Chances are you have seen rumblings of creative, even (dare I say) funny cease-and-desist letters, particularly those aimed towards trademark or copyright infringement, popping up in the news. You know the ones: an actor playing a town crier pops in on a local brewery to read a cease-and-desist letter in ‘ye olde English; or a popular fast food joint sends a pun-filled letter to a local brewery demanding they cease from using the restaurant’s trademarked image. These kinds of cease-and-desist letters, especially in the copyright and trademark context, are becoming all the more prevalent.

But is this the best way to demand an entity stop infringing on your trademark? As anything goes, such a strategy can have very real pros, and very real cons.

First, a little background into what exactly cease-and-desist letters are, and the purposes they serve. Generally, a cease-and-desist letter is a notice to the entity receiving it that the activity they are participating in may be illegal, or more particularly in the case of copyright and trademark infringement, that their activity infringes. Although a cease-and-desist letter has no immediate legal effect, the entity receiving the letter may not use the excuse that it did not know the sending party believed its behavior was illegal, as the letter put it on notice of its potentially illegal activity. Notably for the sake of copyright and trademark infringement, if the entity persists in its illegal behavior after receiving the letter, such notice may aid in proving intent, willfulness, and bad faith.

Although cease-and-desist letters are often thought of as sternly worded letters from stuffy attorneys, creative and humorous cease-and-desist letters can have real benefits for a company. As alluded to above, creative cease-and-desist letters have received especially beneficial PR as of late. As companies become more and more of an open book in this age of social media and online news, crafting creative ways to assert a company’s legal rights helps show that the company is amiable, fair, and all in all fun. Not to mention, such exposure can turn in to free and hopefully beneficial press.

However, creative cease-and-desist letters must be drafted the right way, as they also carry credible risk. For one, if the creativeness is taken over the top, the recipient of the letter may not take it seriously. Ultimately, cease-and-desist letters are meant to be taken seriously and cause the recipient to stop its infringing action—if the recipient thinks the letter is simply a joke, it may continue on engaging in its infringing behavior. In that same vein, if the humor placed in the letter misses the mark, or muddles the issue, the recipient may have an argument that it was in fact not on notice of its allegedly infringing behavior. Finally, straightforward cease-and-desist letters are often quiet and discrete. By issuing a humorous letter, a company is taking a risk and opening itself up to potential public scrutiny. However, if a company is able to strike that perfect balance between informative and humorous, it is potentially a worthwhile risk to take.

All in all, creative and humorous cease-and-desist letters, if done right, are largely beneficial in the copyright and trademark infringement context. If you decide to send such a letter, make sure to do it right, and of course try to have the wittiest attorney you know write the letter for you (although some say witty attorneys are few and far between).

Earlier this month, the Canadian Intellectual Property Office (“CIPO”) published a new set of Trademark Regulations and announced that amendments to Canada’s trademark laws will go into effect on June 17, 2019.  The CIPO’s website describes the regulatory initiative as “accession to trademark treaties and modernization of Canada’s trademark regime.”  As summarized by the Canadian Trademark Blog, the amendments include:

  • Canada’s accession to the Madrid Protocol;
  • eliminating filing bases and use of a mark as a prerequisite;
  • introducing a requirement of grouping goods and services into Nice classes;
  • introducing a shortened 10 year term for registration and renewal; and
  • introducing new distinctiveness requirements for registration.

The Canadian Trade-marks Act is available here.  The new Trademark Regulations are available here.

The National Labor Relations Board (“NLRB”) is seeking comment through mid-December on its proposed rule establishing a joint employer standard, as set forth in 83 FR 46681.  One of our Fox Rothschild partners, Tami McKnew, submitted the following comment to the NLRB, which speaks to the implications of the joint employer rule on trademark licensors/licensees:

“The proposed rule specifically acknowledges the effects of the 2015 shift in joint employer analysis evident in the Board’s decision in Browning-Ferris Industries, 362 NLRB No. 186 (“Browning-Ferris”). Following the Browning-Ferris decision, franchisors, temporary employment firms, contract employers and others whose businesses necessitate some degree of interaction with and arguable control over non-employed workers found themselves as joint employers, despite decades of precedent otherwise. The effect on such businesses was immediate and profound.

