Tag: Trademark

Consumer Perception is Key to Registration of Generic “.com” Marks

In an 8-1 decision, the Supreme Court held in U.S. Patent and Trademark Office v. Booking.com that “generic.com” marks may be registered trademarks or service marks when consumers do not perceive them as generic.

Booking.com is a travel company that provides hotel reservations and other services under the brand “Booking.com,” which is also the domain name of its website. Booking.com filed applications to register four marks in connection with travel-related services, each containing the term “Booking.com.”

A United States Patent and Trademark Office (USPTO) examining attorney and the USPTO’s Trademark Trial and Appeal Board (TTAB) both concluded that the term “Booking.com” is generic for the services at issue and is therefore unregistrable. According to the TTAB, “Booking” means making travel reservations and “.com” signifies a commercial website. The TTAB ruled that customers would understand the term “Booking.com” primarily to refer to an online reservation service for travel, tours, and lodging. Alternatively, the TTAB held that even if “Booking.com” is descriptive, it is unregistrable because it lacks secondary meaning.

Booking.com sought review in the US District Court for the Eastern District of Virginia. Relying in significant part on new evidence of consumer perception, the district court concluded that “Booking.com”—unlike “booking”—is not generic. The “consuming public,” the court found, “primarily understands that BOOKING.COM does not refer to a genus, rather it is descriptive of services involving ‘booking’ available at that domain name.” The Court of Appeals for the Fourth Circuit affirmed the district court’s judgment.

During oral argument at the Supreme Court, the USPTO argued that the combination of a generic word and a “.com” must also be generic. The Court rejected this per se theory, ruling that whether “Booking.com” is generic turns on whether that term, taken as a whole, signifies to consumers the class of online hotel reservation services. According to the Court, if “Booking.com” were generic, one might expect consumers to understand Travelocity—another such service—to be a “Booking.com.” Additionally, one might similarly expect that a consumer, searching for a trusted source of online hotel reservation services, could ask a frequent traveler to name her favorite “Booking.com” provider. However, as noted even by the USPTO and the dissent, only one entity can occupy a particular Internet domain name at a time, so a “consumer who is familiar with that aspect of the domain-name system can infer that BOOKING.COM refers to some specific entity.”

The Court further opined that the USPTO’s fears that trademark protection for “Booking.com” could exclude or inhibit competitors from using the term “booking” or adopting domain names like “ebooking.com” or “hotel-booking.com” are unfounded. According to the Court, this is an issue for any descriptive mark and comes down to a likelihood of confusion analysis.

Justice Sotomayor’s Concurrence

In a concurring opinion, Justice Sotomayor agreed that there is no per se rule against trademark protection for a “generic.com” mark. However, she cautioned the use of surveys as they can have limited probative value depending on the survey design.

Justice Breyer’s Sole Dissent

Justice Stephen Breyer, the sole dissenting justice, argued that the majority disregarded important trademark principles and sound trademark policy. According to Justice Breyer, “[t]erms that merely convey the nature of the producer’s business should remain free for all to use.” Thus, under the majority’s approach, many businesses could obtain a trademark by adding “.com” to the generic names of their products, which Justice Breyer claimed could have widespread anticompetitive effects, and the majority’s reliance on the need to prove confusion and the statutory descriptive use privilege to protect competitors, underestimates the threat of costly litigation.

Implications

The decision in Booking.com expands trademark protection for seemingly generic marks simply by adding “.com” to the mark. A registrant need only rely on the consumer’s perception of the mark, which can be shown by the use of surveys. Thus, even with Justice Sotomayor’s caution against the use of surveys, surveys are likely to become more important during the registration process and in any subsequent litigation.

Copyright © 2020, Hunton Andrews Kurth LLP. All Rights Reserved.

For more on the Booking.com case, see the National Law Review Intellectual Property Law section.

There’s a Fake News Pandemic. Could COVID-19 and Trademarks be the Cure?

As political divides widen, accusations of differing viewpoints being “fake news” have become almost commonplace.  But during the COVID-19 pandemic, fake news has taken a more dangerous and sometimes deadly turn.

Fake news stories with fabricated COVID-19 data, sensational origin stories (it was NOT predicted by Nostradamus or created in a lab in China as a biological weapon), and baseless advice on how to protect against the illness are spreading almost as fast as the virus itself.

Fake news around COVID-19 has been directly linked to higher rates of infection, a rise in hate crimes and discrimination, increased anxiety, and further economic devastation, all of which exacerbate the current pandemic.  Even more troubling, information learned from fake news is more persistent and longer-lasting in a reader’s mind than genuine news sources because of its often sensational nature.

Fake news is a pandemic, and thus far, there is no cure.

Fake News: A brief history

Fake news is defined as “fabricated information that mimics news media content in form but not in organizational process or intent.” Although real news outlets may sometimes print opinion pieces that are more conjecture than fact, or even occasionally erroneously report particular facts amounting to poor reporting, their intent is to report noteworthy information, especially about recent or important events. Fake news, on the other hand, disguises itself as real news in an attempt to “cloak itself in legitimacy and to be easily shareable on social media” without any genuine intent to inform the public or attempt to be truthful.  Rather, it is intended to get clicks (e.g., readers) so as to increase advertisement sales.

Fake news isn’t new.  Its roots can be traced back to at least as early as the sixth century A.D.40 when Procopius, a Byzantine historian, disseminated false information, “known as Anecdota [to] smear the reputation of the Emperor Justinian.” Social media and online advertisement sales, however, have turned it into a seemingly unstoppable beast.

