idea/expression distinction saves Toyota ad from infringement claim

Croak v. Saatchi & Saatchi, North America, Inc., No. 15
Civ. 7201 (S.D.N.Y. Mar. 31, 2016)
 
James Croak created a sculpture, “Pegasus, Some Loves Hurt
More Than Others,” a mixed-media, life- sized work that was first exhibited in
1983. The sculpture “depicts a winged, taxidermied horse that appears to be in
the process of breaking through the roof of a sleek lowrider, as if about to
take flight.” 

Saatchi & Saatchi made
an ad campaign for Toyota, including a TV ad prominently featuring “a massive,
pink stuffed animal–specifically, a hybrid of a unicorn and Pegasus–strapped to
the roof of a Toyota RAV4.”  The
voiceover narrates: “This is Lady. She’s a unicorn. And a Pegasus. And why is
she strapped to the roof of my RAV4? Well if you have kids, then you know why.
Now the real question. Where’s this going in the house? The RAV4. Toyota. Let’s
go places.”  The image also appeared in a
print ad and a display featuring the stuffed animal at the 2015 Chicago Auto
Show.

 

Croak sued for copyright infringement, but the court found
that the only similarity was that of idea, not expression, as a matter of law.
“Indeed, the disparities between the works in terms of their authors’ creative
choices and their total concept and overall feel overwhelm any superficial similarities.”  Croak’s pegasus was “strikingly realistic and
life-like”; defendants’ was “a pink, smiling, oversized stuffed animal,”
different from a life-like pegasus “in virtually all respects, including
appearance and posture.…It appears to be a child’s toy because it is a child’s
toy.”  The cars in the works were also “highly
dissimilar.”  Croak’s featured a vintage
lowrider, half red and half blue, that “exudes cool” (the court discussed the cultural significance of the lowrider in a footnote), while the RAV4 was “a
modern, family-friendly SUV in a glossy blue…. No one could reasonably view
them as sharing an aesthetic appeal.” 
Nor were they presented to the viewer in the same way:
 
The Pegasus in the Sculpture is
presented as bursting forcefully through the roof of a now severely damaged
car, as it unfurls its body in preparation for flight. It radiates exertion,
dynamism, and sheer power. In contrast, defendants’ Pegasus is strapped to the
intact roof of an SUV and carries no suggestion of life, movement, or vitality.
 
The stuffed animal wasn’t free to move—it was pretty clearly
strapped to the car in the TV ad, and the narrator reinforced that impression,
and even in the Chicago Auto Show display the staging was “radically
different.”  The settings were also “strikingly
different”: “The smoke billowing in the background of the Sculpture is in stark
contrast to the sunny, suburban setting” of the TV ad or the setting of the
Chicago Auto Show.  The court refused to
“focus on a laundry list of technical similarities (as opposed to disparities)
that an ordinary observer would be disposed to overlook.”  These technical similarities—the pegasuses
were soft, the cars hard, etc.—“have little to no effect on the aesthetic
appeal of a given work, and … pale in comparison to the works’ disparities,”
particularly the taxidermied animal v. child’s toy impression. 
 
No reasonable jury could find similarity in the “total
concept and overall feel” of the works. Defendants’ works “evoke feelings of
warmth, family, and fun,” while Croak’s sculpture “evokes raw power,
independence, and escape. It depicts the supernatural by animating a
mythological creature, while defendants’ works are situated in the real world.”  Croak’s sculpture could be interpreted in
different ways; in the nature of art, “[s]ome might see violence where others
perceive spirit…. But no reasonable juror would find the Sculpture
light-hearted in nature, evoking family and children.”

