IP Law Alert : Intellectual Property Lawyers & Attorneys : Gibbons Law Firm : Copyrights, Patent Infringement, Unfair Competition

On February 7, 2013, the Trademark Trial and Appeal Board affirmed the refusal to register the mark, STOP THE ISLAMISATION OF AMERICA, for “providing information regarding understanding and preventing terrorism” on the basis that the mark “may disparage or bring into contempt or disrepute persons, institutions, beliefs or national symbols.” The registration of disparaging marks is explicitly prohibited by Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a).

Applying the legal test for disparagement of a non-commercial group (such as a racial or religious group) set forth in In re Lebanese Arak Corp., the Board evaluated the likely meaning of the mark, as well as whether its meaning may be disparaging to a “substantial composite” of the group in question. In affirming the examining attorney’s refusal to register, the Board found that the mark conveyed the message “that the conversion or conformance to Islam must be stopped in order to prevent the intimidating threats and violence associated with terrorism.” It also found that the direct association of Islam and its followers with terrorism would be offensive to the majority of Muslims, citing a number of articles from prominent publications in support of its position.

The applicants’ arguments that refusal to register the mark violated their right to free speech under the First Amendment were rejected wholesale. As the Board rightly noted, the Trademark Office’s decision on registerability has no impact on the applicants’ ability to use the mark. Consequently, the refusal to register “imposes no restraint or limit on their ability to communicate ideas or express points of view, and does not suppress any tangible form of expression.”

Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department.

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The upcoming Super Bowl, pitting San Francisco 49ers Head Coach Jim Harbaugh against his older brother, Baltimore Ravens Head Coach John Harbaugh, has been dubbed “Harbowl” by some. An individual in Rockville, Maryland is attempting to take this name to a new level, by filing a federal trademark application for use of the mark “HarBowl” on athletic apparel.

Last year, the National Football League (“NFL”) requested extensions of time to oppose an Indiana resident’s application for HARBOWL for hats and t-shirts. According to an ESPN.com article, the NFL wrote to this applicant, Roy Fox, expressing concern that his use of HARBOWL would be confusingly similar to its iconic SUPERBOWL trademark. Fox ultimately abandoned his application.

Do the Harbaugh Brothers have any say in all this? Federal trademark applications are scrutinized by the US Patent and Trademark Office (“PTO”) to determine whether a proposed mark meets certain statutory requirements to merit a trademark registration. In particular here, Section 2(a) of the Lanham Act examines whether a mark falsely suggests a connection with another person who is not the applicant. See 15 U.S.C. § 1052. This provision might provide the Harbaugh Brothers with some leverage, particularly if they can (or choose to) demonstrate that consumers confuse the source of the HARBOWL athletic apparel with them.

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Trademark holders no longer have to worry about not being able to dismiss a case by entering into a properly drafted covenant not to sue.

In Already, LLC, dba Yums v. Nike, Inc., the Supreme Court unanimously affirmed the Second Circuit’s opinion by ruling that Nike’s covenant not to sue Yums for trademark infringement was sufficiently broad to render moot Yums' challenge to the validity of Nike's asserted registration. Yums had no reasonable apprehension of litigation and Nike met its burden of showing that Yums could not be sued later. Chief Justice Roberts delivered the opinion, which required a high standard for parties issuing the covenant, as they bear a “formidable burden” to establish that it is “absolutely clear” that the allegedly wrongful conduct cannot reasonably be expected to reoccur. Remand was not necessary under the circumstances, because the Court found that it “cannot conceive” of any shoe that Yums could make “that would potentially infringe Nike’s trademark and yet not fall under the Covenant.” Arguably, the Court construed the covenant so broadly as to exclude a claim of infringement based on Yums’ sale of the exact shoe covered by Nike’s challenged registration.

In a concurring opinion, Justice Kennedy cautioned that for a covenant to bar an invalidity challenge by an accused infringer, it must be sufficiently broad to eliminate any risk that a defendant might be sued again in the future. That concurrence was joined by Justices Alito, Sotomayor and Thomas.

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On Wednesday, the Supreme Court heard oral argument in the case of Already, LLC d/b/a Yums v. Nike, Inc. As we reported previously, that case arose from an appeal of the Second Circuit’s decision affirming the Southern District of New York’s holding that a covenant not to sue entered in a trademark dispute ended the case and controversy between the parties. We enclose the full transcript of the oral argument. 

During oral argument, at which this author was present, Already, LLC d/b/a Yums’ (“Yums”) attorney argued that the covenant would force it to be the "involuntary licensee" of Nike. He analogized the challenged registration to a scarecrow, arguing that it creates "informational injury" by improperly stopping competitors from producing similar shoes, under color of right.

Significantly, Nike’s covenant not-to-sue only extended to claims based on Yums’ current and past products and "colorable imitations" thereof. It did not preclude that Yums might later be sued based on the challenged registration for other shoe designs.

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The U.S. Patent and Trademark Office (“PTO”) recently published for opposition the mark TIM TEBOW. The applicant for the mark in these various goods and services is XV Enterprises LLC of Denver, Colorado, who has indicated that Tim Tebow, the two-time Heisman Trophy winner and New York Jets quarterback (formerly with the Denver Broncos), has consented to the applications.

