Since the COVID-19 pandemic began, the Federal Trade Commission (FTC) has cracked down on companies purporting to sell products that can alleviate or prevent symptoms of COVID-19.  Recently, the FTC announced its approval of a final administrative consent order that settled charges against a marketer of a supplement called “Thrive,” which was advertised as being able to treat, prevent, or reduce the risk of COVID-19.

As discussed in the FTC’s post, Thrive, which consists mainly of Vitamin C and herbal extracts, was advertised and sold online by California-based marketer, Marc Ching doing business as Whole Leaf Organics.  The FTC’s April 2020 administrative complaint states that Ching was advertising and selling Thrive since at least December 2018 but, around the beginning of the COVID-19 pandemic, began marketing Thrive as an “anti viral wellness booster” that can treat, prevent, or reduce the risk of COVID-19. He also deceptively advertised and sold three CBD-containing products.

The FTC’s order bars Ching for making these claims and requires him to send written notices to those who purchased Thrive explaining that it does not have the COVID-19 benefits that he previously advertised and notifying them of his settlement with the FTC. Additionally, he must inform purchasers of the three CBD-containing products that they do not treat cancer.

If a consumer would like to file a report regarding a COVID-19 related scam, they can do so here.

As a reminder, under the FTC Act, the Lanham Act, and state advertising laws, companies should be sure to only advertise information that they have confirmed to be true, accurate, and substantiated – whether related to COVID-19 or any other health benefit.

The Federal Trade Commission (FTC) has reported a three-fold increase in consumer reports about scams arising on social media since last year as well as a spike around the time the COVID-19 pandemic began.  This includes reports about buying products that never arrived and about scams involving romance, economic relief, or income opportunities, which became particularly problematic as the COVID-19 pandemic caused loss of income and jobs.  Although scammers are typically looking for money, sometimes they seek intellectual property.

The FBI reports that intellectual property theft costs US businesses billions of dollars a year and is a growing threat given the rise of digital technology and online file sharing.  The FBI collaborates with brand owners and copyright and trademark holders and, under a new strategy, is working with online marketplaces, payment service providers, and advertisers to help uncover and prevent fraudulent tactics.  The FBI’s tip sheet on safeguarding trade secrets, propriety information, and research is available here.

Companies that operate exclusively online may be a particular target for such scammers.  I recently witnessed a play on a Nigerian scam that targeted an online retail company owned by a family member. (A Nigerian scam is defined as a scheme, typically via email, where the scammer offers a commission to someone who helps transfer a sum of money.)  In this particular scheme, the owner of an online art gallery received a communication from someone purporting to want to buy an expensive painting as a surprise for her husband.  The scammer sent a cashier’s check for well over the painting’s value, surely with the intent to ask that the check be deposited, that a portion be wired back, and that a commission on top of the painting’s price be retained for the inconvenience.  Those who know this scam can predict what happens next — the wire leaves the target’s bank account, the check never clears, and the target has lost the money that was wired.  In this particular scam, it’s possible the scammer could also have ended up with the painting, potentially a valuable piece of intellectual property, without having paid for it.

Luckily the target was too savvy to fall for the scam.  But we did submit a consumer complaint to the FTC in an attempt to protect others who may not be.  Since then, the FTC has announced a new fraud reporting platform for consumers.  The new website, available at reportfraud.ftc.gov, is meant to be a user-friendly way for consumers to report scams, frauds, and bad business practices and now includes a feature for the FTC to provide next steps on what to do.  The FTC will continue to share reports with local agencies, making it a convenient place to file a single report.

Protect your company, your brand, and your intellectual property.  Beware of scammers and fraudsters.  And report their unlawful behavior.

 

On October 27, 2020, the Federal Circuit affirmed a U.S. Trademark Trial and Appeal Board (“TTAB”) decision canceling Corcamore, LLC’s registration for the mark SPROUT. More specifically, the Federal Circuit concluded that the TTAB correctly found that the challenger to Corcamore’s registration had standing, even though the TTAB applied the incorrect legal standard, and that the TTAB did not abuse its discretion in imposing a default judgment against Corcamore as a sanction for Corcamore’s numerous discovery abuses.

