Federal Circuit Clarifies that Non-Government Parties Can Raise Defenses to Patent Infringement Based Upon Federal Government Requirements

27

The Federal Circuit has ruled in IRIS Corp. v. Japan Airlines Corp. that the federal government may be liable for infringement in a patent infringement suit, when the infringement is at the direction of the federal government. The case involved a patent infringement suit brought by IRIS Corp. against Japan Airlines (JAL).  IRIS alleged that JAL infringed its patented method of making secure identifications using passports embedded with RFID chips when the airline scanned passenger passports with such embedded chips at U.S. airports, notably JFK Airport in New York.  JAL asserted that pursuant to Title 28 U.S.C. Section 1498(a), the airline was exempt from any liability associated with scanning requirements, because by federal law, the U.S. government required it to scan passenger passports.  Title 28 U.S.C. Section 1498(a) provides that when the alleged infringement is “by or for the United States” and the alleged infringement occurs “with authorization or consent” of the federal government, the patentee may bring action in the Court of Federal Claims.  JAL further asserted that IRIS’s only recourse for damages for the alleged infringement would be to bring a lawsuit against the federal government.

The U.S. District Court for the Eastern District of New York agreed with JAL, dismissing IRIS’s complaint against JAL, and the Federal Circuit affirmed that decision. The Federal Circuit reasoned that the federal government assumed liability under 28 U.S.C. Section 1498(a) because JAL could not operate in the United States without infringing the IRIS patents, and it had also benefited from the airline’s alleged infringing activities by improved national security, reduced passport fraud, and lowered overall demand on federal government resources in protecting airline passengers and national security.  In the words of the Federal Circuit, “the government benefits here because JAL’s examination of passports improves the detection of fraudulent passports and reduces demands on government resources.”

The IRIS decision has the potential to impact any business that contracts with the government, or carries out government functions, including in the transportation, shipping, security, information technology, natural resources extraction, and other sectors.  Government contractors and any other business in a heavily regulated industry should be aware of the potential for raising a Title 28 U.S.C. Section 1498(a) defense in the event of alleged patent infringement.

If you have questions about patent infringement, you need an experienced attorney.  Anna Vradenburgh is a well-respected, business-minded expert in intellectual property issues.  Anna assists clients in patent and trademark prosecution, and represents clients in trademark opposition matters, domain name dispute matters, and patent and trademark litigation.  Anna can also assist your company in all manner of intellectual property protection.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, nor should be considered legal advice.
Advertisements

Website “Look and Feel” Protectable Trade Dress

Trade dress is important area of intellectual property.  Traditionally, trade dress is the overall appearance or image or design of a product or its packaging, which serves to signify the source of the product to the consumer.  Although trade dress protection has extended beyond simple packaging and product design, it is not always clear what might constitute trade dress.  One area of great importance to many businesses is whether there is protectable trade dress in their website.

Web Site Trade Dress

In a recent case is the U.S. District Court for the Northern District of California, Ingrid & Isabel, LLC v. Baby Be Mine, addresses the increasingly relevant question of what constitutes protectable trade dress for a website.  Although prior trade dress cases found that a website’s “look and feel” can constitute protectable trade dress, at least one case did so to protect the “look and feel” of a website that was, itself, the product, not merely one used to market products.  In other cases, the court did not find trade dress due to the parties’ failure to specifically identify the elements of the website comprising the trade dress.

Generally speaking, trade dress refers to the elements that make up the visual appearance such that the purchasing public associates the trade dress with a single source for the goods.  The courts have found protectable trade dress in the “look and feel” of everything from the color of pads used on dry cleaning equipment, to the colors and shape of a fast food restaurant.  This case analyzes whether the “look and feel” of a website used to market products can constitute protectable trade dress.

In Ingrid & Isabel, LLC v. Baby Be Mine, both companies sell maternity waist bands (stretchy cotton belts that hold up the clothing for pregnant women) as well as other maternity clothing, and both companies operate a respective website.  The parties were not new to litigation, and in fact Ingrid & Isabel had previously sued Baby Be Mine for patent infringement over its band design, trademark infringement based on allegations that Baby Be Mine’s “Belly Band” was confusingly similar to Ingrid & Isabel’s “Bella Band,” as well as for unfair competition.  The present case alleges claims of breach of contract, and trade dress violations under the Lanham Act.

To prevail on a claim of trade dress, a party asserting trade dress must demonstrate that its trade dress is inherently distinctive; that its trade dress is non-functional; and that the defendant’s product creates a likelihood of consumer confusion.

In its Lanham Act claim, Ingrid & Isabel alleged that Baby Be Mine’s use of certain words and phrases on its website and marketing materials, and the overall “look and feel” of its website were distinctive and non-functional.  Ingrid & Isabel recited specific elements contained on its website that it claims had been copied by Baby Be Mine, including cursive script used in the headers, the pale pink-orange color of the lettering, the poses of the models, photographs of models wearing white tanks with jeans, with long naturally wavy hair, where the model is featured head to mid-thigh, model photographs featuring mouse-over change of whimsical, casual poses to display all angles of the product, certain patterns on the website ‘wallpaper’ and other similarities.  Ingrid & Isabel argued that the features on the Baby Be Mine site were similar enough to those specifically recited that it could lead to likelihood of confusion for consumers.

