7th Circuit affirms rare right of publicity loss based on ad

Posted on July 11, 2016 by rtushnet
Martin v. Living Essentials, LLC, No. 16-1370, — Fed.Appx.
—- (7th Cir. Jun. 30, 2016)
The Seventh Circuit knocked this affirmance out
quickly—here’s my discussion
of the Jan. 2016 district court decision.
Guinness World Records lists Johannes “Ted” Martin as the
open singles champion for consecutive kicks of a football; his record has stood
since 1997. A 2013 Living Essentials energy shot ad featured “an actor who
boasts that in just five hours—all because of 5-hour ENERGY—he disproved
Einstein’s theory of relativity, swam the English Channel twice, found Bigfoot,
and ‘mastered origami while beating the record for Hacky Sack.’ The actor, not
to be mistaken for the 56-year-old Martin, appears to be folding an origami
animal while kicking two footbags, not one.”
Martin contended that the reference to “beating the record”
was a reference to him, and thus an unlawful commercial use of his identity,
also tarnishing his reputation by suggesting that his record stemmed from
performance-enhancing drugs.  The
district court found that the ad was puffery, but Martin argued that he was
bringing a false association/endorsement claim. Citing the execrable White v. Samsung, the court reasoned
that, “With advertising, even a parody of a celebrity can trigger liability;
the critical question is whether consumers are likely to be confused and
believe that the aggrieved party endorses or approves of a product.”
The court of appeals found that Martin’s theory was “not
reasonable.”  “[W]e cannot imagine how
this ad would confuse anyone into thinking that Martin himself endorses 5-hour
ENERGY or that his use of the caffeinated drink explains a record set before
the product came to market.”  (But it’s
plausible that consumers would think that Vanna White endorsed Samsung because
a letter-turning blonde robot appeared in its ads?)  The mention of Hacky Sack was “sandwiched
between obviously absurd achievements.” 
Moreover, “the actor cannot be accused of impersonating Martin, since he
brags of besting, not holding for years, a footbag record,” and Martin didn’t
claim to have achieved his title while creating origami animals.  Furthermore, there was no reason to assume
that it was Martin’s record that had
been beaten; other records exist, including for kicks of two footbags (as shown
in the ad).  Nor did Martin plausibly
allege that he had “the degree of public notoriety necessary to support a claim
under the Lanham Act for false endorsement.” 

Moreover, the district court properly held that Martin
failed to state a claim under the Illinois Right of Publicity Act.  That law broadly defines “identity” to mean
“any attribute … that serves to identify that individual to an ordinary, reasonable
viewer or listener.”  But the phrase “the
record for Hacky Sack” is too ambiguous to call an “attribute” of Martin. “[N]o
reasonable viewer would interpret the commercial for 5-hour ENERGY as referring
to Martin, and because he does not plausibly allege that Living Essentials
invoked his ‘identity’ through the actor’s statement, Martin fails to state a
claim under IRPA.”  Note the implication:
if there were only one prior record holder, another person’s claim to have
beaten that record—even if truthful—would seem to be an appropriation of the
loser’s identity.  That seems …
overbroad.

from Blogger http://ift.tt/29yyZ00

Posted in Uncategorized | Tagged , | Leave a comment

Update: that’s not actually the latest in B&B!

Posted on July 8, 2016 by rtushnet

My mistake. The latest is that after the ruling I just wrote about, there was a jury trial, which produced findings that (1) Hargis infringed the federally registered mark, (2) there were no damages/profits awardable from the infringement and the infringement was not willful, (3) the registration/incontestability was procured by fraud, and (4) Hargis prevailed on its false advertising/false designation of origin counterclaims.  Because of (3), the judge granted judgment as a matter of law to Hargis on (1), since fraud on the PTO invalidates the entire registration.

B&B Hardware Inc. v. Hargis Indus.
Inc., 06-cv-01654 (E.D. Ark. Jun. 26, 2016)
The court explained that, absent the
benefits of incontestability, Hargis could’ve shown that the Sealtight mark was
descriptive without secondary meaning. 
Indeed, it did so in a 2000 trial, but then B&B renewed and filed for
incontestability.  Then B&B sued
again in 2006, and the court of appeals found that preclusion didn’t apply
because of the change in the registration’s circumstances from contestable to
incontestable.  (Should that affidavit
even have been filed?  How could it
possibly be correct to say there were no final determinations adverse to
B&B’s ownership of a valid mark?  The
2000 trial sounds an awful lot like a final judgment that the mark wasn’t
valid.  Something has gone very wrong
with incontestability.)   Hargis thus couldn’t repeat its mere
descriptiveness argument, but it did prove fraud on the PTO, which removed the
conclusiveness provided by incontestability. 
“Without incontestability, B&B does not have a change in
circumstances that allows it to escape claim preclusion because the jury in
2000 found that ‘Sealtight’ lacks secondary meaning.” 
Anyway, B&B wasn’t entitled to a
remedy.  No injunction, because protecting
B&B’s registration in the future was no longer possible; Sealtight wasn’t
registered any more.  (This seems to skip
over some issues surrounding likely confusion, but I find it hard to blame the
court.)  Disgorgement was unavailable
because it was subject to the principles of equity, which did not favor
B&B.  There was no intentional
infringement; there were no diverted sales because the parties don’t compete;
and there was no palming off.  True,
B&B was without another remedy, but that was its own fault for failing to
renew; B&B didn’t delay in asserting rights and filed 43 days after its
mark became incontestable; and the public interest was served by enforcing
valid trademarks. But it would be “unfair to disgorge Hargis of its profits
under unjust enrichment or deterrence rationales when B&B did not
lose a single sale as a result of Hargis’s actions and Hargis’s infringement
was unintentional.”  Even if the fraud on
the PTO claim didn’t survive the (inevitable) appeal, there’d be no
justification for disgorgement.

from Blogger http://ift.tt/29W5zKA

Posted in Uncategorized | Tagged | Leave a comment

Guess what the latest development in B&B v. Hargis is?

