Apparently, Goodwill, like Love and like Diamonds, is Forever

On February 28, 2022, The Real USFL, LLC sued Fox Sports in the Central District of California [2:22-cv-1350] for attempting to resurrect the United States Football League (USFL) — a football league that played for three seasons, 1983 through 1985. The league folded before its planned 1986 season, and all tolled had lost over US$163 million in its short life.

The plaintiff is not the original league, but an entity formed six days earlier, on February 22, 2022, but claims to be the holder of “all rights and interest” in the leagues’ trademarks. In its complaint, the plaintiff alleges the defendant Fox Sports has “no right to capitalize on the goodwill of the league.”

Plaintiff alleges that this goodwill was preserved, by among other things, organizing
league and team reunions, and authorizing and appearing in and ESPN 30 for 30
documentary; and entering into certain media licensing arrangements on behalf of the USFL for apparel, books, and other media.

Plaintiff raises claim of trademark infringement, false advertising, false association, unfair competition, and cancellation of trademarks, Plaintiff seems most concerned by Fox’s characterization of its efforts as a “reboot” of the defunct league, when Fox has no direct connection with the original league. However, it is not clear that a reboot excludes such a situation, and is it even more unclear that the old USFL has any rights left to complain. It should be an interesting case. If nothing else we will learn what it takes to maintain rights in a trademark, and what constitutes abandonment.

Amateur Se

On November 8, 2021, Al McZeal filed in the Central District of California (2:21-cv-07093-SVW-RAO), a 134 page complaint in with 13 counts against Amazon, Best Buy, Orion Labs, its lawyer and his law firm, and 10,000 unnamed Does, alleging infringement of McZeal’s registered trademark on (Reg. No. 5303249) on SMART WALKIE TALKIE, for smart walkie talkies.

Orion’s lawyers’ offense is raising the descriptiveness of McZeal’s trademark, both as an attack on the validity of McZeal’s registration, and as a defense (15 USC 1115(b)(4) to the descriptive use of the term. Mr. McZeal mentions “fraud” at least 222 times throughout his filing. It does seem that the lawyers’ position (thoughtfully attached to the Complaint” is at a minimum is well-reasoned, and seems likely correct. A member of the bar should be able to assert a reasonable defenses, with fear of being sued for fraud.

Mr. McZeal is proceeding pro se, but the Complaint (Paragraph 51) states that plaintiff “intends to file a motion for substitution of counsel in order to substitute a competent law firm to protect the intellectual property rights and other rights of the plaintiff.” But after his treatment of defendant’s counsel, prospective plaintiff’s counsel should proceed with caution.

Mr. McZeal, for his own part, makes some questionable statements, not the least of which is swearing to the USPTO that his mark was in use on “INTERSTELLAR COMMUNICATIONS SERVICES” in order to get his registration. Mr. McZeal’s complaint is an interesting read, and will leave a definite feeling that we are all better off when licensed attorneys conduct litigation.

Any Third Party Use is Relevant to Whether a Claimant Made Exclusive Use of a Mark

In Galperdi, Inc., v. Galperti S.R.L., [2021-1011] (November 12, 2021), the Federal Circuit vacated and remanded the TTAB’s finding no falsity of Galperti S.R.L.’s exclusive use from 2002 to 2007, the Board committed two legal
errors: requiring Galperti Inc. to establish its own proprietary rights to the mark and disregarding third party use of the mark.

Galperti S.r.l., to support its application to register GALPERTI, told the PTO that, in the five preceding years, its use of the mark was “substantially exclusive.” In response ,the USPTO issued Reg. No. 3411812. Galperti Inc. petitioned the PTO to cancel the registration, arguing, among other things, that the registration was obtained by fraud because Galperti S.r.l. statement of substantially exclusive use was false and, indeed, intentionally so. When the PTO dismissed the cancellation petition, the Federal Circuit affirmed as to the non-fraud issues but vacated the Board’s rejection of the fraud charge and remanded for further consideration of that charge. On remand the PTAB again dismissed the cancellation proceeding.