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Copyright Registration Practice with Rob Kasunic

Copyright Registration Practice with Robert Kasunic

Wednesday, April 06, 2016
2:00 PM – 5:30 PM
American University Washington College of Law
4300 Nebraska Avenue, NW, Washington, DC
Ceremonial Courtroom NT01

Where I’ll be tomorrow, probably talking about jigsaw puzzles:

Robert Kasunic, the Associate Register of Copyrights and Director of Registration Policy & Practice, will discuss copyright registration practice and the implementation of the Compendium of Copyright Office Practices. Subsequent panels will examine specialized topics in copyright law and registration policy, including a focus on software and a discussion of copyright at the edges of developed law.
Presented by the Program on Information Justice and Intellectual Property

WCL Alumni, AU & WCL Students, Faculty & Staff – No Charge
General Public – No Charge
(registration is required)

For further information, please contact:
Office of Special Events & Continuing Legal Education
American University Washington College of Law
Phone: 202.274.4075; Fax: 202.274.4079; or secle@wcl.american.edu

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Trademark issues seen in NYC

Toy Store: Might Pixar have anything to say?

Banned books matchbooks: Slaughterhouse-Five and Fahrenheit 451
 

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comments on 512 from the Organization for Transformative Works

Available here.  I look forward to participating in the Copyright Office’s roundtable as well. 

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User-generated discontent: patents, gender, and innovation

The NYT has a fascinating story about innovation, menstruation, and the challenges of seeking backing for a project that combines the two.

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Smokeless, no fire: tobacco advertising & TM claims dismissed

VMR Products, LLC v. V2H ApS, 2016 WL 1177834, No.
2:13–cv–7719 (C.D. Cal. Mar. 18, 2016)
 
VMR makes electronic cigarettes under the federally
registered trademarks V2CIGS and V2. V2H ApS is a Danish tobacco company that makes
a smokeless tobacco product called “snus” under the name V2TOBACCO, and V2
Tobacco A/S is its wholly owned distributor subsidiary. The parties have
litigated cases in Denmark, Sweden, and the Southern District of Florida, and
have opposed each other’s applications to register their trademarks in both the
United States and Europe.
 
VMR alleged that defendants infringed its marks with their
V2TOBACCO product through advertising on http://www.v2tobacco.com; there was no
evidence that defendants’ snus purchased from US stores bore the mark
V2TOBACCO, but US consumers could buy the snus through third-party online
stores, which were accessible by clicking on links available on the website,
and this snus bore the mark V2TOBACCO “[a]t the bottom of [the] tin.”  This sufficed as use in commerce.
 
The court dismissed likely confusion claims based on VMR’s
V2CIGS mark.  VMR previously sought a
declaratory judgment that its V2CIGS didn’t infringe V2 TOBACCO, alleging in
its complaint that there was no likelihood of confusion; that the marks were
different; and that the products were different.  VMR was therefore estopped from arguing to
the contrary; the court also applied the Sleekcraft
factors.
 
Strength: There was no evidence that V2CIGS had been
registered without a showing of secondary meaning, so there was no presumption
of inherent distinctiveness; there was also no evidence about inherent
distinctiveness or descriptiveness either way, so strength was neutral;
likewise there was no evidence about defendants’ intent.  VMR was estopped from arguing that the goods
and the marks were similar; it submitted no admissible evidence of actual
confusion; the parties both advertise on websites, but Network Automation says that’s not important; there was no evidence
that any of the parties’ products are sold in the same or even similar stores; there
was no evidence that either party had plans to expand into the other’s market; and
defendants offered evidence that tobacco products are legally required to be
maintained by retailers under lock and key, and argued that therefore consumers
exercise a degree of care in purchasing tobacco products.  Confusion was not likely with respect to the
V2CIGS mark.
 
VMR also argued that defendants made “illegal, literally
false and/or misleading” statements that the raw material in their snus product
is selected on the basis of a “low level of Nitrosamines” on their website and
in their product catalog. The Tobacco Control Act precludes the introduction
into interstate commerce of any modified risk tobacco product unless the FDA
has issued an order that the product may be commercially marketed.  VMR contended that the “low” levels of nitrosamines
claim advertised snus as a modified risk tobacco product without FDA approval.
 