Posted on July 8, 2016 by rtushnet
B&B Hardware, Inc. v. Hargis Industries, Inc., No.
06CV01654, 2016 WL 3615833 (E.D. Ark. May 16, 2016)
So, despite all the commotion surrounding this case, B&B
forgot to renew its registration,
which was duly cancelled.  A cautionary
story for clients!  Also,
incontestability is a really big deal, which deserves to be much, much better
policed.
As you may recall, B&B sells self-sealing fasteners for
the aerospace industry under the mark “Sealtight.” Hargis sells fasteners for
the construction trade under the mark “Sealtite.” As the Supreme Court said,
the full story of the litigation “could fill a long, unhappy book.”  And here we go again, denying Hargis’ motion
for judgment on the pleadings.
B&B registered Sealtight in 1993.  It opposed Hargis’s 1996 application; Hargis
sought to cancel B&B’s mark, and then B&B sued for infringement.  A jury found in favor of Hargis, holding that
B&B’s mark was “merely descriptive” and had not acquired a “secondary
meaning.” Hargis’s petition to cancel B&B’s trademark was dismissed in June
2003.  In 2006, B&B filed a
declaration of incontestability, “negat[ing] the first jury’s findings on
descriptiveness and secondary meaning.” 
B&B then sued again.  Before
the second case went to the 2010 jury, the TTAB found a likelihood of
confusion; the jury again found for Hargis on all claims.  But the Supreme Court held that TTAB
decisions have preclusive effect!  Thus,
the 2010 judgment was remanded for further proceedings, “including what
remedies may be awarded for infringement.” The Eighth Circuit instructed the
trial court to “give preclusive effect to the decision of the TTAB on
likelihood of confusion.”
But then!  After the
remand, “Hargis discovered that B&B failed to renew its registration,
resulting in its cancellation some time after the 2010 trial.”  The PTO’s official record of the cancellation
says the mark was cancelled on February 29, 2016, but Hargis argued that the
cancellation occurred some time prior, which I suspect is true given ordinary
PTO practice but have not specifically investigated.  The cancellation record is a ministerial act; the
registration lapsed when the Section 8 deadline passed. See Land O’ Lakes, Inc.
v. Hugunin, 88 U.S.P.Q.2d 1957, 2008 T.T.A.B. Lexis 47, at *4–5 (T.T.A.B.2008)
(precedential) (“[T]he date of expiration of application’s registration is not
dependent on the date the Office undertook the ministerial function of entering
the cancellation into the USPTO database.”).
B&B since reapplied for registration, which is pending,
but obviously can’t provide B&B with priority over Hargis even if it’s
ultimately granted.  (If it is, because
confusion with Hargis’s use is unlikely and, though preclusion applies in court
to TTAB holdings, the PTO isn’t bound by prior rulings on different marks, then
Hargis will have a good argument for its saga replacing Bleak House as the definititive account of ridiculous litigation; I
haven’t even mentioned some of the details of what went on before.)
The district court confronted the question: now what?
First, B&B didn’t waive review of the non-infringement
claims such as unfair competition, nor was it estopped from relitigating them
or barred by the law of the case.  “Considering
how intertwined ‘likelihood of confusion’ is with the other claims, it cannot
be ruled that B&B waived or is estopped from re-litigating the other claims
when it explicitly argued that such an important element was improperly
decided.”  Nor did the law of the case
govern, because B&B “was
certainly a significant development that changed the game for both parties.”  And the trial court’s earlier error about
preclusion “also affected the admissibility of evidence. B&B was limited by
pretrial rulings on how the decision could be used during trial.”  (Query: why would the TTAB ruling be
admissible now?  Of course the arguments for why it’s not relevant
now have a different basis.)
Then, the court ruled, “the Lanham Act does not require a
registrant to maintain [its] registration through to trial.”  Sections 32 and 43(a) have the same basic
elements, except that incontestability is conclusive evidence of validity
(subject to various defenses).  Hargis
argued that B&B could no longer rely on its registration, because it doesn’t
have one.  “B&B argues that its mark
was registered during the period of infringement and its subsequent
cancellation only changes the theory on which it can rely for the time after
cancellation.”
Hargis argued that the words “registrant,” “registered
mark,” and “registered on the principal register” in the Lanham Act all require
B&B to maintain its registration for the duration of the suit, rather than
simply possess it when Hargis allegedly infringed.  The court considered this an issue of first
impression.  (I’m dubious of the court’s reasoning
here.  Consider the situation where the
registration is directly and successfully attacked.  The court properly orders the registration
cancelled.  It’s beyond peradventure that
the presumptions accorded the registration, although they applied at the outset
of the case, can’t still be accorded the former registration.  The registration did exist when the litigation
started, but now it doesn’t.  Even if the
mark is cancelled for reasons that are not absolute bars, this should be true.  Consider, for example, fraud on the PTO: the
mark is in theory registrable, but the registrant deliberately lied to register
it with the intent to deceive the PTO, then sues someone else.  The fraud is proven and the registration is
cancelled.  The plaintiff claims that it
still has common-law rights (say, secondary meaning for a descriptive term).  The defendant shouldn’t still confront the presumption of ownership/validity that existed
at the outset of the case.)
The court reasoned that, when an unregistered mark becomes
registered during the pendency of the litigation, that doesn’t change the fact
that it was unregistered at the outset and thus no burden-shifting from the
trademark claimant is appropriate.  But
that seems completely different to me, because the initial basis of the
claimant’s rights—its unregistered common-law rights—is still present in the case,
and those rights simply continue.  It
would be completely unfair to, say, a §33(b) remote good faith user to say that
the registration relates back to the initiation of the case, when a key point
of registration is to fix the date on which rights became nationwide as a
matter of law.
But, for the very same reason, the result should be
different here: registration provides statutory
rights that are explicitly provided over and above the common law, and it was
those things—nationwide priority, the very broad description of the goods in
the specification, and, for incontestability, distinctiveness as a matter of
law—that allowed B&B priority and victory in its likely confusion claim.  Those are now gone from B&B’s arsenal.  B&B should be able to claim whatever
common-law priority it has, including rights concurrent with its federal registration,
but the cancelled registration ought to be treated as if it had never existed.   
However, relying on the analogy to unregistered marks that
become registered, the court held that “registration only impacts the theory of
recovery during periods of infringement.” 
The court also considered that its rationale was in line with
constructive notice: even a nonrenewed registration provided constructive notice
during the period of registration.  Action Temp. Serv., Inc. v. Labor Force,
Inc., 870 F.2d 1563, 1566 (Fed. Cir. 1989).
But constructive notice and existence of rights are pretty
different.  Indeed, the Action Temp court continued that the
TTAB’s conclusion that an initially unlawful adoption of a mark stayed unlawful
was “flawed.”  Though use during the
pendency of another’s now-cancelled registration wasn’t “lawful” in the sense
necessary to support a concurrent use registration, that was only one part of
the question the TTAB had to resolve on remand, given that mere knowledge of a
prior user isn’t itself bad faith precluding registration.  See
also Action Temp, 870 F.2d at 1566 n.9 (citing Anderson, Clayton
& Co. v. Krier, 478 F.2d 1246, 1248 (C.C.P.A. 1973), for the proposition that
“whatever benefits a federal registration confers are lost when that
registration is canceled”).
Unfortunately, the B&B
court’s research failed to disclose the cases—few of them, to be sure—reaching
the opposite conclusion.  Spin Master,
Ltd. v. Zobmondo Entertainment, LLC, 2012 WL 8134013 (C.D. Cal. Jun. 18, 2012),
for example, has some striking similarities with this case.  The Ninth Circuit held that plaintiffs’
registration, which was granted without a requirement of showing secondary meaning,
entitled it to a presumption of inherent distinctiveness and therefore reversed
a grant of summary judgment to defendants. While the case was back before the
district court, however, the time for filing the section 8 affidavit
expired.  Plaintiffs argued that the
presumption of validity/inherent distinctiveness still applied to the time the
registration was in effect.  The court
disagreed, concluding that “[t]he statutory evidentiary presumptions attendant
to a registration disappear when the registration lapses, including a lapse
caused by the failure to file a timely Section 8 affidavit.” 
Along with a few other cases, the Zobmondo court pointed to TTAB practice of rejecting expired
registrations as evidence of anything, including protectability, validity, use,
likely confusion, or anything other than that the registration issued.  “When a registration lapses, the ‘applicant
is now in much the same position it would have been had the prior registration
never issued ….’”  See, e.g., In re Compania Tabacalera Santiaguense, S.A., 1999 WL
546830, at *3 (T.T.A.B. July 21, 1999) (“Once a registration has been cancelled
under the provisions of Section 8 of the Trademark Act, however, it cannot
serve as evidence of any existing rights in the mark.… By failing to timely
file a Section 8 affidavit, applicant has opened up its mark to reexamination
under present standards.”); In re Compania Tabacalera Santiaguense, S.A ., 1999
WL 546830, at *3 (T.T.A.B. July 21, 1999) (non-precedential) (“Once a
registration has been cancelled under the provisions of Section 8 of the
Trademark Act … it cannot serve as evidence of any existing rights in the
mark.”); cf. Kellogg Company v.
Western Family Foods, Inc., 209 U.S.P.Q. 440 (T.T.A.B. 1980) (explaining that
TTAB makes an exception to its practice and takes judicial notice of
cancellations of relevant registrations that occur during the pendency of an opposition
proceeding, because of the potential material effect of cancellation on parties’
rights).
In sum, the Zobmondo
court held, the expired registration “is treated as never having been issued,”
which is “a bright-line rule that does not turn on the factual and procedural
nuances of a particular case. Thus, when the ‘830 registration lapsed, the
statutory presumption of validity evaporated.” 
As a result, the plaintiffs would now have to proceed without any rights
conferred by registration, despite their victory at the court of appeals based
on their registration when suit began.  See also Advance Magazine Publ’rs, Inc.
v. Norris, 627 F.Supp.2d 103, 114 n. 2 (S.D.N.Y. 2008) (finding that the
presumption of validity evaporated upon expiration of registration two years
after suit was filed and “affording neither presumptions nor evidentiary
advantages to any party”). 
The reasoning in ZipSleeve, LLC v. West Marine, Inc., 2015
WL 2380990 (D. Or. May 19, 2015), relies on Lexmark
but reaches the same conclusion:
ZipSleeve was indeed the
“registrant” of the registered trademark “ZIPSLEEVE” when West Marine allegedly
began its infringing activity in 2011. ZipSleeve accordingly argues that its
right to sue under § 1114 accrued at that time—and that the cancellation of the
mark [for failure to renew during the pendency of the case] did not extinguish
that right….
A statutory cause of action
“extends only to plaintiffs whose interests fall within the zone of interests
protected by the law invoked.” Lexmark, 134 S.Ct. at 1388. The constructive
notice to competitors and evidentiary presumptions afforded the registrant are
among the most important rights a trademark registrant has under the Lanham Act.
By contrast, the right to exclude others from use of the mark comes not from
registration, but merely from priority of use of a protectable mark. And that
right may be protected, in the absence of a registered trademark, using §
1125(a). The weight of authority thus clearly indicates that Congress sought to
protect only the interests of plaintiffs with registered trademarks under §
1114. Plaintiffs with unregistered trademarks are protected by § 1125(a), but
do not fall within the zone of interests protected by § 1114. Therefore, the
owner of a mark that was valid when issued but which has since lapsed has no
cause of action under § 1114—not even for infringement that occurred during the
lifetime of the mark.
The B&B district
court’s conclusion was, by contrast, that:
“registrant” and “registered mark”
do not refer to a claimant’s present condition, but only the situation at the
time of infringement. Hargis’s argument inserts words into the statute, as the
Lanham Act does not say that a mark must be “presently registered” or
“currently registered.” B&B’s registration was not cancelled because it was
obtained improperly, but merely expired when it failed to renew. 
I don’t understand that distinction, which does not explain
why someone with a mark cancelled for a substantive reason wouldn’t also have
been the “registrant” at the time the lawsuit began.  The statute also doesn’t say “legitimate/ly” or “valid/ly” before registrant/registered.
Anyway, the court went on to hold that B&B’s requested
remedies, an injunction and money damages, were both still available. An
injunction was still available to prevent injury given that B&B filed a new
registration application seeking expedited review.  “Should Hargis be found liable at trial, the
parties may argue whether an injunction is appropriate.”  As for damages, willful infringement wasn’t a
prerequisite; the court found that the statute was straightforward because of
the more recently added language requiring willfulness for damages caused by
dilution.  And anyway, there was a
question of material fact:
Viewed in the light most favorable
to B&B, Hargis knew of B&B’s concern for the confusing marks since the
mid-1990s, and even after Hargis won at trial in 2000, Hargis knew that the PTO
deemed B&B’s mark worthy of registration. Hargis had knowledge of B&B’s
registration, and thus B&B’s right of exclusive ownership, and Hargis
admits that it was aware of the PTO’s later determination of incontestability.
Based on this limited record, this is sufficient to create a jury question on
whether Hargis willfully infringed on B&B’s mark.