Regarding proof of its trade dress violation claim, Ingrid & Isabel offered evidence of direct copying, which courts have recognized as being relevant to a determination of secondary meaning.  Further, the court recognized that many of the specific elements listed, such as the color and pattern of wallpaper, particular poses of the model, color of the script were non-functional elements.  Finally, the court found that Ingrid & Isabel had created triable issues of fact with respect to the issue of likelihood of consumer confusion.

Because Ingrid & Isabel had created a triable issue of fact with respect to each element required to prove its trade dress violation claim, the court denied Baby Be Mine’s request for summary judgment.  The survival of this claim provides the possibility for a finding that the “look and feel” of the Ingrid & Isabel website contains protectable trade dress.  The outcome of this issue in the case may provide some guidance as to what may be required to claim trade dress in a website, and every company with a prominent web presence may be wise to pay attention to this case.

Trade dress rights are valuable intellectual property rights.  If you have questions about trade dress issues, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-minded expert in trademark matters.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, or should be considered to be, legal advice.

TTAB Finds Fraud; Upholds Trademark Opposition to “NATIONSTAR”

Obtaining a federal registration for a trademark is important because it helps to protect a company’s brand.  Due to the importance of receiving a federal registration, the truthfulness of the underlying application for that trademark is paramount.  When filing a trademark application, an applicant must execute a declaration that attests to the truthfulness of the content of the application.  This includes attesting to the fact that the trademark is being used in commerce in connection with the goods or services listed in the application.  If the statements in the declaration are false, any resulting registration can be challenged on the basis of fraud.  If a claim of fraud is brought by a challenger, serious consequences for the registrant can follow.  Such was the case in NationStar Mortgage LLC v. Mujahid Ahmad.

In a precedential opinion, the Trademark Trial and Appeal Board (TTAB) issued a finding of fraud in the opposition matter entitled NationStar Mortgage LLC v. Mujahid Ahmad.  While a finding of fraud is rare, it does happen from time to time.   In the case re Bose Corp., 580 F.3d 1240, 91 USPQ2d 1938 (Fed. Cir 2009), the Federal Circuit articulated the current standard for fraud in procuring a trademark registration.  In the words of the Federal Circuit in Bose, “a trademark is obtained fraudulently under the Lanham Act only if the applicant or registrant knowingly makes a false, material representation with intent to deceive the USPTO.”

The NationStar Mortgage matter involved the attempted registration of the trademark “NATIONSTAR” for “mortgage brokerage,” “insurance brokerage,” and other real estate and mortgage related services.  In April of 2005, long prior to filing the trademark application, the applicant, Mujahid Ahmad, a Virginia real estate agent, registered multiple domain names using derivations of nationstar, for example, nationstarmortgage.com and nationstar.org.  On April 11 and April 18, 2006, counsel for opposer, NationStar Mortgage, sent letters to Mr. Ahmad offering to purchase two of the domains.  The offer was rejected, and within a few days of the offer, Mr. Ahmad filed a use based trademark application for “NATIONSTAR” for a number of services, including real estate brokerage services and insurance brokerage services.  By filing the application based on use, Mr. Ahmad declared that the mark was in use for all the identified services at the time of filing the application.

Fraud in the procurement of a trademark registration must be proven via clear and convincing evidence, and here, the facts were the applicant’s undoing.  The opposer, NationStar Mortgage, alleged that Mr. Ahmad never used the NATIONSTAR MORTGAGE mark in connection with the identified services, and that he “submitted a fabricated specimen that was not used in commerce at least as early as the application filing date.”  In fact, Mr. Ahmad admitted during testimony that he was not a real estate broker, not an insurance broker, nor did he offer mortgage insurance.  While Mr. Ahmad claimed he was the owner of a company called NationStar Mortgage Inc. and used the name in connection with his services as a real estate agent, he also testified that he was unaware of any profits for the company and did not have a bank account.  Mr. Ahmad also admitted that all of the materials submitted to the USPTO were created on his own computer, and by a third party printer; however, he could not produce records of professional printing for the supposed business cards and postcards that were sent to clients or otherwise used commercially.

The TTAB noted that it was skeptical of applicant’s testimony and claims, particularly because, although the applicant was not a lawyer with expertise in trademark law, he was a real estate agent and was familiar with the laws surrounding mortgage brokers and insurance brokers, and would have certainly been aware that he was not licensed as a broker of mortgages or insurance.  The TTAB stated that just because Mr. Ahmad filed his own application, it did not afford him “a free pass to disregard the straightforward requirements of a use-based application and the solemnity of the application declaration that he signed subject to criminal penalties.”

The TTAB was also clear that the facts in this case were inconsistent with merely a mistake or misinterpretation of the law by a non-attorney applicant.  In the words of the TTAB, “this record does not support a finding that applicant’s misrepresentation was occasioned by mere inadvertence or reasonable mistake or misunderstanding….While fraud will not lie if a statement, though false, was made with a reasonable and honest belief that it was true, there are limits to what may be claimed in good faith.”