In 2014, SFM, LLC filed a petition seeking to cancel Corcamore’s SPROUT registration for vending machine services based on SFM’s own federal trademark registration for the mark SPROUTS for retail grocery store services. SFM asserted that SFM had superior rights in its SPROUTS mark because SFM first used the SPROUTS mark at least as early as 2002—more than 6 years before Corcamore’s claimed first use date for Corcamore’s SPROUT mark. SFM further asserted that continued registration of Corcamore’s mark would damage SFM because the relevant consuming publicly would be likely to confuse the two brands.

Corcamore moved to dismiss SFM’s cancellation petition for lack of standing based on the U.S. Supreme Court’s decision in Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118 (2014) (“Lexmark”). Lexmark, which the Supreme Court decided in the context of a civil claim for false designation of origin under 15 U.S.C. § 1125(a), holds that a party has standing to bring a claim if (1) the party’s interests fall within the protection of the Lanham Act and (2) the party’s injuries are “proximately caused” by violations of the Lanham Act.

The TTAB denied Corcamore’s motion to dismiss, concluding that Lexmark did not extend to cancellation of registered marks under 15 U.S.C. § 1064. Instead, the Board concluded that SFM had standing under the Federal Circuit’s decision in Empresa Cubana del Tabaco v. Gen. Cigar Co., 753 F.3d 1270 (Fed. Circ. 2014) (“Empresa”), finding that SFM had sufficiently alleged a real interest in the cancellation proceeding and a reasonable belief of damage, as required under 15 U.S.C. § 1064.

After the TTAB denied Corcamore’s motion to dismiss, Corcamore sent a letter to SFM’s counsel, indicating that Corcamore would bring “procedural maneuvers” against SFM and delay discovery. “Corcamore then embarked on a path of conduct that resulted in two separate sanctions and entry of default judgment in favor of SFM.”  [Federal Circuit Op., at p. 5].

On appeal, Corcamore argued that SFM lacked standing to bring a petition for cancellation of a registered trademark under Lexmark. Corcamore further argued that the Board abused its discretion in granting SFM default judgment as a sanction against Corcamore.

A three-judge panel of the Federal Circuit affirmed the TTAB’s ultimate ruling, but held that the TTAB applied the incorrect legal standard in determining that SFM had legal standing to bring the cancellation proceeding.

Although the Supreme Court decided Lexmark in the context of a false advertising claim under 15 U.S.C. § 1125(a), the Federal Circuit held that Lexmark established the two requirements necessary to find that a party is entitled to bring or maintain a statutory cause of action. First, the party must demonstrate an interest falling within the zone of interest protected by the statue. Second, the party must demonstrate proximate causation.

The Federal Circuit noted that a cancellation proceeding brought under 15 U.S.C. § 1064 is a statutory cause of action provided by the Lanham Act. Accordingly, the Federal Circuit ruled that the Lexmark analytical framework applies to both § 1064 and § 1125(a).

The Federal Circuit, however, concluded that, although the TTAB applied the incorrect legal standard, it still reached the correct result. In reaching that decision, the Federal Circuit stated that a party that demonstrates a real interest in cancelling a trademark under § 1064 has demonstrated an interest falling within the zone of interests protected by § 1064. Moreover, a party that demonstrates a reasonable belief of damage by the registration of a trademark demonstrates proximate causation within the context of § 1064. The Federal Circuit found that SFM had alleged facts sufficient to satisfy both of these requirements and, therefore, had standing under Lexmark to bring the cancellation.

Finally, in light of the facts of record, the Federal Circuit ruled that the TTAB did not abuse its discretion in entering default judgment against Corcamore as a sanction for Corcamore’s repeated discovery abuses.

The decision is Corcamore, LLC v. SFM, LLC, Case No. 2019-1526 (Fed. Cir. Oct. 27, 2020).

As the Senate hearings for Judge Amy Coney Barrett conclude, and as her confirmation looms nearly certain, I’ve been wondering where she falls on Intellectual Property (IP) issues. Turns out so have others.

