Ninth Circuit Court of Appeals

–Dan Kelly, Attorney

The Ninth Circuit Court of Appeals has recently issued a pair of opinions fleshing out a principle in copyright law known as the “first sale doctrine.”  The principle traces its roots to the 1908 Supreme Court opinion of Bobbs-Merrill Co. v. Straus.  It is currently enshrined in statute and provides in basic part, “the owner of a particular copy or phonorecord . . . or any person authorized by such owner, is entitled, without the authority of the copyright owner, to sell or otherwise dispose of the possession of that copy or phonorecord.”  17 U.S.C. 109(a).  The first sale doctrine is well settled in many circumstances, such as with books.  When you buy a book, you are free to do whatever you want with the particular copy you purchased.  Read it, burn it, lend it, make paper airplanes out of it, and, significantly, resell it–even for more than you paid for it.  You own your copies of your books free and clear.

While operation of the first sale doctrine is clear when it comes to traditional books, these recent Ninth Circuit cases establish that the doctrine is still a bit murky when it comes to such relatively longstanding media as software and music.  The first sale doctrine does not apply to licensed copies of particular works (as opposed to owned copies), and copies of both software and musical works are often licensed rather than sold.  This is important.  If a copyright owner has properly licensed copies of its works, it will likely be able to control downstream transactions involving the copies.  If it has instead sold copies of its works, it will not be able to control downstream transactions involving the copies.

In Vernor v. Autodesk, the Ninth Circuit held, “a software user is a licensee rather than an owner of a copy where the copyright owner (1) specifies that the user is granted a license; (2) significantly restricts the user’s ability to transfer the software; and (3) imposes notable use restrictions.”  Great.  Another multi-part balancing test.  The first element is easy enough (although already litigated somewhat in Vernor’s companion case, UMG Recordings v. Augusto).  The second and third elements seem to be legal employment security provisions; it will take many cases to establish what “significant” transfer restrictions and “notable use restrictions” actually are and are not.

Until these elements of licensing are litigated to death, copyright owners would be well advised to revisit current licensing practices to make sure that licenses will work as intended in the Ninth Circuit under Vernor and UMG Recordings.

In the meantime, some trivia:  The “Straus” in Bobbs-Merrill Co. v. Straus referred to Isidor and Nathan Straus.  Can you name the still-existing company name under which they were doing business in 1908?


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–Dan Kelly, Attorney

In November I commented on Gibson Guitar Corp.’s suit against the makers and retailers of PAPER JAMZ toy guitars.  To recap briefly, past efforts by both Gibson and Fender Music to enforce trademark interests in their respective guitar body shapes have been largely unsuccessful.

Until now.

On December 21, 2010, the U.S.

–Dan Kelly, Attorney

Last month, the United States Court of Appeals for the Ninth Circuit issued an opinion in the case of Toyota Motor Sales, U.S.A. v. Tabari that asked whether the domain names buy-a-lexus.com and buyorleaselexus.com used in connection with automobile brokerage services infringed Toyota’s trademark rights in LEXUS.

Conventional legal wisdom is that only the owner of a trademark has a right to use its trademark in a domain name in connection with related goods or services.  The back-of-the-envelope legal calculus is not difficult:  the domain names incorporate LEXUS in its entirety, and they are used in connection with auto brokerage services–services that are closely related to automobiles.  There is only one catch:  the brokers legally deal in genuine LEXUS vehicles.  Astute readers will recognize this fact as raising the issue of nominative fair use.

The Court articulated its nominative fair use test this way:

In cases where a nominative fair use defense is raised, we ask whether (1) the product was “readily identifiable” without use of the mark; (2) defendant used more of the mark than necessary; or (3) defendant falsely suggested he was sponsored or endorsed by the trademark holder.

While correct, I prefer how Steve has articulated the nominative fair use defense, which is established when:

  1. The product cannot be readily identified without using the trademark;
  2. Only so much of the trademark is used as is necessary for the identification; and
  3. No sponsorship or endorsement of the trademark owner is suggested by the use.

I bring this up, because the Court’s analysis began “by asking whether the Tabari’s use of the mark was ‘necessary’ to describe their business.”  In my initial read, I thought that the Court was beginning with the second element of the test, keying off of the word “necessary,” but this is a restatement of the first element, which addresses the issue of necessity in using the mark.  The second element, while using the word “necessary,” really addresses the scope of the use.

