This is big news in the world of internet domain names. Trademark holders have expressed concerns about ICANN’s decision to soon allow custom Top-Level Domains (e.g., .google, .disney, .newyork, .cars, etc.). Companies and other interested parties now have a bit more time to prepare for the change and decide whether to apply for new Top-Level Domains themselves, including domains that may contain their trademarks. The public will also have an opportunity to make further comments to the proposal this Summer.

Top-Level Domains (TLDs) are the portion of a domain name that is to the right of the dot (e.g., .net, .com, etc.). TLDs that are not country codes (e.g., .cn or .uk), are called generic TLDs (gTLDs). ICANN is the body that approves and recommends new gTLDs.

Currently, TLDs are limited to 21 generic top-level domains (like .net, .com, .org or .info). After allowing a few limited expansions (for example, .mobi), ICANN announced last year that it would dramatically expand this system and allow custom gTLD, subject to an elaborate application and evaluation procedure (and, of course, a fee). The new gTLDs can consist of almost anything, including trademarks, geographic locations and generic terms, as well as non-Roman characters. Applicants will have a limited time period to apply for new gTLDs.

The official launch of the program was originally planned for June 2009. After receiving a number of objections and comments from trademark holders and the business community, ICANN just announced that it will delay the program until at least December 2009. A committee is evaluating, and developing solutions in response to the “overreaching issues” with the program. Some of those concerns include: skyrocketing costs for trademark holders, and increased opportunities for malicious behavior and infringement online.

So what’s next? A further report and draft guidebook are scheduled to be published by ICANN in May and June 2009, at which point a new comment period will open. Under the current schedule, it appears that the publication of the “Final Application Guidebook” is planned for December 2009 or the first quarter of 2010. Applications for new gTLDs will be open for 45 days from that date.

Further information is available on the ICANN web site

The estate of rock legend Jimi Hendrix won a trademark infringement lawsuit against a Seattle, Washington-based businessman who used the star’s name and image to promote his brand of vodka. In Experience Hendrix LLC et al v. Electric Hendrix LLC et al, Case No. 2:07-cv-00338-TSZ (W.D. Wash. 2009). a U.S. District Court judge ruled HENDRIX ELECTRIC VODKA infringes on the estate’s trademarks.

Experience Hendrix and Authentic Hendrix, which owns and licenses Hendrix’s likeness and music won a $3.2 million judgment against Craig Dieffenbach and his Electric Hendrix Spirits. Electric Hendrix Spirits had described the liquor as inspired “by the innovative spirit of legendary musician Jimi Hendrix.”

A legal purple haze has surrounded the deceased guitarist for years. In this case, Hendrix’s sister Janie Hendrix, CEO of Experience Hendrix LLC, alleged trademark infringement and false advertising for its “tasteless promotion” of Hendrix Electric Vodka, sold in purple-tinted bottle. Plaintiffs further alleged that Hendrix’s name and likeness were used without permission. Janie Hendrix, however, isn’t the only Hendrix in this fight. Leon Hendrix, Jimi’s biological brother, who has been engaged in a long-running legal dispute with Janie Hendrix over Jimi’s assets, is a partner in defendants’ venture. Indeed, Mr. Dieffenbach, has helped Leon Hendrix finance his court fight over Jimi’s estate. Here’s a story about the lawsuit and the Hendrix family’s squabbles over who has the right to make money off the late rock star.

In its February 12, 2009 order, the District Court ordered the company to cease using Hendrix products for commercial purposes and ordered the vodka and any related advertising be withdrawn. And the beat goes on . . . .

Don’t forget to check the fine print (with your attorney). If you don’t want to view the entire episode, read below:

Michael Scott wants to sell paper. Borrowing an idea from the Roald Dahl book, Charlie and the Chocolate Factory, he decides to put 5 Golden Tickets in pallets of paper to be randomly shipped to existing clients. The tickets allow a company getting the ticket to receive 10% off its paper order. Problem is, Michael decides to seed them himself and all the tickets end up with the same company. Worse, there are no restrictions: no limit to the number of tickets one company can have; no time restrictions; no restriction on the number of orders to which the ticket applies; no limitation on minimum or maximum orders. There go the Dunder-Mifflin profits (and Jim’s commission).

Like a Curious George book, it all works out in the end, but in difficult economic times, clients often make rookie errors when rolling out a promotion that can be easily dispensed with by first “role playing” the promotion, and then, spending a little time with an attorney, who may know about various state and local laws that could affect the outcome. At a minimum, the client should ask itself these questions before proceeding:

– Does this promotion attract the right clientele?
– If I where the target, would I care?
– Is it impossible to “game” the promotion (take advantage of a loophole)?
– Will this have an overall positive impact on the bottom line?

If a client can answer the foregoing questions affirmatively, it’s taken the first step to a promising promotion.

Kia Motors America, Inc. v. Autoworks Distributing, Civil No. 06-156 (February 26, 2009).