An article posted on Bloomberg Law titled “Where Does Judge Barrett Fall on IP Issues” noted that Judge Barrett has only decided a small number of IP-related cases during her three years at the Seventh Circuit but has applied a textualist approach each time.  In reviewing her trademark and trade secret decisions where there was a clear result, the authors found that Judge Barrett has neither clearly favored intellectual property owners (siding with them three times) nor accused infringers (siding with them two times).  The takeaway from the authors is on textualism: “The U.S. Supreme Court has increasingly taken a textualist approach to intellectual property issues in recent years, and President Donald Trump’s nomination of Judge Amy Coney Barrett to the high court promises to continue that trend, if she is confirmed.”

34126235 - copyrightThe Copyright Alliance’s blog recently asked, “What Would Amy Coney Barrett’s Supreme Court Confirmation Mean for Copyright?”  The blog references two decisions the Supreme Court issued while Judge Barrett was clerking for the late Justice Antonin Scalia and also the judicial panels on which Judge Barrett has served that have decided cases involving copyright law.  The blog concludes that Judge Barrett has been exposed to “complex infringement disputes and important copyright doctrines that will influence her consideration of the critical copyright issues that come before the Supreme Court.”

IP issues do not appear to have been a focus of Judge Barrett’s confirmation hearings, though she did answer a few IP-related questions from Senator Thom Tillis, Chair of the Senate Intellectual Property Subcommittee, according to an IP Watchdog article summary.  When asked about patent eligibility decisions, Judge Barrett responded that “clarity in decision-making is always something that courts should strive for” and that “clarity is certainly a virtue in this context.”  The IP Watchdog, recognizing that patent law issues would not have come before Judge Barrett at the Seventh Circuit, concluded that these remarks “should sound a hopeful note to the ears of innovators.”  Later responding to Senator Tillis’ questions about copyright law and technology, Judge Barrett responded, “Most of the things you are identifying sound to me like matters of policy, so those seem like matters that are best addressed by the Legislature; the democratically elected body, not policy made by courts.” The IP Watchdog, noting that these comments likely do not provide insight into copyright activism from the bench, concluded that Judge Barrett believes “matters of policy are best addressed by Congress, as is intended by the Constitution.”

A change on the Supreme Court always yields questions about what direction the court will take on various issues.  Although not a focus to date, where the next Supreme Court justice lands on IP issues will inevitably matter in the years to come.

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In the COVID-19 era, sports leagues have had to come up with creative ways to move forward with their seasons in a safe and stable environment. The solution for multiple leagues has been to create a “bubble,” in which athletes only interact with other athletes and approved team and league personnel. Essentially, how it works is upon entering the bubble—an area equipped to host multiple games and house multiple athletes—each athlete and participating team and league personnel are tested for COVID-19. Any athletes that test negative can enter the bubble, but continue to be tested regularly to be safe. Any athletes that test positive for COVID-19, however, must quarantine for at least two weeks after testing positive, and afterwards must receive two negative tests in a row to enter the bubble. To date, leagues that have taken this approach have experienced a fair amount of success, have avoided any COVID-19 outbreaks, and have been able to continue on with their seasons.

Of course, the introduction of sports bubbles in the COVID-19 era has gone hand in hand with entities and individuals attempting to trademark different terms and phrases that in some way relate to these bubbles. In late July, the Women’s National Basketball Association started its season in a bubble located in Orlando Florida. Quickly, WNBA players began using the term “Wubble” to refer to their league’s bubble. Shortly thereafter, the WNBA filed for a trademark for the term “Wubble.” Similarly, although it is not yet confirmed, the NCAA is considering hosting their yearly March Madness tournament in a bubble. Considering this a likely possibility, the NCAA recently applied to trademark the phrase “Battle in the Bubble.”

Seeking trademarks related to COVID-19 isn’t referenced just for leagues, however. Individual athletes as well have sought to trademark terms or phrases related in some way to the events surrounding their league’s bubble. The NBA—which finished out the second half of their season and their playoffs in a bubble—has had multiple players file for bubble related trademarks. For instance, Miami Heat player Jimmy Butler has filed for three trademarks related to a grassroots coffee business he started from his own hotel room. Further, Los Angeles Clippers player Lou Williams filed for the trademark “Lemon Pepper Lou,” after he received criticism and was forced to quarantine after leaving the NBA bubble to purchase chicken wings.

