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.

Last month, the United States Patent and Trademark Office’s (USPTO) began an initiative to expedite the review of, and waive the fees related to, trademark applications for marks used to identify qualifying Covid-19 products and services.  According to the USPTO’s website, this initiative launched “in view of the critical need to develop and help speed to market medical products and services to combat the COVID-19 virus.”

Only applications for marks covering these medical products and services are eligible for this expedited procedure:

  • Pharmaceutical products or medical devices such as diagnostic tests, ventilators, and personal protective equipment, including surgical masks, face shields, gowns, and gloves, that prevent, diagnose, treat, or cure COVID-19 and are subject to approval by the United States Food and Drug Administration.
  • Medical services or medical research services for the prevention, diagnosis, treatment of, or cure for COVID-19.

However, the application may also include additional related goods or services.

It is unclear how long this program will be in effect, but the USPTO has indicated that it will monitor the resource/workload needs associated with it, its effectiveness, and any public feedback. If the USPTO decides to modify or end the program, it will first notify the public.

For a more detailed explanation of this program and its benefits, see the USPTO’s website and an alert written by two of our colleagues.

This week, the United States Supreme Court issued an important decision in U.S. Patent and Trademark Office v. Booking.com affirming that “Booking.com” is a protectable trademark.  This case stemmed from the United States Patent and Trademark Office’s (“PTO”) rejection of Booking.com’s attempt to register its domain name as a service mark for hotel registration services because it deemed the mark generic.  The PTO argued that adding a designation to a generic term does not confer trademark protection and that registering a “generic.com” domain name like “Booking.com” would cause an anticompetitive effect that the trademark statute is designed to protect against.  Both the district court and the Fourth Circuit Court of Appeals held that, although “booking” itself is a generic term that cannot be afforded trademark protection, “Booking.com” was a descriptive term that had acquired secondary meaning (i.e. it had become associated in the minds of consumers with a single source) and was thus protectable as a trademark.

The United States Supreme Court agreed.  In an 8-1 decision written by Justice Ginsburg, the Supreme Court focused on how consumers view the term, which was evidenced in the district court by Booking.com’s survey evidence that nearly 75% of consumers found Booking.com to be a brand name, rather than a generic term.  Following a relatively brief analysis, Justice Ginsberg stated simply, “[B]ecause ‘Booking.com’ is not a generic name to consumers, it is not generic.”

This is a significant holding, not only for one business that has been waiting for years to register its trademark but for many other businesses that use a “generic.com” domain name or that may be affected by this decision.

Our colleague, Melissa Scott, recently wrote an alert on an opinion from the Ninth Circuit Court of Appeals about access to attorneys’ fees in copyright infringement cases.  The underlying copyright dispute in Doc’s Dream, LLC, v. Dolores Press, Inc., et al. related to the video recordings of a deceased minister’s sermons, but the significant holding relates to the fee-shifting provision in the Copyright Act.

34126235 - copyrightThe district court held that attorneys’ fees were not available to the accused infringer for the declaratory judgment claim on which it was granted summary judgment because the claim did not require construction of the Copyright Act.  The Ninth Circuit reversed, holding that the Copyright Act expressly allows for a discretionary award of attorney’s fees in “any civil action under this title” and that the request for declaratory relief raised multiple aspects of, and invoked, the Copyright Act.  Melissa notes two takeaways from the Ninth Circuit’s holdings:

  • The fee-shifting provision of Section 505 applies to “any civil action under” the Copyright Act.
  • Any action that “turns on the existence of a valid copyright and whether that copyright has been infringed” sufficiently invokes the Copyright Act as to allow for the discretionary award of attorneys’ fees.

For a full summary of the case and holdings, read Melissa’s alert here.

An update from Kaitie Eke, one of the firm’s summer associates:

A copyright infringement lawsuit filed by four major publishing companies against the Internet Archive has prompted early termination of the site’s National Emergency Library, a project that made books available electronically during the COVID-19 pandemic. Although the project’s conclusion may render some of the publishers’ complaints moot, the suit also takes aim at the ongoing operation of the Open Library and larger Controlled Digital Lending (“CDL”) practices.

The Internet Archive is a self-described “non-profit library of millions of free books, movies, software, music, websites, and more.” As part of its CDL practices and large-scale digitization efforts, the organization takes photos of book pages, which are assembled into the digital book files it makes available to patrons free of charge. Unlike traditional ebooks, which are editions of books specially prepared for digital consumption, the files offered by the Internet Archive are scanned copies of physical books.

The Internet Archive believes its practices do not violate copyright law, relying on a theory of fair use. According to the site, it utilizes controls designed to mimic traditional library book lending, such as limiting the lending of digital versions of a given book to one reader at a time and limiting the lending period to two weeks unless checked out again.

On March 24, 2020, however, spurred by pandemic-related library closures and citing an effort “to serve the nation’s displaced learners,” the site announced that it had launched the National Emergency Library to suspend waitlists for books in its library through the later or June 30 or the end of the U.S. national emergency. The publishers’ lawsuit, filed in the United States District Court for the Southern District of New York on June 1, 2020, led the Internet Archive to end the National Emergency Library two weeks early, on June 16, 2020, and to return to its traditional CDL practices.

The National Emergency Library is now closed. Nevertheless, the legality of the Internet Archive’s scanning and distribution of books under copyright law remains an open and debated question.

An update from Kevin Sandoval, one of the firm’s summer associates:

What started as a copyright infringement claim against the California high school that inspired the television series “Glee” has developed into a conflict that could have ramifications for copyright holders and potential copyright infringers everywhere. In 2016, Tresóna Multimedia, LLC filed a suit against Burbank high school’s vocal music director Brett Carroll, the Burbank high school vocal music boosters club, and individual boosters club parents claiming copyright infringement for the use and performance of four songs, including “Magic,” a song originally performed by Olivia Newton-John in a 1980 musical movie. Tresóna claimed at least partial interest in all four songs.