With social media, it is easier than ever to rapidly spread information without verification of the contents or source. Approximately seven-in-ten Americans (of all ages) currently use social media to connect with others and engage with news content, and approximately 43% of adults get their news from Facebook.

With the mere click of a button, a completely fabricated story can be instantly shared with hundreds of people, who in turn can share the story with hundreds more, and so on and so on.  The more click-baitey (i.e., catchy) the title, the quicker the story spreads and the more advertising money the author generates.

Unfortunately, in today’s climate, sensationalism is often more rewarding than the truth.

Legal Avenues are Ineffective to Combat Fake News

Fake news generally takes one of three forms:

  • Type 1-Spoofing: A content provider spoofs a legitimate news source to confuse consumers as to the source of the information (e.g., a fake FORBES Webpage circulating fake articles);

  • Type 2-Poaching: A content provider creates a publication that is intentionally confusingly similar to a recognized news source (e.g., registration of washingtonpost.com.co with a home page that mimics the WASHINTON POST) so as to poach consumers intending to visit a legitimate news source; or

  • Type 3-Original Sensationalism: A content provider creates an original publication under which to provide content, but relies on the sensational nature of the publication to disseminate the content via social media platforms.

Spoofing and poaching, as described above, typically violate several trademark laws.  The creation of a Webpage that spoofs a legitimate news outlet or appears confusingly similar to the news outlet’s brand is likely direct infringement of the news outlet’s trademarks.  Similar arguments could be made under the Lanham Act’s unfair competition and dilution frameworks (if a mark is famous enough to be spoofed, it is likely famous enough to be diluted).  Fair use defenses would also likely be unsuccessful (fair use for parody and satire does not apply where the intent is not to parody or satirize, but rather merely to confuse the relevant public and profit off of the goodwill of the mark).

Website owners, however, can sometimes be difficult to identify (they are often in foreign countries) and new sites can be created faster than infringing sites can be identified and shut down.  News outlets can thus wind up incurring large legal fees to shut down infringing sites in a proverbial game of whack-a-mole with little to no chance of recouping their costs from the bad actors themselves who live to infringe another day.

Several spoofing and poaching Websites owned by Disinformedia, a Web-based fake news content provider, have been shut down (see washingtonpost.com.co, nationalreport.net, and usatoday.com.co) as infringing the trademarks of major news outlets, but fake news is still on the rise.  This is because original sensationalism (type 3 above) is the most common form of fake news and it is nearly impossible to halt through legal action.

Fake news content providers have long relied upon free speech protections.  As long as fake news sources do not pretend to be other news outlets or to confuse readers as to the source of their content (i.e., spoofing and poaching), there is little that the legal system can do to stop the spread of information they may publish, no matter how false.  In very exceptional cases of falsehood, defamation suits may succeed, but these are rarely raised and even harder to prove.

Although legal avenues may not be effective at halting the spread of fake news, trademarks may still ultimately hold the key to stopping the fake news pandemic.

How Fake News is Hurting Facebook’s Brand

Social media platform owners have long held that social networks should not be the arbiters of speech. Mark Zuckerberg, CEO of Facebook, has repeatedly argued that Facebook and similar social media platforms were designed to give everyone a voice and bring them together and that to curtail such speech, no matter how false or offensive, would be to stifle free speech.

This has been a hard line for Mr. Zuckerberg and other social media giants like him.  Even after evidence came to light that foreign powers weaponized fake news to affect the 2016 election, Facebook’s official position on this point did not shift.

However, after months of Facebook failing to remove fake news stories surrounding COVID-19 from its platform, nonprofit groups began to label Facebook an “epicenter of coronavirus misinformation” and advertisers began to boycott the social media platform until it reformed its stance on known fake news stories.

Facebook soon released an official statement that it would finally be taking steps to “connect people to accurate information from health experts and keep harmful misinformation about COVID-19 from spreading”.  During the month of April alone, Facebook placed fake news warning labels on about 50 million pieces of content related to COVID-19 and redirected over “2 billion people to resources from the WHO and other health authorities” via an integrated COVID-19 information box and pop-up warnings notifying users that they had engaged with a fake news article relating to COVID-19.

Facebook’s response to COVID-19 misinformation has proven that it can prevent the spread of fake news without sacrificing its commitment to free speech.  If free speech is no longer an impediment to stopping misinformation, then it is time for Facebook to address the prevalence of fake news on its platform.

Seven-in-ten Americans use Facebook, yet over 60 percent of all Americans now believe the news that they see on social media is fake.  Fake news is ultimately hurting its brand.

As Harvard Business School professor David Yoffie explains, social media platforms such as Facebook have developed goodwill (i.e., trust) in their brands over time.  That goodwill is borrowed by every shared news story, whether real or fake.  When Facebook users see articles generated from an unknown source, they believe the article is factual because it is shared by real people on Facebook and subconsciously or consciously assume that Facebook approves the content.

If the majority of Facebook users now believe that the news they see on social media is fake, then they have lost trust in Facebook itself, thus diluting Facebook’s brand.  As fake news continues to dilute the Facebook brand and associated trademarks, Facebook is at risk of further losing goodwill, users, and, perhaps most importantly to Facebook, advertising dollars.

Few would argue that Facebook has an altruistic interest in the spread of fake news on its platform, but the Facebook brand will continue to be diluted if it does nothing to stop the spread of fake news.  Facebook has taken the first steps to identify and target fake news on its platform brand as it relates to COVID-19, but only time will tell if Facebook will expand these measures to apply to other types of fake news stories.

