The Material Girl’s Battle For MATERIAL GIRL

The trademark lawsuit story du jour was the complaint filed by L.A. Triumph, Inc. (“LA Triumph”) against Madonna and her company, Material Girl Brand, LLC, over the trademark MATERIAL GIRL in connection with clothing. See L.A. Triumph, Inc. v. Material Girl Brand, LLC et al, Case No. 10-cv-6195 (C.D. Cal. Filed August 19, 2010). Complaint can be viewed here (via Courthousenews). Multiple news outlets, blogs and gossip sources ran stories about the suit today (ABC News, Fox News, Huffington Post, RadarOnline, and TMZ)

In short, the complaint alleges that a California company named OC Mercantile Corporation started selling a line of MATERIAL GIRL clothes in 1997 – and even registered the name as a trademark with the California Secretary of State that same year (Reg. No. 102808 for women’s apparel). In 2003, LA Triumph became the successor-in-interest to OC Mercantile and purportedly has continued using the mark in connection with the sale of clothing items to the present day and claims that its clothing line has received national exposure. [Interestingly, LA Triumph does not appear to have any online presence where it sells its clothing goods – Google search results only came back with the published stories about this lawsuit. Of course, LA Triumph might argue that MGB’s recent nationwide marketing blitz have overwhelmed LA Triumph’s use of the mark – so called, reversed confusion.]

The complaint goes on to state that sometime in 2010, LA Triumph became aware that the Defendants were going to start selling a line of young women’s clothing using the MATERIAL GIRL mark. The website promoting Madonna’s brand is found at http://www.materialgirlcollection.com/ (as opposed to the website promoting LA Triumph’s clothing which is found . . . umm, anybody have any idea where LA Triumph’s MATERIAL GIRL clothing is promoted online? The closest I could come – based on the fact that L.A. Triumph, Inc. does business in California under the name MedGear – is a website http://www.medgear.com/ which sells clothing for hospital and medical industry workers, but I did not see anything using the mark MATERIAL GIRL.)

LA Triumph also alleges that MGB improperly filed to register the mark MATERIAL GIRL with the United State Patent and Trademark Office (“USPTO”). Interestingly, MGB’s current application (the one cited in the case) was not the first application in line to register the mark MATERIAL GIRL. On May 11, 2009, Audigier Brand Management Group, LLC filed a trademark application for MATERIAL GIRL (covering 7 different classes of goods including clothing). The USPTO initially refused registration in a non-final office action dated August 13, 2009, but only because the description needed some clarification and not based on a Section 2(d) likelihood of confusion refusal.

Subsequently, the Audigier application was assigned to MGB on December 1, 2009. And within days of this assignment, MGB then filed its own intent-to-use application for the mark MATERIAL GIRL (for 4 classes of goods including clothing) on December 4, 2009. This explains why MGB did not file a timely response to the PTO’s office action in the “Audigier” application, which went abandoned on March 26, 2010.

So why, you ask, would MGB file a new intent-to-use application for MATERIAL GIRL when Audigier’s earlier filed MATERIAL GIRL application had already been assigned to MGB? Most likely because the Audigier application was an intent-to-use application and MGB was not really the successor to any kind of ongoing and existing business by Audigier to which the applied-for mark pertained. Under §10 of the Trademark Act (15 U.S.C. § 1060), an application filed under §1(b) (intent-to-use) may not be assigned before a statement of use has been filed except to a successor to the business of the applicant, or portion thereof, to which the mark pertains, if that business is ongoing and existing. See 15 U.S.C. §1060(a)(1). The law is quite clear that the assignment of a §1(b) application to an entity that is not the successor to the applicant’s business, before filing an allegation of use, renders the application and any resulting registration void. See The Clorox Co. v. Chem. Bank, 40 USPQ2d 1098 (TTAB 1996). By MGB filing a brand new application, MGB could start fresh without having to be concerned about any resulting registration being deemed void on the basis of improper assignment of a §1(b) application.