Plaintiff Kia Motors America was none too pleased that Defendant Autoworks was selling “KIA” parts for below dealer net prices. It sued under the Lanham Act, claiming the parts were either gray market goods (parts authorized by Kia but not intended for the U.S. Market) or were counterfeit goods. Defendant filed for Summary Judgment on the grounds that its admittedly gray market goods were substantially identical to the Plaintiff’s goods and thus, their sale in the U.S. did not violate the Lanham Act.

Employing the Nestle test, the court looked at whether the goods being sold by Defendant were (1) not intended for the U.S. Market; and (2) materially different than those that were intended for the U.S. Market. Once both of these are established, the burden shifts to the Defendant to show that the difference is not the kind consumers would consider in purchasing a product.

The parties did not dispute that Defendant’s parts were not intended for the U.S. market; neither did they dispute that there was a difference between the warranties of each party. Defendant pointed out that its warranty covered all parts. Plaintiff’s warranty expressly excluded Defendant’s part. Thus, Defendant argued, the distinction was not one likely to affect the purchasing decision of its product. The court disagreed, finding that such a different (even though in Defendant’s favor) would be relevant to dealers purchasing the products for use in customers cars, and thus denied Defendant’s motion.

Practice Note: There is a distinction between parallel imports and grey market goods, though the terms are used interchangeably. Parallel imports are those goods that – while not intended for the U.S. market – are identical to the goods sold in the U.S. Courts have routinely held that if the goods are identical to those in the U.S. market, their sale in the U.S. will not constitute infringement. If, however, there is a material distinction between the goods sold elsewhere and those sold abroad, sale of those items may constitute trademark infringement because their sale creates a presumption of consumer confusion.

Fairey et al v. The Associated Press, Case No. 1:09-cv-01123-AKH (S.D.N.Y, filed 02/09/2009)

Shepard Fairey is a contemporary visual artist who created the iconic red, white and blue “Hope” poster that became the symbol of Obama’s campaign and, arguably, a cultural phenomenon (have you Obamicon-ed yourself yet?).

Fairey doesn’t dispute that he used a photograph taken by AP photographer Mannie Garcia at a 2006 National Press Club conference as a “visual reference” for creating the series of “Hope” posters and related merchandise. The AP owns a copyright registration in the photograph (Registration No. VA 1-356-885).

After the AP threatened to sue Fairey for copyright infringement for using the photograph without permission, credit or notice, the artist and his companies filed for declaratory relief. Fairey asserts that his use is protected by the Fair Use Doctrine because: 1) the photograph was used for a “highly transformative purpose;” Fairey “altered the original with new meaning, new expression, and new messages;” 2) the photograph was published “well before” Fairey used it and it is a factual work; 3) Fairey only used a cropped portion of the photograph, and the portion used was reasonable in light of his expressive purpose; and 4) the use not only does not harm the value or market of the photograph or any derivatives, but it has enhanced the photograph’s value “beyond measure.”

In its answer and counterclaim, filed yesterday, the AP asserts that Fairey’s series of posters and merchandise based on the photograph “copy all the distinctive and unequivocally recognizable elements of the [photograph] in their entire detail, retaining the heart and essence of [the photograph], including but not limited to its patriotic theme.” In response to Fairey’s fair use arguments, the counterclaim also alleges that the posters and other merchandise “do not alter any of the distinctive characteristics that make the [photograph] so striking — from the selection of subject matter, to the composition, to the exacting details of the photo.” AP’s counterclaim further points out that licensing of photographs “is an important source of revenue” for news and photo agencies and gives the following as an example of a photograph licensed by the AP for commercial use:

The AP seeks damages and injunctive relief for copyright infringement, contributory infringement and DMCA violation.

To be continued…

Note: Ownership of the copyright in the photograph (and, therefore, the AP’s standing to sue) may become an issue in this case. The AP asserts in its answer that Mannie Garcia was a “full-time salaried staff employee” when he took the 2006 photograph, making the photograph a work-made-for-hire under 17 U.S.C. sec 101. Mr. Garcia, however, claims that he was a freelancer, not an employee.

Textbook cases can get complicated. Those complications generally do not arise in association with the manuscript or first edition, but with the subsequent updates and revisions. This is often the result of the original authors being assisted, or superceded, by other contributing authors. Sometimes the credit and acknowledgement of each contribution is not adequately represented.

The Plaintiff, Vogel, was invited by the Defendant, textbook publisher Wolters Kluwer Health dba Lippincott et al, to author one section of the medical textbook “Pathology” in the Second and Third revisions. Plaintiff was not asked to participate in the Fourth revision; however, the Fourth revision includes portions of Plaintiff’s contributions to the preceding revisions. Plaintiff received no attribution for his earlier, iterative contributions; authorship for the Fourth revision has been credited to a completely new author-physician.

