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When Faux-Fur Birkin Bags Blur a Famous Mark in the Metaverse

July 1, 2023 · by AdminDesign ·

A year ago, this blog reported about the Hermès v. Rothschild case, a trademark infringement suit filed by French fashion house Hermès against artist Mason Rothschild.

Rothschild had created in December 2021 the MetaBirkins series, a series of 100 non-fungible tokens (NFTs) featuring digital images of blurry Birkin Hermès bags covered in fake fur. The NFTs, which are retaining digital records of ownership of the images on a blockchain, sold “for prices comparable to real-world Birkin handbags” as noted by Judge Jed S. Rakoff, from the U.S. District Court for the Southern District of New York (SDNY), in his May 18, 2022 Order, denying Rothschild’s motion to dismiss.

On December 30, 2022, Judge Rakoff denied the parties’ cross motions for summary judgment, with opinion to follow.

Plaintiff and Defendant had both asked the Court to answer two questions:

Should the MetaBirkins be evaluated using the two-part Rogers v. Grimaldi test used when evaluating trademark infringement in artistic works or the Gruner + Jahr test used for general trademark infringement?
Whichever test is applied, do the MetaBirkins dilute the Hermès’ BIRKIN trademarks?

Judge Rakoff published his opinion on February 2, 2023. He reaffirmed, as he did in his May 18, 2022 Order, that the trademark infringement claim should be assessed under the Rogers v. Grimaldi test. However, as genuine issues of material fact remained, the second question had to be answered by a jury, who had to decide whether Rothschild’s decision to focus the series on the Birkin bag was made for artistic expression purposes or merely to use the BIRKIN trademark.

The Rogers test

Under the Rogers test, there is no trademark infringement if defendant uses a mark as the title of an expressive work, or as part of the expressive work if use of the trademark (1) does not have any artistic relevance whatsoever to the underlying work and (2) is not explicitly misleading.

For Judge Rakoff, the Rogers test must be used in this case because:

“Rothschild’s use of Hermès’ marks did not function primarily as a source identifier that would mislead consumers into thinking that Hermès originated or otherwise endorsed the MetaBirkins collection, but rather as part of an artistically expressive project.”

Judge Rakoff reasoned that the title “MetaBirkins” refered to both the NFT and the digital images with which it is associated and that “MetaBirkins” did not, as argued by Hermès, refer only to the NFTs “separate and apart from the digital images” of the faux-fur bags. The NFTs are artistic expression.

Judge Rakoff noted further that Rothschild “viewed the project as a vehicle to comment on the Birkin bag’s influence on modern society”, stating in an interview that the series was “an experiment to see if [he] could create that same kind of illusion that [the Birkin bag] has in real life as a digital commodity”, and that he had decided to cover the bag in fake fur “to introduce “a little bit of irony” to the efforts of some fashion companies to “go fur-free.” Indeed , the artist wrote that the series“ inspired by the acceleration of fashion’s “fur free” initiatives and embrace of alternative textiles.”

While an artistic expression, the First Amendment could not be a defense. Judge Rakoff quoted the Second Circuit Twin Peaks Prods., Inc. v. Publications 1993 case which held that even if a trademark’s use bears “some artistic relevance” to an underlying artistic work, such use is not protected by the First Amendment if it “explicitly misleads as to the source or the content of the work.”

The Second Circuit noted in Twin Peaks that ”the finding of likelihood of confusion must be particularly compelling to outweigh the First Amendment interest recognized in Rogers” and that the Polaroid factors must be applied to determine whether or not there is likelihood of confusion and thus trademark infringement.

Judge Rakoff explained that “the most important difference between the Rogers consumer confusion inquiry and the classic consumer confusion test is that consumer confusion under Rogers must be clear and unambiguous to override the weighty First Amendment interests at stake.”

The Rogers test was indeed used by a federal jury to determine whether or not the MetaBirkins infringed Hermès’ trademarks, but, following a six-day trial, a jury found on February 14, 2023, that Rothschild was liable on the claims of trademark infringement, trademark dilution, and cybersquatting, that the First Amendment was not a defense, and awarded Hermès $133,000 in damages.

Trademark dilution and blurring

Hermès had also claimed trademark dilution and blurring, which refers to use of a famous trademark in a way which dilutes such famous mark by blurring or tarnishment. A famous mark is defined by the Trademark Dilution Revision Act (TDRA) as widely recognized by the general U.S. consuming public as a designation of source of the mark owner’s goods or services.