GALPERTI is “primarily merely a surname” and, so, without more, could not be registered. Lanham Act § 2(e)(4), 15 U.S.C. § 1052(e)(4). Galperti-S.r.l. obtained a registration of GALPERTI on the Principal Register under Section 2(f) alleging “substantially exclusive and continuous use thereof as a mark by the applicant in commerce for the five years before the date on which the claim of distinctiveness is made.” 15 U.S.C. § 1052(f).

While in the prior appeal. the Federal Circuit approved the Board’s conclusion that Galperti S.r.l.’s mere “‘knowledge of other players in the marketplace’” was insufficient to make its statement to the PTO “‘per se false,’” id., it held that the Board had erred in stopping at that point, because the absence of “per se” falsity does not imply the absence of falsity. What was needed was an inquiry, on remand, into whether the uses to which Galperti Inc. pointed as showing the falsity of Galperti S.r.l.’s representation to the PTO were significant or, instead, inconsequential.

Galperti Inc. contended on appeal that the Board’s analysis of falsity includes two legally incorrect premises. One is that
Galperti Inc. had to have trademark-protected rights in its use of the mark at issue (in 2002–2007)—specifically,
secondary meaning (i.e., acquired distinctiveness)—in order for that use to count as significant in assessing the falsity of Galperti-Italy’s assertion of “substantially exclusive use.” The other is that uses by third parties do not count
in the substantially-exclusive-use assessment unless the third parties were in privity with Galperti Inc. The Federal Circuit agreed with Galperti Inc. on both counts.

Third party use does not have to be as a trademark to impact the determination of whether a mark has become distinctive of an applicant. The Federal Circuit said that a significant amount of marketplace use of a term not as a source identifier for those users still tends to undermine an applicant’s assertion that its own use has been substantially exclusive so as to create a prima facie case that the term has come to acquire distinctiveness as a source identifier for the applicant.

Further third party use is not limited to third parties who are in privity with the petitioner or opposer. Thus, the Federal Circuit said that the Board also erred in its related requirement that Galperti Inc. had to demonstrate privity with other users of the mark to rely on those uses to show falsity of Galperti S.r.l.’s claim of substantially exclusive use. “Any” use may frustrate a claim for substantially exclusive use, without limiting that use to the party challenging registration.

Indians Acting Like Cowboys

An interesting suit was filed on October 27 in the Norther District of Ohio by the Guardians Roller Derby team against the Cleveland Guardians Baseball Company f/k/a the Cleveland Indians. The Cleveland Indians after 105 years decided to change their name the Cleveland Guardians, and if the Complaint is to be believed, did so with full knowledge of another Cleveland sports team already using the name, the Cleveland Guardians roller derby team.

As the Complaint (Para. 20) alleges,”it is inconceivable that an organization worth more than $1B and estimated to have annual revenues of $290M+ would not at least have performed a Google search for “Cleveland Guardians” before settling on the name.”

The Complaint lays out the history of events:

While the strategy of filing in a remote jurisdiction to hide interest in a mark from prying eyes is a common one, employed by many large companies, including Apple, and not as sinister as the Complaint implies, the Indians conduct in the face of a party with superior rights seems rather cavalier — wait, no, that’s a different Cleveland team.

The Complaint alleged that “Two sports teams in the same city cannot have identical names. Major League Baseball would never permit “Chicago Cubs” lacrosse or “New York Yankees” rugby teams to operate alongside its storied baseball clubs and rightly so. Confusion would otherwise result. Imagine seeing a “New York Yankees” shirt for sale and buying it. Which team did you just support?” There are certainly problems in such a scenario, although it worked for years in St. Louis, which had both a Cardinals baseball team and a Cardinals football team. This was a special circumstance where similarly named teams, with long histories, found themselves in the same city.

No doubt this will be settled, and there will plenty of branded baseball merchandise to buy in the Forest City, and the city’s newly renamed roller derby team will be the best funded roller derby team in the country. The lesson, if there is one, is to not fall in love with a new name until after it is properly cleared.

Too Late for Brooklyn Brewery to Pursue Brooklyn Brew Shop

In Brooklyn Brewery Corp. v. Brooklyn Brew Shop, LLC, [2020-2277] (October 27, 2021), the Federal Circuit affirmed in part, reversed in part; and remanded in part, a complicated cancellation and opposition proceeding brought by the Brewery against the Brew Shop.

