The Federal Trade Commission (FTC) has a “Cooling-Off Rule” that gives consumers a three-day right to cancel a sale made at their home, workplace, or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground, or restaurant. Thus, the Rule applies both to in-home presentations and to in-person seminars and craft shows.  However, there are a number of exemptions, such as sales under $25, sales made online or over the phone, and goods not primarily intended for personal, family, or household purposes.

As explained by the FTC, a seller in these situations must, at the time of sale, provide the consumer specific information and documents alerting the consumer to his or her right to cancel using a cancellation form.  If the consumer cancels, the seller has 10 days to (1) cancel and return any check the consumer signed, (2) refund the consumer’s money and inform the consumer whether any goods in the consumer’s possession will be picked up, and (3) return any trade-in.  The seller also has 20 days to pick up the goods or reimburse for mailing expenses.  If the consumer is returning any goods, the goods should be in as good of condition as when the consumer received them.

If a consumer believes that a company has violated the Cooling-Off Rule, he or she can file a complaint with the FTC.  The FTC also recommends that consumers contact their state Attorney General or local consumer protection agency.  Consumers can also raise complaints with the Better Business Bureau.

As a reminder, the FTC accepts consumer complaints on a wide variety of topics, including these topics provided on the FTC’s website:

  • Identity theft
  • National Do Not Call Registry violations
  • Computers, the internet and online privacy
  • Telemarketing scams
  • Credit scams
  • Immigration services
  • Sweepstakes, lotteries, and prizes
  • Business opportunities and work-at-home schemes
  • Health and weight loss products
  • Debt collection, credit reports, and financial matters

For years, scam artists have targeted trademark owners with communications that mimic notices from the United States Patent and Trademark Office (USPTO) or other governmental entities.

Unfortunately, there is no end in sight for these fraudulent activities. The USPTO recently reported an uptick in these schemes, as well as a proliferation of new “tools” used to carry them out. Trademark owners should keep abreast of these ever-evolving schemes and pay particular attention to any communications they receive from any party (other than their attorney of record) regarding their registrations or applications.

Typically these scams are designed to instill fear in trademark owners and convince them to take some sort of immediate action. They warn (falsely) that the trademark owner has missed a filing or payment deadline or is at risk of losing trademark registration rights unless the owner executes a power of attorney or pays certain “official fees.”

To lull trademark owners into a false sense of security, these communications use official sounding names, such as the “Patent and Trademark Office,” the “Patent and Trademark Bureau” or the “Trademark Compliance Center.”

Victims of these schemes can find themselves out of pocket for significant sums or, in some cases, having authorized a third party to take action with respect to the owner’s registrations or pending trademark applications.

In the past, the scam artists focused primarily on hardcopy communications purporting to offer legal services, assistance with trademark filings and other services, such as recording trademarks in a “private registry.” Recently, however, efforts have shifted to email scams.

What to Watch Out For

Scam artists use a variety of tactics to make their emails appear to be official governmental communications. Owners of U.S. trademark registrations may receive emails that appear to originate from the USPTO’s domain, @uspto.gov.

In particular, the USPTO has warned owners to beware of messages that do the following:

  • Spoof the USPTO email address (e.g., noreply@uspto.gov);
  • State that the USPTO has implemented “a new policy” requiring separate registration of clients and that there is a penalty for not complying; and
  • Provide incorrect USPTO trademark filing information (e.g., incorrect fee information).

What to Do if You Receive a Communication

Do not respond directly to any communication about one of your trademark applications or registrations – even if the communication appears to originate from the USPTO – and never pay any fees or provide any information to sender of such a communication.

Read the fine print. Pay particular attention to the email domain of the author of the email.

If you have an attorney of record who filed your application and remains the attorney of record for your registration, contact the attorney and inform them of the communication. Your attorney will be able to determine if the communication is legitimate and if you need to take any action.

If you do not have an attorney of record and you have received a communication you believe is from the USPTO, you should confirm the validity of the communication by visiting the USPTO’s Trademark Status & Document Retrieval database. By entering the trademark application or registration number in the TSDR database, you can see all outgoing communications from the USPTO, except for the application filing receipt. If the letter or email you received does not appear in the TSDR file, it likely did not come from the USPTO.