(Is that really sufficient for willfulness as to infringement? Ah well.)  Questions about equitable defenses also would
have to be resolved after liability, if it were found.

from Blogger http://ift.tt/29nUX5w

Posted in Uncategorized | Tagged | Leave a comment

It depends on what the meaning of “is” is: Section 15 declarations and pending challenges

Posted on July 7, 2016 by rtushnet
It turns out that Paleteria La Michoacana, Inc. v.
Productos Lacteos Tocumbo S.A. De C.V., 2016 WL 3034150,  No. 11–1623 (D.D.C. May 27, 2016), is
even more of a hairball than I realized. 
The thorny
legal and factual issues as delineated by the district court are plentiful
enough, and at this point in the case there are also procedural questions about
timeliness of arguments and the like which I can’t even begin to opine on.  
It turns out that there are also what
appears to me to be mistaken Section 15 declarations wrongly accepted by the
PTO.  Given that (1) the court found that
the marks at the core of the controversy were geographically descriptive
(whether the image of the Indian Girl was descriptive is a little unclear, so
that too is an issue, but the decision is clear that the word marks are and its
rationale would seem at least potentially applicable to the Indian Girl as well),
and (2) the incontestability of one side’s marks was part of what let it
prevail on priority, the PTO’s invited error might have been consequential and
this case is even more of an issue-spotter than I thought.
Here’s what apparently happened: Prolacto counterclaimed in
2012 for cancellation of PLM’s older registrations on the grounds of fraud and
abandonment.  (I understand that there were
strategic reasons not to counterclaim for mere descriptiveness, but now that
creates one of the procedural issues.) The court granted summary judgment in
favor of PLM on these counterclaims in September 2014, at which point PLM filed
for incontestability for its registrations of the Indian Girl alone, Nos. 2,905,172
and 2,968,652.

