Monday, March 16, 2015

Righthaven Remembered

It’s hard to believe that Righthaven, the company that was going to change the news media business by applying the patent lawsuit business model to the enforcement of copyrights, filed its first series of lawsuits five years to go.  (The events were so notable that even this trademark dedicated blog could not resist writing up a copyright related post).

To mark the anniversary, former Las Vegas Sun Reporter Steve Green (now a staff writer with the Orange County Register), who helped shine a spotlight on Righthaven as the company embarked on and went about its controversial copyright enforcement campaign, published a new article last week which looks back upon the rise and demise of Righthaven (including new quotes from Righthaven founder Steve Gibson who continues to stand by the actions taken by Righthaven).


Steve Gibson and the infamous “bluetooth” headset.
(Photo © Las Vegas Sun)

Thursday, March 5, 2015

Hakkasan denied preliminary injunctive relief in cybersquatting case for failure to establish irreparable harm

Trademark attorneys in the Ninth Circuit continue to face the fallout from last year’s Ninth Circuit decision in Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., 736 F.3d 1239, 1249 (9th Cir. 2013), cert. denied, 2014 WL 1575656 (Oct. 6, 2014) (“Herb Reed”).  In Herb Reed, the Ninth Circuit, following the Supreme Court’s precedents in eBay Inc. v. MercExchange, 547 U.S. 388 (2006) (which held that the traditional four factor test, including establishing irreparable harm, must be employed in patent cases) and Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008) (which held that parties seeking a preliminary injunction must demonstrate that irreparable harm is likely in the absence of an injunction), rejected the notion that a plaintiff in a trademark infringement lawsuit was entitled to a presumption of irreparable harm upon demonstrating a likelihood of confusion from alleged trademark infringement and held that a plaintiff seeking a preliminary injunction in a trademark infringement case must demonstrate irreparable harm in order to get preliminary injunctive relief:

Gone are the days when “[o]nce the plaintiff in an infringement action has established a likelihood of confusion, it is ordinarily presumed that the plaintiff will suffer irreparable harm if injunctive relief does not issue.” Rodeo Collection, Ltd. v. W. Seventh, 812 F.2d 1215, 1220 (9th Cir. 1987) (citing Apple Computer, Inc. v. Formula International Inc., 725 F.2d 521, 526 (9th Cir.1984)). This approach collapses the likelihood of success and the irreparable harm factors. Those seeking injunctive relief must proffer evidence sufficient to establish a likelihood of irreparable harm.

The Herb Reed case has since left many trademark litigation practitioners (at least those practicing in the Ninth Circuit), after years of being able to obtain preliminary injunctions based on a showing strong showing of likelihood of confusion and the presumption of irreparable harm thereby, now trying to figure out what type of actual “evidence” can be shown to overcome this threshold of demonstrating a likelihood of irreparable harm and having to inform some trademark clients that a preliminary injunction might not be as easily obtainable for trademark infringement as it once was. 
  
The latest example of the struggle to overcome this irreparable harm threshold comes from a court decision by Nevada District Judge Jennifer Dorsey who denied the owner of the Hakkasan nightclub chain preliminary injunctive relief for alleged cybersquatting against an individual who had registered various domain names containing the term “hakkasan.”  See Hakkasan LV, LLC et al v. Eddie Miller, Case No. 2:15-cv-290-JAD-PAL (D. Nev).


Hakkasan had filed a cybersquatting lawsuit against Defendant Miller for his registration of the domain names domain names , , , , and (the “Contested Domain Names”) – one of which was linked to a website offering the domain name for sale for $5000 and the other four linked to a webpage located at (also owned by Miller), which encouraged third parties to “partner” with him. 

Along with the filing of the complaint, Hakkasan also sought an ex parte temporary restraining order and preliminary injunction against Miller.  However, the Court – without receiving any opposition from Miller – denied Hakkasan’s request for preliminary injunctive relief on the grounds that Hakkasan had failed to show any evidence of a likelihood of irreparable harm arising from Miller’s actions.

In rejecting Hakkasan’s arguments of irreparable harm, the Court stated that “there is no evidence that Miller has taken any steps to compete with Hakkasan’s business beyond registering the Contested Domain Names and offering them for sale.”   And while Hakkasan alleged that Miller was using the domain names to “solicit partners to offer counterfeit services to the public,” the Court found
no indication that Miller has sold any of the domain names, partnered with any other person, or constructed a website designed to create confusion with Hakkasan’s business, siphon customers from Hakkasan’s business, or otherwise cause Hakkasan irreparable harm. Speculation of what Miller will do with the domain names is hardly enough to bridge the legal gap between Miller’s actions and Hakkasan’s irreparable injury. Instead, these are the sorts of “platitudes” that the Herb Reed court warned may show harm Hakkasan might suffer, but not harm a party seeking injunctive relief is likely to suffer
Order at p. 4 (emphasis in original).