It took COVID-19 to force Facebook to take steps to protect its trademark (i.e., brand) and confront fake news.  Perhaps it takes a pandemic to face a pandemic.

Copyright 2020 Summa PLLC All Rights Reserved

For more on COVID-19 see the National Law Review Coronavirus News page.

Expunge-Examine-Ex Parte; the Trademark Office Seeks to add Arrows to its Quiver

According to a recent audit carried out by the Trademark Office and evaluating over 8000 registrations, as many as 46% of US use-based registrations were unsupported by actual use, with the percentages for Paris Convention and Madrid Protocol registrations reaching 66% and 65 respectively.

In other words, almost two-thirds of treaty-based applications arriving at the Trademark Office from outside the United States failed to meet a proof-of-use test.

For example, in late January 2018 The United States Patent and Trademark Office received a new application for federal trademark registration and assigned it an “87” series number.  The application was for a mark in standard characters, and was based on a Section 44(d) filing basis (15 USC § 1126(d)); i.e., an application accepted by the USPTO under treaty obligations with reciprocating countries.  (As a quirk of trademark law, practitioners tend to refer to sections of the original 1946 Lanham Act, even though their statutory citations are numbered quite differently.)

Under goods and services, the Applicant listed 115 different items (count ‘em) in International Class 03 (“bleaching preparations and other substances for laundry use; cleaning, polishing, scouring and abrasive preparations; soaps; perfumery, essential oils, cosmetics, hair lotions; dentifrices”).

Because the application was a treaty document, rather than a US use-based application, the Applicant provided neither a specimen nor any other evidence of use.  Following a brief prosecution, the registration issued in February 2019.

Trademark registration, of course, carries some important benefits including (but not limited to) “prima facie evidence of the validity of the registered mark and of the registration of the mark, of the owner’s ownership of the mark, and of the owner’s exclusive right to use the registered mark in commerce on or in connection with the goods or services specified in the certificate….” (15 USC § 1057).

Hunting down the Registrant’s website (or what appears to be the Registrant’s website) took some effort and indicated that the Registrant does not even provide the goods listed in the application, but rather is a service provider who consults with manufacturers and retailers.  These third parties use their own trademarks on their goods rather than the Registrant’s mark on Registrant’s goods.  Thus, this registrant starts with a presumption of rights to which it may not be entitled.

So, what is a competitor to do?  Respect a registration that is arguably invalid?  Such undeserved respect can result in the loss of business.  Obtain a clearance opinion from your intellectual property attorney?  Better, but potentially expensive depending upon circumstances.  File a cancellation proceeding?  Useful, but drawn out and potentially expensive.

The proposed amendments to the Trademark Act Of 1946 (15 USC § 1051 et seqq.; see, H.R. 6196; congress.gov); are intended to provide relief against invalid registrations that is faster, easier, and less expensive, than litigation, opposition, or cancellation.

The amendments also add some administrative touches that should make life better all around, but that will also introduce some new docketing deadlines for practitioners.

Third Party Submissions:  An amendment to current Section 1 (15 USC § 1051) will allow third parties to gain admission to a pending application and submit evidence that the legislation euphemistically refers to as “for inclusion in the record of an application…relevant to a ground for refusal of registration.” In other words, “Dear Examiner the Applicant should never have been granted a registration because….” This provision requires both submitting the evidence and giving a concise explanation of the grounds for refusing registration provided by that evidence.  The examining attorney is then entitled to use the information as they believe best.  This amendment will take effect one year after the final bill passes

Flexible response deadlines (amendments to Section 12(b); 150USC § 1062(b)):  This is an administrative touch which allows the Trademark Office to establish intermediate deadlines less than the statutory six months with appropriate extensions available (read:  “pay extension fees”) in a manner analogous to extensions granted by the Patent Office.  In accordance with US membership in certain treaty organizations, minimum deadlines are 60 days.

Expungement (a new Section 16A, inserted after current 15 USC § 1066):  This is a substantive provision adding collateral attacks on registrations short of a full cancellation proceeding.  In particular, expungement is based on a registrant’s failure to ever use the mark in commerce with some (or presumably all) of the goods and services identified in the petition to expunge (“never been used in commerce”).  The attack requires both supporting evidence and a fee, following which the Office has the authority to initiate an expungement proceeding.  Expungement will generally follow the examination steps for new applications, with the Director given rulemaking powers to establish potential exceptions.

A registrant can respond to expungement by documenting evidence of use, consistent with the “in commerce” requirements of 1946 Trademark Act.  The registrant is also given the opportunity to show some excusable nonuse.

Once the expungement evaluation has been completed, the examiner has the right to cancel the registration for any goods or services for which the owner cannot establish use in commerce.

The Director can also start such an expungement proceeding on his or her own initiative.

In each case, however, an expungement proceeding cannot be initiated until three years following the date of registration. This provides both docketing obligations and marketing opportunities for practitioners because it would presumably be a practitioner’s responsibility to remind clients that if they had included numerous goods and services in their application and registration, they will need to show such use for all of those specific items.

Ex Parte Reexamination (and its differences from Expungement; a new Section 16B following the proposed Section 16A):  At first glance, ex parte reexamination appears to track expungement, but there is an important difference.  To repeat, in expungement, portions of the registration are deleted based on the fact that the mark has “never been used in commerce” on those particular goods and services.

Reexamination applies a different standard to a different situation:  registrations for which the mark was not in use on the goods or services on or before “the relevant date.”  Normally that “date” would be the filing date for a use-based application or the statement of use date for an intent-to-use (“ITU”) application.

