Blogs on Patent & Trademark cases

Can a pharmaceutical company continue making statements such as “#1 Brand for Dry Mouth” in advertising its products?

The U.S. District Court for the Southern District of New York issued its final consent judgment to the settlement agreement between GSK and Laclede, Inc. on Friday, May 24, 2019. By issuing its final consent judgment, the U.S. District Court for the Southern District of New York agreed to the settlement agreement between GSK and Laclede concluding the trademark infringement action over the BIOTENE trademarks.

Multinational pharmaceutical company, GSK, filed intellectual property claims against Laclede, a pharmaceutical company that researches, develops, and manufactures a variety of over-the-counter and prescription medications, after a $170 million dollar purchase of Laclede’s intellectual property that included various BIOTENE trademarks relating to eighteen products of Laclede’s “BIOTENE” dental product line used for treating dry mouth. The BIOTENE dental product line consists of over-the counter products including mouthwashes and toothpastes used for treating dry mouth. After purchasing the rights to the BIOTENE dental product line, GSK invested in advertising and promoting the BIOTENE product line. In 2017, GSK spent over $20 million advertising and promoting the BIOTENE product line. In addition to investing in advertisements and promotion for the BIOTENE product line, GSK also reformulated the BIOTENE dental product line.

Three years after transferring all of the intellectual property rights including the “BIOTENE” trademark, Laclede introduced its SALIVEA dental product line. The SALIVEA dental product line was a direct competitor with the BIOTENE dental product line, and included products such as mouthwash and toothpaste used for treating dry mouth. Court documents indicate that Laclede sent “approximately 100,000 mailers…to healthcare professionals and others” and advertised the SALIVEA product line through its website. Laclede’s advertisements listed trademarked phrases such as “#1 brand for dry mouth”, “ORIGINAL Biotene Formula” and featured trademarked logos such as the “blue-and-red BIOTENE logo” and the “BIOTENE droplet”. On June 4, 2018, GSK filed its trademark infringement claims against Laclede and its shareholders, Michael Pellico and Stephen Pellico, for using various BIOTENE trademarks.

A trademark is any word, name, symbol, and or device used by a trademark holder to identify and distinguish the trademark holder’s products from products manufactured and sold by others. In order for a trademark holder to register a trademark, a trademark must distinguish the trademark holder’s products from the products of others. Once a trademark holder registers a trademark with the Patent and Trademark Office, a trademark holder holds rights to the trademark in the U.S. if the trademark holder uses the trademark in commerce. A trademark holder maintains its rights in its trademark as long as the trademark holder uses the trademark to designate the origin of a product.

Trademark infringement refers to the unauthorized use of a trademark in connection with the sale, offering for sale, distribution, or advertising of any goods where such use is likely to cause confusion. A trademark holder may seek remedies in federal court for infringement under Section 32 of the Lanham Act. The Lanham Act is a federal statute that protects registered trademarks and that allows a trademark holder to file a civil action against an infringer for trademark infringement. In order to prevail in a trademark infringement action under Section 32 of the Lanham Act, a trademark holder, “must establish that the trademark holder possesses a valid, legally protectable trademark, and that the infringer’s subsequent use of a similar mark is likely to create confusion as to the origin of the product at issue.” Whether the infringer’s subsequent use of a similar mark is likely to create confusion as to the origin of the product at issue is guided by an eight factor balancing test first articulated by . The eight factors include: (1) the strength of the trademark; (2) the similarity of the marks; (3) the proximity of the productions and their competitiveness with one another; (4) evidence that the senior user may “bridge the gap” by developing a product for sale in the market of the alleged infringer’s product; (5) evidence of actual consumer confusion; (6) evidence that the imitative mark was adopted in bad faith; (7) the respective quality of the products; and (8) the sophistication (or lack thereof) of consumers in the relevant market.

In its January 23, 2019 Opinion and Order issued by United States District Judge Jesse M. Furman, the Court determined that GSK met the burden of showing that consumers are likely to be confused. The Court found that the first factor weighed in GSK’s favor, stating that there was no dispute that the BIOTENE trademark and BIOTENE droplet were both strong trademarks. The Court also found that the second factor favored GSK because Laclede conceded that its BIOTENE marks used in their advertising materials were identical to GSK’s trademarks. Since the SALIVEA product line is a direct competitor to the BIOTENE product line, the Court found this factor also favored GSK. The Court determined that the fifth factor weighed only slightly in favor of GSK, explaining that even though only twenty reported cases of actual confusion by healthcare professionals were reported, the relatively small number of declarations revealed actual consumer confusion. The Court also determined that Laclede acted in bad faith because some advertisements mentioned BIOTENE more frequently than they mentioned SALIVEA and because the advertisements created the impression that SALIVEA was an improved version of BIOTENE. With respect to the seventh factor, the Court concluded that it favored neither GSK nor Laclede because the quality of SALIVEA would neither create confusion, nor that such confusion would harm GSK’s reputation. Finally, the Court determined that the eighth factor favored Laclede indicating that both the ultimate consumer and healthcare professionals are sophisticated and familiar with the dental product market.

The Court ordered Laclede to refrain from using: the blue-and-red BIOTENE logo and confusingly similar variations; images of the packaging; and from advertising SALIVEA as a replacement for BIOTENE. Several months following the January 23, 2019 Opinion and Order, GSK and Laclede entered into a settlement agreement. The settlement agreement prohibits Laclede from making statements such as “#1 Brand for Dry Mouth” in connection with advertising and packaging its products.