As with the bead
dog case, TSDR clearly shows that this lawsuit is pending right before the Section
15 affidavit, but nonetheless the PTO, which doesn’t conduct substantive examination of Section 15 affidavits, accepted the affidavit.  That affidavit stated that
there was “no proceeding involving
said rights pending and not disposed
of in either the U.S. Patent and Trademark Office or the courts” (emphasis
added).  That was just not true.  The law and the TMEP refer to proceedings and
not to individual claims for cancellation, and rightly so: if the judgment is nonfinal, then, for
example, the challenger could appeal and the court of appeals could reverse the
district court on the nonfinally resolved issue—except, if the Section 15
affidavit is accepted in between the district court and court of appeals
stages, then the court of appeals can’t rule on a challenge to distinctiveness or priority any more! 
There are cases indicating that if the trademark owner is a
plaintiff, and no counterclaim challenging registrability was filed before the
declaration was submitted, that’s not a problem. See TMEP
§1605.04 (“The USPTO does not consider a proceeding involving the mark in
which the owner is the plaintiff, where there is no counterclaim involving the
owner’s rights in the mark, to be a ‘proceeding involving these rights’ that
would preclude the filing or acknowledgment of a §15 affidavit or
declaration.”).  And that too makes
sense, because the mere fact that the trademark owner is fighting alleged infringers
shouldn’t keep it from incontestability; at the point that no counterclaim has
been raised, there is no element of the proceeding challenging the trademark
owner’s ownership/right to register.  But
that’s a completely different situation than a nonfinally rejected challenge to
registrability. To maintain otherwise seems to me an implausibly tendentious
reading of the word “is” that is inconsistent with the concept of challenges
that are “pending” though not finally disposed of.
First, is it fraud on the PTO to file, claiming that there’s
no pending challenge, in such a circumstance? Because the standard for fraud is
so high I would say: not if there was a misunderstanding of the law (or the
facts, though in this case the same firm handled the registration and the
litigation), even an unreasonable misunderstanding.  (Though I think the lawyer should know
better.)  Thus, the registration itself
isn’t invalid. 
But, in my opinion, the Section 15 declaration still has to
be revoked because the statutory requirements for incontestabilty weren’t
fulfilled, even though the registration itself survives.  Because there’s no examination, this is the
only way to keep the register accurate.  See Nahshin v. Product Source
International LLC, 107 U.S.P.Q.2d 1257, 1258 n.1, 2013 WL 6040375 (T.T.A.B.
2013) (§ 15 affidavit filed after a petition to cancel was filed has no legal
effect); cf. Duffy-Mott Co., Inc. v.
Cumberland Packing Co., 424 F.2d 1095, 1100 (C.C.P.A. 1970) (noting that,
because incontestability amounts to a “new right” as to the covered mark/goods,
policing incontestability is of separate importance versus registration
generally). I would think that the PTO, district court, or court of appeals,
when informed of the problem, should revoke the acknowledgement of the
declaration/order it revoked, as the PTO did with the bead dogs.
Here are the cases cited by PLM defending its position that
it could take advantage of the gap between district court and appellate proceedings
to file its affidavit: Sunrise Jewelry Mfg. Corp. v. Fred S.A., 175 F.3d 1322, 1327
(Fed. Cir. 1999) (no proceeding involving rights in the mark was pending
because at the time section 15 affidavit was filed, no counterclaim challenging
registration or validity of mark had yet
been filed, though one was filed in between the filing of the affidavit and
its acceptance by the PTO); Holley Perf. Prods., Inc. v. Quick Fuel Tech.,
Inc., 624 F. Supp. 2d 610, 616 (W.D. Ky. 2008) (section 15 affidavit of
incontestability properly filed where counterclaim had not yet been filed); Levi Strauss & Co. v. Esprit US
Distribution Ltd., 588 F. Supp. 2d 1076, 1083 (N.D. Cal. 2008) (no fraud where affidavit filer failed to
investigate whether there was a pending challenge); J. H. Chapman Grp. v.
Chapman, No. 95 C 7716, 1996 U.S. Dist. LEXIS 899, at *8-9 (N.D. Ill. Jan. 30,
1996) (same where affidavit filer didn’t disclose that a challenge had been threatened but not filed); 3 McCarthy on
Trademarks & Unfair Comp. § 19:140 (4th ed.) (no challenge is pending until counterclaim has been filed); 1-4
Gilson on Trademarks § 4.03(2)(b) (Matthew Bender & Co. 2016) (reference to
ability to file affidavit upon “successful termination of the litigation”; PLM’s brief added the words “on the counterclaim challenging the registered mark”).

Other thoughts?  (I should disclose that PLM cites my earlier post on the case in arguing to the court that the judgment should be corrected because it doesn’t make sense to cancel one of PLM’s marks based on the existence of marks that infringe other, similar PLM marks.  I doubt it will want to cite this one.)

from Blogger http://ift.tt/29vFoec

Posted in Uncategorized | Tagged | Leave a comment

Stunning scope of color TM leads court to cabin registrations

Posted on July 5, 2016 by rtushnet
Cedar Valley Exteriors, Inc. v. Professional Exteriors,
Inc., No. 13-CV-2537 (D. Minn. Jun. 29, 2016)
See DuetsBlog’s
2012 entry on what appears to be a related case, in which the plaintiff roofing/repair
company sued a different competitor for using orange on its signs.  (Related DuetsBlog entry on pervasive
use of orange in the home improvement industry, making the PTO’s actions
here even more troubling and plaintiff’s lawsuits seem even more
anticompetitive.)
One might call this case a poster child for the problem of too-broad
trademark registrations.  The court begin
by deeming Cedar Valley’s service marks
highly unusual in two respects:
First, both marks are for a color— specifically, the color orange. And second,
both marks are extraordinarily broad. Together, the two marks appear to cover
any use of any shade of orange in any article of clothing or any form of
advertisement related to any aspect of the construction industry. Thus, for
example, the use of orange safety vests on a construction site would appear to
be encompassed by the registered marks—something that would no doubt come as a
surprise to thousands of contractors.
How Cedar Valley was able to
persuade the United States Patent and Trademark Office (“PTO”) to register such
marks is a mystery, particularly given that Cedar Valley has used only
particular shades of orange; used it only on shirts, lawn signs, and a few
other advertising items; and used it only in connection with a narrow slice of
the construction industry. But the PTO did register the marks [and they became
incontestable], and, as a result, this lawsuit raises a number of difficult
legal and factual issues. 
The court ultimately amends Cedar Valley’s registration and
finds that there are outstanding questions of fact on likely confusion.
Cedar Valley logo

Flashy Cedar Valley logo

The plaintiff is primarily in the residential repair
business, which it gets through “door-knocking campaigns, use of yard signs,
[and] referrals and other advertising,” as well as through preferential
relationships with insurance companies and their intermediaries.  Professional Exteriors does residential “remodel[ing]
[and] restoration,” including similar services.  Sixty to seventy percent of its work consists
of “insurance restoration” of storm-damaged homes.
“Cedar Valley uses orange on the signs that it puts on
customers’ lawns and the shirts that its employees wear, as well as on flyers,
door hangers, and other advertising materials.” Cedar Valley picked orange
“[b]ecause it stands out more than other colors,” and because orange was “the most
obnoxious, loud” color it could put on signs and shirts, according to its
witness.
In 2008, Cedar Valley registered two service marks involving
the color orange:
Registration No. 3,429,642 (“the
’642 mark”) is for “the color orange as applied to yard signs and other
advertising materials used in advertising the services.” The drawing depicts a
solid-orange yard sign outlined by dotted lines. Registration No. 3,429,643
(“the ‘643 mark”) is for “the color orange as applied to clothing worn during
the performance of the services.” The drawing depicts a solid- orange
short-sleeved polo shirt outlined by dotted lines.
Shirt registration

Sign specimen

Shirt specimen

Sign registration

The description of the services includes “building
construction and repair; building inspection; construction and renovation of
buildings; construction and repair of buildings; general construction
contracting; installing siding; roofing contracting; roofing installation;
roofing repair; [and] roofing services . . . .”
RT here: Examining TSDR, I found that the shirt mark had
initially been nonfinally rejected for failure to function as a mark, with the
2(f) statement of five years of continuous use deemed insufficient because the
nature of the claimed matter—the color of a shirt worn by an employee—wasn’t
such that consumers would ordinarily perceive it as a mark.  The same was true for orange for signs.
In its response to the examining attorney, Cedar Valley
argued that color was in fact registrable. 
It also argued that its sales of over $12 million/year and its pervasive
use of orange in marketing qualified orange as a trademark for its services,
since its 250 sales reps each spoke in person to 5,000 potential customers per
year (which works out to roughly 20/day in a 5-day week, yikes) and thus 1.25
million people were exposed to their orange clothing each year, not to mention
anyone who saw their orange-clad workers on 1,500 roofing etc. jobs per year.  
Cedar Valley submitted employee declarations that they “often
receive telephone calls from prospective and actual customers who often times
invariably ask for them to confirm if Applicant is the roofing/siding company
with the ‘orange signs’, ‘orange flyers’ and/or ‘orange shirts’.”  (Often times invariably?  The declarations themselves say “sometimes,”
which is at least plausible; there are three employee declarations repeating
this statement, though only one considers it common—her estimate is 30 calls/week;
the other two employees only answered the phone when the receptionist was
unavailable.)  Plus, Cedar Valley
contended that there was evidence of actual confusion in that “a member of the
purchasing public recently mistook services of a competitor wearing orange
shirts as the services as provided by the Applicant.”  (In the declaration, the declarant states
that the relevant customer signed a contract with a Cedar Valley sales rep, who unbeknownst to Cedar Valley gave her
contact information to a competitor. 
When the competitor showed up to perform the work, it’s not particularly
surprising that she thought it was Cedar Valley; I can’t imagine the absence of
orange shirts would have changed anything.) 
“We’re the guys with the orange signs!”

