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The General Data Protection Regulation, or GDPR, took effect May 25, 2018. As predicted, the GDPR has complicated access to WHOIS information (commonly used to look up the contact information for website domains for, among other things, stopping others from infringing IP rights) and given ICANN (the corporation that manages WHOIS data) a headache.

ICANN (Internet Corporation for Assigned Names and Numbers) continues to struggle to identify a proposal that bridges the gap between the requirements of the GDPR and access to WHOIS information. On the day the GDPR took effect, ICANN passed a Temporary Specification, which attempted to facilitate GDPR compliance while also preserving parts of the WHOIS system of domain name registration data. This temporary guideline states the registrar and registry operator must provide reasonable access to personal registration data to third parties for: (1) legitimate interests, except where those interests are overridden by the interests or fundamental rights and freedoms of the registrants or (2) when the specified request is deemed lawful by the European Data Protection Board (EDPB), a court having jurisdiction, or applicable legislation or regulation.

First, these temporary specifications have not prevented the brand enforcement problems I previously discussed. For example, some European domain name service registrars have decided to no longer collect WHOIS information. Furthermore, Brian Winterfeldt has reported that a California-based registrar has declined a data access request related to a specific enforcement effort of intellectual property rights and that other registrars are responding to such requests on a “case-by-case basis with no transparent or predictable criteria.” More alarming is the report that at least one global company has estimated its ability to enforce trademark rights against infringing domains may drop 24%.

Second, the EDPB still has problems with ICANN’s proposal. On July 5, 2018, the EDPB urged ICANN to develop new legal justifications for why it asks for the data that makes up the WHOIS database and provided further guidance in developing a GDPR-compliant WHOIS model. ICANN appears to be taking the EDPB’s guidance to heart and is hopeful they can create a GDPR-compliant-model that satisfies their purpose of providing WHOIS data to those who need it.

Unfortunately, only time will tell if a GDPR-compliant WHOIS database will emerge. In the meantime, it has become more difficult to determine who is in charge of websites infringing on intellectual property rights making brand enforcement more challenging.

There are over 330 million domain names supporting over 1.8 billion websites having a unique hostname on the internet right now. But who owns each of these? There are many reasons one may want to identify the owner or operator of a particular domain or website. In addition to law enforcement and cyber security, owners of IP need to be able to enforce their rights against illegal use of their IP or bad faith domain name registration and use. For example, if your trademark is being infringed by its use on a particular website, you would want to be able to identify the owner, send a cease and desist, and/or sue. Somewhat similar to registering a home or motor vehicle, domains or websites are typically registered and information useful to identifying the individual responsible for the domain or website has, historically, been publically available.

WHOIS is a system established in the 1980s, as the modern internet was emerging. It is used to look up domain registrations in databases that store the registered users or assignees of, e.g., a domain name or IP address. Currently, the name, mailing address, phone number, and administrative and technical contacts of those owning or administering a domain name must be made publicly available through WHOIS, pursuant to the Internet Corporation for Assigned Names and Numbers, or ICANN. WHOIS is not an independent database, but rather relies on third-party accredited entities to manage data and registration. According to ICANN, it is “committed to implementing measures to maintain timely, unrestricted and public access to accurate and complete WHOIS information, subject to applicable laws.” Id.

Enter the General Data Protection Regulation, or GDPR, which is a European Union data protection regulation that will apply to any company that transacts with EU citizens, regardless of the location of the business. The GDPR requires any business that collects any personal data to request explicit permission from the subject before using that data. Personal data is defined as any information that can be used to directly or indirectly identify that person, e.g., a name, photo, email, computer IP address, etc. Under the GDPR, enterprises must limit access to personal data to only authorized individuals that specifically require access to that data. The penalties for violations are significant – up to 20 million Euros or more – and there are no exceptions for enterprise size or scope. Id. The GDPR goes into effect May 25, 2018.