The Court also rejected as unpersuasive several other cases cited by Hakkasan as support that its evidentiary proffer was sufficient to show irreparable harm.  One case – Starbucks Corp. d/b/a Starbucks Coffee Company v. Heller, 2014 WL 6685662, at *8 (C.D. Cal. Nov. 24, 2014) – involved a case where the court found irreparable harm where the presence of infringing products in the market could damage business goodwill.  However, the Court noted that Hakkasan had not offered any evidence that Miller had “introduced any competing or counterfeit ‘products’ into the marketplace or taken any steps other than to register the domain name and attempt to sell it to third parties.” Order at p. 4. The second case – Kalologie Franchising LLC v. Kalologie Skincare Medical Group of California , 2014 WL 953442, at *5 (C.D. Cal. Mar. 11, 2014) – involved a defendant who was continuing to use the alleged infringing mark at the defendant’s facility through a point of sale system and a website and where the court found irreparable harm from “plaintiff’s loss of control over its business reputation resulting from a defendant’s alleged unauthorized use of its protected mark during the pendency of an infringement action.”  In the case of Hakkasan, however, there was no indication that Hakkasan’s marks were being used by Miller in a manner that was similar to the Kalologie case. 

Finally, Hakkasan made one final “Hail Mary” argument that Herb Reed was a trademark infringement case and that the Ninth Circuit’s decision did not expressly overrule the presumption of irreparable harm in a cybersquatting case.  The Court rejected such argument, especially given the Ninth Circuit past statements that “cybersquatting is a form of trademark infringement.”  The Court further noted two other cybersquatting court decisions issued post-Herb Reed where the plaintiffs were granted preliminary injunctive relief   one involving an evidentiary record showing systematic cybersquatting that was intended to deceive customers (Bittorrent, Inc. v. Bittorrent Marketing GMBH, 2014 WL 5773197 (N.D. Cal. Nov. 5, 2014) and another where “loss of control over business reputation” established irreparable harm in circumstances where the domain name owner actually operated a business in the same market as the plaintiff and sold products “slightly dissimilar” from plaintiff’s products (Kreation Juicery, Inc. v. Shekarchi, 2014 WL 7564679, at *12 (C.D. Cal. Sept. 17, 2014)).  The Court found that Hakkasan had failed to show use of the Contested Domain Names by Miller that reached the same levels as those in the Bittorrent and Kreation Juicery cases. 

Accordingly, because Hakkasan had failed to demonstrate a likelihood of irreparable harm, the Court denied both Hakkasan’s Application for Temporary Restraining Order and Motion for Preliminary Injunction.

Monday, August 27, 2012

Marc Lurie/AirFX.com Wins Reverse Domain Name Hijacking Claim Against AirFX, LLC on Summary Judgment

AirFX,LLC (“Defendant”), the owner of the trademark AirFX, suffered a defeat last week in its attempt to “acquire” (or as some might say “hijack”) the domain name www.airfx.com from its current registrant, Marc Lurie (“Lurie” or “Plaintiff” ).   [Note: There were many articles about this dispute last year when the court denied Defendant’s Motion to Dismiss – see herehere, here, and here for a small sampling].

The airfx.com domain name was originally registered by Bestinfo on March 21, 2003.  In June 2005, Air Systems Engineering, Inc. ("ASE") filed a trademark registration application for the mark AirFX for “motorcycles, vehicle parts, namely, shock absorbers, and suspension systems for motorcycles, bicycles, automobiles, and powered vehicles.”  The mark registered in March 2007.  In April 2011, ASE assigned its trademark rights to a wholly owned subsidiary, Defendant AirFX,LLC.