The publication for opposition is a procedural step where the PTO gives notice to the public that an application has passed Examining Attorney review by publishing information about the application in the PTO’s Official Gazette. The application reflects the “intent to use” the TIM TEBOW mark on goods and services including in class 9 for DVDs featuring sports and entertainment subjects, sound recordings, and computer games; in class 41 relating to on-line education and entertainment in the field of training and sports; in class 25 for men’s, women’s and children’s clothing, footwear and headwear; in class 28 relating to sporting goods, toys and games; in class 14 for jewelry and watches; and in class 16 relating to paper goods, posters, school supplies and books in the field of sports. Other applications for marks using the name “Tebow” or a variation of it also are pending before the PTO.

The publication of an application starts a 30-day period during which third parties who believe that they will be harmed by registration of the subject mark can either file an opposition with the PTO, or request an extension of time to oppose. If no opposition is filed, the application will either be allowed or registration will be granted, depending on the application’s filing basis. If an opposition is brought, the proceeding will be heard by the Trademark Trial and Appeal Board, an administrative tribunal that is part of the PTO.

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D’Artagnan Trademarks LLC, (“DT”) recently sued the Saul Zaentz Company (“SZ”) in the District of New Jersey regarding the trademark ROHAN.

In December 2011, DT filed a trademark application for ROHAN in connection with the sale of poultry, namely, duck. The PTO approved the application and SZ opposed its registration when it published for opposition in late March. SZ alleged that it has exclusive rights to certain trademarks (the “Marks”) derived from the trilogy of books known as “The Lord of the Rings,” by J.R.R. Tolkien. Readers might recall that in the books, “Rohan” is a fictional realm within the fantasy world of the stories. SZ alleges it owns federal trademark registrations for ROHAN, RIDERS OF ROHAN and ROHAN NUTRITION, relating to animal feed and feed supplements for horses, plastic figurines for use with table top hobby battle games, and website services about computer games. SZ has a number of licensees using these marks.

Trademark registrant DT is the affiliate of luxury foods purveyor D’Artagnan. DT sought the mark for poultry, claiming the name ROHAN is a variation on the word “Rouen,” a city in the Normandy region of France, and Roeun duck, a kind of duck inhabiting that region. Rohan also was the name of a royal family living near Rouen centuries ago.

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Ben & Jerry’s Homemade, Inc. (“Ben & Jerry’s”), the Vermont-based ice cream maker, recently filed a lawsuit in SDNY against adult video company Rodax Distributors, Inc. d/b/a Caballero Video, et al (“Defendants”). The complaint alleged trademark and trade dress dilution and infringement, and related claims arising from Defendants’ production and distribution of a series of hardcore pornographic DVDs whose titles and packaging play upon the names and trade dress of some of Ben & Jerry’s federally registered and famous marks.

Defendants’ allegedly infringing DVD series is sold under the name “Ben & Cherry’s” and includes titles similar to popular Ben & Jerry flavors but, with a colorful twist using pornographic insinuations, as explained in this article. Ben & Jerry’s complaint also sought a temporary restraining order and injunctive relief.

On September 6, Judge Lewis A. Kaplan issued a Temporary Restraining Order against Defendants, and set an expedited briefing schedule for Ben & Jerry’s request for a preliminary injunction.

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Last week, in a prior blog, we reported that Petitioner Already, LLC d/b/a Yums (“Yums”) filed its opening brief with the Supreme Court, arguing that a trademark registrant’s post-suit covenant not to sue does not divest a Federal District Court of standing to review a challenge to the validity of the underlying trademark registration.

Last week, two amicus curiae briefs were filed in the action, the first from U.S. Solicitor General Donald Verrilli on behalf of the United States, and the second from The Public Patent Foundation, Inc., a not-for-profit legal services organization affiliated with the Benjamin N. Cardozo School of Law.

In the amicus curiae brief on behalf of the United States, the U.S. Solicitor General argues that the Appellate Court’s decision should be vacated and the case should be remanded. Disagreeing with Yums, the United States posits that a covenant not to sue could render an invalidity challenge to a registration moot, if it is sufficiently broad to “eliminate any meaningful prospect that the trademark will have an impact on the plaintiff’s business.” It also went on to state that the burden should be on the trademark holder to demonstrate that it is “‘absolutely clear’ that a concrete dispute between the parties over the allegedly invalid trademark ‘could not reasonably be expected to recur.’” Quoting Friends of the Earth, Inc. et al. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 190 (1999). The United States contends that the lower courts did not require Nike to meet that standard, and that the scope of the covenant not to sue and petitioner’s planned business activities are insufficiently clear from the record.

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Earlier today, the United States Court of Appeals for the Second Circuit issued its long-awaited decision in Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc.. The Appellate Court decision reversed the lower court’s finding that a single color can never serve as a trademark for fashion. It also found that Louboutin’s red, lacquered shoe outsole had acquired distinctiveness and is protectable as a trademark. However, the Court went on to state that the trademark is “limited to uses where the red outsole contrasts with the color of the remainder of the shoe.” The case has now been remanded to the District Court for further proceedings.

