with it.  Brozik contends:

So we’re almost certainly not going to see lawsuits over the likes of pepsi.xxx, kleenex.xxx, or xerox.xxx.

Don’t be so sure.  Perhaps there won’t be disputes over those domains and peer brands, but there is an interesting question brewing as to whether paying for de-registration of a .xxx domain name is essential to keeping it from being registered.  Within the adult space, Manwin Licensing International – owner of many prominent brands and valuable domain names, including Brazzers.com and YouPorn.com – has demanded that the .xxx registry’s operators prevent “exploitation” of those domains (or those that are confusingly similar) even without paid de-registration, or turn them over to Manwin, free of charge.  Making matters more interesting, the .xxx registry has preemptively de-registered domain names that constitute famous names, for both celebrities and politicians.  This step was apparently taken free of charge.  There may not be lawsuits brought by Pepsi and Xerox against cyber-squatters, but there may be more attempts by owners of established brands to get something for nothing.

If the .xxx registry’s operators commit trademark infringement for failure to provide de-registration where no registration has yet occurred, it would be a novel theory of liability.  Can one be liable for potential infringements that have not yet occurred?  If nobody registers the domain names, there seems to be a problem of standing, (and a lack of imminent harm, if the registry’s procedures prevent the domain names from being registered).  Other countries, however, may have different standing requirements.  Also, some infringement of the trademarks has to occur (or be sufficiently imminent for standing to exist) for there to be a cause of action for infringement.  Ron Coleman’s interest in secondary trademark infringement notwithstanding, infringement has to occur for primary or secondary liability to attach – just as with copyright infringement.

Given the novelty of the .xxx space and the brands at stake, it is unlikely that this issue is dead, or that it will be for some time to come.

Devaluing your competitor’s brand

May 15, 2011

By J. DeVoy

Trademark law provides brand holders protection from competitors or third parties infringing upon, diluting or tarnishing their business marks, but what happens when the damage comes from the actual market for the brand and the people who consume it?  Every brand has negative connotations; Chevrolet is associated with poor quality and a dysfunctional company that couldn’t exist but for massive government bailouts, Brooks Brothers is perceived to be for old, boring white people, and Ed Hardy is accused to cater to obnoxious douchebags.

Using market forces, these associations can be used to attack and devalue a competitor’s brand without necessarily running afoul of trademark law.  Legally, there is a concept of “tarnishment” within trademark law, which makes it unlawful for a party to cast a trademark in an unflattering light – normally by associating the trademark with unflattering, inferior or unseemly products or services. One example of this is Toys “R” Us v. Akkaoui, 40 U.S.P.Q.2d (BNA) 1836 (N.D. Cal. Oct. 29, 1996), where the Northern District of California held that the defendant’s use of “Adults ‘R’ Us” as an adult website tarnished Toys “R” Us’ trademark by associating it with adult materials inconsistent with the Toys “R” Us brand.  But plenty of harm can be done without direct use of a competitor’s trademark.  Imagine the fallout if Charles Manson were spotted in a Nike tracksuit, or if the Unabomber talked about how cool and refreshing bottled Perrier was when he was living in a woodland shanty.  That kind of damage does not seem to be considered within the ambit of title 15 of the U.S. Code, which governs trademarks.

One recent example involves Snooki, the Jersey Shore cast member who has been arrested, punched in the face, fought with her housemates, and has cried on television more times than I can bother to count.  About a year ago, she stopped toting Coach handbags, largely in favor of Gucci and other purses – because Coach allegedly started sending Snooki the handbags of competitors. (Source.)  Following the adage that your enemy’s enemy is your friend, someone with such a toxic media persona is the enemy of everyone, and can be used to inflict harm upon competitors by associating them – even unwittingly – with competing brands.

