Consumer Advertising Law Blog

New Domain Names: From “Dot.com” to “Not Com” [Part 3 of 3]

In this third and final segment of our series, we suggest strategies that trademark owners may want to adopt and report on a recent development in the new top level domain scheme.

The launch of new top level domain names is right around the corner, on January 12, 2012. Trademark owners, particularly those that have developed significant goodwill in their brands, will be faced with several decisions. This blog briefly surveys those decision points. It also reports on an important letter published by the Department of Commerce (DOC) that may mirror some trademark owners’ concerns.    

Do You Want to Register a New Top Level Domain in the System? 

These are some of the factors that a company otherwise in a position to register a new gTLD (i.e., because it has the financial resources to do so) might consider:

• Is the company’s brand name strong, and arbitrary or fanciful? If the company has a brand that it can protect under the trademark laws, it might simply object to any third party attempt to register its mark as a new gTLD, with some assurance that its objection will succeed.

• Is the company’s name merely descriptive, or at most suggestive, so that the company should register the name as a new gTLD to keep others from doing so, if it wants to use the name in this capacity?

• Does the company want to use the use its mark as a new gTLD for marketing purposes?  Canon, for example, has announced its intent to register .canon and to issue second level domains to Canon customers who purchase cameras with unique chips so photos could be automatically uploaded to personal websites at [customer’s name].canon.

Apart from these issues, DOC’s letter raises a concern that may become widespread as the Internet opens up to new top level domains: Many trademark owners may feel compelled to file defensively at the top level, even if they are not going to use their top level domains, to prevent others from doing so. Of course, they will have an opportunity to object to third party attempts to register the same or confusingly similar letter strings as gTLDs. This, however, requires a trademark owner to be alert to the period for filing an objection, i.e., the period beginning approximately two weeks after the close of the application window on April 12, when ICANN posts the public portions of all applications that have been received on its website, and lasting for approximately seven months.   

Should You Register Any Marks or Names as Second Level Domains? 

Deciding whether you should register any marks or names as second level domains requires an in-depth familiarity with your organization’s portfolio. Some companies have dozens or even hundreds of trademarks, and will not wish to register all of them for cost and organizational reasons. A company may want to select (1) those marks that are its most valuable, and that it plans to continue using into the indefinite future or (2) any marks that it believes third parties will try to misappropriate.  

Trademark owners must then submit evidence of their rights, of the sort we described in the second blog in this series, to the Trademark Clearinghouse. In addition, a rightful trademark owner may reserve its marks as second level domains with the new gTLD during the Sunrise Period, which will open at least 30 days before the launch of a new gTLD, ahead of others who might try to reserve the same names.

- Roberta Horton

2011: Consumer Protection and Advertising Year-in-Review

From celebrity misappropriation suits to blockbuster class action rulings in the Supreme Court, 2011 was another exciting year in consumer advertising law. As we look forward to 2012, here’s a look at eleven of the top stories from the year that was. If you have your own nominees for 2011’s top eleven, send an email (randal.shaheen@aporter.com) and we’ll try to post our readers' list later this month. 

11. Maybe It’s Maybelline … or Maybe It’s Airbrushed

Beauty enhancements should come from products, not post-production! So said the UK’s Advertising Standard Authority in 2011, when it banned advertisements [Aug. 2, 2011] depicting Julia Roberts and Christy Turlington on the basis that the images had been digitally altered.

10. 2011.xxx

Many a legitimate enterprise found itself registering a .xxx domain name in 2011, as a new top level domain was launched for adult content on the Internet. These companies blushingly took advantage of the Sunrise B [Oct. 11, 2011] time period during which non-adult-industry trademark owners could defensively register their marks, thereby eliminating them from the pool of available .xxx domains.

9. There’s No Such Thing as a Free Lunch

It seems like the battle against the bulge is never-ending and so is the FTC’s battle against companies advertising misleading weight loss remedies. In 2011 the FTC reached a $25 million settlement [Oct. 4, 2011] with Reebok over ads for toning shoes that promised “a better butt and better legs with every step.”

8. She Looks Like Kim Kardashian

It’s well known that misappropriation suits are de rigueur for any self-respecting celebrity du jour.  See e.g., Paris Hilton’s 2009 suit against Hallmark (for use of the phrase “that’s hot”); Lindsay Lohan’s 2010 suit against E*Trade (for portraying a baby named Lindsay as a “milkaholic”). 2011 was no exception, as Kim Kardashian sued Old Navy [Aug. 4, 2011] for allegedly using a model resembling her in a TV advertisement.   

7. Made in Havana, Puerto Rico

The rule that literally true statements can be challenged as impliedly false took a hit this year [Oct. 10, 2011] when the Third Circuit held that survey evidence showing that the name “Havana Rum” gave the impression the rum was made in Cuba could be excluded because the statement on the bottle that the rum was “made in Puerto Rico” was objectively verifiable.

6. The Meaning of “Natural” 

The trickle of cases alleging deceptive use of the term “natural” on labeling or in advertisements became a torrent in 2011, with new suits [Oct. 3, 2011] against Conagra, Kellogg, and Skinny Girl, to name just a few.

5.Protecting Children in the US -- Standards for Food Advertising

We have been following FTC efforts to establish principles for marketing food to children for some time. In 2011, these efforts culminated in initial recommendations [May 16, 2011] published by the Interagency Working Group on Food Marketed to Children. These recommendations met with heavy resistance in the form of an industry coalition, [Aug. 9, 2011] which is seeking legislative action on the basis that the proposed standards are overbroad and anti-business.     

4. Protecting Children in the UK -- Standards for Decency 

The UK advertising regulator, the Advertising Standards Authority, was also active in protecting children in 2011, finding ad campaigns directed at children [Oct. 24, 2011] or portraying children (here and here) [Aug. 18 and Dec. 19, 2011] to violate UK standards for responsible advertising.

3.COPPA 

The FTC proposed changes [Sept. 23, 2011] to rules implementing the Children’s Online Privacy Protection Act (COPPA), which provides parents control over what personal information web sites may collect from children under 13 years old. These proposals are significant, particularly because FTC enforcement has made COPPA compliance a serious consideration [Nov. 23, 2011] for all web site operators.

