United States: U.S. Chamber of Commerce Denied Registration of "National Chamber" Mark (IP Update, Vol. 15, No. 4, April 2012 - Part 2)

IP UPDATE: Edited by Paul Devinsky and Rita Weeks

Trademarks / Descriptiveness

U.S. Chamber of Commerce Denied Registration of "National Chamber" Mark
by Bryan James

The U.S. Court of Appeals for the Federal Circuit upheld the decision of the Trademark Trial and Appeal Board (TTAB) to refuse the service mark "NATIONAL CHAMBER" as merely descriptive of the web services promoted by the Chamber of Commerce of the United States of America. In re The Chamber of Commerce of the United States of America, Case No. 11-1330 (Fed. Cir., Apr. 3, 2012) (Reyna J.).

The U.S. Chamber of Commerce (COC) filed two intent-to-use applications for the service mark NATIONAL CHAMBER in conjunction with services for directory information regarding state and local chambers of commerce, information and news in the field of business, and discount programs for goods and services, as well as analysis of governmental policy and regulatory activity relating to businesses for the purpose of promoting the interests of businessmen and businesswomen, and business data analysis. The examining attorney refused registration of the mark pursuant to Section 2(e)(1) of the Lanham Act, which prohibits registration of any trademark that is merely descriptive of the goods or services with which it is used. The examining attorney reasoned that NATIONAL describes services that are nationwide in scope, and CHAMBER is descriptive of services that promote the interests of businesspersons, a purpose common to chambers of commerce.

The TTAB affirmed the examiner's refusal. The TTAB reviewed the U.S. COC's website and certain articles from local chambers of commerce describing their services. The TTAB also relied on a dictionary definition of "chamber" that can refer to "a chamber of commerce," and a definition of "chamber of commerce," which is an association of businesses and/or businesspersons for the promotion of commercial interests. The U.S. COC appealed the refusal to the Federal Circuit.

On appeal, the Court noted that there could be no recourse to secondary meaning or acquired distinctiveness because the applications are based not on actual use, but intent to use. Thus, the analysis must turn on the descriptiveness of the terms themselves. Further, a mark is merely descriptive if it describes even a single feature or attribute of the relevant goods or services; it need not recite each and every feature in detail.

The Court found that substantial evidence to support the TTAB's factual finding that the mark was merely descriptive of at least one of the services described in the applications. The Court cited as examples services for providing directory information regarding local and state chambers of commerce, promotion of the interests of businesspersons and activities to help members become informed and involved in business-related legal and policy decisions by governments.

Further, the Court noted that a term is merely descriptive if it immediately conveys knowledge of a function of the goods and services for which it is to be used. Because the applications expressly recite the function of promoting the interests of businesspersons, within the traditional sphere of chambers of commerce, registration of the mark was rightly refused for being merely descriptive of that function.

Trademarks / Functionality

No Trademark Protection for Design of Closure Cap for Medical Collection Tubes
by Rita Weeks

Considering whether a medical device company was entitled to obtain a trademark registration for its design of a closure cap for medical collection tubes, the U.S. Court of Appeals for the Federal Circuit affirmed a final decision of the Trademark Trial and Appeal Board (TTAB) that the design could not be registered because it is functional. In re Becton, Dickinson and Co., Case No. 11-1111 (Fed. Cir., Apr. 12, 2012) (Clevenger, J.) (Linn, J. dissenting)

Becton, Dickinson (BD) applied to register a particular design of a closure cap for blood collection tubes. The trademark examining attorney refused registration under 15 U.S.C. § 1052(e)(5) on the grounds that the cap design is functional, as well as on the basis that even if the design is non-functional, the cap design is a non-distinctive configuration of the goods under 15 U.S.C. §§ 1051-1052 and 1127. A shape or design is "functional," and therefore may not be protected as a trademark, if it is "essential to the use or purpose of the article or affects the cost or quality of the article." TrafFix Devices, Inc. v. Marketing Displays, Inc. (see IP Update, Vol. 4, No. 4). The examining attorney requested that BD provide additional information concerning the cap design. BD did, providing several of its utility and design patents, samples of advertising materials and photographs of medical closure caps manufactured by third parties. The examining attorney issued a final refusal and BD appealed to the TTAB.

