Lanham Act Archives

Lanham Act

It’s not monkey business: NFTs can be trademarked

by Ashley K. Justice | Jul 31, 2025 | Trademarks

The US Court of Appeals for the Ninth Circuit concluded that a non-fungible token (NFT) is a “good” under the Lanham Act but reversed the district court’s grant of summary judgment for trademark infringement because the owner did not prove as a matter of law that the defendants’ use was likely to cause confusion. The Ninth Circuit also affirmed the district court’s dismissal of the defendants’ counterclaim for declaratory relief regarding copyright ownership. Yuga Labs, Inc. v. Ryder Ripps and Jeremy Cahen, Case No. 24-879 (9th Cir. July 23, 2025) (Bade, Forrest, Curiel, JJ.)

Yuga Labs is the creator of the Bored Ape Yacht Club (BAYC) NFT collection. Yuga created this collection through a smart contract recorded on the blockchain Ethereum. Each BAYC NFT has a cartoon of a bored ape and a sequential unique identifier called an ape ID. Per its terms and conditions, BAYC NFT consumers receive commercial and personal rights free of royalty fees.

Ryder Ripps and Jermey Cahen created the Ryder Ripps Bored Ape Yacht Club (RR/BAYC) using the same ape images and ape IDs. The collection was also hosted on an Ethereum blockchain smart contract. They criticized Yuga for “using neo-Nazi symbolism, alt-right dog whistles, and racist imagery” and alleged that they created RR/BAYC as satire and criticism. Ripps made the RR/BAYC smart contracts’ names “Bored Ape Yacht Club” and made the smart contract symbol “BAYC.” Ripps’ website includes an artist statement that the artwork is a “new mint of BAYC imagery.” NFT marketplace websites for RR/BAYC displayed a large header “Bored Ape Yacht Club” and in a smaller text “@ryder_ripps.”

Yuga sued Ripps and Cahen for several claims, including trademark infringement based on a false designation of origin theory, false advertising, and cybersquatting. In response, the defendants asserted that Yuga did not have enforceable trademark rights, and even if it did, the defendants’ use was protected by fair use and the First Amendment. The defendants asserted several counterclaims, including knowing misrepresentation of infringing activity under the Digital Millenium Copyright Act (DMCA), and sought declaratory judgment of no copyright ownership.

The district court granted Yuga’s motion for summary judgment on its false designation of origin and cybersquatting claims. Yuga withdrew its remaining claims, so the trial proceeded only for equitable remedies on the false designation of origin and cybersquatting. At trial, the district court found that Yuga’s BAYC marks were unregistered trademarks. The district court awarded Yuga disgorgement of the defendants’ profits, maximum statutory damages, and attorneys’ fees after finding that the case was exceptional due to the defendants’ willful infringement, bad faith intent to profit, and litigation conduct. The defendants were also permanently enjoined. The defendants appealed the grant of summary judgment and sought vacatur of the remedies.

The Ninth Circuit first addressed the defendants’ argument that NFTs are not goods protected by the Lanham Act. The Court concluded that NFTs are goods under the Lanham Act based on a US Patent & Trademark Office report that determined them as such. The Court also [...]

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Sound the alarm: Fourth Circuit affirms $190 million verdict based on deceptive trade practices

by Dexter Hamilton | Jul 31, 2025 | Uncategorized

The US Court of Appeals for the Fourth Circuit affirmed a $190 million verdict based on deceptive trade practices, concluding that the district court performed well within its discretion in making the procedural ruling and that the jury verdict was fully supported by the evidence. CPI Security Systems, Inc. v. Vivint Smart Home Inc., Legacy Vivint Smart Home, Inc., Case No. 24-1120 (4th Cir. July 22, 2025) (Benjamin, Berner, Niemeyer, JJ.)

CPI Security Systems and Vivint Smart Home are competitors in the home security industry. CPI sued Vivint in 2020 alleging violation of the Lanham Act and North Carolina Unfair and Deceptive Trade Practices Act (UDTPA), and the common law torts of unfair competition and tortious interference with contracts. CPI’s claims were based on allegations that Vivint used deceptive tactics for door-to-door sales that caused CPI customers to confuse Vivint’s salespeople with CPI representatives. CPI alleged that those customers “unwillingly found themselves with Vivint’s alarm systems installed in their homes and with contractual obligations to both Vivint and CPI.”