2. Concepcion

In AT&T Mobility LLC v. Concepcion [May 4, 2011], the Supreme Court held that arbitration provisions prohibiting class-wide arbitrations can be enforced, and that the California Supreme Court’s decision in Discover Bank finding such provisions unenforceable is preempted by the Federal Arbitration Act. The full ramifications of Concepcion have yet to play out, but at least one court has found that such clauses can still be unconscionable. [Nov. 14, 2011]

1. Wal-Mart v. Dukes

The top spot on our list goes to the Supreme Court’s watershed decision [June 28, 2011] on class certification, the first of its kind in many years. Wal-Mart embraces a rigorous analysis of the elements of class certification, and substantially raises the bar for showing that the commonality element of Rule 23 has been met. Commentators were quick to predict that Wal-Mart would shape class action law for years to come, and early indications [Aug. 24, 2011] suggest that might be an understatement. [Nov. 15, 2011]

- George Langendorf, Randy Shaheen, and Amy Mudge

New Domain Names: From “dot.com” to “not com” [Part 2 of 3]

In this second segment of our series, we discuss options for trademark owners on how to act defensively if they do not become registries under the new top level domain system.

The first blog in this series explained how the opening up of the Internet to new registries -- and the potential explosion of new top level domains -- could change the Internet. Yet many, if not most, trademark owners will not become a registry with their own top level domains, for financial, technical or other reasons. These trademark owners, however, should know how to protect their trademark rights from the new form of cyberpirates that is likely to emerge. This blog briefly describes the more important mechanisms that ICANN plans to offer savvy trademark owners to protect their rights.     

Objecting to a Third Party’s New gTLD Application

Only four grounds may form the basis for a trademark owner’s objection to a new gTLD application: 

• String Confusion Objection: The applicant’s proposed gTLD “string” of letters, is confusingly similar to a pre-existing gTLD or another applied-for gTLD string in the same round of applications. 
• Legal Rights Objection: The applicant’s gTLD string infringes the legal rights of the objector, such as the objector’s trademark rights. Factors in deciding a legal rights objection are similar to those in the Uniform Domain-Name Dispute Resolution Policy under current practice.
• Limited Public Interest Objection: The applicant’s gTLD contravenes generally accepted standards of morality and public order under international law.
• Community Objection: A significant part of the community, such as a geographic community, objects to the gTLD application, e.g., New York City residents might object to a Miami company’s submission for a .nyc registry. 

To initiate a proceeding, the objector must file its complaint by a posted deadline with an appropriate Dispute Resolution Service Provider (DRSP), along with a specified fee. For many companies, the most relevant DRSPs are the World Intellectual Property Organization (for legal rights objections) and the International Centre for Dispute Resolution (for string confusion objections). 

Protecting Against Infringing Second Level Domains in the New Domain Name Space

ICANN’s  program contemplates important measures to protect trademark owners from the registration of second level domains, combined with the new gTLDs, by trademark infringers. Thus, a company owning the ABC^® mark could invoke the procedures described below to prevent a third party from registering “ABC.new TLD” or to learn of such registrations.

The Trademark Clearinghous. ICANN plans to create a Trademark Clearinghouse, i.e., a central database for information about trademark rights. Trademark owners who want to register their second level domains with the new registry ahead of the general public, and trademark owners who want to be notified if a would-be infringer registers their trademarks as second level domains, must submit evidence of their trademark rights to the Trademark Clearinghouse. This evidence may consist of: a trademark registration; a judicial decision recognizing the trademark; or other evidence showing that the mark “constitute[s] intellectual property”. This Clearinghouse will authenticate information about the trademarks it receives and store that information in its database. It will provide information about the authenticity of the trademarks in its database, as needed, to new gTLD registries for use in the Sunrise Service and Trademark Claims Services described below.

Sunrise Service. New gTLD registries must provide a Sunrise Service that protects trademark owners from a “race to registration” against domain name registrants who might infringe the trademark owners’ rights. The anticipated sunrise period will be at least 30 days before the launch of a new gTLD, during which time a rightful trademark owner may reserve its mark as a second level domain with the new gTLD, ahead of others who might try to reserve the same name. For example, if a major car manufacturer could register its MERCEDES^® mark as “mercedes.car” before Company S permits the public to register domain names in the .car gTLD.  

Trademark Claims Service. In addition, all new gTLD registries must provide a Trademark Claims Service for the first 60 days after the public launch of their new gTLDs, i.e., after the general public can begin registering domain names in the gTLDs. This service provides a warning notice, called the Trademarks Claim Notice, to prospective registrants of a pre-existing trademark owner’s rights when the domain name applicant attempts to register a domain name that is an “identical match” to the trademark that the trademark owner has listed with the Trademark Clearinghouse. This notice, however, is of limited utility, because it is only triggered when a third party tries to register a second level domain identical to a trademark that resides in the Trademark Clearinghouse. If the domain name registrant proceeds with the registration application, the trademark owner will receive a notice informing it that a domain name that is an identical match to the trademark owner’s mark has been registered.

Objections to Registrations. The Uniform Dispute Resolution Procedure that currently applies to disputes involving registration of second level domains with .com, .net, .org and certain other top level domains will apply to registration of second level domains with the new gTLDs. An entity that wants to challenge registration of a second level domain with a new gTLD may, assuming jurisdiction and venue lie, also file a lawsuit in the United States alleging infringement, cybersquatting and related causes of action.

- Roberta Horton

 

New Domain Names: From “Dot.Com” to “Not Com” [Part 1 of 3]

This is the first in a series of three blogs on the new gTLDs

Most of you are probably familiar with the common Internet domain name endings such as “.com”, “.net”, or “.org”, which, when combined with an organization’s or individual’s name, serve as addresses for websites in cyberspace (e.g., “microsoft.com”). The portion to the right of the dot is the Top-Level domain (“TLD”). One type of TLD is a “generic” TLD (gTLD), such as .com; another is a “cc TLD” or country code, such as “.jp.” . The portion to the left of the dot is called a “second-level domain name” and is the name of the organization or individual. To date, only 22 gTLDs exist. Beginning on January 12, 2012, however, the Internet will open up to a potentially infinite number of new top level domains or “gTLDs”. This Blog briefly explores how the launch of these new top level domains could change the Internet -- and affect your organization -- dramatically.  