Presumably, no matter what new situations present themselves in the world, there will always be those seeking to capitalize by connecting a trademark to those situations’ most unique aspects.

On September 25, 2020, the TTAB issued a non-precedential decision summarily rejecting an applicant’s attack against an examining attorney’s refusal to register the mark NATURAL LEAF CBD LIVE BETTER NATURALLY & Design for use on and in connection with dietary and nutritional supplements infused with CBD hemp oil extracts. The examining attorney had refused registration of the mark in view of the USPTO’s “Legal Use” requirement.

CBD is an abbreviation for “cannabidiol”—a chemical component of the cannabis plant that is regulated as a drug under the federal Food, Drug & Cosmetics Act (“FDCA”). The FDCA prohibits “[t]he introduction or delivery for introduction into interstate commerce of any food to which has been added … a drug or biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public….” 21 U.S.C. § 331(ll). The FDCA deems a “dietary supplement” a “food.” Id. § 331(ff).

In view of these provisions, the examining attorney refused registration of NL’s mark for lack of lawful use in commerce, arguing that the goods, which contain CBD, are per se violations of the FDCA and the federal Controlled Substances Act (“CSA”).

In appealing the refusal of registration to the TTAB, Applicant NL LLC (“NL”) argued first that the Lanham Act’s use requirement does not require “lawful” use—it merely requires use in commerce. NL further argued that, because use of the NATURAL LEAF CBD mark is legal under Colorado law, the mark comports will all requirements for federal registration.

The TTAB quickly disposed of NL’s arguments noting that the TTAB “‘has consistently held that, to qualify for a federal … registration, the use of a mark in commerce must be lawful.’” [Decision, at p. 3 (quoting In re PharmaCann LLC, 123 USPQ2d 1122, 1123-24 (TTAB 2017)]. Accordingly, the goods for which the applicant uses the applied-for mark cannot be illegal under federal law. [Id., at p. 4]. In finding NL’s goods violative of the FDCA, the TTAB found:

[NL’s] goods are food to which has been added a drug (CBD); substantial clinical investigations of CBD have been instituted, and the existence of these investigations has been made public; and there is no evidence of record that CBD was marketed in food before the substantial clinical investigations of CBD were instituted.

[Decision, at pp. 4-5].

In rejecting NL’s argument that the Lanham Act does not require “lawful use,” the TTAB also noted that numerous federal courts have disagreed with Applicant, affirming the USPTO’s long-standing application of the lawful use requirement. [Id., at p. 5].

Additionally, the TTAB rejected NL’s argument that the USPTO cannot require lawful use where it conflicts with state law noting, “‘[T]he fact that the provision of a product or service may be lawful within a state is irrelevant to the question of federal registration when it is unlawful under federal law.’” [Id., at p. 9 (quoting In re Brown, 199 USPQ2d 1350, 1351, 1352 (TTAB 2016) (emphasis added)]. In reaching this conclusion, the TTAB noted that the Supremacy Clause clearly provides that, “‘if there is any conflict between federal and state law, federal law shall prevail.’” [Id., at p. 9 (quoting Gonzales v. Raich, 545 U.S. 1, 27, 29 (2005)].

The decision is In re NL LLC, Serial No. 87864999 (TTAB Sept. 25, 2018) (non-precedential).

The Federal Trade Commission (FTC) has a “Cooling-Off Rule” that gives consumers a three-day right to cancel a sale made at their home, workplace, or dormitory, or at a seller’s temporary location, like a hotel or motel room, convention center, fairground, or restaurant. Thus, the Rule applies both to in-home presentations and to in-person seminars and craft shows.  However, there are a number of exemptions, such as sales under $25, sales made online or over the phone, and goods not primarily intended for personal, family, or household purposes.

As explained by the FTC, a seller in these situations must, at the time of sale, provide the consumer specific information and documents alerting the consumer to his or her right to cancel using a cancellation form.  If the consumer cancels, the seller has 10 days to (1) cancel and return any check the consumer signed, (2) refund the consumer’s money and inform the consumer whether any goods in the consumer’s possession will be picked up, and (3) return any trade-in.  The seller also has 20 days to pick up the goods or reimburse for mailing expenses.  If the consumer is returning any goods, the goods should be in as good of condition as when the consumer received them.