The legal academy has also noted and commented on this trend.  Professor Jeremy N. Sheff’s forthcoming article in the Fordham Intellectual Property, Media & Entertainment Law Journal, “The Ethics of Unbranding,” addresses this very issue.  In addition to weighing which ethical system is most appropriate for assessing the ethics of using sabotage to disassociate one’s brand with a controversial figure (e.g., Snooki, Lindsay Lohan) and associate another’s brand with that individual, Sheff offers analysis of this conduct under several ethical systems.  The conclusion: While the practice may be questionable depending on one’s perspective, it is not clearly unethical.

Beyond the scope of federal trademark law, there is the specter of state-promulgated unfair competition statutes.  Even then, though, this kind of conduct should not be problematic.  After all, the brands are not deceiving the public through false claims or unsupportable promises: Brand owners are simply providing a prominent individual with products – though not necessarily their own – that the target can use, or choose not to use, in public.  While there is a calculated effect in this tactic, namely making the competitor’s brand look trashy or too widely accessible to truly be a luxury good, it is ultimately the individual who does the damage by incident of his or her status as a trend-setter, rather than the brand owner engaging in this action and feeding a prominent person a competitor’s goods.

This conduct has some historical precedent.  Substantively, it is no different from Ed Bernays paying attractive young women to walk the streets of Manhattan while smoking in order to implant the idea of women smoking into people’s heads – something unthinkable when Bernays did this in the 1920’s and 1930’s. (Source.)  This worked, in part, to break people’s prior conceptions about women and smoking, and worked to open the tobacco market to women, doubling the potential universe of customers.

Similarly, if I’m a black hat public relations manager for Land Rover, two of my main objectives will be to 1) maintain Land Rover as a luxury brand, and 2) make the competition appear non-elite.  Thus, if someone who will diminish my product’s cachet is using it – and especially if they are using it in a particularly derogatory way, such as driving a 15-year-old Range Rover simply to claim they have one  – it’s my job to shift the blame to someone else.  For example, if Amber from MTV’s Teen Mom, who is awaiting trial for beating her ex-fiance in front of their daughter and on national television, started driving a Land Rover, I’d give her a free Escalade to defuse the potential negative connotations.  Or even if she wasn’t driving a Land Rover, the attention surrounding her and her trial in various magazines and tabloids would justify giving her an Escalade just to take Cadillac down a notch. (A Porsche Cayenne would be too obvious.)  As it’s her choice to drive the Cadillac, the damage done to GM’s luxury brand would be at her hands – even if facilitated by a competitor.

State-by-state analysis of unfair competition laws would be important before running into such a plan at full sprint, but there’s nothing intrinsically unfair or dishonest about giving someone the opportunity to devalue a brand – even if unwittingly.  Moreover, there are no readily apparent problems within the realm of trademark law so long as its the controversial spokesperson’s agency – as opposed to the competitor’s manipulation – that causes the damaging brand association to be made.

H/T: The Last Psychiatrist.

9th Circuit: Consumer Sophistication is an important determinant for AdWord bidding cases

March 10, 2011

by Jason Fischer

For some time now, it has been a legal gray area whether bidding on a competitor’s trademarks as Google AdWords constituted infringement.  Google has taken a neutral stance on the matter, only removing ads that actually make use of the mark in ad copy and directing unhappy trademark owners to take their dispute to a court of law for resolution.  Finally, some of these cases are bubbling up through the federal court system and providing some precedent and guidance.

The latest such decision comes out of the 9th Circuit and involves two software developers who sell licenses to high-end task management applications for businesses.  Software Company A decided that it would be a good marketing strategy to bid on Software Company B’s trademark as an AdWord with Google and Bing, providing a “Sponsored Link” to Company A’s product for users who entered the trademark as a search term.  Obviously, Company B was none too happy about the practice and sued Company A claiming trademark infringement and successfully obtained a preliminary injunction.

On appeal, Company A argued that presenting a “Sponsored Link” for its product to potential purchasers who searched for Company B’s product name would not cause any consumer confusion.  As you can imagine, a link to Company B’s product would appear in the very same search results, alongside the link to Company A’s product, but Company A contended that potential purchasers were savvy enough that no one would be confused or tricked into thinking that Company A’s product was sold by Company B, or vice versa.