What will the changes look like? The launch of new gTLDs means that anyone with the means can become a “registry” that creates and manages a database of domains ending with a particular top level domain that it selects. That new gTLD can be a generic term (e.g., “.bank”, “.wine”) or a brand name (e.g., “.canon”, “.nokia”). The registry should have a say in setting the rules for entities eligible to register under that gTLD. For example, if the gTLD is a generic term such as “.bank”, the registry may require that registrants actually offer banking services. If the registry is a car manufacturer using its brand name as the gTLD (e.g., “.mercedes”), it may require that only authorized dealers can register in its gTLD space (e.g., “manhattandealer.mercedes”). Still other registries might use the new gTLDs for creative promotional purposes. The camera company Canon was the first to express an interest in setting up a new registry, under .canon. The company may use “.canon” for marketing purposes, issuing second level domain names to Canon camera owners and embedding a unique chip in the buyers’ cameras so that they could upload photos onto [buyer’s name].canon.

The registry will set the rules for bodies called “registrars”, which are accredited by the Internet Corporation for Assigned Names and Numbers, the global body that governs the Internet. The registrars will, in turn, sell to individual registrants the right to combine their second level names with the top level domain for a limited period of time. 

How does one become a Registry?  The requirements are rigorous, and include a significant financial payment ($185,000), a demonstration of financial stability, and sophisticated technical support on a 24/7 basis. If a Registry elects to outsource its technical work, its financial commitment could run $1 million or more. Applicants must complete a 40+ page application and 10 detailed specifications demonstrating their financial and technical capability. ICANN is not planning to post the actual new GTLD application.  This link, here, will allow an Internet visitor to navigate through the application process. ICANN will evaluate the applications. Among other things, it will guard against the granting of multiple new gTLDs that are confusingly similar to a previous gTLD. The application window lasts for only four months, from January 12, 2012 to April 12, 2012.

What to watch out for if you are not a Registry: Becoming a Registry is not for everyone. Some organizations do not have the expertise or the financial wherewithal, or want to make the commitment required. Still others, such as non-commercial entities that do not sell products or services, might not stand to gain by carving out a space they can control to some degree on the Internet. 

If you are not in the “Registry Game”, you should be prepared to act defensively to: 

1. Object to a third party’s proposed gTLD that incorporates your trademark; or
2. Object to a third party’s  attempt to register second level domains incorporating your name or trademark within the new gTLD space. 

The next blog post in this series will describe these defensive mechanisms and explains how they work.  The third and final post will sum up the new gTLD process and suggests strategies for an organization to  adopt as the launch date approaches.   

- Roberta Horton

 

 

Watching the Sun Rise: Protecting Your Brand in the New .XXX Domain Name Space Before It’s Too Late

The new .XXX top level domain was recently launched as the space for adult content on the Internet (e.g., PLAYBOY.XXX). But this is also an invitation for third party cybersquatters to register in the .XXX space. To guard against this danger, the registry managing the launch is allowing legitimate brand owners a limited window for “reserving” their brand names together with .XXX before these names become generally available. The reservation process, as described below, is quick and relatively easy, but trademark owners should capitalize on it soon to avoid an association between their brands and the adult entertainment industry.

The .XXX launch, which is managed by ICM Registry, LLC (“ICM”), includes three phases:  Sunrise, Land Rush, and General Availability. Sunrise, which began on September 7, 2011, is a limited period during which members of the adult entertainment industry may register .XXX domain names corresponding to their registered trademarks (Sunrise A), and non-industry trademark owners may defensively register their marks (Sunrise B), eliminating them from the pool of available .XXX domains.  The Sunrise period ends October 28, 2011, and when Land Rush begins on November 9, 2011, members of the adult entertainment industry may reserve .XXX domain names regardless of trademark ownership. 

To obtain a Sunrise B defensive registration, trademark owners must apply to ICM through an Accredited Registrar.  Each Registrar sets its own one-time fee for Sunrise B applications, with most charging between $200-$300. Importantly, only a registered trade or service mark of national effect may be the basis for Sunrise B defensive registration; Sunrise B is not available for unregistered marks, or those that are merely state registered. Further, only registrations issued before September 1, 2011 qualify for Sunrise B.

A Change In The Wind For Google?

Google might not fare so well in the recent appeal before the US Court of Appeals for the Fourth Circuit brought by Rosetta Stone, the internationally-known language learning company. In Rosetta Stone Ltd. v. Google Inc., the Fourth Circuit considered a host of IP issues raised by the language learning company involving Google’s sale of Rosetta Stone’s trademarks as keywords. This case is made all the more interesting by the district court’s unusual and (in the authors’ view) misguided interpretation of the trademark and dilution laws. (In full disclosure, the authors represented more than a dozen major brand owners, among them Coach, The Professional Golfers’ Association of America, and Rolls Royce, as amici curiae who urged reversal of the lower court’s opinion on the issues of trademark functionality and dilution.)

Rosetta Stone initially brought suit against Google for selling its trademarks as keywords, including keywords to trigger paid advertisements (then known as “Sponsored Listings”). A panel comprised of Chief Judge William Traxler, Jr., Judge Clyde Hamilton, and Judge Barbara Keenan heard oral argument on September 22, 2011.

On summary judgment, the district court had ruled in favor of Google on all counts. But this ruling might well be overturned on appeal. The difficulty, from Google’s perspective, is that the district judge misapplied the law in some instances and went out on a limb in others, deciding issues in a novel and unsupported way. And this was not lost on the panel.

The Ninth Circuit Speaks and Rejects the Presumption of Irreparable Harm

Earlier this month, in two separate decisions, the Ninth Circuit joined the growing number of appellate courts in rejecting the long-standing presumption of irreparable harm in determining whether a preliminary injunction should issue in intellectual property cases. First, on August 3, 2011, the Court rejected the presumption for copyright cases in Perfect 10 v. Google. And on August 22, 2011, the Ninth Circuit followed up with an opinion rejecting the presumption of irreparable harm in trademark cases in Flexible Lifeline v. Precision Lift. These opinions likely will have a substantial impact on plaintiffs’ ability to obtain preliminary injunctive relief in copyright and trademark cases, as irreparable harm must now be demonstrated and not merely presumed upon a showing of likelihood of success on the merits.