Brewery registered BROOKLYN BREWERY for beer in 2006.  In 2009 Brew Shop began selling kits for making beer, as well as for wine and hard cider.  Between 2011 and 2015, Brewery and Brew Shop partnered on a number of projects, including the sale of co-branded beer making kits.  In 2011, Brew Shop registered BROOKLYN BREW SHOP for beer making kits.  In 2014 Brew Shop applied to register a stylized version of BROOKLYN BREW SHOP for beer making kits, and a wide variety of other products in classes 5 and 32, igniting the dispute.  Brewery then sought to cancel Brew Shop’s existing registration, and oppose Brew Shop’s pending application.

On appeal, Brew Shop challenged Brewery’s standing to appeal the dismissal of the opposition as to sanitizing preparations, and the Federal Circuit agreed, dismissing the appeal for lack of Article III standing.

Brewery contended that the Board erred by failing to enter judgment against Brew Shop on the Class 32 goods (including beer) that it deleted from its application, when it granted Brew Shop’s motion to amend.  Section 18 of the Lanham Act, 15 U.S.C. § 1068, gives the Board authority to, among other things, “modify the application or registration by limiting the goods or services specified therein.”  In determining whether to accept a proposed amendment to an identification that, while contested, is otherwise acceptable, the Board looks to see whether several circumstances are satisfied, including that the applicant consents to the entry of judgment on the grounds for opposition with respect to the broader identification of goods.  Brewery consented, but the Board did not, however, enter the judgment to which BBS consented. Its failure to do so appears to be inadvertent and is inconsistent with its practice.

The purpose of entering judgment on the deleted goods is to preclude Brew Shop from again seeking to register its mark for the deleted goods.  Brew Shop  mades no argument as to why entry of judgment on the deleted goods would be inappropriate, implying instead that formal entry of judgment is unnecessary, but the Federal Circuit remanded with direction for the Board to enter judgment in favor of Brewery.

On the cancellation of Brew Shop’s registration, the Board denied relief on grounds of laches and acquiescence.  Given Brewery’s delay, and awareness of, and participation in, Brew Shops sales of beer making kits. After what the Federal Circuit described as a thorough review of the evidence, the Board concluded that Brewery failed to establish inevitable confusion and dismissed the Section 2(d) claims in both the Cancellation and Registration as to the beer-making kits.

On appeal Brewery did not argue that the defenses of laches and acquiescence were unavailable, but rather that the Board erred in applying them.  In particular Brewery complained its acquiescence in the first registration, which disclaimed Brooklyn, should not affect the application.  Treating the marks as a whole, the Board found otherwise, and the Federal Circuit agreed.

Even if laches or acquiescence applied, Brewery argued that it overcame the defense by establishing inevitable confusion.  The Federal Circuit noted that a showing of inevitable confusion requires that there be no reasonable doubt as to likelihood of confusion.  In the end, the Federal Circuit found no legal error in the Board’s ultimate conclusion that Brewery failed to establish inevitable confusion as to the beer-making kits, and in the Board’s rejection of the likelihood-of-confusion claims.

Brewery also argued that the Board abused its discretion in refusing to consider its geographic descriptiveness claim.  However, the Board found that Brewery had not adequately pled the claim and warned that absent an amendment the case would go forward without the primarily geographically descriptive claim, and Brewery never amended its pleadings, so the Federal Circuit agreed with the Board’s refusal to address the claim.

Finally, Brewery argued that it adequately proved Brew Shop’s mark was merely descriptive.  The Board found that Brew Shop’s marks would not be perceived by prospective customers seeking brewing supplies and accessories as describing a quality, feature, function, or characteristic of the goods.  The Federal Circuit said that descriptiveness is not evaluated “in the abstract,” or broadly as to the class of goods that the applicant sells (brewing supplies), but rather it must be evaluated “in relation to the particular goods for which registration is sought.

The Federal Circuit said that BREW SHOP does not conjure up an image of a “beer-making kit” specifically. One can imagine any number of goods that might be purchased at a “place to buy brewing supplies,” including beer brewing equipment, testing and measuring devices, and beer ingredients. A “beer-making kit” does not immediately come to mind.

