High Court Authorizes Registration of Lowbrow Trademarks

For the second time in two years, the U.S. Supreme Court has invalidated a provision of the Lanham Act on First Amendment grounds.  

In 2017, the Court unanimously ruled in Matal v. Tam that the U.S. Patent and Trademark Office (“USPTO)” had violated Simon Tam’s First Amendment rights when it rejected his application to register the name of his band, "The Slants." In that case, registration was denied based on a provision of the Lanham Act prohibiting the registration of “disparaging” trademarks.  

This week, the high court ruled that a related provision of the statute that bars the registration of “immoral” and “scandalous” trademarks similarly violated the First Amendment rights of Erik Brunetti, an artist and entrepreneur, who applied to register the trademark “FUCT” for his clothing line.  In both cases, the Court ruled that these provisions of 15 U. S. C. §1052(a), infringe the First Amendment rights of applicants because the law disfavors certain ideas.  The First Amendment provides, in relevant part, “Congress shall make no law... abridging the freedom of speech.”

In this week’s majority opinion in Iancu v. Brunetti, Justice Kagan explained that, under the First Amendment, the government may not discriminate against speech based on the ideas or opinions it conveys, and that “viewpoint discrimination” is an egregious form of content discrimination that is presumptively unconstitutional. 

It is a “bedrock First Amendment principle” that the government cannot discriminate against “ideas that offend.”  Thus, although the rejected trademarks may be offensive to many Americans, a law disfavoring “ideas that offend” necessarily discriminates based on viewpoint. 

Justice Kagan explained that “There are a great many immoral and scandalous ideas in the world (even more than there are swearwords), and the Lanham Act covers them all. It therefore violates the First Amendment by barring such words from trademark registration.

The Court's decision comes just shy of the 41st anniversary of the July 3, 1978 decision in FCC v. Pacifica Foundation, in which the Supreme Court found the Federal Communications Commission's censorship of George Carlin's "seven dirty words" monologue, and the Commission's restriction of the broadcast of four-letter words, was not based on a point of view but instead concerned the way in which it was expressed. While not a trademark case, in that decision, the Court held the Commission's censorship of Mr. Carlin's monologue based on his use of those words did not violate the First Amendment.

Four decades later, on the eve of the Fourth of July, the view of the four dissenting justices in that case - Justices Stewart, Brennan, White and Marshall - who believed the governmental restriction of such language constituted an unconstitutional abridgment of the freedom of speech, appears to have carried the day.  
 
The Court’s opinion in Iancu v. Brunetti is available here.

Flattery Will Get You Nowhere: Federal Court Dismisses Winemaker's Insurance Coverage Action Based on Intellectual Property Exclusion

A federal Court in Northern California has dismissed an insurance coverage action based on the insurance policy's intellectual property exclusion. The Court found the insurer did not owe a duty to defend an underlying case against a winemaker for allegedly selling its wine under the name of its former president without his consent. Among the court's findings was that there was no coverage for disparagement because the company's alleged conduct did not disparage the former president. Rather, the use of his name to sell its products was more a form of flattery.

Paul Dolan is a fourth generation winemaker. In 2004, he and a family named Thornhill formed the Mendocino Wine Group (Mendocino). Dolan initially served as president and agreed to permit the company to develop wine using his name as a trademark, so long as he "was able to control the nature and quality of wine that would be sold under his name." The company then began selling wine under the Paul Dolan trademark.

According to Dolan, in 2012, he was "ousted" from the company. He then filed a lawsuit against the company, alleging claims for (1) a declaration that the company could no longer use the Paul Dolan trademark; (2) unfair competition in violation of the Lanham Act; violation of the common law right of publicity and statutory right of publicity under California Civil Code § 3344; and cancellation of the Dolan trademark registration.

Dolan asserted that he never intended the company could use his name forever, and he revoked his consent for the company to use his name in connection with any Dolan trademark. Nevertheless, he alleged, the company continued to distribute and sell wine under the Paul Dolan trademark, and continued to use his name to market, advertise and promote its products. His lawsuit against the company claimed the continued use of the trademark violated his right of publicity and caused damage to Dolan because it directly conflicted with his own ability to use his name in connection with wine and related products and services, and because it falsely suggested the goods the company was selling and distributing were connected with him.

