Federal Circuit: Cities Cannot Register Official Seals

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The case In Re Houston, involved the City of Houston and the District of Columbia city seals.  Both cities attempted to register their seals and both applications were rejected by an examining attorney at the trademark office.  The rejection was based on Section 2(b) of the Lanham act, 15 U.S.C. § 1052 which forbid registration of any trademark which,

 Consists of or comprises the flag or coat of arms or other insignia of the United States, or of any State or municipality, or of any foreign nation, or any simulation thereof.

At the Trademark Trial and Appeal Board, Houston argued that because it was a government entity seeking to register its own seal, Section 2(b) did not apply.  The District of Columbia argued Section 2(b) was inconsistent with the Paris Convention of 1883.  Both arguments were rejected and the cities appealed to the United States District Court for the Federal Circuit.

On appeal, Houston again argued that “government entities use their official insignia to identify their goods and services, and unauthorized use of these insignia confuses the public about the government entities’ approval of the goods or services.”  Houston further argued that Section 2(b), “is at odds with the Lanham Act’s goal of protecting the public from ‘pirates and cheats.’ ” Both of these arguments were rejected.  The court held,

The prohibition of § 2(b) is clear. Section 2(b) prohibits registration of an “insignia of the United States, or of any State or municipality.” We see nothing in this plain language that suggests a government entity such as Houston should be exempted from the reach of the prohibition.
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We note that Houston has other means to prevent “pi-rates and cheats” from using its city seal to deceive the public. Presumably the city of Houston could pass an ordinance prohibiting such activity. Other legal protections under the Lanham Act may exist as well.

The District of Columbia tried a different argument.  It argued that because the Lanham Act was primarily implementing the Paris Convention Treaty of 1883, the Act must be interpreted in light of the language of the treaty.

The District contends that the Board’s interpretation of § 2(b) violates this U.S. treaty obligation because it prohibits everyone, including a municipality in a foreign member country, from registering its insignia in the United States. According to the District, the Board’s interpretation of § 2(b) must be reversed as it violates the Charming Betsy principle by construing a domestic law to violate the law of nations.

The District argued that because the treaty required recognition of trademarks filed in foreign countries in the United States, if a foreign municipality registered its mark in its home country, the United States would need to accept the registration of that insignia or be in violation of the treaty.

The court of appeals disagreed, holding that there is nothing in the Paris Convention which requires that the United States allow the registration of an insignia of a United States municipality.  Whether the treaty would be violated in a hypothetical case of a foreign municipality attempting to register its insignia in the United States was not before the court and the court of appeals refused to address that hypothetical situation.

Registration of municipal insignia was again rejected despite several creative arguments.  This will likely continue to be the law going forward unless Congress amends the Lanham Act to allow such registrations.  As the court points out however, the municipalities are currently well protected — even without a  trademark registration the municipalities can pass laws preventing the use of their insignia as well as bring claims against infringers under other provisions of the Lanham Act.

Groeneveld v. Lubecore: Trademarks Protect Brands, Not Product Functions

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Groeneveld sued Lubecore arguing that Lubecore was selling a grease pump that was “virtually identical” to its own pump.  According to Groeneveld, Lubecore was attempting “to confuse consumers into believing that the two pumps were made by the same company, thus freeriding on Groeneveld’s established goodwill by passing off Lubecore pumps as Groeneveld pumps.” Groeneveld alleged that Lubecore was its only competitor which sold a nearly identical looking pump.

Groeneveld asserted six claims against Lubecore, “trade-dress infringement, unfair competition, and false advertising, all in violation of the Lanham Act § 43(a), 15 U.S.C. § 1125(a) (Counts 1-3); deceptive trade practices, in violation of Ohio Revised Code §§ 4165.02 et seq. (Count 4); unfair competition, in violation of Ohio common law (Count 5); and unlawful interference with contractual and business relationships, again in violation of Ohio common law (Count 6).”

The case proceed to trial where the district judge dismissed as a matter of law Counts 2-6, but allowed the jury to consider Count 1, the trade dress claim.  The jury found in favor of Groeneveld on that claim and awarded Groeneveld more than $1 million in damages.  Lubecore appealed to the Court of Appeals for the Sixth Circuit.

On appeal, Groeneveld argued that the shape of its pump was protected by trade dress.  Lubecore argued that the overall configuration of the pump was functional and therefore not protected by trade dress.  The Court of Appeals noted that in order to prevail on a trade dress claim, three requirements must be met:

To prevail on a claim for the infringement of a product-design trade dress, a plaintiff must prove that its allegedly infringed product design (1) is nonfunctional, (2) has acquired secondary meaning, and (3) is confusingly similar to the allegedly infringing product design. Gen. Motors Corp. v. Lanard Toys, Inc., 468 F.3d 405, 414 (6th Cir. 2006); accord Samara Bros., 529 U.S. at 211. The meaning of these three elements is fleshed out in the caselaw.