During trial, CPI presented testimony from customers who had been solicited by Vivint salespeople. The customers all testified to deceptive tactics. For example, one customer testified that a Vivint representative told her Vivint was acquiring CPI and that she would therefore “no longer have CPI for [her] security company.” The customer was “scared and worried” and signed a contract with Vivint. Another customer testified that a Vivint sales representative claimed to be “with CPI” and was “one of the guys that installed [his] CPI system.”

CPI presented additional evidence to show that these practices were “widespread and systematic,” and that Vivint sales representatives had similarly targeted customers of other competitors. Vivint was aware of the conduct, because, for example, “16 state attorneys general had brought enforcement actions against Vivint for its sales agents’ conduct.”

The jury found in favor of CPI and awarded a combination of compensatory and punitive damages totaling nearly $190 million. Vivint appealed.

Vivint argued that CPI failed to prove reliance on the false statements made to CPI customers, which it claimed was an essential element of a UDTPA claim. Vivint argued that CPI itself must have relied on the false statements, rather than just the customers. The Fourth Circuit rejected Vivint’s argument, in part because:

The UDTPA “is broader and covers more than” fraud.
CPI’s claim was “grounded on unfair competition.”
Unfair competition claims do not require a showing of reliance.

Vivint also argued that CPI had not presented sufficient evidence to support the damages award. CPI had presented evidence to support four distinct categories of damages, and the jury did not specify which category or categories were included in each award. The Fourth Circuit explained that CPI was not required “to show an exact dollar amount with mathematical precision” and had presented evidence that “considered as a whole, was sufficient to allow the jury to reasonably estimate that CPI’s [compensatory] damages were $49.7 million.”

Vivint argued that “at minimum, judgment should be vacated and [...]

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Clean bill of health: Only domestic activities count when analyzing likelihood of confusion

by Hannah Hurley | Jul 24, 2025 | Trademarks

Affirming a summary judgment decision finding no trademark infringement under the Lanham Act, the US Court of Appeals for the Ninth Circuit determined that the district court properly focused on domestic activity with regard to the allegedly infringing trademark. Doctor’s Best, Inc. v. Nature’s Way Products, LLC, Case No. 24-2719 (9th Cir. July 15, 2025) (Paez, Ikuta, Nelson, JJ.) (Ikuta, J., concurring).

Doctor’s Best (DB) manufactures nutritional supplements under the mark NATURE’S DAY at its California facility. Although the products bear English labels compliant with US regulations, they are marketed and sold exclusively in China, South Korea, and Taiwan.

Nature’s Way Products (NWP), owner of the long-standing US trademark NATURE’S WAY, opposed DB’s attempt to register NATURE’S DAY in the United States, citing potential consumer confusion. After NWP sent a cease-and-desist letter, DB preemptively sued for a declaratory judgment of noninfringement. NWP counterclaimed for trademark infringement under Sections 32 and 43(a) of the Lanham Act.

In June 2023, the Supreme Court held in Abitron Austria GmbH v. Hetronic Int’l, Inc. that the Lanham Act’s infringement provisions apply only to domestic “use in commerce.” DB moved for summary judgment, arguing that its only domestic activity – transporting products within the US – did not create a likelihood of confusion among US consumers. The district court agreed, finding that DB’s domestic transport of Nature’s Day products was insufficient to support a claim of infringement. The court concluded that no reasonable jury could find that this conduct would confuse US consumers and granted summary judgment in favor of DB. NWP appealed.

NWP argued that any domestic use in commerce, however minimal, triggered the full likelihood-of-confusion analysis, even if confusion occurred abroad. The Ninth Circuit rejected this interpretation, holding that Abitron requires courts to first identify domestic use before evaluating confusion. The Court found that DB’s manufacturing and transport activities were the only relevant domestic conduct.

Turning to likelihood of confusion, the Ninth Circuit applied the eight-factor test set forth in its 1979 decision in AMF Inc. v. Sleekcraft Boats:

Strength of the mark
Proximity or relatedness of the goods
Similarity of the marks
Evidence of actual confusion
Marketing channels used
Type of goods and the degree of care likely to be exercised by the purchaser
Defendant’s intent in selecting the mark
The likelihood of expansion of the product lines

Reviewing the Sleekcraft factors, the Ninth Circuit concluded that no genuine dispute existed as to the likelihood of confusion. DB’s products were sold exclusively overseas while NWP’s products were sold only in the US. The Court emphasized that confusion must occur among domestic consumers to be actionable under the Lanham Act, and that did not occur here.

