Las Vegas’ “Heavy Hitter” Glen Lerner Files Declaratory Judgment Action Against Owner of “Heavy Hitters” service mark

Most cities probably have at least one personal injury lawyer who is recognized by the public simply from the attorney’s extensive TV advertisements promoting the lawyer’s legal services. In Las Vegas, that attorney is Glen Lerner. Lerner, who established his practice in Nevada in 1991, is well recognized for his somewhat cheesy low-budget TV commercials advertising his personal injury legal services which have been gracing the Las Vegas airways for many years and have made him a mini-celebrity here (I suspect that he keeps his ads intentionally cheesy at this point because while he can certainly afford more polished ads, the cheesiness of his commercials have become another one of his signatures). You can check out some of his greatest hits on YouTube (here as well as his famous Super Bowl – pardon me, “Big Game” ad here.

But if you ask Las Vegas locals to describe Lerner in 3 words or less, most likely you will hear them refer to Lerner as “The Heavy Hitter.” Sometime in 2001, Lerner began promoting himself as “The Heavy Hitter.” While the ad campaign certainly grabbed the attention of the Las Vegas public, it also got the attention of the State Bar of Nevada, who told Lerner that calling himself “The” Heavy Hitter was false and misleading because it’s a statement that he is the only heavy hitter. Instead, the Nevada Bar told Lerner that he could only be “a” heavy hitter. Click here for a Las Vegas Review Journal article on the “heavy hitter” dispute between Lerner and the State Bar of Nevada.


Now Lerner finds himself in the midst of another dispute over the “heavy hitter” moniker – but this time it’s a trademark dispute with a company with which Lerner (apparently up until recently) had a licensing arrangement to use the name HEAVY HITTER. Lerner has apparently refused to pay the agreed-upon licensing fee and is now challenging the company’s trademark rights in court.

On August 22, 2008, Lerner filed a declaratory judgment action against Richard Sackett, LawCo USA, PLLC (“LawCo”), and Group Matrix, Inc. (“Group Matrix”) (collectively, the “Defendants”) in the U.S. District Court for the District of Nevada. See Lerner v. Sackett et al, Case No. 08-cv-01123 (D. Nev.). A copy of the complaint can be downloaded here.

According to the complaint, LawCo and Group Matrix are both advertising agencies purportedly owned and operated by Sackett. LawCo is the named registrant of the registered trademark HEAVY HITTERS for legal services, which it filed on April 3, 2001 as an intent-to-use application and registered on February 1, 2005. Several months after this first application was filed, Sackett himself on August 22, 2001 filed an intent-to-use trademark application for the mark HEAVY HITTERS for advertising, management, and marketing of legal services (later amended to business management, marketing, and advertising services specifically for the legal services of others). The application has been allowed, but no Statement of Use has yet been filed by Sackett.

At first, without knowing anything about LawCo or Sackett, one might think that the two applications and applicants were completely unrelated. Indeed, the attorney of record for Sackett’s application in the Office Action Response filed June 11, 2002 had to argue no likelihood of confusion in response to the PTO’s citation to LawCo’s then pending application. But after the PTO maintained its likelihood of confusion rejection over LawCo’s HEAVY HITTERS mark after it registered, Sackett’s counsel submitted a Declaration stating that Sackett is the “general manager and controls the activities of LawCo USA, P.L.L.C. Corporation.” As such, this makes LawCo and Sackett “related entities” and therefore, the PTO withdrew the likelihood of confusion rejection.

Lerner’s lawsuit seeks a declaratory judgment that his use of the HEAVY HITTER and HEAVY HITTERS marks for legal services does not infringe Defendants’ trademark rights in its Heavy Hitter Marks.

According to Lerner’s complaint, sometime in 2002, Lerner entered into some kind of license agreement with the Defendants to allow Lerner to use the mark HEAVY HITTER in the advertising and promotion of Lerner’s legal practice. [Note: The complaint states that Lerner “attempted” to enter into an agreement, but other parts of the complaint, notably those asking for the agreement to be rescinded, suggest that an actual agreement was indeed entered into by the parties.] At the time, the Defendants claimed trademark rights to the marks HEAVY HITTER and HEAVY HITTERS for use in connection with legal services was based on the above trademark applications. The Defendants have apparently entered into other license agreements with other third party legal service providers to use its Heavy Hitter Marks.

