Friday, September 7, 2007

Lulu suing Hulu

On September 5, 2007, Lulu Enterprises, Inc., which operates the website filed a lawsuit against N-F NewSite, LLC, a joint venture between NBC Universal and News Corp. formed to provide online video content through the website set to launch sometime in October. The complaint (copy of the complaint not yet available) was filed in the United States District Court for the Eastern District of North Carolina and states causes of action for trademark infringement, unfair and deceptive trade practices, and federal cyberpiracy.

Lulu, a Morrisville, North Carolina based company, is headed by CEO Bob Young, the former founder of the Linux operating system software publisher Red Hat. The company proclaims itself as a publisher of contextual-based and multimedia content since 2002 with almost 1.2 million registered users, 3 million unique visitors per month, and more than 4,000 new pieces of content (books, video, music) published each week. According to the company’s press release, Lulu alleges that Hulu, by adopting a similar sound name and domain address for its online video content business, is intentionally attempting to create confusion with Lulu’s business. Young stated, “We have spent more than five years and tens of millions of dollars in investment successfully building the Lulu brand and website into a place for millions of creators and consumers to publish, buy, sell and manage digital content. It is clear we are required to move quickly to protect our intellectual property and defend ourselves against this infringement before it significantly damages our business."

Another part of the story is also revealed from the United State Patent and Trademark Office records. On June 28, 2007, Lulu filed two trademark applications under Section 1(a) (use-in-commerce). The first is LULU (and design) which seeks registration for the mark for various goods and services in International Class 9, 16, 25, 35, 38, 41, and 42. The second is for LULU.COM (and design) which seeks registration in the same classes for the same goods and services. The asserted use dates for most classes is March 2007; however, the use date for Class 25 (Clothing, namely, hats and shirts) is May 2007.

Here is where it gets interesting. On July 11, 2007, Lulu filed another Section 1(a) use-in-commerce trademark application for LULU (and design) seeking registration in six of the same seven international classes (the exception is IC 38). The design is slightly different from the earlier filed application, but that’s not the most noticeable difference. In this newer application, the use-in-commerce dates are November 2002 (for IC 16, 35, and 42), April 2003 (for IC 18 and 25), and June 2003 (for IC 9).

One wonders if Lulu got some advice to file another trademark application filed based on much earlier use-in-commerce dates in order to aid Lulu in a potential infringement lawsuit against another company.

Another interesting nuance is that Lulu filed a Section 1(b) intent-to-use trademark application back in August 16, 2002 for the mark LULU PRESS (the word Press was disclaimed). The application was published for opposition on November 18, 2003, and a notice of allowance was issued. All that Lulu had to do file a statement of use. However, after two extensions of time to file a statement of use, Lulu expressly abandoned the application in August 11, 2005.

So on the one hand, you have a company abandoning a trademark registration for LULU PRESS based on lack of use-in-commerce as late as August 2005. At the same time, the same company is now claiming use-in-commerce for the LULU logo back to 2002 and 2003. Granted, the original application was for LULU PRESS and not the LULU logo, but it still raises an issue about use-in-commerce that Lulu will have to address since its allegations of trademark infringement will have to based on common law trademark rights, which require a showing of use-in-commerce.

Of course, the real question that all trademark attorneys are asking – why did Lulu wait so long to file its trademark applications for the name and logo?

The moral of the story for all future trademark owners – before investing a lot of time and energy into a brand name, file for federal trademark protection. Hulu filed its Section 1(b) intent-to-use application for HULU (standard characters) on August 22, 2007, seeking registration in nine different classes (9, 16, 18, 25, 28, 35, 38, 41, and 42). So this battle will likely be waged both in federal court and in the USPTO.

I’m slightly negative on Lulu’s chances of success on the issue of trademark infringement, although Young has raised a good point when he stated “They're credible and should have known better. If it were just a little startup, we probably would have tried to engage them in a conversation to first point out the mistake. But these guys are multibillion-dollar corporations. We have to assume that with the credibility of their investors, they know what they're doing and are doing it intentionally.” The explanation from Hulu for its name came from NBC Universal CEO Jason Kilar who wrote in a publicized statement that “Objectively, Hulu is short, easy to spell, easy to pronounce, and rhymes with itself. Subjectively, Hulu strikes us as an inherently fun name, one that captures the spirit of the service we're building.” Are we honestly to believe that the players involved in this joint venture of two very powerful companies which raised $100 million in financing from Providence Equity Partners got together and agreed that HULU would be the best name for this online service because it’s a fun name? It just doesn’t pass the smell test (if only the smell test were the test for trademark infringement in a court of law). Of course, the decision to choose the name HULU may have actually happened that way -- who would have thought that the name GOOGLE would be a great name for a search engine? If Hulu is confident in its position, then it should have no problem supplying Lulu’s lawyers with copies of all internal e-mails discussing the proposed name of the service.

A quick search of the USPTO’s database revealed one example of a trademark registration that resembled GOOGLE’s trademark, but with a different beginning -- AUCTOOGLE. However, the registered mark is currently subject to a cancellation proceeding at the Trademark Trial and Appeals Board. Need I say by whom?

As a final sidenote, I would like to recommend that actor George Takei be the spokesperson to the company that is victorious in the dispute. Sulu uses Lulu (or Sulu uses Hulu) has a catchy ring to it.

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