Tattoo Copyright Infringement Suit Dribbles On

Readers of this blog may remember that Solid Oaks Sketches filed a copyright infringement suit against Take-2 Software, the maker of the NBA 2K video game, claiming that its reproduction of several tattoos worn by famous basketball players was copyright infringement. The case is still ongoing in the Southern District of New York, and defendants filed last August a motion for judgment on the pleadings, where they argue that the use was fair use. HT to the Hollywood Reporter.

Solid Oaks bought the copyright for the tattoos of Eric Bledsoe, Lebron James, and Kenyon Martin, which were created by several tattoo artists. These players appear in the NBA 2K game, complete with their tattoos. Solid Oaks claims this is copyright infringement. Take-2 argues that the use is de minimis and fair use.

A real-life depiction

The tattoos “only appear on the players on which they were inked in real life, not other real-world players or fictional characters” (p. 13). Indeed, the NBA 2K game, which is updated every year, depicts over 400 current and retired NBA players “realistically. …These depictions have realistic facial and physical features… They wear jerseys and sportswear with the numbers, colors and logos of their teams. The game even depicts NBA-branded socks” (p.9).

The tattoos at stake were each created specifically for the players. As explained in the motion, “[e]ach tattoo was created as a custom tattoo intended only for the player on which it was inked… Thus, they are imbued with special meaning for the players. For instance, Solid Oak admits that “Child Portrait Tattoo Artwork” depicts LeBron James’s son… Similarly, “330 and Flames Tattoo Artwork” depicts the number 330, which is the area code for Mr. James’s hometown” (p. 12).

Defendant argues that Plaintiffs “seek to hinder the ability to depict people as they appear in real life” (p.6), and that Plaintiff is contending that these famous basketball players must now seek its permission each time they appear in public, in films, or when being photographed.

Use is de minimis

Defendant is arguing that the use of the protected work is de minimis. “[T}rivial copying does not constitute actionable infringement” Newton v. Diamond, 388 F.3d 1189, 1193.

There are 400 players available in the video game, and so the tattoos only appear when the three players featuring the tattoos which copyright is owned by plaintiff appear in the game. Also, the tattoos appear very small in the game and thus are very difficult to see. For Defendant’s the tattoos “are just one of the myriad of elements that makeup NBA 2K” (p.13).

Use is fair use

Defendant is also arguing that it “is not a rival tattooist that has replicated a creative design and inked it on a new person. Rather, its use is completely different in a massive, highly creative video game featuring a virtual world that only uses player tattoos to realistically capture how the players actually look. Each of the factors that courts consider supports a finding of fair use.”

Defendant reviewed each of the four fair use factors and argued that each of the factors is in its favor.

The first factor, the purpose and character of the use, is in Take-Two’s favor because it “uses the Tattoos for a different purpose than that for which they were originally created. While the Tattoos originally were created as the NBA players’ self-expression, Take-Two uses them merely to replicate how the players appear in real life.”

The second factor, the nature of the copyrighted work, should also be in Defendant’s favor because “Take-Two uses them to depict the world accurately.”

The third factor, the amount and substantiality of the portion used, should be in Defendant’s favor because the “use was reasonable given that its purpose was to depict real life accurately, and using any less of the Tattoos would defeat that purpose.”

The fourth fair use factor, the effect of the use upon the potential market, should be in Defendant’s favor because Plaintiff “admitted that it is contractually prohibited from inking the Tattoos on other people, meaning that Take-Two’s use cannot harm that market.”

What about right of publicity?

This is a copyright infringement suit and the players are not parties in the suit. However, one could imagine that they could file a suit against the owner of the copyright of their tattoos for tortious interference in contractual relations, if not owning the copyright of their tattoos would prevent them from licensing their likeness. On the other hand, one can argue that the owner of the copyright has the right to be financially compensated if the work is reproduced, especially for in a commercial venture.

These players are celebrities, but our likeness is more and more used for marketing purposes. A few thousand followers on social media may land us all a lucrative marketing deal. If we sports tattoos but do not own their copyright, should we secure a license before posting selfies? As Jack London once said [on Twitter]: Show me a man with a tattoo and I’ll show you a man with an interesting copyright license.

Image is courtesy of Flickr user Carlos 90 under a CC BY-SA 2.0 license.

This blog post was first published on The 1709 Blog.

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Athletes’ Right of Publicity Claim Preempted by Copyright Act

The U.S. Court of Appeals for the Ninth Circuit ruled on 5 April 2017 that the Copyright Act preempted the California right of publicity claims of Plaintiffs, former college athletes whose photographs are part of the National Collegiate Athletic Association (NCAA) library of images license online by Defendant. The case is Maloney v. T3Media, 15-55630.

Plaintiffs played on the Catholic University basketball team from 1997 to 2001, which won the 2001 Men’s Division III NCAA championship game. Defendant T3Media entered into an agreement with NCAA in 2012 to store, host and license the images in the NCAA photo library. The NCAA runs 90 championships in 24 sports across 3 divisions, and its library contains thousands of photographs of championship games, including some taken during the 2001 Men’s Division III championship game in which Plaintiffs participated.

T3Media sold non-exclusive licenses online for two years that allowed users to download copies of the NCAA photographs for personal use. Plaintiffs contended that such action was a violation of their California statutory right of publicity, California Civil Code § 3344, California common law right of publicity, and a violation of California Unfair Competition Law.

They filed a putative class action suit in June 2014 in the U.S. Central District Court of California on behalf of current and former NCAA athletes whose names, images and likeness had been used without their consent by Defendant for purpose of advertising, selling, or soliciting the purchase of these photographs.

The two-steps of an anti-SLAPP analysis

Defendant moved for a special motion to strike under California anti-SLAPP statute, Cal. Code Civ. Proc. § 425.16, which aims to prevent strategic lawsuits against public participation (SLAPP). Courts follow two-steps when assessing an anti-SLAPP motion to strike: first the moving defendant must show that plaintiff’s suit arises from an act in furtherance of defendant’s right to free speech, as protected by the First Amendment. The second part of the assessment shifts the burden to plaintiff who must demonstrate a probability of prevailing on any of her claims.

T3Media had argued that the photographs at stake, and their captions, had been published in a public forum in connection with a matter of public interest. The district court agreed, finding that the photographs “fell within the realm of an issue of public interest (District Court, at 1134).

This shifted the burden to Plaintiffs to demonstrate a reasonable probability of prevailing on any of their claims. Defendant claimed three affirmative defenses: (1) Plaintiffs’ claims were preempted by federal copyright law, (2) were barred under the First Amendment, and (3) California right of publicity law exempts from liability use of likeness in connection with any news, public affairs, or sports broadcast or account.

The district court did not address the last two defenses as it found that Plaintiffs’ claims were preempted by the Copyright Act, because Plaintiffs asserted rights that fell within the subject matter of copyright, and granted Defendant special motion to strike. Plaintiffs appealed to the Ninth Circuit, which affirmed.

As Plaintiffs had conceded that their suit arose from acts in furtherance of T3Media’s right to free speech, the Ninth Circuit only examined whether Plaintiffs indeed had demonstrated a reasonable probability of prevailing on their claims, and found they had not met that burden, as the Copyright Act preempted their claims.

The copyright preemption two-part test

Section 301 of the Copyright Act provides that common law or statutory state laws are preempted by rights “equivalent to any of the exclusive rights within the general scope of copyright.” Courts in the Ninth Circuit use a two-part test to determine whether a state law claim is preempted the Copyright Act: the courts first decide if the subject matter of the state law is within the subject matter of copyright, and then determine if the rights asserted under state law are equivalent to the exclusive rights of the copyright holders, as determined by Section 106 of the Copyright Act. Parties only argued about the first part of the test.

