Gatorade's Fair Use Defense Defeats SportFuel Trademark Infringement Lawsuit

On June 14, 2018, the U.S. District Court for the Northern District of Illinois granted summary judgment in favor of PepsiCo, Inc. and its subsidiary, The Gatorade Company (“Gatorade”), against the trademark infringement claims brought by SportFuel, Inc. (“SportFuel”), the owner of the registered trademark SPORTFUEL, over Gatorade’s use of the advertising slogan “The Sports Fuel Company.”  SportFuel, Inc. v. PepsiCo, Inc. et al, Case No. 16-cv-07868 (N.D. Ill. 2018) (decision here).

SportFuel is a Chicago-based sports nutrition and wellness consulting firm that also sells a variety of SportFuel-branded dietary supplement powders and capsules.  SportFuel owns two registered trademarks for the name SPORTFUEL – one for “food nutrition consultation,” “nutrition counseling,” and “providing information about dietary supplements and nutrition” (U.S. Trademark Registration No. 3,495,513) and another for “dietary supplements” and “sports drinks enhanced with vitamins” (U.S. Trademark Registration No. 4,832,297).

Gatorade began using the phrase “sports fuel” internally in 2012 in marketing presentations describing their “Sports Fuel” products (which it defined as products designed to improve athletic performance in contrast to sports nutrition products) and describing the growing “Sports Fuel” product market.  In 2015, with full knowledge of SportFuel’s trademark rights, Gatorade began a nationwide rebranding campaign using the slogan “Gatorade The Sports Fuel Company.”  Gatorade obtained a trademark registration for GATORADE THE SPORTS FUEL COMPANY in 2016 (Reg. No. 5,025,026) – although it included a disclaimer of any exclusive rights to “The Sports Fuel Company” apart from the mark as shown in response to an office action which found “The Sports Fuel Company” to be merely descriptive.  Gatorade maintained that it did not use the slogan on any product packaging or labeling – rather, its products used the GATORADE trademark or the G-bolt design mark. 

SportFuel filed its lawsuit against Gatorade and PepsiCo in August 2016 alleging causes of action for trademark infringement, unfair competition, and false designation of origin in violation of the Lanham Act as well as related claims of trademark infringement and unfair competition under state law and common law.  Gatorade filed a motion for summary judgment on all of SportFuel’s claims on two separate grounds – 1) SportFuel has not presented evidence from which a reasonable jury could find likelihood of confusion (a necessary element to all of SportFuel’s claims) and 2) Gatorade’s use of the term “Sports Fuel” in the slogan “Gatorade The Sports Fuel Company” is protected under the fair use doctrine.  The court granted Gatorade’s motion entirely on the grounds of fair use and did not address the likelihood of confusion argument. 

The court first identified the fair use defense and its elements:

Under section 1115(b)(4) of Lanham Act, however, the “fair use” defense allows a junior user of a mark to use the mark “in good faith in its descriptive sense, as opposed to its trademark sense.” Ideal Indus., Inc. v. Gardner Bender, Inc., 612 F.2d 1018, 1027 (7th Cir. 1979); see also 15 U.S.C. § 1115(b)(4); Sorensen v. WD-40 Co., 792 F.3d at 722. The fair use defense “is based on the principle that no one should be able to appropriate descriptive language through trademark registration.” Packman, 267 F.3d at 639 (citation omitted). To prevail on a fair use defense, the defendant must show that (1) it did not use the mark as a trademark; (2) the mark is descriptive of the defendant’s goods or services, and; (3) it used the mark “fairly and in good faith.” Sorensen, 792 F.3d at 722.

With respect to the first element of the fair use defense – showing that it did not use “Sports Fuel” as a trademark – Gatorade argued that it used the term “Sports Fuel” in its slogan “Gatorade The Sports Fuel Company” to describe the type of products it sells rather than to signify the source of the products.  Even though there was no dispute that Gatorade uses its name and G-bolt design mark on its product packaging and advertising, this did not preclude a finding that Gatorade’s use of the words “Sports Fuel” could be viewed as a source identifier of Gatorade’s products.  Nonetheless, in analyzing Gatorade’s actual use of the slogan “The Sports Fuel Company,” the court focused heavily on how the word “Gatorade” typically appeared above the slogan and in a much more noticeably larger and bolder font.  And in those instances where the word “Gatorade” appeared on the same line and in the same font as the slogan, the word “Gatorade” was bolded so that it would stand out from the slogan.

  

The court found that “The fact that the Gatorade house mark appears more prominently than the rest of the slogan reduces the likelihood that Gatorade is using “Sports Fuel” as an indicator of source.”  The court rejected SportFuel’s argument that a Gatorade executive had admitted using “Sports Fuel” as a trademark given that he was not a trademark expert and just giving an opinion.  Moreover, the fact that Gatorade had sought to register “Gatorade The Sports Fuel Company” as a trademark did not change the court’s analysis given Gatorade’s express disclaimer of “The Sports Fuel Company” as part of its trademark registration. 

With respect to the second element of the fair use defense – showing that Gatorade’s use of “Sports Fuel” was in a manner which is descriptive of its goods or services – Gatorade’s argument that its use of “Sports Fuel” would clearly be recognized by consumers as descriptive of “foods and beverages designed to be consumer before, during, or after sports activity” was bolstered by the fact that the PTO had also determined that the phrase “The Sports Fuel Company” was descriptive and had to be disclaimed by Gatorade in its trademark registration application (“As SPORTS FUEL is commonly used in reference to sports nutrition, consumers encountering the wording THE SPORTS FUEL COMPANY in the proposed mark would readily understand it to mean that the goods are provided by a company that provides sports nutrition.”). In addition, Gatorade’s internal marketing documents regarding the slogan “The Sports Fuel Company” had identified “Sports Fuel products” as “[i]tems specifically designed to improve athletic performance.”  As such, the court found that Gatorade’s use of “Sports Fuel” was in a manner which is descriptive of its goods or services and further found that SportFuel had not presented any evidence giving rise to a genuine factual dispute regarding whether Gatorade used the term “Sports Fuel” to describe the nature of the products it sells.

