Pardon My French: France Wins Trademark Dispute Using Sovereign Immunity

The US Court of Appeals for the Fourth Circuit reversed a district’s court denial of sovereign immunity under the Foreign Sovereign Immunity Act (FSIA) and remanded the case to be dismissed with prejudice, holding that France was immune from a trademark infringement claim in the United States brought by the former owner of the domain name France.com. France.com, Inc. v. The French Republic, Case No. 20-1016 (4th Cir. Mar. 25, 2021) (Motz, J.)

Jean-Noel Frydman and his company France.com, Inc. (collectively, Frydman) purchased and registered the domain name France.com and trademarked the name in the United States and in the European Union. In 2015, the Republic of France (RoF) intervened in an ongoing lawsuit between Frydman and a third party, asserting the exclusive right to the use of the term “France” commercially. The RoF also insisted that the use of “France” by a private enterprise infringed on its sovereignty. The Paris District Court agreed and ordered the transfer of the domain name to the RoF.

Frydman filed suit for trademark infringement, expropriation, cybersquatting and reverse domain name hijacking, and federal unfair competition in a Virginia district court against the RoF. The RoF moved to dismiss the claim based on the FSIA. The district court denied the motion, stating that the FSIA immunity defense would be best raised after discovery. The RoF appealed.

The Fourth Circuit first determined, based on Supreme Court precedent, that sovereign immunity was a threshold question to be addressed “as near to the outset of the case as is reasonably possible” and not to be postponed until after discovery.

The Court next considered whether the RoF was immune to suit. The FSIA provides a presumption of immunity for foreign states that can only be overcome if the complaint provides enough information to satisfy one of the specified exceptions. Frydman argued that the commercial activity and expropriation exceptions applied.

The commercial activity exception removes immunity where a foreign state has commercial activity in, or that has a direct effect in, the United States. Essentially, a court must determine whether the actions of the foreign state are those of a sovereign or those of a private party engaged in commerce. The Fourth Circuit first identified that the actual cause of the injury at issue to Frydman was the French court’s ruling that the domain name belonged to the RoF, and found that all claims of wrongdoing by the RoF flowed form the French court’s decision. Additionally, even if it was solely the transfer of the domain name that harmed Frydman, and not the French court’s judgment, the transfer was still based on the French court’s judgment that provided the basis for RoF to obtain the domain name. Because the cause of action was based on the powers of a sovereign nation (the foreign judgment) and not the actions of a private citizen in commerce, the Fourth Circuit found that the commercial activity exception did not apply.

The Fourth Circuit next rejected Frydman’s assertion of the expropriation exception. This exception [...]

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Purple Pain: Warhol’s Prince Series Isn’t Fair Use of Photographer’s Image

In a case spanning nearly 40 years of art and touching the estates of two of the world’s most well-known artists, the US Court of Appeals for the Second Circuit clarified its position on the application of the fair use doctrine and its protection of transformative works. In doing so, the Second Circuit reversed the district court’s finding of fair use and held that a series of prints and illustrations of the musical artist Prince created by the visual artist Andy Warhol were substantially similar to a 1981 portrait photograph of Prince taken by the photographer Lynn Goldsmith. The Court remanded for further proceedings. The Andy Warhol Foundation for the Visual Arts, Inc. v. Lynn Goldsmith, et al., Case No. 19-2420-cv (2d Cir. Mar. 26, 2021) (Lynch, J.) (Sullivan, J., joined by Jacobs, J., concurring) (Jacobs, J., concurring).

In 1984, Goldsmith’s agency licensed her 1981 photograph of Prince to Vanity Fair for use as an artist reference for creating a rendering of Prince to accompany Vanity Fair‘s profile of the artist. What Goldsmith did not learn until more than 30 years later, shortly after Prince’s untimely death, was that the artist commissioned by Vanity Fair to create the Prince drawing was Andy Warhol, and that Warhol had also used the photograph to create an additional 15 silkscreen prints and illustrations, known as the Prince Series. In 2017, Goldsmith notified The Andy Warhol Foundation for the Visual Arts (AWF), as the successor to Warhol’s copyright in the Prince Series, of her claims of copyright infringement. AWF responded with a lawsuit seeking a declaratory judgment that the Prince Series works were non-infringing or, in the alternative, qualified as fair use of Goldsmith’s photograph. Goldsmith countersued for infringement. Relying on the Second Circuit’s 2013 holding in the copyright case Cariou v. Prince, the district court granted summary judgment to AWF, agreeing with its assertion of fair use and considering the Warhol work to be “transformative” of the original. Goldsmith appealed.