Further, the USPTO also provides examples of solicitations from entities that are not affiliated with the USPTO, and a list of known scam artists.

By taking the above steps, you can significantly reduce the risk of falling prey to a scam.

If you have received one of these fraudulent emails or paid money in response to an email scam, you can file a complaint with the Federal Trade Commission.

In the recent decision In re Hop Daddy LLC (Serial No. 88175921), the TTAB reexamined the contours of the doctrine of foreign equivalents.

The USPTO refused Hop Daddy’s application to register the mark SALTY BULL BREWING & Design (with “BREWING” disclaimed) for “Restaurant and bar services; Taproom services; Taproom services featuring beer brewed on premises,” based on a perceived likelihood of confusion with U.S. Trademark Registration No. 5150833 (the “‘833 Registration”) for the plain work mark TORO SALAO. The ‘833 Registration recites Class 043 services in the nature of “Restaurant services, including sit-down service of food and take-out restaurant services.”

In refusing registration of Hop Daddy’s mark, the examining attorney argued that the services at issue overlapped and that the earlier, registered mark TORO SALAO is Spanish for “salty bull.” Hop Daddy appealed the refusal of registration.

On appeal, the TTAB acknowledged substantial differences between the two marks in terms of appearance and sound, but noted, “[E]quivalency in meaning or connotation can outweigh the differences in marks.” [Decision, at p. 8]. Thus, the TTAB undertook a review of the examining attorney’s application of the doctrine of foreign equivalents.

At the outset, the TTAB noted that the doctrine is “not absolute” and “should be viewed merely as a guideline.” [Id., at pp. 8-9]. Further, the TTAB cautioned that examining attorneys should apply the doctrine “only when: (1) the relevant English translation is direct and literal and there is no contradictory evidence establishing another relevant meaning … and (2) “it is likely that the ordinary American purchaser would ‘stop and translate [the word] into its English equivalent.’” [Id.]. That said, the TTAB stated that the “ordinary American purchaser” includes “all American purchasers, including those proficient in a non-English who would ordinarily be expected to translate words into English.” [Id., at p. 9].

In support of the refusal of registration, the examining attorney submitted a webpage from an online language dictionary showing that the word “toro”, in Spanish, translates to “bull”, in English. Further, she provided a second webpage from the same website purportedly showing that the adjective “salao”, in Spanish, translates to “salty”, in English.  [Id., at p. 10].  The examining attorney’s  evidence relating to the term “salao”, however, consisted solely of two blog posts providing differing opinions on the possible meaning of “salao”, depending on the context in which the speaker used the word. [Id., at pp. 10-11]. Accordingly, the TTAB ultimately found that “there is no clear single translation and connotation provided for the term SALAO.” [Id., at p. 11].

In ruling the doctrine foreign doctrine equivalents in applicable, the TTAB stated:

Although “we have routinely applied the doctrine of foreign equivalents to Spanish language marks,” … the absence of any actual dictionary translation from a recognized source for this common language raises some doubt as to whether “salty” is a direct and literal translation of SALAO. Moreover, according to the Cambridge and Collins dictionaries, the direct translation of “salty” from English to Spanish and vice-versa is “salado.”

[Id., at pp. 11-12 (internal citations omitted) (emphasis added)].

Having ruled the doctrine of foreign equivalents inapplicable, the TTAB reversed the examining attorney’s refusal registration, finding that significant differences in overall appearance, sound, connotation, and commercial impression strongly supported a finding of no likelihood of confusion between the marks. [Id., at p. 12].

Earlier this month, the Trademark Trial & Appeal Board (TTAB) issued a  precedential ruling that the term “Gruyere” for cheese is generic.  In 2015, Swiss and French industry groups sought a certification mark for the term, arguing that the mark certifies that the cheese is from the Gruyere region of Switzerland and France.  The U.S. Dairy Export Council and other American groups filed notices of opposition, arguing that Gruyere is a generic term.  In its ruling, although noting that the term Gruyere derives from a geographic region in Switzerland, has been made in France for hundreds of years, and had been given a protected designation recognized by the European Union, the Board sided against the Swiss and French industry groups.

