Author Archives: bwheelock

About bwheelock

Education J.D., Washington University in St. Louis B.S.E. in Mechanical Engineering, Duke University

Trademark Licensees Keep Their Rights When Their Bankrupt Licensors Reject the Licenses

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In Mission Product Holdings, Inc. v. Tempnology, LLC, the Supreme Court held that when a bankrupt trademark licensor rejects the trademark license agreement license (as it is entitled to do under the bankruptcy law) it does not automatically terminate the licensee’s right to use the licensed mark. Under bankruptcy law, the rejection of the license agreement constitutes a breach of the agreement, but, the Supreme Court reasoned, the licensor’s breach does not necessarily terminate the licensee’s continued right to use the mark.

The bankruptcy law (Section 365(n)) protects the licensees of intellectual property from the effects of the rejection of their licenses. However, the bankruptcy statutes defines intellectual property as a (A) trade secret; (B) invention, process, design, or plant protected under title 35; (C) patent application; (D) plant variety; (E) work of authorship protected under title 17; or (F) mask work protected under chapter 9 of title 17. The omission of trademarks from this list led many, apparently including Tempnology, to believe that trademark licensees were not similarly protected.

The Supreme Court disagreed, saying that read as generously as possible to Tempnology, this mash-up of legislative interventions in 365(n) says nothing much of anything about the content of Section 365(g)’s general rule. The Supreme Court said that read less generously, it affirmatively refutes Tempnology’s position, the Court pointing out Congress enacted 365(n), as and when needed, to reinforce or clarify the general rule that contractual rights survive rejection. The Supreme Court concluded that Congress did nothing in adding Section 365(n) to alter the natural reading of Section 365(g)—that rejection and breach have the same results.

Tempnology argued for a special rule for trademarks, claiming that without the right to terminate the license, a bankrupt licensor risks losing the trademark because it cannot afford to exercise the quality control necessary to maintain the trademark. The Supreme Court found that Tempnology’s plea to facilitate trademark licensors’ reorganizations cannot overcome what Sections 365(a) and (g) direct. The Court noted that while the bankruptcy code aims to make reorganizations possible, it does not permit anything and everything that might advance that goal.

The Supreme Court concluded that while a bankrupt licensor has the right to reject the license agreement, this does not terminate the license, it merely terminates the licensor’s obligations under the agreement (which constitutes a breach of the agreement). If such a breach does not effect a termination of the agreement, then the licensee’s right to use the licensed mark continues.

Wake up and Smell the Coffee — Competing Rights in selling “Compatible” Products

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On April 18, 2019, Nespresso USA, Inc.. sued Jones Brothers Coffee Company in the United States District Court for the Southern District of New York [Case 1:19-cv-03449], alleging that Jones Brothers is infringing its trademarks and  trade dress in selling coffee capsules compatible with Nespresso’s coffee machines.

More specifically, Nespresso alleges that Jones Brothers’ use of the phrase “Nespresso compatible” on its packing and in is advertising “falsely suggest and/or imply endorsement and/or sponsorship by and/or affiliation with, Nespressso.” [Complaint, Para. 15].  However if in fact Jones Brothers’ capsules are compatible with Nespresso, that seems like a fact that consumers would want to know, and Jones Brothers should be entitled to tell them.  Not surprisingly, there is nothing in the Complaint to suggest how Jones Brothers could otherwise convey this information to consumers,. and it will be interesting to see how the line is drawn between Jones Brothers right to provide information about the use of its products, and Nespresso’s right to be protected from competitors confusing its customers.

“Nespresso compatible” — consumer information or trademark infringement?

Nespresso also complains about the shape of Jones Brothers’ capsules, which it describes as “nearly identical replicas of the Nespresso Trade Dress in size, shape colors and appearance” sown to the “‘dimpled’ cone shape that is identical to the iconic feature of Nespresso’s capsule.” [Complaint, 16].  This picture makes Nespresso’s point 

However, this shape is similar to the shape of the capsule that Nestle/Nespresso patented in 1979:

It seems that Jones Brothers would have a right to copy technology from an expired patent, but if Jones Brothers’ capsule is really causing actual confusion, should there be a remedy for Nespresso, or should the deal they struck getting the patent be strictly enforced?

This is just the latest instance of balancing intellectual property rights with competition.  Intellectual property should never impeded competition, only unfair combination.  Where Jones Brothers’ conduct falls is now up to the Southern District of New York to decide.

Use in Commerce for Infringement is Different than Use in Commerce for Registration

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In Versatop Support Systems, LLC v. Georgia Expo, Inc., [2018-1208](April 19, 2019), the Federal Circuit reversed the district court’s finding that defendant’s advertising using plaintiff’s PIPE & DRAPE 2.0™ and 2.0™ trademarks did not constitute an infringement because advertising did not constitute a use in commerce.

