Intellectual Property Litigation

Gigi Hadid’s done it, P. Diddy’s done it and now Kim Kardashian. Like any good social media influencer, Kim Kardashian posts photos of herself on her Instagram account. Back in October of 2018, she posted a rare picture of her husband, Kayne West, smiling with her by his side. To date more than 2.2 million people have liked the photo, but at least one person would have hit the dislike button if it was available. That person is Saeed Bolden, the photographer of the picture, who filed a complaint for copyright infringement against Kim and her company Skims Body, Inc. in the Eastern District of New York just last week. The bare bones complaint alleges that the photo was posted without permission. It further states that “Defendants have been willful, intentional, and purposeful, in disregard of and indifference to Plaintiff’s rights.” While the complaint doesn’t state a specific amount of damages, it does request that Plaintiff be awarded actual damages, attorneys’ fees and Defendants’ profits. Here, it seems that Bolden is not eligible for statutory damages because he did not register the photograph until April of 2019, more than three months after the June 2018 first publication date and many months after the alleged infringement began in October 2018. So, what’s the connection to Kim’s shapeware line Skims Body, Inc.? Well, the complaint says that Kim’s Instagram account is Skim’s Instagram account. A quick review of the grid shows that Kim does promote Skims on her page, but Skims also has its own separate account. Was this a clever way to inflate the calculation of profits? Maybe, but we will probably never know… The case was filed by the well-known copyright lawyer Richard Liebowitz, who has filed and mostly settled innumerable copyright lawsuits on behalf of photographers. Barring any fatal deficiencies in the Kardashian complaint, we wouldn’t be surprised to see a resolution of Bolden’s case against Kardashian based on an undisclosed settlement.

Now that the political rollercoaster of the past 3 years over Brexit has drawn to a close with the UK electorate falling firmly behind Boris Johnson and a Conservative Party determined to leave the European Union (EU) with no further delays, the new withdrawal agreement reached between the UK government and the EU is being signed by the EU and will shortly be ratified by the UK government. The UK will accordingly cease to be a member of the EU from midnight on 31 January 2020. Legislation has been passed by Parliament, known as the European Union (Withdrawal) Act 2018, which will bring to an end, from a domestic UK law perspective, the application and supremacy of EU law in the UK, as of the “exit date”. The legislation will convert EU law, as it exists on the exit date (and which forms a significant part of existing law in the UK) into domestic UK law. This will guarantee continuity of the law as it applies domestically in the UK. In many areas, the exercise of transposing EU law into domestic law will require significant amount of detailed secondary legislation, much of it has already been developed over the past few years. In the context of intellectual property rights, legislation will address important (and potentially complex) issue such as the continued protection of EU trade marks and registered designs in the UK. The process the UK government announced in this respect will involve a requirement for the owners of EU rights to notify the UK intellectual property office of their desire to maintain protection in the UK, but not a requirement to re-file their trade marks and designs in the UK. More complex arrangements will be put in place in relation to pending applications before the EU Intellectual Property Office (EUIPO) and to address issues such as priority rights, non-use challenges and trade marks with a reputation (issues where geographical considerations may apply). But in fact all this will not take place on 31 January 2020. The key element of the Withdrawal Agreement between the EU and the UK is the establishment of the “transition period”. That period, which will continue until 31 December 2020, is designed to give the parties a period of time to negotiate a new trade deal or trading arrangements for the future. From a UK law perspective, the transition period is implemented through another piece of legislation known as the European Union (Withdrawal Agreement) Act 2020. The effect of this legislation (which received royal assent on Friday 24 January) is to suspend the effect of the European Union (Withdrawal) Act 2018 until 31 December 2020. So in actual fact (at least from the domestic law point of view) the UK will remain subject to EU law and to the jurisdiction of the Court of Justice of the EU until the end of the transition period, notwithstanding that it will no longer be an EU member from 31 January. Many consider that an 11 month period is woefully inadequate for negotiating a complex trade agreement and believe that the transition period should be extended from time to time to allow time for the necessary discussions to take place. The UK government however is adamant that the transition period will not be extended. One possible and perhaps not unlikely possibility is that a trade deal of some description might be reached by the end of 2020 but it will probably be partial and may well include transitional arrangements in many different areas to allow the status quo to continue for an additional period whilst further agreements and arrangements are being discussed and put in place.

Jay-Z and Iconix Brand recently settled a two-year old lawsuit centered on a $204 million licensing agreement. The settlement not only ends the federal lawsuit, but also ends an arbitration related to the suit which Jay-Z had petitioned to halt on novel grounds—i.e., lack of racial diversity among potential arbitrators. In its complaint, Iconix accused over a dozen different defendants, including Jay-Z, Roc Nation Apparel Group, Major League Baseball, and New Era of undermining its rights in the Rocawear trademarks that it purchased from Jay-Z in 2007. Specifically, Iconix—which manages apparel brands such as Mossimo, Candies, Bongo, and Joe Boxer—alleged that by selling New Era baseball caps bearing the “Roc Nation” trademark, defendants infringed Iconix’s exclusive right to manufacture and sell certain goods and apparel using the “Roc” family of trademarks. In response, Roc Nation and Jay-Z lodged a counterclaim for breach of implied license, arguing that Iconix’s licensing deal covered only the “Rocawear” brand, not the Roc Nation trademarks. In the recent settlement, the parties agreed to drop all claims and Iconix agreed to sell some of its rights in Rocawear back to Roc Nation in exchange for $15 million. What makes this case unique and interesting, however, is not the trademark aspect, but Jay-Z’s bold invocation of the lack of racial diversity among arbitrators as an obstacle to justice. Years before this lawsuit, Iconix and Jay-Z’s companies had previously resolved a separate licensing dispute that resulted in a settlement agreement that mandated arbitration for disputes related to the licensing agreement. After Iconix filed its federal lawsuit, the parties took their dispute to arbitration before the American Arbitration Association’s (“AAA”). One month after beginning the AAA proceedings, in November 2018, Jay-Z sought a temporary restraining order to stop the AAA proceedings because there were not enough African American candidates in the pool of arbitrators to make up the panel. Jay-Z alleged that the AAA was only able to find three “token” African Americans (one of which was conflicted out of sitting on the panel) out of the more than 200 arbitrators who were qualified to participate on the panel for this dispute. Jay-Z also alleged that the AAA’s lack of black candidates with experience in large and complex cases left him with “no choice at all,” and amounted to discrimination based on race and a violation of New York’s Equal Protection Clause. Jay-Z’s camp went on to state that the “blatant failure of the AAA to ensure a diverse slate of arbitrators is particularly shocking” and he “expect[s] there to be the possibility that the person who stands in the shoes of both judge and jury reflects the diverse population.” These allegations were enough to catch the AAA’s attention. The AAA eventually agreed to allow the case to be heard by a three-arbitrator panel instead of by a single arbitrator, and offered five additional African-American candidates to be considered for the panel. The AAA also agreed to consider a list of eleven African-American candidates to add to its greater pool of arbitrators to handle big arbitrations. On those terms, Jay-Z was “content to proceed with the arbitration,” which eventually led to the settlement of the federal case. Though the case settled before the diversity challenge raised by Jay-Z could be decided on the merits, Jay-Z’s efforts highlighted this issue as a critical deficiency in intellectual property disputes. Jay-Z’s novel and creative argument has brought much needed attention to a widely recognized problem that is far too infrequently addressed in litigation.

2019 brought many changes for fitness companies compiling the perfect playlist for group workout classes, especially for at-home virtual classes. Peloton’s most popular product is an indoor bicycle with live streaming and on-demand classes. Music is a key aspect of Peloton’s business because, unsurprisingly, users want inspiring tunes while they ride. These workouts, while similar to an in-person fitness class, require a different music license. The distinction lies in the right to perform the music publicly during an in-person fitness class as opposed to the right to reproduce the music during a recorded class. Recorded classes require a music synchronization license (“sync license”) because the music is accompanied by video. The Copyright Act does not explicitly label synchronization rights. However, 17 U.S.C.S. § 106(1) does give the copyright holder the exclusive right to reproduce the copyrighted work, and synchronization constitutes a reproduction of the music because it is incorporated into another work. Therefore, a sync license gives the licensee the right to reproduce the music into a different format such as a video, commercial, movie, or video game. In March 2019, Peloton was hit with a $150 million original complaint filed by music publishers for streaming over 1,000 songs without approval, including tracks by Taylor Swift, the Beatles, Lizzo, Adele, and more. The original complaint alleged that Peloton had entered into sync licenses with other copyright holders, demonstrating knowledge of the licensing requirements, but used the plaintiffs’ musical works without a license. In September, plaintiffs doubled their damages request in their second amended complaint. Peloton’s answer and counterclaim admits that it does not currently have in place licensing agreements with any of the plaintiffs granting catalog-wide synchronization rights to Peloton, but argues that it has “worked proactively and collaboratively with the music publishing industry to develop a licensing structure . . . to address its unique use case.” Its counterclaim against the plaintiffs and the National Music Publishers’ Association alleges that NMPA engaged in anticompetitive and tortious conduct by coordinating with the plaintiff music publishers to fix prices and generally refuse to deal with Peloton. Peloton has stopped playing unlicensed songs and removed classes with unlicensed music from the database. It is not clear whether this removal has had any effect on the lawsuit, as Peloton continues to battle the claims against it and pursue its counterclaim. Motions to dismiss were briefed in November 2019 and are currently pending. However, since the removal, Peloton subscribers have taken to Reddit and other platforms to complain that Peloton’s music has become repetitive and outdated, explaining that they pay top dollar to work out from home while listening to the latest top hits. As fitness companies transition into quasi-media publishers by creating and posting video workouts, they must keep in mind that music played during video classes must be in sync with licensing requirements.  

A dispute over the trademark KIVA involving use of the mark with health food and cannabis continues to smolder in the Northern District of California. In late 2018, Kiva Health Brands (a national health food and supplements company) sued Kiva Brands (a company selling cannabis-infused edibles in California) under federal and state trademark law. Kiva Brands answered with a number of affirmative defenses (including prior use of the mark and laches) and its own federal and state trademark claims based on alleged prior use of the KIVA mark in California. In late 2019, the Court granted Kiva Health Brands’ motion to dismiss Kiva Brands’ federal trademark counterclaims. It ruled that Kiva Brands cannot assert federal trademark rights (even unregistered rights) because Kiva Brands sells federally illegal products and unlawful use cannot form the basis of a valid federal trademark claim. The parties both moved for summary judgment in late 2019 related to Kiva Brands’ various affirmative defenses and recently filed response briefs on January 3, 2020. Kiva Health Brands argues it should prevail against Kiva Brands’ prior-use affirmative defense given the Court’s prior ruling that Kiva Brands cannot offensively assert any federal trademark rights. Kiva Health Brands claims that, “where a mark is used for cannabis products, the [federal trademark law] does not recognize those ‘rights’ for a federal registration or for any other purpose.” It also contends that any state trademark rights held by Kiva Brands would be preempted by Kiva Health Brands’ federally registered rights - although Kiva Health Brands still has not sought dismissal or summary judgment on Kiva Brands’ state trademark claims. For its part, Kiva Brands requests summary judgment on its laches defense, asserting that Kiva Health Brands unreasonably delayed in filing suit, which resulted in significant prejudice to Kiva Brands. Kiva Brands claims that, under pertinent case law, Kiva Health Brands had only two or three years to bring its claim, while Kiva Health Brands claims it had at least four years and filed within that window. Dorsey will continue to monitor the progress of this case, which has provided helpful insights into trademark disputes involving cannabis, especially the potential limitations of common law trademark rights for such products.

