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Trademarks

First Sale Defense Bars Trademark Infringement Where Trademarked Component Is Adequately Disclosed

by Jodi Benassi | Apr 14, 2022 | Trademarks

A US Court of Appeals for the Ninth Circuit panel vacated a grant of summary judgment in favor of the plaintiff, holding that the first sale doctrine applies when a trademarked product is incorporated into a new product. Bluetooth SIG Inc. v. FCA US LLC, Case No. 21-35561 (9th Cir. Apr. 6, 2022) (per curiam).

Bluetooth SIG administers standards for Bluetooth technology. SIG owns and licenses the trademarks below to product manufacturers:

Fiat Chrysler Automobiles (FCA) makes cars that contain Bluetooth-equipped head units. The head units are made by third-party suppliers that have been qualified by SIG, but FCA has not taken steps to qualify the Bluetooth capabilities in its cars. FCA uses the SIG trademarks on its head units and publications.

SIG sued FCA under the Lanham Act for trademark infringement. In its defense, FCA asserted the first sale doctrine. Under the doctrine, the right of a producer to control the distribution of its trademarked product does not extend past the first sale of the product. For example, a purchaser who stocks, displays and resells a producer’s product under a producer’s trademark violates no trademark rights under the Lanham Act. The district court granted partial summary judgment for SIG on the first sale issue, finding that the first sale doctrine was inapplicable because FCA’s conduct went beyond “stocking, displaying, and reselling a product.” FCA appealed.

The Ninth Circuit found that the lower court erred when it took a narrow view of the Ninth Circuit’s 1995 decision in Sebastian Int’l, Inc. v. Longs Drugs Stores Corp., in which the Court stated that “it is the essence of the ‘first sale’ doctrine that a purchaser who does no more than stock, display, and resell a producer’s product under the producer’s trademark violates no right conferred upon the producer by the Lanham Act.” The panel noted that the Sebastian Court never purported to articulate the outer bounds of the first sale doctrine; instead it simply captured the unauthorized resale of genuine goods.

The Ninth Circuit explained that the first sale doctrine also applies when a trademark is used to refer to a component incorporated into a new end product as long as the seller adequately discloses how the trademarked product was incorporated. The Court cited to the 1925 Supreme Court precedent in Prestonettes, Inc. v. Coty, which effectively extends the first sale doctrine beyond the examples stated in Sebastian. In Prestonettes, the Supreme Court held that trademark law did not prohibit a manufacturer from using a trademark, not to indicate the goods, but to say that the trademarked product was a component in a product being offered as new and changed. The Ninth Circuit also noted its 1998 holding in Enesco Corp. v. Price/Costco, in which it found that the first sale doctrine protected a retailer that resold dolls in allegedly inadequate packaging to the extent the repackaging was disclosed. The Enesco Court explained that if the public was adequately informed that [...]

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Half-Baked Case: No Misappropriation or False Advertising Given Over-Broad Allegations

by Paul Devinsky | Mar 31, 2022 | Trade Secrets, Trademarks

The US Court of Appeals for the Tenth Circuit affirmed a district court’s grant of summary judgment in favor of a defendant baker on a trade dress infringement claim and reversed the district court’s denial of the defendant baker’s motions for judgment as a matter of law on trade secrets misappropriation and false advertising claims. Bimbo Bakeries USA, Inc. v. Sycamore, Case Nos. 18-4062; -4031; -4040 (10th Cir. Mar. 18, 2022) (Hartz, Phillips, Eid, JJ.)

Bimbo Bakeries (and its predecessor, EarthGrains Baking Companies) owns, bakes and sells Grandma Sycamore’s Home-Maid Bread, a popular bread in Utah. U.S. Bakery is a competitor, and Leland Sycamore is the baker who developed the Grandma Sycamore’s recipe. Sycamore parted with his interest in Grandma Sycamore’s and opened his own bakery, Wild Grains Bakery. U.S. Bakery hired Wild Grains Bakery to produce another homemade bread product, Grandma Emilie’s. The relationship soured, and U.S. Bakery moved its Grandma Emilie’s operations in-house. U.S. Bakery developed a new formula for Grandma Emilie’s and enlisted a former Wild Grain employee to help. U.S. Bakery also created packaging for the bread based on Grandma Sycamore’s packaging. U.S. Bakery used several taglines to help sell its products, including “Fresh. Local. Quality.”