The right of publicity claim is not preempted if its basis is the use of a likeness

Plaintiffs argued that their right of publicity claim was not preempted by the Copyright Act because publicity right claims protect the persona of an individual, which cannot be fixed in a tangible medium of expression (p. 12). They relied on Downing v. Abercrombie & Fitch, where the Ninth Circuit held that “the content of the protected right must fall within the subject matter of copyright” for the Copyright Act to preempt the state claim (Downing at 1003). Plaintiffs reasoned that their likeness is not with the subject matter of copyright and thus their state claim cannot be preempted by the Copyright Act.

Defendants argued that Plaintiffs’ likeness had been captured in an artistic work and had not been used on merchandise or in advertising. Indeed, the Ninth Circuit noted that “the “core” of the publicity right is the right not to have one’s identity used in advertising” (p. 13). The court of appeals concluded “that a publicity-right claim is not preempted when it targets non-consensual use of one’s name or likeness on merchandise or in advertising. But when a likeness had been captured in a copyrighted artistic visual work and the work itself is being distributed for personal use, a publicity-right claim interferes with the exclusive rights of the copyright holder, as is preempted by section 301 of the Copyright Act“ (p. 13)(emphasis of the Court).

The Ninth Circuit distinguished its Downing case from the case at stake, as the right of publicity claim in Downing is not about the publication of the photograph, but its use: Abercrombie used the surfer’s likeness in the catalog and had also sold reproductions of the tee-shirts worn by them in the photograph. The Ninth Circuit concluded that If the basis of the right of publicity claim is the use of a likeness in a photograph, the right of publicity claim is not preempted by copyright (p. 17).

When is a likeness misused in a work protected by copyright?

Therefore, the “crux of the issue” was whether the basis of the publicity-right claim was indeed to defend Plaintiff against a misuse of their likeness by Defendant. The court reasoned that Section 301 does not distinguish among different types of work protected by copyright, and that the pertinent issue was the way the likeness was used, not the type of the copyrighted work. In Downing, the basis of the publicity-right claim was not the publication of the photograph, but its use to advertise Abercrombie’s products and the creation of tee-shirts similar to those worn by Plaintiffs in the photograph, which were commercial exploitation of Plaintiff’s likeness (p. 19).

The Ninth Circuit noted further that it held in 2006, in Laws v. Sony Music Entertainment, Inc., that “federal copyright law preempts a claim alleging misappropriation of one’s voice when the entirety of the allegedly misappropriated vocal performance is contained within a copyrighted medium” (Laws at 1141). The Ninth Circuit also cited its Jules Jordan Video, Inc. v. 144942 Canada Inc. 2010 case, where it ruled that federal copyright law preempts a claim alleging misappropriation of one’s name and persona based entirely on the misappropriation of DVDs of movies in which plaintiff performed and of which he owned the copyright. Plaintiff had objected to the use of his likeness on the covers of counterfeit DVDs, which the Ninth Circuit found to be “still shots” of the performance protected by copyright. The Ninth Circuit reasoned that Plaintiff claim was a copyright claim, not a claim that his likeness has been used on an unrelated product or in advertising. For the Ninth Circuit, a likeness embodied in a work protected by copyright is misused if it is used on an unrelated product or in advertising.

Why did Plaintiffs’ claim fail

Plaintiffs’ attorney argued at the hearing that Defendant was selling the photographs “as poster art, as desktop backgrounds, as digital goods” (video at 11:36). This is an interesting argument, as the Ninth Circuit attaches great importance to the type of use of the likeness. However, it is the consumers who are choosing how to use the images, within the rights provided to them by the license, not the Defendant.

The District Court explained that ruling in favor of Plaintiffs “would destroy copyright holders’ ability to exercise their exclusive rights under the Copyright Act, effectively giving the subject of every photograph veto power over the artist’s rights under the Copyright Act and destroying the exclusivity of rights the Copyright Act aims to protect (District Court at 1138).

Plaintiff’s attorney recognized during the hearing that non-commercial use of the photos would be acceptable (video at 13:36). When asked by the judges to give an example of non-commercial use, he suggested editorial use, in a student newspaper or a national newspaper. While the Court did thus not address the issue of free speech, several media organizations filed an amici curiae brief in support of Defendant, to ensure that “the right of publicity is not transformed into a right of censorship—one that can be used to prevent the dissemination of matters of public importance” (amici curiae brief p. 9).

This post has been first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments published by the Stanford-Vienna Transatlantic Technology Law Forum.

Image is courtesy of Flickr user Tom Woodward under a CC BY-SA 2.0 license.

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Former Professional Wrestler Sues Van Morrison for Using his Likeness without Authorization

Billy Two Rivers, a former professional wrestler, is suing musician Van Morrison and his record label company, claiming that, by using his likeness on the cover of the upcoming Roll With the Punches album, they infringed his right of publicity, as protected by New York State’s statutory right to publicity, New York Civil Rights Law §§ 50 and 51, and false endorsement under the Trademark act. The case is Two Rivers v. Morrison, 1-17-cv-05720 (Southern District of New York).

To say that Plaintiff has had an interesting life is an understatement, as he was a professional wrestler from 1953 to 1977, competing in Canada, the U.S. and abroad. He appeared in ten films and television programs. After retiring, he was for 20 years a leader of the Mohawk nation on the Kahnawake reservation, as an elder and a counselor. He is still recognized as an elder and advisor to the First Nations people. The British band The Dogs D’Amour named a song after him in 1988, and Pulitzer Prize-winner Paul Muldoon wrote a poem, “My Father and I and Billy Two Rivers”, about watching Plaintiff competing in a wrestling match. A British racing horse was named after him, with Plaintiff’s consent.

Roll With the Punches will be Van Morrison’s 37th studio album and is set for release on September 22, 2017. Its cover features a black and white photo of Plaintiff engaged in a wrestling match. The cover of the album was used to promote Van Morrison’s tour, and generally to promote the sale of the album, both online and off-line. Plaintiff claims he did not authorize the use of this photo for the album cover. The complaint alleges that he was not even contacted by Defendants.

New York Civil Rights Law § 50, enacted in 1903, makes it a misdemeanor for “[a] person, firm or corporation [to use] for advertising purposes, or for the purposes of trade, the name, portrait or picture of any living person without having first obtained the written consent of such person, or if a minor of his or her parent or guardian...” We saw in a former post that the New York Legislature is actively trying to expand the scope of the law. However, Plaintiff does not need such expansion to file his suit. If the fact alleged in the complaint can be proven, it is a clear case of unauthorized use of likeness for commercial purposes.

Plaintiff is asking the court to enjoin any further use or dissemination of the cover, and to permanently dispose of the albums already produced. He is also asking the court to award him punitive damages.  The case settled out of court.

This post first appeared on The 1709 Blog.

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Ninth Circuit: Using a Trademark as a Verb Is Not Automatically Generic Use

The United States Court of Appeals for the Ninth Circuit ruled on 16 May 2017 that Google is not a generic term for a search engine, and thus the famous California company did not suffer the costly indignity of having its trademarks cancelled through genericide. The case is Elliott v. Google, 2:12-cv-01072.

Plaintiffs had registered 763 domain names, each incorporating the word Google along with the name of a another brand (googledisney.com), of a person (googlebarackobama.net) or a place (googlemexicocity.com). This business plan did not fare well with the famous search engine company, which successfully asked the National Arbitration Forum to transfer all these domain names to Google.

Plaintiffs then filed a suit in the United States District of Arizona claiming that Google is, or has become, a generic term universally used to describe the action of internet searching with any search engines (Complaint, p. 2), and asked the court to cancel Google’s trademarks. Indeed, the Lanham Act, 15 U.S.C. § 1064(3), provides the right to petition for the cancellation of mark if it becomes the generic name for the goods or services, or a portion thereof, for which it is registered.