The TTAB assessed the design's utilitarian functionality under the Morton-Norwich factors: the existence of a design patent disclosing the utilitarian advantages of the design sought to be registered; advertising by applicant that touts the utilitarian advantages of the design; whether the design results from a comparatively simple or inexpensive method of manufacture; and the availability of alternative designs. The Board found applicant's cap to be a functional design based on the first two factors. A utility patent disclosed at least two utilitarian advantages of the cap's design and thus supported functionality. Also, some of BD's advertising materials extolled the utilitarian advantages of several design features of the proposed mark. Becton, Dickinson appealed.

On appeal, the majority of the Federal Circuit agreed with the TTAB, finding substantial evidence supporting the first two Morton-Norwich factors. First, the Court noted that the utility patent disclosing features of applicant's cap design was strong evidence of functionality. BD argued that the references should not be given such probative value because they were found in the specification of the patent and not the actual patent claims. The Court rebuffed the argument, explaining it was not limited to consider only the actual patent claims in evaluating trademark functionality. The Court also gave great weight to BD's own advertising materials touting the utilitarian advantages of its design.

In dissent, Judge Linn argued that the Board and majority improperly compared the functional features against the non-functional features of applicant's cap design to determine whether the mark as a whole is functional and non-registerable. "The proper inquiry," Judge Linn explained, "is to examine the degree to which the mark as a whole is dictated by utilitarian concerns (functional or economic superiority) or is arbitrary ('without complete deference to utility')." In other words, if a particular design is not required to look the way it does, the design is non-functional. Further, Judge Linn stated that more weight should have been given to the third and fourth Morton-Norwich factors, i.e., existence of alternative designs and whether the design resulted in a less expensive method of manufacture. Linn argued that the TTAB and the majority discounted "the most probative evidence submitted" in the case which were the design patents and third-party alternative designs. Linn explained that three distinct design patents showed that the shape of the container could be varied and still perform the same function, weighing against a finding of functionality. Linn explained that even though BD's advertising materials may be viewed supporting finding of functionality, those same materials could also be viewed supporting non-functionality because they showed the existence of alternative cap designs different from the mark.

Trademarks / Strength

A Unique Arbitrary Word Mark Does Not Lose Strength as Trademark when Identified Along with Manufacturer
by Alesha M. Dominique

The U.S. Court of Appeals for the Federal Circuit reversed a decision of the Trademark Trial and Appeal Board (TTAB) dismissing tire manufacturer Bridgestone's opposition to the registration of the mark MILANZA for use with tires. The Federal Circuit found that the mark MILANZA did not lose its strength as a trademark simply because the BRIDGESTONE mark was used concurrent with MILANZA. Bridgestone Americas Tire Operations v. Federal Corp., Case No. 10-1376 (Fed. Cir., Mar. 16, 2012) (Newman, J.).

Applicant Federal filed an intent-to-use application to register the mark MILANZA for tires. Bridgestone opposed applicant's registration of MILANZA on the ground of likelihood of confusion with Bridgestone's marks POTENZA and TURANZA for tires. The TTAB concluded that confusion as to source of tires was not likely because it determined that there was no commercial strength or fame of the POTENZA and TURANZA marks independent of the mark BRIDGESTONE. Specifically, the TTAB found that the POTENZA and TURANZA marks were not strong or famous marks because they were usually accompanied in advertising by the mark BRIDGESTONE or Bridgestone's "B" logo. Thus, the TTAB found that while Bridgestone's marks were inherently distinctive, any market strength was tied to the BRIDGESTONE mark. Bridgestone appealed.

