Trademarks

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In what may be the final installment of a series of blog posts related to the Lanham Act’s disparaging trademark ban and its effect on the Washington Redskins’ trademarks, the Fourth Circuit finally issued a decision in the Redskins’ case.  When the United States Supreme Court ruled last June in a case involving the Slants rock band that section 2(a) of the Lanham Act was unconstitutional, the fate of the Washington Redskins’ trademarks became clear.  But it took until yesterday for the Fourth Circuit to officially weigh in.

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In yesterday’s simple one-page decision, the Fourth Circuit vacated the lower court’s ruling (which affirmed the U.S. Patent and Trademark Office’s earlier order) that six of the team’s trademarks violated section 2(a) of the Lanham Act.  In other words, as expected, the Fourth Circuit issued an order in line with the Supreme Court’s decision that the disparaging trademark ban is unconstitutional and cannot bar the registration of an allegedly disparaging trademark.  As part of its ruling, the Fourth Circuit dispensed with oral argument and remanded the case to the lower court for further proceedings consistent with the Supreme Court’s decision.  Given that the remand is merely a formality at this point, the Washington Redskins may now finally feel closure on the issue (though in true procedural fashion, the Fourth Circuit’s Notice of Judgment does confirm that there is 90 days to file a petition for certiorari to the Supreme Court).

To trace this blog’s history of this interesting trademark issue, check out blog posts here, here, here, here, here, here, here, here.

At most public universities, student organizations are permitted to license various university trademarks to designate the organization’s involvement with the university and the organization’s status as a registered student organization.  My colleague Chris Beall previously wrote blog posts here and here about a dispute stemming from this practice that involved the First Amendment, Iowa State University, two of its students, and their chapter of the National Organization for the Reform of Marijuana Laws (“NORML”).  As a reminder, the case involved Iowa State University’s refusal to continue to license university trademarks to NORML because the organization was using the university’s mark on pro-marijuana t-shirts.  The federal district court, and later the Eighth Circuit (twice), ruled in favor of the students, finding that the First Amendment trumps normal trademark licensing principles for public universities and that Iowa State University violated the students’ First Amendment rights.

According to the Des Moines Register last week, the State of Iowa agreed to pay $150,000 to the two students as emotional distress damages and $193,000 in legal bills to their two law firms.  But apparently this agreement only resolves attorneys’ fees related to the Eighth Circuit aspect of the parties’ dispute, not the district court work for which the students plan to request an additional amount in attorneys’ fees from the court.

As my colleague previously wrote, this case stands as an important reminder that trademark licensing principles are different for governmental organizations because of the overarching constraints of the First Amendment.

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.

Continuing my ongoing coverage of the Lanham Act’s disparaging trademark ban, the Federal Circuit ruled today that the U.S. Supreme Court’s June 2017 ruling striking down the ban on disparaging trademarks also applies to the ban on “immoral” and “scandalous” trademarks set forth in section 2(a) of the Lanham Act.  Applying First Amendment free speech rights, the Federal Circuit overturned the U.S. Patent and Trademark Office’s refusal to allow a trademark applicant to register the term “Fuct” for his apparel brand.  Despite the Supreme Court’s ruling regarding disparaging trademarks, the USPTO had apparently continued to take the position that it would not register immoral or scandalous trademarks.  The Federal Circuit has now rejected that position, finding that the ban on immoral and scandalous trademarks is unconstitutional just like the ban on disparaging trademarks.

Following up on my blog post last month related to the Coachella/Filmchella trademark infringement case pending in the Central District of California, the court held this week that the organizer of the Filmchella music festival cannot use the name Filmchilla now either.  The court had previously issued a preliminary injunction in favor of the organizers of the Coachella music festival enjoining the defendant’s use of Filmchella, but following the parties’ flurry of motions, the court extended its ruling to enjoin the use of Filmchilla as well.  The court was apparently persuaded that Filmchella and Filmchilla sound very similar to each other and are both similar enough to Coachella to warrant injunctive relief.

The Coachella/Filmchella trademark infringement case continues to heat up.  Last month, my colleague Megan Center wrote a blog post about the preliminary injunction granted by the Central District of California to the organizers of the Coachella music festival related to another party’s use of Filmchella to refer to a film festival.  Interestingly, the plaintiff attempted to seek expedited proceedings but the Filmchella festival had already occurred by the time of the court’s order.

Subsequently, the parties have filed a flurry of motions.  The plaintiffs first filed an ex parte motion asking the court to hold the defendant in contempt for violating the preliminary injunction order, but the court found no basis for emergency relief and instead required the parties to argue their positions by regular motion.  The plaintiffs then filed a new motion for an order to show cause as to why the defendant should not be held in contempt, and both parties moved for reconsideration and clarification of the court’s preliminary injunction order.

The plaintiffs contend that the defendant has continued to use terms prohibited by the order, that there is new evidence supporting the issuance of the injunction, and that the court should clarify the scope of the injunction, including deeming it both retrospective and prospective.  The defendant argues that the court’s order is unclear and insufficiently detailed, that the court should clarify the time to comply and the acts to be restrained (including whether use of a related term, Filmchilla, is prohibited), and that there is new evidence disproving damage to the plaintiffs.  These motions will be heard by the court in the next few weeks, but for now, it’s safe to say that there is no end in sight for this ongoing trademark battle.

