California Federal Judge Denies Preliminary Order Seeking Forfeiture of the Mongols Motorcycle Club TrademarkWritten by Jonathan Woodard
United States District Judge Carter recently held that a seizure of the Mongols Motorcycle Club (“MMC”) mark would violate the organization’s First Amendment rights, as well as the Eighth Amendment’s Excessive Fines Clause. The logo at issue – shown below from the Court’s opinion – features a Genghis Khan caricature on a motorcycle with the words “MONGOLS” and “M.C.” prominently displayed in the logo. Following a December 2018 trial, whereby the jurors found the Defendant Mongol Nation guilty of racketeering and conspiracy to commit racketeering (relative to murder, attempted murder and distribution of methamphetamine), the Government proceeded with the forfeiture phase of the trial requesting seizure of the organization’s ammunition, body armor, and firearms, as well as the trademark rights appurtenant to MMC membership. Denying the Government’s request for seizure of the trademark, the Court first noted that “there is no doubt that the display of word marks or symbols on a body or leather vest is pure speech.” United States of America v. Mongol Nation, Case No. CR-13-0106 (C.D. Cal. Feb. 28, 2019). Further, “collective membership marks act as a symbol that communicates a person's association with the Mongol Nation, and his or her support for their views.” Id. Thus, the Court held that “the forced transfer of the legal rights associated with these symbols to the United States government presents immediate harms and chills the Mongol Nation's and its members' right to display the marks given the Government's threats and seizure attempts,” and therefore denied the seizure request on First Amendment grounds. Id.
Next, the Court also analyzed the Government’s request for seizure of the MMC mark under the Eighth Amendment, which “limits the government's power to extract payments, whether in cash or in kind, as punishment for some offense." Id. Pointing out that the trademark was “legally acquired via first use in 1969 and [was] legally maintained via continuous use,” and that it has “immense intangible, subjective value to the Mongol Nation and its members,” the Court held that a forfeiture of the rights associated with the mark would otherwise be harsh and grossly disapproportionate, and denied the Government’s request as violative of the Eighth Amendment.
The MMC trademark displayed in the Court’s opinion in United States of America v. Mongol Nation, Case No. CR-13-0106 (C.D. Cal. Feb. 28, 2019)
The Supreme Court has agreed to review Mission Product Holdings Inc. v. Tempnology LLC, to address a Circuit Split on whether a bankruptcy trustee can terminate a trademark license agreement, thereby allowing a trademark licensee to lose their rights under the license contract. This decision could have a substantial impact on trademark licensees if the Court affirms the First Circuit Court of Appeal’s decision that a licensee loses its right to use a licensor’s trademarks if the licensor has filed a petition for bankruptcy and the trustee elects to reject the agreement pursuant to Section 365(a) of the Bankruptcy Code.
Section 365(a) of the Bankruptcy Code allows a bankruptcy trustee to assume or reject a debtor’s pre-bankruptcy executory contracts, depending on whether the benefits of continued performance of the contract outweigh the burdens to the bankruptcy estate. Under Section 365(a), a rejection is treated as a breach by the debtor if certain conditions are met. While the licensee is entitled to file a claim for damages in the bankruptcy action, that may be insignificant in light of the bankrupt state of the licensor.
However, the Bankruptcy Code does not specifically address the matter at issue before the Supreme Court, which is whether rejection of a trademark license agreement under the Bankruptcy Code strips the licensee of the right to use “trademarks.” While Section 365(n) expressly and specifically protects the rights of “intellectual property” licensees, “trademarks” is not defined in the Bankruptcy Code’s definition of “intellectual property.” In light of this, the First Circuit did not interpret the code’s language of “intellectual property” to include trademarks. Contrastingly, the Seventh Circuit has interpreted “intellectual property” to include trademarks, and therefore held that a licensee’s trademark rights survive any rejections of the agreement by a trustee in bankruptcy. See Sunbeam Prods. v. Chi. Am. Mfg., 686 F.3d 372 (7th Cir. 2012). Of the many actors to file amicus briefs, the U.S. Government appears to agree with the Seventh Circuit’s interpretation, and has taken the position that a trademark owner cannot revoke a licensee’s right to use the trademark via the Bankruptcy Code.
The Supreme Court is expected to begin hearing arguments in the next upcoming months.
U.S. Supreme Court to Decide Whether It Is Constitutional for the U.S. Patent & Trademark Office To Refuse Trademark Registration For Immoral or Scandalous MarksWritten by Mary Beth Hasty
In January, the Supreme Court agreed to hear Iancu v. Brunetti, a case that will decide whether it is constitutional for the U.S. Patent & Trademark Office to refuse trademark registration for immoral or scandalous marks. A clothing line applied to register the mark “FUCT” but was refused by the U.S. Patent & Trademark Office pursuant to Section 2(a) of the Lanham Trademark Act, which specifically bars registration of immoral or scandalous matter. To determine whether a mark is immoral or scandalous, the U.S. Patent and Trademark Office considers ordinary and common meanings. The meaning imparted by a mark must be determined in the context of the current attitudes of the day, and as such, can change over time.