Mendocino tendered Dolan's claims to its insurer, Unigard Insurance Company, for coverage under a commercial general liability insurance policy. The policy stated the insurer would pay "those sums that the insured becomes legally obligated to pay as damages because of 'personal and advertising injury' to which this insurance applies. We will have the right and duty to defend the insured against any 'suit' seeking those damages. However, we will have no duty to defend the insured against any 'suit' seeking damages for 'personal and advertising injury' to which this insurance does not apply..."

The policy also defined "personal and advertising injury" to mean "[o]ral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person's or organization's goods, products or services" and "[o]ral or written publication, in any manner, of material that violates a person's right of privacy."

The policy contained an intellectual property exclusion, which expressly excluded coverage for infringement of copyright, patent, trademark or trade secret, which was defined to mean "'personal and advertising injury' arising out of the infringement of copyright, patent, trademark, trade secret or other intellectual property rights. Under this exclusion, such other intellectual property rights do not include the use of another's advertising idea in your 'advertisement.' 

"However, the exclusion does not apply to infringement, in your 'advertisement,' of copyright, trade dress, or slogan."

Unigard denied coverage of the claims, asserting the claims alleged in the underlying action did not give rise to coverage under the policy's insuring provisions and there was no duty for it to defend Mendocino, and also because coverage was excluded based on the intellectual property exclusion. In turn, Mendocino sued Unigard for breach of contract and bad faith. Unigard filed a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, asserting that Mendocino's complaint failed to state a legal claim for which relief could be granted. The Court agreed and dismissed Mendocino's lawsuit.

The Court explained that, under California law, an insurer must defend its insured against claims that create a potential for indemnity under the policy. Dolan's claims were based on his allegations that Mendocino had misappropriated his likeness without authorization. The Court found these claims did not create even a potential for coverage.

The Court explained there are two types of appropriation claims, which are distinguished by the nature of the plaintiff's right and the resulting injury. The first type - - the right of publicity - - is essentially that the public's reaction the to the individual's name and likeness, which endows them with "commercially exploitable opportunities."

The second type of appropriation brings injury to the feelings. It concerns the plaintiff's peace of mind. It is mental and subjective.

The right of publicity is considered an intellectual property right that protects a form of intellectual property which society deems to have some social utility. The "mental and subjective" type of appropriation, on the other hand, does not.

The Court found that the exclusion applied to bar coverage. While the policy covered damages for violations of privacy rights, it excluded coverage for injuries arising out of violations of intellectual property rights, such as Dolan's right of publicity claim. Dolan did not assert a claim based on injured feelings, but only that Mendocino's use of his name and likeness diminished his marketability and publicity value and deprived him of his right of publicity - - a violation of his intellectual property right, which was excluded by the plain language of the intellectual property exclusion.

Mendocino also argued that there was coverage because the allegations in Dolan's complaint alleged the elements of a defamation claim. Unigard countered that there were no allegations of the publication of defamatory material. Defamation involves a publication that is false, defamatory, and unprivileged, and has a natural tendency to injure or that causes special damage, and that the publication is to a third person who understands both the defamatory meaning of the statement and its application to the referenced person. Similarly, disparagement concerns a false or misleading statement that specifically refers to the plaintiff's product or business and clearly derogates that product or business. Ordinarily, damage caused by defamation involves injury to a person's reputation. However, a party's attempt to copy or infringe another's intellectual property, without more, does not constitute disparagement.

Here the Court found Dolan's allegations did not allege Mendocino's misappropriation constituted a defamatory statement. Rather, Dolan contended his reputation was harmed because Mendocino's unauthorized continued sale, distribution and marketing of wine under the Paul Dolan trademark, which damaged him because it directly conflicted with his ability to use his own name in connection with wine and related products and services, and because it falsely suggested the goods Mendocino was distributing were connected with Dolan. As the court found, while these allegations supported a violation of the right of publicity, they did not support a claim for disparagement or defamation. Indeed, the Court found, Mendocino's alleged attempt to falsely sell its wine under Dolan's name is "more akin to flattery" than disparagement, and therefore did not trigger a duty to defend. (The Court's observation may find support in reports that the company subsequently settled with Dolan in a deal that permitted Mendocino to continue to sell wine under the Dolan name.)