Bimbo Bakeries (then EarthGrains) sued Leland Sycamore, Tyler Sycamore (Leland’s son and co-baker), Wild Grains Bakery and U.S. Bakery, alleging multiple claims related to the Grandma Emilie’s operations, including trade secret misappropriation under the Utah Uniform Trade Secrets Act and trade dress infringement, trade dress dilution, false designation of origin, false advertising and unfair competition under the Lanham Act. Bimbo Bakeries alleged that U.S. Bakery’s use of the word “local” in the tagline “Fresh. Local. Quality.” constituted false or misleading advertising because U.S. Bakery did not actually bake all its bread products within the state of sale. The district court granted summary judgment in favor of U.S. Bakery on the trade dress infringement claim. The parties went to trial on the trade secrets misappropriation and false advertising claims. The jury ruled in Bimbo Bakeries’ favor on both and awarded more than $2 million in damages. The district court increased the damages owed by U.S. Bakery by almost $800,000 because U.S. Bakery was found to have willfully and maliciously misappropriated Bimbo Bakeries’ trade secret. The district court remitted the jury’s damages for the false advertising claim to around $83,000. The district court also permanently enjoined U.S. Bakery and Sycamore from using Bimbo Bakeries’ trade secret and denied renewed motions by U.S. Bakery and Sycamore for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

Bimbo Bakeries, U.S. Bakery and Sycamore appealed. Bimbo Bakeries argued that the district court should not have granted U.S. Bakery summary judgment on its trade dress infringement claim and should not have remitted damages for the false advertising claim. U.S. Bakery and Sycamore argued that the district court should have granted their renewed motions for judgment as a matter of law for the trade secrets misappropriation and false advertising claims.

On [...]

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“TRUMP TOO SMALL” Trademark Decision Leaves Big Questions

by Sarah Bro | Mar 10, 2022 | Trademarks

Revisiting jurisprudence touching on the Lanham Act and the First Amendment from the Supreme Court’s decisions in Matal v. Tam and Iancu v. Brunetti, the US Court of Appeals for the Federal Circuit held that applying Sec. 2(c) of the Lanham Act (which bars registration of a trademark that consists of or comprises a name of a particular living individual without their written consent) may, in certain instances, unconstitutionally restrict free speech in violation of the First Amendment. In this instance, the Federal Circuit found that the Trademark Trial & Appeal Board’s (Board) refusal to register the trademark “TRUMP TOO SMALL” for use on t-shirts involved content-based discrimination that was not justified by a compelling or substantial government interest. In re: Steve Elster, Case No. 20-2205 (Fed. Cir. Feb. 24, 2022) (Dyk, Taranto, Chen, JJ.)

Steve Elster filed a US trademark application in 2018 for the mark “TRUMP TOO SMALL” (a reference to a 2016 Republican presidential primary debate exchange between then- candidate Donald Trump and Senator Marco Rubio (R-FL)) for use on shirts. The US Patent & Trademark Office (PTO) examining attorney, and subsequently the Board, refused registration of the mark on grounds that it clearly referred to former President Trump, and that Elster did not have written consent to use former President Trump’s name in violation of Sec. 2(c) of the Lanham Act. Sec. 2(c) requires such consent when a trademark identifies a “particular living individual.” Elster argued that his trademark aimed to convey that some features of former President Trump and his policies were diminutive and appealed the Board’s holding that Sec. 2(c) is narrowly tailored to advance two compelling government interests, namely, protecting an individual’s rights of privacy and publicity and protecting consumers against source deception.