Finally, with respect to the third element of the fair use defense – showing that Gatorade used “Sports Fuel” fairly and in good faith only to describe its own goods or services – Gatorade argued that there was no genuine factual issue in dispute given that “sports fuel” did accurately describe Gatorade’s expanded product line, Gatorade disclaimed exclusive rights to “The Sports Fuel Company” in its registered trademark, and the concurrent use of its famous GATORADE mark and/or G-bolt design mark in conjunction with the advertising slogan left no doubt regarding the source of Gatorade’s products. 

SportFuel tried to argue that summary judgment was not warranted on the issue of Gatorade’s intent and good faith because Gatorade was aware of SportFuel’s marks prior to beginning public use of its slogan and because Gatorade did not stop using the slogan even after SportFuel had put Gatorade on notice regarding its claims of infringement.  However, the court held that “evidence that Gatorade had knowledge of SportFuel’s mark is insufficient to permit a reasonable inference of bad faith” and Sport Fuel “must point to something more that suggests subjective bad faith.”  Further, the court held that “the fact that Gatorade did not stop using the slogan after SportFuel filed this lawsuit alleging infringement is not probative of bad faith” since Gatorade believed its use did not constitute infringement and there had been no prior adjudication of the issue.  The court found that SportFuel failed to offer any evidence that would support a reasonable inference that Gatorade acted in bad faith.

The court concluded that even with all reasonable inferences drawn in SportFuel’s favor, “no reasonable jury could find that Gatorade’s use of the phrase “Sports Fuel” in its slogan “Gatorade The Sports Fuel Company” is anything other than a fair use.”  As such, the court concluded that Gatorade’s use of “Gatorade The Sports Fuel Company” is protected under the fair use doctrine and granted summary judgment in Gatorade’s favor on all of SportFuel’s claims.  And having granted summary judgment based on fair use, the court chose not to address the parties’ arguments on the issue of likelihood of confusion.  See KP Permanent Make-Up, Inc. v. Lasting Impression I, Inc., 543 U.S. 111, 124 (2004) (a defendant invoking the fair use defense need not establish that its use of the mark in question will not cause consumer confusion).

Ashley Madison Files Trademark Infringement Lawsuit in Canada Against Gripe Sites

Avid Dating Life, Inc., the company behind the extramarital affair dating website AshleyMadison.com, has filed suit in a Canadian court against Dennis Bradshaw and Lena Karachun – the purported owners of the gripe websites ashleymadisonsucks.com and ashleymadisonscam.com. (Complaint here; Courthousenews coverage here).

I don’t know how Canadian courts handle this kind of case up north, but down here, we would call this a pretty strong example of a) non-commercial, fair use of a party’s trademark and b) using allegations of trademark infringement in a lawsuit to quash the lawful exercise of free speech.

Of course, is it really no surprise that a company whose entire business model is established around encouraging extra-marital affairs would resort to a such a questionable course of action in order to obtain possession of some gripe website domain names (and removing some criticism of its services at the same time).

For more information about the trademark infringement implications of gripe sites, I recommend the following online resources:

• Electronic Frontier Foundation, “Avoiding Gripes About Your Gripe (or Parody) Site”
• Rachel Braswell, Consumer Gripe Sites, “Intellectual Property Law, and the Use of Cease- And-Desist Letters to Chill Protected Speech on the Internet”
• Traverse Legal, “Expert Advice for Avoiding Complaints about Your Gripe Site”
• Webgripesites.com – a website which chronicles gripe sites facing legal action

Ninth Circuit Gives Victory to Pro Se Defendants Fighting Against Toyota

The Ninth Circuit Court of Appeals reversed a lower court decision issuing an injunction against two individual defendants that were sued by Toyota for trademark infringement over their ownership and use of two domain names that contained the trademark LEXUS. See Toyota Motor Sales, U.S.A., Inc. v. Tabari, Appeal No. 07-55344 (9th Cir. July 8, 2010). News reports on the decision here and here.

Justice Alex Kozinski – fresh off his recent controversial trademark dilution decision in Visa Int'l Serv. Ass'n v. Jsl Corp., 2010 U.S. App. LEXIS 13380 (9th Cir. June 28, 2010) – issues another trademark related decision that has all of the hallmarks of a Kozinski opinion (a trademark Kozinski opinion). This time, the decision addresses the nominative fair use doctrine with respect to domain names.

A lower district court enjoined the defendants, Farzad and Lisa Tabari, from using the domain names buy-a-lexus.com and buyorleaselexus.com on the basis of infringement of Toyota’s LEXUS trademark. The Ninth Circuit reversed and remanded, finding the injunction overbroad.

The Tabaris worked as auto brokers – “the personal shoppers of the automotive world” – and offered their services through the aforementioned websites. Lexus objected to their use of the term “lexus” in the domain names, sued and after a bench trial, the district court found infringement (on the basis of liklihood of confusion) and enjoined the Tabaris from using their domain names. The Tabaris appealed.

The Court of Appeals knocked out the lower court’s application of the eight-factor test for likelihood of confusion articulated in AMF Inc. v. Sleekcraft Boats, 599 F.2d 341, 348-49 (9th Cir. 1979), by noting that “the Sleek-craft analysis doesn't apply where a defendant uses the mark to refer to the trademarked good itself. See Playboy Enters., Inc. v. Welles, 279 F.3d 796, 801 (9th Cir. 2002); New Kids on the Block v. News Am. Publ'g, Inc., 971 F.2d 302, 308 (9th Cir. 1992).” In this case, the Tabaris were using the term Lexus to describe their business of brokering Lexus automobiles. “We've long held that such use of the trademark is a fair use, namely nominative fair use. And fair use is, by definition, not infringement.”

