Thursday, February 26, 2009

Upper Deck Sues Former Partner Konami Over Hologram

On February 26, 2009, The Upper Deck Company (“Upper Deck”) filed a trademark infringement lawsuit against Konami Marketing, Inc. and Konami Digital Entertainment, Inc. (“Konami”) in the U.S. District Court for the District of Nevada. See The Upper Deck Company v. Konami Marketing, Inc. et al, Case No. 09-cv-00374 (D. Nev.). A copy of the complaint is available here.

Upper Deck, a Nevada corporation, sells various sports trading cards and trading card games. One of Upper Deck’s trading card games is based on the popular Japanese cartoon (“manga”) and anime franchise Yu-Gi-Oh!, owned by Kabushiki Kaisha Shueisha and purportedly licensed for use in the United States by Konami. (Upper Deck’s own webpage on its Yu-Gi-Oh! trading cards even contains a link to Konami’s website in the upper left). Apparently, up until last December, Upper Deck and Konami had an agreement whereby Upper Deck was the exclusive North American distributor of Yu-Gi-Oh! Trading Card Games.

According to the complaint, Upper Deck has used a small square hologram (pictured above) since at least February 2002 to identify certain of its trading card, including Yu-Gi-Oh! trading cards – the logo appears in the bottom right-hand corner of trading cards. Upper Deck claims that the hologram not only serves as a source identifier (and apparently makes the cards more collectible), but also represents its specific, proprietary counterfeit-protection method to distinguish authentic trading cards from counterfeits.

Of course, Upper Deck never bothered to actually register the square hologram as a trademark with the United States Patent and Trademark Office until January 2009. Upper Deck has two applications pending – one for the above square symbol and one for a round symbol. (While Upper Deck has registered many of its hologram shapes in the past, all but one have been canceled – the one current registration being a hologram version of the above shape of the Upper Deck logo – see below). Upper Decks also filed trademark applications for its “SQUARE” with the State of Nevada (here and here), both of which were issued on February 20, 2009. [Ed. –proving once again that you can get anything registered as a trademark at the state level, including a “square”].

Konami apparently terminated the aforementioned distribution agreement with Upper Deck on December 11, 2008. Nonetheless, Konami allegedly is now selling Yu-Gi-Oh! trading cards that contain Upper Deck’s hologram mark (or a confusingly similar type of hologram) without Upper Deck’s consent. Upper Deck argues that Konami’s selling of Yu-Gi-Oh! trading cards with its hologram is likely to cause consumer confusion that Konami’s trading cards are sponsored by, endorsed by, or related to Upper Deck and will cause consumers to erroneously believe that they are purchasing Upper Deck products.

Upper Deck’s causes of action are false designation of origin under 15 U.S.C. §1125(a); trademark infringement under Nevada law (NRS §600.420); deceptive trade practices under Nevada law (NRS §598.0915); and common law trademark infringement and unfair competition.

Vegas™Esq. Comments:
Upper Deck has an uphill battle in trying to show that consumers really identify this hologram as it appears on the Upper Deck cards as a source identifier for Upper Deck’s cards and not recognized more for its functional purposes (i.e., identifying a genuine Yu-Gi-Oh! trading card). While Upper Deck claims that the square hologram is a protectable mark that consumers would recognize and associate with Upper Deck, with respect at least to the Yu-Gi-Oh! trading cards, the hologram clearly shows the words “Yu-Gi-Oh!” (and not Upper Deck). Should Upper Deck be allowed to prevent Konami (or any other company) from using a hologram on trading cards in order to promote its cards as authentic (in a world where counterfeits are rampant)?

Tuesday, February 24, 2009

District Court Rules Against Florida Man Who Sued Owners of UNIX Trademarks

Wayne R. Gray, a Florida man who sought to register (and use) the trademark iNUX in connection with a computer operating system, has suffered a defeat in his lawsuit against the companies behind the UNIX trademarks. U.S. District Court Judge Virginia Hernandez Covington of the U.S. District Court for the Middle District of Florida decided that the company which sought to prevent Grey’s application for the mark iNUX from being registered by the U.S. Patent and Trademark Office (“PTO”) was indeed the valid owner of the UNIX trademarks and therefore the Defendants did not commit any of the alleged fraudulent actions related to the ownership of the UNIX trademarks alleged in Gray’s complaint. See Gray v. Novell, Inc. et al, Case No. 06-cv-1950, 2009 U.S. Dist. LEXIS 13185 (M.D. Fla. Feb. 20, 2009).

The UNIX trademarks were originally registered by AT&T in 1986 (Registration Numbers 1,392,203 and 1,390,593, for computer programs and computers, respectively). In May 1990, AT&T assigned the UNIX marks to Unix Systems Laboratories, Inc., which was later purchased by software company Novell, Inc. in April 1994.

In October 1993, Novell signed a non-binding “term sheet” agreement with several companies (Hewlett Packard, IBM, Sun Microsystems) which set forth a framework for a future definitive agreement among the parties. Under that term sheet, the companies agreed that Novell would license the UNIX brand through X/Open Company Limited (“X/Open”), a United Kingdom Company, to companies whose products conformed to certain quality-control standard. At the end of three years, Novell agreed to transfer ownership of the UNIX brand to X/Open.

In May 1994, Novell and X/Open, in order to effectuate part of the “term sheet” agreement, executed a Trademark Relicensing Agreement in which Novell granted X/Open an exclusive, perpetual, irrevocable license to use, and to sub-license to third parties, the UNIX marks as well as agreed to assign the UNIX marks to X/Open at the end of three years (or any earlier or later time upon agreement by the parties).