The examining attorney accepted these claims; I saw no
further correspondence.  The only “look
for” advertising in the TSDR record was “we’re the guys with the orange signs!”
on the second page of an orange flyer. 
It’s hard to expect examiners to know how pervasive a color is in any
given industry, but I still think this has facts consistent with rejections
upheld by the TTAB, given the high burden of proof that color claimants should
face.
Anyhow, back to the present dispute: Professional Exteriors
began in 2010, and has used orange on its advertising and promotional
materials, including yard signs and shirts.  After a 2011 C&D was ignored, Cedar Valley
sent another in 2013 adding a demand for $25,000 in damages, then sued.
Professional Exteriors logo

Another Professional Exteriors logo

Photo with Professional Exteriors shirt

The court expressed concern about the apparent scope of the
registrations.  At times, Cedar Valley
argued that the marks were narrower than “any shade of orange in any article of
clothing or any form of advertisement related to any aspect of the construction
industry, … although Cedar Valley had difficulty explaining how they were
narrower.”  The court appointed a
trademark lawyer as an expert witness. 
The expert described Cedar Valley’s marks as “very unusual” and the
legal issues raised by those marks as “very hard.”  He concluded that the functionality and “phantom
mark” doctrines justified amending the marks, but nonetheless recommended
summary judgment for Cedar Valley on likely confusion.  The court agreed with the first part, but, as
the responsible entity for legal determinations, not on the latter.

Mark Lemley
& Mark McKenna will be glad to hear how the court approached the issue:
Before the Court can assess the
merits of Cedar Valley’s infringement claims and Professional Exteriors’
defenses, the Court must first determine the scope of the registered marks.
That is, before the Court can answer such questions as “how strong are the
marks?” and “how similar are Professional Exteriors’ marks to Cedar Valley’s
marks?,” the Court must first determine the precise scope of Cedar Valley’s
registered marks. 
Functionality limits the scope of color marks.  In particular, functionality bars
registration of orange for earplugs, because “orange is particularly visible
and facilitates safety checks.”  So too
with payphones, which if orange are easier to find in an emergency. And
likewise with safety in the construction industry.  Given the breadth of the written descriptions
of the marks, they encompassed functional use of orange in “clothing” and “advertising
materials” across the entire construction industry.  Read literally, the registrations would cover
construction workers’ safety vests and some of the orange signs at construction
sites, which could be deemed advertising materials.  However, the court wasn’t sure if the record
showed that orange serves the same safety function in residential repairs as it
did on large construction sites.  (In my
neighborhood, they use orange cones for small repairs all the time—it’s an
easily understood warning sign.)  Still,
orange was functional in most of the construction industry.  There was also a question about the
eye-catching use of orange, that is, aesthetic functionality, but the record
was contested at this point.
Given the record, Cedar Valley’s registrations had to be
amended to be limited to “installing siding; roofing contracting; roofing
installation; roofing repair; [and] roofing services.”
Separately, the marks as described were also illegitimate
phantom marks. “[U]nder the Lanham Act and the rules promulgated thereunder, a
trademark application may only seek to register a single mark.”  A mark that might change is not a single
mark.  “The prohibition against phantom
marks serves the primary purpose of federal trademark registration, which is
providing notice to the public of the registrant’s ownership of the mark,” and
allows people to search the register to figure out what’s there.
Color marks are subject to the phantom mark rule, and Cedar
Valley’s marks conflicted with it on their face.  However, the TMEP allows an exception for
color service marks when an applicant “seeks to register a single color as a
service mark used on a variety of items not viewed simultaneously by purchasers.”
 They can represent the mark as “a
solid-colored square with a dotted peripheral outline . . . .” TMEP §
1202.05(d)(ii). The idea is that a color service mark can be applied to a
variety of objects (“e.g., stationery, uniforms, pens, signs, shuttle buses,
store awning, and walls of the store”), but still create for the consumer a
unified “distinct commercial impression.” 
(The court pointed out that Home Depot has its own registration for
orange for advertising for installation services, “including, notably, the
installation of ‘roofing’ and ‘seamless gutters.’”)
The court’s expert expressed doubt about the validity of
this exception; the TMEP notes that no court has blessed it, and, as a policy
matter, it’s not clear that such a registration provides adequate notice.  The court didn’t need to decide the matter,
though, because Cedar Valley hadn’t registered a solid-colored square with a
dotted peripheral outline.  The drawings
depicted a lawn sign and a polo shirt. 
And, “[i]n the case of a discrepancy between the drawing and the written
description of a color mark, the drawing controls the text”:
To hold otherwise would be to
ignore the public-notice function of trademark law. Cedar Valley’s marks cannot
be allowed to encompass any type of advertising materials and any article of
clothing, because the drawings in the registrations depict only a yard sign and
a polo shirt, and thus indicate to anybody who finds Cedar Valley’s
registrations in a trademark search that the marks are limited to those
particular objects. The drawings do not give anyone wanting to establish their
own service marks adequate notice that Cedar Valley’s marks encompass more than
lawn signs and polo shirts.
The drawings also determined the particular covered shade of
orange, though the court noted that infringement by different shades of orange
would still be possible.  And the
drawings determined the particular manner in which orange was claimed: “the
entire surface” of short-sleeved polo shirts and yard signs, not orange stripes
or orange trim or orange lettering against a non-orange background—though again,
that didn’t exclude infringement claims against such uses.  (Though, especially with functionality
concerns, I think the registration’s limits should weigh very heavily against a
finding of infringement in such cases.)
The court also held that it had power to rectify the
register even as to incontestable marks, which the parties didn’t contest.  And since the changes here aren’t based on
lack of distinctiveness, that seems correct.

On to likely confusion, where there was conflicting evidence
on the strength of the marks and the degree of competition  between the parties; there was no evidence of
bad intent or actual confusion; and the consumers were likely to pay a lot of
attention.  There were also factual
disputes about the functionality of orange in connection with roofing and
siding.  Finally, though Cedar Valley
emphasized the incontestability of its marks, Professional Exteriors could
still argue that the marks were weak because they lacked distinctiveness or
secondary meaning.

from Blogger http://ift.tt/29f163J

Posted in Uncategorized | Tagged | Leave a comment

Trademark question of the day, zoo edition

Posted on July 5, 2016 by rtushnet

Spotted by an eagle-eyed correspondent (no pun intended) at the New Orleans zoo:

Straight Outta Audubon Zoo

Just Voodoo It

from Blogger http://ift.tt/29KZlwL

Posted in Uncategorized | Tagged , | Leave a comment

TM/false advertising interface: “same formulation” statement w/o more infringes

Posted on June 30, 2016 by rtushnet
De Simone v. VSL Pharmaceuticals, Inc., No. TDC-15-1356, 2016
WL 3466033 (D. Md. Jun. 20, 2016)
This case sends us deep into the weeds of the distinctions
between trademark and false advertising, and approves rather onerous
requirements for apparently truthful statements about the relationship between
the parties’ products.
De Simone was one of the inventors of a probiotic that he
then brought to the US market through a partnership with VSL, marketed under
the trademark VSL#3.  In 2015, De Simone
parted ways with VSL and began a partnership with ExeGi Pharma to bring his
formulation to market under the name Visbiome. 
VSL alleged that De Simone and ExeGi infringed the VSL#3 mark and
falsely advertised that VSL#3 was no longer on the market or that Visbiome was
the rebranded version of that product.  The court previously granted a preliminary
injunction in favor of VSL barring certain conduct by the De Simone parties as
infringing, including depictions of Visibiome that referred to it as “Original
Formula VSL#3 Probiotic Blend” and “Visbiome/VSL#3 blend”; the phrase “Same as
Original Formula VSL#3 Probiotic Blend”; references to clinical studies as
“Reported as VSL#3”; and the general statement that Visbiome is “the same” as
VSL#3.
The court also provided safe harbor language that was likely
fair use: (1) “Compare to Ingredients in VSL#3,” as long as it was accompanied
in close proximity by the disclaimers that VSL#3 was a registered trademark of,
and manufactured exclusively for, VSL, and that Visbiome wasn’t affiliated
with, endorsed by, or distributed by VSL; (2) the statement that “Visbiome
contains the same strains, in the same concentrations and proportions, as the VSL#3
probiotic blend as produced before [Date],” one time in the Visbiome materials,
accompanied by the same disclaimer; (3) accurate information about De Simone’s
role in developing VSL#3 that made clear that there was no current affiliation
between Visbiome/ExeGi and VSL#3/VSL. 
E.g.,