The Court of the Middle District of North Carolina granted the Defendant’s motion to dismiss Plaintiff’s claim of false designations of origin on the grounds that “Section 43(a) does not protect the merely communicative aspects of the goods apart from the goods themselves.” Specifically finding that Plaintiff’s interpretation of Dastar is “incorrect,” the Court held that any claims of false authorship attribution must be pursued under copyright law. The copyright claim survives the motion to dismiss and the case will go forward to trial.

Vogel v. Wolters Kluwer Health, Inc. (12/30/08)

Crane v. Poetic Products Ltd., 2009 U.S. Dist. LEXIS 993 (SDNY January 8, 2009)

Arising from a fondness for the conspiracy theory that the 1978 death of Pope John Paul I was a murder most vile to facilitate a specific succession, both plaintiff and defendant to this action wrote works. Crane wrote a two act play entitled “The Last Confession” and filed a declaratory judgement for a ruling that that play does not infringed copyright claimant, Poetic’s, nonfiction book entitled, “In God’s Name”.

In reviewing the two works, the Southern District of New York held that the play is not substantially similar to the book. The court looked at the elements of both works and found that while the selection, arrangement and organization of the facts constitute protectable copyright in both works, the comparison between the two works revealed that the resulting thin copyright did not extent to the specific historical order of presentation that each used in expressing their thinly protectable copyright. No substantial similarity was found between the two that used different means and devices in expressing the same plot. Crane’s work utilized dialogue and a series of flashbacks while the Poetic work employed historical narrative in chronological order.

The court in granting defendant’s motion for summary judgement, the court instructed the clerk to ‘close the case’.

With the goal of capturing “the most detailed experience of a single moment ever in history,” CNN and Microsoft invite inaugural attendees to send photographs documenting the moment that Barack Obama took the oath.

Participants are instructed to:

“1. Take one photo of the moment when Obama takes the oath. If you have a digital camera with a zoom lens, take three photos (wide-angle, mid-zoom, full-zoom).

2. E-mail each photo as soon as possible to themoment@cnn.com (one photo per message, 10MB size limit). Please only send in photos you took yourself.

3. Go to cnn.com/themoment to see all of the photos in our photosynth.”

And what is a “photosynth” exactly? Photosynth is technology developed by Microsoft and the University of Washington that creates a collage, a derivative work. Specifically, photosynth takes multiple shots of the same scene and reconstructs the 2D photos into 3D space. According to the web site, “depending on the number of photos, their resolution and the computing iron thrown at the project we should have a fully explorable virtual environment. It is a technology in its infancy. This is the first time a mass audience has been asked to participate. The technology takes all the submitted images from thousands of sources and angles to create a 360 degree visual image that can be viewed from different angles.”

And what about the copyright in those photographs by the amateur photographers? It is governed by pretty complicated and professional sounding terms of use.

After granting CNN and its affiliates a perpetual, irrevocable, royalty-free, worldwide license to which the submitter retains only personal use rights (which some would call an illusory license, and indeed much more akin to an assignment than a license at all), that photographer “warrants” that he or she, the amateur submitter, has “the written consent of each and every identifiable natural person in any submission to use such persons name or likeness in the manner contemplated by iReport.com, and each such person has released you from any liability that may arise in relation to such use.” Which is a bit of a trick as there is no chance of the amateur having obtained such “written consent” on the Mall on January 20th; and that amateur just also agreed earlier in the terms of use that CNN does not have to inform what “use” will be made of the submission.

And yet, people seem to have blithely blown past all those words and have made their submissions nevertheless.

It’ll be interesting to see the copyright application for registration at the United States Copyright Office that CNN will be making. A daunting task, it will be to draft that application.

A U.S. District Court in California recently granted summary judgment in favor of Boy Scouts of America (“BSA”) in a trademark infringement suit concerning the mark YOUTHSCOUTS. In Wrenn v. Boy Scouts of America, 2008 U.S. Dist. LEXIS 91913 (N.D. Cal. Oct. 28, 2008), the Court found BSA’s Congressional Charter provides special protection to its exclusive use of “emblems, badges, descriptive or designating marks, and words or phrases.” In addition, the protection afforded by congress provides BSA “need not demonstrate” that the mark YOUTHSCOUTS is likely to cause confusion with BSA’s CUB SCOUTS, EAGLE SCOUT, BOY SCOUTS OF AMERICA, and SEA SCOUTS trademarks. While the Court, “for the sake of completeness,” undertook a traditional trademark infringement analysis under Ninth Circuit precedent, this case was ultimately decided in BSA’s favor through application of the “special protection[s]” afforded by Congress whereby specific trademarks are removed from the general trademark process.

Mr. Wrenn, the plaintiff, is the founder of the National Counsel of Youthscouts, a non-profit founded in 2002 when plaintiff’s daughter was denied the right to become a member of her twin brother’s Cub Scout troop. Mr. Wrenn filed a trademark application for YOUTHSCOUTS with the USPTO. Thereafter, BSA filed a notice of opposition to the YOUTHSCOUTS application with the Trademark Trial and Appeal Board (“TTAB”) (Opp. No. 91157313). In response to the TTAB action, Mr. Wrenn sought to cancel or amend numerous BSA marks on the grounds that the terms “Scouts” and “Scouting” are generic. The TTAB issued a ruling that BSA had valid and incontestable rights to marks CUB SCOUTS, EAGLE SCOUT, and BOY SCOUTS OF AMERICA. Plaintiff also filed a declaratory judgment action in the District Court.

