An interesting trademark story recently unfolded involving an NBA draft pick and a team’s new star player.  In this year’s NBA draft, the New Orleans Pelicans drafted college standout Zion Williamson with the first overall pick. This pick was almost unanimously a no brainer: Zion Williamson is one of the most anticipated basketball players to come out of college in years.  With this anticipation, both Williamson and the Pelicans saw a marketing opportunity, and in particular an opportunity centered around what Williamson sees as his own catch phrase: “Let’s Dance.”  With that in mind, the Pelicans filed an application with the Trademark Office the day after the NBA draft for that very phrase.  Shortly thereafter, Williamson also filed a trademark application for “Let’s Dance.”

Obviously, this string of events would have the potential to lead to some real issues: possible litigation, royalty and licensing fights, and not to mention an NBA team alienating its young superstar. With these thoughts in mind, the Pelicans wisely decided to withdraw their trademark claim by filing an “express abandonment” of their request. Now, the path is (relatively) clear for one of the NBA’s youngest stars to trademark his favorite phrase, and stamp “Let’s Dance” on clothing, beverages, and everything in between.

Earlier this month, the United States Patent & Trademark Office’s (USPTO) finalized and announced a rule requiring foreign trademark applicants to be represented by a United States licensed attorney when applying for a US trademark registration .  The rule covers individuals with a permanent legal residence outside the US or its territories and entities with their principal place of business outside the US or its territories.  There is no change to the rule for domestic trademark applicants, who are still not required to be represented by an attorney.

According to the USPTO, the rule is intended to (1) increase USPTO customer compliance with US trademark law and USPTO regulations, (2) improve the accuracy of trademark submissions to the USPTO, and (3) safeguard the identity of the US trademark register.  In explaining the rule, the USPTO articulated, “We discovered an increasing number of foreign trademark applicants, registrants, and parties are filing inaccurate and possibly fraudulent submissions with the USPTO that do not comply with U.S. trademark law or the USPTO’s rules. Often, these submissions are made with the assistance of foreign individuals or entities not authorized to represent applicants at the USPTO.”  It appears the USPTO’s action came as a result of the increasing number of questionable, inaccurate, or potentially fraudulent Chinese applications specifically.

The rule becomes effective August 3, 2019.

It’s old news by now, but the Supreme Court ruled earlier this week that the immoral and scandalous  trademark ban set forth in Section 2(a) of the Lanham Act is unconstitutional under the First Amendment because it disfavors certain ideas and thus discriminates based on viewpoint.  Practically, this means that the United States Patent and Trademark Office (USPTO) can no longer refuse to register such marks.

This is the second case the Supreme Court has decided on two related provisions of Section 2(a) of the Lanham Act — the disparaging trademark ban and the immoral/scandalous trademark ban.  Almost exactly two years ago, the Supreme Court ruled in a case involving the rock band The Slants (which also impacted the Redskins NFL team, a case the Supreme Court did not hear) that the disparaging trademark ban was unconstitutional.  Mirroring that ruling, the Supreme Court has now reached the same conclusion on the immoral/scandalous trademark ban in a case involving the streetwear brand Fuct.  The USPTO, which argued in both cases in favor of maintaining the bans, hoped the Supreme Court would view the two provisions differently, but it did not (more specifically, the majority did not).

Interestingly, the justices appear to have left open an avenue for future legislation more narrowly tailored to a ban that may be upheld — such as a ban on lewd, sexually explicit, and profane marks.  Attorneys around the country are trying to predict what Congress may do in response, but nothing is clear or immediate yet.

This blog has followed these cases for years.  For a full history on The Slants case, see here, here, here, here.  For a full history on the Redskins case, see here and here.  For a full history on the Fuct case, see here, here, and here.

Since 1995, the Federal Trade Commission (FTC) and the Department of Justice (DOJ) have maintained intellectual property licensing guidelines, most recently updated in 2017.  Those guidelines, titled “Antitrust Guidelines for the Licensing of Intellectual Property,” discuss how the FTC and DOJ evaluate licensing for patents, copyrights, trade secrets, and know-how and how they analyze potential antitrust violations. The agencies explain that the guidelines are designed to provide information to businesses and consumers on how they enforce intellectual property licensing and are intended to both protect consumers and promote competition and innovation.