The parties filed cross-motions for summary judgment on the issue of whether the GOOGLE marks were generic: while Plaintiffs claimed that Google is a generic term because a majority of the public use it as a verb, Google argued that use of a trademark as a verb use is not automatically generic use. On 11 September 2014, the United States District of Arizona granted summary judgment for Google. Plaintiffs appealed to the United States Court of Appeals for the Ninth Circuit, which affirmed.

The Google trademarks

As mentioned in the original complaint, Google comes from the term ‘googol’meaning a 1 followed by 100 zeros. Google holds a trademark registration for GOOGLE in class 9 for computer hardware; computer software for creating indexes of information, indexes of web sites and indexes of other information resources” and another one in class 38 for [p]roviding electronic mail and workgroup communications services over computer networks; providing multiple user access to proprietary collections of information by means of global computer information networks.

Generic trademark and genericide

Needless to say, if a mark becomes generic, it is quite costly for the company that invested a lot in developing goodwill towards its brand. A generic term cannot serve as a trademark because it cannot serve as identifying the source of a product or service. Several famous marks, among them aspirin, cellophane, and thermos, fell victim of their success and became generic because they were used by the general public to designate the genus of their product, not just a particular brand. This is “genericide”.

The primary significance test

Plaintiffs had the burden of proving the genericide since they applied for the cancellation of the GOOGLE trademarks, and a registered trademark is presumed to be valid. They argued on appeal that the district court had misapplied the primary significance test, which was coined by the Supreme Court in its 1938 Kellog Co. v. National Biscuit Co. case: a mark is not generic if the primary significance of the term in the minds of the consuming public is not the product but the producer. As noted by the Ninth Circuit, quoting Ty Inc. v. Softbelly’s Inc., a trademark only becomes generic when the primary significance of the registered mark to the relevant public is as the name for a particular type of good or service irrespective of its source.

Plaintiffs argued that the district court had framed the inquiry as to whether the primary significance of “google” to the consuming public is a generic name for search engines, whereas it should have inquired whether the public primarily uses “google” as a verb. The Ninth Circuit disagreed with this argument for two reasons: genericide always relates to a particular good or service and using a trademark as a verb is not automatically generic use.

Genericide always relates to a particular good or service

For the Ninth Circuit, the District Court properly recognized the necessary and inherent link between a claim of genericide and a particular good or service (p. 9). The Court reasoned that failing to consider this would prevent some arbitrary marks to be protectable, giving as example IVORY which is arbitrary as applied to soaps, but would not be so for product made from the tusks of elephants.

The Ninth Circuit found that Plaintiffs’ evidence was largely inapposite to the relevant inquiry under the primary significance test because [the Plaintiffs] ignor[e] the fact that a claim of genericide must relate to a particular type of goods or service (p. 13).

Using a trademark as a verb is not automatically generic use

Also, a verb use does not automatically constitute generic use (p. 10). Plaintiffs had argued that a word can only be used as a trademark if it is used as an adjective. The Ninth Circuit disagreed, noting that it had found in Coca-Cola Co. v. Overland, Inc. that the mere fact that customers ordered a coke did not prove what they were thinking, a mark or a cola beverage, and more evidence was required about the customer’s inner thought process. Therefore, the use of a trademark as a noun may or may not be using it as a trademark (p. 11).

The primary significance test directed plaintiffs to provide evidence that that the primary significance of the GOOGLE trademarks is a general name for search engines, not a trademark identifying a particular search engine. The Ninth Circuit agreed with the district court which had found that, while the verb “google” is indeed used to refer to searching on the internet, regardless of the search engine used, this fact alone cannot support a jury finding of genericide under the primary significance test, as it does not prove how the public primarily understands the word itself, irrespective of its grammatical function, with regard to internet search engines (p. 14).

How to prove that a mark has become generic

Plaintiffs also argued on appeal that the district court impermissibly weighted the evidence presented by Plaintiffs when granting summary judgment to Google. The Ninth Circuit disagreed, because, while Plaintiffs had presented admissible evidence that the majority of the public used GOOGLE as a verb, this was not enough to survive summary judgment, as it cannot alone prove genericide.

Plaintiffs had presented three surveys as evidence. Two were excluded by the district court because they had been conducted by Plaintiffs’ counsel, and a valid survey design typically requires graduate training or professional experience in survey research (p. 15). The third survey was a thermos survey, that is, a survey using open-ended questions, in our case, asking respondents how they would ask a friend to search something on the internet. The majority answered by using GOOGLE as a verb, and the survey was admitted as evidence that a majority of the public uses GOOGLE as a verb meaning searching the internet.

Plaintiffs also gave examples of alleged generic use of GOOGLE by media and consumers, but they failed to convince both the district court and the Ninth Circuit, because Plaintiffs did not provide evidence that the use was indeed generic in the mind of the media and the consumers.

Plaintiffs had also offered expert testimony by three experts who all were of the opinion that GOOGLE is generic when used as a verb. However, this finding alone is not enough to prove genericide. Plaintiffs’ dictionary evidence did not prove either that GOOGLE is a generic name for internet search engines, only proving it is generic when used as a verb.

Plaintiffs also tried to prove that Google itself was using GOOGLE in a generic sense, presenting as evidence an email from Google cofounder Larry Page encouraging its recipients to “keep googling!” Generic use of a mark by its holder can support a finding a genericide, but the email was found by the court to be yet another example of the use of GOOGLE as a verb and did not prove that Larry Page had a particular search engine in mind (p. 19).

Finally, Plaintiff claimed that there was no efficient alternative for GOOGLE as a name for the act of searching the internet, but the Ninth Circuit drily noted that GOOGLE’s competitors do not use GOOGLE to refer to their own services (p.20).

GOOGLE may have become a verb, but this alone does not prove that GOOGLE is a generic mark. Keep googling.

This post has been first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments published by the Stanford-Vienna Transatlantic Technology Law Forum.

Image is courtesy of Flickr user Dudley Carr under a CC BY 2.0 license.

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Donald Graham’s Copyright Infringement Suit against Richard Prince Allowed to Go Forward

People interested in the U.S. fair use doctrine owe appropriation artist Richard Prince gratitude for providing several interesting fair use cases to monitor and comment about.

Prince has been the defendant in several high profile cases in the Second Circuit (see here and here). He famously won the Second Circuit Cariou v. Prince case (see here), where the Court of Appeals found that Prince’s  use of Patrick Cariou’s photographs to create his thirty paintings and collages featured in his Canal Zone exhibition was fair use, as it was transformative.Prince Street Photographer Donald Graham filed a copyright infringement suit against Prince in 2016 (see here and here), claiming that Prince’s use without permission of Graham’s Rastafarian Smoking a Joint photograph, to create an Untitled (Portrait) featured in Prince’s New Portraits exhibition, was copyright infringement. Prince claims it is fair use.

On July 18, U.S. District Judge Sidney H. Stein from the Southern District of New York allowed the case to go forward, as, while granting Prince’s request to dismiss Graham’s demand for punitive damages, he denied Prince’s motion to dismiss the case. The case is Graham v. Prince, 1:15-cv-10160.

Judge Stein noted that, because the fair use defense is fact-related, discovery will be necessary to conduct the fair use inquiry. Therefore, the case cannot be dismissed and will have to go forward. Judge Stein quoted the Second Circuit in Cariou v. Prince, which stated that finding whether a particular use is fair or not requires “an open-ended and context-sensitive inquiry.”

Prince used Graham’s work almost in its entirety, when he printed and exhibited the original work as originally cropped and posted on Instagram, without Graham’s permission, by another Instagram user, then reposted by yet another user and finally reposted by Prince on his own Instagram account. Prince added the nonsensical comment “ReCanal Zinian da lam jam,” followed by an emoji. Is this add-on enough to make Prince’s work transformative enough to be found fair use?