As in the case of expungement, the party petitioning for re-examination needs to raise relevant arguments and submit supporting proofs, and the Director can again cancel the registration for some or all of the goods depending upon the proof presented.

The timing for re-examination, however, moves differently than expungement.  In particular, once the registration reaches the five year anniversary, re-examination is no longer permitted.  This of course differs from expungement which cannot be initiated until three years after registration, but presumably remains available for the lifetime of the registration.

Again, this will potentially require some additional docketing by practitioners.  At a minimum, practitioners will need to docket this for their own clients, and presumably enterprising practitioners might track competitors’ registrations to give their clients an appropriate opportunity is to seek reexamination if they believe it worthwhile.

In summary, the amendments are attractive to at least the Trademark Office and competitors of registrants with flimsy factual support for their trademark claims.  The Office gets to clear out the dead wood, legitimate registrants have nothing to fear, and competitors get three flanking attacks, each of which appears to be faster, easier, and less expensive than any other current option.

Copyright 2020 Summa PLLC All Rights Reserved

ARTICLE BY Philip Summa of Summa PLLC.
For more on USPTO registrations, see the National Law Review Intellectual Property law section.

Supreme Court Preserves Availability of Profits Award for Both “Willful” and “Innocent” Trademark Infringement

On April 23, 2020, the U.S. Supreme Court unanimously held in Romag Fasteners, Inc. v. Fossil Group, Inc., 590 U.S. ___ (2020), that the Lanham Act does not impose a “willfulness” prerequisite for awarding profits in trademark infringement actions.

Disgorgement of a defendant’s profits has long been a critical remedy available to brand owners seeking remediation for the infringement of its trademarks.  A profits award can be a proxy for the actual damages suffered by the trademark owner, as actual damages are often very difficult to prove in trademark cases.  Profits awards also serve to deprive infringers of their unjust gains, and can be an important deterrent against infringing activities.  Some federal courts have considered an infringer’s intent as a factor, but not a prerequisite, to awarding a defendant’s profits to the prevailing plaintiff.  Other courts have required proof that the defendant’s infringement was willful before awarding damages measured by its profits, complicating the availability of this important trademark infringement remedy in certain jurisdictions.

The U.S. Supreme Court has resolved this split, finding that a categorical rule requiring a showing of willfulness cannot be reconciled with the statute’s plain language.  Accordingly, prevailing trademark owners do not have to prove willfulness to be awarded the infringer’s profits.

Background

The parties had an agreement allowing Fossil to use Romag’s fasteners in Fossil’s handbags and other products. Romag discovered that the factories Fossil hired in China to make its products were using counterfeit Romag fasteners. Unable to resolve its concerns amicably, Romag sued, alleging that Fossil had infringed its trademark and falsely represented that its fasteners came from Romag.

The U.S. District Court for the District of Connecticut found Fossil liable, and the jury awarded Romag $6.7 million of Fossil’s profits to “deter future trademark infringement.”  The trial court overturned the jury’s damages award because the jury found Fossil acted “callously,” rather than “willfully,” as required by the controlling Second Circuit precedent for a profits award. The U.S. Court of Appeals for the Federal Circuit affirmed the district court’s decision, and the U.S. Supreme Court vacated that judgment and remanded for further proceedings consistent with its opinion.

Overview of Court’s Opinion

Section 15 U.S.C. §1117(a) of the Lanham Act, which governs remedies for trademark violations, states:

When a violation of any right of the registrant of a mark registered in the Patent and Trademark Office, a violation under section 1125(a) or (d) of this title, or a willful violation under section 1125(c) of this title, shall have been established . . . , the plaintiff shall be entitled, subject to the provisions of sections 1111 and 1114 of this title, and subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. (Underlined emphases added).

Although acknowledging that a defendant’s mental state is a highly important consideration in determining whether a profits award is appropriate, the Court rejected the categorical rule applied in certain lower courts (including controlling Second Circuit precedent) that a plaintiff can win a profits award only after proving that the defendant willfully infringed its trademark.  The Court relied on the plain language in 15 U.S.C. §1117(a) to find that Congress intended to limit such willfulness precondition to a profits award in a suit under Section 1125(c) for trademark dilution. It rejected Fossil’s position that the phrase “subject to the principles of equity” in Section 1117(a) should be read as imposing a willfulness requirement, especially given that Congress prescribed a “willfulness” requirement elsewhere in the very same statutory provision. In no uncertain terms, the Court noted that “the statutory language has never required a showing of willfulness to win a defendant’s profits” in claims under Section 1125(a) for false or misleading use of trademarks (i.e., trademark infringement).

Conclusion

The Court’s decision resolves a split amongst the lower courts and preserves a critical deterrent against trademark infringement by clarifying that Congress intended to allow a trademark owner to recover a defendant’s ill-gotten profits, regardless of whether such infringement was willful.

©2020 Pierce Atwood LLP. All rights reserved.

ARTICLE BY Jonathan M. Gelchinsky and Michael C. Hernandez of Pierce Atwood LLP.

 

For more Trademark Cases, see the National Law Review Intellectual Property Law section.

The Court of Appeals for the Federal Circuit Clarifies that Trademark Protection Is Available for “Graduated” and “Undefined” Color Schemes

There are a number of famous colors that are trademark-protected – such as the color brown, which is registered by UPS, and the color “robin egg blue”, which is registered by Tiffany & Co. This protection stems from the fact that such marks are “inherently distinctive”. That is, the colors have become so readily recognized by the purchasing public as being associated with goods or services. However, some color marks that comprise “undefined” multiple colors, including graduated colors (i.e., where one color fades into another) have generally been treated as never being able to rise to the level of being inherently distinctive.