This sea change in preliminary injunction standards has been developing for some time. In 2006, the Supreme Court, in eBay, Inc. v. MercExchange, L.L.C., held that irreparable harm could not be presumed when determining whether permanent injunctive relief should be granted in patent infringement cases. Since ebay was decided, appellate and district courts have struggled with the question of whether eBay’s prohibition on the presumption of harm applies in copyright or trademark cases, in particular when the plaintiff is seeking preliminary relief. While many courts have continued to enter preliminary injunctions based on a finding that the plaintiff is likely to succeed on the merits followed by a presumption of irreparable harm, there has been a growing shift away from this approach. In Perfect 10 v. Google and Flexible Lifeline v. Precision Lift, the Ninth Circuit became the latest court to join this movement. Resolving a split among district courts within its Circuit, the Ninth Circuit found that eBay’s rejection of the presumption of irreparable harm in patent cases applies equally to actions for copyright and trademark infringement and to requests for preliminary relief.

In light of the decisions in Perfect 10 v. Google and Flexible Lifeline v. Precision Lift, a plaintiff seeking injunctive relief in the Ninth Circuit will have to do more than show a likelihood of success on the merits of its claims and will need to demonstrate through evidence the existence of irreparable harm from ongoing copyright and trademark infringement.

- James Blackburn and Alan Veronick

Sixth Circuit: Adult Products Create Rebuttable Presumption of Trademark Dilution

The long-running dispute between the internationally-known lingerie retailer Victoria’s Secret and the small retailer Victor’s Little Secret has finally come to an end now that U.S. Supreme Court refused its certiorari request. Over a decade ago, Victoria’s Secret sued Victor and Cathy Mosely to stop them from using the names “Victor’s Secret” or “Victor’s Little Secret” for a store in Elizabethtown, Kentucky, which sold merchandise that included sex toys and other “adult” products.

During its first trip through the federal court system, the US Supreme Court famously ruled in Moseley v. V. Secret Catalog, Inc. (2003) that the Federal Trademark Dilution Act (FTDA) required a plaintiff (Victoria’s Secret) to prove that actual dilution had occurred to obtain an injunction under the FTDA. This result upset many trademark owners who complained that they should not have to wait until their famous trademarks had been weakened by third parties before obtaining relief. Responding to these widespread objections, Congress overruled the Supreme Court decision by passage of the Trademark Dilution Revision Act of 2006 (TDRA), decided while the Moseley was on remand to the district court.

The TDRA provides relief for two types of dilution: dilution by blurring or dilution by tarnishment. On remand, Victoria’s Secret sought an injunction against Victor’s Little Secret arguing that the small retailer tarnished the famous VICTORIA’S SECRET mark by associating it with sexually-oriented merchandise. Applying the new TDRA, the Moseley district court concluded that Victor’s Little Secret disparaged the VICTORIA’S SECRET mark and issued an injunction in favor of Victoria’s Secret. Moseley appealed to the Sixth Circuit. Upholding the district court’s injunction, the Sixth Circuit considered the proof necessary for a “dilution by tarnishment” claim under the new TDRA. Over a dissent, the Sixth Circuit found that the sex-related products sold by Victor’s Little Secret created a rebuttable presumption of dilution which shifts the evidentiary burden to the defendant to prove the absence of dilution, “if there is a clear semantic association between the two [trademarks].”

The court found support for its “semantic association” standard based on prior dilution decisions involving pornography websites or movies. Explaining the basis for its decision, the Sixth Circuit stated:

"The new law seems designed to protect trademarks from any unfavorable sexual associations. Thus, any new mark with a lewd or offensive-to-some sexual association raises a strong inference of tarnishment. The inference must be overcome by evidence that rebuts the probability that some consumers will find the new mark both offensive and harmful to the reputation and favorable symbolism of the famous mark."

The Sixth Circuit held that the evidence to overcome this presumption could be expert testimony, surveys, polls, or customer testimony. Acknowledging that any tarnishment may be “speculative,” the court found that the Moseleys failed to present evidence to rebut the presumption of tarnishment. In a dissenting opinion, Sixth Circuit Judge Karen Nelson Moore focused on the speculative nature of the claim alleged by Victoria’s Secret and disagreed with the majority’s burden-shifting presumption based solely on the nature of the goods sold by Mosely. Perhaps heartened by the dissent, Moseley sought to challenge the Sixth Circuit’s “rebuttable presumption” standard before the Supreme Court. The Court’s denial of the petition for certiorari leaves this presumption the law in the Sixth Circuit. Whether or not other circuits will follow is yet to be seen.

- Suzanne Wilson

Degrees of Dilution -- How Close is Not Close Enough?

On February 8, 2011, the Ninth Circuit joined the Second Circuit in deciding that, under the federal Trademark Dilution Revision Act of 2006 (TDRA), owners of famous trademark do not need to show that an allegedly dilutive mark is “identical,” “nearly identical,” “substantially similar,” or “essentially the same” as the famous mark to demonstrate dilution under the TDRA. Instead, in Levi Strauss & Co. v. Abercrombie & Fitch Trading Co., the Ninth Circuit, like the Second Circuit in Starbucks Corp. v. Wolfe’s Borough Coffee, Inc., concluded that its prior precedent requiring that the marks at issue be “identical or nearly identical” does not survive the plain language of Congress's 2006 TDRA, which amended Section 43(c) of the Lanham Act.

In Levi Strauss, the Ninth Circuit reversed the district court’s decision dismissing Levi’s claim that Abercrombie’s “dipsy doodle” design dilutes Levi’s famous “Arcuate” design.

In its decision, the Ninth Circuit intricately traces the origin of its prior “identical or nearly identical” standard back to the Second Circuit’s decision in Mead Data Central, Inc. v. Toyota Motor Sales, U.S.A., Inc. Because the 2006 TDRA explicitly sets forth a number of elements that a court may consider in evaluating a dilution claim, of which the similarity of the marks is only one element, the Ninth Circuit held that the district court’s application of the incorrect “identical or nearly identical” standard was in error. Moreover, the Ninth Circuit concluded that this error permeated the entire decision, requiring a remand to the district court.

At the same time, the Ninth Circuit recognized that some degree of similarity must still be present for dilution to occur. The TDRA requires that a famous mark owner prove an “association arising from the similarity between a mark or trade name and a famous mark.” Not surprisingly, the appellate court observed that “[a] sufficiently strong showing of similarity can overcome all other relevant factors,” and “greater degrees of similarity manifestly are more likely to support a finding of dilution.” Although the Ninth Circuit held “that a particular degree of similarity is not a threshold,” it nonetheless recognized that “similarity is the necessary predicate for dilution analysis.”