The guidelines embody three general principles:  “(a) for the purpose of antitrust analysis, the Agencies apply the same analysis to conduct involving intellectual property as to conduct involving other forms of property, taking into account the specific characteristics of a particular property right; (b) the Agencies do not presume that intellectual property creates market power in the antitrust context; and (c) the Agencies recognize that intellectual property licensing allows firms to combine complementary factors of production and is generally procompetitive.”

Ultimately, the agencies hope the guidelines will aid in predicting whether the agencies would challenge a particular practice as anticompetitive. To achieve that goal, the guidelines provide a thorough analysis of various antitrust considerations—e.g. types of affected markets, horizontal and vertical relationships, and the rule of reason—and include a number of illustrative examples. The guidelines identify a few arrangements that are likely to receive scrutiny: horizontal restraints, minimum resale price maintenance, tying arrangements, exclusive dealing, cross-licensing and pooling arrangements, grantbacks, and certain transfers of intellectual property rights. The guidelines also explain the “safety zone” where the agencies will not challenge a restraint if it is not facially anticompetitive and the licensing parties account for no more than 20% of each relevant, significantly affected market.

Notably absent in the list of intellectual property rights discussed in the guidelines is trademarks. The guidelines explain, “Although the same general antitrust principles that apply to other forms of intellectual property apply to trademarks as well, these Guidelines deal with technology transfer and innovation-related issues that typically arise with respect to patents, copyrights, trade secrets, and know-how agreements, rather than with product-differentiation issues that typically arise with respect to trademarks.”

When undertaking their evaluation of intellectual property licensing, the FTC and DOJ focus on an actual licensing practice and its effects, not on the formal terms of a licensing agreement. Their approach is to analyze whether a particular practice is likely to have anticompetitive effects and whether such practice is reasonably necessary to achieve competitive benefits outweighing those effects.

Those interested or concerned in how the FTC and DOJ may view certain intellectual property licensing practices can review the guidelines at any time on the FTC’s website.

Earlier this month, the Federal Trade Commission (FTC) and the U.S. Food and Drug Administration (FDA) issued warning letters to four companies using social media influencers to post on their behalf.  According to the FTC and the FDA, the social media influencers’ posts were in violation of advertising and labeling laws due to misbranding and failure to disclose material information.  The letters highlight the importance of companies following all advertising laws when using social media influencers.

The Federal Food, Drug, and Cosmetic Act (FD&C Act) prohibits the misbranding of a product through false or misleading labeling.  The FTC Act prohibits unfair or deceptive acts or practices in or affecting commerce.  Thus, social media advertisements that mislead, are unfair, or fail to disclose material health or safety risks violate these acts.  What should companies relying on social media influencers do?  Educate influencers on disclosure obligations and monitor all advertisements.  Companies are responsible for ensuring all advertising, including advertisements promoted through social media, is in compliance with all legal obligations.

The FTC also provided additional guidance to companies relying on social media influencers.  According to the FTC’s Guides Concerning Use of Endorsements and Testimonials in Advertising, 16 C.F.R. § 255.5 (2018) (Endorsement Guides), social media influencers must state if there is a “material connection” between an endorser and the marketer of a product.  Connections that might affect the weight or credibility that consumers give the endorsement should be clearly and conspicuously disclosed, unless the connection is already clear from the context of the communication containing the endorsement.  As the FTC explained:

If your company has a material connection to someone endorsing your products, that relationship should be clearly and conspicuously disclosed in the endorsements, unless the relationship is otherwise apparent. To be both “clear” and “conspicuous,” the disclosure should use unambiguous language and stand out. Consumers should be able to notice the disclosure easily, and not have to look for it. For example, consumers viewing posts in their Instagram streams on mobile devices typically see only the first two lines of a longer post unless they click “more,” and many consumers may not click “more.” Therefore, an endorser should disclose any material connection above the “more” button. In addition, where there are multiple tags, hashtags, or links, readers may just skip over them, especially where they appear at the end of a long post.