This decision is particularly significant to the fashion industry, since it rejects the District Court’s finding that color is per se functional as applied to fashion, and therefore may never be protected as a trademark in that context.

Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department.

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In a prior blog, we reported that the Supreme Court had granted certiorari in Already, LLC dba Yums v. Nike, Inc., No. 11-982, to an appeal from the Second Circuit’s decision affirming the Southern District of New York’s holding that a covenant not to sue entered in a trademark dispute ended the case and controversy between the parties.

The issue before the Supreme Court is “[w]hether a federal district court is divested of Article III jurisdiction over a party’s challenge to the validity of a federally registered trademark if the registrant promises not to assert its mark against the party’s then-existing commercial activities.”

On August 16, 2013, petitioner Yums filed its opening brief with the Court. Yums argues for reversal on the basis that Nike’s covenant not to sue Yums did not divest the district court of jurisdiction over Yums’ challenge to the validity of Nike’s asserted trademark registration. In short, Yums asserts that, although it may not be sued based on the registration, the continued validity of that registration is harmful to it. The registration creates the appearance that Nike may exclude others from using a similar shoe configuration which, Yums posits, disadvantages it “both procedurally and substantively, in [its] efforts to attract investment and compete with [Nike] in the marketplace.”

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Today, ICANN, the Internet’s domain name registration watch dog, will publish a listing of nearly 1,900 new generic Top-Level Domains (“gTLDs”) that may be approved for use as early as March 2013. We previously wrote about ICANN’s expansion program and suggested safeguards that companies could implement to protect themselves.

The Domain Name System helps PC users to navigate the Internet. Every domain name ends with a top level domain (“TLD”), such as .com, .net, .biz and others. The Internet Assigned Numbers Authority (“IANA”) maintains a complete listing of approved domain names. The new program expands the domain name sysyem (“DNS”) already in use and well-known, by allowing any entity to apply for a new gTLD.

As we discussed, this expansion will change the Internet forever. It will also pose new potential risks for trademark owners, who already face a myriad of threats from cyberspace. These newly proposed gTLDs are by no means set in stone. An informed objector may be able to stop an application. However, time is of the essence as the opportunity to properly object or comment is limited.

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For brand owners facing the challenges posed by counterfeiting, U.S. Customs and Border Patrol (“CBP”) recently adopted a new temporary rule which has the potential to make it much easier to combat the import of counterfeit goods into the United States (“Interim Rule”). The Interim Rule provides that in instances where the CBP has suspicions regarding the authenticity of goods being imported, and the importer fails to provide proof of genuineness, the CBP is permitted to share detailed information about the suspect goods and importer with brand owners. This represents a welcome sea change in CBP policy for brand owners who have long been frustrated by CBP’s policy regarding limited information sharing.

In the past, CBP’s policy was to conduct its investigation of suspected counterfeit goods without sharing specific information regarding the goods or the source with brand owners. CBP’s reluctance to share this information was driven by a concern that the goods may prove to be genuine parallel imports - commonly referred to as “gray market” goods. In the United States, gray market goods are legal, and past CBP practice ensured that sources of such goods were not provided to the brand owners for fear of disclosing the domestic gray marketer’s trade secret, such as the foreign source(s) of the goods. Although CBP’s legal concerns were valid, the near total lack of information sharing has been frustrating to brand owners who sought specific details regarding the goods or the foreign source to assist the CBP in reaching a determination regarding the genuineness of the goods. By way of example, the CBP has historically been unwilling to share unique bar code or serial number information relating to the goods despite the fact that the information could lead the brand owner to determine source of manufacture and the shipping or distribution sources. Again, the concern was that this same information could be used by brand owners to identify the source of gray market goods.

Under the Interim Rule, which went into effect on April 24, 2012, CBP is permitted to share specific information regarding the goods and source with brand owners absent the importer providing proof of genuineness after notification of CBP's suspicion that the goods are counterfeit. The Interim Rule is a breath of fresh air for brand owners who have long lobbied for a change of CBP policy. Although brand owners will benefit from the permanent adoption of the Interim Rule, the basis for the policy change was primarily driven by the increasing concerns that many counterfeit goods pose a serious threat to public health and safety, and also national security.

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The United States Patent and Trademark Office (“USPTO”) has issued a warning notice advising trademark owners to beware of third party communications that “mimic the look of official government documents” and request payment of fees. That notice was issued after a number of owners reported to the USPTO that they had made payments in response to such requests, believing that they were for official fees and then learned that they were not.

These types of third-party solicitations often use official-sounding names, as well as formats that are more consistent with the style of government correspondence than that of commercial solicitations. For example, the USPTO specifically mentioned an entity using the name “United States Trademark Registration Office” and provided a copy of a notice that it sent to a trademark applicant.

Trademark applicants and registrants who receive solicitations for payments relating to their trademark filings are encouraged to read that correspondence carefully, or to forward it to their trademark attorneys for attention. All legitimate USPTO correspondence will list the “United States Patent and Trademark Office” as the sender and, if sent by e-mail, will be from an address ending “@uspto.gov.”