The Court then turned its attention to the scope of the district court’s injunction. “A trademark injunction, particularly one involving nominative fair use, can raise serious First Amendment concerns because it can interfere with truthful communication between buyers and sellers in the marketplace. . . . To uphold the broad injunction entered in this case, we would have to be convinced that consumers are likely to believe a site is sponsored or endorsed by a trademark holder whenever the domain name contains the string of letters that make up the trademark.”

In finding the injunction overbroad, the Court stated:

The injunction here is plainly overbroad--as even Toyota's counsel grudgingly conceded at oral argument-- because it prohibits domain names that on their face dispel any confusion as to sponsorship or endorsement. The Tabaris are prohibited from doing business at sites like independent-lexus-broker.com and we-are-definitely-not-lexus.com, although a reasonable consumer wouldn't believe Toyota sponsors the websites using those domains. Prohibition of such truthful and non-misleading speech does not advance the Lanham Act's purpose of protecting consumers and preventing unfair competition; in fact, it undermines that rationale by frustrating honest communication between the Tabaris and their customers.

The Court went on to note that the district court’s injunction, even if modified to exclude domain names that expressly disclaim sponsorship or endorsement, would still be too broad because it would prevent the Tabaris from doing business at lexus-broker.com, “even though that's the most straightforward, obvious and truthful way to describe their business. The nominative fair use doctrine allows such truthful use of a mark, even if the speaker fails to expressly disavow association with the trademark holder, so long as it's unlikely to cause confusion as to sponsorship or endorsement. . . . Speakers are under no obligation to provide a disclaimer as a condition for engaging in truthful, non-misleading speech.”

The Court then discusses a very important point (and does so in a truly articulate manner that one expects from Kozinski -- so well that I've chosen to simply quote most of it rather than simply paraphrase the discussion and not do his words justice) about trademarks appearing in domain names and the sophistication of modern internet users – a point with which I would imagine many trademark owners are likely to disagree:

When a domain name consists only of the trademark followed by .com, or some other suffix like .org or .net, it will typically suggest sponsorship or endorsement by the trademark holder. Cf. Panavision Int'l, L.P. v. Toeppen, 141 F.3d 1316, 1327 (9th Cir. 1998). This is because “[a] customer who is unsure about a company's domain name will often guess that the domain name is also the company's name.” Id. (quoting Cardservice Int'l v. McGee, 950 F. Supp. 737, 741 (E.D. Va. 1997)) (internal quotation marks omitted); see also Brookfield Commc'ns, Inc. v. W. Coast Entm't Corp., 174 F.3d 1036, 1045 (9th Cir. 1999). . . .
But the case where the URL consists of nothing but a trademark followed by a suffix like .com or .org is a special one indeed. See Brookfield, 174 F.3d at 1057. The importance ascribed to trademark.com in fact suggests that far less confusion will result when a domain making nominative use of a trademark includes characters in addition to those making up the mark. Cf. Entrepreneur Media, Inc. v. Smith, 279 F.3d 1135, 1146-47 (9th Cir. 2002). Because the official Lexus site is almost certain to be found at lexus.com (as, in fact, it is), it's far less likely to be found at other sites containing the word Lexus. On the other hand, a number of sites make nominative use of trademarks in their domains but are not sponsored or endorsed by the trademark holder: You can preen about your Mercedes at mercedesforum.com and mercedestalk.net, read the latest about your double-skim-no-whip latte at starbucksgossip.com and find out what goodies the world's greatest electronics store has on sale this week at frys-electronics-ads.com. Consumers who use the internet for shopping are generally quite sophisticated about such matters and won't be fooled into thinking that the prestigious German car manufacturer sells boots at mercedesboots.com, or homes at mercedeshomes.com, or that comcastsucks.org is sponsored or endorsed by the TV cable company just because the string of letters making up its trademark appears in the domain.
When people go shopping online, they don't start out by typing random URLs containing trademarked words hoping to get a lucky hit. They may start out by typing trademark.com, but then they'll rely on a search engine or word of mouth. If word of mouth, confusion is unlikely because the consumer will usually be aware of who runs the site before typing in the URL. And, if the site is located through a search engine, the consumer will click on the link for a likely-relevant site without paying much attention to the URL. Use of a trademark in the site's domain name isn't materially different from use in its text or metatags in this context; a search engine can find a trademark in a site regardless of where exactly it appears. In Welles, we upheld a claim that use of a mark in a site's metatags constituted nominative fair use; we reasoned that “[s]earchers would have a much more difficult time locating relevant websites” if the law outlawed such truthful, non-misleading use of a mark. 279 F.3d at 804. The same logic applies to nominative use of a mark in a domain name.

(footnotes omitted) (bold underline emphasis added).

The court recognized that there would be exceptions to nominative fair use for those cases where the domain name containing a mark suggested sponsorship or endorsement by the trademark holder (e.g., trademark-USA.com, trademark-of-glendale.com, e-trademark.com, official-trademark-site.com, we-are-trademark.com). However, the district court’s injunction was not limited to this type of usage.

The Court again articulates a modern, Internet-saavy take on the use of trademarks in domain names:

When a domain name making nominative use of a mark does not actively suggest sponsorship or endorsement, the worst that can happen is that some consumers may arrive at the site uncertain as to what they will find. But in the age of FIOS, cable modems, DSL and T1 lines, reasonable, prudent and experienced internet consumers are accustomed to such exploration by trial and error. Cf. Interstellar Starship, 304 F.3d at 946. They skip from site to site, ready to hit the back button whenever they're not satisfied with a site's contents. They fully expect to find some sites that aren't what they imagine based on a glance at the domain name or search engine summary. Outside the special case of trademark.com, or domains that actively claim affiliation with the trademark holder, consumers don't form any firm expectations about the sponsorship of a website until they've seen the landing page --if then. This is sensible agnosticism, not consumer confusion. See Jennifer E. Rothman, Initial Interest Confusion: Standing at the Crossroads of Trademark Law, 27 Cardozo L. Rev. 105, 122-24, 140, 158 (2005). So long as the site as a whole does not suggest sponsorship or endorsement by the trademark holder, such momentary uncertainty does not preclude a finding of nominative fair use.