Without a breach of the insurance contract, moreover, there can be no breach of the implied covenant of good faith and fair dealing as a matter of law. The court therefore dismissed Mendocino's claims under Rule 12(b)(6), both for breach of contract and for bad faith.  

The case is Mendocino Wine Grp., LLC v. QBE Ams., Inc., U.S. District Court for the Northern District of California Case No. 15-cv-06342-HSG (August 5, 2016).

Dumb Starbucks Update: When is Infringement Not Infringement?

A flurry of activity after yesterday's post was written revealed the Dumb Starbucks trademark and copyright infringement story was actually part of an elaborate four-day show to which comedian Nathan Fielder has treated Los Angeles, like the coffee he's been providing to customers, free of charge. Fielder actually received quite a bit in exchange for the complimentary coffee. His high concept publicity stunt has elevated his profile beyond the stratosphere; now he's a star.

Demonstrating that what appears to be obvious infringement may not necessarily be infringement at all, late Monday, Fielder revealed himself to be the man-behind-the-counter, first in a video released on YouTube, and later in the store parking lot "press conference" in which he answered reporters' questions. Performer Fielder, playing the coveted role of Fielder the coffee house owner, deadpanned for cameras: "many of you probably know me as a comedian but no bit or joke. This is a real business I plan to get rich from." He's probably right, if the "this" he was referring to was his plan to skyrocket as a performer.

In light of his can't-tell-if-he's-being-serious manner, some have called him the Andy Kaufman of his generation. He could hardly have found greater satisfaction than when, shortly after the "press conference," the Los Angeles Department of Public Health showed up and publicly shut down the business for operating without a health permit (despite Fielder's assertion he was operating an art gallery and that the cups of coffee were individual works of art).

Last year, Fielder, a business school graduate turned comedian with a taste for marketing, completed his first season on the Comedy Central show Nathan for You. In the show, Fielder plays a character of the same name and offers prank advice to small business owners. But before now he was anything but a household name. All that changed this week when he used his blatant coffee shop trademark and copyright infringement hoax to elevate himself to the front page. His act, coming just weeks after what would have been Andy Kaufman's 65th birthday, has been a tremendous success so far and will culminate Tuesday night with an appearance on the network late night show "Jimmy Kimmel Live."

When is infringement not infringement? When it turns out it’s a show.

Dumb Starbucks: A Primer on Parody

[CLICK HERE FOR UPDATE.]

Living in Los Angeles, it's sometimes difficult to distinguish reality and fiction.  Superheroes walk the streets.  Faux moons appear in the hills.  Overnight, a neighbor's house is transformed into the set of a major motion picture.  Automatic gunfire regularly breaks out downtown, from the set of a detective show on location.  So when a coffee house opens its doors down the block that appears to be a blatant example of trademark infringement against a major coffee chain, it's challenging not to remain skeptical.  

This has been the challenge since the "Dumb Starbucks Coffee" opened its doors last Friday in the Los Feliz neighborhood and began serving free coffee on Hillhurst Avenue.  People have been wondering whether it is all part of an extravagant joke, an expensive art experiment, or an up close and personal issue-spotting test question for intellectual property law school students. 

Dumb Starbucks' sign and logo closely track the green, black and white design of real-life  Starbucks, complete with the iconic circular two-tailed mermaid logo, the only difference being the insertion of the word "dumb".  Except for that addition, the cups, menus, tables, counter, and compact-disks-for-sale interior all closely resemble the real thing. 

The new cafe immediately struck a chord among local hipsters.  Within hours, they lined up around the block and have remained a neighborhood fixture for the last three days.  Finding parking in the neighborhood has become next to impossible.  This is not to say the coffee is any good.  While Starbucks reportedly has not yet complained, customers certainly have.  This is Los Feliz, after all, and these people know good coffee and know they have not found it here.  Still, a steady stream of patrons flows through the shop, taking selfies on the way in, exiting with white paper cups in one hand, clutching Dumb Starbucks flyers in the other.  The flyers attempt to justify the operation based on "parody law" and are titled "Frequently Asked Questions," though it is unclear how frequently any such questions were being asked; the place just opened.  