The problems began in September 1995 when Novell and The Santa Cruz Operation (the predecessor-in-interest of Defendant The SCO Group, Inc. (“SCO”)) entered into an Asset Purchase Agreement (the “APA”) pursuant to which certain of Novell’s assets would be transferred to SCO. The APA schedule listed as a transferred asset "Trademarks UNIX and UnixWare as and to the extent held by [Novell] (excluding any compensation [Novell] receives with respect of the license granted to X/Open regarding the UNIX trademark)." Another section of the APA as well as minutes of Novell’s Board of Directors meeting discussing the APA both reference “the trademarks UNIX and UnixWare" as trademarks that would be transferred.

In September 1996, Novell, X/Open, and SCO entered into a Confirmation Agreement acknowledging that the APA conveyed the UNIX marks to SCO subject to the rights and obligations established in the May 1994 Relicensing Agreement. In that same agreement, the parties also agreed that to have X/Open draft an assignment for Novell to execute in order to document the transfer of title of the UNIX marks to X/Open, that Novell would be deemed the legal owner of the UNIX marks for purposes of such assignment, and that such assignment would not be a breach of the APA between Novell and SCO.

A second amendment to the APA was executed on October 16, 1996 (one month after the Confirmation Agreement), which provided that as of that date, “Excluded Assets” as the term was used in the APA was revised to exclude “All copyrights and trademarks, except for the copyrights and trademarks owned by Novell as of the date of the [1995] Agreement required for SCO to exercise its rights with respect to the acquisition of UNIX and UnixWare technologies." (without any specification for what trademarks were necessary nor any reference to the Confirmation Agreement or to Novell as the owner of the UNIX marks).

Two years later, Novell executed a Deed of Assignment dated November 13, 1998, which purportedly assigned all of its right, title, and interest in the UNIX marks along with the associated goodwill to X/Open. This assignment was recorded with the PTO in June 1999.

Wayne Gray began a computer software business in early 1998 (later incorporated under the name MegaChoice, Inc.). Sometime in late 1998, Gray supposedly began testing out the mark “iNUX” as a product name. In January 1999, Gray registered the domain name and On April 29, 1999, Gray applied to register the INUX mark with the PTO (for computer operating system software for use in consumer hardware systems). In August 1999, Gray changed the name of his corporation to iNUX, Inc. Gray claims to have introduced his first iNUX product in late 1999 with limited sales in December 1999 and shipping of products in early 2000.

In February 2001, Gray received a cease and desist letter from X/Open’s counsel regarding Gray’s use of iNUX. A few months later, X/Open filed an opposition against Gray's trademark application. See X/Open Company Ltd. v. Gray, Opposition No. 91122524 (T.T.A.B. Filed April 11, 2001). The parties were unable to negotiate a settled phase out of Gray’s products and a transfer of the inux domain names to X/Open. Meanwhile, Gray began investigating X/Open’s ownership of the UNIX trademarks and, according to Gray, uncovered a fraudulent scheme by X/Open, Novell, and SCO to unlawfully conceal the true owner of the UNIX marks. With copies of the APA showing a transfer of the marks to SCO at the time, Gray filed a counterclaim of fraud in the opposition. The opposition got bogged down in discovery disputes and was eventually suspended pending the outcome of the instant lawsuit.

On October 23, 2006, Gray filed the instant lawsuit asserting eleven causes of action against Novell, X/Open, and SCO, including allegations of racketeering, fraudulent federal trademark registration, unfair competition, common law fraud, and conspiracy to defraud. Gray’s allegations were that Novell and X/Open engaged in an ongoing scheme to conceal Novell’s true ownership of the UNIX marks through the agreed-upon relicensing agreement entered into between Novell and X/Open, thereby allowing the public to believe that X/Open owned the UNIX marks when in fact Novell continued ownership of the UNIX marks. Moreover, SCO joined this scheme by agreeing to conceal SCO’s September 1995 purchase of the UNIX marks, to conceal the group’s “fraudulent acts,” and to continue to publicize X/Open as the owner of the UNIX marks. Gray alleged that the group conspired after the fact to create the Confirmation Agreement and backdate it to September 1996. Gray also alleged that the 1998 Deed of Assignment was a backdated agreement done by the parties with full knowledge that Novell was not the owner of the UNIX marks after 1995 and that the parties perpetrated a fraud on the PTO by recording the assignment – two months after Gray's April 1999 iNUX trademark application was filed

As further support for his position that the trademarks were transferred in 1995, Gray cited to a Utah District Court’s decision in the lawsuit filed by SCO in January 2004 against Novell for breach of the APA for failure to convey the copyrights to the UNIX software. The SCO Group, Inc. v. Novell, Inc., Case No. 04-cv-00139 (D. Utah Aug. 10, 2007) (decision here). The court in that case, after reviewing the APA and the subsequent amendments, bill of sale, business dealings between the parties, and other extrinsic evidence, concluded that the UNIX and UnixWare copyrights had not been included in the assets that were transferred to SCO pursuant to the APA and its two amendments. In deciding the copyright issue, the court noted that the UNIX marks were transferred as part of the APA and Gray argued that the instant court should be bound to the Utah court’s determination of trademark ownership.