(bold underline emphasis added).

In response to Toyota’s arguments regarding its entitlement to the exclusive use of the string “lexus” in any internet domain names because of its hundreds of millions of dollars spent every year investing in the name, the Court notes that such wholesale prohibition of the nominative use of Lexus in domain names “would be unfair to merchants seeking to communicate the nature of the service or product offered at their sites. And it would be unfair to consumers, who would be deprived of an increasingly important means of receiving such information. As noted, this would have serious First Amendment implications. The only winners would be companies like Toyota, which would acquire greater control over the markets for goods and services related to their trademarked brands, to the detriment of competition and consumers. The nominative fair use doctrine is designed to prevent this type of abuse of the rights granted by the Lanham Act.”

After setting forth the general principles regarding nominative fair use in domain names, the court then specifically directed its attention to applying the doctrine to the two domain names at issue in the case. The court found the Tabaris' use of the mark “necessary” given the near impossibility of informing consumers that they are Lexus car brokers without mentioning Lexus. And the fact that the Tabaris sold other cars was irrelevant given their right to focus on one particular car brand: “The Tabaris are entitled to decide what automotive brands to emphasize in their business, and the district court found that the Tabaris do in fact specialize in Lexus vehicles. Potential customers would naturally be interested in that fact, and it was entirely appropriate for the Tabaris to use the Lexus mark to let them know it.”

The Tabaris had also used the stylized Lexus mark and “Lexus L” logo on their website – something that Toyota argued was more than necessary and suggested sponsorship or endorsement by Toyota. The Court agreed, but also noted that the site had changed by the time of trial (removing the stylized logos and adding a disclaimer). Toyota claimed that the revised site with its disclaimer “came too late to protect against confusion caused by their domain names, as such confusion would occur before consumers saw the site or the disclaimer.” The Court disagreed since the domain names by themselves did not contain words suggesting that it was like “authorized” or “official.” “Reasonable consumers would arrive at the Tabaris' site agnostic as to what they would find. Once there, they would immediately see the disclaimer and would promptly be disabused of any notion that the Tabaris' website is sponsored by Toyota. Because there was no risk of confusion as to sponsorship or endorsement, the Tabaris' use of the Lexus mark was fair.”

The Court reversed and remanded – sending the case back to the district court to determine if an injunction was even necessary given that the Tabaris had stopped all infringing activities by the time of trial and where there may be no risk that any infringing conduct would recur. And to the extent an injunction would be necessary in the case of the Tabaris, then the proper injunction would be one that does not entirely prohibit use of the domain names at issue in this case and which allows the use of the Lexus mark in the two domain names owned by the Tabaris.

The Court’s remand included the following guiding principle for the district court: “The important principle to bear in mind on remand is that a trademark injunction should be tailored to prevent ongoing violations, not punish past conduct. Speakers do not lose the right to engage in permissible speech simply because they may have infringed a trademark in the past.” The Court also reminded the district court that the case should be analyzed solely “under the rubric of nominative fair use” – thus putting the burden on Toyota to establish that the Tabaris' use of the Lexus mark was not nominative fair use given that the Tabaris used the mark to refer to the trademarked goods. Miller v. Gammie, 335 F.3d 889, 893 (9th Cir. 2003) (en banc).

What makes the Ninth Circuit's decision all the more interesting is the fact that the trial and appeal were pursued pro se by the two individual defendants, Farzad Tabari and Lisa Tabari. Apparently, they had a lawyer, but when legal fees got to be too much [ed.—the unfortunate price of justice], they decided to go at it by themselves. According to one of the articles, Lisa Tabari was quoted as saying “everyone in the court system, they were so wonderful to us.” And they have shown that with enough hard work and dedication, the little guy can pursue justice in our legal system and be victorious against the big corporation and its army of overpriced lawyers without hiring a lawyer and incurring thousands of dollars in legal fees (although, as a lawyer, I certainly wouldn't advise such a course of action -- after all, they may not have had to shell out dollars to lawyers, but they certainly did pay a cost if you put a monetary value on the amount of time the Tabaris likely spent on the case, including this appeal, along with all of the other things they could have done with their time, but instead had to be devoted to this case).

On a related note, the Court couldn’t help but take one final jab at both the district court and Toyota’s lawyers. In the opinion’s concluding paragraph, the Court stated: “Many of the district court's errors seem to be the result of unevenly-matched lawyering, as Toyota appears to have taken advantage of the fact that the Tabaris appeared pro se . . . . To avoid similar problems on remand, the district court might consider contacting members of the bar to determine if any would be willing to represent the Tabaris at a reduced rate or on a volunteer basis.”

Of course, what’s truly sad and most pathetic is that Toyota’s lawyers, rather than doing the right thing at this stage and just ending the litigation (possibly with a consent agreement, but on terms that allow the Tabaris to keep their domain names but which alleviates any concerns Toyota has regarding confusion) will more than likely continue to push for the domain names even though the Tabaris have clearly shown that they will not back down in this case and will continue to fight. Toyota may even be foolish enough to appeal this Court's decision to the U.S. Supreme Court (although not before filing a motion for reconsideration, possibly en banc). One wonders why Toyota would want to continue paying its high-priced attorneys in the face of such a defeat against two unrepresented parties. But based on the Ninth Circuit’s decision and the Tabaris’ unwielding determination (and acquired acumen regarding the legal system and due process), who really has the better chance of winning in the end?

Woman Sues Sirius-XM over SUNDAY BAROQUE

The Connecticut Post reports (link here) on the trademark infringement lawsuit filed by an Ohio woman named Suzanne Bona-Hatem against satellite radio company Sirius-XM over the use of the mark SUNDAY BAROQUE for a radio music show featuring guess what kind of music which can be heard on guess what day of the week?