Starbucks, so far silent, owns many copyright and trademark rights in connection with its ubiquitous coffee shops, coffee products, coffee making products, and so on.  Just search the term "Starbucks" in the U.S. Patent and Trademark Office's records and scores of applications and registrations instantly appear.  There can be little doubt that Dumb Starbucks' proprietors are aware of this and must expect that lawyers for the Starbucks Corporation will soon be knocking on their doors.  According to the flyer, Dumb Starbucks is a "fully functioning coffee shop."  But the establishment itself admits it is using the Starbucks "name and logo for marketing purposes" and seems to negate its own parody defense when it confirms it does not actually assert that "Starbucks is dumb."  Rather, it continues, "we love Starbucks and look up to them as role models.  Unfortunately, the only way to use their intellectual property under fair use is if we are making fun of them.  So the 'dumb' comes out of necessity, not emnity." Thus,  

[F]or legal reasons Dumb Starbucks needs to be categorized as a work of parody art. So, in the eyes of the law, our "coffee shop" is actually an art gallery and the "coffee" you’re buying is considered the art. But that’s for our lawyers to worry about. All you need to do is enjoy our delicious coffee!  Dumb Starbucks may in the end spend whatever profits it ultimately makes on legal fees.  And when that time comes, Starbucks' lawyers may find themselves arguing that Dumb Starbucks own explanation seems to be more a parody of "parody law" and the law of fair use than a message directing comment or criticism specifically at Starbucks – again, assuming this is not all a big hoax. 

And perhaps that is the point, perhaps the proprietors just wanted to make people wonder what this place is, and what it all means. Given its stated purpose and strong reliance on parody and the defense of fair uses, it seemed it might be useful to address some of those issues here. 

General Intellectual Property Concepts

Intellectual property commonly is understood to encompass copyright, trademark and patent rights, trade secrets, and related intangible property.  Generally speaking, patents protect inventors' ideas by granting exclusive rights to patent owners for limited periods; copyrights protect authors' particular expressions of ideas by granting exclusive rights to the copyright owner, also for limited periods; trademarks protect the public from being confused about the source of goods and services by allowing businesses a perpetual monopoly to use their source identifying marks.  These areas often overlap, as they do at Dumb Starbucks.

Those accused of infringing intellectual property rights often seek refuge under the doctrine of fair use, a defense to infringement under which, if successful, courts assume the plaintiff owns a valid intellectual property right but that the alleged infringer's conduct is nevertheless permitted because it falls outside the scope of what is protected.  However, there are significant differences in its meanings under copyright law, trademark law, and the law of trade dress.  And fair use itself is nothing if not ambiguous.  Since before the Civil War, courts have readily acknowledged the difficulty of applying fair use standards and have equated them to the “metaphysics of the law.”  Predicting the outcome of a case involving the fair use defense is hardly something on which to rely in creating a successful business model, unless the business is intended to generate substantial legal fees. 

In short, what Dumb Starbucks calls "parody law" is not a distinct body of law.  In trademark law, fair use has been described as one of several factors to be considered in determining whether a particular use will confuse the public about the source of goods and services.  Under copyright law, on the other hand, fair use traditionally has been defined more broadly as “a privilege in others than the owner of the copyright to use the copyrighted material in a reasonable manner without his consent.”

Fair Use Under Trademark Law

Under trademark law, a distinction is drawn between "classic fair use" and "nominative fair use."  Classic fair use concerns whether the alleged infringer has used someone else's mark to describe its own product or services (which can lead to confusion in the marketplace).  For example, if one company registers a trademark and begins using it but another company was already using that mark in a particular region, the senior user is entitled to keep using it. 

Nominative fair use, on the other hand, concerns whether the alleged infringer has used the other's mark to describe someone else's products for the purpose of, for example, comparing those goods to its own products.  There is also a related concept of trademark dilution, which can “whittle away" the value of a trademark by "blurring" away the uniqueness and singularity of a mark or “tarnishing" it with negative associations. 

Parody generally concerns "classic fair use" and is considered not so much a defense to claims of trademark infringement, rather, it is one of several factors that will be considered in determining whether the public will be confused about source of goods and services.  Those factors include (1) the strength of the protected mark; (2) the proximity of the two parties' goods to each other; (3) the similarity of the marks; (4) evidence of actual customer confusion; (5) the marketing channels that are used by each party; (6) the type of goods involved and the degree of care likely to be exercised by purchasers; (7) defendant's intent in selecting the mark allegedly infringing mark – such as whether it was intended as a parody; and (8) likelihood of expansion of the respective product lines.