In agreeing with Company A’s position, the appeals court noted that licenses for the software at issue were sold for up to $10,000 and more — indicating that the searching parties were more likely to be careful in their purchasing decision, doing research which would eliminate or significantly reduce the likelihood of confusion.  The court also noted that the type of purchasers for these software products are more likely to be expert users of the Internet, who understand how keyword marketing works with search engines, which would also reduce the likelihood of confusion.

You can read the Judge Wardlaw’s full opinion here, if you’re interested in a more thorough discussion.

This decision, in IMHO, serves as a helpful reminder that there are more than a few factors that attorneys either ignore or tend to dismiss in determining likelihood of confusion, and as a result end up trying to enforce their clients’ marks beyond the rights actually afforded.  Comparative advertising is not only legal in the U.S., but preferred, and use of your competitors trademark is not always an actionable event.

Who knew Susan G. Komen was so litigious?

January 5, 2011

By J. DeVoy

Cynics skeptical of large “awareness-raising” organizations like Susan G. Komen for the Cure now have more to question.  Breast cancer is a serious condition – one that co-blogger Tatiana Von Tauber has dedicated much effort to fighting through The Art Cure – that affected 207,090 women last year (prostate cancer affected 217,730 men).  Some of these funds are being used to patrol smaller charities and ensure they don’t infringe on any of Susan G. Komen for the Cure’s 200 registered trademarks. (source.)

Komen’s strategy runs from demand letters to filing oppositions – “hundreds” of them – with the U.S. Patent and Trademark Office when smaller charities try to register their trademarks.  For owners of intellectual property, this is fairly routine.  The long-term consequences of not patrolling and protecting a brand can lead to its devaluation into a generic or descriptive term incapable of protection.  But Komen ostensibly is a charity, rather than a commercial enterprise like Coca-Cola, so people, and especially other fundraisers, expect a more sensitive approach to IP protection.  Those people are wrong:

Mary Ann Tighe[] said the Komen foundation sent her a letter asking her to stop using the phrase “for a cure” in their title and to never use the color pink in conjunction with their fundraising. What bothered her most about the whole ordeal, she said, was that Komen forced her to spend money and time on legal fees and proceedings instead of raising funds for cancer. (source.) (emphasis added)

“For a cure” or “for the Cure,” doing anything “for” any “Cure” is begging for Komen’s attention.  For non-lawyers who just want to help their communities, that can be a harrowing experience.

Sue Prom, who started a small dog sledding fundraiser for breast cancer called “Mush for the Cure” in Grand Marais, Minn., said she was shocked to hear from Komen’s lawyers this summer asking that she change the name of her event or face legal proceedings.

“I had to call the trademark helpline, because I had no idea what I was doing,” said Prom, who runs the annual sled race with her husband and friend. “We pay for the expenses out of our pockets, and we’ve never personally made a dime from it. We have t-shirts, sweatshirts, domain names, posters, stationery, all with ‘Mush for the Cure’ on it. What do we do with all the materials now? How are we gonna defend ourselves? We’re not like Komen.” (source.)

Look at this from the cynic’s perspective: Money going to these small charities is not money that’s going to Komen.  That means less money for salaries, raises, marketing, and other administrative skimming before passing the rest on to breast cancer research.  If Komen is using large urban law firms like the article suggests, it’s also paying approximately $300 per hour for a first-year associate to hunt down and stop this putative infringement.

But the goal of Susan G. Komen for the Cure isn’t to shut down other charities.  In fact, they can be downright reasonable in granting limited releases of their precious intellectual property.

With the help of a team of pro bono lawyers, Kites for a Cure was able to reach a settlement with Komen: They agreed to only use the phrase “for a Cure” in conjunction with the words “lung cancer” to make the distinction clear. But Tighe said they reached a settlement only after many, many months of a free legal team working long hours each day. (source.)

Unfortunately, this conduct leaves people feeling jaded and bitter about an important issue.  Not only does the expenditure of legal counsel reduce the amount of money being used for research, but the resulting negative public relations adversely affects charitable donations to these organizations and possibly in the aggregate.