X/Open and Novell both filed motions for summary judgment, and Gray file his own motion for summary judgment. The court granted both X/Open’s motion and Novell’s motion and denied Gray’s motion. In the end, the court found that the evidence supported Novell and X/Open's contentions that Novell granted X/Open an exclusive license for the UNIX marks in May 1994, that it intended to transfer ownership of the UNIX marks to X/Open sometime thereafter, that SCO documented its agreement of that transfer in the 1996 Confirmation Agreement, and that the UNIX marks were lawfully transferred to X/Open by operation of the 1998 Deed of Assignment.

With respect to the key language “as and to the extent held by Seller” in the APA that was in dispute between the parties, the court sided with X/Open and Novell that this limiting language meant that the APA was subject to the 1994 licensing agreement which required Novell to assign the UNIX marks to X/Open within a few years (and understanding which was confirmed in the Confirmation Agreement). The court found that the APA as modified or supplemented by the 1996 Confirmation Agreement (an agreement signed by all of the parties to the APA) granted Novell the legal authority to transfer ownership of the UNIX trademark to X/Open in the 1998 Deed of Assignment:

Thus, upon execution of the Confirmation Agreement, the terms of the 1995 APA relating to the UNIX trademarks were superseded to the extent that title to the UNIX marks remained with Novell for the purpose of assigning those marks to X/Open. Regardless of whether the language of the subsequent agreement is thought to merely clarify, or completely alter, the prior agreement, the result is the same. Consequently, based on the clear and unambiguous language of the 1996 Confirmation Agreement, the Court concludes that the subsequent 1998 Deed of Assignment validly passed ownership of the UNIX trademark to X/Open as of November 13, 1998.

Regarding Gray’s arguments about the validity and authenticity of both the Confirmation Agreement and the Deed of Assignment, the court stated that Gray offered “absolutely no evidence to support his allegation that Defendants fraudulently created these documents after the fact and back-dated them in an effort to validate the 1999 recording of assignment with the PTO. Mere suspicions and unsupported theories are not enough to create a triable issue of fact.”

As for the Utah district court's "holding" in SCO v. Novell, the court rejected Gray’s argument that the Utah’s court’s decision should be binding as proof that Novell had no title to pass to X/Open in 1998 – primarily because the issue addressed by the Utah court was transfer to SCO of the copyrights, and not the trademarks. Any statement by the Utah court on the transfer of trademarks “was not necessary to the decision in that case and therefore is non-binding dicta.” Moreover, the court added that the Utah court’s decision about a transfer of the trademarks in 1995 was not necessarily inconsistent with the current court’s findings since “some limited rights in the UNIX marks” did pass to SCO as part of the APA – however, given the execution of the Confirmation Agreement by the parties, the court need not consider to what extent the rights in the UNIX marks transferred to SCO under the APA.

The court found Novell’s 1998 assignment of the UNIX marks to X/Open lawful and valid, and thus the recording of such assignment with the PTO in June 1999 also valid. This determination pretty much undercut all of Gray’s fraud based claims. The court also added that Gray was unable to show standing for his claims of unfair competition nor any injury to support his racketeering claims.

With that, the court granted summary judgment in favor of the Defendants and against Gray on all eleven counts of Gray's complaint.

Friday, February 20, 2009

POP ROCKS sues ROCK'N'POP for trademark infringement

The owner of POP ROCKS carbonated popping candy (or “gasified candy”) filed suit against the makers of a popping candy sold under the name ROCK'N'POP.

Zeta Espacial S.A. (“Zeta”), a corporation based in Spain, is the company which currently owns numerous federal trademark registrations for the mark POP ROCKS. On February 19, 2009, Zeta filed a trademark infringement lawsuit in the U.S. District Court for the Northern District of Illinois against Imaginings 3, Inc. (“Imaginings”), an Illinois corporation doing business as Flix Candy. A copy of the complaint can be downloaded here.

According to the complaint, Imaginings makes its own popping candy which it sells under the name ROCK'N'POP both through wholesale distributors as well as on its website [Note: the only image of any ROCK'N'POP popping candy I could find was the below picture of ROCK'N'POP lollipop and popping candy dip featuring Hannah Montana].

Zeta maintains that Imaginings use of ROCK'N'POP in connection with its popping candy is likely to cause consumer confusion with and dilution of Zeta’s POP ROCKS Marks. Zeta’s causes of action are trademark infringement under 15 U.S.C. § 1114; unfair competition under 15 U.S.C. § 1125(a)(1); federal trademark dilution under 15 U.S.C. § 1125(c); deceptive trade practices under Illinois state law (815 ILCS 510/2); trademark dilution under Illinois state law (756 ILCS 1036/65); and common law trademark infringement and unfair competition.

Vegas™Esq. Comments:
Seems like another example of a case where at first, it would seem apparent that there is no likelihood of confusion given the aural and visual differences between the marks and their different commercial impression. However, once you start applying the likelihood of confusion factors, a different picture emerges that favors Zeta more than one might initially think – strong mark (Zeta will have strong sales and advertising figures and the mark is famous, but there could be some possible room to argue genericness or that the mark has become weak), similarity between the marks, similar goods, similar marketing channels, and inexpensive nature of the goods (low degree of consumer care). While I still think Imaginings has the advantage if it ever went to a jury, does Imaginings really want to get embroiled in an expensive fight over the name?

Of course, no posting about POP ROCKS would be complete without some reference to the famed urban legends surrounding the dangers of eating the candy and then drinking cola. In the internet age, you can even watch the urban legend be tested – ranging from the serious (Mythbusters) to the ridiculous (here).