Prince argued that the use was transformative as it added new messages such as “a commentary on the power of social media to broadly disseminate others work, an endorsement of social media’s  ability to generate[ ] discussion of art,”or a “condemnation of the vanity of social media.”

Judge Stein was not convinced, finding “evident” that Prince’s work is not “so aesthetically different”from the original work and thus not transformative enough. Untitled (Portrait) does not manifest “an entirely different aesthetic” from the original work, as required under Cariou. Unlike the works featured in the Canal Zone exhibition, Untitled (Portrait) does not render the original work, according to Judge Stein, “barely recognizable” as Princes works did in Cariou.

Instead,

“[t]he primary image in both works is the photograph itself… Untitled simply reproduces the entirety of Graham’s photograph –  with some de minimis cropping – “ in the frame of an Instagram post, along with a cryptic comment written by Prince… There is no question that, notwithstanding Prince’s additions, Graham’s unobstructed and unaltered photograph is the dominant image in Untitled.”

Judge Stein concluded that “[b]ecause Prince’s Untitled is not transformative as a matter of law, the Court cannot determine on a motion to dismiss that a “reasonable viewer” would conclude that Prince’s alterations imbued the original work “with new expression, meaning, or message,” quoting the U.S. Supreme Court Campbell v. Acuff-Rose Music 1994 case.

 Given Prince’s  use of essentially the entirety of Grahamâ’s photograph, defendants will not be able to establish that Untitled is a transformative work without substantial evidentiary support. This evidence may include art criticism, such as the articles accompanying defendant’s briefing, which the Court may not consider in the context of this motion.”

Judge Stein called Cariou v. Prince a “prequel to this action.” However, his fair use analysis does not bode well for Prince, who may this time be found to have appropriated a bit too much. To be continued…

Image is courtesy of Gryffindor under a  CC BY-SA 3.0 license.

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New York State Fails to Extend the Scope of its Right of Publicity Statute

New York State has a statutory right to publicity, New York Civil Rights Law 50 and 51. It protects the right of publicity of a “person, firm or corporation” in order to prevent “uses for advertising purposes, or for the purposes of trade”of “the name, portrait or picture of any living person without having first obtained the written consent of such person.”

The New York legislature recently tried to expand this right, but this attempt was so far unsuccessful, and the legislature is now in recess.

Assembly Bill A08155, introduced on May 31, 2017, proposed to establish a right of publicity for both living and deceased individuals. It also proposed that an individual’s name, voice, signature and likeness would be a freely transferable and descendible personal property, making the right of publicity a property right more than a privacy right, as it is now.

An expansion of the scope of the law

Readers of the blog may remember that Lindsay Lohan claimed that flashing the V sign was part of her persona and was thus protected by New York right of publicity law. She was unsuccessful as the scope of New York’s ight of publicity law is narrow.

The bill would have considerably expanded the scope of the law, as it would have also have protected the “likeness” of an individual, which it defined as “an image, digital replica, photograph, painting, sketching, model, diagram, or other recognizable representation of an individual’s face or body, and includes a characteristic.”

The bill defined the “characteristic” of an individual as “a distinctive appearance, gesture or manne “ So, Lindsay Lohan’s V sign could arguably be protected would the bill been enacted.

The geographic scope of the statute would also have been considerably extended. The bill would have protected the right of publicity of a deceased individual, for forty years after the death of the individual, and this”regardless of whether the law of the domicile, residence or citizenship of the individual at the time of death or otherwise recognizes a similar or identical property right.” This could be interpreted as meaning that the law would have applied to virtually anyone in the world.

A right of publicity transferable and descendible

The bill considered the likeness to be personal property, freely transferable

“A living or deceased individual’s name, voice, signature and likeness, individually and collectively known as his or her right of publicity, is personal property, freely transferable or descendible, in whole or in part, by contract or by means of any trust or testamentary instrument.”

If an individual would have transferred his right of publicity, there could have been a risk of losing control over the use of one’s  likeness, even for unsavory use, unless the contract transferring such rights would have been carefully written to protect the individual against such occurrence. One can imagine that a young, talented and beautiful, but nevertheless impecunious individual could have signed up his right of publicity in exchange for money badly needed at the time. Â

New York State, unlike California, does not recognize that deceased individuals have a right to publicity and the bill would have provided such right. The bill detailed at length how such right would have vested to the heirs, whether by will or, in the absence of a will, under the laws of intestate succession. The bill also specified that the rights thus inherited could have been “freely transferable or descendible by any subsequent owner of the deceased individual’s right to publicity.”

The right of publicity would have terminated at the death of the individual who would not have transferred it by contract, license, gift, trust or by will, and if he had no heirs who could have inherited it under the laws of intestate succession.

Such rights would not have “render[d] invalid or unenforceable any contract entered into by a deceased individual during his or her lifetime by which the deceased individual assigned the rights, in whole or in part, to use his or her right of publicity.”

First Amendment defense

The bill would have provided a First Amendment defense. It would not have been necessary to secure the consent of the individual for using her right of publicity if such right would have been

used in connection with news, public affairs or sports broadcast, including the promotion of and advertising for a public affairs or sports broadcast, an account of public interest or a political campaign;a play, book, magazine, newspaper, musical composition, visual work, work of art, audiovisual work, radio or television program if it is fictional or nonfictional entertainment, or a dramatic, literary or musical work;  a work of political, public interest or newsworthy value including a comment, criticism, parody, satire or a transformative creation of a work of authorship; or an advertisement or commercial announcement for any [news, public affairs or sports broadcast, including the promotion of and advertising for a public affairs or sports broadcast, an account of public interest or a political campaign].

These exceptions are quite broad, and so, while the bill expanded the scope of the New York right of publicity, it also expanded the scope of the exceptions to this right.

The Authors Guild expressed its “grave concerns” about the bill, in a letter to three members of the New York legislature, as it “has the potential to cause great harm to our society’s knowledge-base and to stifle speech, as it would make it difficult for authors to write without restraint about public figures, who may threaten to file a right of publicity suit to stifle speech critical of them.

The law is not clear enough

A work thus exempted “that includes a commercial use and replicates the professional performance or activities rendered by an individual” would not have been exempt “where the replication is inextricably intertwined with the right of publicity of such individual,”subject, however, to the First Amendment and section eight of article one of the New York state constitution protecting freedom of expression. What does”inextricably intertwined” mean? Your guess is as good as mine…

Owners or employees of any medium used for advertising which would have published or disseminated an individual’s right of publicity would not have been liable unless established that “they knew the unauthorized use was prohibited by [the New York statutory right of publicity]. Would owners and employees only benefited from this immunity if they did not know the use to be unauthorized and that such unauthorized use was prohibited by law, or would the knowledge that the use was unauthorized been enough? It is difficult to say.

Let’s hope that the bill will be written again in a more precise way, and that its scope will be narrowed. We’ll keep you posted.

Image of Japanese building courtesy of Flickr user antjeverena under a CC BY-SA 2.0 license.

Image of eggs is courtesy of Flickr user Karen Roe under a  CC BY 2.0 license.

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France’s Highest Court Rules in Favor of Freedom of Expression of Director over Heirs’Droit Moral

Readers of this blog may remember that the Paris Court of Appeals found in October 2015 that the staging of the opera Le Dialogue des Carmélites by Dmitry Chernyakov for the Munich Opera in 2010 violated the moral rights of composer and librettist Francis Poulenc, which adapted the eponymous theatrical play by Georges Bernanos.