Reversing the TTAB, the Federal Circuit explained that concurrent use of the BRIDGESTONE mark did not diminish the status of POTENZA and TURANZA as strong marks for tires. The Federal Circuit found that Bridgestone's marks had commercial strength independent of its BRIDGESTONE mark based on the prolonged exclusive use of the marks, extensive promotion and marketing and billions of dollars of sales of tires bearing the marks. The Federal Circuit concluded that a unique arbitrary word mark does not lose its strength as a trademark when the manufacture is identified along with the branded product, as each identification may have trade significance.

The Federal Circuit noted that prior users of marks are entitled to the traditional protections of its marks of trade as against newcomers choosing a confusingly similar mark for the same goods. In light of the identity of the goods, the lengthy prior use of POTENZA and TURANZA, the market strength of the marks, and the similarities of words, sounds, and connotation with MILANZA, the Federal Circuit found sufficient similarly was shown that the mark would cause consumer confusion, deception or mistake. Thus, the Federal Circuit reversed the Board's decision.

Trademarks / Damages

Damages May Not be Used to "Punish" Willful Trademark Infringement
by Sarah Bro

The U.S. Court of Appeals for the Ninth Circuit upheld a jury award of $6.6 million against an internet and phone-based marketer of skydiving services, but rejected the enhancement of the damages, holding that the district court's doubling of actual damages was improperly punitive rather than compensatory. Skydive Arizona v. Quattrocchi, Case No. 10-16033 (9th Cir., Mar. 12, 2012) (Smith, Jr., J.) (Noonan, J., partial concurrence and partial dissent).

Plaintiff Skydive Arizona, one of the most well known skydiving centers in the world, has used the "SKYDIVE ARIZONA" trademark in commerce since 1986. Skydive Arizona sued multiple defendants for false advertising, trademark infringement, and cybersquatting based on claims that defendants used numerous domain names that referenced Arizona (e.g., phoenixSkydiving.com, arizonaSkyDive.com), alleging that through false advertisements on their websites, the defendants misled consumers into believing that Skydive Arizona would accept defendants' discounted skydiving certificates at Skydive Arizona's centers.

The district court awarded partial summary judgment on the false advertising claims, and a jury then found for Skydive Arizona on the trademark infringement and cyber squatting claims. The court awarded Skydive Arizona $1 million in actual damages for false advertising, $2.5 million in actual damages for trademark infringement, $2.5 million in profits and $600,000 for cybersquatting, totaling $6.6 million. The district court then increased the actual damages to $7 million and issued a permanent injunction, which prevented the defendants from using the terms "SKYDIVE ARIZONA," or similar variations, as well as other references to Skydive Arizona in the state of Arizona. The defendants appealed the summary judgment ruling and the damages award, including the enhancement of actual damages. Skydive Arizona appealed the injunction, believing that it should be applicable nationwide.

Concerning the false advertising claim, the 9th Circuit reviewed a customer declaration stating that he purchased a certificate from the defendants based on their representations that he could redeem the certificate with Skydive Arizona. The statements on the defendants' websites and advertisements were found to be material and likely to influence consumer purchasing decisions. While the defendants argued that Skydive Arizona needed to provide consumer survey to prove the materiality, the court found that it was not limited to consumer surveys and use of a personal declaration was sufficient.

Concerning the defendants' appeal of the damages award, the 9th Circuit affirmed the district court on each award with the exception of the enhancement of actual damages. On that issue, the court looked to the plain language of the Lanham Act, which states that treble damages may be awarded, as long as the total is found to be proper compensation rather than a penalty for infringement. Because the district court opinion focused on the defendants' "purposely deceitful" conduct and disregard for the consumers who were confused, the court believed that such language suggested a "punitive motivation" for the enhancement.

Finally, the 9th Circuit also rejected Skydive Arizona's cross-appeal for a nationwide injunction, because Skydive Arizona had not proven that the defendants' conduct outside of the state of Arizona was illegal, and the injunction was affirmed for Arizona only.