The Federal Circuit started with a brief primer on relatively recent decisions in which the Supreme Court found certain provisions of Sec. 2(a) to be improper viewpoint discrimination because they barred registration of trademarks that were disparaging or comprised of immoral or scandalous matter. The Federal Circuit found that while neither Tam nor Brunetti resolved Elster’s appeal pertaining to Sec. 2(c), the cases did establish that a trademark represents private, not government, speech entitled to some form of First Amendment protection, and that denying a trademark registration is akin to the government disfavoring the speech being regulated. The Court then examined whether Sec. 2(c) could legally disadvantage the specific “TRUMP TOO SMALL” speech at issue in Elster’s case, and whether the government has an interest in limiting speech on privacy or publicity grounds if that speech involves criticism of government officials.

The Federal Circuit did not decide the matter on whether a trademark is a government subsidy, avoiding the somewhat varying opinions of the Supreme Court on that issue. Instead, the Federal Circuit found that Elster’s mark constituted speech by a private party for which the registration restriction must be tested by the First Amendment. Regardless of whether strict or intermediate scrutiny is applied [...]

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Message Received: Service of Complaint by Email Found Sufficient

by Paul Devinsky | Mar 3, 2022 | Trademarks

The US Court of Appeals for the Fifth Circuit affirmed the district court’s entry of default judgment against the defendant because email service of the complaint was proper under the Federal Rules of Civil Procedure and the Texas Rules of Civil Procedure. Viahart, L.L.C. v. He GangPeng, Che Haixing, Aszune, Case No. 21-40166 (5th Cir. Feb. 14, 2022) (Wiener, Graves, Ho, JJ.)

Viahart manufactures, distributes and retails toys and educational products under registered trademarks. Viahart sued approximately 50 defendants for selling counterfeit products bearing its trademark on several online marketplaces. At the time Viahart filed its complaint, it moved to serve all defendants by email. The district court denied the motion but permitted Viahart to conduct discovery to determine the identities and addresses of the defendants through the online marketplaces. After attempting to obtain contact information for the defendants, Viahart again moved to serve the defendants by email. In the motion, Viahart documented its efforts to serve defendants physically and provided proof of attempted service for various defendants. The district court granted the motion, and Viahart served the defendants via email.

Viahart subsequently moved for entry of default judgment against defendants that failed to appear or otherwise respond to the complaint. The district court granted the default judgment motion and determined that each defaulting defendant was liable for $500,000 each plus attorneys’ fees and costs. The judgment permanently enjoined defendants from using Viahart’s trademarks, competing with Viahart unfairly, and withdrawing any funds from the online marketplaces or payment processors. Three of the defendants—GangPeng, Haixing and Aszune—appealed the judgment, arguing that service was improper, that they were improperly joined with the 50 other defendants and that “there was no trademark infringement.”

The Fifth Circuit found no error in the district court’s entry of default judgment. The Court noted that it reviews the entry of default for an abuse of discretion and the underlying factual determinations for clear error. The Court determine that Viahart properly complied with the Texas Rules of Civil Procedure in its attempts to serve GangPeng, including documenting its attempts to personally serve GangPeng and attaching the required affidavits that allowed the district court to authorize substitute service. As for Haixing and Aszune, the Court found that under the Federal Rules of Civil Procedure, email service was appropriate because it was court ordered, was reasonably calculated to notify the defendants and was not prohibited by an international agreement.

The Fifth Circuit rejected the defendants’ misjoinder argument, finding that there was no basis for misjoinder under Federal Rules of Civil Procedure 20 and 21. The Court found that the complaint sufficiently alleged that the defendants were all working together and that their conduct arose out of the same transaction, and therefore joinder was appropriate. Finally, the Court rejected the defendants’ argument that there was “no trademark infringement” because factual questions and unpled affirmative defenses cannot be raised on appeal of a default judgment when they were not presented to the district court. Accordingly, the Court affirmed the district court’s default [...]