A product design is functional “if it is essential to the use or purpose of the article or if it affects the cost or quality of the article.” Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 850 n.10 (1982).
. . .
Secondary meaning, perhaps more helpfully dubbed “acquired meaning,” indicates that “in the minds of the public, the primary significance of a product feature or term is to identify the source of the product rather than the product itself.” Inwood Labs., 456 U.S. at 851 n.11; Samara Bros., 529 U.S. at 211, 211 n.*.
. . .
Finally, the test for confusing similarity, also called the “likelihood of confusion” test, is whether an ordinary consumer would confuse the products at issue, which in fact come from different sources, as emanating from a single source or from associated sources. See, e.g., Daddy’s Junky Music Stores, Inc. v. Big Daddy’s Family Music Ctr., 109 F.3d 275, 280 (6th Cir. 1997).
. . .
If the plaintiff fails to present sufficient evidence for a reasonable jury to find in its favor on any one of the three elements, then judgment as a matter of law should be entered for the defendant.

The Court of Appeals held that because both the individual components and the overall configuration of the pump were functional, Groeneveld failed the first prong of the test.

Because Groeneveld presented no evidence showing that the individual components of its grease pump or their overall configuration are nonfunctional, it failed to carry its burden of creating a triable issue of fact with respect to nonfunctionality. See Antioch Co. v. W. Trimming Corp., 347 F.3d 150, 158 (6th Cir. 2003) (“[I]n order to receive trade dress protection for the overall combination of functional features, those features must be configured in an arbitrary, fanciful, or distinctive way. . . . In other words, where individual functional components are combined in a nonarbitrary manner to perform an overall function, the producer cannot claim that the overall trade dress is nonfunctional.” (citing TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 34 (2001)); Leatherman Tool Grp., Inc. v. Cooper Indus., Inc., 199 F.3d 1009, 1013 (9th Cir. 1999) (reversing the jury’s finding of trade-dress infringement, granting judgment as a matter of law for the defendant, and holding that “where the whole is nothing other than the assemblage of functional parts, and where even the arrangement and combination of the parts is designed to result in superior performance, it is semantic trickery to say that there is still some sort of separate ‘overall appearance’ which is non-functional”).

The fact that Groeneveld’s competitors all used very different designs was not persuasive to the Court.  The Court reasoned that the question is not whether Lubecore could have used a different design, the question is whether Groeneveld’s design, “was substantially influenced by functional imperatives or preferences.”

The Court of Appeals also held that ordinary consumers would not likely confuse Groeneveld’s tradedress with Lubecore’s, in part because both products have their respective logos prominently displayed on the products.

One judge from the three judge Court of Appeal panel dissented finding that there was sufficient evidence for a reasonable jury to find in favor of  Groeneveld, and, in fact, a jury did find in its favor.

Looking at the pictures of the two pumps side-by-side, it is difficult to see what portion would be considered “non-functional.”  One aspect which may have influenced the jury in this case is that Lubecore is owned by a former employee of  Groeneveld who likely intentionally copied the design.  The dissent seemed particularly persuaded by the evidence of intentional copying.  However, “intentional copying” of functional aspects of a product is more often than not, simply competition, not trade dress infringement.  Under U.S. law, outside of patents, monopolies are not allowed on functional aspects of a product.

Using Someone’s Slogan is Not Fair Use

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As blogged about previously here, a motivational services business Own Your Power Communications owed by Simone Kelly-Brown sued Oprah Winfrey and several of her companies for producing numerous publications, events, and online content using the phrase “Own Your Power.”

The District Court held that Oprah’s use of “Own Your Power” was fair use and dismissed the case.  The Plaintiffs appealed to the United States Court of Appeals for the Second Circuit.  The Second Circuit, reversed, finding no “fair use” on the part of Oprah and her companies.

The Appeals Court first set out the proper test for fair use in the Second Circuit,

In order to make a successful fair use defense to a trademark infringement claim, the defendant must prove three elements: that the use was made (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith. See 15 U.S.C. § 1115(b)(4); EMI Catalogue P’ship, 228 F.3d at 64. Because fair use is an affirmative defense, it often requires consideration of facts outside of the complaint and thus is inappropriate to resolve on a motion to dismiss. Affirmative defenses may be adjudicated at this stage in the litigation, however, w 1 here the facts necessary to establish the defense are evident on the face of the complaint. McKenna v. Wright, 386 F.3d 432, 436 (2d Cir. 2004). Plaintiffs, in rebutting defendants’ arguments, are held only to the usual burden of a motion to dismiss, id., which is to say they must plead sufficient facts to plausibly suggest that they are entitled to relief, Iqbal, 556 U.S. at 678.

The Appeals Court held that in the Second Circuit, it is not required that Oprah have actually used Own Your Power as a trademark, rather all that is required is that Oprah used the phrase in commerce to attract attention (It is hard to imaging Oprah doing anything without attracting attention).

 in determining whether the defendants were using the words “Own Your Power” as a mark, we ask whether they were using the term “as a symbol to attract public attention.” JA Apparel, 568 F.3d at 400 (internal quotation marks omitted).

The Appeals Court held that this standard was met by Oprah using the phrase on the cover of her magazine, at an “Own Your Power” event, in promotions advertising the event, and in an online video.