ICANN has been struggling to identify a proposal that bridges the gap between the requirements of the GDPR and the access to WHOIS information. The proposals, thus far, do not do enough to assuage the fears of the third party entities that manage WHOIS data that their actions of publishing information to WHOIS are sufficient and justifiable. On the other hand, brand owners and other WHOIS users are concerned that the proposal takes an unjustifiably conservative approach. Thus, ICANN expects a WHOIS blackout period starting May 25, 2018. Going forward, there may be significantly less publicly available information to conduct enforcement investigations, send cease and desist letters, or prepare and file suit.

Online brand enforcement is about to become much more difficult if not, in some cases, nearly impossible.

McDonald’s Twitter account on March 8, 2018

Today is International Women’s Day. As a way to celebrate, McDonald’s has flipped their iconic golden arches upside-down. The arches, one of the most recognizable logos, have been physically flipped in one California location but can be seen on McDonald’s social media channels. Putting aside the effort to flip the California sign, by simply rotating its logo on social media McDonald’s was able, whether intended or not, to accomplish several marketing and advertising objectives. First, the move helped bring further awareness to an inspiring campaign; a great way to enhance brand identity and perception. Second, it created plenty of buzz and free publicity with news outlets in the U.S. and around the world picking up the story. Third, while the change was significant enough for people to take notice, it was not significant enough to cause any brand confusion. That is, consumers could still quickly identify the source.

This move serves as a great reminder that companies can use their brand identity, including their logos and other trademarks, in creative new ways to accomplish a variety of goals. Today, McDonald’s has helped to make sure that International Women’s Day and its objectives are a part of our global conversation. I’m loving it and I’m sure McDonald’s is too.

A trademark may give a business the right to stop others from using these marks to sell similar goods or services or using marks that may be confusingly similar. However, federal trademark protection is out of reach for hundreds of businesses across the country.

The recent announcement that the DOJ was rescinding the Cole Memo reminded us of the friction that exists between Federal and State laws, at least when it comes to Marijuana. The Cole Memo was seen, by some, to provide a sort of “safe harbor” for businesses in the 29 states and the District of Columbia where marijuana has been legalized in some form. Regardless of the Cole Memo, marijuana remains illegal under Federal law and therefore the USPTO will not register marijuana-related marks.

Consequently, an established marijuana dispensary might not be able to stop a competitor from setting up a shop with the same or similar brand name. Similarly, a grower who wins an award for a newly developed strain might not be able to stop others from selling marijuana under the same name. Inevitably, consumers will be confused. Such confusion may result in loss of goodwill or brand image associated with the name or trademark as well as lost sales.

In order to address this problem, some businesses have sought to obtain federal trademarks on non-marijuana-related goods and services. For example, businesses can still trademark their name or logo for use with clothing, accessories, and other merchandise. The more closely related the good or service is to marijuana sales or use the more likely the future protection if such activity becomes legal at the federal level. This is due to a doctrine known as the zone of natural expansion, which allows a company to use a trademark in a new geographical area or product line when the use in the newly expanded area is a natural extension of the prior use. That is, marijuana sales may naturally extend from the sales of rolling papers or vaporizers. However, such merchandise runs the risk of being considered illegal drug paraphernalia and thus similarly banned from trademark protection. Conversely, a business may obtain a trademark related to the sales of t-shirts or other merchandise but marijuana sales may not naturally extend from such products. Also, in order to maintain the trademark, the business must continually use the mark and have actual sales of such products. If such products are not popular, this could result in the loss of the trademark. Unfortunately, even with these steps, there may not be much protection from others using the trademark strictly for marijuana sales.

Another option is to register the mark for state registration. This may provide protection within a particular state but may not be effective throughout the country. For example, if a business registers a trademark in Oregon, it may not afford protection from the use of the same mark in Washington, California, or Nevada – three bordering states where recreational use is legal. A business could expand protection to those states, but this would require additional registrations and actual use of the mark in each state protection was sought.

The rescinding of the Cole Memo indicates this rift between Federal and State law is not going anywhere soon. As more and more states continue to legalize marijuana and the industry continues to grow, conflicts will arise. It is possible the marijuana industry will be as non-confrontational as its users are known to be, but my bet is the effectiveness of these strategies will soon be tested.

