TRADEMARKS
Creation of Advertising Material by Third Party Does Not Constitute Trademark Infringement
COPYRIGHTS
Yer Out at Home—Copyright Infringement Lawsuit Against Jon Bon Jovi Strikes Out
Sony Is the New "King of the Road"
Award of Attorneys' Fees in Copyright Cases Not Beholden to Lodestar Method
TRADE SECRETS
Reverse Engineering Software, Without More, Not Trade Secret Misappropriation in California
Public Agency Need Not Engage in a "Trade" to Protect Information as a Trade Secret
TRADEMARKS / REGISTRATION
The All "Reasonable Manners" of Depiction Standard Rejected in Trademark Examinations, as Well as Oppositions
by Rita Weeks
Reviewing the decision of the Trademark Trial and Appeal Board (Board) refusing to register the trademark XCEED for agricultural seed, the U.S. Court of Appeals for the Federal Circuit upheld the refusal, finding that applicant's XCEED mark was likely to cause confusion with the previously-registered word and design mark X-Seed for the same goods. In Re Viterra, Inc., Case No. 11-1354 (Fed. Cir., March 6, 2012) (O'Malley, J.).
Applicant applied to register the trademark "XCEED," in standard characters, for agricultural seed. The examining attorney refused registration, finding that the applicant's mark was likely to cause confusion with the registered word and design mark "X-Seed," consisting of a large stylized letter X in the color red with the term "-Seed" appearing in smaller letters in the color black outlined in grey. The examining attorney refused registration after concluding that the parties' goods were identical and that the parties' marks were phonetic equivalents and visually similar. On appeal, the Board affirmed the rejection, giving "heavy weight" to the identical nature of the parties' goods. Concerning appearance of the marks, the Board applied its "reasonable manners" standard, explaining that "when an applicant seeks registration of its word mark in standard characters, then the Board must consider all reasonable manners in which those words could be depicted." Under that standard, the Board found that one reasonable variation of applicant's XCEED mark could include a large capital letter "X" followed by the term "ceed" in smaller letters, which would resemble the registrant's pre-existing mark.
On appeal to the Federal Circuit, the applicant argued that the distinctive design and color elements of the pre-existing X-Seed mark rendered it visually different from applicant's XCEED mark. The Board had rejected that argument under the "reasonable manners" standard. In effect, because the applicant had applied to register its mark in standard character form it was not limited to any particular depiction of the mark, and if permitted to register it, the applicant could conceivably use a format similar to the pre-existing registered mark which would cause confusion.
After the Board issued its decision in this case, the Federal Circuit issued a decision in an appeal from a Board decision in an opposition rejecting the "reasonable manners" test as unduly narrow and not required by statute, regulation or case law. The Federal Circuit in Citigroup v. Capital City Bank Group (IP Update, Vol. 14, No. 4) held that a standard should be used that allows a broader range of marks to be considered in the likelihood of confusion analysis when a standard character mark is at issue.
The applicant tried to distinguish Citigroup, arguing it should not apply in an ex parte trademark examination but should be limited to inter partes proceedings such as oppositions. The Federal Circuit rejected the proposition that the "reasonable manners" test should apply in trademark examinations yet not trademark oppositions, explaining that the analysis in both types of cases—whether there is a likelihood of confusion—is the same. Therefore, the Court held that Citigroup applies equally in the context of trademark examinations. Ultimately, the Court upheld the Board's rejection of the application, finding likelihood of confusion based significantly on the parties' identical goods and similar marks.
TRADEMARKS / ADVERTISING
Creation of Advertising Material by Third Party Does Not Constitute Trademark Infringement
by Ulrika E. Mattsson
The U.S. Court of Appeals for the Fifth Circuit reversed in part an award of summary judgment, holding that a commercial printer company that made banners and other advertising material did not use those marks in commerce as required for a finding of trademark infringement under federal law. National Business Forms and Printing Inc. v. Ford Motor Co., Case No. 10-20023 (5th Cir., Feb. 16, 2012) (Garza, J.).
