Trademark Enforcement Options – FAQ

What are My Trademark Enforcement Options?

Question for Trademark lawyerAnswer: Deciding on the right trademark enforcement options may seem pretty easy, but other options exist.

While trademark owners are not required to sue all trademark infringers, not taking some type of action can weaken the trademark as a “source identifier” and weaken the value of the mark. Trademark Owners who fail to enforce their trademark entirely risk abandoning their rights to the mark. Deciding on your company’s trademark enforcement procedure and policy can be very important.

Settlement

The most obvious alternative to litigation is settlement.  Settlement can be used as a trademark enforcement tool as well and is always an option. Owners of trademark and infringers may be able to agree to some form of concurrent trademark use where one party uses the trademark in one geographic area, and the other uses it somewhere else. Another option for settling a trademark dispute is for one party to license the rights to the other. Settlement agreements allow senior trademark user to lower the risk that the trademarks value as an identifier of source will be diminished by the junior user (or it may cause the value to be weakened as a result of the license).

USPTO Oppositions

In the event the trademark infringer has a federal registration for the mark; you can file a trademark oppositions and cancellation proceedings with the United State Patent and Trademark Office. This won’t necessarily get the infringer to stop using the trademark or servicemark, but it will get their attention.

Customs and Border Control

Trademark enforcement options by US Customs
US Customs plays a valuable roll in trademark enforcement.

An additional option  for enforcing trademark rights, in the case of imported products, is to record a federal trademark registration on the US Customs Office’s watch list.  Customs screens imported goods for infringing trademarks and bars them from entry.

Litigation

If other trademark enforcement options don’t work or are not right for you, the trademark owner can file a lawsuit.  Trademark litigation is typically the most expensive enforcement option.  However, if the use significantly weakens the mark and none of these other options are available, litigation may be your only other option.

Trademark Enforcement Resources

Limitation on Color Trademarks in the Fashion Industry

In 1992, shoemaker Christian Louboutin began using red lacquer soles on some of its shoes.  In 2008, the red soles were registered as mark in the US Patent and Trademark Office, and on January 1, 2008, number 3, 361,597, the “red sole mark” came to life.

In 2012 Louboutin sued Yves St. Laurent (“YSL”).  They were seeing red  (pun intended) over the recent Yves St. Laurent 2011 Resort collection, which included red-soled shoes, the Louboutin signature brand detail.  Louboutin filed a trademark action against YSL, which YSL prominently countered with a counter-suit seeking cancellation of the Louboutin trademark registration.  Louboutin responded with a request for a  preliminary injunction temporarily preventing YSL from selling the shoes until the dispute was settled.  The district court initially denied Loboutin’s request largely on the basis that . . .”in the fashion industry color serves ornamental and aesthetic functions vital to robust competition  . . . However, “Color alone “ sometimes ” may be protectable as a trademark, “where that color has attained ‘secondary meaning’ and therefore identifies and distinguishes a particular brand (and thus indicates its ‘source’).” Conversely, color may not be protectable where it is “functional,” meaning that the color is essential to the use or purpose of the product, or affects the cost or quality of the product.”

Affirming in part and reversing in part, the 2nd circuit stated that

We conclude that the District Court’s holding that a single color can never serve as a trademark in the fashion industry, Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., 778 F.Supp.2d 445, 451, 457 (S.D.N.Y.2011) (“Louboutin”), is inconsistent with the Supreme Court’s decision in Qualitex Co. v. Jacobson Products Co., 514 U.S. 159, 162, 115 S.Ct. 1300, 131 L.Ed.2d 248 (1995) (“Qualitex ”), and that the District Court therefore erred by resting its denial of Louboutin’s preliminary injunction motion on that ground. We further conclude that Louboutin’s trademark, which covers the red, lacquered outsole of a woman’s high fashion shoe, has acquired limited “secondary meaning” as a distinctive symbol that identifies the Louboutin brand. As explained below, pursuant to Section 37 of the Lanham Act, 15 U.S.C. § 1119, we limit the trademark to uses in which the red outsole contrasts with the remainder of the shoe (known as the “upper”). We conclude that the trademark, as thus modified, is entitled to trademark protection. Finally, we conclude that, because the monochrome design employed by YSL is not a use of Louboutin’s modified trademark, we need not, and indeed should not, address whether YSL’s use of a red outsole risks consumer confusion or whether the Louboutin mark, as modified, is “functional.” 

In short, the Circuit Court rejected the District courts argument that that clothes are inherently aesthetic, and that the addition of an aesthetic feature like the color is merely a function of the design and therefore not protectable as a trademark, however found that the use of the color in this context has to be fairly limited.