Both the state of Georgia and a non-profit corporation, Public.Resource.Org (PRO) have filed writs of certiorari with the United States Supreme Court seeking its decision on whether annotations commissioned and approved by the state may be copyrighted. Stated differently, that is, in the manner in which PRO asserts the issue, these parties seek to figure out whether citizens can have access to the raw materials of our democracy.

This case arises out of the Official Code of Georgia Annotated (OCGA), which was re-codified and annotated in the 1970s. At this time, the Code Revision Commission of the Georgia General Assembly contracted with the Michie Company to prepare and publish the OCGA. The Michie Company proceeded to prepare a manuscript containing an unannotated compilation of Georgia statutes, which was then adopted as Georgia’s official code. Michie, then, added annotations and the OCGA, as it exists today, became effective in 1982.

Currently, Georgia is under contract with Lexis Nexis to maintain, publish and distribute the OCGA. States often strike deals of this type with private publishers. PRO, in its petition to the Supreme Court, claims that publishers subsequently use tools to control who has access to the text of the law, how much they must pay, and under what terms. However, to ensure that Georgia law is readily accessible to the general public, pursuant to agreement, Lexis is required to publish the code’s unannotated statutory text online, free of charge. Moreover, a CD-ROM version of the OCGA, complete with annotations, is available to the general public without charge at over 60 state and county-operated facilities throughout Georgia, such as libraries and universities.

PRO is operated by Carl Malamud and its primary activity is publishing government documents online, including several state codes, and encouraging the public to access them for free. Despite knowledge of Georgia’ registered copyright, PRO purchased printed volumes and supplements of the OCGA, scanned them, and posted them online. After PRO refused to comply with cease and desist letters, Georgia filed an infringement suit in district court and PRO counterclaimed for judgment of non-infringement. PRO continued reproducing the OCGA after Georgia had filed its suit.

Copyright subsists in original works of authorship fixed in a tangible medium of expression and covers both published and unpublished works. Copyright grants owners a bundle of exclusive rights, including the rights of reproduction and distribution. This protection only extends to the original expressions of ideas and not the ideas themselves. Thus, even if certain elements in a work are ineligible for protection, other elements may still be protected.

It is well-settled that judicial opinions cannot be copyrighted. The Supreme Court last addressed this matter in 1888 when it ruled that “the whole work done by the judges constitutes the authentic exposition and interpretation of the law, which, binding every citizen, is free for publication to all.” The so-called government edicts doctrine is a narrow, judicially created exception to copyright protection for certain works having the force of law. Under this doctrine, the standard that is applied is whether the work sought to be registered has “the force of law.” If it does, it cannot be copyrighted. Some lower courts have applied this principle to statutes but the status of other sorts of legal materials has not been definitively resolved.

No statute directly codifies the government edicts doctrine but instead, the Copyright Act provides that “copyright protection is not available for any work of the United States Government.” That being said, there is no parallel provision for works of state and local governments. Moreover, in a compendium issued by the Copyright Office, it was decreed that a work that does not constitute a government edict may be registered as a copyright “even if it was prepared by an officer or employee of a state, local, territorial, or foreign government while acting within the course of his or her official duties.” The Copyright Office also recognizes that copyright protection is available for annotations that summarize or comment upon legal materials issued by the federal, state, local, or foreign government, unless the annotations themselves have the force of law. If this doctrine extends to works that lack the force of law, such as annotations to a statute, those works would thereby be uncopyrightable

Annotations include descriptions of judicial decisions interpreting the statutes. In particular, in viewing a statute, its meaning is not always necessarily clear. Instead, it is usually necessary to go to the annotations, which lead the court decisions where the judges actually inform as to the meaning of the words of the statute. At times, courts will cite to the annotations as authoritative sources on statutory meaning and legislative intent.

The Georgia General Assembly has repeatedly made clear that only the statutory portion of the OCGA has the force of law and that the annotations constitute mere research aids lacking any legal effect. Due to this, Georgia does not claim copyright protection in the OCGA’s statutory text and numbering but does claim that it holds a registered copyright in the annotations thereof.

The district court held the OCGA annotations were copyrightable and that PRO’s activities constituted infringement, thereby entitling Georgia to injunctive relief. The federal appeals court reversed this finding, ruling against the state and for PRO. Unsurprisingly, the state filed a petition with the Supreme Court asking them to take up the question. On the other hand, in an unusual move, despite its success at the appellate level, PRO has also urged the court to hear the dispute. Indeed, PRO contends, approximately 20 other states have claimed that parts of similar annotated codes are copyrighted so this is an important and relevant case.

Can a rock band prevent a brewery from selling beer by a confusingly similar name?

Guns N’ Roses was initially founded in 1984 by Tracii Guns and Axl Rose when they combined the names of their respective bands, “LA Guns” and “Hollywood Rose,” to form “Guns N’ Roses.” Since its inception, the metal band has achieved national and international renown as one of the greatest, and most commercially and critically successful, bands of all time. In particular, the band has sold millions of records, received billions of views of its music videos on YouTube, and experienced sold-out tours. As one example, the band’s debut album, Appetite for Destruction, is the best-selling debut album of all time in the United States.