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The U.S. Commerce Department recently released a comprehensive report, entitled “Intellectual Property and the U.S. Economy: Industries in Focus,” which identified 75 industries as IP intensive. The Report found that IP at such industries supported at least 40 million jobs in 2011. As of 2010, IP comprised more than $5 trillion dollars, or 34.8 percent of, U.S. gross domestic product (GDP) and accounted for 27.1 million American jobs. Between 2010 and 2011, the U.S. economic recovery resulted in a 1.6% increase in direct employment in IP-intensive industries, faster than the 1.0% growth in non-IP-intensive industries.

The Report concluded that the innovation protected by IP rights were key to creating new jobs and growing exports, all with a positive pervasive effect on the entire economy. IP-driven benefits flowed both upstream and downstream to every sector of the U.S. economy, and not just the final product of workers and companies: every job in some way produces, supplies, consumes, or relies on creativity and commercial distinctiveness to compete. Protecting ideas and IP promotes open and competitive markets, and will help ensure that the U.S. private sector remains America’s innovation engine.

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Pinterest, a play on words of “pin” and “interest,” is a virtual, online “pin board,” where user’s can organize and share things they find on the web. While Pinterest is attracting a loyal community of social media users, the site is also the source of some concern for those same users and owners of intellectual property.

The stated Mission of Pinterest is “to connect everyone in the world through the ‘things’ they find interesting . . . a favorite book, toy, or recipe [which] can reveal a common link between two people. With millions of new pins added every week, Pinterest is connecting people all over the world based on shared tastes and interests.” According to the website, a “pin” is an image added to a user’s Pinterest “board” from either a website or as an uploaded image from a user’s computer. Users add the “Pin It” applet to their web browser, which then allows a user to add a pin (an image) by clicking on the “Pin It” button, and adding the requested pin to the user’s pinboard.

For those individuals and companies looking to capitalize on the free promotion that Pinterest offers, they can add a “Pin It” button to their webpages which looks and functions similarly to the buttons offered by other social media websites. Adding another “button” to companies’ webpages is another avenue to increase the social awareness of a brand or products. While many brand owners, companies and individuals will appreciate being “pinned” by users, there will undoubtedly be those who object.

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On January 12, 2012, ICANN, the Internet’s domain name registration watch dog, began accepting applications for new generic Top-Level Domains (gTLDs) to add to those already in existence, including .com, .net, .biz and others. Under the new scheme, any company can apply for a gTLD, thereby expanding the domain name system (DNS). Ultimately, this expansion will change the Internet forever. Each new gTLD poses an incremental risk for trademark owners who are already under heavy assault in cyberspace from cybersquatting (registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark owner), brandjacking (assuming the online identity of another entity for the purposes of trading on another’s brand equity), and typosquatting (registering URLs with common misspellings) by those seeking to generate illicit profits. According to the Coalition Against Domain Name Abuse (CADNA), cybersquatting already costs trademark owners more than $1 billion each year due to lost sales, lost goodwill, and increased enforcement costs. However, with a major increase in gTLDs, many corporations fear an expansion in expensive litigation to enforce their brands and trademarks.

To safeguard its valuable marks, a company should be proactive. Steps to consider are: First, the company should register its service marks or trademarks with the USPTO. Second, the company should consider registering its marks with the newly created Trademark Clearinghouse and Claims Service, which will serve as a central repository for trademark information submitted by trademark owners. Third, the company should monitor the first round of gTLD applications published by ICANN and file a “Legal Rights Objection” to any gTLD that infringes its marks. Fourth, the company should consider a defensive strategy by registering gTLD domain name variants within the 30 days after each new gTLD is launched. Lastly, the company should actively monitor new gTLD registrations as it does existing TLDs for key terms and marks and challenge potentially infringing domain names utilizing the most appropriate means, namely the Federal Trademark Dilution Act (FTDA), the Anticybersquatting Consumer Protection Act (ACPA), the Uniform Domain Name Dispute Resolution Policy (UDRP), or the new Uniform Rapid Suspension System (URS).

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The Gibbons Women’s Initiative is hosting an upcoming program for in-house counsel entitled, “Protecting Your Company - Trademark Basics You Need to Know,” on Thursday, March 8 from 8:30 - 10:15 am at Gibbons Newark Office.

This program will feature Catherine M. Clayton, a Director in the Gibbons Intellectual Property Department, who leads the firm’s trademark practice. Ms. Clayton has a broad range of experience in trademark and copyright law, and her practice encompasses litigation, licensing and prosecution.

Ms. Clayton will discuss trademark and other intellectual property law basics; acquisition, licensing and registration of marks; and policing and enforcement strategies for businesses.

This informative and practical program is eligible for CLE credit. Please click here for additional details and registration information.

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The New York Knicks’ rising superstar point guard, Jeremy Lin, continues to wow fans around the world. Lin’s NBA ascent also has prompted a rush to the Trademark Office.

Over 20 applications for word marks that bear the letters L-I-N already have been filed. These include LIN-SATIONAL; ALL LIN; LINSPIRATION; I’M A LINNER; LINSOMNIA: LINCREDIBLE; and other derivations using the star’s last name. The frenzy began with applications for the seemingly ubiquitous LINSANITY catch phrase, which were filed on February 7 and February 9, as the star’s career took off. Most of the applications to date have been filed on an intent to use basis, that is, the applicant has expressed a bona fide intent to use the mark in interstate commerce.