The appeal required the Second Circuit to consider, de novo, the four fair use factors under § 107 of the Copyright Act: (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.

The Court focused its analysis on the first fair use factor, and specifically the extent to which the Prince Series works were transformative of the original. The transformative nature of a work is determined by whether the new work merely supersedes the “objects of the original creation,” or whether it “instead adds something new, with a further purpose or different character, altering the first with new expression, meaning, or message.” The Court noted that the assessment of a transformative work is less clear where the [...]

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Triple Trouble: Unauthorized Trademark Use among Organizations with Nearly Identical Name

The US Court of Appeals for the District of Columbia Circuit affirmed a district court ruling that the use of nearly identical marks by a military order, a related foundation and a funding organization was likely to cause confusion. Military Order of the Purple Heart Service Foundation, Inc. v. Military Order of the Purple Heart of the United States of America, Inc., Case No. 19-7167 (DC Cir. Mar. 16, 2021) (non-precedential).

This case involved a dispute among three entities: the Military Order of the Purple Heart of the United States of America, Inc. (Order); the Military Order of the Purple Heart Service Foundation, Inc. (Foundation); and the Military Order of the Purple Heart Service Foundation Holdings, LLC (Holdings). The Order provides charitable services to veterans, and the Foundation funds the Order’s operations. Holdings is owned by the Foundation and licensed the Order to use Holdings’ “Purple Heart” word mark in connection with charitable fundraising for specific approved projects. The funding agreement between the parties was made in 2016, and the use of the trademark was agreed to in 2017. Following a warning from the Foundation in 2018 that the Order’s funding might be reduced for 2019 because of financial problems, the Order began fundraising on its own, at times purposely diverting funds away from the Foundation while using the “Purple Heart” mark without Holdings’ permission.

The Foundation and Holdings sued the Order for breach of the 2016 funding agreement, breach of the 2017 licensing agreement, and trademark infringement. The Order filed its own suit for breach of the funding agreement. The cases were consolidated and the district court ruled that the Order’s use of the mark without permission violated the licensing agreement and two provisions of the Lanham Act. The Order appealed.

The DC Circuit agreed that the Order’s use of Holdings’ mark was in plain violation of the parties’ 2017 agreement. The agreement stated that the Order could use the mark “only in connection with charitable fundraising for specific projects that are approved by [Holdings] and are consistent with [the Order’s] mission statement.” Thus, the Order’s fundraising advertisements using the mark without permission were inconsistent with the agreement.

The DC Circuit also found that the Order’s use of the “Purple Heart” mark was likely to cause confusion. Not only are the names of these entities nearly identical, but the Order’s national commander admitted at trial that the public frequently confuses the Order and the Foundation. Citing its 1982 Foxtrap precedent, the Court concluded that consumer confusion is likely where the marks in issue are identical and the record contains evidence that the businesses are sufficiently related so as to be connected in the mind of the relevant public.




Blame the Lawyer: In Exceptional Case, Plaintiff’s Attorney Liable for Court and Appellate Fees

The US Court of Appeals for the Federal Circuit affirmed an award of attorneys’ fees against a plaintiff and his counsel, and further granted defendants’ motion for appellate attorneys’ fees and double costs where plaintiff had brought baseless claims, engaged in litigation misconduct and brought a frivolous appeal. Pirri v. Cheek, Case No. 20-1959 (Fed. Cir. Mar. 22, 2021) (non-precedential) (per curiam).

When Plaintiff saw Defendant present her patented idea for “online dating in reverse” on the television show “Shark Tank,” he knew that she had gotten the idea from his therapist, Richards, who had betrayed his confidence. Through his counsel, Plaintiff sued Richards as well as Defendant, her company and her co-inventors (whom he never served) (collectively, Cheek) for joint inventorship of the patent (Richards was not a named inventor), and several state law claims, including breach of fiduciary duty, fraud, conversion and unjust enrichment. At the initial pretrial conference, Plaintiff voluntarily dismissed some of the state law claims and the joint inventorship claim against Richards. The district court dismissed the remaining state law claims as “obviously time-barred,” leaving only the joint inventorship claim against Cheek. Defendant moved for Rule 11 sanctions, which the district court denied.