Of course, once MGB’s own application was published for opposition on July 20, 2010, LA Triumph timely filed an opposition – filed the same day that LA Triumph’s district court lawsuit was filed. See L.A. Triumph, Inc. v. Material Girl Brand, LLC, Opposition No. 91196172 (T.T.A.B. Filed August 19, 2010). [As a sidenote, another party, Rwachsberg Holdings Inc., filed an Extension of Time to oppose registration of MGB’s mark. Rwachsberg owns the mark MATERIAL GIRLS for cosmetic products and nutritional food products. ]

But the real question is this – why didn’t either OC Mercantile or even LA Triumph seek to register the mark MATERIAL GIRL in connection with clothing with the USPTO?

While one could speculate that neither company bothered to register because they weren’t actively using the mark on clothing and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned, another very likely answer was that the mark could not have been registered by either company with the USPTO because there was already an existing trademark registration for the identical mark for the identical goods. A Canadian company name Les Ventes Universelles S.H. Inc. had a trademark registration for MATERIAL GIRL in connection with clothing (registered July 8, 1997) based on the company’s foreign registration of the same mark (dating back to May 1990). The company filed the necessary Section 8 Declaration of Use at the 5 year mark, but did not renew the mark by the 10 year renewal deadline and the mark was canceled April 12, 2008.

So the natural follow-up question is this – why didn’t LA Triumph run out right away and seek to file a federal trademark application to register the mark once Les Ventes’ registration was canceled – during the window between April 12, 2008 and May 11, 2009 (when Audigier filed its first application)? Again, perhaps it was because LA Triumph was not really actively using the mark in connection with clothing, and thus the instant lawsuit would be an attempt by LA Triumph to claim trademark rights that were likely minimal at best and/or long since abandoned – but again that would be just pure speculation. [Did I neglect to mention that according to the California Secretary of State’s records the state registration for MATERIAL GIRL expired August 9, 2007?]

So where can I buy LA Triumph’s MATERIAL GIRL clothing again?

Bellagio Hotel & Casino Sues Mattress Maker Over BELLAGIO mark

Bellagio Hotel & Casino in Las Vegas, Nevada

Bellagio, LLC, the Mirage Resorts Incorporated (“MRI”) subsidiary which owns the Bellagio Hotel & Casino in Las Vegas, has sued Italian mattress maker Magniflex USA, Ltd. (“Magniflex”) in the U.S. District Court for the District of Nevada over Magniflex’s use of the mark BELLAGIO in connection with bed mattresses. See Bellagio LLC et al v. Magniflex USA, Ltd., Case No. 10-cv-01311 (D. Nev. Filed August 4, 2010). A copy of the complaint can be downloaded here (HT: Steve Green). The Las Vegas Sun has coverage of the lawsuit filing and Magniflex’s reaction to the lawsuit.

In the complaint, Bellagio alleges that it has been selling BELLAGIO mattresses since at least as early as 2001 through a retail store located at the Bellagio or through its website. Click here to see the section of Bellagio’s website selling “Serta mattresses, exclusively created for Bellagio” [Query: So are these Serta-brand mattresses or Bellagio-brand mattresses? And does Bellagio exercise quality control over the mattresses that Serta creates for it?]

Bellagio’s website

Of course, if Bellagio had been selling such mattresses for all that time, then one wonders why MRI chose to file trademark registration applications on February 3, 2010, for the mark BELLAGIO (word mark and stylized) in connection with “mattresses” on the basis of intent-to-use (as opposed to use-in-commerce). Both applications were provisionally refused registration based on the pending application for the mark BELLAGIO for various furniture goods – which itself was provisionally refused registration based on an existing registration for the mark BELLAGIO LUXURY for future goods. However, the applicant of the BELLAGIO furniture mark recently expressly abandoned its application (after abandoning its effort to cancel the BELLAGIO LUXURY MARK ), so there is nothing likely standing in the way of MRI’s applications moving forward towards publication.

Bellagio’s exclusively designed Serta® mattress

Bellagio first became aware of Magniflex’s mattresses at the Spring 2010 High Point Furniture Market in High Point, N.C. Magniflex showcased its Bellagio mattresses again at the bi-annual Las Vegas Market furniture industry event at the World Market Center in Las Vegas. Bellagio alleges in its complaint that Magniflex is selling a line of mattresses using the BELLAGIO mark that is likely to cause confusion with Bellagio’s use of the BELLAGIO mark in connection with its specially made Serta® mattresses. Bellagio also claims that Magniflex’s use of the BELLAGIO mark is likely to cause dilution of Bellagio’s famous BELLAGIO mark under federal trademark dilution law.

