Welcome to 2016. While I’m excited for another year that will undoubtedly bring more examples of unintellectual property (UnIP), I wanted to touch on perhaps the largest trademark ruling that occurred at the end of 2015. The United States Court of Appeals for the Federal Circuit held that the United States Patent and Trademark Office (USPTO) can not reject trademarks for being offensive. The case stems from an Asian-American rock band’s attempt to register its band name, The Slants. The USPTO refused to to do so and the the Trademark Trial and Appeals Board (TTAB) had sustained the refusal.
When appealed, the Court was tasked with answering one question: Does the bar on registration of disparaging marks in 15 U.S.C. §1052(a) (set forth below) violate the First Amendment? The answer was a resounding and, in this lawyer’s personal opinion, a long overdue YES!
The USPTO’s basis for refusing marks like THE SLANTS, NO $#!+, THE COMPLETE A**HOLE’S GUIDE TO …, F**K PROJECT, AWSHIT WORKS appears to be gone. Will former applicants who were refused registration re-apply? I would advise that they do. As predicted by ArsTechnica, the question now becomes how much of an impact this ruling has on other trademarks in the future (e.g. Redskins). I am glad that I no longer will have to spend so much time trying to advise my clients about what may or may not be immoral or scandalous as they identify potential trademarks, as I clearly had a different interpretation of those terms than the USPTO and its various precedent.
I mean, come on, how can you accurately reconcile some of the USPTO’s refusals and TTAB’s allowances with decisions like the relatively recent one involving NUT SACK DOUBLE BROWN ALE. I know, I know, it all boils down the facts, but would you change your mind knowing that the slogan for that beer was “Give Our Nut Sack a Taste” with a picture that looks like a squirrel holding a bag of nuts (or testicles). The good news is that, so long as the law does not change again, these judgment decisions with regard to offensiveness and immorality should no longer determine the registrability of a mark. Start your dirty mind engines!!!
15 U.S.C. §1052 (Extract)
No trademark by which the goods of the applicant may be distinguished from the goods of others shall be refused registration on the principal register on account of its nature unless it–
- (a) Consists of or comprises immoral, deceptive, or scandalous matter; or matter which may disparage or falsely suggest a connection with persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute; or a geographical indication which, when used on or in connection with wines or spirits, identifies a place other than the origin of the goods and is first used on or in connection with wines or spirits by the applicant on or after one year after the date on which the WTO Agreement (as defined in section 2(9) of the Uruguay Round Agreements Act) enters into force with respect to the United States.
UnIntellectual Property (UnIP): Trademark for “sriracha”
The United States Patent and Trademark Office (USPTO) held that the immensely popular hot sauce, “sriracha,” has become generic and thus is not entitled to trademark registration or protection. The trademark history, as told by law inc., is summarized well enough that I need not repeat it. However, I will note that the most intriguing part of this story is not the debate as to whether “sriracha” is indeed genercized, but rather the decision by its founder, Tren, to not pursue a USPTO trademark registration at the outset. In doing so, there is little doubt that he has forgone millions of dollars of licensing revenue and is jeopardizing the long-term success as others flood the market under the same name. Admittedly, he would have had to spend some legal dollars to register, secure agreements and potentially enforce the mark, but that is a cost of doing business, and a good one when you consider the ROI. While I can’t question the man’s success, his love of zen or the taste of the product itself, I do question his legal stance with regard to trademark protection. As a trademark lawyer and business man, it makes me cringe, much like a bite of too much of his hot sauce.
UnIntellectual Property (UnIP): Trademark Design and Copyright for Mardi Gras Bead Dog for Jewelry, Clothing and King Cake
The United States Court of Appeals for the Fifth Circuit affirmed the District Court’s grant of summary judgment to Plaintiff on its claim for a declaratory judgment of non-infringement of Defendant’s trademarks, and in doing so affirmed cancellation of those trademarks. The dispute centers around the use of a design that is seen at Mardi Gras in New Orleans. In particular, a “bead dog” is commonly made using the beads that are thrown from the balconies to the revelers below. Defendant, Haydel’s Bakery, had registered two trademarks, one character mark for MARDI GRAS BEAD DOG (which was not used by the Plaintiff) and one design mark, as well as a copyright for what it described as a “stylized dog wearing a beaded necklace, with the dog being formed by a series of spheres designed to look like Mardi Gras style beads. The dog has two eyes and a nose, all formed by smaller beads.” When Haydel’s threatened Plaintiff, Nola Spice Designs, over its jewelry, Nola Spice sought declaratory judgment.
