When marketing products or services to children, companies should be aware of applicable statutes and guidance and should be particularly cautious with their advertising claims.

Lanham Act & FTC Act

The prohibitions against false, misleading, and deceptive advertising under the Lanham Act and Section 5 of the FTC Act of course apply to advertising claims directed at children.  It’s important to remember that the advertisements may be viewed by a court or by the FTC as ordinary children would view them (not as the actual buyers, i.e. parents or other adults, would view them).  Therefore, companies should ensure that any advertising claims directed at children do not have the tendency to mislead or deceive those children.

FTC Guidance

The FTC advises companies to comply with truth-in-advertising standards when advertising directly to children or when marketing kid-related products to parents.  For example, the FTC is concerned with child privacy, marketing violent entertainment to children, and, given the rise in childhood obesity rates, food advertising to children.

COPPA

38772807 - little girl hand touch touch pad notebookThe Children’s Online Privacy Protection Act (COPPA) is a federal statute meant to protect children’s privacy and safety online by prohibiting unfair or deceptive practices relating to the collection of personal information from internet users under the age of 13.  COPPA requires providing certain information in privacy policies, giving parents direct notice, and obtaining parental consent before collecting personal information from children.  The FTC’s step-by-step COPPA compliance guide can help a company determine if it is covered by COPPA and, if so, how to comply with the rule.

CARU

The Children’s Advertising Review Unit (CARU) is an investigative unit of the advertising industry administrated by the Council of Better Business Bureaus.  CARU monitors advertisements (tv, print, radio, and online media) with the goal of advancing truthfulness, accuracy, and consistency and eliminating deceptive or inappropriate advertising directed toward children.  CARU publishes self-regulatory guidelines for advertisers and relies upon voluntary cooperation and change by advertisers themselves.

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.

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.

Amid the hullabaloo over the U.S. Supreme Court’s decision this week in Matal v. Tam, a much broader and potentially more significant development might be overlooked. It shouldn’t be.

The case involved Simon Tam’s band “The Slants,” and as our Elizabeth Patton wrote earlier this week, it invalidated the Lanham Act’s prohibition on the registration of disparaging marks. The crucial development that might be missed, however, is separate from the fascination over whether this decision spells the end of efforts to invalidate the trademark registrations held by the NFL for its football team in Washington, D.C. – it does. Rather, the Slants’ case should be seen for what is lurking in the opinions of the concurring justices. That is, the Tam decision marks a potent evisceration of the First Amendment’s commercial speech doctrine, ensuring heightened constitutional protection for commercial speakers.

U.S. Supreme Court Building, Washington, D.C.
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The commercial speech doctrine has long been invoked to allow broader, more intrusive regulation by government of speech that can be characterized as “commercial.” This is the doctrine that justifies not only the Trademark Office’s regulation of trademarks, but also the Federal Trade Commission’s regulation of social media, and a local municipality’s regulation of highway billboards. The commercial speech doctrine holds that because commercial speech is more robust – that is, because it is financially better equipped to defend itself – the government may have a freer hand in regulating such speech. Under this doctrine, a government regulation of commercial speech has heretofore been subject to a lesser degree of constitutional review – the so-called “intermediate” scrutiny of the Supreme Court’s Central Hudson test.

The Tam case dramatically undermines those prior principles.

Indeed, the various opinions in the Tam case buttress a development in the law that has been building in recent years, where the Supreme Court has been much more skeptical of government attempts to regulate the speech of businesses and other commercial actors. This latest case now solidifies a five-justice majority, and potentially a larger one, that will require rigorous, full-bore, core-speech “strict scrutiny” for government regulations of commercial speech when the regulations attempt to restrict or punish non-misleading commercial speech on the basis of the “viewpoint” expressed in the speech.

In other words, there are at least five justices, and likely more, who no longer focus on whether the speech being regulated is “commercial.” Instead, these justices are willing to apply strict scrutiny – and even a presumption of unconstitutionality – to a regulation that can be characterized as “viewpoint” based.

The nose-counting for this principle looks like this:

In his separate concurrence in Tam, Justice Thomas reiterated his long-held view, one that he persistently expressed along with the late Justice Scalia, that all government regulation of commercial speech should be subjected to strict scrutiny if the speech to be regulated is not misleading. Thus, as First Amendment scholars have long recognized, Justice Thomas already stands in the camp that rejects the rationale of the commercial speech doctrine, that commercial speech is entitled to less protection under the First Amendment.