Federal trademark infringement requires that the infringing mark be used in commerce. Relying on the definition of use in commerce in 15 USC 1127, which requires that the mark be placed on goods or containers, the district court concluded that defendant’s use of plaintiff’s marks in these advertisements:

did not constitute infringement because the plaintiff’s marks were not actually applied to products.

The Federal Circuit made quick work of this, first pointing out that the legislative history for the use in commerce definition expressly contemplated that it did not apply to infringement: “Clearly, how-ever, use of any type will continue to be considered in an infringement action.” The Federal Circuit noted that the Ninth Circuit has recognized the distinction between “use in commerce” as a requirement for federal trademark registration—as defined in Section 1127—and infringing uses of a mark. Treatises, such as McCarthy on Trademarks and Unfair Competition likewise recognizes that Section 1127 “defines the kinds of ‘use’ needed to acquire registerable trademark rights—not to infringe them.”

The Federal Circuit concluded that contrary to this precedent, the district court in this case incorrectly applied the definition of “use in commerce” that is included in the statute for purposes of trademark registration, instructing “[t]his definition does not apply to trademark infringement.”

Turning to the likelihood of confusion, the Federal Circuit found ample evidence infringement, so it not only reversed summary judgment, but entered judgment in favor of plaintiff.

A Fine Specimen of a Mark

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In In re Siny Corp., [2018-1077] (January 14, 2019, April 10, 2019), the Federal Circuit affirmed the TTAB’s decision affirming the Examiner’s refusal to register CASALANA because the applicant failed to provide an acceptable specimen of use.

The issue on appeal was whether Siny’s webpage specimen qualified as a “display associated with the goods” under the Lanham Act. The Federal Circuit began its analysis noting that mere advertising is not enough to qualify as such a display. The Federal Circuit disagreed that the TTAB applied improperly rigid requirements, noting that the Board carefully considered the webpage’s contents and determined, on the record before it, that the specimen did not cross the line from mere advertising to an acceptable display associated with the goods.

In particular the Board relied upon the absence of information essential to a purchasing decision, such as a price or or range of prices for the goods, the minimum quantities one may order, accepted methods of payment, or how the goods would be shipped. The Board noted that “if virtually all important aspects of the transaction must be determined from information extraneous to the web page, then the web page is not a point of sale.” The Board further noted the absence of any evidence (as opposed to attorney argument) of how sales are actually made—e.g., documentation or verified statements from knowledgeable personnel as to what happens and how.

The best trademark specimens are, of course, pictures showing the mark actually applied to the product, or to the packages for the product, when these are not available, point of purchase displays, including catalogs and web pages may do, provided they really at the point of purchase and not mere advertising. The only time an advertisement would be an acceptable specimen is to show use of a service mark.

Posted in Use

Wipe that Smile Off Your Face, Cookie

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On February 6, 2019, Eat’n Park Hospitality Group, Inc. sued Eleni’s NYC, Inc., in the Western District of Pennsylvania for infringing Eat’n Park’s registered smiley face trademark [Civil Action No. 2:19-cv-00131-MJH].



Eleni had previously licensed the smiley face from Eat’n Park, and the cookies on its website carry the registered design:

According to the Wikipedia and the Smithsonian Institution, the smiley face was created in 1963 by graphic artist Harvey Ross Ball, as a morale booster for the employees of State Mutual Life Assurance Company of Worcester, Massachusetts. The smiley, with a bright yellow background, dark oval eyes, full smile, and creases at the sides of the mouth, was imprinted on more than fifty million buttons and became familiar around the world.

While Eleni’s cookies appear to bear the registered mark, the question is whether consumers are likely to be confused. Eat’n Park has a federal trademark registration — several in fact — but they still have to prove a likelihood of confusion. Even though Eleni’s cookies use that design the answer may not be so clear, Given the ubiquity of the smilely as a decoration, and the fact that many cookies are decorated, would consumers perceive the smiley as trademark identifying the source or will they simply think it is a pretty cookie?

Given the popularity of the smiley, one would expect that Eat’n Park’s mark is very valuable, but like all trademark owners Eat’n Park needs to make sure that its mark is perceived as a mark and not merely a decoration. For this reason it is good idea for trademark owners to advertise their trademarks in addition to advertising their trademarked products.

Trademark Color Test: What Do You See?

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Five years ago the internet obsessed over whether a particular dress was blue and black or white and gold.

Today’s color test is for trademark aficionado’s, who are probably already familiar Tiffany’s self-described robin’s-egg blue used on its packaging and catalog covers and registered in the USPTO:

The question for trademark experts is: What color is 7cs Fashion House’s JC logo:

infringing or non-infringing?