Lerner argues that the Defendants fraudulently induced him to enter into the agreement based upon a misrepresentation that Defendants held legitimate trademark rights in the Heavy Hitter Marks. [Comment—An intent-to-use application by an applicant with a bona fide intent to use the mark does provide the applicant with legitimate inchoate trademark rights]. Lerner further argues that the Defendants do not provide legal services in connection with the Heavy Hitter Marks nor can they provide such services because they are not licensed attorneys capable of providing legal services. [Comment—“legal services” is a pretty broad category and doesn’t necessarily mean the “practice of law” and Defendants controlled license of the marks constitutes use].

Lerner also claims that Defendants lost their trademark rights by not exercising any quality control over Lerner’s legal services or over any legal services offered by another other third party licensees of the Heavy Hitter Marks. [Comment—My favorite defense – the “naked license”].

Lerner apparently received a cease and desist letter from the Defendants on or around August 14, 2008, threatening suit if he did not stop using the Heavy Hitter Marks, thereby leading to Lerner’s reasonable apprehension that Defendants will file legal action against him and the basis for his seeking declaratory relief.

Based on Defendants’ fraud and naked license, Lerner argues that Defendants have no trademark rights in the Heavy Hitter Marks and thus his use of the marks HEAVY HITTER and HEAVY HITTERS cannot constitute federal or state trademark infringement or unfair competition. Lerner seeks a declaration that his use of the mark HEAVY HITTER or HEAVY HITTERS does not infringe Defendant’s registered trademark, is not likely to cause confusion as to source, origin or affiliation or otherwise constitute unfair competition with Defendants trademark rights, and does not constitute trademark infringement or unfair competition under Nevada state law.

For good measure, Lerner also seeks cancellation of Defendant’s registered HEAVY HITTER mark on the grounds of abandonment and fraud on the USPTO. Lerner argues that the Defendants have abandoned the mark because they have not used the mark in commerce in connection with legal services since the application was filed in 2001. [Comment—what about use by a licensee, such as Lerner?] While not stated very clearly, the complaint also seems to be alleging that since the Defendant never used the mark in commerce, then the Defendants committed fraud on the USPTO when it claimed in its Statement of Use filed August 18, 2003 that it began using the mark at least as early as January 5, 1999. [Practice Pointer: Allegations of fraud on the PTO should be specifically identified. If you want to play the “fraud” card, make sure your complaint specifically identifies the false statement of material fact that the trademark applicant knew or should have known was false at the time and make sure you allege that the PTO relied upon such false statement in issuing the trademark registration.]

Finally, Lerner throws in a claim of common law fraud based on Defendants’ false representation that the Defendants had legitimate rights to the Heavy Hitter Marks, knowledge that its representation was false (i.e., Defendants knew that they were not offering legal services in connection with the Heavy Hitter Marks or were not exercising any quality control over any licensees of such marks), and detrimental reliance on the part of Lerner with respect to those false representations (but for the false representation, he would not have entered into the license agreement with the Defendants). Lerner requests that the “agreement” be rescinded by the court, and thus, Lerner’s use of the Heavy Hitter or Heavy Hitters mark could not be a breach of contract.

The prosecution history of the registered trademark application for HEAVY HITTER would give any reasonable person grounds for questioning the legitimacy of the trademark rights thereunder. After filing the application as an intent-to-use application on April 3, 2001, the application sailed through and received a Notice of Allowance on March 5, 2002. All LawCo had to do was file a Statement of Use or Extension of Time within six months. But for reasons unknown, the due date (September 5, 2002) passed. On October 10, 2002, LawCo filed the Extension Request along with a Petition to Revive the application (having missed the due date for filing such Extension Request). After the Extension Request was granted, LawCo had until March 5, 2003 to file a Statement of Use or additional Extension Request. So what happened? The due date once again came and went without any timely filing. On March 27, 2003, the applicant once again filed the Extension Request that should have been filed along with a second Petition to Revive. This extended the time for LawCo to file a Statement of Use or additional Extension Request to September 5, 2003.