In a concurring opinion, Judge Ikuta agreed with the outcome but clarified that DB’s transport of products constituted a domestic use in commerce. However, she found no genuine issue of material fact regarding whether that use caused domestic confusion, reiterating that Abitron excludes extraterritorial confusion from the analysis.

Damages on Default Judgment Not Barred by Absence of Precise Amount in Complaint

by Amit Kumar Saha, PhD | May 8, 2025 | Trademarks

The US Court of Appeals for the Ninth Circuit reversed and remanded a district court decision, allowing collection of actual damages in a default judgment where the complaint only sought damages “in an amount to be determined at trial.” AirDoctor, LLC v. Xiamen Qichuang Trade Co., Ltd., Case No. 24-215 (9th Cir. Apr. 11, 2025) (Friedland, J.) (Berzon, Kennelly JJ., concurring) (per curiam).

AirDoctor produces and sells air purification products, including branded filters designed specifically for its machines. In 2022, AirDoctor discovered that Xiamen Qichuang Trade had sold tens of thousands of unauthorized replacement filters that were marketed as compatible with AirDoctor products. These filters were allegedly labeled with AirDoctor’s registered trademarks, including AIRDOCTOR and ULTRAHEPA, without permission. AirDoctor asserted that these actions constituted trademark infringement, false advertising, and unfair competition under the Lanham Act and related state laws.

AirDoctor filed a complaint seeking injunctive relief and monetary damages “in an amount to be determined at trial.” Xiamen did not respond or appear in the litigation, and the court entered a default judgment against it. AirDoctor subsequently moved for approximately $2.5 million in actual damages, calculated based on the number of infringing units sold, along with $50,000 in attorneys’ fees and costs. The district court entered a default judgment in Air Doctor’s favor but declined to award damages or attorneys’ fees. The court reasoned that Fed. R. Civ. Pro 54(c) barred monetary relief in default judgments unless the complaint demanded a specific sum. Since AirDoctor’s complaint did not include a precise dollar amount, the court concluded that granting the requested monetary relief would exceed what was demanded in the pleadings and thus violate Rule 54(c). AirDoctor appealed.

The issue before the Ninth Circuit was whether the district court erred in interpreting Rule 54(c) to prohibit an award of actual damages in a default judgment where the complaint requested “damages in an amount to be determined at trial” but did not specify a fixed damages amount. Xiamen did not appear on appeal either.

The Ninth Circuit reversed, concluding that Rule 54(c) does not require a complaint to state a specific sum of damages for a court to award actual damages after a default judgment. The Court emphasized that the rule’s purpose is to prevent awards that are fundamentally different in kind or amount from those for which the defendant had been put on notice by the complaint, not to deny recovery when the type of relief was clearly identified, even if the amount was not. The Court noted that AirDoctor had clearly requested actual damages in its complaint and had indicated that the precise amount would be determined later, which was sufficient to give Xiamen fair notice of the relief sought. Relying on its 1974 decision in Henry v. Sneiders, the Court reaffirmed that actual damages may be awarded in default cases even if the complaint does not state a dollar figure, as long as the damages are of the same kind as those demanded.

The Ninth Circuit clarified that Rule [...]

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No Bull: Historically Generic Term Can Become Non-Generic

by Amit Kumar Saha, PhD | Mar 20, 2025 | Trademarks

The US Court of Appeals for the Federal Circuit affirmed Trademark Trial & Appeal Board rulings, finding that a previously generic term was not generic at the time registration was sought because at that time the mark, as used in connection with the goods for which registration was sought, had achieved secondary meaning. Bullshine Distillery LLC v. Sazerac Brands, LLC, Case Nos. 23-1682; -1900 (Fed. Cir. Mar. 12, 2025) (Moore, C.J.; Reyna, Taranto, JJ.)