Two of the applications appear to be made by Mr. Lin himself, and claim the word marks Jeremy Lin and LINSANITY for goods in Classes 18, 21, 25, 28 and 32, relating to, e.g., sports bags; cups and mugs; clothing; action figures and sporting goods; and sports drinks.

Of course, these applications will be scrutinized under federal trademark law, including Section 2(a) of the Lanham Act, which examines whether a mark falsely suggests a connection with another person who is not the applicant; as well as Section 2(c), which bars a mark identifying a living person, unless that person has consented in writing to the mark, 15 U.S.C. § 1052. Both provisions auger well for Mr. Lin’s applications. These trademark developments will be closely watched, as will the young star’s promising career.

Ralph A. Dengler is Counsel to the Gibbons Intellectual Property Department. Todd M. Nosher, an Associate in the Gibbons Intellectual Property Department, co-authored this post.

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Coming off a year that included the Smith-Leahy “America Invents Act,” 2012 portends to have some significant developments in IP law.

Decisions for IP practitioners and industry to watch for include:

• the Supreme Court’s decision in Caraco Pharm. Labs. Ltd. v. Novo Nordisk A/S, regarding “use codes” and section viii carve-outs under the Hatch-Waxman Act;
• the Supreme Court’s decision in Mayo v. Prometheus, regarding patentable subject matter, post-Bilski; and
• the Federal Circuit’s upcoming en banc decisions in McKesson and Akamai, regarding joint infringement liability.

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New Jersey, along with New York, Massachusetts and Texas, are the only states that have not adopted some form of the Uniform Trade Secrets Act. Not for much longer.

Last week, the New Jersey Trade Secrets Act, A-921/S-2456 passed unanimously in the New Jersey Assembly, and is on its way to the Governor’s desk. Governor Christie will have 45 days to sign the measure into law. Once enacted, the law will be effective immediately, but will not apply retroactively.

To date, New Jersey has applied the common law to trade secrets. The pending law reflects much of this common law tradition. Basically, the Act defines a trade secret as information, regardless of form, that derives independent economic value from not being generally known to others who can gain economic value from its disclosure; and, is the subject of reasonable efforts to maintain its secrecy.

The Act protects a trade secret holder from misappropriation, which is defined as a trade secret acquired by improper means or improperly disclosed. Among the remedies available for misappropriation are: damages, both actual and for unjust enrichment; as well as a reasonable royalty for unauthorized use or disclosure; punitive damages; injunctive relief for actual or threatened misappropriation; and the possibility of attorney’s fees. Attorney’s fees are also available as a remedy for misappropriation claims made in bad faith, and with respect to a motion to terminate an existing injunction that is made or resisted in bad faith. The Act shortens the six-year statute of limitations previously available for bringing an action (under N.J.S.A. §2A:14-1) to a three-year term beginning with the time of actual discovery of a misappropriation or the time at which discovery would have occurred with reasonable diligence.

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The recent establishment of .XXX, a new Top-Level Domain Name (“TLD”) intended for adult-oriented content, has been met with some trepidation and sparked controversy from those within and outside of the adult-oriented industries. Although much has been made of the threat of .XXX cybersquatting relating to mainstream companies, institutions and brands, ironically, the first formal legal challenge to the .XXX TLD, comes from those within the adult industry.

Last week, the owners of two popular adult-oriented websites, YouPorn.com and Digital Playground, filed a federal antitrust lawsuit against the operators of the .XXX TLD, and the administrator of the Domain Name System (“DNS”), alleging antitrust violations related to the creation and maintenance of the controversial TLD. Plaintiffs complaint named the Internet Corporation for Assigned Names and Number ("ICANN") and its exclusive registry operator for the .XXX TLD, ICM Registry, LLC ("ICM") as defendants in the suit. ICANN is a non-profit corporation responsible for the domain names on the internet. It is responsible for administering the internet domain name system by controlling the creation of all TLDs and accrediting registrars for domain names. ICM is a for-profit registry operator providing services to domain registrants for fees.

The suit filed in the Central District of California, alleges monopolistic conduct, price gouging, and anti-competitive and unfair practices. Specifically, the plaintiffs allege that defendant ICM manipulated and intimidated ICANN into entering into an agreement which resulted in a monopoly by: naming ICM as the sole registrar for the .XXX TLD; agreeing to a prohibition on the creation of any competing TLDs for the adult industries; and, granting ICM control of pricing without any oversight by ICANN. As a result, the plaintiffs argue that ICM now maintains a monopoly over the sole adult-oriented TLD.

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On Monday, the International Trademark Association (“INTA”) filed an amicus curae brief  with the United States Court of Appeals for the Second Circuit in Christian Louboutin S.A. v. Yves Saint Laurent America Holding, Inc.. In that brief, INTA argued that the lower court’s decision should be vacated and remanded on the basis that the court did not properly evaluate Louboutin’s federally registered trademark, failed to accord that mark the legal presumption of validity to which it is entitled under federal law, and did not use the appropriate test for aesthetic functionality.