In the music world, performance rights organizations (“PROs”) serve an intermediary function between songwriters and music publishers and third parties who perform the protected works publicly. Among the largest PROs in the United States are the American Society of Composers, Authors and Publishers (“ASCAP”), Broadcast Music, Inc. (“BMI”), and SESAC (originally, the Society of European Stage Authors and Composers). According to § 106(4) of the Copyright Act, the owner of a copyright in musical works has the exclusive right to “perform the copyrighted work publicly.” Third parties who wish to perform copyrighted material registered with these PROs may obtain a non-exclusive license. Performance, in this case, does not only mean live performances (i.e., musicians playing songs on stage), but it also means playing recorded music, such as background music in a restaurant or dance music in a bar. After acquiring public performance rights from songwriters and publishers, the PROs grant music users the right to publicly perform the copyrighted music. The PROs collect license fees on behalf of the songwriters and music publishers and distribute them as royalties to those member copyright holders whose works have been performed. Licensees frequently include television networks and radio stations, podcasts and other new media, clubs, dance studios, bars, restaurants, and hotels. In its catalog, for example, BMI administers rights for over 14 million compositions. One only needs to take a quick look at the news to conclude that the PROs take their licensing rights seriously. See, for example: BMI sues Mississippi nightclub over music licensing. Owner calls fees legal 'extortion.' Old Town bar is being sued for playing ‘Fat Bottomed Girls,’ other popular songs ASCAP goes after Meadowlark Bar for $27,000 in music copyright lawsuit ASCAP Levels Lawsuit Against Sixth Street Music Venue the Nook Two cases from 2019 offer further illustration of the perils of not securing public performance licenses. First, in March, the Eastern District of Kentucky ruled on the public performance issue, after BMI and the owners of four compositions took action against the owner and manager of the Blue Moon, a bar located in Richmond, Kentucky. BMI became aware that Blue Moon was unlicensed and performing live music publicly. Blue Moon previously had a license with BMI, which had expired, and BMI offered to enter into a new license on multiple occasions. Despite notice from BMI, Blue Moon continued performing unlicensed music. The court ruled in favor of BMI on summary judgment, stating that Blue Moon publicly performed four copyrighted works without authorization. BMI proved that the defendants had publicly performed the works based on an affidavit from their investigator. (Note that the PROs employ private investigators who visit unlicensed establishments to observe whether a license is needed and then report back to the PROs). The defendants argued that they were exempt from the licensing requirements based on a statutory exemption found in the Copyright Act, in this case that the compositions were performed without “any purpose of direct or indirect commercial advantage.” The defendants argued that there is no cover charge when bands play, the band receives no compensation, and thus there is no cash generated from the performance. The court disagreed with this reasoning, and found that because Blue Moon was a profit-making enterprise, the exception did not apply. The court also enjoined Blue Moon from performing music held by BMI, and awarded BMI attorney’s fees, costs, and $14,000 in statutory damages. A few weeks before publication of this post, ASCAP artists scored a victory against an establishment in Nashville called “Frisky Frogs.” Beginning in 2016, ASCAP representatives repeatedly warned Frisky Frogs of the consequences of performing unlicensed ASCAP songs, and even attempted to arrange a license agreement with Frisky Frogs. Despite making over 80 attempts to contact Frisky Frogs, ASCAP’s requests were ignored. This included the owner of Frisky Frogs’ failure to appear at a pre-arranged meeting with ASCAP representatives. Despite ASCAP’s numerous warnings, Frisky Frogs continued to present unlicensed music through performances by a live band, piped-in music, and a disc jockey. The Middle District of Tennessee ruled that Frisky Frogs was directly liable for copyright infringement, stating that Frisky Frogs publicly performed four copyrighted works without authorization. The artists proved that the defendants had publicly performed the works based on the findings of ASCAP’s independent investigator. The principals of Frisky Frogs were also held vicariously liable for the copyright infringement, as they had the right and ability to supervise and control the public performance of the works at Frisky Frogs, and derived a direct financial benefit from the performance of these works. Moreover, given the number of times the defendants dodged ASCAP, and their continuous performance the works despite continuous warning, the court determined that the defendants’ infringement of ASCAP’s rights was a “glaring example of willful infringement.” The court also stated that this willful infringement was exacerbated by the defendants’ failure to cooperate after the initiation of proceedings. The court enjoined Frisky Frogs from performing music held by ASCAP, and awarded the artists’ attorney’s fees, costs, and $40,000 in statutory damages. These cases illustrate that the PROs – and the courts – take music public performance rights seriously. In both cases, the rulings were based on the defendants’ performance of only four songs. These instances serve as reminders that establishments that feature live or recorded music must properly secure public performance licenses prior to performance of the licensed music.

Just in time for the holidays, the U.S. Court of Appeals for the Seventh Circuit resolved a lawsuit rooted in the spirit of the season—family drama.  Fabick, Inc. v. JFTCO, Inc. recounts a dispute that pit brother against brother and offers insight into the doctrine of reverse trademark confusion.  The trademark at issue?  The family’s good name, of course. A Family’s Name, a Trademark, and a Lawsuit This story begins with the patriarch, John Fabick, founder of multiple businesses throughout the Midwest.  In 1982, the John Fabick Tractor Company bought two Caterpillar equipment dealerships serving Wisconsin and the Upper Peninsula of Michigan.  John’s son Joseph Fabick, Sr. then moved to Wisconsin and founded FABCO, a business selling Caterpillar equipment, attachments, and parts.  FABCO launched a subsidiary, Fabick, Inc. in the early 1990s.  Fabick, Inc.’s business focused on spray-on sealants for use in the beds of pickup trucks and similar vehicles.  In 1994, Fabick, Inc. obtained a trademark registration for “FABICK” for “polyurethane-based and polyurea-based sealers and protectants to be applied as a coating to hard or flexible surfaces.” One of Joseph Sr.’s sons, Jeré, worked for FABCO, while another, Jay, worked for Fabick, Inc.  Tensions between the brothers made this unworkable, and by the early 2000s, Jeré had taken over FABCO, while Jay assumed sole ownership of Fabick, Inc.  The two companies coexisted peacefully for a time. In 2015, the John Fabick Tractor Company formed a new subsidiary, JFTCO, which purchased FABCO and took over its operations.  JFTCO began operating as a Caterpillar dealer and launched an extensive effort to rebrand under the trade name “Fabick CAT.”  Fabick, Inc. accused JFTCO of trademark infringement, alleging the rebranding resulted in confusion, evidenced by consumers calling Fabick, Inc. looking for JFTCO and Fabick, Inc. receiving checks intended for JFTCO.  At trial, the jury found JFTCO liable for federal trademark infringement. Both parties appealed.  JFTCO challenged the sufficiency of the evidence to support Fabick, Inc.’s infringement claim as well as the court’s jury instructions.  Fabick, Inc. found the trial court’s remedies inadequate, and it appealed the court’s refusal to award lost profits or grant a broad injunction barring JFTCO from using the “Fabick” name in any context. The Seventh Circuit’s Explanation of Reverse Trademark Confusion The Seventh Circuit explained that Fabick, Inc. had proven a less common, but still actionable, theory of trademark infringement under the Lanham Act—reverse trademark confusion.  In a typical infringement case, a smaller junior user attempts to profit from a larger senior user’s goodwill by imitating its mark.  In a reverse confusion case, a larger junior user saturates the market with a mark confusingly similar to that of a smaller senior user.  The junior user may not be trying to profit from the senior user’s goodwill, but the senior user is harmed anyway, as the public assumes the senior user’s products are really the junior user’s or that the two have somehow become connected.  The senior user loses the value of its corporate and product identities, loses control of its goodwill and reputation, and is limited in its ability to move into new markets. The Seventh Circuit found sufficient evidence to support the jury’s verdict that Fabick, Inc. had proven JFTCO liable for reverse trademark infringement.  It also approved the district court’s modification of a standard jury instruction permitting the jury to find infringement if: “[D]efendant JFTCO used the FABICK mark in a manner that is likely to cause confusion as to the source or origin of plaintiff’s product or that [Fabick, Inc.] has somehow become connected to JFTCO.”  (The language the district court added to the Seventh Circuit Pattern Jury Instruction 13.1.2 is bolded.)  This additional language was appropriate in a reverse confusion case because it was accompanied by other instructions that required the jury to find the confusion about a connection between Fabick, Inc. and JFTCO related to the parties products or services, not just “vague ‘general confusion’ in the ether,” which would not support infringement. For its part, Fabick, Inc. challenged the district court’s refusal to award it lost profits or enjoin JFTCO from using the mark “Fabick” in any business context.  The Seventh Circuit relied on other cases finding “meager justification” for profit awards in reverse confusion cases and affirmed.  As it explained, the junior user in a reverse confusion case is not trying to take away the senior user’s customers through confusion, meaning the junior user’s profits are not a proper basis for damages.  The Seventh Circuit also affirmed the district court’s limited injunction requiring JFTCO to use certain disclaimers and notifications for five years to inform consumers that JFTCO and Fabick, Inc. are not related.  A limited injunction was within the district court’s discretion because the case rested on a reverse confusion theory involving a small number of Fabick, Inc.’s customers, the parties were formerly related entities that did not compete, and they were disputing the use of a shared family name. Tips for Avoiding This Issue Although this case has some interesting points for families operating unrelated businesses under the same name, a broader audience will appreciate its lessons on reverse trademark confusion.  In particular, larger businesses evaluating new marks should consider the risks of liability for reverse confusion when they weigh potential marks in use by smaller senior users.  Those smaller users may have rights, whether against unrelated entities or junior users they know all too well.  Early attention to this issue can avoid fights in court and at the holiday dinner table.

On November 25, 2019, the Food and Drug Administration sent a wave of warning letters to fifteen CBD companies claiming they are breaking federal food, drug, and cosmetic laws based on their current CBD product marketing and labelling. Prior to this, the FDA had separately sent letters to seven other CBD companies in 2019 and to only one CBD company in 2018. A comprehensive list of CBD-related warning letters sent by the FDA can be found here. The FDA accompanies the most recent letters with a press release and a revised Consumer Update discussing the FDA’s potential concerns about CBD. As in the past, these letters targeted companies marketing CBD products to treat diseases or claiming that CBD has therapeutic uses for humans and/or animals. The letters also target companies that market CBD products as dietary supplements or as an additive to human and animal foods. At their most basic, the FDA’s objections are rooted in the agency’s interpretation of the Food, Drug, and Cosmetic Act (“FDCA”), which the FDA claims precludes CBD from being classified as a dietary supplement because CBD is also an active ingredient in the drug Epidiolex. The FDA also takes the position that, under the FDCA, CBD products could be viewed as new, unproven drugs where a company promotes use of CBD for curing and treating diseases and ailments. Despite the FDA’s fairly aggressive position and action in issuing the warning letters, the FDA’s press release indicates that it continues to “explore potential pathways for various types of CBD products to be lawfully marketed.” The FDA plans to provide an update on its progress regarding the agency’s approach to these products “in the coming weeks.” As of the time of writing this post, the FDA has not issued a further update. However, these statements still show signs of a potential reversal or at least softening of the FDA’s treatment of CBD. So, what lessons can CBD companies learn from these letters in hopes of avoiding the ire of the FDA? First, just because a company did not receive a letter from the FDA, that does not necessarily mean it is in compliance with the FDA’s current interpretation of the FDCA or that it won’t receive a letter in the future. The FDA has a limited enforcement budget and appears to continue to target offenders making extreme performance claims about CBD. Second, making statements about perceived health/wellness benefits of CBD products is a major no-no. And this doesn’t just apply to obviously extreme claims, such as stating that CBD may cure cancer. It also applies to less extreme statements about CBD performance, such as claiming that CBD products help with “skin rejuvenation” or “joint & muscle relief” or referring to CBD products as “dietary supplements” or food. Companies would be well served by implementing multi-level review processes (including external review where feasible) to ensure marketing materials, packaging, and websites do not fall on the wrong side of this line, at least until the FDA issues further and more specific guidance. Dorsey will continue to monitor the FDA’s actions and updates in this area.