On August 18, 2003, Lawco finally submitted its Statement of Use, but oddly claiming first use as early as January 5, 1999, and attaching a telephone lawyer advertisement for a personal injury law firm in Rochester, NY named Alexander & Catalano which boldly proclaimed “Call The Heavy Hitters!” [Query—If the mark had really been in use since January 5, 1999, how come LawCo couldn’t come up with a specimen of use in a timely manner – and how come LawCo had to file the application originally as intent-to-use?]

Because the drawing of the mark submitted with the application is for HEAVY HITTERS and the specimen showed “Call The Heavy Hitters!” the PTO rejected the specimen and demanded a substitute specimen showing the mark as depicted in the drawing. In response, LawCo apparently provided a CD of “‘Heavy Hitter’ commercials” that were in use prior to the date the Statement of Use was filed and argued that they reflected use of the “HEAVY HITTERS” mark as an “attention-getting symbol” which would be recognized as a service mark.

Well, based on the PTO’s final action in response to the CD, the ads apparently showed the mark HEAVY HITTER and THE HEAVY HITTER [Ed.-Hmmm, I wonder whose ads those were?] which still differed from the original drawing of the mark HEAVY HITTERS submitted with the application. The Examining Attorney allowed LawCo to amend the drawing to HEAVY HITTER so that it conformed to the specimen (apparently not finding such a change to be a material alteration of the essence or character of the mark). And with that, LawCo finally got its service mark registration.

Vegas™Esq. Comments:
As questionable as the prosecution of the application appears to be, there may not be enough of a false statement of material fact in the Statement of Use to kill the registration on the basis of fraud (the stated dates of use, while certainly questionable, will not be deemed material so long as the mark was used in connection with the services as of the date the Statement of Use was filed). Lerner could try to argue that the Defendants never had a bona fide intent to use the mark in commerce, but that may be difficult given the licensing arrangement entered into between the Defendants and Lerner in 2002.

As for abandonment, ownership rights in a trademark or service mark may be acquired and maintained through the use of the mark by a controlled licensee even when the only use of the mark has been made, and is being made, by the licensee. See Turner v. HMH Publishing Co., Inc., 380 F.2d 224, 229, 154 USPQ 330, 334 (5th Cir. 1967), cert. denied, 389 U.S. 1006, 156 USPQ 720 (1967).

Of course, the key word in the above is “controlled” licensee, which comes back to what may be the best argument for Lerner’s abandonment defense -- the apparent “naked license.” If Lerner can show evidence that Defendants have not, nor have they ever, taken any reasonable steps to monitor the quality of the services rendered by Lerner and other licensees, then such failure to ensure quality control can result in the trademark ceasing to function as a symbol of quality and a controlled source in which case the trademark will be deemed to have been abandoned and the Defendants would be estopped from asserting rights to the mark.

For what it’s worth, when I think of the “Heavy Hitter,” only one “source” comes to mind.

The guessing game for the new Oklahoma City NBA franchise begins at the USPTO

There are several reports out today (here and here) that the name of the Oklahoma City’s new NBA franchise will be announced next week. The NBA team formerly known as the Seattle SuperSonics will have a new name, colors, and logo.

The first clues of the proposed name for the new team came from several intent-to-use trademark applications filed by The Professional Basketball Club, LLC on July 25, 2008 for each of the names being considered (one application for various services related to basketball exhibitions and the second for clothing):

• OKLAHOMA CITY THUNDER (Tornadoes would have been more appropriate -- those familiar with Oklahoma City know what I’m talking about)
• OKLAHOMA CITY ENERGY (sounds like the local power company)
• OKLAHOMA CITY WIND (sort of a reference to Tornadoes)
• OKLAHOMA CITY BARONS (oil barons?)
• OKLAHOMA CITY BISON (when you think of basketball, do you think of buffaloes?)
• OKLAHOMA CITY MARSHALLS (hmmm...)

