The NCAA announced that it will allow student-athletes throughout the country to profit from their name, image, and likeness (“NIL”) starting on July 1, 2021, which marks a major shift from the NCAA’s longstanding amateurism model.  So far, nine states—including Alabama, Florida, Georgia, Mississippi, New Mexico, Texas, Kentucky, Ohio, Oregon, and Illinois—have signed NIL legislation to take effect on July 1.

Neither the NCAA nor the federal government have addressed NIL laws, which has made for a fragmented model that varies from state to state.  For example, Georgia’s NIL law allows for team pooling arrangements whereby student athletes who receive compensation for the use of their name, image, or likeness agree to contribute a portion of the compensation they receive to a fund for the benefit of other student-athletes.  Mississippi’s NIL law even authorizes student-athletes to hire agents to negotiate marketing opportunities.

Some student-athletes have already started taking advantage of this seismic shift in college sports.  University of Wisconsin quarterback Graham Mertz recently tweeted a video of his new trademark, and University of Iowa basketball player Jordan Bohannon tweeted a picture of his new apparel brand.

It will be interesting to see how NIL laws change the college landscape.  Recruiting is one of many areas where NIL laws may have an effect.  For example, a highly touted prospect with endorsements deals on the horizon might be swayed from School A to School B if School B is in a state with a less restrictive NIL law.  It will also be interesting to see how colleges and universities respond to their student-athletes’ outside endorsements.  What if a student-athlete signs a contract that conflicts with school policy or with the school’s pre-existing sponsors?  Navigating  NIL laws may present some obstacles, and might very well add a unique layer of intrigue and drama to college sports this season.

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As you may recall, the early days of the COVID-19 pandemic saw a short supply of various products. Toilet paper, alcohol wipes, hand sanitizer, masks, and even flour were in such high demand, that some consumers would need to visit half a dozen stores before finding such precious commodities. Due to these extreme shortages coupled with extreme demand, new concerns arose regarding predatory pricing practices and misleading advertising that could result from COVID-19. This led Congress to enact what is known as the COVID-19 Consumer Protection Act which, by its very text, is meant to prohibit deceptive acts or practices in connection with the novel Coronavirus.

The aforementioned act provides the Federal Trade Commission (“FTC”) with the exclusive authority to enforce its provisions. Just recently, the FTC began to exercise that power. For example, in April of 2021, the FTC brought its first action under the COVID-19 Consumer Protection Act when it charged Eric Anthony Nepute and Quickwork LLC for deceptively marketing products as proven to treat or cure COVID-19.

Now, just yesterday, the FTC has brought its first action under the Act against a PPE related entity. Specifically, the FTC filed a complaint in the Middle District of Florida against Frank Romero, also doing business as multiple other entities, for falsely advertising an ability to quickly deliver N95 facemasks to consumers. For example, Romero on multiple occasions failed to deliver any PPE at all, failed to deliver PPE in a timely manner, failed to issue any refunds, and at times even delivered cloth masks despite promising delivery of N95 masks. As a result, the FTC filed an action against Romero for violating both the COVID-19 Consumer Protection Act and the FTC Act. Likely, these exemplar cases are only the beginning of cases that the FTC may bring under the COVID-19 Consumer Protection Act.

The news cycle remains dominated by COVID-19 issues.  One thing we’re watching is whether and to what extent the World Trade Organization (WTO) will waive intellectual property (IP) protections for vaccines in an attempted effort to increase global access to vaccines.

A broad proposal for waiver on enforcement of IP related to COVID-19 prevention, containment, and treatment, requested by India and South Africa and supported by many developing countries, has been pending for months at the WTO.  The United States originally opposed the waiver but, just in May, the Biden administration announced that it would support a temporary waiver on IP protections for COVID-19 vaccines (a seemingly narrower waiver than that proposed).  Others like the United Kingdom and European Union members still continue to oppose a waiver, with concerns of whether a waiver will actually boost vaccine supply.  In fact, in early June, the European Union proposed its own plan to increase global COVID-19 vaccine distribution, focusing on increasing production, decreasing export restrictions, and issuing limited licenses.

During discussions in early June, the WTO council overseeing the issue sought the competing proposals and an agreement from the members by the next meeting in mid-July.  We will be watching to see how this plays out.

While the NFL’s Washington Football Team decides on a more permanent name (likely in 2022), its hopes of trademarking its current moniker have been put on ice.  On June 18, 2021, the United States Patent and Trademark Office (“USPTO”) issued an initial refusal of the Team’s application to trademark “Washington Football Team,” nearly a year after the mark was applied for.

