Three not-so-interesting circuit decisions -- TV Guide version

Here are links to 3 recent earth-(non)shattering trademark and copyright decisions.

In Schwan's IP, LLC v. Kraft Pizza Co., No. 05-3463 (8th Cir. Aug. 18, 2006), the court held that the mark BRICK OVEN is generic for . . . . . no, not brick ovens, but for . . . . . wait for it . . . . . . PIZZA!! Descriptive, I could see. But generic??? "Um, waiter, I'd like to order the brick oven with extra pepperoni. And can you get the busboy to structurally reinforce our table while we wait?" Sheesh.

In R.J. Reynolds Tobacco Co. v. Cigarettes Cheaper!, No. 05-1456 (7th Cir. Aug. 24, 2006), the Seventh Circuit came to the unremarkable conclusion that the sale in the U.S. of "gray market" goods -- i.e., goods that are in fact produced under authority of the trademark owner but exclusively sold outside the U.S. -- can constitute infringement if the gray market goods are "materially different" than their U.S. market counterparts.

And in T-Peg, Inc. v. Vermont Timberworks, Inc., No. 05-2866 (1st Cir. Aug. 18, 2006), the First Circuit reversed a grant of summary judgment to the defendant in a copyright case involving the Architectural Works Copyright Protection Act amendments to the Copyright Act. The court's analysis was fact-intensive, focusing on the substantial similarity issue.

3d Circuit decision on whether a TTAB decision collaterally estops a later infringement case

The Third Circuit recently decided that a district court infringement case was properly dismissed on grounds of collateral estoppel based on a prior TTAB cancellation proceeding between the parties on the same mark. The case was more notable -- at least from a trademark standpoint -- for what it DIDN'T discuss, rather than what it did discuss.

The 3d Circuit's decision in Jean Alexander Cosmetics v. L'Oreal USA, Inc., No. 05-4321 (3d Cir. Aug. 14, 2006), focused primarily on the element of collateral estoppel that requires that the issue on which collateral estoppel is sought have been "necessary to the decision" in the earlier litigation. Because the TTAB decision was based on alternative holdings, either one of which would have supported the ultimate decision, the Third Circuit engaged in an extended discussion of this issue, trying to figure out whether it preferred the position of the First Restatement of Judgments (alternative holdings can result in preclusion) or the Second Restatement (neither of alternative holdings can result in preclusion). It chose the First Restatement's position.

Oddly, the Third Circuit didn't even raise the issue of whether the TTAB decision on likelihood of confusion was identical to the issue of likelihood of confusion to be litigated in the district court infringement action. You might recall that the Second Circuit held nine years ago that there sometimes are substantial differences in the factors and facts that the TTAB considers in its cases (the TTAB does not always assess what is actually going on in the marketplace and frequently limits its analysis to what is stated on a registration or application) and what district courts consider in infringement cases (district courts, at least in the 2d Circuit, are supposed to look at what is going on in the "entire marketplace context"). See, e.g., Levy v. Kosher Overseers Ass'n of Amer., Inc., 104 F.3d 38 (2d Cir. 1997) (sorry, no link). The Levy court refused to apply collateral estoppel where the TTAB's decision didn't assess those marketplace factors.

9th Circuit decision on whether TM abandonment occurs DURING a sell-off of inventory of TM'ed goods

In an interesting and well-reasoned decision, the Ninth Circuit recently addressed whether a trademark is abandoned during a sell-off of inventory of trademarked goods, but before a complete cessation of the liquidation of trademarked inventory. The answer, it said, was NO.

The main dispute at issue in Electro Source LLC v. Brandess-Kalt-Aetna Group, Inc., No. 04-55844, -55909, -56648 (9th Cir. Aug. 14, 2006), was who owned a mark: a party that took an assignment from a trademark owner while the trademark owner's business was in the process of winding down and while he was slowly selling off remaining inventory; or an unrelated party that had been using the mark since before the assignment. The unrelated third party alleged that the assignee got no prior rights from the assignor because assignor abandoned the mark when he decided to wind-down the business and sell off his inventory of trademarked goods.

The 9th Circuit held that there was no abandonment. It explained that abandonment requires two elements: (1) discontinuation of "bona fide use of the mark in the ordinary course of trade"; and (2) intent not to resume such use. Taking the element of intent first, the 9th Circuit held that, so long as there is continued use, a "subjective intent to abandon the mark or business" or a "prospective declaration of intent to cease use in the future" by itself isn't enough to result in abandonment. The court concluded that "unless the trademark use is actually terminated, the intent not to resume prong of abandonment does not come into play."

As to whether there was a discontinuation of use, the 9th Circuit held that "abandonment requires complete cessation of trademark use." Further, "[e]ven a single instance of use is sufficient . . . if such use is made in good faith." It explained that "[g]ood faith nominal or limited sales of trademarked goods are sufficient . . . where the circumstances legitimately explained the paucity of sales." A wind-down or sell-off qualifies as "good faith" use. The court distinguished such "good faith" sales from sales taking place under a "trademark maintenance program," which are insufficient to avoid abandonment.