The Federal Circuit found that the Board’s conclusion that the presumption of inherent distinctiveness as to the registered mark was not overcome is supported by substantial evidence. The Federal Circuit did find that the Board erred in not considering whether Brew Shops mark had acquired distinctiveness, and remanding for the Board to determine whether Brew Shop had shown acquired distinctiveness. 

False Association Under 2(a) is not the Same As Likelihood of Confusion Under 2(d)

In Piano Factory Group, Inc,. v. Schiedmayer Celesta GmbH, [2020-1196] (September 1, 2021), the Federal Circuit affirmed the TTAB’s cancellation of Piano Factory’s registration on Schiedmayer for falsely suggesting a connection with Schiedmayer in violation of Section 2(a).

A false association claim under section 2(a) of the Lanham Act is similar in some respects to a likelihood of confusion claim under section 2(d) of the Act, although the statutory protection against a false suggestion of a connection is designed not just to protect against deceptive use in commerce, but “to protect persons and institutions from exploitation of their persona. Even in the absence of a likelihood of confusion as to the source of goods, we have stated that under section 2(a), one’s right of privacy, or the related right of publicity, may be violated.

For the first time on appeal, Piano Factory raised a defense of laches, which the Federal Circuit rejected, since it wasn’t raised before the TTAB. The Federal Circuit also rejected Piano Factory’s argument that Schiedmayer could not raise false association with non-parties. but the Federal Circuit found that it is enough that a petitioner have a real interest in the proceeding, and it was not necesary for that party to join every other party that might have such an interest. Further, the Federal Circuit noted that a party asserting a false association bar to registration under section 2(a) need not have proprietary rights to a name as long as the party has a reasonable belief that it will be or is being damaged by the false suggestion of a connection between a person and the challenged mark.

Piano Factory also complained that the Board erred in defining its goods as “keyboard musical instruments” rather than pianos as listed in the registration, and erred in characterizing Schiedmayer’s business as manufacturing and selling “keyboard musical instruments” rather
than manufacturing and selling celestas and glockenspiels. The Federal Circuit said this argument misapprehends the nature of the section 2(a) bar to registration. The Court explained that unlike section 2(d), the false association component of section 2(a) is not directed to the likelihood of confusion regarding the source of goods. Instead, it is directed to the false suggestion that there is a connection between a particular person and another’s goods or services. The, the Federal Circuit said it was not necessary for application of the false association bar that the registration be directed to the same or similar goods as those of the complaining party, as long as the registered mark falsely suggests a connection with a person
other than the registrant. Thus, it did not matter that Piano Facatory limited its registration of the Schiedmayer mark to pianos, as long as the use of that mark falsely suggested an association between Piano Facatory’s Schiedmayer-branded pianos and Schiedmayer.

Finally, Sweet 16 challenges the Board’s application of the four-factor test for determining whether a mark should be canceled because it falsely suggests a connection with
another person or entity:

(1) The mark is the same as, or a close approximation of, the name or identity previously used by another person;
(2) the mark would be recognized as pointing uniquely and unmistakably to that person;
(3) the person named by the mark or using the mark is not connected with the activities performed by the applicant under the mark; and
(4) the prior user’s name or identity is of sufficient fame or reputation that a connection with the person would be presumed when the applicant’s mark is used to identify the applicant’s goods.

With respect to Factor 2, Piano Factory argued that the Board erred in finding that the “Schiedmayer” mark points uniquely and unmistakably to the appellee. The Federal Circuit noted that the Board assessed the evidence, and concluded that there was no proof that anyone other than Piano Factory and Schiedmayer is currently using the mark for keyboard musical instruments in the United States.

With respect to Factor 4, Piano Factory argued that Schiedmayer did not have sufficient fame and reputation at the time the mark was registered such that a connection with the appellee would be presumed. The Federal Circuit found that the Board did not err in relying on recent publications or the history of the Schiedmayer companies to draw inferences as to Schiedmayer Celesta’s fame as of 2007, when Piano Factory, recived the registration.