First, the court found that V2H could be held liable for the
website statements: it was the registrant and owner of http://www.v2tobacco.com; had
previously removed content from the website; and was the “parent company” of V2
Tobacco.
 
Second, the court addressed standing: Under Lexmark, a plaintiff’s claim must fall within
the “zone of interest” of the statute, and the plaintiff must have experienced
“economic or reputational injury” that is proximately caused by the defendant’s
deceptive advertising.  VMR showed that
the parties were competitors in the tobacco market, but offered no evidence of injury
proximately caused by the allegedly false statements. VMR argued that it would
be harmed if an adult smoker, who wanted to purchase a smokeless nicotine
product, relied on defendants’ alleged false advertising to buy snus instead of
VMR’s electronic cigarettes.  However,
there was no requirement that a plaintiff prove injury if it sought only
injunctive relief.  (Something feels
weird about this, but ok.)  Thus, VMR had
standing to pursue its claims, but not standing to seek “additional ancillary
relief that would require proof of injury” such as damages for lost sales.
 
VMR argued that defendants’ statements that their snus
contains low levels of nitrosamines were “literally false” because (1) the statements
 equated to advertising the snus as a
“modified risk tobacco product” under the Act; (2) the Tobacco Control Act
defines “modified risk tobacco products” as those tobacco products that are
used to reduce the harm or risk of tobacco-related diseases associated with
commercially marketed tobacco products; (3) the FDA has not approved the snus
as a “modified risk tobacco product”; and therefore, (4) defendants’
advertisements violate the Tobacco Control Act.  (This doesn’t seem very “literal” to me, given
the chain of inferences required.  It
also seems like a preclusion problem, given the interpretation necessary to
make this into an issue of falsity instead of a violation of the Tobacco
Control Act itself.)  The court found
that this was not a literally false claim given that the FDA hadn’t yet
approved [hunh?] the use of “low” to describe the level of nitrosamines in the
product.
 
Defendants offered evidence that their snus did, in fact,
have low levels of nitrosamines.  VMR
offered no evidence of misleadingness, or of materiality.  Nor would the court presume injury given the
absence of comparative advertising here: “the alleged injury accrues equally to
all competitors.”  Summary judgment for
defendants.

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Bar review question: is this false advertising?

Themis Bar Review, LLC v. Kaplan, Inc., 2016 WL 1162624, No.
14-cv-00208 (S.D. Cal. Mar. 24, 2016)
 
Themis, a relative newcomer to the bar review business,
advertised its students’ bar passage rates; a 2013 ad listed passage rates for
2012.  The left column of the ad listed a
jurisdiction, and the two columns to the right showed Themis’ students’ passage
rates for that jurisdiction and the overall state passage rate for that
jurisdiction. At the top of both of those columns was a small asterisk,
corresponding to fine print language reading “Based on Themis first-time takers
who completed 75% or more of their course assignments and on state bar exam
first-time takers.”  Themis filed a
declaratory judgment action and Kaplan counterclaimed for false advertising.
 

Ad as shown in Themis’ declaratory judgment action

Ad as shown in Kaplan’s counterclaim

The court declined to grant cross-motions for summary
judgment.  Themis argued that Kaplan’s
claim was moot because Kaplan sought only injunctive relief and Themis
permanently ceased circulating the relevant ad. But voluntary cessation doesn’t
guarantee mootness, and Themis failed to provide adequate assurances it wouldn’t
run similar ads in the future.  Its CEO
said that it voluntarily changed the format “to make the explanation larger and
more prominent, in the hopes of eliminating any argument over the issue, and
because I favor full disclosure to students choosing between bar exam
providers.”  But a present intent that
could later change isn’t enough.
 