The clothing line appealed the U.S. Patent and Trademark Office’s decision to refuse its mark under Section 2(a) to the United States Court of Appeals for the Federal Circuit. The Federal Circuit affirmed the U.S. Patent & Trademark Office’s decision to refuse registration under Section 2(a) of the Trademark Act, but then ruled that Section 2(a)’s bar on immoral or scandalous marks is unconstitutional under the Freedom of Speech clause of the First Amendment. The Federal Circuit found that refusing registration of trademarks which the U.S. Patent & Trademark office finds immoral or scandalous results in content-based speech regulation, which is presumptively invalid under the Constitution. The government argued that Section 2(a) does not implicate the First Amendment because trademark registration is either a government subsidy program or a limited public forum, or in the alternative, is commercial speech that implicates only an intermediate level of scrutiny. The Federal Circuit rejected these arguments, and found that “trademarks convey a commercial message, but not exclusively so,” recognizing the “expressive content” of a trademark.
The question turns on how the Supreme Court will classify an individual’s act of applying and obtaining a trademark registration, and the government’s act of granting a trademark registration. On the one hand, the granting of registration can be classified as a government act in many ways, such as a government subsidy program because it is the provision of benefits rather than money, a limited public forum where the government has opened its property for a limited purpose, i.e., trademark registration, or the regulation of commercial speech. On the other hand, should the Supreme Court consider trademark registration as an individual’s expressive speech under the First Amendment as the Federal Circuit did, Section 2(a) will likely be overturned as unconstitutional. Should it be overturned, the U.S. Patent and Trademark Office will no longer be able to refuse registration for marks it deems immoral or scandalous.
The Supreme Court is expected to hear the case this term.
According to random audits by the United States Patent and Trademark Office (USPTO), over half of active trademark and service mark registrations include some goods or services that are not actually being used in commerce. Registrations with goods or services not in use may block mark owners from registering their own marks that are in use. As part of a response to this concern, the Trademark Trial and Appeal Board (TTAB) is piloting a program for cancellation proceedings limited to abandonment and/or nonuse claims with no counterclaims.
The program implements a procedure for addressing registrations or classes not use, which can save petitioners time and money. Click here for more information on this pilot program from the TTAB. A recent precedential case that was part of the pilot program also provides further insight, TV Azteca, S.A.B. de C.V. v. Jeffrey E. Martin, 128 U.S.P.Q.2d 1786 (TTAB 2018).
Dubbed “Brexit,” the United Kingdom (“UK”) decided by national referendum in 2016 to separate from the European Union (“EU”). However, the British Parliament has refused to approve an agreement for orderly withdrawal, so the UK is likely to leave the EU on March 30, 2019 without any terms of separation. Many brand owners have registered their marks through the EU Trade Mark (“EUTM”) system, previously known as the Community Trade Mark (“CTM”), with the expectation that protection extends to the UK. Under the current “guidance” issued by the UK, owners of EUTM registrations should receive an automatic “clone” registration in the UK, which will carry over equivalent protection and seniority. But, pending EUTM applications, will NOT be “cloned”; applicants should be offered a grace period within which to file UK applications claiming the same protection and seniority. Similar provisions are planned for International Registrations designating the EU. Despite the strong expectation of UK legislation in alignment with the guidance, trademark owners should consider immediate action to secure UK trademark rights prior to the official Brexit date. Note: Patent rights in the UK should be relatively unaffected by Brexit because the European Patent Office (“EPO”) is not a European Union institution.
Cartier's "LOVE" bracelets, designed in the 1960's, have acheived some reknown due to the locking mechanism that can only be opened with a screwdriver. While Cartier has had success in certain countries protecting the overall look of the bracelet itself, the Intellectual Property Office of Singapore has determined that Cartier can not excercise trademark rights over the word "LOVE."
Last year, Cartier opposed a trademark application to register the slogan "LOVE GOLD" as a trademark in Singapore. While Cartier owns registrations for its stylized variation of "LOVE," which includes a horizontal line through the "O" to mimic the appearance of the screws adorning its bracelet, the Intellectual Property Office of Singapore has apparently determined that these rights do not extend to the word itself. The opinion states, "'[l]ove' is a word which is commonly used by jewelry traders and should not be monopolized by any trader....The word 'love,' however, should be free for traders to incorporate into their trademarks for jewelry."