Further, under trademark law, a “true” parody may be required to be clear enough that there will be a clear distinction in the viewer's mind between the source of an actual product and the source of the parody.  But if the purpose of the similarity is to capitalize on a famous mark's popularity for the defendant's own commercial use, the claim of parody will be disregarded.

Dumb Starbucks' flyer explains it is using the Starbucks name and logo for marketing purposes and essentially intends to market its shop based on Starbucks' goodwill.  It also explains it has not actually targeted Starbucks with a parodic message and is only "technically" making fun of it in order to "use their intellectual property."  While reasonable jurors may disagree, on its face Dumb Starbucks' use does not appear to constitute either classic or nominative fair use. 

In addition to trademark infringement, Starbucks might allege a claim for "trade dress" infringement.  Trade dress is a concept that extends trademark protection to product packaging and displays, and has specifically been found to protect a restaurant's decor, menu, layout and style of service where imitation is likely to cause consumer confusion.  Parody also can qualify as a defense to a claim of trade dress infringement if it demonstrates that its parody simultaneously conveys the internally contradictory messages that it is both the original and not the original but instead is a parody of the original. Without accomplishing that, the risk is that the customer will be confused, in which case the fair use defense cannot apply. 

Fair Use Under Copyright Law

The its fair use defense and parody concept differ under copyright law.  If Starbucks were to assert a claim for copyright infringement (for example, based on unauthorized copying of the two-tailed mermaid / siren image in its logo) Dumb Starbucks would face additional hurdles. 

In copyright law, fair use is considered an “equitable rule of reason” that requires a careful balancing of several factors in light of the purposes of copyright protection (which is designed to encourage creativity in the first place).  It permits courts to avoid rigid application of the copyright law where doing so would stifle just such creativity.  In determining fair use, the Copyright Act requires courts to consider and weigh four factors: (1) the purpose and character of the allegedly infringing use; (2) the nature of the copyrighted work; (3) the importance of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the accused use on the potential market for or value of the copyrighted work.  These are not definitive but essentially act as guidelines in balancing the equities that should be considered in the circumstances of a particular case.  The outcome in any particular case is anything but certain. 

Copyright law considers parody a form of social and literary criticism and has a significant "free speech" value under the First Amendment.  The heart of a parodist's work may depend on quoting from existing material or using some elements of a prior author's composition to create a new one that, at least in part, comments on the original works.  In a parody, the original work is the target, as compared with satire, when the copyrighted work is merely a vehicle to poke fun at a different target.  The court has found, for example, that a rhyming summary of highlights from the O.J. Simpson double murder trial that used Dr. Seuss' copyrights and trademarks in a work titled, "The Cat NOT in the Hat! A Parody by Dr. Juice," was not protected under the fair use doctrine, because neither Dr. Seuss nor the Cat in the Hat were the targets of the parody. 

Controlling precedent in the Ninth Circuit Court of Appeals (which governs disputes in Los Angeles as well as Seattle, where Starbucks is based) also establishes that, in balancing a parodist's freedom of speech rights with the values underpinning copyright law, courts should apply the “conjure up” test.  This requires one who asserts a parody / fair use defense to demonstrate it has used "no more than is necessary to 'recall' or 'conjure up' the object" of the parody.  

While the Dumb Starbucks use of the Starbucks logo appears to directly target Starbucks, it remains to be determined what the actual message is and whether it fairly may be considered parody.  Whatever defenses it may raise will be viewed in light of its comments in its flyer, which suggest it has not actually intended to criticize Starbucks at all.  Moreover, Dumb Starbucks appears to have used a great deal of real-life Starbucks' works – its sign, logo, menu, shop design, and so on.

It also bears noting that it is not necessarily a defense that Dumb Starbucks may be giving away its products for free.  While that may make it difficult to prove actual damages, under the Copyright Act, a plaintiff who has timely filed an application for copyright registration with the U.S. Copyright Office may be entitled to recover "statutory damages" without actually having to prove it suffered actual harm at all, regardless of whether money changed hands.  Attorneys' fees also may be recoverable.  And, of course, Starbucks may attempt to demonstrate it lost sales – and profits – as a result of the infringement.