With this proposed rulemaking the NLRB more clearly defines the conditions under which joint employment may be evident, and largely restores the pre-Browning-Ferris analytical framework. This is entirely appropriate, given the decades of business relationships and industries whose very structure incorporated and depended upon the prior established analytical framework. As recognized in the Notice, the proposed rule also reflects the pre-Browning-Ferris well-established and long-standing joint employment analytical framework.

However, that the Notice fails to adequately address, by specific acknowledgement or by example, the concerns of licensors and licensees of intellectual property, in particular patent, trademark or service mark licensors. Owners of such intellectual property rights must police and protect those rights; failure to do so may render such rights unenforceable. In legal jurisprudence, a patent owner’s policing obligations have been whittled down, especially given the elimination of a laches defense in infringement actions, SGA Hygiene Products Aktiebolag v. First Quality Baby Products, 137 S.Ct. 954 (2017), but affirmative action must be undertaken by the licensor to protect against infringement. The policing obligation remains for trademark owners, however. 15 U.S.C. §1064(5)(A).

Patent and trademark owners may license rights to practice patented technology or use trademarks or service marks. Such licenses require the licensee to abide by standards and/or to adhere to particular practices. Certain types of patents, for instance, process or method patents, may dictate an entire process and all the operations required to perform the method or process; the licensee has little or no choice as to the operations governed by the patent license.

Similarly, trademark or service mark licenses may dictate extensive quality control standards, processes and procedures. The most obvious example is the central role that trademark and service mark licensing have in a franchise system. But such licenses are not limited to the franchise industry. A dealer or distributor may sell products bearing the trademarks of one or more licensors; it may service products pursuant to licenses from different licensors; and it may lease products under license from yet a third licensor. The scenario is not unlikely. A tire dealer may be licensed to sell multiple brands; it may be licensed to provide recapping services, as directed in the license, by a different licensor; it may lease products under the service marks of yet a third licensor. Each of the licenses will include mandated procedures and operations over which the dealer has no control.

In each of these cases, control over significant operations in the licensee’s business is dictated by the licensor. Will the efforts of the licensors to police and enforce the licensed rights expose them to the risk of being considered the joint employer of the licensee’s employees whose employment is to perform such operations? And for a licensee who holds licenses from multiple licensors, as in the distribution example above, are multiple licensors potential joint employers? In each situation, the licensor can be said to offer “direct and immediate” control over the licensee’s employees, in that the licensor dictates the operations that form the central part of their employment. The ability of an owner of intellectual property to reap the potential financial benefits of a patent or trademark/service mark is ephemeral at best if enforcing those rights exposes one to the risk of becoming a joint employer of the licensee’s employees. More importantly in the context of the NLRB’s proposed rulemaking, it makes little sense to include such licensors at the bargaining table. Absent specific recognition in the proposed rule of the unique position of intellectual property licensors and licensees, the application of the joint employer analysis is unclear.

I respectfully suggest amending the proposed rule to include language which provides that the status of joint employment is inappropriate based solely on a licensor’s policing or enforcement of its patent, trademark or service mark requirements and standards. Intellectual property owners should not be dissuaded from enforcing their rights to control, police and enforce their patent, trademark or service mark rights.”

Credit: Tami’s comment was originally posted on Fox Rothschild’s Franchise Law Update blog.

 

As I previously blogged about, there is a circuit split as to 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.  A case arising from the First Circuit, Mission Product Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC, involves this precise question and has made its way to the United States Supreme Court.

At the end of last week, following the submission of briefs from the parties and others, the Supreme Court decided to grant certiorari in the case.  According to SCOTUS blog, the issue presented is: “Whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s “rejection” of a license agreement—which “constitutes a breach of such contract,” 11 U.S.C. § 365(g)—terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.”

Not surprisingly, the Supreme Court did not provide any reasoning or insight into its decision to grant cert.  Nor did it directly respond to the parties’ positions regarding a recent order in Tempnology’s underlying bankruptcy case, which Tempnology argued (and Mission Product Holdings disagreed) may have a bearing on the Court’s decision to do so.