Magniflex’s Bellagio Lavender mattress

In a statement issued after hearing of the lawsuit, Magniflex’s President Marco Magni stated that its “Bellagio Lavender” line of mattresses were named after the town Bellagio in the Como province in Northern Italy located on Lake Como (which just so happens to have also served as the inspiration for Steve Wynn when he originally built the Bellagio Hotel & Casino). Magni stated that the Bellagio name is meant to pay homage to the Italian city and to be synonymous with fine Italian craftsmanship (Magniflex also maintains that it is one of Italy’s largest mattress manufacturers and sells its products throughout the world).

The town of Bellagio on Lake Como

(Photo Credit: Marcus90)

Bellagio’s causes of action are for federal trademark infringement, federal trademark dilution, federal unfair competition, and common law unfair competition. Bellagio seeks injunctive relief as well as damages, costs, and attorneys fees.

Avoiding the Wrath of Righthaven

There has been a lot of discussion in the Las Vegas area (and nationwide) about the numerous copyright infringement lawsuits filed by a Las Vegas company named Righthaven, LLC. As of August 4, 2010, Righthaven had filed approximately 86 lawsuits against various website operators claiming copyright infringement. While not immediate apparent from the lawsuits, Righthaven is essentially a company established by Stephens Media LLC, the owner of numerous newspaper including the Las Vegas Review Journal (the “RJ”), in order to go after any and all third party websites that improperly excerpt all or part of the copyrighted articles from the RJ.

Many people who post content online may be under the impression that they can lawfully post all or part of an article originally published in the RJ so long as appropriate credit to the RJ is given (as well as possibly a link back to where the article appeared on the RJ’s website). In actuality, such actions may constitute copyright infringement.

The RJ just accepted this type of copyright infringement for the longest time as an unfortunate byproduct of the Internet. However, earlier this year, the RJ apparently had a change of heart and is now aggressively going after anybody who posts any of its copyrighted content online. A blog posting by Sherman Frederick, the publisher of the RJ, posted in May 2010 explained the RJ’s new aggressive actions towards reposting of the RJ’s copyrighted content.

We grubstaked and contracted with a company called Righthaven. It's a local technology company whose only job is to protect copyrighted content. It is our primary hope that Righthaven will stop people from stealing our stuff. It is our secondary hope, if Righthaven shows continued success, that it will find other clients looking for a solution to the theft of copyrighted material.

To describe Righthaven as a “technology company” is probably a glamorization of what is essentially a company more akin to a law firm established by the RJ to be the assignee of various copyrighted articles so that Righthaven can obtain copyright registrations on such articles and then file lawsuits in federal court for copyright infringement. By establishing a separate company, not only can the RJ keep a distance from and avoid being associated directly with the aggressive tactics of Righthaven, it can also have what is (most likely) a law firm working on a contingency basis based on all of the settlement amounts obtained from the unsuspecting website operators who find themselves looking at either paying a quick nuisance settlement or spending thousands of dollars of legal fees defending what may possibly be fair use, but what is more likely than not a clear cut case of copyright infringement (albeit unintentional on the part of the person who just wanted to cite to one of the RJ’s articles). And even in those cases where the articles were posted by third parties under circumstances where the website operator may be immune under the Digital Millennium Copyright Act (“DMCA”), it still often makes more sense to just give into Righthaven’s demands than to pay the cost to prove that no liability exists.

Righthaven’s agenda to obtain quick and easy cash settlements (in addition to having its copyrighted content taken down from those posting without permission) is clear by the fact that Righthaven never contacts any of these websites and orders them to take down the infringing content nor sends any kind of cease and desist letter to takedown request against the website. Of course, Righthaven is under no obligation to do so, but at the same time, if such letters were sent out (something that apparently, rival newspaper company Greenspun Media does with much success), then Righthaven knows that the website operators are likely to quickly comply and take down the content – without Righthaven getting any “compensation” for the use of its articles (or compensation to offset the time and effort for sending out such notices). Instead, the party is immediately named as a defendant in a lawsuit (which only costs $350 to file, not including the time it might take for a paralegal to modify Righthaven’s boilerplate legal complaint to the facts and circumstances of each case), which puts the named defendant in the serious situation of having to spend time and money addressing these allegations or else face a default judgment by the court. Rather than fight against Righthaven and obtain what is at best likely to be pyrrhic victory, most defendants will choose to just settle.