As is common with musicians and other artists, Guns N’ Roses has also branded merchandise, including t-shirts, hats, patches, stickers, buttons, bandannas, wine glasses, shot glasses, beer “koozies” and pint glasses. To protect this merchandise and the band’s brand, Guns N’ Roses is the owner of three incontestable federal trademark registrations of the mark GUNS N’ ROSES. These marks are in International Class 9 for “prerecorded video and audio tapes, prerecorded phonograph records and prerecorded compact discs all featuring music,” International Class 41 for “entertainment services; namely, performances by a musical group,” and International Class 25 for “clothing, namely, t-shirts, shirts, hats, caps, bandannas, sweatpants, and thermal shirts.”

Upon discovering that Oskar Blues Brewery had begun offering for sale and selling craft beer under the mark GUNS ‘N’ ROSE in canned and keg form, as well as, various merchandise bearing the same, including hats, t-shirts, pint glasses, stickers, buttons, and bandannas, the business manager of Guns N’ Roses reached out to the beer company. Despite the manager’s offer to resolve the dispute short of escalating the matter to legal counsel, the brewing company rejected the band’s claims. Following this discussion, a formal letter was sent on behalf of the band, again requesting that Oskar Blues cease its unauthorized use of the Guns ‘N’ Rosé mark and abandon its trademark application for the same. Multiple letters were transmitted between the parties and ultimately, the brewery indicated its intention to continue selling and marketing the Guns ‘N’ Rosé beer, clothing, and other products through March 2020. As such, Guns N’ Roses initiated the present lawsuit against Oskar Blues, claiming trademark infringement, false designation of origin, trademark dilution, unfair competition, and misappropriation of right of publicity.

To be successful on its trademark infringement claims, Guns N’ Roses will need to demonstrate that it has valid and subsisting trademark rights in and to “Guns N’ Roses” and that Oskar Blues Brewery is utilizing a mark that is confusingly similar thereto. More specifically, Oskar Blues’ use of “Guns ‘N’ Rosé” must be in a manner that is likely to cause confusion with respect to the source and origin of its rosé ale and is likely to cause confusion or mistake and to deceive purchasers as to the band’s affiliation, connection, or association with, or approval or sponsorship of, Oskar Blues, its business, and/or the disputed rosé ale.

In addition to its manufacturing and offering for sale of the accused beer, the brewery filed an application to register “Guns ‘N’ Rosé” as a trademark last August. In response, the band filed an opposition proceeding with the Trademark Trial and Appeal Board in March of this year. An opposition proceeding involves the United States Patent and Trademark Office, and not the courts, with the ultimate goal of defeating registration of a mark. Indeed, oppositions challenge pending trademark applications.

Prior to answering the notice of opposition, Oskar Blues Brewery withdrew its application for registration of “Guns ‘N’ Rosé.” Per trademark rules, since Oskar Blues Brewery filed this abandonment without the written consent of the band, judgment necessarily had to be entered against it, thereby sustaining the opposition and refusing registration of “Guns ‘N’ Rosé.” Typically, a refusal in this way is “with prejudice,” that is, the beer company cannot later attempt to gain registration of its “Guns ‘N’ Rosé” mark.

Despite the brewing company’s abandonment of its trademark application, in its district court lawsuit, the band is still requesting that it stop making and selling the pink ale, and deliver to them for destruction any merchandise or promotional material bearing the mark. The rationale is that merely because Oskar Blues abandoned the trademark application, it has not agreed to cease sales and marketing of the infringing beer. Of course, the band also seeks compensatory and punitive damages.

Will Dollar Tree’s parent company be forced to forfeit nearly 22,000 fashion dolls imported from the Canadian border that allegedly infringe Mattel’s Barbie copyright?

In International Falls, Minnesota, agents with Customs and Border Protection seized nearly 22,000 counterfeit Barbie dolls worth almost $140,000 from a railcar. These dolls were imported by the parent company of Dollar Tree, Greenbrief International and were intended to be sold in Dollar Tree’s more than 15,000 stores operated in 48 states and five Canadian provinces. Dollar Tree is a Fortune 200 company that operates under the names Dollar Tree, Family Dollar, and Dollar TreeCanada. The fashion dolls were found in a shipping container aboard a Canadian National Railway train during an inspection at the Minnesota-Canada border. On the rail car’s manifest, “Other Toys” was simply written.

Upon showing Mattel, who is the owner of all copyrights and trademarks in and to Barbie, photographs of the seized toys, Mattel confirmed that the fashion dolls bore copyright protected markings of its “CEO Barbie” and that violate intellectual property laws. In particular, Mattel identified several features of the copyrighted Barbie head sculpt infringed by the fashion dolls. More specifically, the shape of the mouth and particularly the upturned upper lip and dimples at the corner thereof, and the nose, including the shape and proportions of the nostrils, were infringed by the imported dolls. To make matters worse, Mattel claims that the packaging of the fake fashion dolls violated Mattel’s trademark protections.

Copyright protects original works of authorship fixed in any tangible medium of expression, including sculptural works, which is how toys are classified. Even to the extent that a toy may feature individual components which are unoriginal and unprotectable by themselves, copyright does protect original compilations of unoriginal components. To prove copyright infringement, the claimant must show a valid copyright interest and that the accused engaged in the unauthorized reproduction, distribution, performance, or public display thereof.

