The TMCA

On March 2, 2021, stationery and gift retailer Paper Source filed for chapter 11 bankruptcy, stating in court filings that effects of the COVID-19 pandemic damaged its finances and operations. Paper Source stated that in bankruptcy, it sought to sell its assets, reevaluate and renegotiate leases, and continue operations, while minimizing adverse impact on trade partners and other stakeholders. Shortly thereafter, however, card makers identifying themselves as vendors to Paper Source hit social media and the press decrying debts Paper Source racked up just before its bankruptcy for which they did not receive payment. According to some card makers, Paper Source placed orders up to four times larger than usual in January and February 2021. This left vendors who had already shipped goods to Paper Source on generous payment terms with relatively large (in the context of the vendors’ businesses) unsecured, prepetition claims when Paper Source entered bankruptcy. Some Paper Source vendors have received limited relief. In its bankruptcy case, Paper Source immediately sought and obtained an order authorizing it to pay up to an aggregate of $2 million on prepetition claims of vendors critical to its business operations, referred to as “critical vendors,” in full or in part, provided vendors agree to supply goods on continued customary or other favorable trade terms. Prepetition claims are the claims for amounts Paper Source owed as of the date it filed for bankruptcy. The same court order authorizes Paper Source to pay such critical vendors in the ordinary course of business if it cannot strike a deal on trade terms and Paper Source believes failure to pay will result in irreparable harm to its business. Paper Source states it determined which of its vendors are critical for the purposes of the critical vendor relief pursuant to a number of considerations, like the volume of goods supplied, existence of alternative vendors, and vendors’ trade terms. The “critical vendor” motion Paper Source filed to obtain this relief indicates the retailer typically pays for goods ordered via purchase order within 30 to 60 days after receiving products. It also indicates that the $2 million sought will cover less than 20% of its outstanding trade payables as of the date it filed for bankruptcy. Thus, not all vendors are deemed critical, and even critical vendors cannot count on a full and immediate recovery on their prepetition claims under the critical vendor relief. According to media reports, some critical vendors are seeing as little as 10% recoveries of their prepetition claims pursuant to the critical vendor relief. The experience Paper Source vendors report highlights the surprise, frustration, and uncertainty that may confront vendors when a customer files for chapter 11 bankruptcy. The impact can be particularly profound for vendors who are small businesses or essentially captive to the customer, as appears to be the case for some of Paper Source’s vendors. The early effects of Paper Source’s bankruptcy on its vendors and its limited critical vendor relief have garnered public reactions and attention. But there are other procedures in chapter 11 bankruptcy that can affect (and aid) vendors and the payment of their claims against debtors. Administrative Expense Claims. In some cases, vendors may be entitled to assert administrative expense claims—which are paid ahead of any payment to unsecured creditors— for at least part of their claims against a debtor. For example, section 503(b)(9) of the Bankruptcy Code provides for an administrative expense claim for the value of goods provided to the debtor within 20 days of the date the bankruptcy case was filed, provided that such goods were sold to the debtor in the ordinary course of the debtor’s business. Notably, it is unclear if a situation where the debtor ordered significantly more product than usual prior to the bankruptcy filing—as asserted regarding Paper Source—would be considered to be “in the ordinary course” of a debtor’s business. Additionally, a vendor may be entitled to assert an administrative expense claim under section 503(b)(1) of the Bankruptcy Code for goods provided to the debtor after the commencement of the bankruptcy case, if the debtor has not paid for those goods in the ordinary course of business. Administrative expense claims are preferable to general unsecured claims because they have priority in payment. But vendors should note that even if they have an allowed administrative expense claim, it does not mean they will necessarily be paid immediately. Administrative expense claims may not be paid until the case is resolved, which can take months or years. Reclamation of Goods. In some instances, a vendor may prefer to recover goods provided to the debtor rather than wait for payment through the bankruptcy process. Section 546(c) of the Bankruptcy Code provides a mechanism for vendors to enforce rights to reclaim goods provided to the debtor within 45 days of the bankruptcy filing. If a vendor wishes to pursue this option it must act quickly by providing a written demand for reclamation to the debtor no later than (a) 45 days after the receipt of goods by the debtor, or (b) not later than 20 days of commencement of the bankruptcy case, if the 45-day period expires after commencement of the case. The vendor must establish, among other things, that it has a common law right of reclamation, meaning that the goods that are the subject of the demand are in the debtor’s possession and are identifiable. Notably, however, a bankruptcy court may determine that a secured creditor’s “blanket lien” supersedes reclamation rights. Cure Claims. In certain cases, a vendor may have an executory contract with a debtor, which may be assumed or rejected by the debtor in its bankruptcy case. If the debtor wishes to continue its contractual relationship with the vendor and assume the contract, it will be required to cure any past due amounts owing under the contract prior to assumption. The amount required to cure defaults is a “cure claim.” For many vendors—like those in Paper Source—that operate solely on purchase orders, there is no executory contract subject to assumption, and therefore there is no requirement that the debtors cure their outstanding obligations. Claims on Prepetition Claim. If a vendor’s claim does not qualify for or is not satisfied by critical vendor relief, any of the above options, or otherwise, the vendor can file a proof of claim on account of its prepetition claim. Recoveries on vendor claims, which are typically general unsecured claims, and other claims are governed by a chapter 11 plan. In cases where an official committee of unsecured creditors is formed, the committee will often negotiate recoveries on behalf of all unsecured creditors. Such creditors’ committees are typically comprised of a variety of unsecured creditors. For example, the committee in Paper Source’s case is comprised of two product vendors, two landlords, and one service vendor. The existence, availability, and extent of relief available to vendors in a particular bankruptcy case, including the payment options set forth above, will vary from case to case. Many factors affect potential recoveries by vendors in a bankruptcy case, including the identity of the debtor, its circumstances, the purpose of the bankruptcy filing, events that transpire during the bankruptcy case, and the ultimate result of the bankruptcy case. Therefore, vendors should seek the advice of bankruptcy counsel to ensure they protect their rights and optimize their recoveries. As more retailers file for chapter 11 bankruptcy protection as a result of the COVID-19 pandemic, more vendors will be faced with situations like those in Paper Source. Vendors should be prepared to navigate the bankruptcy process, and potentially retain bankruptcy counsel, to protect their interests in the event that a customer files for bankruptcy.

A long-running battle between Deckers Outdoor Corp., the makers of UGG boots, and Australian Leather PTY Ltd. may finally be over after a May 7 ruling by the United States Court of Appeals for the Federal Circuit. The battle began in 2016 in the Northern District of Illinois when Deckers sued Australian Leather for trademark infringement based on its sale of boots in the U.S. bearing Deckers’ UGG trademark that looked quite similar to Deckers’ UGG boots. Australian Leather makes sheepskin boots in Australia that contain “ugg” in the name, which in Australia is a generic term for sheepskin. In the U.S., however, Deckers owns the trademark for UGG in connection with its popular sheepskin boots. When Australian Leather began selling its ugg boots in the U.S.—and it only sold twelve pairs—Deckers filed suit, seeking both an injunction and damages. In response, Australian Leather filed several counterclaims and claimed that ugg was not worthy of trademark protection in the U.S. because it was generic. The parties battled over the generic issue (as well as others) in cross-motions for summary judgment filed in 2018. Australian Leather argued that ugg was a generic term in Australia and should be treated as one in the U.S., relying in large part on the “foreign equivalents” doctrine to support its argument. Under the foreign equivalents doctrine, “one cannot obtain a trademark over a foreign generic word if the trademark designation ‘would prevent competitors from designating a product as what it is in the foreign language their customers know best.’” Deckers Outdoor Corp. v. Australian Leather Pty. Ltd., 340 F. Supp. 3d 706, 709 (N.D. Ill. 2018) (quoting Otokoyama Co. Ltd. v. Wine of Japan Import, Inc., 175 F.3d 266, 271 (2d Cir. 1999)). In its summary judgment opinion, the district court rejected Australian Leather’s genericness defense, including its application of the foreign equivalents doctrine. Relying on expert testimony and survey results from Deckers, the court found that ugg was not generic in the U.S., even if it was in Australia. In particular, based on the fact that 98% of consumers interviewed in Deckers’ survey thought ugg was a brand, the court concluded that “no reasonable factfinder could conclude that ugg is or ever was a generic word for sheepskin boots in the U.S.” The court also declined to apply the foreign equivalents doctrine, finding that it was not a good fit where, as here, it involves a translation from “English to English”. In its summary judgment opinion, the court also rejected several other defenses lodged by Australian Leather, and set the parties on a course for trial. After a four-day jury trial, the jury found that Australian Leather willfully infringed Deckers’ UGG trademark based on its sale in the U.S. of similar boots containing the ugg name and awarded Deckers $450,000 in damages. After receiving the verdict, and a bench trial on separate issues, Australian Leather appealed to the Federal Circuit. Two of the three issues in Australian Leather’s appeal concerned genericness issues, including the application of the foreign equivalents doctrine: “[w]hether the District Court erred when it held that the trademark doctrine of foreign equivalents did not apply to generic words in a foreign country where the primary language is English.” The Federal Circuit heard oral argument on Australian Leather’s appeal on May 5, 2021 and denied it in a short order two days later, on May 7, 2021, without supplying any reasoning. While we do not know whether Australian Leather will file a cert petition with the Supreme Court, we’ll be watching and let you know if and when it does. For now, at least, the battle seems to have ended.

Trademark law aficianados have followed the progress of Romag Fasteners v. Fossil from District Court to the Federal Circuit to the Supreme Court and back again. We previously blogged about the Supreme Court decision here. In the latest installment, the Connecticut District Court refused to enter a $6.7 million advisory jury award, instead awarding a mere $90,000 to Romag Fasteners for this multi-year litigation. The District Court’s opinion is a primer in damages law, with a cautionary tale of what-not-to-do if you want to avoid a court’s ire. The District Court started by laying out the damages theories: an advisory jury verdict of $90,000 of unjust enrichment, based on allocating just 1% of Fossil’s profits to the Romag magnetic fastener, and an advisory jury verdict of $6.7 million based on a deterrence theory. Romag Fasteners had declined to pursue statutory damages, instead seeking the more speculative and much more judical-resource-intensive theory of lost profits. And following the Supreme Court’s decision – holding that lost profits may be available even without willful trademark infringement, though mens rea remains critically important – the District Court had latitude to award damages of $90,000, over seven hundred times $90,000 ($6.7 million), or something in between. The District Court’s disillusionment with Romag’s litigation conduct and aggressiveness disproportionate to its harm was apparent. In evaluating the equitable factors in setting an award, the Court determined that almost all of them favored Fossil. The Court emphasized Romag’s behavior at the beginning of the litigation: from filing a lawsuit immediately prior to the lucrative holiday shopping season, submitting a false affidavit to obtain a TRO, and damaging Fossil due to the strategic timing of its lawsuit. “Plaintiff carefully timed this suit to take advantage of the imminent holiday shopping season to be able to exercise the most leverage over Defendants in an attempt to extract a quick and profitable settlement, as it had done twice before in the past three years.” By contrast, the Court determined that Fossil had acted negligently, at worst, and the relative balance of the behaviors favored a judgment of approximately $90,000 for trademark infringement, which when added to prior patent damages, would total approximately $133,000. In a strange coda to such a long-running and hard-fought case, both parties submitted requests to amend the judgment by remarkably small amounts. Romag Fasteners asked the Court to amend the judgment to reflect the correct value of the patent judgment, for a total judgment of $142,000 plus interest. And Fossil, not to be outdone, submitted a response agreeing with the total of $142,000, but disagreeing as to the date on which interest would apply. So, is this the end of this long-running dispute? Only time will tell.

Consumer surveys. Love ’em or hate ’em, they are an evidentiary staple in many Lanham Act disputes. A well designed and executed survey can bolster your case, or can act as a powerful antidote to counteract your opponent’s. Survey evidence is not, legally speaking, strictly necessary. That said, courts routinely—indeed, almost reflexively—treat the absence of a survey as outcome determinative, especially in cases where a party claims an ambiguous advertisement “deceives” consumers. Sometimes litigants want to avoid the time and expense of conducting a consumer survey and instead opt to have an expert fill in that evidentiary hole with an opinion on how he or she “believes” consumers would perceive an advertisement. That is often a bitter pill. A case in point: In re C2r Global Mfg. issued by the United States Bankruptcy Court for the Eastern District of Wisconsin. There, a competitor pursued a Lanham Act claim against a debtor for falsely advertising the effectiveness of its pharmaceutical drug disposal product. According to the Plaintiff, consumers were deceived by the ads in question and, as a result, purchased the debtor’s product instead of Plaintiff’s product. There is a well-developed playbook for proving up these types of garden variety false advertising claims. The proof often includes marketplace research gathered through a consumer survey.  But here, instead of proffering survey evidence to establish how consumers perceived the debtor’s “drug destroyer” ads, the Plaintiff designated an expert to provide his personal opinion on the effect the ads would have on consumers. He opined that, “because consumers read [debtor’s] capacity advertisements to indicate that RX Destroyer products deactivate medication at a lower price-per-pill than the [plaintiff’s] system, consumers choose to purchase [debtor’s products] rather than [plaintiff’s product].” The court correctly excluded this and similar opinions. The problem with this sort of opinion testimony is at least two-fold. First, this expert attempted to opine on how consumers perceived or interpreted the ads in question. That sort of opinion is not within the province of an expert unless he or she has survey data to support it, and Plaintiff had none. Second, the expert purported to opine on how consumers would react after viewing the ad in that they would be more inclined to purchase the debtor’s product than Plaintiff’s. This sort of opinion is something that should be supported by gathering data from actual consumers and testing whether the ads at issue would be “material” to the consumers’ purchasing decisions. This case tells a cautionary tale about the perils of proxy evidence. If you are trying to establish how consumers perceive an advertisement or how they will react to it, counsel and their experts should resist the urge to “go it alone.” Consider designing and implementing a consumer survey to help bridge the evidentiary gap. Otherwise, going rogue when it comes to survey evidence can have costly implications.