On April 8, 2020, the United States Court of Appeals for the Federal Circuit (CAFC), held that the Trademark Trial and Appeal Board (TTAB) erred in ruling that an “undefined” color trademark on products and product packaging cannot be distinctive enough for registration unless consumers already recognize it as an indicator of product source. In Re: Forney Industries, Inc., Fed. Cir., No. 19-1073, Opinion 4/8/20.

In its federal registration application, Forney Industries, Inc. described its multi-color trademark as “a solid black stripe at the top” and “[b]elow the solid black stripe is the color yellow which fades into the color red” (emphasis added). Early on, the Examining Attorney at the United States Patent and Trademark Office (USPTO), and later the TTAB, decided that Forney multi-color scheme could not be inherently distinctive.

The TTAB cited two Supreme Court decisions supporting its position – that product and packaging marks using color without defined borders or shape also cannot be inherently distinctive. The CAFC found that the board’s decision overstated the Supreme Court precedent and ruled that the TTAB erred by holding that: (1) a multi-color mark can never be inherently distinctive, and (2) product packaging marks that employ color cannot be inherently distinctive in the absence of a well-defined peripheral shape or border.

The CAFC stated that the correct standard to apply in determining inherent distinctiveness is a legal question, which it could review de novo. The CAFC then recognized that neither the Supreme Court nor it, has directly addressed whether a multi-color mark such as described by Forney can ever be inherently distinctive. Recognizing the “Forney is not attempting to preempt the use of the colors red, yellow, and black, but instead seeks to protect only the particular combination of these colors, arranged in a particular design”, the CAFC concluded that there are instances when a multi-color mark, as well as single-color marks, can be inherently distinctive and, therefore, federally protected via the USPTO.

If your products or product packaging is recognizable by your customers, you may want to consider taking the extra step of applying for federal registration of that color, even if the color is not uniform and blends into other colors. Also, consider consulting an attorney who is well-versed in the area of trademark law to make sure that the description of your color mark is worded the best way possible.

There are a number of famous colors that are trademark-protected – such as the color brown, which is registered by UPS, and the color “robin egg blue”, which is registered by Tiffany & Co. This protection stems from the fact that such marks are “inherently distinctive”. That is, the colors have become so readily recognized by the purchasing public as being associated with goods or services. However, some color marks that comprise “undefined” multiple colors, including graduated colors (i.e., where one color fades into another) have generally been treated as never being able to rise to the level of being inherently distinctive.

On April 8, 2020, the United States Court of Appeals for the Federal Circuit (CAFC), held that the Trademark Trial and Appeal Board (TTAB) erred in ruling that an “undefined” color trademark on products and product packaging cannot be distinctive enough for registration unless consumers already recognize it as an indicator of product source. In Re: Forney Industries, Inc., Fed. Cir., No. 19-1073, Opinion 4/8/20.

In its federal registration application, Forney Industries, Inc. described its multi-color trademark as “a solid black stripe at the top” and “[b]elow the solid black stripe is the color yellow which fades into the color red” (emphasis added). Early on, the Examining Attorney at the United States Patent and Trademark Office (USPTO), and later the TTAB, decided that Forney multi-color scheme could not be inherently distinctive.

The TTAB cited two Supreme Court decisions supporting its position – that product and packaging marks using color without defined borders or shape also cannot be inherently distinctive. The CAFC found that the board’s decision overstated the Supreme Court precedent and ruled that the TTAB erred by holding that: (1) a multi-color mark can never be inherently distinctive, and (2) product packaging marks that employ color cannot be inherently distinctive in the absence of a well-defined peripheral shape or border.

The CAFC stated that the correct standard to apply in determining inherent distinctiveness is a legal question, which it could review de novo. The CAFC then recognized that neither the Supreme Court nor it, has directly addressed whether a multi-color mark such as described by Forney can ever be inherently distinctive. Recognizing the “Forney is not attempting to preempt the use of the colors red, yellow, and black, but instead seeks to protect only the particular combination of these colors, arranged in a particular design”, the CAFC concluded that there are instances when a multi-color mark, as well as single-color marks, can be inherently distinctive and, therefore, federally protected via the USPTO.

If your products or product packaging is recognizable by your customers, you may want to consider taking the extra step of applying for federal registration of that color, even if the color is not uniform and blends into other colors. Also, consider consulting an attorney who is well-versed in the area of trademark law to make sure that the description of your color mark is worded the best way possible.

© 2020 Davis|Kuelthau, s.c. All Rights Reserved

For more on trademark enforcement, see the National Law Review Intellectual Property Law section.

Trademark Applicant & Chinese IP Agency Fined for Malicious Registration of Coronavirus Related Trademarks

On March 26, 2020, the Shaoxing Market Supervision Bureau of Zhejiang Province fined a Chinese intellectual property firm, a trademark applicant and a trademark agent responsible for attempting to register a trademark for “Li Wenliang” (李文亮), a famous doctor that later succumbed to COVID-19 after earlier attempts to warn others of a possible new outbreak.   Specifically, the Bureau fined applicant Yang Mofang, the agency Shaoxing Intellectual Property Agency Co., Ltd. and the trademark agent Chen Mougang 2,000 RMB, 20,000 RMB and 10,000 RMB respectively. This is believed to be the first time a trademark applicant was fined for malicious filing of a trademark.  This is the second IP agency to be fined.