In addition to Justice Thomas, a four-justice wing led by Justice Kennedy concurred with the outcome in Tam. Kennedy, along with Justices Ginsburg, Sotomayor, and Kagan (that is, the so-called “liberal” wing of the Court) sounded a clarion call for the highest level of constitutional scrutiny on regulations that attack a person’s speech based on the speaker’s viewpoint, regardless of whether the speaker is engaged in commercial speech. Justice Kennedy wrote that “it is a fundamental principle of the First Amendment that the government may not punish or suppress speech based on disapproval of the ideas or perspectives the speech conveys.” He then said that regardless of whether the speech in question is commercial – that is, regardless of the nuances of the commercial speech doctrine – “[a] law found to discriminate based on viewpoint is an egregious form of content discrimination which is presumptively unconstitutional.” (emphasis added)

Thus, there is a five-justice majority, between Kennedy, Thomas, Ginsburg, Sotomayor, and Kagan, that will apply full First Amendment protection against a government regulation that discriminates on the basis of a speaker’s viewpoint, regardless of whether the speaker is commercial or not.

And finally, there is reason to anticipate sympathy for this view even among the rest of the justices. The portion of Justice Alito’s principal opinion that reflected only a four-justice plurality of himself, and Chief Justice Roberts and Justices Thomas and Breyer, observed that the Supreme Court has said “time and again” that the public expression of ideas “may not be prohibited merely because the ideas are themselves offensive to some of their hearers.”

These pronouncements line up to be an eight-justice majority, and potentially a unanimous Court once Justice Gorsuch’s views become known (he did not participate in the Tam case). The Court has thus made clear that the government is barred from regulating truthful, non-misleading commercial speech where the only justification for the regulation is that the commercial speech offends the sensibilities of the listeners.

This expansion of the strict-scrutiny regime into territory once thought to be an area of more fulsome government regulation puts into play all kinds of statutory regimes. Clearly, in addition to the anti-disparagement provision of the Lanham Act, that statute’s additional prohibitions against the registration of trademarks that are “scandalous” or “immoral” soon will be invalidated. (Indeed, the Trademark Office has already signaled its recognition of the likely invalidity of these provisions in briefing it submitted to the Federal Circuit last year.) As a reuslt, trademark applicants who previously were unable to obtain registrations of marks with profanity in them or marks with sexual innuendoes now likely will be able to obtain such registrations.

Similarly, the FTC’s regulatory guidance that has required media companies to disclose whether content on their websites are “sponsored” is potentially subject to strict scrutiny because these restrictions are a regulation of commercial speech based on the viewpoint of the speaker.

Other statutory regimes are equally at risk under this now more robust protection of commercial speech. Hence, states that have enacted “veggie libel” laws that prohibit advertising that criticizes a state’s agricultural products are now likely to face a presumption of unconstitutionality and a need to justify the laws under a strict scrutiny regime.

In addition, states that have enforced restrictions on companies’ truthful, non-misleading advertising will face more legal challenges. One prime example will be the states where marijuana has been legalized but the states have also restricted how those cannabis businesses may advertise their products. Those regulations discriminate against the cannabis business’ advertising based on their viewpoint. The Tam decision means that those regulations are presumptively unconstitutional.

Similarly, municipalities that have prohibited or restricted the advertising of ride-sharing or room-sharing businesses also will find it much more difficult to defend such commercial speech regulations because they enjoin speech on the basis of the speakers’ viewpoints.

The fundamental sea change that can be seen in the Tam decision is that non-misleading, truthful commercial speech is no longer the benighted stepchild of the First Amendment. Rather, such speech now is entitled to the strongest form of constitutional protection when the government seeks to regulate such speech because of the speaker’s viewpoint – that is, when the speech is targeted “based on the government’s disapproval of the speaker’s choice of message.”

The practical effect of the Tam case, when read together with the earlier line of decisions applying the highest form of First Amendment protection against viewpoint discrimination, is that businesses now have an even stronger First Amendment basis to resist government efforts to control the way they speak to the public and their customers when their speech is not misleading.

