Nearly twenty years of trademark litigation between Marcel Fashions Group and Lucky Brand Dungarees resulted in a Supreme Court decision, which ruled that the principle of claim preclusion does not bar Lucky Brand’s reliance on a new defense, particularly given the evolving facts and issues that can arise in a trademark dispute. In the case under review, Marcel alleged that Lucky Brand infringed on Marcel’s “Get Lucky” mark through its use of “Lucky” in violation of a 2005 injunction (which followed the settlement of a 2003 action between the parties, with certain claims being released). The Supreme Court ruled that Lucky Brand was not precluded from asserting a defense based on the release in the 2003 agreement even though it had not pursued that defense in a prior action, because the defense can only be barred if the causes of action are the same, or “share a common nucleus of operative facts.” Finding that the prior action did not share a common nucleus of operative fact, the Supreme Court reversed the decision below and ruled that Lucky Brand could rely on the defense in the most recent action.
This case marks the third round of litigation between the parties. Marcel initiated the first round in 2001 with an allegation that Lucky Brand infringed on its “Get Lucky” trademark. A settlement was reached in 2003, which stipulated that Lucky Brand would refrain from using “Get Lucky”. In 2005, Lucky Brand initiated the second round, alleging that Marcel copied its designs and logos. Marcel filed multiple counterclaims, almost all relying on Lucky Brand’s continued use of the “Get Lucky” mark in violation of the 2003 agreement. Lucky Brand moved to dismiss Marcel’s counterclaims on the theory that they were barred by a release provision in the 2003 agreement; this was the only time Lucky Brand invoked the release defense prior to the current case. The 2005 action concluded with the district court permanently enjoining Lucky Brand’s use of “Get Lucky.” However, as pointed out by Justice Sotomayor in the Supreme Court’s decision, the injunction did not mention Lucky Brand’s use of other marks or phrases containing the word “Lucky.”
Marcel filed the most recent case in 2011, alleging that Lucky Brand violated the 2005 injunction due to its use of the “Lucky” trademark. The central issue became whether Lucky Brand’s failure to litigate the release defense in the 2005 suit barred it from invoking the release defense in the most recent action. The Second Circuit held that Lucky Brand was unable to assert the defense due to the principle of claim preclusion, which prevents parties from raising issues that could have been raised and decided in a prior action–even if they were not actually litigated. However, the Supreme Court reversed on May 14, 2020, finding that a defense can be barred only if the causes of action are the same, or “share a common nucleus of operative facts.”
The Supreme Court ruled that the 2005 and 2011 cases do not share a common nucleus of operative fact because, while the 2005 action depended on Lucky Brand’s use of “Get Lucky,” the case under review did not. Rather, the 2011 action alleged only that Lucky Brand infringed by using their own marks containing the word “Lucky.” The Court explained that claim preclusion generally does not bar claims predicated on events that postdate the filing of the initial complaint, and highlighted that this principle “takes on particular force in the trademark context, where the enforceability of a mark and likelihood of confusion between marks often turns on extrinsic facts that change over time.” Because the two suits involved different marks, legal theories, conduct, and time frames, the Court found that they do not share a common nucleus of operative fact. As such, the Court held that, under the facts of this case, claim preclusion would not bar Lucky Brand from relying on the release defense in the most recent action.
It was a historic day for the Supreme Court of the United States, as the high court conducted oral arguments that were broadcasted in a live audio stream for the first time in its history. The format for the argument was also unique, with the Justices asking questions in order of seniority.
The first case to be argued was a trademark case, involving an appeal of the U.S. Patent & Trademark Office’s refusal to register BOOKING.COM, based on the PTO’s position that it is a generic term for hotel reservation services and other related services, such that is incapable of functioning as a trademark. The Applicant appealed the PTO’s decision to a federal court, which ruled in its favor, finding BOOKING.COM to be a registrable (and thus enforceable) trademark. The decision was appealed to the U.S. Court of Appeals for the Fourth Circuit, which affirmed the district court’s ruling and held that it did not commit error when it found that the PTO “failed to satisfy its burden of proving that the relevant public understood BOOKING.COM, taken as a whole, to refer to general online hotel reservation services rather than Booking.com the company,” i.e., as a source-identifying trademark.
The audio of the Supreme Court argument can be found here: https://cs.pn/2SI6DJE. The decision on appeal, from the U.S. Court of Appeals for the Fourth Circuit, can be found here: http://www.ca4.uscourts.gov/Opinions/172458.P.pdf.