As for the second factor, whether the phrase “Own Your Power” was used descriptively, the Appeals Court also found against Oprah.

At the outset, it should be noted that the phrase “Own Your Power” differs from the sort of phrase which courts usually find to be used descriptively. Courts more readily find a phrase descriptive when it is in common usage. … Defendants have not argued that the phrase “Own Your Power” was in popular usage.
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here the phrase “Own Your Power” does not describe the contents of the Magazine. The words are prominently displayed in the center of the Magazine with the subtitles “How to  Tap Into Your Strength”; “Focus Your Energy”; and “Let Your Best Self Shine” in smaller type  below. Along the edges of the magazine are specific headlines for articles, including “THE 2010  O POWER LIST! 20 Women Who Are Rocking the World.” Although both the center phrase  and the article headline make use of the word “power,” it does not appear that the phrase “Own  Your Power” is meant to describe the contents of a particular item in the Magazine. For  example, the “Power List” inside the Magazine contains a list of admirable people, accompanied  by biographical information about each. But the list does not provide specific advice regarding how a reader can follow in the footsteps of any of these individuals, nor does it provide advice regarding how a reader can become more powerful in general.

Regarding the final factor, good faith, the Appeals Court again found against Oprah.

Kelly-Brown argues that she has pleaded facts sufficient to plausibly suggest that the defendants had knowledge of her mark and chose to go forward with the “Own Your Power” campaign anyway. Indeed, she alleges that prior to the rollout of Oprah’s new Oprah Winfrey Network, to be known as “OWN,” the defendants bought the rights to use the acronym “OWN” from a woman who had previously registered it as an acronym for the “Onyx Woman Network.” Kelly-Brown argues that this transaction plausibly suggests that the defendants conducted a trademark registration search for the 1 word “Own,” and that such a search would have turned up her then-pending service mark in the phrase “Own Your Power.” We agree that these allegations do plausibly suggest that the defendants had knowledge of Kelly-Brown’s mark, liked it, and decided to use it as their own. In other words, defendants’ allegations that they did not intend to trade on Kelly-Brown’s good will, even if true, do not preclude a finding of bad faith. See Cadbury Beverages, Inc. v. Cott Corp., 73 F.3d 474, 483 (2d Cir. 1996) (declining to decide good faith as a matter of law where defendant used a mark, which happened to be the name of defendant’s parent company, knowing it was identical to plaintiff’s registered mark); see also Kiki Undies Corp. v. Promenade Hosiery Mills, Inc., 411 F.2d 1097, 1101 (2d Cir. 1969) (explaining that defendant has the burden of persuasion in such circumstances).

So Oprah’s use of the phrase Own Your Power was not a clear-cut case of fair use — far from it.  And the Second Circuit vacated the District Court’s order and remanded the case back to the trial court.  The case will now proceed through discovery and to trial unless the matter is resolved.

Louboutin Red Sole Trademark Partially Reinstated on Appeal

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And then the other shoe dropped.  As blogged about previously here, the United States District Court for the District of New York denied a motion for preliminary injunction requested by high fashion shoemaker Christian Louboutin holding that Louboutin’s red sole trademark was not enforceable.

Louboutin appealed this adverse decision to the United States District Court for the Second Circuit which reversed, in part, the District Court’s ruling.  In its ruling, the Second Circuit reversed the District Court’s determination that a single color cannot serve as a trademark in the fashion industry.  The trial court had previously ruled that a single color is always functional in fashion.  The trial court reasoned that giving Louboutin a monopoly on red soles would put Louboutin’s competitors at a competitive disadvantage.  The Second Circuit disagreed holding that a single color could be used as a trademark.

We see no reason why a single-color mark in the specific context of the fashion industry could not acquire secondary meaning―and therefore serve as a brand or source identifier―if it is used so consistently and prominently by a particular designer that it becomes a symbol, “the primary significance” of which is “to identify the source of the product rather than the product itself.” Inwood Labs., 456 U.S. at 851 n.11; see also Mana Prods., Inc., 65 F.3d at 1071 (“In light of the Supreme Court’s decision in Qualitex, color is today capable of obtaining trademark status in the same manner that a descriptive mark satisfies the statutory definition of a trademark, by acting as a symbol and attaining secondary meaning.”).

“The crucial question in a case involving secondary meaning always is whether the public is moved in any degree to buy an article because of its source.”23 Genesee Brewing Co., 124 F.3d at 143 n.4. “Factors that are relevant in determining secondary meaning include ‘(1) advertising expenditures, (2) consumer studies linking the mark to a source, (3) unsolicited media coverage of the product, (4) sales success, (5) attempts to plagiarize the mark, and, (6) length and exclusivity of the mark’s use.'” Id. (quoting Centaur Commc’ns, Ltd. v. A/S/M Commc’ns, Inc., 830 F.2d 1217, 1222 (2d Cir. 1985)).