While 7Cs Fashion House calls the color teal, Tiffany sees red, believing it to be an infringing shade of their robin’s-egg blue color, and on February 6, 2019, filed Opposition 91246260 to block its registration.

Game of Groans

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HBO, the producers of the popular television series GAME OF THRONES has filed an opposition [91244050] against two trademark applications filed by The Trustees of Rancho Santa Ana Botanic Garden to register the marks GAME OF THORNS and this stylized version:

HBO alleges that the Botanic Garden’s use of GAME OF THORNS is likely to cause confusion:

However unless the thought is that consumers won’t notice the difference between THRONES and THORNS, or are likely to believe that HBO misspelled its name, confusion seems unlikely.  HBO also alleges dilution:

It does not seem that a botanic garden is likely to tarnish the image of the world of Westeros and Essos, and as with the likelihood of confusion, tarnishment by blurring would seem to require that consumers won’t notice the difference between THRONES and THORNS, or are likely to believe that HBO misspelled its name.

The Botanic Garden is  clearly making a pun — one of those groan-inducing jokes based on words that sound similar but have dissimilar meanings.  While many regard puns as the lowest form of humor, are they prohibited by trademark law?  It seems that if most people get the joke, there can be no likelihood of confusion or dilution, because getting the joke relies upon knowing the difference between a throne and a thorn.  Not getting the joke, however, might indicate at last a possibility of confusion, and trademark law might apply.

While we don’t want trademark law interfering with good jokes, if it can stop bad jokes, that’s probably a good thing.  We will have to wait to see whether or not the TTAB gets the joke.

Federal Circuit agrees that CORN THINS and RICE THINS are least Merely Descriptive

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In Real Foods Pty., Ltd. v. Frito-Lay North America, Inc., [2017-1959, 2017-2009] (October 4, 2018), the Federal Circuit affirmed-in-part, vacated-in-part, and remanded the TTAB’s decision that the Real Foods marks CORN THINS and RICE THINS  were merely descriptive and have not acquired distinctiveness.

Real Foods argued that the marks are merely suggestive, and not descriptive, and even if they are descriptive, they have acquired secondary meaning.  The Federal Circuit agreed with the TTAB that the marks were merely descriptive.  When determining whether a mark is merely descriptive, one must consider the commercial impression of a mark as a whole, viewed through the eyes of a consumer.  One must consider the mark in relation to the goods for which it is registered, asking whether someone who knows what the goods and services are will understand the mark to convey information about them.  The Federal Circuit found that substantial evidence supports the TTAB’s finding that the proposed marks are highly descriptive, noting that “corn” and “rice” are grains from which the products are made, and “thins” describe the physical characteristics of the products.  Viewing the marks as composites does not create a
different impression.

The Federal Circuit rejected Real Foods arguments about the source of evidence of public understanding of its marks, noting evidence of the public’s understanding of [a] term may be obtained from any competent source.  The Federal Circuit also rejected Real Foods’ arguments that the TTAB failed to properly consider third party registrations containing “THINS,” noting that these did not compel registration, because each application must be examined on its own merits.

The Federal Circuit also found that substantial evidence supported the TTAB’s finding of a lack of acquired distinctiveness.  To determine whether a mark has acquired secondary meaning, courts consider: advertising expenditures and sales success;
length and exclusivity of use; unsolicited media coverage; copying of the mark; and consumer studies.   Real Foods’ sales and advertising figures weigh against a finding of acquired distinctiveness.  Further Real Foods spent a relatively small amount on advertising as compared to other expenditures.  Finally, research conducted
by a third party on behalf of Real Foods demonstrates that consumers have low brand loyalty to and low preference for Real Foods’ corn and rice cakes, as compared to
its competitors.  Frito-Lay’s evidence showed low recognition of the terms are marks.

The Federal Circuit rejected Real Foods’ argument that the TTAB ignored evidence of substantially exclusive and continuous use, find that the TTAB expressly acknowledged the evidence, and was within its discretion to discount it.  As to other evidence, this too was within the TTAB’s right to weigh evidence, and declined the the invitation to re-weigh the evidence.

The TTAB dismissed Frito-Lay’s claim that CORN THINS and RICE THINS are generic.  Frito-Lay argued that the TTAB improperly narrowed genus of the goods and services, tracking Real Foods’ amendment to the description of goods, which related to the species of goods, rather than considering the genus.  Accordingly, the Federal Circuit remanded for the TTAB to reconsider its selected genus and conduct its genericness analysis in light of that genus.