The federal authorities have released a statement explaining that they seek to forfeit and recover the approximately 22,000 fashion dolls that infringe the registered copyright owned by Mattel. Civil forfeiture is a law enforcement tool that allows the government to protect its income from violation of customs and revenue laws. Relevantly, copyright law provides for the seizure of material violating a registered copyright.

This is not the first time Dollar Tree has imported dolls that federal authorities considered to be counterfeit, but rather, this is the second time they got caught. Indeed, in 2016, prosecutors made a similar seizure at the same port of entry of more than 13,000 counterfeit fashion doll mermaids. The mermaids were also found to have head sculpt that infringed on copyright and trademark protections afforded real Barbie dolls. In both instances, the counterfeit dolls originated from the same exporter/shipper located in Hong Kong.

If found guilty by federal authorities, pursuant to federal statute, Dollar Tree could be fined up to $5 million. Moreover, since this is the importer’s second offense, Dollar Tree’s liability could be increased up to $15 million. However, the civil forfeiture suit seeks only forfeiture of the 21,852 dolls and “costs and disbursements in this action, and for such other and further relief as this court deems proper and just.”

Can the California-based retailer, Patagonia, successfully assert trademark infringement against Anheuser-Busch for its use of “Patagonia” as applied to its new line of beer?

California-based retailer, Patagonia, recently filed a lawsuit against Anheuser-Busch InBev’s new “Patagonia” beer brand alleging it unlawfully obtained rights to that mark and further that the mark infringes its trademark rights. The lawsuit alleges Anheuser-Busch is deliberately attempting to take advantage of Patagonia’s tremendous goodwill cultivated in their brand.

Patagonia has been in business for more than forty years and has been involved in designing, developing, marketing, and retailing outdoor apparel, sportswear, and related products. Indeed, the clothier’s products now include a wide range of apparel products and equipment, including technical products designed for climbing, skiing and snowboarding, surfing, fly fishing, and trail running. Further, the complaint alleges, for many years, the brand has been famous in the United States and around the world for innovative apparel designs, quality products and environmental and corporate responsibility. Since at least 1973, the brand has been using the logo comprising PATAGNOIA and a multi-colored silhouette of the jagged peaks of the Mt. Fitz Roy skyline.

Seven years ago, according to the complaint, Anheuser-Busch unlawfully obtained a trademark for Patagonia as applied to “beer.” Later, the beer company filed what is known as a “Statement of Use” proving use of the trademark in commerce. Such evidence usually includes the mark as displayed on products, packaging, or other marketing tools. This filing is important because the United States Patent and Trademark Office will not publish a trademark until it is being actively used. Anheuser-Busch stated that the mark was being used as early as 2012 and its specimen of use comprised photographs of a beer bottle with a PATAGONIA label applied thereto. Patagonia complains that this specimen does not show the beer in a commercial context but rather, consists of a single bottle on a table in a white-walled room. The retailer further claims that Anheuser-Busch did not begin actually selling the beer until 2018.

The lawsuit further alleges that Patagonia owns numerous registrations for and including the standard-character PATAGONIA trademark and its classic logo and that these registrations are in full force and effect. Moreover, Patagonia claims it has annually spent enormous amounts of time, money, and effort advertising and promoting the products and services on which their trademarks are used. As a result, Patagonia products are sold all over the world and the brand has acquired enormous goodwill.

To the contrary, Anheuser-Busch only began using PATAGONIA as applied to beer in late 2018 and as such, has not accumulated any trademark rights. Anheuser-Busch’s logo, similar to Patagonia’s, features the term “PATAGONIA” appearing beneath the silhouette of a mountain. Instead, Patagonia argues, Anheuser-Busch’s use of this trademark and logo have caused consumer confusion in the marketplace. Additionally, this allegedly infringing use, Patagonia claims, is likely to cause dilution of Patagonia’s word trademark by diminishing its distinctiveness.

To make matters more obvious, Patagonia started a food business in 2012 called Patagonia Provisions, Inc. Under this company, Patagonia developed, marketed, and sole socially and environmentally responsible food items under its PATAGONIA PROVISIONS mark, including buffalo jerky, salmon, fruit and almond bars, and soup mixes. In 2016, the food division launched its own beer called Long Root, which used a perennial grain, called Kernza, instead of barley to formulate the beer. Kernza has long roots that store carbon in the ground and Long Root beer thereby services as a vehicle to introduce customers to carbon sequestration as a means of removing greenhouse gases from our atmosphere.

In its lawsuit, Patagonia seeks an order that Anheuser-Busch’s marks incorporating “PATAGONIA” be cancelled. In addition, the clothier requested that the court find the beer company’s use of the mark to infringe and dilute Patagonia’s prior trademark rights. Finally, Patagonia seeks damages as well as an injunction against Anheuser-Busch.

Can Gigi Hadid escape liability for copyright infringement arising out of her use of a photograph of herself taken by paparazzi?

On October 12, 2018, Gigi Hadid posted a photograph of herself on Instagram. The New York company, X-clusive Lee, Inc. (“X-clusive”), that allegedly owns the copyright to the photograph has since filed a copyright infringement lawsuit against the model seeking an injunction, statutory damages, any profits realized from the publication of the image, and attorney fees and costs. The lawsuit arises out of X-clusive’s allegation that Hadid uploaded this copyrighted photograph to her social media account without license or permission from X-clusive.