Bona-Hatem’s “Sunday Baroque” show is a four-hour syndicated Sunday morning program which is broadcast to over 90 stations and heard in over 30 states to an audience of 2.7 million people (according to the suit)

In addition, Bona-Hatem was able to procure her a trademark registration for the mark SUNDAY BAROQUE for “Entertainment in the nature of on-going radio programs in the field of Baroque music” from the U.S. Patent and Trademark Office (“PTO”). Of course, it was only after she first disclaimed the descriptive word “Baroque” from her mark. Moreover, anticipating an obvious descriptiveness refusal by the PTO, the application was initially filed with a claim of Section 2(f) acquired distinctiveness on the basis of Bona-Hatem’s claimed exclusive and continuous use in commerce of the mark for at least the five years prior to making the claim of acquired distinctiveness. The PTO did not raise any questions about her Section 2(f) claim or request any additional evidence to prove her acquired distinctiveness claim.

The lawsuit alleges that Sirius-XM is broadcasting a similar baroque show on Sunday – and using a name that is identical to her mark (although one wonders how you might describe a baroque radio show broadcast on Sundays without using some semblance of her mark).

While one wonders why Sirius-XM didn’t just change the name of its show in response to correspondence from Bona-Hatem’s attorney. After all, she cannot really prevent anyone from using the term Baroque in connection with playing Baroque music – and do you really have to use the word Sunday as part of the program title?

Of course, from Sirius-XM’s perspective, while Bona-Hatem may have a trademark registration for SUNDAY BAROQUE, can she really prevent other radio programs from using the words SUNDAY and BAROQUE in their descriptive sense when broadcasting a baroque music radio show on Sunday (i.e., would “Sunday Morning Baroque” or “Baroque on Sunday” be considered by Bona-Hatem confusingly similar?).

So who do you think is in the right here? Is Bona-Hatem’s trademark so ridiculously descriptive that she should not be allowed to claim any exclusive rights to the term SUNDAY BAROQUE in connection with a baroque radio show broadcast on Sunday? Or is Sirius-XM being ridiculous in not taking the simple step of simply renaming the show (is calling the show by the boringly descriptive “Sunday Baroque” so important that its willing to go to court over it)?

Jones Day (Ab)Using Trademark Infringement Lawsuit To Stop Website From Posting Publicly Available Information

I admit that I missed this big trademark story when it was publicized last week.

In short, BlockShopper is a website which collects publicly available information on real estate transactions in Chicago, South Florida, Las Vegas, and St. Louis. For certain transactions, the website then goes one step further by linking that information with other publicly available information (e.g., publicly posted law firm bios) to write up news articles about such real estate transactions. When BlockShopper reported on expensive condos purchased by two law firm associates (Dan Malone and Jacob Tiedt), BlockShopper identified the two by their employment with “Jones Day” and linked their names to Jones Day’s web site. For that, Jones Day is now claiming trademark infringement. MediaPost ran an article yesterday about the dispute.

Several other bloggers have already eloquently posted comments and criticism on the lawsuit, so I will respectfully defer to them:

• Paul Levy’s blog post on Consumer Law and Policy Blog;
• Prof. Marc Randazza’s blog post; and
• Citizen Media Law Project write-up.

Citizen Media Law Project also has a page devoted to the filings in the lawsuit. The Amended Complaint can be downloaded here.

We’ve all heard the old law adage “A lawyer who represents himself has a fool for a client.” Well, Jones Day has proven the adage once again. One has to wonder what was going through the heads of the lawyers behind the complaint, which the public should be aware was signed by Jones Day lawyers, Paul W. Schroeder, Irene S. Fiorentinos, Meredith M. Wilkes, Robert P. Ducatman, and James W. Walworth Jr (Comment: Curious about why the complaint had so many attorneys named in it -- would you want your name associated with such a pleading?). As Prof. Randazza notes, Jones Day would have had a much less frivolous argument had it pursued a copyright infringement case rather than trademark infringement (for BlockShopper’s use of Jones Day’s pictures of its two associates). But Jones Day – at the foolish direction of its client – chose instead to assert trademark infringement.

If BlockShopper can get this case dismissed for failure to state a claim upon which relief can be granted, I hope that they pursue Rule 11 sanctions against the attorneys for submitting pleadings that contain frivolous arguments or arguments that have no evidentiary support. Unfortunately, such sanctions may be difficult to obtain even in light of the ridiculousness of this complaint given that a big law firm like Jones Day has enough resources to come up with non-frivolous arguments that its frivolous arguments are not frivolous and that its frivolous arguments do have evidentiary support. At a minimum (per Prof. Randazza’s suggestion), the attorneys should be required to attend remedial ethics counseling.

I would also add that if those two associates (or anybody) truly did not want the world to know about their real estate transactions, they had the option of not purchasing real estate at all or, alternatively, not purchasing real estate in their own name (i.e., purchase a house through a private trust or business entity that has no association to their own name). But no one can get around the fact that public real estate records are just that – public. Granted, the Internet and modern technology have made it a lot easier to gather, organize, and publicize it to the world – but that doesn’t change the fact that the information is public.

Harry Potter and the Disappearing Trademark Infringement Claims

In the trial of the lawsuit filed by J.K. Rowling and Warner Bros against RDR Books over its planned publication of the “Harry Potter Lexicon” (a print version of the free-of-charge Harry Potter Lexicon fan website - http://www.hp-lexicon.org/ - created by Steven Vander Ark), so much of the media attention has focused on the copyright infringement claims that I was beginning to wonder when the parties would get around to the “good stuff” – namely, the claims for trademark infringement and unfair competition that were part of the original and amended complaint. See Warner Bros. Entertainment Inc. et al v. RDR Books et al, Case No. 07-cv-09667 (S.D.N.Y.); see also previous blog posts here and here.

Well, either through wizardry or good lawyering, it appears that the parties may have reached a settlement of those claims.