Some may be asking how the RJ can claim a copyright over the news that it covers. While the RJ cannot claim copyright rights over news events, it can claim a copyright to the particular way that one of its employed writers describes a news event. Accordingly, while you can describe a particular news event on your website that you may have read about in the RJ, you cannot describe such news by using the precise copyrighted written text that the RJ used to describe the news.

And while copyright law does protect certain uses of a copyrighted work as “fair use,” such as when a work is reproduced for purposes of criticism, comment, news reporting, teaching, scholarship, and research, whether a particular use constitutes “fair use” actually involves an analysis of several factors used by courts including the purpose and character of the use (whether use is commercial or for nonprofit purposes), the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work. See 17 U.S.C. §107. One factor often overlooked by many website operators is the commercial nature of their websites. Think your website is non-commercial? – well, if you have pay-per-click ads being displayed on your website and you are generating some revenue from the website, then your website is more commercial than you think.

So what is a website to do in order to avoid the “wrath” of Righthaven if you want to mention an RJ news article on your website? While there is nothing clearly outlined on the RJ’s own website, Mark Hinueber, the Vice President and General Counsel for Stephens Media, recently provided some guidance for third parties regarding how to properly cite review journal articles.

Mr. Hinueber is informing interested parties that the appropriate procedure for using stories published in the RJ (and any other publication owned by Stephens Media) is to post the headline of the story and then the first paragraph with a link to the original story. Accordingly, if you wish to quote from an RJ story on your website – and you do not otherwise obtain a non-exclusive license from the RJ to post all or part of the story on your website – then you should post only the headline, the first paragraph of the story, and a link to the RJ’s website where the original story can be found.

The following example illustrates what is acceptable to the RJ:

$145 MILLION BUDGET SHORTFALL: Union proposes pay cut for all employees in Clark County School District
By JAMES HAUG
LAS VEGAS REVIEW-JOURNAL
A 1.5 percent pay cut by all 38,500 employees in the Clark County School District would prevent layoffs and resolve the budget crisis for the 2010-11 school year, according to a proposal from the union representing school principals and administrators.

The rest of the article can be viewed by clicking here.

For those website owners that are not actively involved in posting content, but which maintain a website which allows third parties to post content to online forums, then you need to confirm that you have taken the proper steps to ensure that your website is immune from any claims for damages for copyright infringement under the safe harbor provisions of the DMCA. The DMCA safe harbor provisions require a copyright owner to first give notice to the website owner that copyrighted content appears on its website and an opportunity to take down the material before proceeding with a lawsuit.

Many website owners may be under the impression that they are protected by the DMCA when in reality, there are very specific requirements must be met before a website owner can invoke the DMCA safe harbor provisions. See 17 U.S.C. §512(c).

In particular, the safe harbor only applies to service providers who have designated an agent to receive notifications of claimed infringement and providing information about the agent (name, address, phone number, and electronic mail address of the agent) to the Register of Copyrights, which maintains a directory of agents available for publication inspection. See 17 U.S.C. §512(c)(2). This list can be viewed here.

So it is not enough to just name an agent in your terms of use policy. You must go a step further and provide the name of this agent to the Copyright Office. The Copyright Office has forms available online for designating an agent – Interim Designation of Agent to Receive Notification of Claimed Infringement – and for amending the designated agent – Amended Interim Designation of Agent to Receive Notification of Claimed Infringement. The filing fee is $105 and an additional $10 for group of 30 or fewer alternative names for the service provider. The designation can be mailed to Copyright RRP, P.O. Box 71537, Washington, DC 20024. More information from the Copyright Office on the requirement of designating an agent to receive notification of claims of infringement can be viewed here.

Once you have designated the proper agent, if a user to your website posts an RJ article that infringes the RJ’s or Righthaven’s copyright rights, then the RJ or Righthaven must provide you with the proper takedown notice and allow the website owner to remove the infringing content before proceeding with litigation.

Righthaven has likely been targeting those websites where either the website owner directly posted the RJ’s article or, to the extent a third party may have posted the article, then the website did not have an agent designated to receive notification of claimed infringement, and thus cannot invoke the DMCA safe harbor. (Indeed, some of the more recent complaints filed by Righthaven include factual allegations about the Defendants not instituting any proactive policy intending to address the posting by others of copyright-infringing content).