The matter pending before the Second Circuit is an appeal from the U.S. District Court for the Southern District of New York’s denial of Louboutin’s motion for a preliminary injunction to halt the sale by Yves Saint Laurent America Inc. and its affiliates (“YSL”) of shoes having red soles. In the lower court’s decision, Judge Victor Marrero denied Louboutin’s motion, finding that Louboutin was unlikely to be able to establish that ownership of a protectable mark, since color cannot serve as a trademark if it is functional. Louboutin then filed the instant appeal. Gibbons summarized the lower court’s decision in an earlier blog.

In its amicus brief, INTA argues that the Southern District did not give due deference to Louboutin’s federal registration and the presumption of validity it confers, and that the decision was not based on a finding that YSL had shown “by a preponderance of the evidence” that Louboutin’s mark was not entitled to protection, as the law requires. The brief also criticizes the Southern District’s decision on the basis that it misconstrued Louboutin’s asserted trademark rights as a broad claim to the color red as applied to shoes. However, INTA noted, the mark is limited to a lacquered red that is specifically placed on the sole of a shoe.

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As has been widely reported by the mainstream press and most legal publications, the Internet Corporation for Assigned Names and Numbers (ICANN) has approved a new “.XXX” top-level domain expected to be utilized by the adult entertainment industry. Given the connotation of the .XXX domain, companies and individuals around the globe are considering how best to protect their trademarks from the potential harms of registry misuse, including cyber squatters targeting this new domain to register well known trademarks. Although the creation of the .XXX domain will be a boon to those in the adult entertainment industry and domain registrars, it raises serious threats of infringement, brand dilution or tarnishing for trademarks uninvolved in those industries. If they have not already, all trademark owners should be considering the potential impact of the .XXX domain to their marks and determining whether to take the necessary steps to “opt-out” of .XXX domain registration by the October 28, 2011 deadline for doing so.

ICM Registry LLC (“ICM”), the company responsible for operating the .XXX domain, is offering a potential solution to concerned trademark registrants by offering a period to “opt-out” of .XXX domain registrations. The option to “opt-out” is otherwise known as “Sunrise Period B” and will run from September 7, 2011 to October 28, 2011. Sunrise Period B will permit companies, licensees, assignees and individuals with trademarks that were formally registered as of Sept. 1, 2011, to apply to have their trademarks permanently blocked from the .XXX registry. To successfully do so, a registrant must present its trademark by way of an application to an accredited .XXX registrar. This process involves a one-time fee, typically in the range of $200 to $250 per domain name. Once blocked, the protected domain name will be removed from the ICM registration pool. Additionally, that domain name will simply resolve to an information page stating that the domain name is not available for .XXX registration.

Significantly, the following are not considered formally registered trademarks that qualify for Sunrise B eligibility: (1) trademarks or service marks for which an application for registration has been filed, but is not actually registered by the competent public authority or intergovernmental organization prior to Sept. 1, 2011; (2) trademarks or service marks for which an application has lapsed, been withdrawn, revoked, canceled, or otherwise is no longer in full force and effect; (3) unregistered trademarks or service marks (including common law); U.S. State trademarks or service marks; (4) international applications for the registration of trademarks, made through the Madrid system, unless these are based on or have resulted in a registered trademark of national effect; or (5) U.S. supplemental registrations; or any other rights in a sign or name, including domain names, trade names, and appellations of origin.

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The U.S. District Court for the Southern District of New York’s August 10, 2011 decision in Christian Louboutin S.A. v. Yves Saint Laurent America, Inc., questions whether a single color may serve as a trademark for fashion. That case arises from an action for trademark infringement brought by luxury shoe designer, Christian Louboutin, against Yves Saint Laurent America (“YSL”). Louboutin is well-known for his collection of high end women’s shoes, which have bright red glossy soles. He also owns U.S. Trademark Registration No. 3,361,597 for the following mark, which is described in the registration certificate as “a lacquered red sole on footwear:”

The action alleged, among other things, that YSL’s sale of four shoe designs that are entirely red, with a red sole, including YSL’s Trib Too shoe, were likely to confuse consumers as to the source of the YSL shoes, in violation of Louboutin’s trademark rights. In the August 10, 2011 decision, Judge Victor Marrero denied Louboutin’s motion for preliminary injunction, finding that Louboutin was unlikely to be able to establish that he had a protectable mark, since color cannot serve as a trademark if it is functional.

In its decision, the court recognized the cachet of Louboutin’s red soles, noting that “[w]hen Hollywood starlets cross red carpets and high fashion models strut down runways, and heads turn and eyes drop to the celebrities’ feet, lacquered red outsoles on high-heeled, black shoes flaunt a glamorous statement that pops out at once. For those in the know, cognitive bulbs instantly flash to associate: ‘Louboutin.’” Neither party disputed that Louboutin’s red soles were distinctive, or that they were associated with Louboutin’s high-end footwear brand. The court’s decision turned on its finding that a single color is unlikely to be protectable as applied to fashion.

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Gibbons is pleased to announce that Catherine M. Clayton, a Director in the firm's Intellectual Property Department, will host a roundtable on Internet privacy and emerging issues relating to on-line and new media enforcement on September 22, 2011 at 12:00 pm. This program is part of the International Trademark Association’s (INTA) roundtable series, and will take place at the firm’s Newark office.