Gigi Hadid is perhaps best known for her modeling for the likes of Versace, Chanel, Eli Saab, Fendi, Marc Jacobs, Anna Sui, Miu Miu, Fenty, as well as, others. She has also starred in advertising campaigns for Guess, Versace, Topshop, Stuart Weitzman, and others. Currently, Hadid’s Instagram page has more than 47 million followers. At the time Gigi posted the photograph in question, her Instagram page had over 44 million followers. The disputed photograph received more than 1.6 million likes before it was taken down by Hadid.

The complaint was filed in federal district court in Brooklyn, New York. Therein, X-clusive cites at least 50 “unaccredited photographs” that Hadid had allegedly published to her Instagram account. These photographs include Gigi in public, at press events, or on the runway. The complaint further accuses Hadid of acting willfully, noting another lawsuit filed against the model in 2017 based on very similar facts. In that case, Hadid had published another copyrighted photograph of herself to her social media accounts without permission. However, that case settled out of court prior to the parties conducting discovery.

In an unusual action, lawyers on behalf of Hadid filed a letter addressed to Judge Chen, the presiding judge in the case, requesting a “pre-motion conference on an anticipated motion to dismiss.” In this letter, Hadid’s lawyer sets forth numerous arguments as to why Hadid is not liable and this litigation is not sustainable. First, the letter cites to a recent Supreme Court case, Fourth Estate Pub. Benefit Corp. v. Wall-Street.com, LLC, 139 S. Ct. 881, 888 (2019), which sets forth that a copyright must be registered in order to bring an action for infringement thereof and that registration occurs when the Copyright Office registers the copyright, not when the application is filed. Since X-clusive’s copyright appears to remain a mere application and not yet a registration, X-clusive cannot maintain suit for infringement.

The letter also points out that X-clusive’s complaint does not name or point to any particular individual photographer who actually snapped the photograph in dispute. Further, the complaint does not explain the relationship, if any, between the photographer and X-clusive. Rather, the complaint merely states that X-clusive is the copyright holder for the photograph. In this way, the letter argues, the complaint fails to establish facts to allege that X-clusive had a right to bring this action.

Additionally, the letter sets forth Hadid’s fair use argument. In particular, Hadid’s attorney claims that the photograph was not disseminated for commercial purposes and Hadid has not deprived X-clusive of any significant revenue. Interestingly, the model’s attorney argues that Hadid herself contributed to the copyrightable elements of the photographs, that is, Hadid smiled and posed. Thus, the photographer did not attempt “to convey ideas, emotions, or in any way influence the subject’s post, expression or clothing” and therefore, cannot claim a copyright to the photograph. Overall, the correspondence seeks to establish that the paparazzi was taking advantage of Hadid by surveilling her, taking photographs of her every public movement, and selling them for profit. In this manner, the letter goes on, the plaintiff paparazzi seeks to make their living by exploiting Hadid’s image and selling it for profit.

Gigi Hadid is not the first celebrity to face a lawsuit over posting a copyrighted image of themselves to social media. As one example, in 2016, Khloe Kardashian published a photo of herself on Instagram, which was owned by Xposure Photos and exclusively licensed to the Daily Mail. Xposure, in that case, claimed Kardashian’s conduct was egregious because she or someone on her social media team scrubbed the image clean of copyright information prior to posting. Xposure eventually dismissed the case, presumably after a settlement had been reached.

In these cases, the defendant typically argues right of publicity. More specifically, individuals generally have a right to control the use of their own name, image, likeness, and identity. Additionally, individuals are entitled to prohibit others from using the same for commercial gain without permission. However, there is a well-established exception to this general right of publicity for newsworthy subjects or matters of public interest. New York law interprets these phrases quite broadly giving individuals wide discretion in using other people’s identity even for commercial gain when the use is newsworthy. Moreover, New York law specifically protects photographers from lawsuits against right of publicity lawsuits by their subjects. It remains to be seen whether the court will be persuaded by the arguments set forth in the letter filed by Hadid’s lawyers.

Can Peloton be held responsible for hundreds of millions in damages to music publishers based on its unlicensed inclusion of certain musical works in its exercise videos?

Ten publishing companies that represent songwriters behind hits by the likes of Lady Gaga, Drake, and Rihanna filed a lawsuit against Peloton, the fitness technology company, alleging copyright infringement. Specifically, the publishers complain that the fitness company has used over 1,000 of its copyrighted musical works without permission since 2017. In response, Peloton began removing classes from its repertoire that feature songs the publishers claim were being used without proper licenses.

Peloton is one of the world’s most successful fitness and technology companies. Since its inception in 2012, Peloton has more than 600,000 subscriber members and is reported to be valued in excess of $4 billion. In 2018, Peloton eclipsed cycling giant, SoulCycle, in sales. As a result, Peloton is preparing for its initial public offering (IPO) later this year. The company offers both hardware in the form of a bike or treadmill, as well as, a subscription service that allows consumers to replicate the experience of a high-end exercise studio in the convenience of one’s home. Users are enabled to participate in instructor-led video workouts, while competing against other class participants and viewing performance metrics. In addition to its initial cycling classes, the company has expanded its offering to include yoga, strength, and other exercise classes, all of which are available via live and streaming video. Each of Peloton’s over 13,000 workout videos features music from start to finish, thereby providing a tempo, as well as, an atmosphere for a treadmill run or stationary bike ride.