Thursday, February 19, 2009

Article Spotlights VitaminWater Trade Dress Enforcement posted an article (link here) regarding the trade dress enforcement efforts undertaken by Energy Brands, Inc. (d/b/a Glacéau), the company behind the fruit-flavored “enhanced” water VitaminWater which was purchased by Coca-Cola in 2007 for $4.1 billion. The article describes the efforts by the company’s legal team in aggressively going after competitors that try to imitate VitaminWater's bell-shaped water bottles with their two-toned labels (pictured above).

Glacéau is currently seeking to register its VitaminWater bottle with the U.S. Patent and Trademark Office ("PTO"). Glacéau received a registration for the bottle label. However, Glacéau’s application to register the actual bottle design (filed June 24, 2008) has been preliminarily refused by the PTO on the basis that the product packaging is functional and thus incapable of serving as a source identifier and furthermore on the basis that the packaging is not inherently distinctive. The PTO is currently only willing to register the wording and design on the label (which Glacéau already has).

With Coca-Cola’s trademark legal team supporting it, I would expect a significant response to the PTO’s action by Glacéau arguing that its bottle design is not functional and that product packaging is inherently distinctive (or alternatively, Glacéau can prove acquired distinctiveness based on its strong marketing efforts to date – after all, if Coca-Cola was willing to pay $4.1 billion for the company, it must have been doing something right).

Anyone care to make any predictions on whether Glacéau will prevail? One thing I could not have ever predicted – consumers would pay good money for flavored sugar water. Isn't this just bottled Kool-Aid?

Tuesday, February 17, 2009

Mélange of Trademark Stories

Gummy Bears Battle
The owner of the registered mark GUMMY BEARS (for Bracelets, Charm Danglers, General Jewelry as well as Toys and playthings, namely, board games, stuffed animals, infant toys, and musical toys) which also has a variety of other pending trademark applications filed a lawsuit against New Jersey-based Gummy Bear International (“GBI”) for using the mark in connection with the sale of music videos, animation, ringtones, mp3s, posters, stickers, and other goods (and which has its own pending applications for GUMMIBÄR and GUMMY BEAR). Of course, don’t be confused – this has nothing to do with the GUMMI BEARS candy made by Haribo of America, Inc., which owns the registered mark THE ORIGINAL GUMMI-BEARS).

Intel Attacks NETBOOK
Intel is seeking a declaratory judgment (complaint here) that the registered mark NETBOOK (registered by a Canadian company) is generic for laptop computers. Intel received a cease and desist letter from the registrant (Psion Teklogix, Inc.) on December 22, 2008 (a letter which allegedly was sent out to numerous other well-known names like Dell, HP, and Best Buy).

Intel currently owns the domain name, which is directed to a page for Intel’s ATOM processor for notebook computers. Intel alleges that the Section 8 Declaration filed in 2006 by Psion was fraudulent because it claimed continued use of the mark in commerce by submitting a specimen of a notebook computer that had been discontinued in 2003. Intel also cites numerous other third party uses of the term “netbook” in connection with laptop computers. Psion also apparently filed Google Adword complaints with Google regarding any purchase of the adword “network” including ads purchased by Google using the term.

Nordstrom Seeks to Resolve BECKONS dispute
The press surrounding the efforts by Nordstrom to seek cancellation of the mark BECKONS and the subsequent roar of outrage from the legal blogosphere could have sparked an actual resolution. Nordstrom VP of corporate communications Brooke White, in an e-mail to Information Week’s Global CIO Weblog, stated

Our intention from the beginning was to co-exist with Beckons in a manner that would enable Beckons to use their trademark on yoga merchandise, while we used the Beckon name for fashion apparel and accessories. We never intended to adversely affect Ms. Prater's business and we are sorry if this has happened. We are reaching out again to Ms. Prater's attorneys to reach a settlement that we are hoping she will find acceptable.

The Global CIO Weblog postings can be read here. (HT: Michael Atkins for his coverage).

Of course, unlike what happened in the case of MONSTER GOLF (blogged here), there does not seem to be any kind of outreach (yet) to help pay for Ms. Prater’s legal fees arising from this mess. However, given Nordstrom’s willingness to work out a coexistence agreement, if Ms Prater is unwilling to coexist in the way described by Nordsrom, is Nordstrom still the bad guy should it decide to proceed with its cancellation proceeding?

Blockshopper and Jones Day Settle
Several media stories and bloggers (here, here, here and here) reported on the unfortunate settlement by Blockshopper of the frivolous Jones Day trademark infringement lawsuit (previously blogged here, here, and here) – after accumulating over $100,000 in legal fees fighting the lawsuit.

Jones Day is apparently ok with BlockShopper publishing links to Jones Day as long as they are not “embedded links” and instead place the full web address next to references to the firm. For example, instead of writing something like “Jones Day’s frivolous and abusive lawsuit was brought by Paul W. Schroeder, Irene S. Fiorentinos, Meredith M. Wilkes, Robert P. Ducatman, and James W. Walworth Jr”, Blockshopper would instead have to write it as “Jones Day’s ( frivolous and abusive lawsuit was brought by Paul W. Schroeder (, Irene S. Fiorentinos (, Meredith M. Wilkes (, Robert P. Ducatman (, and James W. Walworth Jr (” Blockshopper has restored the links to the condos purchased by the Jones Day associates at issue. Blockshopper will now also have a page which explains why Jones Day gets treated so special and which describes the lawsuit.

So given the end result and the negative publicity that has been brought to the precious “Jones Day” name, one must really ask -- was it really worth bringing in the first place?