Conclusion

Parody and the fair use defense apply differently under copyright and trademark law.  When the defense is raised by an accused infringer, the results are unpredictable and somewhat subjective, to say the least.  Given Dumb Starbucks' admitted desire to trade on Starbucks' name and goodwill, without criticizing it or offering a message that does anything but praise the original company, it may face a difficult challenge in attempting to justify its parody claim under either trademark, trade dress or copyright law. Or maybe this is all part of some extravagant comedy bit. That would seem to make more sense than Dumb Starbucks' claim that it is a "fully functioning coffee shop" offering "delicious coffee.”  Discerning customers have been saying otherwise.  Ultimately that may present a greater challenge to the coffee shop's long-term survival than any lawsuit. 

The Trademark Wars: Delta Force and Call of Duty Videogame Publishers Engaged In Mortal Combat

As if the ubiquitous videogames-simulating-battlefront-experiences were not enough, a fight to the finish between the elite videogame developers who make them has been playing out on the legal battlefield inside the U.S. District Court for the Central District of California. The battle is between the makers of the "Delta Force" and "Call of Duty" games and the battle lines lie at the border of trademark protection and the First Amendment.

In NovoLogic, Inc. v. Activision Blizzard, et al., the U.S. District Court recently decided that the First Amendment trumps trademark rights in this context.  It awarded summary judgment to the makers of "Call of Duty," who the makers of "Delta Force" had accused of trademark infringement.

In real life, the secretive U.S. unit "1st Special Forces Operational Detachment – Delta" was formed in the 1970s and is popularly known as "Delta Force." It is widely known to be a U.S. Army Special Forces unit, although the U.S. army never has officially recognized its existence. Photographs of Delta Force often appear with members' faces blacked out so as not to reveal their identities. (Although there is a logo Delta Force logo, it is not a logo of any unit officially recognized by the Pentagon.)

In 1998, videogame developer Novalogic, Inc. developed a military first person shooter game called "Delta Force" and has published at least 10 games under that name in the last 15 years, grossing more than $150 million. In 1999, Novalogic registered the word mark "Delta Force" with the U.S. Patent & Trademark Office. In 2003, it also registered a related design mark for its logo.

In 2003, Activision, a gaming competitor, released its first game in a series of an extremely successful "Call of Duty" games. In 2007 Activision released the first in another series, "Call of Duty – Modern Warfare." The 2011 edition, "Call of Duty – Modern Warfare 3," displayed of the words "Delta Force" and a related logo that NovoLogic alleges infringes its trademarks. Within sixteen days of its release, Activision's  grossed approximately $1 billion in sales.  NovoLogic filed suit for trademark infringement, contributory trademark infringement, false designation of origin, and common law infringement under California law.

In its defense, Activision asserted that its use of the name "Delta Force-United States Army" and a logo that evokes the U.S. Army logo was permitted and protected under the First Amendment. The court agreed.

The court explained that, when it comes to reconciling trademark law and an alleged infringer's First Amendment interests the general rules of trademark law are a bit murky on a national level.  However, the Ninth Circuit has drawn clearer boundaries. In light of the Supreme Court's 2011 decision recognizing that videogames are entitled to First Amendment Protection, the district court in this case concluded Activision was entitled to rely on the First Amendment as a defense.

[B]ased on [Call of Duty – Modern Warfare 3]'s compelling narrative and music, distinctive characters, how the players interact with the virtual environment as they complete a series of combat missions, how players can interact with other players, and how players control the fate of the characters and the world that they inhabit, [it] is an expressive work entitled to as much First Amendment protection as any motion picture or any other expressive work.

Notably, the court only addressed the issue only under the First Amendment while ignoring the state free speech rights guaranteed by the California Constitution.  As I have previously written, the state's Constitution affords even greater protections than the First Amendment.

At any rate, the court held that under the First Amendment, the Ninth Circuit applies a two-part test.  The test provides that " 'an artistic work's use of a trademark that would otherwise violate the Lanham Act is not actionable' unless (1) the use of the mark has 'no artistic relevance to the underlying work whatsoever' or (2) it has some artistic relevance, but 'explicitly misleads as to the source or the content of the work.' "

In this case, the court found the use of the Delta Force name and logo in the Call of Duty games to be artistically relevant and related to the content of the work because they gave users:

a sense of a particularized reality of being part of an actual elite special forces operation and serve as a means to increase specific realism of the game. Moreover, they help satisfy the ever increasing demand for "authentic simulation" in video games and add immensely to the enjoyment users receive from playing the complicated game, which undoubtably accounts for its enormous success.

