Famous celebrity chef Chloe Coscarelli (“Chloe”) and Tom Colicchio (“Colicchio”) started a new pop-up restaurant called “Supernatural” that is in the midst of a “food fight” or lawsuit with owners of the By Chloe restaurant Chloe originally founded but no longer has an ownership interest in.  After receiving cease and desist letter from BCH Hospitality Group LLC (“BCH”), Chloe and Colicchio sued BCH in a declaratory judgment action for a judgment that they do not infringe on the CHLOE® trademarks and did not breach Coscarelli’s Name, Face and Likeness Agreement (“NFL Agreement”) with BCH.

Chloe was the first vegan chef to win Cupcake Wars, a national cooking competition, on the Food Network.  She is a published author of four popular cookbooks.  She is known as “Chloe” and “Chef Chloe” and worked at gourmet vegan restaurants in New York and San Francisco.  She has been recognized as “America’s favorite vegan chef” and featured on the “30 under 30” series by  The New York Times, Zagat and Forbes.  However, I must confess that although I am a pescatarian (meaning a vegetarian that eats fish) I had not heard of Chloe or her vegan restaurant until I learned about her lawsuit.

However, I have heard of Chef Tom Colicchio.  He is a James Beard Award winner and also known as “Top Chef.”  Colicchio received an Emmy Award for his work as a Judge on the show Top Chef.  I have had the pleasure of eating at Colicchio’s New York restaurants:  CRAFT (located by the fabulous Flat Iron Building), Gotham Bar & Grill and Gramercy Tavern.  I am hoping to check out The Quilted Giraffe on my next trip to New York (but I digress).

Their Complaint includes the following picture of the chefs:

Chloe founded “by CHLOE” and then partnered with BCH’s predecessor.  BCH is associated with James Haber and ESquared Hospitality.  She claims in her lawsuit that BCH ousted her from the restaurant and she has not been involved for two years.  BCH has a different story, alleging among other things, that she was “grossly negligent” related to losing leases and sabotaging deals with partners.  I have not delved into this messy business “divorce” so I will comment no further.

After Chloe left, BCH started “Sweets by Chloe bakery” pictured below:

am starting to get hungry so I better get back to the legal dispute.  In their Complaint, the chefs included the following picture related to their vegan restaurant:

The chefs argued that the restaurant’s name is “Supernatural” which is not similar to By Chloe at all.  The name highlights that the food is super natural.  According to the Complaint, the two chefs collaboration arose from Colicchio writing “An Open letter to (Male) Chefs” on the platform Medium about rampant harassment in the restaurant industry.  It sounds like Colicchio is on the right side of the Me-Too movement.

In contrast,  BCH focuses on the lower portion that identified the two chefs involved with the new SUPERNATURAL restaurant.  Specifically, the lower part of the sign is “CHLOE COSCARELLI X TOM COLICCHIO COLLABORATION.”  The chefs will likely argue that their names are informative and the trademark and certainly any dominant mark for their restaurant is SUPERNATURAL.  Further, the chefs argue their fame as chefs will not be confused with BCH or its By Chloe marks or restaurants.

I have not seen the NFL Agreement.  It may have a non-compete, but it would likely have some sort of time limit rather than preclude her from working for life.  Chloe asserts the agreement is terminated.  Further, I would doubt that the NFL Agreement required her to change her name or not be able to truthfully state who she is in connection with a restaurant.  The more likely prohibition would be to not use the name “CHLOE” for the restaurant.  But, I have not seen the NFL Agreement, so there may be other arguments that BCH will have against the chef.

This will be an interesting case to follow.  As there are allegations about a dip in quality at By Chloe, the judge and jury might want to sample food from the restaurants involved.

You may recall that DuetsBlog informed you in May of 2016 (here) that Beyoncé filed suit in New York federal court against a company and its owners who were using the mark Feyoncé on apparel and other products, such as mugs. She has now dismissed the lawsuit—likely based on a settlement (although the settlement has not been reported yet, and if there is a confidentiality provision in the agreement we may never know for sure).

Beyoncé was understandably troubled when the company began using both Feyoncé (rhyming with her name, the only difference being the beginning letter) and “Single Ladies,” which is the same name as Beyoncé’s famous Grammy award winning Song of the Year. In her complaint, Beyoncé explains that the song “tells the tale of female empowerment – the protagonist celebrates her newly found status as a single woman in a dance club telling her ex-boyfriend (who is jealous of the attention that she is receiving from other men) that if ‘you liked it, then you shoulda put a ring on it.” Beyoncé alleged that defendants were “seeking to capitalize on the notoriety of ‘Single Ladies’… defendants are selling merchandise bearing the ‘Feyoncé’ mark – a misspelling of ‘fiancé’ intended to call to mind ‘Beyoncé’ and her famous song.”