In the end, the TTAB sustained NationStar’s opposition.  In addition to the obvious lessons in regard to avoiding fraudulent filings, this case highlights the importance of using an experienced attorney to prepare trademark applications.

If you have questions about filing a trademark application, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-minded expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing matters, including drafting and negotiation of trademark licensing agreements.  For more information, visit her website, or contact Anna at (818) 488-8146.  This article is for educational purposes only and nothing in this article is intended to be, or should be considered to be, legal advice.

Stopping Knockoff Goods at the U.S. Border

The U.S. government has taken a number of steps to help stop counterfeit goods from entering the United States, including maintaining the website www.stopfakes.gov, a one-stop source for information on protecting your intellectual property from counterfeit imports.  Stopfakes.gov is a partnership among a number of agencies including the FBI, U.S. Customs and Border Protection, the Department of Justice, Office of the U.S. Trade Representative, and United States Patent and Trademark Office (USPTO).   The website has resources for businesses, including country-specific information about stopping fakes, and resources for reporting counterfeiting activities to federal law enforcement.

One of the best ways to prevent the sale of counterfeit goods is to keep them out of the United States.  Under the federal Lanham Act and the Tariff Act of 1930, the federal government, through the U.S. Customs and Border Protection (USCBP) agency, has the responsibility of protecting trade and enforcing intellectual property rights on behalf of companies.

If you believe counterfeit goods bearing your federally registered trademark are being illegally imported into the United States, there are a few quick and easy ways to alert federal law enforcement.
  1. Record your intellectual property rights with USCBP at http://www.stopfakes.gov/business-tools/us-customs-and-border-protection-e-recordation-tool.  The website allows the submission of an application for online registration of federally registered trademarks and copyrights with the USCBP.  This will typically include submitting descriptions and photographs of your goods, along with samples, or summaries of the content, appearance, and look of your products, such that USCBP will be able to recognize potential fakes.  The application is $190 per trademark per class of goods, or copyright, with a periodic $80 renewal fee.  (Currently, USCBP only provides for the recordation of trademarks and copyrights, not patents.)  As soon as you have filed the application, USCBP will be authorized to detain, seize, notify, and destroy counterfeit versions of goods bearing your trademark, or copyrighted materials.
  2. Authorize a reliable employee, agent, or attorney to serve as the point of communications for the USCBP.  This individual will be the primary point of contact with the USCBP, and should have the skill and availability to definitively identify the counterfeit goods, in person, if necessary.  This agent will receive all notices from USCBP, and should be able to respond quickly, investigate the seized goods, and notify the agency with certainty about the legitimacy of the goods.
If you have questions about importing, counterfeit concerns, or would like more information on customized services to monitor and protect your company’s intellectual property, you need an attorney who understands your needs and can help you protect your rights. Anna Vradenburgh is a well-respected, business-minded attorney with expertise in trademark issues and is able to advise your company on these types of intellectual property matters.  For more information, visit the Eclipse Law Group website, or contact Anna at (818)488-8146.  This newsletter is for educational purposes only and nothing in this newsletter is intended to be, or should be considered to be, legal advice.

Attorney Anna M. Vradenburgh counsels and represents clients facing trademark, copyright, patent and other intellectual property issues, providing expert advice regarding intellectual property protection, exploitation and rights enforcement.

Ms. Vradenburgh can be contacted at :

The Eclipse Group

6345 Balboa Blvd, Suite 325,

Encino, California 91316

(818) 488-8146

www.EclipseGrp.com

Luxury Retailers Fight Counterfeiting on Alibaba – the World’s Largest eCommerce Site

The September IPO of Chinese eCommerce network Alibaba was heralded with great fanfare. Western retailers saw exceptional promise – the ability to sell their goods directly to China’s burgeoning middle class.  Unfortunately, that promise comes with a cautionary warning as allegations of counterfeit goods on the Alibaba website surface in the news.

Let’s rewind a few months back to early July 2014.  Italian luxury label Gucci, and Paris-based Kering SA, which owns the major luxury brands Yves Saint Laurent, Bottega Veneta, and Balenciaga, filed a complaint in federal court in New York against Alibaba Holding Group, Ltd., alleging that the ecommerce site was allowing “an army of counterfeiters to sell their illegal wares throughout the world.”

The luxury brands alleged that not only was Alibaba turning a blind eye to the widespread sale of knockoff bags and accessories on its member sites, it was, in fact, turning massive profits from those sales.   The complaint, which is in excess of a 140 pages, alleges that Alibaba was assisting merchants in selling the counterfeit goods.  The activity referenced in the complaint included selling the use of trademarked keywords, such as, “GUCCI”, to counterfeit merchants to allow them to obtain preferred search placement, and the offering of alternate search terms in order to direct users to counterfeit products.  For example, the complaint alleges that a user typing in the search term GUCCI is offered search terms such as ‘cucci’, ‘guchi’ and ‘guchi bags’, which direct users to merchants selling counterfeit products.  This is but one of a myriad of affirmative actions allegedly taken by Alibaba to assist the counterfeiters.  In addition to any alleged activities by Alibaba, the complaint also alleges that some of the merchants were so bold as to even tout the fact that the products were ‘replicas’ or ‘as good as the original.’