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2022 IP Outlook Report: The Developments Shaping European IP Law

by Dr. Henrik Holzapfel, Laura Morelli, Claire Boosz, Charles de Raignac and Dr. Maximilian Kiemle, LLM | Mar 1, 2022 | EU Update, Patents, Trademarks

Key Takeaways and Outlook for 2022

While European intellectual property (IP) regimes have slowly digested the Brexit shock, brand owners are vacillating between optimism and apprehension in 2022 as they navigate continuous developments in IP law. At the forefront is the prospect of greater patent law harmonization with the entry into force of the Unified Patent Court (UPC) and the European patent with unitary effect. En route to this unification, however, are some anticipated challenges.

The actions initiated in 2021 that will continue to spark conversation (and controversy) in 2022 include:

Read the full report.

Dominik Rissman, a trainee in the Dusseldorf office, also contributed to this report.

The PTO Isn’t Playing Around: More Sanctions for Improper Trademark Filings

by Sarah Bro | Feb 17, 2022 | Trademarks

The US Patent & Trademark Office (PTO) continues to uphold its promise to combat fraud and “protect the integrity of the U.S. trademark register” with initiatives to investigate and sanction actions before the PTO that appear to violate the Trademark Rules of Practice or the PTO website terms of use. The latest effort comes in the form of a January 25, 2022, sanctions order signed by the commissioner for trademarks against Abtach, 360 Digital Marketing and Retrocube based on evidence that each of the respondents engaged in an “egregious scheme to deceive and defraud both the PTO and individual applicants in more than 5,500 trademark applications, including engaging in the unauthorized practice of law and intentionally providing false, fictitious, or fraudulent information to the PTO in violation of the PTO’s rules of practice in trademark matters.” According to the sanctions order, the respondents were each given an opportunity to respond to a show cause order issued in November 2021, but the PTO received no responses from the noticed parties.

In the sanctions order, the PTO outlined the activities of the three respondents, which appear to operate as separate entities but are ultimately controlled by Abtach, a Pakistan-based company that is also under investigation by Pakistan’s Federal Investigation Agency for criminal fraud. The PTO’s use of the word “egregious” to describe the respondents’ actions might be an understatement. The sanctions order describes how the respondents set up dozens of websites to hold themselves out as providers of logo designs and low-cost trademark application filing services while forging documents that appear to be issued by the PTO, artificially modifying official PTO documents, threatening customers with legal action if they did not file for registration of their logos through the respondents, intentionally filing applications with errors to delay and increase the cost of the prosecution process, submitting invalid verifications and declarations and demanding payments for unnecessary services or fraudulently inflated fees. The respondents took these actions while failing to employ any US-licensed lawyers to do this work before the PTO.

In determining appropriate sanctions, the PTO considers several factors, including whether the conduct was willful or negligent, whether it was part of a pattern of activity or an isolated event, whether it infected the entire record or was limited to a single submission, whether it was intended to injure a party, what effect it has on the PTO and what is needed to deter similar conduct by others. In this case, the PTO found that the respondents had orchestrated a “widespread, intentional and coordinated effort to defraud both applicants and the USPTO.” Finding the respondents’ activities to be both willful and fraudulent, and to have harmed thousands of applicants while also delaying proceedings in the PTO and “eroding trust in the U.S. trademark registration process,” the PTO ordered termination of all trademark applications and proceedings submitted by the respondents. The PTO will also flag any issued registrations as being subject to a sanctions order. To the extent any victims of the respondents have [...]

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2022 IP Outlook Report: The Developments Shaping Trademark Law

by Sarah Bro, Eleanor B. Atkins and Joshua Revilla | Feb 15, 2022 | Trademarks

Key Takeaways and Outlook for 2022

While Gen Z taught us all on TikTok how not to be “cheugy,” or out of touch with pop culture, similarly, trademark law in 2021 ushered in new and changed regulations, provided further guidance on traditional legal concepts and gave us a peek into how brands may help shape the future in the “metaverse”—and beyond. Trademarks (like Gen Z), keeping us all hip.

