Posts Tagged: "Lanham Act"

After Brunetti: The Trademark Bar Reacts to Fractured Decision

The Supreme Court issued its decision yesterday in Iancu v. Brunetti. As largely expected, the Court followed its own lead in Matal v. Tam and struck down the Lanham Act’s bar on “immoral or scandalous” trademarks as violating the First Amendment. Below are some insider perspectives on what the ruling means for brands and trademark practitioners going forward.

Rule Requiring Prescription Drug Price Disclosures in TV Ads Will Create Complex Lanham Act Enforcement Issues and First Amendment Implications

A Final Rule issued by the Centers for Medicare and Medicaid Services (CMS) on May 8 (the “Final Rule”) that requires direct-to-consumer (DTC) television advertisements for a prescription drug or biologic covered by the Medicare or Medicaid programs to disclose the product’s “list price,” will become effective on July 9, 2019. The Final Rule mandates price disclosures for any covered drug that is $35 or more for a one-month supply or the usual course of therapy, and includes a unique enforcement mechanism whereby CMS would rely for enforcement on private lawsuits filed pursuant to Section 43(a) of the Lanham Act. In a conference call with reporters, Department of Health and Human Services (HHS) Secretary Alex M. Azar II analogized the new requirement to mandatory price disclosures required for the automobile industry—despite the fact that cars are not reimbursed by the government, subject to co-pays, prescribed by third parties who function as gatekeepers, or subject to complex arrangements with prescription benefit managers (PBMs) and other healthcare providers. The strained analogy to automobile price disclosures reflects the legal complexities implicated by this requirement and the absence of relevant precedent.

Federal Alcohol Labeling Following Tam and Brunetti

The U.S. Supreme Court and the Court of Appeals for the Federal Circuit recently struck down certain trademark registration requirements on First Amendment grounds. These cases raise questions about whether similar alcohol labeling requirements likewise violate the First Amendment. In the U.S., alcohol is a regulated product at both the state and federal level. Federally, the Alcohol Administration Act (FAA Act) sets forth the labeling requirements for distilled spirits, wine and malt beverages. Alcohol producers must get alcohol labels approved by the U.S. Department of the Treasury, Alcohol and Tobacco Tax and Trade Bureau (TTB). These approvals come in the form of a Certificate of Label Approval/Exemption or “COLA.” The labeling requirements of the FAA Act are detailed in 27 U.S.C. §205(e) and prohibit labels that “are disparaging of a competitor’s products or are false, misleading, obscene, or indecent…” See 27 U.S.C. §205(e)(4). The associated rules are promulgated in 27 C.F.R. Parts 4, 5, and 7. These rules similarly prohibit statements on labels that are “disparaging of a competitor’s products,” or which are “obscene or indecent.” 27 C.F.R. §4.39, §5.42, and §7.29.

CBD Wins with USPTO’s New Examination Guide for Cannabis Marks, but Lawful Use Requirements Remain Intact

On May 2, 2019, the USPTO issued a new examination guide titled “Examination of Marks for Cannabis and Cannabis-Related Goods and Services after Enactment of the 2018 Farm Bill.” A hasty reader may have assumed that this guide would offer options for the cannabis business whose federal trademark applications have been thwarted by the lawful use requirement, but this is not the case.The lawful use requirement, as explained by the USPTO, mandates that “use of a mark in commerce must be lawful use to be the basis for federal registration of the mark.” TMEP §907, citing to 37 C.F.R. §2.69 and §§1, 45 of the Lanham Act. In other words, if a product cannot be legally sold in interstate commerce then, according to the USPTO, the mark cannot be used legally in interstate commerce and, lacking trademark use, the trademark cannot be registered. Alas, the new examination guide only allows federal trademark registrations under very narrow circumstances. Under Sections 6 and 297A of the Farm Bill 2018, “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis” are removed from the Controlled Substances Act (CSA). In effect, these plants and their parts have become legal. Similarly, cannabidiol—commonly referred to as CBD—and those CBD products that have very low THC content, have become legal under the CSA. Being legal under the CSA means that these products can be legally sold in interstate commerce.