Beyoncé brought a motion for summary judgment. In denying the motion, the court found that there were genuine questions of fact regarding whether there was a likelihood of confusion. It was not enough that the company had tried to “capitalize off the exceedingly famous ‘Beyoncé’ mark.” There were still questions as to whether consumers would believe that Beyoncé was associated with the ‘Feyoncé’ products.

Beyoncé takes intellectual property rights seriously (as we all should). You may recall we blogged about her efforts to protect intellectual property related to her daughter Blue Ivy Carter, here, here and here.

We have likely not seen the last of Beyoncé’s efforts to protect intellectual property.

The battle for attorneys’ fees after an intense trademark dispute often leaves many prevailing parties empty handed. This is because the Lanham Act only provides for attorneys’ fees in “exceptional cases.” Congress’s (and courts’) reluctance to award attorneys’ fees stems from the “American Rule,” which provides that each party to a lawsuit is responsible for paying its own fees–unless a statute provides otherwise. But the Lanham Act erects a high bar to obtaining fees by requiring that the case be “exceptional.”

On the one hand, trademark owners should not have to fully shoulder the burden of what often turns into expensive litigation just to enforce their rights. Indeed, the estimated cost of protecting one’s rights can dramatically affect the calculus of whether to sue for infringement in the first place. But on the other hand, trademark violations are sometimes debatable and unclear. In such circumstances, the American Rule provides some protection to litigants who would otherwise be discouraged from seeking redress due to the risk that they might have to pay the defendant’s fees in the end if they lose. Thus, the Lanham Act strikes a balance, providing for reimbursement in cases of brazen and clear infringement–or brazen and clear abuse of the litigation process–while retaining the benefits the American Rule otherwise provides.

The Lanham Act’s fee provision has come up recently in two high-profile trademark cases: one involving Comic Con (reported on previously here and here), the other meme-famous Grumpy Cat (also reported on previously here). But the result was legally different in both cases, with Comic-con obtaining millions in fees under the Lanham Act, while Grumpy Cat obtained nothing under the Act, but recovered nevertheless pursuant to a contract between her and the infringer. What explains the different results?

Comic-con: The Comic Con (short for “comic book convention”) dispute began when the San Diego Comic Con sued the Salt Lake Comic Con for infringing on San Diego’s “Comic-Con” trademarks. The San Diego convention was one of the first comics-fan conventions.  And it is the largest convention of its kind, drawing more than 130,000 attendees each year. Salt Lake’s convention began in 2013, but it has quickly grown to over 120,000 attendees. Thus, it is probably no surprise that San Diego took exception to Salt Lake’s competing event and use of the same “Comic Con” name–though, as my colleague Jessica Alm pointed out, there are many other conventions across the United States using the same name.

San Diego Comic Con sued Salt Lake Comic Con for infringement. But despite the seemingly-debatable nature of the dispute (because the name could be generic, and it would be difficult to prove consume confusion), less than a year ago a jury determined that Salt Lake was liable for infringement in the amount of $20,000. Thereafter, San Diego moved for fees in the amount of $5 million–a little disproportionate, one would think (but perhaps not in view of San Diego’s requested $12 million in damages).

The district court judge granted $3.9 million. The reasons? Salt Lake repeatedly disregarded court rules, violated confidentiality rules, squandered judicial resources by relitigating issues, based arguments on irrelevant law, and attempted to bias the jury during the trial. The judge felt that the case stood out from others due to the “unreasonable manner it was litigated.” Expect an appeal on the $20,000:$3.9 million ratio.

Grumpy Cat: The Grumpy Cat dispute began when Grenade Beverage LLC, which had licensed Grumpy Cat’s trademarks (names and likenesses) to be used in trade dress and advertising for a new line of iced coffee products called “Grumppuccinos,” also used the marks in connection with a new coffee bean product without Grumpy Cat’s permission. Like the Comic Con litigation, the parties also litigated this case for three years. In addition, a jury awarded Grumpy Cat over $700,000–much more than San Diego Comic Con. But only $1 of that was for breach of the licensing agreement.