The attendance of a multi-day concert/festival in the desert seems to be a right of passage for millennials with events popping up all over the country. However, are you permitted to utilize the goodwill associated with those events to create your own event? The U.S. District Court for the Central District of California (Court) held that a company could not do so in granting a preliminary injunction in Coachella Music Festival, LLC and Goldenvoice, LLC v. Robert Trevor Simms.

Robert Trevor Simms (Simms) purported to create a film festival known as FILMCHELLA. Prior to filing for the injunction, Coachella Music Festival, LLC and Goldenvoice, LLC (collectively, Coachella) sent numerous cease and desist letters to Simms demanding that Simms change its name with no success. As such, Coachella was forced to file for a preliminary injunction to prevent Simms from using the terms, “Filmchella”, “Coachella for Movies” and “Coachella Film Festival” due to alleged trademark infringement. Coachella argued that Simms’ use of these terms will cause consumer confusion, dilution of its marks and other irreparable harm.

Generally, a claimant must fulfill the four-pronged test to allow a court to grant a preliminary injunction in its favor. Specifically, the moving party must establish that: (1) it has a likelihood of success on the merits of the underlying case, (2) it is likely to suffer irreparable harm if no action is taken, (3) the balance of inequities shifts in the favor of the moving party, and (4) an injunction is in the public interest. Here, the Court took a slightly different approach and used a sliding scale approach.

In granting the preliminary injunction, the Court noted that even if a moving party cannot fulfill the first prong of the test, a Court may decide that the moving party has sustained its burden if the moving party can show the balance of hardships shifts sharply in its favor of the moving party and the remaining two prongs of the test also weigh in its favor.

In examining whether Coachella had sustained its burden to obtain a preliminary injunction, the Court first examined the merits of the trademark infringement claim. Here, the Court determined that a protectable interest existed through Coachella’s trademark registrations for COACHELLA and CHELLA. Second, the Court held that the likelihood of confusion inquiry weighed in Coachella’s favor because both events are designed to be artistic, multi-day festivals; Coachella’s marks are widely known and strong; and using the suffix CHELLA is likely to confuse consumers as to the affiliation with Coachella. However, Coachella failed to demonstrate that it is likely to succeed on the merits of the underlying claim because the two events are focused on different mediums of entertainment; the marks look and sound different; no actual confusion has been demonstrated; Coachella failed to submit concrete evidence that the two events compete with one another; and Simms’ lacked the intent to confuse consumers. As such, Coachella is required to demonstrate that it fulfills the “shifts sharply” rule in its favor.

In this case, the Court held that Coachella sustained its burden. First, Simms’ event occurred prior to the issuance of this order so the potential injury to Simms is greatly decreased. Further, the issuance of this order does not prohibit Simms’ from conducting other film festivals under a different name. Additionally, Simms’ continued use of the potentially infringing mark is likely to cause serious, irreparable harm to Coachella with respect to potential damage to its reputation and dilution of its trademarks. Lastly, it is in the public interest to grant this injunction to prevent potential customer confusion. As such, the Court held that Coachella sustained its burden and granted the preliminary injunction.

What this decision demonstrates is a court’s willingness to grant a preliminary injunction despite a moving party failing to show a likelihood of success on the merits of the underlying claim. This is a big win for large companies seeking to protect their brands. It’s a hit to the little guys trying to make a name for themselves. Time will tell how far future courts will take this ruling, and what facts will support a determination that the balance of hardships “shifts sharply” in favor of the moving party.

Customer feedback is a two-way street.  On the one hand, positive customers reviews can inspire trust in potential new customers who might otherwise be apprehensive about purchasing products or services from an unfamiliar company.  Negative reviews, on the other hand, typically have the opposite effect.  As such, businesses may be tempted to stifle or “bury” negative customer feedback in order to preserve their reputation.  Businesses that engage in such complaint suppression tactics, however, run the risk attracting the ire of federal enforcement agencies.