Having conclusively retired the requirement that the dilutive mark be “nearly identical” to the famous mark, the Ninth and Second Circuits’ recent decisions open a new front at the opposite end of the similarity spectrum: When are marks so dissimilar that there can be no dilution as a matter of law? In Starbucks, the Second Circuit found that the district court did not err in concluding that the disputed marks “were minimally similar to the Starbucks Marks.” Yet, “the existence of some -- but not substantial -- similarity between the subject marks may be sufficient in some cases to demonstrate a likelihood of dilution . . . .” This “minimally similar” standard provides little guidance to courts and gives little comfort to defendants seeking to resolve a dilution claim early in a case. The Ninth Circuit’s decision offers little additional guidance:

The degree of similarity between the [parties’ marks] may be insufficient to support a likelihood of dilution, but that conclusion can come only after consideration of the degree of similarity in light of all other relevant factors and cannot be determined conclusively by application of an “essentially the same” threshold.

The federal dilution standards continue to evolve, but they have not become any clearer.

- Suzanne Wilson and Brent LaBarge

Ninth Circuit Finds Trademark Dispute Too "Delicious" for Summary Judgment

In a recent trademark infringement decision, the Ninth Circuit reaffirmed that issues of confusion, fair use and the weight to be given survey evidence are factual issues which are to be decided at trial.  In Fortune Dynamic, Inc. v. Victoria’s Secret Stores Brand Management, Inc., No. 08-56291 (August 19, 2010), the Ninth Circuit reversed the district court’s entry of summary judgment in favor of defendant Victoria’s Secret, whose use of the stylized word DELICIOUS on tank tops was alleged to violate plaintiff’s DELICIOUS trademark.  Holding that, “because of the intensely factual nature of trademark disputes, summary judgment is generally disfavored in the trademark arena,” the appellate court ordered the case be tried. 

Plaintiff Fortune Dynamics owns a registered trademark for the DELICIOUS mark for women’s shoes, which are advertised in popular women’s fashion magazines.  This dispute arose when Victoria’s Secret launched a promotional campaign for its Beauty Rush makeup.  Without conducting a trademark search, Victoria’s Secret sold hot pink tank tops with the word DELICIOUS in silver lettering across the front.  Fortune Dynamics alleged the use of its DELICIOUS mark on Victoria’s Secret tanks constituted trademark infringement. 

The district court granted summary judgment for Victoria’s Secret, “holding that the factors used to determine whether there is a likelihood of confusion weighed” in favor of defendant, and that Fortune’s claims were “entirely barred by the fair use defense.”  The district court also excluded Fortune’s trademark expert, including his confusion survey.

Last month, the Ninth Circuit reversed and remanded the case for trial, reiterating several times that the district court improperly decided issues of fact that are the province of the jury.  The appellate court carefully analyzed the relevant legal issues, identifying the factual issues that must be reserved for the jury.  On the question of likelihood of confusion, the Ninth Circuit reviewed many of the relevant factors and determined that a reasonable jury could come out either way on each of them.  For example, Victoria’s Secret had argued that confusion was unlikely because the tank top was sold only in Victoria’s Secret stores, which sells only Victoria’s Secret merchandise.  The appellate court observed that post-sale confusion was within the scope of the Lanham Act and was relevant in this case when the tank top was observed being worn outside of Victoria’s Secret stores. 

With regard to plaintiff’s trademark expert and his survey, the appellate court acknowledged the alleged shortcomings in the survey and the court’s role as a gatekeeper with respect to expert evidence.  Nonetheless, the Ninth Circuit held that the “side-by-side,” internet survey of prospective purchasers met the basic standards of acceptable survey techniques and, thus, should be admitted.  Critiques of the survey went to the “weight” of the survey to be determined by the jury.

Finally, Victoria’s Secret argued that its use of “DELICIOUS” on a tank top was a descriptive use of the word and not a trademark use prohibited by the Lanham Act.  See 15 U.S.C. § 1115(b)(4).  Victoria’s Secret witnesses had testified that the DELICIOUS word was selected for non-trademark purposes:  (1) “delicious” “accurately described the taste of the BEAUTY RUSH lip glosses and the smell of the BEAUTY RUSH body care”; and/or (2) “the word served as a ‘playful self-descriptor,’ as if the woman wearing the top is saying, ‘I’m delicious.’”  Finding an issue of disputed fact, the Ninth Circuit noted that there was contrary evidence which a reasonable jury could conclude proved that Victoria’s Secret was using DELICIOUS as a trademark.  In fact, Victoria’s Secret’s own use of its trademarks on clothing was significant to the court:

Perhaps most important, Victoria’s Secret’s used “Delicious” in a remarkably similar way to how it uses two of its own trademarks — PINK and VERY SEXY.  PINK is written in bold capital letters on different items of Victoria’s Secret clothing, while VERY SEXY was written, in hot pink crystals, across the chest of a similar black-ribbed tank top during a very similar promotion.  The fact that Victoria’s Secret used “Delicious” in the same way that it uses other Victoria’s Secret trademarks could be persuasive evidence to a jury that Victoria’s Secret used, or at least intended to establish, “Delicious” as a trademark.

The appellate court concluded that a jury must decide these issues, not the district court. 

Although both plaintiffs and defendants frequently obtain summary judgment orders from federal courts, this case serves as a good reminder that factual issues are the purview of the jury.  The jury must decide questions about the context and uses of trademarks even though the evidence appears to favor one side.  When a trademark plaintiff presents admissible evidence on issues such as likelihood of confusion and descriptiveness, the jury and not the judge must weigh it.

- Suzy Wilson and Amie Medley

Federal Circuit Smashes Standing Requirement for False Patent Marking Lawsuits

In a much anticipated decision, the Court of Appeals for the Federal Circuit recently held in Stauffer v. Brooks Brothers, Inc., that “any person” has standing to bring a false patent marking action, regardless of whether or not that individual suffered any personal harm and without any allegation of competitive harm to the marketplace from the false marking. The Stauffer case has been closely watched by legal observers, and several false marking cases have been stayed pending the decision. The Federal Circuit’s holding places essentially no standing limitation on a person’s right to sue for false patent marking, and potentially opens the door to even more false marking litigation.