The jury found that the BIRKIN mark was blurred by Rothschild’s by blurring the distinctiveness of the famous BIRKIN mark and diminished its capacity to identify and distinguish Hermès’ goods and services, regardless of the presence or absence of actual or likely confusion, of competition, or of actual economic injury.

Cybersquatting

The jury also held in favor of Hermès, which had claimed that the <metabirkins.com> domain name was cybersquatting. To prevail on a cybersquatting claim, Hermès had to prove (1) that the BIRKIN mark was distinctive at the time <metabirkins.com> was registered; (2) that the <metabirkins.com> domain name is identical to, or confusingly similar to, Hermes’ s BIRKIN mark; and (3) that Rothschild had a bad faith intent to profit from the BIRKIN mark.

The court’s instructions to the jury explained that when determining whether Rothschild acted in bad faith on this claim, the jury had to consider whether the artist used the domain name in connection with the offering of any goods or products and whether he “intended to divert consumers from the mark owner’s online location to a site that could harm the goodwill represented.”

Trademarks, symbols and humor

While the primary function of a trademark is to indicate the source or a product or service, some trademarks have become symbol and are used by consumers to provide a desired cachet, one of luxury and exclusivity in the case of the BIRKIN trademark.

The Birkin bag created by Hermès was named after actress and singer Jane Birkin. While expensive, they sell well: as noted by Judge Rakoff in its February 2, 2023, opinion, since 1986, Hermès has sold over $1 billion worth of Birkin handbags in the United States, $100 million dollars’ worth in the past ten years. Both parties recognized that it is a “symbol of wealth and exclusivity.”

The MetaBirkins sold in total over $1.1 million through June 2022 and it is likely that at least some bought them as symbol of their wealth, taste, and sense of irony. However, unlike in the case of Jack Daniel’s Properties, Inc. v. VIP Products LLC, a case about dog chew toys resembling Jack Daniels bottles, the use of the BIRKIN mark was not humorous.

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

The image of of “Hermes Carriage Auto Body” is courtesy of Flickr user Christopher Schmidt and is used, with no modifications, under a CC BY 2.0 license.

Filed Under: Trademark, TTLF Newsletter · Tagged: Metaverse, Trademark, Trademark Dilution

A sponsored blog post may be trademark infringement

August 30, 2021 · by marie-andree@maw-law.com ·

Cosmetics company Rodan & Fields, LLC (R+F) launched in July 2020 a new product, its “Brow Defining Boost,” which did not fare well with Petunia Products, Inc. (Petunia), a competitor owning the federal trademark BROW BOOST, registered since June 2006.

R+F marketed its “Brow Defining Boost” product on social media and allegedly used the #BROWBOOST hashtag so prominently that it flooded Petunia’s marketing efforts to use this hashtag.

Former model Molly Sims now manages a beauty blog. Users may register for her newsletter, and follow her Instagram account, which is “shoppable.” Sims wrote a post on her blog promoting R+F “Brow Defining Boost” product, linking to R+F’s website. She wrote a second blog post, thanking R+F for sponsoring her post, reviewing favorably R+F’s product, including a link to R+F’s site as well as an image of the product and its price.

Last April, Petunia sued R+F and Sims for trademark infringement, contributory trademark infringement, false advertising under Cal. Bus. & Prof. Code § 17500, and unlawful and unfair business practices under Cal. Bus. & Prof. Code § 17200.

Sims moved to dismiss. On August 6, 2021, Judge Carney from the Central District of California granted the former model’s motion to dismiss Plaintiff’s contributory trademark infringement and Cal. Bus. & Prof. Code § 17500 claims but denied her motion to dismiss Plaintiff’s direct trademark infringement and Cal. Bus. & Prof. Code § 17200 claims.

The case is Petunia Products, Inc. v. Rodan & Fields, 8:21-cv-00630 (C.D. Cal.).

The blog post may be direct trademark infringement

Plaintiff alleged that R+F is a direct competitor, that its product serves a similar purpose than Plaintiff’s product, and further argued that it uses similar marketing channels as R+F, which may increase likelihood of confusion.

Judge Carney found that the Molly Sim’s post was a paid advertisement, and that she has “thus crossed from protected consumer commentary to commercial use.” As Molly Sims had used the term “Brow Defining Boost” several times in her post, which is similar to BROW BOOST, Judge Carney found that it was “plausible that readers of Sims’ Blog Post might believe that the Allegedly Infringing Product is affiliated with Plaintiff.”