Then, just two weeks later, in what might be considered a surprising turn of events, and in advance of the IPO, the lawsuit was withdrawn without prejudice.  The Wall Street Journal reported that Alibaba and Gucci issued a joint press release saying that the parties had begun “constructive dialogue.” As the details have not been made public, it is unknown what caused the luxury brands to dismiss this lawsuit, especially given the overwhelming allegations of blatant and coordinated infringements. Although purely speculation, Alibaba may have made promises to curtail activities that were viewed as vicarious infringements to address an issue that might have negatively affected their IPO.

However, despite the dismissal of the lawsuit, Alibaba still appears to be incurring the ire of western companies as a result of its activities.  In a recent article, the New York Times reported that American sneaker manufacturer New Balance had initial success selling its genuine goods on Alibaba site Tmall, which contributed to soaring demand in China for the popular running shoes.   However, as with other brand owners, New Balance complained that it began experiencing increasing problems controlling counterfeits on the Alibaba network of sites.  According to the New York Times, “Alibaba does not make it easy for New Balance to remove counterfeits from its sites.” Indeed, despite the hundreds of thousands of counterfeit New Balance products available on the sites, the site required the company to identify each problematic listing.  Said a New Balance representative, “Alibaba knows this remains a huge issue.”

Since the IPO,  a quick search for GUCCI on Alibaba.com still returns listings of what might be counterfeiters, and offerings of alternate search terms, including ‘cucci’, ‘guchi’ and ‘guchi bags’.  Whether Alibaba curbs activities that have been the subject of numerous complaints by western companies remains to be seen, as does whether a new infringement suit is brought by other brand owners, like New Balance, or whether Gucci et al., refiles its suit.  In any event, as the Chinese market for western products continues to grow, it is clear that much will need to change before sites like Alibaba will no longer be the target of claims that they provide assistance to counterfeiters.

Attorney Anna M. Vradenburgh counsels and represents clients facing trademark, copyright, patent and other intellectual property issues, providing expert advice regarding intellectual property protection, exploitation and rights enforcement.

Ms. Vradenburgh can be contacted at :

The Eclipse Group

6345 Balboa Blvd, Suite 325,

Encino, California 91316

(818) 488-8146

www.EclipseGrp.com

Data Privacy in the European Union – American Companies Beware

Many US-based companies collect cookies, location data, ISP identities, and other information pertaining to website users and their computers without giving much consideration to consumer privacy rules.  However, anyone who operates a global website or engages with customer data on a global scale should be aware of the stringency of data privacy protection in the European Union (EU), including impending changes in consumer privacy laws known as the General Data Protection Regulation (GDPR).

20

Currently, the European Union has some of the world’s strongest data privacy protections.  Privacy rights are included in the European Union’s Charter of Fundamental Rights.  Those rights protect a wide spectrum of information including names, photographs, addresses, credit card numbers, ISPs, and the like.

However, without final centralized government action, the law for companies operating in Europe is currently murky.  For example, in 2012, a court in France ruled that Twitter, a US-based company, was required to reveal French user identities, where users had posted hate speech.  Twitter fought that ruling, but ultimately revealed the identification of the users to French prosecutors in compliance with a law enforcement request.  Conversely, a German regulatory body, the Unabhaengiges Landeszentrum fuer Datenschutz (ULD, Office of the Data Protection Commissioner) Schleswig-Holstein, Independent State Center for Data Privacy (ULD), ruled that Facebook Inc. (USA) as well Facebook Ltd. (Ireland) could not require users to register their real names in accordance with the German Telemedia Act (“TMG”), ruling that German data protection laws applied to the company, even though it was based in the US.

In an attempt to resolve these conflicting laws, the European Commission has spent the last several years drafting and debating a single EU regulation known as the General Data Protection Regulation (GDPR), which would apply to all 27 EU member nations.  The European Parliament approved the law in draft format in March 2014.  While it has yet to be finalized, experts predict that the new rules could be approved as early as the end of 2014.  The proposed regulation would give EU regulators authority to impose penalties of up to 1 million Euros or up to 2% of global annual revenues of a company, and up to 100 million Euros for negligent data breaches.  Companies with more than 250 employees will be required to appoint Data Protection Officers.  Companies would be given two years from the law’s passage to achieve full compliance.

Here in the US, data protection laws exist, but there is no overarching law as in the EU.  Further, in attempting to comply with US laws, companies may find themselves in conflict with foreign laws in jurisdictions in which they are doing business.  For instance, it is prohibited to transfer personal data from the EU to a non-EU country which does not have adequate protection for personal information in place.  Many commentators have opined that EU lawmakers are not convinced that the US provides the same level of protection as EU laws or are even adequate to fundamentally protect privacy as viewed from the EU’s perspective.  This raises the question of how a US company that only seeks to comply with U.S. privacy laws can legally collect personal data from EU customers.