This morning, the United States Supreme Court issued its long-anticipated ruling in the Lee v. Tam (now designated Matal v. Tam) trademark dispute involving the rock band, The Slants.  As detailed in an earlier blog post, the legal issue faced by the Supreme Court was whether section 2(a) of the Lanham Act, which bars the registration of disparaging trademarks, is constitutional.

roadsign
Copyright: 72soul / 123RF Stock Photo

Justice Alito wrote the opinion for the Supreme Court, which affirmed 8-0 the Federal Circuit’s prior determination that the disparaging trademark ban is facially unconstitutional under the First Amendment’s free speech clause.  In reaching that conclusion, Justice Alito explained that trademarks constitute private speech, not government speech as the government had argued.  As Justice Alito pointedly and simply stated, “Speech may not be banned on the ground that it expresses ideas that offend.”  Justice Alito’s analysis, other aspects of his opinion joined by a smaller number of justices, and two concurring opinions can be read here.

As noted in an earlier blog post, although the Supreme Court decided to hear the Tam case last year, it decided not to hear the Washington Redskins’ related trademark dispute described in another earlier blog post.  It now seems that the Supreme Court’s decision with respect to The Slants will allow the Washington Redskins to keep their federally-registered trademarks in the Redskins name, despite the United States Patent and Trademark Office’s prior cancellation of a number of those trademarks.  More broadly, the outcome of the Tam case may entitle any trademark registrant to invoke the First Amendment’s free speech clause to register disparaging or offensive trademarks.

In April 2016, the FTC filed a Complaint against Dr. Joseph Mercola and his companies alleging that their indoor tanning system advertisements violated section 5(a) of the FTC Act, which prohibits unfair or deceptive practices in commerce, and section 12(a) of the FTC Act, which prohibits the dissemination of false advertisements in commerce for the purpose of inducing the purchase of foods, drugs, devices, services, or cosmetics.  According to the FTC, indoor tanning systems qualify as “devices” under the FTC Act.

tanning bed
Copyright: kzenon / 123RF Stock Photo

In its Complaint, the FTC alleged that the defendants disseminated a number of false, misleading, deceptive, and unsubstantiated advertisements on the Mercola.com website, in search engine advertising, in a YouTube video of Dr. Mercola himself, and via newsletters.  Such advertisements include:

  • Tanning with Mercola brand indoor tanning systems is safe;
  • Tanning with Mercola brand indoor tanning systems will not increase the risk of skin cancer as long as consumers top using the system when their skin is only the slightest shade of pink and not burned;
  • Tanning with Mercola brand indoor tanning systems does not increase the risk of skin cancer, including melanoma skin cancer;
  • Tanning with Mercola brand indoor tanning systems reduces the risk of skin cancer;
  • The FDA has endorsed the use of indoor tanning systems as safe;
  • Research proves that indoor tanning systems do not increase the risk of melanoma skin cancer;
  • Certain Mercola brand tanning systems will pull collagen back to the surface of the skin, increase elastin and other enzymes that support the skin, fill in lines and wrinkles, and reverse the appearance of aging;
  • Tanning with Mercola brand tanning systems provides various benefits to consumers, including increasing Vitamin D and providing Vitamin D-related health benefits; and
  • The Vitamin D Council recommends Mercola brand tanning systems (without disclosing that the defendants arranged for the Vitamin D Council to be compensated for its endorsement).

Today, the FTC announced that, as a result of a settlement agreement reached with Dr. Mercola and its companies, the FTC is mailing $2.59 million in refunds to more than 1,300 purchasers of Mercola indoor tanning systems. According to the FTC, the average refund check is $1,897.  Additionally, under the settlement agreement, the defendants are banned from selling indoor tanning systems in the future.

More information regarding the FTC’s views on indoor tanning advertising can be found on the FTC’s website and blog.  According to the FTC, no government agency recommends indoor tanning and the FDA requires indoor tanning equipment to contain signs warning users of the risk of cancer.  In addition, the FTC actively investigates false, misleading, and deceptive advertisements related to indoor tanning.

This morning, the United States Supreme Court heard the long-anticipated oral argument in the Lee v. Tam trademark dispute. The issue in the case, as reported on the SCOTUS blog, is as follows:

“Whether the disparagement provision of the Lanham Act, 15 U.S.C. 1052(a), which provides that no trademark shall be refused registration on account of its nature unless, inter alia, it ‘[c]onsists of . . . matter which may disparage . . . persons, living or dead, institutions, beliefs, or national symbols, or bring them into contempt, or disrepute’ is facially invalid under the Free Speech Clause of the First Amendment.”