Judge Carney found that “Plaintiff has sufficiently pled a likelihood of confusion under the Sleekcraft factors,” used in the Ninth Circuit to assess likelihood of confusion. The name of R+F’s “Brow Defining Boost” “is quite similar” to Plaintiff’s BROW BOOST trademark, as it “contains the terms “Brow” and “Boost”—the terms which comprise the Trademark—separated by the term “Defining.””

Judge Carney also noted that there is a risk of likelihood of reverse confusion, which “occurs when consumers dealing with the senior mark holder believe that they are doing business with the junior one.”

The blog post is not contributory trademark infringement

Contributory trademark infringement occurs when a defendant intentionally induced the primary infringer to infringe, or if a defendant has continued to supply an infringing product to an infringer knowing that the infringer is mislabeling the product supplied.

However, merely blogging about Defendant’s product as Sims did in the sponsored post is not contributory trademark infringement, and she was not aware of any infringement. Judge Carney granted her motion to dismiss the contributory infringement claim.

The blog post is not false advertising under California law

Using a mark likely to cause confusion can constitute false advertising under Section 17500. However, as Plaintiff “ha[d] not alleged actual or constructive knowledge as required under Section 17500,” Judge Carney granted Sims’ motion to dismiss the contributory infringement claim.

The blog post may be unlawful and unfair business practices under California law

As Judge Carney did not dismiss Plaintiff’s claim of direct trademark infringement, he did not dismiss Plaintiff’s “congruous” unlawful and unfair business practices claim under Cal. Bus. & Prof. Code § 17200.

Takeaway

The case will now move forward to a jury unless the parties settle.

Should Petunia prevail in a court of law, influencers would have to conduct due diligence before accepting to sponsor a product or services, including verifying that the name of the product or services is not infringing. This would be a heavy responsibility to bear.

Influencers would then be likely to negotiate in their contract a provision that the company “represents, warrants and covenants” that the product or service they are asked to promote or sponsor does not infringe third parties’ rights.

Image is courtesy of the Met Museum: Tabula (Square) with the Head of Spring, 5th–7th century

Filed Under: Influencers, Social Media Law, Trademark · Tagged: Influencers, Likelihood of confusion, Trademark

A Study in Trademarked Characters

February 22, 2019 · by marie-andree@maw-law.com ·

The characters created by Disney, Marvel, and LucasFilms are valuable intellectual property and are protected both by copyright and by trademark. However, a recently decided case in the Southern District of New York (SDNY), Disney Inc. v. Sarelli, 322 F.Supp.3d 413 (2018), demonstrates that preventing the unauthorized use of such characters may not be as easy as expected.

In this case, Plaintiffs are Disney Enterprises, Marvel Characters and LucasFilm, all of which own copyrights and trademarks in many of the most famous characters in the world, such as Mickey Mouse, Hulk, and Chewbacca. These characters were first featured in movies like Frozen, The Avengers or Star Wars, and are now licensed or featured in derivative products such as comic books, video games, or theme parks. Their exploitation is highly lucrative.

When visiting Plaintiffs’ theme parks, one has a chance to meet the characters “in person.” This experience is also offered by Characters for Hire, a New York company offering, as the name implies, character hiring services. The company’s principal owner is Nick Sarelli (Defendant). Characters for Hire offers a service wherein actors dressed in costumes entertain guests during birthday parties or corporate events. For example, actors have allegedly dressed as Mickey, Elsa and Anna from Frozen, Captain America and Hulk from The Avengers, and Luke Skywalker and Darth Vader from Star Wars.

The contracts Defendants provided to their clients contained disclaimer language, stating, for example, that Defendants do not use trademarked and licensed characters. The contracts also warned clients that the costumes may differ from those seen in movies “for copyright reasons,” adding that “[a]ny resemblance to nationally known copyright character is strictly coincidental.”

These disclaimers did not appease Plaintiffs, who sent several cease and desist letters to Defendants before filing a federal copyright and trademark infringement suit and a New York trademark dilution suit.

While Judge Daniels from the SDNY granted Defendants’ motion for summary judgment and dismissed Plaintiffs’ claim for trademark infringement on August 9, 2018, he denied the motion to dismiss the copyright infringement claim and the trademark dilution claim.

The descriptive fair use defense failed

Plaintiffs claimed that the use of their trademarked characters to advertise and promote Defendants’ business, along with their portrayal by costumed actors, was likely to confuse consumers as to the origin of the services.
Defendants argued that their use of Plaintiffs’ characters was descriptive and nominative fair use, and that there was no likelihood of confusion.