China, like the United States, is a party to the Berne Convention for the Protection of Literary and Artistic Works. As such, in general any literary or artistic work created in the US will also be protected in China. Unlike trademark rights, which are based on use or registration (depending on the country of adoption and use), copyright rights are automatically generated once the creation of the relevant work has been completed and do not require any compulsory registration. Nonetheless, some Berne Convention countries, including China and the US, offer a system of voluntary copyright registration in order to provide a way for the copyright owners to record the particulars of the copyright in the works they created/own and other related transactions. Copyright registration in the US is also a prerequisite for filing a lawsuit for infringement, and depending on when registration occurs relative to the date when infringement began, copyright registration in the US, can provide enhanced statutory remedies once liability is established. This article provides an introduction to the voluntary copyright registration system in China and some key advantages in holding a copyright registration in China enforcement actions. Voluntary copyright registration in China Voluntary copyright registration in China is administered by the Copyright Protection Center of China (CPCC). The CPCC, after receiving an application for copyright registration, will only review the application documents to ensure that all the formality requirements for copyright registration are met before approving a registration. No substantive examination will be conducted by the CPCC in relation to the application by looking into the validity of the underlying copyright rights. The whole process will generally take a few months to complete. Obtaining a copyright registration in China is a relatively cost-efficient process since the CPCC does not require notarization and legalization of the application documents, except the certificate of good standing of the applicant pursuant to the recently-updated requirements of the CPCC. Once registered, a copyright registration certificate will be issued by the CPCC. The certificate will contain the important particulars relating to the work registered, such as the title of the work, the name of the author, the name of the copyright owner, the mode of creation, the date of completion and the place of creation, etc. A sample of the subject work as recognized by the CPCC will be attached to the certificate. Key advantages in holding a copyright registration in China If a US copyright owner wishes to initiate a copyright enforcement action in China, such as online takedowns, administrative raid, trademark opposition and invalidation, border interception at the Chinese Customs, and civil and criminal proceedings, it first has to prove that it owns the copyright in the subject work in question. A copyright registration certificate issued by the CPCC may serve as prima facie proof of the holder’s ownership of the copyright in the subject work. By contrast, if no copyright registration is obtained in China, a US copyright owner will be required to submit documents to prove its ownership of the copyright in the subject work, which is a notoriously difficult task and expensive exercise for foreign copyright owners. In China, a witness statement such as a declaration/affirmation of creation and ownership of a work alone will not be given much weight by the Chinese courts and government enforcement authorities, and will not be welcomed by the major trading platforms for takedown purposes either. In addition, even assuming a US copyright owner is able to produce the relevant documents required to prove its ownership in the subject work, those documents must first meet the formality requirement of notarization and legalization and must be translated into Chinese before they can be admitted as evidence in an enforcement action in China. This onerous formality requirement and its cost implication might simply deter a US copyright owner from taking enforcement action. A copyright registration in the US for the same work is normally not very helpful in serving as prima facie evidence of proof of the registrant’s ownership, primarily because it does not include an officially- recognized sample of the subject work attached to the registration certificate. Trademark opposition and invalidation actions in China – Conflict with prior copyright in an artistic work is a valid opposition/invalidation ground under Article 32 of the Chinese Trademark Law. The Chinese trademark authorities have been more willing to recognize the effect of a copyright registration in China in ascertaining and determining the issue of the opponent’s/petitioner’s ownership of copyright in the work in question, especially where the copyright registration certificate submitted by the opponent/petitioner predates the filing date of the disputed trademark filing, or there is some other favorable circumstance or evidence in the case, notwithstanding that the copyright registration is obtained without going through any substantive examination. Administrative Raid Action – The copyright administration authority requests that a copyright owner prove its copyright ownership as a pre-condition for accepting a complaint of copyright infringement filed by the rights owner. A copyright registration certificate as issued by the CPCC in Chinese will be good evidence to overcome this first hurdle in an administrative raid action on the complainant. Unless the infringer can provide conflicting evidence to successfully rebut the validity of the copyright registration in China, the copyright administration authority will officially accept the complaint for further investigation and review. Online takedowns – Online takedowns have become frequent enforcement actions taken by US copyright owners to protect their IP rights in China. To file a copyright takedown complaint with the major online trading platforms in China such as Taobao, Tmall and JD, a complainant is required to submit proof of its ownership of the copyright to the platform. In this situation, a copyright registration certificate in China will obviously be the most preferred prima facie evidence that those trading platforms would like to receive for verification, as a copyright registration certificate is an official certificate issued by a government body (i.e., the CPCC), which contains all the necessary particulars for the platforms’ verification. A copyright takedown request can only be filed with those online trading platforms after the platforms have completed their verification process and recognize the complainant’s copyright ownership. Enforcement via Chinese Customs – Customs/border interception of goods suspected to have infringed other’s trademark rights, copyrights or patent rights is also an important way to protect the owners’ rights and interest and enforce against infringers. In order to avail oneself of the Customs protection, an IP rights owner will normally need to record its IP rights with the Chinese Customs in advance. With regard to the recordal of copyright rights with the Chinese Customs, Section 7(2) of the Implementing Measures of the Regulations on Customs Protection of IP rights in China specifically provides that a copy of the copyright registration certificate, together with a sample of the work officially recognized by the CPCC in China, are acceptable proof of the applicant’s copyright ownership for purpose of recordal. Otherwise, a foreign copyright owner will need to go through the difficult and expensive exercise as mentioned above to prove its copyright ownership to the Chinese Customs.

The Ohio State Buckeyes may have lost the college football national championship to Alabama earlier this year but OSU can take some consolation from its recent victory in a trademark case before the Sixth Circuit Court of Appeals. In The Ohio State University v. Redbubble, Inc., Case No. 19-3388 (6th Cir. Feb. 25, 2021), the Sixth Circuit reversed a lower court’s grant of summary judgment in favor of defendant Redbubble, an Australian online retailer that OSU had sued for trademark infringement and related claims. In doing so, the Sixth Circuit grappled with an increasingly relevant issue in the digital age: whether e-commerce companies are liable for trademark infringement arising from products they sell in the online marketplace. Redbubble operates an online marketplace for print-on-demand products based on user-submitted artwork. Independent artists upload images to Redbubble’s interface and consumers can place an order for a customized item. Once a consumer makes a purchase, Redbubble contacts the artist and arranges the manufacturing and shipping of the product with independent third parties. The shipped products, however, are delivered in Redbubble packaging with Redbubble tags. Back in 2017, OSU discovered products on Redbubble’s marketplace that displayed OSU’s trademarked images without approval. Redbubble declined to remove the offending articles unless OSU complied with onerous demands for identification of the infringing articles, following which OSU sued it for trademark infringement, counterfeiting, and unfair competition (under both the Lanham Act and Ohio’s right-of-publicity law) in the Southern District of Ohio. The parties subsequently cross-moved for summary judgment, and the district court granted summary judgment for Redbubble, holding that “Redbubble did not ‘use’ OSU’s trademarked images in operating its business model under the Lanham Act because it only acted as a ‘transactional intermediary’ between buyers, sellers, manufacturers, and shippers. On appeal, the Sixth Circuit first addressed OSU’s argument that Redbubble was vicariously liable under the Lanham Act. The appellate court held that, while OSU might have a good argument for vicarious liability, it was barred from pursuing that claim because it had failed to raise the issue in the district court (litigators, don’t let this happen to you - make sure to raise every possible argument in the trial court or you risk being barred from pursuing even meritorious claims on appeal). The Sixth Circuit then moved on to the more interesting question: did Redbubble “use” OSU’s trademarks under the Lanham Act by marketing and selling infringing products? The Court first noted that online marketplaces, like eBay and Amazon, that merely facilitate sales for independent vendors generally escape Lanham Act liability. On the other hand, parties who design and print trademark-infringing goods typically violate the Lanham Act, as do direct sellers of offending products (whether brick-and-mortar stores or company websites). So, which is Redbubble? The Court distilled the question as follows: “What level of involvement and control must a defendant exercise over the creation, manufacture, or sale of offending goods to be considered akin to a ‘seller’ or ‘manufacturer’ to whom Lanham Act liability applies?” The Court stated that, based upon Sixth Circuit precedent, a key distinction between a direct seller who “uses” a trademark and a mere facilitator of sales is “the degree to which the party represents itself, rather than a third-party vendor, as the seller, or somehow identifies the goods as its own.” In this case, the evidence suggested that “products ordered on Redbubble’s website do not yet exist, come into being only when ordered through Redbubble, and are delivered in Redbubble packaging with Redbubble tags.” Thus, Redbubble is more than just a “passive facilitator” – it “brings trademark-infringing products into being by working with third-party seller to create new Redbubble products, not to sell the artists’ products.” In the mind of the Sixth Circuit, that “use” of OSU’s trademark was sufficient to preclude summary judgment in Redbubble’s favor. After discussing OSU’s Ohio right-of-publicity claim (again reversing the district court’s grant of summary judgment to Redbubble on this claim too), the Court considered whether OSU was entitled to summary judgment on its claims. On that issue, the Sixth Circuit concluded that there was insufficient record evidence and so remanded for additional fact-finding. According to the Court, the factual gaps include the precise nature of Redbubble’s contractual relationships with third-party manufacturers and shippers, the degree to which Redbubble is involved in selecting and imprinting trademark-infringing designs on its products, Redbubble’s involvement in product returns, and facts relating to potential defenses Redbubble might have. While the final outcome of this case is uncertain, OSU can certainly be pleased with the Sixth Circuit’s decision. More generally, this case contributes to an understanding of when and how online retailers may be liable for trademark infringement – at least in the Sixth Circuit. The general lesson? Unless an online retailer is clearly a passive facilitator of third-party sales like Amazon or eBay, it needs to be careful how involved it is in the product manufacturing and sales process or it runs the risk of being sued for trademark infringement. Also, lawyers: make sure you preserve issues for appeal!

In December 2020, Taylor Swift released her ninth studio album, Evermore. The album came as somewhat of a surprise, following the release of her eighth album, Folklore, by only 5 months. Evermore sold over 1 million copies in its first week, helped propel Swift to being the most streamed artist on Apple Music in 2020, and was met with critical success. It was also met with a lawsuit. On February 2, 2021, Evermore Park, LLC sued Taylor Swift in the U.S. District Court for the District of Utah. In its Complaint, Evermore Park alleged that Evermore infringes several EVERMORE trademarks that Evermore Park has owned since 2015. Evermore Park also sued TAS Rights Management, LLC (“TAS”), the entity that owns and manages Taylor Swift’s intellectual property rights, and Taylor Nation, LLC, the entity that operates Swift’s websites among other things. Evermore Park is an “ancient township” built “upon a body of mysterious energy” that opened in 2018. According to its website, doorways to other lands, worlds and dimensional planes once open at Evermore Park were sealed for centuries until keys to unlocking the magic of these gateways were rediscovered and the portals were unsealed. Now guests can experience the magic emanating from the portals at the Park’s Axe Throwing Field, Elven Archery Range, or Crooked Lantern Tavern. Like many theme parks, Evermore Park sells merchandise at the Park and through its online store, such as bags, t-shirts, and ornaments. Evermore Park also has live musical performances at the park and plays songs upon request, including Taylor Swift’s songs. Evermore Park owns several trademarks for EVERMORE for use on these goods and services, namely several types of apparel and “live visual and audio performances by an actor.” Evermore Park is alleging that Taylor Swift is already marketing Evermore merchandise that infringes its trademarks and is likely to begin offering “live visual and audio performances,” presumably in the form of concerts or a tour, using the EVERMORE trademark. In addition, Evermore Park claims that because it has created two original music scores Evermore Park Vol. 1 and Evermore Park Vol. 2, Swift’s Evermore album itself is likely to cause confusion in the marketplace. Evermore Park claims that Swift’s alleged infringement is causing it irreparable harm, and has filed a Motion for Preliminary Injunction, seeking to stop Swift’s sale of Evermore merchandise or offering “live entertainment services” under the Evermore brand during the pendency of the case. Swift’s team has not responded to Evermore Park’s Complaint or Motion for Preliminary Injunction. But in a letter exchanged before Evermore Park filed the Complaint, Swift’s attorneys made clear that “there is no basis” for Evermore Park’s claims of trademark infringement. And, if anything, rather than causing harm, the Evermore album has created marketing opportunities for Evermore Park. Curiously, the Park confirmed this in its Complaint, noting that it experienced a 330% increase in traffic to its website in the days following the release of Evermore. Swift’s counsel ended the letter warning that “the asserted claims are frivolous and irresponsible and, if pursued further, will be defended vigorously.” As they say, the most vigorous defense is a good offense. Taylor Swift, through TAS, filed her own Complaint in the U.S. District Court for the Middle District of Tennessee on February 22, 2021. TAS alleges that Evermore Park has infringed several of Swift’s copyright protected works, including some of her most well-known songs: Bad Blood, You Belong With Me, and Love Story. According to TAS, Broadcast Music, Inc. (“BMI”) protects and enforces Swift’s rights in the songs and has been attempting to get Evermore Park to license the music since at least August 2019. Despite repeated follow ups, Evermore Park “blatantly ignored” BMI—until TAS threatened to file this lawsuit. The Complaint alleges that once this lawsuit became imminent, Evermore Park contacted BMI to request a retroactive license for live performances of Swift’s songs from 2018 to present. However, Evermore Park is not out the woods yet. TAS alleges that by seeking the retroactive license, Evermore was trying to cover its tracks and has all but admitted infringement in the process.