Protecting brands and not being a jackass aren’t mutually exclusive goals.  Maybe a financial hit will chasten Susan G. Komen for the Cure and teach them that lesson without other charities having to suffer.

H/T: Chuck Ross

The hazards of citing to Wikipedia

January 5, 2011

By J. DeVoy

This should be obvious, but the TTAB has commented on the matter in a surprisingly important case.  The Trademark Trial and Appeal Board’s decision in General Motors LLC v. Sweeney, gave GM a dangerous warning that the Corvette brand is not to be taken for granted.  GM’s counsel submitted a sparse evidentiary record in opposing the registration of Sweeney’s proposed mark, Corvoltte, under International Class 12 (for “electric vehicles, namely, automobiles”).  One of those sources, comprising a non-trivial percentage of the evidentiary record, was the Wikipedia entry for Corvette – presumably the Chevrolet Corvette, as there is more than one.

As the colloquialism goes – and the TTAB concurs – talk is cheap:

There is no evidence of sales, advertising or the extent of the mark’s renown. To the extent that opposer has relied on the Wikipedia evidence to establish the fame of the CORVETTE mark, an Internet entry is admissible for the limited purpose of demonstrating what has been printed, not for the truth of what has been printed. [...] Suffice it to say, opposer’s evidence falls far short of establishing the fame or renown of its CORVETTE mark. (p 4.)

The TTAB cites Safer Incorporated v. OMS Investments Incorporated, 94 USPQ2d 1031, 1040 (TTAB 2010) for the proposition that such entries are admissible to show only what is written, and not the statements’ veracity.  That case is not the first time the TTAB has considered Wikipedia and wiki-type sites cited as evidence, though.  In re IP Carrier Consulting Group, 84 USPQ2d 1028, 1032 (TTAB 2007) cut to the heart of the matter, as the TTAB wrote “There are inherent problems regarding the reliability of Wikipedia entries because Wikipedia is a collaborative website that permits anyone to edit the entries” in its opinion.  In re Total Quality Group, Inc., 51 USPQ2d 1474, 1475-76 (TTAB 1999)  also dealt with these issues, questioning the weight to give internet sources of unknown origin.  Good news, though: Unlike the Corvette decision, these are all citable precedent.

Citations to Wikipedia are not outright inadmissible.  In In re Bayer Aktiengesellschaft, the Federal Circuit held that articles accessed on the Internet are admissible as evidence available to the general public, but must be carefully evaluated because of reliability concerns. 488 F.3d 960 (Fed. Cir. 2007).  Similarly, the Southern District of New York has provided some guidance in how to approach Wikipedia articles used as evidence.  Because of the adversary system inherent in legal disputed, the information in a Wikipedia entry “is not so inherently unreliable” to make it inadmissible per se. Alfa Corp. v. OAO Alfa Bank, 475 F. Supp. 2d 357, 362 (S.D.N.Y. 2007).

The federal judiciary isn’t as curmudgeonly as a sociology professor insisting that you can never cite to wikipedia as authority.  Generally speaking, you shouldn’t.  User-generated sources can be very helpful, though, in showing common understandings and uses of words, terms and other phrases, which are particularly important in trademark disputes.  To that extent, it’s a net positive that Wikipedia entries aren’t inadmissible.  But, given the ease of subterfuge, it should be an evidentiary last resort.

As for the beloved Corvette, the TTAB found a likelihood of confusion under Section 2(d), and the applicant’s mark was denied registration (to nobody’s great surprise).  The DuPont factors ultimately weighed in Corvette’s favor, as the goods, channels of trade, targeted purchasers and marks themselves were virtually – if not actually – identical. See In re E. I. du Pont De Nemours & Co., 177 USPQ at 567 (CCPA 1973).  A brand of less renown, however, may not have fared as well as GM’s historically relevant Corvette if faced with a similar challenge – especially if relying on Wikipedia as evidence.

H/T: TTAB Blog


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