Lurie originally was involved in operating skydiving wind tunnel businesses under the name "SkyVenture," but later decided to use the name AIRFX in connection with a new line of wind tunnels (despite having found ASE’s application to register AIRFX after conducting a trademark search).  Lurie acquired the airfx.com from Bestinfo for $2,100 on February 2, 2007, but never posted any content or created a website – and instead has a typical landing page (or “splash page” as defined in the opinion) put up by the registrar, GoDaddy.com.  While the landing page does have links to third party advertisements, Lurie maintained that he drived no revenue from such advertisements (and Defendant never provided any evidence to the contrary).  After leaving SkyVenture, Lurie was bound by a non-compete agreement prohibiting him from developing his own line of wind tunnels until 2010.  However, Lurie never sold any product under the brand AIRFX nor conducted any advertising, marketing, or manufacturing activities.  Lurie also never sold or offered to sell suspension systems for motorcycles, or any other motorcycle-related products.

Defendant contacted Lurie in 2008 regarding the purchase of airfx.com.  While the partie dispute the terms of the offer at that time, no agreement was reached.  In 2011, Defendant filed a domain dispute complaint before the National Arbitration Forum.  On May 16, 2011, the arbitration panel ruled in favor of Defendant and ordered that GoDaddy transfer airfx.com to Defendant.  See AirFX, LLC v. ATTN AIRFX.COM, Claim Number FA1104001384655 (NAF May 16, 2011)).

Lurie sought relief against the ordered transfer by filing a complaint which included a claim for reverse domain name hijacking under 15 U.S.C. § 1114(2)(D)(v).  Defendant counterclaimed with claims of cybersquatting and trademark infringement.  The parties filed cross motions for summary judgment.  On August 23, 2012, the U.S. District Court for the District of Arizona ruled in favor of Lurie by finding as a matter of law that Lurie was not liable for Defendant’s counterclaims of cybersquatting or  trademark infringement, and accordingly, Lurie’s Motion for Summary Judgment on its reverse domain name hijacking claim was granted.  See AIRFX.com et al. v. AirFX LLC, 2012 U.S. Dist. LEXIS 120285   (D. Ariz. August 23, 2012) (order here).

In deciding Defendant’s cybersquatting claim, the issue centered around the meaning of “registration” (ed.-an issue near and dear to my heart).  The court detailed the Ninth Circuit’s recent decision in GoPets Ltd. v. Hise, 657 F.3d 1024, 1030 (9th Cir. 2011) which clarified the meaning of "registration" and found that a party’s re-registration and continued ownership of a domain name that a party had registered long before a trademark owner registered its trademarks does not violate the cybersquatting statute (prior blog post here). 

Defendant attempted to distinguish GoPets because in that case, the original domain name registrant transferred the domain name to an entity that he co-owned.  In contrast, Lurie purchased airfx.com from an unrelated third party.  Defendant argued that the purpose of the ACPA would be undermined if a cybersquatter who purchases a domain name in bad faith is immune from liability simply because the domain name he purchased existed before a mark was  distinctive.

However, the court found otherwise: 
Nothing in the language of GoPets indicates that it should be read as narrowly as defendant suggests. GoPets did not distinguish between transfers of a domain name to related parties and other kinds of domain name transfers. To the contrary, GoPets broadly reasoned that if an original owner's rights associated with a domain name were lost upon transfer to "another owner," the rights to many domain names would become "effectively inalienable," a result the intention of which was not reflected in either the structure or the text of the ACPA.

In short, the court, following GoPets, found that it was undisputed that airfx.com was initially registered on March 21, 2003 by Bestinfo, ASE’s first use in commerce of the AirFX mark was June 2005, and Lurie purchased airfx.com on February 2, 2007 – and thus, Lurie’s registration of airfx.com in February 2007 "was not a registration within the meaning of § 1125(d)(1)” and because Bestinfo registered airfx.com long before ASE registered its mark, Lurie’s  registration and ownership of airfx.com does not violate the cybersquatting statute.  The court granted summary judgment on Defendant’s cybersquatting counterclaim in favor of Lurie. 

As for Defendant’s counterclaim for trademark infringement, the court focused on the fundamental issue of whether Lurie used the mark “in commerce” (noting that “If a person's use of a mark is noncommercial, it does not violate the Lanham Act.”).  Defendant’s sole argument of Lurie’s commercial use centered on particular allegations and admissions.  However, the court found no dispute that Lurie had never sold an AirFX product, have no advertising or marketing activities, have no manufacturing activities, never developed a website for airfx.com, and never sold any AirFX products or services on such website.  The court further found that Lurie’s limited activity of some pre-sales efforts and preliminary research, viewing such facts in the light most favorable to Defendant, was still insufficient to constitute commercial use of a mark.
Although plaintiffs have developed a brand name, registered a domain name, started  researching the design of their wind tunnels and approached potential investors and  customers, plaintiffs have not sold, manufactured, advertised, or marketed any product  bearing the AirFX mark. Defendant points to no other facts to establish plaintiffs'  commercial use of the AirFX mark.