The opinion of the Court is a detailed and reasoned one, worth reading, especially since it provides Appendices showing each of the images at issue. The Court deemed both trademarks as being merely descriptive, in that they were a “rendering of the old time bead dog” and “iconic Mardi Gras symbol.” The Defendant was not able to provide sufficient evidence of secondary meaning.
With respect to the copyright infringement claim, the Court separated the unprotectable elements before applying the substantial similarity test. In doing so, it recognized this was a derivative work, thus focusing only on the material contributed by Defendant, which excluded the body of the dog. Although Defendant tried to convince the Court that the “original contributions include, among other things, the selection and arrangement of a necklace, nose, eyes, and a tail, all made of smaller beads,” the Court cited case law and held that anatomical features on replicas of animals are ideas not entitled to copyright protection. This left little for the Defendant, though the Court recognized that while the idea of eyes, a nose, a tail, and a collar are not protectable, the manner in which Defendant expresses these features may be protectable, as long as that expression is original and not dictated by the underlying idea. Unfortunately for Defendant, with the collar being the protectable element, the Court found that no substantial similarity existed, especially since the cited confusion was likely due to a comparison of the designs as a whole, which included unprotectable elements.
Thus, this is an example of the risk of threatening to enforce unprotectable IP, though likely a tough one to bear for the Defendant who had clearly taken the necessary steps with both the USPTO and US Copyright Office in order to gain registration and the presumptions that go along therewith. That said, it is yet another reminder for those threatened with claims of infringement that just because a mark or design is registered does not mean infringement is a given. Ultimately, I may have to visit New Orleans and analyze this matter further over a Hurricane cocktail or two (which may entirely change my opinion as to this decision, hah).
UnIntellectual Property (UnIP): Copyright for Recipes
The United States District Court for the Northern District of Ohio has ruled that a recipe itself is not subject to copyright protection. That said, it has noted that the layout of a recipe book can. The Court held that the ingredient list was a statement of facts and recipes themselves are merely “functional directions for achieving a result.”
A short summary and link to the Order granting summary judgment to the defendants is provided by the World Intellectual Property Review.
This decision reinforces the importance of understanding what copyright does and does not protect, and how other forms of IP may be more useful (e.g. patent or trade secret for a recipe).
UnIntellectual Property (UnIP): Trademark for “Vulgar” Underwear Brand
The United States Patent and Trademark Office (USPTO) has refused registration of the trademark COMFYBALLS, finding it too vulgar since “balls” could only relate to male genitalia. The World Intellectual Property Review goes into greater detail of the decision.
Needless to say, the subjectivity of such an analysis is front and center in this decision. It is worth noting that Europe had no such issue with the application and issued a registration. I always wonder, over time, will something that is now considered to be vulgar no longer be such in the future? Who knows, but for now, this applicant appears to be blue balled!
Copyright infringement attorneys would be well-served to review a recent case out of the United States District Court for the Middle District of Louisiana. The case involved one test preparation company suing another for copyright infringement. The allegations stemmed from the Defendant using 14 exam questions that were identical to those in Plaintiff’s registered copyright for 1,083 multiple-choice questions. Rather than determine whether the questions themselves were subject to copyright protection, the Court relied on the the de minimis doctrine. The Defendant asserted that any infringement was de minimis, and thus, “cannot lead to a finding of substantial similarity.” “This means that even where the fact of copying is conceded, no legal consequences will follow from that fact unless the copying is substantial.” “To establish that an infringement is quantitatively de minimis and therefore not actionable, the alleged infringer must demonstrate that the copying of the protected material is so trivial ‘as to fall below the quantitative threshold of substantial similarity.’” (Citations omitted).
The Court went on to analyze the doctrine’s applicability and hold that there was no actionable copyright infringement.