Descriptive fair use is an affirmative defense to a trademark infringement suit, as Section 33(b)(4) of the Trademark Act allows “use… of a term or device which is descriptive of and used fairly and in good faith [but] only to describe the goods or services of such party, or their geographic origin.” In other words, a defendant can use plaintiffs’ trademarks in a descriptive sense, or to describe an aspect of his own good or service.

For such a defense to succeed in the Second Circuit, a defendant must prove that the use was made (1) other than as a mark, (2) in a descriptive sense, and (3) in good faith (Kelly-Brown v. Winfrey at 308). This defense failed in the present case, as Defendants had not made a descriptive use of Plaintiffs’ marks. Instead, Judge Daniels found that their ads “were specifically designed to evoke [Plaintiff’s marks] in consumers’ minds…”

The nominative fair use defense also failed

Defendants also claimed that they used Plaintiffs’ marks to describe their own products. Such nominative fair use is a defense to a trademark infringement suit if such use “does not imply a false affiliation or endorsement by the plaintiff of the defendant” (Tiffany v. eBay at 102-103). But this nominative fair use defense also failed, as Defendants used Plaintiffs’ marks to identify their own service, which is hiring out characters for parties, rather than Plaintiffs’ trademarked characters.

Defendants’ use of characters was not trademark infringement
Judge Daniels used the eight-factor Polaroid test used by the Second Circuit in trademark infringement cases to determine whether Defendants’ use of Plaintiffs’ marks were likely to confuse consumers.

While Plaintiffs’ marks are undoubtedly strong (first factor), the similarity of the marks (second factor), weighed only slightly in Plaintiffs’ favor because Defendants used different names for their characters than Plaintiffs’ trademarked character names, e.g., “Big Green Guy,” “Indian Princess,” and “The Dark Lord” instead of Hulk, Pocahontas and Darth Vader.

The third and fourth Polaroid factors, the proximity of the goods and services, and the possibility that the senior user will enter the market of the junior user, were found to weigh in Defendants’ favor. There was no evidence that Plaintiff has plans to expand into the private entertainment service industry.

The fifth Polaroid factor, evidence of actual confusion, also weighed in Defendants’ favor, as there was no evidence that Defendants’ customers used the names of Plaintiffs’ trademarked characters when referring to Defendants’ services in online reviews or otherwise. Plaintiffs could not provide a survey proving customers’ confusion either.

Judge Daniels found the sixth factor, Defendants’ intent and evidence of bad faith, to also be in Defendants’ favor, since Defendants had put customers on notice that their services were not sponsored by or affiliated with Plaintiffs by using altered versions of Plaintiffs’ characters’ names and by removing Plaintiffs’ characters’ names in their online reviews.

The seventh Polaroid factor, the quality of Defendants’ products, was also in Defendants’ favor, as Defendants’ services, being of a lesser quality than Plaintiffs’, makes it likely that consumers will not be confused as to the source of the services.

The eighth Polaroid factor, consumer sophistication, also was in favor of Defendants, as Plaintiffs did not prove the sophistication level of Defendants’ relevant consumers.

Balancing these eight factors, the SDNY found no likelihood of consumer confusion and denied Plaintiffs’ motion for summary judgment on their trademark infringement claim.

Trademark dilution
Plaintiffs chose to claim trademark dilution under New York trademark dilution law, Section 360-1 of New York Business Law, and not under the Federal Trademark Dilution Act. This choice may have been made because the New York law does not require a mark to be famous to be protected, and a plaintiff only needs to prove the mark’s distinctiveness or secondary meaning.

Judge Daniels found that there was a genuine issue of fact as to whether Defendants’ use of Plaintiffs’ marks is likely to dilute Plaintiffs’ marks by tarnishment. A court will have to determine if Defendants provide services of poor quality.

Copyright

Plaintiffs argued that Defendants had “copied and used the images, likenesses, personas, and names of Plaintiffs’ characters…to promote and advertise its services online.” Defendants argued in response that the characters in which Plaintiffs own copyrights are based on prior works that are part of the public domain.

Both parties will have more chances to pursue their arguments as Judge Daniels denied the motion for summary judgment on copyright infringement. He found that Plaintiffs had presented as evidence screenshots from Defendants’ website and videos allegedly published by Defendants which had not been properly authenticated. More specifically, they had not been authenticated by someone “with personal knowledge of reliability of the archive service from which the screenshots were retrieved,” citing Specht v. Google, a 2014 Seventh Circuit case.