On November 15, 2019, the Supreme Court granted cert in Google LLC v. Oracle America Inc. For many observers, this was a long time coming; the parties have been litigating the underlying case since August 2010, and from its inception Google v. Oracle has been closely watched by commentators, earning the epithet of “copyright lawsuit of the decade.” By granting cert, the Court has agreed to consider two questions, each of which has the potential to transform copyright law and the software industry. This post is the first in a new series from the TMCA intended to help make sense of this long-running and multifaceted dispute. Over the next few months, we will publish updates on Google v. Oracle, reporting on developments and digging into the key issues implicated by the Court’s forthcoming decision. Questions Presented The two questions presented to the Court rest on—and have the potential to materially affect—several key doctrines of copyright law. Of more immediate concern to most people, however, Google v. Oracle risks disrupting the software industry. Per Google, if the Court sides with Oracle on either question, it will prevent developers from adapting software interfaces to build new computer programs, forcing programmers to write new code each time. Per Oracle, if the Court sides with Google, then innovators will no longer be able to protect their investments in software if it becomes popular enough that developers find it commercially advantageous to use it freely. Scope of Copyright Protection The first question before the Court is “[w]hether copyright protection extends to a software interface.” Notably, even the scope of this question is in dispute, with Oracle arguing that Google “invented for its petition” the term “software interfaces” to avoid well-settled law that recognizes software as copyrightable. Google responds that Oracle misrepresents the dispute by suggesting it is about software generally, when the question posed to the Court is in fact narrower: whether software interfaces—i.e., what Google alleges are purely functional methods of operating software, as distinct from expressive aspects of the software itself—are copyrightable. Fair Use The second question is “[w]hether, as the jury found, petitioner’s use of a software interface in the context of creating a new computer program constitutes fair use.” Apart from the merits, the Court must decide whether the Federal Circuit properly revisited and reversed the jury’s finding of fair use. As to the merits, although fair use is determined based on a four-part test, here the two most important factors were the first and fourth—i.e., the purpose and character of the use, and the effect on existing and potential markets. This first factor turns on whether Google’s use of Oracle’s code in creating the Android platform is sufficiently “transformative” as that term is used in the fair use analysis. Google argues that software interfaces should be provided “thin” copyright protection given their functional nature and that creating an entirely new mobile platform comprised of relatively few lines of Oracle’s code is an “undoubtedly transformative” use. Oracle responds by stressing that Google’s use is not transformative because Google’s platform uses thousands of lines of Oracle’s code in exactly the same way Oracle uses the code. The fourth factor turns on whether Google’s use of Oracle source code to build Android harmed Oracle’s market for mobile devices. Google argues that the jury correctly found that Google and Oracle occupy different markets, and by relying on copyright law to create barriers to entry, Oracle “would effectively block competing platforms from accessing developers trained in the Java language.” Oracle responds that Google’s use inflicted “incalculable market harm” on Oracle, and that a use that results in such harm cannot be considered fair use. What Is This Case Really About? In brief, the dispute centers around Oracle’s popular Java programming language, which Sun Microsystems originally developed and which Oracle acquired shortly before suing Google in 2010. The dispute can be summed up as concerning whether the declaring code in Java’s application programming interfaces (“API”) are functional, and thus exempt from copyright protection, or whether they are expressive, and thus protected under copyright law. And, per the second question before the Court, if the Java APIs are protected, the extent to which competitors can rely on the doctrine of fair use when using APIs to build new programs. To better understand the dispute, it helps to have a basic grounding in the structure of the source code at issue. Each API includes hundreds of lines of pre-written code bundled as a package. APIs are designed to perform specific functions when called to do so by a programmer. Programmers use “declaring code” to call one of the pre-written APIs. The declaring code is paired with a corresponding “implementing code” that performs the function of the activated API. For example, if a programmer wishes to display an image on a screen, he or she can simply enter the declaring code for generating a display and the corresponding implementing code will cause the program to display the image without further input from the programmer. APIs are intended to promote efficiency—i.e., a programmer can use a pre-programmed API instead of having to code a function from scratch each time it is used. Because Google copied only Oracle’s declaring code, Google relies on the functional nature of APIs to argue that they are exempt from copyright protection. Google analogizes declaring code to a letter on a keyboard, arguing that “[j]ust as a typist writes ‘a’ by pressing a particular key . . . a developer triggers a particular function by using the relevant declaration to run the corresponding implementing code” and in this way “the Java API facilitates the creation of programs in the Java language across different platforms, much as the now-standard QWERTY keyboard layout facilitates the creation of documents by enabling more efficient typing regardless of the specific word-processing program being used.” As Oracle stresses in its briefing, however, its declaring code did not fall out of the sky. Engineers wrote Oracle’s APIs over a period of years at the cost of hundreds of millions of dollars; Oracle thus insists the APIs are the result of expressive choices made by those engineers, which entitles APIs to copyright protection. According to Oracle, declaring code is “far more expressive” than the letters on a keyboard, and “communicates to programmers what each program does, how it relates to other programs, and what you need to do to make it work.” In contrast, a single key-stroke on a keyboard expresses only the letter itself. Industry Impact Although Google’s appeal has not yet reached the merits phase, several companies, industry groups, legal scholars, and organizations filed amicus briefs during the cert phase that highlight the legal and practical implications this case will likely have on the software industry. Of the 16 amicus briefs filed so far, three were primarily directed to the copyrightability question, two were directed to the fair use question, and 11 were directed to both questions. Each of the amici supported Google’s request to grant cert, except for the Solicitor General of the United States, who argued that both questions were fully and fairly considered below and the petition should be denied. Although the briefing schedule on the merits phase of Google’s appeal remains to be set, Google has requested until January 6, 2020, to file its opening brief. Given the stakes, we expect to see many more amicus briefs filed with the Court at the merits phase. How Did We Get Here? One of the reasons Google v. Oracle is poised to make such an impact is that it has been around for a long time, and several district court and Federal Circuit opinions have elaborated on the concepts introduced above. So how did we get here? Google v. Oracle arose from one of the most important technological developments of our era: smartphones. When it released Android in 2008, Google wanted developers to be able to quickly and easily develop applications for Android. One way in which Google achieved this goal is by drafting thousands of their pre-written packages of code to perform common functions. Although Google developed its own implementing code to execute each function, it used declaring codes from 37 Java API libraries—which Oracle reminds the Court amounts to 11,500 lines of code—that it considered particularly well-suited to the mobile environment instead of writing its own declaring code for these tasks. In 2010, Oracle sued Google for patent and copyright infringement, alleging that Google used verbatim copies of Oracle’s declaring code from its popular Java coding language to develop Google’s Android platform. Over the last decade, this case has bounced back and forth between the United States District Court for the Northern District of California and the United States Court of Appeals for the Federal Circuit. In 2012, Judge Alsup of the Northern District of California found that declaring code is not protectable because it amounts to a method of operating the Java API, which is exempt from protection under 17 U.S.C. § 102(b). Judge Alsup also found that declaring code is not protectable under the merger doctrine, which provides that no one can claim ownership of an expression “when there is only one (or only a few) ways to express something.” Oracle appealed, and the Federal Circuit decided that the declaring code is an expression of an idea that is protectable despite being embodied in a method of operation and that the merger doctrine does not preclude copyright infringement because Oracle had “unlimited options” as to the selection and arrangement of the code that Google copied. Dissatisfied with the Federal Circuit’s decision, Google filed a petition for cert at the Supreme Court in 2015. The Solicitor General recommended that the Supreme Court deny cert because the fair use issue had not been fully litigated below. The Supreme Court did not grant cert. On remand to the Northern District of California in 2016, the jury found that Google’s use of the declaring code was a fair use of Oracle’s copyright-protected API. Oracle appealed the decision to the Federal Circuit. In the Federal Circuit’s 2018 decision, the court again reversed and remanded to the Northern District of California. The Federal Circuit held that fair use did not shield Google’s use of the declaring code, primarily because it serves the same purpose and function in Google’s Android platform as in Oracle’s Java platform and therefor Google’s use is not transformative. The court also held that Google’s use is commercial in nature and has caused harm to Oracle because some of Oracle’s customers in the tablet and smart-device industry switched from Java to Android. Google again petitioned the Supreme Court, which this time granted cert. What’s Next? As even this introductory post shows, there is a lot to cover here. In the coming months we’ll focus on specific issues introduced above to examine how the Court’s decision in Google v. Oracle could affect copyright law and the software industry.

The arrival of the California Consumer Privacy Act (CCPA) on January 1, 2020 brings steep risk for companies that collect information on California residents. In particular, and among other statutory penalties, a business that suffers a data breach is subject to statutory penalties of $100-750 per consumer per incident if such data breach arises from a failure to implement "reasonable security procedures and practices." What many businesses may not realize is that this risk is present even when data processing activities are conducted by a third party on behalf of the business and with vendors that businesses may not immediately think about when considering the processing of personal data. An oft-overlooked example of this risk lies within the advertising and marketing vendor ecosystem. Advertising technology, or AdTech, is an evolving field that encompasses software and other tools that help organizations target, deliver, and evaluate their digital advertising initiatives. It is not a secret that this technology includes tracking technologies to monitor online activity of consumers, which is then ultimately used to target consumers with tailored ads. While some organizations have the resources and personnel to undertake and oversee all of their advertising and other marketing needs, many rely on advertising vendors to fill this role. These AdTech vendors are part of the advertising vendor ecosystem, a complex, dynamic industry aimed to opportunistically deliver relevant ads to consumers. In order to accomplish this, these vendors must use consumer data. As an example of the complexity of the AdTech space, consider the following. Organizations hire media agencies to purchase media on behalf of their clients and ad agencies to generate creative media initiatives using that media. A media agency provides services through an agency trading desk (ATD), which gathers all available data obtained through advertising campaigns and plans and manages ads across several different platforms. Advertisers use technology platforms known as Demand Side Platforms (DSPs) to bid on and purchase ad placements through exchanges or networks using data and tools to optimize campaigns to accomplish the advertiser’s goals. Advertisers rely on Data Management Platforms (DMPs) to collect data from a variety of sources, including advertising campaigns, websites, social networks, and mobile apps, and then use data analytics, artificial intelligence, and machine learning technology to analyze that data to identify trends and target specific consumers. An advertising network is a company that acts as the intermediary between advertisers and publishers, aggregating ad inventory from publishers to sell to advertisers. Ad networks operate in an ad exchange, which is either an open or private marketplace that facilitates the buying and selling of ad inventories—advertisers often select desired ad inventory using DSPs. Supply Side Platforms (SSPs) are technology platforms used by publishers to analyze demand from ad networks and exchanges and consolidate and expose their ad inventory to DSPs to ultimately earn revenue. Ad networks, ad agencies, advertisers, and publishers run ad campaigns using ad servers, which are applications to host and deliver the ads, all while tracking and collecting ad performance data. Through these relationships, AdTech vendors may be processing a variety of personal data types on behalf of businesses, including names, physical addresses, phone numbers, email addresses, IP addresses, device IDs, behavioral, biometric, payment, social media profile information, etc. As such, companies have a responsibility to ensure the security of the information that AdTech vendors process on their behalf and may face CCPA liability in the event of a data breach for a compromise to this data if the company did not conduct proper third party security diligence and oversight of the vendor. Performing diligence on AdTech vendors is not a materially different process from performing diligence on any other vendor that processes personal information. Companies should assess the risk associated with the vendor, which can be related to the type of information processed, volume of information, technical integrations, sophistication of the vendor, or any combination of these or other factors. Once a company has determined the risk associated with a vendor, it should determine what level of diligence it should undertake in relation to that risk. Generally, diligence levels fall on a spectrum with bare contractual terms being the bare minimum and moving up through questionnaires, internal policy evaluations, third party artifacts, audits, all the way to even controlling the security of the vendor through various mechanisms. Whatever level of diligence a company decides to apply to a vendor, it should document that decision and the basis for reaching it. Companies should also consider including indemnity clauses in AdTech vendor contracts as a means to hold the vendors accountable for data breaches caused by unreliable data processing. Most important of all, however, with any vendor that may be processing personal information on behalf of a business, is to ensure that the business has established an efficient incident response process with the vendor. This process should not only be codified in the vendor contract, but also in the business' own incident response plan. It is critical that a vendor understands what type of security incident it needs to notify its customers about, who to contact at the customer site regarding the incident, and on what timeline. There may be key coordination efforts that need to be mutually undertaken during an incident and trying to figure all of this out in the heat of the moment will lead to problems. Remember, as a data controller, the customer may ultimately be responsible for the protection of the data; therefore, relying entirely on a vendor to handle incidents with no oversight or other controls may not be a reasonable position. In the end, AdTech vendors that handle personal information should be treated as any other vendor that processes sensitive information and should undergo proper diligence, oversight, and be subject to adequate contractual controls. Failure to do so could result in significant penalties under the CCPA and other emerging privacy laws.