The District Court reviewed the history of BSA and its Congressional Charter. In 1916, Congress passed a charter providing special protections for BSA. The original Congressional Charter provided: “The corporation shall have the sole and exclusive right to use, in carrying out its purposes, all emblems and badges, descriptive or designation marks, and words or phrases now or heretofore used by the Boy Scout of America in carrying out its program.” In 1998, the charter was changed slightly and now provides: “The corporation has the exclusive right to use emblems, badges, descriptive or designating marks, and words or phrases the corporation adopts.”

Ultimately, the District Court granted Defendant BSA’s Motions for Summary Judgment and Judgment on the Pleadings. In doing so, the Court found that “BSA need not demonstrate the likelihood of confusion because it has been granted special protection by Congressional charter,” citing The Last Best Beef, LLC v. Dudas, 506 F. 3d 333, 339 (4th Cir. 2007) and S.F. Arts & Athletics, Inc. v. U.S. Olympic Committee, 483 U.S. 522, 531 (1987).

PRACTICE POINTER: A list of Patriotic and National Organizations recognized by Congress can be found here. If your client is on this list, its Congressional Charter may serve it well in a trademark infringement action.

This week, Apple announced that Digital Rights Management (DRM) would not attach to any single song from the iTunes store. This is huge confirmation of what most music fans have noticed: DRM doesn’t work and may never work. The details of this change include a price change. A tiered spectrum of prices will be the tariff card with the most ‘popular’ (read: hot and new) costing $1.29; the usual .99 cents for the chestnuts and perennial favorites; and then .69 cents for the sentimental and slow demand ones.

That music downloaded necessarily involves a ‘codec’ (which means that only a fraction of the full fidelity is made available) seems to continue to elude the consumer. But as anyone who has tried to play iTunes music on a full fidelity, fancy speaker knows, the quality of music is definitely strained…. and thin sounding.

For those of us who have been watching the DRM life cycle over the last decade, this is more confirmation that technological control efforts have far less to do with piracy than with an effort to control the design of consumer electronics, digital broadcasting and the evolving distribution models. Content owners are about out of tricks for how to slice and dice the accessing of content (regional codes, restrictions on porting lawfully made copies and pricing).

Washington D.C. is full of original works of art in the form of sculptures. One description of D.C. made by a young friend is that D.C. is a sculpture garden disguised as a town. A score of years ago, the Supreme Court issued a copyright opinion on another sculpture case, The Community for Creative NonViolence (CCNV). This opinion, Gaylord v. U.S., which issued on December 16, 2008, is consistent with CCNV.

The title of the work at issue, “The Column”, refers to a public sculpture depicting 19 Korean War soldiers in a ‘column’ formation. This sculpture forms the core of the larger Korean War Veterans Memorial (KWVM) in Washington, D.C. Frank C. Gaylord, the acknowledged artist who authored “The Column”, objected when the United States Postal Service commissioned a freelance photographer for $1,500.00 and then used that image on a commemorative stamp. The USPS sold 86.8 million 37-cent stamps bearing the image before retiring the stamp in 1998. The photographer pocketed his $1,500. Gaylord got nothing, not even a free stamp.

Gaylord sued; alleged copyright infringement; and demanded as damage 10% of the revenue of the USPS stamp sales.

The tangled facts surrounding the creation of the sculpture are pivotal in understanding this case. It is a fact pattern that reads like a nested Russian doll. An architectural firm won the contract from the American Battle Monuments Commission (ABMC) to create and install the KWVM; and, that architectural firm subcontracted the sculpture of the soldiers (19 in all) to Frank Gaylord, a self employed and well known artist. In the documentation regarding the creation of the sculpture, Gaylord demanded; was refused; and then succeeded in unimpeded ownership to the copyright in his works. Gaylord obtained numerous copyright registrations covering the sculptures of the poncho wearing foot soldiers both individually as a grouped column.

After the KWVM was installed, an amateur photographer visited the KWVM during a snowstorm and took photographs. The snow frosted images of trudging soldiers in column was licensed to the United States Postal Service for $1,500. The photographer notified the Postal Service that the permission of the artist of the sculpture would also be needed for reproduction of the image. The Postal Service contacted the ABMC who represented that it had the rights to the sculptures. No one contacted Mr. Gaylord; Mr. Gaylord did not consent.

Upon learning of the use of his work, Gaylord tried negotiating a ten percent license on the revenue of the stamp sales, and when that was refused, he sued the United States.