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 id courtesy of Flickr User Alan Levine, Public Domain.

Filed Under: Trademark, TTLF Newsletter · Tagged: Descriptive Fair Use, Disney Chracacters, Nominative Fair Use, SDNY, Trademark, Trademark Dilution

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

November 3, 2017 · by marie-andree@maw-law.com ·

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 resourcesâ€ 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.

Filed Under: Trademark, TTLF Newsletter · Tagged: Generic Trademarks, Trademark

Does the Disparagement Provision of the Trademark Act Violate First Amendment? The Supreme Court Will Answer

September 30, 2016 · by marie-andree@maw-law.com ·

The Supreme Court agreed yesterday to review the case of Lee v. Tam. The Supreme Court will now rule on whether the disparagement provision in 15 U.S.C. 1052(a) is facially invalid under the Free Speech Clause of the First Amendment. Section 2(a) of the Lanham Act, 15 U.S.C. 1052(a), provides that no trademark shall be refused registration on account of its nature unless, inter alia, it “[c]onsists of… matter which may disparage.”

I wrote about the case on this blog three years ago and again a few months ago. Last June, I wrote about The Slants filing a petition for a writ of certiorari for the TTLF Newsletter on Transatlantic Antitrust and IPR Developments, published by the Stanford-Vienna Transatlantic Technology Law Forum. Here it is below.

Re-appropriation, disparagement, and free speech. The Slants, continued

We saw in the last issue of the TTLF newsletter that the Federal Circuit held en banc that the disparagement provision of § 2(a) of the Trademark Act, 15 U.S.C. 1052(a), which forbids registration of disparaging trademarks, violates the First Amendment.

The case is about the mark THE SLANTS, which Simon Tam is seeking to register in connection for live performances of his dance-rock music group. The United States Patent and Trademark Office (PTO) refused to register it, claiming it was an ethnic slur disparaging to persons of Asian ancestry. The Trademark Trial and Appeal Board (TTAB) affirmed, but the Federal Circuit ruled in favor of Mr. Tam and remanded the case for further proceeding.

Now the PTO has filed a petition for a writ of certiorari asking the Supreme Court to answer “[w]hether the disparagement provision in 15 U.S.C. 1052(a) is facially invalid under the Free Speech Clause of the First Amendment.”

The Federal Circuit held that §2(a) “penaliz[es] private speech merely because [the government] disapproves of the message it conveys.” The PTO argues in its petition that §2(a) does not prohibit any speech, but only “directs the PTO not to provide the benefit of federal registration to disparaging marks” (petition p. 8).

Would refusing to register THE SLANTS as a trademark merely deny Mr. Tam the benefits of federal trademark registration, or would his freedom of speech be violated?

PTO argument: Mr. Tam is merely denied the benefits of federal registration

The petition notes that federal registration does not create trademarks, but is merely “a supplement to common-law protection” and that a person who first uses a distinct mark in commerce acquires rights to this mark, citing the 1879 In re Trade-Mark Cases Supreme Court case (petition p. 3 and p. 11). The PTO further argues that “[t]he holder of a trademark may use and enforce his mark without federal registration” (petition p. 3). Mr. Tam would still have federal remedies available to him to protect his mark, even if THE SLANTS is not federally registered. For example, the Anti-Cybersquatting Consumer Protection Act, 15 U.S.C. § 1125(D), does not require the mark seeking protection to be registered (petition p. 12).

For the PTO, Section 1052(a) is not unconstitutional, as it does not prohibit speech, nor does it proscribe any conduct or restrict the use of any trademark. Instead, it merely “directs the PTO not to provide the benefits of federal registration to disparaging marks.” Since a mark can function as a mark without the benefit of federal registration, even if a mark is speech, it does not need the benefit of federal registration to be expressed, and therefore, it is not a violation of the First Amendment to refuse to register it.

The PTO further argues that the purpose of Section 1052(a) is to avoid the federal government “affirmatively promot[ing] the use of racial slurs and other disparaging terms by granting them the benefits of registration” (petition p. 10) and that “Congress legitimately determined that a federal agency should not use government funds to issue certificates in the name of the United States of America conferring statutory benefits for use of racial slurs and other disparaging terms” (p. 15-16).

However, in In re Old Glory Condom Corp.(at FN3), the Trademark Trial and Appeal Board noted that “the issuance of a trademark registration for applicant’s mark [does not amount] to the awarding of the U.S. Government’s “imprimatur” to the mark.”