As reported by the WSJ.com Law Blog today (link here), the lawyers informed the court this morning that they had reached a settlement on the false advertising and deceptive trade practices claims whereby RDR agreed not to use J.K Rowling’s name nor her quote endorsing the online version of the Lexicon on the cover of the book version.

In addition, Anthony Falzone, the executive director of the Fair Use Project at Stanford University’s Center for Internet and Society, who is one of the attorneys representing RDR Books, also informed the court that the parties want to “paper a settlement” on the trademark infringement and unfair competition claims.

Sounds like the parties have reached an agreement on the disclaimer to be used on the book’s cover and elsewhere (and possibly an agreement not to use the stylized Harry Potter mark) in order to prevent the public from being confused as to any affiliation, connection, or association of the publisher with Rowling and Warner Bros. or as to the origin, sponsorship, or approval of the Lexicon by Rowling and Warner Bros.

With those claims settled, that only leaves that boring copyright infringement claim. (yawn – ed.)

But for those of you interested in the copyright infringement aspects of the case, which are significant especially with respect to the fair use defense, check out the following posts:

• WSJ Law Blog Q&A with King & Spalding IP attorney Ethan Horwitz (link here)


• Prof. William Patry’s post (here) on “The Patry Copyright Blog” regarding the case


• Professor Tim Wu’s comments (here) on Slate about the lawsuit

Vegas Condo-Hotel Management Company Sues Donald Trump for $1 Billion

On January 26, 2008, Nights at Vegas, Inc. (“NAV”), a Vegas-based real estate property management company, filed a lawsuit against Donald Trump, Trump Ruffin LLC, and Trump Ruffin Tower I LLC (together “Trump”) seeking declaratory relief of non-infringement of trademarks as well as $1 billion in damages for alleged anti-trust violations, false promotion, and unfair competition. See Nights at Vegas, Inc. v. Trump Ruffin LLC et al, Case No. 08-cv-00122 (D. Nev.). A copy of the complaint can be downloaded here (courtesy of me).

NAV is in the business of helping owners of Las Vegas’ many high-rise condo hotels rent their units, including owners of condo-hotel units at the Trump International Hotel & Tower (the “Trump Tower”).

The Trump International Hotel & Tower

in Las Vegas

Billionaire Donald Trump needs no introduction, except to say that he is the owner of numerous trademark registrations and applications containing his famous moniker, including TRUMP INTERNATIONAL HOTEL & TOWER (for, among other goods and services, real estate services, namely, listing, leasing, and managing commercial and residential property) as well as a pending application for TRUMP (for real estate services, namely, listing, leasing, financing, and managing commercial, residential, and hotel properties). Trump Ruffin LLC is the joint venture owned by Trump and Phil G. Ruffin – the owner of the land where the Trump Tower now stands. Trump Ruffin Tower I LLC is the official owner of Tower 1 of the Trump International Hotel & Tower in Las Vegas (with Tower 2 now accepting reservations for any interested readers).

The "Donald"

Declaratory Relief
NAV’s first cause of action is for a declaratory judgment of non-infringement. NAV claims that it has received letters from Trump demanding that NAV cease and desist using the trademarks “Trump,” “Trump International,” and “Trump International Hotel and & Tower” in advertising its services or else face a lawsuit. NAV claims that such use is fair use and not likely to cause confusion because the marks serve to describe the public identity and location of the residential units. NAV’s website even has the following disclaimer: “Nights at Vegas, Inc. is an independent property management company which acts directly with and on behalf of the owners of units in condominium hotels, so that it may act independently to bring you better service and rates. None of its partners, agents, employees, or the company itself, are directly affiliated with any one hotel, casino, or condominium hotel.” Under this threat of lawsuit, NAV seeks a declaration that its use of the aforementioned Trump Marks is not trademark infringement.

It should be noted, however, that in arguing that Trump demanded that NAV cease and desist use of the Trump trademarks, NAV attaches a letter from Trump’s attorneys, Snell & Wilmer (with offices, I might add, in the nice, shiny new building in the Howard Hughes complex). However, the demands made by Trump’s attorneys were a) to correct misleading information about NAV’s 80/20 split (which counsel argued was misleading because it was not made clear that such split occurs after certain expenses are deducted); b) to stop contacting purchasers of Trump Tower through proprietary information that may have been misappropriated; and c) remove references on NAV’s website to references to a business relationship with Expedia, Travelocity, and Orbitz. There was no demand made regarding the use of Trump’s trademarks.

Anti-Trust Violations
NAV’s second cause of action is that Trump is engaging in certain monopolitistic practices to prevent NAV from offering its managerial services to owners of condo units at the Trump Tower. First, Trump has exclusive agreements with online travel sites such as Expedia, Travelocity, and Orbitz, which NAV argues prevents it from being able to list and rent units on such sites. Second, Trump is preventing NAV from using the aforementioned Trump trademarks to market its services. Third, NAV claims that Trump is using its own managerial company to offer services similar to NAV while refusing to agree to protocols and administrative procedures with NAV to allow the check-in/check-out of transient guests and the cleaning of the units that NAV manages. Fourth, NAV alleges that Trump has instituted certain fees against companies like NAV that it does not charge its own management company. Finally, NAV argues that Trump has been providing inaccurate information to unit owners who inquire about NAV’s services, in particular, the staff at the Tower tell inquiring customers that NAV is not allowed to market units of the building and is not allowed to rent such units.

NAV seeks injunctive relief, but also requests damages. According to NAV, but for Trump’s anti-competitive actions, at least 50% of the unit owners in the Trump Tower would engage NAV’s services because of NAV’s far more profitable 80/20 split versus the 50/50 split offered by Trump’s in-house management. NAV believes the amount of lost revenue from the many hundreds of units owners who have no alternative but to use Trump’s in-house management services is approx. $250 million. And because of alleged difficulties in switching property management companies, mandatory notice requirements, and mandatory term lengths, Trump has secured such revenue stream for an average of 4 years, and thus NAV seeks damages in excess of $1 billion. In addition, NAV asks for $3 billion in treble damages as well as court costs and attorney’s fees.