In the mid-1990s, Professor Claudio De Simone, M.D. invented a proprietary
blend of probiotic strains and collaborated with VSL Pharmaceuticals, Inc. to
produce and market it as ‘VSL #3,’ a trademark owned by VSL Pharmaceuticals,
Inc. In 2014, Professor De Simone decided to leave VSL Pharmaceuticals and is
now collaborating with ExeGi Pharma, LLC to produce Visbiome, a probiotic using
the same proprietary blend of probiotic strains that De Simone originally
invented.
ExeGi launched Visbiome on February 1, 2016, the day after
the agreement between VSL and Danisco, the original manufacturer of VSL#3 and
current manufacturer of Visbiome, expired on January 31, 2016.   ExeGi issued a press release and a LinkedIn
posting using the safe harbor language with a disclaimer in a footnote.  The press release also redefined the strains
and concentrations in VSL#3 as the “De Simone Formulation,” to indicate a
continuity with VSL#3 without the actual use of that trademark, and asserted
that the De Simone Formulation had undergone numerous scientific trials and was
the subject of “over 60 peer-reviewed studies.”
The press release also said: “The license agreement between
Professor De Simone and VSL Pharmaceuticals, Inc., which provided VSL
Pharmaceuticals, Inc. the rights to market the De Simone Formulation using the
‘VSL#3’ trademark, expired on January 31, 2016.”  Likewise, on LinkedIn, ExeGi sent a message
to its 85 LinkedIn followers stating: “Have you prescribed the medical food
VSL#3 in the past to your patients with IBS, Pouchitis or Ulcerative Colitis?
The De Simone formulation you’ve been prescribing to your patients will now be
available as Visbiome.”  The posting did
not contain the disclaimer.
After further infighting, the court issued an additional
order requiring ExeGi to remove the language about license expiration from
future communications and generally refrain from stating or suggesting that the
license agreement had expired or that VSL#3 wouldno longer be on the market,
and include the disclaimer in close proximity. 
VSL objected to statements on the Visbiome website (multiple
uses of the safe harbor statements, references to clinical trials that included
VSL#3 in their titles, and claims to exclusivity of the formulation), ads that
appeared in response to Google searches, and statements made by ExeGi sales
representatives and the sales training materials they received and used.  [I note, with respect to the clinical trials,
if they really did use VSL#3 in their titles, and if ExeGi really is using the
formulation tested, there would appear to be a severe First Amendment problem
with banning any references to those trials. 
The court focused on the fact that the
webpage listing studies didn’t contain a disclaimer or explain why VSL#3 was
being referenced.]
ExeGi used both static and dynamic AdWords ads. Static ads
display pre-drafted text, while dynamic ads incorporate searched-for keywords
into the text of an otherwise pre-drafted ad. “A line of code for a dynamic ad
might read ‘Best treatment for {keyword},’ with the user’s search term to be
inserted in place of ‘{keyword}’ when the ad appears.”  For its static ads, ExeGi used ads such as
one beginning “Have You Ever Used VSL#3?/If So, Check Out Visbiome….”  For dynamic ads, it used ads such as one
beginning “{ Keyword: Have You Ever Used VSL#3}/If So, Check Out Visbiome….”  The ads didn’t have a disclaimer, and some of
the ads actually appeared as “VSL#3/www.visbiome.com/If So, Check Out Visbiome
High-Potency Probiotic….”  VSL’s expert
witness on AdWords and SEO testified that this truncation to the keyword alone occurs
“when the proposed dynamic headline, including the keyword, would exceed 25
characters.”  ExeGi maintained that it
never intended for VSL#3 to appear by itself without the question, and it paused
the ads when Google was unable to explain the truncation.
VSL’s expert witness also said that Visbiome’s website showed
“keyword stuffing”: repeatedly using VSL#3 to increase the likelihood that
Google’s search algorithm will associate the website with that term and thereby
increase the prominence of that site in search results relating to that term. “VSL”
was the second most frequently used term on the Visbiome website, used even
more frequently than “ExeGi.” “VSL#3” frequently appeared “below the fold,” “a
placement that may indicate that the term is used more to influence the search
algorithm than as text intended for website users.”  ExeGi responded that it put the Disclaimer on every page of the website to be responsive to
VSL’s concerns, at the bottom of the page in a “black box” to signal its
importance to medical professionals.
VSL also complained that ExeGi sales reps told people in at
least three doctors’ offices that VSL#3 was no longer being sold.
VSL moved to hold the De Simone parties in civil contempt,
which requires violation of the terms of a valid decree that caused harm to the
movant. There is no requirement that the violation be willful.  But, because intent is irrelevant, the order
allegedly violated must be one that sets forth in “specific detail an
unequivocal command.”  
VSL argued that the use of the safe harbor statements on the
Visbiome website was excessive and the disclaimer wasn’t close enough to the
use of the mark.  The court found that it
was unreasonable for the De Simone parties to interpret the term “only once in
the Visbiome materials” as permitting multiple uses on the Visbiome website, up
to once on each individual page of the website. 
Thus, they violated the spirit of the order, though not its letter, because
the order never expressly barred any particular number of uses of VSL#3 or
other approved language.  The multiple
uses went outside the safe harbor, which was for a single use, but didn’t
violate the order.  The order also
required the disclaimer to be in “close proximity” to use of VSL#3, and the court
found no violation there—sometimes the disclaimer was in text shortly after the
reference to VSL#3, and when it was in a footnote, it had the same font, same
size, and same color as the main text. “The use of a footnote and placement of
the Disclaimer ‘below the fold’ may reduce the likelihood that a user will read
it, but with Visbiome’s own content at times requiring the reader to scroll
down, the Court cannot say that there is clear and convincing evidence that
ExeGi has placed its required disclaimers at a distance too far from the VSL#3
mark to satisfy the requirement of ‘close proximity.’”
However, the court was “troubled” by the lack of footnote
reference markers next to the term VSL#3 when it was used in study names.  This appears to me to be excessively
formalistic.  Anyone looking at the
references would likely have plenty of opportunity to see the disclaimer
already, and as the court itself noted, readers would need to understand the
relationship between VSL#3 and Visbiome to understand why these were listed as
references. But the court reasoned otherwise: “The failure to direct the reader
to the Disclaimer substantially decreased the likelihood that it would be
noticed, so this omission could be viewed as indicating an intent to obfuscate
the fact that the clinical trials were performed on a product offered by a
different company.”  Still, the
disclaimer was at the bottom of the clinical references page, and so there was
no violation of the order.
The court did find the De Simone parties in contempt for the
AdWords ads.  “While the Court agrees
that the headline ‘VSL#3,’ accompanied by no other text, would appear to be an
aggressive attempt to co-opt the VSL#3 mark, the Court has issued no orders
barring advertising through Google AdWords, employing dynamic ads, or using
VSL#3 as a keyword for such ads, so the fact that a dynamic ad resulted in such
a headline, intentionally or unintentionally, does not specifically implicate
any of the Court’s prior orders.”  But
the disclaimer was required, and several of the AdWords ads didn’t have it.  Even if AdWords text didn’t have enough space
for the disclaimer, the court’s order provided no exceptions for space
limitations in particular advertising media. 
Nor was “close proximity” satisfied by having the disclaimer available
once someone clicked on the ad.  “The De
Simone Parties’ interpretation of proximity as ‘one click away’ defines that
term as a physical act, not a measure of distance, and thus cannot be deemed a
reasonable interpretation of the language of the February 2016 Order.”  (I think it’s a bit odd for the court to say
that proximity requires physical distance in this context, but ok.)  This shifted the burden of compliance to
Google’s users, who needed to click to see the disclaimer. 
The court also found that the initial use of the statement
that the De Simone formulation was “exclusively available” from ExeGi, coupled
with the website’s assertion that the De Simone Formulation is the same as that
used in VSL#3, led to “the unmistakable conclusion that VSL#3 is no longer
available for sale,” thus violating the court’s order.  The De Simone parties might have intended
only to go up to the acceptable line, but they crossed it.  By contrast, statements that De Simone was
“collaborating exclusively” with ExeGi “merely states that De Simone has
changed companies and does not suggest that VSL#3 is no longer on the market.”  (Interesting how thinly the court is slicing
this, given that the targeted consumers probably don’t make these distinctions—or
care.)
The court then turned to VSL’s false advertising claims,
which turned on ExeGi’s claims to exclusivity/claims that VSL#3 had been
discontinued.  Given that VSL had
stockpiled the older formulation of VSL#3 and could still sell it, plus the
fact that VSL was going to reformulate the product, these claims were false or
misleading.  De Simone’s statement “my
formulation is now exclusively available from ExeGi Pharma” as Visbiome was
likely literally false while VSL’s plentiful stockpiles were available.  This was likely to harm VSL; the court noted
that when an ExeGi sales rep made similar statements to one gastroenterologist’s
office, that office accepted Visbiome samples and declined to accept any more
VSL#3 samples.  
However, the court found that the sales reps’ statements
weren’t likely to constitute advertising or promotion.  The Fourth Circuit hasn’t interpreted that
language in the Lanham Act.  The court
cited the Seventh Circuit’s since-renounced holding that for purposes of a
false advertising claim, “[a]dvertising is a form of promotion to anonymous