The European Union (“EU”) has shaped and developed Intellectual property (“IP”) policy extensively over the years. IP law in EU member states is today largely a matter of EU law. Key areas of IP are dominated by EU rights and institutions. Separating the United Kingdom (“UK”) out of those systems can be a complicated matter. As in many other areas, the UK and the EU handled the separation in very different ways.  In principle, the implications of Britain’s withdrawal from the EU in relation to IP are pretty obvious and unequivocal. The UK ceases to be part of the EU trademark and design systems (managed by the EUIPO) which means that from now on trademark and design registrations have to be secured locally. More generally, EU law and the decisions of the EU courts no longer apply in the UK and in the future the UK can develop and revise its laws independently. Those are the simple facts. Where there is much more room for nuance is in relation to IP separation issues and transitional arrangements. For Britain, “Project Brexit” was all about smoothing out the transition, ensuring continuity, where possible, and minimising disruption. By contrast, the EU was never going to go out of its way to ensure an easy transition. Politically, the main message the EU wanted to send out was that there is a heavy price for leaving the bloc, so that other member states are not tempted to follow in Britain’s footsteps. In terms of IP, the EU’s main policy seems to have been to let things lie where they fall. Continuity of Law In broad terms, to ensure continuity of law, the UK adopted all EU legislation existing on 31 December 2020 into its domestic law.  The same applies to IP laws. The EU has legislated in most areas of IP and EU law, harmonising and modernising the law across the EU and introducing many new policies. Apart from the fact that the UK has withdrawn from the EU trademark and design systems, this EU legislation generally continues to apply in the UK with very few modifications and the UK courts will continue to follow the case law of the Court of Justice of the EU (up to and including 31 December 2020) subject to future changes in domestic UK law. There are some important exceptions. The new and controversial Copyright in the Digital Single Market directive which has not yet been implemented into UK law will not be adopted. The UK has also announced that it will not participate in the EU unitary patent scheme. The implementation of the EU unitary patent and the corresponding agreement on the Unified Patent Court have been delayed since 2016 following the Brexit referendum decision. Most EU member states are yet to ratify the agreement which is a pre-condition for the EU unitary patent to come into effect. Following Brexit, it is unclear whether these initiatives will ever be implemented by the EU.  EU Trademarks and EU Designs The UK’s exit from the EU meant that it could no longer participate in the EU trademarks and design systems. However, from the UK point of view, it was a priority to ensure continuity and to minimise disruption. Further, the owners of registered EU trademarks and registered designs had vested property rights in the UK based on these EU registrations. It was out of the question to allow those IP owners to lose their property rights in the UK as a result of Britain’s withdrawal from the EU. So it was clear that the UK will have to continue to protect those EU trademarks and designs after Brexit.  Still, the UK had different options how to manage the transition. At the end of the day it chose a solution that ensures maximum continuity and requires no intervention on the part of right holders. The UK adopted legislation to automatically extend protection in the UK to all EU trademarks and designs registered as at 31 December 2020, without any fee or notification requirements. By creating cloned UK registrations for each EU trademark and design registration, the UK effectively created new domestic independent UK registrations to replace the legacy EU rights, with the new rights having the same priority and renewal dates as their legacy rights.  In the same way, for each international trademark registered under the Madrid Protocol and protected in the EU on 31 December 2020, the UK automatically created a new domestic independent registration in the UK, without requiring right holders to apply for such protection. The same arrangement applies to registered designs registered at WIPO under the Hague Agreement Concerning the International Deposit of Industrial Designs. Applications for EU trademarks and EU registered designs which were still pending before the EUIPO on 31 December 2020 are treated differently. They were not replicated as UK applications, but applicants can file new applications in the UK, which can have the benefit of the priority date of the legacy EU application if filed within 9 months.  Owners of international registrations designating the EU, unless the registration was already protected in the EU on 31 December 2020, will have to re-designate their international registrations to include the UK if they wish their international registration to be protected in the UK.  Transitional Arrangements The extraction of the UK from the EU trademark and design systems opens up a number of practical legal questions. For example, in the context of for EU proceedings, whether the use of a mark in the in the UK before 31 December 2020 should be taken into account when considering issues such as acquired distinctiveness, non-use, reputation and likelihood of confusion, or similar questions in the context of UK proceedings with regard to the use or repute of a mark gained in the EU before Brexit. Many such questions will remain relevant for years to come in contentious proceedings both in the UK and in the EU. In this context, the UK and the EU adopted quite distinct approaches. The UK introduced comprehensive new legislation to deal with those kind of separation and transitional issues. The legislation lays down a new rule book which provide a nuanced approach to those issues and will enable right holders and practitioners to plan ahead and for the courts and the UKIPO to resolve disputes.  By contrast, no legislation at all has been introduced by the EU to deal with similar questions that will inevitably arise in EU proceedings. The EUIPO issued guidance to right holders and representatives regarding the implications of Brexit. The guidance, which has no legal effect, explains how the EUIPO would deal with issues relating to the UK. Essentially, the EUIPO interprets the existing law and concludes, in almost every respect, that UK prior rights or the use or reputation of a right in the UK (including reputation or use before 1 January 2021) will be ignored by the EUIPO. The one exception is that use of an EU mark before 1 January 2021 can still be relied on as part of a defence to a non-use challenge. The guidance is useful as far as it goes, but it is not legislation. Parties to disputes may seek to test the law and courts in member states will have to decide themselves how to interpret the law in view of Brexit. It is likely that some uncertainty will surround those issues within the EU for some time to come. 

Have you ever been to an indoor cycling class? If so, you most likely have heard the term “spin class,” or referred to the act itself as “spinning.” Mad Dogg Athletics, Inc. would take offense, however, calling such uses infringement unless the studio is an authorized licensee of its marks. Mad Dogg Athletics has owned numerous trademark registrations for SPIN and SPINNING for a number of goods and services, including exercise equipment and fitness instruction, since the early 1990s. It’s been a heck of a ride for Mad Dogg, though Peloton Interactive Inc. recently upped resistance by filing petitions in the U.S. Trademark Trial and Appeal Board to cancel Mad Dogg’s exclusive rights in both marks for exercise equipment and fitness instruction.  According to Peloton, Mad Dogg Athletics has lost exclusive rights in the SPIN and SPINNING marks for indoor cycling equipment and fitness instruction due to genericide. Genericide is nothing new: ESCALATOR, LINOLEUM, and DRY ICE are just a few examples of terms that were once the subject of trademark protection that are now known as common nouns for those same items. Genericide is not up to a brand owner – it occurs when the relevant public understands the primary significance of the mark as referring to the name for the goods or services. See 15 U.S.C. §1064(3). In essence, companies can fall victim to their own success in the marketplace when the brand name they create and promote becomes what their goods/services actually are called or how they are referred to generally instead of functioning as a source indicator. Brand owners can contribute to genericide by using their trademarks as verbs or nouns, which effectively turns the mark into an everyday term instead of a source indicator. The relevant public is the primary decider, however, of which marks have become generic, and consumer survey evidence often plays a critical role in the inquiry into whether a term has become generic. Successful brand owners understand the need to break away from genericide by actively policing the marketplace, enforcing against descriptive uses of their marks by competitors, informing the press, and educating their customers and licensees on how to properly refer to the brand as a source indicator. For example, the owners and attorneys who represent Velcro® fasteners made the hilarious viral video "Don't Say Velcro" to educate the public that Velcro® is a registered trademark for hook and loop fasteners. Mad Dogg Athletics has tried similar tactics, allegedly sending numerous demand letters to competitors and even writing to the Deputy Commissioner of the U.S. Patent and Trademark Office in 2012, requesting that Examining Attorneys refuse marks that include SPIN and SPINNING for goods/services related to health and fitness, particularly indoor cycling and group fitness instruction; stop treating the terms “spin” and “spinning” as merely descriptive for goods/services related to indoor cycling; and stop permitting third parties to include “spin” or “spinning” relating to indoor cycles or indoor cycling instructions. Whether such efforts have succeeded is a question that Mad Dogg Athletics will have to address in the TTAB proceeding. Peloton obviously has the resources to go the distance in this trademark dispute and to commission consumer survey evidence to support its position. Ultimately, though, whether Mad Dogg’s marks have become generic will shift down to what the relevant public understands the terms “spin” and “spinning” to mean.

The Northern District of California concluded last week that Constellation Brands has the exclusive right to use the TO KALON and TO KALON VINEYARD marks on wine, and that The Vineyard House, LLC (TVH) “cannot use the term in any way, shape or form.” At issue was Constellation’s claim that TVH was improperly selling wine using Constellation’s validly registered “To Kalon” mark. TVH claimed that because it grew its grapes on land owned by the original “To Kalon” wine maker, it used the phrase “To Kalon” on its label and in its marketing, not as a trademark, but instead as a vineyard designation. To determine whether TVH could appropriately use the To Kalon mark as a geographic source identifier, the court had to unwind the tangled vines covering the history of the To Kalon marks. The History of the Mark The term “To Kalon,” a Greek phrase meaning “Highest Good” or “Highest Beauty,” has a complex history with and relationship to wine that extends back over 130 years to a vigneron named Hamilton Walker Crabb. Between 1868 and 1879, Mr. Crabb purchased approximately 360 acres of land in the Napa Valley, and he harvested and sold grapes from this land. In 1889, Mr. Crabb bought another 168.5 acre, non-continuous parcel – the Baldridge Parcel – which was largely hilly and wooded. Relying on Mr. Crabb’s probate records, which the court found was the best evidence, the court concluded that Mr. Crabb never used the Baldridge Parcel to grow wine grapes, but instead its value was comprised of water rights, piping, and timber. Though he initially cultivated grapes and sold wine under the name “Hermosa Vineyards,” in 1886 Mr. Crabb renamed his winery as the To-Kalon Winery Company, and thereafter won numerous domestic and European wine awards, spoke at conferences, wrote prolifically and shared his expertise and knowledge about viticulture. In short, he promoted the To Kalon name. Mr. Crabb continued growing grapes on the non-Baldridge Parcel land and selling wine under the To Kalon name until 1899 when he passed away, and the winery operations continued under the To Kalon name until 1939 when a fire closed the operations. After a multi-decade hiatus, Robert Mondavi Wines (RMW), Constellation’s predecessor trademark owner, picked up the To Kalon torch. RMW was awarded trademark registrations in TO KALON on May 24, 1988, and both the TO KALON and TO KALON VINEYARDS marks had achieved incontestability. Mr. Mondavi himself then worked to make the To Kalon marks famous by repeatedly retelling the (nonfictional) story of the original significance of Mr. Crabb’s land, and the (fictional) story of how after buying grapes from the To Kalon land for years, he ultimately purchased 325 acres of the To Kalon land in 1958. The Court Finds TVH Infringed Based on this background, the court concluded that sophisticated wine consumers, merchants, and professionals immersed in the Northern California wine industry have a current understanding of To Kalon, but that this understanding did not exist prior to 1988. The court therefore held TVH committed trademark infringement because Constellation owned a valid, protectable mark, TVH used the mark on wine without Constellation’s consent, and after applying the Sleekcraft factors, that such use was likely to cause confusion among ordinary consumers of such wine. The court also ruled against TVH on each affirmative defense, but its analysis of the fair use and cancellation affirmative defenses are what is noteworthy. TVH claimed fair use in referencing To Kalon on its wine bottles because Mr. Crabb owned the Baldridge Parcel for at least ten years before he died, and, according to TVH, Mr. Crabb produced wine from grapes grown on the Baldridge Parcel. Though typically the fair use doctrine requires a party show the use by the alleged infringing party is “otherwise than as a mark,” in some circumstances, a junior user can use another’s registered trademark so long as it is in a non-trademark, geographical sense. Producers of goods that are located in a specific place have a limited right to tell purchasers their location. TVH claimed, therefore, that because it grew grapes used to make and sell wine sourced from one of Mr. Crabb’s parcels—the Baldridge Parcel—it should be permitted to use To Kalon as a geographic source identifier. The court rejected this argument because the evidence suggested that Mr. Crabb had never actually used the hilly and wooded Baldridge Parcel to grow grapes for the To Kalon wine, and TVH’s own expert conceded that the wine industry did not consider the reference to “To Kalon” to include hillside vineyards, such as the Baldridge Parcel. Based on this, the court concluded that not only was TVH’s reference to Kalon not fair use, but also that “such a representation on its wine would itself mislead the wine consuming public.” The court next turned to TVH’s claim that Constellation’s To Kalon marks should be cancelled because in his response to an Office Action from the USPTO, RMW had misrepresented (according to TVH) that “TO KALON” had “no present meaning or significance” in wine though “[p]rior to the turn of the 20th Century, there was a winery in the Napa Valley which used the name ‘Tokalon’.” This statement is largely true, but also incomplete, including because it arguably understated the prior notoriety of the To Kalon mark, stated that the name had no present meaning or significance and incorrectly stated that its use was only “prior to the turn of the 20th Century” when its use continued to until the 1939 fire. But the court took a ‘close enough’ approach noting that “while RMW could have been more complete in its response,” the missing or incorrect information is “not the type of material information which is determinative of whether the ‘primary significance’ of a term is geographic,” especially in light of the substantial evidence showing that Mr. Crabb himself used To Kalon as both a brand and a reference to his vineyard. The Real Winner(s) Constellation vindicated its exclusive right to use the To Kalon mark in court, but the lawsuit, and, perhaps more importantly, the coverage of the lawsuit should provide some consolation to TVH. Drawing a distinct line between Constellation’s To Kalon and TVH’s Baldridge Parcel grapes may just lead to an increase in sales. I, for one, look forward to purchasing and opening a bottle from each to determine which is the true winner. I suspect I won’t be alone.