Supreme Court Rules that Willful Infringement Is Not A Prerequisite for an Award of Profits in Trademark Infringement CasesWritten by Mary Beth Hasty
*** APRIL 2020 UPDATE ***
In an unanimous opinion dispelling a split approach among Circuits, the Supreme Court ruled that a trademark infringement plaintiff is not required to demonstrate that the defendant’s trademark infringement activity was willful in order to obtain an award of the defendant’s profits. The question revolved around the language of Section 43(a), 15 U.S.C. § 1125(a), which states:
When . . . a violation under section 1125(a) of this title, or a willful violation under section 1125(c) of this title, shall have been established in any civil action arising under this chapter, the plaintiff shall be entitled . . . subject to the principles of equity, to recover (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action.
The Circuits have been split as to how to apply the “principles of equity,” and what role a “willful violation” should play. In order to reward profits, the Second, Eighth, Ninth, Tenth, D.C., and Federal Circuit required a finding that the Defendant acted willfully in the infringing activity, whereas the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits found that the infringer’s intent was merely one of the many factors in the weighing of the equities. The First Circuit took an alternative approach by requiring willfulness only when the parties are not competitors.
Justice Gorsuch, who authored the Supreme Court’s deciding opinion, noted that an innocent infringer and an intentional one “stand in very different shoes.” While the Justices “do not doubt that a trademark defendant’s mental state is a highly consideration in determining whether an award of profits is appropriate,” this acknowledgement that willfulness of a defendant plays an important role in the determination is a “far cry” from the “inflexible precondition” that willfulness be proven to award profits. As such, an establishment of willful infringement is not required to obtain an award of an infringer’s profits.
As an update to a blog entry on March 31, the U.S. Patent and Trademark Office (“USPTO”) has taken additional actions in response to the COVID-19 health crisis. Pursuant to temporary authority provided under the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), the USPTO has extended various filing and fee payment deadlines for patent and trademark cases (due dates between March 27 and May 31) to June 1, 2020. This is in addition to the prior extension the USPTO had announced on March 31, 2020. Andrei Iancu, Under Secretary of Commerce for Intellectual Property and Director of the USPTO, said, “Innovation and entrepreneurship will play a key role in our fight against this pandemic, and in the upcoming recovery of our country…. Accordingly, the USPTO continues to assess measures to support the work of inventors and entrepreneurs during this crisis and beyond.” For more information about particular deadlines, feel free to speak to one of the Firm’s attorneys.
In another lawsuit between Michael Jordan and Qiaodan Sports, the Supreme People’s Court ruled in favor of Michael Jordan over Qiaodan Sports for a trademark dispute. The suit arises at least over the fact that one may translate the name “Jordan” to the phonetic of “Qiaodan” in Chinese. In essence, Michael Jordan argued that his name has been misappropriated, utilized for illicit gains, and has tainted his goodwill. Qiaodan Sports defended themselves with a plethora of counter arguments, at least including the fact that “Qiaodan” may have multiple meanings and even if “Qiaodan” did reference Jordan, it may not reference Michael Jordan.
The end of the trail concluded that Qiaodan Sports misled it’s consumers with at least one of their product lines, infringing on Michael Jordan’s name. Thus, any of Qiaodan Sports’ Chinese registered trademarks bearing “Qiaodan” in the mark will be revoked from use in China. While no settlements are to be paid, and Qiaodan sports will continue to utilize their current logo, other suits are still on-going or pending between Michael and Qiaodan Sports, sure to bring further judgements.
According to a recent study by Lex Machine (a LexisNexis Company), trademark litigation in the United States has reached a four-year high, and for the second consecutive year, has exceeded patent cases. Namely, Lex Machina reports that over 4,300 trademark cases were brought in district courts last year (2019), and that the Southern District of Florida was one of the top five (5) venues, reporting in at 269 filings. Among the most active caseloads of individual judges were none other than Southern District of Florida Judges Roy Altman and Rodney Smith, both with 32 cases, respectively.
Rolex Sues La Californienne for Trademark Counterfeiting and Infringement - A Case for all Timepiece Customizers to BeholdWritten by Victor Bruzos
For some, buying a Rolex or other high quality watch is a statement in self and brand identity in it of itself. For others, a need arises to truly distinguish such a purchase by means of customization. For these others, a range of deemed "watch customizers" exist to re-paint, re-fit, skeletonize, or otherwise modify high quality timepieces or watches. Recently, this customization has become a large trend and it seems that watch manufacturers are paying attention.