For those that have to date flown under the Righthaven radar, you can begin taking immediate steps to avoid facing any kind of copyright infringement liability. However, if you are the unfortunate recipient of a notice that a lawsuit has been filed against you by Righthaven for copyright infringement, you should take the matter seriously and immediately consult with legal counsel familiar with copyright law and with Righthaven. If you choose not to respond to the complaint, you could face a default judgment being rendered against you by the court that could go as high as $150,000 per infringement.

[08/09/10 Update: Las Vegas Sun has an article that includes a reference to this particular blog post and other websites dedicated to the Righthaven.]

Las Vegas Sun Spotlights Righthaven Copyright Infringement Lawsuits

To date, I have not written anything on this blog about Righthaven LLC, the so-called start-up company in Las Vegas that has garnered much nationwide attention for filing a slew of copyright infringement lawsuits in Nevada U.S. District Court against websites posting Las Vegas Review Journal stories. The lack of any coverage on my part was mostly due to my deliberate choice to make this blog strictly about trademarks; but like most intellectual property attorneys in Las Vegas, I am well aware of the name Righthaven.

Nevertheless, a group of articles published today by Steve Green with the Las Vegas Sun compels me to break with my blogging tradition in order to spotlight these articles (published in the LVRJ’s competitor paper) which provide a detailed report of Righthaven’s actions from all points of view (and not just because one of the articles includes a quote from yours truly).

Main article: Legal attack dog sicked on websites accused of violating R-J copyrights

Related Articles:

• Some targets of Righthaven lawsuits fighting back
• Are website copyright violations hurting newspapers’ bottom line?
• Defendants in R-J copyright lawsuits speak out

Having taken the plunge into discussing copyrights on this blog and specifically about Righthaven, I hope to post my own article that I’ve written about Righthaven within the next day or so.

New York New York Hotel/Casino Successfully Hijacks NewYorkNewYork.com

This is the sad (but probably all too common) story of one individual’s attempt to seek justice in our courts only to be smacked in the face with the reality of how our legal system really works. In this case, Goliath not only defeated David, but also obtained possession of a valuable internet domain name in the process leaving David with nothing.

The David in this case is California resident Ronnie Katzin (“Katzin”) and the Goliath in this case is New York-New York Hotel & Casino, LLC (“NY-NY”), the company which owns the New York New York Hotel & Casino in Las Vegas.

Not the real "New York New York" (but thanks to a default judgment, now the proud owner of http://www.newyorknewyork.com/)

On November 6, 2009, NY-NY filed a cybersquatting and trademark infringement lawsuit against Katzin and his wholly-owned corporation, NewYorkNewYork.com, Inc., regarding the domain name newyorknewyork.com (the “Domain Name”). See New York-New York Hotel & Casino, LLC v. Katzin et al, Case No. 09-cv-02139 (D. Nev. November 6, 2009). Complaint here (via Las Vegas Sun).

I previously blogged about this lawsuit here. I think it’s clear from the tone of my original post that I believed this lawsuit to be a clear cut case of NY-NY overreaching and using weak claims of trademark infringement and cybersquatting in order to reverse hijack the very valuable domain name newyorknewyork.com for NY-NY’s own business purposes.

While the allegations in the complaint sounded pretty egregious and straightforward, one must always keep in mind that almost anything can be stated in allegations set forth in a legal complaint – it does not mean that such allegations are automatically true (and indeed that’s what trials are all about – a jury or judge determining what are the true facts of a case based on evidence).

On the face of the complaint, NY-NY based its cybersquatting claim on the fact that its predecessor in interest, MGM Grand, Inc, announced the hotel-casino in 1994, and then on September 13, 1995 (three months prior to the date that NY-NY acknowledges in its complaint that Katzin registered the domain), NY-NY filed two trademark applications for NEW YORK NEW YORK (one for hotel services and one for casino services), which registered in September 1998