In 2015 Bullshine sought to register the trademark BULLSHINE FIREBULL for its line of “[a]lcoholic beverages except beers.” Sazerac, the owner of the FIREBALL marks used for liqueurs and whiskey, opposed registration. Sazerac argued that the registration of BULLSHINE FIREBULL would likely cause consumer confusion due to its similarity to Sazerac’s FIREBALL marks. Bullshine counterclaimed, asserting that the term “fireball” had become generic and was commonly used to describe a type of alcoholic drink, thus invalidating Sazerac’s claim to exclusivity.

The Board found that the FIREBALL mark was not generic either at the time of registration nor at the time of trial, and that BULLSHINE FIREBULL was not likely to cause confusion with Sazerac’s marks. The Board determined that the FIREBALL mark was “commercially strong but conceptually weak,” that the respective marks of Sazerac and Bullshine were dissimilar when considered in their entireties, and that Bullshine did not act in bad faith in choosing its marks. The Board denied Sazerac’s opposition to the BULLSHINE FIREBULL mark as well as Bullshine’s counterclaim that the FIREBALL mark was generic. Both parties appealed.

Bullshine argued that the Board applied the incorrect legal standard in finding FIREBALL not generic and that consequently, the finding of non-genericness (upon consideration of secondary meaning) was erroneous. Bullshine argued that since “fireball” was a generic term prior to Sazerac’s registration (as both parties agreed), that fact should have precluded Sazerac’s registration, and the Board erred in considering evidence of secondary meaning. Bullshine argued that if a term was generic at any time prior to registration, it remains generic, regardless of how it might be understood at the time of registration (i.e., once generic, always generic). Sazerac argued that the time to assess genericness is at the time of registration. The Federal Circuit agreed with Sazerac.

The Federal Circuit explained that the genericness inquiry is ultimately guided by “what consumers would think at the time of registration,” and that this ruling is supported by the statutory scheme of the Lanham Act. The Court explained that the Lanham Act, in addition to preventing registration of generic terms, also provides for cancellations of marks “[a]t any time,” and even marks with incontestable statuses can be challenged based on genericness. Therefore, Congress intended that the analysis of whether a term is generic can change over time, and Bullshine’s argument was inconsistent with the statute. This conclusion follows from the legal premise that impression of consumers is “necessarily contemporaneous with the time of registration.”

Bullshine cited the 1961 CCPA decision in Weiss Noodle in support of its argument that [...]

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Trade Dress Requires Separate Articulation and Distinctiveness Requirements

by Ashley K. Justice | Feb 20, 2025 | Trademarks

The US Court of Appeals for the Second Circuit vacated and remanded a district court’s dismissal of a complaint for trade dress infringement and unfair competition, finding that the district court erred in requiring the plaintiffs to articulate distinctiveness of trade dress infringement at the pleading stage. Cardinal Motors, Inc. v. H&H Sports Protection USA Inc., Case No. 23-7586 (2d Cir. Feb. 6, 2025) (Chin, Sullivan, Kelly, JJ.)

Cardinal is a designer and licensor of motorcycle helmets. At issue was the “Bullitt” helmet, which Cardinal exclusively licenses to Bell Sports and is “one of the most popular helmets made by Bell.” H&H manufactures and sells the “Torc T-1” helmet. Both the Bullitt and Torc T-1 helmets have “flat and bubble versions,” feature “metallic borders around the bottom and front opening of the helmet,” and “share similar technical specifications.”

Cardinal sued H&H in September 2020, alleging unfair competition and trade dress infringement. Cardinal amended its complaint twice but both amended complaints were dismissed for failure “to adequately plead the claimed trade dress with precision or with allegations of its distinctiveness.” In Cardinal’s third amended complaint, it included two alternative trade dresses – a “General Trade Dress” and “Detailed Trade Dress” – which listed features of the Bullitt at different levels of detail.

Despite the amendment, the district court dismissed the third amended complaint with prejudice. Based on the general trade dress, the district court reasoned that Cardinal failed to allege distinctiveness and therefore failed to allege a plausible trade dress claim. The district court extended its reasoning to “summarily conclud[e]” that the detailed trade dress also failed to articulate distinctiveness. Cardinal appealed.

Prior to making any determinations, the Second Circuit clarified that distinctiveness and the articulation requirement are separate inquiries, and that the articulation requirement is evaluated first. A plaintiff meets the articulation “requirement by describing with precision the components – i.e., specific attributes, details, and features – that make up its claimed trade dress.” The Court explained that the articulation requirement assists courts and juries to evaluate infringement claims, ensures the design is not too general to protect, and allows a court to identify what combination of elements would be infringing.