If a consumer believes that a company has violated the Cooling-Off Rule, he or she can file a complaint with the FTC.  The FTC also recommends that consumers contact their state Attorney General or local consumer protection agency.  Consumers can also raise complaints with the Better Business Bureau.

As a reminder, the FTC accepts consumer complaints on a wide variety of topics, including these topics provided on the FTC’s website:

  • Identity theft
  • National Do Not Call Registry violations
  • Computers, the internet and online privacy
  • Telemarketing scams
  • Credit scams
  • Immigration services
  • Sweepstakes, lotteries, and prizes
  • Business opportunities and work-at-home schemes
  • Health and weight loss products
  • Debt collection, credit reports, and financial matters

For years, scam artists have targeted trademark owners with communications that mimic notices from the United States Patent and Trademark Office (USPTO) or other governmental entities.

Unfortunately, there is no end in sight for these fraudulent activities. The USPTO recently reported an uptick in these schemes, as well as a proliferation of new “tools” used to carry them out. Trademark owners should keep abreast of these ever-evolving schemes and pay particular attention to any communications they receive from any party (other than their attorney of record) regarding their registrations or applications.

Typically these scams are designed to instill fear in trademark owners and convince them to take some sort of immediate action. They warn (falsely) that the trademark owner has missed a filing or payment deadline or is at risk of losing trademark registration rights unless the owner executes a power of attorney or pays certain “official fees.”

To lull trademark owners into a false sense of security, these communications use official sounding names, such as the “Patent and Trademark Office,” the “Patent and Trademark Bureau” or the “Trademark Compliance Center.”

Victims of these schemes can find themselves out of pocket for significant sums or, in some cases, having authorized a third party to take action with respect to the owner’s registrations or pending trademark applications.

In the past, the scam artists focused primarily on hardcopy communications purporting to offer legal services, assistance with trademark filings and other services, such as recording trademarks in a “private registry.” Recently, however, efforts have shifted to email scams.

What to Watch Out For

Scam artists use a variety of tactics to make their emails appear to be official governmental communications. Owners of U.S. trademark registrations may receive emails that appear to originate from the USPTO’s domain, @uspto.gov.

In particular, the USPTO has warned owners to beware of messages that do the following:

  • Spoof the USPTO email address (e.g., noreply@uspto.gov);
  • State that the USPTO has implemented “a new policy” requiring separate registration of clients and that there is a penalty for not complying; and
  • Provide incorrect USPTO trademark filing information (e.g., incorrect fee information).

What to Do if You Receive a Communication

Do not respond directly to any communication about one of your trademark applications or registrations – even if the communication appears to originate from the USPTO – and never pay any fees or provide any information to sender of such a communication.

Read the fine print. Pay particular attention to the email domain of the author of the email.

If you have an attorney of record who filed your application and remains the attorney of record for your registration, contact the attorney and inform them of the communication. Your attorney will be able to determine if the communication is legitimate and if you need to take any action.

If you do not have an attorney of record and you have received a communication you believe is from the USPTO, you should confirm the validity of the communication by visiting the USPTO’s Trademark Status & Document Retrieval database. By entering the trademark application or registration number in the TSDR database, you can see all outgoing communications from the USPTO, except for the application filing receipt. If the letter or email you received does not appear in the TSDR file, it likely did not come from the USPTO.

Further, the USPTO also provides examples of solicitations from entities that are not affiliated with the USPTO, and a list of known scam artists.

By taking the above steps, you can significantly reduce the risk of falling prey to a scam.

If you have received one of these fraudulent emails or paid money in response to an email scam, you can file a complaint with the Federal Trade Commission.

In the recent decision In re Hop Daddy LLC (Serial No. 88175921), the TTAB reexamined the contours of the doctrine of foreign equivalents.