The lawsuit, filed in the United States District Court for the Southern District of New York, seeks up to $150 million in damages for Peloton’s alleged copyright infringement. Copyright Infringement involves the reproduction, distribution, performance, public display, or making of a derivative work of copyrighted work without the permission of the copyright owner. The United States Copyright Act grants copyright owners exclusive rights in their copyrighted works, including the right to reproduce, perform publicly and distribute and authorized others to do the same those copyrighted works. Pursuant to this, the publishing company plaintiffs had previously licensed the public performance, reproduction, synchronization and distribution of many musical works in their catalogs.

The publishers claim Peloton used more than 1,000 musical works, including songs by Drake, Rihanna, Kanye West, Lady Gaga, Tiesto, Benny Benassi, Avicii in addition to many others, over a period of years in the videos that it makes available to its hundreds of thousands of customers. Each of these works has been registered with the United States Copyright Office. Moreover, many of these musical works are featured in multiple workout videos. For example, the complaint states that Rihanna’s famous “Umbrella” is played in at least 55 separate workout videos since late 2017. Each of these uses would have required a separate synchronization license and Peloton obtained none.

The crux of this lawsuit is that the New York-based start-up failed to secure a synchronization license for a single one of the more than 1,000 songs. The right to license the synchronization of a musical work is derived from the copyright owner’s exclusive right of reproduction. Synchronization licenses, or sync licenses, permit the licensee to lawfully reproduce a protected work in connection with or in timed relation with a visual image, such as the videos that Peloton records, archives and makes available to its customers. In this way, use of the same musical composition in a different context or in a different audiovisual work would require a separate license, carrying an additional fee.

Based on the fact that Peloton has previously obtained licenses for other songs it features in its videos, the plaintiffs claim Peloton is a “textbook willful infringer.” Peloton is allegedly well aware of and fully understands copyright law requirements due to the existence of these other licenses. In this manner, the publishers claim “there is no doubt that Peloton’s infringement was and continues to be knowing and reckless.” Willful infringement involves instances when the named defendants knew or should have known of their wrongful conduct.

Copyright law allows a maximum statutory damages in the amount of $150,000 for each willful infringement. The publishing companies seek this maximum amount for each of the 1,000 works infringed. Alternatively, plaintiffs may be entitled to actual damages, including Peloton’s profits from its infringement of the copyrighted works. It remains to be seen if Peloton’s removal of the infringing videos will allay the publishing companies’ concerns. However, in a letter that went out to Peloton subscribers, Peloton claimed that prior to the filing of the lawsuit, “fruitful discussions” had been ongoing with these publishing companies. Nonetheless, Peloton goes on, the classes were removed “out of an abundance of caution.”

Will the NCAA succeed in its opposition proceeding against TM2A, Inc., which is attempting to register “March Mulligans” as a trademark?

This past week, the National Collegiate Athletic Association (NCAA) initiated an opposition proceeding against a Missouri-based company known as TM2A, Inc., which is attempting to register “MARCH MULLIGANS” as a trademark. The Missouri company, TM2A, Inc., which stands for “The March to April” invented a new twist on the traditional March Madness bracket challenge by allowing fans to correct erroneous game predictions during the competition. The purpose of “March Mulligans” is to maintain fans’ interest in the Tournament even after their brackets otherwise would have busted. The classic basketball bracket challenge involves a grid of all the teams in the tournament and selecting predicted winners in each of the 67 games. No one has ever successfully filled out a perfect bracket.

The NCAA is a non-profit organization that regulates the athletes of over 1200 North American institutions and conferences. The NCAA Division I Men’s Basketball Tournament, otherwise known and branded as March Madness, is a single-elimination tournament played each spring featuring the college basketball teams from the Division I level schools to determine the national championship. The NCA owns various registrations for “MARCH MADNESS”, eight of such registrations were cited in the NCAA’s Notice of Opposition. The first registration for “MARCH MADNESS” was filed in 1989 in International Class 041 for “entertainment services, namely, presentation of athletic and entertainment personalities in a panel forum.”

In March 2015, TM2A filed an intent-to-use trademark application to register “MARCH MULLIGANS” in connection with “entertainment services, namely, organizing, conducting and providing online electronic sweepstakes, games of chance and contests.” Three years later, the application was published for opposition, at which point the NCAA filed an opposition to the mark’s registration. The opposition claims that the applied-for mark, “MARCH MULLIGANS,” is confusingly similar to the NCAA’s “MARCH MADNESS” marks and that if the applied-for mark were to register, consumers are likely to be confused, mistaken, or deceived into believing there exists an association between NCAA’s prior marks and the non-traditional bracket challenge.

Upon acceptance by the examiner in the United States Patent and Trademark Office, an application for registration on the Principal Register is published for opposition in the Official Gazette. This initiates a period of 30 days within which any oppositions to registration of the mark must be filed. Once an opposition is filed, the case will proceed before the Trademark Trial and Appeal Board (TTAB), which follows the Federal Rules of Civil Procedures used in general civil actions. However, there is no formal trial before the TTAB. Instead, there is first a testimony period, during which the opposer submits evidence in support of opposition and the applicant responds with evidence supporting registration. The evidence may be in the form of depositions, admissions, answers to interrogatories and each party is provided the opportunity to rebut the other side’s proof. Upon conclusion of the testimony period, the parties file briefs and the TTAB will only hear oral arguments by the parties upon the request of either party.