The United States defended stating that the Gaylord sculpture was a joint work. In reviewing the facts and logic, which were reminiscent of those of the Community for Creative Nonviolence (1988), the Court of Federal Claims found no joint authorship and that Gaylord is the sole owner of the sculptures. However, in reviewing the defense of fair use, the Court of Federal Claims found that United States Postal Service stamp was a fair use of Mr. Gaylord’s solely owned sculpture as the stamp is a transformative work, having a new and different character and expression from that of Mr. Gaylord’s sculpture. Gaylord for all his effort and for his tenacity in taking the matter to court; still gets nothing.

In re Innovative Technologies Corp. of America, Inc., Serial No. 78691831 (September 15, 2008)

In this recent decision, the Board held that the mark HAIR OF THE DOG for clothing was not likely to be confused with the registered mark LES CHEVEUX DU CHIEN for “custom manufacture of clothing, personal accessories in the nature of jewelry, stoles, scarves, linens, and home décor items.”

The Board found that, while the cited mark, LES CHEVEUX DU CHIEN, translated to “hair of the dog” in English, the marks were “clearly different in appearance and pronunciation,” and did not have “the same idiomatic meaning.” Indeed, the idiom “hair of the dog” in English refers to a hangover cure. This idiomatic meaning, the Board found, was the “predominant meaning” and the “most likely commercial impression” of applicant’s mark HAIR OF THE DOG. On the other hand, the Board noted, a French speaker would “likely see the mark LES CHEVEUX DU CHIEN and perceive it literally as a statement about a dog’s hair.”

The marks, considered as a whole, did not mean the same thing, and, therefore, were not foreign equivalents. The Board further noted that, unlike MARCHE NOIR and BLACK MARKET, the marks HAIR OF THE DOG and its “literal” translation in French LES CHEVEUX DU CHIEN did not have the same idiomatic meaning in both languages. Accordingly, the Board reversed the refusal to register HAIR OF THE DOG.

Comment:

This author is a native French speaker. While in agreement that these two marks are not likely to be confused (if only because of the distinctions between the goods, channels of trade and consumers), she has a très petit bone to pick with the TTAB.

Yes, the marks have different meanings; but not (just) because “hair of the dog” is an idiom and “les cheveux du chien” is not. While the French word “chien” does mean “dog,” the word “cheveux” in LES CHEVEUX DU CHIEN simply does not translate to dog hair in French–or any animal hair for that matter; it means human hair (as in the hair growing on a person’s head). So, when seeing the mark LES CHEVEUX DU CHIEN, a French speaker would not, as the Board stated, “perceive it literally as a statement about a dog’s hair;” a French speaker may, however, perceive it as a statement about a dog wearing a wig (the correct literal French translation for “hair of the dog,” by the way, is “les poils du chien”). Who knew the French had two words for “hair”? Not the applicant apparently; they did not raise this argument in their appeal brief.

Would the Board’s analysis have been different if applicant had presented expert testimony that “les cheveux du chien” did not mean “hair of the dog,” not only idiomatically, but literally? It’s hard to tell. For example, in the recent TTAB decision applying the doctrine of foreign equivalents, In re La Peregrina Limited, 86 USPQ2d 1645 (TTAB 2008) the Board held that the mark LA PEREGRINA was confusingly similar with PILGRIM for jewelry and found that declarations from bilingual individuals, asserting that they would not translate LA PEREGRINA into its English equivalent, were insufficient to rebut the PTO’s evidence.

Practice Pointer:

When responding to a likelihood of confusion refusal based on the doctrine of foreign equivalents, this case reminds us that: 1) if applicant’s mark has any idiomatic meaning, this defense should be raised; and 2) that applicant or applicant’s attorney should try to check with a native speaker whether the marks really mean the same thing in both languages. Dictionaries are helpful, but as this case illustrates, they are not foolproof. While a bilingual expert may or may not sway the Board, knowing whether the words are literal equivalents may at least be helpful in mounting additional arguments against the refusal.

Last Wednesday, the Eastern Division of the Central District Court of California issued a series of extraordinarily sweeping injunctions in favor of Mattel, in the four-year legal dispute between the toy giant and the makers of the popular BRATZ dolls, MGA Entertainment.

Unless you don’t have any tween girls in your entourage, you may know that the BRATZ dolls are saucy, sexy versions of the BARBIE dolls. They came on the market in 2001 and were an instant sensation with young girls, resulting in a billion-dollar franchise, including over 40 characters, video games, and a whole host of ancillary products, accessories and related toys, like BRATZ BOYZ or BRATZ PETZ; even a movie.

Last July, Mattel won a $100 million jury award against MGA for breach of contract and copyright infringement. The jury found that the creator of the BRATZ dolls, Carter Bryant, came up with the idea and design while still under an exclusive contract with Mattel and that MGA had interfered with that contractual relationship. The jury also found that Mattel’s copyright had been infringed by the BRATZ dolls.