Le Dialogue des Carmélites tells the story of French aristocrat Blanche de la Force who decides to enter the Carmelite Convent, possibly to be sheltered from life, as she is fearful and shy. The French Revolution upset her world and the Carmelites must leave the convent. Blanche leaves the congregation to return to her family. When the Carmelites are arrested and sentenced to death by the revolutionary tribunal, Blanche returns to them as they are each climbing the steps to the guillotine, and she is the last one to have her head cut off.

Dmitry Chernyakov had not modified the score or the dialogue. However, his interpretation did not take place during the French revolution, but in contemporary time. In the last scene, the Carmelites are locked up in a shed full of explosives. Blanche appears on the scene and pulls them all out to safety, one by one. She then comes back to the shed which explodes, killing her, an apparent suicide.

The heirs of both Francis Poulenc and Georges Bernanos had sued Dmitry Chernyakov and the Munich Opera, claiming a violation of their moral rights, which are which are perpetual and transferable upon death under Article L. 121-1 of the French intellectual property code. The Paris Court of Appeals had ruled in their favor, finding that the scenography profoundly modified the final scene and distorted its spirit. The DVD of the play could no longer be sold.

The director and the Opera took the case to the Cour de cassation, France’s highest civil court. The heirs argued in defense that if a certain freedom can be recognized for the director to performance his work, this freedom is limited by the moral right of the author to the respect of the integrity and spirit of his work, which must not be denatured.”

But the Cour de cassation just ‘broke’ this holding on June 22. The Court reasoned that the Paris Court of appeals had noted that “the contested staging did not modify the dialogue, absent in this part of the preexisting work, nor the music, even going so far as to reproduce, along with the religious songs, the sound of the guillotine which rhythms, in the Francis Poulenc opera,. Each death, and that the end of the story, as staged and described by Dmitry Chernyakov, respected the themes of hope, of martyrdom, of grace and transfer of grace and of the communion of saints dear to the authors of the original work, [and that therefore] the Court of appeals did not draw the legal consequences of its own findings and violated [article L. 113-4 of the French intellectual property code.]”

Article L.113-4 of the French intellectual property code states that “[t]he composite work is the property of the author who created it, subject to the rights of the author of the pre-existing work.”

In our case, the staging of the opera is a composite work, subject indeed to the rights of the authors of the pre-existing work, the opera. Such rights include moral rights. But the staging, as a composite work, is also a work on its own, protected by article L. 113-4. Since it does not infringe on the rights of the authors of the original work, their rights had not been violated.

This ruling is not surprising, as the Cour de cassation had held on May 15, 2015, that a Court of Appeals must explain “in a concrete manner how searching for the right balance between the rights [of the author of the original work and the rights of the author of the composite work] justified the sentence it had pronounced.”

The Cour de cassation also cited Article 10 § 2, of the Convention for the Protection of Human Rights and Fundamental Freedoms. Protecting freedom of expression, to find that the Court of appeals erred in forbidding the sale of the DVDs of the opera and its broadcast, because it should have examined “what in the search for a fair balance between the director’s freedom of creation and the protection of the moral rights of the composer and the author of the libretto justified the prohibition order it ordered.”

The Versailles Court of Appeals will not review the case again and will likely rule in favor of the director, and thus preserve his freedom to create and to express himself. Moral rights are often viewed in the U.S. as a way to censor creativity, and the 2015 Paris Court of appeals ruling certainly provided grounds for this view.

This post originally appeared on The 1709 Blog. 

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Anti-Harassment Video Turned Appetizers Ad is Not False Endorsement

On 24 January 2017, Judge Abrams from the Southern District of New York (SDNY) granted a motion to dismiss from a video director who had been sued for violation of Section 43(a) of the Lanham Act by an actress featured in an anti-street-harassment video he had directed, and which he later licensed for use in an TGI Friday’s appetizers advertisement. The case is Roberts v. Bliss, No. 15-CV-10167.

Plaintiff had been hired to appear in “10 Hours Walking in NYC as a Woman,” (the video) which was filmed by hidden camera to show the amount of catcalling directed at women walking on the streets. The actress was filmed for 10 hours walking in the streets of Manhattan, while men commented on her appearance and asked for her phone number. The footage was edited to a 1.56 minute video, which ended with a message urging viewers to donate to a non-profit organization dedicated to fighting street harassment, which had commissioned the video.

The video was directed and produced by Defendant Rob Bliss. He posted the video on YouTube in October 2014, and it went viral within 24 hours, receiving 10 million views in the first 24 hours of its posting. It has now been seen some 44 million times. After the video went viral, Bliss used it on his professional website to advertise his services. In February 2015, he licensed the video to a Colorado advertising agency, which used it to create two ads for TGI Friday’s, a fifteen-second ad and a thirty-second ad (the ad).

The ad starts with a black screen with the text, ”Nobody likes a catcaller,” and then shows clips of the video, with oversized pictures of new TGI Friday’s appetizers entirely covering Plaintiff’s body. This gives the impression that men on the street are  expressing their admiration for mozzarella sticks or potato skins. The ad ends with another black screen which reads: “But who can blame someone for #AppCalling?”

Plaintiff sued Bliss, his company, and the non-profit which had originally commissioned the ad, claiming that the ad misleadingly implied that she had endorsed the ad and the appetizers, in violation of Section 43(a) of the Lanham Act, which forbids false endorsements. She also claimed that her right of publicity under New York law had been violated. Claims against the non-profit were later dropped.

The Section 43(a) false endorsement claim fails

Plaintiff claimed that she had not licensed her identity or persona to be used in the ads and would not have done so if offered to license it. She claimed that the ad violates Section 43(a) of the Lanham Act, as it “depicted [her] persona and conveyed the false impression to a substantial group of viewers… that she had participated in, authorized or endorsed the [ad]” (Complaint, p. 12-13).

While right of publicity laws generally forbid using a person’s likeness for commercial purposes, the Lanham Act, which prohibits the unauthorized use of personal identity in endorsements or advertising, may also be used to that effect. Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a) prohibits:

“us[ing] in commerce any word, term, name, symbol, or device, or any combination thereof, or any false designation of origin, false or misleading description of fact, or false or misleading representation of fact, which… is likely to cause confusion, or to cause mistake, or to deceive as to the affiliation, connection, or association of such person with another person, or as to the origin, sponsorship, or approval of his or her goods, services, or commercial activities by another person, or… in commercial advertising or promotion, misrepresents the nature, characteristics, qualities, or geographic origin of his or her or another person’s goods, services, or commercial activities.”

Judge Abrams cited Burck v. Mars, Inc., a 2008 SDNY case, which enumerated the elements of a false endorsement claim under the Lanham Act, which require that “the defendant, (1) in commerce, (2) made a false or misleading representation of fact (3) in connection with goods or services (4) that is likely to cause consumer confusion as to the origin, sponsorship, or approval of the goods or services”.

The ad did not use Plaintiff’s persona

Plaintiff did not claim that her name had been used, but instead her “persona,” which indeed could fall within the scope of Section 43(a), as its broad terms may indeed protect persona.

Judge Abrams examined what exactly is a “persona” and noted that it is defined by the Oxford English Dictionary as “the aspect of a person’s character that is displayed to or perceived by others.” He also quoted two 1992 Ninth Circuit cases recognizing persona. In Waits v. Frito Lay, a case about the unauthorized imitation of Tom Waits‘ voice, the court held that an artist’s distinctive voice and style was part of his persona. In White v. Samsung Elecs. Am. Inc., the court recognized that Vanna White had a right to her individual style and stance within the context of the set of Wheel of Fortune, where she had become famous; therefore, an ad could not use a robot in a blonde wig and pink dress on a set resembling Wheel of Fortune.

In this case, Judge Abrams was not convinced by Plaintiff’s claim “because neither she, nor any representation of her, her image, or her persona, appear in the TGI Friday’s advertisement, and the ad contains no false or misleading statement suggesting that she endorsed TGI Friday’s or its appetizers.” He noted further that “the superimposed renderings of appetizers cover [Plaintiff’s] entire body.”