The roundtable will examine a host of emerging issues, including the impact of Internet privacy issues on brand owners; taking action against Internet scams; protesting infringement on social media sites; and the upcoming roll-out of new generic top level domains (gTLDs) for brand names, generic terms and locations. To register, please visit INTA’s website.

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Tory Burch LLC (“Tory Burch”), the makers of women’s apparel, designer shoes and fashion accessories, recently obtained a $164 million damages award against forty-one defendants accused of selling counterfeit versions of its products through numerous websites. This decision confers the largest award ever granted to a fashion company in a counterfeiting action.

In December 2010, Tory Burch brought this action before the United States District Court for the Southern District of New York, after conducting a lengthy investigation of China-based counterfeiters offering counterfeit TORY BURCH branded shoes, clothing and accessories for sale on-line to American consumers. Many of the websites used in this infringement scheme were posted at domain names that included the TORY BURCH mark, or marks of other luxury fashion brands. Among the numerous accused domain names were ToryBurchOutlets.com, DiscountToryBurch.com, CheapToryBurchs.com, Tory-Burch.us, ChristianLouboutinMy.com, The HouseofGucci.com and NikeJordanCenter.com.

The complaint included causes of action for trademark infringement, counterfeiting and cybersquatting and sought both monetary damages and permanent injunctive relief. At the time of filing, the company also sought and was granted a temporary restraining order enjoining the defendants from offering the counterfeit goods. In direct violation of the court-ordered temporary restraints, the defendants continued to operate by offering and selling the counterfeit Tory Burch goods as the lawsuit proceeded.

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Earlier today, the Supreme Court denied certiorari in the Tiffany v. eBay action, permitting a ruling to stand that places the burden on trademark owners to police infringements taking place on on-line auction sites. The Supreme Court’s denial of cert was without comment.

Critical to the underlying decisions of the Second Circuit Court of Appeals and the U.S. District Court for the Southern District of New York was that eBay was not itself the seller of the infringing goods, and that it acted promptly to take down auctions when it received notice that the goods were not legitimate. eBay reportedly has made investments of up to $20 million per year to stop fraud and infringements occurring via its site.

This action, which has been pending since 2004, has been carefully watched by brand owners and on-line retailers alike, since it examines the modern question of how responsibility for infringement should be allocated when third parties sell goods via an on-line marketplace. Given the Supreme Court’s denial of certiorari, the brunt of that burden currently remains on trademark owners.

Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department.

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On October 14, 2010, the U.S. District Court for the Southern District of Texas granted what is reportedly the largest judgment ever awarded in an action involving on-line counterfeiting. In Farouk Systems, Inc. v. Eyou Int’l Trading Co., Judge Kenneth M. Hoyt entered a default judgment and permanent injunction against more than seventy defendants, who were operating an Internet counterfeiting ring out of China. The judgment required that each of the defendants pay Farouk statutory damages of $4 million, resulting in an award of approximately $300 million. In addition to being significant because of the amount of the damages awarded, this decision is noteworthy for the pragmatic approach that the Court took to ensure that the relief awarded to the plaintiff would be meaningful.

In Farouk, the Court found the defendants guilty of operating an on-line counterfeiting ring that distributed spurious CHI® and FAROUK® branded hair care products, including straightening irons and hairdryers. Judge Hoyt noted that the defendants had gone to “great lengths to conceal and/or move themselves and their ill-gotten proceeds from Plaintiff’s and [the] Court’s detection and reach, including by using multiple false identities and addresses associated with their operations and purposely-deceptive contact information.” To give teeth to the decision, Judge Hoyt required that PayPal, Inc. release money in the defendants’ PayPal accounts to Farouk, in partial payment of the judgment. He also enjoined a broad array of third parties from providing services that would assist any defendant with its infringing activities. Among those enjoined are Internet Service Providers, sponsored search engine and ad word providers, banks, payment processing services, and entities such as Alibaba.com and DIYtrade.com, which provide on-line B2B (business to business) selling platforms.

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On August 5, 2010, the Second Circuit issued an important decision affecting a brand owner’s ability to establish personal jurisdiction against out-of-state defendants involved in the online sale of counterfeit goods. In Chloe v. Queen Bee of Beverly Hills, LLC, the Second Circuit vacated a Southern District of New York (“SDNY”) decision dismissing an anti-counterfeiting case for lack of personal jurisdiction. See Chloe v. Queen Bee of Beverly Hills, LLC, 571 F. Supp. 2d 518 (S.D.N.Y. 2008) (hereafter “District Court op.”), vacated and remanded, 2010 U.S. App. LEXIS 16192 (2d Cir. 2010) (hereafter “Second Circuit op.”).