In Stauffer, a patent attorney acting on his own behalf sued Brooks Brothers for selling bow ties containing adjustment mechanisms that were marked with two patents that had been expired for over fifty years. Stauffer argued that continuing to mark the ties with expired patent numbers constituted false patent marking in violation of the false marking statute. Brooks Brothers moved to dismiss Stauffer’s complaint for lack of standing and for failure to allege an intent to deceive the public with sufficient specificity to meet the heightened pleading requirements for claims of fraud. The district court held that Stauffer did lack standing to assert a false marking claim because he had not sufficiently alleged an injury in fact to the United States or to himself.

The Federal Circuit reversed. According to the Court, in order to have standing, Stauffer was required to allege that the United States suffered an injury in fact causally connected to Brooks Brothers’ conduct. That requirement was met because Congress’ decision to enact § 292 reflected its determination that deceptive patent mismarking is harmful and should be prohibited, and a violation of § 292 inherently constitutes an injury to the United States. Because the government would have standing to enforce its own law, Stauffer, as the government’s assignee, also had standing to enforce § 292, even if Stauffer himself had not suffered a concrete injury. The court found that either a proprietary or sovereign (i.e., the government’s right to enforce its own laws) injury of the United States conferred standing on the government, and therefore Stauffer.

The Federal Circuit’s decision removes a potential standing defense to false marking claims, if not overturned by Supreme Court review or congressional action.. At the same time, however, the Court hinted at other potential defenses to such a claim. First, in Stauffer, an amici asserted [insert brief if libref finds] that the government’s assignment of a false marking claim without retaining control over the assignee’s actions violated the “take Care” clause of Article II, § 3 of the Constitution. The Federal Circuit noted that Ciba raised “relevant points” but expressly declined to decide the constitutionality of § 292 because the issue had not been raised or argued by the parties. The constitutionality of the false marking statute may well be the next battleground in such cases. Second, the court remanded the case to the district court with instructions to consider the merits of Stauffer’s case, including Brooks Brothers’ motion to dismiss pursuant to Rule 12(b)(6) “that the complaint fails to state a plausible claim to relief because it fails to allege an intent to deceive the public with sufficient specificity to meet the heightened pleading requirements for claims of fraud imposed by” Rule 9(b). It may be exceedingly difficult for false marking plaintiffs to meet that burden. Indeed, at least one district court has already dismissed two false marking suits on this basis.

See here for more information on the decision and its import.

- James Blackburn and Matthew Bathon

Is A Certified Electronics Recycler® a Trademark or a Type of Recycler?

If you’ve ever wondered what to do with your old cell phone or laptop, you’re not alone. According to the Basel Action Network (BAN), a Seattle-based non-profit, “e-waste” is the fastest growing toxic waste stream in the world, and too much of it is currently being dumped, burned, or exported to less developed countries that lack the technologies needed to manage toxic materials without harming human health and the environment. In April, BAN launched its e-Stewards® Certification program, which allows individuals and organizations to identify recyclers that comply with BAN’s standards for the handling, recycling, and reuse of electronic waste. In connection with the program, BAN wants to use the phrases “electronics recycler,” “certified recycler,” and “certified electronics recycler” to describe those recyclers who have obtained e-Stewards® status. The problem? The phrase “Certified Electronics Recycler” has been registered as a certification trademark by another non-profit that claims to certify recyclers. On June 7, BAN sued the International Association of Electronics Recyclers, Inc. (IAER) and its successor, the Institute of Scrap Recycling Industries, Inc. (ISRI), for cancellation of the Certified Electronics Recycler® certification mark and for a judicial declaration that BAN’s use of the phrase does not constitute trademark infringement. (BAN originally petitioned the U.S. Patent & Trademark Office to cancel the Certified Electronics Recycler® mark but recently opted to pursue a federal court complaint instead.)

In its Complaint, BAN alleges the phrase “electronics recycler” is a generic phrase which is a commonly used industry term to describe an entity that recycles electronic equipment or parts, and that “certified electronics recycler” is commonly used to describe an electronics recycler that has been certified or accredited by a private or public standards-setting organization. The continued use and registration of the Certified Electronics Recycler® certification mark, BAN argues, erroneously suggests that only ISRI can certify a genuine “certified electronics recycler,” which harms BAN, its e-Stewards program, and the public. Second, BAN alleges defendants have abandoned the IAER certification standards, which were originally associated with defendants’ certification mark, and are currently misusing the mark in connection with a different set of standards adopted by ISRI. BAN argues that because the certification mark “Certified Electronics Recycler” has not been used consistently with one set of consistent standards, the use of the phrase as a certification mark is inherently misleading and confusing to the consumer, and should be cancelled under the Lanham Act’s trademark cancellation provisions.

The amount of electronics waste expected to increase 8% per year (according to BAN). At the same time, there is an increased desire by all of us who want to upgrade our cell phones and laptops in an environmentally responsible way and the government that we dispose of this waste in an appropriate manner. If one company or organization can claim ownership and rights to the Certified Electronics Recycler® mark, will that organization have a competitive advantage over other standards-setting organizations in certifying electronics recycling companies? The federal court in Seattle, Washington is currently poised to answer this question. 

- Suzanne Wilson, Anna Manville, and Elizabeth Frank

Protecting Your Trademark Is No Laughing Matter

The online retailer ThinkGeek is known for having some pretty bizarre items, but none are wackier than the annual April Fool’s Day products. This year’s lineup included Canned Unicorn Meat, billed as “the new white meat.” Below a picture of a block of sparkly meat, the product page explains how a group of Irish nuns care for aging unicorns and “fatten them on a diet comprised entirely of candy corn.” A diagram of the cuts of unicorn, including “magic,” “giggles,” and “rainbows,” completes the page.

The product led the National Pork Board (NPB), owners of the trademark THE OTHER WHITE MEAT, to send a cease and desist letter warning ThinkGeek of possible infringement. The letter objected to the product’s slogan—“Pâté is passé. Unicorn - the new white meat.” It also noted that other websites, in linking to Canned Unicorn Meat, had used the phrase “The Other White Meat.”

THE OTHER WHITE MEAT has been in use for over twenty years, with over $550 million spent on advertisements using the slogan. A 2000 study found it to be the fifth most well-known advertising slogan in the United States. Based on this and other evidence, the Patent and Trademark Office recently found the slogan to be a famous mark and refused to allow a salmon distributor to register THE OTHER RED MEAT because it would cause dilution by blurring the distinctiveness of the NPB’s mark.