 

 

 

Beyoncé v. Feyonce — If Enough Consumers Get the Joke, There May not be a Likelihood of Confusion

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In Beyoncé Giselle Knowles-Carter v. Feyonce, Inc., [16-CV-2532 (AJN)](September 30, 2018) the Southern District of New York denied summary judgment to plaintiff, the entertainer Beyoncé, against defendants for the sale of merchandise using the brand name “Feyonce” (rhymes with fiancé),  which defendants market to the engaged to be married.

There was no dispute that in marketing to fiance purchasers, defendants chose the formation “FEYONCE” in order to capitalize off of the exceedingly famous BEYONCE mark. However the district said that that alone does not establish a likelihood of confusion — the critical question was whether a rational consumer would mistakenly believe FEYONCE products are sponsored by or affiliated with BEYONCE products.

The court said: “A rational jury might or might not conclude that the pun here is sufficient to dispel any confusion among the purchasing public. Thus, there is a genuine dispute of material fact that requires denial of the motion for summary judgment.”

Intent to capitalize on fame is not enough, if enough rational consumers get the pun there may not be a likelihood of confusion.

The Real World is Irrelevant in Judging the Similarity Between DETROIT ATHLETIC CO. and DETROIT ATHLETIC CLUB

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In In re Detroit Athletic Co., [2017-2361](September 10, 2018) the Federal Circuit affirmed the TTAB’s affirming the Patent and Trademark Office’s refusal to register
DETROIT ATHLETIC CO. for sports apparel retail services.

The Trademark Examiner refused registration of DETROIT ATHLETIC CO. in view of a prior registration on DETROIT ATHLETIC CLUB.  The TTAB affirmed, concluding that, “because the marks are similar, the goods and services are related, and the channels of trade and consumers overlap,” consumers are likely to be confused by the marks.   The Board considered four of the thirteen duPont factors relevant:  (A) similarity or dissimilarity of the marks; (B) similarity or dissimilarity and nature of the goods or services; (C) similarity or dissimilarity of trade channels; and (D) concurrent use without evidence of actual confusion.

On the similarity of the marks, the Federal Circuit found the TTAB’s finding that the marks “are nearly identical in terms of sound, appearance and commercial impression” was supported by substantial evidence.  The Federal Circuit undertook a detailed analysis of the marks, finding that when viewed in their entireties, the marks reveal an identical structure and a similar appearance, sound, connotation, and commercial impression.  The Federal Circuit rejected the argument that the difference between Co. and Club would allow consumers to distinguish the marks.  The Federal Circuit said that while the mere fact that “Co.” and “Club” were disclaimed from their respective does not give one license to simply ignore those words in the likelihood of confusion analysis, the TTAB did not err in focusing on the more dominant portions of the marks.  Moreover, the record showed that these terms did not serve source-identifying functions.

With respect to the similarity of the goods, the Federal Circuit agreed with the TTAB that while the goods and services are not identical, they substantially overlap, which weighs in favor of finding a likelihood of confusion. In response to applicant’s argument that consumers would have little problem distinguishing between DACo’s clothing store
and the Detroit Athletic Club’s private social club., the Federal Circuit said that the relevant inquiry in an ex parte proceeding focuses on the goods and services described in the application and registration, and not on real-world conditions.

With respect to trade channels, the Federal Circuit found that the Board’s determination that the Detroit Athletic Club’s clothing comprises the type of goods likely to be sold through applicant’s sports apparel retail services, was supported by substantial evidence.  Applicant argued that the Detroit Athletic Club sells clothing only to its club members and only in its gift shop located onsite, and thus this would prevent confusion among the public at large, but the Federal Circuit found this too, irrelevant, because confusion must be evaluated with an eye toward the channels specified in the application and registration, not those as they exist in the real world.  The Federal Circuit noted that to the extent applicant objects to the breadth of the goods or channels of trade described in the Detroit Athletic Club’s registration, that objection amounts to an attack on the registration’s validity, an attack better suited for resolution in a cancellation proceeding.

Finally, with respect to the lack of confusion during concurrent use, the Federal Circuit noted that the relevant test is likelihood of confusion, not actual confusion, so evidence
that the consuming public was not actually confused is legally relevant to the analysis, but it is not dispositive.  Further, the Federal Circuit’s analysis of applicant’s evidence did not establishe a lack of consumer confusion in commercially meaningful contexts.
The Federal Circuit therefore concluded that substantial evidence therefore supports the TTAB’s finding that the evidence purporting to show a lack of actual confusion was not sufficiently probative.

On balance, the factors supported a finding of likelihood of confusion.  The Federal Circuit rebuffed applicant’s argument that the Board erred by not addressing
all DuPont factors for which evidence was proffered, noting that it is well established that the Board need not consider every DuPont factor.  The Board is not required to expressly address each evidentiary item proffered by a party.