The Board applied the following genericness test: (1) what is the genus of goods or services at issue, and (2) does the relevant public understand the designation primarily to refer to that genus of goods or services?  Utilizing that test, and relying on various pieces of evidence, the Board determined that the genus of goods is cheese and that consumers of cheese understand Gruyere to refer to a category of cheese that is not limited to a specific geographic region but rather can come from anywhere.  As such, the Board found the term generic and ineligible for protection as a trademark.

The Board’s ruling means that Swiss and French industry groups will not be able to police use of the term Gruyere by American companies, absent a reversal on appeal or different outcome in district court. It could also have future implications on other similar food or beverage names involving a geographic region where the name has become genericized.

On August 5, 2020, the United States Court of Appeals for the Federal Circuit affirmed the TTAB’s decision to cancel a trademark registration for the mark HOLLYWOOD BEER as a discovery sanction for the registrant’s repeated, frivolous filings and failure to comply with discovery orders.

In August 2015, Hollywood Vodka, LLC (“HVL”) filed a petition to cancel Kris Kaszuba’s registration for the mark HOLLYWOOD BEER. Following a lengthy and somewhat tortured pleading stage, the parties moved on to discovery. Due to repeated filings that continually delayed the case, the TTAB issued an Order directing Kaszuba to seek leave from the Interlocutory Attorney before filing any future submissions. The TTAB did not issue a similar warning to HVL because HVL had just retained new counsel.

In November 2017, the TTAB granted, in part, HVL’s motion to compel discovery based on Kaszuba’s failure to respond to interrogatories and document requests. The TTAB ordered Kaszuba to respond to the discovery requests, but denied HVL’s request for sanctions. The TTAB, however, cautioned Kaszuba that the failure to respond to the discovery requests could result in “a renewed motion for sanctions, including entry of judgment as appropriate.” The TTAB further directed both parties to seek leave before filing any new motions.

Without explanation, Kaszuba chose not to respond to the discovery requests, instead filing a request for permission to seeking reconsideration of the TTAB’s November 2017 decision on HVL’s motion to compel. The TTAB denied Kaszuba’s request.

Despite the TTAB’s ruling, Kaszuba again failed to respond to the discovery requests, leading to another motion for sanctions and another motion for reconsideration—both of which the parties filed without leave. The TTAB denied the motions, noting that Kaszuba had “deliberately sought to evade and frustrate” HVL’s efforts to take discovery. The TTAB granted Kaszuba an additional extension of time to serve discovery responses and cautioned Kaszuba that, if he again failed to comply with the discovery order, the TTAB would enter judgment against him following motion by HVL.

Kaszuba, again, failed to serve the requested discovery responses and continued to file numerous submissions with the TTAB seeking reconsideration of the TTAB’s Orders, claiming that the TTAB had treated him unfairly. HVL ultimately filed a renewed motion for sanctions seeking entry of judgment or an order precluding Kaszuba from introducing evidence at trial.

The TTAB granted HVL’s motion, entering judgment against Kaszuba. In its Order, the TTAB acknowledged that the sanction was harsh, but held “no less drastic remedy would be effective and there is a strong showing of willful evasion.”

On appeal, Kaszuba argued that the TTAB based the cancellation of his mark on “erroneous and inadequate filings.” In affirming the TTAB’s decision, the Federal Circuit noted: “Kaszuba [did] not offer any explanation for his refusal to comply with the Board’s orders compelling discovery, despite the multiple extensions afforded to him. Nor [did] he provide any basis for us to conclude that the Board abused its discretion in imposing the sanction of default judgment.” The Federal Circuit also pointed to the Board’s repeated warnings that his failure to comply with the TTAB’s discovery orders could result in entry of a default judgment against Kaszuba and that the TTAB had granted Kaszuba multiple extensions of time to produce the requested discovery.

The Federal Circuit’s decision underscores the need to timely comply with discovery obligations and the specifics of TTAB Orders. Failure to do so, can result in the loss of trademark rights—a result that all parties and trademark practitioners obviously want to avoid. Yet another reminder that parties and counsel’s conduct before the TTAB should be above reproach.