The USPTO’s reasoning was twofold.  First, the USPTO reasoned that the applied-for mark was “primarily geographically descriptive”—i.e., that the mark was too generic.  Second, the USPTO determined that “Washington Football Team” too closely resembled a preexisting registration for the “Washington Football Club,” a trademark applied for by Martin McCaulay.  Mr. McCaulay is a longtime fan of the Team who holds several trademarks for Washington-related team names, including the “Red-Tailed Hawks” and the “Americans,”  Because of these issues, the Washington Football Team may have a difficult time preventing others from copying its name on apparel and other merchandise throughout the 2021 NFL season.

The Washington Football Team has until December 18, 2021, to file a response to the USPTO.  By that time, the Team will be thirteen games into the now seventeen-game NFL season.

 

On May 20, 2021, the TTAB issued a lengthy and comprehensive precedential opinion canceling Proof Research, Inc.’s registration for the trade dress of a gun barrel (as shown below) on grounds of de jure functionality under Section 2(e)(5).

The registered trade dress “consists of trade dress applied to gun barrels formed with a mottled pattern of irregularly-sized, rippled patches, resembling a quilt having striated patches of varying shapes and reflectivity depending on the ambient light source and viewing angle.”

Petitioner McGowen Precision Barrels, LLC sought cancellation of the registered trade dress on five different grounds—namely that (1) the mark “comprises matter that, as a whole is functional,” (2) the Registration “encompasses more than one mark,” (3) the “trade dress encompassed in [the] Registration … is generic,” (4) the trade dress is aesthetically functional, and (5) the Registration was obtained through fraud. [Opinion, at p. 2]. The TTAB did not reach grounds #2-5, relying, in large part, on Proof Research’s own utility patent to find the trade dress functional. [Id., at p. 3].

Significantly, the parties did not dispute carbon fiber composite barrels provide various functional benefits for rifles.  Instead, the focus of the dispute centered on whether the specific appearance of Proof Research’s carbon fiber composite barrels is functional as a natural by-product of the manufacturing process or whether it is  the result of aesthetic efforts to create a trade dress consumers associate with Proof Research.

The TTAB began its analysis noting, “A product design or feature is considered functional in a utilitarian sense if: (1) it is ‘essential to the use or purpose of the article,’ or (2) it ‘affects the cost or quality of the article.’ [Id., at p. 37 (citing TrafFix Devices, Inc. v. Mktg. Displays, Inc., 532 U.S. 23, 58 USPQ2d 1001, 1006 (2001) (quoting Inwood Labs., Inc. v. Ives Labs., Inc., 456 U.S. 844, 214 USPQ 1, 4 n.10 (1982))].  If functionality of the trade dress is established under the Inwood test, an analysis of all types of Morton-Norwich evidence is unnecessary. [Id., at n. 193].

In reaching its decision that the trade dress was functional, the TTAB relied heavily on Proof Research’s utility patent, citing well-settled law that “‘[a] prior [utility] patent … has vital significance in resolving the trade dress claim’ and ‘is strong evidence that the features therein claimed are functional.’” [Id., at p. 39 (quoting TrafFix, 58 USPQ2d at 1005)].  Following a thorough examination of the claims in Proof Research’s utility patent, the TTAB held that Proof Research’s trade dress was the result of a manufacturing process that followed a specific claim of the utility patent:

The TTAB further found the particular appearance of the trade dress resulted from Proof Research’s implementation of the “best mode” for practicing its patented invention. [Id., at pp. 40-41]. “In other words, the appearance of the barrel is dictated by its function.” [Id., at p. 56].

The TTAB ultimately concluded, as follows: “‘[W]e view the disclosures in the [’117] Utility Patent as so strong as to be sufficient, by [themselves], to sustain the functionality refusal without consideration of the other Morton Norwich categories of evidence.’ In re OEP Enters., Inc., 2019 USPQ2d 309323, *10-11 (TTAB 2019). See also Grote Indus., 126 USPQ2d at 1203. Simply put, the patent evidence, combined with the evidence regarding Respondent’s manufacturing process, is dispositive on the issue of functionality.” [Id., at p. 65]. In view of this analysis the TTAB cancelled the Registration under Section 2(e)(5).

The TTAB’s decision is a stark reminder that a risk in applying for utility patent protection and trade dress protection for the same product exists because of the inherent tension between the utilitarian usefulness required for utility patent protection, and non-functionality of the same design features required for trade dress protection

The decision is McGowen Precision Barrels, LLC v. Proof Research, Inc., Cancellation No. 92067618 (TTAB May 20, 2021).