To attempt to address the thorny problem presented by the dissimilarity of treatment of online privacy under EU and American law, the U.S. Department of Commerce in consultation with the European Commission developed a “safe harbor” framework, the so-called “Safe Harbor principals” (See http://www.export.gov/safeharbor/eu/eg_main_018475.asp) that require, for example, notice to users about the purpose for which it collects and uses information, how to contact the website regarding complaints, and an option to choose whether the information is disseminated to third parties.  But notwithstanding the Safe Harbor provisions, the bottom line is that there simply is no comprehensive solution to the problem of incompatible legal treatment of online privacy by the EU and the United States.

If your American based company is operating its website globally, it may be time to seriously consider your policies regarding data privacy and protection.  Because of the size of the problem of dissimilar treatment of online privacy by many different countries, the scope of this article cannot even begin to address the number or complexity of issues that arise with respect to data and privacy protection on global networks like the Internet.  But, regardless of the magnitude of the problem, one simple bit of advice is universally applicable, if you are operating in a particular geographical marketplace, it will always be wise to acquire competent legal assistance to help you become familiar and compliant with the privacy laws applicable to that jurisdiction.

If you have questions about customer data privacy, you need an attorney who understands your needs and can help you protect your rights.  Anna Vradenburgh is a well-respected, business-minded attorney with expertise in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.

Reservation of Trademark Rights Requires A Bona Fide Intent to Use

While many countries issue trademark registrations with a broad description of goods and services, and without evidence of use of the mark on any of the identified goods and services, to obtain a trademark registration in the United States, an applicant must ultimately provide evidence of use of the trademark in association with the goods and services identified in the applicant’s trademark application.

Although the United States Patent and Trademark Office (USPTO) requires that trademark applicants provide evidence of use of the mark on the goods and services identified in the application, the USPTO allows applicants to file a trademark application based either on actual and current use in interstate commerce, or upon a declaration that the applicant has a bona fide intent to use the trademark in interstate commerce in association with the identified goods and services.  This latter type of application is known as an intent-to-use (ITU) application.

Because an ITU application is not based on use of a mark, applicants tend to include broad descriptions of goods and services in the initial filing.  While doing so is not improper per se, it is important for applicants to remember that they must actually have a bona fide intent to use the mark on the identified goods and services at the time of filing.

While the USPTO may not typically question an applicant’s declared intent to use a mark with specified goods and services, third parties may not be so willing to believe the applicant’s declaration of a bona fide intent to use the mark in association with the listed goods or services.  Indeed, a recent opinion from the Trademark Trial and Appeal Board (TTAB) demonstrates that this declaration, alone, may not be sufficient to overcome a challenge from a third party that the applicant lacked a bona fide intent to use the mark on the goods and services at the time of filing.   In Lincoln National Corp v. Anderson, 100 USPQ2d 1271 (TTAB 2014), the TTAB sustained two oppositions to register the mark FUTURE, finding that the applicant lacked a bona fide intent to use the mark for specific services.

In this case, applicant Kent G. Anderson, a colorful trademark applicant, filed two ITU applications to register the mark “FUTURE.”  Between the applications, Mr. Anderson listed goods and services in 19 different classes for literally hundreds of varying and somewhat unrelated goods and services, including, for example, insurance agency brokerages, electronic credit card transactions, leasing shopping mall space, and for goods ranging from candy to electronic consumer products to shoes.   An opposition against each of Mr. Anderson’s applications was filed by the plaintiff, Lincoln National, collectively challenging his Class 35 services, for in part, shopping malls, franchising, and data processing services, and the Class 36 services, which included banking, insurance and financial services.  Lincoln National based its challenges on the claim that the applicant did not have a bona fide intent to use the mark on the services in these classes at the time of filing the applications.

Trademark Act Section 1(b)(1) (“Section 1(b)”) provides, in pertinent part, that “[a] person who has a bona fide intention, under circumstances showing the good faith of such person, to use a trademark in commerce may request registration of its trademark on the principal register….” In its discussion, the Board reiterated the standard for bona fide intention to use a mark, namely, “the determination of whether an applicant has a bona fide intention to use the mark in commerce is to be a fair, objective determination based upon all of the circumstances.”  The Board then noted that the requirement that an applicant have a bona fide intent to use the mark must be read in conjunction with the definition of ‘use in commerce’, wherein ‘use in commerce’ is defined as use “in the ordinary course of trade, and not made merely to reserve a right in a mark.”

In evaluating Mr. Anderson’s intent to use the mark with respect to the challenged services, the TTAB noted that while the applicant had “idealistic hopes for forming a futuristic company,” had created a website that described his plans for the future, and had produced letters he had written to a variety of companies, including Ferrari, Proctor & Gamble, and Kellogg’s, outlining his visions for the future, these actions alone were insufficient to demonstrate intent to use the mark in connection with the described services.  For example, none of the letters actually identified any of the services, and each were merely discussions about general ideas and hopes for a FUTURE project.  The Board noted that Mr. Anderson was a sole proprietor without any knowledge of many of the areas included in his trademark applications, and specifically admitted in depositions that he lacked the funding, connections, know how, and even the desire to undertake business ventures associated with the challenged services identified in the trademark applications.