But unlike the Comic Con litigation, a federal judge recently denied Grumpy Cat’s request for approximately $320,000 in fees under the Lanham and Copyright Acts. The judge did, however, granted Grumpy Cat fees under the licensing agreement with Grenade Beverage–though, the judge said that there needs to be additional briefing on how much in fees can be awarded under the contract. Central to the judge’s decision on the Lanham Act fees issue was the fact that Grenade Beverage had not acted frivolously or in bad faith when they adopted an interpretation of the licensing agreement that entitled them to use Grumpy Cat’s marks in a line of Grumpy-Cat- branded “coffee products,” rather than just iced coffee. This reasonable difference of opinion–and, presumably, reasonable litigation behavior throughout the case–did not make out “exceptional” circumstances justifying fees under the Lanham Act.

In general, the Comic Con and Grumpy Cat cases provide two high-level teachings when it comes to fees. First, it is important to choose professional counsel, make reasonable litigation decisions, and take good faith positions throughout the course of a case. Otherwise, that conduct in and of itself may make the case “exceptional,” putting you on the hook. Second, attorneys’ fees provisions in a licensing agreement can serve as a helpful back-up if the Lanham Act fees request fails. But in providing for such fees, one should consider whether it is truly advantageous in the circumstances to remove the American Rule’s protections. That requires some thought…I need a Grumppuccino.

P.S. In April, I wrote about the USPTO’s attempt to obtain attorneys’ fees when it prevails in district court patent litigation. The Federal Circuit rejected this attempt, stating “the American Rule prohibits courts from shifting attorneys’ fees from one party to another absent a ‘specific and explicit’ directive from Congress. The phrase ‘[a]ll the expenses of the proceedings’ [in 35 U.S.C. § 145] falls short of this stringent standard.”

The trademark ST. ROCH MARKET is at the heart of a dispute in New Orleans (aka NOLA).  The City of New Orleans is battling in court with the current lessee of the building associated with the trademark.

ROCH MARKET has been associated with a popular market in New Orleans since 1875. Prior to Hurricane Katrina, the market sold fresh seafood. After begin devastated by the hurricane, the City pumped over $3.2 million dollars to transform the place into a food hall with vendors selling seafood, confections, coffee, alcoholic drinks, streetfood, and other food.  Renowned food expert ZAGAT states that it is “An absolute must visit.”  I intend to do so when I visit my friend in NOLA this fall.

Following the renovation, Bayou Secret, LLC leased the building to operate a full service neighborhood restaurant with multiple vendors in a stalls concept.   The company’s sole member Helpful Hound, LLC applied to register the ST. ROCH MARKET mark in April 2017 in connection with food kiosk services and retail vending stand services (Bayou Secret, LLC, and Helpful Hound, LLC and certain individuals associated with the entitityes will collectively be referred to as the “Bayou Secret Parties”).  Because the term ST. ROCH MARKET is descriptive of an actual place, the mark could not be registered on the Principal Register of the United States Patent and Trademark Office.  However, registration for the mark was secured on the Supplemental Register at U.S. Reg. No. 5,293,244 based on the mark’s secondary meaning.

The Bayou Secret Parties launched a similar food hall in Miami in April 2018 and planned to expand into Chicago and Nashville.  Within days of each other in April 2018, the City of NOLA and Bayou Secret Parties filed lawsuits against each other.  The Court consolidated the two cases which involve allegations that Bayou Secret Parties infringed the City of NOLA’s trademark, that the famous trademark was being diluted, among others.

The City of NOLA also filed its own application for the ST. ROCH MARKET in April 2018 in connection with the leasing and management of space for food and drink vendors in a public market at Ser. No. 87/890,988.

In August, the City of NOLA and its management company (NOBC) secured a preliminary injunction that barred the Bayou Secret Parties from using the ST. ROCH MARKET mark for food hall locations other than in NOLA and its newly opened food hall in Miami.

The Bayou Secret Parties brought a motion to dismiss on various grounds.  The City of NOLA defeated the motion with the exception of having its claim for trademark dilution dismissed.  The court found the allegation that the mark “is widely recognized by the general consuming public of the United States” was merely conclusory.

Do you think the EATALY® mark associated with food halls would fare better?  (See U.S. Ser. Nos. 3,065,012; 3,567,939).  It might.  The mark is associated with the well known food halls located near the iconic Flatiron building in New York, downtown Chicago and other locations.

Significantly, famous chef Mario Batali is a partner with the Italian owner of the EATALY mark that was first used in Turin, Italy for a food and wine market before traveling to the United States.