Piano Factoroy further argued that that the Board erred in determining that the fame or reputation of the appellee extended to pianos, as opposed to being limited to just celestas and glockenspiels. The Federal Circuit noted that the Board concluded that in light of the history of the Schiedmayer brand, the fame and reputation of the Schiedmayer Celesta company extended to keyboard musical instruments generally, not just to the two keyboard instruments
that the company was manufacturing as of the time of the registration. In addition, the Federal Circuit pointed out that the Board found that celestas are close cousins of pianos and that from the outside they look quite similar, and that it was reasonable for the Board to consider
the issue of the Schiedmayer’s fame and reputation from the perspective of purchasers of keyboard musical instruments, who would be more likely than the general public to
associate Schiedmayer-labeled pianos with the Schiedmayer.

In sum, the Federal Circuit said that all of the relevant factors—similarity of the goods, recognition among particular consumers, and intent in using the mark—support the Board’s finding that the appellee’s name was sufficiently well known among consumers of Piano Factory’s products that a connection with the appellee would be presumed. The Federal Circuit concluded that substantial evidence supports the Board’s conclusion on that issue.

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Upwork Can Use the Term “Freelancer” to Describe an App for Freelancers

In Freelancer International Pty Ltd v. Upwork Global, Inc., the Ninth Circuit recently (June 22, 2021) affirmed the Northern District of California’s denial of a preliminary injunction against Upworks’s use of Freelancer’s registered trademark FREELANCER in the name of its app “Upwork for Freelancers.” Upwork had apps for it clients, called Upwork for Clients and an corresponding app for the freelancers it placed called Upwork for Freelancers:

Once downloaded to a device, Upwork’s “Upwork for Freelancers” provides its display name, listed beneath the app’s “Up” logo icon, as “Freelancer” on iOS devices and as “Freelancer-Upwork” on Android devices — This is what Freelancer objected to.

The district court found that Freelancer lacked the required likelihood of success. Upwork argued that its use of “freelancer” was a fair use under 15 USC 1115(b)(4). The district court said that the fair use defense is applicable in instances where defendants’ alleged infringing use of plaintiff’s mark “is a use, otherwise than as a mark . . . of a term or device which is descriptive of and used fairly and in good faith only to describe the goods or services of such party, or their geographic origin.” The court noted that defendants submitted evidence showing (1) defendants use the word “freelancer” to describe their users and (2) the word “freelancer” is well-known and defined as “someone who is not permanently employed by a particular company, but sells their services to more than one company.” The court found that plaintiffs did not offer a persuasive refutation of defendants’ fair use argument, dismissing the fair use defense as inapplicable because plaintiffs do not challenge defendants’ use of the word “Freelancer” where it is not used “as a mark.”

The court discussed and rejected Freelancer’s arguments, finding that the instances in which Upwork allegedly uses “freelancer” as a mark are proper and descriptive uses of a common word distinguishing Upwork’s freelancer app from its client app. The Court was not persuaded that bold font and a capital letter are sufficient to show defendants use “Freelancer” as a mark versus a descriptive term – especially when Upwork’s distinctive lime green logo or coloring is placed directly alongside the various notifications. The Court noted that Upwork did not list the word “Freelancer” among its own publicly listed trademarks, nor did Upwork implement a stylized font or “TM” symbol when using the word “Freelancer.”

Based on the current record, the court found that Upwork does not use “freelancer” as a mark, rather, Upwork’s used the word in good faith to describe its users, and thus the court agreed that the defendants’ use of the word “freelancer” satisfies the requirements of fair use under 15 U.S.C. § 1115(b)(4).

The 9th Circuit concluded that the district court did not abuse its discretion by concluding that Freelancer could not carry its burden to show likely success on the merits.

The case provides some helpful guidelines to companies trying to use a registered mark descriptively: Avoid presenting the mark in a stylized font and avoid identifying the term with a TM. Capitalization and bolding are not enough to change this, at least where the user’s trademark is also prominently displayed. The case also provides a helpful reminder to brand owners: The more descriptive your mark, the more likely a third party use of the term will be found to be a descriptive use.

Do Lawyers Make Us Rude?

A trending story today is Courtney Love’s accusation that Olivia Rodrigo of copied Love’s Hole album cover:

Love has clarified that her complaint is that she wasn’t asked, calling Rodrigo’s actions “rude.” A lot of people agree with Love that it was rude not to ask.