Of course, what the complaint never revealed was that NY-NY’s trademark applications were initially denied registration on the basis of descriptiveness (or possibly genericness -- the file wrapper is not available online so I’m not certain the basis for the refusal). NY-NY obtained these trademark registrations only after making a claim of “acquired distinctiveness” under Section 2(f). NY-NY acknowledges that it did not start actually using the mark until January 1997 when the hotel-casino opened – over a year after the Domain Name had been registered. So how could the mark “NEW YORK NEW YORK” have been distinctive at the time of the Domain Name was registered if the only basis for NY-NY’s own claim for registration on the Principal Register is NY-NY’s claim of acquire distinctiveness which it could not have achieved until it began using the mark in commerce in January 1997? And if the mark “NEW YORK NEW YORK” was not distinctive at the time Katzin registered the Domain Name, how could such registration be deemed cybersquatting under the Anticybersquatting Consumer Protection Act (“ACPA”) (setting aside the fact that a registration dating back to 1995 was pre-ACPA)? [Of course, some would argue that subsequent re-registrations of the Domain Name – even if occurring by Katzin himself – constitute new registrations and restart the date for determining distinctiveness and cybersquatting -- a position I strongly disagree with (and I believe this case demonstrates why), but which the courts seem to be embracing nonetheless despite the unfair consequences that can arise to domain name owners.]

What’s even more unbelievable is the single event that seemed to give NY-NY the “hook” for making its claims against Katzin after all this time. The website that Katzin was running at the Domain Name was a basic travel-type site that allowed visitors to make reservations to various hotels, restaurants, entertainment attractions located, where else, in New York, New York. Unfortunately, as part of that website, Katzin put up a banner ad which displayed “New York-New York Hotel & Casino” and which visitors to the Domain Name could click on and make reservations to that hotel or possibly other hotels in the Las Vegas. According to Katzin (in a statement he made to the Las Vegas Sun), this image linked to a room-booking website operated by Expedia's Interactive Affiliate Network, which has a deal to sell MGM Mirage rooms (NY-NY is part of MGM Mirage). This single banner ad (pictured below) that probably only ran for a short period of time gave NY-NY the hook that it had probably been looking for to file a cybersquatting complaint against Katzin and his corporation.

A screenshot of the so-called “infringing” website captured just before the lawsuit

Is this trademark infringement? Maybe, but only for minor damages and nothing that can’t be remedied through a court injunction and certainly not deserving of a court order turning over such a valuable domain name. Is this cybersquatting? Only if you believe that Katzin registered the Domain Name all those many years ago before New York-New York Hotel & Casino had even opened (and could make any claim for acquired distinctiveness), waited nearly 15 years, and then through the posting of a single banner ad in a larger website that had nothing to do with New York-New York Hotel & Casino is engaging in bad faith use of the Domain Name such that Katzin should be labeled as a cybersquatter.

Unfortunately for Katzin, the WHOIS registration information for the Domain Name reflected that the corporation was the registrant of the Domain Name, which is why the corporation was named as a co-Defendant in the case. While some of the filings show that Katzin represented himself in this case, he could not represent the corporation before the court since Katzin is not a licensed attorney. Without legal representation, NY-NY was able to obtain a default against the corporation and requested a default judgment against the corporation.

A review of some documents filed by Katzin in the case do raise some questions regarding ownership of the Domain Name (issues of fact that should’ve been decided by a factfinder). While the corporation may have been listed as the registrant on the WHOIS database, I would argue (and indeed I have argued albeit somewhat unsuccessfully) that WHOIS cannot be relied upon for determining ownership to a particular domain name. There was also some evidence that Mr. Katzin may have even had a written license agreement with the corporation for the corporation to use the domain name – which would suggest that Katzin was indeed the true owner of the Domain Name despite what was reflected in WHOIS.

But none of that mattered unfortunately because Katzin apparently could not afford to hire legal counsel to represent the corporation in this matter. And last week, U.S. District Court Judge Lloyd George awarded NYNY the Domain Name by virtue of a default judgment against the corporation – the purported owner of the domain name. A copy of the court’s order is available here. The Domain Name was apparently transferred the very day the court entered its order (an order that was drafted by NY-NY and merely signed off on by the court).