Since last week, the internet has blown-up about what United States Supreme Court nominee Judge Brett Kavanaugh might decide regarding issues coming before the Supreme Court if he joined the highest Court of the land. As a judge on the D.C. Circuit, Judge Kavanaugh has been skeptical about the authority of administrative agencies. This could impact decisions rendered by the United States Patent and Trademark Office (“USPTO”).

Specifically, Judge Kavanaugh has been critical of the authority of the government agencies to promulgate regulations interpreting legislation. Judge Kavanaugh would likely find it inappropriate for an agency to fill in gaps left in a statute.  Judge Kavanaugh would likely chip away or do away with the Chevron doctrine. Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). This doctrine refers to a defense invoked by a government agency that allows a court to show deference to the agency’s interpretation of a law that it administers.

Several years ago, the United States Supreme Court held that issue preclusion should apply (so long as the other elements of issue preclusion are met) when the trademark usages adjudicated by the Trademark Trial and Appeal Board (“TTAB”) are materially the same as those before the district court. B&B Hardware Inc. v. Hargis Indus., _ U.S. _, 135 S. Ct. 1293 (2015).  In other words, the decision of the TTAB can be binding on other courts. DuetsBlog has posted on this decision before:

Likelihood of Preclusion: Fallout From the Supreme Court Ruling on Likely Confusion and What Do Gripe Sites Have to Do with SCOTUS’s B&B Hardware Decision?

Justice Thomas and the late Justice Scalia disagreed with the majority in the B&B Hardware decision. In his dissent, Justice Thomas was troubled by the fact that the TTAB was not comprised of Article III judges. Instead, the judges serving on the TTAB lacked input from either the President of the United States or the Senate. The dissent believed that applying issue preclusion raised serious constitutional concerns.

Judge Kavanaugh appeared to have a similar view in connection with a decision related to an underlying decision rendered by the Copyright Royalty Board (“CRB”). He suggested that there was “a serious constitutional issue” with the way judges are appointed to the CRB. Judge Kavanaugh further wrote that “under the Appointments Clause, principal offices of the United States must be nominated by the President and confirmed by the Senate.” Judge Kavanaugh wrote that the CRB had acted arbitrarily.

It will be interesting to see what impact a Justice Kavanaugh (or whoever becomes the ultimate replacement for Justice Kennedy) will have on the USPTO and intellectual property issues in general.

DJ Khaled and his son’s company sued an online retailer named Curtis Bordenave and his company, Business Moves Consulting, Inc., alleging that they are illegally using his and his son Asahd’s intellectual property.

Most of you likely know who DJ Khaled is, but I had not heard of him before reading about this dispute.  When I asked my friend about him on Friday night , she said “I know he is famous but I can’t tell you why.”  In looking at the Complaint, I found that “Khaled has enjoyed tremendous success in the United States and beyond as an entertainer, record producer, radio personality, radio label executive, and media celebrity.”  Wow. It appears I have been missing out.

DJ Khaled himself owns the KHALED mark in connection with musical sound recordings musical video records, disc jockey services, and other entertainment services.

DJ Khaled’s son, Asahd Tuck Khaled, is frequently featured on Instagram. The complaint asserts that Asahd has become a social media phenomenon.  He has lots of followers on Instagram (a social media I need to start using more—I have an account that I only use right now to communicate with my niece and nephew).

In addition, DJ Khaled is challenging Bordenave’s filing an application for “We The Best Lifestyle,” which infringes on his trademark WE THE BEST®.  DJ Khaled has registered the WE THE BEST® trademark in connection with, among other goods and services, musical recordings, entertainment services, online retail clothing store services, recordings and e-cigarette liquid.

Khaled frequently uses the saying “We the Best.”  Forbes even wrote an article entitled “How many Times can DJ Khaled say ‘We the Best’ in 40 seconds?” in November 2014.

Khaled worked the circuit using his catch phrase “We the Best” on shows such as The Ellen Show, Jimmy Kimmel Live, Live with Kelly and Ryan, The Chew, Rachel Ray, The Daily Show, The Late Show with Stephen Colbert, Late Night With Seth Meyers, and Good Morning America.  Khaled formed ATK Entertainment, Inc. to protect his infant son’s interests.