The case is Kris Kaszuba, d/b/a Hollywood Group v. Andrei Iancu, Docket No. 2019-1547 (Fed. Cir. Aug. 5, 2020).

On July 28, 2020, the TTAB issued a precedential decision regarding an underutilized method for responding to summary judgment motions filed before the non-moving party has had a reasonable opportunity to obtain relevant discovery.

In Anand K. Chavakula v. Praise Broadcasting AKA Praise FM (Cancellation No. 92071482), Chavakula filed a petition to cancel Praise FM’s registration for the mark PRAISELIVE & Design based on an alleged likelihood of confusion with Chavakula’s purportedly earlier, unregistered PRAISELIVE mark.

Despite having repeatedly failed to respond to Praise FM’s discovery requests, Chavakula filed a motion for summary judgment prior to the close of discovery.  Rather than file a brief in opposition, Praise FM invoked Federal Rule of Civil Procedure 56(d), an underutilized method for obtaining discovery necessary to adequately respond to a motion for summary judgment.

Pursuant to Rule 56(d), if a party served with a motion for summary judgment shows, by affidavit or declaration, that, for specified reasons, it cannot present facts essential to justify its opposition, the court (or in this case, the TTAB) may (1) defer considering the motion or deny it, (2) allow the non-moving party time to obtain affidavits or declarations or to take discovery, or (3) issue any other appropriate order.  Fed. R. Civ. P. 56(d).  To obtain the protections afforded by Rule 56(d), the party must state specific reasons why it is unable, without discovery, to present facts necessary to oppose the motion for summary judgment.  Further, the requested discovery must be reasonably directed to obtaining facts essential to the party’s opposition to the motion for summary judgment.

Praise FM argued that it required discovery regarding Chavakula’s asserted priority, as well as certain likelihood of confusion factors, to adequately respond to the motion for summary judgment.  In support of its position, Praise FM directed the TTAB to numerous of its outstanding discovery requests that were specifically directed to these issues—including numerous requests that covered certain “undisputed” facts set forth in Chavakula’s summary judgment motion.

The TTAB granted Praise FM’s Rule 56(d) motion, stating that Chavakula’s summary judgment motion “places in issue any matters that are probative of [Chavakula’s] asserted priority, and likelihood of confusion.”  Further, while acknowledging that a party invoking Rule 56(d) need not have previously sought discovery, the TTAB stated that Praise FM had, in fact, timely sought discovery regarding these issues.  In light of these facts, the TTAB found that Praise FM had adequately explained “why it is unable to prepare a response [to the summary judgment motion] without discovery and confirm[ed] that what it needs is largely within [Chavakula’s] possession, custody, or control.”

In granting Praise FM’s motion, the TTAB noted that the purpose of Rule 56(d) is to protect non-movants “from being ‘railroaded’ by premature summary judgment motions.”  Moreover, the TTAB stated that, although it rigorously applies the requirements of Rule 56(d), and denies such motions when they are unsupported, the TTAB “will not penalize a Rule 56(d) movant whose motion is less than ideally supported when the motion arises from the actions of an uncooperative or recalcitrant adversary who gridlocks discovery.”

The TTAB granted Chavakula 20 days to respond to the outstanding discovery requests identified by Praise FM, without objection, and to serve all requested documents, labeled with bates numbers.  The TTAB further granted Praise FM 40 days from the date of Chavakula response deadline to file an opposition to the motions for summary judgment.

Practitioners often consider filing an early summary judgment motion to gain a strategic advantage or to bring a quick close to an opposition or cancellation proceeding.  The Chavakula decision, however, serves as a stark reminder that such efforts may prove futile if the moving party has been unreasonable or failed to adequately comply with its own discovery obligations.

Conversely, the TTAB’s ruling reminds non-moving parties facing premature summary judgment motions that there is an avenue available for obtaining the discovery necessary to respond to such motions—if the non-moving party can satisfy the stringent requirements of Rule 56(d).