recipients, as distinguished from face-to-face communication.” First Health
Group Corp. v. BCE Emergis Corp., 269 F.3d 800, 803 (7th Cir. 2001).  [See Neuros Co., Ltd. v. KTurbo, Inc., 698
F.3d 514 (7th Cir. 2012)]. But the court here agreed with the Second Circuit that
such a reading “collapsed the disjunctive statutory language ‘commercial
advertising or promotion’ into only commercial advertising.”  Using the relevant parts of Gordon & Breach, the court followed
the Second Circuit’s lead, looking for (1) commercial speech; (2) for the
purpose of influencing consumers to buy defendant’s goods or services; (3) disseminated
sufficiently to the relevant purchasing public to constitute “advertising” or
“promotion” within that industry.  Element (3) was not satisfied on the present
record.  Since Visbiome’s launch, ExeGi
sales reps had made sales calls at about a thousand doctors’ offices; three
alleged instances of false statements weren’t sufficient in that context.
VSL argued that the court should consider the sales reps’ statements
as part of an organized campaign along with the website statements and find
them collectively to qualify as “widespread dissemination.”  The court here declined to hold that “face-to-face
statements could be combined with distinct forms of commercial advertising,
such as websites or press releases, to satisfy this requirement.”
The court presumed irreparable harm because the literally
false statements were functionally comparative advertising. The public interest
is against misleading advertising, and so a more expansive preliminary
injunction was warranted.
“The evidence presented has amply established that the De
Simone Parties’ activities in all three areas continue to be likely to cause
confusion over whether Visbiome and VSL#3 are the same product.”  I note that stated this way, this is purely
false advertising, not confusion over source or sponsorship—and if they have
the same formulation, reasonable consumers might well consider them to be the “same
product.” Nonetheless, the court proceeded as if this were a trademark
case, holding that the repeated use of VSL#3 on the Visbiome website went too
far.  The court cited 15 U.S.C.
§1115(b)(4) and descriptive fair use cases, not nominative fair use cases, even
though the use is very clearly not descriptive in the ordinary trademark sense.  Also, this result highlights the silliness
that the “too much” inquiry can lead to—the ultimate question should be “is this
use confusing?” and the fact that a website has a single footer that it uses on
every page doesn’t plausibly increase the likelihood of confusion. 
The court also didn’t like that the disclaimer frequently
appeared only in a footnote at the bottom of the page, “barely within ‘close
proximity’ to the VSL#3 mark.”  So too with the references to clinical trials, which the court previously allowed “so
long as the VSL# 3 trademark was not used in such references,” and the De
Simone parties’ use of the added parenthetical “Reported as VSL#3” in
connection with clinical studies was expressly barred by the prior court order.
 In the court’s view,
the combination of the repeated
claim throughout the website that the De Simone Formulation has been the
subject of over 60 clinical trials and this listing of numerous clinical
studies with VSL #3 in the title without a cross-reference to the Disclaimer
creates significant confusion whether VSL#3 and Visbiome are the same product.
Even if ExeGi has a reason to refer to those studies because Visbiome is, as a
scientific matter, the same formulation that was subjected to those trials,
that scientific equivalence cannot be used as an opportunity or excuse to erode
VSL’s trademark.
And here we have the guts of the problem: “eroding” a
trademark isn’t actually a claim under the Lanham Act.  If the use causes confusion as to source or
sponsorship, that’s trademark infringement, but the court seems to think that
confusion over what’s in Visbiome
(which might be understanding, not confusion!) is also trademark
infringement.  The classic Smith
v. Chanel case, like many others,
makes clear that the remedy for this latter claim, if it’s false, is in false advertising. 
In fairness, the fact that trademark now is so expansive and
covers immaterial confusion makes it easy for the court to conflate the
two.  The court appealed to testimony
from one staff member in a doctor’s office who apparently came to believe that
VSL#3 had changed its name to Visbiome, which “implicates not just false
advertising concerns, but also trademark infringement concerns, because the
staff member appears to have believed that Visbiome was the same product, made
by the same company, as VSL#3.”  I do
note that this testimony appears to have been submitted by an affidavit
solicited by VSL, without too much inquiry into how much the staff member distinguished
between the two propositions (what’s in the product/who sold the product in the US) or cared.  
One useful feature of nominative fair use, for all its
flaws, is that it insists on the basic right of people in the market to make
truthful claims.  If, as I expect is the
case, some set of consumers will always understand “Visbiome has the
formulation that used to be available in VSL#3” to indicate some continuity
between the responsible companies (which is at least true-ish in this case!),
that shouldn’t prevent the seller from stating the truth of that fact.  We can pile on further disclaimer
requirements, but most disclaimers don’t work, so this is often just courts
making themselves feel better about inevitable confusion.  In this situation, perhaps, doctors will have
an incentive to listen and learn that “VSL#3 is still on the market, but with a
new formulation, and we’ll be the only supplier of the formulation you know and
love once stockpiles of existing VSL#3 run out.” But that’s probably rare.
The court also found that prior statements on the website, “asserting
that the formulation used in VSL#3 was now ‘exclusively available’ as Visbiome,
created additional confusion whether VSL#3 had simply been renamed as Visbiome.”  Again, the court is mushing together two
questions—who produces Visbiome (a particularly tricky inquiry given that, in
fact, VSL#3 used to get its formulation from the same manufacturer now
providing it only to ExeGi in the US) and what’s in Visbiome.  A reasonable consumer could easily understand
these claims to be about what’s in Visbiome, and as far as I can tell from what’s
written in the opinion, that interpretation renders the claim true, with the exception
of the stockpiled VSL#3. The court doesn’t even indicate that the inactive
ingredients differ.
The court found that ExeGi’s use of this language was “a
telling indicator of ExeGi’s market posture,” which was to use VSL#3 “to define
what Visbiome itself is. The Court therefore can draw no other conclusion than
that ExeGi has and continues to use the VSL#3 mark on the Visbiome website in a
way that creates confusion and thereby enables Visbiome to impermissibly ‘profit
from another’s reputation.’”  Why this
isn’t the same mechanism used in Smith v.
Chanel is an open question.
For AdWords, VSL didn’t argue that mere use of VSL#3 as a
keyword would be infringing, and there wasn’t enough evidence to find that the
De Simone parties were “keyword stuffing”; search results showed Visbiome
appearing as part of one of ExeGi’s Google AdWords ads, but not as a result of
organic search results, and the court noted that, in recent years, courts have
understood that such conduct probably doesn’t improve search ranking anyway.  However, the Google ads using just VSL#3 in
the top line “exacerbated the confusion in the marketplace between Visbiome and
VSL#3.”
The court declined to treat the De Simone parties as
adjudicated infringers required to keep a “safe distance” from VSL’s mark, in
the absence of a final ruling on the merits. 
The court declined to prohibit use of VSL#3 entirely, but expanded the
injunction given the De Simone parties’ demonstrated willingness to “go as
close as possible to any line drawn by this Court.”
As a result, the De Simone parties were allowed to use the “same
strains” language and “De Simone history” language only once on the entire
Visbiome website, with the disclaimer in immediately adjacent text, not a
footnote.  [I wonder if you could change
the website so that it was just frames for other parts, so that these always
stayed on top ….] “Any other phrases using VSL#3 must be approved by the Court
and may appear only once on the website, again with the Disclaimer in the
immediately adjacent text.”  They had to
remove the footer from any page that didn’t use VSL#3 in text.
Further, the website couldn’t claim that any clinical study
using “VSL#3” in the study title constituted a study relating to the “De Simone
Formulation” and couldn’t not list such studies on the website or the package
inserts.  [Hold on!  I take it that all the studies, whether or
not they used VSL#3 in their titles, used VSL#3 on their subjects.  Thus, the parties
seem to agree that it’s truthful to refer to studies that used VSL#3 to show
the likely effect of Visbiome on patients. 
Given these predicates, how is this injunction compatible with the First
Amendment?  Either it’s truthful to
attribute VSL#3 results to the formulation, or it’s not; that can’t turn on the
study’s name.]
AdWords text couldn’t include VSL#3 unless the court
approved text including the substance of the disclaimer.  And the DeSimone Parties had deliver to each
medical office on its sales list a letter, with language pre-approved by the court,
stating that VSL#3 has not been discontinued or scheduled to be discontinued,
that VSL#3 did not change its name to Visbiome, and that Visbiome is a
competing probiotic produced by a different company. The letter couldn’t
address the status of licensing agreements or rights to produce a probiotic
using the same formulation as VSL#3 prior to January 31, 2016.  [But could the letter say that VSL#3’s formulation
will change?  Because that seems like
really, really important information for people to know, if they have patients
who are doing well on the formulation.]
While the case was pending, “all Visbiome promotional and
marketing materials, including the website, package inserts, sales scripts, and
any other materials to be provided to or used in discussions with potential
customers or medical offices” had to be submitted to VSL’s counsel and, if
there were disputes, preapproved by the court.