The complaint alleged that “Plaintiffs bring this action to halt the brazen attempt by trademark pirates…to usurp and trade on the names and trademarks of world-famous entertainer Rahled M. Khaled, known popularly as “DJ Khaled, and his 18-month old son, Asahd Tuck Khaled.”  It further describes Bordenave’s actions as “parasitic  conduct and bad-faith act.”  Specifically,  DJ Khaled and his son’s company brought various claims of violation of both Khaled and his son’s trademark rights and right of publicity under New York state law.  Not all states have such laws. Minnesota does not. See a former Duets post on the subject, here.

Specifically, DJ Khaled and his son’s company have brought claims under the New York Right of Privacy Act (N.Y. Civ. Rights Law §§ 50-51), trademark infringement and unfair competition under the Lanham Act and common law, state law claims under the New York Deceptive and Unfair Trade Practices Act (N.Y. Gen. Bus. Law § 349), and commercial defamation.  Finally, they brought a declaratory judgment action seeking a declaration that they are not violating any rights of Bordenave or his company.

Khaled alleges damage because Bordenave attempted to interfere with a deal that Khaled had made with Nike to use his son’s name in conjunction with Michael Jordan to sell clothes.

This is not Bordenave’s first rodeo. The complaint states that he is a “serial trademark infringer.” Bordenave and his company have previously applied to register:

  • CARDI-B—which is the name of a well-known rapper
  • STORMI COUTURE—which it applied to register within a month of the birth of Kylie Jenner’s daughter Stormi Webster.

The complaint also alleges Bordenave improperly filed six other trademark applications based on other famous people, television stations or radio stations.

This appears to be a new trend with the rich and famous: promoting your kids names to sell products. Other famous parents have sought trademarks in connection with their children’s names. For example, Beyoncé and Jay Z applied for the mark BLUE IVY CARTER® in connection with numerous goods and services, including but not limited to, entertainment services, fragrances, cosmetics, skin care products, metal key chains and metal key rings, DVDs, CDs, and audio and visual sound recordings featuring musical performances, handheld and mobile digital electronic devices, baby teething rings, baby strollers and book, bags, and hair accessories. Beyoncé’s company is currently battling an Opposition filed by a company named Blue Ivy that is an entertainment and event planning firm focused on weddings and other elegant events.

We will have to see if DJ Khaled can stop Bordenave from capitalizing on his young son’s fame.

On Monday, November 27, 2017, the U.S. Supreme Court heard argument in Oil States Energy Services, LLC v. Greene’s Energy Group, LLC, No. 16-712. The case presents a direct challenge to the U.S. Patent and Trademark Office’s (“USPTO’s”) “inter partes review” (“IPR”) process, under which third parties can petition the USPTO’s Patent Trial and Appeal Board (the “PTAB”) to cancel one or more claims of an already-issued patent.

Photo Credit: Fox

ScotusBlog recently offered a brief introduction to Oil States’s “remarkably pedestrian” backstory:

Petitioner Oil States sued respondent Greene’s Energy, contending that Greene’s Energy was infringing a patent that Oil States holds on technology useful for preserving wellhead equipment in the oil and gas industry. Predictably, Greene’s responded by seeking inter partes review, hoping that the PTO would invalidate the Oil States patent. When the PTO concluded that the patent in fact was invalid, Oil States raised the stakes, arguing that Congress violated Article III and the Seventh Amendment when it authorized an administrative agency to invalidate the patent without affording Oil States an opportunity for a jury trial.

If the Supreme Court decides that IPR is unconstitutional, the holding will have major consequences. As an initial matter, many would-be litigants have chosen to pursue IPR petitions instead of patent defenses or claims in court because the IPR process is faster and more cost-effective than federal litigation. For example, a typical medium-sized patent dispute costs around $3M to litigate in federal court, but IPR proceedings are one-tenth the cost. The average time to trial is around 2 years, 3 months, whereas IPR proceedings take just over half as long to conclude. In addition to offering advantages to litigants, IPR proceedings have played a significant role in lightening the federal patent docket, addressing more than 1,000 patent cases with dispositive effect. Usually, patent cases are stayed pending an IPR proceeding. Thus, the IPR process in many cases eliminated the need for protracted federal litigation.  