One of the post-trial disputes between Mattel and MGA was centered on whether the jury found that only the first generation BRATZ dolls created by Bryant while he worked at Mattel (Yasmine, Chloe, Sasha and Jade) infringed on Mattel’s copyright, or whether the entire line of BRATZ products was in violation. In this latest series of orders, issued on December 3, 2008, the District Court found the entire line to be infringing and issued the following rulings:

- MGA must cease manufacturing, marketing and selling the BRATZ line and any ancillary products;
- MGA must deliver, at its own expense, all infringing dolls and products to Mattel for impoundment; and
- Mattel is granted a constructive trust in the BRATZ and JADE trademarks and related domain names.

These unusually broad injunctions, once in place, would essentially shut down MGA’s business. It may not be the end of the Bratz quite yet, however (no matter what some parents may hope!). The District Court stayed the orders until February 2009 and MGA issued a statement that it will file an appeal to the 9th Circuit and request a stay.

Practice Pointer:

While ideas and concepts are not copyrightable, the expression of ideas and concepts is. Here, the employee crossed a line by re-using more than just intangible ideas and by taking with him actual trademarks and designs created at his former job. This case reminds us of the very real and very costly copyright risk that exists when a company hires an employee or independent contractor who has worked for a competitor. Ideally, you want your new employee to create something new and original every time but, practically speaking, that is not always possible. One prudent practice is to institute in-house policies for clear and clean copyright and content hygiene. Such policies, for example, specify which materials employees may or may not re-use in the scope of employment; and may also set forth a clearance process for “prior art” and open source materials employees are allowed to use from time to time.

Plastwood SRL v. Rose Art Industries (Case No. c07-0458LJR, W.D. Wash. Dec. 5, 2008).

District Court Judge James Robart granted the Motion for Summary Judgment filed by Rose Art, finding that its packaging did not contain literally false statements.

At issue in this case was Rose Art’s line of MAGNEXT toys, plastic and magnetic construction sets that compete directly with Plaintiff Plastwood’s SUPERMAG construction sets. In its complaint, Plaintiff alleged false advertising under Section 43(a) of the Lanham Act for claims made on the packaging. In particular, Plaintiff contended that while Defendant’s packaging makes the claim that “500 designs” can be made from the contents in the box, many of the structures described collapse under their own weight and/or cannot be made by kids.

During discovery, Defendant provided an adult expert who was able to construct all of the structures claimed on the box. Plaintiff complained that even if the expert was able to construct each of the structures, the toy was intended for children, not expert toy builders. Accordingly, the advertising was literally false as to its intended audience. In dismissing Plaintiff’s contention, the court noted that Defendant’s box had an age range of 3 to 100. Thus the court, while acknowledging that the question of whether a statement is false is a question of fact to be decided by a jury, found that Plaintiff had failed to “establish any genuine issue of material fact in support of its assertion that the structures cannot be built,” and further noted that Plaintiff provided no evidence that consumers were actually misled. According to the decision, in fact Plaintiff did show that at least three of the structures could not be built and that many more could be built, but not in the manner shown by the instructions. Nevertheless, the court found that there was no material issue of fact with regard to the truth of Defedant’s statement and granted its motion.

Comment: The decision is an interesting one. Plaintiff brought its case on a theory literal falsity of Defendant’s statements. Under the Lanham Act, if a statement is “literally false,” then a Plaintiff does not have to provide evidence that consumers were actually deceived; rather, if a statement is found to be literally false, the court must assume consumers were misled (Rosco, Inc. v. Saks Fifth Ave., 284 F.3d 302, 311 (1st Cir. 2002) ). Thus, it seems in part, the court may have been using the test for whether a statement, though true, is false by necessary implication, to find for Defendant.

Had the Plaintiff alleged implied false advertising or, in the alternative, “false by necessary implication” (literally true, but misleading), it would have had to provide evidence that consumers were misled. On the other hand, by bringing such a claim, Plaintiff could have made a credible showing that the box indication of “ages 3-100” does not really reflect the toy’s intended audience. Evidence of where the toy was sold (and who bought the toy) could have narrowed the range and survey evidence might have shown that in fact, parents who bought the toy assumed the product designs could be constructed by their child.

Practice Pointer: Appropriate disclaimers should be included on a box (or, if online, at the point of purchase) to notify the purchaser of product limitations. In this case, a claim that the box’s contents make 500 different structures might have been followed by a simple statement that “expert skill may be required to make some structures.” Such a statement would have been unlikely to change the buying habits of a parent interested in the toy, and would likely have alleviated the need to defend against the claim brought.

For the holidays, Lucky Brand has issued what it believes to be the first User-Generated coupon, where your discount depends upon your level of skill. A unique way to drive users directly to its online presence, the company asks you to “Buck Your Way To Holiday Savings” by playing a game in which users control Santa’s bucking reindeer. The more items he bucks off (get it?), the bigger a users discount will be. If you like, you can even upload a picture of yourself so you can buck your own way to savings.