In Queen Bee, Chloe sued several defendants including Queen Bee of Beverly Hills, LLC and its partners Rebecca Rushing and Simone Ubaldelli for trademark infringement and counterfeiting arising out of the defendants’ sales of counterfeit Chloe® handbags. District Court Op. at 521. Individual defendant Ubaldelli moved to dismiss for lack of personal jurisdiction, arguing that one sale to an employee of the plaintiff’s attorneys’ law firm—a so-called “manufactured contact”—was insufficient to confer personal jurisdiction on him See id. at 524. The district court dismissed the claims against Ubaldelli, reasoning that, among other grounds, “it would violate due process to permit a plaintiff to manufacture personal jurisdiction by purchasing an allegedly infringing product in a plaintiff’s forum of choice.” Id. at 526 & 530. In its decision, the district court acknowledged the existence of conflicting precedent within the SDNY on that jurisdictional issue. While some SDNY decisions have held that personal jurisdiction in a trademark infringement case can not derive solely from Internet sales “manufactured” by the plaintiff or its representatives, see District Court Op. at 524-525; citing Mattel v. Anderson, No. 04 Civ. 5275, 2005 U.S. Dist. (S.D.N.Y. July 18, 2005), others have found personal jurisdiction based solely on the solicitation of Internet sales and a shipment into New York initiated by a plaintiff representative. See District Court Op. at 524-525, citing Mattel v. Procount Bus. Svcs., No. 03 Civ. 7234, 2004 U.S. Dist. LEXIS 3895 (S.D.N.Y. Mar. 10, 2004); Mattel v. Adventure Apparel, No. 00 Civ. 4085, 2001 U.S. Dist. LEXIS 3179 (S.D.N.Y. Mar. 22, 2001).

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Last month, ICANN announced that its Board had approved changes to the Rules for the Uniform Domain Name Dispute Resolution Policy (“Rules”) providing for electronic filing of UDRP documents. Under the modified Rules, electronic filing will become mandatory effective March 1, 2010.

Both the World Intellectual Property Organization (“WIPO”) and the National Arbitration Forum (“NAF”) were quick to implement the paperless filings. WIPO began accepting paperless filings on December 14, 2009. The WIPO eUDRP procedures are explained in its new Supplemental Rules, Model Complaint and Filing Guidelines.

Similarly, the NAF began accepting paperless filings on December 29, 2009. The NAF has an opt-in form for parties to elect to participate in its paperless filing program prior to the mandatory eUDRP launch this coming March. NAF’s procedures are explained in its new Supplemental Rules, and it has prepared a new transmittal sheet for use in commencing a paperless proceeding.

Overall, the change to eUDRP is likely to be seen as a welcome improvement. In addition to being greener, eUDRP may further streamline resolution of UDRP proceedings. In fact, WIPO recently announced that its first eUDRP proceeding was resolved in just 37 days, and that user reactions to the new paperless procedures have been “highly positive.” We welcome comments on your experiences using the new eUDRP procedures.

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On November 16, 2009, the Supreme Court denied a petition for certiorari in the case of Harjo v. Pro-Football, Inc. The underlying action was brought by Native American activists (“Harjo”) who challenged the Washington Redskins’ right to register its team name and logos on the basis that they are scandalous, disparaging and may bring Native Americans into disrepute or contempt. Marks that do any of those things are not entitled to registration, as provided by Section 2(a) of the Lanham Act, 15 U.S.C. § 1052(a). The sole issue submitted for the Supreme Court’s review, however, was whether the activists’ claim was barred by laches, as found by the U.S. Court of Appeals for the D.C. Circuit.

Under the Lanham Act, the grounds on which a trademark registration may be cancelled become limited once the registration has existed for five years. For example, after that point, no challenge may be brought on the basis that the mark is merely descriptive. However, the Lanham Act specifies that certain claims may be brought “at any time,” including that a mark is disparaging, that it has been abandoned, or has become generic. 15 U.S.C. § 1064(3).

The issue submitted for the Supreme Court’s review arose out of a Trademark Trial and Appeal Board (“TTAB”) proceeding in which Harjo sought cancellation of a number of the Redskins’ registrations on the basis that the marks are disparaging and scandalous. On April 2, 1999, the TTAB ruled for Harjo on the issue of disparagement and ordered that the registrations be cancelled. Harjo, 50 U.S.P.Q.2d 1705 (TTAB 1999). The Washington Redskins then appealed that decision to the U.S. District Court for the District of Columbia, and that court held that the activists’ claim was barred under the doctrine of laches, i.e. that the activists had waited too long to bring the claim. Pro-Football v. Harjo, 284 F. Supp.2d 96, (D.D.C. 2003). The activists then appealed that decision. The gist of their argument was that laches may not bar a claim that the law explicitly states may be brought “at any time.” The U.S. Court of Appeals for the District of Columbia did not agree, and it affirmed the lower court’s decision on May 15, 2009. Pro-Football, 565 F.3d 880 (D.C. Cir. 2009). The activists then petitioned the Supreme Court for certiorari.

That the Supreme Court has refused to hear this action does not mean that the Redskins’ registrations will stand indefinitely. Another challenge, Blackhorse v. Pro-Football, Inc., is pending before the TTAB, brought by a group of Native Americans who had only recently reached the age of majority (i.e. the age at which the laches clock starts ticking for individuals) at the time their complaint was filed. That proceeding was suspended pending outcome of the Harjo action, and is expected to move forward in view of the Supreme Court’s decision to deny certiorari. So, while the Washington Redskins may have prevailed in Harjo, it remains to be seen how the challenge to the nature of its marks will be resolved.


Catherine M. Clayton is a Director in the Gibbons Intellectual Property Department.

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