Judge Abrams also noted that Plaintiff could not claim that she is so associated with her performance that the ad falsely implies that she endorsed the appetizers, because the Second Circuit held in Oliveira v. Frito Lays, Inc. that a signature performance, which is one in which a “widespread audience associates with the performing artist,” cannot be claimed as a trademark. In Oliveira, the Court found that Astrud Gilberto, the singer who first sang The Girl From Ipanema, could not claim her performance as a trademark and thus claim her rights had been infringed by the use of her performance in an ad without her permission. Judge Abrams noted that TGI Friday’s had purchased a license for the video, just as Frito Lays had purchased a license to use The Girl from Ipanema in the potato chip ad. Judge Abrams concluded that the ad did not falsely imply that Plaintiff endorsed the products, noting again that Plaintiff is not seen at all in the ads.

There is no likelihood of confusion as to Plaintiff’s sponsorship because the ad is parody

Judge Abrams also found that Plaintiff did not prove that consumers were likely to be confused as to her sponsorship of the ad. He quoted Burck, where the SDNY found that if a trademark is parodied, it may be enough to result in no confusion under the statutory likelihood of confusion analysis.” Thus, if there is a parody, there is probably not consumer confusion. This had also been noted in January 2016 by Judge Furman of the SDNY in the Louis Vuitton v. My Other Bag case, which was recently affirmed by the Second Circuit (see here for a former discussion of the case in the TTLF newsletter). In that case, Judge Furman discussed the parody of a trademarks at length, and observed that “a parody clearly indicates to the ordinary observer that the defendant is not connected in any way with the owner of the… trademark.” In Bliss, Judge Abrams found the ad to be “a clear parody” of the video, which “in no way suggests that [Plaintiff] was championing the product used to mock the video for its own commercial benefit.”

The right of publicity claim was not addressed by the federal court

Since Judge Abrams dismissed the federal law claim which had justified federal jurisdiction, he declined to review the New York right of publicity claim.

New York’s right of publicity law is codified in New York Civil Rights Law, Section 50-5, and protects the right to privacy of a person if a “person, firm or corporation” uses her “name, portrait or picture” for “advertising purposes, or for the purposes of trade… without having first obtained the written consent of such person”.

Would Plaintiff be more successful in her claim that her persona had been used without her permission in a New York court? As noted in a previous TTLF newsletter, some state’s right of publicity laws protect personas, such as the Alabama Right of Publicity Act which protects the right of publicity of individuals “in any Indicia of Identity,” and thus extend its protection to persona. This is not the case in New York.

Actress Lindsay Lohan recently argued that the protection of New York’s right of publicity includes her persona, which she claimed is composed of various elements such as a bikini, shoulder-length blonde hair, jewelry, a cell phone, sunglasses, a loose white top, and her signature ‘peace sign’ pose. he Appellate division of the New York Supreme Court dismissed her claim on 1 September 2016, because New York law only protects against unauthorized use of a person’ name, portrait, or picture— not a persona. However, in February 2017 the New York Court of Appeals accepted review of this case, and so may affirm or modify the narrow scope of the New York’s right of publicity.

Plaintiff has appealed her federal case and is likely to pursue her New York right of publicity case. Regardless, this case highlights the dangers of performing without a written contract. Plaintiff alleged in her complaint that she agreed to participate in the project without being compensated because the video had been presented to her as a public service announcement against street harassment. She received death and rape threats after appearing in the original video. This case brings in mind the Garcia v. Google case (discussed in a previous TTLF newsletter here) where an actress unsuccessfully claimed copyright in her performance. There are no neighboring rights provided to performers in U.S. law, unlike, say, French law, which grants performers a droit voisin,, a sort of property right over their interpretation of the work protected by copyright . In a statement, Plaintiff wrote that “the rights of all actors and other creative artists are increasingly threatened by those who profit commercially from their content without paying for it.” Should U.S. law give performers a neighboring right?

This post has been first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments published by the Stanford-Vienna Transatlantic Technology Law Forum.

 

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Is Adidas too Agressive At Enforcing its Trademarks?

Adidas owns multiple trademark registrations in the European Union and the U.S. for its famous three stripe design, and it fiercely protects them. It has filed, and won, several trademark infringement suits, and regularly sends cease-and-desist letters asking brands to stop selling shoes or clothes bearing stripes.

In February 2017, Adidas filed a notice of opposition with the U.S. Patent and Trademark Office Trademark Trial and Appeal Board (TTAB) to the registration of a mark that Tesla Motors was seeking to register for articles of clothing. The mark would have consisted of “three equal length horizontal stylized lines in the manner of a stylized number 3.” The trademark has since been abandoned after an inter-partes decision by the TTAB.

On 17 February 2017, Adidas also filed a trademark infringement and dilution suit against competitor Puma North America Inc. in the district court of Oregon. Adidas claimed that Puma’s new model of soccer cleats, which bear four diagonal stripes on each side, infringes on the Adidas trademark as it is likely to cause consumer confusion as to the source of the footwear. Adidas voluntarily dismissed the case on 28 February  2017, likely following successful negotiations with Puma.

On 14 February 2017, the Barcelona Football Club abandoned its application to register a mark in class 28, for sporting articles, following a notice of opposition filed by Adidas on 31 October 2016, and an inter-partes decision by the TTAB. The abandoned mark consisted of “a square containing seven vertical stripes. The 1st, 3rd, 5th and 7th stripes from the left are blue, and the remaining three stripes are garnet.”

On 17 March 2017, Adidas filed a trademark infringement and dilution suit in the Eastern District of North Carolina, against fashion company Juicy Couture, which came to fame some 15 years ago for creating a velour tracksuit. Adidas claimed that some jackets and pants, bearing stripes on their sleeves and sides, infringe several of its trademarks.

Adidas has won or settled all of the trademark infringement cases it has filed. Will the streak ever end?

The scope of the three-stripe trademark

What exactly do the Adidas trademarks protect? Are all three stripes claimed by Adidas under the trademark? Are all stripes on shoes and clothing, regardless of the number of stripes, claimed by Adidas?

Adidas owns several federal trademark registrations in the U.S. for a mark consisting “of three parallel stripes applied to footwear,  the stripes are positioned on the footwear upper in the area between the laces and the sole,” (see here, here, or here). Adidas also owns trademarks for clothing bearing the three stripes (see here) and even for verbal trademarks using the term “3 stripes,” such as the trademark “THE BRAND WITH THE 3 STRIPES.” Does that mean that Adidas has a monopoly for just about every trademark featuring three stripes, every trademark featuring two or four stripes, or even for clothing featuring any number of stripes?

The February 2017 complaint against Puma stated that Adidas has been using the three-stripe trademark on shoes since 1952 and on apparel since 1967. While easily recognizable, Adidas’s three-stripe trademark is also simple: three stripes, often shown diagonally on the sides of shoes, on the sleeves of a training jacket, or the sides of training pants, shorts, or shirts. The three stripes are all of the same width when seen together, but this width varies from trademark to trademark. The distance between each stripe also varies.

In the USPTO Design Search Code Manual, category 26 is for “geometric figures and solids.” 26.17 is for “lines, bands, bars, chevrons and angles” and 26.17.01 is for “straight line(s), band(s) or bar(s).” 26.17.05 is the code for “horizontal line(s), band(s) or bar(s).”

The design search codes for the trademark which Tesla sought to register were 26.17.01 and 26.17. A recent search in the TESS database for a mark with a 26.17. 01 code yielded 89,266 records and a search for marks with the 26.17.05 code yielded 81,820 records. Amongst the 26.17.05 results, 14 were filed by Adidas.