The end result is that NY-NY, by pursuing a case through the legal system against a party that it probably knew would not have the financial wherewithal to mount a defense against a big-time hotel/casino company like NY-NY, was able to lawfully take from Katzin an extremely valuable domain name for its own use. The newyorknewyork.com domain name was probably worth upwards of $100,000 – and rather than buying it from Katzin for a fair market price, NY-NY obtained it for the costs of filing a district court action and its attorneys fees. And not only did NY-NY get the Domain Name, but the court awarded NY-NY the maximum statutory damages allowed under the ACPA for cybersquatting ($100,000). So not only did NY-NY obtain a domain name worth $100,000, but also got a default judgment against Katzin’s corporation for $100,000. [ed--talk about the “house” winning.]

The cybersquatting statute was meant to stop bad faith registration of domain names and bad faith use of a domain – it was not mean to be used as a tool by large businesses to obtain possession of domain names that they feel rightfully belong to them from someone who was lucky enough to buy a valuable domain name during the infancy of the internet and who had been holding onto such domain name and making actual good faith use of the name separate and apart from its meaning as a designator of a Las Vegas hotel and casino [that’s right – New York New York does have another highly recognized meaning out there that has nothing to do with NY-NY's hotel/casino]. Instead, the ACPA has become a tool to allow trademark owners like NY-NY to hijack domain names that they would like to have as part of their asset portfolio under the guise of cybersquatting and trademark infringement claims.

Based on what I saw from court filings, there was no evidence in the case that the Domain Name had ever once relied upon the goodwill of NY-NY other than the aforementioned banner ad – an action that could’ve easily been redressed with a cease and desist letter. [There were some other interesting facts in this case involving the Domain Name also being hijacked from Katzin in 2004 (during which time it may have been improperly used, but not by Katzin) – only to be returned in 2006 after the FBI discovered the large scale theft of domain names by a company named True Magic – but that’s outside the scope of this post (and touched upon briefly in my prior blog posting).] Of course, NY-NY didn’t want Katzin to cease and desist from using the banner ad on the website – NY-NY wanted the Domain Name, plain and simple. While NY-NY may have had a real cause for complaint regarding trademark infringement because of this banner ad , this was not cybersquatting and did not merit the handing over to NY-NY of the Domain Name. This was a successful domain name hijacking, plain and simple. And all because a business entity must be represented in court by legal counsel and legal complaints that go unanswered are deemed true regardless of what kind of fatuous allegations are stated therein and despite the existence of other evidence that raises serious issues of fact regarding such factual allegations.

While the case technically moves on because NY-NY sued both the corporation and Katzin personally, and the default judgment was only against the corporation and not Katzin, now that NY-NY has what it really wanted all along (along with a $100,000 cherry on top), I would suspect that NY-NY might simply voluntarily dismiss its claims against Katzin individually so that the judgment against the corporation can be made final.

On remand, CRISTAL champagne maker seals victory against CRISTALINO sparkling wine

Cristal Champagne

In 2006, Champagne Louis Roederer, the company which makes CRISTAL CHAMPAGNE, sued J. Garcia Carrion, S.A. (“Carrion”), maker of a sparkling wine sold under the mark CRISTALINO, for trademark infringement. See Champagne Louis Roederer v. J. Garcia Carrion, S.A., Case No 06-cv-00213 (D. Minn). The lower court originally barred Roederer from pursuing its trademark infringement claims on the basis of laches; however, the Eighth Circuit reversed that decision and remanded the case for further proceedings. See Champagne Louis Roederer v. J. Garcia Carrion, S.A., et al., No. 08-2907 (8th Cir. June 24, 2009) (previous blog post here).

Cristalino Cava

On remand, a trial was held in February 2010. On July 27, 2010, the U.S. District Court for the District of Minnesota filed under seal Findings of Fact and Conclusions of Law (possibly unsealed at a later date) and based on such findings and conclusions, issued a permanent injunction against Carrion which prohibited Carrion from using the CRISTALINO mark in connection with the sale of sparkling wine subject to several explicit exceptions. See Court’s order here.

First, Carrion can use CRISTALINO but only as part of the phrase “JAUME SERRA CRISTALINO” and must include a prominent disclaimer stating “JAUME SERRA CRISTALINO is not affiliated with, sponsored by, approved by, endorsed by, or in any way connected to Louis Roederer’s CRISTAL® champagne or Louis Roederer.”

Second, the font used by Carrion for the phrase “JAUME SERRA CRISTALINO” must be dissimilar to the Roman serif font used for the word “CRISTAL” by Roederer and must be entirely the same font type and size with JAUME SERRA displayed in close proximity to CRISTALINO.