The appeals court further held that Louboutin’s trademark of a red sole on high end women’s shoes has, in fact, acquired limited secondary meaning.  The court did find an exception, however.  Louboutin has not acquired secondary meaning of a red sole when the entire shoe is red.  Since the defendant in this case was sued for making an all red shoe, the court held the defendant did not violate Louboutin’s trademark.

 In light of the evidence in the record, including extensive consumer surveys submitted by both parties during the preliminary injunction proceedings, and of the factual findings of the District Court, we think it plain that Louboutin’s marketing efforts have created what the able district judge described as “a . . . brand with worldwide recognition,” Louboutin, 778 F. Supp. 2d at 448. By placing the color red “in [a] context [that] seems unusual,” Qualitex, 514 U.S. at 162, and deliberately tying that color to his product, Louboutin has created an identifying mark firmly associated with his brand which, “to those in the know,” “instantly” denotes his shoes’ source, Louboutin, 778 F. Supp. 2d at 448. These findings of fact by the District Court in addressing a motion for a preliminary injunction are not clearly erroneous. We hold that the lacquered red outsole, as applied to a shoe with an “upper”25 of a different color, has “come to identify and distinguish” the Louboutin brand, Qualitex, 514 U.S. at 163, and is therefore a distinctive symbol that qualifies for trademark protection.

We further hold that the record fails to demonstrate that the secondary meaning of the Red Sole Mark extends to uses in which the sole does not contrast with the upper―in other words, when a red sole is used on a monochromatic red shoe.

The Second Circuit went on to modify the Louboutin’ trademark registration to be consistent with the court’s ruling,

Because we conclude that the secondary meaning of the mark held by Louboutin extends only to the use of a lacquered red outsole that contrasts with the adjoining portion of the shoe, we modify the Red Sole Mark, pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119,26 insofar as it is sought to be applied to any shoe bearing the same color “upper” as the outsole. We therefore instruct the Director of the Patent and Trade Office to limit the registration of the Red Sole Mark to only those situations in which the red lacquered outsole contrasts in color with the adjoining “upper” of the shoe.

Because the defendant’s shoe at issue in this dispute was all-red, the Appeal’s Court went on to find in favor of the defendant and uphold the denial of the preliminary injunction.  In sum, Louboutin had its trademark reinstated, but lost this case because its trademark does not apply to all-red shoes.

Yellowbook v. Brandeberry: Can you sell your a trademark and then continue to use it?

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Yellow PagesSteven Brandeberry operated a phonebook business under the name AMTEL.  In 2002, Brandeberry sold his phonebook business to Barney White who then sold the business to Yellowbook.  In 2009, Brandeberry decided to start up another phonebook business and call it AMTEL.  Not surprisingly, Brandeberry was promptly sued by Yellowbook.

Brandeberry argued that the AMTEL name was owned both by him individually and his company.  Since only his company singed the sale agreement to Barney White he individually still owned the trademark AMTEL.  The district court agreed, finding that since the sale to Barney White did not involve Brandeberry individually, Brandeberry retained his individual trademark rights and White merely received a non-exclusive right to use the AMTEL mark.

On appeal to the United States District Court for the Sixth Circuit, Yellowbook argued that the agreement with White should be read to transfer the entire ownership of the mark to White.  Yellowbook further argued that even if Brandeberry retained some rights in 2002, by 2009 Brandeberry had abandoned any trademark rights.

The Sixth Circuit reversed the district court holding that Brandeberry never held an individual right to the trademark AMTEL.

The most basic problem with the district court’s reading is that no part of the contract makes any mention of joint ownership. Brandeberry and his corporation are always collectively referred to as a singular “licensee.”
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As 100% owner of American Telephone, Brandeberry had no reason to retain any individual stake. Burkhalter made sure Brandeberry signed the contract in his individual capacity to hold him personally liable for the $50,000 purchase price of the trademark, not to bifurcate the property rights between Brandeberry and his corporation.

The Sixth Circuit further held that any rights Brandeberry may have held have long since been abandoned.

Even if we were to hold that Brandeberry acquired an individual right that he did not transfer in 2002, Brandeberry abandoned any such right over the next several years.
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To prove abandonment, a party must demonstrate both non-use and intent not to resume use. Kellogg, 209 F.3d at 575. Here, it is undisputed that Brandeberry did not use the AMTEL mark (and conversely that White did) from 2003 to 2009. This six-year period of non-use puts Brandeberry well beyond the three-year statutory presumption for abandonment. 15 U.S.C. § 1127. At this point, the burden shifts to Brandeberry to demonstrate intent to resume use. Crash Dummy Movie, LLC v. Mattel, Inc., 601 F.3d 1387, 1391 (Fed. Cir. 2010).

The court therefore reversed the decision of the district court finding in favor of Yellowbook.

Eastland Music v. Lionsgate: Can a movie title infringe the name of music group?

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fifty-fiftyEastland Music Group owns the registered trademark Phifty-50, the name of a rap duo.  Eastland also claims a  trademark in 50/50.  Lionsgate released a dark comedy in 2011 titled 50/50 starring Seth Rogen and Joseph Gordon Levitt. The title of the movie refers to one of main characters fifty-fifty chance of survival after he learns he has a malignant tumor in his spine.