Thunder is reportedly the favorite.

Sportsline has a thread of recommended names from fans with good senses of humor. One that I particularly liked and which fits with my tornado theme above – Oklahoma City Cyclones.

I guess no one considered the Oklahoma City Okies.

Privé Nightclub Files Libel Lawsuit Against Vegas Blogger Under the Guise of Trademark Infringement

On August 20, 2008, Privé Vegas, LLC (“Privé”), Justin Levine, and Frank Tucker filed a defamation lawsuit against Michael Politz and various unnamed individuals and businesses in the U.S. District Court for the District of Nevada under the pretext of a trademark infringement/dilution-by-tarnishment lawsuit. See Privé Vegas LLC et al v. Politz et al, Case No. 08-cv-01104 (D. Nev.). A copy of the complaint can be downloaded here.

Privé owns and operates the Privé nightclub at the Planet Hollywood Resort and Casino in Las Vegas, Nevada, which first opened December 31, 2007. Levine is a Managing Partner and Tucker is Managing Director. Politz is the publisher of his own blog located at http://www.thevegaseye.com/, where he posts comments and other content relating to Las Vegas businesses and entertainment.

According to the complaint, after Politz was denied entry into the Privé club sometime in January, he posted some negative comments about the club on his blog and allegedly threatened to publish negative content regarding Tucker as well as supposedly contacted Levine and requested cash payment to be on his “good side.” The complaint also alleges that Politz sometime in March 2008 contacted another member of Privé management and admitted to posting negative content in exchange for a cash payment.

Between April and June 2008, four former hosts of Privé quit their employment with Privé and went to work for a competing club. On June 23, 2008, Privé filed a lawsuit against these four former employees for breaching a covenant not to compete and, for one of the hosts, stealing an using a supposedly confidential, proprietary customer list to solicit customers.

Around July 23, 2008, Defendant Politz published a blog post titled “IS THE PRIVÉ SHIP STARTING TO SINK?” which described the lawsuit filed by Privé against the four former employees, but then goes on to read as follows:

The question is WHY is all this energy being expended to shake these folks senseless? Does anyone really know? WE do. These four have information that Privé Management doesn't want getting out to anyone. And it has nothing to do with their client list. Something bizarre is boiling up beneath the surface at Privé. For instance what’s this we’re told about employees being shaken down for tip money by someone called “The Tax Man?” “The Tax Man” is apparently a Privé higher-up who uses the merest infractions – being late to meetings, wearing White after Labor Day-- as excuses to levy fines against employees as high as $500 a pop. The purloined tips go to feed something called “The Slush Fund.” Whatever that is. It's a mess. The winds of change are blowing at Privé, folks. We’ll batten down the hatches and keep our eyes peeled for the scoop, But don’t say you weren’t warned. Wear your seatbelts.

Privé’s complaint argues that this post contains factually false and damaging content. In addition, Privé notes that the top of this particular post is adorned with the Privé trademark (pictured below):

On August 12, 2008, Defendant Politz wrote another blog post entitled “Privé Exposed” which included a copy of an anonymous letter addressed to the Gaming Control Board. Plaintiffs argue that the content of the letter was libelous and defamatory. The Complaint cites many supposed false statements of fact in the letter, including accusations that Privé employees face continual harassment and a hostile and threatening work environment, hourly employees working overtime without pay, drug use on the premises, drug sales by management, minors being served alcohol, servers being screamed at when refusing to serve alcohol to minors, management sneaking underage girls into Privé, and tip money being taken from employees by management and never declared.

So what does all of this have to do with trademarks? After detailing all of the supposed false statements in the letter, the Complaint goes on to note that the title for this content on Defendant Politz’s TheVegasEye.com contained the Privé name with a red slash across it (pictured below), suggesting that the factually inaccurate and libelous statements within the Letter were in fact true, and separately tarnishing/disparaging Privé’s trademark. [Comment—I guess one person’s infringement/tarnishment is another person’s nominative fair use/free speech commentary? And I doubt that most people when seeing a red slash in this context will interpret such use to suggest that the statements within the letter are in fact true.]