Issuing a partial dissent in connection with the jury's $2.5 million actual damages award, Judge Noonan explained that the evidence submitted by Skydive Arizona concerning its advertising expenditures may have been relevant to the value of the goodwill of its trademark, but that such evidence did not prove any actual damage to that goodwill. He also indicated that the defendants' profits were not a measure of Skydive Arizona's actual damages.

Trademarks / ACPA

Misleading UDRP Exhibits Could Create Liability Under Anticybersquatting Consumer Protection Act
by Elisabeth (Bess) Malis

In an unpublished opinion, the U.S. Court of Appeals for the Fifth Circuit held that a company that allegedly redacted portions of an exhibit submitted in connection with a complaint under the Uniform Domain Name Dispute Resolution Policy (UDRP) may be liable for misrepresentation under the Anticybersquatting Consumer Protection Act (ACPA). ISystems v. Spark Networks, Ltd., Case No. 10-10905 (5th Cir., Mar. 21, 2012) (per curiam).

In 1997, defendant Spark Networks Limited purchased the domain name jdate.com, through which it provides online dating services that cater to Jewish singles. The defendant registered the "JDate" mark with the U.S. Patent and Trademark Office for its web-based introduction services in January 2001. In May 2001, plaintiff ISystems purchased the domain name jdate.net to market its Julian date (or "JDATE") computation software product. The plaintiff later allowed an organization called the Jewish Dating Network to use a subdomain of its jdate.net website to provide a non-profit service that rates Jewish online dating resources. When the plaintiff did not comply with the defendant's request that the plaintiff transfer to it the jdate.net domain, the defendant filed an arbitration complaint under the UDRP. The defendant won transfer of the jdate.net domain, causing the plaintiff to file a complaint in federal district court against the defendant and its parent company alleging, among other claims, that the defendant's efforts in the UDRP action violated the Anticybersquatting Protection Act (ACPA). The district court ultimately granted the defendant's motion to dismiss, and the 5th Circuit affirmed the district court. The 5th Circuit later granted the plaintiff's petition for rehearing.

Under the ACPA, a party is liable for damages if a registrar transfers a domain name based on such party's "knowing and material misrepresentation...that a domain name is identical to, confusingly similar to, or dilutive of a mark." The plaintiff alleged that the defendant materially misrepresented the nature of the plaintiff's site by presenting a "true and correct copy" of the plaintiffs' webpage as an exhibit to its UDRP complaint, while blacking out certain portions of the exhibit to make its website appear to be a commercial site rather than a non-profit resource. The plaintiff claimed that an actual copy of the opening page of the site would have identified the website as a not-for-profit resource, but instead, the redacted image of the site suggested that it redirected visitors to other websites for profit. Taking the plaintiff's factual allegations as true (consistent with the applicable motion to dismiss standard of review), the 5th Circuit agreed that the defendant's alleged misrepresentation was material because the ACPA's definition of dilution specifically excludes noncommercial uses of a mark. In fact, the arbitrator explicitly relied on the lack of evidence of noncommercial use of jdate.net in its decision to transfer the domain. On this basis, the 5th Circuit reversed and remanded this ACPA claim, finding that the plaintiff pled the facts with sufficient particularity to survive the motion to dismiss.

The plaintiff also met its burden under the ACPA to proceed in seeking an order that its registration of jdate.net was not unlawful at the outset, which is determined by reviewing evidence of bad faith intent to profit from the domain name. The plaintiff alleged that it selected the "JDate" name solely to use in connection with its software product and that any similarity with the jdate.com site did not benefit the plaintiff's marketing of its software. Further, the plaintiff alleged that although the Jewish Dating Network eventually used a portion of its site, the use was purely non-commercial and resulted in no profits. Taking the plaintiff's allegations as true, the 5th Circuit was persuaded that the plaintiff lacked bad-faith intent and reversed and remanded this ACPA claim as well.

Practice Note: Practitioners should exercise caution in submitting UDRP-related filings, as any alteration to exhibits may be construed as misrepresentation.

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