Apparent Agreement did Not Protect Condom Company from Attack

In Australian Therapeutic Supplies Pty. Ltd. v. Naked TM, LLC, [2019-1567] (July 27, 2020), the Federal Circuit reversed and remanded the TTAB’s dismissal of Australian Therapeutic’s petition to cancel Naked TM’s U.S. Reg. No. 3,325,577 for the mark NAKED for condoms.

The Board found that, although no formal written agreement existed, the parties entered into an informal agreement through email communications and the parties’ actions under which Australian Therapeutics agreed it would not use or register its unregistered mark in the United States and that Naked could use and register its NAKED mark in the United States. The Board found that Australian Therepeutic led Naked to reasonably believe that Australian had abandoned its rights in the United States to the NAKED mark in connection with condoms.

The Federal Circuit said that the Board discussed the requirements to bring a cancellation proceeding under 15 U.S.C. § 1064 in terms of “standing” instead of a statutory entitlement to a cause of action under 15 U.S.C. § 1064, and proceeded to review de novo whether Australian has established entitlement to a statutory cause of action under § 1064. Section 1064 provides that a petitioner may seek cancellation of a registered trademark if the petitioner “believes that he is or will be damaged” by the registered trademark. § 1064.

The Federal Circuit said that the Board required that Australian establish proprietary rights in its unregistered mark in order to demonstrate a cause of action under § 1064, and said that this was error. Neither § 1064 nor Federal Circuit precedent requires that a petitioner have a proprietary right in its own mark in order to demonstrate a cause of action before the Board. For example, a trade association may have standing to oppose a mark’s registration without having proprietary rights in a mark.

The Federal Circuit said that the Board determined that Australian had contracted away its right to use and register its unregistered mark, but contracting away one’s rights to use a trademark does not preclude a petitioner from challenging a mark before the Board. The Federal Circuit noted that while an agreement could ultimately bar Australian from proving actual damage, § 1064 requires only a belief of damage.

The Federal Circuit concluded that neither § 1064 nor its precedent requires that a petitioner in a cancellation proceeding must prove that it has proprietary rights in its own mark in order to demonstrate a real interest in the proceeding and a belief of damage.

On the issue of a real interest and reasonable belief of damage,the Federal Circuit said that such an interest exists where the petitioner’s application has been refused registration based on a likelihood of confusion with the challenged mark, or where the petitioner is making and selling products with the challenged mark. The Federal Circuit said that Australian Therapeutic demonstrates a real interest in the proceeding because it twice filed an application to register its unregistered mark, and because the USPTO refused registration of both applications based on a likelihood of confusion with Naked’s registered mark. Australian’s applications for registration, the USPTO’s refusal of registration, and the USPTO’s suspension of prosecution support a conclusion that Australian Therapeutic meets the statutory requirements under § 1064.

Naked argued that Australian Therapeutic’s applications do not support a cause of action under § 1064 because Australian abandoned the first one and the second one was a post filing futile attempt to establish its standing. Naked further argued that “mere ownership of a pending application does not in itself provide standing to oppose other applications.” The Federal Circuit was not persuaded. The Federal Circuit noted that a trademark owner does not abandon her rights in a mark by abandoning prosecution. The Federal Circuit also noted Australian Therapeutic’s advertising and sales in the United States also demonstrate a real interest and reasonable belief of damage.

Naked challenged the sufficiency of Australian’s commercial activity because Australian’s marketing and advertising activities are “isolated,” “limited,” and “de minimis,” and its sales are “sporadic” and “nominal,” but the Federal Circuit said that Section 1064 does not impose a minimum threshold of commercial activity, and it declined to define one.

The Federal Circuit concluded that based on the facts established before the Board, Australian Therapeutic had a real interest in the cancellation proceeding and a reasonable belief of damage, thereby satisfying the statutory requirements to seek cancellation of a registered trademark. We reverse and remand to the Board for further proceedings consistent with this opinion.

Public Perception, Not Per Se Rules, Determines Registrability of Marks with Generic Terms

Today in U.S.P.T.O v. Booking.com B.V., the Supreme Court rejected the USPTO’s position that BOOKING.COM was unregistrable because it merely a combination of a generic term and a tld designator.  The Supreme Court rejected the application of a per se rule against the registrability of compound marks based on generic terms, finding instead that consumer perception of the term should control.  Judge Ginsberg noting that “[b]ecause ‘Booking.com’ is not a generic name to consumers, it is not generic.”

The Court distinguished Goodyear’s India Rubber Glove Mfg. Co. v. Goodyear Rubber Co., 128 U. S. 598 (1888), where it held that a generic corporate designation added to a generic term does not confer trademark eligibility.  The Court found the comparison faulty because of the nature of the internet — a “generic.com” term could convey to consumers a source-identifying characteristic: an association with a particular website.

The Court also rejected a per se rule that every generic term combined with a tld is automatically not generic, holding that whether any given generic.com term is generic “depends on whether consumers in fact perceive that term as the name of a class or, instead, as a term capable of dis­tinguishing among members of the class.”

It will be interesting to see what the USPTO does with the application on remand.  Will it require a disclaimer of the generic term “booking” and the tld “.com”?  If so, then the applicant will have disclaimed the entire mark apart from itself.