Focusing on distinctiveness, the Second Circuit explained that a trade dress plaintiff must specifically allege that its product design has acquired distinctiveness. Acquired distinctiveness is when the mark has a secondary meaning, where the public primarily associates the mark with the “source of the product rather than the product itself.” Separate from the elements of trademark, the plaintiff must meet the articulation requirement, which entails listing the components that make up the trade dress.

Having clarified the pleading requirements, the Second Circuit found de novo that the district court erred in mixing the articulation requirement with the distinctiveness requirement at the pleading stage. The Second Circuit determined that the district court erred in dismissing Cardinal’s complaint for failure to meet the articulation requirement. The Court found that Cardinal met the articulation requirement because the general trade dress was “sufficiently [...]

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Religious Texts, Copyrights, and Estate Law: A Case of Strange Bedfellows

by Ashley K. Justice | Feb 13, 2025 | Copyrights

The US Court of Appeals for the Ninth Circuit affirmed in part and reversed in part a case involving a deceased religious leader who owned the copyrights to works reflecting his teachings. The Court found that the copyrighted works were not works for hire under copyright law, that the leader therefore had the right to license his copyrights, and that the subsequent owner of the copyrights (not a statutory heir) also had the right to terminate licenses. Aquarian Foundation, Inc. v. Bruce Kimberley Lowndes, Case No. 22-35704 (9th Cir. Feb. 3, 2025) (Hawkins, McKeown, de Alba, JJ.)

Aquarian Foundation is a nonprofit religious organization founded by Keith Milton Rhinehart. During his time as the leader of Aquarian, Rhinehart copyrighted his spiritual teachings. An Aquarian member, Bruce Lowndes, claimed that he obtained a license from Rhinehart in 1985. Upon Rinehart’s death in 1999, he left his estate, including interests in copyrights, to Aquarian. In 2014, Aquarian discovered that Lowndes was uploading Rhinehart’s teachings online and sent Lowndes takedown requests pursuant to the Digital Millennium Copyright Act (DMCA). In 2021, Aquarian sent Lowndes a letter terminating Lowndes’ license and sued Lowndes for copyright infringement, trademark infringement, and false designation of origin.

After a bench trial, the district court concluded that Rhinehart’s works were not works for hire under either the 1909 or the 1976 Copyright Act, so Rhinehart had the authority to grant Lowndes an unrestricted license. The district court also found that Aquarian did not have the authority to terminate the license as a nonstatutory heir and should have given Lowndes two years notice. The district court denied attorneys’ fees. Both parties appealed the district court’s ruling on ownership and attorneys’ fees, and Aquarian appealed the ruling on its lack of authority to terminate the license.

The Ninth Circuit, finding no clear error, affirmed the district court’s holding that Rhinehart’s works were not works for hire under either the 1909 or the 1976 Copyright Act. Under the 1909 Act’s “instance and expense” test, the Court found that “the creation and maintenance of the works was Rhinehart’s purview, and not the church’s domain.” Under the 1976 Act, which applies agency law, the Court similarly found that Rhinehart’s creation of the works was outside the scope of his employment as Aquarian’s president and secretary. Therefore, under either act, Rhinehart’s works were not works for hire, making Rhinehart the copyright owner. The Ninth Circuit affirmed the district court’s finding that as owner, Rhinehart had authority to grant the license to Lowndes. The Court also found that Lowndes’ license to “use copyrighted materials ‘without restriction’” referenced “a coming World Wide Network,” so Lowndes did not breach the license by posting the works online.

The Ninth Circuit also affirmed that the testamentary transfer of copyrights to Aquarian was permitted by both the 1909 and 1976 Copyright Acts: “Both the 1909 and 1976 Copyright Acts allow for the transfer of a copyright by will. 17 U.S.C. § 42 (repealed) (providing that copyrights ‘may be bequeathed by will’); [...]

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Dog Toy Maker in the Doghouse (Again) for Tarnishing Jack Daniel’s Marks

by Eleanor B. Atkins | Feb 6, 2025 | Trademarks

Addressing this case for the third time, the US District Court for the District of Arizona found on remand that Jack Daniel’s was entitled to a permanent injunction after finding that VIP Products’ “Bad Spaniels” dog toy diluted Jack Daniel’s trademark and trade dress, despite VIP not having infringed those marks. VIP Products LLC v. Jack Daniel’s Properties Inc., Case No. CV-14-02057-PHX-SMM (D. Ariz. Jan. 21, 2025).