PTO argument: no violation of free speech, as Mr. Tam can still use his mark to convey his message

The PTO also argues that Section 1052(a) is not an affirmative restriction on speech because the federal law does not prevent Mr. Tam “from promoting his band using any racial slur or image he wishes,” does not limit Mr. Tam’s choice of songs played, or the messages he wishes to convey (petition p. 12).

The PTO gives Sons of Confederate Veterans, Inc. as an example of a case where the Supreme Court recognized the government’s right to “take into account the content of speech in deciding whether to assist would-be private speakers.” However, this case can be distinguished from our case. The Supreme Court held in Sons of Confederate Veterans that a state can refuse to issue a specialty license plate if it carries a symbol which the general public finds offensive, in that case a confederate flag. But the owner of a car can still reap the government benefits of car registration, which is mandatory to operate a motor vehicle, even though his speech has been suppressed by the government as disparaging, while, in our case Mr. Tam cannot reap the benefits provided to the holder of a federally registered mark. The fact that he still has some benefits as the owner of a common law mark is irrelevant.

The petition also gives National Endowment for the Arts v. Finley as an example of a case where the Supreme Court upheld the government’s right to take moral issues into consideration when denying a federal benefit. In this case, a court of appeals had held that §954(d) (1) of the National Foundation of the Art and the Humanities Act violated the First Amendment. This federal law requires the Chairperson of the National Endowment for the Arts (NEA) to make sure “that artistic excellence and artistic merit are the criteria by which applications are judged, taking into consideration general standards of decency and respect for the diverse beliefs and values of the American public.” The Supreme Court found in Finley that §954(d) (1) was constitutional.

However, Finley can also be distinguished from our case. The Supreme Court noted there that respondents had not “allege[d] discrimination in any particular funding decision” and that, therefore, the Supreme Court could not assess whether a particular refusal for the NEA grant was “the product of invidious viewpoint discrimination.” In our case, we do know that the only reason the PTO refused to register THE SLANTS is because it assessed the mark to be disparaging, and so the Supreme Court could very well find this decision to be an “invidious viewpoint discrimination.” Also, while not receiving a grant from the NEA may make it more difficult for an artist to create art, it does not entirely prevent it, even a particular piece of art which would shock standards of decency.

If a mark is a racial slur, should the intent of applicant for registering the mark matter?

The TTAB affirmed the refusal to register THE SLANTS because it was disparaging to persons of Asian ancestry and because the mark was disparaging to a substantial composite of this group. The PTO noted in its petition that the TTAB had determined “that Section 1052(a) prohibits registration of respondent mark despite the fact that respondent’s stated purpose for using the mark is to “reclaim” the slur as a sign or ethnic pride” (emphasis in original text, p. 13 of the petition). The PTO seems to argue that Section 1052(a) views disparaging content neutrally, without questioning the intent behind the choice of disparaging speech as trademark.

Judge Dyk from the Federal Circuit wrote in his concurring/dissenting opinion that he would have held that Section 1052(a) is facially constitutional because “the statute is designed to preclude the use of government resources not when the government disagrees with a trademark’s message, but rather when its meaning “may be disparaging to a substantial composite of the referenced group,” citing In re Lebanese Arak Corp.” In this case, the USPTO had refused to register KHORAN as a trademark for alcoholic beverages because it was disparaging to the beliefs of Muslims.

For Judge Dyk, the purpose of Section1052(a) is “to protect underrepresented groups in our society from being bombarded with demeaning messages in commercial advertising” and Section 1052(a) “is constitutional as applied to purely commercial trademarks, but not as to core political speech, of which Mr. Tam’s mark is one example.” Judge Dyk argued further that, while the First Amendment protects speech which is offensive to some in order to preserve a robust marketplace of ideas, “this principle simply does not apply in the commercial context,” giving as example racial or sexual harassment in the workplace.

But this argument seems to make a difference between registrants: Mr. Tam could register a racial slur to make a point, but could not do so if his purpose for registering the same mark would be to insult people of Asian descent. This interpretation of Section 1052(a) is troubling, as courts would have to determine if a particular mark is indeed political speech, then decide if it is “good” political speech or “bad” political speech. This is noted by the PTO in a footnote to the petition as being viewpoint discrimination which violates the First Amendment (p. 13).