In a dispute between two fruit product manufacturers concerning whether the phrase “Fruit is Our 1st Ingredient” is protectable as a trademark the parties initially litigated the application of the “first-to-file” rule where an anticipatory declaratory judgment suit is filed to achieve a jurisdictional advantage over a later-filed infringement action in another forum. J.M. Smucker Company v. Promotion In Motion, Inc., Case No. 5:19-cv-1116 (N.D. Ohio). The Ohio district court held that the anticipatory suit should not be given priority, declined to enforce the first-to-file rule, and dismissed the case in favor of the second-filed case in another district. To understand why the later-filed case took precedence, some background is required, first. In early April 2019, Promotion in Motion, Inc. (“PIM”), the maker of Welch’s Fruit Snacks, sent a cease and desist letter to J.M. Smucker Company (“Smucker”), who manufactures consumer food products such as jams, jellies and preserves, claiming that Smucker was infringing PIM’s trademark “Fruit is Our 1st Ingredient.” At the time, both parties were using the phrase to describe fruit-based products where fruit was, in fact, the first ingredient in the product. In the cease and desist letter, PIM alleged that the use of the same slogan was likely to deceive consumers into believing that the products were affiliated and that Smucker’s conduct violated PIM’s trademark rights under the Lanham Act. To no surprise, Smucker disagreed, and responded to PIM on April 19, 2019 that the phrase was “merely descriptive and incapable of functioning as a mark,” that no consumers recognized that phrase as a trademark, and that the phrase had no “commercial impression” outside of its ordinary meaning. PIM rejected Smucker’s position in its response letter dated April 30 and warned Smucker that if it continued to use the phrase, PIM would take steps to “protect its rights.” Having received no response for two weeks, PIM followed-up on May 14, asking for a response “by the end of this week.” Smucker responded the following day stating that it needed to speak with its outside counsel, who was out of town, and would provide a response the following week “after the INTA Annual Meeting.” However, that’s not exactly what happened. Although Smucker did provide a response on May 17, Smucker also filed a complaint in the United States District Court for the Northern District of Ohio seeking a declaratory judgment that its use of the phrase was non-infringing. And, Smucker failed to mention that it had filed the lawsuit in its response to PIM, which was sent the same day it filed the lawsuit. While Smucker did not serve the complaint immediately—it waited until May 30—PIM learned of the filing and filed its own complaint for trademark infringement on May 24 in the United States District Court for the District of New Jersey. See Promotion in Motion, Inc. v. The J.M. Smucker Company, Case No. 2:19-cv-12927 (D.N.J.). In the Ohio case, PIM moved to dismiss the complaint on the ground that it constituted an “anticipatory action designed to deprive PIM of its choice of forum.” PIM asked the court to disregard the general first-to-file rule because the first filed lawsuit was motivated by forum shopping and “deceptive gamesmanship”; specifically, that Smucker used the excuse of its counsel being out of town—at INTA—to lull PIM into inaction so Smucker could get its lawsuit, in Ohio, on file before PIM could do so—in New Jersey. The first-to-file rule prevents duplicative litigation in different districts. When a duplicative or overlapping lawsuit is filed, it will be dismissed in favor of the first filed lawsuit provided certain criteria are met. However, even when the criteria are met, courts retain discretion to reject the rule when there are “equitable considerations” present. Those equitable considerations include “inequitable conduct, bad faith, an anticipatory lawsuit or forum shopping” on behalf of the party that filed first. After finding that the first-to-file rule presumptively applied, the Court turned to the equitable considerations. Anticipatory suits are closely scrutinized when they involve declaratory judgments, like Smucker’s, because their utility diminishes when subsequent, “coercive” suits are filed and because of the possibility that it was filed for an improper purpose. In reaching its decision, the court found that Smucker’s lawsuit was filed for the improper purpose of “procedural fencing,” which is essentially forum shopping. The court focused heavily on Smucker’s request for more time to respond to PIM because its outside counsel was attending INTA, only to file a lawsuit a lawsuit several days later without even telling PIM that it was doing so in its letter response sent the same day. Based on that conduct, the court held that “Smucker’s declaratory judgment complaint was motivated by improper forum shopping.” The court accordingly dismissed Smucker’s declaratory judgment action in Ohio, and the parties are currently litigating their dispute in New Jersey. While we don’t yet know whether the phrase is protectable (and if it is, who owns it), we do know that you can’t do what Smucker did. Courts will not look kindly upon manipulative conduct with the aim of winning a race to the courthouse. We’ll follow-up and let you know what happens if and when the New Jersey court decides the merits of the case.

On May 9, 2019, Kim Kardashian West and Kanye West’s fourth child, Psalm West, was born. On May 18, 2019, Kim Kardashian West’s company, fittingly named Kimsaprincess Inc., filed sixteen trademark applications for PSALM WEST for a litany of goods and services. Psalm isn’t the first child whose name Kim and Kanye have sought to trademark. Kimsaprincess Inc. has applications on file in the names of children North, Saint and Chicago. Kanye has already secured trademark registrations for his name, and Kim owns registrations for several variations of her name, as do the rest of the Kardashian/Jenner clan. One word can explain this flurry of filings: branding. Public figures often commercialize their names and personas through cosmetic products, clothing lines, endorsement deals, etc. In other words, they leverage their celebrity to create a brand. Kim Kardashian West, ever the savvy businessperson, clearly understands the power of branding, and knows that an important part of successfully building and exploiting a brand is ensuring that that brand is properly protected. Trademark law is one of the most important tools a celebrity can turn to when looking to protect their personal brand. As a celebrity gains widespread recognition and begins to cultivate their persona, trademark law can help them to prevent others from exploiting that hard earned good will for the others’ commercial gain, giving the celebrity a degree of commercial exclusivity and control over their own name or persona. This helps put the celebrity in a better position to reap the benefits of their valuable brand for themselves. Of course, trademark rights are not without limits, as Beyoncé learned earlier this year. Trademarks cannot be wielded to prevent certain speech that is protected under the First Amendment, such as most uses of a trademarked name in news reporting. Nor can it be used to prevent fair uses of the trademark, such as uses of a trademarked name as part of a parody, which is a type of expression that is specifically protected under the U.S. Trademark Act. Moreover, trademark applications must specify the goods and services that are to be used in connection with the mark, and applicants must be able to demonstrate a bona fide intent to use with respect to any applied-for goods/services that they are not already using at the time of filing. The Kardashian-Wests, along with the rest of the Kardashians/Jenners, are a testament to the power and promise of effective branding. The attention and resources that they’ve each committed to obtaining trademark protection for their names underscores the importance of integrating trademarks into an overall branding strategy. Kim may remember May 9, 2019, as the day her baby, Psalm West, was born, but we should also commemorate May 18, 2019, as the day Psalm West™, the brand, was born.

On November 6, 2019, I discussed a licensing dispute regarding Ms. Pac-Man between Bandai Namco and AtGames Holdings. At that time, Bandai Namco sought a preliminary injunction against AtGames based on AtGames’ alleged unauthorized infringement of Bandai Namco’s IP rights in Ms. Pac-Man. AtGames countered that it had not infringed Bandai Namco’s rights and had no plans to use Ms. Pac-Man without a license. Rather, AtGames had created a prototype of a potential Ms. Pac-Man arcade product, and it had been negotiating with Bandai Namco for over a year to acquire the rights it needs to commercialize the product. Since then, the players parties have progressed to the next level. On November 19, 2019, United States District Court Judge Vince Chhabria of the Northern District of California, denied Bandai Namco’s request for a preliminary injunction in a strongly-worded, one-paragraph order. Judge Chhabria ruled that “Bandai’s likelihood of success on the merits is questionable at best,” and its “allegations of reputational harm fall somewhere between speculative and fanciful.” Discouraging words like these might as well have been accompanied by the sound Ms. Pac-Man makes when she gets clobbered by a ghost: https://www.youtube.com/watch?v=jpkxkKcLsho. On November 14, 2019, a few days before the Court issued its order, AtGames filed its answer to Bandai Namco’s complaint. AtGames also asserted three counterclaims against Bandai Namco for (1) breach of contract, (2) declaratory judgement that Bandai Namco’s termination of certain agreements it had with AtGames is null, void, and without legal effect, and (3) breach of implied covenant of good faith and fair dealing. Thus, the dynamics of the litigation have shifted and not in Bandai Namco’s favor. With a preliminary injunction denied and the stakes raised by AtGames counterclaims, will Bandai Namco and AtGames be able to resolve their differences with a mutually beneficial settlement? Or will they litigate until one of them reaches the legal equivalent of a game over screen? Keep watch on TheTMCA.

    In 2005, Christian Faith Fellowship Church, a Chicago-based church group, filed two trademark applications for the mark ADD A ZERO for use on clothing, including shirts and caps that they later sold to raise money for charity. One application was for a standard character word mark and the other application was a stylized version of the phrase shown below. Both applications reported a first use date in the summer of 2005 and matured to registration in 2006. In 2009, adidas AG filed a trademark application for the mark ADIZERO for use on footwear, shirts, jackets, and other apparel. Adidas uses the ADIZERO mark on a collection of lightweight athletic shoes and related products and reported a first use date in December of 2005. The application was refused due to a likelihood of confusion with the Church’s ADD A ZERO marks. Determined to secure the rights in the mark, Adidas moved to cancel the Church’s registrations on the grounds that (1) the Church failed to show sufficient “use in commerce” required for a use-based application for registration; (2) the Church had abandoned the marks by failing to use them in commerce after obtaining the registrations; and (3) the phrase ADD A ZERO was an informative phrase rather than an indicator of source and therefore fails to function as a trademark. In the first go-round at the TTAB in 2015, the Board agreed with Adidas’ first argument and cancelled both of the Church’s registrations. According to the Board, federal trademark rights stem from Congress’ power to regulate interstate commerce, and the “use in commerce” required to obtain a federal trademark registration must be interstate commerce. The Church primarily used the ADD A ZERO phrase as “a prophetic word spoken to the congregation” to encourage charitable giving. However, t-shirts and other apparel bearing the ADD A ZERO phrase and stylized mark were available for purchase at the Church’s bookstore, and the Church was able to show that one resident of Wisconsin purchased two hats for $38. The TTAB found that this single sale was not sufficient to establish an interstate “use in commerce” and cancelled both of the Church’s applications under Adidas’ first theory. The Church appealed the TTAB’s decision to the Court of Appeals for the Federal Circuit. The Federal Circuit applied Supreme Court precedent, finding that the Church’s single sale of two hats is “quintessentially economic” that if “taken in the aggregate would cause a substantial effect on interstate commerce.” The Federal Circuit went even further, holding that the Church need not show actual proof that its conduct affected interstate commerce, just that the conduct is in a class that affects interstate commerce. The appellate court thus reversed as to Adidas’ first theory and remanded to the TTAB to address the remaining issues of abandonment and failure to function as a trademark. Considering abandonment on remand, the TTAB reasoned that if the single sale transaction of two shirts for $38 is sufficient use in commerce to register a trademark, the same minimal or de minimis sale must be sufficient to overcome an inference of abandonment. The TTAB found no three-year period where the Church made zero sales of products bearing the ADD A ZERO phrase or stylized mark without intent to resume use. There was a four year period where no sales of products bearing the mark were made, but the Church was able to show that the non-use was excusable due to remodeling and that sales had resumed afterwards in the Church’s online store. As such, neither the ADD A ZERO word mark nor the ADD A ZERO stylized mark had been abandoned. The standard articulated in this case appears to set a very low bar of use required to avoid abandonment of a registered trademark rights, so long as the sale of products bearing the mark – however limited – are bona fide economic transactions in commerce. The TTAB’s decision here is non-precedential, but the Federal Circuit’s decision relating to initial registration is binding on the TTAB. It will be interesting to see whether subsequent TTAB decisions apply the same standard articulated in this case. The TTAB then considered each mark independently to adjudicate the failure to function issue. A mark fails to function as a trademark if the public would perceive it as merely conveying information about goods or services rather than as an indication of a single source of goods or services. Adidas presented evidence of several charitable organizations using some version of ADD A ZERO to encourage donors to give more money. As an example, charities often use some form of the sentiment: “determine how much you can afford to donate, and then add a zero to that amount.” The TTAB held that the ADD A ZERO slogan is a general fundraising term used to convey enthusiasm and support for fundraising causes and consumers would not view it as being uniquely associated with the Church. Therefore, the ADD A ZERO word mark does not function as a trademark and the TTAB cancelled the registration. The ADD A ZERO stylized mark, however, was held to be a “specific combination, placement and shading of the wording and design elements” that create a unitary, distinct mark. Despite the informational nature of the slogan, the three-dimensional unitary design creates a distinct commercial impression in the minds of consumers. The TTAB therefore held that it does function as a trademark and denied the claim for cancellation of this registration. Because the parties are in this for the long run, it will be interesting to see if the ADD A ZERO case makes a return trip to the Court of Appeals for the Federal Circuit. The TMCA previously reported on LeBron James’ IT’S TACO TUESDAY application and Cardi B’s OKURR application, both of which were denied for failure to function as a trademark. Like those cases, the ADD A ZERO case demonstrates the obstacles to obtaining trademark registration protection for trademarks that are likely to be perceived as common phrases or informational matter.