At issue in the case of Levi Strauss & Co. v. Yves Saint Laurent America, Inc., recently filed in the Northern District of California, is whether Levi’s trademark rights preclude jean manufacturers from stitching a label onto the vertical seam of the jean’s back pocket. Levi’s claims that its “Tab Trademark” does in fact prohibit such copying (and seemingly regardless of where the tab is placed). As shown in side-by-side comparison pictures displayed in the complaint, the Levi’s tab is sewn on the left side of the back-right jean pocket, whereas the Yves Saint Laurent (“YSL”) tab is stitched onto the right side of the back-right jean pocket. See p. 5 at https://www.scribd.com/document/393676941/Levi-Strauss-v-Yves-Saint-Laurent. Nevertheless, and despite the generally large disparity in price points between Levi’s and YSL denim, Levi’s alleges that the YSL tab is likely to confuse consumers about the sources of YSL’s products and/or a relationship between YSL and Levi’s.
In a constantly evolving market and with millions of dollars in play, Levi’s is no stranger to enforcing its intellectual property rights through litigation. In fact, Levi’s has consistently bumped heads with jeans manufacturers in the past (approximately 100 lawsuits since 2001), alleging infringement either based on the display of a “tag” stitched to a back pocket, or copying Levi’s signature design (two intersecting arcs stitched into the back pockets). As the denim giant attempts to prove that it owns a monopoly on tabs stitched onto jean back pockets, one of the ultimate questions will be whether the consuming public views the tag as a source identifier, such that it solely relates to Levi’s.
Online Retailer Accused of Using Bedding Corporation’s Trademarks to Promote and Sell “Inferior” ProductsWritten by Jessica Neer McDonald
The Comphy Co. ("Plaintiff"), a California corporation selling luxury bedding products, filed a complaint against Amazon.com, Inc. ("Defendant") in the Northern District of Illinois alleging trademark infringement, contributory trademark infringement, and false designation of origin under federal law. The complaint also alleges violation of Illinois Uniform Deceptive Trade Practices Act and Consumer Fraud under Illinois law.
The claims primarily involve (1) the Plaintiff's "COMPHY," stylized "C," "COMPHY COMPANY," and "COMPHY SHEETS" trademarks and (2) Plaintiff's insistance that it has no interest and has expressly refused to sell its products on Defendant's website, amazon.com. According to the complaint, the Defendant is making unauthorized and infringing use of Plaintiff's trademarks by using the trademarks to promote bedding and related products not made or authorized by the Plaintiff on Defendant's website. In particular, the Plaintiff states that the Defendant is posting results for "inferior" third-party sheets when consumers search for terms including Plaintiff's trademarks on Defendant's website. Moreover, the Defendant pays third-party search engines to direct consumers to Defendant's website when searching for "COMPHY" brand sheets. Such actions are said to drive sales to competing products and are likely to cause and have caused actual confusion.
The Plaintiff asks the court for an injunction as well as a variety of monetary damages, fees, and costs.
The case can be followed at The Comphy Co., v. Amazon.com, Inc., 18-cv-04584 (N.D. Ill.).
The film studio (STX) behind the raunchy comedy, “The Happytime Murders,” successfully fended off a trademark infringement suit by Sesame Workshop. Specifically, Sesame Workshop contended that the R-rated movie depicting puppets joking about drugs, sex, and guns confused the public with “Sesame Street,” tarnished the kid-friendly show’s reputation, and exploited Sesame Street’s mark and related goodwill by implying an affiliation that did not otherwise exist. United States District Judge Vernon Broderick disagreed, however, stating that the comedy’s slogan – “No sesame. All street” – actually proved to distinguish the film from the children’s cartoon, and further noted that the “R” rating automatically served as a differentiating characteristic. The Happytime Murders will begin showing in theatres in August of 2018.
This week the Eleventh Circuit ruled on service mark infringement claims brought by Savannah College of Art and Design ("SCAD") against Sportswear, Inc. for selling unlicensed apparel and other goods on its website. The district court in the Northern District of Georgia had found that though SCAD had registered marks in connection with education services, SCAD failed to establish its mark's rights extended to apparel. More specifically, in relying on precedent concerning unregistered marks, SCAD could not show common law priority because SCAD could not show prior use of the mark on apparel before Sportswear.
On appeal, Judge Adalberto Jordan published a decision reversing the district court's findings, relying on 1975 precedent Boston Prof'l Hockey Ass'n, Inc. v. Dallas Cap & Emblem Mfg., Inc., to find that SCAD's registered service mark protection may extend to goods as well. While recognizing that infringement claims under § 1114(1)(a) are based on federally-registered marks, claims under § 1125(a) can be based on federally-registered or unregistered marks, and the oft-blurred lines between both claims, both claims nonetheless required SCAD to establish the following: (1) enforceable trademark rights in the mark (validity and scope); and (2) likelihood of confusion from the infringer's unauthorized use of its mark. In informing the first part of the analysis, the Court found it instructive to follow Boston Hockey based on SCAD's registered service marks. The precedent, which is not without criticism, "extends protection for federally-registered service marks to goods, and therefore beyond the area of registration listed in the certificate." The case was therefore remanded for further proceedings under the § 1114(1)(a) and § 1125(a) claims in light of Boston Hockey.
See the full opinion here: http://media.ca11.uscourts.gov/opinions/pub/files/201513830.pdf