The mark which Tesla sought to register was described in the application as consisting of “three equal length horizontal stylized lines in the manner of a stylized number 3.” Yet the stripes were not similar to Adidas stripes, which are cut in a neat angle. Tesla’s stripes were cut on the side in a soft curve, resembling a Japanese wood beam or roof. The Barcelona Football Club was trying to register as a trademark the stripes which are seen on its own logo, which is itself a registered trademark! Indeed, many sports teams around the world sport stripes on their uniforms. A stripe is a stripe is a stripe. Yet Adidas opposed these two trademark registrations.

Is Adidas going too far?

This is not the first time that Adidas sued a company over the use of stripes on shoes or clothing, even if more or less than three stripes are featured. Adidas sued several European retailers in the late nineties over the use of two stripes on the side of sports clothes, which eventually led to the European Court of Justice ruling in 2008, in Adidas AG and Others v. Marca Mode CV and Others, that Adidas’ competitors could not “be authorized to infringe the three-stripe logo registered by Adidas by placing on the sports and leisure garments marketed by them stripe motifs which are so similar to that registered by Adidas that there is a likelihood of confusion in the mind of the public” (at 32).

While there may be a need for signs which do not have a distinctive character, such as stripes, to be available for competitors, this need “cannot be taken into account in the assessment of the scope of the exclusive rights of the proprietor of a trade mark” (ruling of the Court). The European Court of Justice thus chose to protect the public against any likelihood of confusion.

U.S. fashion manufacturers also encounter legal difficulties when using stripes on garments, and their frustration is mounting. On 3 March 2017, fashion retailer and manufacturer Forever 21 filed a complaint against Adidas, asking the Central District Court of California for a declaratory judgment of non-infringement of trademark. Forever 21 claims that Adidas is now “essentially asserting that no item of clothing can have any number of stripes in any location without infringing Adidas trademarks.” Forever 21 is “[t]ired of operating with a cloud over its head with regard to its right to design and sell clothing items bearing ornamental/decorative stripes” and “has decided that enough is enough… This matter is ripe for a declaratory judgment.” However, Forever 21 voluntarily dismissed the case on 13 March 2017.

Stripes are never out of fashion, and fashion designers frequently use them on the side of pants or jackets. Is this infringement? Forever 21 had claimed that “Adidas should not be allowed to claim that Adidas, alone, has a monopoly on striped clothing.” The retailer filed the suit after receiving yet another cease and desist letter sent by Adidas, this time asking Forever 21 to stop selling clothes bearing four stripes, including a sports bra, tee shirts and pants. Forever 21 claimed that “[a]ny use of stripes on clothing sold by Forever 21 is ornamental, decorative, and aesthetically functional.”

Adidas had sent a similar letter to Forever 21 in June 2015, which claimed that a sweat shirt featuring Snoopy, with stripes on its cuffs, bottom and collar, was infringing. However, varsity jackets, or letterman jackets, traditionally sport stripes in similar places, and Forever 21 indeed described its Snoopy shirt as featuring “generic varsity-style stripe pattern.” Is Adidas too aggressive in enforcing its mark?

A need to police the mark

These cease and desist letters illustrate what trademark owner must do to avoid losing their rights through failure to control use. Section 45 of the Trademark Act states that a mark is abandoned when “any course of conduct of the owner, including acts of omission as well as commission, causes the mark to… lose its significance as a mark.” This includes failing to adequately police the mark against third-party use. Also, the three-stripe mark is famous, thus making trademark dilution another concern for Adidas. In fact, even just the appearance of dilution is a concern, since trademark owners only need to prove a likelihood of dilution, not actual dilution, after the enactment of the Trademark Dilution Revision Act of 2006. Adidas does not want its three stripes to strike out. But is it the general public which ends up losing?

This post has been first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments published by the Stanford-Vienna Transatlantic Technology Law Forum

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CJEU: Comparative Advertising Lawful Only if it Compares Goods from Stores of Similar Sizes

On 8 February 2017, the Court of Justice of the European Union (CJEU) held that an advertisement   comparing prices of goods sold in shops of different sizes and formats is liable to be  unlawful as the advertisement does not clearly inform consumers of these differences in sthe stores’ sizes and formats. The case is Carrefour Hypermarchés SAS v. ITM Alimentaire International SASU, C-562/15.

ITM is responsible for the strategy and commercial policy Intermarché, the retail chain, which owns supermarkets and hypermarkets, the largest of stores in the EU (Intermarché). Carrefour Hypermarché is part of the Carrefour group, which owns supermarkets, hypermarkets, and small stores in cities (Carrefour).

Carrefour launched a comparative television advertising campaign in 2012 which compared the prices of 500 leading brand products sold in its hypermarkets with the prices of these goods in competitors’ stores, and offered to reimburse consumers twice the price difference if they found cheaper prices for these goods than at Carrefour stores.

However, Carrefour compared its hypermarkets prices with Intermarché’s supermarket prices, without informing the public of the difference in the stores’ sizes and format. which prices were being compared in the advertisement. This information was only published on Carrefour’s website, and in small print.

Intermarché filed suit against Carrefour in October 2013, asking the Paris Commercial Court to enjoin Carrefour from disseminating the ad. The Court awarded Intermarché 800,000 euros in damages. Carrefour appealed to the Paris Court of Appeals, and also requested that the issue be referred to the CJEU for a preliminary ruling.

The European Union law and the French law of comparative advertising

Article 6 of Directive 2005/29 defines a misleading commercial action as one which “contains false information and is therefore untruthful or in any way… deceives or is likely to deceive the average consumer… or is likely to cause him to take a transactional decision that he would not have taken otherwise.” Article 2(b) of Directive 2006/114/EC defines “misleading advertising” as “any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which, for those reasons injures or is likely to injure a competitor.”

Article 4 of Directive 2006/114/EC allows comparative advertising if it is not misleading, Article 4(a), and if it “objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price,” Article 4(c). Similarly, French law authorizes comparative advertising if it is not misleading or likely to deceive, Article L. 121-8 of the Consumer Code, in force when the suit against Carrefour was filed.[1] Both articles recite the termsof Directive 2006/114/EC.

The Paris Commercial Court found that Carrefour advertising did not comply with Article L. 121-8 of the Consumer Code. The Paris Court of Appeals asked the CJEU if price comparison is allowed by Article 4 of Directive 2006/114/EC only if the goods are sold in stores with similar formats and sizes. It also asked the CJEU if comparing prices of stores with different sizes and formats is “material information” within the meaning of Article 7(1) of Directive 2005/29, which states that a commercial practice is “misleading” if it omits “material information that the average consumer needs” to make an informed transactional decision. The Paris Court of Appeals also asked the CJEU to explain to what degree and via which medium this information must be disseminated to the consumer.

Is comparative advertising only legal if it compares prices of products sold in shops of similar sizes?

The CJEU synthesized the questions of the Paris Court of Appeals as: whether Article 4(a) and 4(c) must be interpreted as saying that an advertisement comparing the prices of products sold in shops of different sizes is unlawful?

The CJEU noted that Article 4 of Directive 2006/114 does not require that the shops compared be of similar formats or sizes. However, comparative advertising must not undermine fair competition or the interest of consumers (at 22). This would be the case if the comparative advertisement is misleading.

The difference in size or format of the shop may distort the objectivity of the price comparison

Article 4(c) of Directive 2006/114 requires the comparison be objective. However, as noted by the Court, “in certain circumstances the difference in size or format of the shops in which the prizes being compared by the advertiser have been identifiedmay distort the objectivity of the comparison” (at 26). Indeed, Attorney General Saugmandsgaard Øe noted in his October 19, 2016 Opinion, “that generally… the prices of consumer products are likely to vary according to the format and size of the shop” (Opinion at 43). Such “asymmetric comparison” of prices could “artificially creat[e] or increase[e] any difference between the advertiser’s and the competitor’s prices, depending on the selection of the shops for the comparison” (Opinion at 57, and CJEU at 27).