In a blog post, ThinkGeek asserted that it has “nothing to worry about--this kind of use is protected as a parody.” Confident in its legal position, ThinkGeek had a field day at the NPB’s expense, posting a portion of the letter—which it called the “best-ever cease and desist”—and implying that the NPB’s lawyers thought the product was real. ThinkGeek’s parent company even issued a Press Release, apologizing for “caus[ing] a national crisis and misguid[ing] American citizens regarding the differences between the pig and the unicorn.” Almost immediately, bloggers got in an the action, exclaiming that “the pork people had no sense of humor” and “weren’t in on the joke.”

However, parody is not a defense to infringement per se, but rather an argument that there is no likelihood of confusion—a necessary element of infringement—because consumers will know that the parody is a joke. A parody, though, must make fun of or criticize the trademark or its owner; using a trademark to make fun of something else is not a parody. Thus, to be a parody, Canned Unicorn Meat must be meant as commentary on THE OTHER WHITE MEAT or the NPB. If Canned Unicorn Meat does not qualify as a parody, ThinkGeek may face liability for infringement or possible dilution of the NPB’s famous mark. And there would be nothing magical about that.

- Suzanne Wilson and Karen Otto

“Ambush Marketing” and the World Cup: How Does an “Official Sponsor” Protect that Position?

What comes to mind when you see thirty women wearing orange mini-dresses? If you said ambush marketing, you may be correct. Companies spend substantial sums to sponsor high profile events, such as the FIFA World Cup. The benefits of sponsorship generally include exclusive advertising rights associated with the event. Occasionally non sponsors may use techniques known as “ambush marketing” to leverage their own marketing campaigns at high profile events. Ambush marketing is not always easy to police. Even if legal action is available, it is often only available after the ambush has occurred.

The World Cup is a prime target for ambush marketing given the worldwide attention it attracts. Recently, Bavaria NV, a Dutch beer brewery (which is not an official sponsor of the World Cup), sent more than thirty women wearing orange mini-dresses to a match in order to promote the brewery’s ongoing beer advertising campaign in the Netherlands. An equal opportunity ambusher, Bavaria enlisted a group of men to attend matches at the 2006 World Cup wearing orange lederhosen with a distinctive black tail that displayed the company’s name. A South African budget airline has also attempted to use the World Cup’s popularity to its advantage.

In response, FIFA (as well as other international sporting organizations) has developed a global rights protection program. The program entails close collaboration with local authorities in an effort to address ambush marketing strategies as soon as possible. Moreover, South Africa, in anticipation of the World Cup, passed anti-ambush marketing legislation that outlawed the misuse of registered marks and unfair competition. Although these rigorous action steps may help FIFA’s policing efforts, the challenge for an “official sponsor” remains how to effectively protect against ambush marketing before it occurs.

In the United States, the US Soccer Federation obtained a preliminary injunction against retailer The Sports Authority (TSA) over TSA’s use of advertisements during the World Cup that included official US Soccer trademarks. In its complaint, US Soccer alleged that TSA's advertising campaign infringed on Dick’s Sporting Goods’ official sponsorship relationship with US Soccer. While the ads had already appeared during the US-England match, the injunction was filed to prevent TSA from running the ad during the US-Slovenia match on Friday, June 18 -- the day after the order was obtained.

The Lanham Act provides potential remedies for ambush marketing that results in consumer confusion, or the likelihood of consumer confusion, regarding the relationship between the company being advertised and the targeted sporting event. However, US courts also recognize a company’s First Amendment right to engage in commercial speech if consumer confusion is not threatened. Accordingly, organizations such as FIFA, as well as its official sponsors, will no doubt continue to look for new and better methods of protecting their relationships and the benefits that sponsorship provide. The beginning of Wimbledon this week will undoubtedly give rise to a whole new array of ambush marketing opportunities and the corresponding policing challenges.

- Suzanne Wilson and Andrew Macurdy

Patent False Marking Claims Require Evidence of Deceptive Intent

The Federal Circuit last week provided practical guidance on what qualifies as deceptive intent in a false patent marking case. This new decision follows on the court’s landmark decision last December in Forest Group v. Bon Tool Inc. that the penalty of up to $500 for false patent marking should be imposed for each article that is falsely marked. That decision sparked a wave of false patent marking lawsuits seeking to capitalize on the increased potential damages for false patent marking.

In Pequignot v. Solo Cup Company, the Federal Circuit held that, while marking items with expired patent numbers constitutes false patent marking, a plaintiff in a false marking case must still prove that the false marking was done with the intent to deceive the public. Proof of intent requires more than mere knowledge that the patent marking is false, and likely will require in most instances a fact-intensive inquiry regarding the defendant’s motivation for continuing to mark its products with the numbers of expired patents.

The court held that the combination of a false statement with knowledge of the statement’s falsity creates a presumption of deceptive intent but that presumption was rebuttable. In the case of expired patents, however, the presumption is weaker. The court also held that the bar for proving intent to deceive is “particularly high,” requiring not only knowledge but a “conscious desire” to deceive. A defendant can successfully rebut this admittedly weak presumption by showing, by a preponderance of the evidence, that it did not consciously desire to deceive the public. In Pequignot, Solo Cup met this burden by offering credible evidence that it relied in good faith on the advice of counsel and made its decisions based upon legitimate desires to reduce costs and avoid interruption of its manufacturing process.

While the Pequignot decision does not conclusively end liability for false patent marking claims based on expired patents, it does provide valuable guidance on steps a company can and should take to protect itself from liability for false marking. First and foremost, consider whether patent marking is the right course of action for your company. Patent marking protects a company’s right to seek damages from infringers prior to giving notice of a claim. If you do not intend to enforce your patents, or do not foresee significant competition, then patent marking may not provide any benefit and could expose your company to a false marking claim if done incorrectly. Moreover, defense of such a claim on the basis of advice of counsel could require waiver of the attorney-client privilege. If you decide to mark, you should consult with legal counsel regarding your patent marking policies, and adopt a policy to audit your patent markings for accuracy and to remove markings for expired patents from its products. Moreover, you should document your good faith business reasons for any phased or delayed approach to removal of expired patent marking to rebut any presumption that continued use of those markings was done for the purpose of deceiving the public.

Click here for a more extensive written analysis of this case. For a video about this development, click here.