For example, just last week, a federal court ruled that the Federal Trade Commission (“FTC”) is likely to prevail in its case against World Patent Marketing, Inc. (“WPM”), a business that has marketed and sold research, patenting, and invention-promotion services to consumers since 2014.  According to the FTC, WPM intimidated and threatened customers to prevent them from complaining and to compel them to retract complaints, often through cease and desist letters from WPM’s lawyers frivolously insisting that such conduct constitutes unlawful defamation or even criminal extortion.

The court agreed with the FTC that WPM’s tactics likely violate Section 5(a) of the FTC Act, which proscribes any unfair act or practice that “is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.”  The court explained that complaint-suppression tactics like those employed by WPM cause substantial consumer injury “because they serve to limit the flow of truthful information” about the quality of a business’s services to prospective consumers, making it “nearly impossible for consumers to make informed decisions.”

The court also found that there are no countervailing benefits to such tactics, as “existing customers do not benefit from having their complaints suppressed and prospective consumers do not benefit from being denied access to material information.”  To the contrary, suppressing customer complaints in this manner permitted WPM  “to hinder competition and harm legitimate competitors in the marketplace.”

This case highlights a need for businesses to take special care when responding to customer complaints and negative online reviews.  However damaging a bad Yelp review may be for your business, getting sued by the federal government is certainly worse.

Trademark professionals often warn our clients to be skeptical when they receive official seeming bills or notices offering pricey and unneeded trademark related services. These scams have been around for as long as I have been practicing trademark law. There are periodic attempts to combat the practice by our community with warnings (we blogged about the issue here), information (the USPTO maintains a blacklist and encourages trademark owners to email a copy of the notice and the envelope it came in to TMFeedback@uspto.gov in order to keep the list up-to-date) and lawsuits.

Whack-a-Mole Game at a CarnivalThis summer has seen another flurry of activity against the moles.

A few weeks ago the United States Patent and Trademark Office held a roundtable on fraudulent solicitations:

Numerous owners of U.S. trademark registrations, as well as applicants for such registrations, have been targeted by unscrupulous parties who extract their names from … USPTO databases and offer them services, often holding themselves out to be acting on behalf of the USPTO. In many instances, the services are never performed, or are performed in an incorrect manner that puts the registration at risk of cancellation. In addition, inflated fees may be charged for the alleged services.

Leason Ellis, a 25-attorney IP boutique firm based outside New York City, filed a lawsuit in 2012 against a scammer called USA Trademark Enterprises, which was eventually resolved by a consent decree. The firm sued again in 2013, this time against a renewal scam called Patent and Trademark Agency LLC. Last month the firm reportedly filed a new lawsuit against the similarly-named Patent and Trademark Association Inc.

If you are victimized by one of these con artists, we encourage you to take action both for yourself and for the good of the community. If you have incurred actual damages, talk to a lawyer about how to obtain reimbursement and whether you might be a good candidate for a class action lawsuit on behalf of other victims. Although your losses may not be enough to justify incurring legal fees, a successful class action lawsuit reimburses class representatives for their reasonable costs and covers the attorney fees as well. Think about it…

Registering your brand name as a trademark domestically or internationally can be a long, confusing process involving obscure governmental agencies requiring various fees at seemingly random intervals. Some of these demands are legitimate (International Bureau of the World Intellectual Property Organization notification that payment of a 2nd part fee is due in Swiss francs): but many others are NOT (WPAT s.r.o. invoice for 2738$ “on or before”, 2798$ “after”).

These solicitations arrive because the process of registering a trademark creates a public record. This means that anyone who infringes a registered trademark is not allowed to complain they did not know about the trademark but it also lets potential scam artists know that you have a trademark you care enough about to spend money registering.

But be careful not to be misled by the flurry of official looking invoices! Like this one:

Don't pay this invoice!
Don’t pay this invoice!

The United States Patent and Trademark Office warns against such scams, listing a number of examples (the above image was taken from their website).