On July 30, 2020, the U.S. Trademark Trial and Appeal Board (TTAB) issued a precedential decision holding, in effect, that the mark GUARANTEED RATE is too common for registration in the absence of a consumer survey showing acquired distinctiveness.

Applicant, Guaranteed Rate Inc., sought registration on the USPTO’s Principal Register of the plain word mark GUARANTEED RATE and a GUARANTEED RATE design mark for use with various mortgage financing and banking services. The examining attorney refused registration of the applied-for marks deeming the marks descriptive and finding Applicant’s claim of acquired distinctiveness insufficient. The examining attorney also refused registration of the subject marks on the ground that the term GUARANTEED RATE, as used in the marks, is incapable of functioning as a mark because it is merely informational.

In appealing the examining attorney’s refusal of registration, Applicant conceded that the phrase GUARANTEED RATE is merely descriptive of its services.  However, Applicant argued that it had presented the examining attorney with sufficient evidence to carry its burden of proving acquired distinctiveness for the subject marks.

Despite Applicant’s arguments, the TTAB affirmed the examining attorney’s refusal of registration, finding the term GUARANTEED RATE to be highly descriptivei.e., a “key aspect”—of Applicant’s services and concluding that Applicant had failed to satisfy the substantial burden of establishing acquired distinctiveness for the marks.

In determining whether the term GUARANTEED RATE has acquired distinctiveness, the TTAB considered the 6 factors set forth in In re Snowizard, Inc., 129 USPQ2d 1001, 1005 (TTAB 2018) (quoting Converse, Inc. v. ITC, 128 USPQ2d 1538, 1546 (Fed. Cir. 2018)):

[T]he considerations to be assessed in determining whether a mark has acquired secondary meaning can be described by the following six factors: (1) association of the [mark] with a particular source by actual purchasers (typically measured by customer surveys); (2) length, degree, and exclusivity of use; (3) amount and manner of advertising; (4) amount of sales and number of customers; (5) intentional copying; and (6) unsolicited media coverage of the product embodying the mark.

Applicant submitted evidence regarding the second, third, fourth, and sixth factors, but did not submit a consumer survey or other direct evidence. Specifically, Applicant submitted evidence showing, among other things, that:

    1. Applicant has used the phrase GUARANTEED RATE in connection with the recited mortgage services since at least as early as 2000;
    2. Applicant owns two registrations for GUARANTEED RATE AFFINITY for the same services, both of which issued with a claim of acquired distinctiveness for GUARANTEED RATE;
    3. Applicant spent more than $140 million promoting its services under the subject marks (primarily under the design mark);
    4. Applicant has received favorable media coverage; and
    5. Applicant is the fifth largest mortgage company in the United States.

The TTAB found Applicant’s advertising and sales figures “impressive.” However, the TTAB was “not convinced that this evidence demonstrates consumer recognition of this highly descriptive wording as indicating a single source because of the extensive evidence of third party use” of the term “guaranteed rate.” (emphasis added).  The TTAB further held that, even if Applicant’s use of GUARANTEED RATE had been substantially exclusive since 2000, this factor, alone, would not be dispositive of the acquired distinctiveness question.

With respect to Applicant’s existing registrations, the TTAB acknowledged that, “inappropriate cases,” ownership of registrations of the “same mark” may be accepted as prima facie evidence of distinctiveness “if the goods or services are sufficiently similar to the goods or services in the application.” The TTAB, however, recognized that, under applicable Trademark Rules, the examining attorney can require further evidence from Applicant and, given the high degree of descriptiveness at issue with respect to the applied-for marks, Applicant faces a “proportionally higher burden” in showing acquired distinctiveness.

Here, the TTAB found Applicant’s existing registrations insufficient to support a finding of acquired distinctiveness for the subject marks because (1) the term GUARANTEED RATE is highly descriptive, (2) the prior registrations are less than 5 years old and still susceptible to a third party’s challenge on grounds of mere descriptiveness, and (3) the public understands and uses the phrase “guaranteed rate” to describe a feature of Applicant’s mortgage lending services. More specifically, the TTAB held: “Consumers are likely to perceive the term ‘Guaranteed Rate’ when used in connection with mortgage lending services not as a trademark for one company, but rather as a term commonly used by many entities in the industry.”