Politz’s blog post was subsequently updated by him to make clear that he doesn’t “endorse the anonymous letter or anything that is stated within the letter. The publishing of this letter does not reflect the opinions of anyone working here. We simply put the letter up for our readers to read and judge for themselves.” Politz was then contacted by Privé’s attorneys demanding a retraction and apology for posting the letter. Politz states that he was willing to retract on the condition that Privé release him from any liability for posting the letter, but would not apologize for the “contents of an unsolicited anonymous letter that we happened to receive and had absolutely nothing to do with.”

What the complaint does not note (but Politz is happy to point out on his own blog post) is that on August 18, 2008, a picture showing (allegedly) a Privé staff member wearing a hat the makes its own possibly defamatory statement about Politz:

Who has a claim for defamation now?

In essence, Privé is alleging that Politz, as part of some alleged modus operandi of “extorting” businesses, is the source behind the anonymous letter – either having written it himself or working in conjunction with unknown individuals (i.e. the former Privé hosts now being sued by their own boss) – and thus he is responsible for the libelous content regarding the Plaintiffs as well as the tarnishment to Privé’s trademark.

While the primary causes of action are the state common law claims for Defamation Per Se, Commercial Defamation Per Se, Intentional Interference with Existing Business Relations, Intentional Interference with Prospective Business, and Extortion, the Complaint’s first cause of action is for trademark infringement/dilution by tarnishment. [Comment--I guess Privé believes its name is already famous after only eight months of use]. Of course, this particular cause of action is important because it is the sole basis for the federal court’s original jurisdiction. The court’s jurisdiction for the state law claims is based solely on the court’s supplemental jurisdiction.

So in addition to this being a fascinating story about the Las Vegas night club scene, it also demonstrates using a questionable trademark cause of action as a jurisdictional hook in order to get state law claims heard in a federal court.

The basis for a federal court having supplemental jurisdiction is 28 U.S.C. §1367(a), which states “In any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy . . .” Claims are so related as to form the “same case or controversy” when such claims are derived from a common nucleus of operative fact. Thus, a federal court only has supplemental jurisdiction over state law claims if they form part of the same “case or controversy” as the claim upon which original jurisdiction is based.

So Privé is relying on its “trademark infringement” claim to carry the day for its five state causes of action. Of course, it is a bit of stretch to say that the five state causes of action form part of the same “case or controversy” as the claim for trademark infringement given that the facts necessary to resolve those state claims are not likely to relate to the facts necessary to resolve a claim for trademark infringement (basically, ownership of a mark and likelihood of confusion)

In addition, courts may decline to exercise supplemental jurisdiction over claims if the state claims substantially predominate over the claim on which the district court has original jurisdiction in terms of proof, the scope of the issues raised, or the comprehensiveness of the remedy sought. See 28 U.S.C. § 1367(c)(2).

Here, the allegations predominantly relate to the false statements of fact about the Plaintiffs in the letter posted by Politz – the allegations of trademark infringement/dilution by tarnishment appear to rely primarily on Politz’s posting of the Privé trademark with a red slash across it in connection with Politz’s posting of the letter. Privé's argument is that this posting of Privé trademark in connection with Politz’s comments and posting of the letter irreparably infringed upon, disparaged, diluted and tarnished, damaged and reduced the value of the “Privé” trademark under §43(a) and (c) of the Lanham Act (15 U.S.C. §1125(a) (c)): “The infringement upon, dilution, tarnishment and disparagement of the ‘Privé’ trademark suggested that the factually inaccurate and libelous statements within the Letter were in fact true and further irreparably damaged Plaintiffs individually and collectively.”