Last Friday, the U.S. Supreme Court granted the USPTO’s writ of certiorari to review traveling website company Booking.com’s trademark application for “booking.com”. The TMCA previously covered developments in this case here and here. Back in 2016, the USPTO rejected the company’s trademark application because the proposed mark “Booking.com” was a generic term for the services offered, commenting that “booking” generically refers to “a reservation or arrangement to buy a travel ticket or stay in a hotel”. The company appealed to federal district court in the Eastern District of Virginia, which reversed the USPTO’s rejection. The district court held that although “booking” was a generic term for the services identified, BOOKING.COM as a whole was nevertheless a descriptive mark. Further, the company submitted survey evidence demonstration that 74.8% of consumers recognized BOOKING.COM as a brand rather than a generic service. The USPTO appealed to the 4th Circuit Court of Appeals, which affirmed the district court holding. The appellate court observed that “this case presents one such rare occasion where the record evidence supported a finding that the USPTO failed to meet its burden of proving that the public primarily understood BOOKING.COM to refer to the genus of online hotel reservation services, rather than the company or brand itself.” In other words, even though the terms “booking” and “.com”, were independently generic, the USPTO failed to rebut the evidence from the company showing that the combination had acquired secondary meaning. This USPTO then petitioned for Supreme Court review of the appellate ruling. It is anticipated that by summer of 2020, the Supreme Court will provide the final say on this issue.

1980 was a momentous year. Not only was it the year in which the Rubik’s Cube was first released, it was also when approximately 350 million people worldwide finally learned who shot J.R. on TV’s “Dallas” (spoiler alert: it was Kristin Shepard, J.R.’s angry mistress, obviously). But perhaps the most significant event of all was the creation of Pac-Man by a Japanese company named Namco. That same year, Pac-Man spread to the U.S. and the rest of the world like a virus through Namco’s licensed publisher, Bally Midway. The virus was known as Pac-Man Fever. As a child, I caught Pac-Man Fever when I received this primitive LED device for Christmas in 1981: That’s what fun looked like back in the early 1980s. Still in its original box. Pac-Man Fever has continued to spread with new Pac-Man-related games and products being released in a steady stream to this very day. But, as a game, Pac-Man was perfected in 1981 with the release of Ms. Pac-Man, one of the most popular arcade games of all time. Over the course of that game, Pac-Man and Ms. Pac-Man bonded over their shared love of dots and hatred of ghosts, and, despite their strong familial resemblance and same last name, married and had a child, Jr. Pac-Man. The Ms. Pac-Man game was very similar to the original Pac-Man, but it added tweaks to the graphics, mazes, and other details that made the game even more fun to play. Despite changing very little, these addictive games have let Namco, now Bandai Namco, use its Pac-Man and Ms. Pac-Man-related copyrights and trademarks to repeatedly sell children and nostalgic adults virtually the same game and associated merchandise for nearly 40 years. As Exhibit A, here are two different handheld versions of Ms. Pac-Man, licensed by Bandai Namco, that I, as an otherwise responsible adult, purchased this past year: My kids are not allowed to touch these until a week after my funeral. But behind the charming graphics, intuitive gameplay, and repetitive, yet hypnotic, “wakka, wakka, wakka” sound of Ms. Pac-Man, there is a darker, and even more interesting story about IP licensing that has recently led Namco Bandai to file suit in the Northern District of California this past September for alleged infringement of its rights to Ms. Pac-Man by AtGames Holdings, Ltd. That story begins many years ago with Ms. Pac-Man’s weird alter ego, Crazy Otto. In the 1970s, a group of MIT students formed a corporation called General Computer Corporation (“GCC”), which made and sold “enhancement kits” for arcade games. The enhancement kits were intended to modify the original game by making it harder and adding new features that would make an old game more fun and more profitable. Crazy Otto was a 1981 enhancement kit for Pac-Man. Being both smart and cautious, before releasing Crazy Otto, GCC approached Bally Midway for permission. Bally Midway liked Crazy Otto so much that they bought the rights to it and re-designed it into Ms. Pac-Man. According to Namco Bandai’s September 20, 2019 Complaint (“Complaint”), that purchase came with the requirement to pay ongoing royalties to the GCC rights holders for certain commercial uses of Ms. Pac-Man. That means that Bally Midway owned the rights to Ms. Pac-Man for which they paid royalties to GCC, while at the same time they licensed the rights to Pac-Man from Namco. Thus, from the very beginning, the ownership and licensing situation with respect to the rights to Pac-Man and Ms. Pac-Man was somewhat complicated. Over time, it became even murkier. According to the Complaint, GCC and Bally Midway had a dispute over Ms. Pac-Man that resulted in litigation that was settled by agreement in 1983. Around the same time, GCC and Namco entered into an agreement in which, according to the Complaint, GCC assigned whatever rights it still had in Ms. Pac-Man to Namco. Subsequently, in or around 1987, Bally Midway also assigned its rights in Ms. Pac-Man to Namco. Despite these allegations, GCC apparently believed it held on to at least some of its interests in Ms. Pac-Man, such as its rights to royalties. The Complaint fails to mention negotiations and an arbitration between GCC and Namco over unpaid royalties from 2002 to 2006, according to a 2016 Game Developers Conference presentation by a GCC developer. In addition, the Complaint itself states that, “[o]ver the course of a year, until late August 2019 BANDAI NAMCO and the GCC Successors continued to engage in active discussions relating to the GCC Agreement and Ms. PAC-MAN.” Presumably the terms of those agreements and the negotiation are confidential, but recent court filings suggest that Bandai Namco may have been trying to obtain GCC’s royalty interest. The latest stage of this story began when AtGames swooped in and purchased GCC’s rights before GCC could reach agreement with Bandai Namco in August 2019. AtGames makes “plug-and-play” replicas of old consoles that are packed with multiple games and playable on modern televisions. Since 2012, AtGames has licensed many properties from Bandai Namco, including Pac-Man. Recent filings by AtGames indicate that it had also been negotiating for the rights to Ms. Pac-Man for over a year. AtGames purports to have been granted the rights to make a plug-and-play Ms. Pac-Man mini-console but it was still actively seeking permission to sell a miniature replica of the Ms. Pac-Man arcade game. According to AtGames’ recent filings, Bandai Namco was concerned about further licensing of Ms. Pac-Man because it would have to pay royalties to a third party, GCC. In an alleged attempt to remove this obstacle, AtGames decided to acquire GCC’s rights to Ms. Pac-Man this past August. Unfortunately, that acquisition crossed a line with Bandai Namco, because it soon filed suit against AtGames and sought a temporary restraining order. The court denied that request but ordered AtGames to file a brief by October 31, 2019 showing why injunctive relief should not be granted. Bandai Namco evidently sees AtGames’ acquisition of these rights as part of a plan to sell unauthorized Ms. Pac-Man products, and it believes that those actions must be enjoined. But in AtGames’ October 31 filings, it claims that its so-called unauthorized products were merely prototypes, and it has never questioned that it would need Bandai Namco’s permission to commercialize them. It claims that the lawsuit and request for injunctive relief are really just retaliation against AtGames for acquiring GCC’s royalty rights. As any seasoned Ms. Pac-Man player knows, timing is key. The same is true in litigation. Bandai Namco tells a tale of infringement that must be stopped immediately, while AtGames tells a tale of a premature complaint filed for the wrong reasons. And underlying all of this is the 1981 agreement with GCC, which seems to haunt Bandai Namco like ghosts haunt Ms. Pac-Man. I’m looking forward to seeing how this story develops when Bandai Namco files its reply brief on November 5. Stay tuned on TheTMCA!

It is no secret about the proliferation of copyright lawsuits that have been filed over the past four years over the unauthorized use of photos online, many against media companies that seek to shield themselves from liability with a fair use defense. A large number of these suits (over 1,600 at last count) have been brought by New York-based plaintiff’s lawyer Richard Liebowitz. A photo use lawsuit filed in August 2018, which was the subject of a recent decision on a motion to dismiss, Yang v. Mic Networks, Inc., is no exception. In that case, a photographer by the name of Stephen Yang took a photo of an executive by the name of Dan Rochkind in a Manhattan bar. The New York Post licensed the photo for use as part of a piece that it ran on April 12, 2017 about Rochkind’s dating experiences under the title “Why I Don’t Date Hot Women Anymore.” For reasons that can be readily gleaned from its title, the story engendered significant criticism. Mic Networks covered the criticism in its own next day story “Twitter is skewering the ‘New York Post’ for a piece on why a man ‘won’t date hot women’” in its Mic online publication. As part of its piece, Mic included a screenshot of the New York Post article and the upper half of the licensed photo as it appeared as part of the Post’s original story. After unsuccessfully demanding payment for publishing his photo, Yang sued Mic in the Southern District of New York for copyright infringement. Mic filed a motion to dismiss, citing fair use, and the court agreed. On the motion to dismiss, the court ran through the four factors that make up a fair use analysis in the copyright realm -- (1) the purpose and character of the use, (2) the nature of the copyrighted work, (3) the amount and substantiality of the portion used, and (4) the effect of the use upon the potential market for or value of the copyrighted work -- but focused, as many fair use analyses tend to do, on whether Mic’s use was transformative, which is a prong of the first factor. The court found Mic’s use of the photo to be transformative for three reasons. First, the screenshot clearly served to illustrate why the original article had been controversial and was accompanied by Mic’s commentary too. Second, the Mic article not only commented on Rochkind and the controversy, but also used the screenshot to both criticize and mock the original Post article, which was a much different purpose than that the original use of the photo. Third, the Mic story used the photo to paint Rochkind in a “harshly negative light”, while the original use of the photo was to paint him in a positive or neutral light, which is transformative. The court did consider other factors, such as the fact that the screenshot was used by Mic for commercial benefit, and that Mic had cut off part of the photo, removing a photo credit to Yang, which could support a finding of bad faith. The court also dismissed as implausible Yang’s assertion that Mic should have used embedded tweets of the original photo, or taken its own photo of Rochkind instead. Taking into account all factors, the court dismissed the case, finding Mic’s use to be clearly fair and transformative. Yang has filed a motion for reconsideration of the decision and Mic also has a motion for attorneys’ fees and sanctions pending as of the date of this post.