Friday, February 13, 2009

Hualapai Tribe opens a new front in its long running trademark battle over GRAND CANYON WEST

The "Skywalk"at the Hualpai Tribe's Grand Canyon West
(AP Photo from Flickr)

I previously wrote (link here) about the Trademark Trial and Appeal Board decision in the opposition filed by Grand Canyon West Ranch, LLC (“Ranch”) against the Hualapai Tribe over the Indian tribe’s attempt to register the mark GRAND CANYON WEST. See Grand Canyon West Ranch, LLC v. Hualapai Tribe, Opposition No. 91162008 (June 30, 2008).

By way of background, Ranch, which had its own pending applications for GRAND CANYON WEST RANCH (filed about a year after Hualapai Tribe’s application), opposed registration of the mark on the basis that it was geographically descriptive (and had not acquired distinctiveness) and because of fraud of the PTO. While the TTAB decision determined that the Hualapai Tribe had proven that the mark GRAND CANYON WEST had acquired distinctiveness, the Board nonetheless sustained the opposition based on fraud. Hualapai Tribe has filed an appeal to the Federal Circuit of the TTAB’s decision (Appeal No. 2009-1012). A copy of the Amicus Curiae brief filed by the AIPLA in support of the Hualapai Tribe is available here. Apparently, Ranch did not appeal the Board’s determination regarding acquired distinctiveness.

So while that appeal is pending, on February 12, 2009, Grand Canyon Resort Corporation (“GCR”), the Hualapai Tribe’s federally chartered corporation, filed a lawsuit in the U.S. District Court for the District of Arizona against Ranch. See Grand Canyon Resort Corporation v. Grand Canyon West Ranch, LLC, Case No. 09-cv-00289 (D. Ariz.). A copy of the complaint can be downloaded here. Not surprisingly, GCR is now attempting to stop Ranch from using the mark GRAND CANYON WEST RANCH in connection with its tourism business.

GCR claims that it has used the mark GRAND CANYON WEST in connection tourism related to the Hualapai Tribe’s land on the west rim of the Grand Canyon commonly referred to as “Grand Canyon West” since October 1998. [Note: In the TTAB decision, the Hualapai Tribe claimed use of “Grand Canyon West” back to 1986, but in that case, the party fighting the opposition was the Hualapai Tribe, whereas the plaintiff in this case did not exist until October 1998.] According to the complaint, GCR’s tourism revenue from GRAND CANYON WEST was $2.8 million. [Query– Is that from 1998 to 2000, for the year 2000 alone, or from the time they began operating “Grand Canyon West” including the time when it was operated by the Hualapai Tribe? The amount seems low regardless.]

For a period of time before 2000, GCR (or possibly its predecessor-in-interest) had an agreement with a company name Heli-USA, Inc. to provide helicopter tours at Grand Canyon West. The agreement was apparently terminated in 2000 after a dispute arose between GCR and a principal of Heli-USA, Nigel Turner.

According to the complaint, Turner, through Ranch (another company that he owned or managed) purchased some property that was located on the same road which leads to GCR’s “Grand Canyon West” sometime in 2000 or 2001. At that time, Ranch named the property “Grand Canyon West Ranch” and began operating it a tourist destination – presumably in competition with the tourism services offered by GCR.

GCR seeks a declaratory judgment that is consistent with the TTAB’s decision that GCR’s GRAND CANYON WEST mark has acquired distinctiveness. GCR’s other causes of action are for federal trademark infringement, federal trademark dilution, and common law trademark infringement.

Vegas™Esq. Comments:
The TTAB Opposition was filed back in September 8, 2004, so it’s fair to say that GCR knew about Ranch’s use of “Grand Canyon West Ranch” at least as far back as September 2004 (and more likely knew about it going all the way back to 2001). But instead of taking action back in 2004 to stop Ranch’s use of the mark GRAND CANYON WEST RANCH, GCR waited 4 years and 4 months to take such action. Laches, anyone?

Thursday, February 12, 2009

Adidas’ $305 Million Trademark Infringement Jury Verdict Not Exceptional Enough to Merit Attorney Fees

On February 6, 2009, the court involved in the “epic” adidas v. Payless trademark infringement lawsuit that in July of last year resulted in a jury verdict of $305 million (although later reduced by the court to $65 million) has decided that the case is not exceptional enough to award attorney’s fees. See adidas America, Inc. et al v. Payless ShoeSource, Inc., 2009 U.S. Dist. LEXIS 9482 (D. Or. Feb. 6, 2009). For excellent background on the decisions last year, see Michael Atkins’ Seattle Trademark Lawyer blog post here.

adidas sought $ 6,574,493.40 in attorney fees, arguing that the jury's finding that Payless acted willfully or in bad faith as well as the jury’s award of punitive damages for acting with malice or in wanton and reckless disregard for adidas' rights merited a finding that this case was an “exceptional case” for purposes of 15 U.S.C. §1117(a)(3) which provides that “The court in exceptional cases may award reasonable attorney fees to the prevailing party.”

The court noted that in the Ninth Circuit, "A trademark case is exceptional where the district court finds that the defendant acted maliciously, fraudulently, deliberately, or willfully." Earthquake Sound Corp. v. Bumper Industries, 352 F.3d 1210, 1216 (9th Cir. 2003); and furthermore, attorney fees awards are "never automatic and may be limited by equitable considerations." Rolex Watch, U.S.A., Inc. v. Michel Co., 179 F.3d 704, 711 (9th Cir. 1999

While the court found the question to be a close one, the court ultimately concluded that the case was not an exceptional case supporting an award of attorney fees. One factor was very case specific arising from a prior settlement agreement between the parties:

I first note that Payless sold the infringing shoes for three years believing that Judges Jelderks' and Haggerty's opinions allowed the sales under the 1994 settlement agreement. This is balanced by the fact that Payless did not stop selling the shoes after the Ninth Circuit reversed those rulings. The Ninth Circuit, however, only stated that adidas could prosecute these claims. The court did not give any opinion on whether the shoes infringed the trademark. Thus, Payless could have prevailed at trial.