Supreme Court
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Stated more simply, the issue facing the Supreme Court is whether section 2(a) of the Lanham Act, which bars the registration of disparaging trademarks, is constitutional. The Supreme Court is now primed to make that decision, which will not only have an impact on the Lee v. Tam dispute but also the Washington Redskins dispute and many others.

In making that decision, the justices will consider the parties’ oral argument and briefing as well as the numerous amicus briefs filed by numerous third party organizations and individuals interested in the outcome of the Lee v. Tam dispute. Demonstrating the significance of this dispute, numerous of the justices during oral argument today asked pointed questions to the attorneys representing the parties, particularly to the attorney arguing on behalf of the United States Patent and Trademark Office (in favor of the Lanham Act’s current prohibition). Today’s oral argument started and ended with questions related to differences in trademark law and copyright law and included questions on a whole range of topics relevant to section 2(a), its constitutionality, and its implications.

The Supreme Court will issue an order in the case later this year. Additional background regarding this dispute and the related Washington Redskins dispute can be found in prior blog posts as part of this blog’s ongoing coverage of developments in this landmark dispute.

Although a rose “by any other name would smell as sweet,” (Romeo & Juliet, Act II, sc. 2, ln 48), there just aren’t any trademark registrations to be had in a person’s name, at least not without the person’s written consent.  So the U.S. Patent and Trademark Office recently reminded a trademark applicant who had applied for a trademark registration for the mark “LOVE TRUMPS HATE,” in connection with clothing.

Registered trademark in a red background
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In an Office Action issued last week (Nov. 21, 2016), an examining attorney preliminarily rejected a trademark registration application filed for the mark “LOVE TRUMPS HATE” on the grounds that the mark identifies a particular living individual and the applicant had failed to make a part of his application a formal, written consent to the registration from that living person – in this case, president-elect Donald J. Trump.  (See Office Action, Nov. 21, 2016, Trademark Serial No. 87117865.)

The Trademark Office’s response to the application relies on Section 2(c) of the Lanham Act, 15 U.S.C. § 1052(c), which is among the many “statutory bars” that may trip up a business’ effort to secure trademark registrations.  In this case, the statutory bar for non-consensual registrations of marks that identify a living individual is one of the provisions of the Lanham Act intended to protect the personal rights of individuals whose names have become famous or otherwise may be the target of appropriation in the marketplace.  (The prohibition against false endorsements in Section 43(a)(1)(A) of the Lanham Act is another such area of protection for people with famous names.)  The statutory bar in Section 2(c) has been invoked in past cases as a barrier to registrations of marks such as “PRINCESS KATE,” and “BO JACKSON,” and “OBAMA PAJAMA.”

In this most recent case, an applicant from New York City sought to register the famous slogan from the Hillary Clinton presidential campaign, in connection with t-shirts, sweatshirts, and caps, on an intent-to-use basis, in an application that was filed with the Trademark Office on July 27, 2016.  At the time of the application, the Clinton campaign had begun using the slogan “Love Trumps Hate” in response to various statements made by the Republican nominee.  Indeed, the last words that Mrs. Clinton uttered in public on the last night of her campaign before Election Day were “Love trumps hate.”

Setting aside questions of whether the use of this slogan on t-shirts, sweatshirts, and caps would be a sufficient usage to designate the source or origin of the products – a question bearing on whether the phrase functions as an actual trademark, rather than merely an ornamental slogan – the Trademark Office issued its preliminary denial because, the examining attorney concluded, the phrase “LOVE TRUMPS HATE” “clearly references Donald Trump.”  The Trademark Office was not swayed by the fact that this phrase obviously conveys a meaning apart from a reference to Mr. Trump, in that it propounds a worldview in which the emotion of love overcomes those things we may despise.  The Trademark Office pointed out that the statutory bar precludes registration of any mark that identifies a living individual (where the person does not give formal, written consent) if the person identified in the mark “is so well known that the public would reasonably assume a connection between the person and the goods.”

Of course, this specific Office Action is only a preliminary refusal to register the mark, and the applicant may well attempt to bring to bear the gamut of First Amendment arguments that certainly protect the applicant’s right to criticize Mr. Trump.  Whether those First Amendment rights are sufficient to authorize a trademark registration in this context is a legal question that the Trademark Office likely would not find persuasive, especially in light of the Office’s positions in other cases involving the intersection of the Lanham Act’s statutory bars and the First Amendment.