To put it mildly, Privé’s case for trademark infringement is a little weak (nominative fair use anyone? ) and the case for dilution-by-tarnishment is even weaker (again, famous after eight months?). Some courts have found that a weak federal claim is an additional factor for courts to consider in determining if state law claims substantially predominate in a complaint. As such, I would think that a federal court judge would opt to decline to exercise supplemental jurisdiction over the state law claims in this case. Of course, whether that happens will ultimately be up to Politz to decide because if Politz decides to file a motion to dismiss the state law claims for lack of supplemental jurisdiction and the court chooses to decline to exercise supplemental jurisdiction over the state law claims, Privé could turn right around and file the same claims in state court, in which case Politz would then be faced with two concurrent lawsuits. Even though the court probably should not exercise supplemental jurisdiction over the claims, sometimes it’s better to fight the battle on one front rather than two.

[Update: Sam Bayard over at the Citizen Media Law Project (link here) provides his own take on the merits of the lawsuit along with some great legal analysis and has even added it to their database of cases that the group is monitoring -- see Privé Vegas, LLC v. Politz.]

The Girls of Glitter Gulch go after Unauthorized “Glitter Gulch” Website

This summary is not available. Please click here to view the post.

Fifth Circuit finds Urgent Care to be generic for providers of urgent care medical services

The Fifth Circuit Court of Appeals reversed a lower court’s decision granting a preliminary injunction enjoining an urgent care medical provider from using the term “Urgent Care.” See Urgent Care, Inc. et al v. South Mississippi Urgent Care, Inc. et al, 2008 U.S. App. LEXIS 17411, Case No. 08-60155 (5th Cir. Aug. 13, 2008) (unpublished)

Lydia King Rayner began operating Urgent Care, Inc. in Mississippi in 1985 and registered the name “Urgent Care, Inc” as a servicemark with the Mississippi Secretary of State in 2001, but not with the United States Patent and Trademark Office (“USPTO”). Rayner later formed “Urgicare, Inc” and registered the mark mark “UrgiCare” with both the Mississippi Secretary of State and the USPTO.

Rayner filed suit against two companies that started up medical clinics using the name Urgent Care (Apple Urgent Care Occupational Clinic and South Mississippi Urgent Care, Inc.) claiming infringement of the above state and federal registrations. The district court granted Rayner’s Motion for Preliminary Injunction against South Mississippi Urgent Care after determining that Rayner had established the required elements for preliminary injunctive relief, including substantial likelihood of success on the merits due to a likelihood of confusion between each of the parties’ marks and implicitly finding that the marks were protectable in the first place (i.e., not generic and that they had acquired a secondary meaning if descriptive).

In finding that the the district court had erred in its determination, the Court analyzed each of the marks at issue. With respect to the mark “Urgent Care,” the Court of Appeals concluded that the term had not become distinctive of Rayner’s goods and indeed was generic and therefore not entitled to any trademark protection. The court focused on the number of other medical providers that have adopted the word “Urgent Care” in their name as well as a definition of “Urgent Care Medicine” by the American Academy of Urgent Care Medicine. Such extensive use by others shows that others are equally entitled to use such nondistintive words to identify their own services. Finding the “Urgent Care” mark to be generic, the Court of Appeals found the district court’s injunction to be in error and an abuse of discretion.

As for Rayner’s other claimed mark for “UrgiCare,” Rayner’s argument for likelihood of confusion was that because “UrgiCare” sounds like the phrase “urgent care,” the use of the phrase “urgent care” infringed the “UrgiCare” mark. Having found the term “Urgent Care” to be generic, the Court rejected this argument stating that Raynor cannot prevent companies from using a generic term by obtaining a registration on a similar-sounding, but differently spelled mark. The Court further found that “South Mississippi Urgent Care” is sufficiently distinct from UrgiCare that Rayner’s trademark rights were not infringed. As such, the Court reversed the district court’s preliminary injunction with respect to the “UrgiCare” mark as well.

Sprinkles Cupcakes claims trademark infringement over its cupcake dot

The news outlets were abuzz today about the trademark infringement lawsuit filed by California cupcake maker Sprinkles Cupcakes against rival cupcake maker Famous Cupcakes (Reuters news report here).

The lawsuit, filed on Thursday, claims that Famous has appropriated Sprinkles’ signature “nested circle design” trademark into its packaging, store décor, and website.