As for false advertising, the De Simone parties were
enjoined from misleading customers and medical professionals into believing
that (1) VSL#3 is or will in the future no longer be on the market; (2) that
the De Simone Parties were the exclusive provider of the De Simone Formulation
or the probiotic formulation in VSL#3; (3) that VSL#3’s license to sell this
formulation has expired or would expire; (4) that VSL#3 had a new name or that
Visbiome was a rebranded version of VSL#3. 

from Blogger http://ift.tt/29bpeI9

Posted in Uncategorized | Tagged , , | Leave a comment

Copyright/TM question of the day, politics edition

Posted on June 28, 2016 by rtushnet

Analyze the linked Buzzfeed public service announcement about registration (warning: link will likely autoplay).

from Blogger http://ift.tt/298KRKR

Posted in Uncategorized | Tagged , , | Leave a comment

Judge McKeown on copyright, and responses (including mine)

Posted on June 28, 2016 by rtushnet

Hon. M. Margaret McKeown,  Censorship in the Guise of Authorship: Harmonizing Copyright and the First Amendment, 15 Chi.-Kent J. Intell. Prop. 1 (2016)

Margaret Chon, Copyright’s Other Functions, 15 Chi.-Kent J. Intell. Prop. 364

Edward Lee, Suspect Assertions of Copyright, 15 Chi.-Kent J. Intell. Prop. 379

Rebecca Tushnet, Fair Use’s Unfinished Business, 15 Chi.-Kent J. Intell. Prop. 399

Alfred C. Yen, The Challenges of Following Good Advice About Copyright and the First Amendment, 15 Chi.-Kent J. Intell. Prop. 412

from Blogger http://ift.tt/293xGKb

Posted in Uncategorized | Tagged , , , , , | Leave a comment

Allegations of undisclosed sponsorship defeat anti-SLAPP motion at pleading stage

Posted on June 27, 2016 by rtushnet
Woodard v. Labrada, 2016
WL 3436434, No. 16-00189 (C.D. Cal. May 12, 2016)
Woodard brought a
putative class action alleging that various defendants (Media Defendants) misrepresented
the weight loss benefits of weight loss supplement products made by the
Manufacturing Defendants. Woodard alleged that Dr. Oz fraudulently promoted and
marketed the weight loss benefits of the products on his daytime television
show “The Doctor Oz Show.” Dr. Oz was allegedly “paid by Defendants Labrada,
Interhealth, and/or Naturex in exchange for promoting Green Coffee Bean
Extract, Garcinia Cambogia, and Raspberry Ketones on The Dr. Oz Show.”  Media defendants Zoco, Harpo, and Sony produce
The Doctor Oz Show and that Sony distributes the show. Woodard alleged that Dr.
Oz, Zoco, Harpo, and Sony were jointly liable for Dr. Oz’s misrepresentations.
The court found that
Woodard didn’t allege sufficient facts showing Zoco, Harpo, and Sony engaged in
a joint venture or civil conspiracy with Dr. Oz to fraudulently promote the products,
or that they were liable through an agency relationship or aiding and abetting.
However, the court declined to dismiss various consumer protection claims
against Dr. Oz.
The court briefly
dealt with the argument that Dr. Oz’s statements weren’t commercial speech,
because Dr. Oz didn’t propose a commercial transaction in any of his challenged
statements and repeatedly told viewers of his television show that he did not
promote or sell any of the Products. However, the complaint alleged that Dr. Oz
informed viewers of his show that specific brands of commercial weight loss
products were effective. Moreover, the Complaint alleged that Dr. Oz was paid by the
manufacturing defendants in exchange for promoting the products. That was
enough under Kasky v. Nike.
Although defendants
argued that California’s anti-SLAPP law applied, FRCP 56(d) overrode it for
discovery purposes.  Woodard was entitled
to discovery about the relationships between Dr. Oz, the other media
defendants, and the manufacturers, to determine whether the speech at issue was
in fact commercial speech.  The court
thus declined, at this point, to shift fees under the anti-SLAPP law.

from Blogger http://ift.tt/28YbZqW

Posted in Uncategorized | Tagged , , | Leave a comment