This case began more than 10 years ago when VIP filed a declaratory judgment action that its “Bad Spaniels” Silly Squeaker dog toy did not infringe or dilute Jack Daniel’s trademark rights. Jack Daniel’s counterclaimed, alleging trademark infringement and dilution. The district court initially entered a permanent injunction against VIP, finding that VIP’s “Bad Spaniels” toy violated and tarnished Jack Daniel’s trademarks and trade dress. VIP appealed, and the US Court of Appeals for the Ninth Circuit found that VIP’s use of “Bad Spaniels” was protected expressive speech under the First Amendment. On remand, the district court granted summary judgment to VIP on infringement and dilution. Jack Daniel’s appealed, but the Ninth Circuit affirmed the grant of summary judgment.

The Supreme Court granted certiorari and held that the heightened protection afforded by the First Amendment does not apply where the contested mark is used as a trademark. The Supreme Court therefore vacated the Ninth Circuit’s decision and remanded for further consideration. The Ninth Circuit remanded the case to the district court to determine whether VIP’s use of “Bad Spaniels” tarnished and/or infringed Jack Daniel’s trademarks and trade dress, consistent with the Supreme Court’s decision.

On remand, VIP attempted to challenge the constitutionality of the Lanham Act’s cause of action for dilution by tarnishment, arguing that “the statute amounts to unconstitutional viewpoint discrimination by enjoining the use of a mark that ‘harms the reputation’ of a famous mark.” Ultimately, the district court did not consider the merits of the constitutional challenge. The district court stated that although it was not precluded from considering VIP’s constitutional challenge, the issue was not properly before the court because VIP had not amended its pleadings to assert the challenge.

The district court assessed dilution by tarnishment using a three-factor analysis of fame, similarity, and reputational harm. With respect to fame, the parties did not dispute that the JACK DANIEL’S mark was famous. Nonetheless, VIP contended that Jack Daniel’s had not shown tarnishment of a famous mark by a “correlative junior mark.” Specifically, VIP argued that the famous JACK DANIEL’S mark correlated with VIP’s “Bad Spaniels,” and VIP’s use of “Old. No. 2” correlated with Jack Daniel’s mark “Old No. 7.” According to VIP, there could be no tarnishment because only the latter was offensive and Jack Daniel’s had not demonstrated that “Old. No. 7” was a famous mark. The district court disagreed with VIP’s correlative mark argument, stating, “it is VIP’s use of Jack Daniel’s marks – on a poop-themed dog chew toy – that Jack Daniel’s claims tarnish its trademarks, not ‘Bad Spaniels’ itself [...]

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Equity Is Neither a “Good” Nor a “Service” Under Lanham Act

by Cecilia Choy, Ph.D. | Jan 16, 2025 | Trademarks

The US Court of Appeals for the Ninth Circuit affirmed a district court’s decision that, in terms of trademark use in commerce, corporate equity is not a “good” or “service” under the Lanham Act. LegalForce RAPC Worldwide, PC v. LegalForce, Inc., Case No. 23-2855 (9th Cir. Dec. 27, 2024) (Thomas, Wardlaw, Collins, JJ.) (Collins, J., concurring).

LegalForce RAPC Worldwide is a California corporation that operates legal services websites and owns the US mark LEGALFORCE. LegalForce, Inc., is a Japanese corporation that provides legal software services and owns the Japanese mark LEGALFORCE.

Both parties had discussions with the same group of investors. After those meetings, LegalForce Japan secured $130 million in funding, while LegalForce USA received nothing. Thereafter, LegalForce USA brought several claims against LegalForce Japan, including a trademark infringement claim. To support its case, LegalForce USA cited LegalForce Japan’s expansion plan, a trademark application for the mark LF, website ownership, and the use of LEGALFORCE to sell and advertise equity shares to investors in California.