- James Blackburn and Ryan McMonagle

No Decision on Legality of Search Engine’s Sale of Keywords

Last month, Google Inc. and Rescuecom Corp. settled their long fight over Google’s sale of the RESCUECOM mark as a search engine keyword, which permitted Rescuecom’s competitors to display “sponsored listings” when Internet users searched for Rescuecom. The dismissal settles Rescuecom’s trademark infringement and dilution claims, and comes after the parties took their dispute up to the Second Circuit, which found in favor of Rescuecom and remanded the case for further proceedings. The dismissal itself contains no clues as to why the parties finally decided to end their six-year dispute.

The Rescuecom case is just one of many trademark infringement and dilution cases filed in the US and in Europe against Google’s sale of third party trademarks as keywords in its AdWords program. For years, Google has defended these sales, and its “suggestion” tool that prompts customers to purchase the trademarks of others, by claiming that these sales do not fall within the definition of “use in commerce” under the Lanham Act’s trademark provisions. This has been a thorny issue for trademark owners, particularly in the Second Circuit, which includes New York. Last year, the Second Circuit’s decision in favor of Rescuecom cleared the way for trademark plaintiffs who sought to proceed past the complaint stage in lawsuits against search engines to be able to prove the substance of their trademark claims. Rescuecom Corp. v. Google, Inc.¸ 562 F.3d 123 (2d Cir. 2009). After last year’s appellate decision revived Rescuecom’s trademark infringement lawsuit against Google, many trademark owners were waiting to see how Rescuecom’s claims would proceed on their merits at the trial court.

Though the dismissal itself contains no settlement terms, news reports state that Rescuecom was ready to settle because it learned recently that Google had removed the RESCUECOM mark form its suggestion tool five years ago, which, when combined with Google’s stated policy of not allowing trademarks in ad text, would diminish the use and visibility of the RESCUECOM mark in competitors’ sponsored listings. Rescuecom is claiming victory in this settlement, trumpeting the dismissal as “A Case of David versus Googleiath” in a recent press release (available here). According to the press release, Rescuecom achieved two of its three objectives (i.e., removal of its mark from the suggestion tool and from the text of advertisements), though Rescuecom admits that it did not obtain relief on its third goal of preventing use of its mark as a keyword “trigger” for advertisements.

Google is still involved in other trademark keyword disputes but, with the settlement of Rescuecom, has avoided a trial on the merits of such a case for now. Meanwhile, Rescuecom is embroiled in another lawsuit, a declaratory judgment lawsuit it filed against Best Buy, which, ironically, seeks to prove that Rescuecom’s purchase of the GEEK SQUAD mark as a keyword is a fair use, among other things. See Rescuecom Corp. v. BBY Solutions, Inc. (NDNY filed Oct. 14, 2009).

- Suzanne Wilson and Catie Rowland

Beware! Growing Danger of False Patent Marking Suits

Marking a product with the number of its underlying patent is good practice––it provides notice of the patent and is a prerequisite for certain types of damages in infringement actions. Falsely marking a product, however, can create problems and recent developments in false marking law merit a closer look at marking practices. Recent cases have increased the potential bounty available in false marking suits. 

Section 292 of the Patent Act provides that: 

Whoever marks upon, or affixes to, or uses in advertising in connection with any unpatented article, the word “patent” or any word or number importing that the same is patented, for the purpose of deceiving the public . . . Shall be fined not more than $500 for every such offense. 

35 U.S.C. § 292(a). Under § 292(b), half of the $500 fine is kept by the plaintiff, and the other half goes to the United States. According to the statute, “[a]ny person may sue for the penalty.” This provision is not new, but recently the Federal Circuit made clear that the $500 fine is awarded for each wrongly marked article. Previously, some courts had not interpreted “offense” to mean each wrongly marked article.  

In Forest Group, Inc. v. Bon Tool Company, 590 F.3d 1295 (Fed. Cir. Dec. 28, 2009) the lower court, and a court in a parallel proceeding, had issued claim constructions of the patent-in-suit that required elements not met by the plaintiff patentee’s own products. Despite these orders, the plaintiff continued to label its products with the patent number. The lower court then issued a single $500 fine to the plaintiff based on this continued marking in the face of the court orders. The Federal Circuit affirmed the lower court’s decision that the plaintiff had engaged in false marking, but announced that the marking statute “clearly requires that each article that is falsely marked with intent to deceive constitutes an offense . . . .” The court remanded the case for a determination of the total penalty based on each item sold with the false marking. 

The Federal Circuit did not provide clear guidance on what it takes to prove an intent to deceive, but it did make clear that its opinion was not meant “to suggest that multiple claim constructions or summary judgments are required before the requisite knowledge for false marking can be found.” Indeed, more frequently, false marking problems arise when marking continues even after the patent has expired. If false marking is proven, a company that sells thousands of units of product a year may quickly find itself on the receiving end of a large fine if it knowingly marks its products with inapplicable patent information.

The key lessons: (1) Implement a regular program to ensure that markings are removed when a patent expires. (2) Review markings after claims construction and summary judgment decisions. (3) Seek an independent counsel’s opinion when false marking is a potential problem. (4) Only use “patent pending” after filing for patent protection.

- Monty Agarwal and Aaron Schur

Google AdWords Gets Cleared by European Advocate General from Keyword Trademark Infringement Claims

The Advocate General of the European Court of Justice today gave his opinion on three cases concerning Google’s AdWords system, which permits advertisers to purchase third-party trademarks as keywords to trigger sponsored links in search results. The opinion is not binding on the ECJ, but the court often follows the Advocate General's opinion in the majority of cases. The three cases encompassed by today’s opinion are: Google France v Louis Vuitton, Google v CNHRR and Google v Viaticum Luteceil, (Joined Cases C-236/08, C-237/08 and C-238/08).

These cases were brought to address on a large scale issues frequently confronted by brand owners in their efforts against counterfeiters. Specifically, counterfeiters frequently purchase keywords from Google that correspond to registered trademarks such as “Louis Vuitton. ” When an Internet user searches for “Louis Vuitton,” this triggers advertisements in Google’s search results that redirect consumers to websites where they can purchase counterfeit merchandise (e.g., “Louis Vuitton Replica” and “fake Louis Vuitton handbags”). The Advocate General’s resolution of the questions posed to the ECJ is bad news for trademark owners.