As such, without raising any genuine issue  of material fact as to whether plaintiffs' use of the mark was commercial, the court found as a matter of law that no commercial use existed and therefore, there could be no trademark infringement as a matter of law and granted summary judgment on Defendant’s trademark infringement counterclaim in favor of Lurie. 

Finally, with respect to Lurie’s claim for reverse domain name hijacking, the only issue was whether Lurie’s registration of the airfx.com domain name was “not unlawful."
Because we have concluded that plaintiffs cannot be liable under the ACPA for cybersquatting as a matter of law, and because plaintiffs are entitled to summary judgment on the trademark infringement claim, we conclude that there is no genuine issue of fact as to whether plaintiffs' use of the domain name is lawful.

Defendant tried to argue that Lurie should not be entitled to such equitable relief because Lurie “conducted the litigation in unprecedented, and unprofessional ways.” [ed.—there are two sides to every story, and I’m sure Lurie has some stories about the actions of Defendant’s counsel as well].  However, the court noted the clear mandate of 15 U.S.C. § 1114(2)(D)(v), which allows the court to “grant injunctive relief to the domain name registrant, including the reactivation of the domain name or transfer of the domain name to the domain name registrant."  As such, the court ordered that the airfx.com remain registered with Lurie.

The court’s final words was to note that “[b]oth parties argue that this case is ‘exceptional’ under the Lanham Act, warranting an award of attorneys' fees. We will address a motion for attorneys' fees if and when one is before us.”   Stay tuned . . . 

Wednesday, August 8, 2012

Stephens Media Wins $200,000 Default Judgment Over Alleged Trademark Infringement of “Best of Las Vegas”



[After all these years, they still have do not have a category for “Best Las Vegas Trademark Attorney Blog” – or perhaps my dearth of blog posting in 2012 took me out of the running this year]

Back in 2009 (when I had much more time to blog on a more regular basis), I wrote about the three separate trademark infringement lawsuits filed by Stephens Media LLC (“Stephens Media”), the owner of the Las Vegas newspaper The Las Vegas Review Journal, against three separate companies over their alleged use of the term “BEST OF LAS VEGAS.”   See previous blog entry here.

In the case against one of the companies, CitiHealth LLC (“CitiHealth”), on August 6, 2012, U.S. District Court Judge Miranda Du issued a decision on a motion for default judgment filed by Stephens Media.  See Stephens Media LLC v. CitiHealth LLC, 2012 U.S. Dist. LEXIS 109431 (D. Nev. August 6, 2012).  What is interesting is how long it took for the case to get to this point.

The complaint against CitiHealth was originally filed on December 2, 2009, and related to the company’s publication of a magazine in December 2008 called “Healthy Living Las Vegas” that included the phrase on the cover “Best of Las Vegas.”  When CitiHealth failed to answer the complaint, a default was entered by the Clerk on March 24, 2010.  So why didn’t Stephens Media seek a default judgment at that time?  Well, the complaint was originally filed by Steve Gibson and his former firm Gibson Lowry and Burris.  Steve Gibson is also better known as the CEO of Righthaven LLC, the copyright enforcement company established by Gibson and Stephens Media to file lawsuits against websites that infringed on copyrights associated with Las Vegas Review Journal articles.  [I certainly don’t have the time or energy to go into all of the details of the Righthaven-saga in this post and will instead defer to those websites (here and here) that have tracked all things Righthaven and which will give any interested party the necessary background to understand what may have caused Mr. Gibson to be a little distracted during 2010 and 2011 as well as what may have caused  a rift between Mr. Gibson and Stephens Media].

Over a year went by without any follow-up after the entry of default against CitiHealth.  Finally, on May 24, 2012, the Court issued a Order to Show Cause, as to why the case should not be dismissed for failure to prosecute.  Six days later, Stephens Media filed a Motion to Substitute Attorney and subsequently informed the Court that that it had retained new counsel and intended to seek a preliminary injunction and default judgment.  On July 2, 2012, through new counsel Gordon Silver, Stephens Media filed the Motion for Default Judgment.  On July 13, 2012, Kenneth Shepherd, the co-owner of CitiHealth, notified both the Court and Stephens Media’s counsel that Healthy Living no longer exists and has not existed for the past 3 years and that CitiHealth had dissolved on May 9, 2012 and that the co-owners of the company had had filed for personal bankruptcy.