The PTO argues that if Section 1052(a) is unconstitutional, then the PTO can no longer refuse to register as a trademark “even the most vile racial epithet” (p.10). Mr. Tam does not deny that “slant” is an ethnic slur. Indeed, he choose to name his band “The Slants” because it is a slur, in order to “take on stereotypes” about Asians (petition p. 5). Therefore, the mark may be an ethnic slur, but it is not disparaging. It all depends on the eyes and ears of the beholder. This was also the idea behind the attempted registration of HEEB or DIKES ON BIKE as trademarks.
Therefore, the question of who are the members of the group of reference is important. But it should not be.

Is it possible to protect minorities and the First Amendment?

If Mr. Tam would be authorized to register his trademark, it would be a victory for freedom of speech. The Slants would be able to promote further their anti-xenophobic message, and this would benefit the nation as a whole. But what if a person or an entity wishes to trademark a racial slur in order to advocate xenophobia? Owning the trademark could then serve as a tool to censor speech opposing racism. It would not be the first time that trademarks are used to suppress speech.

One can also argue that allowing disparaging trademark to be registered could confuse consumers about the origin of the product. Some consumers would not understand that a particular term is a racial slur. Others may understand it, but not know that it was meant to be used to fight prejudice. Since the function of a trademark is also to reduce consumer search costs, federal law could create a sign informing consumers that the trademark is used in an ironic way. I propose adding in these cases an irony punctuation (¿) after®. Is it a good idea?¿

Picture is courtesy of Flickr user leesean under a CC_BY_SA-2.0 license.

Filed Under: First Amendment, Trademark, TTLF Newsletter · Tagged: First Amendment, The Slants, Trademark, Trademark Disparagement

Seventh Circuit: No Trademark Infringement by a Fictional Product

August 21, 2014 · by marie-andree@maw-law.com ·

I wrote a post this week for The IPKat blog about the Fortres Grand Corporation v.Warner Bros. case no. 12-cv-00535.

The Seventh Circuit affirmed the district court’s judgment which had found that Warner Bros. had not infringed the CLEAN SLATE trademark owned by Fortres Grand for computer software. What makes this case interesting is that Fortres Grand was claiming that Warner Bros. had infringed its trademark in its Batman movie The Dark Knight Rises, which includes several references to a fictional software program called “clean slate.”

Image is Don’t waste your college life in a drunken stupor courtesy of Flickr user Waldo Jaquith under a CC BY-SA 2.0 license.

Filed Under: Trademark · Tagged: Likelihood of confusion, Reverse Confusion, Trademark, Trademark Infringement

‘The Fitchuation’ T-Shirt Did Not Infringe ‘The Situation’ Trademark

September 24, 2013 · by marie-andree@maw-law.com ·

Michael Sorrentino, a former Jersey Shore cast member, recently lost his trademark infringement suit against retailer Abercrombie & Fitch (A&F).

Sorrentino was part of the cast of the (in)famous MTV reality television show from its December 2009 start. He gave himself the nickname ‘The Situation’ or ‘Sitch.’ The show quickly became popular and, on February 2010, A&F started selling on its web site t-shirts with “The Fitchuation” printed in front, a word play on ‘The Situation.’

However, A&F’s interest in Sorrentino and the Jersey Shore show turned quickly into disdain. When casts members, including Sorrentino, wore A&F clothing on the show, A&F released a statement in August 2011 stating that “[it was] deeply concerned that Mr. Sorrentino’s association with [its]brand could cause significant damage to [its] image.” A&F even offered up to $10,000 to Sorrentino and other members of the cast NOT to wear A&F apparel. (See August,16 2011 press release here)

Sorrentino owns with his brother Marc the MPS Entertainment Limited Liability Company, which holds several ‘The Situation’ registered trademarks. The trademark applications were filed late 2010, and the company sells apparel on its web site, some of them bearing ‘The Situation’ trademark.

Sorrentino and MPS (Plaintiffs) filed a trademark infringement suit in 2012 against A&F (Defendant), claiming that A&F infringed on their trademark ‘The Situation’ by selling and advertising its ‘Fitchuation’ t-shirts. On June 28, 2013, the Southern District of Florida granted summary judgment to Defendant, finding no trademark infringement.

No Likelihood of Consumer Confusion

The Southern District Court of Florida belongs to the 11^th Circuit, and thus used the Alliance Metals v. Hinely Indus. Inc. multifactor test for likelihood of consumer confusion. These seven factors are:

– Strength of the mark

– Similarity of the mark

– Comparison of the goods and services

– Similarity of the parties retail outlets and customers

– Similarity of Advertising media

– Defendants’ intent

– Actual confusion in the consuming public

Strength of the mark: Trademarks are traditionally classified by courts and commentators as (1) generic, (2) descriptive, (3) suggestive or (4) arbitrary or fanciful (see Zatarain’s Inc. v. Oak Grove Smokehouse, Inc). Arbitrary or fanciful terms “bear no relationship to the products or services to which they are applied” (Zatarain) and do not have to prove that they have acquired secondary meaning for the public, that is, that the public recognizes a particular term as designating a particular product. Think as an example ‘Apple’ designating a cell phone, not a fruit.