Two recent decisions from the Western District of North Carolina in Winestore Holdings LLC v. Justin Vineyards & Winery LLC provide a tasting of the requirements for bringing a declaratory judgment action for non-infringement of a trademark in federal court. The Court in Winestore held that sending an alleged trademark infringer a communication that is less than a firm demand to cease and desist did not create a justiciable case or controversy, even when followed by the filing of an opposition proceeding against an application to register the mark at issue. Justin Vineyards & Winery LLC is a California-based retailer of wine that distributes wine throughout the United States and owns a federal registration for the mark “OVERLOOK” for wine. Winestore Holdings LLC operates a chain of wine retail stores in North Carolina and distributes wine nationally through its website. Winestore filed a trademark application for the term “OVERBROOK” in 2015, also for use on wine, and began using the mark in April 2016, including on a full-bodied, astringent Overbrook Cabernet. https://winestore-online.com/wines/detail/509454 In April 2017, Justin sent Winestore an email stating that the OVERBROOK mark sought to be registered “is too similar to [Justin’s] OVERLOOK trademark and its use could be interpreted as intending to trade off of the goodwill” associated with Justin’s wines. The email further indicated that using OVERBROOK “may constitute trademark infringement, false designation of origin and unfair competition” and “may also dilute” the OVERLOOK mark. Finally, the email urged Winestore to contact Justin’s counsel, stating that “Justin prefers to settle matters amicably where possible.” (emphases added). Winestore sued Justin on June 14, 2017, seeking a declaratory judgment that its use of OVERBROOK does not violate any federal or state trademark rights. Winestore relied solely on the email from Justin as the basis for the lawsuit, arguing that the email showed a justiciable controversy between the parties that was both immediate and real. The Court found this argument to be corked. Unlike a cease and desist letter that definitively demands a cessation of use of the mark in dispute, the email did not show that Justin was willing or prepared to sue Winestore and therefore did not create a justiciable controversy. While this first case was pending, Justin filed a Notice of Opposition against Winestore’s OVERBROOK application. Because there must be a justiciable controversy before the filing date of the complaint, the Court held that the Opposition did nothing to change its analysis. Under these circumstances, the email, by itself, did not create a justiciable controversy and the Court granted Justin’s motion to dismiss without prejudice. Three weeks later, Winestore filed a second action in federal court, again seeking a declaration that its use of OVERBROOK does not infringe or dilute Justin’s OVERLOOK trademark. The Court again dismissed the case, holding that the filing of a Notice of Opposition that objects to the use and registration of a mark “is insufficient, without more, to establish an actual controversy between the parties.” The email that was the focus of the Court’s prior decision did nothing to change the analysis “for the reasons stated in the Court’s earlier decision.” In a prior TMCA post on this topic involving a New York federal court decision in Classic Liquor Importers, Ltd v. Spirits International, B.V., we reported that a single cease and desist letter did create a justiciable controversy. And as the second decision in Winestore noted, there are a number of precedents in which the filing of an opposition proceeding was sufficient to find a case or controversy for purposes of exercising declaratory judgment jurisdiction. How can these cases be reconciled? A lot depends on the “totality of the circumstances” and in particular, the exact language used in a cease and desist letter and in a Notice of Opposition or Petition for Cancellation, if one is filed. The email in the Winestore case was couched in conditional language, like “may constitute” and “could be,” and urged Winestore to negotiate with Justin. While the Court stated that a communication need not include “explicit threats or demands” to be considered a justiciable controversy, the Court characterized the language as “modal verbs” that did not indicate an immediate or real controversy. To create a justiciable controversy, according to this Court, a communication to an alleged infringer must include language that is more absolute or should identify specific activities of the alleged infringer and show the trademark holder’s “preparedness and willingness” to enforce its rights. The precise language used in a Notice of Opposition matters as well. The Notice of Opposition in Winestore alleged that consumers are “likely to be led to believe that wine or related goods bearing the OVERBROOK Mark emanate from or are . . . affiliated with [Justin]” but did not use infringement language or assert the existence of actual confusion. Thus, the Court in Winestore was able to distinguish a California district court case, in which the filing of a notice of opposition supported the exercise of declaratory judgment jurisdiction because “by invoking the language of trademark infringement, the opposition created a reasonable apprehension of litigation in plaintiff, and thus, was sufficient to establish an actual controversy.” Alternatively, even if a notice of opposition does not use language that conveys an accusation of infringement, it may create a justiciable controversy if accompanied by a clear demand to cease using a mark or a threat to commence litigation. In Winestore, neither the content of the email nor the language used in the Notice of Opposition was sufficient to create a justiciable controversy. As the Court concluded, “a single TTAB opposition that objects to use of a mark, in addition to registration, is insufficient, without more, to establish an actual controversy between the parties. A single TTAB opposition simply does not present a substantial controversy of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.” For now, Winestore will have to barrel this case, aging it into full-bodied controversy. The Court didn’t like the mouth-feel of the first case or the end-note of the second case; perhaps the Court will have the palate for a third. Trademark owners should take note. If you want to avoid a declaratory judgment action, communications with an adverse party should avoid accusations of infringement, definitive demands to cease use of a mark, and threats of legal action. Instead, a communication should rely on hypothetical or conditional language, and should make it clear that the trademark owner is open to and would prefer to negotiate an amicable resolution.

Ariana Grande, identified in a recent complaint filed in federal court as an “internationally renowned singer, songwriter and actress,” is challenging struggling retailer Forever 21’s use of images that allegedly mimic Ms. Grande’s likeness and persona. This is no small matter—Ms. Grande alleges that she has 160 million Instagram followers, and 64 million Twitter followers, giving her “the largest social media following of any female celebrity in the world.” On the strength of that influence, Ms. Grande alleges that the market value for “even a single Instagram post” by her is “well into the six figures,” and that she commands in the “mid-seven figures to over eight figures” for longer-term endorsement deals for use of her name and likeness. Ms. Grande alleges that Forever 21 used a look-alike model for a social media marketing campaign after negotiations fell through between the parties for the use of Ms. Grande’s image. According to Ms. Grande’s complaint, Forever 21 used 30 photos and videos in which a look-alike model is portrayed to resemble Ms. Grande as she appears in her music videos. The complaint focuses on details including the model’s hairstyle, clothing, accessories, poses, and choice of background. Although the complaint asserts several claims, including Lanham Act for false endorsement and trademark infringement as well as claims under the Copyright Act, Ms. Grande’s lawsuit is ultimately grounded in the concept of “right of publicity.” Right-of-publicity laws prohibit the use of a name, image, or likeness to advertise a product, and have been interpreted to prohibit the false impression that a celebrity endorses a product. In her lawsuit, Ms. Grande is claiming at least $10 million in damages. Courts have famously grappled with similar allegations in the past. In 1990, musician Tom Waits won $2.475 million in damages, including punitive damages, from Frito-Lay Inc. after the food giant hired a voice actor to mimic Mr. Waits’ distinctive voice. And in 1994, Vanna White won a right-of-publicity lawsuit against Samsung after it advertised a robot dressed in a gown and wig, turning letters on a TV set that resembled the “Wheel of Fortune” game show in which she stars. Ms. Grande filed suit against the retailer in the Central District of California on September 2, 2019, and Forever 21 announced it is filing for bankruptcy on September 29, 2019. Forever 21’s answer to Ms. Grande’s complaint is expected on November 8, 2019.

According to a recent ESPN report, Los Angeles Lakers basketball player LeBron James made “IT’S TACO TUESDAY” T-shirts to promote his video posts of his family’s taco nights. He then sought a trademark registration for the phrase for use on T-shirts and other goods. Unfortunately for LeBron, his shot to beat others down the court for Tuesday tacos fell short. In an office action refusing the application, the U.S. Patent and Trademark Office said that TACO TUESDAY “is a commonplace term, message, or expression widely used by a variety of sources that merely conveys an ordinary, familiar, well-recognized concept or sentiment message.” To be eligible for trademark registration, a word, symbol or phrase must function as a mark. In other words, the matter must serve to indicate the source of the goods/services and to identify and distinguish the goods/services from those of other sources. Matter that fails to indicate the source of goods/services is therefore ineligible for trademark registration. As one example, matter that simply informs purchasers about certain features, characteristics or functions of a product would not be perceived as a source indicator but rather as merely informational or explanatory content. Another way in which a designation could fail to function as a trademark is if it is a common phrase or widely used message, in which case it would not be perceived as a source indicator. As demonstrated by the LeBron application, “Taco Tuesday” on a T-shirt is more likely to be perceived by the public as a general celebration of eating tacos on Tuesday, a sentiment associated with many different sources and public uses, rather than indicating that LeBron James’ company is the source of the T-shirt. According to USPTO policy, “a common phrase or message that would ordinarily be used in advertising or in the relevant industry, or that consumers are accustomed to seeing used in everyday speech by a variety of sources” is considered merely “informational matter” that fails to function as a source indicator and is thus not registrable. TMEP §1202.04(b). In another recent case, the famous rapper Cardi B was refused a trademark registration for her catchphrase “Okurr”, as it was considered “commonplace.” In the Office Action refusal, the USPTO stated, “a minor variation of this term, e.g., OKURRR, is commonly used in the drag community and by celebrities as an alternate way of saying ‘OK’ or ‘something that is said to affirm when someone is being put in their place.’ Because consumers are accustomed to seeing this term or expression commonly used in everyday speech by many different sources, they would not perceive it as a mark identifying the source of applicant’s goods and/or services but rather as only conveying an informational message.” While Cardi B may have coined the phrase, the phrase became so integrated into everyday language that it was no longer only associated with Cardi B as the source, and it became too late for Cardi B to register the mark. Another way in which matter might fail to function as a mark is if it is purely ornamental or decorative in the context of the applied-for goods, a ground of refusal often asserted when T-shirts and other promotional merchandise are involved. This principle was recently demonstrated by the USPTO’s refusal of an application filed by Ohio State University to register the word “THE” for clothing, such as T-shirts and hats. In this instance, the mark was not refused based on its commonality—and can you think of a more common word than “the”? Instead, the mark was refused based on how the words were presented on the specimen submitted to the USPTO. According to the USPTO, “the applied-for mark as used on the specimen of record is merely a decorative or ornamental feature of applicant’s clothing and, thus, does not function as a trademark to indicate the source of applicant’s clothing and to identify and distinguish applicant’s clothing from others.” The rejection issued by the USPTO suggests the university may be able to receive trademark protection for “THE” so long as it is applied to clothing in a manner that clearly signifies association with Ohio State and its brand (e.g., small or discrete wording as opposed to the large font dominating the overall appearance of the goods). What is particularly notable about failure-to-function refusals based on the informational nature of a mark is that the refusals “cannot be overcome by claiming acquired distinctiveness, by amending the application to seek registration on the Supplemental Register, or by merely submitting an otherwise acceptable substitute specimen.” USPTO Examination Guide 2-17, Merely Informational Matter, July 2017, at 3. On the other hand, a refusal on the ground that a mark fails to function due to ornamental use may be overcome by submitting a different specimen that shows proper trademark use (e.g., hang tags and labels used inside a garment that more clearly indicate source). However, according to USPTO guidance, “[i]f the evidence shows that the public would not perceive the proposed mark as serving to indicate the source of the identified goods/services, the mark may not be registered regardless of the manner of use depicted on the specimens or the filing basis on which applicant relies.” Examination Guide 2-17 at 13. Essentially, if you want the USPTO to say “Okurr” to your trademark, make sure the matter you seek to register is more likely to be associated with your brand than it is to be considered merely an everyday use or ornamental display of the designation.