The Court nevertheless proceeded to analyze Stephens Media’s motion for default judgment under the Eitel factors established by the Ninth Circuit:

"The Ninth Circuit has identified the following factors as relevant to the exercise of the court's discretion in determining whether to grant default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due to the excusable neglect; and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471--72 (9th Cir. 1986); see also Trustees of Elec. Workers Health and Welfare Trust v. Campbell, No. 07-724, 2009 WL 3255169 (D. Nev. Oct. 7, 2009)."
Despite CitiHealth's dissolution, the Court found that CitiHealth's failure to appear in this action and the likelihood that it will never respond to this action creates a high possibility of prejudice to Plaintiff in the absence of a default judgment.  The Court found that the Complaint did sufficiently state claims for relief (under the Rule 8 liberal pleading standards).

With respect to the amount of money at stake, Stephens Media sought $200,000 pursuant to 15 U.S.C. § 1117(c)(1) for non-willful trademark infringement of one mark (i.e., the Trademark Act’s statutory damages provision for use of “counterfeit” marks).  Without much discussion, the Court stated that “[b]ecause Stephens demonstrates a basis for its requested monetary relief, the fourth Eitel factor favors Stephens.”   [Comment:  counterfeit use, really?  And even so, court has discretion to award statutory damages ranging  from $1000 to $200,000—did the circumstances really merit the “maximum”?]

The Court found that the sufficiency of the Complaint was such that no genuine dispute of material facts would prejudice granting the motion.  The Court also found that CitiHealth had sufficient notice of the complaint and therefore it is unlikely that CitiHealth's failure to respond and subsequent default resulted from excusable neglect.  Finally, the Court, while recognizing the preference to have cases decided on the merits, found that CitiHealth's failure to answer Stephens Media's Complaint makes a decision on the merits impractical, if not impossible.

In the end, the Court entered a default judgment  awarding $200,000 against CitiHealth as well as a permanent injunction against CitiHealth and its officers against any further use of the “Best of Las Vegas” mark.  The Court also gave Stephens Media 30 days to file a motion for attorneys fees.

While its highly unlikely that Stephens Media will be able to collect on its $200,000 default judgment, one wonders if Stephens Media, should it be able to collect such funds, would be willing to pump that money into back into Righthaven LLC so that Righthaven can pay the money that it owes to its creditors (including multiple defendants that the Nevada District Court found were wrongly sued by Righthaven for copyright infringement).   That’s probably even more highly unlikely.     

Friday, April 20, 2012

New Blog Tracks the Las Vegas Sound Choice Lawsuit



For regular readers who have noticed a lack of activity on this blog, it’s the classic conundrum of client demands getting in the way of blogging.  I hope to be back to normal posting in mid-May (of course, I said that back in January and look what happened).

One story that I would have like to have covered is the “trademark infringement” lawsuit filed by Slep-Tone Entertainment Corporation against karaoke DJs (“KJs”) and venues in Las Vegas for alleged infringement of the SOUND CHOICE trademark.  (Las Vegas Sun articles here and here). 

I’ve been watching Slep-Tone pursue its “litigation business model” going all the way back to 2009 (back before Steve Gibson’s Righthaven brought a new name to the business model of filing lawsuits to get quick settlements).   All one has to do is type “sound choice lawsuit” into a search engine and you’ll find numerous sources (e.g., SoundChoiceSucks) commenting on Slep-Tone’s lawsuit campaign  (including Sound Choice’s own web page about why it is pursuing this “piracy campaign” and Sound Choice’s uber-aggressive investigation firm APS and Associates).

Well, it was only a matter of time before Slep-Tone made its way to “sin city” to troll for some quickie settlements here by filing a single, boilerplate lawsuit naming approx. 200 KJs and venues.  See Slep-Tone Entertainment Corporation v. Ellis Island Casino & Brewery et al, Case No. 12-cv-00239 (D. Nev.) (lawsuit here).   This lawsuit was actually a long-time coming.  Slep-Tone’s investigation firm, APS, was trolling (pun intended) around Las Vegas last May and June 2011 doing its “investigations” into potential KJs and venues it could sue.  Letters were sent out at that time citing the KJs as potential trademark violators – and demanding that they submit themselves to an audit to determine that their Sound Choice tracks were legitimate.  Those who did not respond or otherwise settle are now the defendants in this mass-trademark infringement lawsuit. 