After another year of uncertainty marked by an ongoing pandemic, environmental strains, fights for social justice and a growing understanding of what it means to be truly equitable and inclusive, we expect that brands will continue to serve as cultural beacons, consumer protection tools and drivers of change in 2022. Developments to watch include:

Read the full report.

This .SUCKS: Trademark Applications for Identical Characters Is a No-Go

by Jodi Benassi | Feb 10, 2022 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed a Trademark Trial and Appeal Board (Board) decision affirming the US Patent and Trademark Office’s (PTO) refusal to register two trademark applications for “.SUCKS.” In Re: Vox Populi Registry Ltd., Case No. 21-1496 (Fed. Cir. Feb. 2, 2022) (Lourie, Dyk, Stoll, JJ.)

Vox is a domain registry operator that maintains the master database of all domain names registered in each top-level domain. Vox filed two trademark applications for identical characters, one as a standard character and the other as a stylized form of .SUCKS, as shown below.

The PTO refused Vox’s applications on the grounds that, when used in connection with the domain services, each failed to function as a trademark. Vox appealed to the Board. The Board concluded that .SUCKS, whether as a standard mark or in the stylized form, would not be perceived as a source identifier. Vox appealed the Board’s decision only with respect to the stylized form of .SUCKS.

On appeal, the Federal Circuit noted that although Vox did not appeal the rejection of the standard character application, it spent much of its opening brief arguing that the standard character functions as a mark. As such, the Court reviewed the Board’s decision with respect to the standard character mark .SUCKS under the substantial evidence standard. Substantial evidence “means only such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” The Court found that substantial evidence supported the Board’s finding that consumers will view .SUCKS as only a non-source identifying part of a domain name, rather than as a trademark. The Court cited evidence reviewed by the Board, including Vox’s website, online articles and advertisements showing that .SUCKS refers to a product rather than as an identifiable provider or service. Ultimately, the Court found that the Board reasonably weighed the evidence.

The Federal Circuit next addressed the question of whether the stylized design of .SUCKS is registerable. The Court found no error in the Board’s analysis of whether the stylized form creates a separate commercial impression, where “all of the characters in the mark are the same height and width and are merely displayed in a font style that was once mandated by the technological limitations of computer screens.” Because the stylized design was not inherently distinctive, the Court rejected Vox’s application, thus affirming the Board’s decision in full.

Alleged Trademark Infringer Remains Hog-Tied after Appeal

by Paul Devinsky | Feb 3, 2022 | Trademarks

The US Court of Appeals for the Tenth Circuit dismissed an appeal of a district court order denying a stay of a federal action for lack of jurisdiction under 28 U.S.C. § 1291 and reversed in part the district court’s grant of a preliminary injunction. The Trial Lawyers College v. Gerry Spence Trial Lawyers College at Thunderhead Ranch, Case No. 20-8038 (10th Cir. Jan. 27, 2022) (Bacharach, Briscoe, Murphy, JJ.).

The dispute between the parties arose out of a program called The Trial Lawyers College at Thunderhead Ranch in Wyoming. The College’s board of directors split into two factions known as the “Spence Group” and the “Sloan Group.” After the split, the two groups sued each other. The Spence Group sued in state court for dissolution of the College and a declaratory judgment regarding control of the board of directors. The Sloan Group sued in federal court claiming trademark infringement under the Lanham Act.

Both groups sought relief in the federal case. The Spence Group filed a motion to stay the federal court proceedings in light of the state court proceedings, and the Sloan Group requested a preliminary injunction. The district court denied the Spence Group’s stay and granted the Sloan Group’s request for a preliminary injunction. The Spence Group appealed both rulings.

The Tenth Circuit found that it lacked jurisdiction to review the district court’s stay denial. First, the state court resolved the dispute concerning board control, rendering part of the requested stay moot. Second, the Court determined that it lacked jurisdiction over the remaining motion for stay because it was not a final order. The Court explained that it needed to decide the appealability of the ruling based on the category of order rather than the particular facts of the case. The Court found that there was no unsettled issue of unique urgency or importance that warranted the Court exercising jurisdiction over the denial of the stay. Specifically, the Court explained that piecemeal litigation was unlikely because the state court already decided the issue of board control, and the Spence Group did not identify an unsettled issue of unique urgency.