On April 23, 2019, the Standing Committee of the National People’s Congress of the People’s Republic of China promulgated the fourth revision of the Trademark Law of the People’s Republic of China which will come into effect on November 1, 2019. This is the fourth amendment of the PRC Trademark Law after the amendments made in the years of 1993, 2001 and 2013. The PRC Trademark Office (the “TMO”) receives millions of trademark applications each year.  In 2018 alone, more than seven million trademark applications were filed in China. However, many of those applications were filed by applicants with no the intent to use contrary to the requirement under Article 4 of the PRC Trademark Law, such as bad faith applications filed by trademark squatters or trademark hoarding for purposes of resale.  To combat this problem and as part of China’s escalated efforts to protect intellectual property rights and deter dishonest and malicious filings in China, this fourth revision takes a much stronger stance on such bad faith or malicious applications. The primary change brought by the 4th Amendment of the PRC Trademark Law is the creation of two (2) new absolute grounds for refusing, opposing or invalidating trademark registrations in China to tackle bad faith filing and trademark hoarding by amending Articles 4, 33 and 44(1) of the existing PRC Trademark Law. Specifically, Article 4 of the PRC Trademark Law is amended by adding that “any trademark application that is filed in bad faith and is not filed for the purpose of use shall be rejected”. In addition and accordingly, Article 19 (3) of the PRC Trademark Law is amended by imposing an obligation on the trademark agent (among its other duties) not to accept instructions and handle any trademark application which it knows or ought to know that the said trademark application in question violates Article 4 of the PRC Trademark Law. Article 33 of the PRC Trademark Law is amended to include the violation of Article 4 or Article 19 (4) as absolute grounds for opposing a trademark application by anyone. Likewise, violation of Article 4 and Article 19(4) have been recognized as absolute grounds for invalidating a trademark registration under Article 44 (1) by virtue of the 4th Amendment Article 19(4) is an existing provision under the PRC Trademark Law which prohibits a trademark agency from registering any trademark other than its service mark for the trademark agency. This primary change means that any application that is filed by an applicant who owns numerous trademark filings, especially when the applicant is an individual, may face a higher chance of being rejected by the TMO during examination, or being successfully opposed or invalidated (if a registration) under amended Article 4. Another highlight of the 4th Amendment is that the maximum amount for statutory damages for trademark infringement is increased from RMB 3 million (~US$425K) to RMB 5 million (~USD710K), and the maximum punitive multiplier is increased from three to five (Article 63). Other amendments include the new provision Article 63(4) which provides additional remedies for the people’s courts to order the destruction of the counterfeit goods as well as the materials and tools used for the manufacturing of the counterfeit goods etc. Moreover, the new provision Article 63(5) prohibits any counterfeit goods from re-entering the market by merely removing  the counterfeit marks from the goods. The 4th Amendment reflects the Chinese government’s determination to crack down on dishonest and malicious trademark filing activities in China and to protect the rights of lawful brand owners. Whilst the 4th Amendment has not yet come into effect, we have already experienced voluntary alignment of the trademark examination / prosecution practice with the 4th Amendment by the TMO. We expect to see the full impact of the 4th Amendment after November 1, 2019 and will closely monitor the development of the associated practice.

Judge Alison Nathan of the Southern District federal court in New York recently dismissed copyright infringement claims against comedian Jerry Seinfeld over the show Comedians in Cars Getting Coffee because the statute of limitations had lapsed. Plaintiff Christian Charles was a collaborator with Seinfeld on several projects, including several popular American Express commercials and the movie Comedian. According to the complaint, Charles first suggested the idea for Comedians in Cars to Seinfeld back in 2000. In 2001, Charles created a TV treatment titled ’67 Bug, with the alternate title Two Stupid Guys In A Stupid Car Driving To A Stupid Town. Seinfeld rejected the proposal but continued to work with Charles on other projects over the next decade. In 2011, it was alleged that Seinfeld mentioned to Charles the idea of a show about “comedians driving in a car to a coffee place and just ‘chatting’” as his next project. After Charles purportedly reminded Seinfeld that this was the same idea from his earlier treatment, Seinfeld and Charles agreed to work together on the project. Charles prepared a new treatment that had the “look and feel” of the show, shot a pilot, and finalized the title of the show. Charles assumed that his production company would produce the show and that he would be heavily involved. The relationship between the parties soured after Seinfeld engaged with another company to handle production. When Charles purportedly requested compensation and involvement in early 2012, Seinfeld allegedly responded in anger and only offered Charles “work-for-hire” directing responsibilities. Charles claimed that various business partners, confidantes, and representatives of Seinfeld assured Charles that he would eventually be involved with the show. In 2016, Charles contacted Seinfeld after a deal to air the show on Netflix was announced. Seinfeld's lawyer responded, stating that Seinfeld was the creator and owner of the show, leading Charles to file suit in February of 2018. The relevant inquiry before the Court was whether Charles’ ownership claims to Comedians in Cars were timed-barred based on the allegations in an amended complaint. The Court noted that the ownership claim accrues only once - when a reasonably diligent plaintiff would have been put on inquiry as to the existence of a right. Civil actions under the Copyright Act have a three-year statute of limitations. The Court found that Charles was on notice of his ownership claims since at least 2012. Charles was deemed to be on notice of his claims when Seinfeld allegedly limited Charles to “work-for-hire” director jobs in 2012. The Court found that this “necessarily contradicted any idea that Charles was the owner of intellectual property in the show.” The purported assurances by other parties did not matter because they were directed to the level of involvement, not whether Charles was the rightful owner. The Court only dismissed with prejudice claims based on the Copyright Act; claims based state law were dismissed without prejudice. This leaves open the possibility of continuing this dispute in state court. In this case, the plaintiff relied to his detriment on his prior working relationship and overlooked potential warning signs of trouble to come. The plaintiff’s Copyright Act claims were doomed by a lack of a written agreement between the parties during development as well as the plaintiff’s failure to seek legal assistance earlier to understand the scope and limitations of his ownership claims. Ultimately, this case is an unfortunate example of how contentious disputes can underpin seemingly relaxed and light-hearted entertainment.

Earlier this week, the Court of Justice of the European Union, perhaps for the first time, drew a territorial limitation to the requirements imposed under the General Data Protection Regulation (‘GDPR’). The court held that an individual’s exercise of their “right to be forgotten” in relation to certain materials available online, which obliges Google’s search engine to remove search results to websites containing that content, does not extend to the versions of Google’s search engine directed to non-EU member states. In other words, the search results would only have to be removed insofar as the search engine is accessed from the EU. This is good news for Google and other operators of online services, at least in that they will need to worry less about having potentially conflicting legal obligations in different jurisdictions when complying with ‘right to be forgotten’ requests relating to their online services. Online service operators can now proceed on the basis that when content has to be taken down to comply with a ‘right to be forgotten’ request, it will only need to be taken down from the versions or iterations of these services servicing the EU market. In principle, non-EU versions of the services would not need to be affected by the request. It is noteworthy that the Court’s reasoning drew on the idea that privacy interests are not absolute rights but rights that have to be balanced against competing interests and that different countries (even within the European Union) may strike a different balance between the interests of privacy on the one hand and the interests of free speech and freedom of information on the other. In other words, the EU court recognises that countries outside the European Union may legitimately place a stronger weight, for example, on freedom of speech interests and that unless the EU legislature clearly imposes a duty that extends to territories outside the EU, the court will interpret the legislation as being limited to the territory of the EU. The court held further that, when issuing an order for the delisting of search results based on a ‘right to be forgotten’ request, the national regulatory authority must determine the geographical extent of the order as necessary in the circumstances to protect the individual’s legitimate privacy interest. The court noted that the legislation requires national authorities within the EU to coordinate in these matters. The court said that EU law does not require that the delisting should be done on a global basis, but that it does not stop the national authority issuing an order with a global reach, outside the EU, if it considers such order to be necessary. The decision, however, sends a signal to national authorities that they should use that power carefully and that they should recognise that other countries, particularly outside the EU, may have different views on how to balance competing interests. The wider implications of the decision are very difficult to predict. The decision does not consider the broad issues concerning the territorial effect of GDPR. The provisions of Article 3 GDPR that define its territorial effect clearly extend the legal rights and obligations of GDPR, in many circumstances, to the processing of personal data outside the EU including by entities operating outside the EU. Today’s decision of the EU court does not address these broader territorial issues. Rather, the case focused specifically on the obligations of a global online service – specifically a search engine - that hosts personal data, flowing from the exercise by an individual of the ‘right to be forgotten’. The courts will have to develop the law further before it becomes clearer in what other ways the legal obligations under GDPR may be limited to the territory of the EU.

In the largest settlement ever obtained in connection with the Children’s Online Privacy Protection Act (COPPA), Google and its subsidiary YouTube have agreed to pay $170 million to the Federal Trade Commission (FTC) and the New York Attorney General (NYAG). The settlement comes in response to allegations that, in violation of COPPA rules, Google and YouTube collected personal information from children under 13 to serve them targeted advertising, without first notifying parents and obtaining their consent. COPPA imposes compliance obligations on the operators of child-directed commercial websites and online services that “collect, use, or disclose” the personal information of children under 13. The FTC has also interpreted COPPA to apply to websites or online services having “actual knowledge that they are collecting personal information directly from users of another website or online service directed to children.” Where COPPA requires that covered operators provide notice to parents, and thereafter obtain their verifiable consent prior to collecting personal information from children, the complaint alleges that Google and YouTube collected personal information in the form of persistent identifiers, such as cookies or unique device identifiers, that can be used to track users over time and across websites from the viewers of child-directed channels on the YouTube platform for behavioral advertising purposes. According to the complaint, Google and YouTube impermissibly effected this collection in the absence of parental notice and consent. The complaint further alleges that Google and YouTube had actual knowledge that they were collecting personal information from viewers of child-directed channels. Per the complaint, Google and YouTube actively marketed YouTube as “a top destination for kids” to brands producing children’s products, such as Mattel and Hasbro, as evidenced by various Google presentations to the companies. Furthermore, Google and YouTube maintain a rating system that assigns (based on both automated and manual review) age-based ratings to every channel and video, including a “Y” rating, indicating such video is intended for viewers ages 0-7. Using Y and G (indicating such content is suitable for all ages) content derived from YouTube, Google and YouTube created a separate mobile application called “YouTube Kids,” which is targeted to children ages 2-12. The YouTube content that appears on the YouTube Kids home screen is specifically selected, following manual review by Google and YouTube. Thus, through their own review and curation, and indeed through their communications with specific channel owners, who are stated to have informed Google and YouTube that their content is targeted to children under 13, Google and YouTube, the complaint concludes, evidenced actual knowledge of the “child-directed nature” of these YouTube channels. Nevertheless, the complaint continues, they collected personal information, including persistent identifiers, from viewers of these channels without ever attempting to provide COPPA-compliant notice of their information collection to parents, or to obtain verifiable parental consent preceding any such collection. According to the terms of the settlement, Google and YouTube must pay a total of $170 million in civil penalties, $136 million to the FTC, and $34 million to the NYAG. Other notable “fencing-in” provisions of the settlement require Google and YouTube to develop a system enabling channel owners to indicate whether their content is child-directed. As part of this system, Google and YouTube must provide notice to channel owners who are tasked with making the aforementioned designation that their child-directed content may implicate COPPA. Google and YouTube must also provide annual training on the subject of COPPA compliance to employees working with YouTube channel owners. On the same day the settlement was announced, YouTube released a statement regarding upcoming changes, among others, to its data practices. Notably, starting in four months, YouTube will treat the data associated with any user viewing children’s content, notwithstanding that user’s actual age, as belonging to a child. YouTube also promised to stop serving personalized ads on children’s content. Finally, where the terms of the settlement merely require channel owners to designate their own content as child-directed, YouTube has also affirmed that it will use machine learning to identify child-directed videos.