I am a big believer that knowledge is power and using the internet to inform the public (particularly, in this case, small-time KJs who cannot afford to hire a lawyer to defend against Slep-Tone’s specious lawsuit).  I was originally planning to start up a separate website that would monitor and track the Las Vegas Sound Choice lawsuit (posting the major court filings so that others could benefit from law firm work product as well as articles and other information already out there).  A single resource that had good, usable information to assist those caught up in Slep-Tone’s questionable lawsuit.   

Well, the lack of blogging here should be an indication of the time (or lack thereof) that I had to pursue such a project.  And now someone else has beaten me to it.

Local attorney Robert J. Kossack, Esq. started up soundchoicelasvegaslawsuit.com.  As he describes on his “About the Host” page, he started out writing an article for a magazine about the lawsuit and it took on a life of its own.  His detailed post “Massive lawsuit threatens to change karaoke in Las Vegas” details the legal issues pretty well.  (I don’t have the time to get into the merits of the lawsuit, but needless to say, I have always been bothered by the counterfeiting claims because it seemed like a reach on the part of Slep-Tone just so that it could threaten small-time defendants with statutory damages for infringement). 

In addition, Mr. Kossack has not only made available all of the major court filings in the lawsuit (link here), but he even provides “template” joinders (one for motions to dismiss and one for motions to sever) that pro-se KJs who can’t afford an attorney can copy and paste (hey, what do you think lawyers do?) and file with the court so in order to “join” the motion to dismiss and motion to sever filed by the larger casino venues (PTs, Caesars, Treasure Island, Station Casinos) to ensure that Slep-Tone cannot get a default judgment against you (at least not at this early stage). 

Mr. Kossack has done exactly what I wanted to do in order to inform the public (especially KJs) about the Las Vegas Sound Choice lawsuit.  And that is why soundchoicelasvegaslawsuit.com is my new favorite blog.  I think it has the potential to become another website along the lines of those which popped up during the Righthaven debacle (Righthaven Lawsuits, Righthaven Victims).

I just hope he doesn’t get too busy dealing with client demands  -- after all, nothing worse than a blog where months go by without any new postings. 

Saturday, February 11, 2012

Trade Dress Protection does not Prevent a Competitor from Copying your Product

[Post by Mark Borghese]

When a competitor makes an identical copy of your product, but sells the copy-cat product under a different brand name, do you have any recourse? What if your product and the competitor's product are so close they look as if they came from the same mold? Is that enough to sue?

Unless you have a utility patent, or some of the copied portions are artistic or ornamental, the answer is almost always no.

In the United States, utility patents are the only way to protect functional elements of a product. Over the years, litigants have made many attempts to protect product engineering with something other than a utility patent with very little success. Often, when a competitor duplicates a product there is no patent claim (because a patent was never granted), no trademark claim (because the product is sold under a different brand), and no copyright claim (because nothing artistic was copied). Often the only possible intellectual property claim left is "trade dress" which refers to the visual appearance of a product or its packaging that signals to consumers the product's source. But not just any visual appearances are entitled to trade dress protection. Only non-functional visual appearances count. This means something artistic or arbitrary in a product's design or packaging.

In Secalt S.A. v. Wuxi Shenxi Construction ___ F.3d ___ (9th Cir. 2012), one of the Plaintiffs, Tractel, Inc., manufactures and sells the Tirak traction hoist pictured below.



These type of traction hoists typically raise and lower swing stage scaffolding platforms on large buildings like this one sold by Tractel.



During a tradeshow in Las Vegas, Tractel saw a Chinese competitor, Jiangsu Shenxi Construction Machinery Co. ("Jiangsu") exhibiting a competing product that looked strikingly similar to Tractel's product.


Tractel sued the Chinese competitor in the District of Nevada alleging trade dress infringement. When discovery closed, both parties moved for summary judgment. The presiding district judge, James C. Mahan, ruled in favor of the Defendants. Judge Mahan found there was no trade dress infringement as all of the claimed "trade dress" served a functional purpose.

Plaintiff appealed to the Ninth Circuit Court of Appeals which upheld Judge Mahan’s ruling. The Ninth Circuit held:

Tractel's hoist is . . . a utilitarian machine with no indication that the visual appearance of its rectangular exterior design is anything more than the result of a simple amalgamation of functional component parts. Absent are any indicia of arbitrary or fanciful design. "To uphold a finding of infringement here . . . would suggest that the general appearance of almost any unpatented product rarely if ever could be copied faithfully. That is not the law." Leatherman, 199 F.3d at 1011. The form of Tractel's hoist follows its function, making the hoist a classic example of "de jure" functionality. We affirm the district court’s determination that Tractel did not present evidence sufficient to create a triable issue as to the nonfunctionality of its claimed trade dress.