On March 3, 2020, the Shaoxing Market Supervision Bureau was informed that Shaoxing Intellectual Property Agency Co., Ltd.  represented the trademark applicant Yang Moufang for the trademark registration application of “Li Wenliang.”  On the 4th , the Municipal Bureau’s Trademark Advertising Office and the Comprehensive Administrative Law Enforcement Team conducted surprise inspections of relevant business establishments, conducted administrative interviews with relevant responsible persons  and required them to withdraw their applications immediately. In the afternoon, the agency quickly withdrew the trademark registration application. On the 5th, the Shaoxing Municipal Bureau filed an investigation on the applicant, agency and directly responsible person for the malicious registration of the “Li Wenliang” trademark. On March 26, administrative penalties were imposed on the relevant parties.

Per the Bureau, “Li Wenliang was a Wuhan Central Hospital ophthalmologist  unfortunately infected in the fight against new coronavirus epidemic. After his sacrifice, public opinion in the whole society was highly concerned and he had achieved a high degree of popularity and influence in the country. Several parties in the case knew or should have known these circumstances and still applied for trademarks on Dr. Li, which could easily cause significant social adverse effects.”

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more on IP and other COVID-19 affected industries, see the dedicated National Law Review Coronavirus News page.

Bank Strategy Briefing: Moving Away From Common Bank Names

It is difficult to overstate the importance of a bank’s name. After all, it’s the centerpiece of a bank’s long-term branding strategy. Before reaching the teller line or setting up a meeting with a banker, seeing a bank’s name on a branch sign, billboard or website is likely the first interaction a customer has with the institution.  With many Midwest institutions approaching or surpassing 100-year anniversaries, a bank’s name may reflect generations of service to a community or the ownership family’s legacy.

Many banks share common names

A surprisingly large number of banks in the U.S. share common naming elements, as detailed below:

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While many reasons for this degree of commonality exist, community pride and company history among them, similar names can result in market confusion, or worse, trademark disputes.

To differentiate themselves, a number of banks have begun changing names. In some instances, it’s a legal name change as specified in the institution’s articles, while in others it’s adopting a trade name.

How to change a bank’s legal name

The process for changing a legal name is relatively simple. First, a thorough search must be conducted to ensure the new name is available. This search would identify existing bank trademarks for the name as well as other potential uses that could cause marketplace confusion. Then comes amending the bank’s articles of incorporation. This requires board and shareholder approval. Once the amendment is effective, customer-facing marketing materials and legal documentation will need to reflect the new legal name.

How to adopt a trade name

Trade names are more nuanced and compliance-sensitive. In addition to validating that a name is available for use, various banking agencies require disclosures about the trade name to appear in signage, advertising and account-opening documentation. This helps customers understand that accounts under each name will be aggregated when calculating FDIC insurance coverage. For example, the Wisconsin Department of Financial Institution’s (WDFI’s) guidance requires disclosure that trade names be identified as a “branch” of the bank. WDFI does not permit other descriptors like “division” or “unit.”

Name changes create new marketing opportunities

Beyond the legal and logistical aspects of a name change, it’s important to develop a robust marketing plan to maximize the opportunity a name change creates. Consider ways to reintroduce the bank to the marketplace and retell its story to the community.

Copyright © 2020 Godfrey & Kahn S.C.

Ferrero Successfully Enforces the Tic Tac Shape Mark in Italy

Many of us had a Tic Tac box in our pockets as kids, no matter the country we grew up in. Ferrero Spa (“Ferrero”), the Italian manufacturer of Tic Tac (and lots of other delicious confectionary products) registered the Tic Tac box as a trade mark in several jurisdictions, including Italy.

After succeeding before the CJEU in the invalidation action against BMB sp. z o.o. earlier this year (click here), in a recent case brought before the Italian courts, Ferrero successfully defended its shape marks, despite the invalidity claim brought by S.r.o. Mocca spol. (“Mocca”), a Czech company selling Bliki-branded mints in an identical container.

Background

In 2017, Ferrero commenced proceedings against Mocca for infringement of its 3D reputed trade marks, the earliest of which was registered in 1973, as well as unfair competition.

Mocca, on the other end, argued that:

  1. an Italian court had no jurisdiction, as Mocca’s mints were produced in the Czech Republic;
  2. Ferrero’s trade marks would be invalid, as the shape would give substantial value to the goods or would be necessary to obtain a technical result; and
  3. there would be no likelihood of confusion because the containers would carry different word marks and the shape of the mints is standard in the industry.

The court’s findings

The court of Turin determined that it did have jurisdiction to hear the case, as the claimant was enforcing Italian trade marks, irrespective of where the defendant resides. The court also noted that sales of the Bliki products had taken place in Italy, providing further reason for the Italian court’s jurisdiction.

With regard to the second argument brought by the defendant, the court found that Ferrero’s box shape is not necessary to obtain a technical result, although it had been previously registered as a patent. In fact, the patent was registered for the closing mechanism, which is not visible on the representation for the trade marks. Lastly, the court also denied that the shape gives substantial value to the goods, as Ferrero’s mints are also sold separately, and it has not been proved that the box influences the purchase experience.

In relation to the likelihood of confusion, the court noted that the only difference claimed by the defendant was the brand on the box. However, the brand (ie Bliki and Tic Tac) was irrelevant in this case, as Ferrero was enforcing its exclusive rights on the box shape rather than on the Tic Tac trade mark (which was not included in the 3D mark registrations). By contrast, the defendant box maintained the same shape and size of the Tic Tac mints.