 

 

Over the past year, including in my blog post last month, we’ve traced the progression of the Coachella/Filmchella lawsuit, which was scheduled for trial earlier this month.  Approximately a week before trial, the parties settled the case and the Court entered a stipulated order as a result.  The order contains a permanent injunction prohibiting the Filmchella defendants from using the Filmchella marks, the Coachella marks, and any confusingly similar marks and requiring them to transfer certain domain names.  Like many trademark cases, this interesting and contested one did not make it to a jury.

The Coachella/Filmchella trademark infringement case, which we have previously covered herehere, and here, is headed to trial in California this October.  Last week, the federal judge assigned to the case denied Coachella’s partial summary judgment motion and ruled that a jury, not the judge, must ultimately decide whether the Filmchella founder committed trademark infringement by way of his movie festival.  The standard the judge had to apply was whether a reasonable juror could find that the two festivals are not similar enough to cause confusion, which is exactly what the judge determined.

As a result, the case will head to trial and will be decided by jury verdict.  Until then, the court’s preliminary injunction in favor of Coachella, which currently prohibits the use of Filmchella, remains in effect.

 

Just when we thought the unconstitutionality of the ban on disparaging and scandalous trademarks had been resolved, the United States Patent and Trademark Office (“USPTO”) is shaking things up.  As a reminder, and as previously covered on this blog here and here, there were two important rulings in 2017 related to the trademark ban set forth in section 2(a) of the Lanham Act.  First, in June 2017, the United States Supreme Court ruled that the disparaging trademark ban is unconstitutional under the First Amendment’s free speech clause and later, in December 2017, the Federal Circuit found that the Supreme Court’s ruling also applies to the ban on immoral and scandalous trademarks.

Refusing to accept the latter ruling, the USPTO has now petitioned the Supreme Court to review the Federal Circuit’s decision and to essentially reinstate the ban on scandalous trademarks.  Although the unconstitutionality of the disparaging trademark ban is settled law from the Supreme Court, the USPTO views the scandalous trademark ban as different and as not violative of the First Amendment.  Whether the Supreme Court will hear the case and will agree with the USPTO remains to be seen.

 

66567075 - ketogenic diet with nutrition diagram written on a note.Yesterday the Trademark Trial and Appeal Board (“TTAB”) affirmed the refusal by the United States Patent and Trademark Office (“USPTO”) to allow a Florida company to register trademarks containing the word “Keto.”  In its ruling, the TTAB explained that the term “keto” is descriptive for ketogenic dietary products, even when combined with the other words making up the company’s trademark registrations.  With the popularity in ketogenic dieting and products, this may serve as an informative ruling going forward.

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.

When a trademark owner/licensor files for bankruptcy, there is an open question as to whether 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.  When it comes to the licensing of patents and copyrights, the question is already closed: Congress created an exception in U.S. bankruptcy law that allows licensees of such intellectual property to retain their rights even after a licensing agreement has been rejected by the intellectual property owner who has filed for bankruptcy.  However, whether purposely or not, Congress did not mention trademarks in the exception, thereby leading to the current question.

The U.S. Supreme Court is currently considering whether to grant certiorari in a case that would answer this question and resolve a circuit-split on the issue.  That case is Mission Products Holdings, Inc. v. Tempnology, LLC N/K/A Old Cold LLC, which was decided by the First Circuit early this year in favor of the trademark licensor, Tempnology.  The First Circuit held that Tempnology’s rejection of its licensing agreement with Mission Products Holdings caused the latter to lose its trademark rights under the parties’ agreement in light of Tempnology’s bankruptcy.  Now Mission Products Holdings, Inc., the trademark licensee, has filed a petition seeking review by the Supreme Court and a ruling that a trademark licensee’s rights to use a trademark cannot be revoked upon the trademark owner/licensor filing for bankruptcy.

The International Trademark Association (INTA) has already filed an amicus brief asking that the Supreme Court take the case and resolve the dispute in favor of trademark licensees, who make significant investments in their businesses using the licensed marks.  According to INTA’s brief, trademarks “are the most widely used form of registered intellectual property” and a ruling in favor of trademark licensees “enhances the value of trademark licenses and promotes the stability of the trademark system.”  Tempnology’s response to Mission Product Holdings’ petition is due in early September, and the case is set for conference in late September, after which the justices may decide to hear the case (or not).