National Business Forms and Printing, a commercial printing company, offers reproduction of trademark-protected corporate logos for use in custom design and printing services. National had a bank of corporate logos available on its website that it offered to its customers. Among other trademarks and logos, National offered reproductions of Ford Motor Co.'s trademarks and logos. Following Ford's objections to National's use of its FORD trademarks, National filed a claim in Texas state court, seeking a declaration of non-infringement. Ford filed counterclaims for, among other things, trademark infringement and dilution and moved for summary judgment.
The district court found that the sales to authorized Ford dealers were not infringing but that sales to unauthorized used car dealers were infringing. On appeal, the 5th Circuit upheld the district court's ruling holding that the sale of advertising material using Ford's corporate logos to authorized dealers did not infringe Ford's trademarks. The court explained that Ford's sales and service agreement with authorized dealers permitted Ford's authorized dealers to meet their advertising needs through any vendors of their choosing, provided that such printed materials complied with the proscribed manner and form requirements. The 5th Circuit also agreed with the district court that National's "printed material was unlikely to result in consumer confusion or mistake as to the authenticity of the goods and services that the Ford dealers traded in."
However, the 5th Circuit did not agree with the district court's finding that advertising material using Ford's logos by unauthorized dealers were infringing. The 5th Circuit rejected the district court's finding that the unauthorized dealers "displayed the Ford logos and marks in a manner that is likely to cause confusion among the public" and were likely to "confuse consumers on whether Ford endorsed or approved those businesses' sales of Ford vehicles." Instead, the appeals court held that "the context in which the Ford marks appear in the promotional materials described above makes the likelihood of consumer confusion negligible." The 5th Circuit explained that National creates material bearing the logos of numerous auto makers and that "the grouping of several competitors extinguishes any possible confusion, particularly where nothing in the district court's findings or in the record suggests that these used car dealers displayed the Ford marks elsewhere on their lots or showroom floors."
Finally, the appeals court upheld the district court's dismissal of the dilution claim, holding that a commercial printer's inclusion of a company's trademark on advertising material did not constitute a use in commerce and thus could not be infringing.
COPYRIGHTS / INFRINGEMENT
Yer Out at Home—Copyright Infringement Lawsuit Against Jon Bon Jovi Strikes Out
by Ulrika E. Mattsson
The U.S. Court of Appeals for the First Circuit affirmed the dismissal of three suits against rock star Jon Bon Jovi and other defendants that claimed that Jon Bon Jovi's song "I Love This Town," which was used in baseball game commercials, infringed upon plaintiff Samuel Bartley Steele's work. Steele v. Ricigliano et al., Case No. 1-1675; Steele et al. v. Bongiovi et al., Case No. 11-1674; Steele et al. v. Vector Management et al., Case No. 10-2173; and Steele et al. v. Turner Broadcasting System Inc. et al., Case No. 09-2571 (1st Cir., Feb. 10, 2012).
Steele, a singer and songwriter, wrote a song about the Boston Red Sox called "Man I Really Love this Team." In October, 2008, Steele filed a copyright-infringement suit in Boston, asserting that his song "Man I Love This Town" was infringed by a commercial for Major League Baseball. The allegedly offending commercial used Bon Jovi's "I Love This Town" as a soundtrack. Steele claimed $400 billion in damages.
To succeed on a claim for copyright infringement, a plaintiff must prove ownership of a valid copyright and copying of constituent elements of the work that are original. As part of the second prong of the test, a plaintiff must prove that the copyrighted and alleged infringing works are substantially similar. A defendant's work is substantially similar to the copyrighted work only if "an ordinary person of reasonable attentiveness would, upon listening to both, conclude that the defendant unlawfully appropriated the plaintiff's protectable expression." Moreover, the substantial similarity between the works must also relate to the original elements of the copyrighted work and, therefore, a court must separate the copyrighted work's original, protected expressive elements from those aspects that are not copyrightable.