Any party that believes that he or she would be damaged by the registration of a mark on the Principal Register may file an opposition. In particular, the opposer must demonstrate that it has standing and that there exists a statutory ground that negates the applicant’s entitlement to registration. Standing requires that the opposer have a direct and personal stake in the outcome of the proceeding. Also, the belief of damage must have a reasonable basis in fact and not be merely subjective. With respect to the second requirement, the opposer may assert any statutory ground that negates the applicant’s entitlement to registration, including likelihood of confusion, mere descriptiveness of the mark, dilution, functionality, genericness, disparagement, geographic descriptiveness, or that the applicant has no bona fide intent to use the mark.

The NCAA claims it has offered and sold millions of dollars’ worth of goods and services in connection with its “MARCH MADNESS” mark and that it has also spent significant sums advertising and promoting its mark throughout the United States. As a result of such expenditures, the NCAA asserts that its mark represents extremely valuable goodwill. Moreover, the NCAA claims its registrations are all incontestable, which provides conclusive evidence of the validity of a registered trademark, the registrant’s ownership of the mark, and the registrant’s exclusive right to use the mark in commerce. Thus, the NCAA claims not only that consumers are likely to be confused if TM2A’s mark were to issue but also that the distinctive quality and reputation of its MARCH MADNESS mark will be diluted if TM2A’s MARCH MULLIGANS mark is used in commerce.

TM2A has yet to file a response to the NCAA’s trademark opposition and has until April 20, 2019 to do so, absent the filing of an extension. This is another instance of the NCAA using its vast resources to protect its intellectual property. Indeed, the NCAA has historically been aggressive in patrolling and enforcing its marks. For example, in 2017, the NCAA filed a trademark infringement action against a company that ran online sports-themed promotions and sweepstakes under the marks “April Madness” and “Final 3.” Another case involved a car dealership that had registered and was using the mark “Markdown Madness” in advertising.

Amazon Launches Project Zero To Stop Counterfeit Sales

Counterfeit sales at Amazon have increased so much that it stated it is much more damaging to a brand owner than to Amazon when a consumer receives a counterfeit product.

In February 2019, Amazon.com filed a Form 10-K annual Report with the U.S. Securities and Exchange Commission officially acknowledging to shareholders that the company’s online sales platforms risked being found liable for fraudulent or unlawful activities of sellers on those platforms. Amazon admitted they may not be able to prevent sellers trafficking counterfeit and pirated goods.

Amazon’s Form 10-K filing stated that the law relating to the liability of online service providers is currently unsettled. They stated their seller programs may render the company unable to stop sellers from collecting payments when buyers never receive products they ordered or when products buyers receive are materially different than described by sellers. It was noted this is the first time Amazon used the word “counterfeit” in an annual report. Although this may be their first acknowledgement of counterfeiting activities affecting their online retailers, it is old news for both small and large brand owners, i.e., Apple, Williams-Sonoma, Elevation Lab and Daimler AG. Apple claimed that 90% of Apple-branded products sold on Amazon are counterfeits. The Counterfeit Report noted that CEO Jeff Bezos himself is complicit in the sale of counterfeit items on Amazon’s e-commerce platform.

Amazon’s susceptibility to the counterfeit problem is affected by how the company’s e-commerce services are structured. Amazon is structured into three different e-commerce tiers: (1) The Amazon Retailer, where buyers employed by them negotiate wholesale prices for items, which are then sold by Amazon.com LLC; (2) Fulfilled by Amazon, where the sellers are third parties. The goods are stored in Amazon warehouses and shipped by Amazon employees; and (3) Amazon Marketplace, which is more like eBay, where Amazon is the platform, and storage and shipping is handled solely by the seller. Consumer trust is developed from the idea that when you buy from Amazon, you are receiving what you believe is a genuine product. Recent lawsuits from Daimler and Williams-Sonoma show that it is more damaging to a brand owner than to Amazon when a counterfeit product is received. Many people don’t even know they received a counterfeit.

China is the main culprit of counterfeit goods. In 2017, nearly 90% of all global counterfeit products seized by U.S. customs agents came from China and Hong Kong. If online retailers are going to continue to make their platforms available to China-based sellers, there should be some burden on them to show that the products are legitimate. In addition, trademark owners dealing with counterfeits should be filing lawsuits and forcing Internet stores to pay damages for counterfeits.