False Promotion
NAV’s third cause of action is for false promotion (i.e. false or misleading description or representation of fact in commercial advertising or promotion under 15 U.S.C. §1125(a)(1)(B)). According to NAV, the covenants, conditions & restrictions (CC&R’s) that buyers of the Trump Tower’s residential units must comply state the following:

. . .THAT ANY RENTAL PROGRAM THAT MAY BECOME AVAILABLE IN WHICH A REISDENTIAL UNIT OWNER MIGHT DESIRE TO PARTICIPATE WILL MOST LIKELY PLACE SEVERE RESTRICTIONS ON A RESIDENTIAL OWNER’S RIGHTS TO USE SAID OWNER’S UNIT, INCLUDING IMPOSING BLACKOUT PERIODS OR OTHER DATE RESTRICTIONS ON USE OF THE REISDENTIAL UNIT THAT ARE IN ADDITION TO THE RESTRICTIONS AND REQUIREMENTS IMPOSED BY THIS DECLARATION.

NAV maintains that this statement has harmed it because the statement leads unit owners to believe that any other management service outside of Trump will jeopardize the owner’s ability to use the unit – a statement that NAV claims is false.

Unfair Competition
NAV’s final cause of action is for unfair competition, without any further elaboration.

1 billlllllion dollars !

Barack Obama faces trademark infringement threat over “Change Rocks” campaign slogan

In 2004, Stefan Doyno, currently a 19-year-old student at SUNY-Buffalo, came up with an idea for jewelry with interchangeable stones. As he states on his Change Rocks website, he got the idea for the ring after creating a homemade gift for his mother: "I wanted to create a high-quality, yet affordable ring that women could change to match what they were wearing or how they were feeling. There was nothing out there like it, and I've been developing the high-end design ever since."

He thought the idea was novel enough that, after consulting a patent attorney, he filed a provisional patent application on August 11, 2004 (U.S. Provisional Application No. 60/600,513). A year later, on August 10, 2005, he filed his patent application for “Adaptable jewelry apparatus” (U.S. Patent Application No. 20060032270), which is still pending and can be viewed here). The following is from the abstract:

An adaptive jewelry apparatus includes a mechanism for allowing quick and secure interchange between stones or stone and base assemblies. In one embodiment, a stone is fixably joined to a base assembly, and the combined assembly is threadably interchanged with a receiving socket on a jewelry member. In an alternative embodiment the base assembly remains fixed to the jewelry member and includes mechanical or other means for release-ably securing a variety of interchangeable stones. In each embodiment the interchangeable stone is retained securely to the jewelry member while allowing ready release and replacement.

Approximately one month later on October 7, 2005, Doyno, recognizing the value of intellectual property, filed a Section 1(b) intent-to-use trademark application, to register the mark CHANGE ROCKS (for jewelry). His mark was registered on July 17, 2007.

Doyno’s business has been growing and his jewelry is now being sold in select stores in New York, New Jersey, Pennsylvania, Texas, and even Canada. Doyno has stated that he has also come out with pendants and is planning a line of T-shirts.

Doyno was surprised when one day last month, after doing a Google search for “Change Rocks,” discovered that Barack Obama’s campaign had used the phrase for a December 7th concert and fundraiser in Chicago. A poster on an Iowa campaign headquarters website indicated that Obama had at least one other “Change Rocks” concert in Des Moines, Iowa on December 29th.

On December 18th, Doyno’s lawyers sent Obama’s campaign a letter regarding Doyno’s registered mark warning Obama that use of the slogan on any T-shirts or campaign memorabilia may constitute trademark infringement.

Doyno’s lawyers apparently suggested pursuing an arrangement whereby Obama could continue to use the mark:

Mr. Doyno is far more interested in exploring possible synergies between Mr. Obama's use of Change Rocks as a slogan or theme and the Change Rocks mark and products than he is in preventing Mr. Obama from using the mark in connection with the campaign.

While Obama’s campaign has not responded to Doyno, one Obama spokeswoman has stated that no merchandise has been sold with the slogan “Change Rocks” and wished Doyno the best of luck with his business.

Vegas™Esq. Comments:
Doyno has what looks like a very promising venture based on a very creative idea that is likely to spawn numerous Chinese knockoffs, which hopefully Doyno can combat if his patent is issued. With an issued patent, Doyno can is also likely to find several licensees who will license his patent.

And while I praise Doyno’s ingenuity and appreciation for intellectual property and wish him the best of luck with his business, I doubt very much that any court would find Obama’s use of the slogan “Change Rocks” to be likely to cause confusion with Doyno’s jewelry goods.

First, while the marks are identical, there is little chance of any likelihood of confusion because Doyno’s mark is not very strong or distinctive and the "goods" at issue are completely unrelated. Even if Doyno sells T-shirts with his “Change Rocks” mark on them, such use is likely to be deemed ornamental, and not as a source identifier, and the mark has not been so widely used for Doyno’s goods that the public would recognize the phrase on a T-shirt as an indicator of secondary source or sponsorship.

Second, Obama’s use may not even be actionable “use in commerce” given that its use is as a campaign slogan (even when placed on T-shirts and buttons sold at the campaign event) and not as a mark “in the ordinary course of trade.” See 15 U.S.C. §1127.

Finally, Obama’s use is likely protected by the First Amendment and would be considered “fair use” since the campaign is using the phrase for an expressive purpose – people will recognize the word “Change” to be associated with political change (after all, aren’t the candidates always saying this election is about “change”) and the term “Rocks” to be a reference to the rock music being played at the concert or a suggestion about “change” being something “cool” that the likely younger voters attending the campaign event should support.