Third, when Carrion uses “JAUME SERRA CRISTALINO” on bottles of cava, the phrase is only to appear on labels having a background color “other than gold if the cava is a brut, dry, extra-dry, or semi-dry and other than a pink-hued copper if the cava is a rosé.” [ed—Hmmm, that's pretty specific.]

Finally, the court determined that Carrion can sell its existing inventory of CRISTALINO cava which are already labeled, but otherwise, must immediately destroy all labels, signs, prints, packages, wrappers, receptacles, and advertisements in its possession bearing the mark CRISTALINO.

No indication of any award for damages or attorneys fees.

News coverage on the decision from Businessweek.

Court of Appeals Reverses Lower Court’s Constructive Trust on BRATZ trademarks

Various news reports (Reuters, Bloomberg, USA Today, LA Times) reported on the decision by the Ninth Circuit Court of Appeal reversing a district court’s decision to enjoin MGA Entertainment, Inc. (“MGA”) from selling its popular BRATZ line of dolls. See MGA Entertainment Inc et al Mattel Inc, Nos. 09-55673 and 09-55812 (9th Cir. July 22, 2010). The district court’s injunctive relief was entered after a jury found that Mattel, Inc. (“Mattel”) was the rightful owner of the BRATZ dolls because the doll idea and name was created by a former Mattel employee and awarded Mattel millions of dollars in damages (this latest decision states that $10 million was awarded although most published reports at the time of the original jury decision was $100 million – anyone explain the discrepancy?).

As part of the district court's injunctive relief, the court imposed a constructive trust over MGA’s entire Bratz trademark portfolio, which essentially transferred MGA’s entire BRATZ trademark portfolio to Mattel. Under the rationale that “[t]he beneficiary of the constructive trust is entitled to enhancement in value of the trust property,” the lower court concluded that, because the two marks BRATZ and JADE had been transferred improperly, Mattel was entitled to the enhancement of the value of such property and ordered a constructive trust over MGA’s entire Bratz trademark portfolio.

The Court of Appeals, however, reversed this decision on the ground that the court’s overly broad constructive trust allowed Mattel to acquire “the fruit of MGA’s hard work, and not just the appreciation in value of the ideas Mattel claims it owns.” The court noted that the general rule of making the beneficiary of the constructive trust entitled to the enhancement in value of the trust property “has the greatest force where the appreciation of the property is due to external factors rather than the efforts of the wrongful acquisitor.” But when the value of the trust property increases based on the efforts of the defendant, “a constructive trust that passes on the profit of the defendant’s labor to the plaintiff usually goes too far.”

The court stated the following:

Even assuming that MGA took some ideas wrongfully, it added tremendous value by turning the ideas into products and, eventually, a popular and highly profitable brand. The value added by MGA’s hard work and creativity dwarfs the value of the original ideas Bryant brought with him, even recognizing the significance of those ideas.

In this case, while the original Mattel employee’s idea of a line of dolls, which included the names BRATZ and JADE, may have been improperly taken by MGA, MGA went on to create multiple generations of Bratz dolls (from Cloe, Yasmin, Sasha and Jade to Ciara, Dana, Diona, Felicia, and Fianna to variations on the original four dolls such as Bratz Flower Girlz Cloe and Bratz on Ice Doll Yasmin) as well as Bratz doll accessories, video games, and a move – efforts which “significantly raised the profile of the Bratz brand and increased the value of the Bratz trademarks.”

The Court, in vacating the lower court’s constructive trust, found the court’s actions of transferring an entire $1 billion brand over to Mattel – value that was created mostly from MGA’s own efforts and not reflective of the value of the two particular names, BRATZ and JADE, that were found to have been taken improperly by MGA – was an abuse of discretion:

It is not equitable to transfer this billion dollar brand— the value of which is overwhelmingly the result of MGA’s legitimate efforts—because it may have started with two misappropriated names. The district court’s imposition of a constructive trust forcing MGA to hand over its sweat equity was an abuse of discretion and must be vacated.

For copyright fans, the decision also includes an interesting discussion regarding the fine line between copyrightable expression and unprotectable ideas (“Mattel can’t claim a monopoly over fashion dolls with a bratty look or attitude, or dolls sporting trendy clothing—these are all unprotectable ideas.”).