The TTAB specifically recognized that applicable law does not require survey evidence to establish acquired distinctiveness.  However, the TTAB went on to conclude that  Applicant’s sales and advertising figures, length of use, and prior registrations failed to establish acquired distinctiveness in the absence of survey evidence showing consumer recognition of the applied-for marks. In reaching this conclusion, the TTAB noted, “[O]ur society is better served if … highly descriptive or generic marks remain available for use among competitors.”

The TTAB affirmed the refusal of registration for the plain word mark and afforded Applicant 30 days in which to submit a disclaimer of the words “guaranteed rate” for the design mark.

The TTAB’s decision will likely raise some uncertainty among practitioners regarding what constitutes a “highly descriptive” mark and when evidence of extensive sales, advertising expenditures, and length of exclusive use are insufficient to prove acquired distinctiveness such that consumer survey becomes necessary to achieve registration.

On Monday, G&M Realty, a real estate development company, asked the U.S. Supreme Court to reverse a $6.75 million damages award that the U.S. District Court for the Eastern District of New York entered in favor of a group of graffiti artists after G&M Realty, without warning, whitewashed the artists’ work, which had been displayed on a collection of dilapidated warehouses in New York City known as “5Pointz.”

The ongoing dispute between G&M Realty and the graffiti artists goes back several years.

In 2002, G&M Realty’s then-owner Jerry Wolkoff (who passed away just last week), recruited a group of graffiti artists to turn the 5Pointz warehouses into an exhibition space for artists. Numerous artists painted the buildings’ exterior walls and 5Pointz became a tourist attraction for visitors from around the world.

However, in 2013, Wolkoff sought municipal approval to demolish 5Pointz to clear a space for the construction of luxury apartments. After unsuccessfully seeking to have 5Pointz designated as a “cultural site,” several of the graffiti artists sued G&M Realty in the Eastern District of New York, under the Visual Artists Rights Act (“VARA”) to prevent destruction of the site.

VARA, a rarely litigated copyright law, provides that visual works of art meeting certain requirements afford their authors additional rights in the works, regardless of any subsequent physical ownership of the work itself or who holds the copyright to the work. The provision of VARA at issue in the 5Pointz case provides that authors of works of “recognized stature” may prohibit intentional or grossly negligent destruction of a work.

The Eastern District of New York denied the artists’ motion for a preliminary injunction. However, before the court could issue its opinion, Wolkoff directed workers to whitewash the artists’ works.

Near the conclusion of the trial, the parties agreed to waive a jury and the district court converted the jury to an advisory one. In February 2018, after the jury returned an advisory verdict in favor of the artists, the district court ruled that (1) 45 of the graffiti works had achieved “recognized stature” under VARA, (2) G&M Realty had violated VARA by destroying the works, and (3) G&M Realty’s violation was willful.

In concluding that the 5Pointz works had achieved protectable, “recognized stature,” the district court observed that the works had been recognized in, among other things, films, news articles, and social media. The district court also cited with approval expert testimony regarding the works’ artisanship and the reputation of the 5Pointz works in the art world.

The district court subsequently entered a $6.74 million award against G&M Realty.

In February 2020, the United States Court of Appeals for the Second Circuit affirmed the district court’s decision, defining a work of “recognized stature” as “one of high quality, status, or caliber that has been acknowledged as such by a relevant community.”

In its recent petition for Supreme Court review, G&M Realty argued that the part of VARA allegedly protecting the 5Pointz art from destruction is unconstitutionally vague, leaving property owners nationwide mired in uncertainty regarding the ownership of art. More specifically, G&M Realty maintained that the term “recognized stature,” as used in VARA, is undefined and unconstitutionally vague because it fails to provide adequate notice of what constitutes protected works, as well as what constitutes prohibited conduct.

G&M Realty further argued that VARA fails to identify “who must do the recognizing” with respect to the “stature” of the visual work. While the Second Circuit held that a “relevant community” should make this determination, G&M Realty argued that the Second Circuit failed to explain (1) how the standard applies “when members of these ‘communities’ do not agree;” (2) “how many members must ‘recognize’ a work’s stature; and (3) “whether the requisite recognition is qualitative, quantitative, or both.”