Businesses may receive a bit of breathing room as a result of two amendments to the California Consumer Privacy Act (CCPA) passed on Friday, September 13, 2019, by the California Legislature.  The Legislature gave businesses a one-year moratorium on two significant aspects of the law:  its application to employees, job applicants, owners, officers, directors, medical staff members, and contractors; and its application to business-to-business transactions.  The Governor has until October 13, 2019, to sign or reject the amendments.  Although the amendments provide some of the needed clarifications and error corrections and a significant break from needing to respond to certain data subject requests from employees and B2B contacts, businesses will still need to complete their data mapping (even for these categories of consumers) and will still need to be prepared to offer the rights not exempted on January 1, 2020, even if these amendments are signed by the Governor. For those following the process, five bills passed the Legislature: AB 25, AB 874, AB 1146, AB 1355, and AB 1564.  Proposed amendment AB 846 on loyalty programs was shelved.  In addition to the two widely applicable amendments about employees and business-to-business transactions discussed in detail below, the Legislature also passed a number of minor or narrowly applicable amendments.  The amendments amount to 98 pages of printed material.  We will cover only the more significant of them in this article. The employment-related amendments in AB 25 exempt businesses from many of the CCPA’s requirements for one year when applied to employees, job applicants, owners, officers, directors, medical staff members, and contractors “to the extent that the natural person’s personal information is collected and used by the business solely within the context of the natural person’s role or former role as a job applicant to, an employee of, owner of, director of, officer of, medical staff member of, or a contractor of that business” (emphasis added).  The amendment also covers certain use of personal information in the context of emergency contact information and benefits administration. If AB 25 is signed by the Governor, two CCPA requirements will still apply to these types of individuals when collected and used in this context:  (1) the requirements to inform them about the categories of personal information collected and the purposes for which the personal information will be used in 1798.100(b) and (2) the right to sue in a private right of action after a data breach in 1798.150.  This would mean the other consumer rights to deletion, access, opt-out of selling, and no price discrimination would not apply in this context for one year (until January 1, 2021).  This will be a welcome change to most businesses, to the extent it gives them a break from the experience EU businesses have had responding to data subject requests from employees, ex-employees and job applicants in Europe since the General Data Protection Regulation (GDPR) became effective. Unfortunately, even if this amendment becomes law, businesses will still need to complete their data mapping and draft disclosures in connection with the information of employees, job applicants, owners, officers, directors, medical staff members, and contractors. The business-to-business (B2B) moratorium in AB 1355 would exempt businesses from many of the CCPA’s requirements for one year when applied to “personal information reflecting a written or verbal communication or a transaction between the business and the consumer, where the consumer is a natural person who is acting as an employee, owner, director, officer, or contractor of a company, partnership, sole proprietorship, nonprofit, or government agency and whose communications or transaction with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from such company, partnership, sole proprietorship, nonprofit or government agency” (emphasis added). The B2B moratorium would not apply to collection or use of personal information outside of the context described in this amendment, to the right to opt-out of “selling” in 1798.120, to the price discrimination provisions of 1798.125, or to the right to sue in a private right of action after a data breach in 1798.150.  If this amendment is signed into law, businesses will have a break until January 1, 2021, in the requirements of notice, deletion, access, information about onward disclosures, the opt-out link and the means for exercising consumer rights when it comes to B2B diligence or product/service provision or receipt.  This means businesses would still need to complete their data inventories of information received in a B2B context, be prepared to respond to opt-out requests, and apply all other sections of the CCPA to uses of B2B personal information outside of the diligence or transaction itself (such as marketing uses). Other important amendments include: Clarifications regarding authentication of data subject requests in AB 25; Changes to language regarding methods for submitting data subject requests in AB 1564; Changes to exempt certain vehicle-related information from the right to opt-out from selling in AB 1146; Changes to exempt certain warranty and product recall information from the right to deletion in AB 1146; Changes to the definition of “personal information” in connection with the reasonability of associating information with a particular consumer or household, with the definition of “publicly available,” and with the applicability to deidentified or aggregate consumer information in AB 874; Correction of errors in the price discrimination section 1798.120 about “value provided to the consumer” versus “value provided to the business” in AB 1355; Clarification regarding impact of encrypting and redacting personal information on civil right of action in AB 1355; Changes to the exemption regarding consumer credit and related information in AB 1355; and Error corrections in 1798.110(c) regarding privacy notice requirements and in 1798.115(a)(2) regarding right to know in AB 1355. If these amendments are signed by Governor Newsom by October 13, 2019, they will provide a one-year extension in connection with some provisions of the CCPA.  However, the majority of the provisions related to consumer privacy will still be in effect.  No fundamental rights have been removed from the CCPA.  Businesses will need to continue their compliance efforts with focused intensity over the next several months.  We will provide updates regarding the Governor’s actions and the California Attorney General’s regulatory guidance as they become available. The completed legislative session gives businesses a clearer understanding of the CCPA’s obligations (subject of course to signature by Governor Newsom).  For those companies not previously required to comply with the European Union’s GDPR, this may pose significant operational and technical challenges. Stay tuned to the TMCA for updates.

Most opposition proceedings in the Trademark Trial and Appeal Board of the USPTO settle before final judgment, often based on a negotiated settlement agreement requiring the abandonment of the opposed application. In these circumstances, will judgment be entered against the applicant and in favor of opposer in the proceeding? It depends on how the settlement agreement is phrased, according to a recent decision of the TTAB on reconsideration in Kathy Michael d/b/a Cedar Cove Inn v. Debbie Macomber, Inc., Opp. No. 91239859 (non-precedential). Unless the settlement agreement specifically states that the opposer expressly consents to the abandonment of the application, judgment will be entered against the applicant. The opposer in Macomber entered into a settlement agreement with the applicant that included a number of substantive provisions concerning ongoing use and registration of the parties’ respective marks. With respect to the opposed application, the agreement specified: “Express Withdrawal of Application. [Applicant] shall, by December 14, 2018, expressly withdraw pending U.S. Trademark Application No. 87586893.” The Agreement did not include a specific provision as to how the opposition proceeding itself would be resolved. After the settlement agreement was executed, the applicant filed a motion to abandon its application without opposer’s written consent. Three days later, the TTAB entered judgment against the applicant, the opposition was sustained, and the application refused. So far so good for opposer. But the next day, the applicant filed a “corrected” motion to abandon the application, this time including an allegation of opposer’s consent based on the signed settlement agreement. The Board then issued an order noting the corrected motion to abandon the application with opposer’s written consent and dismissed the opposition without prejudice. Not so good for opposer. So the opposer filed a request for reconsideration, arguing that the Board had erred in accepting applicant’s assertion in the “corrected” motion that the signed settlement agreement constituted the required written consent to abandonment of the application that would result in a dismissal of the opposition without prejudice. On take three for the TTAB, the Board agreed that it had indeed erred by dismissing the opposition without prejudice in response to the “corrected” motion. According to the Board, Trademark Rule 2.135 provides that after an opposition has been commenced, if the applicant files a written abandonment of its application “without the written consent of every adverse party to the proceeding, judgment shall be entered against the applicant.” The Board agreed with opposer that at no point in the settlement agreement did it provide its express consent to withdrawal of the application. According to the Board, signing the settlement agreement just “means that the parties consent to settling their dispute on the terms set forth in the agreement.” The Board further rejected applicant’s argument that the reciprocal promises included in the settlement agreement should be construed as a consent to the withdrawal, even though the settlement agreement did in fact provide for the withdrawal of the application. In other words, just including terms in a settlement agreement requiring the applicant to withdraw the opposed application -- but without also specifying either that opposer consents to the withdrawal or that the parties agree that the opposition will be withdrawn instead of being sustained -- will not be considered the equivalent to express consent by opposer that will lead to a dismissal of the opposition without prejudice. Here are the takeaways from the Board’s decision on reconsideration: If an applicant wants to withdraw its application and not have judgment entered against it in the proceeding, the settlement agreement must specifically provide that the withdrawal will be with the express consent of opposer One way to ensure that the parties mutually understand how an application will be abandoned is to attach an exhibit with the form of abandonment (and exact language) agreed to If an opposer wants to have judgment entered against the applicant, silence in a settlement agreement about whether consent will be provided to the abandonment of the application will be construed against the applicant, and opposer will be entitled to judgment sustaining the opposition.

Anyone who saw the Special Delivery commercial during the Super Bowl is familiar with Bud Light’s “No Corn Syrup” campaign. The Special Delivery commercial made it pretty clear that Miller Light and Coors Light are brewed with corn syrup whereas Bud Light is brewed with rice. As the campaign evolved to include dozens of commercials, print advertisements, and social media posts, Anheuser-Busch dropped the “brewed with” language in favor of bare statements that Bud Light has “No Corn Syrup.” Comparative advertisements go even further, by displaying Miller Light or Coors Light in direct association with the words corn syrup: MillerCoors, the owner of Miller Lite and Coors Lite, sued Anheuser-Busch on March 21, 2019, alleging that the “No Corn Syrup” campaign constitutes false advertising under the Lanham Act. The case is still in the early stages of litigation, but it’s not looking good for Bud Light. On May 24, 2019, the Western District of Wisconsin granted a preliminary injunction in MillerCoors’ favor. The original preliminary injunction enjoined Anheuser-Busch from using versions of the “No Corn Syrup” campaign that do not clearly indicate that the presence or absence of corn syrup relates to the brewing process. During brewing, yeast break down sugar, converting it into alcohol and carbon dioxide through fermentation. The yeast is then removed along with any excess sugar. Miller Light and Coors Light both use corn syrup as their main sugar source during brewing. Bud Light proudly uses rice as its main sugar source. Because MillerCoors uses corn syrup and Bud Light does not use corn syrup during the brewing process, the phrases “No Corn Syrup,” “100% Less Corn Syrup,” and similar statements are factually accurate. But in the false advertising world, a factually true statement may be deemed impliedly false or misleading if the true statement is likely to deceive or confuse consumers. The Bud Light statements that fail to indicate that “No Corn Syrup” refers to the brewing process, according to the court, may deceive consumers into believing that the finished products, Miller Light and Coors Light, actually contain corn syrup in the beer itself. MillerCoors was able to show that some customers exposed to the “No Corn Syrup” campaign actually believed that Miller Light and Coors Light contain corn syrup. This was enough for the court to find that MillerCoors is likely to succeed on claims related to these statements and that MillerCoors would be irreparably harmed without a preliminary injunction. The original preliminary injunction only applied to commercials, print advertising, and social media. In a more recent development, on September 4, 2019, the court modified the preliminary injunction, extending it to include Bud Light packaging. The Bud Light packaging does not directly compare Bud Light with Miller Light or Coors Light — it just indicates that Bud Light lacks corn syrup. However, MillerCoors was able to show that consumers view the packaging as implicitly comparing Bud Light to Miller Light and Coors Light because the three beers are almost always displayed alongside one another in retail stores and they make up nearly 100% of the light beer market in the United States. The court also viewed the packaging in light of the larger campaign, which does expressly compare Bud Light with MillerCoors’ beers. Because the packaging lacks express comparative statements, the modified injunction allows Anheuser-Busch to use all of the “No Corn Syrup” packaging that it had on hand as of June 6, 2019. Anheuser-Busch is allowed to use the packaging until March 2, 2020, or until it runs out of the packaging, whichever occurs first. Context in advertising is key, especially when comparing a product with competing products. Had Bud Light always indicated that Miller Light and Coors Light are brewed with corn syrup, the advertising likely would not be subject to the current injunction. Moreover, in extending the injunction to include packaging that does not include a comparative reference to MillerCoors’ beers, the court considered the packaging in the context of Anheuser-Busch’s broader advertising campaign and the fact that only three beer brands make up nearly the entire light beer market in the U.S. Bud Light already had to change their advertisements to comply with the original injunction, removing any bare references to a lack of corn syrup and clarifying that Bud Light is not brewed with corn syrup. For example, the Bud Light website now reads “Hops. Barley. Water. Rice.” where it used to read, “Hops. Barley. Water. Rice. And No Corn Syrup.” As for the packaging, Anheuser-Busch filed an emergency motion to vacate, modify, or stay the preliminary injunction and the court issued a second modification to the preliminary injunction. Anheuser-Busch successfully showed that the packaging produced prior to June 6, 2019 was essentially depleted and that if it was only allowed to use packaging created as of June 6, 2019, “an injunction would take effect immediately” causing it significant harm if unable to use packaging produced after that date. Although the court was “troubled by defendant’s decision to continue to print new packaging containing language that almost certainly violated the spirit of the court’s earlier injunction with respect to its television and print media, defendant is correct that the court intended to craft an injunction that would not impinge on the orderly production of Bud Light” (thus providing reassurance to consumers preparing for tailgating season!). Anheuser-Busch now has until November 1, 2019 to comply with the court’s injunction, “based on Anheuser-Busch’s representation that it cannot have packaging complying with the court’s injunction until the end of October.” Stay tuned to TheTMCA.com for further developments in this epic battle between two leading light beer brands.