Kaplan argued that the pass rate was literally false, even
coupled with the footnote, because Themis’ data collection methods were
problematic. The court rejected a literal falsity argument based only on the
main text, because “the proper focus is on the advertisement as a whole rather
than an isolated section. Thus, the pass rates are literally false only if they
are inaccurate with respect to the population defined in the footnote: first
time takers who complete 75% or more of the course.”  RT: This reasoning wrongly assumes that the
ad, taken as a whole, actually conveys the message in the footnote to
consumers.  If the footnote doesn’t work
as a disclosure, then Themis shouldn’t get to convert a literal falsity claim
into a more difficult to prove implicit falsity claim by including an element
in the ad that consumers don’t actually perceive as part of the ad context.

As to the footnote-modified claim, Kaplan submitted an expert report concluding
that Themis’ practice of individually contacting students in states that do not
publish pass lists is problematic. Self-reporting “may result in a systematic
response bias such that students who failed the exam might be ashamed of the
fact and therefore lie when asked whether they passed.” Themis argued that
there wouldn’t be misreporting because (1) law students are honest, and (2) it
was in students’ self-interest to report failure because they could get a free
repeat course if they failed.  A
reasonable jury could go either way on this.
 
Likewise, as for the misleadingness claim, summary judgment
was inappropriate.  Law students are the
relevant audience.  Kaplan’s survey gave
the ad to 331 current law students, allowed them to look at it for as long as
they wanted, and then took it away from them before asking various questions. The
test group received the actual Themis ad. The control group received a modified
version that displayed the footnote text more prominently.

Kaplan control ad with disclosure in column text

Both groups were
asked whether the pass rates on the ad represented all Themis test takers or
only a certain subgroup of test takers. In the test group, 15.7% of the
students answered correctly and 69.3 % answered incorrectly. In the control
group, 64.8% of students answered correctly and only 17.6% answered
incorrectly.


Themis’ study was essentially the same, except that it didn’t use a control
group and allowed respondents to keep the ad and refer to it while answering
the questions.  And it tested two
different ads with significantly more prominent footnotes.  (So, completely different.) About 84.5% of the
801 students tested correctly answered that the pass rates referred to a
certain subgroup of Themis students, while about 12% incorrectly said that the
pass rates covered the entire population of Themis students.
 

Ad tested by Themis

Another ad tested by Themis

Themis argued that “in high-level involvement purchasing
decisions such as choosing a bar prep company, a reading test, where the
subject can reference the ad while answering questions, is more appropriate
than a memory test,” given that humans have bad short-term memories.  Kaplan responded that memory wasn’t the issue;
if a student noticed the footnote, short-term memory issues wouldn’t prevent them
from answering correctly a very short time later.  Moreover, Kaplan argued, a memory test was
more realistic, because consumers look at an ad as long as they need to and
form their impressions during this time period. “Thus, if a student did not
notice the footnote after looking at the advertisement but before being asked
about it, that suggests that the advertisement would be misleading in a real
life scenario.”  Asking specific
questions while the student is reviewing the ad causes them to pay more
attention to the footnote than they otherwise would have.  (Repeating court’s use of singular
“they” because I support it
.) 
 

Screenshot from Themis survey

Another screenshot from Themis survey

Also, the presentation of Themis’ survey emphasized the
disclaimer. As Kaplan’s expert said: “When respondents scrolled down to reach
the question, they were left with a view of the ad that is heavily focused on
the disclaimer. If respondents read the question and then looked back up to the
ad, the disclaimer is the first thing they would see (and possibly the only
part of the ad they would see).” The court found Kaplan’s arguments “highly
probative” (noting in passing that it saw no reason to distinguish a trademark
case accepting Kaplan’s position from a false advertising case).
 
Themis argued that, in any event, the ad was factually true
and facially unambiguous and therefore survey evidence of misleadingness couldn’t
be considered, apparently trying to invoke the Mead Johnson/Havana Club line of cases, but the court noted that
there was no “binding” authority supporting Themis’ argument.  (Also, if you need a footnote to clarify your
claim, your claim is not “facially” unambiguous.)  In any event, Themis failed to establish that
the pass rates were literally true.
 