As a result of its findings, the TTAB found that the applicant failed to demonstrate a bona fide intent to use the “FUTURE” mark, sustaining oppositions to register the mark for the challenged services, stating that the applications were void ab initio as to Classes 35 and 361.  In other words, the TTAB held that bona fide intent to use must be based on tangible evidence-capital, business plans, distribution contracts, concrete partnerships-and may not exist merely in the head of the applicant.

To support its conclusion, the Board looked to the legislative history of Section 1(b), 15 U.S.C. Section 1051(b) et seq., and noted that included in the objective circumstances which may cast doubt or even disprove the bona fide nature of the intent was “an excessive number of intent to use applications in relation to the number of products that the applicant…[was actually] likely to introduce under the applied for marks during the pendency of the applications.”  Accordingly, the Board concluded that Mr. Anderson, “in filing the application, was merely attempting to reserve a general right in the [FUTURE] mark for potential use on some undetermined goods or services at some indefinite time in the future.”

This case is a reminder that, although the Trademark Office allows a liberal filing of goods and services based upon the intent to use a mark, that intent must be demonstrable, if challenged.  Thus, as a practical matter, although it is acceptable to list many unrelated and disparate goods and services in an ITU application, it might be more prudent to limit the goods and services to those that are reasonably likely to be transformed from merely an intent to use, to actual use in commerce.

If you have questions about filing a trademark application, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-minded expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna directly at (818) 488-8146.

1This decision did not affect any of the remaining goods and services.  Thus, the entire applications were not void ab initio, only the applications as to Classes 35 and 36.

Trademarks, the Lanham Act, and Your Business

The Lanham Act Reexamined

In recent months, the U.S. Supreme Court has issued two opinions that clarify the scope of the Lanham Act.  In March, the court ruled on Lexmark International v. Static Control Components, which addressed the issue of standing, including the issue of who could bring a claim, thereby clarifying the Lanham Act’s broad language which states that “any person who believes that he or she is or is likely to be damaged” by another person’s false advertising could bring a civil action.  The high Court’s Lexmark ruling confirmed the right of one competitor to sue another competitor for “false or misleading” statements in advertising and labeling, and dismissed prior complex tests for proving standing to bring Lanham Act claims.In June, following Lexmark, the court ruled in Pom Wonderful v. Coca-Cola, that Lanham Act claims were not pre-empted by Food and Drug Administration (FDA) labeling regulations.  In both of these cases, the court outlined the importance of the Lanham Act and the rights of competitors to use the Lanham Act to address false and misleading statements in both advertising and labeling on products, for the benefit of the consumer.

The Pom case is illustrative, in that it is a very simple example of a Lanham Act claim by a competitor.  Pom sells pure pomegranate juice, which it claims has health benefits.  Pom sued competitor Coca-Cola under the Lanham Act alleging that the label on one of its juice products misleads consumers into believing the product consists predominantly of pomegranate and blueberry juice as it prominently displays the wording “pomegranate blueberry”, when it in fact, the product contains only 0.3% pomegranate juice and 0.2% blueberry juice.  In its opinion, the Supreme Court reviewed the intersection between two bodies of federal law-the Lanham Act, and the FDA’s labeling requirements.  Coca-Cola claimed that Pom’s Lanham Act claims were barred because Congress intended the FDA labeling rules to govern product labeling issues.  The high Court disagreed with Coca-Cola, ruling that Pom Wonderful may pursue claims under the Lanham Act against competitor Coca-Cola for alleged false claims on its product labels. (Ironically, Pom Wonderful is appealing a decision of the Federal Trade Commission that concluded Pom’s health claims on its products were deceptive.)

According to a Bloomberg article, “the ruling means that food labels will come under increasing scrutiny, and it’s possible many won’t fare well.”

While this is an important ruling for food manufacturers, the decision extends to all types of businesses.  Indeed, the general issues of unfair competition, and false advertising create a potential Lanham Act claim for any operating business.

Your Business and the Lanham Act

Any business, regardless of whether it sells labeled products, should be aware that it, in addition to other regulations, may be subject to claims of unfair competition and/or false and deceptive advertising under the Lanham Act.  Here are a few tips for consideration to help avoid such claims:

1.  Review your product labels, website, advertising and other written materials.  Ask whether your company’s product labels and advertising is accurate and truthful.  Do they claim that your product or service does more than it really does?  Could your claims be considered misleading to consumers?  Could your product or service claims be confusing to the average customer or client?  If so, maybe it is time for a re-write before you find yourself fending off claims by competitors.

 

2.  Consider your competitors’ claims.  Are your competitors claiming that their products can do more than they really do, in a way that is harming your business?  Could competitor statements be misleading or confusing to consumers?  If your competitors are making fraudulent or misleading claims, and those claims are harming your company’s bottom line, bringing a Lanham Act claim might be one way to fight back.

 

If you have questions about trademarks, or the Lanham Act, and the intersection between the Lanham Act and your intellectual property, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-mind expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.