As we wrote in Parts I and II in this series, the Trademark Modernization Act of 2020 (“TMA”) was signed into law on December 27, 2020, containing several significant amendments to the Lanham Act. This post will cover two of the legislative changes: (1) the formalization of procedures for Letters of Protest; and (2) the discretionary shortened timeframe to file a response to Office Actions. The formalization of procedures for Letters of Protest is not anticipated to require new regulations for implementation, and the newly-formalized procedures and fee for submissions went into effect on January 2, 2021. The new changes for shortened response times to Office Actions will take effect on December 27, 2021, though the implementing regulations and procedures, as well as the fees for these procedures, have not yet been set. Procedures for Letters of Protest Letters of Protest can be a useful tool for interested third parties to bring to the attention of an examining attorney the existence of prior pending applications or registrations alleged to be confusing similar, or other issues, such as the descriptive significance of the applied-for mark, that a third party believes create a bar to registration. A third party must follow the procedures set forth below. (For additional details, we suggest reviewing the procedures on the USPTO’s website.) These newly-formalized procedures may not be very different from what has been informal practice up until now, but it is helpful to have confirmation of what the USPTO requires: Letters of Protest must include a valid legal ground for a USPTO examining attorney to refuse registration. Evidence must be submitted by the party filing the Letter of Protest. Timing for filing a Letter of Protest and Evidentiary Requirements: If filed before the trademark application is published, the evidence must be relevant to the stated reason(s) for why registration should be refused. If filed after the trademark application has published, the evidence must establish a prima facie case for refusing registration. Letters of Protest must be filed electronically at the USPTO and a fee of $50 is required. The TMA adds the following changes to the procedures: A third party may submit for consideration for inclusion in the record of an application evidence relevant to a ground for refusal of registration. The submission shall identify the ground for refusal and include a concise description of each piece of evidence submitted in support of each identified ground for refusal. Not later than 2 months after the date on which the submission is filed, the Director shall determine whether the evidence shall be included in the record of the application. If the Director determines that the third party evidence should be included in the record of the application, only the evidence and the ground for refusal to which the evidence relates may be included. Any determination by the Director whether or not to include evidence in the record of an application shall be final and non-reviewable, and a determination to include or to not include evidence in the record shall not prejudice any party’s right to raise any issue and rely on any evidence in any other proceeding. The key takeaway here is that the USPTO now will have a set deadline to review evidence submitted in Letters of Protest and make a determination about whether the evidence will be included in the record of the application. Provision for Discretionary Shortened Response Deadline to Respond to Office Actions Under current USPTO procedures, an application will be reviewed by an examining attorney, who will either approve an application for publication for opposition, or issue an Office Action raising particular issues that must be addressed before the application can move forward. If an Office Action issues, an applicant has 6 months to respond. The TMA changes the current process by authorizing the issuance of Office Actions that require a response as early as 60 days after issuance, or within 6 months from issuance. The discretionary shortened response deadline is intended to be a tool for eliminating applications that will ultimately be abandoned and thus unclutter the register. If an applicant fails to reply, amend, or appeal within the relevant time period, including any extension available, the application shall be deemed abandoned, unless it can be shown to the satisfaction of the Director that the delay was unintentional, in which case the application may be revived and time may be extended. The Director may prescribe a fee to accompany any request to revive. The Director shall provide by regulation for extensions of time to respond to the examiner for any time period that is less than 6 months. The Director shall allow the applicant to obtain extensions of time to reply or amend for a period of time not exceeding 6 months from the date of notification of the issuance of the Office Action. However, the Director may set by regulation the time for individual periods of extension, and prescribe a fee, by regulation, for any extension request. Any request for extension shall be filed on or before the date on which a reply or amendment is due. It remains to be seen how it will be determined which issues might fall into the shortened “60-day deadline” or less than 6 months categories. While the USPTO suggests that the goal behind the implementation of the shortened deadline to respond to an Office Action is to cut dead wood from the register, it could have the effect of making the application process more expensive for applicants who may need additional time beyond a 60-day Response deadline to address what may seem to an examining attorney to be relatively minor issues. We will, of course, provide updates on the implementation of the TMA as updates become available over the course of 2021.

As we wrote in Part 1 of this series, the Trademark Modernization Act of 2020 (“TMA”) was signed into law on December 27, 2020, and contained several significant amendments to the Lanham Act. This post will cover three of the legislative changes, all pertaining to the elimination of “deadwood” marks that clutter the register and create needless impediments to registration of new marks: (1) ex parte expungement; (2) ex parte reexamination; and (3) non-use cancellation. These new vehicles for challenging unused marks will not take effect until December 27, 2021, and implementing regulations and procedures, as well as the fees for these procedures, have not yet been established. Ex Parte Expungement – For Marks That Have Never Been Used What for – As a well-known New Yorker cartoon asked – “How about never – is never good for you?” If the answer is a mark has never been used, then ex parte expungement is the procedure for you to consider. Section 16A is added to the Lanham Act to allow any person—including the Director of the USPTO on the Director’s own initiative—to file a petition to expunge a trademark registration on the ground that the mark has never been used in commerce on or in connection with some or all of the goods or services covered by the registration. Who can petition – The TMA provides that “any person” can file an expungement petition. So unless the implementing regulations specify a standing requirement or one is adapted from analogous opposition and cancellation proceedings through case law, it appears that anyone (plus the Director) can take advantage of this procedure. How to petition – A petition for expungement must identify the specific goods or services alleged never to have been used in commerce in association with the mark. Further, the petitioner must include a verified statement that sets forth the details of its reasonable investigation into whether the goods or services have been offered and additional facts that support the allegations. The TMA indicates that the Director is to promulgate regulations regarding what constitutes a reasonable investigation and the type of evidence that could support a prima facie case that a mark has never been used in commerce. How to respond – The TMA indicates that a registrant’s evidence of use in defense of an ex parte expungement proceeding is the type of evidence that is consistent with when a mark is deemed to be in use in commerce under Section 45 of the Lanham Act. The Director is also charged with establishing the procedures for ex parte expungement proceedings, including setting response times. What about U.S. Marks Registered Based on a Foreign Registration? – For a mark registered solely on foreign registration basis (Section 44(e)) or as an extension of protection via the Madrid Protocol (Section 66), a registrant can offer evidence of special circumstances that provide a basis for excusable nonuse. No duplicate proceedings – The TMA prohibits co-pending ex parte expungement proceedings against the same goods or services in a registration. Further, once ex parte expungement proceedings have been brought against a registration and the registration is upheld for the goods or services at issue, there is an estoppel provision in the Act providing that no later petitions with respect to those same goods or services can be filed, regardless of the identity of the petitioner. When you can petition – Until December 27, 2023, ex parte expungement petitions can be filed against any registration at any time after the third anniversary of the registration. Beginning December 28, 2023, petitions can only be filed between the third and tenth anniversary of a registration. Appeal Procedure – The TMA allows for appeal of decisions in ex parte expungement proceedings to the Trademark Trial and Appeal Board or to the Federal Circuit. Ex Parte Reexamination – For Marks Not in Use When Use Was Alleged What for – The TMA adds a new Section 16B to the Lanham Act to allow any party to petition for reexamination of a registration on the ground that the mark was not in use in commerce in connection with some or all of the goods covered by the registration on or before the “relevant date.” As used in the statute, “relevant date” means: (1) for use-based applications that did not have any change in basis after filing, the date the application was initially filed; or (2) for intent-to-use applications, the date on which an amendment to allege use was filed. What about U.S. Marks Registered Based on a Foreign Registration? – The ex parte reexamination procedure under Section 16B cannot be initiated against foreign-based registrations issued under Sections 44(e) or 66 of the Lanham Act. Who can petition – As with expungement petitions under Section 16A, there is no standing requirement – a reexamination petition can be filed by any person. How to petition and respond – Ex parte reexamination proceedings will share the following similarities with ex parte expungement proceedings: the Director can request ex parte reexamination on the Director’s own initiative; the petitioner must identify the challenged goods or services and include a verified statement that details the reasonable investigation into use the petitioner has conducted; the Director will establish the procedures for ex parte reexamination proceedings; the Director will identify the type of evidence that could support a prima facie case that a mark has never been used in commerce; a registrant’s evidence of use is the type of evidence that is consistent with when a mark is deemed to be in use in commerce under Section 45 of the Lanham Act; co-pending proceedings involving the same goods or services are not allowed; if a registration is upheld for certain goods or services, no further ex parte reexamination proceedings may be initiated against the registration for those goods or services; and decisions can be appealed to the Trademark Trial and Appeal Board or the Federal Circuit. When you can petition – Petitions for ex parte reexamination may be commenced at any time before the fifth anniversary of a registration, except for registrations on the Supplemental Register, which are vulnerable to petition for reexamination at any time. New Non-Use Cancellation Proceeding What for – Section 14 of the Lanham Act is amended to allow a petition for cancellation on the ground that the registered mark has never been used in commerce on or in connection with some or all of the goods covered by the registration. Who can petition – A party who believes it may be damaged by a trademark registration; thus, there is a standing requirement, as with other types of cancellation proceedings. When you can petition – This new non-use cancellation petition can only be filed after the third anniversary of the registration. How does this ground of cancellation for non-use differ from abandonment claims? This new ground for cancellation based on non-use appears to differ from a claim for abandonment because it applies to marks that have never been used, as opposed to marks that were in use for some time but then discontinued. It also does not involve any requirement for a petitioner to establish a lack of intent to resume use by the registrant, a factor that comes into play when a mark has been used for a period of time and then discontinued. *          *          * Look for Part 3 of our series on the TMA soon, which will discuss new Letter of Protest procedures and the discretion given to examining attorneys to set discretionary response deadlines.

Rupp v. Courier-Journal, Inc. involves a dispute between the makers of DERBY-PIE®—a trademarked chocolate-nut pie—and a local newspaper that published two articles about other businesses creating other chocolate-nut desserts. Departing somewhat from its own ruling decades earlier in a separate case involving “Derby pie,” the Sixth Circuit doled out a loss to Rupp, affirming the district court’s holding that the defendant’s challenged use of the term “Derby pie” was a non-trademark use for which the newspaper was not liable. This is a case packed to the brim with sweet treats, racing horses, and a reminder that each race—er, litigation—is a fresh opportunity to win or lose. Plaintiff Alan Rupp, owner of the bakery and Kentucky institution Kern’s Kitchen, sued the Courier-Journal for its use of the phrase “Derby Pie.” The Kern family developed its secret recipe for this chocolate-walnut-vanilla pie in the 1950s and registered a trademark for DERBY-PIE® in 1969. Since at least the 1980s, Kern’s Kitchen has repeatedly sued restaurants and publishers who have used the term “Derby pie” to refer generically to a chocolate-nut pie. See, e.g., Kern’s Kitchen, Inc. v. Bon Appetit, Case Nos. 87-5852, 87-6152 (6th Cir. July 7, 1988). In past decades, this strategy seemed to work, even though defendants had claimed that the term “Derby pie” was a generic descriptor for a chocolate nut pie. For example, in the 1980s Kern’s sued the magazine Bon Appetit for its inclusion of an article for “Derby pie” in a cookbook. Although the district court granted summary judgment to Bon Appetit on the ground that “Derby pie” is a generic term, the Sixth Circuit reversed, holding that there was a genuine factual dispute. Id. But earlier this month, the Sixth Circuit determined that the newspaper’s use of the term “Derby pie” in two articles was merely descriptive. The first piece, titled “Bourbon makes this Derby pie a state original,” shared a recipe for a walnut-chocolate-bourbon pie from a different local restaurant, the Captain’s Quarters. The second piece was a review of an up-and-coming new bakery, and included a reference to a Derby-pie-flavored macaron. The Courier-Journal argued that it was simply using the popular phrase to describe chocolate-nut flavored baked goods, not as an indicator of the source of goods (Kern’s). Importantly, trademark law only applies if the mark is used in a way that designates the origin of goods. But Rupp tried to skip straight to the likelihood-of-confusion test, and the Sixth Circuit sent him back to the starting line. Rupp reminds trademark owners that before even contemplating whether a trademark use is actionable, including applying the eight-factor likelihood-of-confusion test, a court must find that the trademark was used in a legally-protected way. If a trademark is used in a non-trademark way—for example, in a descriptive way—trademark infringement laws simply don’t apply. The Sixth Circuit’s decision was based on all three factors of the test used to determine whether the use of a trademark constitutes a “non-trademark” use: The goods were “sufficiently different”: the newspaper Derby pie used bourbon and no vanilla, and there was no indication Kern’s had ever made any macarons. Both newspaper articles clearly identified the source: other local establishments. Without citing the earlier Sixth Circuit opinion in Kern’s v. Bon Appetit, the Sixth Circuit stated that “Derby Pie” was a common descriptive phrase to denote chocolate-nut flavored pie. The Court’s decision that a descriptive, non-trademark use is not actionable is a straightforward application of trademark law. But the Court’s implicit suggestion that “Derby pie” is a generic term—at odds with the 1988 Sixth Circuit opinion stating there is an issue of fact as to whether it is generic—is notable. Perhaps the mark lost its uniqueness in the intervening three decades, and now approaches generic status. Or perhaps, as the Sixth Circuit suggested, the evidence presented by Rupp defeated his own case. Indeed, the Sixth Circuit explained that the DERBY-PIE® sold by Kern’s could not be confused with the “Derby pie” referenced in the newspaper, because the latter lacked a key ingredient that make DERBY-PIE® famous (vanilla), and included an ingredient never found in DERBY-PIE® (bourbon). So, would a consumer confuse “Derby pie” with DERBY-PIE®? Perhaps, but Rupp confirms that we must first ask the “necessary preliminary question” of whether the mark was used in a non-trademark way. For brand owners, Rupp thus serves as a reminder to consider the broader context of how their marks are used by others when contemplating litigation.

One of the many reasons the year 2020 will be memorable is for the social justice movements and demonstrations that have inspired a flood of new trademark applications with the U.S. Patent and Trademark Office. A recent search of the USPTO database revealed that there are 77 pending or dead applications for trademarks that include the phrase “Black Lives Matter.” Since the murder of George Floyd in late May 2020, over 50 new applications were filed for marks such as “BLACK LIVES MATTER MOVEMENT,” “BLACK LIVES MATTER HAND SANITIZER,” and “BLACK LIVES MATTER MOSCATO.” This wave of “Black Lives Matter”-related trademark applications in 2020 is remarkable, given the USPTO’s previously articulated position regarding the registrability of trademarks using the phrase. Specifically, in 2018, the USPTO rejected the six applications containing the phrase “Black Lives Matter” that were filed by the originators of the movement. Founded by Alicia Garza, Patrisse Cullors, and Opal Tometi, three black women, #BlackLivesMatter was ignited in response to the acquittal of George Zimmerman who fatally shot Trayvon Martin. Since 2013, #BlackLivesMatter (or sometimes referred to as “BLM”) has utilized its platform to address racism across the nation, and seeks to affirm black humanity, to acknowledge of the contributions made in society by black men and women, and recognize the resilience of the black community in the face of oppression. Relying upon this history, the USPTO rejected the BLM founders’ the applications for three reasons. First, the USPTO determined that the “Black Lives Matter” a slogan or term that does not function as a trademark or indicate the source of applicant’s goods and/or services and to identify and distinguish them from others. Second, the phrase identifies an informational, social, political, religious, or similar kind of message that merely conveys support of, admiration for, or affiliation with the ideals conveyed by the message. Third, the phrase is not one the public would not perceive as source-identifying matter that identifies applicant alone as the source of the goods/services, but rather as an expression of support for anti-violence advocates and civil rights groups because potential consumers would simply access the publications and enlist or engage in applicant’s services because they want to support the cause that the slogan represents, not because they believe the slogan indicates the source of such goods and services. The USPTO gave no weight to the fact that the founders of the BLM movement lodged the application. The USPTO’s position is not surprising given that the purpose of a trademark registration is to identify a source. Trademarks help consumers identify the goods and services they wish to purchase, and those they want to avoid. The function of trademark is to designate the source of a particular good or service and to protect the good will of merchant supplying that good or service. Whether a term or phrase functions as a trademark or service mark depends on how it would be perceived by the public. The USPTO has determined that the more frequently a phase is used, the less likely that the public will use it to identify a source. In fact, the USPTO’s standard practice is to reject applications seeking to register marks that are merely informational, based on the nature and the context of the mark’s use in the marketplace, consumers would perceive it as merely conveying general information about the goods or services or an informational message, and not as a means to identify and distinguish the applicant’s goods/services from those of others. See Trademark Manual of Examining Procedure section 1202.04. Specifically, the USPTO instructs the examiners reviewing trademark applications to reject those seeking to register “widely used messages” or otherwise, slogans, terms, and phrases used by various parties to convey ordinary or familiar concepts or sentiments, as well as social, political, religious, or similar informational messages that are in common use or are otherwise generally understood. See 1202.04(b). The USPTO has recently rejected the first of Black Lives Matter applications that were filed in 2020. Like the applications filed by the BLM founders in 2018, the USPTO determined that the recently applied-for mark, “2020 BLACK LIVES MATTER,” fails to function as a trademark to indicate the source of the applicant’s goods and fails to identify and distinguish itself from other “Black Lives Matter” marks or the movement itself. However, a rejected application does not diminish the value and significance of the Black Lives Matter slogan or movement. Kevin Britton, a summer associate, co-wrote this with Tiana Towns.