The court further noted that there was no evidence of point-of-sale confusion, the infringing shoes all had two or four stripes rather than the three stripes from adidas' trademark, there was substantial evidence of companies other than Payless selling two and four stripe shoes for years, and there was no evidence that adidas lost any sales because of the infringement (the court noted that the jury’s damages award, while substantial, “was based on more theoretical types of damage than lost sales.”).

The court also declined to award $1,362,380.94 in other nontaxable expenses (telecommunications expenses, postage, messenger charges, travel, online research, mediation fees, and expert witness fees), for which the court has discretion to award as reasonable attorney fees in exceptional cases. See Mathis v. Spears, 857 F.2d 749, 758 (Fed. Cir. 1988).

The court’s decision then goes through the remaining $383,226.49 sought by adidas in costs that are taxable under 28 U.S.C. §1920 and ultimately awards $380,596.84 (the difference being a pro hace vice fee for one attorney that the court found was not reasonably necessary to the case and about 2,245.00 in delivery costs, which are not taxable under §1920. Smith v. Tenet Healthsystem SL, Inc., 436 F.3d 879, 889 (8th Cir. 2006)).

Finally, the court also declined to award adidas prejudgment interest of $ 10,445,154.12 on the award of actual damages and $ 6,712,823.98 on the award of profits. First, adidas’ post-judgment motion for prejudgment interest (governed by Federal Rule of Civil Procedure 59(e)) was apparently filed one week late and thus untimely such that the court could not award prejudgment interest. Second, the court added that even if he could have awarded prejudgment interest, it would have declined to do so for the same reasons why the court did not consider this case an exceptional case and because such prejudgment interest is not necessary to make adidas whole from this infringement.

So let this be a lesson to those plaintiff’s attorneys who so confidently inform their clients that they can recover attorney’s fees for a defendant’s infringement based on the idea that such infringement is “exceptional” -- think again. Of course, one wonders if the court would have thought differently had a much smaller, but still significant judgment (e.g., $5 million) been awarded by the jury.

Tuesday, February 10, 2009

Yahoo! gets partial victory in AKAUSHI keyword lawsuit

The Akaushi (Japanese Red) breed of Wagyu cattle
(How do you say "moo" in Japanese?)

Heartbrand Beef, Inc. (“Heartbrand”), which claims to be the only U.S. provider of Akaushi beef (meat from Akaushi cattle, a heavily regulated breed of cow from Japan), filed a lawsuit last July against Defendants Lobel’s Of New York, LLC (“Lobel’s”); Worldwide Media, Inc.; Thought Convergence, Inc.; and Yahoo! Inc. (“Yahoo”). Defendant Worldwide Media owned the domain name, which had no actual content but instead was a landing page with a collection links, some of which included the word “Akaushi.” If a visitor clicked on the “Akaushi” link on that page, they were taken to, which is the website for Lobel’s, which sells beef, but does not offer Akaushi beef.

While the other three defendants in the case settled, Yahoo filed a motion to dismiss Heartbrand’s allegations of violations of 15 U.S.C. §1125(a) as well as common law unfair competition. Heartbrand's allegations against Yahoo stemmed from the fact that when a user searched for “Akaushi” on, the first “paid listing” was because Yahoo had sold Lobel's the right to have be the first result for the keyword “Akaushi.” U.S. District Court Judge John D. Rainey granted Yahoo’s motion in part and denied it in part. See Heartbrand Beef, Inc. v. Lobel’s Of New York, LLC, et al., 2009 U.S. Dist. LEXIS 8822, Case No. 08-cv-0062 (S.D. Tex. Feb. 5, 2009).

In analyzing Heartbrand's false designation of origin claim, the court focused on the first of five elements used in the Fifth Circuit to analyze claims arising under (a)(1)(A) or (B) – specifically whether the “defendant made a false or misleading statement of fact about its product or service.” The court noted that Heartbrand does not identify any actual statement made by Yahoo. Instead, Heartbrand's alleges that at the direction of other parties, Yahoo placed a link to in response to a user searching for the term “Akaushi.” As the court states, “To call this a ‘statement’ would stretch the meaning of that word.” In addition, even if Yahoo’s placement of an advertisement could constitute a statement, Heartbrand had not alleged that Yahoo made a statement about Yahoo's own products or services. Therefore, the court found that Heartbrand has failed to state a claim for false designation of origin.

Regarding Heartbrand’s claim for relief under common law unfair competition, Yahoo apparently did not directly address the claim, and thus gave the court no grounds on which the Court could rely in order to dismiss the state law claim. [Query: How about lack of subject matter jurisdiction?] Apparently, much of the Yahoo’s brief focused on “trademark infringement”; however, because “trademark infringement” was not one of the counts against Yahoo, the court found Yahoo’s arguments related to trademark infringement irrelevant. As such, the court denied Yahoo’s motion to dismiss Heartbrand’s claim for relief under “common law unfair competition.”

[Update: Related blogs posts on the decision can be found at Eric Goldman's Technology & Marketing Law Blog as well as Rebecca Tushnet's 43(B)log.]