Sprinkles sells a wide variety of cupcakes each of which are topped with a signature dot that functions as an indication of the particular flavor of the cupcake. Sprinkles’ flavor card showing which dots correspond with which flavor can be viewed here.

However, Sprinkles was able to overcome the PTO’s two refusals to register the design on the Principal Register (a non-distinct configuration refusal and an ornamental refusal) by changing the basis of the application to Section 2(f) and providing evidence that the mark had acquired distinctiveness (i.e., customers had come to associate the dot design with Sprinkles). Sprinkles’ "nested circle design" for "bakery goods" was registered April 3, 2007.

While a quick view of Famous’ website didn’t reveal any particular appropriation of Sprinkles’ “dots” that I could see, Famous, which has its own unique group of flavors (here), does offer its customers the choice of various “toppers” on their cupcake. Is Sprinkles claiming that no other cupcake makers can put any kind of candy heart or other design in the center of a cupcake?

Famous Cupcake's Toppers

Britney Spears’ Stint at “Rehab” Leads to Trademark Infringement Lawsuit Against the Hard Rock Hotel & Casino

On August 8, 2008, Jimmy Daniel Alexander, a member of the rock band “Rehab,” filed a trademark infringement lawsuit in the U.S. District Court for the District of Nevada against the owners of the Hard Rock Hotel & Casino (“Hard Rock”) in Las Vegas. See Alexander v. Hard Rock Hotel, Inc. et al, Case No. 08-cv-01035 (D. Nev). A copy of the complaint can be downloaded here.

According to the complaint, Alexander, along with two other musicians, formed “Rehab” in the late 1990s in Atlanta, Georgia (see also Wikipedia write-up). The band has released 5 albums to date (its major label debut “Southern Discomfort” was released in 2000 and sold over 170,000 albums). The band even played in Las Vegas as recently as August 5, 2008 (The Las Vegas Weekly here even noted that "It's not Hard Rock's Rehab but they do rock hard").

CD cover of Rehab's 2005 "Graffiti The World" Album

Alexander also currently owns a federal trademark registration for the mark REHAB for music (August 31, 1999 first use date) and clothing (September 2000 first use date) which he acquired by assignment from Destiny Music, Inc. on January 31, 2005. You can see the “Rehab” clothing line here. Alexander also has an application pending for the mark REHAB for live performances by a musical band.

A REHAB hoodie.

Sometime in 2004, the Hard Rock began hosting Sunday afternoon pool parties under the name “Rehab.” (For those with high-speed modems, click here to check out the Hard Rock’s interactive view into the world of “Rehab” – complete with its own “movie trailer”).

The Hard Rock, through its IP Holding company, HRHH IP, LLC, also holds its own trademark registrations for the design marks REHAB RX and REHAB RX SUNDAYS AT THE POOL -- both for "seasonal poolside party held weekly with food, drinks and entertainment" with first use dates of April 5, 2004. In addition to hosting these parties, the Hard Rock also sells clothing (t-shirts, hats, etc.) ornamentally displaying its Rehab marks.

According to the complaint, sometime in March 2006, a fan of the band “Rehab” forwarded a photo of Britney Spears wearing a “Rehab” shirt thinking that it was referring to the band, but in actuality it was a shirt from the Hard Rock’s “Rehab” party.

Possibly the photo that sparked it all?

On April 7, 2006, Alexander’s attorney at the time contacted the Hard Rock's legal counsel regarding its “infringing use” of Alexander’s REHAB mark. Hard Rock's counsel supposedly told Alexander’s attorney that all infringing merchandise had been removed and offered a $7500 settlement (claiming that the Hard Rock had never grossed more than $13,000 from the sale of such merchandise). The attorneys supposedly reached an agreement on the terms of a settlement involving a $10,000 payment along with an agreement for the Hard Rock to sell Alexander’s “Rehab” merchandise through the Hard Rock’s retail outlet, but the agreement had to be approved by the Hard Rock.