Iancu v. Brunetti: Lawyers Weigh In On Fate of Scandalous Trademarks

In Iancu v. Brunetti (Case No. 18-302), the United States Patent and Trademark Office (USPTO) is appealing to the Supreme Court from a U.S. Court of Appeals for the Federal Circuit decision that held the Lanham Act’s prohibition on “immoral” or “scandalous” marks violates the First Amendment’s free speech clause. The case is the second in two years that the High Court has taken on the subject, and was argued on Monday, April 15. The federal government’s petition specifically asks the Court to consider “whether Section 1052(a) [of the Lanham Act]’s prohibition on the federal registration of ‘immoral’ or ‘scandalous’ marks is facially invalid under the Free Speech Clause of the First Amendment.” At issue is Erik Brunetti’s FUCT trademark for clothing, which was refused in 2011 because it was considered a scandalous term under Section 1052(a) of the Lanham Act.According to the report from Monday’s hearing, the justices’ line of questioning indicated they are likely to follow their own lead in Matal v. Tam, which struck down the disparagement clause of the Lanham Act, by likewise striking down the restriction on federal registration of trademarks that are “immoral or scandalous” on First Amendment grounds. But, according to most observers, they are likely to take a relatively cautious approach in doing so. As is customary, IPWatchdog reached out to industry experts for some additional views on the hearing.

Tam 2.0? SCOTUS Likely to Strike Down Bar on Immoral/Scandalous Marks in Iancu v. Brunetti

Following our visit to the Supreme Court for Monday’s entertaining oral argument in Iancu v. Brunetti, we can report that the Court seems likely to strike down, on First Amendment grounds, the statutory restriction on federal registration of trademarks that are “immoral or scandalous.”  It seems less likely that the case will generate a clear and ringing statement of First Amendment principles. Rather, the justices’ comments at argument seem to presage a limited, cautious opinion. The Court’s main legal concerns appear to be the facial overbreadth of the existing statute and its history of inconsistent application. Congress and the U.S. Patent and Trademark Office (USPTO) may  therefore be left with room to try again, seeking a narrower and more predictable approach to limiting the federal registration of dirty words as trademarks (especially given the Court’s main practical concern of the loss of civility represented by the proliferation of such marks).

Brunetti Briefs: Section 2(a) Bar on Immoral or Scandalous Marks Fails Constitutional Test

On April 15, the Supreme Court will hear oral argument in Iancu v. Brunetti, a case the International Trademark Association (INTA) has remarked raises a critical issue for all trademark owners—namely, which trademarks reliably can be expected to obtain registration under the Lanham Act. At the heart of the case, and of the amicus brief we helped file for INTA this week, is whether free speech concerns should trump the statutory bar on registration of “immoral” or “scandalous” marks. INTA says the First Amendment should win out, and the statutory bar should fall. The category of marks at issue is exemplified by the FUCT apparel mark, owned by Erik Brunetti, to which the U.S. Patent and Trademark Office (USPTO) denied federal registration. After the Federal Circuit reversed, holding that Section 2(a)’s bar on registering immoral or scandalous marks is an unconstitutional restriction of free speech, the U.S. government sought the Supreme Court’s review, and the Court granted certiorari. It must now decide whether the prohibition in Section 2(a) of the Lanham Act on the federal registration of “immoral . . . or scandalous” marks like FUCT is invalid under the Free Speech Clause of the First Amendment.

SCOTUS to Hear ‘The Most Significant Unresolved Legal Issue in Trademark Licensing’ in Mission Product Holdings Inc. v. Tempnology, LLC

On February 20, the Supreme Court will hear oral argument in Mission Product Holdings Inc. v. Tempnology, LLC on appeal from the Court of Appeals for the First Circuit. The case presents the question of whether a debtor-licensor’s rejection of an executory trademark license agreement in bankruptcy, pursuant to 11 U.S.C. § 365, results in the agreement’s complete termination, including loss of the licensee’s right to use the licensed trademark. Given that trademarks are the most widely used form of registered intellectual property, and trademark rights often are among a debtor’s key assets, the treatment of the debtor’s licenses of those rights is an issue that arises frequently in the bankruptcy context. For this reason, among others, the issue presented by this case has been hailed by the International Trademark Association (INTA) as “the most significant unresolved legal issue in trademark licensing.”

Smells Like Trademark Infringement: Nirvana Sues Over Smiley Face Logo

On December 28, 2018, the limited liability company representing famed Seattle-area grunge rock band Nirvana sued clothing designer Marc Jacobs and fashion retailers Neiman Marcus and Saks Fifth Avenue in the U.S. Federal District Court for the Central District of California. At the center of the lawsuit are copyright and trademark infringement allegations regarding the use of Nirvana’s “smiley face” logo on a line of designer clothing made by Marc Jacobs. Nirvana alleges that Marc Jacobs has used the band’s common law trademarks and infringed the band’s copyright in the smiley face logo in a misleading way in order to make it appear that Marc Jacobs’ “Bootleg Redux Grunge” clothing line is endorsed by or somehow associated with Nirvana. Nirvana first licensed the use of the smiley face logo, designed by deceased Nirvana front man Kurt Cobain in 1992, and it has been continuously used to identify Nirvana’s music and licensed merchandise since.