Litigants rarely invoke the protections of VARA and courts have rarely had the opportunity to interpret its provisions. If the Supreme Court accepts G&M Realty’s invitation to revisit VARA, the Court’s decision could have a significant impact on the frequency with which lawyers and litigants seek to invoke VARA in the future. Indeed, depending on the outcome of such a decision, a rarely utilized law could become a much more popular avenue for artists seeking relief.

The case is G&M Realty LP v. Castillo, U.S. Docket No. pending, Petition for Writ of Certiorari filed on July 20, 2020.

On July 16, 2020, the U.S. Court of Appeals for the Fourth Circuit issued a decision highlighting the critical need for litigants to preserve evidence once notified of a potential lawsuit, and the serious ramifications associated with failing to do so.  See QueTel Corp. v. Hisham Abbas, et al., No. 18-2334 (4th Cir. July 16, 2020).

In QueTel Corp. v. Hisham Abbas, et al., a software copyright infringement and trade secret case, QueTel alleged that an ex-employee had misappropriated software code and provided it to competitor, Defendant Finalcover LLC, for use with Finalcover’s CaseGuard software. Four months after receiving a cease-and-desist letter from QueTel, Defendants destroyed the computer used to develop the CaseGuard software. Further, despite receiving discovery requests seeking information regarding the continued existence or disposition of each computer used in Defendants’ business, Defendants failed to disclose the destruction of the computer until QueTel’s counsel directly confronted Defendants. Defendants also deleted a source control system and a significant amount of CaseGuard-related files from a replacement computer during discovery.

The U.S. District Court for the Eastern District of Virginia awarded QueTel a judgment and permanent injunction against Defendants as a sanction for Defendants’ spoliation of evidence. The district court ruled that QueTel’s cease-and-desist letter had placed Defendants on notice of a potential litigation and, therefore, Defendants had a duty to preserve the destroyed evidence. The district court further ruled that Defendants had destroyed the evidence in bad faith and, in doing so, had irreparably harmed QueTel. Finally, the district court concluded that an adverse inference jury instruction was insufficient to remedy the harm because Defendants’ spoliation had deprived QueTel of its ability to pursue its copyright infringement and trade secret misappropriation claims.

The Fourth Circuit affirmed the district court’s rulings in their entirety. While QueTel involved facts on which a court could base a finding of bad faith on the part of Defendants, the Fourth Circuit’s decision is a stark reminder that, even in cases of “innocent” spoliation, litigants can potentially face case-dispositive sanctions due to the failure to preserve evidence. To that end, litigants should make the preservation of potential evidence a primary objective in all disputes.

As a surprise to many, the Washington Redskins recently announced that it will be changing its 87-year old name.  This decision comes after recent events that sparked nationwide discussions about race and caused various corporate sponsors to exert pressure on the Redskins’ organization.  But it also comes after years of the Redskins fighting to protect what the USPTO argued were disparaging trademarks, which this blog closely followed in relation to both the Redskins and a rock band whose case made it to the Supreme Court. Ultimately, the disparaging trademark ban in the Lanham Act was found unconstitutional such that it could not bar the registration of an allegedly disparaging mark. Accordingly, the Redskins were able to possess trademarks over a name that many believed was disparaging to Native Americans.

Now the Redskins are facing a very different trademark battle.  According to the Washington Post, although the organization has a preferred name, it is being held up by trademark issues caused by those who have applied for trademarks on names they bet will be chosen. Although those applications may not ultimately hold water, the organization appears to be waiting to unveil its new name and logo until those issues are resolved. Right now, there is an impetus to do so quickly, as the team will need updated helmets, uniforms, signage, and promotional materials in advance of the first kick-off in just a few weeks.

Of course this decision will also have a significant advertising and marketing impact. The organization not only needs to make various changes for advertising purposes, but advertisers and sponsors themselves will want to change their messaging and certainly third-party merchandise stores will also be affected.  The advertising that exists behind professional sports teams is significant and far-reaching, so changing a team name/logo is no small feat.