Water Bottler Thirsty for Justice in Trademark Dispute

Maine Springs LLC v. Nestlé Waters, U.S. District Court for District of Maine, 2:14-cv-00321 (2014), Filed August 11, 2014

One Maine water bottler is thirsty for justice in a federal unfair competition dispute.  Maine Springs LLC, a local water company in Maine, has filed a suit against Nestlé Waters NA in U.S. District Court for the District of Maine alleging false and misleading advertising, and tortious interference with business.  More specifically, Maine Springs alleges that labels on Nestlé’s bottled water products bearing the Poland Spring® mark contain false and/or misleading statements as to the sources of the water in violation of the federal Lanham Act, and that because of its assertion of its trademark rights in the Poland Spring® mark against Maine Springs, Nestlé has effectively interfered with Maine Springs’s attempts to sell its bulk water to other third party bottling companies.

This suit is one of the first to follow a recent ruling from the U.S. Supreme Court in a similar labeling dispute between Coca-Cola and Pom Wonderful, LLC (discussed in more detail below).  In that case, the Supreme Court ruled that a Lanham Act claim could be brought against a competitor challenging the competitor’s food and beverage label, even though the food and beverage label was subject to Food and Drug Administration labeling regulations.

The dispute between Maine Springs and Nestlé arises from Maine Springs allegations that the Poland Spring, a natural water source in Maine, has not been in use for more than 30 years, and thus, accordingly the complaint, was not in use in 1994, when Nestlé began bottling and selling water under the Poland Spring® brand.  Thus, any statements made by Nestlé that the water is sourced from the Poland Spring are false and misleading.  Further, according to the complaint, Nestlé’s label indicates that the water is 100% spring water.  Maine Springs contends that this too is false, and states that Nestlé utilizes water from other springs and non-spring water sources, from other places in the region.

According to Nestlé, the Poland Spring® brand is famous and has been marketed for decades.  Indeed, Nestlé owns numerous U.S. federal trademark registrations that include the words POLAND SPRING for spring water.  Based on its rights in these registrations, Nestlé sent Maine Springs a cease and desist letter threatening litigation in response to Maine Springs’ attempt to bottle and market a bottled water product after securing permits to extract water from underground spring water sources in Maine, wherein the label on the bottled water product identified the source of the water as Poland Spring, Maine.  Nestlé contended that this would create confusion with Nestlé’s Poland Spring® bottled water product.

Further, Maine Springs was in the process of securing contracts to sell bulk water to other small and mid-sized bottlers, including Niagara Bottling Company, and Crystal Rock.  Maine Springs alleges that because of a cease and desist letter from Nestlé threatening trademark infringement against Maine Springs for labeling that indicated that the water source was Poland Spring, its potential business partners rejected Maine Springs’ proposals for fear of threatened litigation by Nestlé.  Although there are no allegations that Nestlé ever directly contacted any of the bottlers, Maine Springs alleges that Nestlé’s actions constituted tortious interference with prospective business advantage.

This is the third lawsuit that Nestlé has defended regarding the label on its bottled water.  The company settled two prior consumer class action suits for fraud in Illinois and Connecticut, by parties who claimed that Nestlé used municipal water to fill its bottles, despite product labels that represented the product was 100% natural spring water.

Whether Nestlé’s statements on the labels are false and misleading remains to be seen, as does whether threatening litigation against Maine Springs constitutes tortious interference of business with parties in negotiation with Maine Springs.  However, based on its registrations, Nestlé has the right to object to product labels that attempt to utilize its brand Poland Spring® as a source identifier of the product.  Competitors, however, are entitled to identify the geographic location Poland Spring.  Thus, the resolution of this issue will likely depend upon the manner in which the identification of the geographic location, Poland Spring, is presented on the label, as it is not likely that Nestlé’s registration rights will allow them the ability to prevent truthful statements regarding the geographic location of the water being sold to be included on the product.

If you have questions about trademarks, or have received a cease and desist letter from a competitor, you need an experienced trademark attorney.  Anna Vradenburgh is a well-respected, business-mind expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks.  In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board.  Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements.  For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.

Business Tips for Trademarks

There has been a lot of media coverage regarding the case before the Trademark Trial and Appeals Board (TTAB) that resulted in the cancellation of the federally issued trademarks owned by National Football League’s Washington Redskins containing the word “REDSKINS” on the ground that the term is disparaging to Native Americans. With the Redskins case in the news in the last few weeks, many businesses are looking at their own trademark portfolios with an understandable degree of concern as to whether they too may own trademark registrations that might also be potentially challenged and cancelled on similar grounds.

Judging from the discussions I have had in the wake of the news regarding the cancellation of the Redskins federal trademark registrations, I think many business owners are wondering how a famous trademark, like REDSKINS, that has been federally registered since September 1967 (almost 45 years) could be subject to cancellation. Above and beyond simple curiosity, there is justifiable concern regarding the protectability of trademark rights when those rights appear to be subject to termination by judicial fiat. It is not unreasonable, in my opinion, in the wake of the Redskins decision for businesses to wonder whether their investment of capital and effort in a protectable brand is as safe or prudent a use of their resources today as it was prior to the Redskins decision.   One might reasonably wonder, for example, if the owners of the Redskins football team had been asked, years ago, to invest millions of dollars to develop the REDSKINS brand and to properly protect the brand via federal trademark registration, with the caveat, that despite the investment of an enormous amount of time and money, the brand would be subject to challenge, and the corresponding trademark registration subject to cancellation, decades later, by persons, not yet born, who would not be competitors or even associated with football, my guess is that the answer would have been a resounding ‘NO’.