The district court dismissed Eastland Music’s complaint for failure to state a claim holding that that the movie’s title was descriptive of the plot.  Eastland appealed to the United States Court of Appeals for the Seventh Circuit.  On appeal, the Seventh Circuit focused on whether the title of the movie has actually caused confusion as to its source, rather than whether the title was descriptive.

this complaint fails at the threshold: it does not allege that the use of “50/50” as a title has caused any confusion about the film’s source—and any such allegation would be too implausible to support costly litigation. See Ashcroft v. Iqbal, 556 U.S. 662 (2009); Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007).

During oral argument the court questioned Eastland’s counsel about the lack of confusion.  The attorney admitted that no one ever contacted Eastland claiming confusion about the source of the film.

At oral argument, plaintiffs’ counsel conceded that not a single person has ever contacted Eastland or its web site to seek a copy of the film or complain about the film’s contents or quality. Nor does the complaint allege that any potential customer has turned to Lionsgate or Summit in quest of the rap duo’s products.

The court further noted that 50/50 has been used as a title for numerous films, many of which pre-date Eastland’s use of the mark Phifty-50.

The phrase 50/50 or a sound-alike variant (50-50, fiftyfifty, fifty/fifty) has been in use as the title of intellectual property for a long time. Wikipedia lists eight films with that title, opening in 1916, 1925, 1972, 1981, 1982, 1992, 2004, and 2011. See http://en.wikipedia.org/wiki/ 50/50. Six of these movies predate Eastland Music’s use. The 1982 film is by and about a rock band. Wikipedia lists three TV shows with that title, plus an episode of a fourth show. It also lists three songs whose titles contain the phrase 50/50. One of these is Frank Zappa’s 1973 song “50/50”. Then there’s “50/50 Luv” released in 1995 by the rap group B.G. Knocc Out & Dresta. And Wikipedia’s list is not comprehensive, for it omits anything by the rap duo Phifty-50; doubtless other examples also are missing. If there is any prospect of intellectual property in the phrase 50/50, Eastland Music is a very junior user and in no position to complain about the 2011 film.

Phifty-50 entered a crowded field, and its rights are correspondingly weak and narrow. See 2 McCarthy on Trademarks and Unfair Competition §§ 11.85–.87 (4th ed. 2012).

The court concluded that the title of work can only infringe a trademark if there is source confusion.

The title of a work of intellectual property can infringe another author’s mark only if the title falsely implies that the latter author is its origin. Dastar Corp. v. Twentieth Century Fox Film Corp., 539 U.S. 23 (2003). The titles of Truman Capote’s novella Breakfast at Tiffany’s, and the movie of the same name, do not infringe the rights of Tiffany & Co. because no reasonable reader or moviegoer thinks that the jeweler is the source of the book or the movie.

The Seventh Circuit therefore affirmed the district court’s dismissal.

Miller’s Ale House v. Carolina Ale House – Is copying a competitor’s name, décor, and layout fair competition or infringement?

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Miller’s Ale House has approximately fifty locations primarily in Florida.  Each location has a geographically determined name (e.g. a street, a town, a district) followed by the phrase Ale House.  One location located in Boynton Beach, Florida is named Boynton Ale House.  About a mile from the Boynton Ale House a competitor opened a bar named Carolina Ale House.  Apart from merely copying the name, Miller’s Ale House argued that Carolina Ale House copied the décor, layout, and styling of its Boynton Ale House.

Miller’s Ale House sued Carolina Ale House for common law trademark infringement of the term “ale house,” trade dress infringement for copying the décor, and copyright infringement for copying its copyrighted restaurant layout.

Regarding the common law trademark infringement claim for the term “ale house” the court found that Miller’s Ale House and Carolina Ale House had already litigated this claim ten years earlier.  In that case, the Fourth Circuit Court of Appeals held that the term “ale house” was generic for bar and tavern services.  Despite the passage of time and the fact that Miller’s Ale House had spent significant advertising funds promoting its Ale Houses, the Eleventh Circuit Court of Appeals held that Miller’s Ale House was bound by the prior fourth circuit decision.  The Eleventh Circuit further found that “ale house” is a generic term for a facility that serves beer and ale.

we agree with the District Court that Miller’s is bound by the Fourth Circuit’s decision. Miller’s still has “no protectable interest in the words ‘ale house’ [because] [t]hey are generic words for a facility that serves beer and ale, with or without food.” Ale House Mgmt., 205 F.3d at 141. Because a generic name may not receive trademark protection, the District Court properly granted summary judgment on Miller’s trademark infringement claim.

While Miller’s did present some evidence of consumer confusion, the court found the evidence irrelevant.

 The prominent use of a generic term by two competitors may understandably confuse consumers; however, this does not make the term any less generic. See Gift of Learning Found., Inc. v. TGC, Inc., 329 F.3d 792, 801 (11th Cir. 2003) (“[C]onfusion . . . is irrelevant unless the mark is protectible in the first instance.”); Boston Duck Tours, 531 F.3d at 21 (“[T]rademark law . . . is not intended to prevent confusion between two similar, generic marks.”).