Many industries were negatively impacted by the pandemic in 2020, but one industry that continues to grow is the influencer marketing industry. The influencer marketing model typically involves agreements between companies and influencers, where the influencer creates content promoting companies’ products for posts on social media and blog sites. Influencers have often built their brands, social media accounts, and blog sites under their own names, and companies want access to the loyal consumer fan base drawn to those names. However, as disputes shared on Instagram this year illustrate, it is not always clear as to which party owns the brand, social media accounts, or products bearing the influencer’s name. Moving into the New Year, both companies and influencers can learn lessons on clarity in IP and social media agreements when engaging in influencer marketing. Two weeks ago, popular wedding dress designer Hayley Paige Gutman (known as “Hayley Paige”) posted on Instagram about a legal dispute arising from an employment agreement between her and bridal house JLM Couture, Inc., her former employer. JLM recently filed suit against Hayley Paige in the Southern District of New York, asserting breach of contract, conversion, and trademark dilution, among other claims. The complaint alleges that an employment agreement between JLM Couture and Hayley Paige provides that Hayley Paige granted JLM “the exclusive world-wide right and license to use her name ‘Hayley’, ‘Paige’, ‘Hayley Paige Gutman’, ‘Hayley Gutman’, ‘Hayley Paige’ or any derivative thereof (collectively the ‘Designer’s Name’) in connection with the design, manufacture, marketing and/or sale of bridal clothing, bridal accessories and related bridal and wedding items, including and [sic] all good will associated therewith for the term of the Agreement, and for a period of two years thereafter”. The complaint also alleges that Hayley Paige irrevocably sold, assigned, and transferred all right, title, and interest to JLM to register her name as a trademark. JLM alleges that Hayley Paige covenanted that she would have no right to use her name during the term of the employment agreement or any time after without JLM’s consent. Based on these provisions, JLM alleges that it owns social media accounts bearing Hayley Paige’s name. The main social media account at issue – @misshayleypaige – features a mix of bridal and wedding-related content and personal images, and has more than 1 million followers. JLM alleges that the account was created as part of its marketing strategy, and thus the number of followers of the account is a direct result of JLM Couture’s advertising expenditures. JLM argues that Hayley Paige’s assistance in the collaborative maintenance of the account falls within the scope of her employment under the employment agreement. The federal court for the Southern District of New York granted JLM’s request for a temporary restraining order against Hayley Paige, prohibiting the designer from making any changes and postings to social media accounts bearing her name, including the @misshayleypaige Instagram, Pinterest, and TikTok accounts. The court also ordered Hayley Paige to deliver to JLM the login credentials for these social media accounts. In two videos with over 2 million views combined posted on a separate account, Hayley Paige stated she has resigned from JLM Couture after a year and a half long legal battle to negotiate a new contract with JLM. Hayley Paige stated that she always considered the @misshayleypaige Instagram account to be her own since the account was opened, and that the employment agreement makes no mention of social media accounts or management thereof. Hayley Paige stated that the @misshayleypaige Instagram account has always been used for her own personal photos, thoughtful quotes, and real relationships. In the meantime, Hayley Paige noted that she is no longer posting or engaging on the social media accounts bearing her name until the dispute is resolved in court. While the dispute between Hayley Paige and JLM Couture focuses on the scope of an employment agreement and the use of an employee’s name, companies and influencers can also learn from a business dispute involving the use of a vegan chef’s name. This past year, the winner of the television competition Cupcake Wars and vegan chef Chloe Coscarelli (known as “Chef Chloe”) recently posted on Instagram that she won a legal dispute with her business partner, ESquared Hospitality LLC (“ESquared”) in May. Chef Chloe rose to fame after she won the television competition Cupcake Wars, and has since authored cookbooks, made other television appearances, impacted the vegan culinary scene, and originated the concept for a fast casual vegan restaurant chain bearing her name – “by Chloe.” Chef Chloe wholly owns California limited liability company Chef Chloe LLC. Under her limited liability company, Chef Chloe filed a demand for arbitration against business partner ESquared, seeking a judgment declaring that Chef Chloe still owns 50% of the interests in “by Chloe” restaurants. Chef Chloe also sought a permanent injunction barring her business partner from selling any packaged food or beverages using the name “Chloe” or any variation thereof, including the trademark “by Chloe,” for projects other than fast casual vegan restaurants. The arbitration addressed terms of an operating agreement between Chef Chloe LLC and ESquared. One of the issues addressed in the arbitration was whether, under the operating agreement, the vegan restaurants had the unlimited right to expand their usage of the “by Chloe” trademark without obtaining consent from Chef Chloe because Chef Chloe LLC was terminated as a member. The arbitrator found that the operating agreement did not strip Chef Chloe of approval rights for future expansion of trademark usage as one of its penalties for termination as a member. The arbitrator stated that Chef Chloe must “abide by the deal that she made with the Company to continue to use her first name as the name of the fast casual vegan restaurant, but likewise [her business partner] must abide by the terms of the deal that it struck with Chef Chloe not to expand the use [of] the trademark beyond fast casual restaurants without getting her pre-approval.” The arbitrator also awarded full, undiluted 50 % interest in the restaurant chain. Thus, Chef Chloe retains approval rights for the usage of her name, even though she does not actually own the mark. Companies and influencers can also learn from a disagreement stemming from the control of an influencer’s blog-turned-apparel brand bearing the influencer’s name. This past June, influencer Julia Berolzheimer posted on Instagram that she would no longer use the name of the blog-turned-content creation business she originated following a disagreement with her business partner. Julia Berolzheimer is a successful influencer known all over the world with 1.4 million followers on Instagram. Julia began her brand, “Gal Meets Glam,” as a personal style blog. The blog was transformed into a content creation business, which then expanded into an apparel brand bearing the name of the blog – the Gal Meets Glam Collection. Despite the success of the brand, Julia Berolzheimer announced on her blog that the Gal Meets Glam Collection would be ending. Julia Berolzheimer stated that the decision to end the Gal Meets Glam Collection stemmed “from the lengthy disagreement between how we wanted to build Gal Meets Glam and how our business partner felt it should be run.” Julia informed her followers that her content would now fall under her own name, rather than the Gal Meets Glam name. These three disputes about individual names being used as trademarks involve different kinds of agreements in varying circumstances, but there are general lessons companies and influencers can apply when engaging in influencer marketing in the New Year. Agreements arising from influencer partnerships should clearly delineate social media accounts and blog sites, rather than extending intellectual property provisions in general broad terms to encompass these accounts. Ownership of the social media account (both during the term and after the expiration of the agreement), management of the social media account, the name of the account, and approval of content should be spelled out in the agreement and employment policies, where relevant. In this way, both the company and the influencer are clear as to the roles and expectations surrounding names functioning as trademarks for the New Year and beyond.

After a fair amount of end-of-year legislative drama, the Trademark Modernization Act of 2020 (“TMA”) was signed into law on December 27, 2020 as part of the Consolidated Appropriations Act for 2021, which also included needed funding for COVID-19 relief and support. The text of the Act from the House Report can be seen here. The TMA amends the Lanham Act in several different unrelated ways, all of which are important for trademark practitioners, whether litigating in federal court, prosecuting trademark applications in the USPTO or engaging in proceedings before the Trademark Trial and Appeal Board. Some parts of the TMA, such as the provisions for ex parte reexamination, become effective a year from signing, on December 27, 2021. Other provisions, such as the statutory amendment concerning the presumption of irreparable harm and the clarification of status of TTAB judges do not specify an effective date and may be left to the courts to decide. Our first post on The TMCA will cover the presumption of irreparable harm for obtaining injunctive relief under the Lanham Act and amendments to ensure that the independence of Trademark Trial and Appeal Board (“TTAB”) judges cannot be challenged under the Appointments Clause of the Constitution. In subsequent posts, we will address changes to Letter of Protest and office action response procedures during the application examination process and new procedural mechanisms for challenging the validity of registrations based on lack of commercial use of the registered mark. Clarification on Presumption of Irreparable Harm for Obtaining Injunctive Relief The TMA clarifies that when seeking injunctive relief on a claim for trademark infringement, a rebuttable presumption of irreparable harm is created upon a finding of trademark infringement at trial, or upon a showing of likelihood of success on the merits for preliminary injunctive relief or a temporary restraining order. The rebuttable presumption also applies to claims of unfair competition, false advertising, dilution or cyberpiracy under Section 43 of the Lanham Act. An amendment to the Lanham Act was needed due to a Circuit split regarding the standard for injunctive relief in trademark infringement cases following the U.S. Supreme Court’s ruling in eBay Inc. v. MercExchange, which eliminated a similar presumption of irreparable harm in patent cases. In trademark cases decided since eBay, Circuit courts have ruled inconsistently on whether the four equitable factors for obtaining an injunction should be weighed in each case, or whether irreparable harm should be presumed once there is a finding of infringement or a likelihood of success is shown for purposes of obtaining expedited relief. This split encouraged forum shopping and undermined the consumer protection purposes of the Lanham Act. The TMA now codifies in the Lanham Act a nationwide uniform standard that the presumption should be applied in trademark cases. Thus, the Act reduces the evidentiary burden on trademark owners for obtaining injunctive relief to protect their trademark rights and prevent consumer confusion. Protection of Administrative Law Judges Serving on the Trademark Trial and Appeal Board The TMA also contains a provision giving the Director of the U.S. Patent and Trademark Office considerably more power over the administrative law judges of the TTAB. The amendment to Section 18 of the TMA clarifies that “the authority of the Director under this section includes the authority to reconsider, and modify or set aside, a decision of the Trademark Trial and Appeal Board.” This provision should avoid the problem highlighted in the 2019 Arthrex v. Smith & Nephew decision of the Federal Circuit. The court in that case held that Patent Trial and Appeal Board judges were not subject to sufficient oversight and supervision by the USPTO Director to be considered inferior officers under the Appointments Clause, and thus were unconstitutionally appointed since they had not been nominated by the President and confirmed by the Senate. The TMA amendments confirm that TTAB judges are inferior officers, which should immunize them from any application of the Arthrex holding. Stay tuned for further TMCA posts on other important changes to the Lanham Act coming your way under the TMA.

Just in time to steal ComicMix’s Christmas, the Ninth Circuit recently held that the bookmaker’s mashup story Oh, the Places You’ll Boldly Go! (which combines elements of the Dr. Seuss book Oh, the Places You’ll Go! with Star Trek) is not a defensible fair use under copyright law. The opinion reverses in part a summary judgment ruling by the District Court for the Southern District of California, which we wrote about here. Seuss Enterprises had sued ComicMix for copyright and trademark infringement over Boldly, which features Star Trek characters set in a Seussian world highly reminiscent (and in some instances directly copied from) Go! and other works by Dr. Seuss. The TMCA featured a Seuss-styled introduction to the case here. ComicMix was able to eliminate Seuss’s trademark and associated unfair competition claims on a motion to dismiss. Next, on summary judgment, the district court concluded that ComicMix’s work constituted fair use (and thus defeated Seuss’s copyright claim) because the book was a highly transformative “literary and pictorial ‘mash-up.’” Seuss appealed both decisions. Beginning with its own riff on a quote from Go! (“mash-ups can happen to you”), a unanimous Ninth Circuit panel concluded that none of the four fair use factors favored ComicMix and reversed the district court. Considering the all-important transformative-use factor, the court concluded that “[a]lthough ComicMix’s work need not boldly go where no one has gone before, its repackaging, copying, and lack of critique of Seuss, coupled with its commercial use of [Dr. Seuss’ work], do not result in a transformative use.” Next, the court found that the creative nature of Go! tilted in favor of Seuss. With respect to the amount and substantiality of the work copied, ComicMix “extensive[ly] and meticulous[ly]” copied Go!, and statements in the record showed that ComicMix could have created Boldly without this sort of “wholesale copying.” Finally, the court held that ComicMix’s book “targets and usurps” Seuss’s potential market, including because it intentionally aimed to capitalize on the same graduation market as Seuss. Although Seuss may have gotten its green eggs, it didn’t get its ham. The Ninth Circuit affirmed the district court’s denial of Seuss’s trademark claim. That analysis focused on whether the federal Lanham Act even applies given that the alleged infringing mark is the title of ComicMix’s Boldly. Under the Rogers test, a Lanham Act claim applies only if the allegedly infringing title of an artistic work is (1) not artistically relevant to the underlying work or (2) explicitly misleads consumers as to the source or content of the work. The test was not satisfied because the title helped to achieve ComicMix’s artistic purpose and did not explicitly mislead consumers. The question now is whether ComicMix will seek further review and, if so, whether the Supreme Court will take up the issue. Until then, we leave you with some further Seussian stylings: We wrote ’bout it before, so you’ll want to hear more, Of the rulings on mashups and smashups galore. So come round once again, and listen my friend, To a story that could be quite far from the end. Now, the first-level court, in its SJ report, Found a combo of works a sufficient retort To the claims of the Seuss shouting, “This ain’t fair use! A mashup, transformative? That’s far, far too loose!” Undeterred by a loss from that first-level boss, Seuss went back to work to perfect its next toss. De novo review, don’t you know that it’s true, Can provide quite a different result when it’s through. So appeal Seuss did file ’gainst the judgment reviled, In hopes to proceed to the coveted trial. The Ninth was enthused (and slightly amused), And its notions of fair use downright disabused. “A mashup you say? We don’t see it that way. You took all of their content, and that’s not okay. Your work doesn’t transform and quite far from the norm, In the mind of book buyers ’twill cause a s***storm.” “So go back to the start and take this to heart, Fair use isn’t accomplished by jamming some parts Of a couple of works with some relative quirk Together like some sort of drunk soda jerk.” ’Fore this wears to the bone and again you do groan, I believe that its time that we leave this alone. So, we’ll try to be curt yet remain quite alert, And we’ll see if the masher is granted its cert.