Ribbon Communications Decries ‘Baseless Attacks’ on IP Rights After Metaswitch Networks Files Antitrust Suit

Secure cloud communications provider Ribbon Communications announced it would continue to enforce its intellectual property rights in the face of what it called “baseless attacks” by its UK-based cloud competitor Metaswitch Networks. Ribbon decried a recent antitrust lawsuit filed against it by Metaswitch and charged its competitor with continuing to infringe upon Ribbon’s patent claims despite earlier jury verdicts in district court which found that Metaswitch was infringing upon those asserted claims. Ribbon Communications’ announcement follows a lawsuit filed by Metaswitch Networks on November 19th in the Southern District of New York. “It is disappointing that Metaswitch is attempting to relitigate claims that it already lost in federal court,” said Ribbon CEO Franklin “Fritz” Hobbs. “Ribbon will not be deterred by these actions, and we look forward to having Ribbon’s intellectual property rights vindicated and Metaswitch finally paying for its misappropriation of Ribbon technology.”

‘Honey Badger Don’t Care’ But the Ninth Circuit Does, Finds Triable Issue of Fact in Gordon v. Drape Creative

Christopher Gordon, under the pseudonym “Randall,” released the Honey Badger movie in 2011 and the 3:20-long video has been viewed more than 89 million times. Gordon filed trademark applications to cover the use of the video’s well-known phrase Honey Badger Don’t Care in various classes including audio books, greeting cards, mugs and clothing. In 2012, Gordon hired a licensing agent who contacted American Greetings, the parent company of co-defendant Papyrus-Recycled Greetings, to discuss a potential licensing deal but those parties never agreed to a deal. Beginning in June 2012, the defendants released a series of seven greeting cards, including birthday, Halloween and election cards, which made use of the trademarked phrase Honey Badger Don’t Care and another well-known phrase from the video, Honey Badger Don’t Give A S—.

International Trademark Lessons from the Bayer-Belmora FLANAX Trademark Fight

A closely watched cross-border trademark case finally has been resolved, and the results of the case have implications for global trademark holders. A  U.S. District Court Judge in the Eastern District of Virginia granted Bayer AG’s motion for summary judgment, dismissing rival Belmora’s claims to the trademark FLANAX. In Mexico, Bayer uses the FLANAX mark for the popular pain medication known elsewhere as Aleve (naproxen), and successfully blocked Belmora’s attempt to market its own naproxen product under the mark FLANAX in the United States. The ruling also affirms a U.S. Trial and Appeal Board ruling that cancelled Belmora’s U.S. trademark for FLANAX, which the company secured in 2005. The United States Court of Appeals for the Fourth Circuit had previously determined that the Lanham Act authorized Bayer’s claims against Belmora for unfair competition under §43(a) and its cancellation action under §14(3).

Trademark Licensing Protection Act to Prevent Brand Control from Creating Joint Employer Relationship

Congressman Steve Chabot (R-OH) and Congressman Henry Cuellar (D-TX) are co-sponsoring H.R. 6695, the Trademark Licensing Protection Act of 2018, which has been referred to the House Committee on the Judiciary. The bill is designed to clarify the law around trademark licensing for franchises in a way that reduces the liability of franchisees under current U.S. labor law.

Supreme Court Asked to Consider Immoral or Scandalous Trademarks

On September 7, 2018, the government filed a petition for writ of certiorari in the case relating to Eric Brunetti’s clothing brand, called FUCT. Although Brunetti has marketed various apparel under the FUCT mark since the early 1990s, the application at issue in this case was filed in 2011. The examiner rejected the application under Section 2(a), finding that FUCT “is the past tense of F*CK,” and “is scandalous because it is disparaging and [] total[ly] vulgar.” The Trademark Trial and Appeal Board agreed, finding that “the Trademark Examining Attorney has shown by a preponderance of the evidence that a substantial composite of the general public would find this designation vulgar.” If the U.S. Supreme Court agrees to hear the Brunetti case, it could have a substantial impact on “shock value” marks in commerce.

Matal v. Tam: What’s New and What to Watch in Registration of Disparaging, Immoral, and Scandalous Trademarks

Many other related issues remain ripe for consideration in Brunetti and future cases. Most significantly, are trademarks considered “commercial speech?”  If so, laws relating to trademarks might be subject to relaxed scrutiny for constitutional compliance rather than strict scrutiny… While Tam settled some issues related to The Slants, the Washington Redskins, and D*kes on Bikes, the decision’s full impact remains to be seen.  Brunetti seems to be a promising avenue for the Supreme Court to address some of the tangential issues left open by the Tam decision.