“Based on the uncontroverted evidence, there are approximately 1,083 multiple-choice questions in the plaintiff’s copyrighted materials. (Doc. 31–2, p. 1). Accordingly, even assuming 14 questions were copied from the overall work, that would be approximately 1.3% of the total questions in the copyrighted material.2 This is even smaller than the 2% copying at issue in the Newton case, which the Ninth Circuit found was not quantitatively significant. Additionally, there is no indication, allegation, or argument that the 14 questions were any more significant than the 1,069 other questions in the copyrighted materials. These were not summary questions or “wrap up” questions, but rather, each question allegedly copied was merely another question in the overall mass of 1,083 copyrighted questions. There is no evidence even suggesting that these questions were essential to the overall work. Rather, all of the evidence indicates that these questions were merely an insignificant few in the overall mass. Furthermore, the evidence shows that these questions were not unique, but rather, appear to be standard questions and concepts in the contractor testing and test-preparation business. (See Doc. 25–9; doc. 30–4, p. 3–7). Accordingly, the Court finds that the relevant questions are a “simple, minimal, and insignificant” portion of the entire copyrighted material. Newton, 388 F.3d at 1196. Accordingly, looking at the evidence in the light most favorable to the plaintiff, this Court finds that there are no genuine issues of material fact, and judgment must be awarded in favor of the defendant as a matter of law. Based on this Court’s review, any alleged copying in this case cannot be deemed anything more than de minimis, and thus, not actionable copying.”
This practice tip serves as a reminder to analyze whether the amount of copying is sufficient enough to qualify for copyright infringement. More importantly, defendants, and their copyright infringement attorneys, should be sure to understand the scope of the claimed infringement and consider a de minimis defense.
UnIntellectual Property (UnIP): Trade Secret for Online Database
The United States District Court for the Southern District of New York granted Defendant’s Motion for Summary Judgment, holding that Plaintiff did not possess the requisite trade secret for its trade secret misappropriation claim. Both Plaintiff and Defendant provide construction product information (“CPI”). Plaintiff and Defendant are the two national level provider of CPI services, which includes nationwide searchable databases that can filter projects based on the user’s preferences. For example, a user can search for library projects in Topeka, Kansas, worth more than three million dollars, that need plumbing in the next two months. The CPI service will collect all the projects meeting those specifications and provide plans, bidding information, and contact information for the planner, architect, or general contractor on the job. Reed and McGraw–Hill each sell CPI subscriptions at the national, state, and local levels. When Defendant secretly subscribed to Plaintiff’s service in order to perform comparisons and ensure its database was complete, Plaintiff sued for misappropriation of trade secrets, among other things.
The Court said: “It is clear that under New York law, which is more permissive than Georgia law, Reed’s CPI lost its trade-secrets status-if it ever had any-when Reed gave out free trial subscriptions unaccompanied by any contractual restrictions on their use.”
So, the Court relied upon lack of maintained secrecy. However, were other reasons present? Was this information even a trade secret? Perhaps a compilation trade secret? Would New York and Georgia law, the latter follows UTSA, have come out the same on these issues?
UnIntellectual Property (UnIP): Trade Secret for Source Code and Other Deliverables
The United States District Court of the Southern District of New York has granted a defendant’s motion to dismiss a lawsuit involving claims of copyright infringement and trade secret misappropriation. The lawsuit arose after Plaintiff was hired to create a website for an entity that shared employees and facilities with Defendant. When Defendant failed to pay, Plaintiff sued. At issue in the motion to dismiss was whether Plaintiff has properly pled causes of action for copyright infringement and trade secret misappropriation.
The Court first disposed of the copyright claim, despite Plaintiff having filed for a copyright registration. It is worth noting that Plaintiff’s copyright registration was limited to text, not the claimed code and other Deliverables. The Plaintiff’s copyright infringement claim, however, relied upon an entire list of Deliverables containing both copyrightable subject matter and non-copyrightable subject matter. This, the Court held, was not sufficient to provide notice as to which Deliverables are eligible for copyright protection and, of those, which are registered. Thus, it dismissed the copyright infringement claim.