The impact of COVID-19 restrictions and precautions, combined with trending consumer preferences to shop online, is fueling bankruptcy filings of well-known brick-and-mortar brands. As customers bid farewell to fond strip mall haunts, savvy and imaginative purchasers reap the benefits by snapping up household names like RadioShack, Pier 1 Imports, and Toys “R” Us. The retail market is poised for a restructuring of its own kind—a shift of major brand names into exclusively ecommerce businesses. General Wireless Operations, Inc. dba RadioShack, Inc., which emerged from a bankruptcy in 2018, is a recent example. In November, Retail Ecommerce Ventures (“REV”) purchased the rights to use RadioShack’s brand, private label names, and website in the U.S. and certain other countries. REV has earned a reputation for acquiring distressed retail brands, like Pier 1 Imports, dressbarn, Modell’s Sporting Goods, and Linens ’n Things. Transformations from bankrupt brick-and-mortar to .com are often accomplished through the acquisition of a debtor retailer’s intellectual property from its bankruptcy estate. For instance: Last week, REV won a bankruptcy auction for the intellectual property, domain names, social media accounts, and other assets of Stein Mart with a $6 million bid. It announced plans to relaunch Stein Mart as online-only. Last year, Marquee Brands, purchased the ecommerce business, intellectual property, and other assets of Destination Maternity Corp., which includes the brands Motherhood Maternity and A Pea In The Pod, from Destination Maternity’s chapter 11 estate. Marquee partnered with liquidation specialists Gordon Brothers and Hilco Merchant Resources, on the winning $50 million bid, which included the rights to operate store-closing sales for all remaining physical locations. In 2018, lenders of Toys “R” Us acquired the intellectual property and other assets of the famed toy retailer after the assets were marketed in a bankruptcy sale process. With the exception of two shopping mall locations, Toys “R” Us now operates entirely online. In August, Hong Kong-based Newtimes Group purchased the assets of women’s clothing retailer and former bankruptcy debtor Coldwater Creek from the estate created by an assignment for the benefit of creditors. So-called “ABCs” are a state-law governed alternative to federal bankruptcy options. The Newtimes Group purchase agreement allocated over 93% of the $12.2 million purchase price toward intellectual property, with the remainder allocated toward inventory. As these sales illustrate, an insolvent, big-name retailer’s most prized asset is often its brand. Trademark-protected names, logos, patents, copyrights, trade secrets, and data have become more significant with the rise of ecommerce. The upside for purchasers who shell out millions for intellectual property and related assets includes generating income through licensing and royalty transactions, without the overhead associated with brick-and-mortar stores. Assets obtained through bankruptcy and other distress-type sales are often discounted, adding to the appeal of “brand shopping” for investors. Advantages specific to bankruptcy sales include the ability to acquire assets free and clear of most liabilities, the ability of the debtor to assign executory contracts (i.e., contracts where the parties have performance still outstanding) to a purchaser, a relatively quick sale process, and the protection of a federal bankruptcy court order. The sale process typically transpires in accordance with court-approved sale procedures, which contemplate marketing of the assets, a bid process, an auction, and approval of the sale through an order after a hearing, all with related deadlines. The bankruptcy court often approves sales of assets free and clear of liens, claims, and other encumbrances, provided that applicable non-bankruptcy laws permit such sales. The court’s order operates as an injunction that bars the debtor’s creditors from bringing claims against the purchaser. Bankruptcy debtors have the power to determine whether they will continue to perform and “assume” or refuse to perform and “reject” executory contracts. Assumed contracts can be assigned to third parties, even if—with some exceptions—those contracts contain non-assignability clauses. A debtor-seller’s assignment of assumed, favorable contracts to a purchaser facilitates the immediate continuation of operations and beneficial relationships upon closing of the sale. Conversely, bankruptcy debtor can reject an executory contract, which functions as a breach and leaves the counterparty with a claim it can file against the bankruptcy estate for damages arising from the breach. Notably, under the Bankruptcy Code and case law, most intellectual property licensees may continue using licensed IP for the duration of their license agreements, regardless of a debtor licensor’s rejection of the agreement. Prospective purchasers interested in capitalizing on brand sales in the wake of an online shopping surge, or otherwise considering purchasing assets from a distressed company or bankruptcy estate, should seek qualified counsel to navigate the sale process and negotiate and execute on their bids.

Does the Lanham Act require a plaintiff to show a likelihood of confusion to prevail on a counterfeiting claim? And if so, should the court simply compare the marks at issue, or look beyond them to the products themselves and other marketplace factors bearing on likely confusion? In the Ninth Circuit at least, the answer to both of these questions is now a clear yes. Except, as discussed below, when it isn’t. Summary Although the Ninth Circuit has previously held that Section 1114 requires a likelihood of confusion for a trademark infringement claim, it had never expressly held that a counterfeiting claim requires such a showing. That changed when the appellate court issued its recent decision in Arcona v. Farmacy Beauty. The Ninth Circuit also held that even assuming the marks at issue are identical, there is no presumption of confusion if the products at issue are not identical, before adding in a footnote that there “may be times the mark itself is so strong in the marketplace” that an identical mark could be confusing even if the products are different. Facts and Background The facts and procedural posture are straightforward. Arcona, Inc. sued Farmacy Beauty for trademark infringement and related causes of action based on its rights in the registered trademark “EYE DEW” for skincare products. The district court granted summary judgment for Farmacy, finding that a reasonable consumer would not confuse Farmacy’s skincare product with Arcona’s because their respective packaging featured different shapes, design schemes, text, and colors as well as distinguishing house marks. The Ninth Circuit affirmed, finding that the Lanham Act requires a likelihood of confusion based on a comparison of the products as a whole, and other marketplace factors such as third party use of the plaintiff’s mark, rather than confining the analysis to a comparison of the identical marks on their own. Practice Points Why does this decision matter? In short, the Lanham Act gives plaintiffs more leverage in trademark disputes when their allegations involve a counterfeiting claim because such claims allow plaintiffs to seek treble and statutory damages, as well as attorney’s fees. Counterfeiting claims often arise when there’s little factual dispute as to the similarity of the marks. As a result, defendants not only face greater exposure, they can have less room to maneuver. But by confirming that plaintiffs cannot take the likelihood of confusion element of their claim for granted even if the marks at issue are identical, the Ninth Circuit created more opportunities for factual disputes that can cut in defendants’ favor. This, in turn, can reduce the leverage plaintiffs benefit from in these situations. The Ninth Circuit also left breadcrumbs for defendants hoping to argue that their identical marks are not counterfeit. In a footnote, the appellate court noted that the district court’s grant of summary judgment appeared to be based in part on its finding that “EYE DEW” was not itself a counterfeit as that term is defined under Section 1127 of the Lanham Act. The district court appeared to construe Section 1127 to allow a court to look beyond the mark and examine the product as a whole in determining whether the “spurious mark” is “identical with, or substantially indistinguishable” from the registered mark. The Ninth Circuit declined to resolve this issue on appeal, but left open the possibility that accused infringers can dispute that a seemingly identical mark is a counterfeit if the product it is attached to cuts against such a finding. Taken together, the Ninth Circuit gave defendants two viable paths to defeat allegations of counterfeiting even when the marks are identical: (1) argue that the mark is not counterfeit, and (2) argue that even if it were, consumers are unlikely to be confused. Although not earth-shattering, the decision has the potential to shift leverage away from plaintiffs toward defendants in cases involving allegations of counterfeiting based only on the use of an identical mark. The Fine Print This may sound like a decision that unambiguously favors defendants, but the Ninth Circuit gave a little something to trademark owners as well. Despite rejecting the premise that confusion can be presumed and insisting that confusion must be assessed by examining the whole product at issue, the appellate court acknowledged in a footnote that there may be times the mark itself is so strong in the marketplace that “the use of an identical mark by itself may cause consumer confusion, even if other aspects of the products are different.” It remains to be seen how lower courts will interpret that guidance, but we can expect this footnote to receive a lot of attention from brand owners eager to avoid the consequences of the holding in this case.

In recent years, commentators have discussed patent venue ad nasuem in the run-up to and following the Supreme Court’s 2017 decision in TC Heartland. In a nutshell: after TC Heartland restricted the circumstances under which venue can be found proper for patent cases, plaintiffs brought fewer cases in the Eastern District of Texas. (Before TC Heartland, the Eastern District of Texas achieved a measure of notoriety as the preferred forum for patent plaintiffs.) Not as few as might have been expected, however, as the Eastern District of Texas strained to hold onto jurisdiction by, for example, ruling that the presence of a computer server means a defendant can be “found” in the jurisdiction. The Federal Circuit, however, rejected that view. As expected, the District of Delaware has seen a huge influx of cases, while the California districts have seen fewer than expected. The most noteworthy recent development is the rise of the Western District of Texas, which is now seeing large new numbers of patent filings. But what is happening on the copyright and trademark front? Although there is no equivalent to TC Heartland on which we can hang any conclusions about forum shopping, there are some notable trends highlighted below. On the copyright side, the biggest shift in 2020 is a notable decrease in cases filed in the Southern District of New York in 2020. The Southern District of New York is currently annualizing to have 40% fewer copyright cases in 2020 than in 2019, bringing it roughly back to its 2016 level. Has the apparent bubble of large cases there burst? The chart below, showing cases filed in each calendar year, illustrates the camel hump of cases that appears to be tapering off. On the trademark side, the biggest change is the steep rise in cases filed in the Northern District of Illinois. The Illinois 2020 filings are on pace to be more than double the number filed in that district in 2017, and for the first time far outnumber the filings in the Central District of California. By contrast, the other top four jurisdictions—the Central District of California, Northern District of California, Southern District of Florida, and Southern District of New York—are seeing a decline in cases filed. The irony is that the most popular jurisdictions for copyright and trademark cases are also among the busiest districts, with the largest number of judicial vacancies and cases per judge. For example, the District of New Jersey has six judicial vacancies—two of which have been empty for over five years—and weighted caseloads of over 1,000 filings per judgeship. The Central District of California has seven judicial vacancies, and nearly 700 cases per judgeship. Will litigants begin selecting judicial districts that have a lower caseload, or will they opt to stay with the tried-and-true jurisdictions? Only time will tell. And in this year, more than any other, we know that our vision is not 20-20.

In the ever-raging battle against trademark infringers gobbling up domain names for squatting purposes, trademark owners received a new tool in their arsenal, thanks to a recent update with the Ongoing Notification Service of the Trademark Clearinghouse (TMCH). The TMCH is a centralized database of verified trademarks, built into the Internet Corporation for Assigned Names and Numbers’ (ICANN) program for new generic Top-Level Domains (gTLD). Among its other responsibilities, ICANN oversees the introduction of new gTLDs, or as we more commonly know them, internet domain name extensions—e.g., .biz., .net, .edu, etc. Since October 2013, ICANN’s gTLD program has enabled hundreds of new gTLDs to gain usage on the internet. With the introduction of each new gTLD, however, there comes a risk that third parties will register domain names that infringe trademark rights, whether intentionally for squatting purposes, or unintentionally. To protect trademark owners, the TMCH database provides trademark owners with information helpful to enforcing their rights against infringing domain names when they are registered on a gTLD. For instance, if a trademark owner registers their trademarks in the TMCH database, whenever someone registers a domain name that matches the trademark records in the TMCH, the new domain name registrant is alerted that there are existing trademark rights in the database that it may be infringing. The new registrant then has to affirmatively acknowledge the trademark owner’s rights prior to completing the registration. If the domain name registration is completed, the TMCH notifies the trademark owner that a domain name was registered. This is an immediate flag of possible trademark infringement. In the past, the TMCH supported most internet domain name extensions—.de, .net, .pro, etc.—but to the frustration of trademark owners, it did not support the most common one of all: .com. Therefore, anytime a new .com domain name was registered, registered trademark owners would not be notified if that new domain contained potentially infringing terms. As of late August 2020, however, the TMCH began alerting its subscribers whenever a potentially infringing .com domain name is registered. With that change, the TMCH became even more useful for trademark owners.

In a precedential decision earlier this year, the Trademark Trial and Appeal Board thinned some of the haze surrounding the registrability of trademarks for hemp-derived CBD products. In line with the U.S. Patent and Trademark Office guidelines issued last year, the Board confirmed that marks covering food and dietary supplements containing hemp-derived CBD are not currently registrable. The decision involved an application for the mark CW covering “hemp oil extracts sold as an integral component of dietary and nutritional supplements” owned by the company behind the “Charlotte’s Web” strain of cannabis, which some may recognize due to national news coverage of its efficacy in treating seizure disorders. The record contained evidence that the applicant sold versions of the goods containing both CBD derived from marijuana (defined as cannabis containing more than 0.3% THC and which is illegal under the Controlled Substance Act (“CSA”)) and from hemp (defined as cannabis containing less than 0.3% THC and which is no longer illegal under the CSA). This dual use prompted the examining attorney to refuse the application on the ground the goods cannot be used lawfully in interstate commerce because they constitute foods that are per se illegal under the federal Food Drug and Cosmetics Act (“FDCA”) and on the ground that the goods are illegal under the CSA. Eschewing the CSA, the Board focused its review on the legality of the goods under the FDCA. Consistent with FDA guidelines, the Board concluded that the CBD oil sold by the applicant qualifies as a food that is subject to the FDCA. The Board further concluded that the CBD oil cannot be a lawful food or dietary supplement under the FDCA because CBD is an active ingredient in the drug Epidiolex, and the FDA’s general rule is that a biologic (such as CBD) cannot be marketed as food or a dietary supplement if the biologic is part of a clinical investigation. In response, the applicant attempted to invoke an exception to the FDCA by arguing that CBD was marketed as a food/dietary supplement before these clinical investigations were underway. The Board rejected this argument on the ground the evidence submitted, which consisted of conclusory statements from the Hemp Industries Association supporting the position, were self-serving and not probative. The decision is also notable for what it does not say. Specifically, the Board did not outright reject the legality of the mark on the ground it is used with goods deemed unlawful under the CSA, which would have been a much easier needle to thread given the applicant’s use of the mark with marijuana byproducts. This tends to confirm that unlawful use of a mark with one type of product does not necessarily prohibit registration of a mark with another lawful product. Additionally, the Board did not completely foreclose the possibility of registering marks for hemp-derived CBD in connection with foods or dietary supplements. To the extent there exists evidence that supports invoking the FDCA’s exception based on marketing of CBD prior to clinical trials, registration may be achievable. And the FDA could always change course in how it treats CBD products. Indeed, organizations such as the National Industrial Hemp Council have submitted comments urging the FDA to consider CBD as “generally recognized as safe” for consumption. If the FDA were to take this approach, it would almost certainly clear the path for federal registration of marks for food and dietary supplements containing CBD. We’ll continue to monitor the FDA’s treatment of CBD products and any impact it might have on the registrability of marks in this space.