The USPTO refused Hop Daddy’s application to register the mark SALTY BULL BREWING & Design (with “BREWING” disclaimed) for “Restaurant and bar services; Taproom services; Taproom services featuring beer brewed on premises,” based on a perceived likelihood of confusion with U.S. Trademark Registration No. 5150833 (the “‘833 Registration”) for the plain work mark TORO SALAO. The ‘833 Registration recites Class 043 services in the nature of “Restaurant services, including sit-down service of food and take-out restaurant services.”

In refusing registration of Hop Daddy’s mark, the examining attorney argued that the services at issue overlapped and that the earlier, registered mark TORO SALAO is Spanish for “salty bull.” Hop Daddy appealed the refusal of registration.

On appeal, the TTAB acknowledged substantial differences between the two marks in terms of appearance and sound, but noted, “[E]quivalency in meaning or connotation can outweigh the differences in marks.” [Decision, at p. 8]. Thus, the TTAB undertook a review of the examining attorney’s application of the doctrine of foreign equivalents.

At the outset, the TTAB noted that the doctrine is “not absolute” and “should be viewed merely as a guideline.” [Id., at pp. 8-9]. Further, the TTAB cautioned that examining attorneys should apply the doctrine “only when: (1) the relevant English translation is direct and literal and there is no contradictory evidence establishing another relevant meaning … and (2) “it is likely that the ordinary American purchaser would ‘stop and translate [the word] into its English equivalent.’” [Id.]. That said, the TTAB stated that the “ordinary American purchaser” includes “all American purchasers, including those proficient in a non-English who would ordinarily be expected to translate words into English.” [Id., at p. 9].

In support of the refusal of registration, the examining attorney submitted a webpage from an online language dictionary showing that the word “toro”, in Spanish, translates to “bull”, in English. Further, she provided a second webpage from the same website purportedly showing that the adjective “salao”, in Spanish, translates to “salty”, in English.  [Id., at p. 10].  The examining attorney’s  evidence relating to the term “salao”, however, consisted solely of two blog posts providing differing opinions on the possible meaning of “salao”, depending on the context in which the speaker used the word. [Id., at pp. 10-11]. Accordingly, the TTAB ultimately found that “there is no clear single translation and connotation provided for the term SALAO.” [Id., at p. 11].

In ruling the doctrine foreign doctrine equivalents in applicable, the TTAB stated:

Although “we have routinely applied the doctrine of foreign equivalents to Spanish language marks,” … the absence of any actual dictionary translation from a recognized source for this common language raises some doubt as to whether “salty” is a direct and literal translation of SALAO. Moreover, according to the Cambridge and Collins dictionaries, the direct translation of “salty” from English to Spanish and vice-versa is “salado.”

[Id., at pp. 11-12 (internal citations omitted) (emphasis added)].

Having ruled the doctrine of foreign equivalents inapplicable, the TTAB reversed the examining attorney’s refusal registration, finding that significant differences in overall appearance, sound, connotation, and commercial impression strongly supported a finding of no likelihood of confusion between the marks. [Id., at p. 12].

Earlier this month, the Trademark Trial & Appeal Board (TTAB) issued a  precedential ruling that the term “Gruyere” for cheese is generic.  In 2015, Swiss and French industry groups sought a certification mark for the term, arguing that the mark certifies that the cheese is from the Gruyere region of Switzerland and France.  The U.S. Dairy Export Council and other American groups filed notices of opposition, arguing that Gruyere is a generic term.  In its ruling, although noting that the term Gruyere derives from a geographic region in Switzerland, has been made in France for hundreds of years, and had been given a protected designation recognized by the European Union, the Board sided against the Swiss and French industry groups.

The Board applied the following genericness test: (1) what is the genus of goods or services at issue, and (2) does the relevant public understand the designation primarily to refer to that genus of goods or services?  Utilizing that test, and relying on various pieces of evidence, the Board determined that the genus of goods is cheese and that consumers of cheese understand Gruyere to refer to a category of cheese that is not limited to a specific geographic region but rather can come from anywhere.  As such, the Board found the term generic and ineligible for protection as a trademark.

The Board’s ruling means that Swiss and French industry groups will not be able to police use of the term Gruyere by American companies, absent a reversal on appeal or different outcome in district court. It could also have future implications on other similar food or beverage names involving a geographic region where the name has become genericized.