This particular concept meets a number of marketing goals. First, it drives customers directly to the website, where they can view the products for sale. Second, it creates stickiness on the site, which makes users more likely to buy over time. The uniqueness of the promotion suggests users will send the webpage to a friend, encouraging viral marketing.

Practice Pointers:

1. Although not legally required, a good rule of thumb for a promotion such as this is to allow users to play repeatedly until they receive the maximum discount. Such a provision creates goodwill and keeps customers on the site longer.
2. As with any discount promotion, make certain to post restrictions including time for use, maximum amount, number of coupons available per person, and whether or not the coupon can be combined with other discounts.

Today, according to the U.S. Department of Justice, Juan Luis Llamas was sentenced to prison for his role in what is being called a massive sweepstakes fraud scheme that bilked U.S. citizens out of millions. Llamas was sentenced to 11 years in prison and ordered to pay restitution of over $4 million, jointly with his co-conspirators.

Llamas, who pleaded guilty in late 2007, was charged with conspiring to defraud U.S. residents, mostly seniors, of millions of dollars. According to the indictments, Llamas and his co-conspirators made calls to U.S. residents from Costa Rica (using VoIP technology to disguise the call’s origin). Victims were told they had won a “sweepstakes contest” and were being contacted by the “Sweepstakes Security Commission” to ensure the safety of the award. The bogus calls requested the victims wire thousands of dollars as a “refundable insurance fee.” In many cases, victims were asked to wire additional money.

Practice Pointer: The United States does not have a Sweepstakes Security Commission, or any other government entity tasked with awarding money to individuals. In addition, legitimate prize providers will not request an actual winner wire funds to insure a safe transfer of a prize. Finally, if you didn’t enter a sweepstakes, and someone wants to award you money, it’s likely a scam.

Winter 2009. Reebok, in conjunction with the National Hockey League, is hoping consumer recognition of its brand will translate to money in the bank. Reebok will run a “Find the Lost Logo” promotion during the NHL Winter Classic, where it will ask fans to find the hockey player who is not displaying the Reebok logo on his jersey.

Entrants can play by watching the Classic on television and submitting their answer via text message or online; or attendees of the game can submit their answers via text message. All answers submitted will have an opportunity to win four tickets to the Stanley Cup final game. The winner will be announced at the 3rd period.

Practice Pointers:

1. The law is still not clear regarding whether a proper alternate method of entry for a text-messaging sweepstakes can be an online entry. Currently, the matter is being litigated in California courts.
2. This sort of promotion is categorized as a “treasure hunt” and is generally considered a sweepstakes, not a contest.

In re Hudson Fairfax Group LLC, Serial No. 76662560 (November 21, 2008)

In this non-precedential decision, the TTAB found that that a web page displaying the words “India Continuum Fund” (shown below) was acceptable to show use of the applied-for mark CONTINUUM for financial investment services.

The Board held that, because the word “India” was geographically descriptive (as the location of the investments) and the word “fund” was generic, the word CONTINUUM was not “a mutilation of applicant’s mark,” even though the words “India” and “fund” appeared in the same size and font type as the mark CONTINUUM on the specimen page. In short, the Board found that CONTINUUM and INDIA CONTINUUM FUND created a similar commercial impression.

To say that this is a surprising result is an understatement!

The TMEP is clear that “the drawing of the mark must be a substantially exact representation of the mark . . . as shown by the specimen.” TMEP § 807.12(a) citing 37 C.F.R. §2.51(a), emphasis added. In addition, the mark on the drawing must be a complete mark, as shown on the specimen of use. When the representation on a drawing is missing an essential and integral portion, it is sometimes referred to as “mutilation,” which was ground for refusal of CONTINUUM in this case. The determinative factor is “whether or not the subject matter in question makes a separate and distinct commercial impression apart from the other element(s).” TMEP § 807.12(a).

In the specimen submitted by applicant in this case, the word CONTINUUM did not stand out in any way from the words “India” and “fund” (same font, size, color, etc.), which, arguably, creates a unitary mark (INDIA CONTINUUM FUND) that has a distinctive commercial impression from the mark CONTINUUM by itself. Longstanding TTAB case law supports this position. For example in In re Semans, 193 USPQ 727 (TTAB 1976), the Board found that the term “KRAZY,” displayed on the specimen on the same line and in the same script as the expression “MIXED-UP” did not in itself function as a registrable trademark apart from the unitary phrase “KRAZY MIXED-UP.” The recent case In re Yale Sportswear Corp., 88 USPQ2d 1121 (TTAB 2008) is also instructive: the mark UPPER 90 for clothing was refused registration because the specimen of use did not match the drawing. The specimen was a hangtag that included a degree symbol after “90,” a difference that “substantially change[d] the overall impression of the mark.”

If a degree symbol is sufficient to create a distinct commercial impression of the mark, why aren’t the words INDIA and FUND?