Themis’ study, however, didn’t suffice to defeat Kaplan’s
motion, because it didn’t test the Themis ad at issue.  “Given this disparity in footnote prominence,
it is possible that a substantial number of the students who correctly answered
the question would not have answered correctly if presented with the much
smaller footnote of the actual Themis Ad at issue here.”  (Which makes my point about facial ambiguity.)  Themis argued that law students were trained
to read “fine print,” especially given the expense of bar prep and the
importance of passing the bar.  (I
routinely ask my students how many of them have read the full agreement between
them and the law school, or them and their landlords.  Spoiler: always some, never a lot.)  Moreover, “[n]o Themis student has ever
complained to Themis that Themis’ advertisements are misleading or deceptive.”  Those arguments were enough to reject Kaplan’s motion for summary judgment.  The court would not hold, as a matter of law,
that law students were unlikely to read footnotes signaled by asterisks “when
evaluating which expensive bar review course to choose to prepare for one of
the most important tests of their lives, especially when there is evidence that
no student has ever complained of being misled.”
 
Kaplan also argued that, even assuming that students read
the footnote, Themis’ ads were still misleading with respect to some
jurisdictions because of a lack of statistical significance.  (I think Kaplan should be arguing about practical significance,
but this is a common lawyers’ problem.)  For
example, Themis advertised that 100% of its students who were first time takers
and completed 75% or more of the course passed the July 2013 Washington D.C.
bar exam, compared to the DC-wide average of 71%. But that 100% pass rate was
based a population of four students, which couldn’t realistically show any
Themis advantage.  The court agreed that
comparing Themis pass rates to state/district-wide averages might imply that
the Themis pass rates were based on a sample size large enough to show significance
(statistical or practical).  A reasonable
jury could go either way.
 

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Foreign marks may be protected in the US under 43(a), Fourth Circuit rules

Belmora LLC v. Bayer Consumer Care AG, No. 15-1335 (4th Cir.
Mar. 23, 2016)
 
Disclosure: I worked on the brief for Belmora, the loser in
this appeal. 
 
Bayer (BCC) registered FLANAX in Mexico for pharmaceutical
products, analgesics, and anti-inflammatories, with sales of naproxen sodium
under the Flanax mark in the hundreds of millions of dollars since 1976.  Some sales come near the US border, but BCC
never sells Flanax in the US and importing it would be against the law.
 

BCC Flanax
Belmora began selling naproxen sodium tablets in the US
under the Flanax mark in 2004, then registered the mark in 2005.  Belmora’s early packaging “closely mimicked”
BCC’s Mexican Flanax packaging in color scheme, font size, and typeface. Though
Belmora changed the packaging, the color scheme, font size, and typeface remain
similar to that of BCC’s Flanax.  In
addition, Belmora made statements “implying that its FLANAX brand was the same
FLANAX product sold by BCC in Mexico,” such as this in a brochure to
prospective distributors:
 
For generations, Flanax has been a
brand that Latinos have turned to for various common ailments. Now you too can
profit from this highly recognized topselling brand among Latinos. Flanax is
now made in the U.S. and continues to show record sales growth everywhere it is
sold. Flanax acts as a powerful attraction for Latinos by providing them with
products they know, trust and prefer.
 

Early Belmora Flanax

Revised Belmora Flanax

Belmora received questions regarding whether it was legal
for Flanax to have been imported from Mexico. And BCC allegedly “identified at
least 30 [purchasers] who believed that the Flanax products . . . were the same
as, or affiliated with, the Flanax products they knew from Mexico.”
 