Miller’s also argued that Carolina Ale House infringed its trade dress in its décor.  Miller pointed out that Carolina Ale House copied its external red lettering, it severs dress of Khaki’s and polo shirts, its center bar, its open kitchen, and its wood paneling.  In order to be protective trade dress, however, the décor must be unique or otherwise distinctive.  The court held that Miller’s claimed trade dress was not “distinctive” and was therefore unprotectable.

We find nothing particularly unique in a restaurant fixing its name in red letters on the outside of its building and on its menu, branding items it sells with that name, dressing its staff in khakis and a polo shirt, featuring a center bar with a soffit, offering seating at “high-top” tables, and paneling its walls with wood. These are the prototypical features—what we might call the “common . . . design,” Brooks Shoe, 716 F.2d at 858—of a standard sports bar or brew pub. The particular name affixed on the wall and to menu items, the specific color of the polo shirts, the type of wood on the walls, the placement of the “high-top” tables, and the openness of the kitchen,14 “even if they in combination could be deemed unique,” Wiley v. American Greetings Corp., 762 F.2d 139, 142 (1st Cir. 1985), are all “mere refinement[s]” of this “commonly-adopted and well-known form of ornamentation,” Brooks Shoe, 716 F.2d at 858.

Miller’s last argument was that Carolina Ale House’s infringed its copyrighted floor plan.  The court was equally unimpressed with this argument.  In order to establish copyright infringement, “protectable” elements must be copied.  Here Miller’s argued that Carolina Ale House copied its center bar design, its booth seating to the left of the bar, its high-top tables to the right of the bar, the location of its kitchen and the location of its restrooms.  The court held that these elements, even in combination, was not sufficient to support a claim of copyright infringement.

Because there are only a limited number of ways to turn a rectangular building into a sports bar and restaurant, “similarities in the general layout of rooms can easily occur innocently.”
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After an examination of the respective floor plans, we agree with the District Court “that the differences here are dramatic and overwhelming, and that the similarities between [Boynton Carolina’s] layout and Miller’s floor plan exist only at the broad conceptual level.”

So despite the similarities between the two ale houses, the Eleventh Circuit found that there was no infringement, merely fair competition.

Already v. Nike – You Cannot Invalidate a Trademark After the Trademark Case is Settled

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Nike sued Already, LLC dba YUMS (“Already”) alleging that Already’s “Soulja Boys” and “Sugars” shoes infringed or diluted Nike’s Air Force 1 shoe design trademark.  Already filed a counter-claim to invalidate Nike’s trademark.  In the middle of the lawsuit Nike executed a covenant not to sue promising not to sue Already for trademark infringement or unfair competition for its shoe designs. The covenant stated:

[Nike] unconditionally and irrevocably covenants to refrain from making any claim(s) or demand(s) . . . against Already or any of its . . . related business entities . . . [including] distributors . . . and employees of such entities and all customers . . . on account of any possible cause of action based on or involving trademark infringement, unfair competition, or dilution, under state or federal law . . . relating to the NIKE Mark based on the appearance of any of Already’s current and/or previous footwear product designs, and any colorable imitations thereof, regardless of whether that footwear is produced . . . or otherwise used in commerce before or after the Effective Date of this Covenant.

When Nike moved to dismiss the entire case, however, Already argued that its counter-claims should not be dismissed.  The trial court dismissed the case finding that there was no longer a justiciable case or controversy to maintain the action.  The Second Circuit affirmed.  Already then appealed to the Supreme Court of the United States.

The Supreme Court affirmed holding that the case was moot.

Article III of the Constitution grants the Judicial Branch authority to adjudicate “Cases” and “Controversies.” In our system of government, courts have “no business” deciding legal disputes or expounding on law in the absence of such a case or controversy. DaimlerChrysler Corp. v. Cuno, 547 U. S. 332, 341 (2006). That limitation requires those who invoke the power of a federal court to demonstrate standing—a “personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.” Allen v. Wright, 468 U. S. 737, 751 (1984). We have repeatedly held that an “actual controversy” must exist not only “at the time the complaint is filed,” but through “all stages” of the litigation. Alvarez v. Smith, 558 U. S. 87, 92 (2009) (internal quotation marks omitted); Arizonans for Official English v. Arizona, 520 U. S. 43, 67 (1997) (“To qualify as a casefit for federal-court adjudication, ‘an actual controversy must be extant at all stages of review, not merely at the time the complaint is filed'” (quoting Preiser v. Newkirk, 422 U.S. 395, 401 (1975))).

A case becomes moot—and therefore no longer a “Case”or “Controversy” for purposes of Article III—”when the issues presented are no longer ‘live’ or the parties lacka legally cognizable interest in the outcome.” Murphy v. Hunt, 455 U. S. 478, 481 (1982) (per curiam) (some internal quotation marks omitted). No matter how vehemently the parties continue to dispute the lawfulness of the conduct that precipitated the lawsuit, the case is moot if the dispute “is no longer embedded in any actual controversy about the plaintiffs’ particular legal rights.” Alvarez, supra, at 93.