The district court held that "considered as a whole,
differences between the two songs (as recognized by plaintiff's
own musicologist) overwhelmingly eclipse any similarity in
structure and rhyme scheme" and that "no reasonable jury
could conclude that the Bon Jovi song is substantially similar to
the original lyrical elements of the Steele song." The
district court therefore granted the defendants' motions for
summary judgment.
The 1st Circuit affirmed the district court's grant of summary
judgment for the defendants, holding that "after our own
independent review of the record and the briefs of the parties we
conclude that ... no reasonable juror could find either substantial
similarity of expression sufficient to support an infringement
claim or probative similarity of expression sufficient to support
an inference of actual copying, even taking the evidence in the
light most favorable to plaintiff." The 1st Circuit
further held that "to the extent that there are similarities
between the works at issue, many of them relate to stock
scènes à faire naturally stemming form both
works' subject matter, which are not subject to copyright
protection. [...] The remaining similarities are not substantial,
and the differences between the works are fundamental and
extensive."
COPYRIGHTS / ASSIGNMENT AND RENEWALS UNDER 1909 COPYRIGHT ACT
Sony Is the New "King of the Road"
by Rita Weeks
Considering whether musician Roger Miller's widow or a music publishing company owned his music catalog, including the hit song "King of the Road," the U.S. Court of Appeals for the Sixth Circuit reversed a lower court's decision that found the publishing company liable for copyright infringement thereby vacating an award of almost $1 million in damages. Roger Miller v. Sony, Case No. 10-5363 (6th Cir., Feb 22, 2012) (Moore, J.).
In 1964, musician Roger Miller assigned the copyrights in his song catalog to a predecessor of Sony/ATV Publishing, LLC in exchange for royalty payments. The works at issue fell under the 1909 Copyright Act, giving them an initial 28-year copyright term followed by a renewal term. Sony had applied to renew the copyrights in January and April 1992, for which the renewal term began January 1, 1993. Miller died in October 1992. In his will, he granted all interests in his intellectual property to his wife, who assigned those interests to Roger Miller Music, Inc. Sony continued to exploit the song catalog and pay royalties to Roger Miller Music for the next 12 years.
In 2004, Roger Miller Music brought suit against Sony for copyright infringement, seeking damages and a declaration that Roger Miller Music was the owner of the renewal copyrights, based on the Copyright Act's hierarchy of who is entitled to renewal copyrights. Original and renewal copyrights (applying to works originally copyrighted between January 1, 1964 and December 31, 1977) are separate and distinct legal interests, allowing an author who sells the original copyright, or his heirs, a second chance to claim ownership at the end of the original term. The district court found that Sony did not own the renewal copyrights because Miller had died prior to the vesting of the renewal term and assignees, such as Sony, were not included in the applicable statutory hierarchy.
Sony appealed, arguing that Miller's assignment of the renewal copyrights to Sony was effective because Sony filed the renewal applications prior to Miller's death. Roger Miller Music argued that the assignment could only have been effective if Miller had been living as of January 1, 1993, the start of the renewal term and the date on which ownership would have vested in Miller. The 6th Circuit agreed with Sony. The Copyright Act's applicable renewal provision specifies that if an application to register the renewal copyright is filed within the renewal year, the renewal copyright vests first in the author if still living, then the surviving spouse or children if the author was not, then to the author's executors, and last, to the author's next of kin in the absence of a will. If no renewal application is filed, the renewal copyright vests in the same persons under that same hierarchy. The difference is that under the statute, if the renewal application was made within the renewal year, the renewal copyright vests in the appropriate person pursuant to the hierarchy "at the time the application [was] made." If no application is filed, the renewal copyright vests in the appropriate person pursuant to the hierarchy as of the beginning date of the renewal term. Because the renewal applications for Miller's songs were filed in the renewal year, the statutory hierarchy vested Miller, as the living author, with the renewal copyrights as of the dates of the applications. Thus, the 6th Circuit explained, Miller's assignment to Sony of the renewal copyrights was valid despite the fact that Miller died before the renewal term began.