The Tenth Circuit did exercise jurisdiction over the district court’s grant of a preliminary injunction. The Spence Group challenged the district court’s finding of irreparable harm, the order to remove sculptures bearing the College’s name, restrictions on what the Spence Group could say and the consideration of evidence presented after the hearing ended. The Court reviewed the district court’s findings under an abuse-of-discretion standard. The Court found that the district court did not abuse its discretion by finding irreparable harm, considering evidence after the hearing and enjoining the Spence Group from using words associated with the College. The Court explained that the district court reasonably found irreparable harm based on the College’s efforts to protect its name, logo and trademarks, as well as evidence of likely confusion among customers of the College based on the Spence Group’s use of those trademarks. As for the sculptures, the Court found [...]

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Can’t Presume Personal Jurisdiction Exists When Challenged

by Lisa P. Rumin, Claire Danberg and Joshua W. Eastby | Feb 3, 2022 | Trademarks

The US Court of Appeals for the First Circuit affirmed a district court order dismissing a trademark infringement case for lack of personal jurisdiction, finding that if challenged, personal jurisdiction cannot be assumed into existence. Motus, LLC v. CarData Consultants, Inc., Case No. 21-1226 (1st Cir. Jan. 18, 2022) (Lynch, Selya, McConnell, JJ.)

Motus is a Delaware corporation headquartered in Boston, Massachusetts. CarData is a Canadian corporation with offices in Colorado, New York and Toronto. Both Motus and CarData offer tools for companies to manage employee expense reimbursement. Motus asserted a trademark over the phrase “corporate reimbursement services,” which was present in the meta title of CarData’s website. In November 2019, Motus asked CarData to remove the phrase from its website, and CarData did so within three days.

Motus nevertheless filed a federal lawsuit in the District of Massachusetts asserting Lanham Act claims for trademark infringement, trademark dilution and other state and federal causes of action. CarData moved to dismiss for lack of personal jurisdiction, among other grounds. The district court granted the motion to dismiss, finding that Motus failed to demonstrate either the existence of personal jurisdiction over CarData or that discovery into CarData’s jurisdictional claims were warranted. Motus appealed.

On appeal, the First Circuit reiterated that Motus bore the burden of demonstrating that the district court’s exercise of personal jurisdiction over CarData was proper, noting that although a plaintiff is not required to plead facts sufficient for personal jurisdiction, “it must—if challenged—ensure that the record contains such facts.” To demonstrate that personal jurisdiction over CarData was proper, Motus had to show that CarData had sufficient “minimum contacts” with the forum that were sufficiently related to the matter at issue and evidenced a “purposeful availment of the privilege of conducting business in the forum,” and also had to show the reasonableness of the exercise of personal jurisdiction in that forum. Motus argued that CarData had sufficient “minimum contacts” with Massachusetts for personal jurisdiction to lie there, primarily because CarData had offices elsewhere in the United States and because CarData maintained a website that was available to serve Massachusetts residents.

Given that Motus’s arguments for personal jurisdiction related primarily to the publicly available nature of CarData’s website to residents of Massachusetts, the First Circuit explained that “[i]n website cases we have recognized that the ‘purposeful availment’ element often proves dispositive.” Here, the Court found nothing in the record suggesting that CarData specifically targeted or did business with Massachusetts residents. The Court rejected Motus’s citation to informational content on the website because it was not specific enough to evidence intentional solicitation of business from any particular state. Nor was there evidence of substantial CarData revenue from Massachusetts. Thus, the Court found that there was no “purposeful availment.”

Finally, the First Circuit affirmed the district court’s denial of jurisdictional discovery into CarData’s “minimum contacts” with Massachusetts. The Court found that although Motus mentioned the availability of jurisdictional discovery in a single sentence in a footnote to its opposition to CarData’s motion to [...]

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