As Oil States neared oral argument, several commentators offered their take on how the case might turn out. But the Justices’ questions at oral argument provide better hints at whether affirmance or reversal will result:

Right out of the gate, Chief Justice Roberts asked the petitioner, Oil States, to explain its distinction between the USPTO’s post-grant procedures that are “examinational” in nature, versus those which are adjudicative. The distinction relates to the federal government’s separation of powers between its three branches, with the judiciary serving the role of adjudicating disputes–as provided by Article III, which vests the “judicial power” in the federal courts. Getting to the heart of the matter, Justice Sotomayor asked, “What is so fundamentally Article III that changes [the IPR] process into an Article III violation?” Suggesting an answer to her own question, the Justice stated, “Both [IPR processes and other post-grant processes] are just informing the PTO of the nature of its error and giving it an opportunity to correct its error.” Justice Ginsburg later chimed in: “[IPR] is geared to be an error correction mechanism and not a substitute for litigation.” Justice Breyer appeared to agree, stating, “I thought it’s the most common thing in the world that agencies decide all kinds of matters through adjudicatory-type procedures often involving private parties. So what’s so special about this one…?” Justice Kagan remarked, “it seems a little bit odd to say, sure, the government can reexamine this…but there’s some line that falls short of what” is constitutional.

Justice Gorsuch suggested that the distinctions between permissible examination and impermissible adjudication could be avoided by focusing on whether there is a private or public right involved, the idea being that public rights (e.g., licenses) need not be adjudicated by an Article III court. Justice Kennedy asked, “[C]ould Congress say…we will grant you a patent on the condition that you agree to this procedure; otherwise, we don’t give you the patent?” Justice Alito later asked a similar question. Justice Kennedy followed up, “Could Congress say that we are reducing the life of all patents by 10 years?” When counsel for Oil States answered yes, he responded, “Well, then that–doesn’t that show that the patent owner has limited expectations as to the scope and the validity of the property right that he holds?” Justice Gorsuch begged to differ, however, stating “we have a number of cases that have arguably addressed this issue…in which this Court said the only authority competent to set a patent aside or to annul it or to correct it for any reason whatever is vested in the courts of the United States.” But Justice Sotomayor, seemingly rejecting that argument, stated that at least one of the cases cited by Justice Gorsuch (McCormick v. Aultman) did not involve determinations of constitutional law, nor did it involve statutory analysis of post-grant procedures because none were applicable or available at the time that case was decided.

Turning to the respondent, Greene’s Energy, Justice Breyer fired off the first question, asking whether it was a “problem” that a company could invest $40B in developing a patent and could have it for 10 years before an IPR proceeding cancelled the patent. He asked, “Is there something in the Constitution that protects a person after a long period of time and much reliance from a reexamination at a time where much of the evidence will have disappeared,” suggesting a due process-flavored argument. Chief Justice Roberts followed up, asking whether Greene’s Energy’s position is that “If you want the sweet of having a patent, you’ve got to take the bitter that the government might reevaluate it at some subsequent point.” Finding agreement, he said, “Well, haven’t our cases rejected that…proposition? I’m thinking of the public employment cases, the welfare benefits cases. We’ve said you…cannot put someone in that position.”

The discussion shifted to whether the availability for subsequent judicial review of the PTAB’s IPR decisions bears on IPR’s constitutionality. Justice Sotomayor remarked, “That..was what troubled me deeply about you telling Justice Kagan that, without judicial review, that this would be adequate. I mean, for me, this–what saves this, even a patent invalidity finding, [is that it] can be appealed to a court….[H]ow can you argue that the…PTO…has unfettered discretion to take away that which it’s granted?”

Justice Gorsuch again brought up the public-private rights distinction, noting that “there’s an abundance of law going back 400 years. Justice Story says it. I mean, you know, this is not a new idea, that once [a patent is] granted, it’s a private right belonging to the inventor.”

Finally, the Court turned its attention to the Government’s argument. Justices Gorsuch and Roberts asked about the “bitter with the sweet” argument. The Government responded that employment and welfare decisions are often made by executive officials and must always comport with due process, but need not be adjudicated by courts in the first instance.

Justices Breyer and Roberts then steered the conversation toward factors that might help distinguish private rights from public rights. Justice Breyer expressed the view that the large investment underlying a patent might justify a due process or takings clause argument, but the Government responded that there is no as-applied challenge in this case.

The Government also brought up the adjudication versus examination point, arguing that IPR is distinct from typical judicial functions, which involve determining liability between private litigants and assessing monetary damages. For example, an infringement action involves determining liability for use of a patented idea and the reasonable royalty damages that should be paid for that use. IPRs, on the other hand, merely address patentability and do not involve liability or damages. The Government also noted that the executive frequently employs adjudicative proceedings to take appropriate executive action. IPR is no different.