Practice Pointer: Regardless of this odd decision, make sure your clients submit specimens of use that are substantially exact representations of their marks, as filed. Small variations are generally fine (like punctuation; although an exclamation point has been held to change the commercial impression of a mark). Whenever possible, the mark should stand out from the words surrounding it, i.e. using a different font, size and/or color. For example, in In re Servel, Inc., 181 F.2d 192 (C.C.P.A. 1950) the Board reversed the refusal to register the term SERVEL as a mutilation of the mark SERVEL INKLINGS, where the specimen displayed an insignia between the words “SERVEL“ and “INKLINGS,“ and “INKLINGS” was printed in a large and different kind of type.

A little something from Doug:

I received a last minute call the other day from a boyhood friend inviting me to see the band AC/DC in concert at the Oracle Arena in Oakland, CA. Needless to say, I jumped at the opportunity. Why? On one hand, I’ve never seen AC/DC live. Say what you will, but any band that can sell out two shows at a modern basketball arena, some 35 years after their founding, must be doing something right. Indeed, since forming in 1973, AC/DC has achieved global sales totaling more than 150 million albums. Moreover, AC/DC is Sony BMG Music’s best-selling catalog act worldwide, selling nearly 70 million albums in the U.S. alone. On the other hand, I was also interested in AC/DC the “brand.” Would my interest have been as piqued if our seats were in, say, section 213, rather than in a catered club level luxury suite with preferred parking?? Does Angus Young wear corduroy shorts???

Arriving at the Arena parking lot the first thing I noticed was the T-shirts. Everyone seemed to have a unique AC/DC concert shirt. A badge of honor amongst concert veterans. Consistent, however, in these t-shirts was the prominent placement of the the recognizable AC/DC logo. Seeing that prominent AC/DC logo got me thinking about, and looking at, all of the band’s merchandise for sale, emblazoned with its unique logo.

It is evident that AC/DC understands the power of its logo and the goodwill associated therewith. In addition to T-shirts (designs for men, women, and children), on sale at the venue were: AC/DC posters and stickers, AC/DC jackets and outerwear, AC/DC hats, AC/DC magnets and key chains, AC/DC 2009 wall calendars, and AC/DC tour programs. Interestingly, AC/DC currently maintains U.S. trademark registrations in only International Classes 016, 025, and 026. These registrations are for the AC/DC Logo design mark, and not the standard word mark. While these registrations provide the band significant protection, and the band certainly has significant common law protection, there are some categories of goods and services the band could consider.

For example, AC/DC maintains a fairly elaborate website, yet does not maintain a U.S. registration in Class 041. The website offers streaming audio and video, but the band is not registered in Class 038. Of course, as their bread and butter, AC/DC sells CD, DVDs, and video game cartridges and discs, yet the band has no registration in Class 009. The band sells tote bags, luggage tags, and doggie sweaters in Class 18, and ashtrays in Class 034, all without U.S. trademark registrations. Big deal, you say . . . who’s gonna rip off AC/DC’s trademark? There’s an old saying, “an ounce of prevention is worth a pound of cure.” One need only look at AC/DC’s metal brethren METALLICA, and its numerous trademark registrations, to see what a few ounces of prevention is worth.

“Angus, baby, call me . . . we’ll do lunch. Have you thought about AC/DC air fresheners in Class 005?”

Note from Tsan: Except as related to information pertaining to the practice of trademark law and expansion of brand protection, the views expressed herein (including without limitation the reference to the band as legendary) do not necessarily reflect the position of Cobalt or Doug’s colleagues.

On December 5, 2008, The Children’s Advertising Review Unit (”CARU,”) a division of the Better Business Bureau, issue a press release admonishing advertisers to make clear disclosure about the need for adult supervision with certain toys, particularly when those toys are advertised directly to children.

CARU highlighted a new product from Wham-O, called the Slip ‘N’ Slide Mega Shark, a water toy for children’s play. The toy was advertised on Nickelodeon during a time when children are the primary viewing audience.

CARU questioned whether a small graphic disclosure on the screen was sufficient to inform children that no one over 5’ tall or weighing over 110 pounds should use the toy. Moreover, CARU expressed concern that because the disclosure was not properly made, the toy might be misused by children.

The lack of adequate disclosure was only one of the concerns CARU expressed. CARU also worried that the commercial should have shown adequate adult supervision, noting there was only a brief showing of a woman watching the children play on the slide. Overall, CARU found, the commercial did not meet CARU’s voluntary requirements.

Case law supports CARU’s contention that more precautions should be taken. In particular, with water sliding devices, the weight and height requirement is important, as spinal cord injuries, rendering users unable to walk, have been reported, and numerous law suits have dealt with this issue.

Practice Note: In an era of childhood obesity, it is not unusual for children to weight over 110 pounds. Clients CARU is self-regulatory and speaks softly, but carries a big stick. In cases where an advertiser refuses to alter its ad campaign, CARU can (and will) refer matters directly to the Federal Trade Commission for prosecution. Moreover, CARU can alert the CPSC if it believes the product or its advertising present a problem.