Is humor protected speech? Although the answer might seem like an obvious yes, a dog toy maker’s Jack Daniel’s bottle lookalike dog chew toy with poopy puns blurs the line between freedom of expression and the protection of famous marks. In 2014, VIP Products LLC began selling a dog chew toy designed to look like the Jack Daniel’s whiskey bottle, but bearing the name “Bad Spaniels.” In place of the “Old No. 7 Sour Mash Whiskey” that can be found on the famous whiskey bottle, VIP Products’ dog toy humorously states “Old No. 2. on your Tennessee Carpet.” Jack Daniel’s issued a cease and desist letter, which resulted in VIP Products dragging the whiskey maker into court. VIP Products filed a declaratory judgment action in the U.S. District Court for the District of Arizona seeking the court to declare that Bad Spaniels did not infringe or dilute any trademark rights and that Jack Daniel’s trade dress and bottle design were not entitled to trademark protection. Jack Daniel’s filed federal and state law counterclaims for infringement and dilution by tarnishment of its trademark and trade dress. After a four-day bench trial, the District of Arizona found in favor of Jack Daniel’s. On January 29, 2018, the district court issued its ruling which held that Jack Daniel’s had established the likelihood of consumer confusion and established that the Bad Spaniels dog toy likely tarnished the reputation of Jack Daniel’s trademarks by linking a product for human consumption with dog poop. Notably, the District of Arizona specifically rejected VIP Products’ defense that its Bad Spaniels chew toy merited heightened First Amendment protection. VIP Products filed an appeal to the Ninth Circuit. On March 31, 2020, the Ninth Circuit issued its decision. It did not disturb the district court’s factual findings that VIP Products’ use of the Jack Daniel’s trademarks and trade dress created a likelihood of confusion. Rather, the Ninth Circuit ruled that the Bad Spaniels dog toy merited heightened First Amendment protection, and therefore vacated the district court’s judgment in favor of Jack Daniel’s and remanded the case for further proceedings. Specifically, the Ninth Circuit found that the Bad Spaniels dog toy—although “surely not equivalent of the Mona Lisa”—was an “expressive work” because it communicated a “humorous message.” Because of this finding, the Ninth Circuit used the Second Circuit’s framework in Rogers v. Grimaldi to analyze whether the Bad Spaniels dog toy violated the Lanham Act. In Rogers, actress Ginger Rogers claimed that a movie titled “Ginger and Fred” violated Section 1125(a) of the Lanham Act by creating a false impression that the actress had sponsored the movie. The Second Circuit rejected this claim and reasoned that the expressive element of a movie title warranted more protection than the labeling of ordinary commercial products. Thus, the Rogers’ analysis requires a plaintiff claiming trademark infringement to prove not only a likelihood of confusion, but also that the defendant’s use of a trademark is “not artistically relevant to the underlying work” or “explicitly misleads consumers as to the source or content of the work.” On September 15, 2020, Jack Daniel’s filed a petition for a writ of certiorari with the Supreme Court. In its Petition, Jack Daniel’s highlights the Court of Appeals circuit split regarding the treatment of trademark infringement claims when the use of a famous mark in a commercial product is humorous. As the Petition remarks, the Second, Fourth, Fifth, Seventh, Eighth, and Tenth Circuits do not require a heightened analysis for trademark infringement claims with respect to the humorous use of marks in commercial products. Per Jack Daniel's, the Ninth Circuit diverged from these circuits by requiring Jack Daniel’s not only to establish likelihood of consumer confusion for trademark infringement, but also to demonstrate that the use of the mark is either “not artistically relevant to the underlying work” or “explicitly misleads consumers as to the source or content of the work.” As the Petition points out, the Second Circuit has refused to extend the Rogers’ analysis to claims involving the humorous use of a mark to sell a competing product. Although Jack Daniel’s does not argue that the Bad Spaniels dog toy competes with its famous whiskey, nevertheless the whiskey maker argues that the dog toy is sold in such a way that consumers are likely to associate it with Jack Daniel’s. The Petition states that the Bad Spaniels dog toy is sold through several retailers that also sell Jack Daniel’s licensed merchandise, and further, VIP Products’ promotional materials feature the dog toy along with a real Jack Daniel’s bottle, all of which could lead to a false conclusion that the two products are related. The Ninth Circuit sidestepped the commercial product aspect of the dog toy. Instead, relying on Rogers, the Ninth Circuit held that although VIP Products used Jack Daniel’s trade dress and bottle design to sell its Bad Spaniels dog toy, the use was nonetheless “noncommercial” because it conveyed a “humorous message” and therefore was entitled to First Amendment protection. Eyes are on the Supreme Court to see if it weighs in on the issue of whether humorous products are entitled to First Amendment protections, and whether it will extend the Second Circuit’s analysis for trademark infringement claims of “expressive works” to VIP Products’ humorous dog toys.

Over the past decade, the influx of online shopping and home delivery has made every day feel like Christmas. The presence of an ever-growing network of online retailers makes it easier than ever to order just about anything online and have it delivered to your doorstep. While many, if not most, products arrive in non-distinct, brown boxes with clear plastic packaging, do not expect the same boring packaging from cosmetics retailer Glossier, Inc. On May 9, 2019, Glossier filed a trademark application for the color pink in connection with a variety of cosmetic products. Glossier ships its products to consumers in its signature “Pink Pouch,” which includes a bubble wrap lining and zipper closure. In its trademark application, Glossier’s description of the mark stated that, “the color pink and a translucent circle patterns displayed on the bag are claimed as a feature of the mark which is displayed on bags.” (emphasis added). The inclusion of “translucent circle patterns” as a feature of the mark drew a refusal to register on the basis that the “translucent circle patterns” (i.e., bubble wrap) were a functional feature of the mark. According to established trademark law, a mark that consists of a three-dimensional configuration of a product or its packaging is functional, and thus unregistrable, when the evidence shows that the design provides identifiable utilitarian advantages to the user. Valu Eng’g, Inc. v. Rexnord Corp., 278 F.3d 1268, 1274, 61 USPQ2d 1422, 1425 (Fed. Cir. 2002). Furthermore, the trademark examiner cited third party evidence of use of empty, pink pouches with a bubble wrap design as support that Glossier’s packaging lacked distinctiveness and did not serve as an indicator of source in the minds of consumers. To overcome the functionality refusal, Glossier amended the description of the mark to: “The mark consists of the claimed color pink as applied to bags featuring lining of translucent circular air bubbles and a zipper closure.” (emphasis added). The difference in how the bubble wrap feature of the design was described proved crucial to overcoming the functionality refusal. To overcome the lack of distinctiveness refusal, Glossier submitted a variety of evidence to demonstrate the color pink had acquired secondary meaning in connection with Glossier’s Pink Pouch. For traditional trademarks, even though a party can support a claim of acquired distinctiveness based on only five years of consecutive use, when attempting to register a non-traditional trademark (such as a color), historically, applicants have often demonstrated longstanding use of the color in connection with the claimed goods/services (among other factors) to meet the acquired distinctiveness standard (See e.g., U.S. Registration No. 2,131,693 for the color brown, registered January 27, 1998, with a first use date of 1917; U.S. Registration No. 2,390,667 for the color yellow, registered October 3, 2000, with a first use date of 1978; U.S. Registration No. 3,361,597 for the color red, registered January 1, 2008, with a first use date of 1992; U.S. Registration No. 2,416,794 for the color blue, registered January 2, 2001, with a first use date of 1939). Glossier claims October 6, 2014, as the date of first use for its color pink. At first blush, a claim of acquired distinctiveness for a color based on only 6 years of use could fall short as compared to the longstanding use shown in previous color registrations. However, in support of its claim, Glossier submitted evidence of over $100 million in sales in the year 2018, declarations from 98 customers attesting to recognition of the Pink Pouch as originating from Glossier, marketing materials referencing the Pink Pouch, social media posts and media coverage referencing the Pink Pouch, and third party parodies and imitations of the Pink Pouch. This compilation of evidence was sufficient to overcome the refusal, and the color pink was registered on August 25, 2020. Moreover, it appears Glossier may have a second registration for the color pink on the way for its “Pink Box” packaging. See U.S. Application Serial No. 88/422,355, scheduled for publication in the Official Gazette on September 29, 2020. Glossier’s successful registration effort reinforces the notion that the language used to describe a color on a particular product or product packaging is important and can ultimately impact the registrability of the color. Additionally, while no specific amount of evidence is required to demonstrate acquired distinctiveness of a single color trademark, Glossier’s resourceful use of social media and other media outlets to generate such strong sales and consumer recognition of its brand and pink product packaging in a relatively short amount of time is fairly remarkable. With social media and social media influencers now key components of many marketing campaigns, it will be interesting to see if Glossier’s success inspires other brands to capitalize on such readily available resources to quickly develop widespread brand recognition for a specific color or other unique identifier beyond a traditional trademark.

  On June 19, 2020, the Trade Marks (Amendment) Ordinance was published in the Gazette of the Hong Kong Special Administrative Region Government, providing a basis for the application of the Madrid Protocol, consolidating the criminal enforcement powers, and making some other technical amendments to the Trade Marks Ordinance (Cap. 559, Laws of Hong Kong). Getting ready for the implementation of the Madrid Protocol The Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks, known as the “Madrid Protocol”, currently has 106 contracting parties including the U.S., China and many other countries and jurisdictions. It provides a cost-effective and convenient solution for trademark owners by allowing them to apply to the International Bureau of the World Intellectual Property Organization (WIPO) through one single office for registration of trademarks, and seek to extend the protection of trademark registrations in multiple jurisdictions by a one-stop application process through such registrations. Currently, Hong Kong entities would need to apply to the individual jurisdictions for registration of their trademarks. Likewise, foreign trademark owners would need to file local trademark applications with the Trade Marks Registry in Hong Kong if they would like to have registered trademark protection in Hong Kong. The Trade Marks Ordinance has now been amended with a new Part XA that deals with international registration under the Madrid Protocol in Hong Kong. The Madrid Protocol has yet to be applied to Hong Kong. The Hong Kong government is now preparing subsidiary legislation to provide for the relevant procedural details, setting up a dedicated information technology system and drawing up detailed workflows for processing various cases under the international registration system. The relevant sections of the Trade Marks Ordinance for the implementation of the Madrid Protocol will come into force on a day to be appointed by the Secretary for Commerce and Economic Development by notice published in the Gazette after completing the relevant preparatory work, which is expected to happen in 2022-2023 the earliest. Consolidating the criminal enforcement powers to the Customs and Excise Department The Customs and Excise Department in Hong Kong has been responsible for enforcing the criminal provisions relating to the infringement of trademarks registered in Hong Kong under the Trade Descriptions Ordinance (Cap. 362, Laws of Hong Kong), whereas the Hong Kong Police has been responsible for the enforcement of offences such as “falsification of the register”, “falsely representing that a trademark as registered” and “misuse of title of ‘Trade Marks Registry’” under the Trade Marks Ordinance. The Trade Marks Ordinance has now been amended to consolidate the criminal enforcement powers by authorizing the Customs and Excise Department to enforce the criminal provisions of the Trade Marks Ordinance. Other technical amendments With the National Anthem Ordinance (Instrument A405) that came into effect on June 12, 2020, the “Absolute grounds for refusal” chapter of the Trade Marks Registry Work Manual in Hong Kong has been updated to provide a new absolute ground for refusal of registration concerning use of the national anthem (or its lyrics or score) in applied-for trademarks, which is now prohibited. The Trade Marks Ordinance has also made corresponding changes to reflect this new absolute ground. Further, under the amended Trade Marks Ordinance, an applicant is now required to provide its “place of incorporation” and “state of incorporation” (the latter for US corporations only) when filing a trademark application or recording a registrable transaction relating to a trademark application or registration (such as a trademark license or assignment) in Hong Kong. However, the Trade Marks Registry will not verify the information provided by the applicant in that respect. As a result of all of these amendments, the Hong Kong Trade Marks Registry also amended the trade mark forms effective from June 19, 2020 with a 6-month transitional period for using the existing forms and the revised forms until December 19, 2020. Hong Kong has been dedicated to improving its IP protection mechanism and to promoting itself as a premier IP trading hub in the region. The recent amendment to the Trade Marks Ordinance that provides the framework for the implementation of the Madrid Protocol is a welcome development. It also further equips Hong Kong to serve as an ideal place for commercial activities and IP trading.