BCC petitioned the TTAB for cancellation of Belmora’s
registration under Article 6bis of the Paris Convention “as made applicable by
Sections 44(b) and (h) of the Lanham Act” And under § 14(3) of the Lanham Act
because Belmora had used the FLANAX mark “to misrepresent the source of the
goods . . . [on] which the mark is used.”  The TTAB found that Article 6bis isn’t
self-executing, and BCC abandoned this ground on appeal so the court of appeals
didn’t reach it. The TTAB did cancel Belmora’s mark under §14(3), finding that
this wasn’t a close case; the appeal of that cancellation, and BCC’s §43
claims, all ended up before a district court that dismissed all the claims on
the ground that BCC lacked a protectable interest in the Flanax mark in the US.
 
Applying Lexmark,
the court of appeals reversed, holding that “the plain language of § 43(a) does
not require that a plaintiff possess or have used a trademark in U.S. commerce
as an element of the cause of action.” 
Instead, it’s the defendant’s
use in commerce of an offending “word, term, name, symbol, or device” or of a
“false or misleading description [or representation] of fact” “that creates the
injury under the terms of the statute.” 
So BCC had to show that it was likely to be damaged by this use.  “It is important to emphasize that this is an
unfair competition case, not a trademark infringement case.” [Mark McKenna will
be pleased. Although I think it
shouldn’t ultimately matter
, I wonder if the government will pick up on
this panel holding as it relates to Blackhorse;
if §43(a) doesn’t require trademark rights, that implies that cancellation
would not end the Washington team’s federally enforceable rights.]
 
Moreover, the relevant economic harm didn’t have to occur in
the US, because the Lanham Act covers “commerce within the control of Congress,”
and prior Fourth Circuit precedent says that includes “foreign trade.”  “Of course, any such ‘foreign trade’ must
satisfy the Lexmark ‘zone of
interests’ and ‘proximate cause’ requirements to be cognizable for Lanham Act
purposes.”
 
The court of appeals saw this case as relevantly similar to
cases protecting plaintiffs whose mark has become generic against a competitor
who “fail[s] adequately to identify itself as distinct” such that its name
causes “confusion or a likelihood of confusion.”  
 
Likewise, in a “reverse passing
off” case, the plaintiff need not have used a mark in commerce to bring a §
43(a) action. Thus, the plaintiff in a reverse passing off case must plead and
prove only that the work “originated with” him — not that he used the work
(which may or may not be associated with a mark) in U.S. commerce.
 
If use of a mark in US commerce were required for a §43(a)
claim, the genericity and reverse passing off cases couldn’t exist. [After Dastar, the court probably shouldn’t be
saying “work,” since that implies a copyrighted work, not a material object in
which a work is embodied, the only remaining target of a reverse passing off
claim.  So, does the Fourth Circuit now
have a famous foreign marks doctrine, like the Ninth?] 
 
The court of appeals commented that “[a] plaintiff who
relies only on foreign commercial activity may face difficulty proving a
cognizable false association injury under § 43(a). A few isolated consumers who
confuse a mark with one seen abroad, based only on the presence of the mark on
a product in this country and not other misleading conduct by the mark holder,
would rarely seem to have a viable § 43(a) claim.”  [Why? 
Is it the few consumers or the lack of other misleading conduct?  What if it’s a lot of consumers but an
innocent seller?] However, the court of appeals felt differently when there was
alleged intentional passing off in the US “in order to influence purchases by
American consumers,” since “intentional deception can go a long way toward
establishing likelihood of confusion.”
 
Under the circumstances, BCC could bring both false
association and false advertising claims. 
For false association, BCC was within the relevant zone of interest,
given the Lanham Act’s purpose of  “making
actionable the deceptive and misleading use of marks” in “commerce within the
control of Congress.” The complaint alleged that Belmora’s conduct caused BCC
customers to buy Belmora Flanax in the US instead of purchasing BCC’s Flanax in
Mexico. Mexican citizens or Mexican-Americans in border areas might cross into
the US and buy Belmora Flanax here before returning to Mexico, or might forego
purchasing BCC’s Flanax when they visited Mexico because they’d bought the US
Flanax instead.  “Further, by also
deceiving distributors and vendors, Belmora makes its FLANAX more available to
consumers, which would exacerbate BCC’s losses.”  For similar reasons, BCC also alleged
proximate cause.  “BCC may ultimately be
unable to prove that Belmora’s deception ‘cause[d] [these consumers] to
withhold trade from [BCC]’ in either circumstance, but at the initial pleading
stage we  must draw all reasonable
factual inferences in BCC’s favor.”
 