Tractel attempted to argue that the overall exterior appearance of its product was non-functional due to its "cubist" and "modern" look and feel. The Ninth Circuit rejected these arguments. In fact, the court found Plaintiff's arguments to be nothing more than semantic trickery.

It is not enough to say that the design portrays a "cubist" feel—so does a square table supported by four legs. The fins may be attractive but they serve a functional purpose. And the cube-shaped gear box is simply housing. Except for conclusory, self-serving statements, Tractel provides no other evidence of fanciful design or arbitrariness; instead, here, "the whole is nothing other than the assemblage of functional parts, and where even the arrangement and combination of the parts is designed to result in superior performance, it is semantic trickery to say that there is still some sort of separate 'overall appearance' which is non-functional."

What Tractel really lacked in this litigation was evidence that any of its customers viewed the design of Tractel’s hoists as non-function or a source identifier. The Ninth-Circuit noted that one of Tractel’s customers testified that everything about the hoist design is functional.

[T]he entire design is predicated on function from what I've seen, and again as with most hoist manufacturers, every element on there is critical to the design otherwise they wouldn’t waste the money or the weight which again comes back to the weight is the key component. So in my opinion every element on there is important to the function.
The Ninth Circuit found that Tractel's other witnesses were just as unpersuasive.

From its own witnesses, Tractel at best offered either unsupported or conclusory claims about the design. Fatal to its claim was the testimony of its own witnesses who honestly laid out the functional nature of the design. Lacking was any evidence, like engineering notebooks or testimony from the designers, about design or aesthetics. Even more devastating was the testimony of third-party witnesses called by Tractel who laid bare the claim of nonfunctionality. For example, they testified that the fins play an important function of dissipating heat and are not for aesthetics. Likewise, the shape of the hoist is practical because it fits in confined construction sites and it is "more efficient and more compact" than some of the other hoists on the market.
Trade dress protection claims -- especially unregistered trade dress protection claims -- are notoriously difficult to prove. And, as the Ninth Circuit held here, impossible to prove without evidence that the design elements are non-functional.

--
About the author
Mark Borghese is a Las Vegas entertainment law attorney with the law firm of Borghese Legal, Ltd.

Wednesday, January 18, 2012

The Blog Posts That Never Were

Oh how many times there have been where I wanted to blog about some interesting trademark story or legal development . . . only to have client needs get in the way.  So many blog posts started, and so few ever finished.  But that doesn’t mean I still can’t post a long list of them here – with links to articles and/or other blog postings that cover the topics as eloquently as I could have. 

Let’s call it my Top 10 Missed Trademark Blog Opportunities. 

10.  Who Doesn’t Love Boobies!
Foundation which owns the I (Heart) Boobies trademark sues company for selling unauthorized I (Heart) Boobies bracelets.  Complaint here.   San Diego Reader Article

9.  The Platters Trademark Lawsuits Keeps Going and Going. 
VegasInc Article Here.  Amazing that the name still generates enough revenue to make these kinds of actions worthwhile.

(Scene from The Hangover Part II)

8.  Louis Vuitton Sues Warner Brothers for Scene in the Hangover Part II.
Really, Louis Vuitton?  How would anybody in the world know if the bag that Zach Galifianakis’ character references as a  Louis Vuitton is fake or real? (frankly, you can barely even see it in the scene).  More importantly, who would care even if they knew? (It doesn’t change the humor in the particular scene which is more about his mispronunciation of Louis as “loo-is”).

7.  Pepsi and Frito Lay Sue Vegas Company for Creating “Diversionary Concealment Devices” Using Pepsi and Frito Lay Cans
Pepsi and Frito Lay accuse company of using their soft drink and food cans to create containers marketed to hide  illicit narcotics  and weapons.  Complaint here.   Courthousenews Article.  Well of course such canister safes have to be created from Pepsi and Frito Lay’s original packaging bearing their trademarks – the police won’t be fooled by cans that says “Cola” or “Tortilla Chips.”  Uh, duh!

6.  Hasbro Files Section 1071(b) Action of PTO Opposition of “Motown Metal” trademark
After failing to overcome the trademark opposition to its application for register Motown Metal at the PTO (TTAB Decision here), Hasbro decides to pursue a Section 1071(b) action rather than appealing to the Federal Circuit.  Complaint here.  TTABlog Post on TTAB Decision here and Hasbro’s action here.