This settlement, however, was apparently never approved and finalized before the Hard Rock was sold to Morgan Hotel Group in 2007. Afterwards, Alexander's attorney was put in touch with Mr. Phillip Shahala, the newly appointed Vice President of Marketing, and the two came to some kind of “agreement” through a series of e-mails whereby Alexander would allow the Hard Rock to continue to use the name “Rehab” in exchange for a $13,000 payment to Alexander, a percentage of all clothing sales from the Hard Rock “Rehab” pool parties, space for Alexander’s “Rehab” clothing to be sold at the retail store located at the Hard Rock, and a promise to schedule 3 performances for the band to play at the Hard Rock’s concert venues.

It is not clear from the complaint whether an agreement was actually reached (and subsequently breached) by the Hard Rock or whether the parties were still in the negotiation phase. While Alexander claims to have acted pursuant to the terms of this “settlement agreement” with Shahala by not pursuing any action to stop the Hard Rock from using the “Rehab” name, it appears that Alexander was never paid the $13,000 nor was there any final written agreement memorializing the terms of any such settlement. [Ed. – Wouldn’t you have been a little suspicious when the Hard Rock didn’t at least pay the $13,000? Is there really an enforceable settlement agreement here if there are only e-mail exchanges negotiating terms of a settlement? Did Shahala have authority to enter into such an agreement? And why didn't Shahala turn the matter over to Hard Rock's legal counsel?] The Hard Rock apparently broke off contact with Alexander and did not take any actions consistent with the supposed terms of settlement.

Alexander claims that the Hard Rock’s use of its “Rehab” mark is likely to cause confusion with its own REHAB mark. Alexander’s causes of action are for registered trademark infringement (15 U.S.C. § 1114), federal unfair competition (15 U.S.C. § 1125(a)), common law trademark infringement, breach of contract, and unjust enrichment.

Alexander seeks an injunction to stop the Hard Rock from using the name “Rehab” (and the request is not limited to just the use on clothing but appears to cover use by the Hard Rock of the name "Rehab" for pool parties as well). Alexander also seeks an accounting of Hard Rock’s profits from any infringement [Query—profits just from the sale of clothing or from the pool parties as well, which is where the real money is likely to be] as well as damages for the “breach” of the settlement agreement, which Alexander values at in excess of $1,000,000 because of the promotional value to the band of the promised concert appearances.

Vegas™Esq. Comments:
With all of the talk these days about celebrities going to “rehab,” I don’t think the mark, at least with respect to clothing goods, is especially strong given that the word "rehab" is well recognized to be short for "rehabilition." In addition, the word “Rehab” appears on the clothing as more of an ornamental feature and not necessarily functioning as a source identifier and it's arguable whether it would even be recognized by consumers as an indicator of secondary source or sponsorship (i.e., recognizing “Rehab” to be a reference to the band “Rehab”) although the PTO was apparently satisfied with the specimens submitted with the application and even with the most recent Statement of Use filed in 2007.

The primary goods/services at issue (pool party entertainment versus rock band music CDs) are different enough that it will probably be enough for Hard Rock to prevail on a likelihood of confusion analysis. After all, the PTO didn't seem to find the marks to be confusingly similar. The Hard Rock's use of the term "rehab" is most likely to be recognized as a suggestive play on "rehabilitation" (i.e., going to the Hard Rock's pool party is like going to rehab) and not likely to be recognized as the official pool party of the band Rehab. But then again, Alexander could play up the rock & roll connection between his band and the Hard Rock.

As for the Hard Rock’s sale of clothing bearing the Hard Rock’s own “Rehab” mark, this may be more of a challenge for the Hard Rock given the similarity of the marks, similarity of the goods, similar marketing channels, low degree of consumer care regarding purchases of clothing, and evidence of actual confusion (however weak), all of which tend to favor Alexander. Of course, given that the Hard Rock's use of the word “Rehab” on clothing is likely to be recognized more as ornamental or as an indicator of secondary source or sponsorship and not as a trademark for such clothing, the Hard Rock may end up having to rely on a more fundamental argument that its use of the word "Rehab" on its clothing does not even constitute "use in commerce" under the Lanham Act. See 15 U.S.C. § 1127.