Unauthorized distribution is a problem for trademark owners. Numerous brand owners who sell luxury products have had to deal with unauthorized sales of their genuine products on Amazon. These products are only supposed to be sold through a network of authorized dealers; however, brand owners find it difficult to control downstream access due to the first sale doctrine, which allows for resale of genuine products in an unchanged state. If the products get out of their normal distribution channel and end up on Amazon, it can be problematic where a brand owner wants to protect pricing and provide consumers with a specialized sales force and warranties, which is not available online. Unauthorized sales could hurt a brand owner’s reputation with consumers if Amazon’s price is much lower, and it can hurt relationships with dealers who feel the price difference is unfair. It’s a little easier to combat unauthorized sales on Amazon when it’s not a manufacturer selling the products on Amazon because Amazon collects material from the seller. When the manufacturer provides the materials, Amazon receives a sublicense to them and makes it more difficult for brand owners from a copyright standpoint through takedown notices. Brand owners concerned about counterfeits or unauthorized sales could use watermarking techniques or covert markings which are difficult for counterfeiters to replicate. It is very important to keep records of copyrightable materials, i.e., product images or advertising materials that can be registered with the U.S. Copyright Office. A copyright action is much more straightforward when a second or third party has appropriated copyrighted material, but not easy to enforce without accurate records. Brand owners could file for copyright registration in the event a manufacturer or someone else embarks on unauthorized sales on Amazon.

To reassure the public that expects to purchase authentic products, an Amazon spokesperson stated they strictly prohibit the sale of counterfeit products and invest heavily through funds and company energy to ensure their policy against the sale of counterfeit products is followed. They are available 24/7 to act on reported violations. They have dedicated teams of software engineers, research scientists, program managers, and investigators to continuously operate and refine their anti-counterfeiting program. Over 99% of all Amazon page views by customers landed on pages that did not receive a notice of potential infringement. Additionally, customers are protected by their guarantee, whether purchased from Amazon or a third-party seller. If the product is not as advertised, customers receive a full refund of their order.

There still may be reason to question Amazon’s ability to effectively eliminate counterfeits. Amazon’s service representatives who handle the requests to take down counterfeit items usually are not legal professionals and follow a script on handling the claims. Noted are instances of identical takedown warnings sent to Amazon whereby one is accepted and one is denied when they were analyzed by different service team members. While Amazon’s statistic on the 99% of customer page views seems great, considering how large Amazon is with billions of page views yearly, that percentage could include a large number of infringing items not yet sent a notice. Regarding Amazon’s statement that customers can get a full refund on counterfeit purchases through its A-to-Z Guarantee program, in it’s 10-K filing, Amazon said that it “reimburse[s] buyers for payments up to certain limits.” That phrase doesn’t guarantee a full refund in all cases.

What do trademark lawyers do?

Trademark law involves the protection of brand names, logos, designs, and trade dress applied to goods and services. Trademark attorneys, like those at Omni Legal Group, provide legal advice on trademark matters and assist clients in all stages of the trademark process. Unlike patent attorneys, trademark attorneys need not have passed any specialized registration examination before the United States Patent and Trademark Office (USPTO). Rather, trademark attorneys need only be active members in good standing of the bar of the highest court of any State. Trademark lawyers’ jobs include both transactional and litigation aspects.

When a new trademark is contemplated for registration, one key function of a trademark lawyer is to determine that the proposed mark qualifies for protection and does not infringe another’s rights. In order to do so, the lawyer may perform a trademark search of the USPTO database and other available records for confusingly similar registered marks. Indeed, all information submitted to the USPTO at any point during the trademark application and/or registration process is public record so even if a mere application has been filed for a mark, the USPTO database will indicate the same. If the attorney finds a conflicting mark, the client will potentially be denied registration and may even be subject to a lawsuit by the registered owner of the existing mark. In this way, trademark lawyers assess the chances of success of an application. Thus, trademark attorneys’ role in advising on adoption and selection of a new trademark can save time and resources down the road.

After the trademark clearance has been performed, the trademark lawyer may also file and prosecute the trademark application. Initially, this entails preparing the application forms, including an online form through the Trademark Electronic Application System, the applicable fee, and, if the mark is already in use by the client, the specimen showing such commercial use. If the trademark has not previously been used by the client, the trademark attorney will file what is known as an intent-to-use, or Section 1(b), application, indicating the client has a bona fide intent to use the trademark in commerce. Prior to registration of the mark, it must be demonstrated that the mark is actually being used in commerce.

Not all trademark applications result in registrations. After the USPTO determines that the application meets the minimum filing requirements, a serial number will be assigned and the application forwarded to an examining attorney. The USPTO examining attorney reviews the application and checks its compliance with applicable rules and statutes, such as that mentioned before with regard to likelihood of confusion with an existing mark. If the examining attorney decides that a mark does not deserve registration, an Office Action is issued which explains any substantive, technical, or procedural reasons for refusal. Trademark attorneys are skilled at identifying such issues and responding accordingly, including submitting arguments against substantive refusals and correcting technical or procedural deficiencies.

Once a trademark has been registered, the owner of the mark may still face legal issues in relation thereto. On the one hand, a third party may come forward and claim superior rights to the registered trademark and may oppose registration or seek cancellation of the mark. In such a scenario, the trademark attorney may defend the registrant before the Trademark Trial and Appeal Board or in District Court in proving the mark’s validity and the client’s rights. On the other hand, a third party may begin infringing the trademark owner’s rights by utilizing a mark that is likely to cause consumers to believe there exists an association between the trademark owner and the third party. In this case, the trademark attorney may bring a lawsuit on behalf of the trademark owner to stop the third party’s infringement and ideally obtain monetary relief representing harm suffered by the client.

It is important to note that some trademark attorneys limit their practice strictly to prosecution while others are solely litigators. Here, at Omni Legal Group, our skilled attorneys handle the entire gambit of trademark issues from clearance to prosecution to litigation and have the experience to find the proper solution for your trademark needs.