If your company has a written social media policy that addresses the disclosure of material connections by endorsers, you may want to evaluate how it applies to the posts identified in this letter and to posts by other endorsers of your products. If your company does not have such a policy, you may want to consider implementing one that provides appropriate guidance to your endorsers. You may also want to review your company’s social media marketing to ensure that posts contain necessary disclosures and they are clear and conspicuous.

“These letters are a reminder that companies who use social media influencers to promote their products must comply with all applicable advertising requirements,” said Andrew Smith, Director of the FTC’s Bureau of Consumer Protection.

The Federal Trade Commission (FTC), which enforces federal consumer protection and antitrust laws with the goal of promoting competition while protecting consumers from fraud, deception, and unfair business practices, has enforcement or administrative responsibility over dozens of laws, including the Consumer Review Fairness Act (CRFA). The CRFA is designed to protect consumers’ ability to share their honest opinions about a business or its goods/services, and it thus prohibits form contract terms that disallow or penalize consumers from freely posting negative reviews, including on social media. This week, the FTC announced that it issued complaints and proposed settlements against two rental home companies that had included illegal non-disparagement provisions in their form customer contracts. Like with its other recent CRFA enforcement actions, the FTC will require future compliance as well as notification to the customers who were subject to the prohibited terms.

38772807 - little girl hand touch touch pad notebookAs summarized by the FTC, it is illegal for a company to prohibit or punish customers from leaving negative reviews or to give up their intellectual property rights in their reviews but it is lawful for that same company to prohibit or remove a review that:

  1. contains confidential or private information – for example, a person’s financial, medical, or personnel file information or a company’s trade secrets;
  2. is libelous, harassing, abusive, obscene, vulgar, sexually explicit, or is inappropriate with respect to race, gender, sexuality, ethnicity, or other intrinsic characteristic;
  3. is unrelated to the company’s products or services; or
  4. is clearly false or misleading.

If a company violates the CRFA, it can be subject to fines and/or court orders. The FTC’s advice?  “The wisest policy: Let people speak honestly about your products and their experience with your company.”

 

On May 19, 2019, HBO’s hit series “Game of Thrones” aired its final episode. Although many fans are surely sad to see the popular series come to a close, us trademark fans have much “Game of Thrones” related intrigue to look forward to, as its trademarks live on.

Game of Thrones began back in 2011 and lasted for eight seasons.  Throughout those eight seasons, HBO sought to protect its brand by applying for numerous trademarks. HBO of course quickly applied for registration of the trademark “Game of Thrones,”  and additionally obtained trademarks in phrases made popular by the show such as “Winter is Coming.” However, possessing the foresight of a “Three-Eyed Raven” and the speed of a “White Walker,” HBO has been quick to trademark lesser known phrases from the series such as “Dracarys,” “Valar Dohaeris,” and, of course, the above mentioned phrases “Three-Eyed Raven” and “White Walker.”

With the series ending, one might think that HBO has less incentive to register and protect its trademarks. That thought would likely be mistaken. Game of Thrones has enjoyed an incredible level of popularity, averaging just under 12 million viewers per episode in the United States alone in its final season. With this kind of popularity comes extensive opportunity in the form of merchandising and even spin-offs. By registering trademarks in popular terms and phrases used in the show, HBO helped ensure that third-parties who do not have rights in HBO’s trademarks cannot profit directly off of the show’s success. As such, HBO will likely see its trademarking efforts pay off substantially, especially as it pertains to merchandising.

In its tenure, Game of Thrones representatives have protected their trademarks with careful precision. In doing so, HBO has likely been careful in toeing the line between protecting its rights in merchandise and other licensing, and avoiding the untenable consequence of stamping out fan engagement.  Who knows, if unauthorized third parties increasingly use Game of Thrones trademarks, maybe fun and interesting Game of Thrones cease and desist letters will start popping up in the news.  Although “[The Show] Has Ended,” the trademark fun lives on.