The court found that Nike’s covenant not to sue was unconditional and irrevocable.  The court noted that the covenant protected Already as well as its distributor and customers. Moreover, the covenant prevented Nike from making any claim or demand.

Already argued that a case or controversy still exists because as long as Nike can assert its trademark in the future, Already is in danger of being sued again.  Already also argued that the existence of Nike’s trademark will make investors apprehensive about investing in Already.  Already further argued that as a competitor of Nike it has inherent standing to challenge Nike’s trademarks.

But the Supreme Court said, “enough already” and rejected all of these arguments.

The problem for Already is that none of these injuries suffices to support Article III standing.

. . .

Already’s arguments boil down to a basic policy objection that dismissing this case allows Nike to bully small innovators lawfully operating in the public domain. This concern cannot compel us to adopt Already’s broad theory of standing.

. . .

Accepting Already’s theory may benefit the small competitor in this case. But lowering the gates for one party lowers the gates for all. As a result, larger companies with more resources will have standing to challenge the intellectual property portfolios of their more humble rivals—not because they are threatened by any particular patent or trademark, but simply because they are competitors in the same market. This would further encourage parties to employ litigation as a weapon against their competitors rather than as a last resort for settling disputes.
Already’s only legally cognizable injury—the fact that Nike took steps to enforce its trademark—is now gone and, given the breadth of the covenant, cannot reasonably be expected to recur. There being no other basis on which to find a live controversy, the case is clearly moot.

The Supreme Court thus affirmed the judgment of the Court of Appeals.  The implicit implication of the court’s order is that a broad enough covenant not to sue will moot any trademark invalidity claim.  While the trademark still technically stands as valid, its inability to enforce it significantly weakens its value — at least against companies which choose to fight and allege counterclaims.

Oriental v. Cooperativa: How long is too long to wait to sue a trademark infringer?

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Puerto_Rico

Oriental Financial Group (“Oriental”) began using the mark COOP ORIENTAL in Puerto Rico in 1964.  Two years later,  in 1966, Cooperativa de Ahorro Y Crédito ORIENTAL (“Cooperativa”) began using the same COOP ORIENTAL mark in Puerto Rico.

Forty-three years later, in 2009, Oriental sent Cooperative a cease and desist letter.  When Cooperativa refused, Oriental sued.  The district court found a likelihood of confusion between the two marks and entered an injunction requiring Cooperativa to stop using the most recent version of its logo, but allowed Cooperativa to use an older version of it logo.

Among several issues on appeal was Cooperativa’s argument that after forty-three years of using the COOP ORIENTAL mark, Oriental’s claims were barred by latches.

“Laches requires proof of (1) lack of diligence by the party against whom the defense is asserted, and (2) prejudice to the party asserting the defense.” Museum of Fine Arts, Bos. v. Seger-Thomschitz, 623 F.3d 1, 10 n.9 (1st Cir. 2010) (quoting Costello v. United States, 365 U.S. 265, 282 (1961)). However, laches applies only where the plaintiff knew or should have known of the infringing conduct. See Valmor Prods., 464 F.2d at 204; see also What-A-Burger of Va., Inc. v. Whataburger, Inc. of Corpus Christi, Tex., 357 F.3d 441, 450 (4th Cir. 2004) (“Instead of focusing on when the trademark owner first knew that another party was using its mark, the court should be trying to determine the time at which the use became infringing and the time at which the owner should have known it . . . .”); ProFitness Physical Therapy Ctr. v. Pro-Fit Orthopedic & Sports Physical Therapy P.C., 314 F.3d 62, 70 (2d Cir. 2002) (“[A] plaintiff should not be obligated to sue until its right to protection has ripened such that plaintiff knew or should have known . . . that plaintiff had a provable infringement claim against defendant.”).

Oriental argued that despite the diminutive size of Puerto Rico and the limited number of banks on the island, it had no knowledge of Cooperativa’s use of COOP ORIENTAL until 2009.   Oriental further argued that Cooperativa failed to establish prejudice.

In a classic move, the United States Court of Appeals for the First Circuit ignored both of these arguments.  Instead, the Court held that latches did not bar Oriental’s claim based on the doctrine of progressive encroachment.

As a general rule the progressive encroachment doctrine requires proof that (1) during the period of the delay the plaintiff could reasonably conclude that it should not bring suit to challenge the allegedly infringing activity; (2) the defendant materially altered its infringing activities; and (3) suit was not unreasonably delayed after the alteration in infringing activity. See generally 6 McCarthy, supra, § 31:20.