So, just how did the Washington Redskins and the NFL come to find themselves in this position? Well, let’s start with the selection of the trademark.

Trademarks are typically categorized as fanciful or coined, arbitrary, suggestive, and merely descriptive. There is one more category, generic. However, technically any term that falls into this category can never be a trademark for reasons discussed below.

To create a strong brand, it is best if the mark is ‘fanciful’ or ‘coined’. These are terms that are completely made-up, that is, the term has no meaning other than as a trademark. A classic example is XEROX for photocopiers.   These are some of the strongest marks assuming they are properly used and protected.

‘Arbitrary’ marks are those marks which comprise a word that is a common word, but the meaning of the word has no relation to the goods or services associated with the mark. APPLE for computers is one such example. These too, start as very strong marks.

A ‘suggestive’ mark is one that suggests some attribute or characteristic of the goods or services, but does not describe them.   An example of a suggestive mark is AIRBUS for airplanes.

Finally, a ‘descriptive’ mark is one that merely describes the goods or services. These types of marks can ultimately be registered on the Principal (or primary) Register, but only after proving they are capable of being a source identifier, that is, consumers believe the goods or services emanate from a common source. These marks are near the weaker end of the spectrum, but can be protected.

Terms that are generic, that is, they are the common term for the goods or services can never be registered. The selection of a generic term as a brand does not offer protection for the brand name and allows third parties to use the term freely.

The REDSKINS mark is considered an arbitrary mark, and therefore a choice that, from a trademark protection perspective, was a good choice for a strong mark. Why then, was it subject to challenge?

In addition to the considerations of the type of mark to select (fanciful, arbitrary, etc.), persons seeking federal registration of trademarks must also consider other important issues. For example, consideration must be given regarding whether the mark is a surname or a geographical location, whether the mark is misdescriptive of the goods or services with which it is to be associated, whether the mark is protected indicia, or whether the proposed trademark is immoral or scandalous, or may disparage, for example, persons (living or dead), beliefs, or symbols. This last consideration, i.e., whether the mark would be considered disparaging, is the one at the heart of the REDSKINS cancellation proceeding.

There is no published information to my knowledge regarding whether the issue of disparagement toward Native Americans was considered in the selection of the REDSKINS mark. The evidence in the case presumably showed that the sentiment that the trademark was disparaging existed at the time the trademark was selected. The NFL has maintained throughout the dispute that it has always acted honorably and respectfully towards Native Americans. While this may be true, with respect to the action brought by Native Americans before the TTAB, the NFL’s intent is irrelevant.

The TTAB ruling suggests that Native Americans may have been objecting to the use of this mark for quite some time. But the first cancellation proceeding brought by the petitioners in the REDSKINS case was not filed until 1992, fully twenty-five years after the mark’s initial federal registration. One might ask if a substantial composite of Native Americans found the term “redskins” to be disparaging at the time of the registrations of these successively filed marks, why the offended parties did not institute proceedings years ago? While there may be an answer to that question, it does not appear in the record of the case. Moreover, the issue of the lack of objection by Native Americans to the use of the name for decades did not apparently factor into the TTAB’s decision.   Many believe this is unfortunate or even unfair as the NFL heavily invested in the REDSKINS brand relying on what might well have been a reasonable belief that use of the brand in association with a highly successful and much beloved football team was not offensive to a substantial composite of Native Americans.

The cancellation of the REDSKINS federal trademark registration has sent shock waves throughout the legal and business communities.  The ruling will act as established precedent for future cancellation proceedings.   It is a ruling that has provoked questions about vulnerability of trademark rights to attack by individuals or groups that might be able to demonstrate that they are somehow offended by a mark.   But more importantly, perhaps, is the fact that the case has raised, and will continue to raise, questions of fundamental fairness. Specifically, the fairness of basing the cancellation of a famous trademark comprising an enormously successful brand for which the owner has made a huge monetary investment over literally decades on the ground that the trademark was disparaging at the time of its registration and offends a group that failed to timely pursue its rights.

The NFL has indicated that it will appeal the ruling. Accordingly, the fate of these registrations is yet to be seen.

trademark

If you need assistance with trademark registrations, searches, or trademark licensing, Anna Vradenburgh is a well-respected, business-mind expert in trademark issues with extensive experience prosecuting domestic and foreign trademarks. In addition to her prosecution practice, Anna also assists clients in the selection and use of trademarks and represents clients in trademark opposition matters, domain name dispute matters, and before the federal Trademark Trial and Appeals Board. Anna can also assist your company in licensing maters, including drafting and negotiation of trademark licensing agreements. For more information visit the Eclipse Law Group website, or contact Anna at (818) 488-8146.