Monday, February 9, 2009

Archway Cookies Sues Voortman Cookies for Trade Dress Infringement

The Charlotte Observer had a story today on a trade dress infringement lawsuit filed last week by Charlotte, North Carolina based cookie company, Lance Mfg LLC, and Archway Bakeries, LLC –– the owner of the Archway Cookies brand and purchased by Lance out of bankruptcy in December –– against Ontario, Canada-based Voortman Cookies Ltd. in the U.S. District Court for the Western District of North Carolina. See Lance Mfg LLC et al v. Voortman Cookies Limited, Case No. 09-cv-00044 (W.D.N.C. Filed February 6, 2009).

Since 2005, Archway has used a red-and-gold plastic packaging for its best selling oatmeal and oatmeal-raisin cookies. Apparently in the last few weeks, Voortman began selling its oatmeal and oatmeal-raisin cookies in a very similar red-and-gold packaging. Archway alleges that the infringing packaging is designed to “exploit the uncertainty among both consumers and the retail trade resulting from the Archway bankruptcy” in order to confuse consumers into believing that Voortman is the new owner of the Archway brand.

Here are pictures of the two brands:

Given the obvious similarities, the primary issue will probably be whether Archway’s product packaging is distinctive enough in the marketplace to serve as a source identifier (i.e. whether Archway’s packaging is protectable trade dress)? While product packaging can be inherently distinctive (see Two Pesos, Inc. v. Taco Cabana, Inc., 505 U.S. 763 (1992); Wal-Mart Stores, Inc. v. Samara Brothers, Inc., 529 U.S. 205 (2000)), because Archway’s trade dress does not appear to have been registered with the PTO, it will first have to demonstrate that its product packaging is inherently distinctive (so unusual and memorable that it is likely to serve primarily as a designator of origin of the product) or, alternatively, that it has acquired a secondary meaning such that consumers have come to associate the packaging exclusively with Archway.

It's not clear how much advertising dollars Archway has spent in the relatively short period of time (since 2005) in which it has been marketing its cookies using this product packaging. However, evidence that another party has intentionally copied a particular trade dress will often times be considered strong evidence by the court that the trade dress has acquired a secondary meaning.

You be the judge.

Friday, February 6, 2009

Adventist Church Wants U.S. Government Agencies to “Quit Now!”

On February 3, 2009, The General Conference of Seventh-day Adventists (“GCSA”), the governing organization of the Seventh-day Adventist Church, filed a trademark infringement lawsuit against the U.S. Department of Health and Human Services (“HHS”) and the National Institutes of Health (“NIH”) in the U.S. District Court for the District of Columbia. A copy of the complaint can be downloaded here.

At issue is the phone number 1-800-QUIT-NOW established by HHS/NIH in connection with services to help people stop smoking. In addition to setting up the number, HHS/NIH began using the number as a service mark in connection with such smoking cessation services sometime around January 2007 (currently promoted on the website

HHS also filed a trademark registration application for the above design mark, but was ultimately refused registration by the UPSTO as likely to cause confusion with two federal trademark registrations owned by GCSA for the mark QUIT NOW! (for both the word mark and design mark) for two classes of services (“conducting smoking cessation seminars and distributing educational brochures and materials dealing with smoking cessation in connection with the seminars” and “health care services, namely counseling to assist individuals to stop smoking”). HHS failed to file a response to the PTO’s second office action, which was due December 8, 2008, and a Notice of Abandonment was issue on February 2, 2009.

According to the complaint, in early 2008 (after the PTO’s initial office action, but before the PTO's second office action), NIH contacted GCSA about acquiring its QUIT NOW! marks. While GCSA was not interested in selling, it did express an interest in licensing the marks. A draft agreement was forwarded to NIH in March 2008, but NIH (like most government agencies) was not very quick to respond. There were several attempts by GCSA to follow-up on NIH’s interest in licensing the marks, but NIH never responded. Instead, in December 2008, HHS/NIH apparently began a larger marketing campaign for its 1-800-QUIT-NOW number and website.

GCSA’s causes of action are federal trademark infringement under 15 U.S.C. §1114; federal unfair competition under 15 U.S.C. §1125(a); and federal trademark dilution under 15 U.S.C. §1125(c).

[Comment: Am I the only one out there who finds it annoying when trademark litigants throw in a trademark dilution claim for a mark with very questionable “fame.” Either some parties are delusional about their “fame” or they don’t appreciate the fact that fame requires a mark to be recognized by the general consuming public of the United States. Do these people really believe that their mark is “famous”? GCSA filed for the QUIT NOW! marks in late 2001/early 2002. Both were allowed in November 2002. GCSA filed five extensions of time to file a Statement of Use. Finally, just shy of the three year deadline, GCSA filed Statements of Use in November 2005 – claiming first use in July 2005. The marks were registered February 2006. GCSA may have a decent case against the government for trademark infringement, but dilution after a little over 3 years of use? -- I have two words for that cause of action: quit now!]

Wednesday, February 4, 2009

Bill introduced in Nevada Legislature to Update Nevada’s trademark laws

Nevada’s state trademark laws will get a significant makeover if a recently introduced bill (Assembly Bill No. 115) is passed by the Nevada Legislature during its feverish 120 day session (the Nevada legislature, by law, meets biennially and its session is limited to 120 calendar days) and signed into law by the Governor. A copy of the bill as introduced can be viewed here (HT: John Krieger).

Nevada’s current laws for state trademark trade names and service marks (NRS 600.240-600.450), like the state trademark laws in many other states, is based on the International Trademark Association’s (“INTA”) Model State Trademark Bill (“MSTB”).