If you have hired a trademark attorney to register your brand name for you, you need never pay any of the invoices yourself. Trademark attorneys will pay the legitimate ones on your behalf. In the United States and in most other countries, legitimate communications will be directed only to the trademark attorney and not to the trademark owner. When in doubt, just forward the communication to your trademark attorney.

If you are trying to negotiate the process yourself or just want to be able to spot wrongdoers, here is our list of red flags:

  1. Who dd it come from? Scammers like to use slight deviations from the correct names of the legitimate agencies. For example instead of “The United States Patent and Trademark Office”, the notice will come from entities such as the “Trademark and Patent Office” or the “United States Trademark Registration Office”.
  2. Where dd it come from? The real United States Patent and Trademark Office is located in Alexandria, Virginia. Beware of solicitations directing funds be sent to an address in New York or Philadelphia Pennsylvania. And, especially not Slovakia!
  3. Read the fine print. Some of the communications helpfully state that they are not legitimate (in a tiny difficult-to-read font, embedded in the middle of a long paragraph with otherwise unalarming factual information): “THIS PUBLICATION IS AN ELECTIVE SERVICE WHICH NEITHER SUBSTITUTE THE REGISTRATION NOR PROLONGS THE VALIDITY OF THIS TRADEMARK OR PATENT WITH U.S.P.T.O.”
  4. Watch the grammar! Typos, grammar and spelling errors are common in these types of scams. See the example in our red flag number 3…
  5. Check the website address. The real United States Patent and Trademark Office operates from the address USPTO.gov. Addresses such as patenttrademarkoffice.org, on the other hand, take you to a website that explains, in the “About Us” tab: “Headquartered in New York City, the Patent Trademark Office is the nation’s premier Trademark and Patent renewal service.” (ha!). Likewise, World Intellectual Property Organization (WIPO) operates from the address WIPO.int. Be suspicious of any address ending in a .com, .org or .us.
 Don’t fall prey to these confusing communications!

 

 

It makes complete sense that a brand owner shouldn’t be able to lie to the Trademark Office when it tried to register its brand name as a trademark. Let there be consequences for making false statements! But it is not always that easy to avoid the fraud cow pie.

For example, when you file an application to register a trademark you are supposed to list the goods and/or services associated with that trademark. Cow pie alert!

In 2002, a medical device company stepped in the cow pie when it filed a required declaration stating it had used its brand name on “neurological stents and catheters” but it had in fact only been using the name on catheters. Penalty: its trademark registration was cancelled, even though the company attempted to come clean by amending it to delete the offending language (“stents”).

For the next six or seven years, fraud was all the rage.  Litigants brought successful cancellation actions — or threatened to bring them — against all sorts of trademark registrations, triumphantly arguing fraud had been committed against the Trademark Office. Suddenly there were cow pies everywhere.

In 2009, a higher court tried to clean the field up, emphatically stating that proof of intent to deceive is required to establish fraud against the Trademark Office.

You would think that would put an end to the mess, but no. Fraud is still alive and well as a potential cow pie. The Trademark Office is willing to, and often has, concluded that some sneaky strategic behavior by brand owners can amount to an intent to deceive. And litigants are still trying to prove that trademark applicants intended to deceive the Trademark Office.

Just this month, a trademark registrant escaped stepping into the pie (but no doubt had to spend a pretty penny doing so).

A car dealership using its brand name in southeastern Massachusetts accused a Maine car dealership of fraud when it failed to disclose the Massachusetts outfit’s use of the same name in its application to federally register the trademark.

A federal registration entitles its owner to the exclusive right to use the registered name in the United States. Because of this, applicants are required to swear they believe “no one else, to the best of his or her knowledge and belief, has the right to use” a confusingly similar name. The board reviewing the case decided that though the Maine car dealership was wrong (the board kindly termed it “mistaken”) when it made this statement, there wasn’t enough evidence to show it was actually fraudulent. Phew!

Fraud continues to be an issue that brand owners (and we lawyers) must keep an eye on.