The court also found the test's second prong was satisfied because there was no evidence that Activision had made any "explicitly misleading" affirmative statement of Novalogic's sponsorship or endorsement, beyond the mere use of the mark.

Thus, the court granted summary judgment on all four of NovoLogic's trademark infringement claims. Like the members of the actual Delta Force, the parties' attorneys have been relatively quiet since the court's ruling and have not made public what their next tactical steps will be.

The case is NovoLogic, Inc. v. Activision Blizzard, et al., U.S. District Court, C.D. Cal., Case No. CV 12-4011-JFW (SHx).

Nike Checkmate's Competitor's Attempt To Invalidate Its Air Force 1 Trademark

Nike makes many lines of shoes, including footwear designed for running, basketball, football, soccer and training. In light of its recent legal maneuvering in a Federal trademark dispute that threatened the viability of its "Air Force 1" trademark, it might be time for Nike to consider add a line of shoes for playing chess.

Article III of the United States Constitution grants limited authority to the Judicial Branch to adjudicate "cases" and "controversies". The U.S. Supreme Court has explained that, absent an actual such case or controversy, courts have “no business” deciding legal disputes or expounding on the law. A party that invokes the power of a federal court is therefore required to demonstrate it has "standing" to sue. That is, it must establish a “personal injury fairly traceable to the defendant’s allegedly unlawful conduct and likely to be redressed by the requested relief.” And standing must exist not only at the time the complaint is filed but through all stages of the litigation. Nike employed this doctrine to obtain dismissal of a trademark infringement lawsuit it had itself commenced.

Nike originally filed its trademark infringement suit against Already, LLC, which, under the name Yums, sells a shoe line popularly known as “Sugars” and “Soulja Boys.” Nike alleged that the Soulja Boys line infringed and diluted its Air Force 1 trademark. Already denied the allegations and filed a counterclaim, asserting it was also entitled to a declaration that Nike's Air Force 1 trademark was invalid. Nike responded by employing a strategy with echoes of a classic chess maneuver designed to protect the king: it castled.

Several months after had Nike filed its complaint, it asked the court to dismiss its claims in a manner that would ultimately end the threat to its Air Force 1 trademark. First, Nike issued a “Covenant Not to Sue,” in which it stated that “Already’s actions... no longer infringe or dilute the NIKE Mark at a level sufficient to warrant the substantial time and expense of continued litigation.” Nike further promised it would not raise any trademark or unfair competition claims against Already or any affiliated entities based on any of Already’s existing footwear designs or any future Already designs that constituted a “colorable imitation” of Already’s current products.

Following its issuance of this covenant, Nike then moved to dismiss its own claims with prejudice and also asked the court to dismiss Already’s invalidity counterclaim on the ground that the covenant not to sue extinguished the case or controversy between the parties.  Already opposed Nike's request to dismiss its counterclaim, arguing that Nike had not established that its voluntary cessation had mooted the case. Already submitted an affidavit in which its president stated that Already had plans to introduce new versions of its shoe lines into the market. It also submitted affidavits from three potential investors who asserted they would not consider investing in Already until Nike’s trademark was invalidated. It also submitted an affidavit from one of its executives, stating that Nike had intimidated retailers into refusing to carry Already’s shoes.

But the district court granted Nike's request and dismissed Already’s counterclaim. The court explained that because Already was seeking to invoke the court’s declaratory judgment jurisdiction, it continued to bear the burden of demonstrating the court had subject matter jurisdiction over its counterclaim. The court found Already could not meet this burden.  The court broadly interpreted Nike's covenant not to sue and concluded that any of Already’s future products that arguably infringed Nike's mark would be considered "colorable imitations” of Already’s current footwear and therefore were protected against future trademark infringement claims Nike might bring. The court found there was no evidence that Already was seeking to develop any shoes that would not be covered by the covenant and concluded there was no longer a substantial controversy between the parties that might allow the court to continue to excercise jurisdiction.  Therefore, it dismissed the case.

Already appealed to the Second Circuit but it was unsuccessful in the Court of Appeals.  It then appealed to the U.S. Supreme Court. However, the Supreme Court also affirmed the dismissal, unanimously. Check mate.