Now we wait. The final brief was submitted this past week in connection with an interlocutory appeal to the Second Circuit of the district court’s denial of a preliminary injunction over use of the WOODSTOCK mark. Potentially at issue in the appeal is whether Plaintiffs or Defendants, or neither, has the superior right to use the WOODSTOCK mark in connection with the sale of cannabis and cannabis-related products. Plaintiffs sued Defendants claiming that Defendants engaged in trademark infringement by selling recreational marijuana under the WOODSTOCK trademark. After filing suit, Plaintiffs entered into a licensing agreement with MM Enterprises, Inc. (“MedMen”)—one of the nation’s largest cannabis retailers—under which Plaintiffs granted MedMen certain rights to use the WOODSTOCK mark in connection with the sale of cannabis and cannabis-related products. Defendants then moved for a preliminary injunction seeking to enjoin Plaintiffs from using or licensing the WOODSTOCK marks in connection with the sale of cannabis and cannabis-related products. Plaintiffs—the producers of the 1969 Woodstock music festival—have used the WOODSTOCK mark in association with concerts, motion pictures, television programs and merchandise. Plaintiffs own a variety of federally registered trademarks for the mark WOODSTOCK, which concern entertainment services, clothing, and other merchandise, such as posters. Plaintiffs claim that recreational marijuana falls within their “natural zone of expansion” and, as a result, Defendants are prohibited from using the mark in association with recreational marijuana. Defendants contend they have “used the WOODSTOCK mark for more than thirty-five years for a variety of goods and services.” Defendants further contend they sought and obtained “federal registration of the WOODSTOCK mark for smokers’ articles and related goods and services,” including tobacco-free electronic cigarettes for medical purposes, vaporizer pipes, and cigarette rolling papers. Defendants claim that “cannabis and cannabis-related products are within a logical zone of expansion for Defendants as to Defendants’ WOODSTOCK marks and registration for smokers’ articles,” and as a result seek to enjoin the MedMen license. After a three day evidentiary hearing, the district court denied Defendants’ request for a preliminary injunction, concluding Defendants failed to establish likelihood of success on the merits because, after analyzing each of the Polaroid factors, Defendants had not demonstrated a likelihood of confusion between smokers’ articles bearing Defendants’ WOODSTOCK marks and the use of the WOODSTOCK mark on adult-use marijuana and marijuana vaping devices. Specifically, the court concluded the similarity of the marks, the proximity in the marketplace, the bridging the gap and the bad faith Polaroid factors all weighed against granting a preliminary injunction for Defendants, and that there was no evidence offered regarding the actual confusion, the quality of products or the consumer sophistication Polaroid factors. The court did conclude that the strength of the mark weighed “only modestly” in Defendants’ favor because while the mark was conceptually strong it was commercially weak, but this was the only factor the court concluded weighed in Defendants’ favor. In short, only one of the eight Polaroid factors weighed slightly in Defendants’ favor, and the remaining seven factors either weighed against Defendants or were not considered because there was no evidence presented for it. The appeal here is interesting because of the arguments and implications surrounding the fourth Polaroid factor—bridging the gap—which describes the senior user’s interest in preserving avenues of expansion and entering into related fields. Here, both parties claim to be the senior user, and both claim that using the WOODSTOCK marks in connection with the sale of marijuana and marijuana-related products fits within their respective “zone[s] of natural [or logical] expansion.” But the district court concluded it could not consider Defendants’ alleged intent to expand into the area of selling recreational marijuana because the sale of recreational marijuana is illegal under federal law. The outcome of the “bridging the gap” Polaroid factor was not determinative at the district court level because of the other Polaroid factors, and likely will not be determinative on appeal. But what if the evidence for all of the other Polaroid factors—except bridging the gap—had established a high likelihood of consumer confusion here? Boiled to its essence, and despite creative arguments to the contrary, it appears both Plaintiffs and Defendants seek federal trademark protection so each can use (and prevent the other from using) the WOODSTOCK mark in connection with the sale of marijuana, which is a federally illegal product. While the Second Circuit will almost certainly follow the same approach the district court did in examining each of the Polaroid factors, it could theoretically simplify the issue by concluding that because the logical “zone of expansion” for which each party seeks federal trademark protection involves a product or service that is federally illegal, the courts will not get involved. The briefs are in, so we shall see.

It is an epic trademark dispute with a lot of bling. Tiffany & Co. vs. Costco. The famed jeweler from the east vs. the titan of warehouse discounts from the west. A jury found that Costco was liable to Tiffany & Co. to the tune of over $21,000,000 for trademark infringement and related claims due to Costco’s use of “Tiffany.” Yesterday, the Second Circuit overturned that sterling verdict and gave Tiffany & Co. a big lump of coal instead. The Court’s decision is an important one regarding descriptive uses of registered trademarks, as well as the trial court’s proper role in wading into the waters of trademark disputes at summary judgment. The setting for this dispute dates back to the late 1800s. That is when Charles Lewis Tiffany first developed a diamond ring designed with “six prongs” that affixed the diamond to the ring. Since that time, numerous advertisements, publications, and many other documents have referred to diamond settings of that style as “Tiffany settings.” Tiffany & Co. owns a small arsenal of federal trademark registrations for the word “Tiffany,” including a registration dating back to 1920 for “jewelry for personal wear.” A number of years ago, Costco began advertising and selling diamond rings to its members using such words as “Tiffany,” “Tiffany set,” or “Tiffany style,” in its point of sale material. Tiffany & Co. did not take a shine to Costco’s use and sued under the Lanham Act and New York law for injunctive relief and damages. After lengthy discovery and motion practice, the trial court granted summary judgment to Tiffany & Co. on its claims for relief. It also rejected Costco’s “fair use” defense that it was only using “Tiffany” to describe the style of “setting” rather than as a source identifier. The case proceeded to trial on damages and Tiffany & Co. received a total verdict of just over $21,000,000. Costco appealed, and won. The Court’s analysis revolved around 3 key pieces of evidence that were considered in the trial court’s summary judgment ruling. First, Tiffany & Co. produced a consumer survey showing consumers were confused. Costco did not commission its own survey, but only attacked the methodology used by Tiffany & Co.’s expert. The trial court found Costco’s lack of a counter-survey meant there was no dispute as to actual confusion. The appellate court disagreed and determined that the jury should have been given an opportunity to weigh in on this competing battle of evidence. Second, although the trial court found Costco’s bad faith undisputed, the appellate court again disagreed. Perhaps Costco was just trying to borrow certain successful features from Tiffany & Co. As the appellate court noted, there is a difference from selling jewelry that “looks like Tiffany’s as opposed to an intent to have its jewelry pass as Tiffany’s.” Finally, the appellate court held that there was competing evidence on the issue of “sophistication” of potential consumers and that the trial court should have let the jury decide that issue too. The case was remanded for a trial on the merits, including Costco’s “fair use” defense that it was only using “Tiffany” in a descriptive sense. Summary judgement is typically tough to get in trademark cases. Tiffany v. Costco is a shiny example of that proposition. This case is also a good reminder about the power of the descriptive use defense to trademark infringement and related claims. Even storied, well-known brands with big bejeweled portfolios aren’t necessarily able to stop all commercial uses of their registered marks.

Veronica Morales, a wedding/event planner providing services under the trademark BLUE IVY (depicted above), has unsuccessfully challenged a pending application for the mark BLUE IVY CARTER, filed by BGK Trademark Holdings, LLC (Beyoncé Giselle Knowles-Carter). The decision contains some helpful lessons on how to pursue a discovery dispute in accordance with Board procedures to ensure that an opposing party’s allegedly recalcitrant conduct can be used against it on a trial on the merits. In addition, in attempting to prove an applicant’s lack of bona fide intent to use, relying on ill-advised statements made by the husband of the applicant to a reporter – in this case, Jay-Z – is not a recipe for success as an evidentiary matter. Blue Ivy Carter, the eldest child of Beyoncé Knowles-Carter and Jay-Z, was born January 7, 2012. Ms. Morales filed a trademark application at the PTO for the mark BLUE IVY in February 2012 for her event planning services, which registered in October 2012. Ms. Morales claimed first use of the BLUE IVY mark in commerce in October 2009. BGK filed an application for the mark BLUE IVY CARTER on January 26, 2012, on an intent-to-use basis, for a variety of consumer goods and services. The BLUE IVY CARTER application subsequently abandoned in February 2016 because no evidence of use was filed within the deadline. BGK filed an identical replacement intent-to-use application for the BLUE IVY CARTER mark in January 2016, which was approved and published for opposition in January 2017. Ms. Morales opposed the registration of the BLUE IVY CARTER mark claiming: 1) a likelihood of confusion with her own BLUE IVY mark for wedding/event planning services; 2) no bona fide intent on the part of BGK to make use of the BLUE IVY CARTER mark for the goods/services in the application; and, 3) fraud on the PTO. The Trademark Trial and Appeal Board dismissed all three claims in the Opposition in favor of BGK. Most notably, Ms. Morales failed to establish any admissible evidence that BGK lacked a bona fide intention to use the BLUE IVY CARTER mark, and missed an opportunity to compel BGK to respond to discovery requests through established rules of procedure before the Board. In a trademark opposition, an Opposer has the initial burden to demonstrate by a preponderance of the evidence that an applicant lacked a bona fide intent to use the mark on the identified goods and/or services in a trademark application. One manner in which an Opposer may establish prima facie evidence of a lack of a bona fide intention to use a mark is to show that the applicant does not have any documentary evidence to support its alleged intent to use as of the filing date of a trademark application. Ms. Morales relied heavily on that argument, and stated that BGK “acted in a recalcitrant and uncooperative manner throughout the case, disclosing no substantive information in response to interrogatories and producing no documents in response to requests for production.” In fact, BGK had objected to all of Ms. Morales’ interrogatories and requests for production, but said that supplementary responses would be provided after the execution of an agreed upon or Board-ordered protective order. A few months later, the Board issued an order providing its standard protective order. BGK never responded to the interrogatories or requests for production in a substantive manner, but said it was due to “Opposer’s misconduct,” Contending that “Opposer used [her] discovery requests as a weapon to pry into the personal life of Mrs. Carter and to threaten and intimidate her.” The Board in its opinion stated that both parties “painted an incomplete picture.” While the Board issued an order for a standard protective order, the Board also denied Ms. Morales’ motion to compel the production of documents she wanted because she did not make a good faith effort to resolve the discovery dispute between the parties. Ms. Morales had the opportunity to raise the issue of the subsequent unsatisfactory supplemental discovery responses from BGK before the Board, but she did not timely file a renewed motion to compel. If she had filed a renewed motion to compel and the Board had granted the motion, it would have remedied the unsatisfactory responses. Ms. Morales did not follow the Board’s “clear procedures during discovery and prior to trial.” Interestingly, Ms. Morales also pointed to the filing of an identical prior trademark application as bad faith and evidence of no bona fide intent to make use of the mark. The refiling of a new intent-to-use based trademark application for the same mark is not particularly unusual. The Board has found a pattern of bad faith conduct in previous cases where multiple applications have been filed for the identical mark (16 applications for the same mark, for example), but one new trademark application for the identical mark will not and did not establish a pattern of bad faith conduct. Ms. Morales also relied on the content an interview of Jay-Z, which was published in a 2013 article in Vanity Fair magazine. The interviewer reported that Jay-Z said during the interview that he and Beyoncé filed a trademark application for their daughter’s name “merely so that no one else could.” Ms. Morales contends that the statement made by Jay-Z shows the true intent behind filing the trademark application and is “an admitted pattern of abusing the trademark process.” The argument failed because not only was Jay-Z’s statement hearsay within hearsay, but Jay-Z is also not a party to the proceedings, so his statements were deemed irrelevant. In addition, a hearsay exception that might be applicable to a party as an admission against interest was also inapplicable, again, because Jay-Z was not a party to the opposition proceeding. The Board found none of the evidence or arguments compelling and dismissed the Opposition. We will monitor and report upon the filing of an Appeal to the Federal Circuit or the commencement of a civil action before a district court.

An administrative enforcement action is one of the ways to enforce registered trademark rights in China against infringers, especially counterfeiters. Such enforcement actions are conducted by the Administration of Market Regulation (MSA) and its local branches. After receiving a complaint of trademark infringement, an MSA officer would need to first determine whether the complained-of act should be deemed trademark infringement before he can proceed to consider the enforcement steps, such as to raid and seize infringing goods and issue a penalty decision. In order to unify the standard and enforcement practice on the determination of trademark infringement, the China National Intellectual Property Administration (CNIPA) issued “The Standard For Determination Of Trademark Infringement” on June 15, 2020 to provide guidelines to the enforcement officers in determining the issues relating to trademark infringement. The Standard contains 38 Articles that offer operational guidance to the various issues an enforcement officer often encounters and needs to determine in administrative actions, such as what constitutes “trademark use”, the similarity of marks and goods or services, the element of “confusion”, and the considerations in respect to conflicting rights. The Standard appears to be an overall reflection and consolidation of the existing laws, judicial interpretations and administrative regulations on substantive issues relating to the determination of trademark infringement from an administrative enforcement perspective. We highlight some of the issues addressed by the Standard that foreign brand owners may be interested to know about. Trademark Use The starting point in evaluating trademark infringement is to determine whether the complained-of use constitutes “trademark use”. Articles 3 to 7 of the Standard provide open-ended descriptions of instances of trademark use, such as the use on the product, packaging, containers, shop signage, transaction documents or in advertising or exhibitions. The Standard specifically includes the use of a mark on an instant messaging tool, internet social media platforms, apps and 2-dimensional bar codes as examples of trademark use. It appears to be the majority view of trademark practitioners in China that the Standard has taken a cautious approach towards the issue of OEM use of a mark, i.e., whether the use of a mark on products manufactured in China solely for purpose of export and that will not be sold in China will be regarded as “trademark use” and hence whether such use constitutes trademark infringement, depending on the answer to the question. The Standard only provides an “overall consideration” approach under Article 7 that the determination of the issue of “trademark use” should be based on an overall consideration of the intent of the user, the manner of use and advertising, the general industrial practice and the ordinary consumer’s perception. Suspension of Administrative Actions The Standard expressly provides under Article 35 that an administrative enforcement action may be suspended in the following three circumstances: an invalidation action against the registered trademark is pending; the registered trademark is under the grace period for renewal; or the registered trademark is facing other ownership dispute. Note that a local enforcement officer still has discretion in deciding whether or not to suspend an enforcement action. For example, a request for suspension may nonetheless be rejected if the enforcement officer takes the view that the invalidation action against the registered trademark apparently has no merit. Infringement Liability of Organizers And E-business Platforms Under Article 30 of the Standard, a market or exhibition organizer, a lessor of sales counters or an e-business platform will be held liable for trademark infringement if it fails to exercise its duty of care in managing the business venue, and fails to take preventive steps when it knows or ought to know that an operator in the market, a participant in an exhibition, the lessee of the sales counter or an e-business operator is committing trademark infringement, or it fails to take necessary steps to stop infringing activities after being notified of an effective administrative or judicial enforcement order. This is the first time that systematic guidelines have been issued by the CNIPA covering most of the substantive issues in administrative actions on whether or not a trademark infringement complaint should be entertained. It provides an additional and presumably authoritative legal source for trademark owners who wish to enforce their registered trademark rights in China via an administrative channel. However, we have also observed that the Standard avoids certain complicated issues relating to trademark infringement, such as the OEM issue discussed above, and the issue relating to parallel importing and keyword search infringement. Foreign brand owners may be better served by judicial actions in relation to these complicated kinds of trademark infringement.