Last week, the U.S. Food and Drug Administration (“FDA”) announced that it will be conducting research in conjunction with a new rule they plan to roll out. The FDA update is located here.  This proposed rule would update the definition of “healthy” and create a symbol for the “healthy” nutrient content claim. These updates are a part of the FDA’s Nutrition Innovation Strategy (NIS), which is intended to reduce the burden of chronic diseases related to nutrition. Nutrition-based chronic diseases impact communities of color at disproportionately higher rates than other communities. Nutrient content claims serve as quick signals to consumers about the health benefits of the food or drink they choose. Updated claims and symbols will help consumers get a better understanding of nutrition information and can also encourage companies to reevaluate the nutritional value of their products. If you have an idea on how the FDA can enhance the quality, usefulness, and clarity of the information they’re collecting, submit a comment here.

In case you missed it, Maryland became the first state back in February to pass a digital advertising services tax into law (and over the governor’s veto no less).  The law, titled Digital Advertising Gross Revenues Tax, is designed to tax annual gross revenues derived from “digital advertising services” (meaning advertisements on a digital interface like a website or app) in the state.  But it only applies to large-scale businesses (annual revenues from digital advertising services in Maryland of at least $1 million and global annual gross revenues of at least $100 million), with a sliding-scale tax rate, from 2.5% to 10%, based upon each business’s global annual gross revenues. The law was passed to be retroactive to January 1, 2021, meaning it would apply to the entirety of the 2021 tax year.  Legal challenges came quickly thereafter, but none resulted in immediate overturning of the law.

Instead, in April, the Maryland legislature passed an emergency bill to amend the law (with no anticipated governor veto this time).  The amendment provides exceptions such as disallowing the direct passing of the tax onto the consumer and exempting broadcast and news media entities.  The amendment also delays the effective start date of the tax until January 1, 2022.  The amendment is set to go into effect later this month and be retroactive to the date of the amendment.  However, legal challenges continue to mount and will be monitored closely by those affected on both sides.

Critics of the legislation say that it will push the tax back onto consumers through higher prices.  Proponents point to estimates that the law will create millions in tax revenue for the State of Maryland.  Others comment, either positively or negatively, that the law appears to target businesses based outside of the state that provide digital advertising services within the state.  Regardless of your viewpoint, it will be interesting to see if other states jump on this bandwagon — at least a few are considering it but may be waiting to see how Maryland’s legal challenges play out.

Every day we are inundated with countless advertisements. TV ads, radio ads, internet ads, billboard ads. But have you stopped to think, what exactly qualifies as an advertisement? Luckily for us, the National Advertising Division (“NAD”) recently issued a decision that sheds some light on exactly how broad agencies monitoring the advertising industry view “advertising.”

As a result of the COVID-19 pandemic, the ACT standardized testing organization published, on its website, that test centers may “occasionally” cancel tests due to unforeseen circumstances. Of course, due to the pandemic, ACT testing would likely, and presumably has been, cancelled far more than just “occasionally.” As a result, the NAD recommended that ACT update its website to provide more specifics on the possibility of cancellations, provide information on what a test taker should do if the test is cancelled, and provide specifics on what test centers may or may not be open during the pandemic.

But what does information regarding how often a test may be cancelled have to do with advertising? According to the NAD, advertising can be as broad to include any messaging that is meant to obtain a sale or some other form of commercial transaction. Because the messages pertaining to how often tests are administered are meant to induce a consumer to register for a test, the NAD determined that such communications do, indeed, fall into the category of advertisements. So, next time you are publishing a message, on a website or otherwise, give some thought as to whether it could be interpreted to be done for the purpose of obtaining a sale. If it is, do your best to include sufficient, clear information, especially in this time of COVID-19 uncertainty.

Yesterday, the USPTO issued an alert regarding emails that U.S. attorneys have been receiving from unlicensed persons offering to pay attorneys in exchange for use of the attorneys’ bar credentials in trademark filings. The USPTO views such communications as a tool intended to circumvent the U.S. counsel rule.

The USPTO cautioned U.S. attorneys that, by agreeing to such an arrangement, an attorney is aiding the unauthorized practice of law and violating the Federal Rules, including the USPTO’s Rules of Professional Conduct, 37 C.F.R. Part 11.

U.S. practitioners should be on the look out for these types of solicitations.  If you receive a solicitation requesting use of your bar credentials, the USPTO has requested that you report it to TMScams@uspto.gov.

On March 17, 2021, in a matter of first impression, the United States Court of Appeals for the Fourth Circuit held a party appealing a decision of the United States Trademark Trial and Appeal Board (“TTAB”) may seek review of the decision in either the United States Court of Appeals for the Federal Circuit or a district court—even if the party had previously appealed an earlier TTAB decision in the same case to the Federal Circuit.  See Snyder’s-Lance, Inc. v. Frito-Lay N. Am., Inc., Case No. 19-2316 (4th Cir. Mar. 17, 2021).