With respect to the trade secrets, the Court recognized that there was insufficient particularity in the pleadings. More importantly, the Court recognized Plaintiff’s copyright registration and held that it would necessarily require public disclosure of the alleged secrets. Thus, no trade secret could exist. Moreover, the Court also stressed that Plaintiff “does not explain how source code AI wrote for, and delivered to, Adorama would constitute “information which is used in [AI’s] business,” a necessary element of trade secret status, nor does it explain how that information would provide AI with “an opportunity to obtain an advantage over competitors who do not know or use it.”” Put another way, the Court found that since the source code was created for Defendant, and not used by Plaintiff, it was not Plaintiff’s trade secret, especially given the failure to identify the same in the contract between the parties.
The Court did allow for amendment, which would necessarily require greater specificity with respect to the trade secret claim. My belief is that the Plaintiff would have to show that whatever it claims was not publicly disclosed to the U.S. Copyright Office, identify what alleged trade secret was owned by Plaintiff as part of its preexisting toolkit that would not be publicly available through Defendants or any previous customers website (especially the source code) and establish proof of its own use for a competitive advantage. While doing so may get it beyond a motion to dismiss stage, I have a strong belief a motion for summary judgment would be forthcoming on what appears to be a difficult claim to establish, especially given this ruling to date.
UnIntellectual Property (UnIP): Trade Secret for Drug Ingredients and Dosage/Marketing Strategies
Massachusetts is relatively unique in that it has yet to adopt the Uniform Trade Secrets Act. Instead, a blend of statutory law (Massachusetts Trade Secret Protection Act) and common law define a trade secret and what happens in the event of misappropriation. This case arises out of a dispute between pharmaceutical companies that promote and offer for sale competing bowel preparation drugs that are administered prior to colonoscopies. When the General Counsel of Defendant came into possession of certain training materials “sent in from the field” by an unknown source, Plaintiff took this present action claiming that Defendant had misappropriated an undisclosed number of pages of its raining materials and the trade secrets contained therein.
The Court granted Defendant’s motion to dismiss for failure to state a claim, which was based upon Plaintiff’s entire set of training materials. In doing so, the Court held that the lawsuit cannot proceed because Plaintiff has not identified with adequate specificity any trade secrets in materials that have not been submitted with the pleadings. Moreover, the items claimed do not amount to a trade secret under Massachusetts law. In particular, the six pages of material included publicly available information about the drug, such as its ingredients and recommended dosage, all of which is within the public domain. In addition, while noting that marketing strategies may be protectable as a trade secret, in this case, the differences in price, efficacy and safety was not established to be proprietary to Plaintiff. Finally, the Court held that “it is implausible that platitudes such as “Cash in on relationships!” are the product of significant effort or investment or are valuable to Braintree’s competitors.” Thus, no trade secrets existed under law.
I envision a similar result if UTSA was enacted in Massachusetts. Fortunately for Plaintiff, its other causes of action remain.
The United States District Court for the Southern District of Ohio denied Defendant’s Motion for Partial Summary Judgement, which was based upon the argument that Plaintiff’s claimed service mark, VNA, was generic. The Court’s threshold question was whether the term “VNA” is generic. The Defendant argued it was generic for Visiting Nurse Association and offered evidence of such use. This followed denial of Plaintiff’s attempt at a preliminary injunction. However, the Court quickly determined that a “term may be considered generic in certain regions of the country and not in others.” Thus, given Plaintiff’s Ohio trademark registration and disputed issues of fact surrounding use in the Ohio region, the Court denied summary judgement on the issue of genericness. In doing so, the Court noted: “While the Defendant makes a compelling case for summary judgment because the evidence supports a finding that the term “VNA” is generic, Plaintiff has yet to complete discovery. Moreover, Defendants failed to cite any case where a court made a factual finding as to genericness before the close of discovery or at least until after an evidentiary hearing.”
Ultimately, the Court seems to be sending a signal that Plaintiff better come up with evidence to support that its VNA mark is not generic, at least in the Ohio region. Regardless, this is a good reminder to trademark attorneys litigating cases involving claims of genericness involving common law trademark rights that such trademark rights may differ by region.