The Supreme Court's decision, in Already, LLC v. Nike, Inc., is available here. 

Copyright Office Strikes Pose Against Yoga, Announces It Will No Longer Register Arrangements of Asanas

The U.S. Copyright Office announced today it will stop issuing copyright registrations for compilations of exercises or the selection and arrangement of yoga poses.

The announcement came in a policy statement clarifying the Copyright Office's practices relating to its examination of claims in compilations - - particularly with respect to claims of copyrightable authorship in the selection and arrangement of "uncopyrightable matter." It also clarified its policies for registration of choreographic works.

Historically the Copyright Office has accepted registration claims based on the "selection, coordination, or arrangement" of uncopyrightable elements, because the Copyright Act specifically states that copyrightable authorship includes compilations pursuant to 17 U.S.C. § 103. Viewed in a vacuum, the Copyright Office explained that one might conclude that any organization of preexisting material may be copyrightable.

An unanswered question under copyright law has been whether the selection, coordination, or arrangement of preexisting materials must relate to the categories of copyrightable subject matter. Today's policy statement today answered that question, at least for the Copyright Office; the answer was yes.

Because yoga and other forms of exercise are not copyrightable (they are not included among the categories of copyrightable subject matter under § 102 of the Copyright Act), compilations of those poses are not copyrightable either. (However, books, drawings and photographs of them would nevertheless be protectable because they qualify, for example, as visual and literary works - - that is, works that are copyrightable.)

The Copyright Office also explained that although choreography is copyrightable, simple dance routines generally are not. "[T]he selection, coordination or arrangement of dance steps does not transform a compilation of dance steps into a choreographic work unless the resulting work amounts to an integrated and coherent compositional whole." And Copyright Office policy holds that "a selection, coordination, or arrangement of functional physical movements such as sports movements, exercises, and other ordinary motor activities alone do not represent the type of authorship intended to be protected… as a choreographic work."

However, the landscape is vast between, for example, a series of push-ups, sit-ups and jumping jacks compared with other forms of exercise whose arrangement may not be purely functional, and may actually result in an integrated work and "coherent compositional whole." A prominent Pilates teacher, studio owner and former ballet dancer Zoë Hagler Marcus, reached for comment at studio in Pasadena California, noted that "drawing the line between choreography and a series of exercises may be difficult to define."

In any event, today's policy statement promises to be a major development in the exercise community. Yoga, Pilates, Feldenkrais, Zumba, QiGong & Karate studio owners and others who believe they have arranged original compilations of exercises will now face new hurdles in fending off the competition. Much like the mass dilution that flowed from the loss of the Pilates trademark a decade ago, today's announcement marks a new challenge in the effort to prevent unauthorized copying and unfair competition in the exercise world. One example: a copyright registration is ordinarily a prerequisite to filing a copyright infringement lawsuit in Federal court.

A copy of the Copyright Office's announcement can be found here.

Small Claims System For IP Disputes May Be On The Horizon: Copyright and Trademark Offices Sponsor Discussion

The U.S. Copyright Office and the U.S Patent and Trademark Office (USPTO) and recently hosted a roundtable to discuss the potential for creating a more affordable small claims system that would avoid pricing out small publishers and rights owners wishing to protect their intellectual property rights.  The discussion, which was conducted at George Washington University Law School, included several prominent intellectual property experts.

David Kappos, the Under Secretary of Commerce for Intellectual Property and Director of the USPTO, explained that small rights holders have long believed that litigation in Federal courts is not a viable option due to the significant expenses involved and that small rights holders are priced out of the market. He described the need to protect content creators and to provide a model for other countries around the world.  U.S. Register of Copyrights Maria A. Pallante explained that small presses and small rights holders are also priorities at the Copyright Office and that their experiences with Google Books - - the Google Inc. service that searches full text of scanned books and magazines in its digital database - - and resulting disputes and tensions between Google and copyright owners was instructive.

The discussions focused on copyright and patent rights and breakout sessions were conducted in each of those areas.  Pallante noted that the Copyright Office is conducting a study related to the issues, which is expected to be submitted to Congress next Fall.  The USPTO promises to continue to work on these issues with the Copyright Office and Kappos has invited people interested in the issue to post comments here.