In a long-awaited decision, Iancu v. Brunetti, the Supreme Court held – in a 6-3 opinion delivered by Justice Kagan – that the Lanham Act’s prohibition on registration of “immoral or scandalous” trademarks violates the First Amendment. The decision completes a trilogy of cases that, in recent years, stirred up significant interest on the interplay between freedom of speech and certain Lanham Act trademark prohibitions. Initially, the constitutionality of the bar against registration of disparaging marks was brought to nationwide media attention through the Redskins case (Blackhorse v. Pro-Football, Inc), previously reported on by Gibbons, which culminated the legal effort by Native American tribes to delineate the term “redskin” as an offensive and disparaging racial slur, resulting in the initial cancellation of the eponymous mark owned by the Washington Redskins. Pending review by the Supreme Court, the Blackhorse case was cut short by another case, Matal v. Tam. In that 2017 decision, the Court struck down a Lanham Act provision that prevented registration for marks that are deemed “disparaging,” thus rendering moot any further review of Blackhorse. Because the Court in Matal had already declared the “disparaging” bar unconstitutional, it comes as no surprise that the Section 2(a) prohibition (15...
Reversing the First Circuit, the Supreme Court Holds That Rejection of an Executory Trademark License Does Not Bar the Licensee From Continuing to Use the Mark
In Mission Product Holdings v. Tempnology, the Supreme Court, in an 8-1 opinion delivered by Justice Kagan, held that a debtor’s rejection of a trademark license under Section 365 of the Bankruptcy Code does not terminate the licensee’s rights to use the trademark under the agreement. Tempnology made clothing and accessories designed to stay cool during exercise, and marketed those products under the brand name “Coolcore.” In 2012, Tempnology gave Mission Product Holdings an exclusive license to distribute certain Coolcore products in the United States and granted Mission a non-exclusive global license to use the Coolcore trademarks. The agreement was set to expire in July 2016. In September 2015, however, Tempnology filed for relief under Chapter 11 of the Bankruptcy Code, and rejected the license agreement under Section 365(a). The Bankruptcy Court held that Tempnology’s rejection of the agreement revoked Mission’s right to use the marks. The Bankruptcy Appellate Panel reversed. The First Circuit rejected the Bankruptcy Appellate Panel’s view and reinstated the Bankruptcy Court’s decision. The First Circuit reasoned that Congress, in enacting Section 365(n) in 1988, “expressly listed six kinds of intellectual property,” but not trademarks. The First Circuit thus held that trademark licenses are categorically unprotected from...
Last year’s Supreme Court’s decision in B&B Hardware raised the stakes in opposition proceedings when it stated that TTAB rulings may have preclusive effects in subsequent federal district court litigation. As litigants and practitioners are still assessing the consequences of that landmark decision, an unexpected confrontation took place between the Board and the Federal District.
A federal district court in the Northern District of California has recently given litigants in trademark counterfeiting cases guidance on where wrongful seizure claims under the ex parte provisions of the Lanham Act may be brought. The court ruled in United Tactical Systems, LLC v. Real Action Paintball, Inc. that wrongful seizure claims may be brought in any federal court, and not just the court that ordered the seizure. The case should be watched by accused infringers who have been the target of an ex parte seizure under the Lanham Act.
Illinois Court Refuses to Release Frozen Funds or Enlarge Bond Amount in Trademark Counterfeiting Case
A federal district court in the Northern District of Illinois has refused a request by certain defendants accused of trademark counterfeiting to release funds frozen in PayPal accounts and to increase the amount of a bond posted by the plaintiff in the case. The case highlights an uptick in challenges to financial asset restraints by defendants and nonparties in trademark counterfeiting cases and the discretion courts have in setting an appropriate bond to protect defendants in such cases.
Court Orders Nonparty Bank to Produce Documents Said to be Located Abroad in Trademark Counterfeiting Case
After more than five years of litigating access to documents requested in a subpoena directed to a nonparty foreign bank, the district court in Gucci Am. Inc. v. Weixing Li has ordered the bank to produce the documents, despite objections from the bank that production would violate Chinese law. The decision written by Judge Sullivan of the Southern District of New York, is an important decision for brand owners seeking to obtain financial documentation related to the sale of allegedly counterfeit goods.
New York Real Property Owners at Risk for Exposure to Joint and Several Liability in Connection with Trademark Counterfeiting Taking Place on Their Property
Brand owners are increasingly asserting claims against owners of real property where alleged trademark counterfeiting is taking place. Three recent actions filed in the Southern District of New York, styled Michael Kors, LLC v. Mulberry Street Properties Corp., et. al., 15-cv-5504 (S.D.N.Y.); Michael Kors, LLC v. Canal Venture, Inc. et. al., 15-cv-5788 (S.D.N.Y.); and Michael Kors, LLC v. Mid Center Equities Associates, et. al., 15-cv-5856 (S.D.N.Y.), raise the question of when property owners/lessors can be held jointly and severally liable for damages resulting from the sale of counterfeit goods on their properties.
District Courts Adopting Middle Ground in Fashioning Statutory Damages Awards in Trademark Counterfeiting Cases
Two recent opinions, one from the Northern District of Illinois and another from the Southern District of New York, offer guidance to those electing statutory damages in lieu of actual damages and profits in trademark counterfeiting cases. The takeaway for litigators is that courts appear to be taking a middle ground in statutory damages awards, awarding $1 million per mark/good combination instead of the $2 million statutory maximum.
A group of brand owners has filed another complaint against eleven Alibaba and Taobao entities for claims including direct and contributory trademark counterfeiting and violations of the RICO statute. At issue is when and to what extent a service provider can be held liable for alleged trademark counterfeiting taking place on an online platform.
Registrations of non-traditional trademarks are uncommon, and often discussed only among legal scholars and in academic papers. A recent Wall Street Journal article, however, called attention to a growing trend in trademark law: registration of scents and fragrances. The article describes the efforts of CESI Chemical, Inc., a producer of solvents for the fracking industry, which filed an application to register the orange scent imbued in its chemical additives for its hydraulic fracturing fluid.