In the end, as always, divining the eventual decision from the Justices’ questioning is more art than science–no puns intended. Justices Sotomayor, Ginsburg, Breyer, and Kagan all appear to endorse the view that IPR proceedings do not violate separation of powers. Justices Kennedy and Alito also seem to fall in the same camp. On the other hand, Justices Breyer, Roberts, and Sotomayor’s questions suggest that these Justices think there may be serious due process concerns. Only Justices Gorsuch, Breyer, and Roberts were interested in the public rights versus private rights distinction, but two of those Justices expressed doubts about the distinction’s defining features. If I had to call it, I would guess that the Court will find that IPRs, as currently structured, do not violate separation of powers or due process and are therefore constitutional. Stay tuned for updates on this important case.

— Jessica Gutierrez Alm, Attorney

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I’m a rules follower. Going back to the days of the Game Genie—a device that allowed gamers to play Super Mario Bros. with infinite lives or the Legend of Zelda with infinite bombs—I have always preferred the satisfaction of beating the IMG_0016game by its own rules.

Like the video games that have progressed since the Nintendo NES, the corresponding cheat codes have become increasingly more sophisticated. Bossland is a company that creates and sells entire programs dedicated to hacking and cheating in popular video games, such as World of Warcraft, Overwatch, and Diablo 3, all made by Blizzard Entertainment. Many of the Bossland programs allow users to create “bots” that play the game automatically without any user interaction so that the user can, for example, achieve a higher level character without the usual effort. This is a practice sometimes referred to as “botting.”

Blizzard has been fighting companies like Bossland for years. Since 2013, Bossland has sold approximately 118,939 products in the United States alone. Blizzard estimates that 36% of these products were cheats for Blizzard games. In June of 2016, Blizzard sued Bossland in the Central District of California. According to Blizzard, the Bossland cheats give users an unfair advantage, reducing the enjoyment of the game for other players. Blizzard alleged, among other causes of action, that Bossland violated an anti-circumvention provision of the Digital Millennium Copyright Act. The DMCA provides:

No person shall manufacture, import, offer to the public, provide, or otherwise traffic in any technology, product, service, device, component, or part thereof, that—
(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title;
(B) has only limited commercially significant purpose or use other than to circumvent a technological measure that effectively controls access to a work protected under this title; or
(C) is marketed by that person or another acting in concert with that person with that person’s knowledge for use in circumventing a technological measure that effectively controls access to a work protected under this title.

17 U.S.C. 1201(a)(2). Within its games, Blizzard has “technological measures” that operate to prevent users from using cheats and hacks, but the Bossland programs are designed to work around Blizzard’s measures. At first blush, Bossland’s programming seems like the very type of circumvention efforts that the anti-circumvention provisions of the DMCA were designed to protect against. But the DMCA was enacted in response to internet file sharing concerns. In 2009, Blizzard was involved in a similar lawsuit against another cheat company. Many were concerned that a ruling in favor of Blizzard would overly expand the DMCA to allow for recovery under any circumvention of any type of technological control. Jef Pearlman of Stanford University suggested that “because anything can contain copyrighted works,” a ruling in favor of Blizzard could suggest that “any access to anything becomes a DMCA violation.” Blizzard did win its 2009 case, and the judgment was affirmed on appeal to the Ninth Circuit.

Late last year, Bossland motioned to dismiss the lawsuit for a lack of jurisdiction over the Germany-based company. The district court denied Bossland’s motion. After that attempt, Bossland apparently stopped defending the suit altogether. As a result, Blizzard obtained from the court a default judgment against Bossland. The judgment awards damages to Blizzard based on available statutory damages under the DMCA. The DMCA allows a plaintiff to collect a minimum of $200 per violation. Blizzard alleged 42,818 violations of the DMCA, and because Bossland did not dispute any of them, Blizzard obtained a judgment of statutory damages to the tune of over $8.5 million.

Bossland maintains on its product websites that “Botting is not against any law.” While perhaps technically true, the circumvention of digital copyright safeguards is.

-Wes Anderson, Attorney

In the market for sunglasses, I recently went to Amazon.com and searched for “Holbrook sunglasses.” HOLBROOK is, of course, a trademark of Oakley, Inc. – but I had no intention of purchasing Oakleys. Instead, I wanted a far cheaper pair of sunglasses based on that style, so I could more easily justify inevitably losing them. Was I a victim of self-inflicted “initial interest confusion”?