While the red sole has become synonymous with Louboutin, with women paying  $595- $1000 for a pair of these status symbol shoes, the ability to take an entire color off of the pallet of future designers would be far reaching and stifle the creativity contained in future catalogs and runways.

Thanks to Sara Harrison for her assistance with this post.

Edited 10/27/14

Piercing the Corporate Veil in Minnesota

piercing the veilThe term “piercing the veil” is a reference to a method of holding a company or individual responsible for the liabilities of a corporation or other business entity despite the company being a separate corporate entity with limitations on its liability.  Saint Paul attorney Jack Roberts on his Minnesota Business & Real Estate Law Blog recently had a great post laying out many of the issues related to piercing the corporate veil and some sound advice on preventing it from happening. Jack’s article can be found here.

Public Performance and Ringtones

As if to demonstrate why the general public continues to question the validity of all copyright claims in music, ASCAP recently provided us with one of the stupidest and greediest copyright cases in the recent past. (opinion at www.eff.org). After being sued in relationship to the reasonableness of its blanket licenses (related to its antitrust exemption), ASCAP argued that when someone’s cell phone rings with a musical ringtone, the ring is a public performance of the composition and therefore the phone companies owe licensing fees for each call. The Electronic Freedom Foundation, who filed an amicus brief in the case, noted that: “Under this reasoning from ASCAP, it would be a copyright violation for you to play your car radio with the window down!” While I am not sure it is quite this bad, the arguments advanced by ASCAP do require a great deal of legal gymanstics in order to work.

While the law of copyright is intended to be largely technology neutral, with any newer technologies, the courts are often called upon to interpret how copyright applies in new circumstances. – ringtones are no exception. For example, a few years back the recording industry obtained clarification from the Copyright Office over whether a mechanical royalty was necessary for creating the digital files that make up ringtones – the outcome was a decision that ringtones were in fact subject to a statutory/mechanical license payable by the makers of the ringtones. The arguments made by ASCAP for performance licenses, however, are much less persuasive than those made for mechanicals. ASCAP made several legal arguments to support its position, some more technical than others, but all them largely coming down to a discussion of whether the activation of the ringtone by an incoming call constitutes a public performance that is not exempt for claims of copyright infringement. ASCAP basis its arguments on two separate theories: 1) that the downloading of the ringtone is the same as a public performance, and 2) that sending the signal activating the ringtone is part of a performance authorized by cell phone companies.

Downloading Ringtones is Not a Performance
ASCAP argues that under the “Transmission” clause of Section 101, which provides that the transmission of a protected work that is made available to the public is an act of infringement. ASCAP first argues that the Verizon allows its customers to download songs, and that these downloads are public transmissions. Wisely, the court points out that the download is being made to one party and is not to the public at large. ASCAP, however, goes an additional step and argues that the download is also the first step in a two step process whereby the performance is shifted to such times as when a phone company customer receives a telephone call which others may overhear. In an odd bit of irony, this argument strikes me as ASCAP attempting to use a time-shift argument FOR infringement.

Playing of compositions: Direct and Secondary Liability
ASCAP also argues that even if the transmission by the cell companies is not infringement, the playing of the music by the owner of the phone is, and that the phone company is either directly or indirectly liable for the infringement due to its participation in the process of the music being played. Perhaps the strangest argument made by ASCAP is the one that the court notes is their primary argument – ASCAP argued that the playing of any ringtone was in effect a direct performance by Verizon on the basis that Verizon sends a signal that triggers the playing of the music and therefore they are the instigators and the source of the performance in some Rube Goldberg like manner. ASCAP’s second argument is based on secondary liability, which requires a finding that there has been a direct or primary infringement by one party (the cell phone owner), and is aided in some way by the second (Verizon).

While the court addressed many sub-issues related to their claims and every theoretical possibility, the majority of its analysis were based on a finding that playing of ringtones are generally just intended for use by person who’s phone it is on, and is therefore not a public performance as defined by Section 101. The court backed this argument up by noting that even if the playing of the ringtone was loud enough to be heard by a general audience and constitute a public performance; Section 110(4) exempts the public performance from liability if there is no commercial intent in making it public.

Conclusion
ASCAP cited many cases to support its position in this case – the majority of which were cases involving mechanical rights to reproduce a copyrighted work rather than ones dealing in issues of performance, which the court points out are not in dispute and in fact have already been paid. While in many cases the payment of performance royalties in addition to mechanical is entirely proper and appropriate, the attempt of ASCAP to apply a secondary license in this context is clearly overreaching, and it is this type of overreach that causes the general public to begin to question all copyright protections, which in turn only serves to hurt the very people that ASCAP is suppose to be working for – the artists.

Forum Selection in Creative Commons Licenses

Users of Creative Common’s licenses beware!