It was perhaps serendipitous that Doyna discovered Obama’s campaign using the phrase because it allowed Doyna to use the coincidence to get some wide-scale attention for his product. The subsequent media attention to Doyno’s product has probably helped him sell more of his goods than any harm that could possibly come from Obama’s use (either in the past or even in the future) of the slogan. The publicity also helps strengthen his mark should real infringer decide to infringe the mark.

So while there is not much of a trademark controversy here, I would not be surprised if this letter to Obama’s campaign warning of trademark infringement was actually an ingenuous way to garner attention for his product (he is certainly smart enough to have considered entertained the thought).

Rock on!

Harry Potter and the Trademark Infringement Lawsuit

I’m a few days late on this one because most published reports about the lawsuit have focused on the copyright infringement aspect of the case with little publicity about the accompanying trademark infringement allegations.

On October 31, 2007, J.K. Rowling (author of the widely popular Harry Potter series of books) along with Warner Brothers Entertainment Inc. (the producer of the Harry Potter movies) filed a lawsuit in U.S. District Court for the Southern District of New York against RDR Books (“RDR”), a book publisher, and John Does 1-10 for copyright and trademark infringement. See Warner Bros. Entertainment Inc. et al v. RDR Books et al, Case No. 1:2007-cv-09667 (S.D.N.Y.). A copy of the complaint can be downloaded here.

At issue is RDR’s plan to publish a 400 page book entitled the “Harry Potter Lexicon” which is apparently just a print version of the free-of-charge Harry Potter Lexicon fan website website (http://www.hp-lexicon.org/). The book is scheduled to be released in the United Kingdom on or about November 5, 2007, and in the United States on November 28, 2007. The author is Steve Vander Ark, the editor of the Harry Potter Lexicon fan website and a noted librarian of all things Harry Potter (even Rowling herself has admitted to occasionally perusing the website to check a fact while writing her books).

Despite the fan website having Rowling’s explicit endorsement, this repackaging of the website’s contents from a free website into a commercial book apparently goes against Rowling’s own plans to publish her own Harry Potter companion book, the proceeds of which would be donated to charity (as she has done with two other such companion books).

Much of the complaint is spent educating about the history of the Harry Potter books. (I can now say that I know what a Quidditch is.) The complaint also details the back and forth communications between Plaintiffs’ counsel and RDR over the pending publication of the book leading up to the filing of the lawsuit.

On September 18, 2007, counsel for Plaintiffs sent a cease and desist letter to RDR citing two federal court cases where companion books were found to be copyright infringement. RDR did not respond other than to indicate its own legal counsel was reviewing the issues raised. In an interesting turn, however, on October 11, 2007, RDR sent its own cease and desist letter to Warner Bros. claiming that a timeline appearing on some of the Harry Potter DVDs infringes on the copyrighted content of the Lexicon website.

While the complaint’s main count is the copyright infringement allegations, Plaintiffs also wield their magic trademarks to help fight this dastardly battle against the evil RDR. The complaint cites to the fact that, pursuant to an agreement between Warner Bros. and Rowling, Warner Bros. holds over 15 federal trademark registrations for the HARRY POTTER mark (along with several other registrations and pending applications based on the various titles of the Harry Potter books). The two most relevant registrations are Reg. Nos. 2,450,788 (word mark) and 2,685,932 (stylized), both for “Printed matter and paper goods” which covers books featuring characters from animated, action adventure, comedy and/or drama features, comic books, and children's books.

Plaintiffs allege Section 32(1) federal trademark infringement (15 USC §1114(1)) against RDR’s use of Plaintiff’s registered HARRY POTTER marks in connection with the sale of the Lexicon book. Plaintiffs further allege that RDR’s book, through its use of the HARRY POTTER marks and lack of adequate disclaimer, will create a likelihood of confusion as to the affiliation, connection, association, origin, source, and sponsorship of the book (amounting to Section 43(a) unfair competition and false designation of origin (15 USC §1125(a)(1)(A)) as well as a likelihood of confusion as to the nature, characteristics and qualities of the book (amounting to Section 43(a) false advertising (15 USC §1125(a)(1)(B))).

The complaint also includes allegations of deceptive trade practices under New York General Business Law §349 (New York Deceptive Trade Practices Act) and unfair competition under New York common law. Finally, Plaintiffs seek a declaratory judgment regarding Defendant’s allegations of copyright infringement over the timeline that Plaintiff Warner Bros. included in DVD versions of several Harry Potter films. The complaint requests a permanent injunction against RDR, actual damages, statutory damages (for the copyright infringement claim), treble damages, costs and attorneys fees.

It is interesting that the Plaintiffs explicitly state in the complaint that “Plaintiffs intend to donate any monetary award that may result from Defendant’s activities prior to an injunction being entered to charity.” This may be a preemptive measure on the part of Rowling and Warner Bros. to assuage any negative publicity arising from the lawsuit from fans who might be alienated by the impression of the big bad evil wizards (Rowling and Warner Bros.) going after a loyal Harry Potter fan.

If you are interested in commentary on the copyright aspects of the lawsuit, I recommend Prof. William Patry’s post (link here) on “The Patry Copyright Blog” as well as the comments by Sharmil McKee at the McKee Law Office Small Business Blog (link here).

As for the trademark aspects of the lawsuit, in addition to a fair use defense, which will also be claimed as part of RDR’s defense to the copyright infringement allegations, I would suspect RDR to claim laches on the part of the Plaintiffs who not only allowed the Lexicon website to use the HARRY POTTER marks in the same way that the alleged Lexicon book likely will, but also endorsed such use,

How effective a fair use defense may be will depend on the extent to which RDR attempts to prevent any likelihood of confusion (through a disclaimer on the cover, etc.). The complaint’s allegations that no such disclaimer will be on the cover of the book was based on information and believe since RDR apparently did not provide Plaintiffs with a copy of the book or its cover before the complaint was filed.

Regardless of where this case ends up, one wonders if Dumbledore would be happy or upset that this lawsuit has taken away from the media coverage surrounding the recent revelation by Rowling of his sexual orientation.