Earlier this month, the United States Patent and Trademark Office (“USPTO”) issued Examination Guide 1-19, intended to “clarify the procedure for examining marks for cannabis and cannabis-derived goods and for services involving cannabis and cannabis production following the 2018 Farm Bill.”

In the guide, the USPTO reminds us that use of a trademark in commerce must be lawful under federal law in order for the mark to be federally registered, regardless of legality under state law.  What better/more timely example of the continued dichotomy between federal and state law than cannabis.

According to the USPTO, it has historically refused registration for marks covering cannabis-derived goods/cannabis-related services and will continue to do so for trademark applications pre-dating the signing of the 2018 Farm Bill into law on December 20, 2018 (with the option for amendment).  The Bill, which amended the Agricultural Marketing Act of 1946 to remove “hemp” from the Controlled Substance Act’s definition of “marijuana,” means that cannabis plants and derivatives such as cannabidiol (“CBD”) under a certain THC percentage are no longer considered controlled substances.  Thus, for new trademark registrations, the USPTO may stop refusing registration for marks covering goods derived from hemp (defined as containing less than 0.3% THC on a dry-weight basis) or services involving the cultivation/production of hemp (which has its own requirements).

The USPTO’s guide also informs us that not all hemp-derived goods are now considered lawful, that the Food & Drug Administration still has the authority to regulate cannabis products under the Federal Food Drug and Cosmetic Act (“FDCA”), and that “registration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the FDCA, even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.”

 

Earlier this month, the Federal Circuit ruled that trademark rulings from the International Trade Commission (“ITC”) do not have preclusive effect.  This means that ITC actions do not bar district court cases, that ITC trademark rulings are not binding on district courts, and that parties are not estopped from raising arguments they’ve raised in front of the ITC to a district court.

Above The Fold - The Fox Rothschild Advertising Law BlogThe ITC is an independent quasi-judicial federal agency that, pursuant to Section 337 of the Administrative Procedure Act, has the authority to conduct investigations, hold trial proceedings, and make determinations on intellectual property disputes.  According to the ITC’s website, “Section 337 investigations conducted by the U.S. International Trade Commission most often involve claims regarding intellectual property rights, including allegations of patent infringement and trademark infringement by imported goods. Both utility and design patents, as well as registered and common law trademarks, may be asserted in these investigations. Other forms of unfair competition involving imported products, such as infringement of registered copyrights, mask works or boat hull designs, misappropriation of trade secrets or trade dress, passing off, and false advertising, may also be asserted. Additionally, antitrust claims relating to imported goods may be asserted.”

The ITC may grant remedies in the form of exclusion orders directing Customs to stop the import of infringing products and cease and desist orders directed to importers and others.  ITC cases generally move more quickly than district court cases and monetary damages are not involved.

 

This week, the U.S. Supreme Court issued a decision in the Product Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC case previously blogged about here and here.  The issue in that case was whether, when a trademark owner/licensor files for bankruptcy, the licensee of the trademark can legally continue use of the mark or whether the trademark owner/licensor can reject its obligations under the licensing agreement and effectively prohibit the licensee’s continued use of the mark.  The Supreme Court decided 8-1 in favor of the former — i.e. that a bankrupt trademark owner/licensor cannot revoke a trademark licensee’s right to use the already-licensed mark.  This reverses what the First Circuit held and is more consistent with the exception Congress previously created for the licensing of patents and copyrights, where licensees of such intellectual property retain their rights even after a licensing agreement has been rejected by a bankrupt intellectual property owner.

In Monday’s opinion written by Justice Kagan, the Supreme Court found that the protections granted to bankrupt companies by Section 365 of the Bankruptcy Code do not extend this far and that a rejection of licensing obligations by a bankrupt trademark owner/licensor would breach the contract but would not constitute a rescission of the contract.  Justice Sotomayor concurred to point out that non-bankruptcy law could still impact individual cases and that other forms of intellectual property are still governed by different rules.  Justice Gorsuch dissented on the basis of the license agreement at issue having already expired.  Regardless of what happens next in this specific case, the Supreme Court’s ruling has implications for other cases across the country and an impact on future licensing disputes.