In 2007, the INTA proposed several amendments to its MSTB, mostly to account for legal changes that occurred in the area of trademark dilution. The MSTB had not been changed since 1996 when it was amended by the INTA to reflect the Federal Trademark Dilution Act of 1995 (“FTDA”). However, when the U.S. Supreme Court decided in Moseley v. V Secret Catalogue, Inc., 537 U.S. 418 (2003) that the FTDA required evidence of actual dilution, Congress in 2006 passed the Trademark Dilution Revision Act of 2006 (“TDRA”), Pub.L.No. 109-312, 120 Stat. 1730 (2006) (now codified at 15 U.S.C. § 1125(c)), effective October 6, 2006, thereby enacting a likelihood of dilution standard for claims of dilution under federal law. So in 2007, INTA amended its MSTB to incorporate the changes to dilution law made by the TDRA (a summary of the 2007 amendments is posted on INTA’s website).

However, there is an additional significant change being proposed by the bill that will change the way in which Nevada state trademarks are obtained. Presently, Nevada’s system of registering trademarks, service marks, and tradenames (like many other states) has been mostly a “rubber stamp” process – a registration is almost always granted so long as no other party currently has a similar mark already registered with the Nevada Secretary of State (“NV SOS”). No formal examination (as is done at the federal level with the U.S. Patent and Trademark Office) is done at the state level for state registration applications (even though NRS 600.330 does set forth grounds for refusing to register marks similar to the grounds for refusal under 15 U.S.C. §1052).

It looks like all of that is going to change under this new legislation. In addition to making the state’s dilution provisions consistent with the TDRA, the bill will implement a formal system of examination of state registration applications that is consistent with the federal system of registration of trademarks under federal law, including a full application submitted for examination (Section 13) (which may include the requirement for disclaimers of unregisterable components), a process for appealing to the District Court final refusals to register by the NV SOS (Section 14), and even provisions for cancellation proceedings for senior users who want to cancel a junior user who was first to file (Section 15).

Which raises the obvious question – if filing for a Nevada trademark is essentially going to be treated the same as a federal trademark registration application, why bother with filing a state application where the scope of your trademark rights are limited to just the state – why not go for the federal trademark registration and get exclusive rights nationwide? After all, if you are refused registration at the PTO on the basis of likelihood of confusion with an existing registered mark, why would you take the risk of adopting that mark for use in the state when the federal registrant could sue for trademark infringement? And if you are refused registration at the PTO level for one of the other Section 2 grounds for refusal, then, in theory, those same reasons would block a state trademark registration as well. Part of the new law states that the NV SOS may require the applicant to disclose whether an application has been filed with the PTO and if the application was refused registration, the reasons for refusal.

One possible benefit might be in the case where your research shows that a registered mark might actually be abandoned even though it is still on the Principal Register. If such a registered mark were to preclude registration of your proposed mark at the federal level and yet you are certain that the mark has been legally abandoned, then rather than going through the process of petitioning to cancel the registered mark, a state registration would buy you some degree of protection over your mark (assuming the mark is not already registered at the state level). Of course, if you are that serious about the mark and that certain of the registered mark's abandonment, you should hire an attorney to file a cancellation petition. If the registered mark is truly abandoned, then no one will respond to the petition and the mark will be cancelled. And if the registrant happens to step forward to claim that the mark has not been abandoned, then you can reconsider whether you want to use the mark in the first place.

The one benefit the state system does have over the federal system – no opposition period. So perhaps for those owners who apply to register a mark with the PTO but whose efforts are quashed by an opposition filed by some overzealous company that seeks to stop any federal registrations containing a word that the company sees as being exclusively their own (say, an innocent word like “Virgin” -- see my post from Monday), the state system offers another avenue towards obtaining some level of protection for the owner’s mark. Of course, if a company was so eager to oppose registration at the federal level, one should think twice about whether to use such mark at all and possibly bear the wrath of a trademark infringement lawsuit from the overzealous company (see the aforementioned blog post).

Monday, February 2, 2009

One Former Las Vegas Businessman is a Trademark “Virgin” No More

A former Las Vegas businessman got a lesson in trademark law and found out the hard way how seriously some large companies take their trademarks.

This last Saturday, the Las Vegas Review Journal had an article (link here) about a lawsuit filed by Virgin Enterprises, Ltd. (“Virgin”), the owner of numerous trademark registrations for the mark VIRGIN, against Paul Johnson, the owner of Virgin Properties – a company specializing in acquiring and development of previously untouched property (i.e., “virgin” property). [Note: I was unable to find the lawsuit listed on].

Benjamin Spillman, the reporter who wrote the story, interviewed me about the lawsuit and included a few of my quotes.

As most lawyers in the trademark world already know, Virgin is well known for trying to stop any other businesses from using the word “Virgin” in connection with any other goods and services (regardless of whether Virgin actually holds any trademark rights to the mark VIRGIN in connection with an alleged infringers goods and services – and thus apparently having to rely on a dilution type of argument occasionally where the traditional likelihood of confusion might fail). Click here for a listing of other trademark applicants who were challenged by Virgin in their attempt to register some mark with the word VIRGIN in it.

And thus, the reason why this man using the term VIRGIN in connection with the descriptive term PROPERTIES incurred the wrath of Virgin.

Of course, one wonders if Johnson had instead chosen to use “virgin properties” in a more obviously descriptive sense (e.g., “Paul Johnson – Selling Virgin Properties Exclusively Since 2000”), would Virgin still have gone after him?