The Court recognized that it was not necessary in an absolute philosophical sense for the Tabaris to use buy-a-lexus.com or buyorleaselexus.com; it observed that they could have just as easily used autobroker.com or fastimports.com (Fast Imports being the Tabaris’ d/b/a).  But here’s the clincher:  “One way or the other, the Tabaris need to let consumers know that they are brokers of Lexus cars, and that’s nearly impossible to do without mentioning Lexus, . . . be it via domain name, metatag, radio jingle, telephone solicitation or blimp.”  (It is fair to characterize this last quip as dicta.)

Lawyers and fans of legal minutiae can read after the jump for one other legal issue raised by this case that has me puzzled.


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–Dan Kelly, Attorney

A couple of weeks ago, the U.S. Court of Appeals for the Ninth Circuit reversed a district court that had held that the federally registered trademark “WOULD YOU RATHER . . . ?” was merely descriptive as applied to books and games.  (PDF of appellate opinion here.)  Briefly, the facts are that Falls Media owns the aforementioned trademark registration, which has priority to July 1997, and Zobmondo Entertainment, who publishes books and games under the identical mark as a subtitle, has challenged Falls Media’s trademark rights in court.  The appellate opinion gives a fairly succinct overview of the sordid details — it sounds like these parties have been feuding in one way or another about this trademark for more than ten years — almost as long as Falls Media’s rights in the mark.  Identical marks and goods usually makes for good spectating.

This case fascinates me for a few reasons.  First, the appellate opinion is quite good, and treats well issues related to the fuzzy border between descriptive and suggestive trademarks, particularly in the context of the sometimes nerdy procedural legal issue of summary judgment.  It also contains some excellent evidentiary analysis.  Second, there is something morbidly interesting about parties that have been feuding for more than ten years.  This is like the Hatfields and McCoys.  Third, and perhaps most interesting, is that the entire dispute centers around two parties that are both experiencing commercial success exploiting a game that I think has existed as some form of a parlor or car game since long before 1997.  Calls to mind a trite phrase about the rate at which suckers are born.

For now, the WOULD YOU RATHER . . . ? trademark has survived its first challenge, but the case now returns to the District Court for further proceedings, or maybe settlement, if the parties would rather . . . but probably not.

P.S.  On an unrelated note, does the Zobmondo “Would Your Rather” game box remind you of anything?  My answer after the jump . . .


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Taglines and advertising slogans can be wonderful branding and marketing tools, but I’m thinking (not Arby’s, by the way) that McDonald’s is probably not thinkin’ that its (likely) famous I’m lovin’ it tagline accurately describes its taste for the federal trademark infringement lawsuit that Twin Cities-based Lion’s Tap recently slapped on McDonald’s for its whopper of an advertising campaign — promoting its new Angus Third Pounders — served up with the clever and simple play-on-words advertising slogan and question: Who’s Your Patty?

No doubt, McDonald’s likely will not make a run for the border, instead, it likely will instruct its team of lawyers to think outside the bun in designing a successful legal defense and response strategy, in the hope of not hearing the court say to Lion’s Tap in the end, have it your way.

For your reading pleasure, here is a pdf copy of the complaint filed last Friday in Minnesota federal district court. As you will see from the Minnesota State Who’s Your Patty? Certificate of Registration (attached to the filed complaint), Lion’s Tap waited to register its claimed mark in Minnesota until August 18, 2009, ten days before filing suit. As a result, Lion’s Tap clearly did not register the tagline “four years ago,” or back in 2005 (the year it claims to have commenced use), as incorrectly reported ad nauseam, here, here, here, here, here, here, here, here, and here. Well, at least a couple of the media outlets covering the story avoided the mistake, and got the registration date right.

So, why is the date of registration significant? If McDonald’s didn’t know about Lion’s Tap’s use before rolling out its own use of “Who’s Your Patty?” — an entirely plausible scenario, since the mark was not registered, even in Minnesota, until well after and apparently in response to McDonald’s already commenced use — it starts to look like a much different case for Lion’s Tap (more un-Hamburglar-like), for reasons I’ll explain later.


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