Plaintiff sought leave to amend the complaint to add several new defendants and claims, but the district court denied the motion as futile. Notwithstanding the dismissal of Richards from the suit, Plaintiff subpoenaed Richards’s employment records, but withdrew the subpoena when Richards moved to quash. Plaintiff requested a discovery extension, which the Court denied as relating to irrelevant material. Just before the close of discovery, Plaintiff moved for voluntary dismissal with prejudice. Defendant opposed the dismissal motion in order to seek fees, and the district court denied the motion. Six days later, Plaintiff renewed the motion for dismissal, arguing that the previous denial of Rule 11 sanctions collaterally estopped a fees award. Again, Defendant opposed, and the Court denied the motion.

Two months later, the district court held a pre-summary-judgment conference, before which it ordered Plaintiff to file a letter indicating whether and why he would oppose summary judgment. After declining on several occasions to concede summary judgment or identify any evidence supporting his claims, Plaintiff finally consented to summary judgment for Defendants, which the district court granted.

The district court later granted Defendant’s motion for fees, finding that the case was exceptional. Because Plaintiffs’ counsel had prepared, signed and filed all the relevant submissions, the district court held counsel jointly and severally liable for the award.

Plaintiff appealed, and Defendant moved for appellate fees and double costs.

The Federal Circuit affirmed the fee award, finding no abuse of discretion, and further found that the appeal was frivolous as argued in part because Plaintiff’s counsel distorted the factual and legal bases for the fees award and “leveraged inapposite legal doctrines to make arguments that can only be described as baffling.” The Court concluded that “[w]hen an appeal is frivolous as argued, we may hold a party’s counsel jointly and severally liable.”




Set Phase to Subject Matter Ineligible: More Accurate Haplotype Phase Method Still Abstract

In an appeal from a final rejection of a pending application, the US Court of Appeals for the Federal Circuit held that claims directed to methods for determining “haplotype phase” were correctly rejected as subject matter ineligible. In Re: Board of Trustees of The Leland Stanford Junior University, Case No. 20-1288 (Fed. Cir. Mar. 11, 2021) (Reyna, J.)

This case was consolidated for the purposes of oral argument with In Re: The Board of Trustees of the Leland Stanford Junior University, Case No. 20-1012 (Stanford Part I). Both cases relate to methods of determining “haplotype phase” (a scientific way of describing the methodology for determining from which parent a particular allele (or gene) is inherited).

Stanford Part I related to a claimed method that utilized “linkage disequilibrium data” and “transition probability data” to increase the number of haplotype predictions made. In Stanford Part I, the Federal Circuit held that this claimed method for increasing the number of haplotype predictions made did nothing more than recite a haplotype phase algorithm and instruct users to “apply it,” similar to the claimed subject matter prohibited by Alice.

The claims at issue in this appeal were directed toward a method of improving the accuracy and efficiency of haplotype predictions, which involves “building a data structure describing a Hidden Markov Model,” and then “repeatedly randomly modifying at least one of the imputed initial haplotype phases” to automatically recompute the parameters of the Hidden Markov Model until the parameters indicate that the most likely haplotype phase is found. In addition to these mathematical steps, the claims recited the steps of receiving genotype data, imputing an initial haplotype phase, extracting the final predicted haplotype phase from the data structure and storing it in computer memory.

The examiner and then the Patent Trial & Appeal Board found that this claimed improved process was directed toward patent-eligible subject matter—a mathematical algorithm. Stanford appealed.

Applying the two-step Alice framework, the Federal Circuit first determined whether the claims were directed to an abstract mathematical calculation and thus directed to patent-ineligible subject matter under 35 USC § 101.

Stanford argued that the claimed process was not directed to a patent-ineligible abstract idea, but instead represented an improvement on a technological process—namely, an improvement in the efficiency of haplotype phase predictions that this mathematical algorithm could yield. The Federal Circuit found that Stanford had forfeited this argument by failing to raise it before the Board.

Stanford separately argued that another claimed advantage was that the claim steps resulted in more accurate haplotype predictions, rendering the claimed invention a practical application rather than an abstract idea. The Federal Circuit disagreed, explaining that the improvement in computational accuracy alleged here did not qualify as an improvement to a technological process, but rather was an enhancement to the abstract mathematical calculation of haplotype phase itself.

Next, under step two of the Alice inquiry, the Federal Circuit found that the claims did not include additional limitations that, when taken as a whole, provided an [...]

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