The Southern District Court of Florida found that ‘The Situation’ is an arbitrary and fanciful mark, as it bears no relationship to the product or service.

Similarity of the mark: Defendant had argued that ‘The Fitchuation’ t-shirt was a parody. The court did not elaborate on this argument, but nevertheless weighed in favor of Defendant on that factor. It noted that Defendant had used its own ‘Fitch’ trademark and that had reduced the likelihood of consumer confusion. The court also noted that “The Fitchuation” is “visually and phonetically different that “The Situation.””

Comparison of the goods and services: This factor weighed in favor the Defendant as there was no evidence that the public had confused its products with those of Plaintiff which, indeed, had not even started selling its own t-shirt line at the time A&F sold its ‘Fitchuation’ t-shirt.

Similarity of the parties retail outlets and customers: A&F sold its t-shirt exclusively though its stores and web site. There was no similarity of sales channels here, and there was no similarity of advertising media either.

As for Defendants’ intent, A&F did not have the intent to misappropriate the plaintiff’s goodwill. The t-shirt was a parody, and was not sold it to profit from Plaintiffs’ business reputation. The court cited the 1987 10^th Circuit case Jordache Enterprises, Inc. v. Hogg Wyld, Ltd. where the court had found no likelihood of confusion between Jordache blue jeans and Lardasche blue jeans for plus size women, sold complete with a smiling pig and the word ‘Lardashe’ on the back of the pants.

Finally, there was no Actual confusion in the consuming public Plaintiff did not present any evidence to the contrary, and the court rejected a survey presented by Plaintiff as evidence as defective.

For all these reasons, the Southern District of Florida granted summary judgment to A&F on the trademark infringement claim.

Barring ‘Undesirable’ Customers from Wearing one’s Goods (Not a Good Idea!)

From the August 16, 2011 A&F press release about Jersey Shore cast members wearing A&F clothing:

“We are deeply concerned that Mr. Sorrentino’s association with our brand could cause significant damage to our image. We understand that the show is for entertainment purposes, but believe this association is contrary to the aspirational nature of our brand, and may be distressing to many of our fans.”

A&F is using the term “brand,” not “trademark.”A brand refers to the whole package, going to the store, emulating the models featured in the catalog and adhering to company’s ‘values.’ A&F has “fans,” not customers, and the brand is “aspirational,” meaning that the customers buy the goods to emulate a certain lifestyle, most of the time a lifestyle above their current socio-economical mean. A customer may buy and wear, say, a branded tee-shirt, because he aspires to be part of the happy-few set wearing that particular brand. But what if some customers deemed ‘undeserving’ by a brand do start wearing its products?

You Are Not Worthy!

In 2005, Burberry was desperate to prevent ‘Chavs’ from wearing its famous check. At the time, they particularly favored a certain Burberry baseball cap. ‘Chavs’ gained the reputation to party (very) hard, and the Burberrys baseball cap became a symbol of infamy. Some night clubs even started banning them and Burberry eventually decided to stop producing them.

A&F is notorious for seeking to prevent some people from wearing A&F goods. After an A&F manager reportedly peeped that poor people should not wear A&F clothing, Greg Karber, a LA-based writer launched a campaign on You Tube urging people to donate A&F clothing to homeless people.

In essence, what Mr. Karber was trying to achieve is a non-commercial dilution of the brand. The Lanham Act prevents dilution of the distinctive quality of a famous mark, but the use has to be commercial. It defines dilution by tarnishment as an “association arising from the similarity between a mark or trade name and a famous mark that harms the reputation of the famous mark.” Let’s hope that there will never, ever, be a bill proposing that wearing a brand while not being ‘worthy’ of it could be deemed tarnishment as well.

Image is Snooki & The Situation: The Egg Version courtesy of Flickr user chicagogeek pursuant to a CC BY 2.0 license.

Filed Under: Fashion Law, Trademark · Tagged: branding, dilution, Likelihood of confusion, Trademark

Seventh Circuit: No Trademark Infringement by a Fictional Product

‘The Fitchuation’ T-Shirt Did Not Infringe ‘The Situation’ Trademark

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