Initial interest confusion is a theoretical “subset” of trademark infringement, whereby infringement can occur “where a plaintiff can demonstrate that a consumer was confused by a defendant’s conduct at the time of interest in a product or service, even if that initial confusion is corrected by the time of purchase.” In other words, under an IIC theory, a plaintiff could sustain a lawsuit based on source or affiliation confusion, even if that confusion was not the basis for the consumer’s ultimate decision to purchase the product.Screen Shot 2017-01-27 at 7.59.28 AM

At yesterday’s INTA Roundtable here at Winthrop, my colleagues and fellow practitioners discussed Multi Time Machine, Inc. v. Amazon.com, Inc. and Amazon Services LLC, 804 F.3d 930 (9th Cir. 2015), a case holding that Amazon is not liable for trademark infringement resulting from its search results – and rebuking an “initial interest confusion” theory.

Multi Time Machine, Inc., a maker of high-end watches, brought a trademark infringement action against Amazon.com, alleging that Amazon infringed its trademark because a search for “mtm special ops” on Amazon’s website returns search results for alternative products, including other watches. Multi Time Machine does not actually sell its own watches on Amazon.com, so only competitors’ products would be listed.

MTM argued that because a search for MTM Special Ops watches on Amazon displays watches manufactured by MTM’s competitors and does not inform the consumer that Amazon does not carry MTM watches, there is a likelihood of “initial interest confusion.” Namely, MTM argued that a consumer may be confused into thinking that a relationship exists between MTM and one of its competitors, as displayed in the Amazon search. Because of this initial confusion, MTM asserted, the consumer may choose to buy the competitor watch instead of continuing to seek out an MTM watch.

In a 2-1 majority decision, the panel affirmed the district court’s summary judgment in favor of Amazon, holding that Amazon’s search results page does not create a likelihood of confusion by displaying other brands’ watches.

INTA, for its part, recommends that courts adopt initial interest confusion as an actionable theory:

INTA recommends that courts recognize that the initial interest confusion doctrine is not separate from a likelihood of confusion analysis. It is simply a timing question as to when confusion occurs, which recognizes confusion that is dispelled before an actual sale occurs may be actionable. Courts should consider initial interest confusion claims, whether in brick and mortar cases or Internet cases, under traditional likelihood of confusion tests and should consider each element of such tests, as well as related defenses, based on the facts of each case.

Personally, I’m a bit skeptical of this particular theory of liability, and I’m certainly not alone in the trademark blog world. And perhaps the Ninth Circuit’s ruling is a step towards minimizing the scope of initial-interest liability.

HoustonLawsuitGraphic

A trademark problem, that is, as reported by the Texas Tribune on Friday of last week.

Lest you be fooled by the above reference to Houston College of Law being established in 1923, the name has only been around since June of 2016.

In fact, when South Texas College of Law rebranded to Houston College of Law in June, the University of Houston Law Center jumped into federal court with both boots and within five days of the announcement, seeking a preliminary injunction, to temporarily stop the use while the case proceeds through the court system to an eventual trial.

Last Friday the federal district court granted University of Houston Law Center’s request for a preliminary injunction, in a detailed 42-page decision, holding:

There is a substantial likelihood of success on the merits of UH’s trademark infringement claim under the Lanham Act: at least two of UH’s marks, “UNIVERSITY OF HOUSTON” and “UNIVERSITY OF HOUSTON LAW CENTER,” are eligible for protection; UH is the senior user of these marks; and there is a likelihood of confusion between UH’s marks (both individually and collectively) and Defendant’s use of “HOUSTON COLLEGE OF LAW.”

And, herein lies the problem for South Texas College of Law: Does it really make sense to litigate for a year or more to try and convince the court there really is no likelihood of confusion, after it already has ruled that University of Houston Law Center has established a “substantial likelihood of success on the merits” of its trademark claim?

South Texas College of Law appears to believe so, and is prepared for another lengthy legal fight, so stay tuned for more as this case proceeds.

The court has scheduled a hearing for Wednesday to determine a “feasible timeline” for South Texas College of law to comply with the injunction, and to determine whether the University of Houston Law Center will need to post a bond, and if so, in what amount, in case it is later determined that the grant of the injunction was not warranted.

As a marketing type or brand manager, suppose you faced this kind of problem, after running into a legal brick wall and being ordered to cease using the chosen new brand name, under what circumstances would you fight in the court system for a year or more for the legal right to hopefully change the court’s mind so you can change your brand name once again?

Is this why many trademark disputes resolve by way of settlement after the grant or denial of a preliminary injunction?

UPDATE:

Above the Law covers the story, here.