Earlier this week, Under Armour filed a declaratory judgment action in Maryland federal court against Battle Fashions Inc. and Kelsey Battle seeking an order that Under Armour is not infringing any of Battle Fashion’s trademark rights.  In its complaint, Under Armour describes multiple communications the defendants sent to Under Armour demanding that it cease and desist all uses of the phrases “I Can Do All Things” and “I Can. I Will.” as infringing upon the defendants’ “ICAN” trademark, or otherwise be subject to legal action and an injunction.  In addition, Under Armour alleges that the defendants sent communications to its advertising agency, NBA player Steph Curry, and his agent asserting that Under Armour is infringing the defendants’ “ICAN” trademark.  That trademark was obtained by Kelsey Battle doing business as Battle Fashions in 2006.

According to its complaint, Under Armour uses the phrase “I Can Do All Things” on a line of apparel associated with Steph Curry as a reference to his favorite bible verse: “I can do all things through Christ who strengthens me.”  Likewise, Under Armour uses the phrase “I Can. I Will” on various of its apparel products.  Under Armour asserts that, prior to initiating this action, it told the defendants that it “was using ‘I Can’ as part of formative and descriptive phrases, such as ‘I Can Do All Things,’ that the use was a fair use, that numerous third parties use similar descriptive phrases that begin with ‘I Can,’ and that confusion was unlikely.”  But Under Armour asserts that it did not receive any concession from the defendants and thus it decided to initiate a declaratory judgment action.

Under the Declaratory Judgment Act, 28 U.S.C. § 2201-2202, a party may affirmatory file a lawsuit seeking a declaration or order regarding its legal rights.  In this context, as a result of Battle Fashion’s demands, Under Armour seeks an order that it is not infringing, has not infringed, and is not liable for any infringement of the defendants’ trademark rights under either the federal Lanham Act or any state trademark or unfair competition laws.  In its complaint, Under Armour explains that, without an order from the court, it believes it cannot know with certainty whether it is exposing itself to liability through its uses of the phrases “I Can Do All Things” and “I Can. I Will.” on its products.  The defendants have not yet answered the complaint.

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.

In direct response to the U.S. Supreme Court’s decision striking down the constitutionality of section 2(a) of the Lanham Act, which as enacted barred the registration of disparaging trademarks, there is reason to believe that offensive trademark registration applications are on the rise.

According to Reuters, there were at least nine new applications filed with the U.S. Patent and Trademark Office (“PTO”) between the June 19, 2017 Supreme Court ruling and the end of July 2017.  Such marks include versions of the N-word, a swastika symbol, and other offensive terms/phrases.  For example, Snowflake Enterprises LLC has filed multiple trademark applications for offensive marks, examples of which can be found on the PTO’s website (a version of the N-word can be seen here and a swastika symbol can be seen here). Prior to the Supreme Court’s ruling, it’s likely that the PTO would have outright rejected such filings as they had with similar filings in the past.  But the PTO is now under new guidance—that trademark applicants are protected by the free speech rights guaranteed under the First Amendment to the United States Constitution.  According to Reuters, the PTO told its staff a few days after the June 19 Supreme Court ruling that they could no longer use section 2(a) of the Lanham Act to reject a trademark application for a disparaging trademark.

The full effect of the June 19, 2017 Supreme Court ruling remains to be seen, but the evidence to date suggests that applications for offensive trademarks will increase and that the PTO will be forced to approve them if the marks otherwise qualify for trademark registration.  However, if the applicant does not establish actual use of the offensive mark or does not use the offensive mark as a source identifier, the PTO can still reject the application.  Thus, with the exception of the once-applied disparaging trademark ban, the PTO will continue to apply the same standards to trademark applications as it has in the past.

Prior Above the Fold blog posts explaining the Supreme Court’s June 19, 2017 ruling in more detail can be found here and here.

Rashanda Bruce writes:

Social media megaphone cartoonIn a growing world of technology, companies are employing social media platforms to attract new customers and grow their online presence.  #Hashtags and @Handles – made popular by Twitter – have proven to be effective sources for growing business.  Hashtags label words, making it easier for customers to find themed information or specific content.  Handles create unique identifiers, making it easier for companies to create and market their brand.

Celebrities also rely on hashtags and handles to market their brands.  With followers ranging in the thousands to the millions, celebrities use these social media tools to maintain and boost engagement with fans.  Additionally, celebrities rely on social media when they enter into partnerships with companies.  The partnerships typically require celebrities to reference companies on social media platforms.  These references increase a company’s awareness and provide brand validation for celebrity followers.  Recognizing this trend, some companies have started to reference celebrities via hashtags and handles – even where the celebrity and company do not have a partnership.  Although a profitable marketing strategy, companies should understand how this strategy could lead to a celebrity claiming a right of publicity violation.

The right of publicity prevents the unauthorized commercial use of an individual’s name, likeness, or other recognizable aspects of one’s persona.  Although not governed by a federal statute, the right of publicity is actionable and protected by state common or statutory law.  The right of publicity is a property right, thereby prohibiting others from using an individual’s identity for a commercial gain.  Companies who use social media for marketing purposes should take precautionary steps to avoid possible violations.

For example, companies desiring to use a celebrity’s name for marketing purposes should consult with the celebrity.  Best practice is to obtain consent from the celebrity in writing with clearly defined language and detailed rights regarding name use on social media platforms.  Where a celebrity is unavailable or unresponsive, companies should think about whether it is better to simply refrain from using the celebrity’s name.  Companies should also develop policies for employees who use social media on behalf of the company.  Establishing protocol will help alleviate concerns and risk.

Social media marketing using celebrity names can be profitable for companies when appropriately used.  However, this same marketing tool can also prove to be burdensome and costly if celebrities feel their publicity rights have been violated.  In a growing world of technology, companies need to exercise caution and good judgment when making these marketing decisions.

Rashanda Bruce is a summer associate, based in the firm’s Minneapolis office.