As a result, the court determined that the Ferrero trade marks were valid and had been infringed. In addition, Mocca’s acts amount to unfair competition. Ferrero was awarded the legal costs of this matter, the payment of a penalty should any box be sold by Mocca after 60 days from the decision and the publication of the decision on a national newspaper. However, Ferrero was not awarded damages as no evidence was filed in this regard.

Implications

In comparison to traditional trade marks, protecting shape marks can be difficult, as their validity is likely to be challenged in the context of an infringement proceeding. Therefore, national registrations may be helpful tools to ensure an effective enforcement strategy. In addition, as shown in this case, trade mark holders should always consider registering shapes without brands or logos to achieve a greater overall protection.

Copyright 2019 K & L Gates

More on shape and trade marks on the National Law Review Intellectual Property law page.

UKIPO Knocks Undefeated Reds off Their Perch: The Liverpool Trademark and Lessons for Brand Owners

To the interest of many a scouser and football fan alike, Liverpool Football Club’s attempt to register as a UK trademark LIVERPOOL has been rejected by the UKIPO on the grounds that the word is of “geographical significance” to the city. Liverpool FC had filed its application in regards to various goods in relation to football and the filing had attracted significant public attention.

Other English football clubs (Everton, Chelsea and Tottenham) have managed to register several trade marks for each of their respective area names. In addition Southampton Football Club has managed to register SOUTHAMPTON as an EU trade mark. As a result, it is not surprising that Liverpool FC would seek to register a similar mark to help protect its valuable brand.

However, as a result of the filing the club received significant backlash from the people of Liverpool, including their own supporters, and – probably in a related move – Liverpool FC has said that it does not plan to appeal the refusal and it has withdrawn the application. An additional trade mark application for LIVERPOOL with different claims has also been withdrawn.

The matter presents a great case study for brand owners on balancing the need to protect their brand whilst being considerate of the potential adverse PR that will come with the application for certain trade marks.

Innovation in protecting your brand

Brand owners certainly need to adopt innovative tactics when looking to fight counterfeiters and to protect their brand and Liverpool FC has shown a keen eye to identifying new brand assets.

Liverpool FC may have been unsuccessful with this application but they recently successfully applied to trade mark the phrase “LET’S TALK ABOUT SIX BABY” in the UK. The saying was coined by Reds Manager Jürgen Klopp when he ended his run of six successive final defeats and claimed a first trophy as Liverpool FC’s manager with the UEFA Champions League triumph earlier this year. No doubt will form an important part of the club’s merchandise moving forward and is a cunning registration.

Consideration of PR implications

However, all innovative steps in brand protection must be considered in their context.

Liverpool FC argued that the trade mark application was purely “in the context of football products and services” and to stop counterfeiters from benefiting from the sale of counterfeit Liverpool FC products. However, this does raise the question as to why the existing portfolio of club name, mottos and logos would not be sufficient to defeat the majority of inauthentic products that are currently on the market.

In addition, the vitriol with which the application was greeted raises further queries concerning the club’s decision to apply to register the trade mark. The Liverpool FC supporters group ‘Spirit of Shankly’ called the UKIPO’s rejection of the application a “victory for common sense” and declared that the word LIVERPOOL belongs to the “city of Liverpool”. Supporters also took the decision to wear non-official items of clothing carrying the club’s name and logo during a match against Newcastle in protest.

As a result, the case highlights the perils brand owners face when pursuing a robust approach to protecting their brand, particularly when looking to register terms as trade marks with cultural significance. Applicants must bear in mind the negative PR that can accompany any new filing strategy.

Copyright 2019 K & L Gates

ARTICLE BY Simon Casinader and Niall J. Lavery of K&L Gates.
For more trademark law, see the National Law Review Intellectual Property law page.

A Dark Day for Franchising: Ninth Circuit Reinstates its Misguided Vazquez Decision, Undermining the Franchise Business Model

In the course of a politically-charged frenzy to eliminate the misclassification of employees as independent contractors, the franchise business model has been trampled without respect by both the courts and the legislature in California, disrupting commercial relationships that have been a vital driver of the state’s economy for more than fifty years.  Only five years ago, the California Supreme Court acknowledged the vital importance of franchising to the California economy in generating “trillions of dollars in total sales,” “billions of dollars” of payroll and the “millions of people” franchising employs.  Patterson v. Domino’s Pizza, LLC (2014) 60 Cal.4th 474, 489.

Taking into account the “ubiquitous, lucrative, and thriving” franchise business model and its “profound” effects on the economy, the Patterson court held that the usual tests for “determining the circumstances under which an employment or agency relationship exists” could not be applied to franchises.  Id. at 477, 489 and 503.  To avoid disruption of the franchise relationship and turning the model “on its head,” a different test that took into account the practical realities of franchising had to be applied to franchise relationships.  Id. at 498, 499 and 503.  The “imposition and enforcement of a uniform marketing and operational plan cannot automatically saddle the franchisor with responsibility.”  Id. at 478.  A franchisor is liable “only if it has retained or assumed a general right of control over factors such as hiring, direction, supervision, discipline, discharge, and relevant day-to-day aspects of the workplace behavior of the franchisee’s employees.”  Id. at 497-98.  The special rule for franchising has been commonly referred to as the “Patterson gloss.”

On September 25, 2019, a panel of the Ninth Circuit Court reinstated an opinion it had previously published on May 2, 2019, then withdrew on July 22, 2019, recklessly undermining the delicate framework of the franchise business model in derogation of the California Supreme Court’s “Patterson gloss.”  Vazquez v. Jan-Pro, 923 F.3d 575 (9th Cir. May 2, 2019), opinion withdrawn, 2019 US App. Lexis 21687 (July 22, 2019), opinion reinstated, 2019 BL 357978 (9th Cir. September 24, 2019).