In 2004, Princeton Vanguard, LLC (later acquired by Snyder’s-Lance in 2012) (collectively, “Plaintiffs”) obtained a supplemental registration for the mark PRETZEL CRISPS for use with flat pretzel crackers.  In 2009, Plaintiffs reapplied to register the PRETZEL CRISPS mark on the Principal Register in connection with the same goods based on a claim of acquired distinctiveness.  Frito-Lay opposed the application and sought to cancel the supplemental registration, arguing the PRETZEL CRIPS mark is generic or, alternatively, the mark is highly descriptive of the product and has not acquired distinctiveness.

The TTAB ruled in Frito-Lay’s favor, holding the PRETZEL CRISPS mark is generic.  The TTAB cancelled Plaintiffs’ supplemental registration and refused the application for registration on the Principal Register.  The TTAB did not reach the question of acquired distinctiveness.

The Lanham Act provides that a party can seek review of an adverse TTAB decision through either the Federal Circuit or a district court.  15 U.S.C. §§ 1071(a), (b).  Appealing to the Federal Circuit generally provides a quicker resolution of the appeal, but restricts the record to that developed before the TTAB.  Conversely, filing a civil action in a district court allows for additional development of the factual record and de novo review of the TTAB decision.  The district court path, however, is not without risks as it opens the appellant up to counterclaims by the other party.

If the appellant choses to seek Federal Circuit review, it waives the right to seek review of the TTAB decision in the district court.  However, the appellee can force the case to proceed before a district court.  15 U.S.C. § 1071(a)(1).  The reverse is not true.  Neither party can force the other party to proceed before the Federal Circuit.

Plaintiffs appealed the adverse TTAB decision to the Federal Circuit because they sought review of a legal question and believed this to be the quicker route.  The Federal Circuit held that the TTAB had applied the incorrect legal standard in determining whether the mark was generic, vacated the TTAB’s judgment, and remanded the case to the TTAB for further proceedings.

On remand, the TTAB again concluded that the PRETZEL CRISPS mark is generic.  This time, however, it also concluded that, in the alternative, the mark had not acquired distinctiveness.

The second time around, Plaintiffs elected to seek review of the adverse decision in federal district court so they could expand the record to include additional evidence of acquired distinctiveness that had arisen during the intervening years—something they could not do in the Federal Circuit.

The parties litigated the case for two years before it was reassigned to a new district judge who, sua sponte, raised, for the first time, the question of whether the district court had jurisdiction to review the TTAB’s second decision given Plaintiffs had appealed the TTAB’s first decision to the Federal Circuit.  The court ultimately concluded Plaintiffs’ initial election to proceed before the Federal Circuit meant they could appeal subsequent TTAB decision in the same case only to the Federal Circuit.  Thus, the court dismissed the case for lack of subject matter jurisdiction.  Plaintiffs appealed the district court’s decision to the Fourth Circuit.

The Fourth Circuit held the district court erred in dismissing the case for lack of subject matter jurisdiction.  In reaching its decision, the Court noted that the Section 1071 waiver language relates only to the choice of review options for the decision from which a party appeals.  More specifically, each unique decision the TTAB issues gives the losing party a new chance to choose between the two Section 1071 review options.

The Court found the statutory text ambiguous, yet ruled that the text favored Plaintiffs because the statute’s specification that, if a party elects Federal Circuit review, the Federal Circuit’s decision governs future proceedings in a case supports the notion that not all subsequent appeals would proceed before the Federal Circuit.  If all future appeals had to return to the Federal Circuit, such language would be unnecessary.

Further, the Court determined that Congress’s use of the language “further proceedings in the case” makes clear that Congress knows how to refer to the whole case when it wants.  Congress’s conscious use of the language “the decision” reinforces that the statute refers to each TTAB decision and that the wavier applies only to that decision, not to the full proceedings.

Moreover, applying the initial appellate venue choice to all later TTAB decisions would unfairly bind the initial winning party to the decision not to force district court review.

The Court also ruled that the legislative history for parallel patent provisions supported the Court’s decision, as did prior decisions issued by the Seventh and Ninth Circuit Courts of Appeal.

Finally, the Court evaluated policy considerations and concluded judicial economy favored Plaintiffs’ interpretation because, if a party could choose its appellate venue only once, it would likely to opt for district court review so as not to be precluded from further developing the record where necessary.  This would result in more appellants seeking the drawn-out proceedings in district court rather than a quicker review by the Federal Circuit.

In view of the above, the Fourth Circuit reversed the district court’s decision and remanded the case to the district court for further proceedings.