False advertising: Here, BCC and the US company, BHC, both
brought claims under §43(a)(1)(B), which the court of appeals also
reinstated.  BHC (maker of Aleve) brought
a “typical” false advertising claim, as a direct competitor with Belmora in the
US. “If not for Belmora’s statements that its FLANAX was the same one known and
trusted in Mexico, some of its consumers could very well have instead purchased
BHC’s ALEVE brand.”  BCC’s false
advertising claim wasn’t as typical, but still satisfied the zone of interests
test given the Lanham Act’s purpose of “making actionable the deceptive and
misleading use of marks.”
 
Beyond false association, Belmora “parlay[ed]” the Flanax
mark into misleading statements about the product’s “nature, characteristics, qualities,
or geographic origin.” Because its claims regarding popularity, trust, and a
history of quality were “anchored as a factual matter to the FLANAX mark’s
history ‘in the Latino American market,’” they weren’t puffery.
 
The court of appeals cautioned that Belmora owns Flanax as a
mark in the US.  “But trademark rights do
not include using the mark to deceive customers as a form of unfair
competition, as is alleged here.”  An
appropriate remedy might allow Belmora to use the mark, but with measures to
avoid confusion; “any remedy should take into account traditional trademark
principles relating to Belmora’s ownership of the mark,” such as altering the
font and color of the packaging, attaching the manufacturer’s name to the brand
name, or using a disclaimer.
 
The §14(3) cancellation claim was also reinstated. The TTAB
found that the preponderance of the evidence “readily establishe[d] blatant
misuse of the FLANAX mark in a manner calculated to trade in the United States
on the reputation and goodwill of petitioner’s mark created by its use in
Mexico.”  The court of appeals noted that
a cancellation petition can be filed by “any person who believes that he is or
will be damaged . . . by the registration of a mark.”  This language is similar to that interpreted
in Lexmark.  For §14(3), the petitioner must also establish
that the “registrant deliberately sought to pass off its goods as those of
petitioner.”  As with §43, §14(3) didn’t
include a requirement of use in the US.
 
The court of appeals noted that cancellation strips an owner
of “important legal rights and benefits” that accompany federal registration,
but it “does not invalidate underlying common law rights in the
trademark.”  [Note that In re Tam says otherwise, unless Belmora
can re-register once it has purged itself of the misrepresentation, as the
remedy discussion above suggests it may.] 
In a footnote, the court of appeals noted the PTO’s argument that §
14(3) might require a lesser showing of causation because it sets forth an
administrative remedy, whereas the Supreme Court based its Lexmark analysis on common law proximate cause requirements for
judicial remedies. [Again note that In re
Tam
bears on this, not just B&B
v. Hargis
.]

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Amicus brief in Fox v. TVEyes appeal

Arguing that TVEyes’ database and its functions are fair use.  Thanks to the signers, especially Chris Sprigman, & I’m also grateful for the last-minute help of Michael Levy, for when I discovered that being an e-filer in the Second Circuit doesn’t actually make you an e-filer in the Second Circuit unless you have connected your PACER account with your NextGen account, which for some reason requires human intervention.  Lesson learned!