The district court dismissed claims related to the website for lack of personal jurisdiction and dismissed claims related to the US expansion plan, trademark application, and alleged software sales in the United States as unripe. The district court dismissed the trademark infringement claims related to the efforts to sell equity shares for failure to state a claim. The court found that advertising and selling equity cannot constitute trademark infringement because it is not connected to the sale of goods or services, and the case did not present justification for extraterritorial application of the Lanham Act. LegalForce USA appealed.

To state a claim for trademark infringement under the Lanham Act, plaintiffs must show that:

They have a protectible ownership interest in the mark, or for some claims, a registered mark
The defendant used the mark “in connection with” goods or services
That use is likely to cause confusion. 15 U.S.C. § 1114(1)(a), § 1125(a).

The Ninth Circuit agreed with the district court that LegalForce Japan had not used LegalForce USA’s mark “in connection with” goods or services, and thus LegalForce USA failed to state a claim for which relief could be granted.

The Ninth Circuit concluded that using LEGALFORCE to advertise and sell equity failed to satisfy the requirement that a defendant used the mark in connection with goods or services. Referring to the U.C.C., the Court explained that corporate equity is “not a good for purposes of the Lanham Act, because it is not a movable or tangible thing.” Equity is also not a service because it is not a performance of labor for the benefit of another. There is no “another” involved because those who buy LegalForce Japan equity are owners and so they are not legally separate “others.”

The Ninth Circuit also agreed with the district court that LegalForce Japan’s services in Japan did not satisfy the “in connection with” goods or services requirement under the Lanham Act. To determine when a statute applies extraterritorially, courts invoke the 2023 Supreme Court
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Interoperability Doesn’t Imply Derivative Work

by Jodi Benassi | Jan 9, 2025 | Copyrights

The US Court of Appeals for the Ninth Circuit explained that to be a derivative work, a program interoperative with another must actually incorporate aspects of the underlying work. The Court further ruled that licensees of a copy of a computer program are not “owners” of the copy and therefore are not entitled to make copies for the purposes permitted by 17 U.S.C. § 117(a). Oracle International Corp. v. Rimini Street, Inc., Case No. 23-16038 (9th Cir. Dec. 16, 2024) (Bybee, Bumatay, Bennett, JJ.)

Rimini provides third-party support for Oracle software and is a direct competitor with Oracle in the software support services market. For more than a decade, Oracle and Rimini have been involved in what the Ninth Circuit describes as a “pitched copyright war.” This latest battle relates to changes Rimini made to its business model after a district court determined that Rimini had infringed Oracle’s copyrights. Rimini developed a new process for servicing customers using Oracle software and sought a declaratory judgment that its revised process did not infringe Oracle’s copyrights. Oracle counterclaimed for copyright infringement and Lanham Act violations.

The district court found that Rimini created infringing derivative works because its new process interacted and was usable with Oracle software. The district court found that Rimini violated Oracle’s PeopleSoft and Database licensing agreements and made several statements violating the Lanham Act. The court struck Rimini’s affirmative defense to copyright infringement under 17 U.S.C. § 117(a), granted Oracle summary judgment that Rimini infringed Oracle’s copyrights, and issued a permanent injunction against Rimini. Rimini appealed.

Derivative Works

The Ninth Circuit disagreed with the district court’s analysis of Rimini’s new process, noting that the district court focused on an “interoperability test,” which does not exist under the text of the Copyright Act or in precedent. In effect, the district court’s test would find that if a product interoperates with a preexisting copyrighted work, then it must be derivative. The Ninth Circuit explained that while the Copyright Act uses broad language to describe derivative works, the derivative work must actually incorporate the underlying work. For Rimini’s new process to be a derivative work, it must incorporate Oracle’s copyrighted work, either literally or nonliterally. The Court found that just because Rimini’s new process interacted with Oracle’s software, that was insufficient to find it was a derivative work.

Affirmative Defense: Section 117(a)

The Copyright Act permits an owner of a copy of a computer program to make a copy or adaptation of that program for certain purposes under 17 U.S.C. § 117(a). The Ninth Circuit vacated the district court’s ruling, striking Rimini’s affirmative defense under Section 117(a), because the district court erred in determining whether Oracle’s customers “owned” a copy of Oracle’s software, PeopleSoft. The Court explained that to determine whether a party is an “owner of a copy” of a computer program, the courts look to whether the party has “sufficient incidents of ownership” over the “copy” of the software, in view of the totality of the parties’ agreement. Factors that [...]

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