Here, satisfaction of the second and third requirements are not open to serious dispute. The second requirement “turns . . . on the likelihood of confusion resulting from the defendant’s moving into the same or similar market area and placing itself more squarely in competition with the plaintiff.” Kellogg, 209 F.3d at 573 (emphasis added). Put succinctly, we ask “whether [the] defendant, after beginning its use of the mark, redirected its business so that it more squarely competed with plaintiff and thereby increased the likelihood of public confusion of the marks.” ProFitness Physical Therapy, 314 F.3d at 70 (emphasis added); Kason Indus., 120 F.3d at 1205; see also Tillamook Country Smoker, 465 F.3d at 1110 (“To establish progressive encroachment, [a plaintiff] . . . ha[s] to show that [the defendant] ‘expand[ed] its business into different regions or into different markets.'” (quoting Grupo Gigante SA De CV v. Dallo & Co., Inc., 391 F.3d 1088, 1103 (9th Cir. 2004) (emphasis added))). Increases in the allegedly infringing advertising are also pertinent.

The Court noted that for years Cooperativa only had three branches in Puerto Rico all near the city of Humacao, and none in San Juan where Oriental was based.  It was not until 2008 that Cooperativa began to expand its business into San Juan.  (This was apparently sufficient for the Court even though Humacao is only a 45 minute drive  from San Juan).  In addition in 2009 Cooperativa began expanding its advertising efforts.  The court viewed these activities as an expansion of Cooperativa’s business from “regional” to “island-wide.” (This was apparently sufficient for the Court even though you can drive across the whole island in about three hours).

Latches is a tough issue for the courts.  On the one hand, it is difficult for a court to take away a trademark holder’s right to sue.  On the other hand, if a company has been using a mark for some what rights, if any, has it aquired?  It is often the case that companies may for years co-exist with no likelihood of confusion despite similar or even identical marks.  It is only when businesses change and enter in new areas (geographically or types of goods and services) that a conflict is actually created.

When is Paris, not in France? In Re Miracle Tuesday

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Miracle Tuesday, LLC filed an intent-to-use trademark application for the stylized mark JPK Paris 75 for sunglasses, wallets, handbags and purses, travel bags, suitcases, belts, and shoes.  Because the applicant is a U.S. company, the trademark office rejected the mark as primarily geographically deceptively misdescriptive under Section 2(e)(3) of the Lanham Act, 15, USC § 1052(e)(3).

In support of the application, Miracle Tuesday argued that the owner of Miracle Tuesday Jean-Pierre Klifa (whose initials appear in the logo) is a French citizen who lived in Paris for 22 years.  Mr. Klifa also argued that he exhibit at two trade shows while in Paris.  The Examining Attorney disagreed finding that the primary significance of the mark is Paris and that Paris is famous for fashion.  Because the goods do not originate from Paris, the Examining Attorney found that misrepresentation regarding the geographic origin of the goods would be a material decision in a consumer’s decision to purchase products branded with the proposed trademark.

Miracle Tuesday appealed the Examining Attorney’s decision to the Trademark Trial And Appeal Board (“TTAB”).  The TTAB upheld the examiner’s decision and rejected Miracle Tuesday’s argument that the goods are not geographically misdescriptive as Mr. Kilfa is from Paris and designs the applicant’s goods.  The TTAB found that a substantial portion of consumers would believe that applicant’s goods came from Paris. The mark in question appears below:

Miracle Tuesday then appealed to the United States Court of Appeals for the Federal Circuit.  The Court explained that:

Under Section 2(e)(3) of the Lanham Act, a mark may not be registered on the principal register if the mark, “when used on or in connection with the goods of the applicant is primarily geographically deceptively misdescriptive of them.” 15 U.S.C. § 1052(e)(3). A mark is primarily geographically deceptively misdescriptive, and thus barred from registration, if: (1) “the primary significance of the mark is a generally known geographic location”; (2) “the consuming public is likely to believe the place identified by the mark indicates the origin of the goods bearing the mark, when in fact the goods do not come from that place”; and (3) “the misrepresentation was a material factor in the consumer’s decision” to purchase the goods. In re Cal. Innovations, Inc., 329 F.3d 1334, 1341 (Fed. Cir. 2003).

Reviewing the evidence submitted to the trademark office, the Federal Circuit upheld the refusal to register.  The court held:

It is undisputed that Paris is famous for fashion and fashion accessories, including the types of goods identified in the application. Because relevant purchasers are likely to think of Paris as a known source for fashion accessories, we agree with the Board that there is sufficient evidence of a goods/place association between Paris and the goods listed.

The court went on to find that the correct inquiry is whether there is a connection between the goods and the geographic location, not between the designer and the geographic location.

Although there is support for the proposition that goods need not be manufactured in the named place to originate there – and we do not endorse application of a contrary rule here – it is clear that there must be some other direct connection between the goods and the place identified in the mark (e.g., the place identified is where the goods are designed or distributed, where the applicant is headquartered or has its research and development facility, or where a main component of the good originates). Here, Miracle Tuesday concedes that the goods identified in the application do not originate in Paris. Indeed, at oral argument, counsel for Miracle Tuesday revealed that the goods at issue “are made outside the United States, in Asia.” See Oral Argument at 3:03. The record further reveals that the goods identified are designed in Miami, and there is no evidence that a main component of the goods, or even any component of the goods, comes from Paris. Simply put, there is no evidence of a current connection between the goods and Paris.

So it was three strikes you’re out for the applicant Miracle Tuesday.  (Or as they say in Paris, adieu.)