While Directive 2005/29 does not define what the “material information” cannot be omitted from the ad, the CJEU found that material information is the information that an average consumer would need to make an informed transactional decision (at 30).

If the prices compared in the ad are those of shops of different sizes and formats, it is likely to deceive the consumer, if these shops “are part of retail chains each of which includes a range of shops having different sizes or formats” (CJEU ruling, paragraph 1). Indeed, the customer may believe that the advertised price difference applies to all the shops in the advertiser’s retail chain, and such advertising is thus misleading (at 33 and 34). As this information is “necessary” for the consumer to make an informed decision on where to shop, it is a “material information” within the meaning of Article 7 of Directive 2005/29 (at 35).

The information of the difference in shops ‘sizes and format must be clear

Such advertising is misleading unless the customer is informed that the prices compared concerns shops of different sizes and formats (at 36). Such information must “clearly” provided, in the advertisement itself (at 38).

It is the duty of the national courts to assert, case by case, whether a particular advertising is misleading (at 31) and thus the referring court, the Paris Court of Appeals, will have to ascertain, in the light of this case, if the Carrefour comparative advertisement is misleading (CJEU ruling, paragraph 2). It is very likely that it will rule that such comparative advertising is misleading, as Carrefour compared prices in its hypermarkets to prices with Intermarché’s supermarkets, and such shops. While both shops are part of a retail chain, they are different in size and format.

[1] Article L. 121-8 of the Consumer Code has since been  abrogated and  replaced,  without any changes, by  Article L. 122-1 of the Consumer Code.

On 8 February 2017, the Court of Justice of the European Union (CJEU) held that an advertisement   comparing prices of goods sold in shops of different sizes and formats is liable to be  unlawful as the advertisement does not clearly inform consumers of these differences in sthe stores’ sizes and formats. The case is Carrefour Hypermarchés SAS v. ITM Alimentaire International SASU, C-562/15.

ITM is responsible for the strategy and commercial policy Intermarché, the retail chain, which owns supermarkets and hypermarkets, the largest of stores in the EU (Intermarché). Carrefour Hypermarché is part of the Carrefour group, which owns supermarkets, hypermarkets, and small stores in cities (Carrefour).

Carrefour launched a comparative television advertising campaign in 2012 which compared the prices of 500 leading brand products sold in its hypermarkets with the prices of these goods in competitors’ stores, and offered to reimburse consumers twice the price difference if they found cheaper prices for these goods than at Carrefour stores.

However, Carrefour compared its hypermarkets prices with Intermarché’s supermarket prices, without informing the public of the difference in the stores’ sizes and format. which prices were being compared in the advertisement. This information was only published on Carrefour’s website, and in small print.

Intermarché filed suit against Carrefour in October 2013, asking the Paris Commercial Court to enjoin Carrefour from disseminating the ad. The Court awarded Intermarché 800,000 euros in damages. Carrefour appealed to the Paris Court of Appeals, and also requested that the issue be referred to the CJEU for a preliminary ruling.

The European Union law and the French law of comparative advertising

Article 6 of Directive 2005/29 defines a misleading commercial action as one which “contains false information and is therefore untruthful or in any way… deceives or is likely to deceive the average consumer… or is likely to cause him to take a transactional decision that he would not have taken otherwise.” Article 2(b) of Directive 2006/114/EC defines “misleading advertising” as “any advertising which in any way, including its presentation, deceives or is likely to deceive the persons to whom it is addressed or whom it reaches and which, by reason of its deceptive nature, is likely to affect their economic behavior or which, for those reasons injures or is likely to injure a competitor.”

Article 4 of Directive 2006/114/EC allows comparative advertising if it is not misleading, Article 4(a), and if it “objectively compares one or more material, relevant, verifiable and representative features of those goods and services, which may include price,” Article 4(c). Similarly, French law authorizes comparative advertising if it is not misleading or likely to deceive, Article L. 121-8 of the Consumer Code, in force when the suit against Carrefour was filed.[1] Both articles recite the termsof Directive 2006/114/EC.

The Paris Commercial Court found that Carrefour advertising did not comply with Article L. 121-8 of the Consumer Code. The Paris Court of Appeals asked the CJEU if price comparison is allowed by Article 4 of Directive 2006/114/EC only if the goods are sold in stores with similar formats and sizes. It also asked the CJEU if comparing prices of stores with different sizes and formats is “material information” within the meaning of Article 7(1) of Directive 2005/29, which states that a commercial practice is “misleading” if it omits “material information that the average consumer needs” to make an informed transactional decision. The Paris Court of Appeals also asked the CJEU to explain to what degree and via which medium this information must be disseminated to the consumer.

Is comparative advertising only legal if it compares prices of products sold in shops of similar sizes?

The CJEU synthesized the questions of the Paris Court of Appeals as: whether Article 4(a) and 4(c) must be interpreted as saying that an advertisement comparing the prices of products sold in shops of different sizes is unlawful?

The CJEU noted that Article 4 of Directive 2006/114 does not require that the shops compared be of similar formats or sizes. However, comparative advertising must not undermine fair competition or the interest of consumers (at 22). This would be the case if the comparative advertisement is misleading.

The difference in size or format of the shop may distort the objectivity of the price comparison

Article 4(c) of Directive 2006/114 requires the comparison be objective. However, as noted by the Court, “in certain circumstances the difference in size or format of the shops in which the prizes being compared by the advertiser have been identifiedmay distort the objectivity of the comparison” (at 26). Indeed, Attorney General Saugmandsgaard Øe noted in his October 19, 2016 Opinion, “that generally… the prices of consumer products are likely to vary according to the format and size of the shop” (Opinion at 43). Such “asymmetric comparison” of prices could “artificially creat[e] or increase[e] any difference between the advertiser’s and the competitor’s prices, depending on the selection of the shops for the comparison” (Opinion at 57, and CJEU at 27).

While Directive 2005/29 does not define what the “material information” cannot be omitted from the ad, the CJEU found that material information is the information that an average consumer would need to make an informed transactional decision (at 30).

If the prices compared in the ad are those of shops of different sizes and formats, it is likely to deceive the consumer, if these shops “are part of retail chains each of which includes a range of shops having different sizes or formats” (CJEU ruling, paragraph 1). Indeed, the customer may believe that the advertised price difference applies to all the shops in the advertiser’s retail chain, and such advertising is thus misleading (at 33 and 34). As this information is “necessary” for the consumer to make an informed decision on where to shop, it is a “material information” within the meaning of Article 7 of Directive 2005/29 (at 35).

The information of the difference in shops ‘sizes and format must be clear

Such advertising is misleading unless the customer is informed that the prices compared concerns shops of different sizes and formats (at 36). Such information must “clearly” provided, in the advertisement itself (at 38).

It is the duty of the national courts to assert, case by case, whether a particular advertising is misleading (at 31) and thus the referring court, the Paris Court of Appeals, will have to ascertain, in the light of this case, if the Carrefour comparative advertisement is misleading (CJEU ruling, paragraph 2). It is very likely that it will rule that such comparative advertising is misleading, as Carrefour compared prices in its hypermarkets to prices with Intermarché’s supermarkets, and such shops. While both shops are part of a retail chain, they are different in size and format.

[1] Article L. 121-8 of the Consumer Code has since been  abrogated and  replaced,  without any changes, by  Article L. 122-1 of the Consumer Code.

 

This post has been first published on the TTLF Newsletter on Transatlantic Antitrust and IPR Developments published by the Stanford-Vienna Transatlantic Technology Law Forum

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