5.  Petronas Towers Comes Crashing Down In Bid To Go After GoDaddy For Contributory Cybersquatting
Owner of the Petronas Towers in Kuala Lumpur, Malaysia, was not content to win control of the two domain names – petronastower.net and petronastowers.net – through in rem actions (previous blog post here); it just had to keep pushing to try to make GoDaddy liable in some way . . . and failed big time.  Berhad v. GoDaddy, 09-5939 (N.D. Cal. Jan. 3, 2012).  Technology & Marketing Law Blog Post (Post by Venkat Balasubramani).  Of course, if the company was bold enough to have even maintained this action, it’s likely to be bold enough to appeal to the Ninth Circuit. 

4.  The Return of the Sliding Scale Test for Preliminary Injunctive Relief in the Ninth Circuit
The Ninth Circuit Court of Appeals explains how its old “sliding scale” approach to preliminary injunctive relief remains viable following the U.S. Supreme Court’s decision on the standard for preliminary injunctions in Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7 (2008)See Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).   Seattle Trademark Lawyer Blog Post.


3.  Cupcakery Determined to Be Generic
The PTO finds CUPCAKERY to be generic and refuses registration:
The applicant’s mark is THE CUPCAKERY for, “Retail and online retail bakery shops.”  CUPCAKERY is defined as, “A bakery which only sells cupcakes”.  Please see the attached dictionary definition.  THE CUPCAKERY immediately describes a feature or characteristic of the applicant’s services, specifically, the applicant is a bakery that sells cupcakes.  Please see the attached evidence from the applicant’s website which shows that the applicant’s bakery sells cupcakes.  Further, please see the attached third party Internet website evidence from www.frostedcupcakery.com, www.sibbyscupcakery.com,www.carolinacupcakery.comwww.ourcupcakery.com, www.batchcupcakery.com, www.buttercreamcupcakery.com, www.kumquatcupcakery.com, www.sugarcupcakery.com, sivadascupcakery.com, and sugarbabiescupcakery.com which shows that in the applicant’s industry a cupcakery is a bakery specializing in cupcakes and is commonly used by cupcake bakeries.
PTO File Wrapper for one of the four applications here.  Of course, the applications were filed in September 2008 and one wonders if the mark, while possibly distinctive at the time of filing, became generic during their pendency.

2.  Cavern Club files Section 1071(b) Action in Nevada District Court
Filed around the same time as the Hasbro case above – making TTAB appeals via Section 1071(b) appear to be growing in popularity.  Not happy with the results it obtain at the TTAB (decision here), owner of the UK club that was popular venue for The Beatles sues Hard Rock to cancel CAVERN CLUB registration.  Trademark Blog Post.  Complaint here.

And Las Vegas Trademark Attorney's #1 Missed Blog Opportunity . . .


1.  Ninth Circuit Determines that Renewal of Domain is Not Re-Registration
Or as I liked to say when the decision was issued . . . “I told you so!” (those who know me and my previous involvement in a cybersquatting dispute that involved this precise issue will understand what I mean). GoPets Ltd. v. Hise, Appeal No. 08-56110 (9th Cir. 2011).  Technically, there was a blog post about this case on this blog (link here), but it was written by fellow local trademark attorney Mark Borghese (who was kind enough to contribute some blog content during a period of time last year that was particularly busy).  Finnegan’s Incontestable Article.

The more interesting question, however, is does this now give cybersquatting immunity to domainers who purchase a domain name from another owner who happened to originally register the domain name at a time when no distinctive mark existed, but who then begin using such domain name in a way that would constitutes cybersquatting had the domainer’s purchase been considered a “registration” under the statute?


Honorable Mention -- The AIRFX Reverse Domain Name Hijacking Case
AirFX LLC won a UDRP decision over the domain name airfx.com (AirFX, LLC v. ATTN AIRFX.COM, Claim Number FA1104001384655 (NAF May 16, 2011)), and so the domain name owner, Mark Laurie, sought relief by filing a reverse domain name hijacking lawsuit.  See Airfx.com et al v. AirFX LLC, Case No. 11-01064 (D. Ariz.).   Not only did the court deny AirFX, LLC’s motion to dismiss, the Court also awarded Plaintiff $4086 in costs and fees for AirFX’s failure to waive service of process.  Decision here.    Technology & Marketing Law Blog Post.