Two MORE recent TM decisions in the 9th Circuit

The Ninth Circuit has always seemed to have more than its fair share of interesting trademark cases. Here are two more noteworthy recent decisions.

Aesthetic Functionality of Audi and VW logos on car accessories -- A few weeks ago, I noted a decision of the 6th Circuit concerning the use of a car manufacturer's logo on replacement grilles made by an unlicensed company, wondering why the issue of aesthetic functionality never came up. Well, in Au-Tomotive Gold, Inc. v. Volkswagen of America, Inc., No. 04-16174 (9th Cir. Aug. 11, 2006), the issue was squarely raised and addressed. The case involved key chains, license plates, and license plate frames bearing exact replicas of the VW circle logo and the Audi four-ring logo. The district court had granted summary judgment to the unauthorized manufacturer of these items, holding that its use of the logos was aesthetically functional as a matter of law because the logos themselves were what drove the sales of the items: people liked the logos.

Natch, Audi and VW appealed. The 9th Circuit reversed. In a well-reasoned opinion, the Court discussed the history of the elusive concept of aesthetic functionality, from the 1938 Restatement of Torts through the Supreme Court's recent TrafFix decision. Ultimately, the 9th Circuit held that where the "entire significance" of the allegedly aesthetically-functional feature is its value as an identifier of source, then use of the mark is "naked appropriation" rather than appropriate. The Court -- correctly, in my view -- pointed out that to hold otherwise "would be the death knell for trademark protection."

Adoption (in dictum) of the "Sublicensing Rule" in TM cases -- In a case involving the tortuous twists and turns in the saga of the GLENN MILLER mark for music and related stuff, the 9th Circuit in Miller v. Glenn Miller Productions, Inc., No. 04-55874 (9th Cir. July 19, 2006), rejected a licensee's argument that it should be able to sub-license without express permission from the licensor in the absence of a prohibition against it. It adopted the rule that licensees can't sublicense without express permission (which was born in patent and copyright cases) because if the rule were otherwise it would make it hard for a licensor to exercise its duty to supervise and control use of its mark, thus undermining markholders' rights. Makes sense to me.

The problem, however, was that the 9th Circuit also rejected the licensors' claims based on laches, thus making the entire discussion about how the licensors were wronged dicta. That darn activist 9th Circuit! Next thing, they'll be ruling that the Pledge of Allegiance can by copyrighted by atheists. God . . . , er, . . . Someone help us.

Two (relatively) recent TM decisions

I'm a little behind because of vacation, etc., but here are two interesting appeals court decisions from the last few weeks.

11th Circuit "Fair Use" Decision -- In International Stamp Art, Inc. v. United States Postal Service, No. 05-13492 (11th Cir. July 18, 2006), the plaintiff owned a registration for a perforated border (like on a stamp) in connection with a line of "stamp art" cards and postcards. The USPS had previously licensed certain of its stamp designs to the plaintiff for use on these cards, but then went into business for itself selling them (with the obligatory "perforated border"). The plaintiff sued and the USPS raised the "fair use" defense, arguing that it didn't use the perforated border as a mark, but that the border simply descriptively depicted a portion of the stamp that was reproduced on the card.

The only issue on appeal was whether the USPS acted in "good faith." The 11th Circuit held that good faith means only that the defendant did NOT "intend to trade on the goodwill of the trademark owner by creating confusion as to the source of the goods or services." The 11th Circuit found that the USPS satisfied this standard, in part because there was no evidence of bad faith and in part because the USPS "provided affirmative evidence of good faith in showing that it prominently places its own familiar Eagle trademark on the backs of its stamp art products thereby identifying them as Postal Service products rather than the products of anyone else in the marketplace."

An explicit holding that use of a house mark supports a showing of good faith is a useful precedent to remember.

9th Circuit Decision Warning About Promiscuous Use of Ex Parte TROs -- In Reno Air Racing Association v. McCord, No. 04-16001 (9th Cir. July 7, 2008), the 9th Circuit went on a rant about how important it is for district court to remember that Rule 65(b) has stringent requirement that must be met before a court can issue a TRO without notice. Essentially, the 9th Circuit said that ex parte TROs are appropriate only where (a) it is impossible for the plaintiff to find the defendant; or (b) the defendant can be found, but the plaintiff can make a SPECIFIC showing that the defendant would disregard a direct court order AND would hide or dispose of the goods before the hearing could take place. The specific showing must either be of the defendant's past activities or of activities of similarly situated persons.

The court also talked a bit about what language to use to properly describe the enjoined trademark in an injunctive order.

Having been bushwhacked (twice) by too-casually-issued ex parte TROs, I'm going to tuck this one away for future use.