Posts Tagged: "Lanham Act"

The U.S. District Court for the Central District of California recently issued a decision in the closely watched Patagonia, Inc. v. Anheuser-Busch, LLC, 19-CV-02702 case. Here, the clothing company Patagonia sued the beer company Anheuser-Busch for trademark infringement, unfair competition, dilution of a famous mark, and cancellation of Anheuser-Busch’s various PATAGONIA trademark registrations. Anheuser-Busch moved to dismiss certain claims, including the dilution claim, for failure to state a claim under Rule 12(b)(6). The court issued a decision finding that Patagonia had adequately pled its dilution claim. The case provides trademark practitioners with insight into early case strategies when asserting and defending against a trademark dilution claim.

The U.S. District Court for the Eastern District of Michigan, Southern Division, on September 9 granted Motions to Dismiss in favor of all defendants in a federal trademark infringement action brought by R&B band Ready for the World, Inc. (Ready for the World) against Melvin Riley, John Eaton, Daniel Dillman, Renee Atkins, and Jan Mark Land. Ready for the World brought us classic 1980s hits including “Oh, Sheila!” and “Love You Down”. Riley and Eaton are original band members, while Dillman works for a nonprofit that promoted a concert performed by Riley and Atkins and Land were alleged to be employed by Riley. In their Motions to Dismiss, Eaton and Riley argued lack of subject matter jurisdiction because Ready for the World did not plead a claim arising under the Lanham Act. Citing Derminer v. Kramer, they argued that they are co-owners of the Ready for the World trademark and thus cannot infringe upon the mark. The court agreed, and also granted the motions of Dillman, Atkins and Land.

The Intellectual Property Owners Association and four other associations have filed amicus briefs with the Supreme Court in the case of Romag Fasteners v. Fossil, Inc., Fossil Stores, I. Inc., Macy’s Inc, and Macy’s Retail Holdings, Inc. The case will examine whether lower courts have discretion under the Lanham Act with respect to how to award damages in trademark infringement cases, or whether courts are required to establish that the infringement was willful before awarding profits. While the American Bar Association (ABA), the International Trademark Association (INTA), the American Intellectual Property Law Association (AIPLA) and the Intellectual Property Law Association of Chicago (IPLAC) support adopting a more flexible approach that would not make willfulness a prerequisite to recover profits, IPO argues that the plain language of the statute necessitates such a requirement.

In the most recent development in a case between energy drink brand Monster Energy Company and maker of automotive tools Integrated Supply Network, LLC (ISN), the U.S. District Court for the Central District of California on July 2 denied Monster’s request for a permanent injunction against ISN. Monster appealed on July 3 to the U.S. Court of Appeals for the Ninth Circuit and ISN cross-appealed on July 12. The district court found that Monster did not offer evidence demonstrating that ISN’s infringement had actually caused a loss of control over its business reputation leading to irreparable harm and loss of prospective customers. Additionally, the court reasoned that evidence regarding consumer confusion does not necessarily demonstrate irreparable harm. Even where ISN had not ceased infringing activity, Monster still had not proven irreparable harm as required to justify a permanent injunction, said the court.

On August 7, the U.S. Court of Appeals for the Eleventh Circuit affirmed a jury verdict from the U.S. District Court for the Northern District of Georgia finding a landlord liable for contributory trademark infringement . The jury ruled for Plaintiffs Luxottica Group, LLC and Oakley, Inc., holding that Defendants Airport Mini Mall, LLC (AMM); Yes Assets, LLC; Chienjung (Jerome) Yeh; Donald Yeh; Jenny Yeh; and Alice Jamison were liable for contributory trademark infringement under the Lanham Act for allowing their subtenants to sell counterfeit goods that infringed the plaintiffs’ trademarks.

The U.S. Court of Appeals for the Second Circuit issued a decision in an appeal from the U.S. District Court for the Southern District of New York last Thursday that in part clarified that “a plaintiff prosecuting a trademark infringement claim need not in every case demonstrate actual consumer confusion to be entitled to an award of an infringer’s profits.” The Second Circuit court also remanded the case back to the District Court to apply the Octane Fitness standard for determining “exceptional” cases under the Lanham Act.

The United States Court of Appeals for the Seventh Circuit last week ruled that well-known sports drink maker Gatorade’s use of the slogan, ““Gatorade The Sports Fuel Company” beginning in 2016 amounted to  fair use under the Lanham Act and therefore did not violate SportFuel Inc.’s trademark rights. SportFuel is a nutrition and wellness consulting company based in Chicago that holds two registered trademarks for “SportFuel.” Around 2013, Gatorade, a subsidiary of PepsiCo., began a rebranding effort that included public descriptions of its products as “sports fuels”. Gatorade registered a trademark for “Gatorade The Sports Fuel Company” in 2016 but disclaimed “The Sports Fuel Company” due to the U.S. Patent and Trademark Office’s (USPTO’s) notice that the phrase was descriptive of its products. However, the company continued to use the slogan.

On June 28, the U.S. Supreme Court granted certiorari to take up a pair of cases that could affect how trademark cases are argued in federal courts. In Lucky Brands Dungarees, Inc. v. Marcel Fashion Group, Inc., the Court will determine whether federal preclusion principles bar defendants from raising defenses that could have been raised in previous cases between the same parties, even when the plaintiff asserts new claims. In Romag Fasteners, Inc. v. Fossil, Inc., SCOTUS will decide whether a finding of willful infringement is required to award an infringer’s profits in cases involving false designation of origin or false description.

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.

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.

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.

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.

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.

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).

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.