The Central District of California (“District Court”) held that Tresóna did not have standing to bring copyright infringement claims for three of the songs because it received its interests in those songs from individual co-owners of copyright and thus it held only non-exclusive rights in those songs. As to the fourth song, the District Court acknowledged that Tresóna had rights in “Magic,” but held that Carroll was protected from suit because of his qualified immunity as a public employee and that the other defendants could not be held liable for direct or secondary copyright infringement.

34126235 - copyrightOn appeal, in a decision dated March 24, 2020, the Court of Appeals for the Ninth Circuit affirmed the District Court’s holding that Tresóna did not have standing to bring a copyright infringement suit for the three songs, but determined that the merits of Carroll’s fair use defense in regard to “Magic” needed to be evaluated because the question of fair use was applicable to a broader music and teaching community. The Ninth Circuit used the four fair use factors outlined in 17 U.S.C. § 107, and ultimately held the defense of fair use applied to “Magic,” most notably because the use was limited and transformative and was for nonprofit educational purposes.

Further, although the District Court had declined to award Carroll’s attorney’s fees to Tresóna, the Ninth Circuit reversed because it determined that Tresóna pursued groundless claims against a school teacher, boosters club, and parent volunteers. According to the Ninth Circuit, Tresóna was an “overzealous monopolist” that sought to “stamp out the very creativity that the [Copyright] Act seeks to ignite.” Despite the Court’s harsh holding, Tresóna is pushing forward because it sees a larger issue at play than fair use.

On May 21, 2020, Tresóna filed a motion to stay so that it can petition for writ of certiorari to the United States Supreme Court, which it says is due later this summer. In its motion, which the Ninth Circuit just granted on June 26, 2020, Tresóna states that the issue to be presented to the Supreme Court concerns the Ninth’s Circuit’s reading of the word “exclusive” in the Copyright Act, and it argues that a third-party who has received exclusive rights or an assignment of its rights from a copyright co-owner should be able to stand in the shoes of the copyright owner on an infringement claim. If Tresóna ends up in front of the Supreme Court on this issue, it will be an interesting case to watch as it could impact whether copyright infringers could be more susceptible to suit from any number of copyright co-owners or assignees.

An update from Jennifer Madaras, one of the firm’s summer associates:

A California federal judge has ruled that two animal rescue groups can proceed with unfair competition claims against numerous defendants accused of misusing the word “rescues” when advertising dogs they purchased from breeders and puppy mills.

The plaintiffs asserted claims under both state and federal law. The plaintiffs’ federal claim arises under the Lanham Act, which prohibits trademark infringement and false advertising, among other things.  The plaintiffs, PetConnect Rescue Inc. and Lucky Pup Dog Rescue.Com, allege the defendants’ use of an infringing mark has harmed the plaintiffs’ reputation, caused customer confusion, and required plaintiffs to divert resources to correct the confusion.

The plaintiffs’ state claim arises under California’s Unfair Competition Law, which prohibits “any unlawful, unfair or fraudulent business act or practice” and any “unfair, deceptive, untrue, or misleading advertising. . . .” The plaintiffs’ claim is based upon California’s Health and Safety Code, which prevents pet stores from selling a live dog, cat, or rabbit unless the animal comes from a public animal control agency or shelter/rescue group, and which defines a “rescue group” as a non-profit that does not obtain the animals from breeders or brokers for compensation. The plaintiffs allege that the defendants committed unlawful business practices by selling dogs bred for profit in California that they obtained from out-of-state breeders and brokers, and that the defendants fraudulently advertised those dogs as “rescues.”

The defendants moved to dismiss the claims, arguing the plaintiffs failed to establish standing and provide facts to support their claim. Judge Huff of the Southern District of California declined to dismiss the claims because he found the plaintiffs had sufficiently pled that the defendants sold dogs bred for profit and misrepresented those dogs as “rescues.” He further found standing because the plaintiff “clearly uses their mark to accompany the services it provides.”

Judge Huff also held that the summary judgment phase is better suited to determine whether one plaintiff’s mark, “PetConnect Rescue,” is a protectable trademark.  He did find the mark descriptive – i.e. it describes the qualities or characteristic of the plaintiffs’ goods or services – but noted that descriptive marks are protectable if they acquire secondary meaning and that  whether the mark has gained an association in consumers’ minds is better suited for summary judgment.

Although specific to its facts and involving an advertising term (“rescues”) unlikely to be used in many other contexts, still this case serves as a cautionary reminder that all promotional materials should comply with state and federal law and that sometimes companies are sued by even unlikely plaintiffs.

Something we may never have thought would take off – branded face masks – are now on the rise.  With CDC recommendations and state/local orders recommending or even requiring employees (and sometimes even all citizens outside of their homes) to wear masks, businesses have an unexpected yet significant marketing opportunity to present their brand in a new setting.  This is particularly true for certain types of businesses, such as consumer-facing retail stores, restaurants/bars, and sports team.  Companies specializing in branded t-shirts, uniforms, and the like have certainly expanded their offerings to account for this new sales prospect to the businesses they service.

As a result, many businesses are taking advantage, seeing the increase in face mask use as another chance to present their logo, brand, or other message to the public or even just to their own employees.  Fashion designers are also jumping into the ring in a way that promotes their brands.  But other businesses may be concerned that turning a precautionary device into a walking billboard could make light of the pandemic or face mask requirement.

Whichever camp your business is in, this new and unexpected marketing strategy is on the rise.