The “Patterson gloss” arose from the California Supreme Court’s subtle appreciation for the historical development of the franchise business model.  At the heart of all franchise relationships is a trademark license.  At common law, trademark licenses were seen as a representation to the public of the source of a product.  An attempt to license a trademark risked the forfeiture of any right to royalties and the abandonment of the licensed mark.  See Lea v. New Home Sewing Mach. Co., 139 F. 732 (C.C.E.D.N.Y. 1905); Dawn Donut Co. v. Hart’s Food Stores, Inc., 267 F.2d 358, 367 (2d Cir. 1959).

Although the Trademark Act of 1905 did not allow for the licensing of trademarks, the Trademark Act of 1946, the Lanham Act, 15 U.S.C. § 1051, did allow a trademark to be licensed, but only where the licensee was “controlled by the registrant. . . in respect to the nature and quality of the goods or services in connection with which the mark is used.”  15 U.S.C. § 1127.   After the passage of the Lanham Act, a trademark could be licensed, as long as “the plaintiff sufficiently policed and inspected its licensees’ operations to guarantee the quality of the products they sold under its trademarks to the public.”  Dawn Donut, at 367.  After the Lanham Act had legitimized trademark licensing, the franchise model began to emerge in the 1950s, as the Patterson court noted (at 489), leading to the explosive growth of franchising over the last seven decades.

“Franchising is a heavily regulated form of business in California.”  Cislaw v. Southland Corporation (1992) 4 Cal.App.4th 1284, 1288.  Franchisors must provide prospective franchisees with detailed pre-sale disclosure documents under the California Franchise Investment Law, Corporations Code § 31000 et seq. and the FTC Rule, 39 Fed. Reg. 30360 (1974).  There are criminal, civil and administrative consequences for failure to comply.  Franchisees’ rights are protected by the California Franchise Relations Act, Business & Professions Code § 20000, et seq., which includes recently enhanced penalties for non-compliance.

Over the years, California courts have acknowledged the fundamental obligation of franchisors to impose controls over their licensees and have uniformly held that such controls do not create an employment or agency relationship.  See, e.g., Cislaw, 4 Cal.App.4th at 1295 (the owner of a brand may impose restrictions on a licensee “without incurring the responsibilities or acquiring the immunities of a master, with respect to the person controlled.”); Kaplan v. Coldwell Banker (1997) 59 Cal.App.4th 746, (“If the law were otherwise, every franchisee who independently owned and operated a franchise would be the true agent or employee of the franchisor.”).  This doctrine came to be known as the “Patterson gloss” and is the glue that holds the franchise business model together—allowing the franchisor to exert the controls necessary to license a trademark without incurring the responsibilities of an employer.

In its September 25, 2019 decision in Vazquez, the Ninth Circuit once again discarded the Patterson gloss like an extra part found in the bottom of an Ikea box after the hasty assembly of an end table.  According to the Vazquez court, Patterson had no relevance because it was just a vicarious liability decision, not an employment decision.  But Patterson was an employment case.

Patterson was a Fair Employment and Housing claim brought by a teenage girl after her supervisor had repeatedly groped her breasts and buttocks.  Patterson, at 479.  It is hard to understand why the Vazquez court considered the wage order claims before it to be more significant than Taylor Patterson’s right to pursue legal claims for sexual harassment.

Even more disturbingly, the Vazquez court disregarded the “Patterson gloss” because Dynamex [Dynamex Operations West, Inc. v. Superior Court of Los Angeles (2018) 4 Cal.5th 903] had favorably cited two Massachusetts decisions that applied the ABC test in the franchise context.  Id. at 39.  The Massachusetts cases were cited in Dynamex only as examples of cases where it had been more efficient to address “the latter two parts of the [ABC] standard” on a dispositive motion, rather than all three prongs.  Dynamex, 4 Cal.5th at 48.  The court never mentions franchising or the inconsequential fact that the parties in cited cases were franchises.  The Dynamex court could not be fairly understood to have abandoned its stalwart embrace of the franchise business model in its 2014 Patterson decision, without ever bothering to mention the case or to make any reference to franchising.  Yet the Vazquez court concluded that a passing citation to cases that happened to involve franchise companies in the Dynamex opinion—to make a procedural point that was unrelated to franchising in any way—was an occult signal from the California Supreme Court that the “Patterson gloss” had been abandoned by implication five years after its creation.

Nor was it valid for the Vazquez court to confine the “Patterson gloss” to vicarious liability cases.  As Witkin points out, California law on vicarious liability and employment developed together, so that most “of the rules relating to duties, authority, liability, etc. are applicable to employees as well as other agents.”  Witkin, Summary of California Law (10th ed., Agency & Employment, § 4).  The core obligation to control a trademark licensee—hard-wired by the Lanham Act into every franchise relationship—must be respected in both vicarious liability and employment cases if the franchise business model is to be preserved.

The Vazquez court had it right when it withdrew and de-published its original decision on July 22, 2019.  When the court certified the retroactivity issue to the California Supreme Court that day, it could have also certified the franchise issue back to the court that created the Patterson gloss, but it did not do so.  Franchisors are now left to wonder how they are to maintain existing long-term commercial relationships and to continue to sell franchises after the Vazquez opinion has taken from them the fundamental right to license trademarks without incurring the unintended liabilities of employers.

© 2019 Bryan Cave Leighton Paisner LLP

Read more on the topic on the National Law Review Franchising Law page.