However, what lawyer would advise a client to ask? We all know that if you ask, you have to accept the answer. There is no coming back from asking for permission, being denied, and going ahead anyway. If you believe what you are doing is appropriate and are definitely proceeding, asking is an unnecessary risk.

Was Rodrigo rude not to ask, was she just following her lawyer’s advice, or both?

Flagging a Potential Issue

Flag Day is an appropriate day to reflect on the use of the American Flag in trademarks and advertising. The Flag Act, 4 USC 3, prohibits the use of the American Flag in advertising in the District of Columbia:

Any person who, within the District of Columbia, in any manner, for exhibition or display, shall place or cause to be placed any word, figure, mark, picture, design, drawing, or any advertisement of any nature upon any flag, standard, colors, or ensign of the United States of America; or shall expose or cause to be exposed to public view any such flag, standard, colors, or ensign upon which shall have been printed, painted, or otherwise placed, or to which shall be attached, appended, affixed, or annexed any word, figure, mark, picture, design, or drawing, or any advertisement of any nature; or who, within the District of Columbia, shall manufacture, sell, expose for sale, or to public view, or give away or have in possession for sale, or to be given away or for use for any purpose, any article or substance being an article of merchandise, or a receptacle for merchandise or article or thing for carrying or transporting merchandise, upon which shall have been printed, painted, attached, or otherwise placed a representation of any such flag, standard, colors, or ensign, to advertise, call attention to, decorate, mark, or distinguish the article or substance on which so placed shall be deemed guilty of a misdemeanor and shall be punished by a fine not exceeding $100 or by imprisonment for not more than thirty days, or both, in the discretion of the court. The words “flag, standard, colors, or ensign”, as used herein, shall include any flag, standard, colors, ensign, or any picture or representation of either, or of any part or parts of either, made of any substance or represented on any substance, of any size evidently purporting to be either of said flag, standard, colors, or ensign of the United States of America or a picture or a representation of either, upon which shall be shown the colors, the stars and the stripes, in any number of either thereof, or of any part or parts of either, by which the average person seeing the same without deliberation may believe the same to represent the flag, colors, standard, or ensign of the United States of America.

Most states have a statute purporting to restrict the commercial use of the flag. Here is a list from 2002. Nebraska’s statute was upheld by the U.S. Supreme Court in 1907 in Nebraska v. Halter (which involved the depiction of a flag on a bottle of beer.  However, in a country where modifying and even burning the flag constitutes free speech, it seems likely that such laws would not be found enforceable today — even accounting for the fact that commercial speech is afforded less protection. Given the fact that the USPTO has assigned a special design code for the American flag (24.09.05    American flags in any form), it doesn’t seem that anyone is taking restrictions on the use of the American flag in advertising very seriously.

There is an excellent review of flag protection laws published by the Congressional Research Service here.

Something From “Nothing”

Nothing Bundt Cakes has built a business around bundt cakes. Anyone with a bundt pan can bake a bundt cake — Nothing Bundt Cakes, like any business, needed something to differentiate itself from other bakers, and found it in the way it frosted its cakes:

Nothing Bundt Cakes protected its unique design as its trade dress, and getting a federal trademark registration was the icing on the cake:

Nothing Bundt Cakes now has over 300 franchise locations throughout the United States and Canada, which collectively earn over $100 million annually in revenue. When All About Bundt Cakes opened a bundt cake business in Dallas-Fort Worth, and copied Nothing Bundt Cakes’s distinctive frosting pattern:

Nothing Bundt Cakes couldn’t stop another bakery form selling bundt cakes, but it could protect the distinctive elements that it purposely incorporated into its product, and the 21 franchisees it had in the area. Nothing Bundt Cakes sued All About Bundt Cakes in the Easter District of Texas [4:20-cv-00813-SDJ, filed 10/22/20]. Nothing Bundt Cakes sought a preliminary injunction, and when Anything Bundt Cakes failed to appear at the February 12 hearing, the Court granted the preliminary inunction.

Even a business with a relatively simple product can create value by making its product distinctive, and protecting that distinctiveness. The key is to develop unique, non-functional features that customers can rely upon to identify the business and its products, and protect those features, for example with a federal trademark registration