In watch manufacturers paying attention, such a watch customizer, La Californienne is now being sued by Rolex for trademark counterfeiting, infringement and false representation.
La Californienne markets themselves as a company that at least, replaces original watch crystals, refashions watch bezels and alters the (watch) dials by stripping the paint and finish from the original watch face dials, and repainting and refinishing them in various vibrant colors (reinstalling Rolex marks and original indicia). In interpretation, La Californienne obtains an original watch, such as a Rolex, and modifies portions of the watch, then re-sells the creation.
At the time of writing, examples of their creations can be found here and in the images below.
Rolex asserts, La Californienne modified watches (although derived and customized from original Rolex watches) should be deemed "Counterfeit." This deeming comes from at least examination of two separate La Californienne modified Rolex watches. In examination, Rolex was able to determine La Californienne had at least reprinted or re-attached some of Rolex's registered trademarks, and more subsequently, installed non-genuine products of Rolex on the watches such as a crystal, refinished the dial surface, which may lead to debris in the movement of the watch to affect time keeping ability, and improperly fitted a bezel, which may allow water to leak through the watch adversely affecting the watch. Importantly, Rolex also noted that La Californienne added their name to a dial on one of the watches. Rolex also utilized La Californienne’s web presence to determine how they modify Rolex watches.
In assertion, Rolex is claiming that La Californienne is confusing and deceiving the public because their use of Rolex Registered Trademarks tends to and does create the erroneous impression that La Californienne's products and services emanate or originate from Rolex and/or that the products and services are authorized, sponsored or approved by Rolex, even though they are not. In legal terms, Rolex is claiming that a likelihood of consumer confusion is created by La Californienne which may cause irreparable harm to Rolex and the Rolex Registered Trademarks.
As Rolex believes La Californienne is being unjustly enriched by illegally using and misappropriating Rolex's intellectual property for their own financial gain, Rolex seeks damages, La Californienne's profits, and attorney's fees.
More on the case can be found here: Rolex Watch U.S.A., Inc. v. Reference Watch LLC d/b/a/ La Californienne et al
On Friday, November 8, the Supreme Court granted the federal government's petition for review in U.S. Patent and Trademark Office v. Booking.com. The issue to be reviewed is whether the addition of the generic top-level domain ".com" to a generic term can create a protectable trademark.
The dispute first arose when Booking.com applied to register trademarks containing the term BOOKING.COM in connection with online hotel reservation services. The USPTO refused registration on the ground that the term "booking" is generic for the underlying services in the application and that the addition of the generic top-level domain ".com" did not create a protectable mark. The decision was reviewed by the United States District Court for the Eastern District of Virginia, which held that BOOKING.COM was non-generic and potentially protectable as a trademark. The Fourth Circuit affirmed.
The case of Romag Fasteners v. Fossil is scheduled for argument before the Supreme Court of the United States during the court's October 2019-2020 term. At issue is whether, under the Lanham Act, willfulness is a prerequisite for an award of the infringer’s profits. Under the current landscape, the Third, Fourth, Fifth, Sixth, Seventh, and Eleventh Circuits have held that willfulness is not an absolute requirement in order for the plaintiff to recover profits. On the other hand, the Second, Ninth, Tenth, and District of Columbia Circuits have disagreed, stating that a willfulness finding is required in order to award the infringer’s profits to the plaintiff. The Supreme Court’s ultimate ruling on the issue will potentially resolve the sharply divided circuit split, and provide trademark owners a clearer roadmap in terms of damages and financial recovery following a finding of infringement.
The U.S. Patent and Trademark Office (“PTO”) recently issued a second request for public comments on the impact of artificial intelligence on intellectual property laws and policies, this time with a focus on copyright and trademark related issues.
Among the questions recently posed by the PTO:
Should a work produced by an AI algorithm or process, without the involvement of a natural person contributing expression to the resulting work, qualify as a work of authorship protectable under U.S. copyright law? Why or why not?;
Would the use of AI in trademark searching impact the registrablity of trademarks? If so, how?; and
Are there any other AI-related issues pertinent to intellectual property rights (other than those related to patent rights) that the USPTO should examine?
You may submit comments in writing through December 16, 2019. The full list of questions is presented in the Request for Comments on Intellectual Property Protection for Artificial Intelligence Innovation, available in the Federal Register here.
The PTO previously issued a Request for Comments on Patenting Artificial Intelligence Inventions, available here, and has extended the deadline to submit comments through November 8, 2019.