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Inconclusive investigation isn’t enough to give knowledge for contributory TM infringement purposes

Spy Phone Labs LLC v. Google Inc., No. 15-cv-03756-PSG, 2016
BL 86393 (N.D. Cal. Mar. 21, 2016)
 
SPL registered Spy Phone as a mark (for something, I presume),
and submitted its Android app, SPY PHONE Phone Tracker, to Google.  It was downloaded over a million times, and
Google took down a number of competing apps with similar names when SPL requested
that it do so via Google’s online complaint form.  Whenever Google removed an app based on a
trademark complaint, it sent the app developer a notification containing the
complainant’s name and email address.
 
According to the complaint: The app stores information on
phone locations and use on a secure server, and it periodically displays an
icon to let users know the app is running; it’s free, but SPL generates revenue
by running ads via Google on spyphone.com. 
After one developer objected in May 2013, the relationship between
Google and SPL eroded.  SPL submitted a
trademark infringement complaint about another app, “Reptilicus.net Brutal Spy
Phone,” and this time Google said it couldn’t determine the merits of the claim
and refused to act.  Then in June, the
Google Play team removed SPL’s own app, citing violations of Google’s
anti-spyware policy, allegedly despite the fact that SPL’s app complied with
the policy.  Eventually, Google explained
that although none of the functions of SPL’s app violated the anti-spyware
policy, the name itself was unacceptable because it contained the word “spy.”  Though other apps used the same word, Google
promised that it intended to prohibit all developers from doing so in the
future.
 
Thus, SPL decided to drop its lawsuit and relaunch its app
under the name “Phone Tracker.”  In October
2013, Google reinstated SPL’s developer account, but it deleted all the
consumer reviews and records of downloads for SPL’s original app, and the new
app managed only 260,000 downloads in ten months, leading to a steep reduction
in SPL’s advertising revenue.29 Meanwhile, other apps continued to use “spy”  in their names with impunity.  So SPL resumed submitting complaints about
other apps that used “spy” or “SPY PHONE” in their names, but instead of using
the trademark infringement form—which would notify developers of SPL’s identity—SPL
claimed violations of the same anti-spyware policy of which it had fallen
afoul.  In July 2014, SPL made a
complaint about another app from the Reptilicus.net developer, and Google again
suspended SPL’s account without warning, this time for purportedly violating
Google’s spam policy. SPL alleged that its app complied with that policy, but
that the other developer had submitted a false complaint.  This other developer had multiple Play Store
parental monitoring apps—which in itself violates Google’s policies—and several
of these apps contained the word “spy,” or even the phrase “Spy Phone,” in
their names.  SPL allegedly received a
letter from a “concerned” member of the Google Play team “confirming SPL’s
suspicions.”  After this second takedown,
Google searches for the phrase “spy phone” started to list competing apps
before SPL’s website, and the top-listed result is now an app that allegedly
infringes SPL’s trademark.
 
SPL sued the developer, who has not yet been served, and
Google, alleging contributory trademark infringement against Google and
tortious interference against all the defendants. The court first found that
SPL didn’t allege facts sufficient to state a claim for contributory trademark
infringement by Google. With an online marketplace, “a service provider must
have more than a general knowledge or reason to know that its service is being
used to sell counterfeit goods. Some contemporary knowledge of which particular
listings are infringing or will infringe . . . is necessary.”  SPL didn’t allege that Google had notice for
most of the apps; SPL intentionally made spyware complaints instead of
trademark complaints in order to remain anonymous.  “But spyware complaints are not the same as
trademark complaints, and Google could not be expected to respond to a
complaint about one offense by investigating another.”
 
Google also didn’t ignore the initial Reptilicus.net app; it
investigated and responded that it could not assess the merits of the claim.  The app might have used the words “Spy Phone”
simply as a descriptor, as opposed to the distinctive prefix “Reptilicus.net
Brutal,” and that fact would constitute a defense to infringement.  Uncertainty over the existence of
infringement is relevant to an alleged contributory infringer’s knowledge.  That uncertainty, combined with Google’s
investigation and response, made the allegations of knowledge implausible.
 
Nor did tortious interference work, because there was no
allegation that Google committed any act wrongful apart from the interference
itself.

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