Nevertheless, this little anecdote is a cautionary reminder to businesses that their trademarks may not be registrable if they identify a particular living individual, absent a formal written consent from that individual, where the mark’s use of a person’s name would cause the public to see a connection between the famous person and the goods for which the mark is used.  (Whether such protection of a celebrity’s right of publicity is a good or bad thing, or is overreaching, is a legislative question to be addressed to Congress, and in that regard, it is a question likely to go unresolved in this era celebrity-drenched politics.)  Thus, businesses seeking to appropriate the fame of a well-known person’s name in their trademarks – even in this context of a double entendre on Mr. Trump’s name – would be well advised to think twice, or certainly, to negotiate a consent agreement that avoids the difficulty of having an application for registration denied on the strength of this statutory bar.

The ongoing battle before the United States Supreme Court regarding the ability to register disparaging trademarks, prior details of which can be found in earlier blog posts here, here, and here, is heating up with a recent flurry of amicus brief filings. Earlier this month, the USPTO filed its opening brief in the case involving the rock band The Slants pending before the Supreme Court, urging the Court to uphold section 2(a) of the Lanham Act, the section that bans the registration of disparaging trademarks, and explaining why it believes the ban is not a restriction on free speech. Following that submission, numerous other groups have filed amicus briefs taking various positions on the issue.

The Native Americans who petitioned to cancel the Washington Redskins’ trademark registrations filed an amicus brief in favor of the USPTO’s position and arguing that there is no right under the First Amendment to use a disparaging trademark to silence others. Other Native American organizations also filed an amicus brief asking the Supreme Court to rule in favor of the USPTO and find section 2(a) of the Lanham Act constitutional in light of the government’s incentive to discourage discriminatory conduct. A collection of bar associations filed an amicus brief seeking the same result. The Washington Redskins, on the other hand, are expected to file an amicus brief arguing the opposite–in favor of allowing registration of allegedly disparaging trademarks.

American Bar Association Stamp
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The American Bar Association (“ABA”) filed a procedurally interesting amicus brief, in which it declined to take a position on whether section 2(a) of the Lanham Act is constitutional and instead focused on a procedural issue. The ABA argued that if the Supreme Court holds that disparaging marks are not registerable (i.e. that section 2(a) is constitutional), it should also hold that such marks are still enforceable under the common law and the federal unfair competition provision of the Lanham Act. The ABA believes that the Federal Circuit’s underlying decision is too vague on this point and that it should be clarified at the Supreme Court level. Were the Supreme Court to follow the ABA’s thinking, the implication may be that trademark users (including The Slants and the Washington Redskins) continue to use disparaging marks but rely upon common law protection or federal unfair competition protection for enforcement purposes.

Other amicus briefs have also been filed with the Supreme Court and can be read on the SCOTUS blog website.  The Slants’ brief is forthcoming, and a decision from the Court is not expected until next year.

The U.S. Olympic Committee, like many other major sports organizations, does not shy away from enforcing its trademarks. In addition to enforcing use of the words “Olympic,” “Olympics,” and “Olympiad” and any use of the interlocking rings logo, the Olympic Committee also enforces the use of names and years in the particular convention used by the Olympics (e.g. “Sochi2014” or “Rio2016”).  For example, last year the Olympic Committee sued an individual who had registered 177 websites using the Olympic Committee’s naming convention.  In addition, the Olympic Committee aggressively pursues users of its naming convention and other trademarks as hashtags on social media websites (such as #Rio2016 and #TeamUSA).  This year, a Minnesota company who sought to post about the 2016 Olympics on social media pages filed a declaratory judgment against the Olympic Committee in an attempt to assert its right to do so.  That suit has not been resolved and has instead been plagued by a recent procedural dispute.

Although the Olympic Committee may not always be successful in all of its trademark enforcement efforts, the Olympic Committee shows no sign of letting up. One reason may be that the Olympic Committee has more trademark protection under the Lanham Act than other organizations.  In fact, under the Olympic and Amateur Sports Act of 1978, the Olympic Committee has the exclusive right to use some of its trademarks even where another’s use does not result in a likelihood of customer confusion. This is different than other enforcers of trademarks, who are required to show that another’s use of a trademark (or variation thereof) results in a likelihood of confusion.  Since the Olympic Committee is not required to jump over that particular hurdle, it arguably has a unique ability to enforce certain of its trademarks.