It will also be interesting to see what booking.com will do with its registration.  No reasonable competitor would consider using “booking.com” as their own brand, because they would be driving customers to booking.com.  What is the point?  Can booking.com tie up booking combined with other tld’s? Booking.com conceded that booking.com would be “weak” (Tr. of Oral Arg. 66). Indeed they will get a registration only because of the association of the term with a particular website.  What of a booking.online (which presently appears to be available)?  Would that create a likelihood of confusion, or would the fame of booking.com that won them a registration make such confusion unlikely?  Competitors are entitled to use the generic term “booking”, what remains to be seen is how.

Oh Yes You Are.

On March 26 Adidas prevailed on Summary Judgment in a trademark infringement suit alleging that its use of “You’re Never Done” infringed U.S. Reg. No. 4,928,298 on YOU’RE NEVER DONE for a variety of products including athletic shoes.

Plaintiff’s Reg. No. 4,928,298.

The court held that plaintiff did not use the mark in commerce before defendant. The parties did not dispute that Plaintiff did not make any product sales, because potential customers could not do so through plaintiff’s website until after suit was filed. Plaintiff tried to rely on non-sales activity, such as purchasing the domain names, establishing the website, and ordering products bearing the marks. However, the district court held that these activities, taken together, reflect “mere preparation to use a term as a trademark,” rather than actual use.

Plaintiff’s specimen showing the mark on products that weren’t actually on sale.

Ultimately, the Court found that Plaintiff’s registration on the YOU’RE NEVER DONE was void ab initio. The Court then turned to the question of whether plaintiff had common law rights in YOU”RE NEVER DONE

The court found that plaintiff did not show that he used the marks in commerce such that he is entitled to common law rights in them. Just as the Court found with respect to the plaintiff’s registration, Plaintiff’s non-sales activity relating to YOU’RE NEVER DONE reflects “mere preparation” rather than actual use. The Court found that Adidas started its campaign in March 2018 while plaintiff conceded its actual use did not begin until October 2019. Accordingly, even if plaintiff had “used” the mark in commerce, his alleged use postdates Defendant’s use, thus depriving him of any common law right in the marks.

The Court granted summary judgment in favor of defendant on the Lanham Act, and on plaintiff’s state law claims as well..

Pocket Stitching Trademark is a Pain in Walmart’s A**

On March 24, 2020, American Eagle Outfitters sued Walmart in the Western District of Pennsylvania (2:20-cv-00412-DSC) complaining that the stitching on the rear pocket of Walmart’s jeans is confusingly similar to American Eagle’s “unique, distinctive, and proprietary pocket stitching design.” American Eagle alleges that Walmart’s misuse of its mark on a line of lower-priced jeans threatens its reputation.

One Applicant Gets his Registration, but all Trademark Owners may be F-U-C-T

In Iancu v. Brunetti, the Supreme Court extended our right to register offensive trademarks from the merely disparaging, to the outright immoral or scandalous. The Supreme Court reasoned that the “immoral or scandalous” bar discriminates on the basis of viewpoint and thus collides with the Court’s First Amendment doctrine. As a result, Mr. Brunetti is entitled to register F-U-C-T as a trademark.

In the personal opinion of this blogger, the Supreme Court has never really justified how denial of a federal trademark registration in an impingement on speech. The trademark owner is entitled to say whatever it was entitled to say before the refusal. Ironically, the effect of registration is to make it easier for the registrant to voice the same messages, the registration facilitating the enforcement of exclusive rights in the message. Trademarks are source identifiers, not messages, and by facilitating the protection of messages, what is the Court saying about the right of others to convey the same message.

Trademark owners should be wary. Aside from the continued erosion of propriety, the elevation of trademarks to protected speech may make enforcement more difficult against third parties inclined to voice the same or similar message. Already the line between trademark and message on t-shirts is blurred. With the explicit recognition of trademarks are messages, it seems that infringement may be harder to prove, and dilution almost impossible.

To continue its battle against view point discrimination the Supreme Court sacrificed propriety, and by elevating trademarks to protected speech, may have weakened the trademark rights of everyone. One applicant will get his registration, but all trademark owners may be F-U-C-T.

Does Your Trademark Have 401(k)?

Well perhaps not a 401(k), but a trademark does need a retirement plan. When a business a legacy mark with a new mark, the legacy mark may be deemed abandoned, free for anyone to adopt. To the extent that the legacy mark has residual good will, it may be lost to the owner, and may inure to the usurper. This unsatisfactory result can be avoided with a little (retirement) planning.

First, the owner should avoid any external (or internal) statements that the legacy mark it being dropped, eliminated or abandoned. It is sufficient to direct use of the new mark.

Second, the owner should use both the legacy mark and the new mark on product and in advertising, gradually decreasing the prominence of the legacy mark until customers’ loyalty is transferred to the new mark.

Third, the owner should find a version or model of the product on which to continue to use the mark. Ideally, this use would be continuous, but anniversary or special or limited editions can be enough to maintain rights. It may even be possible to introduce the new mark as a premium brand over the legacy brand.

Fourth, the business should step up its use of the legacy mark in connection with warranty and repair services and replacement parts. Registering the legacy mark for these services and parts will help maintain rights in the legacy mark.

Fifth, feature the legacy mark in company/product line histories in printed materials and on the company’s website.

Make no mistake, the only reason that an usurper would adopt another company’s legacy mark is to take the residual good will and divert business from the legacy brand owner. A few simple steps during re-branding can insure that your legacy mark enjoys a happy retirement.

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

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

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.

Wipe that Smile Off Your Face, Cookie

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?

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.