COPYRIGHTS/ ATTORNEYS' FEES
Award of Attorneys' Fees in Copyright Cases Not Beholden to Lodestar Method
by Leigh J. Martinson
Considering an attorneys' fees award in a copyright infringement suit under the Architectural Works Copyright Protection Act, which created a new category of copyrightable subject matter for "architectural works," the U.S. Court of Appeals for the First Circuit found the district court did not abuse its discretion by departing from the Lodestar method in awarding attorneys' fees. T-Peg Inc. v. Vermont Timber Works Inc., Case Nos. 10-2234; -2300 (1st. Cir., Feb. 16, 2012) (Thompson, J.).
Stanley Isbitski wished to build his dream house. He consulted with both T-Peg and VTW. T-Peg drafted a preliminary design in 1999. After working with Isbitski to refine the design, T-Peg registered its updated design with the Copyright Office in May 2001. Meanwhile, in 2000, Isbitski showed T-Peg's unregistered preliminary design to Vermont Timber Works (VTW), which began working on its own design. VTW completed its plan in 2002 with significant, minutely detailed input from Isbitski. Mr. Isbitski sold the property before it was completed to a Mr. Dupee. When completed, the home apparently reflected T-Peg's registered design.
T-Peg sued for copyright infringement initially in October 2003. In February 2005, the district court granted summary judgment for VTW, concluding that no reasonable jury could find that T-Peg's and VTW's designs were substantially similar. T-Peg appealed, and the 1st Circuit reversed.
After considerable delay involving motion practice, mediation efforts and an attempt at an interlocutory appeal, the case went to trial in September 2009. Six days later, the jury found in VTW's favor and rejected T-Peg's infringement claims. VTW moved for attorneys' fees and costs that the district court, in its discretion, may grant the prevailing party in a copyright claim under the Copyright Act. VTW sought more than $200,000 in attorneys' fees and costs, while the case involved only $66,350 in damages. T-Peg opposed the motion, arguing that equitable principles (e.g., the absence of any bad faith on T-Peg's part) called for the court to exercise its discretion to deny any fee award entirely.
The district court granted VTW a fee award of $35,000. Both parties appealed, T-Peg challenging the grant of any award at all and VTW challenging the award's amount. T-Peg argued that no award was appropriate because the district court applied a factor it claimed was improper: whether a fee award would "deter plaintiffs with reasonable claims, and defendants with meritorious defenses, from litigating in a manner greatly disproportional to the matter at stake." The 1st Circuit held that that T-Peg's protest was groundless. The Copyright Act allows the district court to impose a "reasonable" fee award, the appeals court reasoned, and the Supreme Court has said broadly that a district court may consider principles of deterrence in exercising its discretion to fashion a reasonable award.
VTW argued that by diverging from the Lodestar method (i.e., hours productively expended and multiply that time by reasonable hourly rates) for determining attorneys' fees, the district court violated the 1st Circuit's "strong preference" for that method and therefore abused its discretion. Again, the appeals court disagreed, stating that district courts have discretion to fashion an appropriate award as long as they explain their reasoning in accordance with the equitable principles spelled out by the Supreme Court and that reasoning holds up to scrutiny. The 1st Circuit determined that the district court's explanation and analysis, contained in a 15-page option, was more than sufficient and was not only reasonable but thoughtful. In any event, the district court's reasoning certainly did not indicate an abuse of discretion. Therefore, the 1st Circuit affirmed the $35,000 award.
TRADE SECRETS
Reverse Engineering Software, Without More, Not Trade Secret Misappropriation in California
by Elisabeth (Bess) Malis
The U.S. District Court for the Central District of California held that reverse engineering software in violation of a form end-user license agreement, without more, did not rise to the level of trade secret misappropriation. Aqua Connect, Inc. v. Code Rebel, LLC et al., Case No. CV 11-5764-RSWL (C.D. Cal., Feb. 13, 2012) (Lew, J.).