Chang v. Virgin Mobile USA, LLC
2009 WL 111570 (N.D.Tex. January 16, 2009)

Texas plaintiffs posted a photo to a popular picture sharing website using a Creative Commons licenses. The photo was then down loaded by an Australian company who used the photo inconsistent with the Creative Commons 2.o license and Plaintiff’s wishes. Plaintiff sued Defendant in a Texas court and Defendant moved to dismiss for lack of jurisdiction. While many factors were considered, of particular note is how to court pointed out that the license did not require the license to take place in Texas.

In fact, the Creative Commons license used specifically does not contain either a forum selection clause or a choice of law clause that would outline where cases should be heard and under what state law a dispute will be analyzed. T he Creative Commons FAQ specifically notes that the selection of jurisdiction in the license

These clauses are commonly used in most transactions to provide some guidance to the parties to know where and under whose laws a dispute will be heard – to avoid problems such as the one in the Chang case.

While I understand the passion for Creative Commons licensing, it is this type of outcome that highlights for me why licensing parties should take a step back and make sure they really understand what they are doing when using these licenses. It also raise the question in my mind of whether licensors should consider making some additions to these terms such as adding in something stating the residency of the licensor, that the license is entered into under the laws of licensor and that all disputes will be heard in the licensor’s state/forum.

Non-compete is based on customers, not location.

While worker non-competes have are generally construed against the employer, the standard of enforceability in the sale of a business in more liberally interpreted in favor of the party seeking to enforce, as it is focused on whether the restriction is reasonable to protect the goodwill of the business that was sold.

When selling his optometry business, Jay Peterson agreed not to “participate, compete or be engaged in the business of optical goods . . . within a five-mile radius of . . .” the location of his former business. After a dispute arose concerning the terms of the sale, Peterson opened a new practice ten miles away, which would have been fine except for the fact that he then took out advertising in the newspaper located in his old town encouraging clients to come and see him at the new location. In February, the Minnesota Appellate court ruled that the Peterson could be prevented from placing those advertisements even though the business itself was outside of the designated geographic area. Interestingly, the court noted that while they felt a limited restriction was appropriate, it should not be seen as placing a general ban on advertising that may have incidental exposure to the geographic area. In relevant part the court noted –

. . .the Court will not restrain publications with large circulation areas that happen to enter the five mile area (e.g. Minneapolis Star and Tribune). We agree with the district court’s reasoning. Advertising in the Yellow Pages and the Internet, which have large circulation areas that only incidentally enter the restricted geographic areas, therefore, would not be prohibited by the non-compete agreement. Rather, the prohibition is limited to advertisements “specifically targeted” at persons in the restricted geographic areas.

Sealock v. Petersen, No. A06-2479 (Minn. App. 2/5/2008) (Minn. App., 2008).

This case provides a nice illustration of how you should look at the intent of the agreement to not solicit customers, rather than trying to circumvent the intent based on the literal geography of the agreement. However, in this age of mass circulation, this decision highlights a distinction that the court is willing to make between specifically targeted marketing efforts and marketing nets cast by much broader means.

Minimum Contacts in A Virtual World

This article was orignally printed in Minnesota Bench & Bar (February 1998)

Each month thousands of American businesses create new Internet sites in order to market and distribute products and services nationally or internationally. The ease of using the Internet for global marketing has struck down many of the previous financial and legal hurdles that companies were required to clear. Consequently, many businesses are rushing forward without considering the possibilities that they may be subjected to the jurisdiction of distant states or nations, and courts increasingly are finding that web pages create the minimum contacts necessary to exercise personal jurisdiction over distant defendants. Thus, the challenge for attorneys is to help businesses use this vibrant medium without being subjected to the jurisdiction of foreign states and countries.

The rest of this article can be found at kunklelaw.net

Fart Dolls and Opinions

While you would think the first posting of a new blog would take the high road and post on something impressive in order to flex a little muscle, I can’t resist making this the first post.

In what is one of the more amusing topics for a case that I’ve seen lately, the U.S. 7th Circuit Court of Appeals recently issued an opinion in a copyright case involving “fart Dolls.” The dolls name you ask? – “Pull my Finger Fred.” An interesting opinion, however I suspect the judge enjoyed the opportunity to be a little juvenile – I mean how often is he going to have the opportunity to use some version of the word “fart” over 40 times in a single opinion, or my favorite “silent but deadly.” Let’s face it, this is a rare opportunity for you as a judge and I’m frankly a little disappointed he didn’t take it further. As an attorneythe thing I find fascinating is that not only are hundreds of thousands of these dolls being sold, the attorneys were at one point awarded over 500k in fees!!!

http://caselaw.lp.findlaw.com/data2/circs/7th/052498p.pdf