Aqua Connect sued Code Rebel for misappropriating its trade secrets, alleging that Code Rebel downloaded a trial version of the plaintiff's server software, reverse engineered the software in violation of the End User License Agreement (EULA) and used that information to produce and distribute a competing software product. Code Rebel moved to dismiss for failure to state a cause of action.
The district court granted the defendant's motion to dismiss. Under California law, a claim for misappropriation of trade secrets must include proof that the defendant "acquired, disclosed, or used the plaintiff's trade secret through improper means." "Improper means" includes "theft, bribery, misrepresentation, breach or inducement of a breach of a duty to maintain secrecy, or espionage through electronic or other means." Notably, reverse engineering or independent derivation of a trade secret, without more, is not considered to be improper means. Citing the California Supreme Court decision DVD Copy Control Ass'n Inc. v. Bunner, the Court held that reverse engineering is not elevated into "improper means" by virtue of it breaching a form EULA. Moreover, the court noted that Code Rebel fairly and honestly acquired the software from which the alleged trade secret information was derived.
The court also rejected the plaintiff's alternative theory that the EULA created a duty to maintain the secrecy of the software, which Code Rebel breached by reverse engineering the software. The court found that the plaintiff's argument lacked merit because in California, the duty to maintain secrecy arises in the context of a fiduciary relationship or an employment agreement covering trade secrets – not in the context of a form license agreement.
TRADE SECRET / FOIA
Public Agency Need Not Engage in a "Trade" to Protect Information as a Trade Secret
by Sarika Singh, Ph.D.
Addressing for the first time the issue of whether a public agency can create and maintain trade secrets that are exempt from disclosure under the Freedom of Information Act (FOIA), the Supreme Court of Connecticut affirmed the trial court's holding that no requirement exists under FOIA that the entity creating and maintaining the information must be engaged in a ''trade" to benefit from trade secret protection. University of Connecticut v. Freedom of Information Commission et al., Case No. SC 18772 (Conn. Supr. Ct., Feb. 21, 2012) (Harper, J.).
The owners of a public relations company made a FOIA request to the University of Connecticut seeking disclosure of information concerning persons who had paid to attend, donated to, inquired about or participated in certain educational, cultural or athletic activities of institutions within the university. The university refused to disclose four of its databases which identified such persons, alleging that the databases were trade secrets exempt under General Statutes § 1-210 (b) (5) (A)1 of FOIA. The Freedom of Information Commission determined that none of the databases at issue could be a trade secret despite finding the information to be consistent with the statutory definition of a trade secret, i.e., the databases could be of economic value to others and the university maintained secrecy of the databases, because the university was not principally engaged in a trade. The trial court sustained the administrative appeal of the university, holding that the university could, as a matter of law, create a trade secret exempt from disclosure under FOIA.
The Freedom of Information Commission appealed to the Appeal Court of Connecticut, which the Supreme Court transferred before itself. At the appeal, the commission took a somewhat narrower position that the trade secrets exemption to disclosure "must be construed to apply to public agencies only when they are engaged in a trade," in view of the public policy of disclosure underlying the FOIA. The court rejected the commission's interpretation, citing no basis for applying such criteria in case of a public agency in the definition of trade secret either under FOAI or under Trade Secret Act (TSA). The court found that the definition "focuses exclusively on the nature and accessibility of the information, not on the status or characteristics of the entity creating and maintaining that information." The court also noted that the TSA expressly applied to both public and private entities, and a different construction under the FOIA would nullify the rights provided under the TSA. Citing other legislation providing for ownership of intellectual property by universities, and the desirability of the university and the state benefiting from and recouping their investment in research by procuring intellectual property rights, the court concluded that there was unambiguous legislative intent to afford trade secret protection to the university under the FOIA. Thus, the only criteria applicable for determining trade secret protection are those set out in the statutory definition.
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